The Tesla Model 3: What It Means for the Electric Car Industry

, Senior policy and legal analyst | April 8, 2016, 11:53 am EDT
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People are going b-a-n-a-n-a-s for the all-electric Tesla Model 3—and for good reason. The Model 3 is promised to go 0-60 in under 6 seconds, seat 5 adults, include standard autopilot features, and achieve a 215-mile range, all for $35,000 (and that’s before any additional state credits or rebates or the $7,500 federal tax credit that will be available to some Tesla buyers).

The Model 3 will also be able to gain 170 miles of range from a mere 30 minutes of charging from Tesla’s growing network of high-speed “Superchargers.” These features, combined with an iPhone-like rollout, got more than 325,000 people to put down a $1,000 deposit on the Model 3 even though it won’t start shipping until the end of 2017 at the earliest.

Consumers are ready for electric vehicles…

Skeptics may not have been surprised that there were lines to put down a deposit in San Francisco, Seattle, Portland, or other cities where electric cars are more common. What they may have been surprised to see is that there were lines for the Model 3 across the U.S. and around the world. Places like Lone Tree, Colorado and Dallas, Texas each had over 1,000 people wait to put down a deposit, and similar lines queued up in Switzerland, Australia, Canada and beyond. I think even Tesla CEO Elon Musk was surprised at this initial level of enthusiasm.

…and for good reason

As I’ve previously written, there are many reasons to choose a Model 3 or any of the 20-plus other electric vehicles on the market. They are cheaper and cleaner to drive than gasoline vehicles, get strong safety marks, and include the latest and greatest vehicle technology like assisted driving and wireless connectivity.

Dive deeper on the benefits of driving on electricity by checking out our “EV emissions calculator” and take note of this Department of Energy page that tracks how much it costs to drive on electricity. Using a national average price of electricity, fueling an electric vehicle is like paying only $1.09 per gallon of gasoline when gas currently costs an average of $2.07 at the pump. Moreover, the price of electricity has been remarkably stable over the last several decades, so electric vehicles allow you to better plan for how much you will spend on fuel.

It doesn’t take much to own an EV. All you really need is a place to park and plug-in and a general sense of how far you need to drive each day, though plug-in hybrid electric vehicles like the Chevy Volt can be fueled from electricity and gasoline, helping alleviate any electric range anxiety on long road trips.



Sound transportation policy helped create a market for electric vehicles

It’s easy to forget the pivotal role public policy has played in enabling Tesla, and other electric vehicle makers, to succeed. For example, Tesla received a $465 million loan from the Department of Energy ATVM program that helped kick start their vehicle production and which they’ve repaid in full (plus interest).

The federal tax credit of up to $7,500 has helped offset the purchase price of hundreds of thousands of electric vehicles across the country, and a number of states like California, Massachusetts, New York, and Connecticut have created their own electric vehicle incentive programs. In addition, the Zero Emission Vehicle program in 10 states has put pressure on both automakers to accelerate the switch from gasoline to electric engines and on utilities and other companies to build out public electric vehicle charging stations.

The excitement over the launch of the Model 3 and upcoming electric vehicle offerings like the Chevy Bolt and Hyundai Ioniq (both of which I’ll detail in my next post) demonstrate that automakers are starting to realize that Americans across the country—not just in California—want electric vehicles.

In 2014 we found that 42 percent of American households could use an electric vehicle based on their driving habits, so it’s not a matter of whether electric vehicle technology is at a state at which it would work for millions of Americans. It’s a matter of whether all auto companies can step up and give the people what they want.

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  • solodoctor

    I was close to leasing a Nissan Leaf a few days ago. I backed out, however, because of the deceptive sales practices at the dealership. I was so fed up with the manner in which I was treated that I went and purchased a late model, low mileage Prius the next day. Having owned and liked my 2008 Prius a lot I went back to ‘old reliable’ rather than forged ahead into a car with less of a carbon footprint. The Toyota dealership treated me with more respect and honesty. It’ll be at least a few more years before my wife and I might be ready to replace her gasoline powered car. Maybe then we will consider an EV or a hydrogen based vehicle.

  • Mark Renburke

    Excellent piece, Josh. Bears repeating: “It’s a matter of whether all auto companies can step up and give the people what they want.” And the way for that to accelerate is for the average car buyer to get informed of the personal and/or societal benefits of driving electric (as well as dispel the many myths). In other words, the catch phrases “WIIFM – What’s In It For Me”, and “Come on in, the water’s fine.”

    And that’s exactly what happened when 300,000+ consumers spoke with their wallets. This is what needs to happen at car dealerships across the nation and beyond, until the pressure at the executive boardrooms can no longer be ignored. Toyota, Chrysler/Fiat, etc: Will you listen now, at least for your own profit motive?