If Tesla sales drop due to cheap gas, has the Model S failed?

"Jayhawk Jake" (jayhawkjake)
12/23/2014 at 12:50 • Filed to: None

From the Morning Shift, news outlets are reporting that electric car sales could plummet with oil prices dropping to record lows.

http://jalopnik.com/cheap-oil-coul…

This in and of itself isn't surprising, but there's one implication I take from that: if Tesla sales drop, haven't they failed their mission to make an electric car that competes with gas powered alternatives on more than efficiency alone?

It was my understanding that Tesla wanted to make a good car that people would buy because it's hood, not because it's electric. And it certainly is a good car, but if it's selling on its own merits shouldn't its sales remain unphased by oil prices? Would that show that the model s is disappointing if it isn't cheaper to drive? Does it prove that people still only buy electric to save in energy costs?

What say you, oppo? Is the electric car forever doomed to live on only for economy? Or can one still expect to make an electric car that is just plain better than the competition, cost savings or not?

DISCUSSION (13)

Party-vi > Jayhawk Jake
12/23/2014 at 13:01

Tesla sales and the cost of gas have nothing do to with each other. People do not purchase $70,000+ electric cars because gas is too expensive for them. A Tesla is not a cost saving measure like a normal electric/hybrid vehicle. Alternatively, the people in the market for a Tesla aren't going to another brand just because gas prices drop.

Now, Leaf and Volt sales on the other hand might suffer, but again the people who are considering purchasing an electric car aren't the type to purchase a gas-power vehicle just because gas is cheap.

Stapleface-Now Hyphenated! > Jayhawk Jake
12/23/2014 at 13:02

This is hard to answer for me. Looking at this at face value, it would appear that yes, the Model S has failed.

But, it's also a bit of a niche vehicle to begin with. People that might have been on the fence as to what to buy in that price range might have bought the Model S because it was the hip thing to own. People can be quite fickle and susceptible to wanting to fit in. That's not to say that the Model S is a bad car. I'm sure it's a fine automobile. But when there's no cost savings over a traditional petroleum based vehicle it becomes an increasingly difficult sell.

Another thing to consider is exactly where the Model S is sold. I can't drive down to the local automall and purchase one. Their dealer network is quite limited. And not to mention that it might not make sense to buy an electric vehicle due to what the consumer might have to pay for electric. If you are off the grid or using solar, it might make a ton of sense to have a Model S. If you're still paying the power company though it probably makes a lot less sense.

I think if they could come to market with a vehicle that has a respectable range (say 150 miles) with a price around 30k they'd sell a ton of them. But right now range anxiety and price point are what is holding Tesla Motors back. Can Tesla make a vehicle with half the range for 1/3 (roughly) the price? That remains to be seen.

deekster_caddy > Jayhawk Jake
12/23/2014 at 13:03

I drive electric not to save money, but because it's finally viable, fun, cool and fun. I can't afford a Tesla but the Volt is still a lot of fun to drive. I usually manage to stay about 70% electric. I love that it only costs $1 for the first 30-40 miles I travel every day, but that's not why I bought it.

Jayhawk Jake > Party-vi
12/23/2014 at 13:05

It was a broad statement based on the broad statements being made regarding electric cars.

Do-Rif-To > Jayhawk Jake
12/23/2014 at 13:06

If someone with the money and knowledge to want a Model S really thinks that fuel prices won't be right back up within a year, we're more screwed than I ever thought. I think that unless gas sinks down below $2 average across the U.S., electric cars will still be an attractive enough cost-cutting measure to keep sales going, both for the eco-friendly crowd and the penny pinchers.

jariten1781 > Jayhawk Jake
12/23/2014 at 13:09

Tesla wants to be a volume manufacturer. The Model 3 is going to be the real make or break point. Energy costs will matter to those buyers.

They seem to have done well with the boutique expensive luxury electric thing they've done so far. That market is only so big though. They won't be able to continue to invest in infrastructure (superchargers, battery swap stations, etc) once they've reached saturation there. If the Model 3 (and X to some extent) are significantly less enticing due to lower gas costs it puts their whole model on shaky ground.

This question should be postponed until the Model 3 is out. If it shows up, is as good as anything else in the 35-45k range and no one buys them, then yeah...the experiment was a failure. Remains to be seen.

Party-vi > Jayhawk Jake
12/23/2014 at 13:10

Generally I generally avoid generalizations.

bropocalypse > Jayhawk Jake
12/23/2014 at 13:16

every friggin 3rd car you see in Mountain View or Palo Alto is a tesla

Jayhawk Jake > Party-vi
12/23/2014 at 13:31

Not to generalize, but I generally do as well

BaconSandwich is tasty. > Do-Rif-To
12/23/2014 at 13:47

I still want a Model S more than ever - gas prices be darned.

Do-Rif-To > BaconSandwich is tasty.
12/23/2014 at 13:49

Straight up. Isn't this the time when you could get great deals because demand would be low?

BKosher84 > Jayhawk Jake
12/23/2014 at 14:05

People aren't buying a 70k-100k Electric car to save on the gas (regardless on how the Tesla website breaks down their damn loan details to make them seem cheap). They are buying them because they just retired from 35-40 years of work and they want to splurge on their retirement (I know this because I live 2 minutes from the Tesla Dealership in Cleveland and visit every once in awhile and every person that is buying or looking into buying on is in their 60's and well dressed).

BaconSandwich is tasty. > Do-Rif-To
12/23/2014 at 15:34

In theory. Thing is, demand is still high.