The Model 3 is less than half the cost of Tesla’s previous models.
Like seemingly everyone else on the planet, I tuned into Tesla’s online launch of the Model 3.
I watched with appreciation as CEO Elon Musk worked his showmanship and was nothing short of gobsmacked with the stories of loyalists lining up just for the right to buy a car. It was unprecedented. It was incredible. It might have even been uplifting.
It was also, for those of us who trumpet reason over emotion, a little disturbing. Lining up for three days to buy a car? Seriously? For a car you might not take delivery of for four years?
While others saw “a reinvigorated future for electric vehicles” and the long-predicted move to profitability for Tesla Motors Inc., what I saw — at least judging by the blissed-out visages of the show’s attendees — was a Creflo A. Dollar revival meeting.
Musk certainly wasn’t shy about passing the basket around, fairly glowing in the reports at the time that almost 150,000 — now closer to 276,000 — had ponied up their US$1,000 alms, er, deposits for the right to buy a Model 3 at some undisclosed point in the future. What disturbed me most — but seemed to impress everyone else in the media, however — is that 115,000 of those true believers ponied up their offerings without the slightest bit of knowledge about what they were buying, such was their faith.
Even when the independently foolish pony up large in advance for the delivery of an ultra-exclusive Ferrari and Lamborghini — something the typical Tesla owner no doubt titters about — they have at least seen pictures of what they are buying and know how fast or, more importantly, how far it will go.
What, or perhaps more importantly, when are they buying?
Tesla, long on promissory deadlines, short on timely deliveries, says the car will start to arrive late in 2017. Even if that proves accurate, according to Forbes magazine and Cairn Energy Research Advisors, Tesla may be able to deliver only 12,200 Model 3s by the end of 2017 and 76,860 by the end of 2018. Indeed, if all the current 276,000 (as of April 3) deposits hold up, deliveries could well be backlogged into 2020.
Just as a reminder, that’s four long years hence, more than long enough for Audi, Porsche, General Motors and all the other traditional automakers working furiously on their own EVs to produce a new battery-powered car that will trump Tesla’s current design. Imagine the reaction you’d get if you asked someone to put a deposit on a 2016 Ford Focus they would take delivery of in 2020.
For those speculating there might be a condo-like profit to be made in the flipping of their Model 3 option — Musk has promised that all deposits are refundable — there may even be more bad news. As Forbes points out, the U.S. federal $7,500 tax credit for battery-powered electric vehicles begins to phase out when a manufacturer’s cumulative sales hit 200,000 (essentially, a 50 per cent reduction six months after hitting the 200,000 mark; complete elimination a year later).
Tesla has already sold more than 50,000 EVs in the U.S., so those Model 3 contracts may not be as valuable as predicted.
Nor is Musk’s contention that profits from the Model S and X paid for the 3’s development entirely accurate. According to the BBC, Tesla lost US$889 million last year, part of which was the US$718 million spent on research and development. Thus the cumulative US$276 million reportedly donated, er, deposited in Tesla’s coffers is coming in handy.
Actually, Musk has even more reason to smile. Though media reports have focused on the US$1,000 American Model 3 intenders had to cough up, the average worldwide ante is closer to US$1,250. Factor that in and it would appear Musk “crowd-funded” almost half his development funding in but three days of religious-like worship.
More troubling — at least for those hoping EVs take over from internal combustion-powered automobiles — is the Model 3’s overwhelming reception is not, as the media has been predicting, a sign of the future success long predicted for electric vehicles (plug-ins still account for far less than one per cent of the market). Chevrolet’s Bolt, for instance, offers essentially the same range and performance as the Tesla for about the same money and yet there have been no reports of anyone standing in line outside GM dealers.
True believers also seem to take Musk’s every prognostication as gospel. He drew, for instance, the requisite astonished gasps when he reminded the assembled that — according to a study by no less an authority than the prestigious Massachusetts Institute of Technology — the transportation industry’s emissions are responsible for 53,000 deaths annually in the United States. Cue much-nodded affirmation.
What Musk didn’t mention is the same MIT study says the American electricity-generating industry, much of it coal-fired, accounts for almost as many premature deaths — 52,000 — as road transportation (which, by the way, also includes PM 2.5 nano-particle-spewing diesel trucks).
Does Musk have a point in warning of the dangers wrought by internal combustion tailpipe emissions? Indubitably. Is he the unadulterated “truth-teller” his acolytes claim to seek? I fear not.
Finding the replacement for internal combustion engines is important. It is, as Musk so often pontificates, serious stuff. It is most certainly not, contrary to media types looking for easy comparators, Steve Jobs peddling some silly little iPod thingamabob. This is about, to use Musk’s own words, accelerating “the transition to sustainable transport.”
Maybe electricity really is the future of mobility. Musk may even be correct in his contention his Model 3 is the best battery-powered electric vehicle (almost) available. That doesn’t change the fact that what is needed from everyone, including those buying Tesla products, is a little less fawning adoration and a little more critical analysis.
Environmentalism should not become a religion, no matter how charismatic its preacher.
— Postmedia Network Inc. 2016