Why I will not buy a Tesla: market expectations vs reality

Is Something Wrong With Tesla, or Has the Industry Caught Up?

 

In early 2021 I was considering my next car and wanted to embrace the electric vehicle (EV) trend. It is only a matter of time before petrol cars will be permanently replaced by EVs, and the impact on the resale value on petrol cars may soon start to become an serious consideration.

But not yet. The value of used cars is very high! 

I did a reasonable amount of reserach, exploring all of the options for EVs in early 2021. 

After a considerable amount of time and some deliberation, I came to some conclusions that I will share with you, including why I will not buy a Tesla, who are the leading EV automaker as I write this.

The first conclusion in early 2021 was that EVs are simply not yet ready to compete with the petrol/gas equivalent.

I drove a Tesla Model S about three years ago. A very nice car, and ridiculously quick! But it was and still is a very expensive car to buy at about £80K ($112K). I could have bought a Porsche for the same amount, and a Porsche is a far nicer car and in a different league to Tesla.

Despite all this, I was a growing fan of Tesla when I drove the Model S. The car looks fairly good and remains a cool brand. People seem to want to be seen in a Tesla.

I was very much undecided, and because the dealership in Milton Keynes, UK (or 'shop' in Tesla world) didn't follow up with me after the test-drive, I had more time to consider my options.

I decided to pass on the Tesla at that time, and today I am very glad that I did. The expectations versus reality in this hotly contested electric vehicle market requires some serious scrutiny if you want to make the right decision.

That was in early 2021 and things have moved on considerably.

Buying an EV today is far more complicated than simply following a cool (thawing) brand, and a CEO in Elon Musk who is idolised by many. For some people this is enough. Commiting to a cool brand and owning a pretty decent car. But Tesla and its marketing shenigans over the years is becoming more than a little tiresome. 

And the competition in the EV market in 2022 is seriously impressive. There are far better EV cars out there than the cars that Tesla has to offer.

But this is about why Tesla may not be the EV choice, and it goes beyond whether their cars are good. Don't get me wrong, their cars are good, but the competition has caught up, and have done so very quickly.

The disturbing aspect of Tesla that concerns me are the games that they play. You can now buy a Tesla with Dogecoin,

This is yet another example of Elon Musk using his brand to manipulate cryptocurrencies, and in turn attempt to increase the value of his own crypto investments.

This will ultimately damage Tesla in the long run. I do not want to spend a significant amount of money on a dubious brand, which is what Tesla are becoming.

What does this do to Tesla's creditability?

 

The Electric Vehicle Landscape

 

The Tesla brand has achieved great success, in a decade during which they had no competition at all. They were always the EV car maker, while the big names in the car industry continued developing great petrol/gas powered vehicles.

But Tesla made some dubious decisions in their dominant years, and this should concern anyone considering buying one of their vehicles. I need to be confident in the choice that I make when committing to a new car maker, and I do not want to commit to an expensive brand that may lose its appeal and subsequently its value.

There are many reasons why Tesla are not the car maker that I will spend my hard earned money on.

I will not lie. I find Musk's Tweets and his ‘Trump-like’ obsession with Twitter, which has on occasion reduced him to, well, Trump, quite disturbing. The non-profit business model and the expectation that Musk will sell the business when it suits him does not help assure me. Not to mention the quality of their cars and the innevitable competition around the corner.

In the longer term, Elon Musk may damage Tesla's potential with his antics. He has been using the pseudo and equally dubious Bitcoin currency to gain attention and influence his Bitcoin stash to his advantage, otherwise referred to as Insider Trading. Spreading insinuations that he had sold this Bitcoin investment heavily influenced the price of Bitcoin, which is a sham and has Tesla's name written all over it.

On a more serious note, Tesla's acrimonious fallout with Toyota in 2017 was probably not the best judged action by the brand.

None of this will help Tesla as an electric car maker, despite them achieving their first profitable year in 2020, and ironically passing Toyota as the most valuable car maker as a result of their 2020 trading numbers. Accolades like this may sound impressive, and they are, but they may well be short lived.

