Tesla’s Electric Vehicle Assault on the Auto Industry is Imminent

Tesla Model S: the world’s first premium, all-electric sedan (Image: Tesla).

Tesla’s goals are lofty. They aspire to manufacture over one million electric vehicles per year by 2020, according to their CEO, Elon Musk. This represents an order of magnitude (10x) increase over current production.

Tesla is an anomaly in the automotive industry, for two reasons. Firstly, they have been around for less than fifteen years — a mere blip on the radar compared to most. Secondly, every vehicle they produce is all-electric. No fossil fuel is needed.

However, Tesla have already managed to forge close to a one third stake in the US premium sedan market. This is thanks to the continued success of their Model S. Since its launch in 2012, the Model S has managed to topple the likes of Mercedes Benz, BMW and Audi.

“If we can replicate that in other segments, the results are obvious,” stated Musk. He is referring to vast bunches of untouched, low hanging fruit: the 17 million fossil fuel-powered vehicles sold annually in the US. Tesla are preparing to stage a multi-pronged attack on the automotive industry.

Tesla Model 3 is Coming in July 2017

Initial production of Tesla’s first budget, mass-produced electric vehicle — the Model 3 — is expected in July. With an entry price of US$35,000 before incentives, Tesla Model 3 is aimed at the average consumer wishing to go electric.

The base Model 3 will have a range of 215 miles (345 km) per charge, and will be good for a 0-60 mph dash in under six seconds, which is quicker than most gasoline-powered cars.

Model 3 is Tesla’s first mass-produced electric vehicle. It starts at US$35,000 (Image: Tesla).

Model 3 has been designed from the outset with ease of manufacturing in mind. In fact, Model 3 production is 3-4 times more automated than for the Model S or Model X.

An aggressive Model 3 production ramp is planned. Preparations at Tesla’s Fremont factory are on track to produce 5,000 Model 3s per week at some point in 2017, and then up to 10,000 per week sometime in 2018.

Projecting forward, Tesla could be producing up to 500,000 Model 3s per year by 2019.

Model S & X Production Reaching the Top of the S-Curve

Based on current order and production rates, Tesla’s first half outlook remains unchanged at 47,000 to 50,000 combined Model S and Model X deliveries. This represents a growth of between 61%-71% in annual vehicle deliveries.

Model X is an all-electric SUV. You will never have to fill up again (Image: Tesla).

The Model S and X factory was only designed to push out 100,000 vehicles per year. As production nears the top of the S-curve, the focus is now on improving production efficiency, continuing to improve quality, and reducing internal costs. This will help achieve the goal of 30% gross margin on the Model S and Model X.

Tesla’s Charging Ecosystem is Growing

Advancing the adoption of electric vehicles is not simply a matter of pumping out as many as possible. Tesla are well aware that they must invest heavily in charging infrastructure. With the roads soon to be inundated with hundreds of thousands of Model 3s, their goal is to make charging “convenient, abundant, and reliable for all owners, current and future.”

Since it came online in 2012, Tesla’s Supercharger network has grown to over 5,400 high-speed charging stations globally.  Further, more than 9,000 Tesla Destination Charging connectors are available at hotels, resorts, and restaurants worldwide.

More Superchargers are coming in 2017 (Image: Tesla).

There are plans in place to greatly expand this charging ecosystem. By the end of 2017, there should be over 10,000 Superchargers and 15,000 Destination Charging connectors around the world.

In North America, the number of Superchargers will increase by 150%. California alone is set to receive more than 1,000 new Superchargers (Figure 1). Many sites will soon enter construction, opening in time for the summer travel season. A Supercharger station is even coming to Honolulu.

Figure 1: Tesla’s Supercharger network is expanding rapidly in North America (Image: Tesla).

Existing Supercharger sites, along busy US travel routes, are going to be expanded to accommodate several dozen vehicles simultaneously (Figure 2). The number of charging locations within city hearts will also increase. More sites will be built further off the highway, with the goal of making charging ubiquitous in urban centers.

Figure 2: Artist’s impression of future Supercharger facilities (Image: Tesla).
“Anti-Selling” Model 3 — Redux

Even though Tesla are attempting to “anti-sell” the Model 3, net reservations continue to grow each week, apparently. However, there is the possibility that the “3” in Model 3 is still causing some confusion among consumers.

