Tesla Motors and the Transportation Revolution

Updated on December 14, 2016

The First Automobile

When Karl Benz and Gottlieb Daimler (independently from each other) produced their first automobiles in 1886, they set off a revolution in transportation. The first version of horseless carriages might have looked odd to their contemporaries, but continuous improvements would soon displace the horse-drawn carriages and ever fancier models conquer the market of transport. A century on there were some 500 million cars circulating on the world's ever-busier roads. Despite revolutionary technological advances in almost all parts, the main way of propulsion throughout the years has remained the internal combustion engine (ICE). Almost the entire fleet of the world's cars is powered by an ICE. Yet at the dawn of the third millennium, finally, a new revolution looms on the horizon.

Electric Cars From the Earliest Beginnings

The first electric car:  Flocken Elektrowagen 1888
The first electric car: Flocken Elektrowagen 1888 | Source

Electric cars are not entirely new; in fact they date back to the earliest beginnings of the automobile. The Flocken Elektrowagen of 1888 by German inventor Andreas Flocken is widely regarded as the first electric car.

Despite a promising start in the early 20th century, electric vehicles (EVs) could not really keep up with gas-powered cars due to their technical limitations: low speed limit and short range. Throughout the 20th century electric vehicles were mainly relegated to clean-air pilot projects in cities. Environmental concerns revived electric power towards the end of the past century in hybrid models like the Toyota Prius (released 1997) and the Chevrolet Volt (from 2010) (in Europe Opel Ampera, Vauxhall in the UK). Yet hybrid models, aside from their often unfashionable design, have the disadvantage of excelling in neither of two modes: as EVs their range is too limited, as petrol engines they're too expensive in their category.

The Tesla Roadster

All-electric, stylish, and fast
All-electric, stylish, and fast | Source

Tesla Motors took a more radical approach, betting everything on all-electric cars. Elon Musk, Tesla's founder and CEO, stated that his ambition from the start was to build EVs that are more compelling and outperform their petrol counterparts. Starting a car company from scratch is a truly challenging project. Yet in 2008, just five years after its establishment, Tesla Motors was able to release the Roadster, an EV that excelled in every measure of performance.

The Roadster was the first serial production of an all-electric car to reach the 200 miles (320 km) range. Staggering acceleration (0-60 mph (97 km/h) in 3.9 sec for the standard model) and instantaneous maximum torque guaranteed a new driving experience.

At a base price tag of USD 109,000, the Roadster was clearly a model for the upper end market. Yet it allowed Tesla to actually start manufacturing cars, provide much-needed revenue and develop the know-how to further advance electric cars. From 2008 to 2012 a total of 2,450 Roadsters were built.

The Model S

All-Electric Luxury Sedan stylish and powerful
All-Electric Luxury Sedan stylish and powerful | Source

In 2012 Tesla introduced the Model S, a stylish five-seat luxury car. The Model S is available in a wide range of motor powers and starts selling from USD 70,000. It has further extended the range record for all-electric cars to over 300 mi (500 km) and has a mind-boggling acceleration of 2.5 sec from 0-60 mph (97 km/h) for its top version (Model S P100D). Fitted with high qualities materials the Model S features also advance self-driving options. As of November 2016 sales units had passed the 150,000 mark. The Model S has received multiple awards for its excellence in performance, environmental sustainability and high safety standards.

The Model X

Not a Lamborghini - Model X Falcon-wing doors wide open
Not a Lamborghini - Model X Falcon-wing doors wide open | Source

In 2015 Tesla introduced its SUV, the stylish Model X, with its eye-catching falcon-wing rear doors and a medical-grade HEPA cabin filter; definitely a high-end car.

The Model 3: For a Wider Market

Excellence for the mass market
Excellence for the mass market | Source

Tesla's big next product launch would be the Model 3 - the first all-electric vehicle designed for the mass market. At a price tag of only USD 35,000 (excluding government incentives) the Model 3 is the first e-totaller affordable for the common people, a sort of Volkswagen Beetle for the new generation of EVs, though in size more comparable to an Audi A4, BMW 3-series or Mercedes-Benz C-Class type vehicle. The Model 3 was unveiled in 2016 and serial production is expected for late 2017. Tesla, which sells directly through its stores and website instead of relying on a dealer network, is accepting orders for a USD 1,000 deposit. One week after the unveiling event, Tesla had a staggering 325,000 reservations of the Model 3, beating the company's most optimistic anticipations. There clearly is a market for affordable EVs.

