Alex Cochran, Deseret News
On a crisp fall afternoon in Salt Lake City, standing outside a Tesla showroom, it looked as though the electric vehicle company was building some kind of clone army.
There were empty Teslas — mostly Model Ys — crowding every available parking spot and lining the adjoining sidewalks and Supercharger stations. Some were coated in dirt, many had their hazard lights blinking. This mass of electric vehicles swept around the side of the building and into the back lot.
“All these vehicles have been sold,” an employee tells me while nonchalantly gesturing toward the lines of cars wrapped around the establishment. “They’re just waiting for pickup.”
In fact, there’s zero inventory for sale, he says, gazing without expression at the chaotic scene.
When I arrived, I expected something similar to the Audi dealership up the street, where salespeople in branded polos prowl the lot, waiting for interested parties to arrive. Instead, I encountered a soft-spoken twenty-something-year-old in jeans and a videogame-branded T-Shirt.
He was knowledgeable but carried an air of apathy, like someone explaining their PC specs to an Apple user. I couldn’t picture him selling me a toothbrush, much less a $50,000 luxury sedan. But apparently, he doesn’t have to sell anyone on anything.
His job is, well, it was never actually clear what he is there to do, besides helping customers connect their phones to their new car’s software. But the employee claimed that, in order to meet demand, Tesla is projected to manufacture three million cars in the year 2023. Reuters reports the projection is more like 2.1 million, optimistically.
Still, it is more than twice the number of models produced in 2021.
Due to this high demand, if a customer orders one of the most popular models — the Model Ys and Model 3s — they are likely to receive them in April of next year. Where traditionally, a car buyer could drive their choice vehicle off the lot that day, ordering a Tesla can take anywhere from a few weeks to many months in Utah and across the West.
In 2021, two notable shifts occurred in the U.S. automotive landscape. One, for the first time in 90 years, General Motors was not the best-selling manufacturer in the United States, overtaken by Toyota Motor Company.
Second, Tesla became the most popular luxury car brand in the U.S., growing to hold an estimated 2% of the U.S. market share in 2021. While that number sounds small, it is quickly approaching the scale of more established brands like Mercedes Benz and BMW (all in the 2% range).
In states like Arizona, Nevada, Utah and Colorado, adoption is well above the national average. But this western takeover cannot be easily explained by local environmentalism or the natural growth of the electric vehicle market. No, it seems to be a Tesla-specific phenomenon.
The birth of a car company is a rare occurrence. Staggering amounts of seed money have to go into research, development and safety testing to produce a single road-worthy model.
Tesla was founded by two silicon valley engineers in 2003, but it took five years and millions in funding for the company to begin regular production on its first model, the Roadster, and four years after that to deliver the Model S, its first real consumer vehicle.
And even though these Model S cars have been in production since 2012, they have only been widely available to the average consumers (average consumers with tens of thousands burning a hole in their pocket) in the past few years. In fact, it seems the electric car industry has hit a critical mass of adoption just this past year — the result of almost two decades of careful planning, luck, and a lot of cash.
Until now, the time has not been right for widespread adoption. The cost and range of batteries have been a major limiting factor, as well as lack of charging infrastructure.
The first wave of electric cars hit the U.S. at the turn of the 20th century. A third of all consumer vehicles on the road were electric at that time, according to the Department of Energy. But in the 20s and 30s, the “better roads and discovery of cheap Texas crude oil” contributed to the disappearance of the electric car, and early battery technology was no match for the internal combustion engine.
The instability in fuel prices and new regulations in the 90s encouraged manufacturers to take another look at electric vehicle technology. General Motors developed the cult favorite EV1 but lost money on every model produced. The early versions had heavy lead-acid batteries, the range was less than 100 miles, it charged slowly, and cost around $60,000 in today’s money.
They were only leased, and GM gathered (almost) all of them up and crushed them, along with the hopes of a domestic electrified car market.
Where GM had the distribution network without the technology, decades later, Tesla had the tech but no distribution.
In order to scale, the company had to ensure customers could buy their cars anywhere in the U.S. But to sell their vehicles without the cumbersome franchise distribution model of every other major car manufacturer, the company was forced to navigate a hostile regulatory environment, where a powerful car dealers’ lobby is still fighting against the direct distribution of vehicles.
Since the 1950s, the distribution of personal vehicles has been controlled by inconsistent state laws, for the original purpose of preventing the big three car manufacturers from exploiting their franchised dealers. The highly specific conditions that made these laws relevant have long since passed, yet this fraught car distribution system is a significant factor in controlling what cars you see on the road in your home state.
The Federal Trade Commission has spoken out against these laws, saying “states should allow consumers to choose not only the cars they buy, but also how they buy them.”
