EV analyst Chris Robinson cautions that Tesla Model 3 not yet a tipping point for EV market, industry
The long awaited first Tesla Model 3 – a sleek black four door gifted to CEO Elon Musk by a board member – hit the streets of California Monday and immediately became a social media sensation. The $35,000USD Model 3 is the company’s first mass market electric vehicle, but analyst Chris Robinson says it still isn’t quite a game changer for the nascent EV industry.
“The first certified production Model 3 that meets all regulatory requirements will be completed this week, with a handover of ~30 customer cars at our Fremont factory on July 28. More details to follow soon,” Tesla said in a press release Friday.
“Handover party for first 30 customer Model 3’s on the 28th! Production grows exponentially, so Aug should be 100 cars and Sept above 1500,” Musk tweeted last week. “Looks like we can reach 20,000 Model 3 cars per month in Dec.”
Musk has said he expects the Model 3 to help Tesla deliver five times its current annual sales volume, which last year was just over 100,000 units.
Robinson says that while it is encouraging to see the Model 3 coming off production lines on time, something that previous Tesla vehicles have failed to do, he doesn’t consider the EV a tipping point for industry sales.
“Tesla still needs to prove it can successfully ramp up production to 20,000 vehicles per month by the end of 2017 and needs to do so without costly recalls that plagued previous models,” the Lux Research EV analyst said in an emailed interview.
“This vehicle could be used as a symbol of the battery price reductions that enable low-cost long-range EVs, but one model on its own doesn’t represent the EV tipping point. Even selling 500,000 EVs each year as the company has stated is well under one per cent of total vehicle sales globally.”
That isn’t to detract what Tesla has done in the electric vehicle space, Robinson points out, as Musk and company forced the hands of many other automakers to produce plug-in vehicles of their own,
One of those EVs is the Chevy Bolt, introduced in Jan. by General Motors and thus far off to a very conservative start, with monthly sales yet to surpass 2,000 per month. The Bolt is a four-door hatch that sells for $37,500USD and is considered a direct competitor of the Model 3.
“There are a few reasons it would be premature to think of the Bolt of a failure,” says Robinson. “First, the roll out was anticipated to be a cautious one following the aggressive targets and subsequent underwhelming sales of the hybrid plug-in Chevy Volt – reflected in the fact that the vehicle is still not available in all markets. Even in the markets it’s available in, not all dealerships have purchased them and many GM lots don’t have a Bolt available for test driving.”
Robinson says sales of the Bolt are gradually increasing despite an overall drop in interest of hatchback EVs as the segment dropped to its lowest sales of the year in May.
“While the Bolt hasn’t been the home run many expected, steadily increasing sales and wider availability in 2018 and beyond mean it is far too early to call the Bolt a failure,” he said.
Tesla’s shares over the past few weeks because investors are concerned that demand for the flagship Model S sedan is weakening.
Research firm IHS Markit says Tesla registrations in California, its largest market, fell 24 per cent in April from a year ago, according to Reuters.
Tesla says that the main reason Q2 deliveries were down “was a severe production shortfall of 100 kWh battery packs, which are made using new technologies on new production lines. The technology challenge grows exponentially with energy density. Until early June, production averaged about 40% below demand. Once this was resolved, June orders and deliveries were strong, ranking as one of the best in Tesla history.”