As Tesla’s $10 billion market valuation soared past that of Fiat SpA at the end of last quarter, the company has the attention of investors, but of value to actual car drivers is Tesla aims to strip Nissan’s Leaf of any perceived market superiority.
A sub-$40,000 Tesla electric car with 200 miles range, said CEO Elon Musk in an interview with the Detroit News, is due in “three to four years” and Tesla has previously repeated this is a priority.
“With the Model S, you have a compelling car that’s too expensive for most people,” Musk said. “And you have the Leaf, which is cheap, but it’s not great. What the world really needs is a great, affordable electric car. I’m not going to let anything go, no matter what people offer, until I complete that mission.”
Speaking further about the pending electric peoples’, Musk said at the D11 Conference yesterday, “Also, the car will probably be 20-percent smaller than the Model S [pictured], and an order of magnitude bigger production.”
Musk was also asked when Tesla be profitable without subsidies?
“By the end of this year,” said Musk at D11. “We’re expecting 25 percent gross margins absent of credits. Well including consumer tax credits, but not subsidies.”
Musk has demonstrated a history of putting his money where his mouth is, having floated much of the company with personal funds as needed, and personally backing Model S resale values in more recent announcements.
Note he says what “the world” needs, and his reference to not letting go of control of the company until the “mission” is completed.
His goal is to make a more substantial stamp on the automotive landscape than a high-end iPod on wheels that smokes a BMW M5 to 100 mph.
The goal of affordable transportation is one he wished to prove is possible. He was asked whether he’d consider selling off Tesla, and said it is “one of the possible outcomes, I suppose,” but not too soon, and not to an existing automaker.
“I’d guess it would come from outside the auto industry. It would be a buyer with a very large cash position,” he said.
This said, while the Model S is blazing fast and super trendy, Nissan’s Leaf is the electric car to beat for people looking to keep the budget closer to the $31,000 average new car price, and Nissan’s Leaf is not resting on its laurels.
Musk’s pockets are deep, but not as deep as Nissan’s which just relocated Leaf production to Tennessee this year, and built a lithium-ion factory costing somewhere around one-tenth of Tesla’s entire (possibly inflated) value with capacity to build 20 times what was needed for 2012 Leaf production.
Plans by Nissan are to go up market into Tesla’s territory with and Infiniti electric car, although details on this are scarce at this point. And, plans are to keep the Leaf competitive, as the maker showed by taking a knife to Leaf prices while competitors by Ford and GM are content to price higher, and take what business they can.
The electric car market is easy pickins for critics at this stage, but then there was a time when automobiles were challenged to competition and compared to horse and buggies.
While it’s a given no one knows the future, indicators are positive there is much more to come for the reborn electric car market, with ego-driven leaders pushing for prominence, and others also preparing offerings as well.