There's been lots and lots of Tesla in the news lately, but mostly the wrong stories. Not that story content was wrong; it's just that the mass media - as MSM never fail to do - went after the wrong stories.
The really big Tesla news are this. Some of you remember the insanely steep Model 3 production ramp Tesla had originally promised? Reaching 5k/week by the end of 2017 as shown above?
Well, it is finally happening, big time. About 9 months late and quite a few dollars shorter than planned, but last month Tesla delivered >22000 Model 3’s in the US — more than Toyota Corollas! And demand is still super-brisk, and Tesla has plenty of $$ to keep going.
So... has Tesla started selling EVs to the masses? Not quite... which makes the Model 3's feat of breaking into the US Top 20 selling vehicles list (see here and here), and moving swiftly up the ranks every month — all the more impressive.
But what does all this means for the EV revolution, and for us who want to resist this Fossil Regime? "Too early to tell" sounds about right. Follow me to learn more.
#RbPi (#RESIST-by-Plugging-in) diaries expand awareness that:
- When the government is run by oil interests and global-warming deniers, switching to a Plug-in vehicle (a.k.a. electric car or EV) becomes a direct, effective act of #Resistance.
- On the merits, EVs are viable and increasingly attractive in many segments of the US new and used auto market.
If you are serious about resisting, have a car, and you haven’t plugged in yet, I hope to help you and your community move ahead in the inevitable path to electrification, sooner rather than later. #Resist.
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A Semi-Pology
The last #RbPi went up about a month ago. It was a bit rant-y and not very well received. I'm sorry, I was feeling bad from not posting for so long, and was actually on vacation and trying to push that one through before the end of the month, so my patience (which is not braggable to begin with) was even thinner than usual.
My main points that I tried to get across were that
- The variety, available technology and price-points of new and used EVs in the US (including plug-in hybrids a.k.a. PHEVs) have long ceased to be a barrier for mainstream acceptance, and
- There are many millions of cars in the US that — in terms of what they need to do and whether they park near an electrical outlet — could be replaced today by the EVs mentioned in #1. Even if you the reader don’t fit the definition personally, you know many people who do.
The bottlenecks to accelerated EV adoption across the board are now mostly dealer-level attitudes, and consumer-side awareness and hesitance. I still stand behind this message 100%. I just did a really bad outreach job with it last time. Sorry again, and I hope you'll consider.
This is not about me and my writing style. It’s about resisting a regime that is so venal as to switch overnight from rabid global warming denial — to claiming we shouldn’t bother to save oil, because the planet is fucked anyway.
Tesla's Numbers
Model 3 deliveries over the past 12 months, courtesy of insideevs.com.
Oct. 2017 |
145 |
Nov. 2017 |
337 |
Dec. 2017 |
1060 |
Jan. 2018 |
1875 |
Feb. 2018 |
2485 |
Mar. 2018 |
3820 |
Apr. 2018 |
3750 |
May 2018 |
6000
|
Jun. 2018 |
5920 |
Jul. 2018 |
14250
|
Aug. 2018 |
17800 |
Sep. 2018 |
22250 |
Each month starting May, Model 3 broke the all-time US monthly EV sales record. The exception in June was not due to production hiccups like earlier, but a deliberate hoarding of ready-to-deliver cars in order to gain another quarter of Fed rebate.
Each month starting August, Model 3 broke the all-time global EV monthly sales record. It is guaranteed to break the annual global record as well, and will likely be the first EV to reach 6-digit sales in a single year (the Nissan Leaf may reach 100k as well, if it ends the year strongly).
In September, the Tesla Model 3 was the #4 best-selling passenger car in the US, #9 among cars+SUVs combined, and #12 among cars/SUVs/trucks. It came ahead of all-time hits like the Toyota Corolla and the Ford Explorer and Escape.
The Model 3 numbers are pulling overall US plug-in sales to new heights: 44.5k in September — which is likely over 3% of total US car and light truck sales last month. Just 3 months ago, the monthly record was 26k, the monthly plug-in share had never crossed 2%, and the annual share hovered just above 1%. A single model has changed it all. But for Tesla this is really the culmination of a multi-year trend.
