Will the Tesla Model S Lead to Cheaper Electric Vehicles from Other Automakers?

4 years ago by Eric Loveday 10

Tesla Model S

Tesla Model S

Though it’s argued by some that the cost of the Tesla Model S is simply too high to afford it mainstream appeal, there’s an argument presented by the folks at MIT Technology Review that says the Model S lofty price tag is necessary today and will soon lead to cheaper electric vehicle from other automakers.

Model S Kicks Butt on the Strip

Model S Kicks Butt on the Strip

The argument may at first seem invalid, but there’s reasoning behind it that falls in line with some of our beliefs here at InsideEVs.  Maybe you’ll agree, too.

Tesla went all out in developing the Model S.  In some way, you could say Tesla spared little expense.  It developed a breakthrough vehicle for its day by utilizing technology that few others had considered.

Now that the Model S is successfully and mainstream-ish, other automakers will undoubtedly take note of how an electric vehicle is done right.  Had it not been for Tesla attempting the near-impossible, then we’d most likely see a future full of them converted electrics (Ford Focus Electric, Honda Fit EV as two examples) that seem to always be compromised vehicles in some way.

But Tesla’s “breakthrough” technology won’t stay in the hand of Tesla alone.  Other automakers will duplicate some of the techniques used by Tesla (possibly even source components from Tesla) to produce future electric vehicles.  These “other automakers,” all of which are larger than Tesla, have economies of scale on their sides and boast the bargaining power to drive down supplier prices.  It’s not like Tesla develops and manufacturers every component for the Model S.  Tesla mainly focuses on the electric motor, on-board charger, various controllers and has some say in the area of the battery, though Panasonic provides the cells.

Tesla Model S Battery Pack Doesn't Compromise Interior Space

Tesla Model S Battery Pack Doesn’t Compromise Interior Space

We may be getting sidetracked here, so we’ll turn it back over to the folks at MIT Technology Review:

“Still, while there are many valid reasons for objecting to the DOE’s funding of Tesla—or any startup for that matter—the fact that the car it makes is expensive isn’t one of them. Tesla innovations might help make electric vehicles more competitive with gas powered ones, leading to the more widespread use of electric cars and lower oil consumption. More specifically, it’s lowering the cost of the battery, and it’s showing how, in some ways, electric vehicles are actually more valuable—and worth paying more for—than gas-powered ones.”

And if a small outfit like Tesla can prove to the world that “electric vehicles are actually more valuable,” then imagine what could be achieved by today’s major players.  Yes, the massive automakers out there may screw it up, but we can still dream that, one day, a mega automaker will bring Tesla’s innovative ideas to the masses.

via MIT Technology Review

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10 responses to "Will the Tesla Model S Lead to Cheaper Electric Vehicles from Other Automakers?"

  1. evnow says:

    Makes no sense. Tesla just showed that there is some market for “green” luxury cars. To generalize that to anything more than that is not fact based.

    Infact cancellation of 40kWh model probably increases the price of BMW i3 & Infiniti LE.

  2. GeorgeS says:

    Will Gen 2 Volt have the batteries in the floor like the Tesla and the Leaf? I would hope so but I’ll believe it when I see it. GM is really slow on their feet. Musk could have the car re-engineered in a week but it takes GM 5 years….

  3. David Murray says:

    Well, I think Tesla is probably a regular topic at other manufacturer’s board rooms. And while the model S is not likely to take away sales from vehicles like a Honda Civic or a Toyota Camry, they have to realize that if Tesla stays around long enough to produce their 3rd generation car, then they will have something to worry about. So they need to have something ready in time to compete with that.

  4. Kimmi says:

    The major players need Tesla’s know-how, Mercedes and Toyota will benefit from their collaboration with Tesla and the agreement could work the other way around, because those two companies have the economies of scale needed for the californian company to grow, after all, despite being profitable, right now it is still one small fish in a shark-infested pool.

