The First Wave Of Tesla Mass-Market Cars Is About To Go Into Production
Volvo has also announced that each of its cars will be equipped with an electric engine by 2019.
Tesla’s first mass-market vehicle will go into production this week, with 100 Model 3 vehicles planned to be produced in August. The production will scale up each month with an aim of completing 20,000 vehicles by December and half a million per year by 2018.
True to form, Tesla Chairman Elon Musk broke the news via a late night Twitter announcement.
The Model 3 is significant because it marks Tesla’s first foray into mass-market vehicles. Priced at $35,000, the vehicle will be available to a new market of middle-class families. For comparison, the cost of Tesla’s Model S ranged from $68,000 to $140,000.
At the same time the Model 3 goes into production, Volvo is announcing that each of its cars will be equipped with electric engines by 2019. The move places the Chinese-owned carmaker squarely against Tesla in a race to own the future of electric vehicles. More broadly, the news signifies the impending “death knell” for the internal combustion engine.
Volvo specifically plans on rolling out five electric models between 2019 and 2021 in addition to a “range of hybrid models.” Further down the road, the company aspires to sell one million electric cars by 2025. “People increasingly demand electrified cars, and we want to respond to our customers’ current and future needs,” stated Hakan Samuelsson, CEO of Volvo’s car-making division, in the announcement.
Telsa may have beat Volvo to the mass-market car punch, but the process leading up to the production of the Model 3 hasn’t come without its challenges. Per the New York Times, the day after the company announced its plans for the electric car, it reported a “severe shortfall” in the production of its 100-kilowatt battery packs. Consequently, Tesla barely exceeded its first-quarter production results, although the year over year output increased by 40 percent. The repercussions were felt on Wall Street, as Tesla’s stock is down more than 7 percent as of July 5.
Despite these current obstacles, shares of the company are up approximately 65 percent and it boasts a market value of $58 billion—that’s about $4 billion more than General Motors and $12 billion more than Ford, in case you were wondering.
What does all of this mean for oil demand? A recent report by Wood Mackenzie claims that the Model 3 could reduce gasoline demand in the U.S. by 300,000 barrels per day by 2035. The report also stated that by the same year, roughly 12 percent of new car sales in the U.S., roughly 16 million cars, will be electric.
“The impact of Model 3 on the larger energy markets will not be in how many Model 3s Tesla sells, but what it has arguably done to spur wider electric-car production,” explained Prajit Ghosh, research director and lead author of the Wood Mac report, to sources at Oilprice.com.
The news from Volvo seems to indicate that the mainstream-ification of electric vehicles is already well underway. On July 6, France announced that it wants to end the sale of fossil fuel-powered cars by 2040.
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