Looking over a longer time period, note how sharply Tesla's overall deliveries have been ramping up year after year. The MSM, even some usually-reliable outlets like the Guardian, describe Tesla nowadays as "troubled". Does this look like a troubled automaker to you?
The astonishing thing is that the cheapest available Model 3 costs $49k, and the average Model 3 price point in recent months (according to insideevs) has been ~$60k, because Tesla keeps introducing higher and higher trims of this baby, and people apparently love them.
Do you know how far down the US sales list one has to go to find a car with this price point, even after discounting the Model 3’s $7.5k Fed rebate? The first one I found was the Mercedes E-class, which made ~4k sales last month, vs. the Model 3’s 22k.
So What does it All Mean?
For us Little People who don't care much about brands, but want the EV revolution to succeed, there are two main facts right now:
1. Tesla is making and selling an unprecedented shit-ton of EVs, and has an endless and growing list of eager would-be customers.
2. To date, Tesla hasn't built or sold a single midmarket EV; only luxury and now also premium.
Point 1 reminds us what a crucial role Tesla, its 100% commitment to EVs, and its de-novo approach to design, production and marketing, has played. In particular, it has dragged legacy automakers kicking and screaming into the EV scene.
Point 2 reminds us that we desperately need other EV makers besides Tesla. The >90% of us who cannot afford a Tesla at current prices, would still be waiting on the sidelines — at least until spring 2019, and that too only if we paid a $1000 deposit back in spring 2016. Recall that the Model 3 was marketed from the get-go, and is still known in the mainstream discourse, as “Tesla’s $35k car”. But that won’t be happening soon.
If not for other automakers’ EVs, no matter how halfhearted and half-assed their efforts have been, we would have been in a pretty bad place right now. There are already several million EVs on the world’s roads, and Teslas are only a few percent of those. Even in Tesla-dominated US where EVs just crossed the cumulative one-million mark, 70%-75% of EVs are not Teslas.
Model 3, the Four-Wheeled iPhone
One thing worrying me in the US, is that desire for Teslas is not translating into desire for EVs. Heck, it isn't even translating into awareness, acceptance and openness towards EVs. Outside of Tesla, BEV sales in the US have been actually coming down this year. This has nothing to do with the quality and value of these BEVs anymore. In fact, as I keep and will keep harping on and on, the selection and quality of midmarket EVs and cheap used EVs available Stateside is better than ever before, and improving rapidly. Domestically, Tesla is simply blocking out the EV light so no one can see the others.
It’s a great business achievement for Tesla. In present-day consumer society, particularly the US, selling people what they need can only get you so far. The Holy Grail of consumer-society marketing is shaping people’s desires so that your product is the stuff of their dreams. You don’t just sell more, you also sell for more if the sale satisfies their desires. This is particularly true for cars — hence the ridiculous style of most car commercials. Tesla has pulled it off better than anyone else, and without any TV ads. People in America are sold on Tesla to the degree that other EVs don’t even exist for them. Just like so many Americans would shell out $1000 for the latest iPhone, not even considering the perfectly good $300 Android right next to it (not to mention the passable $150 Android, like the one I have in my pocket).
So as of now, Tesla's main service to acceptance of EVs in America has been to change the canard
EVs are uncool golf carts forced upon us by XXX
into
EVs are uncool golf carts forced upon us by XXX - except for Tesla.
That is not very helpful, unless you are Tesla.
(canard reading instruction: if you have right-leaning gut instincts, replace XXX by “regulators who want us to eat our veggies”. If left-leaning, replace XXX by “corporations who want us to buy too much stuff”. Or whatever you think XXX best represents for you)
Fortunately, outside the US the situation is quite different. But I won’t elaborate on that here.
What’s Next?
