Luxury electric car maker Tesla may be taking on the burden of achieving President Obama’s failed electric vehicle policy with the recent unveiling of its clean car for the masses.
Tesla’s president and founder, Elon Musk, nearly sold as many electric vehicles in one week as major automakers did in five years, under Obama’s missed target of one million by 2015. During the president’s goal period, between 400,000 and 430,000 cars were sold, or about 1 percent of the country’s vehicle sales.
Musk received 325,000 orders since the introduction of the Model 3. But as some business news websites put it, those are “theoretical” sales. The mass-market sedans, priced at around $40,000 plus, haven’t been built. Those are all soft orders worth about $14 billion, although Musk is making some money from the $1,000 it takes just to go on the waiting list.
The orders won’t begin being filled until late 2017.
But many of those orders are likely to fall by the wayside as people get tired of waiting or decide to buy sport utility vehicles instead, which the Commerce Department says is more than likely. Low gasoline and diesel prices in the last year have driven consumers to by more conventional vehicles, forcing hybrid-electric and battery-powered cars to take a backseat to a resurgence in SUV and truck sales, the government reported.
“Not all of those reservations will convert to actual orders, of course,” John Voelcker of Green Cars Report wrote earlier in the week. “But even if only half of them do, 150,000 Model 3s would amount to more plug-in electric cars than General Motors, Toyota, Ford, BMW, or VW Group has sold in more than five years. Only Nissan has sold more (slightly over 200,000 as of last month).”
Those are all the companies that Obama was hoping would pump up sales to more than 1 million electric cars by now, which they couldn’t do in five years.
Bloomberg New Energy Finance issued a recent report that projects electric cars being cost competitive with gasoline by 2025. But despite the billions of dollars the administration has put into developing the technology, the advances necessary appear decades away.
At the same time, experts say gasoline-powered cars are becoming much more efficient and electrified than in the past, while still relying on liquid fuels as the primary source of power for the vehicles. That will make it tougher for the battery-powered cars without a better way to store electricity that can deliver the same energy punch as gasoline.
“Cheap oil, cheap gas, cheap renewables. There is an abundance of supply that we have not had for decades and this is driving intense competition,” said Michael Liebreich, the founder of Bloomberg New Energy Finance, at the analyst group’s summit in New York earlier this week. He said in the struggle to find the right clean energy fit, nuclear power “is not the miracle we are looking for.”
Instead, he said the “miracle of Musk” may be the best place to focus, given the pre-orders received for the Model 3, which Liebreich said beat both the iPhone 6 and “Star Wars: The Force Awakens” in terms of opening sales.
Liebreich says 35 percent of new cars could be electric by 2040 if the price of oil doesn’t drop any lower. With $20 oil, market penetration would be slower, he said. Sales could climb as high as 50 percent by 2050, which would begin to have profound implications for the economy.
But many of Bloomberg’s projections are based on people buying electric car options such the Model 3, which costs less than the luxury models that can run upwards of $70,000, but is not cheap. Bloomberg’s analysis predicts prices continuing to fall with the cost of batteries.
At the same time, a new report out from researchers at MaritzCX say low gasoline prices have deflated demand for the cars by as much as 5 percent since 2012. The researchers say even with automakers offering more models of hybrids and electric cars, their popularity has dropped significantly.