“Anti-selling”  the Model 3 continues (Image: Tesla).

Tesla state that “We have seen a belief among some that Model 3 is the newest and more advanced generation of Model S. This is not correct. Model S will always have more range, more acceleration, more power, more passenger cargo room, more displays (two), and more customization choices.”

Model S will continue to be Tesla’s flagship sedan, and it is available now (Image: Tesla).

Tesla have recently revised the pricing of their Model S and Model X lineup, and have removed the Model S 60/D option. The now base Model S 75 is also $5,000 cheaper, starting at $69,500 (Figure 3). This is almost double the Model 3’s $35,000 entry point. It’s hard to understand how someone could think the Model 3 will be superior to the Model S, given this price disparity.

Figure 3: Tesla Model S and Model X US price list, May 2017 (Data: Tesla)
Tesla Model Y Crossover Expected by 2020

With Tesla planning to produce 500,000 Model 3 and 100,000 combined Model S and Model X per year, how do they intend to reach their annual production goal of one million electric vehicles by 2020? Musk believes they need to release their Model Y crossover sometime that same year, or possibly in late 2019.

Model Y will be an affordable alternative to the Model X. It will be built on a completely different platform compared to the Model 3, and will be even easier to manufacture. Musk believes Model Y production automation will be next level, surpassing all other factories in the world.

Tesla Semi — It’s Alive!

During a recent TED talk, Elon Musk revealed the Tesla Semi. Resembling something out of a science fiction movie, the Semi will be an all-electric alternative to diesel trucks. According to Musk, it will couple the highest weight capability with long range. We will have to wait until September to find out more details at the official unveiling, but the Tesla Semi could be a disruptor in the heavy trucking industry, if everything goes to plan.

The Tesla Semi could pose some serious competition for conventional diesel trucks (Image: Tesla).

While it looks far removed from anything Tesla have released before, apparently the incremental complexity of manufacturing the Semi “is much less than it might seem,” according to Tesla executive Jon McNeill. For instance, the Semi will utilise a bunch of the same electric motors used in the Model 3.

How does the Tesla Semi compare with a regular, diesel powered semi? With a mountain of torque on demand, Musk sums it up by saying “if you had a tug of war competition, the Tesla Semi will tug the diesel semi, uphill.

One of the most pressing safety concerns with long-haul trucking is driver fatigue. Now, what if a truck could drive itself?

Tesla Autopilot

Thanks to Autopilot hardware and software, incorporated into every Tesla since October 2016, vehicles can autosteer at highway speeds of up to 90 mph (145 kph).

Tesla’s goal is to reach full automation (SAE level 5), which would require zero input from the driver (see video below). Musk believes they can achieve this with the current sensor hardware and wiring harness, and possibly using the current generation of computer processors. If more processing power is required, a vehicle’s on-board computer can be switched out easily via the glove box.

Musk is so confident in Autopilot, that he stated “Essentially, November or December of this year, we should be able to go all the way from a parking lot in California to a parking lot in New York, no controls touched at any point during the entire journey.”

Sitting in Traffic? Boring

With more and more cars on the road each year, it is no secret that the transportation hub in most cities struggles to keep up. Musk has started a side project — The Boring Company — which could help alleviate this problem.

As shown in the video above, it is proposed that a 3D network of tunnels be dug, within which cars are transported via electric skates at speeds of up to 125 mph (~200 kph). The entrance and exit can be integrated into the tunnel network using just two parking spaces at street level, with all of the action occurring below ground.

In terms of the far future, Elon Musk stated that “I intend to be actively involved with Tesla for the rest of my life.”

“I really do not see any segment of transport that will not be electric. In fact I’m highly confident that all transport will go fully electric, with the ironic exception of rockets,” said Musk.

In July, all eyes will be focused on Tesla’s final unveil of the production version of their Model 3. If everything goes to plan, release of the Model 3 could be a quantum leap in accelerating the world’s transition to sustainable energy.

Source: Q1 2017 Update, Q1 2017 Q&A, Blog, TED.