Tesla - the game changer?

Apr 26 2016

Tesla – the game changer?


It’s here! With much hype, Tesla has unveiled its latest model – The Tesla Model 3. Well, actually, it is more of a prototype with the first delivery anticipated to be late 2017. None the less, Tesla has already received in excess of 200, 000 orders in just over 48 hours!

The Tesla Model 3 boasts a high efficiency motor accelerating from zero to 60mph in less than six seconds, a battery reach of 345km and equipped with electric all-wheel drive,  the base model comes with a price tag of USD$35,000. (The Australian price is yet to be released.)



Tesla hopes to hit the mass market with a predicted increase in yearly sales to 500,000 vehicles per year by 2020 with this lower price, higher volume model,  a 10 fold increase on its current production.

This release car is the fastest growing customer order list in the history of the automobile industry.*

Such hype as is being experienced by the release of the Tesla model 3, has formerly only been experienced by brands such as Apple. Both the Sydney and Melbourne stores are experiencing unprecedented customer queues to pre-order the model 3 without even seeing the vehicle’s features and design.

This all certainly sounds very impressive. Analysts claim these vehicles to be absolute ‘game changers’ and likely to play a critical role in the automotive industry transition form internal combustion engine to electric car.

Tesla electrifies the masses

Visionary Tesla founder Elon Musk and his PR team have managed to create a global brand without any traditional forms of advertising. They have developed Teslas image as a technological pioneer. In addition, Tesla quenches the worlds growing demand for low or no emission vehicles and was able to attain a ‘Green World Savior status’ among its fans.

And the Volkswagen scandal certainly accelerated the demands in the electric vehicles sector.

Musk also seems to have no trouble financing his ventures. He has a history of delivering on his promises making him the darling of banks and investors. This should help the company in any possible delays with the Model 3.

The market is changing

China and India have indicated plans to decrease petrol cars and have even indicated that all cars on their roads be electric by 2030. China has tripled electronic vehicle sales in 2015 and expect that number to double each year.

While other carmakers like GM, VW, BMW and others are highly dependent on energy suppliers , Tesla has surely thought about how drivers can refuel their cars. They have built up their own network of fast chargers with 8 currently in Australia and growing fast.  Charging your Tesla is free and takes only 20 to 30 minutes. Chances are that Tesla will look at setting up charging stations near hotels and restaurants so motorist can re-charge while the vehicle is charging.

The Gigafactory

Tesla built the world’s largest battery factory in the Nevada desert. The sheer scale will help to lower the vehicle prices by at least 30% and therefore help to make the Model 3 affordable and profitable. No other car manufacturer or supplier has a comparable factory.


Direct Distribution
Tesla does not operate with traditional car sales models with the buyer purchasing the vehicle over the internet at fancy city store rather than a showroom. Tesla does not offer discounts or market sales, they eliminate commissions through their direct distribution model. This model certainly impacts Tesla’s margin levels.

Government influences

Governments like India, Germany, Norway and the Netherlands are implementing legislation to reduce fossil fueled cars. The electric car market will certainly benefit and profit from these government driven initiatives.

But what are the roadblocks?

Car customers are a conservative bunch. They are still unsure about the technology at this stage. It usually takes years for customers to trust a new car brand.  Locating a charging station might also be cumbersome for many at the moment.

Currently, petrol prices are relatively low. For many, this is certainly an incentive to stick with a petrol fueled car.

In the US where the Tesla vehicles are built, the subsidies are running out, which makes the vehicle affordable in the first place.

In the US, where Tesla manufactures their vehicles, the subsidies designed to keep vehicle prices low are running out and could impact on pricing in the future,

Also, Tesla still needs to work on how the vehicle might be serviced and repaired.

All of these developments will certainly affect our industry. The automotive aftermarket will have to stay on the forefront of these developments to continue to service our valued customers



*Source: Reneweconomy.com

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