Tesla: The Day Finally Arrived
An era of affordable all electric vehicles is rapidly approaching as Tesla revamped their entire lineup and pricing structure becoming more affordable and available than ever. With EV Excitement building before the Geneva Auto Show next week in Switzerland, Tesla took the opportunity to draw all eyes as it released the long awaited $35,000 starting price Model 3 Standard for the US.
They didn’t stop there, introducing a new Model 3, the Plus with partial Premium interior for $2,000 more adding 20 miles range and most of the Premium upgrades. They also brought back my personal favorite, the Long Range RWD model, putting the actual EPA rating on of 325 miles. They didn’t stop with the Model 3 and slashed prices on the Model S and X as well.
Tesla announced they were closing their retail shops and converting the busiest to galleries, switching to all online sales with rapid delivery and remote service. Smoothing out remaining kinks in the process and focusing on improving the service experience.
What does this mean for the EV industry? Tesla isn’t unique in offering a $35,000 vehicle with over 200 mile range. What makes Tesla unique is the overall EV infrastructure. They offer their own supercharging network well spread out over the US, they offer over the air updates, and even are starting to roll out full self driving features that is available on all their cars (not limited to high end models). What makes Tesla special is the Volume, expecting to make over 350,000 cars this year and well over 500,000 next year.
Once the big automakers decides to compete, are they going to crush Tesla? No. The issue is Tesla is successful because they aren’t the traditional dealership model, and once other companies finally decide to compete they will be behind and Tesla will have established themselves as the leader. Tesla with their lower costs will undermine their pricing making EVs for them less profitable and met with more resistance from investors. That isn’t to say they won’t compete eventually, but they need to be smart about it.
Tesla has agile software and hardware updates, adjusts price for market conditions and passes that straight to consumer instead of forcing the consumer to haggle with an intermediary that decides to keep the incentives for themselves, and Tesla offers a more pleasant experience ownership experience. There is a reason Tesla ranks so high in Consumer Reports’ Owner Satisfaction Survey, even if they aren’t the most reliable vehicles.
The first round of “competition” from the legacy automakers is coming now, and pricing and feature set on it reflects that the cars are designed to retain existing buyers. The EQC is designed to appeal to existing Mercedes customers. The fallacy is that their customers are leaving because they want an electric vehicle. Although that is part of it, there is more to it. Many of those customers are leaving because they want the Tesla experience. To retain them you need to not offer what you already do in a different package and instead mirror the Tesla experience. I think Polestar is making a better attempt at this as I mentioned last week.
Whatever the outcome, the Tesla announcement along with all the announcements surrounding Geneva means that we will have an ever increasing number of EVs available to choose from. A win for everyone.
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