Tesla’s devoted customer base took the matter into their own hands to become the company’s evangelists and overcome the regulatory barriers. KCCI, a Des Moines-based news site, reported that in 2014, Tesla owners from Minnesota drove their vehicles to a central Iowa grocery store parking lot to give test drives. Not sponsored by Tesla, these enthusiastic electric vehicle owners just “wanted to make sure everyone in Iowa (had) the opportunity to see these cars” in the face of the Iowa DMV restrictions preventing the direct sale of Teslas in the state.
In the west, after hard-fought, years-long battles fronted by Tesla and other EV rivals like Rivian and Lucid Motors, according to Tech Crunch, “at least a dozen states, including Arizona, Colorado and Utah have only recently reversed bans that prevented Tesla from selling directly to consumers either through new legislation or via the courts.”
So although consumers have heard about these vehicles for a decade, they have only recently become easily accessible.
Aside from distribution, another major obstacle to electric vehicle adoption has been refueling infrastructure.
The National Association of State Energy Officials identified the concern about reaching the destination, or anxiety about the car’s battery range, as the biggest barrier to electric vehicle adoption, followed by the prohibitive upfront cost of the vehicle and lack of public fast-charging stations.
Major efforts have been made by public and private parties to expand the electric vehicle infrastructure, but constructing a novel nationwide utility is a huge undertaking. Axios reports there are around 145,000 gas stations in the U.S. though that number is declining.
While Tesla was butting heads with states to allow direct sales, they were quietly building proprietary charging infrastructure. In 2013, around the same time Tesla’s first customers were enjoying their shiny new Model S, there were six Supercharging stations in California and two on the East Coast.
Within a decade, the Tesla charging network grew from eight stations to 35,000 stations globally, gaining a large head start on public charging availability.
“Although Tesla sold only a few thousand cars in its early years, it had built out a huge network,” according to the Harvard Business Review. “This addressed the buyer’s ‘range anxiety’ problem.” They argue that Musk and his team understood that transportation of the future is a service, not a product, and invested in the platform to support that vision.
Many more charging stations will have to be constructed for the general public to go electric. At least in major population centers, there is now sufficient infrastructure to ease consumers’ worries about running out of battery on the freeway.
Even the CEO of Exxon Mobil, one of the world’s largest oil and gas companies, is projecting that by 2040 every personal vehicle sold will likely be electric. And last year Biden announced hopes that over 50% of vehicles sold should be electric by 2030.
For electric vehicle adoption to increase in the west, however, transportation infrastructure must be available to support the new technology.
In October 2017, the Governors of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming established a joint plant to create an electric vehicle-friendly region, but work has been slow in adding charging connections to the expansive network of highways, especially those far from population centers.
In these eight western states, the number of fully electric cars registered is clearly accelerating, though some states are being left behind. According to data from the National Research Energy Lab, the top four states in this agreement (Arizona, Colorado, Nevada, Utah) have seen growth in electric cars registration of 410% from 2017 – 2021. The national average was 286%.
Approximately 49,560 public charging port installations will be needed to be deployed every year to meet the goal by 2030, per the U.S. Department of Energy. This will require a significant increase from the 18,696 ports installed in 2020. Still, “state-level adoption of credit programs, tougher emissions standards, and increasing electrification commitments from major US (car manufacturers) — will likely continue to increase,” and aid in the deployment of EV infrastructure, according to McKinsey and Company.
In Utah for example, energy officials have found infrastructure gaps near five national park system locations in the southern portion of the state as well as gaps in interstates heading to Nevada and Idaho.
The Bipartisan Infrastructure Law has put funds towards this issue, setting aside $15 billion to fund the construction of “a national network of 500,000 charging stations.” But Tesla got the jump on other companies by building an early charging platform for their product.
Do they have staying power? Or will Tesla be the Walkman to another manufacturer’s iPod?
The largest manufacturers in the world, with the most resources at their disposal (and the most to lose from new emissions regulations), have set their sights on the electric vehicle market, adding competition to the marketplace. Government-funded, public charging infrastructure could cut into Tesla’s advantage as well.
And the recent string of recalls has reminded potential buyers that the young company’s manufacturing processes don’t have the time-tested advantage of the Toyota production system, for example. An alignment of funding, technology, vision, and regulatory change was necessary for what Berkshire Hathaway Vice Chairman Charlie Munger called the “minor miracle” that is Tesla.
In that regard, Tesla is still proving to be an industry leader, but with more market pressure pitted against them than ever, and internal conflicts that threaten stakeholder confidence, only aggressive innovation — like autopilot capability — will provide the company with staying power over its second twenty years in business.
Right now, electric vehicles may be noticeable newcomers to your city. But the hum of a direct drive motor may soon pass without turning a single head. Whether that car is built by Tesla, General Motors, Toyota is still yet to be determined.
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