Tesla: The Plug-In Revolution
The Silicon Valley car company is challenging industry conventions and reinventing the wheel...literally.
When Tesla Motors unveiled the Model 3, its $35,000 electric car, the 373,000 drivers who reserved preorders did so without so much as kicking a tire or sitting behind the steering wheel. In what Bloomberg News called “the single biggest one-week launch of any product ever,” tens of thousands of people stood in line with $1,000 refundable deposits to buy a vehicle they had never seen in any showroom.
The March 2016 unveiling, before a cheering audience at a live stream on the company’s website, was, according to Bloomberg, “unique in the 100-year history of the mass-market automobile.”
Unique is the key word. Since its establishment in 2003 by PayPal co-founder Elon Musk, Tesla Motors has been driving an unconventional and sometimes bumpy route on its mission to speed the adoption of sustainable energy. It’s not only that Tesla has plugged the electric car into the world’s collective consumer consciousness. It’s that the company’s astounding success, as illustrated by the preorders for the Model 3, has all but allowed the upstart to seize the wheel of the $1-trillion auto industry and steer it in an entirely new direction.
$35,000 start price; $42,000 average price
Seats five adults comfortably
215 miles per charge
0-60 acceleration in less than six seconds
Battery pack on the floor
Front and back trunks
Motor mounted between the wheels
Center touchscreen to navigate real-time traffic data, access streaming media, and connect to the Internet with the web browser
Autopilot that uses cameras, radar, ultrasonic sensors, and data to steer on the highway, change lanes, adjust speed in response to traffic, and parallel park on command
Free over-the-air software updates
Highest safety ratings in every category
Based in Palo Alto, California, instead of auto-centric Detroit, Tesla began its crusade in a down economy when the industry scoffed at the mere idea of producing, let alone, selling a fully electric car. Because it was initially financed by entrepreneurs including CEO Musk—who reportedly didn’t ask for outside money because he was convinced the company would fail—Tesla was able to set its own independent course. “We were a tiny company with few resources,” Musk reminded fans at the unveiling. “We started small.”
Tesla Motors is following the lead of Musk’s other long-term, long-shot project, SpaceX, which he founded in 2002 with the ultimate goal of having people live on other planets. Although Tesla’s first model, the limited-edition 2008 Roadster, was a luxury sports car, Musk’s long-term goal was to produce affordable, mass-market sedans and compacts.
Tesla, which is named after the futurist inventor Nikola Tesla and uses an AC motor that is based on his 1882 design, eschewed Detroit’s short-sighted electric vision, choosing to engineer and design its cars from the ground up rather than building them on gasoline-powered platforms.
It also shunned the standard single-purpose larger batteries of its competitors, substituting thousands of tiny cylindrical-shaped lithium-ion 18650 commodity cells that are typically found in laptops and other small electronic devices.
“Our strategy was to show that people didn’t need to compromise to drive electric,” a Tesla spokesperson says. “That electric cars can be beautiful, safe, and incredibly fun to drive.”
Produced in the company’s Fremont, California, factory, the cars are sold directly to customers online and in Tesla-owned showrooms. They are charged at the buyer’s homes and at the company’s rapidly expanding network of over 7,000 destination charging and supercharging stations around the globe. The Tesla Gigafactory, outside Sparks, Nevada, manufactures the batteries.
“We’ve looked for the best way to do things from best practices across every industry, including software, aerospace, and retail,” a spokesperson says. “Similarly, we challenge industry standards in the way we hire, bringing in the best from unexpected industries like luxury retail, as well as what and when we outsource, bringing as much of the work in-house as possible.”
The success of the $109,000 Roadster led to the Model S, the first fully electric sedan and the best-selling electric car in 2015, and the aerodynamic falcon-winged Model X, which Tesla bills as the “safest, fastest, and most capable sport utility vehicle in history.”
The innovative design and engineering of the S and X, not to mention their popularity, jolted the auto industry, jump-starting Nissan’s Leaf and GM’s Chevy Volt.
“With the Model S, we incorporated everything we thought a car of the 21st century should be, ignoring any preconceived notions about what should be included,” said a company spokesperson.
The Model S, which was named the 2013 Motor Trend Car of the Year, is the first plug-in to reach the 1-billion-mile mark. A $465-million loan from the US government (repaid in 2013) spurred development as did a 2010 IPO that raised $226 million for the company, which became profitable in 2009.
“The sales of the S and X paid for the Model 3,” Musk told the crowd at the unveiling. “The 3 is really a good car even with no options.”
Tesla’s unorthodox approach to car manufacturing has not been without controversy. The online sales have generated court cases in several states and safety issues, including suspension breakdowns in the Model S. Claims that customers were told not to report them have brought scrutiny from the National Highway Traffic Safety Administration.
A company spokesman, calling the cars the “safest, highest performing, and most efficient on the road,” declares that they are “not only as good as gasoline cars but also fundamentally better in every way.”
While the Model 3 is waiting to hit the road, Tesla has upgraded its Model S. The Model S 60 and 60D offer increased speed and range and decreased prices of $66,000 to $71,000.
“When comparing the price of any electric vehicle to an internal combustion vehicle, it’s important to compare not just the out-of-pocket prices, but also the effective cost of ownership,” the company spokesperson says. “Factoring in annual fuel savings, which typically range between $1,000 and $1,500, as well as available tax incentives, the effective cost of owning Model S 60 comes to about $50,000.”
If the company’s success continues, in the next couple of years, it’s likely that there will be a Tesla in every garage or at least on every road.
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