Elon Musk and Tesla Motors’ Big Gamble

This week, if everything goes as planned, the world will get a glimpse of Elon Musk’s Tesla 3. According to Tesla, the first peek will occur on March 31, although it’s still not clear just how much of an unveiling there will be.

Still, the global community is ready.

There’s been a fair amount of fanfare in recent months about all of the things that the Tesla 3 automobile will finally bring to the market: autonomous driving, crossover capabilities for a larger family model and insanely high mileage. But none has garnered as much attention as its price point.

That’s because, for most of the consumer base, electric cars are just a titilating fascination. Few of us, save those with truly disposable cash at their fingertips, would envision the opportunity of plunking down the cost of a modest family house (very modest, admittedly). Nice idea, and a remarkably smart concept, but for most North Americans, $90,000 or more is out of reach when it comes to basic transportation. Even with no gas bill.

But the Tesla 3 changes all of that. At $35,000 before government incentives, it puts it in the ball park with the average fossil-fuel-guzzling economy car. It allows a relatively small niche automaker to compete with the big boys like GM, Ford and Toyota and Dodge, all of which have cornered the market in one way or another in affordable transportation. Affordable fossil fuel transportation, for the most part.

And that’s where analysts see the potential impact of the Tesla 3. Not only does it make cutting-edge technology within consideration of  the working family, but it puts emphasis behind a basic question that no car manufacturer to date, has really succeeded in validating: Why do we even need fossil fuel cars? Why deplete our carbon reserves if we really can create sustainable, high-mileage transportation without it?

Of course, that question presumes a number of things, all of which carry their own risks for Musk’s career-long pursuit for an economical electric car. It assumes that:

  • State, federal, county and city governments in the U.S. and Canada will get behind boosting publicly accessible electric chargers so the cars really can be sold and used world-wide.
  • Here in the U.S.
    and Canada, government entities will get on board in transitioning their electric grid to sustainable sources. The benefit of electric transportation is undercut by grids that rely on non-sustainable sources like coal.
  • Banks and lending organizations will be progressive in their funding criteria
  • Consumers will buy. (And buy and buy.)

Those are big risks for a small automaker, especially one that last year was averaging a loss of $4,000 per car sold. That loss is part of the simple math that goes into building cars on a dime: Auto manufacturers work off of reserves when they build cars, and small manufacturers incur more risk the higher they go, especially when their goals are ambitious, though popular.

But like most optimists, I am more impressed by the potential of Musk’s dream than its huge risks. Even though solar energy research has been around for centuries no one expected it would eventually turn our idea of global power generation on its head. Today, it is possible not only to power a home with solar panels, but to reform the way we think of power generation for our local grid (well, in most states). It’s impacted consumer rights and voice and its opened doors for improving living standards in some of the world’s remotest communities.

Elon Musk’s vision has that potential as well. These next few weeks, we may know whether that vision and appeal carries weight in the consumer market. With General Motors’ Bolt electric car already in initial production and due to hit the market at about $37,500 without incentives, the Tesla 3 will have some competition — some high-production competition. But it will also have mastered something that other larger companies haven’t: a consumer fascination for the little guy that is willing to put everything on the line for a vision and a commitment to transform the way we live. And to many, that’s worth supporting.

Image credit: Flickr/Mauricio Pesce