News that Tesla will be discontinuing the cheapest version of its Model S sedan has caught many people by surprise. On the surface this would seem to be pushing consumers towards more expensive high-end vehicles at a time when the company is apparently looking to target the mass market. However, this really is just a clean-up process because the Model S sedan has a battery capable of offering 75 kW which is restricted to just 60 kW by locking software.
Simplifying the process
It is possible to upgrade the 75 kW battery to full power by buying a software upgrade, so all the company really has really done is remove the upgrade and jump straight to 75 kW battery-powered Model S sedans. This makes perfect sense when you bear in mind the cost of designing and manufacturing individual vehicles. Even though the company has billions of dollars in the bank it still has a relatively high burn rate which will need to be addressed. Streamlining the company’s offerings and focusing more promotion on fewer vehicles makes perfect sense.
Tesla Model 3 sedan on the way
It is common knowledge that the Tesla Model 3 sedan will go into production in July this year. This is the car which broke all records when the company announced it would take deposits for future orders. The vehicle itself will be priced at around $35,000 for the most basic model before any tax incentives from the authorities. This should be more than enough to push the vehicle towards the mass market which has been the company’s goal for some time now.
Company prospects
The Tesla share price has been extremely volatile over the last three or four years reflecting the volatile nature of the electric vehicle market. It is now starting to flirt with an all-time high share price in light of a successful $1.2 billion fundraising which raised more than initially expected. Funding has always been an issue with Tesla because the development of this cutting-edge technology is very expensive. There were suggestions that very few if any Tesla vehicles were sold “at a profit” but Elon Musk, the leading light of Tesla, has refuted this on numerous occasions.
Sometimes it is as if some experts want the company to fail, want the electric car market to fall by the wayside and everyone to return to their total dependence on fossil fuels. There is no doubt that Tesla has made mistakes, the recent acquisition of a company directly associated with Elon Musk in the shape of SolarCity being one, but this does to a certain extent overshadow the company’s successes.
For the good of the industry
Is Tesla given enough credit for opening up expensive technology patents to competitors for the good of the electric car market? Elon Musk, while a very successful multibillionaire businessman, wants to leave his mark on the industry as opposed to squeeze every dollar out of consumers. The exposure created when the company’s technology patents were made available to 3rd parties certainly did Tesla no harm. There is obviously some give-and-take, Tesla is not spending billions of dollars of shareholders money for nothing, but the quicker the industry hits the mass market the better for Tesla.
Do not underestimate Elon Musk!