Elon Musk’s year is not off to a great start. His luxe compensation package from Tesla—estimated to be worth as much as $55 billion—was blocked by a court in Delaware, the tax haven where the company is incorporated. Tesla is also being sued by 25 California counties over its alleged mishandling of toxic waste. Amid all that well-earned bad press, though, Tesla seems to have made at least one good decision: to start offering a small, cheap electric car.
Last week, the automaker announced to suppliers that it plans to start producing a compact crossover electric vehicle that will retail for $25,000; its cheapest current offering is the $38,900 Model 3. The new model would also be slightly less expensive than the Chevy Bolt EV, which starts at around $27,000.
The decision is less an example of stunning business acumen than common sense. Last month, Tesla lost its status as the world’s top-selling EV maker to the Chinese automaker BYD, whose best-selling model is a compact that starts at $14,000. And while U.S. consumers certainly buy lots of big, expensive cars, the U.S. still only accounts for 8 percent of the global EV market. According to the International Energy Agency, 60 percent of electric cars sold worldwide are bought in China. Europe is the second largest market, accounting for 25 percent of EV sales.
What’s astounding is just how little interest U.S. automakers whining about their struggles with electrification have shown in actually competing on EV sales. As I’ve written about before, the “Big Three” (GM, Ford and Stellantis) have spent the last half-century or so specializing in the kinds of big, heavy pick-up trucks and SUVs that allow them to charge customers more and skirt regulations.
The reason they’ve done that has to do with American regulatory history. Starting in the 1970s, larger vehicles—which were at the time predominately used by farmers, construction workers and other laborers—were exempted from early fuel efficiency rules; those carve-outs remain mostly intact. In order to take advantage of this regulatory gap, however, car companies had to convince customers they needed features like four-wheel drive and huge hauling capacities that the vast majority simply didn’t. So automakers got to work pitching big cars as gateways to adventure, safety, and rugged individualism.
The project of selling Americans on big cars has been phenomenally successful. At this point, the Big Three have basically stopped making anything else, ceding markets for compacts and sedans to foreign companies as models in the U.S. keep getting bigger and more dangerous. The same firms are now seemingly up-selling customers on another largely extraneous feature in the transition to electric vehicles: range. In other words, seem content to use the specter of ultra-long-distance driving to convince people to buy a very particular type of car.
In general, the bigger the battery, the longer an electric car can go without charging. The Ford F-150 Lighting, for instance, has a 300 mile range and an 1,800 pound battery. Those batteries are the most expensive part of the car, helping add to the average 30 percent price premium over gas-powered cars. They also require enormous amounts of so-called critical minerals such as lithium. Aside from the social and environmental concerns of big mining operations, this growing demand also poses a logistical one: mining, processing and battery production capacities are overwhelmingly concentrated abroad, including in China. Prioritizing range above all else, meanwhile—and the bigger, resource-intensive batteries that entails—could make what would already be an uphill battle for the U.S. to reshore EV supply chains an almost impossibly steep one.
Nonetheless, U.S. consumers have been craving ever-greater range. In 2019, a survey from Cox Automotive found that prospective EV buyers desired a car that could go 300 miles without a charge; by 2021, that had jumped to 341 miles. Still, exceedingly few people are regularly driving hundreds of miles in a single go: just 5 percent of trips taken in the U.S. are longer than 30 miles; nearly 60 percent of all trips are less than 6 miles. One 2016 study, published in Nature Energy, found that lower-range cars like the early version Nissan Leaf—with its 73-mile range—could satisfy 87 percent of driving days in the U.S. so long as they could plug in overnight. If everyone who fit that driving profile suddenly had just such an EV, researchers found, U.S. gasoline consumption from personal vehicles—the leading cause of transportation sector emissions—would be slashed by 61 percent.
Range anxieties aren’t all nonsense, of course: U.S. charging infrastructure does indeed leave a lot to be desired. But consumer demands aren’t formed in a vacuum: A buying public that hadn’t been primed for decades to buy cars they don’t need might well be more open to a more modest and functional range of electric ones. The bigger problem is that most U.S. automakers don’t want to make these smaller, less resource-intensive and more practical cars. With any hope, Tesla’s new offering to the U.S. EV market will be the first of many.
The Worst Person You Know Just Made a Great Point About Electric Cars
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01.02.2024
Elon Musk’s year is not off to a great start. His luxe compensation package from Tesla—estimated to be worth as much as $55 billion—was blocked by a court in Delaware, the tax haven where the company is incorporated. Tesla is also being sued by 25 California counties over its alleged mishandling of toxic waste. Amid all that well-earned bad press, though, Tesla seems to have made at least one good decision: to start offering a small, cheap electric car.
Last week, the automaker announced to suppliers that it plans to start producing a compact crossover electric vehicle that will retail for $25,000; its cheapest current offering is the $38,900 Model 3. The new model would also be slightly less expensive than the Chevy Bolt EV, which starts at around $27,000.
The decision is less an example of stunning business acumen than common sense. Last month, Tesla lost its status as the world’s top-selling EV maker to the Chinese automaker BYD, whose best-selling model is a compact that starts at $14,000. And while U.S. consumers certainly buy lots of big, expensive cars, the U.S. still only accounts for 8 percent of the global EV market. According to the International Energy Agency, 60 percent of electric cars sold worldwide are bought in China. Europe is........
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