Tesla to Produce 'Affordable EV' by 2016

If his goal was to make an affordable vehicle from the beginning, why didn't he do it? Was the technology not there?

 

Affordability means large scale, which means Billions of dollars invested in manufacuring facilities, R&D, vehicle design, staff, supplychains, stock, brand, showrooms, service centres etc.
He was unlikely to get the Billions of dollars upfront, so made a low volume high cost technology proof for vehicle one (the Roadster) to get the funding needed to design and manufacture a mass produced medium volume high margin luxury car (the Model S) to fund all the other business elements above like the service centres and brand in order to be -able- to offer an affordable car. GM, Ford, Fiat/Chrysler, Toyota........ they all could have done this way easier because they have all the stuff above already, they just choose not to.

 

A bit of trivia.
Ford built high end, expensive cars before the Model T.

History of Ford Motor Company - Wikipedia, the free encyclopedia

 

I like how a lot of comments to that article states that $30k is not affordable. I guess I am not the only one shocked that the average car price in 2012 topped $30k
Average price of new car sales transaction hits $30,748, an all-time record - Autoblog
I'd like to know what median price is just case super cars are skewing the average.

This makes the price of my PiP after rebates and including TT&L couple thousand $ less than average. I bought a cheap car?!

 

That's when I plan to buy a new auto, my Gen II will hold up fine until then. I expect better battery tech, longer miles per charge range, and much faster on a 220 based system!
I got money in my car savings account, just come through with a reasonably priced dependable auto, with range.
It's not like I want a Z axis controls system or anything.....

 

29 Reasons Why Elon Musk Is The Most Badass CEO In America!

Elon Musk Is The World's Most Badass CEO - Business Insider

 

Tesla could really put the pressure on Volts' sales with a lower priced EV.

DBCassidy

 

He is being conservative with the range of that "affordable" car, anticipates 200 miles. I hope it's more.

 

It has to do with competition, economies of scale, and the practical obstacles that face a start-up company. Mass-market cars, to be competitive, must be built in huge numbers to obtain the necessary economies of scale. This requires a very large plant and hundreds of billions of dollars for R&D and plant construction. It also requires an enormous customer base to sell enough cars to make the venture competitive.

A start-up company just does not have this. Musk is worth about a billion dollars, which is nowhere near enough. And Tesla's technology is too new for mass acceptance. Six or seven years ago there were not enough customers, and today there are still not enough for a mass-market EV. Big companies like Nissan can carry such a project on the back of their other business until the customer base matures, but a start-up company cannot.

So Musk devised a strategy which IMO made perfect sense:

Start out in a market where a start-up company can compete: Low-volume, high-end, high-performance hand-made cars. The Tesla Roadster was conceived as a limited edition (2,500 cars) proof-of-concept. It would demonstrate that an EV can be exciting, devastatingly quick off the line, with a real-life usable range. It would also demonstrate that Tesla, the company, could raise the money, engineer the car, construct the plant, produce the car, service warranty repairs reliably, and generally function as a company worthy of respect in the market, both for customers and for investors.

The Roadster did all this.

With its proof of concept on the road and a brilliant success, Tesla was able to move on to stage 2 of Musk's plan: Raise more money, design and build a high-end sporty sedan to rival anything in its price class. The Model S, at $50,000 after federal incentives for the base model, $70,000 for the 300-mile version, and $80,000 or thereabouts fully loaded, has been a whopping success. This is a mass-manufactured car, but at the low-volume end of mass production, at a level that a new company at Tesla's present stage of development can compete in. The Model X will be a variation on the Model S, with a few additional features and refinements.

If Tesla succeeds in bringing out a 200-mile, $30,000 sedan in 2016, or even 2020, it will have gone from conception to true mass-market faster than probably any other car company in history, not counting subsidiaries of established major companies operating with the backing of the parent company.

So the answer to your question, Why didn't Tesla build an affordable sedan first? is that it could not be done. Raising the necessary capital, building the engineering department, and creating sufficient public demand for such a car required starting with a low-volume, high-performance car, and working down slowly to a mass-market price range.

If you've never driven a Tesla Roadster, I can tell you it's quite a thrill: Torque up the wazoo, from a dead stop right up to well over legal freeway speed. Passing and merging are lightning-fast. Response is instantaneous. Powerful regenerative braking mimics sports-car engine braking only much more so. And while looks are subjective, I think it's a remarkably beautiful car, though to be fair, the credit for that goes to Lotus. Top Gear's fraudulent hatchet job notwithstanding, the Roadster was and is impressive enough that investors were willing to put up the money for the Model S, and customers who could not afford the Roadster, or needed a full-size car, were impressed enough with the Roadster to line up in the thousands for the Model S.

In Short, Elon Musk demonstrated profound business sense when he devised Tesla's plan to work gradually toward an affordable electric sedan.

 

He had the drive, courage and vision to make this happen.

DBCassidy

 

More a case of he amassed a wretched excess amount of subsidy (a strong multiple of vehicle sales revenue) to make this happen...

 

Isn't that what all business is?

 

I know of very few start up companies that don't take advantage of government loans or subsidies.
And I know of no other company that has repaid the loan in full nine years early.

In addition to the great answers given above, battery technology continues a slow steady advance which will lower prices, increase range, or some of both.
This will allow a less expensive Tesla model Ina few years when the company has the production capabilities and finances to support it.

 

Thankfully, no. Though the headlines often seem to suggest so, highlighting those who play the game.

It's not only DOE loans involved with Tesla...

 

Tesla got a big boost with the government loan at a critical moment. They have now paid back the loan, in full, with interest. America benefits with the establishment of a new kind of car company, building a new technology (electric cars are not new, but the technology making the present crop of EVs possible is new) and employing a growing number of workers. Everybody wins. Except maybe Nissan, the only big car company making EVs on a large scale, since now, thanks in part to the government loan, Nissan will face serious competition from an American company making much better EVs, and in a few years, Tesla will be competing in the same price range market as Nissan, but making better cars than Nissan.

 

Anyone which can build a rocket and deliver a payload for NASA, well, I would not bet against him being able to deliver an affordable EV. If that happens, I just hope the battery technology gets to the point that I can use it to make my 90,000 miles per year in hot shot deliveries. I already get plenty of comments about mine being the first hybrid delivery these chemical plants and refineries have ever had pulling up to the receiving dock.

 

I've seen some speculation about a 200-mile range, though that might be for a premium trim line with a bigger pack than the $30,000 version. Tesla does like to tout the price of the cheapest model alongside the range of the most expensive model. I'm guessing your 90,000 miles per year would be a stretch. That's six times the "typical" driving miles of 15,000.

There are some people who drive so much that an EV will not be practical until battery technology matures. You sound like one of these. But if you're located where you can make use of the new super-chargers, you might be able to make that car work.

 

I would hope 200 miles is the minimum range by 2016. It looks like Dallas will be getting some supercharger love by the end of the year.

 

Sure -- if he can argue for and harvest more subsidies...