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Tesla’s Long and Winding Road Worldwide

Oct 29 2014 Automotive, Consumer Goods

Research Question: Can Tesla overcome the looming obstacles in China and Europe?

Companies: BRK.A, DDAIF, EPA:RNO, ETR:BMW, ETR:NSU, F, FIATY, GM, HKG:1114, HKG:1211, KRX:000270, POAHY, TSLA, TYO:7201, TYO:7203, TYO:7211, TYO:7267, VLKAY


By: Chris Jenks

Click here to download the report (.pdf)

 

Summary of Findings

  • Tesla Motors Inc. (TSLA) is in different stages of sales progression for its Model S sedan among Blueshift Research’s 27 global electric vehicle (EV) source The company’s ambitious 2014 projections will likely not be met in China; its growth is strong but off of a low baseline in Europe; and its sales are trending back up in the United States after a dip this summer related to factory reconfiguration.Summary of Findings
  • Chinese sources remain unanimously skeptical of Tesla’s goal of selling 8,000 Model S units in their country this year. However, several have raised their own projections. Sources’ average sales estimate was less than 4,400 units. The Model S’ high price tag has joinedsupercharger infrastructure as major concerns regarding its near-term sales potential in China.
  • European sources note strong near-term demand trends for the Model S, butprojected growth is off of a very low base and early adopters remain the car’s primary Still, Europe’s charging infrastructure is progressing, and the top issue for Tesla and EVs in general—largely unfounded concerns about battery range and durability—can be eased through education and government support.
  • U.S. sources reported sales growth for the Model S as well as some interest and sales beyond early adopters, but said price remains an impediment to further growth. Tesla’s momentum was tempered this summer for four of 10 U.S. sources, who said factory reconfiguration temporarily slowed
  • All 27 sources said the fall 2015 release of Tesla’s Model X SUV has had no effect on demand for or sales of the Model S sedan.

 

Silo Summaries

1) Automotive Industry Specialists in China

Although Model S forecasts in China have improved incrementally with each Blueshift report, these eight sources said the car’s sales continue to fall well short of Tesla’s projections of approximately 8,000 units in the country. China’s market is limited namely by Tesla’s high price point but also issues with the charging infrastructure, insurance claim processing, and Tesla’s aftermarket service. Three sources said capacity constraints are a problem for Tesla, but three others believe the issue was manufactured by the company to make demand appear stronger. Four sources cited the lack of government support as an ongoing negative factor for Tesla in China.

2) Automotive Industry Specialists in Europe

These nine sources represent multiple European countries and said Tesla’s Model S demand and sales are growing albeit off of a low base. Even in countries without an infrastructure or government support for EVs, the Model S is gaining momentum. Still, six sources said Tesla’s sales are being curtailed by consumers’ largely unfounded concerns regarding battery range and durability. It is too early for Model S to be of interest to European consumers beyond early adopters at this point.

3) U.S. Automotive Industry Specialists

These six sources said Model S sales have been in line with or ahead of their expectations, although two reported a temporary summer slowdown related to factory reconfiguration. Four sources said a high price point is holding back the model’s sales, while two said battery supply constraints are an issue for Tesla. Still, four said Model S customers are moving beyond the early adopters. One source expects Tesla to announce grid-level energy storage products.

4) U.S, Automotive Supply Chain Sources

All four supplier sources said their expectations have been met or exceeded in terms of Model S sales and Tesla’s supply orders. Two reported a summer slowdown related to factory reconfiguration, which has since abated. All four said price is the biggest concern but that safety is a nonissue for Tesla. The company has few direct competitors, but two source did mention GM’s Cadillac ELR.

 

Background

Tesla narrowly beat its guidance by delivering 7,759 vehicles in the second quarter, but trounced Wall Street’s earnings estimates, earning 11¢ per share against a consensus forecast of 4¢. Tesla reported revenues of $858 million, up 55% from a year ago, and saw gross margins rise to a record 26.8%, up considerably from the first quarter. Tesla reiterated that it is on track to deliver 35,000 vehicles this year despite a two-week shutdown of its manufacturing plant. It also confirmed it broke ground for its $5 billion battery gigafactory in June. Norway has led the pack in Tesla’s European monthly delivery results, often receiving three to four times more vehicles than the larger markets of Germany or France. China received its first delivery of the Model S in April. Its Model X, to be released in the spring of 2015, surpassed 20,000 preorders, 25% of which originated in Asia, and Tesla estimates they will make up half of its sales in 2015.

In order for Tesla to meet its fourth-quarter and 2015 sales estimates, growth must continue at its current pace in the United States and Europe. However, meeting fourth-quarter guidance likely also would require Asia deliveries of 5,700 to 6,300 units. Some analysts believe Tesla’s expansion in China will be enough to offset the tepid demand in Europe, given that more than 1,300 Model S units already have been delivered to the country. Tesla surprised Wall Street in September when it struck a deal to build 400 charging stations in China by the end of 2015, and stated a similar deal soon will occur in Europe. In the United States, Tesla continues to add innovative software updates for its Model S, such as a calendar app upgrade that pulls up directions for appointments listed in the driver’s calendar and also communicates with other Tesla vehicles to determine traffic conditions.

Sources for Blueshift Research’s Feb 6 Tesla report forecast strong 2014 sales and said Tesla’s only constraint was in producing more vehicles. Tesla employees reported more interest from a broadening demographic. Sales in Europe possibly had been stifled by Tesla’s price points and the mature hybrid/EV market. Battery developments continued to be an area of great focus, both for Tesla’s planned increase in production scale and as a key component in its mass-market Model E. Blueshift’s April 22 Tesla report found sales potential for the Model S in China and Europe, but that Tesla’s projections for 2014 likely would fall short of actual sales. The Chinese market’s lack of a charging station infrastructure was expected to inhibit growth. European sources said Tesla sales were growing consistently but off of a low base, and that the Model S was only viable to high-end buyers except in Norway.

 

Current Research

Blueshift Research assessed how Tesla’s Model S was faring around the globe. We employed our pattern mining approach to establish five independent silos, comprising 27 primary sources (including 17 repeat sources) and eight relevant secondary sources focused on recent developments for Tesla and the EV space in general:

  • Automotive industry specialists in China (8)
  • Automotive industry specialists in Europe (9)
  • Automotive industry specialists in the United States (6)
  • Automotive supply chain sources in the United States (4)
  • Secondary sources (8)

 

Next Steps

Blueshift Research will continue to monitor Tesla sales around the world, paying particular attention to Model S demand in light of the pending Model X release. We also will begin to track production progress of Tesla’s Model 3.

 

Silos

 

1) Automotive Industry Specialists in China

Although Model S forecasts in China have improved incrementally with each Blueshift report, these eight sources said the car’s sales continue to fall well short of Tesla’s projections of approximately 8,000 units in the country. China’s market is limited namely by Tesla’s high price point but also issues with the charging infrastructure, insurance claim processing, and Tesla’s aftermarket service. Four of the eight sources believe the more rational Chinese consumer will wait before buying a Tesla. For now, the primary Tesla buyers of Model S for personal use in China are status-conscious wealthy drivers. Three sources said capacity constraints are a problem for Tesla, but three others believe the issue was manufactured by the company to make demand appear stronger. Four sources cited the lack of government support as an ongoing negative factor for Tesla in China.

 

KEY SILO FINDINGS

Trends

  • None of these 8 sources expects Tesla to reach its stated goal of 8,000 units in 2014.
  • Sources’ estimates of Tesla Model S sales in China ranged from 2,000 units to 5,500 units, and averaged less than 4,400 units.
  • 3 have raised their own sales estimates for 2014, while 1 revised the forecast downward.
  • 4 said China’s more practical, rational consumers are waitingfor a lower price, a built-out charging infrastructure, and improved servicebefore buying the Model S.

Competition

  • Tesla lacks direct competition, but potential threats could come from BMW AG (ETR:BMW), Daimler AG’s (DDAIF) Mercedes-Benz, Nissan Motor Co. Ltd. (TYO:7201) and Toyota Motor Corp.’s (TYO:7203) Lexus.
  • Price was identified as a constraint by all 8 sources.
  • Although 3 believe capacity constraints will hold back sales, 3 others said that this is a manufactured issue.

Buyer Profile

  • Sources are unanimous that the pending Model X release will not affect demand for the Model S.

Batteries and Other Developments

  • 4 reported inefficient or complicated processes for insurance claims and aftermarket services for Tesla’s Model S.
  • 4 sources noted a lack of government support for Tesla in China.

 

1) Chief engineer for a Chinese vehicle manufacturer; repeat source

Tesla Model S sales in China may reach 4,000 units, but only 1,000 units will get license plates. Most customers buy the Model S for their second, third and fourth car. Tesla has been successful at targeting customers, but they are a small segment of mostly newly wealthy consumers. A price decrease is the only way to maximize Tesla’s potential with Chinese drivers. Tesla is not China’s electric car share leader. Hybrid or electric options from BMW, Mercedes-Benz and Audi AG (ETR:NSU, majority-owned by Volkswagen AG/VLKAY) could become its most formidable competition. Sufficient charging stations definitely will spur EV sales, but the current lack of an infrastructure has not overly affected Tesla sales. Production constraints have been fabricated by the company.

Trends

  • “Demand for Tesla Model S hasn’t seen big changes recently in China. The sales number of the Model S, which will be really getting license plates, will be only around 1,000 units in 2014.”
  • “I can’t predict the sales number, but its actual sales may reach 4,000 units, including the cars getting the license plates and those without. It is hard to sell more than 4,000 units. Some customers buy this car not for daily use. It is just a tool or toy for them to show their fortune. Its target customer group is very small.”
  • “According to what Tesla disclosed to the public about already selling nearly 2,000 units, you should have already seen a few Tesla Model S units on the road.”
  • “My expectations for 2014 Tesla sales in China now are slightly more optimistic than at the beginning of this year. However, I still think it is impossible that the sales will reach 8,000 units as Tesla expected. Nobody buys this car as their primary car. Instead, it will be their second, even third or fourth cars.”
  • “The company has been successful at getting their target customers but not the majority of customers. Tesla has built their reputation as a symbol of luxury cars. They are using different marketing ways and different topics to hype up by the media.”
  • “If Tesla wants to maximize its marketing potential with Chinese drivers, it has to decrease its costs in order to decrease its selling price. Currently, its brand name and car are just a story. Most car companies and car suppliers are not cooperating with Tesla because its orders are too small.”
  • “I don’t think Tesla’s production runs into capacity constraints. It is just a topic Tesla has hyped on its own. If capacity constraints really exist, it only shows that their investment is not enough.”
  • “The pending Model X release will not affect Model S demand and sales too much in China because demand for each will be small.

Competition

  • “BMW, Mercedes-Benz and Audi will be the most formidable competition for Tesla’s Model S in China if they launch EV or hybrid cars. Their technology is mature. They haven’t launched or have delayed their launch of an electric/hybrid car because they don’t want to compete with their own traditional cars. Although there are a few Chinese domestic electric/hybrid car vendors, none of them can compete with Tesla.”
  • “I don’t think Tesla is the electric car market leader in China because its market share is too small. It is said that China will sell 400,000 electric/hybrid cars from 2014 to 2015, but Tesla’s sales are only four digits. Maybe we can say Tesla is the leader in electric car concept.”
  • “Price will most likely affect Tesla demand and sales in China. China has a large luxury car market. Although Tesla considers itself a luxury car vendor similar to Ferrari and Maserati [both owned by Fiat S.p.A./FIATY], its reputation actually can’t even compare with BMW and Mercedes-Benz. Its prices are too high in relation to its reputation.”
  • “In China, Tesla’s prices are lower than some luxury models, so even this doesn’t make it unique. Just from functionality, its price is too high compared with the BMW 5 Series and Audi A6 Series.”

Buyer Profile

  • “IT fans and some young and wealthy auto fans are the early adopters of Tesla Model S, but recently I have found that the profile of the Model S buyer has changed a little bit. … Tesla oriented the Model S to the cultural elite, but now more and more nouveau riche have started to buy the car.”
  • “It is hard to say who will be the initial Model X buyers. Tesla’s release time is still too short, so no customers will buy the second Tesla car after they just bought the Model S. At least I believe Model X buyers will be the new customers. I don’t think that customers who focus on their families will treat the Model X as real family SUV.”
  • “I used to think that customers were definitely waiting until a charging network was built before buying a Tesla, but now I think that customers really do not consider this too much when they buy a Tesla car because it will not be their primary car.”

Batteries and Other Developments

  • “Tesla’s battery prices will continue to decrease.”
  • “The new U.S. battery factory is just a normal investment. It is the necessary way to decrease the costs. I have heard that this battery factory is pretty big. My concern is that if Tesla has such big battery demand in the near future. Many companies are investing in battery factories, so if Tesla has no big demand to support its own battery factories, it is possible that there is also not enough demand from other companies.”
  • “If there are enough charging stations, it will definitely help spur greater EV sales. However, the lack of a fully built-out network will not impact sales too much.”

 

2) Director of a multinational auto parts company; repeat source

The source has changed his opinion about demand for Tesla’s Model S from a few hundred units at the beginning of 2014 to 3,000 to 5,000 units for the full year. Model S demand could be even stronger if its price point were lowered. For now price is keeping Tesla from leading China’s EV market. The BMW i5 and i8, the Lexus [hybrids] and Ford Motor Co.’s (F) Land Rover PHEV are Tesla’s major competitors. Wealthy and fashionable people remain Tesla’s main buyers. China does not have enough charging stations, but this is a bigger issue for EV players other than for Tesla, which has the widest-ranging battery.

Trends

  • “Demand for Tesla’s Model S has been trending pretty well in China recently.”
  • “I have changed my expectations for 2014 Tesla sales in China since the beginning of this year. I didn’t expect it to have such strong demand. I expected its sales would be only a few hundred units even in April, but now I increase my expected units to 3,000 to 5,000 units.”
  • “The company has been successful at getting Chinese citizens to want to own a Tesla. If Tesla could decrease the prices more, it would maximize its potential among Chinese drivers.”
  • “I have no idea about the effects of the pending Model X release on Model S demand and sales in China.”

Competition

  • “The BMW i5 and i8, Lexus M300H and Land Rover PHEV are the most formidable competition for Tesla’s model S in China.”
  • “I don’t think Tesla leads the electric car market in China due to high prices.”
  • “The price is and will be the biggest factor to affect Tesla demand and sales in China going forward. For Chinese customers, its prices are still way too high.”

Buyer Profile

  • “Tesla Model S buyers in China normally are wealthy people. Also, they are fashionable. This trend will not change in the following two years.”
  • “We haven’t seen significant demand of Model S from customers outside of the early adopters. Maybe I should even say demand is not that If Tesla Model S prices could be cut 30%, demand would become strong.”
  • “Based on current Model S sales and feedback from early adopters, initial Model X buyers likely will be the new to the EV space entirely.”
  • “If customers want to own a Tesla, the charging network will not be a major issue for them. They are not waiting until a charging network is build or planned out. They just buy it.”

Batteries and Other Developments

  • “I don’t know too much about Tesla’s battery.”
  • “Battery supply will be an issue that will hold back sales. It depends on a battery factory’s production ability, quality and stability.”
  • “I expect Tesla’s production to run into capacity constraints for the Model S in both full vehicle production and along the supply chain.”
  • “I believe the new U.S. factory will improve Tesla’s battery production and capacity significantly.”
  • “The lack of a fully built-out network definitely holds the industry back, but for Tesla’s own sales, its impact is very small.”

 

3) Marketing director of a BMW dealership in China; repeat source

Model S sales will be around 5,000 units this year, fewer than the source predicted (8,000 units) a few months ago because demand for the car has cooled off after the initial rush. Tesla should do more marketing activities and cut prices a bit. The pending Model X release is not affecting Model S demand and sales in China. The BMW i3 and i8 will be the Model S’ major competitor in the following two years. Electric cars will become more accepted by Chinese consumers in light of growing government support, but this will create more competitors for Tesla. Model S buyers in China are the wealthy who have bought it as a spare car. Other potential customers likely are waiting until a charging network is built.