  5. bloggin says:

    It seems Ford and Tesla are already talking…..

    – Elon has too much detailed info on the production and grade of aluminum to be in the new 2015 F-150 that Ford has not announced yet.

    – Elon talked about how Ford’s production process for the new F-150 using aluminum makes more sense than Audi’s production process with the A8.

    – Elon talked about how Ford is going the better route by using the same grade of aluminum that Tesla used on space ships.

    – Bill Ford is publicly touting how much he respects/admires Tesla

    – Elon talks about how Tesla plans on building a truck.

    – Tesla and Ford(hybrids and Energi vehicles) both use the same Panasonic battery cells to build their battery packs.

    – Ford reveals a Fiesta EV concept that has motors in the wheels, and presents the battery pack below the car, along with using the engine compartment as ‘storage’.

    I predict that Lincoln will skip the plug-in hybrid concept with the new 2015/16 MKS, and offer a 230 – 300 EV mile version using a Tesla’s configurable battery pack.

    1. David Murray says:

      Fascinating. I did not realize the Energi products were using 18650 cells. I had thought that Tesla was the only one in the market using those. I had often wondered why nobody else took advantage of this off-the-shelf technology.

    2. Bill Howland says:

      “…..I predict that Lincoln with skip the plug-in hybrid….. offer a 230 EV mile version…..”

      They better do something because Lincoln continually loses market share. Their BIG DUMB mistake was getting rid of Mercury.. Many people liked them, (me too) since they were a classier verison of a plain old ford, in ways that were classy not merely glitzy.

      I didn’t think they had anyone Smart Enough at Ford to do this. All of their attempts so far have been (only to these eyes mind you), overpriced hacked conversion glue on jobs. My appologies for anyone who has bought these, and actually like them and think they are good values..

  6. George Parrott says:

    Very good points in the article, but I would also observe that Tesla also does pretty much all the body production as well in house….However the general point of “design from the ground up” is well-taken. Adapting anything for a secondary function almost always is less than ideal in terms of design and engineering (compared to design specific from the beginning).

    As Road and Track and several others have observed, the Model S, actually competes on PRICE as well as performance in the “luxury category.” When operating cost is then factored in over a 3-5 year ownership period, the Model S can often pencil out CHEAPER than a comparable performing Audi, BMW, Mercedes or Jaguar.

    When Tesla scales down their technology and engineering for the Bluestar model, IF they came bring that to the market at anything under $40,000 and still hold 250+ miles EPA range, THAT will be a true “mainstream” EV and threaten ALL the “established players.”

    I am much impressed with the Volt, prior to what Tesla has done with the Model S, and even considering the technology in the Model S, I think the Volt is absolutely THE BEST engineering ever to come out of America’s car companies. My only fault in terms of the overall “Volt experience” (and we have both the Volt and the Leaf and have a Model S scheduled for delivery in the next 10 days) is that GM pulled an “off the shelf gas engine” to use rather than engineering a “function specific powerplant” as the electric generator. The Volt, largely because the platform also functions for the Cruze models, and because GM was too “convention bound” to develop aluminum body and chassis components, is TOO heavy. But with another “function specific ICE” as a generator and with an application specific floorplan/chassis, GM is better poised than Ford or certainly Chrysler to potentially offer an incredible PHEV in the next generation Volt.

    1. Bill Howland says:

      I believe the Volt engine choice late in the game was to satisfy Union Problems in Austria. To calm ruffled feathers they gave the plant something to do. I have a 2011 volt. True, not ideal, but there are worse engines out there.

  7. vdiv says:

    The question is does the Model S help with selling the “compromised” EVs that so far have been responsible for BEV proliferation to the post early-adopter general public. The related question is can Tesla indeed make, sell and support a low-priced, high-volume EV. Designing and building on a budget is not easy, there is too much compromise. Often the compromised aspects go too far and inhibit the sales and acceptance of the model, especially to that general public that expects everything, but is willing to pay nothing.