The problem with electric cars at the moment is the fact that they’re still new technology. That means they’re nowhere near their potential, and cost a lot of money. With any new technology, as more money is put into its development, the quality goes up and the price goes down. Because of this, Tesla’s master plan was to enter the market in the premium sector, then drive down quickly into more high volume, low cost applications.
Back in 2006, Elon Musk said the idea was to have “lower prices with each successive model.” That worked with the Model S following the Roadster, but the Model X became so complicated over time that it’s actually more expensive than the Model S. Why is it more expensive? Well…
The Model X could have been a quick and easy extra model for the Tesla range, but Musk got carried away. While the Model X doesn’t fit into the original plan, its original reason for coming into being is legitimate. Basically, Tesla realised it could use the Model S platform to make a slightly taller MPV to give families more room, thereby adding a whole new model without having to do very much at all besides creating new bodywork.
Unfortunately, it got carried away trying to bring complicated new technology that wasn’t necessary. Earlier this year, even Musk admitted that “There’s far more there than is really necessary to sell a car…They do make the car better, but the difficulty of engineering those parts is so high, that in retrospect, if we had known the true engineering costs and the amount of complexity associated with it, I think we would have probably done fewer new things.”
All of these complications contributed to the Model X being delayed by about two years, with the biggest contributor to this being the Falcon Wing doors. Not only did the original seals not work, requiring a redesign and hand fitting to every car to ensure everything was as it should be, Tesla also had problems with a German parts supplier.
So as we know, the idea is to get down to the money making mass produced car as quickly as possible. In Tesla speak, that’s the Model 3 that’s supposed to be revealed in March this year. As a tech startup, Tesla has been given a lot of cash to burn through to produce products that eventually lead to making money. Right now it’s losing cash hand over fist, so it needs the £30k car as soon as possible. The delays encountered with the Model X have pushed the Model 3 back even further, meaning that investors are getting a bit nervous about the product plan.
Elon Musk and Tesla are very good at marketing, and despite the fact that the general perception of EVs is negative, people love Tesla. It felt as though Tesla could do no wrong, but the Model X has proven that the company is just as capable of getting it wrong as anyone else. The problem for Tesla is that its image is everything, as it’s trying to shake up the system.
With its do-or-die car set to be revealed next month, now is the most important time to prove to customers that it can cope as a mainstream manufacturer. If the Model 3 is to truly break into the mainstream, consumers need to know that they’ll get their cars fairly quickly. Put down a deposit on a Ford or a Volkswagen, and even if it’s a totally brand new model, chances are you’ll only have to wait a few months, if at all. The mainstream consumer won’t accept a three year wait for their car, so unless Tesla can instil Joe Bloggs’ faith in its ability to actually deliver cars, the Model 3 could be a huge flop.