Automotive World
How Tesla is steering the automotive Industry
Tesla has been pioneering EV development and pulling all other manufacturers in the EV game.
The Electric Vehicle game started way back in 1997 when General Motors launched EV-1, the world’s first battery-electric vehicle. GM provided the vehicles on lease only agreements. EV-1 program did not allow any of the users to buy their cars. EV-1 took shape when GM’s Impact electric concept was admired by many at the 1990 LA Auto show.
Motivated by the viability of the Impact concept, California Air Resources Board(CARB) passed a mandate for the major automakers in the US to produce and sell Zero Emissions Vehicles(ZEV’s) to continue selling their cars in California. The ruling was very stringent and demanded 2% of the fleet to be emission-free by 1998 and 10% by 2003. This was all done to improve the air quality in California. Because in the late 90’s pollution problem in California was worse than all other 49 states combined.
At the time of launch, GM expected very few bookings for EV-1, but when the lines opened, the number of calls was mind-blowing. The governing authorities were happy to see the response GM was getting.
GM only selected a handful of lessees who could get their hands on the car. There were only 1,180 EV-1s ever made, but thousands of customers waiting to get their hands on the vehicle.
In 2000 when GM and other automakers sued CARB in federal court and got the deadlines extended, seeking that the EVs were not a viable solution. GM went so far, proving that people were not willing to buy an electric vehicle until given a premium amount of $30,000. But this study was later abolished by the CalETC study, stating that it found the annual consumer market for EVs to be 12–18% of the new light-duty vehicle market in California. Amounting to annual sales of between 151,200 and 226,800 electric vehicles back in 2000, way beyond required for CARB mandate. The major part of this study was the assumption that EVs will be available for the same price as their ICE counterparts.
Many were in the waiting line till 2003 when GM CEO Rick Wagoner, cancelled the EV-1 program. The reason put up by GM was the non-profitability of the program. GM also announced that it would not renew an expiring lease for the program and removing all EV-1s from the roads. Many EV-1 drivers wrote to GM to extend the lease with no responsibility whatsoever to the automaker, but no avail. GM crushed all the EV-1’s despite many protests and pleas by the lessees.
Many conspiracy theories were surrounding the discontinuation of the program. Since, 2003 automakers have been lodging for extensions to improve their technologies for a viable ZEV technology. It was until the formation of Tesla Motors, which changed the perception of electric vehicles.
Martin Eberhard and Marc Tarpenning went out on a hunt to find a way out of fossil fuels. They did their research and as Marc says:
No matter what technology is against us electric cars are going to win.
They studied the industry and deciphered the market. The founders wanted to disrupt the automobile market because disruption was what Tesla required to get more and more people to adapt to EV’s.
Ian Wright joined the company, and later Elon Musk joined as an investor. Elon also took part in designing the company’s first vehicle. After a lot of research and development, Tesla Roadster was born. The Roadster was the first true ZEV which people could buy(not lease). No one would come one day, take your loving car and crush it; even when you are willing to pay anything to keep it with you.
Musk took over the board of directors while the others handled the business aspect of the company. Tesla’s goal was to start with a premium sports car aimed at early EV adopters and then moving into more mainstream vehicles, including sedans and affordable compacts.
Today, Tesla has a complete car line-up with 4 models and 3 upcoming models in the line. Tesla has been very successful in pitching their products way ahead in time. This way Tesla procures some token money which helps them keep making their vehicles. Tesla has not been able to post yearly profits since launch, but has been profitable in some quarters. The most recent profitable quarter ended on March 2020.
Today, Tesla is the undisputed king in the EV market, with Model 3 leading the pact. I think it will be replaced by Model Y climbing to the top.
Tesla is gaining popularity at a much higher pace than anticipated. They have integrated cutting edge technology into their vehicles. Sandy Munro from Munro Associates has mentioned that Tesla batteries and motors are way ahead of all the competitors powertrains. The cars consist of capable hardware, even to a scale that the new vehicles rolling off Tesla production lines are also capable of full-autonomous driving when the software is ready.
The cars are equipped with sentry mode which uses all the cameras to monitor the surroundings round the clock.
With the success of Tesla and it’s vehicles, the regulatory bodies are now very confident regarding ZEVs. Today, many governing authorities have put stringent norms into action.
European Union
EU has implemented the 95g/km per car rule. If any car company operating in Europe is found to have emissions higher than that of 95g/km they will have to pay €95 per gram per vehicle.
This regulation means that many automakers in Europe are doomed to pay thousands of Dollars in compensation if they do not introduce Hybrids and Electric vehicles in their line-up. The automakers with ZEVs will also get some compensatory points down the road.
Today all the major automakers are playing the catch up game by trying to replicate what Tesla has to offer. Because they have pretty low emissions per car as compared to other automakers.
In the United States, the Federal State Governments have been very effective, granting up to $7500 tax rebate to early EV adopters. The compensations have boosted the sales, but EVs market share is still a bit above 2%. Tesla has successfully produced the mass-market EV, but the masses seem to be not ready to adapt to EVs. The major concern that a common man seems to have is of Range and lack of charging network. But with government compensations and initiatives, we can soon bridge the gap between the number of charging stations and better batteries in development could increase range, hopefully we would see better figures next year.
Today most of the Major Automakers in World have at least one electric vehicle on offer. Most have done a great job catching up.
- Ford- Mustang Mach-E.
- Mercedes- EQC and EQS under development.
- Audi- E-tron line-up with SUV already available.
- Jaguar- I-pace.
- Volkwagen- I.D line-up.
- Porsche- Taycan.
- Chevrolet- Bolt.
- Hyundai/Kia- Kona and Soul EV.
With all the major automakers jumping in the EV race pioneered by Tesla, I cannot guarantee that Tesla will have the upper hand for a longer period. Tesla has been struggling with quality issues from day one. The new models are also experiencing the same quality issues, and this might lure customers away from Tesla when other automakers are ready with promising vehicles. All the older companies know how to make cars and do them right.
Tesla is not dying anytime soon, and neither are other automakers.
The amount of engineering which automobile giants can put into the development of EVs is tremendous. When these giants come out with their vehicles, in my opinion, they will be good enough to beat Tesla sales figures.
They already have a vast dealership network spread across the world with service centres. Whereas Tesla is still expanding and does not have many dedicated EV workshops, this still haunts buyers.
Today, Porsche Taycan is termed to be the best performance electric available. The enthusiasts are mad over how an electric car is able to do everything as good as a combustion vehicle and Porsche has already secured it’s market in the premium segment.
Likewise, Jaguar developed the I-Pace which went on to win back to back awards at all the major automobile awards.
However, the Martin and Marc’s dream of electric cars everywhere will be a reality. Maybe not all EVs on road will be from Tesla.
With all the major automakers slating to produce all-electric fleets by the end of 2030, we can witness the impact(disruption) they have created in the industry.
This shows that the vehicles will keep on improving and customers will get more choice. At the end consumer is the King and we get to choose from various available options as the competition grows.