Trends

  • “As a pure electric car, I think Tesla’s Model S demand has been pretty good.”
  • “Its current sales are better than preorders in 2013. I heard it keeps around 1,500 unit sales every quarter in China now, so I forecast Model S sales will be around 5,000 units over the course of 2014.”
  • “At the beginning of the year … I thought sales of 8,000 units in 2014 was possible. Now I expect sales to be around 5,000 units because demand has been relatively calm following the initially hot orders. More customers will still choose traditional gas cars after doing some research. … Also, Tesla Model S is too expensive.”
  • “The company has been successful at getting Chinese citizens to want to own a Tesla. Its concept is new, and the Model S is the coolest electric car on the market.”
  • “Tesla needs to do more marketing activities like traditional car vendors do. Meanwhile, if it can cut the prices a little bit, that would make it more attractive to customers. For example, if the Model S price could compare with the BMW i3, it would attract considerable customer traffic.”
  • “The pending Model X release is not affecting Model S demand and sales in China because their target customers are different.”

Competition

  • “I don’t think Tesla leads the electric car market in China now. I thought it was market leader because there were no direct competitors for the Model S before, but now the government offers more favorable policies for electric cars, which drive this market. More electric cars will be released in 2015.”
  • “Electric cars will be more and more accepted by customers because the government policies are leaning towards to them. Not only will more traditional car vendors compete in this market, but also some other industries’ companies will join the competition.”
  • “Tesla doesn’t enjoy any favoring in China, such as government subsidies and license plate quotas, as an imported car, which hurt its sales in big cities. Also, its prices are too high.”
  • “The BMW i3 and i8 will be the Tesla Model S’ major competitor in the following two years. The BMW i3 has an obvious price advantage, while the i8 has a marketing advantage. Also, BMW’s brand is well accepted. [Toyota’s] Lexus CT 200h cars are pretty popular.”

Buyer Profile

  • “All Tesla Model S buyers are rich. [Also,] the Model S is just one of their spare cars.”
  • “There has been no change in profile of the Model S buyer since the car was first released.”
  • “We haven’t seen large demand for the Model S from customers outside of the early adopters. More brands will start to release EV/hybrid cars, so demand for Tesla is becoming scattered.”
  • “Model X initial buyers will be totally new to the EV space. Some of them will be customers who already have waited and have seen EV cars for a while. Another group will be people who always drive luxury cars and want a change.”
  • “Potential customers normally will wait until a charging network is built because they are more rational. They’d like to do more comparison of brands, prices and after-sales and operating costs.”

Batteries and Other Developments

  • “Battery costs will decrease.”
  • “I am not familiar with Tesla’s new U.S. battery factory, but I believe it will help Tesla sales.”
  • “I don’t think battery supply will be an issue for sales. I feel that the battery inventory is sufficient in the market.”
  • “I don’t know too much about Tesla’s production running into capacity constraints for the Model S. I guess the capacity constraints are from both full vehicle production and supply chain.”
  • “The lack of a fully built-out network holds the industry back. If there were enough charging stations, it could attract more potential customers.”

 

4) Executive of a state-level automobile organization in China

Tesla can sell a few thousand Model S units in China this year, but most will be to car dealers or to car parts and R&D companies. Tesla does not lead China’s electric car market even though it is small and does not have many competitors. EV sales could be improved by a better charging station infrastructure, but such a development would require government support. The source has a better outlook for the BMW i3 and i8 than for Tesla. Battery supply will be an issue that holds back Tesla sales. The pending Model X release will not affect Model S demand and sales.

Trends

  • “I don’t know exact sales of Tesla Model S, but I feel its demand is not big in China. More numbers and topics are hyping up.”
  • “I guess it only can sell a few thousand units Model S in China over the course of 2014. According to what I see, the majority of sales currently is from car dealers who like to put a Tesla as pop-up car in their exhibition or from car parts or R&D companies. … There are only a few personal customers of Model S.”
  • “I don’t think Tesla has been successful at getting Chinese citizens to want to own its cars.”
  • “Most Chinese families are still buying their first car, so they will not consider a Tesla due to high prices and low endurance. It is different from Western countries whose drivers buy Tesla as second and third cars.”
  • “I have low expectations for 2014 Tesla sales. … I will not change my forecast at least until the end of this year.”
  • “It is difficult for Tesla do more to maximize its potential with Chinese drivers. The key issue is to solve battery endurance problems. However, the whole industry can’t solve this problem now. The second issue is price—not only expensive cars but also the cost to replace the battery.”
  • “The pending Model X release will not affect Model S demand and sales in China. I am not familiar with the Model X, but I think its situation will be very similar to the Model S. Any brand that wants to open a new market needs time to cultivate it.”

Competition

  • “Tesla doesn’t lead the electric car market in China. We only can say that Tesla leads the electric car concept.”
  • “There is not strong competition among electric car vendors because EVs are not a big market in China. Tesla’s Model S has no obvious EV competitor. The real competition is from hybrid car vendors. Toyota’s hybrid car technology is very mature now. In addition, I think the BMW i3 and i8 are easier for customers to accept because BMW has a better reputation, and its battery replacement policy is better than Tesla’s.”
  • “Battery endurance will most likely affect Tesla demand and sales in China going forward, and then price. If Tesla’s price could compete with Chinese domestic hybrid cars (including foreign brands that produce cars in China), its sales could increase.”

Buyer Profile

  • “I see many car dealers buying the Tesla Model S, but I haven’t seen too many personal customers buying it.”
  • “Its demand … is very small. Unless the electric car market suddenly becomes mature, I don’t think demand will increase too much in the next two years.”

Batteries and Other Developments

  • “The key issue is still battery endurance.”
  • “The battery supply will be an issue that holds back Tesla sales. I don’t know when this problem will be solved. It is a global problem, not just for Tesla but for all car vendors that are making or plan to make electric cars.”
  • “It would help EV sales a little bit if there were enough charging stations. However … the charging station buildout will not be smooth without the government’s help.”
  • “Tesla running into capacity constraints for the Model S is not true. It is fake. At least in China, there is no such big demand.”

 

5) CRM manager at a global auto manufacturer in China

Demand for Tesla’s Model S is lagging. Tesla may sell 8,000 Model S units this year in China, but actual deliveries will be less than two-thirds of the orders. Still, Tesla’s potential will be huge after 2016 when the company’s infrastructure will be more complete. The company has been successful at attracting a small group Chinese citizens, particularly those interested in technology and those who are wealthy and fashionable. The profile of the Model S buyer has changed a little since the car was first released. More small dealers and some owners of event companies have purchased a Model S. Tesla lacks a direct competitor in China, but may see a threat from BMW Brilliance’s (a joint venture between BMW and Brilliance China Automotive Holding Ltd., or CBA/HKG:1114) Zinoro 1E in 2015. More than 80% of the initial Model X buyers will be completely new to Tesla, and more than 50% potential customers are waiting until a charging network is built or at least planned before buying one of its cars. Battery supply will be one of a few sales issues. A broadened charging infrastructure would spur EV sales.

Trends

  • “Demand for Tesla’s Model S is not good in China. It is just a big toy for rich people. There are too many limitations for it, such as battery endurance, difficulty in finding a place to install the charging pile, and a long charging time, so it is only good to drive within or around the city.”
  • “I can’t give you the exact number of Model S sales. I guess it may reach 8,000 units orders, but the actual delivery will be less than two-thirds of the orders.”
  • “The company has been successful at getting a small group of Chinese citizens to want a Tesla, such as … IT elite and some traditionally wealthy consumers who want to be … fashionable. The general public has no interest in Tesla because it is too expensive. Also, most Chinese people live in apartment buildings, which have no place to install charging piles.”
  • “It has built its car as a kind of a Apple-style, rich people’s toy. But if it wants to attract more customers, it needs to change its ‘toy’ image. For example, it could do some promotional activities that give real data. Tesla says that its car can drive 350 km on a full charge, but customers have no idea how far away that would be.”
  • “Chinese people prefer to buy cars in a dealership model, so whether the Model X release is pending or not, it will not affect Model S demand if it is not shown in a showroom. If competitors release an electric or hybrid SUV before the Model X, it will impact the Model X’s demand.”

Competition

  • “We can say that Tesla leads the electric car market in China now. There are still no famous, traditional car companies making electric cars whose battery endurance is better than Tesla’s. Also, Tesla’s design is unique.”
  • “There are no direct competitors for the Model S in China. However, if the Mercedes-Benz E Class, BMW 5 Series and Audi A6 can launch EV or hybrid cars, they will definitely be the Model S’ competitors. The BMW i3 looks more like a toy than the Model S. BMW i8 is a much higher-level car and more expensive than Model S. … I expect China BMW’s Zinoro 1E to compete with the Model S directly. It is also an electric car and will be released in 2015. Because it will be made by CBA … it will get some subsidies or tax benefits from the government. I expect that the Zinoro 1E will be listed as an official government car.”
  • “The continued battery endurance [will] most likely to affect Tesla’s demand and sales in China. Some factors like battery endurance can’t be improved quickly, but others can. Tesla need to strengthen its PR. … There are so many negative opinions about Tesla from [industry sources] in China. The customers trust these experts’ opinion.”

Buyer Profile

  • “The Tesla Model S buyers in China are primarily of new wealth, especially in science and technology fields.”
  • “Chinese people like high-tech products. Tesla has strong high-tech features.”
  • “The profile of the Model S buyer has changed a little bit since the car was first released. More small dealers and some owners of event companies have started to buy the Model S. They said it is to keep up appearances.”
  • “I haven’t seen significant demand of the Model S from customers outside of the early adopters, but I believe its potential is huge. I think this demand will appear after 2016 when its infrastructure, such as service centers and the charging network, is more complete.”
  • “I expect more than 80% of initial Model X buyers will be totally new customers. Some of them will want to replace their traditional car. Some of them are high-end SUV customers … and will buy the Model X just for use in the city.”
  • “More than 50% of potential customers are waiting until a charging network is built or at least planned out before buying a Tesla. These customers are not rich, but they have high-paying jobs and are more practical.”

Batteries and Other Developments

  • “Tesla should consider battery replacements. For example … if the drivers can go to a charging station and just replace a battery, that would be a big positive for Tesla.”
  • “The new U.S. factory will help Tesla speed up delivery times. Meanwhile, battery life also will be improved.”
  • “Battery supply will be one of issues that hold back sales but not the key issue.”
  • “If there are enough charging stations, it will definitely help spur greater EV sales because the continued battery endurance is better. The lack of a fully built network does hold the industry back.”
  • “I expect Tesla’s production could run into capacity constraints for the Model S anywhere along the supply chain. Every car vendor has this problem, but Tesla’s problems appear more serious because it doesn’t have many suppliers. … When one supplier run into capacity constraints, it impacts Tesla’s production directly.”

 

6) Director of the software and testing department for a technology research group; repeat source

The source adjusted 2014 sales expectations for the Model S from 3,000 units to 5,000 to 6,000 units, and expects demand to be strong for the next two years. After that, Tesla will need to cut its prices to lure more consumers. Insurance claim problems also have hindered demand. Tesla does not have a direct competitor in the high-end EV market. Nissan Leaf sales are ahead than other cars in the EV/hybrid market, while BYD Co. Ltd.’s (HKG:1211) electric cars are selling, thanks to EV subsidies and an agreement for license plate procurement. Most Model S customers are from the upper class or are from auto companies for R&D. Model X buyers will be totally new EV customers. The new U.S. battery factory will definitely boost Tesla battery production. The lack of a built-out network holds back China’s EV market.

Trends

  • “Tesla’s Model S has had strong demand. Our company ordered a few units, but they have delivered only one unit.”
  • “I forecast Model S sales will be around 5,000 to 6,000 units over the course of 2014. Its prices are still too high. If it releases its lower-end model, its demand will be driven up.”
  • “Compared with a few months ago, I have adjusted my sales expectations from 2,000 to 3,000 units to 5,000 to 6,000 units based on my company’s situation and my experience in driving [my company’s] Model S.”
  • “I was excited by its large screen, but I find this is the least useful thing because the Model S uses Google Maps. Google is not available in China.”
  • “I drive my company’s Model S. In June, I was the only one at the charging station, but in October I have since noticed three to four Model S cars charging. From this, we can see its sales growing.”
  • “Tesla not only has been successful at getting Chinese citizens to want to own a Tesla, but also has driven the whole electric car market in China.”
  • “However, Tesla has an insurance claim problem. One Tesla had an accident, the insurer suggested a repair, but Tesla would only do a replacement.”
  • “Tesla outsources its after-sales services. Chinese customers are not familiar with this kind of process.”
  • “The pending Model X release will not affect Model S demand and sales in China because they are two different kinds of cars.”
  • “I believe potential customers will buy a Tesla when the company releases its low-end version, for which prices could be around ¥200,000 to ¥300,000 [U.S. $32,689 to $49,033].”

Competition

  • “In the high-end EV market, Tesla has no direct competitor. BMW just released the i3 and i8, which could compete with Tesla, but they launched nearly a year later than the Model S.”
  • “Tesla leads the electric car market not only in China but also in the world. It has advanced technology, a good user experience and a smart marketing strategy.”
  • “The Tesla Model S is a nice car, but the only negative factor … is price. It is still too expensive for most customers.”
  • “In the EV/hybrid car market, Nissan Leaf sales are ahead than other vendors’ cars. BYD’s electric cars are selling very well in Shanghai because customers can get a license plate that normally would cost ¥70,000 [$11,441] for free. In addition, customers get another ¥60,000 to ¥70,000 [in $9,807 to $11,441] in EV subsidies. Hence, a ¥230,000 [$37,592] car costs only ¥90,000 to ¥100,000 [$14,710 to $16,344]. … They sell 5,000 to 6,000 units per month.”

Buyer Profile

  • “The Model S definitely is not a family’s first car. Chinese families that can afford two or more cars normally are wealthy.”
  • “I don’t think customers are waiting until a charging network is built before buying a Tesla car. Tesla’s current customer group is small but rich, so they don’t care if Tesla has a fully built-up charging network because Tesla is not their first or daily car.”
  • “Many auto companies are buying Tesla cars for R&D, like our company, and some wedding companies are buying a Tesla for a cool wedding car.”
  • “Most cities in China give EV/hybrid cars a favorable policy for obtaining license plates. However, Tesla is not in this list.”
  • “Model X buyers will be totally new customers. Many customers who are waiting and seeing Model S will buy the Model X.”

Batteries and Other Developments

  • “It will have more new technologies coming out. The most important thing is the fast-charging technology.”
  • “The new U.S. battery factory will definitely help Tesla’s battery production. Larger production is good thing for Tesla. Only if the battery production is much improved can Tesla make a low-end electric car.”
  • “I don’t think that the battery supply will be an issue that holds back sales.”
  • “The lack of a fully built-out network does hold the industry back. How to link the parking lot with the charging pile in most Chinese apartment buildings and office buildings will be an important focus. In China, all domestic electric car vendors are using the same charging standard, so the country will give the subsidies to help build the charging network. … If Tesla wants to keep its own charging standard and build its own network, it will be very difficult.”
  • “I don’t think Tesla has run into capacity constraints for the Model S or Model X. It is just a marketing strategy.”

 

7) Manager of an auto service retail location, Shanghai

Tesla’s 2014 sales will be around 2,000 units in China. The company has not been successful in appealing to Chinese citizens, who are put off by its high prices and limited service centers. It must improve its marketing, lower its prices and release a lower-end EV. More auto manufacturers are competing in the EV market, including the Chevrolet Volt (General Motors Co./GM), the Nissan Leaf, Honda Motor Co. Ltd.’s (TYO:7267) Fit EV, the Ford Focus EV and the Fiat 500e. Competition and price will most likely affect Tesla demand and sales in China going forward. Model S buyers have high incomes and are trendsetters. The Model X release will not affect Model S demand and sales. Tesla’s battery is fine in terms of durability and endurance. The lack of a built-out network is holding the industry back.

