It’s looking to be a great week for Tesla Motors, who previewed its Q1 results yesterday and promises more good news today. In a nutshell, the company sold more cars than expected and is now even more confident about its profitability this term. All good stuff, and Tesla deserves kudos for the achievement.
A much smaller bit of news is that only 4% of Model S buyers have chosen the smallest (40kWh) battery pack option, so it will effectively be cancelled. Technically, you can still buy a “40kWh” version; you’ll simply get a 60kWh version that has the extra 20kWh software-sequestered unless and until you choose to pay for the additional capacity. (While you’re at it, Tesla’s hoping you’ll also choose to pay to enable the Supercharging capability that will also be installed on every car from now on.) Clever moves by Tesla, helping to streamline production and “encourage” buyers into cars with higher profit margin. Makes total sense from a corporate perspective, and only Tesla has a fan base who will embrace the choice without the cynicism that would be lobbed at other automakers.
However, some perspective is needed for those who are already drawing broader conclusions about EV consumer range demands based on the seemingly low choice of the 40kWh model (in which most folks can easily get 120-160 miles of range). It’s artificial data at best, and not at all indicative of range preferences of even Tesla’s own buyer category, and certainly not the broader EV market.
- Tesla started with a “top-down” production approach for the Model S, meaning that the 85kWh cars were built first, then the 60kWh version, then the 40kWh version. Combined with a well-publicized backlog of reservations, some buyers who were comfortable with the 40kWh range felt compelled to step up in order to get their cars sooner.
- Tesla’s proprietary Supercharging option was not available on the 40kWh version, but an option on the 60 and standard on the 85. Again, fast-charging seekers moved into a higher capacity version than they might have otherwise picked.
- As with other plug-in cars, the earliest Model S adopters tend to be at the higher demographic end even of Tesla’s own market, and those for whom the $10k difference between each version of the Model S isn’t as impactful as it will be for later Model S buyers, let alone those of later models. Some are choosing the longer range simply because they can, not because they truly need – or even think they need – more than 160 miles of range on a daily basis.
Bottom line: Tesla made the right choice given the company’s current priorities. But today’s market will not be tomorrow’s, and not every company is Tesla. What works for Tesla is not inherently the right move for others. And as always, any single statistic at this stage should be taken with a grain of salt.