Despite the fact that Tesla Motor’s current models are all offered at luxury-vehicle pricing, executives with the carmaker want critics to stop labeling it as an elite brand.
After all, explained Tesla executives, it has only been through these higher priced models that the upcoming, affordable Model 3 will be possible.
“We have a business plan that we’ve been working on from the beginning, and it’s more than what we are today,” said Diarmuid O’Connell, the vice president of business development for Tesla.
O’Connell addressed these misconceptions while speaking at the Center for Automotive Research (CARS) Management Briefing Seminars this week in Traverse City, Mich.
“There are competitors out there who are trying to characterize us as what we are right now, at this snapshot in time, with the products we have,” said O’Connell. “They also did that in 2008 when all we had was the even more expensive roadster.”
“It is not the vision of this company to produce a mass-market $35,000 car by 2017 – it is the plan,” he added. “There is a massive disbelief hurdle at every stage of our development. We will never launch a roadster. We will never launch the Model S. And every time, we overcome the disbelief.”
Of Tesla’s three versions of the Model S currently on the market, the cheapest starts at $75,000. The company’s website subtracts the $7,500 federal tax credit, and somewhat misleadingly deducts another $10,000 for “estimated gas savings over 5 years,” to arrive at a starting price of $57,000.
This adjusted tag prices the Model S in the neighborhood of luxury models like the Cadillac CTS or the BMW M3. But, said Nelson Ireson with Motor Authority, price doesn’t make the Model S a luxury car.
The Model S is “well-built and comely, even inside, and it does have a desktop-sized screen in its dash, but against the Mercedes-Benz S Class and BMW 7-Series, the Model S comes off as more of an up-market mainstream sedan in materials and design. Think premium Accord rather than Audi A8,” explained Ireson.
At the moment, Tesla seems happy to distance itself from other luxury vehicles, with O’Connell emphasizing that this is label not an accurate depiction of the brand as a whole.
“The fact is, this is the business plan we were forced into because we were coming from zero with no capital, no reputation and no product. Other manufacturers can put a compelling $35,000 vehicle on the road today. In the meantime, we put an aspirational product out in the market that hopefully will attract others,” said O’Connell.
“We have a plan and we’re going to get there. The demographics of our buyer is going to change.”
If this rhetoric sounds familiar, it’s because Tesla CEO Elon Musk said much the same thing two years ago when he defended the price of the company’s electric cars.
“Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible,” Musk said.
“If we could have done that with our first product, we would have, but that was simply impossible to achieve for a startup company that had never built a car and that had one technology iteration and no economies of scale. Our first product was going to be expensive no matter what it looked like, so we decided to build a sports car, as that seemed like it had the best chance of being competitive with its gasoline alternatives.”