Trends

  • “Demand for Tesla’s Model S is just so-so in China. I think its sales have been suppressed by GM’s Volt in Shanghai.”
  • “I don’t have good expectations for Model S sales. For 2014, I forecast its sales will be only around 2,000 units.”
  • “Tesla has not been successful in getting Chinese citizens to want a Tesla. Its market orientation is too high-end, its prices are too high, and its service centers are limited. Why would customers spend big money for poor services?”
  • “The company should focus on adjusting its marketing and decreasing its prices in order to maximize its marketing potential with Chinese drivers. If Tesla released a low-end version, it would definitely attract a lot of potential customers.”
  • “The Model X release will not affect Model S demand and sales too much. I think it is a marketing strategy again.”

Competition

  • “There are more and more vendors competing in the EV market. Some of them already occupy pretty good market share. GM’s Chevrolet Volt, Nissan’s Leaf, the Honda Fit EV version, the Ford Focus EV version and the Fiat 500e are or will be Tesla’s competitors.”
  • “We can count Tesla as the EV market leader in China.”
  • “Competition and price will most likely affect Tesla demand and sales in China going forward.”

Buyer Profile

  • “The first Model S buyers are high-income people. They are a group of people with tastes of their own. They also like to think of themselves as environmentalists.”
  • “Model S demand is not very big outside of the early adopters because of the high prices.”
  • “Tesla’s significant demand will start when it releases a low-end version. At that time all EVs will be much more popular than today.”
  • “There is no doubt that Model X buyers will be high-income people as well. Some of them will be hybrid car users and will change to EVs. Some of them will be totally new customers.”
  • “I don’t know how other customers think about the charging network. I myself will wait until a charging network is built and other hardware infrastructures are more complete. I will wait until they have more service centers. … Also, I will wait for prices to be cut.”

Batteries and Other Developments

  • “I don’t know what changes will be forthcoming in Tesla’s battery, but I think customers care more about durability, the life of the battery and having more service centers.”
  • “Battery supply and car prices are two major issues holding back sales. I remembered that Tesla’s battery is from Panasonic [Corp./TYO:6752]. To be honest, I have to say that Tesla’s battery already is great compared to other vendors’ EV battery, whether in durability or endurance.”
  • “Capacity constraints for the Model S or Model X could occur anywhere along the supply chain.”
  • “The lack of a full, built-out network definitely holds the industry back because charging stations are a necessary factor for EV sales. There are no doubts that China does not have enough charging stations. If Tesla could work with gas stations to put its charging piles in as in the United States, it would be a big win.”

 

8) Senior marketing analyst for a Tesla supplier in China

Tesla Model S demand and sales are better than expected. The source expects Tesla to sell 30,000 Model S units globally based on Tesla’s parts orders from this supply company. Tesla can maximize its potential with Chinese drivers in speeding up its charging station buildout, improving its after-sales service and controlling its costs. The BMW i3 and i8 will be the most formidable competition for the Model S. Tesla buyers are wealthy and are looking for the latest technology. The Model X’s pending release will bring about complaints regarding Tesla’s delivery times.

Trends

  • “I don’t have details of the demand for Tesla’s Model S trending recently in China, but I can say it is much better than expectations.”
  • “I don’t have the exact numbers of how many Model S units can sell in China in 2014. It will be definitely higher than expected. Based on Tesla’s orders from our company, I expect Tesla to sell 30,000 Model S units globally in 2014.”
  • “Tesla is successful at getting Chinese citizens to want to own its cars.”
  • “I don’t think that the pending Model X release will affect Model S demand and sales in China, but it will bring more doubts of whether it can deliver its vehicles on time.”

Competition

  • “The BMW i series, such as the new i3 and i8, will be the most formidable competition for Tesla’s Model S in China.”
  • “We can’t say Tesla leads the electric car market in China because the market is huge and Tesla has just a very small share.”
  • “The government subsidies will most likely affect Tesla demand and sales in China going forward. If other electric cars can get this subsidy but Tesla can’t, it will impact customers’ decision.”

Buyer Profile

  • “Many people think that Tesla Model S buyers in China are rich. I think we can’t say that just wealthy people buy Tesla. Actually, it is a group of wealthy people who want to make some changes and accept fresh technologies.”
  • “The profile of the Model S buyers has not changed since the car was first released.”
  • “The Model S hasn’t seen significant demand from customers outside of the early adopters. Its demand will take hold only when it has completed its charging network and has expanded its service network.”
  • “The Model X buyer’s profile will be similar to the Model S’. … However, they will be totally new customers who haven’t bought a Model S or another EV before.”
  • “The customers are waiting until a charging network is built before they buy a Tesla.”

Batteries and Other Developments

  • “The costs of Tesla’s batteries will decrease, and its charging efficiency should be improved.”
  • “The new U.S. factory is impacting not only battery production but also the car’s capacity. It is a positive for Tesla.”
  • “The battery supply will be an issue that holds back sales. The low costs are a symbol of large-scale production. When the battery costs decrease more, then EV production and sales will be improve quickly.”
  • “The lack of a built-out network does hold the industry back, especially the charging equipment in residential areas.”

 

 

2) Automotive Industry Specialists in Europe

These nine sources represent multiple European countries and said Tesla’s Model S demand and sales are growing albeit off of a low base. Even in countries without an infrastructure or government support for EVs, the Model S is gaining momentum. Still, six sources said Tesla’s sales are being curtailed by consumers’ largely unfounded concerns regarding battery range and durability. Tesla’s own capacity constraints further limit its near-term potential, according to three sources. It is too early for Model S to be of interest to European consumers beyond early adopters at this point. Two said Tesla will achieve a battery technology breakthrough within two years, which should bode well for its release of the more affordable Model 3 by 2017.

 

KEY SILO FINDINGS

Trends

  • All 9 said Tesla’s Model S is seeing healthy to strong growth in demand and sales.
  • 3 (1 each in Norway, Switzerland and Denmark) said word of mouth has boosted Tesla’s acceptance and sales.

Competition

  • No source reported direct competition for the Model S.
  • BMW and Mercedes may become competition through their superior track record.

Buyer Profile

  • The pending Model X release will not affect demand for the Model S.

Batteries and Other Developments

  • 6 of 9 said consumer concerns—specifically regarding battery range and durability—are unfounded. Education, combined with subsidies or incentives, is needed to allay these concern
  • 2 believe a battery technology breakthrough will be achieved by Tesla in the next 2 years.
  • 3 believe Tesla’s own capacity constraints hold back some potential sales in Europe.

 

1) President of a European EV association; repeat source

The European EV market is still in its infancy, with EV sales representing almost 5% of the total car market in Norway but less than 1% in other European countries. This is mainly due to a lack of consumer awareness and to misconceptions in owning and driving an EV. Also, most European economies remain sluggish. Still, Tesla continues to be a success story; it is targeted at a high-income group who is less affected by economic woes. Its sales have benefited from a very good marketing strategy, publicity, product distinction and top-notch technology. Sales are likely to accelerate, particularly once the all-wheel-drive version of the Model S and the lower-end Model 3 are released. Also, Tesla lacks a direct competitor. BMW may be a threat based on customer loyalty, but the source said the market is large enough for both companies.

Trends

  • “Tesla continues to do very well although from a very low base, and still represents a very small portion of the market.”
  • “It is a car that cannot be afforded by everyone, but in the segment of consumers it is targeted at, it is doing very well.”
  • “If you look at the total EV market or even the total car market in any given country (with the exception of Norway because of its excellent incentives), then Tesla is really small and may be seen as performing in a sluggish way because it still represents a very small portion of the overall market and most Europeans cannot afford it. However, Tesla is not targeting the mass market, not yet. They are targeting high-end consumers. If you just concentrate on that, then I don’t think Tesla is having tepid sales.”
  • “Tesla is doing well in the countries with good incentives and where it is investing more on charging stations.”
  • “One of the things it is helping them is their good strategies; they really keep the buzz going. No one has stopped talking about them since they entered the market. … The launch of the four-wheel drive [Model S] contributes to that.”
  • “I am completely confident in Tesla’s approach. They started high-end to have a foothold with the market segment of Mercedes buyers, and will eventually go to a higher volume with the Model 3 but all in the right time.”
  • “There is a lot of potential for growth for Tesla. Tesla has recently offered a payback guarantee for leasing cars, which could make it very interesting for the leasing sector. This will also boost confidence in the second-hand market. I think Tesla has lots of opportunities to explore in Europe yet.”
  • “The real breakthrough for Tesla will come with the Tesla 3, not with the Tesla X or the four-wheel drive. It will come with a more affordable Tesla within the reach of more pockets in the European market.”
  • “I don’t think that either the four-wheel drive Tesla S or the Tesla X will cannibalize Tesla S; they are different types of cars.”

Competition

  • “Tesla is not really competing with other EVs on the market. It is still mainly competing with luxury cars like Maserati or Porsche [Automobil Holding SE/POAHY].”
  • “BMW is trying to copy Tesla. The main driver for Tesla owners or potential owners is to own something different. However many people trust BMW and however good BMW’s cars may be, it doesn’t give the image of having something different.
  • “Some people who want to go slowly into the fully EV sector may buy a BMW i3 as a first step. … It an urban car with the possibility of making it a plug-in hybrid.”

Buyer Profile

  • “People buying a Tesla are those who want to have the latest technology. … They are not buying it necessarily for environmental reasons.”
  • “With the exception of Norway, Tesla buyers are still early adopters. In most markets EV doesn’t even account for 1% of the market. It is said that once the market share of a product reaches 5% or above, it is beyond the early adopters’ threshold, but it is not the case for Tesla yet.”
  • “The bulk of Tesla’s consumers are very similar to when we spoke last time: 40- to 55-year-old males, mainly located in close-to-urban areas, well educated. A large number of Teslas are company cars for executives who want to give the image of being avant garde and environmentally friendly. Lots of owners or those in high management positions for small and midsized companies also own them.”
  • “Because of the lack of a proper charging infrastructure in Europe, a Tesla is not the only car a family or a household tends to own.”

Batteries and Other Developments

  • “[Tesla has] to [slowly produce enough cars to meet demand]; they couldn’t do it more quickly as I don’t think they would be able to meet demand. They are creating demand. The market is not ready for an electric car for everyone.”
  • “Their battery factory will be up and running. I believe only one-third of the factory from Toyota is being used; everything is timed for them to be able to meet higher demand in the future.”
  • “Battery range continues to be a concern and a hampering factor for sales of EVs in general.”
  • “However, it is less of a concern for Tesla buyers based on Tesla having the longest battery range available.”
  • “In terms of battery development, we are at the tipping point between generations 1 and 2; generation 3 is already being tested in laboratories, and generation 4 will come in about at least 10 years. The problem is that some companies potentially or originally interested in investing in battery development don’t see it as a quick return on investment and are concerned about investing in a second-generation battery.”
  • “I believe Tesla will come up with a battery breakthrough with their Model 3, which will be cheaper with a greater capacity, greater autonomy, and more stability and durability.”
  • “Most people owning an EV recharge it either at night or while they are in their offices. If you live in the city center in a flat, it is most likely you won’t own an EV. People are not relying so much on public charging stations.”
  • “As battery developments are slow, in order to increase EV usage we need to widen the charging infrastructure, which is already improving depending on the country. … It is all still at a very infant stage.”

 

2) Marketing manager in Norway; repeat source

Tesla has continued to be a success story. Healthy demand is due to word of mouth and EV incentives, and has outpaced supply in Norway. Sales will be boosted further by the new Tesla launches, which will not cannibalize Tesla S sales. Other car manufacturers are well behind Tesla, and stronger competitors will not appear for a matter of years. The company is well positioned to have the longest battery on the market and the competitive advantage for at least the next few years. Still, Tesla faces some challenges in Norway from production constraints, internal structuring, and building up a network of garages to be able to service customers.

Trends

  • “Demand for Tesla cars hasn’t diminished in Norway. It has remained at least the same as it was when they first launched Tesla S back in August 2013.”
  • “At the beginning of its launch or just after, Tesla surprised me. I had high expectations for the brand but not so high, and now Tesla’s performance is in line with my expectations [which I have raised].”
  • “Everybody knows that Tesla S is a very good car. Some potential buyers were cautious at the beginning and wanted to wait and see what the neighbors would tell them about it. Now word of mouth about the quality and advantages of the car has really spread. People’s concerns about Tesla are not about how good the S or X might be but how well Tesla is going to service my car once I buy it.”
  • “Tesla is investing heavily on building up service stations; they have built a huge one with more than 20 repair points here. Even though Tesla cars don’t need a lot of maintenance, it reassures people to have service stations. … I know of people who are not buying a Tesla because they want to see how the company develops its garage network.”
  • “There may be some people not buying a Tesla S at the moment because of the upcoming launch of the Tesla X, but I believe demand for Tesla S is still strong in Norway. I don’t think that the Model X will cannibalize Model S; they are two different cars.”

Competition

  • “Tesla has no competition in the EV sector in Norway.”
  • “I don’t envision any competitor for Tesla in the next year.”
  • “People like BMW are trying to copy them, but they are not competition in terms of quality and performance.”
  • “Supply could affect them, but … I don’t think any other competitor is going to take advantage of that, because [they] also have a long delivery time.”

Buyer Profile

  • “The consumer profile of a Model S hasn’t changed since it was released.”
  • “Demand outside of early adopters is expanding although I would say the group expanding the most is that of people who were attracted to the brand at the beginning but wanted to wait and see what other buyers would tell them. Now these people are ordering them.”
  • “Lots of middle-income people can afford the Model S because of the huge EV incentives in Norway.”
  • “Our very good incentives make Tesla an attractive and relatively affordable car for many people in this country—not just rich people as in most other countries in Europe.”

Batteries and Other Developments

  • “I don’t think that [capacity constraints are] a real issue at the moment, but it is definitely a challenge to try and deliver cars and satisfy such a huge demand supplying its cars worldwide only from a single factory in the U.S. In terms of delivery wait time, they are not behind other competitors.”
  • “More than the battery issue, which I am sure they [Tesla] will improve in about two years’ time, some people are just concerned about Tesla service stations supporting their Tesla cars. Tesla is building them at the moment. … Tesla is starting everything from scratch; they are making so many steps in the right direction, but everything takes awhile.”
  • “However, I am not saying that the demand has weakened because of that, I am saying that it could even be stronger when they build more after-sales service garages, which they are in the process of doing.”
  • “Tesla is going through lots of internal changes in Norway. They have gone from having one Tesla dealership with very few employees in this country to 200 to be able to deliver and service their cars.”
  • “By European standards, our country is very big but with a low population density, which means that service garages are very important for us.”

 

3) Consultant and member of an EV association in Germany; repeat source

EVs still represent a small portion of the whole car market because of the lack of support by the German government in terms of incentives as well as consumer concerns about battery range. Furthermore, Tesla represents a small portion of this EV market but is doing better than expected, thanks to word of mouth. Tesla is smaller in Germany than in countries like Norway but mostly because of differences in incentives. The source also said a portion of Germany’s affluent population has never heard of Tesla.

Trends

  • “Demand has continued to increase in Germany since Tesla was launched last year. In spite of the virtual lack of incentives for EVs in Germany, Tesla has sold really well.”
  • “When Tesla was introduced I thought it was going to be a hype that would fade away, and I have been proven wrong.”
  • “Sales of Tesla S have been above my expectations since the beginning of the year.”
  • “I have no doubt that Tesla is going to be very successful in Germany in the future; all big German car makers have an aim: to build a better car than Tesla. That is not so easy, and it takes time.”
  • “With the four-wheel drive, demand for the [standard, non-four-wheel drive] Tesla S will remain good.”
  • “I don’t think Tesla X will cannibalize Tesla S; there is a segment for each one. I know of people who already own a Tesla S, and are ordering a Tesla X and will keep both in the family. Also I have heard that some people have ordered the Tesla X and may sell their Tesla S.”
  • “I expect good demand and sales for the Tesla X; people are already ordering it.”
  • “Tesla doesn’t do any regular marketing or advertising. I don’t think they need to do it; but if they did, I am sure they would sell more in this country.”

