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Published on January 10, 2021 |
by Loren McDonald
January 10, 2021 by Loren McDonald
A year and a half after Elon Musk said in July 2020 that Tesla would not be launching a standard Model Y range under 250 miles, that’s exactly what the company has done by rolling out the cheaper Model Y on its website on Thursday, January 6. .
In the United States, this means that the popular Model Y crossover is now available in three variants and at significantly different prices and range combinations:
- Standard Range: $ 41,990 | 244 miles of EPA range | $ 172 / kWh
- Long range: $ 49,990 | 326 miles of EPA range | $ 153 / kWh
- Yield: $ 59,990 | 303 miles of EPA range | $ 198 / kWh
At $ 8,000 more and with 82 more miles of range, the long-range version of the Model Y actually has the lowest cost per kWh. But at a starting price of around $ 42,000 versus $ 50,000, the standard range becomes very attractive and more affordable for many more American households.
Why did Tesla and Elon Musk change their mind?
I’ll be honest, I did a little party dance at the table when I found out about this news Thursday night. In July 2020, my CleanTechnica item “Is Elon Musk wrong about a Model Y under 250 miles? “ has raced and the reaction both in the comments and on Twitter has been overwhelmingly negative to my suggestion that Elon was wrong and Tesla should offer a standard Model Y range at or near 250 miles from the EPA range.
When I shared this news on Twitter Thursday night, Tesla and Elon Musk fans shrugged and said things like: “It’s Elon, he changes his mind” and “And so, they cut their costs.”
I’ll let others dig into the details of what got Tesla now, 6 months later, to offer a Model Y for $ 42,000. But my guess is that: 1) As the company increased the production volume of Model 3 and Model Y (which shares 73% of the same parts as Model 3), it led to lower unit costs. ; and 2) continuous improvement in the efficiency of battery packs.
But my focus of this article is “why?” Musk, and presumably Tesla’s leadership, have clearly changed their minds that a Model Y of just under 250 miles of range is not acceptable to American consumers, and on the way out. a standard Model Y lineup (which Musk clearly stated would not be done). Again, the cost savings may have made a less expensive and lower range Model Y more acceptable from a margin standpoint, but what caused a change of heart around less than 250? miles of range that was not acceptable?
“Musk didn’t share what the EPA lineup of a standard-range model Y would go into, but I’m going to pick an arbitrary distance of 235 miles as a guess for this article. Yes the Standard Range version was actually rated at just under 250 – say 245 or 247 miles – I guess with some software tweaks, battery upgrades, and tire combinations Tesla could easily increase that range to magic number of 250 in 3 -6 months. And everyone would forget the initial lineup, just like no one cares about the initial Model S lineup. ”
So the standard range actually comes in at 244 miles (although the site says “estimated”), a bit higher than my assumption of 235 miles. But over the past 6 months, Tesla could easily have found around 10 extra miles through various efficiencies over what was then expected.
During the Q2 2020 earnings call, Musk said:
“As far as passenger vehicles go, I think the new standard for range will be, just in US EPA terms, around 300 miles. So I think people will really come to expect that number to approach over 300 miles.
So six months ago, Musk claimed that American households now expect almost 300 miles of range as the new standard for electric vehicles. And in his previous Tweet, he exclaimed that “<250 miles of EPA range was 'unacceptably low'."
Data and graph by Loren McDonald / EVAdoption.com
On one level. Musk is right about the 300 mile count. Almost all of the surveys of potential BEV buyers place 300 miles as the most common answer for the number of miles needed to make an EV acceptable. And based on my own analysis, available BEVs in the US will reach almost 300 miles of range by 2023. My analysis also places the current average BEV range at 255 miles.
So what would make the executives at Musk and Tesla now essentially say that just under 250 miles of range is perfectly acceptable to American auto buyers?
Three probable reasons why less than 250 miles of range is now acceptable
There are probably three main reasons why Musk and Tesla have decided to launch the 244 mile standard range Model Y now:
Slowdown in demand: BBefore all Tesla fans start looking for arrows in their quivers, I’m not suggesting for a moment that there is no demand for Tesla models. (For the record, I drive a Model S – our second – with Tesla Solar and I’m not anti-Tesla.) What I’m suggesting is that there is a greater market opportunity for electric vehicles out there. order of $ 40,000 +/-. And with several electric SUVs and CUVs now available or coming this year in this price range, Tesla should expect many buyers to switch to EVs in this lower price range. And without the benefit of the federal electric vehicle tax credit of $ 7,500, Tesla is already at a significant disadvantage in this segment with the Model Y Long Range.
US market acceptance of a lower range: While 300 miles of range continues to be the magic number that American consumers look for in an electric vehicle, many, especially those in two- or three-car households, agree that 200 to 250 miles of range is probably enough for 95% to 98% of their annual driving needs. If you need to take your kid to college, visit your grandma, or take the kids to Disneyland 500 miles away, you can cram the family into the Chevy Tahoe or a longer-range electric vehicle. (For the record, we drove our first Tesla Model S, the Model 60 with 210 miles of range, 3 times out of 900 miles round trip – so I can attest that even less than 250 miles of range is “OK” for long journeys.)
Figure source: Geography of transport systems
Lots of new contests: According to my analysis, in 2021, 30 potential new electric vehicles (BEVs and PHEVs) are expected to be available to buyers in the United States by the end of the year. I’m guessing, though, that at least a few of them will either be delayed until 2022, or at least we won’t see any significant deliveries by then.
Data and table: Loren McDonald / EVAdoption.com
And among those 30 new electric vehicles, 10 of them are to some extent direct competitors of the Model Y. These include:
- Ford Mustang Mach-E
- Volkswagen ID.4
- Nissan ariya
- Audi Q4 e-tron
- Charging Volvo XC40
- Chevy Bolt EUV
- Ford Escape PHEV
- Lincoln Corsair PHEV
- Toyota RAV-4 Prime (PHEV)
- Hyundai IONIQ 5
None of the BEVs above have the reach of the Model Y Long Range or access to Tesla’s charging networks. But all of the above vehicles (except the Chevrolet Bolt EUV) can / will be eligible for the Federal Electric Vehicle Tax Credit. And of those that do, all are eligible for the $ 7,500 credit, with the exception of the Ford Escape and Lincoln Corsair plug-in hybrids, which go up to $ 6,843.
And in addition to the 10 new SUVs / CUVs above, the Chevrolet Bolt EV, Kia Niro EV, and Hyundai Kona EV remain options for buyers who want an affordable electric crossover with around 250 miles of range.
Maybe Tesla and Musk had always planned to offer a Model Y with a range of around 250 miles in the lower $ 40,000 range, but were just waiting for the competition to justify it. Either way, the Standard line is here and I have no doubt that it will be a big seller in the US.
The good news for American consumers is that for the very first time there are several compelling electric SUVs / CUVs in the $ 35,000 to $ 50,000 range. This is a great thing and will go a long way in increasing the adoption of EVs in the United States.
(Disclosure: I own all of one Tesla share.)
Related: Tesla Model Y = CleanTechnica Car of the Year 2020
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Sell Teslas in 2012 compared to 2021
About the Author
Loren McDonald writes about the factors driving the adoption of electric vehicles and the opportunities and challenges that the transition to electric vehicles presents for businesses and entrepreneurs in the automotive, utilities, energy, retail and others. His research and content is published on CleanTechnica, his own blog / site, www.EVAdoption.com, and in his upcoming book “Gas Station Zero” on the enormous changes and shifts in multiple industries brought about by the transition to electric, autonomous and shared vehicle batteries.
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