The two leading electric-vehicle manufacturers in the United States, Tesla and Nikola Motor Company, have been under attack recently.
Tesla has been bombarded with criticism in the media in response to its CEO, Elon Musk, stating that sales of the Model 3, the Tesla’s entry-level vehicle, were “lackluster” in the company’s first quarter results announcement.
Tesla’s results appear to indicate that the company sold only about 25,000 of the Model 3, the car that Musk pledged would sell for $35,000. That’s well below what Wall Street analysts had predicted.
An earlier estimate was that Tesla would have sold 40,000 Model 3s in the first quarter. Tesla’s first-quarter financial report showed a 31% decline in revenue and a net loss of $735 million, making this the electric-car maker’s worst quarterly performance ever.
However, the company did manage to keep its operations afloat and paid off its $1.1 billion of debt that it owed to JPMorgan Chase. The reason for this is that Tesla sold 40,000 Tesla Model S sedans and 27,000 Tesla Model X SUVs during the first quarter.
When considering the tech giant’s quarterly earnings, there was one thing that stands out for many readers – that the Model 3 has not been an extremely popular vehicle. This is not to say that the Tesla’s Model 3 is not a very popular vehicle – but the company still needs to sell 40,000 of these cars each year to keep its large operations in San Jose, Calif., and Fremont, Calif., sustainable.
TESLA: AT LEAST ONE ALARMING REVIEW
Tesla also received a blistering review from a news website.
The Review had a negative focus, saying the luxury electric-car maker was “out-of-step” when it comes to safety on highways, increasing the risk of a crash.
Autolineury.com also pointed out that Tesla’s batteries weren’t designed to work with the oil-filled plugs on most regular vehicles, making them less safe.
For an automobile company, these stories seem out of place. They’re not worth discussing here. The reality of Tesla’s Model 3 is that it is a luxury vehicle, priced at $45,000 to $50,000. That’s more than a Mercedes-Benz S-Class, which also sells for $45,000 to $50,000. Even the Volvo S60 and S90, which sell for about $40,000, appear to be more attractive on the road than the Model 3.
Alternatively, no one can argue that the $70,000+ Tesla Model S is a luxury sedan.
The question is: Is Tesla really better than Mercedes-Benz? Of course not. Tesla has not delivered a product that has.
But neither has Nikola, which Musk bought last month.
STUDYING NEV INDUSTRY FOR THE FUTURE
Tesla clearly knows the future of the electric-vehicle industry. That’s why it is testing its biggest electric-car factory yet, a massive factory in Washington state with over 600 acres of land, where Musk says it can have production of as many as 500,000 cars a year by 2022.
Nikola Motor Company is trying something different by purchasing a former General Motors plant in Michigan and planning to build a car with roughly 200 horsepower that could be an affordable alternative to Tesla’s Model 3.
The Model 3 is also starting to be found with more traditional car dealerships, such as many Acura dealerships and other company dealerships. The Model 3 is also starting to have its first gas station in Warren, Mich.
Nikola is aiming for a more affordable vehicle priced at less than $30,000, and while Tesla’s strategy does seem questionable, with a potential model launch coming up in March 2020, perhaps Musk is on to something with his Model 3 plans.