Competition

  • “There is not a single car competing with Tesla at the moment.”
  • “More Mitsubishis [Mitsubishi Motors Corp./TYO:7211], Nissan Leafs or Renault [S.A./EPA:RNO] Zoes are sold simply because they are cheaper.”
  • “I don’t think that BMW i3 is a real competitor to Tesla. I have tried it myself, and it is an inferior car. … The BMW i8 is not even fully EV, and it is even more expensive.”
  • “However, of the big car manufacturers, BMW seems to be the only one car maker that is making more efforts in the electric car sector. They are even building an extra factory to make them. The other car makers are producing them to compensate for the maximum emission of CO2 their production capacity can reach.”
  • “I don’t think that Tesla is really competing with the luxury car models, like Porsche and Maserati. Yes, they cost similarly, but they are different cars that belong to another segment.”
  • “If there was a German car as good as Tesla, maybe Tesla wouldn’t have so much demand in Germany, but there is actually no German car that is comparably as good as Tesla.

Buyer Profile

  • “The consumer profile of a Tesla buyer hasn’t changed since the Model S was released. They are still early adopters.”
  • “People who own a Tesla already have at least one or two cars.”
  • “They are people who buy it either as a company car or to give the image of being entrepreneurial.”

Batteries and Other Developments

  • “I don’t know whether Tesla will run into capacity constraints for the Model S or Model X.”
  • “There is a lack of awareness and information about the fact that there are enough fast-charging stations between the main cities in Germany. Most Germans don’t even know this.”
  • “The problem is consumer minds’ and concerns about battery range. Many people with lots of money don’t know that Tesla exists, and many who know about Tesla don’t know about how large their battery range is.”
  • “The real factor hampering sales of EVs is concerns about battery ranges. It applies much less to Tesla because it has the battery with the largest range in the market, but it is still a concern.”
  • “The real turnaround for this sector will be to come up with a cheaper battery. Tesla is going in the right direction by joining forces with Panasonic and investing in battery production.”
  • “I expect the battery price to go down when they build their own battery themselves.”
  • “I don’t know if Tesla will sell the car cheaper then, but batteries will be cheaper.”
  • “I expect Tesla to come up with a cheaper and more durable battery in two years.”

 

4) German EV consultant; repeat source

The EV market is growing very rapidly but from a very low base. Its small size is due to a lack of attractive incentives. Still, Tesla is very well positioned to succeed and is gaining brand awareness every day. Demand is stronger than supply for Tesla cars. Tesla lacks EV competition in Germany because it has the longest battery range, but cautious consumers are more likely to buy an extended range car and then a fully EV car from a brand they know. Still, the Model S is positioned now among the best-selling non-ICE cars. People buy the car for its technology and as a status symbol.

Trends

  • “In spite of the limited incentives the EV sector is still facing in Germany, Tesla is doing very well because its consumer base here is composed of people with lots of money. It still represents a very small percentage of the EV sector of the overall car market because it can only be afforded by affluent people, but in that segment it is doing very well.”
  • “Sales have been activated by very good word of mouth, excellent publicity coverage, a top quality and a very attractive product, increased consumer awareness of the benefit of owning an EV, and the opening of new stores and new charging stations.
  • “Demand has accelerated since the last time we spoke. I don’t think that the new launches in the EV or plug-in hybrid sectors have taken share from Tesla S. They belong to another league. Although it is true that BMW enjoys a very high level of consumer loyalty in this country, I don’t think that the i3 and BMW i8 have been a real threat to Tesla.”
  • “I am not sure about the demand for the new, enhanced [all-wheel-drive] car by Tesla. It is a car more suitable for the forest. I believe the average Tesla buyer is more of an urban person. I don’t really know whether this new [Model S] will help Tesla sales; what it may do is increase consumer awareness of the Tesla brand.”
  • “Tesla’s strategy is the correct one: First they launched the Roadster to show the general public that an EV could run very fast, up to 500 km per hour. Afterwards with the launch of Tesla S, they have shown potential consumers that an electric car can also be a family car with a wide battery range. With the new, enhanced edition, they will show that an EV can also be a four-wheel-drive type of car. With the upcoming launch of the Tesla X they will show that an EV can also be affordable.”
  • “The main challenge for Tesla in Germany is that unless the government supports EVs with more incentives, it will remain a very exclusive car that can only be afforded by the rich. However, I don’t think they are worried about that at the moment, as they wouldn’t be able to supply such growing demand for the moment.”

Competition

  • “Tesla continues to be unique, and that is what makes them so attractive for its customers. They are buying something very unique, a very elegant car, with a very chic and cool design, top quality and with the best battery range for an EV in the market.
  • “Other car manufacturers are trying to copy Tesla and come up with something similar, but not a single manufacturer has come up with anything similar yet.
  • “The BMW i3 cannot be considered a competitor to Tesla because it is a smaller car; it is cheaper, that it true, but it is a smaller car with a much smaller battery range. It can be purchased as fully EV with the option of making it hybrid with the purchase of an add-on [gasoline engine as a generator to recharge the battery].”
  • “The BMW i8 is not considered as a competitor to Tesla S either as it is a hybrid and more expensive car. A Tesla S is retailed at around €65,000 to €70,0000, and the BMW i8 is costs over €100,000.”
  • “However, I know that BMW is a competition for Tesla in some consumers’ minds; this is for the more cautious consumers who want to enter this market step by step and with a brand they know and trust.”
  • “The other EVs are no competitor to Tesla S. The ones that could compete with it are the regular gasoline/diesel luxury cars, such as the high-end Mercedes, BMWs or Porsche.”

Buyer Profile

  • “Although German consumers are very environmentally aware, they are also concerned about their pockets. … Market penetration of EVs is still very small here. That’s is why not so many people own either a plug-in hybrid or an electric car, let alone a Tesla.”
  • “The typical buyer or a Tesla car hasn’t changed in the last few months; they are either relatively young to middle-aged people, using them as company cars to give the image of success, status and environmentally friendliness, or … very rich people who buy it as a third or fourth car just for the fun of having one of the best cars on the market.”

Batteries and Other Developments

  • “Battery lifespan continues to be an issue in Germany. The general public still thinks they could be left stuck and stranded in the middle of the motorway and that you can[not] drive fast enough with an EV.”
  • “Apart from investments in battery in the industry … a lot of investment needs to be injected in changing potential consumers’ perception of driving an EV.”

 

5) Research manager of EVs for a German insurance company; repeat source

Despite the low incentives for EVs and the cautious nature of some consumers, Tesla has performed very well in Germany thanks to publicity, word of mouth, superior technology, its wide battery range, and new launches. German brands could take some of Tesla’s potential consumers but do not yet represent a real threat.

Trends

  • “Tesla is a success story. Two years ago the only EVs available in the market were small … but Tesla is slowly showing Germany and the whole of the world that EVs can also be fast, strong, good, chic, elegant and can have a large battery range.”
  • “The reason why Tesla demand has grown and accelerated (although I want to reiterate it is from a low base) is because of the fact that more and more people are recognizing it.”
  • “Sales of Tesla S have registered growth in Germany and are expected to continue to do so for the remainder of the year. The new Model X will help sales of Tesla in general, thanks to greater advertising and more consumer awareness of the brand.”
  • “Sales have been helped by customer satisfaction, quality, very reliable service and very good word of mouth.”
  • “People are very loyal to German car brands in this market, but if they test the [Tesla] car they will see it is superior.”
  • “Although we [Germans] are much more cautious and tend to wait until a product is a bit more established in the market to start placing trust in it, Tesla’s performance has taken even me by surprise.”
  • “I expect Tesla to remain a very niche market, but I predict it to be very successful within this market with lots of room for growth.”
  • “Tesla X is also likely to do very well. But if they manage to do a more affordable and smaller car, then Tesla is likely to become less of a niche market and grow more rapidly here, despite the high levels of consumer loyalty towards BMW and German brands. This is likely to happen with Model 3, for which I also predict very good sales.”
  • “The main hindering factor for growth for Tesla S or Tesla in general for the moment is the lack of support that any foreign brand, especially in the car industry, gets from the government. Still, Tesla has such a good product that they are managing to dodge that as people are increasingly recognizing the superiority of its cars.”
  • “The situation has changed compared to a year ago or even nine months ago in terms of the government and car manufacturers. The government is investing a bit more and making more of an effort to support the sector, and the car manufacturers are also investing more in it.”

Competition

  • “I don’t think the Tesla S is really competing with most of the EVs in Germany, as virtually all others available in the market are positioned further down.”
  • “German consumers tend to be very loyal to German makes; competition is any high-end make made in Germany, regardless of whether they are EV.”
  • “I don’t think that BMW i3 is a real threat for Tesla; it is different in price, range and aesthetically. They are two different cars as the BMW i3 is more of a city car.”
  • “[Tesla] sales have been, however, hindered by growing competition after the launch of BMW i8, which managed to increase sales more rapidly.”
  • “Tesla competes with Ferrari, [Audi’s] Lamborghini, Porsche, Mercedes S class and with BMW i8 a bit.”

Buyer Profile

  • “Tesla S is an aspirational and desirable car in Germany that only high-income consumers can afford. Most of the Tesla buyers tend to belong to the 35- to 55-year-old group.”
  • “The typical buyer of a Tesla is still an early adopter in this country.”
  • “Many consumers in this country tend to trust German brands first, especially when it comes to new technology … in cars. Tesla appeals to more innovative and open people.”
  • “The market continues to be dominated by corporate cars, not private buyers.”
  • “The common EV user is some who uses its EV for the city, work, to go to the supermarket, and uses another car for long distances.”
  • “Most people cannot afford an EV, let alone a Tesla. Any EV costs around twice the price of a regular car; because of that, not so many people are interested in EVs. This is just to show how tiny the EV market can be when it doesn’t enjoy lots of incentives. However, Tesla owners or potential buyers don’t need those incentives to buy a Tesla. They have enough money. It is at least their second or third car, and they buy it not because of how green the car is but because of the image and status it gives them.”

Batteries and Other Developments

  • “Despite lots of investment in the battery charging infrastructure, [public stations] are not seen as practical, and most people have to charge their cars at home.”
  • “In Germany 80% car users drive below 50 kms per day; 19% drivers 80 kms a day, which very easily can be covered by a much more affordable EV. … However, there are some potential buyers who are still reticent about buying an EV because of fears of the battery range.”
  • “It is great that Tesla is building a network of superchargers in Germany. Although it will help their sales, there are a number of people with lots of money who will want to wait a bit to see whether it really works.”
  • “Tesla said that the reason German sales are lower than those in Norway or Holland was because of its lack of charging stations and the lack of a Tesla shop [dealership] in Germany.”

 

6) Marketing manager for a Dutch car association; repeat source

Tesla has held steady during 2014 and has performed better than expected, especially considering that some attractive incentives ended in 2013. An estimated 289 Tesla S units were sold in Holland during September, a sharp increase from August. Tesla has emerged as the country’s best-selling EV. However, hybrids still are the best sellers in the “alternative car segment” because of concerns about battery ranges, despite improvements in the network of charging stations. Plug-ins have grown more rapidly than EVs. Policy changes in 2015 or 2016, specifically a re-introduction of incentives similar to those that expired at the end of 2013, will likely spur sales to a wider market.

Trends

  • “There were 1,863 Tesla S being driven in Holland by August this year. Until September, 957 Teslas were sold in Holland so far in 2014, and in September alone there were 289 Tesla S sold, vs. 70 in August. Tesla has remained the best-selling electric car in Holland.”
  • “The EV market accounts for just above 4% of the total car market, one of the biggest in Europe.”
  • “I expect sales to grow at the same rate as this year. I expect a slight increase year over year each month until the end of the year and in the next few months. I don’t expect any big jumps as I don’t envision the introduction of any additional policies in the horizon. These cars are so expensive that—outside of the really environmentally concerned people with lots of money—the main factor that activates sales are incentives to make it more affordable to a bit of a wider consumer group. We don’t expect any changes in terms of policies until 2015 or 2016.”
  • “[Sales of] plug-in hybrids are increasing at a faster rate than EVs in Holland at the moment. The main reasons behind that are there is a greater supply of them. Plug-in hybrids also are perceived as more practical, more affordable and are taken as the first step toward perhaps buying an EV in the future. Also, they get similar incentives as EVs here and are seen as more suitable as company cars.”
  • “There are two concerns over Tesla, which are the battery range (although it is better than that of other EV manufacturers) and its price. It is still too expensive for the average Dutch consumer. That’s why I always go back to the same issue: incentives.”
  • “However, sales of Tesla S are being driven by the fact that Tesla offers the best battery range in the market and because it is a desirable car.”
  • “I don’t really see any reason for Tesla to accelerate demand; it will remain similar to now, which is healthy.”

Competition

  • “Tesla doesn’t have any competitors in the EV sector. There is no car like Tesla on the market; it’s as simple as that.”
  • “Tesla is the EV with the longest [battery] range, and that makes them stand out.”
  • “The second best-selling car in the EV sector has been the Nissan Leaf, but they are two different cups of tea.”
  • “If anything, Tesla competes with other desirable sports cars.”

Buyer Profile

  • “The consumer profile of the typical Tesla buyer hasn’t really changed since the last time we spoke; they continue to be companies and not private consumers. They tend to be used as company cars. The incentives in place are still more attractive for companies than for private consumers.”
  • “It continues to be very rich people from 40 onwards until 60 years of age—people who really want to have the latest technology in a car and who can afford it. They are usually CEOs or people in top management positions who are entrepreneurial, often with their own business.”
  • “The average Dutch consumers cannot afford a Tesla. This is not Norway; we don’t get such great incentives as people get there.”
  • “People are very concerned about environmental issues in Holland and want to be green. Actually, the most green people here don’t even own a car; they cycle. … The infrastructure is there to support people cycling almost everywhere.”
  • “There has been a lot of discussion over how environmentally friendly EVs really are, most importantly about how green batteries are. This is hampering sales of EVs in general in Holland.”

Batteries and Other Developments

  • “Holland has a much stronger charging infrastructure than many other European countries; we have 4,000 public charging stations, 6,000 semi-public. Tesla can be charged both ways and also from its extra superfast charging stations. We also have another 160 fast-charging stations.”
  • “Battery range continues to be an issue for many potential buyers.”
  • “We expect a breakthrough in battery technology that can really make a difference in the next two years.”
  • “Lots of potential buyers are still waiting for this breakthrough. Many are still reticent to buy an EV because of concerns over the convenience, smoothness and practicality of recharging an EV.”

 

7) Director of an EV association in Switzerland; new source at repeat location

Tesla continues to be a success story in Switzerland, where its sales have grown month to month. It is now the best-selling EV, representing 27% of the nascent EV market. The company will be helped by greater demand from other sectors that are becoming aware of the benefits of driving an EV, such as taxi companies, leasing companies and businesses needing company cars. BMW with its i3 and BMW i8 can be seen as a threat to Tesla based on brand loyalty. However, most people buying a Tesla do so to own something different. Battery charging continues to be a concern but is not as big an issue as in other countries. Switzerland already has built more than 30 non-Tesla fast-charging stations.

Trends

  • “Tesla has continued to do very well in Switzerland; it has even accelerated since April.”
  • “Tesla sold 32 cars in September, followed by BMW i3 having sold 30. Tesla is emerging as the best EV, accounting for 27% of the total EV market. And BMW i3 represents 22% so far [through September].”
  • “I forecast Tesla sales to continue to sell do very well and even accelerate in at least the next few months. They are still at an infant stage. They are still being bought by early adopters.”
  • “The major drivers for growth for Tesla are: 1) the fact that it is a very unique car; 2) it offers the latest technology in cars; 3) it is extremely fun to drive; 4) it enjoys very positive publicity; 5) it has great marketing and 6) it is a sexy product.”
  • “Switzerland is made for Tesla … high-income population, very mountainous country with a need for high-powered cars, and very short distances.”
  • “[Word of mouth] will be helped by greater interest from companies in offering it to their executives as they don’t have to pay any penalties on CO2 emissions with EVs as well as by greater demand from other industry sectors going greener and seeing the advantages of driving an EV, such as taxi companies. Also, there is a lot of potential and room for growth in the leasing sector because of the payback guarantee recently offered by Tesla.”
  • “The new Tesla S edition will help sales of Tesla; this new four-wheel-drive will be a success. It will bring other people into the market, a portion of which is likely to switch to Tesla.”
  • “I don’t know much about the Tesla X; I doubt it will be introduced during the second quarter of 2015. Usually cars are launched later than expected and later than what car makers say.”
  • “EVs don’t get lots of incentives compared to other countries, and they don’t get lots of support from the government either.”

