Tesla entered the automotive market in 2006 with a car no sane person would buy: a shiny electric car of the future tied to charging stations that barely existed. They had to adopt a strategy more familiar to the technology industry than that of run-of-the-mill car-makers. If no sane person would buy it, who would they target?
Enter the Tesla Roadster. All-electric and all of US$128,500. With a high-end product aimed at the luxury sports-car niche, Tesla waited for the consumer market in electric vehicles to mature. It paid off. Tesla spent the time developing a car that targeted a lower price point. The Tesla Model S, released in 2012, is currently priced at US$65,000 thanks to U.S. federal tax credit. Its next model, code-named BlueStar, will be a $30,000 car targeting the mass-market. At this price range, low-end BMWs and the rest of the usual choices are going to look a comparative joke.
The Model S displayed on Tesla’s Canadian regional site
And why not?
An incident on the 14th of January this year was a source of many chuckles. The U.S. National Highway Safety Administration released two recalls related to problems that could cause fires. One was from Tesla Motors and the other from GM. Owners of 370,000 General Motors vehicles will need to take time out of their day to turn in their cars and pickups at dealerships’ for updates. In Tesla’s case, 29,222 happy owners got their fixes over-the-air, a la Apple iPhone software upgrades.
Of course, this sort of fix is limited to software problems. However it does indicate two things: 1) Tesla is getting things right, more so than an established player like General Motors, and 2) Electric cars, once a source of derision due to unreliability and infeasibility, are no longer the butt-end of the joke.
Market sentiment agrees. Barely one year ago, Tesla share price was at US$39. Today it’s US$196. Now if Elon Musk’s hints about a new plant in China hold any promise, Tesla will find that its planned entry into the potentially lucrative Chinese market propels that value even higher just that much faster.
Source: Google Finance
Sources:
Tesla Motors’ Over-the-Air Repairs Are the Way Forward (MIT Techonology Review)
I bet on Tesla because most investors don’t understand electric cars (The Globe and Mail)