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Tesla's next car, a sedan, will cost $58,000. What is it that makes electric cars so expensive? I don't know much about cars, but I thought electric cars had f

Tesla's next car, a sedan, will cost $58,000. What is it that makes electric cars so expensive? I don't know much about cars, but I thought electric cars had fewer parts than a gas car. Is it just that the parts for electric cars haven't reached economies of scale yet?

pitdesi 15y ago
Batteries. http://en.wikipedia.org/wiki/Electric_car#Price http://en.wikipedia.org/wiki/Electric_car#Price
MikeCapone 15y ago
Batteries are still expensive, and there isn't much economies of scale yet.
btilly 15y ago
Batteries. In The Innovator's Dilemma there is an analysis from the 90s presented about when pure electric cars would be economically viable for a mass market. Based on then-current technology projections, it would happen around 2020. The critical combination that their analysis found necessary is price below a certain level, sufficient acceleration to merge into an Interstate, sufficient range, and fast enough recharge time. The Tesla currently fails on price and recharge time. It over-delivers on power, and has about the right range.
- Corrado 15y ago
  OK, but why are batteries expensive? 20 years ago rechargeable AA cells were very expensive, now they are cheap, plentiful, and work better than ever. Will electric vehicle cells follow the same curve? If not, why not? Is it because they contain precious materials? Lack of economies of scale? ???
  - btilly 15y ago
    The long and short of it is, "Moore's law is ubiquitous." In many very different industries for a long time, once there was an agreed upon and measurable criterion for "better" they delivered exponentially improving performance for periods of decades. What is exceptional about transistors is the rate of doubling, but not the general shape of the curve. (More normal rates of sustained improvement are 5-10%/year.) Lithium-ion batteries have been on a sustained path of improvement since the first commercial ones were released in 1991. If that curve is projected forward to 2020, you hit a price-performance point where electric cars are likely to be competitive. Incidentally if the history of innovation is to be trusted, I would not look for the first successful mainstream electric cars to be from major auto makers or from companies like Tesla. Successful disruptions tend to come up from the bottom of the market. Look at companies like Club Car that sell things like electric golf carts that are already appearing on the road. It is much easier for companies to expand upmarket than it is to strip products down. There is no reason to believe that this has changed.
    - wooster 15y ago
      There are examples of markets being disrupted from the top. The iPod is a notable example. It started at a very high price, then dropped into the range where it has become ubiquitous. The trick seems to be that the company who establishes a high-price and high-margin product needs to be willing to cannibalize their own sales with lower priced offerings.
- nextparadigms 15y ago
  That sounds about right. I think Tesla plans on reducing the price in half for every next models every 3 years. So that would be $120k in 2009 (Roadster), $60k in 2012 (Model S), $30k in 2015 (already announced)...so I suppose a $15k-$20k in 2018. That should make it mainstream enough. Hopefully, by then we'll also have Li-Air batteries or more viable ultra-capacitors (which Elon Musk thinks are the future for electric cars). Also, Better Place has an interesting business model, similar to the one of carriers subsidizing phones, by subsidizing electric cars to make them cheaper upfront and then having to pay a few hundred dollars per month to replace your battery at their stations whenever it discharges. I heard it's already gaining traction in some Middle East countries and also in China, and they plan to expand in some European countries, soon. http://www.betterplace.com/ http://www.betterplace.com/

pitdesi 15y ago

Batteries. http://en.wikipedia.org/wiki/Electric_car#Price http://en.wikipedia.org/wiki/Electric_car#Price

MikeCapone 15y ago

Batteries are still expensive, and there isn't much economies of scale yet.

btilly 15y ago

Batteries. In The Innovator's Dilemma there is an analysis from the 90s presented about when pure electric cars would be economically viable for a mass market. Based on then-current technology projections, it would happen around 2020. The critical combination that their analysis found necessary is price below a certain level, sufficient acceleration to merge into an Interstate, sufficient range, and fast enough recharge time. The Tesla currently fails on price and recharge time. It over-delivers on power, and has about the right range.

Corrado 15y ago
OK, but why are batteries expensive? 20 years ago rechargeable AA cells were very expensive, now they are cheap, plentiful, and work better than ever. Will electric vehicle cells follow the same curve? If not, why not? Is it because they contain precious materials? Lack of economies of scale? ???
- btilly 15y ago
  The long and short of it is, "Moore's law is ubiquitous." In many very different industries for a long time, once there was an agreed upon and measurable criterion for "better" they delivered exponentially improving performance for periods of decades. What is exceptional about transistors is the rate of doubling, but not the general shape of the curve. (More normal rates of sustained improvement are 5-10%/year.) Lithium-ion batteries have been on a sustained path of improvement since the first commercial ones were released in 1991. If that curve is projected forward to 2020, you hit a price-performance point where electric cars are likely to be competitive. Incidentally if the history of innovation is to be trusted, I would not look for the first successful mainstream electric cars to be from major auto makers or from companies like Tesla. Successful disruptions tend to come up from the bottom of the market. Look at companies like Club Car that sell things like electric golf carts that are already appearing on the road. It is much easier for companies to expand upmarket than it is to strip products down. There is no reason to believe that this has changed.
  - wooster 15y ago
    There are examples of markets being disrupted from the top. The iPod is a notable example. It started at a very high price, then dropped into the range where it has become ubiquitous. The trick seems to be that the company who establishes a high-price and high-margin product needs to be willing to cannibalize their own sales with lower priced offerings.
nextparadigms 15y ago
That sounds about right. I think Tesla plans on reducing the price in half for every next models every 3 years. So that would be $120k in 2009 (Roadster), $60k in 2012 (Model S), $30k in 2015 (already announced)...so I suppose a $15k-$20k in 2018. That should make it mainstream enough. Hopefully, by then we'll also have Li-Air batteries or more viable ultra-capacitors (which Elon Musk thinks are the future for electric cars). Also, Better Place has an interesting business model, similar to the one of carriers subsidizing phones, by subsidizing electric cars to make them cheaper upfront and then having to pay a few hundred dollars per month to replace your battery at their stations whenever it discharges. I heard it's already gaining traction in some Middle East countries and also in China, and they plan to expand in some European countries, soon. http://www.betterplace.com/ http://www.betterplace.com/