Competition

  • “Tesla doesn’t have any real competitor in the EV market. The cars that are competing with Tesla are non-EVs such as the top end of the Mercedes, BMW or Audi series or Porsche. Tesla’s more direct competitors are BMW series 7 and 8, Audi top series, and Mercedes high range.”
  • “Companies are trying to compete and come up with something similar, but they haven’t quite got it there yet.”
  • “The BMW i3 is clearly no competitor to Tesla; BMW is a city car with a more limited battery range than Tesla and a smaller size. They are targeting different segments.”
  • “I don’t see the BMW i8 as a strong competitor for Tesla; it is more expensive and is regarded less as a pioneer.”

Buyer Profile

  • “Consumer awareness of the benefits of owning an EV is really increasing.”
  • “I already know of three taxi companies in Switzerland that have started buying [EV] cars.”
  • “Tesla has offered a payback guarantee which can be very interesting for the second-hand market and the leasing market.”
  • “The average Tesla buyer is a high-management executive, usually well-educated males with a high income, from 30 to 35 years of age onwards. It is not primarily seen as a family car in this country.”
  • “There are also lots of people in their 50s and 60s buying them.”
  • “It is usually owned by a household with more than one car, and Tesla would be their first EV car. And an SUV could be the second car for the ladies.”
  • “Still, the bulk of the market is represented by early adopters.”

Batteries and Other Developments

  • “Over 30 fast-charging stations have been built in Switzerland, and there are about four Tesla superchargers.”
  • “We [EV industry specialists and authorities in Switzerland] are not supporting Tesla’s strategy of having their own charging stations exclusively for Tesla drivers. We have come up with a compromise; next weekend there will be two combined stations, with a Tesla supercharger but also a regular, standard fast-charging facility.”
  • “There are already a number of public charging stations, and many people are still charging from home. It seems concerns over charging infrastructure are being tackled in this country properly.”
  • “In Switzerland there is much less lobbying in support of [or in opposition of the] development of the EV sector. We don’t produce cars here; we don’t have any of the big car manufacturers lobbying against it or making it difficult for new entrants in the sector.”

 

8) Marketing director of a Danish EV association; repeat source

The EV sector continues to be very immature in Denmark, accounting for 1% of total car sales. Tesla is very well positioned to succeed in this country. Tesla can compete with the executive line of top brands, such as BMW or Audi, and word of mouth is fueling demand for its cars. The possible removal of incentives at the end of 2015 or in 2016 could hold sales back for EVs and Tesla.

Trends

  • “Tesla has continued to register healthy demand increases since the last time we spoke, and its performance has even accelerated. We cannot really analyze their sales on a month-to-month basis as it entirely depends on their availability and how quickly they can be shipped. On average, 30 to 40 Tesla cars have been sold per month, but I expect Tesla to accelerate in the next few months to at least 50 to 80 or even more.”
  • “Word of mouth is working very well for Tesla.”
  • “People buying a Tesla are not concerned about spare parts in terms of a possible unavailability or a late delivery of a part because they know that virtually the whole process is concentrated on Tesla as a company; they do everything themselves. Tesla has managed to gain lots of trust in a small period of time; people buying it or potential buyers have the feeling that everything will be taken care of by Tesla.”
  • “EVs receive a very good incentive in Denmark, which is the exemption of the car registration tax, which can be very high in this country. This tax can even reach two and a half times the price of the original price of the car.”
  • “Thanks to these incentives, more and more people are buying it.”
  • “My colleagues told me today that there are 40 Tesla owners who very probably will sell their cars because they want to buy the new [AWD] Tesla S edition. We’ll have to look into that, but that shows how capricious Tesla buyers are; they want to have the very latest in the market.”
  • “However, I don’t think the new Tesla S edition will cannibalize Tesla S.”
  • “There are lots of uncertainties over the Tesla X. I believe it will be launched around summer next year. Tesla may face some challenges in Denmark with that model as there are talks of removing the incentives that EVs have enjoyed until now by the end of 2015. I guess then that if the Tesla X is launched in the summer, deliveries would not happen until around eight months after its launch. … If the exemption is removed by the end of the year, I don’t think people will buy the Tesla X until they see what happens with these incentives.”

Competition

  • “BMW i3 could be seen as a competitor for Tesla, but Tesla is still selling better.”
  • “In the EV sector it is hard to find a competitor to Tesla to be honest; I would find them in the standard gasoline/diesel sector.
  • “In September, the Nissan Leaf was the best-selling EV car, but it was followed by Tesla and BMW i3.”
  • “[The BMW i3] is a smaller car than Tesla; its range is more limited. But it is true that it solves some people’s concerns about battery range as it can also be purchased with an add-on, which is a small gasoline engine of 9-liter capacity.”
  • “The BMW i3 is an urban car; it is a car for the city. And Tesla S is more a car for the weekends and for longer distances. Also, the BMW i3 has a less attractive design than that of Tesla.”

Buyer Profile

  • “The consumer profile of a Tesla buyer generally comprises people with lots of money, typically men living in urban areas around Copenhagen, mainly corporate executives. It is not regarded as a family car.”

Batteries and Other Developments

  • “If you are a Tesla owner, you have three possibilities of charging your battery: either at one of the four supercharging stations located on the two main roads crossing the country. … The last time we spoke there was only one or maybe two maximum. The second possibility would be to charge it at a public charging station, and finally at home. In practical terms, many people charge them at home.”
  • “The problem with the public charging stations is it is not so easy to find a place. What people end up having is a small charging box installed at home, which usually takes 8 to 12 hours to recharge the battery to a full. There are also some subsidies for those charging their cars at home with a 40% reduction on the electricity costs, which is expected to last until next year at least.”
  • “Although electricity is a bit expensive here and I know people would buy more EVs if it were cheaper, I also know this is not an obstacle for the average Tesla buyer.”
  • “However, I also know there are still some people waiting for some more superchargers to be built in order to buy a Tesla.”

 

9) Chief economist for a UK auto trade association; new source at repeat location

The market for EVs and hybrids continues to be very small because of weaker incentives than in other countries as well as budget constraints and battery recharging concerns. Of the 7.43 million registered cars in the United Kingdom, only some 10,000 cars are either plug-in hybrids or EVs. However, the sector continues to grow very rapidly. Demand for Tesla is expected to continue, thanks to word of mouth, publicity and the company’s uniqueness.

Trends

  • “As expected, Tesla has done very well in the UK. Even though it is only a niche, the very rich are attracted to its technology, design, driving, smoothness.”
  • “Publicity is doing wonders for that car in the UK.”
  • “Tesla is innovative and … they have the right strategy here: They are developing a network of charging stations themselves, distributing their product rapidly, opening dealerships.”
  • “My only concern about Tesla is, will it be able to supply all the demand it is creating in the UK?”
  • “Consumer perceptions about battery lifespan and battery range continue to hamper the market as last time; people need to be made aware that they don’t drive long distances on a daily basis and that EVs have a very low maintenance.”
  • “A further subsidy is going to be necessary in the next 10 to 15 years to really activate the EV segment, but for where Tesla is positioned, budget is not a concern. People can afford these cars without incentives.”
  • “The enhanced four-wheel-drive S will definitely spur sales of Tesla S, and also the Model X; the room for growth for this car in the UK is just amazing.”
  • “The battery range is not so much a concern for Tesla buyers as Tesla is usually at least their second or third carin the household.”

Competition

  • “There is no competition for Tesla in the EV segment; no other car has the same battery range. But due to its prices, it is likely to remain a car for rich people in this country.”
  • “I don’t see any competition for Tesla in the near future. The BMW i3 could be considered by some because of the name BMW behind it, but when you test-drive it and compare it with Tesla, it belongs to another league.”

Buyer Profile

  • “We are not so environmentally aware … as in Scandinavian countries, for instance. The reason why [UK] people are buying a Tesla is because of its technology and because it is one of the best cars in the market at the moment.”
  • “The consumer profile remains the same: rich people who already own at least two to three cars minimum that are interested in having the latest technology in the market to show off and to have fun driving it.”
  • “Tesla is something different and unique in the market. It gives the image of exclusivity and status, and it is very suited to a segment of the market that would buy anything to have something unique and the latest thing in the market. And don’t forget that many people here are crazy about cars.”

Batteries and Other Developments

  • “Concerns about battery range are not really an issue for buyers of a Tesla; they want to have the latest thing in the market. … Tesla wouldn’t be their first car.”
  • “I don’t expect any real developments in batteries in the short term. It will be more in the medium to long term.”
  • “I know Tesla is investing heavily in batteries with their new plant in the U.S. and is likely to come up with an even better, cheaper and more durable battery sooner than later.”
  • “There are trial initiatives to be introduced, which would offset the battery issue for potential EV drivers.”
  • “There is currently a lot of focus on extending the charging infrastructure in the UK, with plans to set up rapid superchargers in the highway, at exits and entry points. And by the end of the year there will be a 20,000 charging points in the UK, which is a lot considering how underdeveloped this sector has been until around a year ago.”

 

 

3) Automotive Industry Specialists in the United States

These six sources said Model S sales have been in line with or ahead of their expectations, although two reported a temporary summer slowdown related to factory reconfiguration. The upcoming Model X release has not yet affected Model S sales. Instead, four said a high price point is holding back the model’s sales, while two said battery supply constraints are an issue for Tesla. Still, four sources said Model S customers are moving beyond the early adopters. Charging options are sufficient and growing. Also, three sources said most Tesla drivers’ charging needs are served at home. One source expects Tesla to announce grid-level energy storage products.

 

KEY SILO FINDINGS

Trends

  • All 6 said Model S sales have been in line with or ahead of expectations, though 2 note a factory-related summer slowdown.

Competition

  • The Model S does not have a direct competitor, though BMW’s i3, Cadillac’s ELR and Nissan’s Leaf were
  • 4 see price constraining Model S sales, while 2 believe supply—specifically the battery—is holding back

Buyer Profile

  • The pending Model X has yet to affect demand for Model S; 1 source expects Model S demand to be affected by the X’s lower price point.

Batteries and Other Developments

  • Charging stations are growing sufficiently for Tesla drivers; 3 said home charging is most important for Tesla, and believe that a quicker and more convenient 120-volt home charging system will be key.
  • 1 expects Tesla to announce grid-level energy storage products.

 

1) Senior editor of a trade publication; repeat source

Early Tesla adopters in China are actually speculators. Tesla will be within 10% of its target for 2014 Model S sales in the United States. Sales did slow down a bit in July and August, when Tesla shut down the lines to gear up for Models X and D. Still, other buyers now are replacing the early adopters. SUVs are big in the United States, and the Model X should sell as well as or better than the Model S. Tesla has top brand recognition, and BMW will not cut into its sales. Price does not appear to be an issue. The charging network is nearly ubiquitous, and most Model S owners have home charging stations. The company will have limited supply problems. Tesla is not affected by battery issues like other companies. The battery will continue to evolve, but major changes will not be seen until 2020.

Trends

  • “Model S sales are easily in line with what I expected for 2014. They hit a snag in July and August when they shut down the lines for the Model X and, of course, the D. Tesla will be roughly on target, within 10%, for S models in 2014.”
  • “The demand in China is an open question. I hear that their early buyers are really speculators, not early adopters.”
  • “The X will not have a lot of effect on S sales. The Model X is out there, and people have put deposits down despite little promotion by Tesla. But it will be hard to say how it will go until the car comes out. There will be some portion of S owners who will trade in their S models for an X, and this will be likely to create a stream of used cars.”
  • “People who want a high-end, all-wheel drive with dual-drive features will wait for the X. Crossovers are beloved by Americans, and they are now really selling more than sedans. In the end, Model X sales will equal or surpass Model S sales.”
  • “Tesla has offered immediate availability of a Model S to those who have been waiting for an X. I haven’t heard of anything else that Tesla is doing.”
  • “When [Ford’s] Jaguar added an all-wheel drive, their sales in the Northeast became vastly higher. Approximately 70% to 80% of their cars ordered had all-wheel drive, so Tesla has been missing some potential demand. As for the P85D [largest battery], there are always people who want the fastest.”
  • “People now take Tesla’s projections seriously. In the past Tesla had a challenge working with vendors, and they had to get rid of some vendors who couldn’t meet their demand. I don’t see any constraints into 2015 and beyond. Working with Panasonic on the cells might have some constraints.”
  • “I have known that the D was coming for a long time. All-wheel drive is necessary now, and the fit from the X to the S made total sense. But people didn’t expect the performance acceleration. It is silly fast. The D gives Tesla another new glamour car at the top end. The D offers a power train option on Model S.”

Competition

  • “Thus far, no company will bring an S competitor to market in the next few years, but Tesla is no longer the outlier. There are more EVs out there, but Tesla has top brand recognition; it is really phenomenal.”
  • “I hear about the higher-range BMW i3, and it is bringing new buyers to the EV market. I think they have sold about 1,000 per month for the last two months. It is a validated market, and this was a bit surprising. But there is no way that the i3 will chew away at the Tesla market.”
  • “BMW is already adding new features to the i3, and it is adding to the luxury choices with the i8, a plug-in hybrid. And they are not the only luxury hybrid and electric cars. [Nissan’s] Infiniti and Cadillac will soon follow.”
  • “[Toyota’s] Prius is the 1 trade-in car for an EV.”
  • “To some degree, Tesla will be constrained by all factors: supply, competition, price, charging and safety. However, they are not terribly supply-constrained and they are still selling the S, so I don’t think price will be much of an issue. This will all depend on the Model 3 and how it does. Tesla is also well on its way to a ubiquitous charging network.”

Buyer Profile

  • “The X and S buyers have a similar profile in that they have high incomes. A number of people may trade in their Model S for an X. Maybe the S didn’t work for them because it was too small or they needed an all-wheel drive. There will be some migration here.”
  • “Very few people cross-shop. There are two-seat buyers and five-seat buyers, and they are not looking for the same car.”
  • “There is a general worry in the EV space that they will exhaust the early adopters, then have to brave it through until the price drops. But I don’t see any indications of this for Tesla.”
  • “People who can afford this car want the top end, whatever it is and says. But most of the public is holding out for a smaller, cheaper car.”

Batteries and Other Developments

  • “Five years from now batteries won’t be an issue. DC quick-charging will be more available.”
  • “The battery will continue to evolve, but there will not be any big changes until 2020. The newer battery cells will be more energy-dense; they will be a grade up. There will also be larger battery packs. The durability of the lithium battery has been good so far.”
  • “It is too early to say about the battery factory. Batteries are a problem for the other manufacturers, and Tesla is seeing this. Nissan is closing its battery plants in the United States, and [may] be turning to LG [Corp./KRX:003550] for batteries. General Motors has had some issues, but they don’t get as much publicity.”
  • “There are several levels of charging: the stations, home charging (level 2), and quick charging (level 3). There is no business model out yet for the public charging, but electricity is really cheap. However, public charging is irrelevant for Tesla buyers because they all have garages and chargers. Most of their charging will be done at home.”

 

2) Owner of a Tesla-authorized auto body shop; repeat source

Tesla is having a banner year in the United States. Model S sales are strong, and complaints are few about the Model X delay. The Model S and Model X cater to two completely different customers: Current Model S buyers have watched the buzz for a while and are ready to buy, while Model X buyers need more room for their families. Some families may end up with both cars. The Model D will create more interest and be Tesla’s marketing tool. Tesla continues to have no real competition. The BMW i3 is drawing interest, but some buyers are using it as an interim car until they can afford a Tesla. Other manufacturers are trying to compete, but face major hurdles when trying to rebuild complex cars that are tied to gasoline. Batteries will continue to be developed. Once the new battery plant is up and running, Tesla might sell batteries to other EV manufacturers.

