Tesla Motors, the electric car company that aspires to become the next great American car company, is set to release its Model S in mid 2012, with 6,000 reserved orders already lined up for sale, for an approximate third of a billion dollars in revenue for the company.
Tesla has garnered a great deal of interest for its approach to car design, which has been rather unorthodox in its use of electric motors, batteries, plug-in charging and carbon fiber materials, all of which combine to make the cars quite environmentally friendly, but still with strong performance; the Model S can go from 0 to 60 in less than 6 seconds, upending the established wisdom of oil being the only way to get a powerful engine, while still being capable of charging from any ordinary outlet.
The Model S comes in three varieties, with a range of 160, 230 and 300 miles, with the basic model starting around $57,000, though that numbers drops below $50,000 with the federal tax credit for such vehicles. By comparison, the hype-heavy Chevrolet Volt hybrid is capable of approximately 40 miles on its battery-only charge, though it can then switch to the gas engine. Though this number is enough to take care of the daily commute of a good 80% or so of American drivers, it puts into perspective the technological achievement of Tesla and its designs, though admittedly with the price tag appropriate for higher-end, cutting-edge technology.
Such performance numbers, as well as the business prospects of such a product, has led analysts at Deutsche Bank and others to maintain a hold rating on Tesla Motors, citing its stable business model and financial situation, and the upcoming purchases for the release of the Model S, among other factors. If Tesla can gain some mainstream acceptance, perhaps by developing a lower-cost model for the mainstream of consumers, it is likely to smash a pretty significant dent in the market, and will pay off for those such as Deutsche Bank who are banking on the company’s continued success.
Tesla Motors currently designs what is clearly a premium product, and while focusing on such a market is clearly successful as a business model in many situations (and likely this one), it would certainly be quite a sight to see a $30,000 model available as a mass-market product.
What could be particularly interesting would be to combine the developments of Tesla Motors’ electric-only engine, and its carbon-fiber body (which has advantages beyond simply increased engine efficiency, such as lowered inertia in crashes, and therefore less deadly impacts), with the modular components and other cost-cutting measures of the Tata cars from India. If the developments of the Tata Nano, which produced a car approximately 1/5 the cost of many economy cars, costing just a few thousand dollars, could be implemented with Tesla, the car would theoretically cost $12,000.
A tall order, certainly, and obviously subject to a variety of factors which might drive the cost higher. But if even a few of these developments could be implemented in future Tesla models, it could become a mainstream, revolutionary product beyond its current niche.
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