In a time when a barrel of oil can cost less than a … barrel, the EV market suffers. Market leader Tesla Motors saw its shares take a dive this month after it reported sales in the bottom range of its forecast for the 2015 fourth quarter. So, how can Tesla, Nissan or any other player in the EV space right now protect themselves against fluctuating oil prices.
When the price is high, the EV market flourishes and, conversely, goes down with oil that sells for pennies. Tesla’s boss, Elon Musk, has this covered: he wants to make electric cars so exceptional that you won’t care anymore about how much a full tank costs.
Speaking at the “StartmeupHK” event, Musk said the company is hiring 1,600 software engineers to mature “Autopilot” — Tesla’s autonomous self-driving feature which the company hopes will be ready by 2018. Another interesting feature is “Summon”. Musk said earlier this month that it will be possible to summon your Tesla to come pick you up from anywhere in the country, even if you’re in NYC and the car sits idle in San Francisco. Sounds audacious, but really the only thing that can seriously hinder this plan is legislation. The technical challenges aren’t as hard you might think (not for Tesla at least).
“What we’re aspiring to do is to make the cars so compelling that even with lower gas prices, it’s still the car you want to buy,” said Musk.
“If you go long, long term my guess is there isn’t (going to be) a steering wheel in most cars, it would be something that you’re going to have to special order.”
There are a couple of market and economics of scale challenges that Tesla needs to address before people can safely ignore oil prices. For one, Tesla’s cars are expensive. The Model 3 seeks to address this by expanding the company’s reach. The Model 3 will be 20 percent smaller than the Model S, but will cost half as much, expecting to sell for $35,000. Production is scheduled for 2017. The GigaFactory will also help level the costs by dramatically reducing battery-related expenses. Infrastructure-wise, Tesla is adding hundreds of Supercharger stations throughout the country each year. By 2018 you will be able to drive your Tesla anywhere without fear of having nowhere to plug it. To me at least, it seems like Tesla is on the verge of a tipping point. If it can climb and pass it safely, it will become one of the most prosperous companies in the world.