Trends

  • “Just like I said before, nothing will stop Tesla in 2014. They have had a banner year and strong Model S sales.”
  • “There are 20,000 Model Xs sold already. Some folks will change their minds if they can’t come up with the money when it is due.”
  • “I don’t believe that Tesla is using incentives to get restless X customers to buy the S. Some customers are antsy, sure, but if they want to switch to an S, Tesla is willing to sell them one.”
  • “This is just an observation, but when the X proves successful, Tesla will end up with waiting problems. They want to get it right, so it may not come out for a while. Some companies have gone bankrupt if they couldn’t deliver on time, but Tesla is at a stage when all things have come together. They have introduced a new fuel, are building orders, and have lots of money. Now they need batteries. All these things have to come together. But they won’t be in trouble. Tesla was at a critical stage when the orders weren’t built fast enough, but in 2014 they’ve gotten beyond those problems.”
  • “The risk market, like the Model D, won’t make Tesla successful. But it will be the best of Tesla out in front, a marketing device, just like the Corvette was for Chevy. Chevrolet lost money every year with the Corvette, but it was their marketing device.”
  • “The D is a fully self-driving car that is not enabled yet because of safety concerns. The Model D can park itself, with no one in it. It can also come to the driver. The Model D will be faster and perform better. It has all the features and then some. It is part of Tesla’s DNA.”

Competition

  • “There is still no real competition for the Model S. It is in a class of its own.”
  • “The BMW i3 is getting some notice. It will sell quite a few cars because they make it a little better each time. It gets a real 80 miles per a charge, not like the Volt. It is roomy, and new EV buyers won’t mind the clown-looking panel, with the dial and knobs, because it is what they are used to. One problem with the BMW i3 is that it is a BMW, which is not known for reliability. It is also made of carbon fiber instead of steel, and you need to take it to BMW to get fixed. Carbon fiber is a light, strong material, but it is expensive.”
  • “In 2011, for comparison purposes,Toyota, General Motors, Volkswagen, Honda and Daimler spent $38.1 billion on research and development, while Tesla spent $209 million. These leviathans don’t seem to have gotten very far for spending [more than] 182 times as much, have they?”
  • “Only supply and price issues will hold Tesla back. They have addressed charging issues, and there are no safety issues. This is the safest car around. It is scary strong. But it is so fast and quiet that it is easy to get into an accident. I think autopilot will make it a safer car.”
  • “Tesla will have problems producing enough cars because they won’t have enough batteries. Batteries may be a constraint. They are addressing that issue with a new factory, and it will take time to get that up and running.”
  • “Major manufacturers face the following hurdles [when trying to challenge Tesla]: 1) The cars they build and sell have too many unnecessary parts. 2) Their dealer network depends on these parts and the vehicle’s complexity for their survival and will fight any attempt to eliminate regular service. The dealer adds an average of $1,800 to the purchase price of the vehicle including the $150 to $300 delivery charge. 3) Now the dealers are consolidating. Berkshire Hathaway [Inc./BRK.A] just bought the largest dealer group.”
  • “[Conventional] car manufacturers are in the wrong business. The car is now a battery on four wheels with a computer. It will be and already is, as in the case of Tesla, connected to the factory and can be instantly updated as well as fleetwide trend- This tight integration extends to the free charging network as well, and it is not at the mercy of big oil fluctuations. … They don’t understand the voice of the customer, and they will have a hard time with self-driving vehicles because gas car complexity is no match for autonomous-driving EVs.”

Buyer Profile

  • “The Model S and Model X are two different things. If the X is successful as a sports-utility vehicle, then it will be popular. A few people are complaining about the X delay … but not too many are complaining. The Model X is a terrific car and Tesla wants to do it right, so they are taking their time [developing the car].”
  • “It all depends on how you define ‘early adopters,’ but some would say early adopters already have bought the car. Other folks are now buying the Model S.”
  • “Tesla has the factory preowned program, and folks may turn in their Model S for a Model D. This may give Tesla a secondary market of affordable cars. It is possible you will see preowned Model S cars for $35,000 to $50,000 someday, but it will not be like a used Malibu. Teslas are built to last for a long time.”

Batteries and Other Developments

  • “The batteries are getting larger, and Tesla can go further. Battery performance and safety are advancing all the time. Lithium batteries are only made of chemicals, and they are 100% recyclable.”
  • “Tesla can also supply other vehicles that need batteries. We may even see them supply EV car kits once their batteries become more available.”
  • “The charging network is building out steadily, and one to three stations are being added every day. Tesla is always announcing new construction and filling out some supercharger station. I believe there are now 30,000 charging stations.”
  • “Most people will only need to use a supercharger five or 10 times a year at the most. You just need it when taking long road trips.”
  • “The last time we talked [early 2014] there were only four authorized Tesla body shops, but now there are hundreds.”
  • “Tesla has had some problems delivering parts because they moved their warehouse. They get things wrong because some parts have different numbers. But all it takes is one phone call. They apologize and ship the right part overnight. They will talk to us. It is way different than dealing with dealers.”
  • “It is hard to be a publicly traded company and do the right thing. Companies concentrate on making money for the investors; they don’t necessarily want to do the right thing. Tesla is different. They are not beholden to stock brokers. They want to see a world with all electric cars, not just their car. That is their goal. They are serious about climate control. We are on a downward [climate] slide already, and that is on Tesla’s side.”

 

3) Senior policy analyst specializing in energy and transportation; repeat source

Demand for EVs, including the Model S, is down this year as gas prices have stabilized. Tesla had a short dip in fulfilling Model S orders because it temporarily closed its plant to gear up for the Model X. The X caters to a different customer and could well end up selling more cars than the Model S as consumers become more comfortable with EVs. Tesla is playing catch-up with the Model D. The lower-priced Model 3, expected in 2017, will differentiate Tesla from other manufacturers and determine if the EV market is viable. The BMW i3 presents some competition, but its range is only half that of the Model S.

Trends

  • “The demand for all EVs is down this year according to the Wall Street Journal, and the Model S is no different. It is aimed at the luxury market, which is becoming saturated. … The market is not in free-fall, but it is leveling out, with limited market size.”
  • “Tesla is still behind in S orders because they had to slow the Fremont [CA] facilities for retooling. This is a short-term dip, but now they are ramping up.”
  • “The X and the S are really two different kinds of cars. Tesla doesn’t think the X is affecting Model S because they are doubling their capacity for the X. They are similar cars with the same base and technology, but the X is shooting for families or couples that need space. No one can really predict the demand.”
  • “The X is slightly cheaper than the S, but it is still a luxury car. It is the first all-electric sports utility vehicle to come in a big way.”
  • “I haven’t heard about any package incentive for the S. Preorders for the X are really strong, 5,000 to 8,000. State and federal incentives should be the same.”
  • “Tesla is catching up in the luxury market with the Model D. It has the new features, such as autonomous or semiautonomous driving, that have been developed for the X. It could differentiate the S and the X. Elon Musk wants to be like Apple and make slight updates like the iPhone 6.”
  • “My feelings on Tesla haven’t changed in the past year. The Model 3, which is coming out in 2017, will be what differentiates the company from everyone else. If Tesla can offer it in the $30,000 to $35,000 range, then they can change the market. Tesla will be the reason why the EV market works or not.”

Competition

  • “The BMW i3 is new and selling well; it is quickly ramping up. It is on par with Tesla and a strong competitor, but the Tesla has better features. It is two times the range of BMW. The i7 and i8 are more expensive.”
  • “The Nissan Leaf could be coined as a luxury car. It is lower in price, $40,000, which could be a huge selling point. The Leaf has bigger sales numbers.”
  • “Price is a constraint, especially as gas prices fall, and people feel less pinch at the pump. Tesla needs to [get the Model 3] baseline at $20,000 to $30,000. Safety issues were overblown last year.”

Buyer Profile

  • “The Model S is a bigger selling point for people without kids.”
  • “The Model X is still small compared to other sports utility vehicles, but they have added extra seating. If the X is cheaper than the S, then it would become more popular. The X has some speed.”
  • “The early adopters are over; they are shifting to the X. Consumers are becoming more comfortable with the idea of an EV, the range and short trips.”
  • “It took buyers awhile to become comfortable with the hybrid. It looked weird, but consumers eventually saw the benefits. Consumers are now looking for stability; they don’t want to worry about gas prices.”

Batteries and Other Developments

  • “There is a bigger demand for lithium batteries, and Tesla will have problems getting enough. The battery is Tesla’s ultimate constraint.”
  • “All indications are that the X uses the same battery as the S, a midsize or larger such as a 65 or 85 kilowatt.”
  • “A more powerful battery will allow lower costs, but I don’t know of anything really different coming up.”
  • “One-half the cost of a Tesla is its batteries.”
  • “It will take a few years to build up the battery factory, but if they can build a better product, it will be a way to keep costs down.”
  • “Tesla is continuing to build charging stations and the network, with a focus on the highways and where they sell the most vehicles. They are emphasized on Highway 95 and the California coast.”
  • “There is a business side and a consumer side to the charging stations. Portable charging vans that come to you [are becoming more popular], and Verizon and Google have [corporate lot] charging stations as well. But there is not enough space to charge if people park in the spots all day. Tesla buyers put chargers in their homes, and if they have the performance package, they can go 300 miles on a charge. They are not worried about charging. However, people who live in apartments or do not have a garage would not have room for a charger.”

 

4) Senior editor of a trade magazine; repeat source

The Chinese car culture has exploded in the last 15 years, but Tesla faces big issues around private property and charging stations in that country. In the long run, a Tesla plant in Germany or China would be beneficial. The Model X will be a 2016 car if introduced in the fall of 2015. As a result, the Model 3 also will be delayed. With four models out, Tesla will have to offer incentives to keep the lines moving, especially as more competition enters the field. The company may have to consider using showrooms or dealerships. Tesla owners with families are opting for the higher-end Model S but also may buy a Model X given that they already have a charging station at home.

Trends

  • “The Chinese car culture is a baby culture, and it is exploding very quickly, only recently in the last 15 years.
  • “There are big issues in China around the charging stations with electrification. There is not a lot of separate property, and you need to carve out a space in parking garages. Private property is an oddity; the Chinese mentality is different.”
  • “A plant in Germany or China would make sense in the long run.”
  • “The Model S is a status symbol anywhere. It says, ‘I’m green, wealthy and smart.’”
  • “The X and S are totally different animals. Tesla will need to keep both hot in the showroom.”
  • “The X is delayed probably until the third quarter 2015. It really is a 2016 model. That is close to when the Model 3 was supposed to come out, so that car will be delayed as well. Being in Silicon Valley, Tesla thought they could make cars, but now they are finding out they need automotive folks. Elon [Musk] is finding out that the auto business is really not as easy as making cell phones.”
  • “The Model D stands for ‘’ It is a gap builder. It is not the first car with all-wheel drive and competitive car technology. They put it out to create some 2015 buzz.”
  • “Now Tesla will have four times the number of name plates—just in three years–to compete with the rest of the industry.”
  • “I haven’t seen any incentives yet, but Elon Musk needs to keep these lines moving. In the future, you will see cars with rebates and incentives.”
  • “It is amazing that with every car launching, Tesla hasn’t advertised yet. There is nothing on TV or the I It is all word of mouth, using the Silicon Valley media.”

Competition

  • “The rest of the industry is coming in this space; everyone has got something in the EV realm. Tesla competes with the Lexus 460 and Cadillac. A lot of German cars are already there, Mercedes, Audi. BMW is selling, but the volumes are low. The i3 is closest to the Tesla. While driving around, I saw one i3 on the road and seven outside a dealership. The i3 has not had an impact yet, but it is an awareness thing. BMW is not quite there yet.”
  • “In the next few years, there will be many more models and more competition. They will be competing with the other cars and the superchargers, and Tesla will have a tough time with these things.”
  • “EVs may have a harder selling time now that gas prices are lowering.”

Buyer Profile

  • “Tesla buyers are bright, tech-savvy, higher income. The X buyers want an EV with the attributes of a sports utility vehicle. … But $40,000 is still a lot of money.”
  • “There may be a lot of piggy-backing. Families with a Model S buy a second Tesla, the X. If they already have a charging station at home, then it is perfect for them.”
  • “A lot of people can afford a $100,000 car, and most of Tesla’s sales are on the high end. Most buyers are opting for the 85-kilowatt car, the most expensive car with the 300-plus mile range.”

Batteries and Other Developments

  • “I’m not really seeing any battery breakthrough, as was expected at this point. We are decades away from a 500-mile range. But you don’t hear much about [problems with] lithium batteries.”
  • “The problem is the battery weight in the car. Everyone wants a bigger range but not a bigger battery. And they want prices to come down.”
  • “Tesla is tethered to the supercharger network. We are still in the Wild West mode.”
  • “We are used to filling up a gas tank in just a few minutes. We don’t want to spend much more time filling a car with energy. The overnight charging with a 120-kW line doesn’t cut it. You need fast charging.”
  • “Tesla may need to add stores in key locations. It is much different when you can go in and see how the models look. Why wouldn’t Elon want to experiment with dealer points in key locations? They could offer a service tech, tire rotation, change fluids, air conditioning maintenance, brake pads. I saw a Tesla maintenance van in Chicago.”
  • “The Fremont plant is so mammoth, you can build B52s in it. Tesla hasn’t even scratched the surface of putting out cars. They still have a lot of headroom, and they don’t need another North America plant.”

 

5) Founder and chairperson of multiple EV trade associations

Demand for the Model S remains steady as shipments to Europe, Asia and Australia continue to grow, and the supercharging network will expand in China with the help of contractors. Worldwide consumer demand for EVs is expected to grow in the next few years. Now that AWD has been added to the Model S, it is equally as capable as the Model X and a further enticement to prospective customers. Tesla continues to ramp up production and has dropped suppliers with slow delivery or substandard quality. When the gigafactory opens, the battery pack will be updated. The source expects Tesla to announce grid-level energy storage products in the near future. Tesla has no competitors in the all-EV market and will have the advantage until 2018. The BMW i3 has a limited range and requires a lot of maintenance.

Trends

  • “[Demand for the Model S] is holding steady as wider geographic distribution begins. I expect that output volumes are increasing at the factory as shipments to Europe, Asia and now Australia continue to grow.”
  • “Some people want an SUV, [but demand for the X will have] no effect [on the S]. With AWD now an option for the S, that takes a bit of demand away from the X, if anything. The two are seen now as more equally capable.”
  • “New features such as AWD improve range by as much as 5% instead of degrading it … which is a further enticement to prospective customers.”
  • “[There are] no capacity constraints. Tesla’s ramp rate continues to slowly increase as they added the fork in the production line in late July 2014 to allow for Model X production. The supply chain is slowly realizing this is a serious endeavor from a significant production facility. Those who are late to recognize that fact were dropped or placed in a secondary or tertiary supplier status. Tesla simply wouldn’t tolerate slow deliveries or substandard quality at incoming receiving inspection.”

Competition

  • “There is no formidable competitor, just a bunch of ‘also-rans.’ Who has more than a 200-mile range? None except for hybrids like the Chevy Volt and Cadillac ELR. In the pure BEV [battery electric vehicle] space, there is no one.”
  • “No other competitors are expected. Perhaps Nissan’s Leaf will approach the 200-mile mark, but it’s doubtful their rumored battery will break that barrier.”
  • “The BMW i3 has not affected the EV market because its range is just not there. Sure, it’s a choice in a growing field of choices. But even with their Rex version, it’s a hybrid. It still needs all the pesky maintenance.”
  • “Price is not a factor because people amazingly seem to come up with the money to get one if they really want one.”
  • “Tesla is the safest vehicle on the road out there.”
  • “The nearly completed U.S. supercharging network is unique and, if anything, a strong draw for building a customer base. Who doesn’t want a freebie? In Europe where the distances are smaller, it’s not an issue either. In China the network is just getting started, with sales just beginning. The supercharger network will expand in China with the help of their local contractors.”