Right now, while ramping up so impressively, Tesla has manipulated its Model 3 waitlist reservation holders into a very innovative shakedown. Back in March-April 2016 these customers, besides helping shape the Model 3 into an object of massive desire, collectively gave Tesla an interest-free loan grant of >$450 Million ($1k x 450k customers). Two and a half years later, when talk on the Street is mostly around Tesla’s cash burn rate, this has turned out to be a very crucial cash cushion. Tesla seems to have ~$2B in cash, but may need to pay out nearly $1B to bond holders in March if its stock is below $360 at that time. TSLA is currently at ~$260 and fluctuating as wildly as ever.
The majority of these 450k waitlist customers were there, naturally, for the heavily advertised and promised “$35k Tesla”, not for the far more expensive trims currently on offer. How do I know it’s the majority? Because in June Tesla invited all people on the waitlist to place an order immediately, as long as it is for the available trims ($49k to ~$80k). Then in September it started offering immediate walk-in deliveries of certain high trims, to anyone on the waitlist even if they did not place an order. You don’t do stuff like that, unless you are running out of high-trim orders from reservation holders in North America (the Model 3 hasn’t been delivered to the Old World yet). To date Tesla has delivered ~80k Model 3s, which means that a far larger number is still holding out for that midmarket trim (most of the waitlist is US-based).
These waitlisted grant-providers have gone through a lot. First they learned that the earliest Model 3’s were $49k and up, and they will get theirs “a few months later”. Then all the inevitable production-line troubles popped up, and the wait stretched out longer and longer… then in May the “$35k Tesla” hopefuls became framed by Musk (via Twitter, naturally) and his fans as a burden, silly free-riders expecting to get something at a price Tesla cannot afford. Tesla would literally sink if it had to sell Model 3’s for $35k anytime soon (that’s what Elon said). And now things are getting even worse for the waitlisted, because of the peculiar structure of the EV Federal rebate, which is phased out by automaker rather than across the board.
New Teslas are eligible for the full $7500 rebate only if delivered through 2018. For the first half of 2019, buyers will get half that. Starting July they will get one quarter and starting 2020 (unless the law changes) they will get nothing.
Model 3 waitlist holders now know, officially, that waiting for that base trim might cost them at least an extra $3750, and very likely >$5.5k. So suddenly the $14k gap between what they wanted and what Tesla is offering, has shrunk in Tesla’s favor. The gap is even smaller, because the $35k price tag is for bare-bones with black color and funky-looking (though energy-efficient) wheels, so most people were probably ready to order something around $38-42k. They might as well cough up a few extra grand, and settle for the bare-bones black version of the higher trim to cut their losses.
Or they might consider, say, the Chevy Bolt, a highly praised 240-mile BEV with more cargo space than the Model 3. They can likely haggle the GM dealer down at least $5k from the Bolt’s $38k price tag, get the full Federal rebate (and another couple grand in state rebate in many places), and drive it off the lot at the net cost of a typical midmarket compact car, ~$15k less than the cheapest Model 3 they can have right now. They can settle for an even cheaper 150-mile 2018 Leaf. But most waitlist holders won’t do it. Unlike the iPhone analogy, US EV customers are still not aware (or at least don’t have a realistic perception) of their full range of options, and US automakers and dealers don’t push their EV products nearly as massively as Samsung et al. push their Androids.
If I were to speculate what happens next with the Model 3, I’d say Tesla will manage to “convince” tens of thousands of $35k hopefuls to buy a lot of extra battery they don’t need (what proportion of cars on the road must have a 310-mile range?) before the end of 2018. Then eventually sometime in 2019 (not necessarily as early as the current schedule says), the 220-mile trim will come out, but will occupy only a minority of production volume. Tesla has a huge incentive to start shipping out higher Model 3 trims to the Old World, rather than let the lower-margin riffraff for domestic customers take over its production line. Not for a while at least.
What about Elon?
Ahhh…. Elon. He’s been Tweeting. Like someone else we know. Unlike that someone, Elon Musk has actually done some positive things in his career. OTOH, Musk doesn’t enjoy the layers of political and media cover that protect The Orange Turd from paying any price. Musk’s current behavior has become a distraction not just from Tesla’s very real and very impressive achievements, but from EVs as a whole. And a danger to his company.
So there will be new episodes to this Teslanovela, sooner rather than later. Stay tuned.