Refueling for Free

There is a special bonus for Tesla cars ordered before January 1, 2017: these orders include totally free charging at supercharger stations for life! (Later orders will include a certain number of charging cycles in the purchase price, while charging for additional cycles.) That is, the purchase price of the car currently includes free refueling for life! Try to go to your local (petrol) car dealer and find out whether he could include your future gas bills in the purchase price as a special bonus!

Truly Green

It has sometimes been objected that electric cars, while keeping the air of cities clean, overall emit the same or sometimes even more carbon than petrol engines through the carbon emissions of the grid. Ultimately the environmental sustainability of EVs depend on how the grid generates energy. A good example is Norway, where now one out of four new cars is an EV and the grid is powered by hydroelectricity to a large extent. Tesla Motor's acquisition of Solar City also fits this pattern; the grid is greener when Tesla Supercharger stations are powered by green solar energy.

No Easy Choice

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Growing Slowly But Steadily

If international climate agreements are to stand a chance of meeting their targets, transport will have to go electric some way. Yet oil is not easily replaced. Even if oil should go to USD 100 per barrel, the price of batteries would have to fall by a factor of three just to break even. For now EVs represent less than 0.1% of the global fleet, though reaching the 1 million mark has been a milestone for electric cars. The Electric Vehicle Initiative (EVI) ambitious goal for now is to have 20 million EVs by 2020. Slowly EVs are on the rise, even in countries like China, a country not particularly renown for environmental sustainability.

Tesla Models

Model
Price
Range
Acceleration 0-60 miles (0-97 km/h)
Year of production
 
(starting at)
Basic / Top
Basic / Top
from / to
Roadster
USD 109,000
244 mi (393 km)
3.9 sec / 3.7 sec
2008 - 2012
Model S
USD 66,000
129 mi (224 km) / 315 mi (507 km)
6.5 sec / 2.5 sec
2012 - present
Model X
USD 74,000
200 mi ( 322 km) / 250 mi (400 km)
3.8 sec / 3.2 sec
2015 - present
Model 3
USD 35,000
215 mi (346 km) / 300+ mi (482+ km)
< 6 sec / < 4 sec
starting 2017
(Prices excluding government incentives)

Peak Oil Determined by Demand Rather Than Supply

In the 1970s there was much talk about peak oil, a point in time when global oil production would have reached a supply peak, after which it would gradually fall due to dwindling reserves of the black stuff. Yet the future has always been hard to predict. Improved fuel efficiency, new extraction techniques, discoveries of new deposits and the development of alternative energy sources have all contributed to reverse the trend. The new peak oil will not be constrained by supply but rather demand. Depending on the price of oil this trend might take decades, but it will hardly reverse. Oil demand will gradually slow as driving will be shaken up by electric cars.

Today almost all big brands are working on hybrid and e-totallers models. Tesla might lack the production capacity of BMW or Mercedes-Benz, yet the manufacturer from Palo Alto anticipated (and undoubtedly accelerated) a trend that many had written off too early: that all-electric vehicles will be the car of the future. The BMW i3, Mercedes-Benz B-Class Electric Drive, Nissan Leaf, Renault Zoe and E-models by other big brands are a sure sign the industry has finally recognized the viability and market of EVs.

The Cost of the Battery is Crucial

The Gigafactory in Nevada; still some work to do
The Gigafactory in Nevada; still some work to do | Source

Much of the transition process will depend on how fast battery prices fall. Tesla is currently in the process of completing its Gigafactory for lithium-ion batteries in Nevada. The price of these mass-produced batteries is expected to fall to USD 100 per kilowatt hour: astonishingly low compared to today's prices, yet hardly enough to ultimately transform transportation. Yet new battery technologies are still in their infancy, and new advances (beyond the basic lithium-ion type) are expected to produce batteries that are more energy-dense—that is, lighter and more powerful—at a lower cost.

Transformational Trends

Other trends will further transform transportation: Ride-sharing apps like Uber will transform conventional car ownership and ultimately reduce the number of cars on the roads. Self-driving technologies have already proven their technical feasibility, with Google cars performing over 1 million miles on self-driving mode. Apple is rumored to have hired at least 1,000 engineers to develop its own self-driving technology. Automating driving and transportation will undoubtedly further contribute to reduce fuel consumption and favor environmental sustainability. That too is a trend anticipated by Tesla, whose vehicles are fitted with advanced autonomous driving capabilities.

Time Will Tell

Looking back, historians might one day wonder how the 21st century revolution in transport was spearheaded not by one of the big established car manufacturers, but by a newly founded California company. Maybe it is a sign of the times that outsiders still stand a chance against the establishment.

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