Once again, gas prices are rising and not surprisingly, the electric car market is still making headlines, specifically with Tesla thanks to a scathing test review of its new model S by New York Times writer John Broder. Despite Tesla’s claims that Broder fabricated data in his story (more like exaggerated in my opinion) the question remains whether or not now is the time for an electric vehicle that is priced in the stratosphere, and what the long term future will be for the Bay Area-based auto maker.
I honestly think 2013 will be a benchmark year for Tesla as they work hard to achieve profitability and somehow sell the idea of a luxury electric vehicle to ‘green’ driving enthusiasts. The EV industry is already working hard to sell the public on the idea of owning a pure electric vehicle in general let alone one that is priced well over, in fact more than double in some cases, the average price of nearly every EV that is now on the market. When you think about it, you would never buy a Tesla on the idea that you would be saving money on fuel costs. Why? Because even the cheap Model S cost more than $50K, with the higher performance version selling for almost $100K. So, for example, if you buy a 2013 Honda Fit for $20K that gets at least 30 mpg, when you break it down, it would be much cheaper to own than even the cheapest Tesla. So why buy a luxury EV? Is the ‘green’ Tesla the new smug impractical car to own, much like owning a Hummer use to be?
On the financial side of things, Tesla has notoriously been losing money. Its losses in profits went from losing more that $50 million in 2009 to more than $250 million in 2011, and just recently announced, in 2012, the company lost almost $400 million. Despite all that, and the fact that they only produced about 3,000 cars last year, the company hopes that next quarter they will actually show a profit, and are on track to make approximately 20,000 cars by the end of the year. They also claim to have some 15,000 orders for the new model S. That sounds great for 2013, but will the demand sustain itself when the Wall St. Journal just reported that used vehicle sales are at an all-time high right now because drivers are looking at every possible means to save money. Used car dealers are actually having a hard time keeping any inventory. I hate to sound like a broken record, but more than a hundred years ago, Henry Ford succeeded in making the automobile highly successful by making it, at the very least, affordable to the masses. The Tesla seems like a very well-built car, but is it the EV that the auto industry has been craving for so long that will make electric cars mainstream?