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Can Tesla really change the world?

Elon Musk wants to transform the car industry with the Model 3. Can he do it?

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With 325,000 pre-orders in its first week on sale earlier this year, the new Tesla Model 3 electric car is still creating a vast amount of curiosity from potential car buyers.

Could this car – that isn’t due to arrive in UK showrooms before the end of 2017 at the earliest – transform the electric vehicle (EV) industry the same way that the Ford Model T transformed motoring over 100 years ago?

When Ford began production of the Model T back in 1908, it wasn’t the world’s, or even America’s, first automobile. Karl Benz, Gottlieb Daimler and several others all beat Ford to market with motorised vehicles. However it was Henry Ford and his Model T who really changed the way people move around the globe. In fact, the Model T was largely responsible for horse-drawn carriages fading out of popularity altogether.

What the Model T did to effect such significant change in the world was, in the words of Popular Mechanics: “to bring together the then-rare attributes of reliability, ruggedness, utility and economy – all in one machine that was eminently affordable.”

In its debut year of 1908, the Model T established a new automotive sales record: with a purchase price of $825, over 10,000 Model Ts were sold. During its 19 years on sale, Model T production rose greatly, with an average 37% annual production increase due to a continually dropping price (just under 3% per year), enabled by the cost savings of mass production.
Ford Model T price change over production

Is the Tesla Model 3 the 21st-century equivalent of the Ford Model T?

Elon Musk, Tesla boss and renewable energy entrepreneur, plans to churn out hundreds of thousands of Teslas per year from his Gigafactories. But can he fundamentally change the market for fossil-fuelled vehicles? If Musk could replicate the impact of Ford in today’s world, we would see a staggering 323 million Tesla Model 3 vehicles on the road by 2034.

Like Ford, Tesla is also not the first manufacturer to produce an electric car – the first modern attempt at launching an EV was the General Motors EV1. Probably the most controversial electric car ever, it was discontinued due to lack of consumer interest and other controversies. GM even ended up buying all the cars back and scrapping them just to get rid of them.

The Mitsubishi i-MiEV (the first electric car to sell more than 10,000 units) and Nissan Leaf (currently the best-selling electric car ever) are only minor successes in terms of overall sales, much like the early motor vehicles were not very affordable or popular. So there are similarities between the electric vehicle market now and the horseless carriage market prior to the First World War.

Clearing the hurdle of consumer confidence

In addition to the public’s concerns about electric vehicle cost, range and recharging, Tesla has come under fire in recent weeks after the first fatality in one of its self-driving cars. This has brought media and consumer attention to Tesla’s overall reliability issues. New York-based Consumer Reports has predicted that “owning a Tesla is likely to involve a worse-than-average overall problem rate.”

Tesla is working hard to address concerns about recharging, continuing to roll out its ‘supercharger’ network around the world. The company plans to have 7,200 superchargers and 15,000 destination chargers in place around the globe by the end of 2017.

As well as being significantly cheaper than the current Model S, the Model 3 has a target range of 215 miles on a full charge. Tesla claims it will it will easily site five adults, will provide “more cargo capacity than any petrol car with the same external dimensions” thanks to having boot space both front and rear. The Model 3 will also feature an upgraded Autopilot system and be able to go from zero to 60mph in under six seconds.

Over its long production life, the Ford Model T decreased in price by about 2.8 per cent per year and finishing up costing $360 by the end of production in 1927. To replicate that sort of performance, the Tesla Model 3 would end up starting out at its expected £40,000 price and falling to only £15,000 by 2034. Although the costs of batteries and electric motors are likely to fall significantly, such an overall fall in vehicle price seems highly unlikely in the 21st century.

What about EV running costs?

In terms of running costs, the UK’s Vehicle Certification Agency (VCA) has calculated that the most affordable cars in 2015 were EVs.

The Volkswagen Up, Citroën C-Zero and Peugeot iOn cost approximately £330 over 12,000 miles, while the much larger and more powerful Tesla Model S running costs would come to approximately £500 per 12,000 miles.

This is quite a significant saving compared to conventional petrol and diesel vehicles, where the overall market average for yearly running cost in the passenger segment last year was £1,300.

More EVs on our roads will reduce emissions

As well as the impact on their wallets, vehicle history check company HPI says that 71% of UK car buyers rated CO2 emissions as a factor which influenced their purchasing decision. Obviously, the level of CO2 emissions in the atmosphere has impacted pattern of the world’s weather; increasing the intensity and frequency of heatwaves, floods, droughts and storms.

In 2013, domestic and international transport accounted for 26 per cent of UK and 29 per cent of US greenhouse gas emissions, so vehicle technology which can significant reduce carbon emissions will be very important.

Additionally, in 2015 NASA research showed the concentration of COin parts per million (ppm) was 399.5, compared to 378.9 in 2005. Temperatures have recorded a 1.7° C rise since 1880, and the ten warmest years in the 134 years of recorded data have all occurred since 2000.

Fossil-fuelled cars in 2015 produced an average emissions level of about 1,130kg of CO2 per year, while an electric car – even allowing for the UK’s current level of fossil-fuel electricity production – squeezes out just 570kg of CO2, reducing emissions by half.

CO2 comparison between EVs and fossil fuel carsAccording to the Society of Motor Manufacturers and Traders (SMMT), the average age of a car in the UK is 7.7 years, so if the Model 3 or maybe another EV could replicate the same sales impact of the Ford Model T, there is a potential that over a lifetime of a car during the next 19 years we could see a 1.6 billion tons of CO2 saved.

That also does not take into consideration the likelihood that EV CO2 emissions are likely to reduce further in years to come thanks to advancement in green energy production and a reduced reliance on coal and gas power plants.

To date, Elon Musk has spent billions on his electric car company, betting that it will eventually succeed and flourish despite research suggesting that drivers are perfectly happy with their fossil-fuel cars. This has caused fellow investors and market analysts some concern, as the business model relies on Musk continuing to pursue his electric car dream with the Model 3 and other future vehicles announced last week.

However, several studies have shown that the majority of car buyers still seem to be happy with their current petrol and diesel engine vehicles.

Maybe Musk has taken inspiration from Henry Ford and the Model T in another way? When asked what he thought of market research, Ford replied: “If I had asked customers what they wanted, they would have told me ‘A faster horse!’”

2018 Tesla Model 3 expected to cost £40,000

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Jovita Ivinskaite
Jovita Ivinskaite
Jovita is an automotive project executive and has recently turned her hand to blogging for The Car Expert!