The transition to EVs is increasingly dependent on the success of Tesla—with Tesla likely to account for 60% of all EVs sold in the United States by the end of this year.
When I visited Tesla’s tiny factory in Silicon Valley in March 2008—months after Elon Musk took over as CEO—I was floored by their ambition and skeptical they could survive, much less thrive. Tesla’s journey from upstart visionary to household name has been a wild ride, filled with remarkable highs and lows. 2010 saw Tesla become the first auto manufacturer to launch an IPO in more than 60 years. The company’s stock and profile soared, eventually reaching a market capitalization of more than $50 billion, similar to Ford and General Motors.
At the same time, Tesla has struggled to maintain adequate cash flow, meet targets, and overcome manufacturing issues. Recent challenges meeting expectations and demand for the Tesla’s Model 3 mass-market sedan— challenges compounded by co-founder and CEO Elon Musk’s erratic and distracted behavior—are fueling predictions that the company is on the verge of collapse.
Tesla’s volatile past makes it difficult to predict its future. I don’t have any personal, professional, or financial interests in the success of the company. But as someone who has dedicated a career to studying electric vehicle (EV) technology and policy, I am confident that we need a strong private-sector leader like Tesla pulling EV technologies and markets forward in the United States. Such leadership has profound implications for climate change, pollution, and U.S. competitiveness in the global economy.
The status of EVs is fragile, especially in the United States. EV market share has crept up to 1.4% nationwide. The Trump administration is threatening to freeze national fuel-efficiency and CO2 standards, which would undermine automaker investments in EVs. It is also threatening to block the zero-emission vehicle mandates in place in California and nine other states, further undermining investments.
While domestic progress on EVs stalls, other countries are pulling away. China sold almost half a million EVs the first half of 2018, comprising 3% of that country’s domestic auto market (double the equivalent U.S. figure). China now accounts for half of all EVs sold worldwide. China is also leading on electrifying larger vehicles. The Chinese city of Shenzhen, home to 13 million people, has converted every one of its 16,000 buses to electricity. The story is similar in Europe. Cities across the continent are agitating for cleaner air and threatening to ban diesel cars. EVs sales are emerging as an important substitute for diesel, with EV sales now approaching 2% of all light-duty vehicles sold in Europe.
If not for Tesla, the gap between the United States and other global powers would be even wider. Tesla is the only company other than BYD, the Chinese company Warren Buffet invested in, making a massive and unequivocal commitment to EVs. Though Tesla is admittedly falling short of its ambitious production goals, it is continuing to churn out and sell its Model X SUV and Model S sedan, and is ramping up its less-expensive Model 3. It is likely that by the end of this year, Tesla will account for over 60% of all EV sales in the United States (up from 43% in May–June).
Tesla also plays an essential role as a visionary. Tesla consistently pushes the envelope on EV technology, forcing a rethinking of what EVs are and can be. Tesla pioneered over-the-air software updates, long driving ranges, and a network of fast chargers that enable Tesla owners to drive anywhere in the United States without running out of juice. And by designing their vehicles to be sleek and sexy, Tesla has helped take EVs from objects of ridicule to objects of desire.
If Tesla falls, who can we count on to carry the torch on EVs? Unfortunately, potential successors lag far behind. GM’s Chevrolet Bolt can travel more than 200 miles on a single charge, making it range-competitive with Tesla. But GM’s resolve is suspect. EVs account for just 0.5% of GM’s total U.S. car sales. Nissan does slightly better, with EVs accounting for nearly 1% of total U.S. sales, though Nissan’s sole EV (the Leaf) has a range half that of a Bolt or Tesla. BMW’s EV sales rate in the United States is best (at 8%), but at a much smaller overall sales volume. These low figures are not surprising given that EV production is at present a money-losing proposition.
Certainly the fact that all major automakers are even producing EVs represents major progress. But active innovation and sustained commitment is needed for progress to continue to the point where EV manufacturing becomes profitable and hence self-sustaining. Indeed, a new industry study suggests that smart technology and manufacturing designs, as embedded in the Tesla Model 3, might generate 30% profits, more than triple the industry average.
The success of EVs is crucial in so many ways—to the success of the U.S. auto industry, cleaning up our cities, and slowing climate change. So far, Tesla is the only company leading that charge.
Dan Sperling is the Distinguished Blue Planet Prize Professor of Engineering and Environmental Science and Policy at the University of California, Davis, and lead author of Three Revolutions: Steering Automated, Shared, and Electric Vehicles to a Better Future. Opinions expressed in this piece are the personal viewpoint of the author. Follow on Twitter: @DanSperling_ITS, @ITS_UCDavis, @3Rev_ITSDavis