I’m in a parking area within Menlo Park, California, along with Tesla owner Darrell, in my recent trip to California’s Bay Area to research the technology behind electric cars.
The bright orange Roadster convertible attracts admiring glances from passing motorists. In a few minutes, we’re driving along Highway 280, winding into the Santa Cruz mountains of the San Francisco peninsula. I am amazed by the silence of the car cruising at pace, even with the canvas roof panels taken off.
Darrell says that, now and again, his wife reminds Darrell to “punch it.” “So I have to punch it!” Then Darrell mashes the accelerator, and the Roadster bounces us back with its slouched seats.
In Darrell’s character, we might imagine the idealized Tesla Motors owner, a “first user,” in the sociological sense. I met him wearing an official Tesla baseball cap. He lives in a two-Tesla household. If he isn’t cruising about in the Roadster during the weekends, both he and his wife travel with their Model S.
Darrell has spent the majority of his time working in IT administration. He was also awed by the splendor, the privileges, and the sense of wonder that comes from life within Silicon Valley.
“My experience has always been Disney. Disney as well as Tesla Motors are my two interests.”
In a way, Tesla Motors is as idealized a manufacturing facility as Disney. The business model of Tesla Motors is based around Tesla’s electric Supercar. This vehicle was designed to eliminate the apparent negatives of electronic vehicle (EV) technologies, particularly the unattractive design and limited range.
But the CEO of the moment, Elon Musk, is pursuing a greater goal in mind: using the profits from high-end EVs to help fund the development of a battery-electric vehicle that is affordable to the average person. The first customers like Darrell are crucial to the company’s success.
Similar to Apple Inc., devotees of Tesla Motors strongly identify with the technology so much that they will gladly promote and make speeches on behalf of the business. However, when Tesla expands its market, the early adopter’s enthusiasm will only get it to a certain extent.
Betting on the Model 3
In its quest to establish itself as a competitor in the fiercely competitive auto industry, Tesla Motors has courted the interest of customers like Darrell, who are people of means with a love of adventure and the ability to ignore the scrapes and bumps that are inevitable with the advent of technology.
One of the main elements of the company’s mythology is its capacity to give an element of agency to its customers as well as a feeling of active participation in the shaping of history. First-time users form bonds to share information and get the feeling of being empowered via The Tesla Motors Forums as a semi-official sounding platform.
Tesla is a company with a mission to create sustainable transportation and inspires admiration for the CEO Elon Musk and Tesla.
There were indeed several small blips along the way to those futuristic landscapes drawn by Musk. This year, Consumer Reports breathlessly rated the Model S ” best in show,” and awarded it 103 of 100 points in a review in August 2015.
Two weeks later, the guidebook released an apology of some sort and gave the vehicle a lower-than-average quality rating. Owners have reported a myriad of issues that ranged from minor issues like bad fit and finish to more serious problems like leaky cooling systems for the battery and rotors on the brakes that were warped. These are costly to fix outside of warranty.
It’s no surprise that the level of satisfaction among customers remains very high. Tesla Motors offers a very large eight-year warranty with unlimited mileage for the drivetrain and battery for Model S and the new Model S and the new Model X SUV. Its customer service is renowned and is the key to the company’s building brand trust. Darrell told of an incident where, after blowing two of the tires in the Model S on a monster pothole, Tesla technicians recovered the vehicle with flatbed trucks and fixed it in less than one hour.
The less understood is the role of consumers and the viability of the business model for supercars in the current context of Tesla Motors’ attempts to transition into the mass market. Tesla Motors’ current exaggerated stock price is largely based on Musk’s pledge to launch the $35,000, 200-mile Model 3, a supposedly entry-level supercar, between 2017 and 2018.
In Model 3 Model 3, the company is looking for non-believers. These people have been conditioned to the superior standards of cost-effectiveness and comfort that come with modern gas engine technologies. These consumers will not be able to bear the cost and issues with EV technology, which the first customers now accept as a cost that comes with owning the piece in the future.
Room with an elephant
The most significant issue with the affordability of model 3 is affordability. Model 3, of course, is the power source. The cost of a battery pack per kilowatt hour is the most frequently mentioned problem, and the attempt to bring it down to $200 per Kilowatt-hour (kWh) from its current value of $400/kWh 400/kWh is frequently viewed as the main technological goal of the project to market electric cars.
However, the aging of batteries is the main issue. Since batteries have smaller lifespans than electric motors, which could be used for decades, pure battery electric vehicles come with hidden costs for replacement that buyers might or may not want to pay for.