Buyer Profile

  • “The most popular Tesla model is whatever you can have now. This is really a premature question. The X will be a refined S but also will have a different clientele.”
  • “[Early adopters are still buying the S] because they can get it now, instead of waiting. Possibly [there is customer demand outside of the early adopters], but it is not yet significant. Most people still don’t understand the new paradigm. Home fueling, no maintenance, strong performance, good batteries—it’s all about education. [Consumer demand outside of the early adopters] will increase in one to two years.”
  • “Model S buyers will be the first to buy a Model X, then other EV buyers, then hybrid buyers, and lastly newcomers to the EV space.”

Batteries and Other Developments

  • “Battery capacity will continue to grow as science advances, at the standard rate seen since the mid-1980s of about 8% CAGR. That translates directly to range. When the gigafactory opens, but probably not before, we’ll see an updated pack for the Fremont factory. Cost will go down when the gigafactory starts production. Clearly the rate of production and the delivery rate of cars will go up. Durability will remain unchanged [because the batteries] are more than good enough now for all of [Tesla’s] needs.”
  • “What will other battery applications do to the production rate of the Tesla factory? Tesla will soon announce grid-level energy storage products.”
  • “The new factory will help battery production, but until the batteries are produced, around 2017, [battery supply issues] will not hold back sales at all. The projections for ramp-up rates done by Elon’s team are what led them to embark on the gigafactory trip. They do good homework examples and consider many factors, some you wouldn’t [consider]. I can see pretty clearly that up until 2018, things will go well. After that time the crystal ball gets to blurry. After 2020, it’s truly a dart throw.”
  • “Enough [charging stations] are out there. Most people … use their cars for local driving, and General Motors’ numbers back that. Sure, more public charging stations would help those apartment dwellers in cities nationwide. But many big city dwellers don’t even own a car. … Public policy needs to change in some areas before that happens. Landlords are not proactive, generally speaking.”
  • “The supercharger network will never be fully built. There are more than 55 million households nationwide, and every single one (with few exceptions) has electricity. There are 10 to 20 times more electric outlets in the United States in public and private places than there are gas filling stations. We know that between two major EVSE [electric vehicle supply equipment] vendors, there already are north of 40,000 installed public [charging stations] nationwide. Remember that more than 80% of charging takes place at home. This network is not a limitation, only a perception.”

 

6) Research engineer and speaker at EV conferences

Demand for the Model S has been fantastic in 2014, but sales may drop somewhat in light of interest for the less-expensive Model X. Early adopters already have bought into the higher-priced cars, so the EV price needs to come down to capture other customers. Having a competitor, such as the BMW i3, will increase EV enthusiasm. Consumers do not need the long range they have been trained to have, and they eventually will ignore charging stations and use simple 120-volt charging in their homes. The first manufacturer to recognize this and offer a pull-out cord will come out on top.

Trends

  • “The demand for the Model S this year has been fantastic. [It] has exceeded all of my expectations.”
  • “Sales of the Model S should go down somewhat due to the lower cost of the X.”
  • “[Tesla will] probably experience some [capacity constraints]. This will depend on how much of the factory is dual-use. The capacity is fixed, so of course it is limited.”

Competition

  • “The BMW i3 is probably the 1 competitor to the Tesla. The i3 is the only other car clearly built from the ground up to be electric. Having such a competitor will ‘raise all boats’ on the rising tide of EV enthusiasm.”
  • “Tesla will mostly be affected by the high price [in the long run]. Early adopters have already bought in, so the price has to come down to bring in the next level of investors in our electric future.”

Buyer Profile

  • “I know someone who has sold his Model S because he also has a THINK car in the family. He wanted to sell his S while the price was still up there.”
  • “The Model X buyers will be new to the EV space.”

Batteries and Other Developments

  • “[Manufacturers] need to push for smaller batteries to help meet capacity. [Consumers] need an option of a smaller battery. The smart EV shopper looks for the smallest battery that meets her daily need, not the biggest and most expensive. Many of the people who are buying the full-range Tesla are stuck in a gas-tank, gas-station legacy thinking and don’t know any better. When they learn they don’t need a 250-mile battery 98% of the time, they will begin to want a smaller”
  • “The state of Maryland has determined that 97% of all charging at work can be met with simple 120-volt charging. [Manufacturers] should make this convenient.”
  • “[Tesla should] be the first EV manufacturer to recognize that simply plugging into a 120-volt outlet at home and at work can satisfy a daily 80-mile need. The 1 feature should be a standard pull-out appliance cord, like a vacuum cleaner cord, for convenient daily charging while parked. This is not a safety issue, but the EVSE inside the car. … The first one to market this will be the winner.”

 

 

4) Automotive Supply Chain Sources in the United States

All four supplier sources said their expectations have been met or exceeded in terms of Model S sales and Tesla’s supply orders. Two reported a summer slowdown related to factory reconfiguration, which has since abated. The pending Model X release has had no effect on the Model S. All four said price is the biggest concern but that safety is a nonissue for Tesla. The company has few direct competitors, but two sources did mention GM’s Cadillac ELR. One source said the charging network is not yet where it needs to be, though other sources said the infrastructure is growing.

 

KEY SILO FINDINGS

Sales Trends

  • All 4 said Model S sales were even with or exceeding expectations, though 2 noted a slowdown this summer related to factory reconfiguration.

Competition

  • 2 said Cadillac’s ELR is the closest thing to direct competition for the Model S.
  • All 4 said price is the most important factor for Tesla, but safety is not an issue for the company.

Buyer Profile

  • Sources said the Tesla market is too new to have a specific buyer profile, though one noted that the Model S is moving beyond early adopters.

Batteries and Other Developments

  • 1 mentioned weakness in the supply chain but would not elaborate.
  • 1 notes that charger buildout is lagging, while others described it as growing.

 

1) Manager of a Tesla supplier in the United States

Tesla is selling more Model S cars than expected, but the source’s sales to Tesla are stable year to year. Tesla does not follow traditional automotive rules, and the Model X delay is not atypical. The X will do well because it is less expensive than the S and has more features; as a result, Model S sales will stay stable. Tesla does not compete with any other car, but it could use a lower-priced offering. The company also should extend the supercharger network, broaden its driving radius, and reduce charging times.

Sales Trends

  • “Tesla is selling more Model S cars than we expected.”
  • “Our Tesla sales this past year are what we expected. It is somewhat stable.”
  • “The X will continue to do well, but once it comes out, the Model S won’t grow. The X will be less expensive and have some extra features like all-wheel drive.”
  • “Tesla is different from the most automotive manufacturers. Tesla doesn’t go by traditional rules and launch dates. The Model X delay would not be considered unusual for them.”
  • “Tesla needs a better price piece.”
  • “I’m not sure about constraints within the supply chain. Tesla is not affected by our company, but I’m not sure about others.”

Competition

  • “Tesla is doing a good thing and setting a market trend, both price-wise and feature-wise.”
  • “The Cadillac ELR is the only comparable luxury car around. I don’t know anything about the BMW i3.”
  • “Price is the 1 factor that will affect Tesla. Safety is not an issue, and given recent recall news, consumers assume that vehicles have a safety factor.”

Buyer Profile

  • “It is hard to say if the X is more popular than the S, given that the X hasn’t even come out yet.”
  • “There could be some early adopters still buying the car, but they are the slow ones. I think other people are now looking into the Model S.”

Batteries and Other Developments

  • “They are working on extending the driving range and addressing slower charging times.”
  • “The new factory will have no impact on battery supply, sales or manufacturing.”
  • “The infrastructure of charging stations is not where it needs to be. We have a fair number of charging stations in our community, but it needs to get better. And the times to recharge need to be addressed and reduced.”

 

2) Regional sales manager for a Tesla supplier in the United States

Model S sales and availability are starting to pick up. The source sells an optional product to Tesla for which sales are stable, as expected. The Model X will not affect sales for the Model S, and the source cited no evidence that Tesla is offering consumers incentives to buy the S. Price is the biggest issue for Tesla. The new factory will address charging constraints, and the supercharging network continues to grow. Safety is no longer a top concern.

Sales Trends

  • “The Model S is starting to pick up [after factory reconfiguring]. Sales are on the positive side, and availability is picking up.”
  • “Our sales are stable; they are pretty much what we expected them to be.”
  • “The Model X will not impede the Model S.”
  • “I have also heard a bit about Tesla offering incentives for consumers to buy the S, but I have seen no evidence of it.”
  • “I know of no capacity constraints on the supply chain, either up or down. We sell an optional product, but a standard product could be impacted at some point.”
  • “Price is the most vulnerable constraint. In terms of volume and purchasing power, it is hard to get costs down based on lack of volume.”

Competition

  • “I am not familiar with Tesla’s segment competition. The S competes with the hybrid upscale and luxury cars. … Outside of Tesla, there is a lot of focus on the Ford Focus, but it is not a real competitor.”
  • “The i3 is interesting. It competes with Tesla on market technology.”
  • “Factors affecting Tesla would primarily be price and, second, charging availability. But the new factory will address this issue. Safety is no longer a top concern.”

Buyer Profile

  • N/A

Batteries and Other Developments

  • “I don’t know anything about the batteries.”
  • “There is a trend for more charging station availability; I believe this is growing.”

 

3) Technical director of a Tesla supplier in the United States; repeat source

Model S sales will meet projections for 2014, and the Model X has not yet affected S sales. The source’s sales to Tesla are up 20% to 30% year to year. Batteries are the concern in the supply chain, but any problems should be eased by the new factory. Tesla has succeeded in developing the charging infrastructure, but it will face competition within the next few years as more consumers become aware of EVs.

Sales Trends

  • “The Model S has done quite well this year and will for the rest of the year. My gut feeling is that sales will be as good as projected.”
  • “I will take a stab and say that our year-to-year Tesla sales will be up 20% to 30%. They have not doubled, like we originally projected, but we do well with Tesla. For what the company is all about and what the next deal coming is, they have done an amazing job, from what our company has seen.”
  • “I really can’t add much about the X; it hasn’t had an impact yet. I have not heard of any Model S incentives offered to customers.”
  • “The supply chain could be vulnerable at some points, but I’m not aware of issues. The companies that supply Tesla directly with metal and plastic are doing quite well. There is a lot of equipment going out to Tesla.”

Competition

  • “In one, two, three years, Tesla may have competition. Tesla’s cars are purpose-built EVs, but right now they compete with a variety of hybrids. General Motors has the Volt, and there’s the Cadillac, but they are not pure electric. Tesla is hard to beat because it offers the full electric package of range, comfort and safety.”
  • “I don’t know much about the BMW i3.”
  • “In the next two to five years, Tesla will face more automaker competition. That is bound to happen eventually.”

Buyer Profile

  • “A lot of people still aren’t sure about electric vehicles; it depends on who you talk to. And there are a lot of people, especially back East, who haven’t heard of Tesla. EVs aren’t mainstream yet, but word is getting out.”

Batteries and Other Developments

  • “Tesla will not be affected by charging and safety going forward. Tesla is the only one who is going to town and creating an infrastructure. They have had problems with safety in the past, but that was just a bump in the road.”
  • “As far as battery production, we are not tied to the new factory so it will not impact us. For some suppliers, it may well increase their sales. … Batteries are the bottleneck of Tesla, so a new factory and more production would benefit the company.”
  • “I have not tested an infrastructure charging station, but I give Tesla a thumbs up. They are building stations all over our area, and I get email updates from them.”
  • “Cold weather does impact charging, but the cars are doing well in cold climates. There are even five Teslas in Greenland.”

 

4) Quality engineer for a Tesla supplier in the United States

Model S sales slowed for a few weeks this summer but are back to normal now. The source was not free to comment on the supplier’s sales to Tesla, but did mention a weakness in Tesla’s supply chain. Tesla is working on battery constraints with the new factory, and the U.S. supercharger network is well established. In China, superchargers eventually will become mainstream because of the need to improve the country’s air quality.

Sales Trends

  • “Model S sales have been OK this year, pretty much what we expected. It was slow for a few weeks this summer, when they had the factory transfer, but now it is pretty much back to normal.”
  • “I cannot comment on how our sales to Tesla are doing.”
  • “I believe there is a weakness in their supply chain, and there is room to work on this. I’m saying this in general, not for a particular area. But I cannot comment more.”
  • “In China, it is possible that the early adopters are speculators, but I’m not sure I really agree with that statement. Maybe they are part speculators.”
  • “There is personal space in China for the superchargers. I think this will become mainstream because of the air quality; it is important for the people.”

Competition

  • “It is hard to say what cars compete with the Model S because there are so many cars in different price ranges—maybe the higher-end I do not know the BMW i3.”
  • “Most people look at a lower-priced car, so I would say that price is an issue. This is a safe car.”

Buyer Profile

  • “Mostly seniors, older people with money, can afford the Model S. But a lot of people would love it.”
  • “The X buyers are different. They are looking for a family car.”

Batteries and Other Developments

  • “They are working on new, smaller batteries that won’t cost as much. The new factory will address these issues.”
  • “The United States has a good and growing network of chargers. I think this system is working.”

 

Secondary Sources

The following eight secondary sources covered Tesla CEO Elon Musk’s response to the Wall Street Journal’s information on Model S sales, the economic output derived from the gigafactory in Nevada, new innovations in the EV sector, and challenges facing charging station buildouts in the United States and China.

 

Model S Sales

Oct. 28 Business Insider article

Elon Musk took to Twitter to refute the Wall Street Journal’s reports of declining sales for the Model S through September year to year.

  • “Everyone was taken aback when The Wall Street Journal’s Mike Ramsey and John D. Stoll reported a breathtaking plunge in sales for one of the Tesla models.”
  • “There are obviously some confusing points here. The article acknowledges the vehicles are back-ordered, which would suggest Tesla is probably on track to meet its goal of selling 35,000 units. Indeed, this was the message CEO Elon Musk advanced in the company’s Q2 earnings announcement, in which he also projected a run-rate of 100,000 units in 2015.”
  • Musk fired back on Twitter, saying point blank that The Journal was ‘’”
  • “Some folks have noticed an issue with Musk’s tweet. Specifically, Musk says September was up 65% year-over-year. Meanwhile, The Journal says down 26% ‘through September,’ suggesting it was measuring year-to-date sales.”
  • “Nevertheless, Musk is saying something is wrong.”
  • “In July, Tesla announced it would be shutting down production of its Fremont Model S factory to retool in preparation for its new Model X. It’s possible that any resulting supply disruption could mean delayed deliveries.”
  • “In other words, while sales have been technically strong, the cars sold might not actually be on the owners’”

 

Tesla’s Gigafactory

These two articles discussed the controversy surrounding the economic benefits of Tesla’s gigafactory, and the number of jobs and the wages the gigafactory is expected to produce.

Oct. 18 San Jose Mercury News Business article

The benefits of Tesla’s gigafactory were largely overestimated by Nevada Governor Brian Sandoval, but Tesla still believes the factory can supercharge the local economy.

  • “When Nevada Gov. Brian Sandoval announced a $1.3 billion package of public subsidies to lure a Tesla Motors battery factory, he stressed that the huge sum would be dwarfed by an economic windfall for local residents. The electric car maker will create $100 billion in economic benefits, he said, and ‘change Nevada forever.’”
  • “‘Even the most skeptical economist would conclude that this is a strong return for us,’ Sandoval said during a news conference with Tesla Chief Executive Elon Musk.”
  • “Economists who reviewed Nevada’s economic benefit estimates for the Los Angeles Times concluded something quite different. They pointed to flawed assumptions and inflated projections in the state’s promises of job creation, tax revenue and overall spending created by the $5 billion lithium-ion battery facility.”
  • “The projection, for instance, counts all future tax revenue, but makes no allowance for government spending to serve the influx of residents. It counts every dollar of workers’ salaries as if they were unemployed or lived out of state before Tesla arrived. And more than half of the estimated economic jolt relies on the assumption that the bulk of the factory’s supply chain will relocate to Nevada.”
  • “Tesla plans to hire 6,500 workers, and the estimate counts a projected 16,000 additional jobs from suppliers and other local business to serve the new workforce.”
  • “Tesla officials, for their part, say the factory will supercharge the local economy of Nevada. While economists have scrutinized the incentive package, the automaker should be credited for a commitment to manufacturing in the U.S. rather than lower-cost markets such as Mexico, they say.”
  • “‘The idea that this is some kind of giveaway to a private corporation, at the expense of taxpayers, is fallacious,’ said Diarmuid O’Connell, Tesla’s vice president of business development. ‘The bottom line is that this project, and other projects like it, are huge economic multipliers.’”

