tesla automotive market

The discourse around electric cars has traditionally celebrated their importance for environmental reasons, whilst simultaneously including caveats that they are expensive, low range, and altogether too novel for the average consumer.

However, that may now be changing – with Tesla’s Model 3.

The Model 3, which is actually the fourth car released by Tesla, is now the top-selling American car in the US.

Tesla notched up an estimated 24,000 Model 3 sales in the US in September, and over 100,000 Model 3s have now been produced. The next most prevalent American badged car is the Ford Fusion, with approximately 16,000 sales in September.

The Ford Fusion, another mid-sized sedan, also comes in gas/electric hybrid, and gas/plug-in electric hybrid variants.

Such sales numbers from electric and hybrid vehicles would have been inconceivable mere years ago, due largely to the prohibitive cost of large-scale lithium-ion batteries. For example, around 42% of the sale price of Tesla’s flagship Model S is directly attributable to batteries.

However, batteries are getting cheaper – in 2010, it cost around $1,000 USD per kilowatt-hour (kWh)of battery, in 2017, that number was reduced to $200 USD.

Elon Musk has claimed that Tesla would be at $100 per kWh in the next two years; which would represent a drop in lithium-ion battery costs of 90% over ten years.

The rapid reduction of battery pricing has been in large part thanks to the creation of large lithium-ion battery factories (Tesla calls theirs “Gigafactories”) around the world that are using scale to drive production costs down.

Despite this, the cost of a new Tesla is still well above the cost of entry-level internal combustion engine (ICE) vehicles, and whilst the novelty of an electric vehicle is a good selling point, Teslas have also been lauded for their safety, reliability and pleasurable driving experience.

Writing in Forbes, Tom Raftery claims “…the internal combustion engine is a dead man walking.” And that, “Electric cars are the future. The transition has just begun, but the move from ICE vehicles to electric will happen sooner and more quickly than most people suspect.”

And if the latest US sales numbers are anything to go by, Mr Raftery is correct.

The explosive growth in Tesla’s manufacturing has also been a boon for Americans, and American employment. Tesla now employs around 46,000 people, single-handedly creating tens of thousands of jobs over the past few years and adding billions of dollars to the US economy.

Contrast this with the conventional ICE vehicle producers, many of whom went bankrupt or were close to going bankrupt between 2008-10, and it seems that a shift may be starting in the world’s automotive market.

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