 

Oct. 22 RGJ article

Numbers released by Tesla revealed true plans of employing 6,500 full-time employees by the eighth year after its conception, while paying out $353.6 million a year in wages. The gigafactory will produce 500,000 batteries not only for Tesla but for other partners as well.

  • “Tesla Motors revealed a few more details about its gigafactory on Wednesday, including a breakdown of its employment and investment plans, as it formally submitted its application for incentives to the state of Nevada.”
  • “The application confirmed that the plant will employ 6,500 full-time employees but raised its average wage estimate to $26.16 per hour. Tesla expects to employ 300 workers during the first year of the project, growing that to 2,000 workers by the third year and 4,000 workers by the fifth year. Tesla plans to have 6,500 employees by its eighth year. Initial projections had the gigafactory being fully operational by 2017.”
  • “Wages paid by Tesla for the gigafactory will total $353.6 million per year at full employment The figure does not include construction employment.”
  • “Tesla also provided a more detailed breakdown of the $5 billion in capital investments it will make on the facility through 2028. The cost for the building and site infrastructure will be $1.1 billion. Machinery and equipment will account for the remaining $3.9 billion, including materials processing and product assembly.”
  • “Once the 5.5 million-square-foot facility reaches full operation, it will produce enough batteries for 500,000 Tesla electric cars each year. Although the number is significantly less compared to major auto manufacturers—Toyota and General Motors sold nearly 10 million units each last year—it represents a big leap for Tesla.”
  • “In addition to making batteries for its cars, Tesla also expects the gigafactory to produce products for other automotive manufacturers and suppliers as well as electric utilities and power generation and storage companies. Tesla, for example, recently finished a joint electric drivetrain project with Mercedes Benz parent company Daimler AG and also produced the batteries for Daimler’s electric Smart car.”

 

Innovation in the Sector

These three articles discussed EV innovation, specifically lighter, more efficient vehicles, new engines that will allow for longer distances, and tools to educate the public.

Oct. 22 Slash Gear article

Competition for the future of EVs is heating up in light of a new prototype designed by a team of researchers from multiple institutes. The new idea will allow for a lightweight vehicle at a price lower than for gas-powered vehicles.

  • “Electric cars may already be out on the roads around us, but that doesn’t mean the segment isn’t ripe for some innovation, and while Tesla might be doing its level best to push speed and luxury at the top end of the market, so one German team believes it has something similarly ground-breaking at the entry-level. Visio.M is the handiwork of researchers at TUM in Germany, tasked with cooking up an electric-powered city car that not only looks and drives well, but which cuts some of the legacy ties with old-fashioned production techniques, inefficient materials, and needless expense. The result is a somewhat 80s-esque coupe with a range just shy of 100 miles.”
  • “From the outside, there’s more than a little of the BMW i3 EV about the Visio.M. That may not be entirely surprising, though; BMW is one of the industry partners with the team responsible for the car, along with Daimler, the German Federal Ministry of Education and Research, and others.”
  • “The project cost €7.1m ($9m) and has taken 2.5 years, resulting in a working prototype of a lightweight EV.”
  • “Now, 100 miles may not sound like a whole lot, but what’s impressive is how little power they demand. The Visio.M has a 13.5 kWh li-ion battery slung behind its seats an weighing 85kg; in contrast, the Kia Soul EV we tested a month ago has a similar range but uses a much larger 27 kWh battery.”
  • “The way it’s achieved is through a combination of weight savings and smarter component selection. Carbon-fiber reinforced plastic (CFRP) is used for the front and rear sections, in addition to the roof frame; BMW’s i3 also makes heavy use of CFRP for its featherlight benefits. Rather than glass for the windows, the TUM team has used polycarbonate – it’s half the weight, but after being given a scratch and weather-proof coating is just as resilient as the material it replaces.”
  • “Components in the chassis, steering, and transmission have been switched for lighter equivalents wherever possible. 360-degree sensors watching for potential hazards or crash situations around the car can trigger structural airbags in the bumpers and doors, absorbing impacts, while special seat belts actively pull the occupant away from the point of the crash.”
  • “An airbag running down the center, meanwhile, prevents the driver and passenger from colliding. As for the brakes, they’re aided by a torque vectoring differential – more commonly found in sports cars – that adjusts power between the rear wheels as well as flipping into an electric generator during braking.”
  • “The Visio.M team also built its infotainment and car control system with open software architecture in mind, paving the way for autonomous drive, cloud processing, media [streaming], and other premium services to be added over time.”
  • “The overall design should result in an EV that’s actually less expensive than a comparable gas car, the TUM researchers claim, though you shouldn’t expect it to show up on forecourts any time soon. ‘It is still a long way to serial production,’ [Professor] Markus Lienkamp of the team warns, ‘because almost all components must be adapted to the manufacturing conditions of large series.’”
  • “Still, there are hopes that other manufacturers will look at the more innovative elements and start to experiment with similar ways to cut weight and cost while still keeping range strong on their production EVs and hybrids.”

 

Oct. 22 Scientific American article

Researchers in Singapore have found a way to increase the running time of EV vehicles by creating a 2-in-1 electric motor that uses the air-conditioning compressor to be the main traction motor.

  • “An air-conditioned cabin is the best way to drop a car’s fuel efficiency on a hot day. This is true of electric vehicles (EV) as much as it is for gas-guzzlers. Researchers in Singapore, who know something about hot-weather driving, say they’ve found a way to help an EV to run up to 20 percent longer between recharges during air-conditioning use.”
  • “Their idea: a ‘2-in-1 electric motor’ that consolidates the air-conditioning compressor into the same housing as the main traction motor powering the vehicle’s wheels. This creates efficiencies and frees up additional space for auxiliary batteries to power other electrical accessories, thereby reducing the load on the main battery. Automobile A-C systems can drain up to half of a vehicle’s battery charge, according to researchers at Nanyang Technological University in Singapore.”
  • “Components common to the compressor and traction motor could be shared, eliminating duplicate parts such as mounting brackets, casing, inverter housing, seals, cooling mechanism and electromagnetic shielding. Building the refrigerant compressor into a vehicle’s main power plant would also enable the compressor to tap at least some portion of the energy produced by a vehicle’s regenerative braking system.”
  • “The integrated motor took about two years to design, and Nanyang plans to build a proof-of-concept prototype within the next six months, says lead developer Satheesh Kumar, a research scholar at the university’s Energy Research Institute. Once the prototype is tested in the lab and tweaked, the German Aerospace Center—that country’s aerospace agency—plans to prepare the motor for commercialization, creating a ruggedized version that can withstand the heat, vibration and other extreme conditions it will encounter under the hood while speeding down the highway.”
  • “And despite sharing the same housing, the two motors operate independently—while the vehicle is stopped the compressor can run at full capacity, for example. ‘Our invention is not coupled with the main drive motor in any manner during normal drive mode,’ Kumar adds. ‘The main drive connects with the compressor only during regenerative braking mode.’”
  • “The idea of a two-in-one motor bucks a trend both in the automotive and aviation industries to decouple subsystems from the main engine, says Angelo Patti, a mechanical engineer in Ford’s Climate Control Systems Engineering department and chairman of SAE International’s Interior Climate Control Committee. (Patti was not involved in Nanyang’s research and commented on the motor as a technical expert, not on behalf of Ford or SAE.) Such separation enables different computer-controlled motors to operate independently and, as a result, more efficiently. Still, when it comes to electric vehicles, extra battery capacity is a big advantage, he adds.”

 

Oct. 22 Domestic Fuel article

A new website/app released by the Sierra Club allows consumers to easily research EVs.

  • “Consumers interested in electric vehicles (EVs) now have a way to do their research. A new ‘pick-a-plug’ web tool has been released by the Sierra Club. The app asks the user a few questions about driving habits and vehicle needs, and then generates a list of EVs that fit the bill. Sierra Club said there is no overall best EV—the best EV for any given driver depends on how many miles a day the person drives, whether the person takes frequent long trips, whether there is a place to plug in the car, and how much money the person is prepared to spend.”
  • “‘There are a lot of compelling reasons why more than a quarter million Americans have already bought EVs since they first came on the mass market a few years ago,’ said Gina Coplon-Newfield, director of the Sierra Club’s Future Fleet & Electric Vehicles Initiative. ‘They are cool high-tech wonders, there is little or no need to ever visit a gas station, they are much cheaper to fuel -the equivalent of about $1 a gallon, and they are much better for the environment -even when considering the emissions from the electricity to charge them up.’”
  • “Today there is a $2,500-7,500 federal tax credit that comes with the purchase of an EV, and many cities and states offer additional incentives, like a purchase/lease rebate, carpool lane access, and special utility rates for EV drivers. Linked to the new ‘pick-a-plug-in’ web tool is Sierra Club’s online EV Guide where all of this information is available by zip code, as well as a tool that calculates how much carbon emissions and fueling costs the EV will save compared to the average conventional car.”
  • “Currently, less than 1 percent of U.S. households have an EV, but according to a poll conducted last year by the Consumers Union and the Union of Concerned Scientists, nearly half of American households could purchase an EV for their next car based on driving needs and access to electrical outlets or EV charging stations.”

 

Charging Stations

These two articles highlighted Tesla’s challenges in setting up both public and private charging stations in China, as well as issues faced by all EV companies in the United States.

Sept. 28 article from The Wall Street Journal

Tesla is trying to install charging stations at garages in China, which is being held up by property management companies.

  • “Tesla Motors has big ambitions for selling its electric cars in China. But first, it has to get its chargers accepted by skeptics, such as the property manager at the Tonghui Riverside residential complex.”
  • “That delicate task falls to Huang Weiguo, who leads a team of Tesla contractors who install charging stations at the homes of new Tesla owners in Beijing. Part technician and part diplomat, he deals with anxious garage workers, puzzled security guards and dubious building managers while laying the groundwork for the luxury car maker in China.”
  • “China presents unique challenges for Tesla and other electric-car makers. Its people tend to live in apartment buildings rather than the single-family homes commonly found in the U.S. Low-rise multifamily housing makes up 74% of all urban housing in China, according to a 2007 estimate by consulting firm Chreod Ltd.”
  • “That means the family garage is a rarity in China. People instead tend to park in shared garage complexes or on the street. That complicates setting up the home charger that is essential to keeping a Tesla running. Occasionally, it also makes wary neighbors and property managers hurdles to ownership.”
  • “The process in China is ‘really very hard,’ said Shawn Gao, who is responsible for overseeing installations for Tesla across the country. ‘The technical part is not the big issue. Getting approval from property-management companies is.’”
  • “Jacky Tan, a Shanghai engineer, took delivery of his new Tesla Model S in June. But it spends little time in the parking spot he bought for it at his apartment complex. The complex’s property-management company objected first; then residents expressed worry that the chargers would cause power surges or affect their power bills.”
  • “‘No matter how hard Tesla and I explained to the neighbors that it won’t affect their life, the committee refused to give us the green light,’ Mr. Tan said. Tesla later installed the charging station at Mr. Tan’s workplace instead, an arrangement that he says is unsatisfactory.”
  • “Chargers are a chicken-and-egg problem for electric-car makers. Without one, there can’t be the other. And sales of electric vehicles so far in China have been disappointing, totaling 70,000, including buses, well short of Tesla’s goal of half a million by 2015, according to Stephen Dyer, a partner in the Shanghai office of consultancy A.T. Kearney. ‘China is still way off target,’ he said.”
  • “BMW AG recently launched its pure electric BMW i3 and plug-in hybrid BMW i8 in China, and it has teamed up with local partners to install 50 charging stations in Shanghai. BYD Co. and Daimler AG will work with Switzerland-based ABB Ltd. to supply wall-mounted chargers to buyers of their jointly made Denza electric cars. Nissan Motor Co. month released its first electric car here.”
  • “Tesla has tried to forestall the problem of buyers ending up with cars with no power. It said earlier this year it wouldn’t deliver cars unless local charging stations were available, frustrating some early buyers. One owner, irate at the delay, smashed the windshield of his Tesla when it was delivered and posted a picture online. In June, another wealthy Tesla enthusiast built his own network of charging stations so that he could drive to Guangzhou, some 1,300 miles from Beijing.”
  • “In August, the Palo Alto, Calif., company signed a deal with telecommunications provider China Unicom to build together 20 superchargers and 400 charging posts in 120 cities to speed up the process. It also has tie-ups with property developers such as Soho China Ltd. to install charging stations in developments. Other partnerships are in the works.”
  • “A widespread network of public chargers is important because Tesla sees China as its biggest international market within three years, eventually overtaking even the U.S., said Veronica Wu, its China chief.”
  • “It hopes to install a network in China of 100 superchargers, which charge cars faster than regular chargers, and to have 20 sales outlets by the end of next year.”

 

Oct. 22 TechRepublic article

Listed were EV companies’ charging station challenges, including speed of charging, renewable use for charging, demand, state regulations, utility providers and location.

  • “A major reason—beside price of course — why EVs still haven’t caught on is the significant lack of effective electric vehicle charging stations.”
  • “There are a plethora of charging service providers, types of EVs, and varying state standards. It’s a bit of a tangled mess, but automakers are working together toward the common goal of moving EVs into the mass market. Here are the hurdles they have to overcome first:”
  • “1. Implementing fast charging”
  • “Fast charging is the latest trend in the EV industry, according to Mike Tinskey, Ford’s director of electrification. It’s ideal for road trips, especially, but also important for everyday use. If the lithium ion battery isn’t overheated, it can get up to 80% full in just 15 minutes, which is much more efficient than the typical charge time. The average time it takes a person to fill up a gasoline tank (plus extra time if they go inside the gas station) is eight minutes. So, 15 is quite comparable, Tinskey said.”
  • “Tesla’s Superchargers, which allow Model S owners to charge their battery in as little as 20 minutes. They are along highways in Europe, North America, and Asia.”
  • “2. Demand charges”
  • “An important hurdle to fast charging public stations is demand charges (as in a set fee). A commercial business owner or charging station owner has to pay a fixed monthly fee for large amounts of available energy, and then those charges go up for drivers, too. In the near future, they’ll have to work with regulators and local utilities to find ways around high demand charges in order to make the system more efficient, because no one wants to pay demand charges that are comparable to gasoline prices. That defeats the purpose of this technology.”
  • “3. Convincing utility providers”
  • “4. Getting through the red tape”
  • “To install a charging station, service providers must go through local governments, utility providers, and business owners (if the station will be on a private lot), which takes time.”
  • “5. More data”
  • “We need more data to figure out how the public understands and uses EVs, and how to improve them in the future. With sensors and data monitoring techniques, Ford is learning a lot about how people are using their EVs and other vehicles. In the EVs and plug-in hybrids that Ford makes, there is coaching to tell the driver how many electric miles they’re getting, how much energy is captured, all based on how they accelerate, brake, and what their top speeds are.”
  • “6. The need for bigger batteries”
  • “7. Figuring out home charging first”
  • “According to Ford research, 95% of EV charging is done at home. It makes sense, of course—charging at night when the car is in the garage, or while you’re at home for a few hours, is the easiest and most effective way. Figuring out the best way to generate and store power in the home will catalyze the growth of workplace and public charging stations.”
  • “8. Powering stations with renewables”
  • “9. Location of public charging stations”
  • “10. Using the right type of station”
  • “The terminology for charging stations is often confusing, as some services call one plug-in a ‘charging station,’ even though it can only charge one car at a time. Sites like PlugShare, which lists the available charging stations in the US, may not differentiate large scale and small scale stations, or even types of vehicles they are compatible with.”

 


Additional research by Gloria Shao, Isabel Bernabe and Renee Euchner