But the reasons for me not choosing a Tesla as my next car are based on more than simply a challenging CEO and the dubious statistics reported by the firm. It is about the technology, the quality and the price, and most importantly what he future holds for electric vehicles. I am just not convinced that Tesla are on the right track as a business. I am certainly not convinced that EVs are ready for general consumption. 

 

Price and Technology

 

Despite Elon Musk’s ambition to build an affordable EV, Tesla has not yet succeeded in reaching this goal, and that we are a few years away still. The clock is ticking for Tesla. 

Tesla cars are still very expensive, and this is from Elon Musk himself, not to mention that the Model S is looking very tired still, despite the updates. In my opinion, the new 2021 Model S is not really much of an improvement in style from the previous version from from 2010. Tesla is a car maker working to a budget it seems, and this will hurt them. 

It is now 2021, and it is fair to say that the electric vehicle landscape will look very different in another 12 months. It will include many more brands, and will include a wider variety of engine technologies.

 

What Technology Powers an Electric Vehicle?

 

So let's take a closer look at what is behind the technology for electric vehicles - Lithium-ion (Li-ion) batteries for the most part. They have revolutionised the electric car market, and of course very many other aspects of our lives. It is what the EV market is powered by.

Tesla have taken the lead when it comes to their battery technology and their position in the autonomous vehicle sector. They have invested huge amounts developing improved battery technology and are building Gigafactories around the world to produce the battery packs for their cars. As a direct result of this investment in battery development in recent years, Tesla has reduced the price they pay per kilowatt hour (kWh) in their cars, compared to other car manufacturers. An EVs range is determined by the amount of power it holds, in other words the kWh stored in its batteries. 

General Motors are however catching up with Tesla, as are the other significant players in the automotive industry including the likes of Volkswagen, who are predictably throwing huge amounts of resources in to the development of their own technology. And these established car makers will all catch up with Tesla at some point, perhaps sooner than we may think.

Phil LeBeau wrote an article on CNBC on Tesla’s Lead in the battery technology stakes, which presents Tesla’s current position with some context. Phil references Sam Jaffe, Managing Director of Cairn Energy Research Advisors, who has calculated that Tesla (who's battery cell suppliers are Panasonic, LG Chem and CATL) will pay an average of $142 per kWh for its battery cells, while GM will pay an average of $169 per kWh. This means that Tesla can produce battery packs 10% cheaper than GM, and 24% less than the rest of the auto industry, according to Jaffe.

But hang on, there are the economics the speculation and risk taking that is still needed to supply the raw materials to support the growth in demand for the developing Li-ion technology.

Although Lithium metal is not necessarily in short supply, the forecasting of the demand for it requires a level of risk taking. Camila Domonoske at npr.org explores how the demand for batteries will impact Lithium supply as the auto industry goes electric. Demand for Lithium will place considerable strain on the supply chain for EVs.

But what really is the long-term future for the Li-ion battery in the motor industry?

The Faraday Institution, who are the UK's independent institute for electrochemical energy storage research, have said the following:

“Unfortunately, traditional Li-ion chemistry is approaching its physicochemical limit. The demand for higher density (longer range), high power (fast charging), and safer EVs has recently created a resurgence of interest in solid state batteries (SSB)”

You don’t really want to hear that when you are about to commit a fairly large sum of money on a new electric car based on Li-ion technology. Tesla car or otherwise.

 

Solid State Batteries

 

And let’s be absolutely clear - Solid State Batteries will be a game-changer for the electric vehicle market if they can be made to work effectively and produced at scale. But SSBs comes with their own unique set of challenges. The 2020 Roadmap on solid state batteries, published on IOP Science, explains in detail what these challenges are. Essentially, the ability to produce at scale, and overcoming the barriers between the electrolyte and the two electrodes. Technical stuff that may be too much of a challenge.

But SSBs may well be viable in delivering the sort of benefits expected. Some car makers think so. Can you guess which one has recently announced the launch of its own Solid State Battery electric vehicle for 2021? Yep, Toyota.

Peter Nielson’s article on Toyota's SSB in torquenews.com provides a similar insight in to the impact that this will have, if Toyota are able to make their SSBs work for them and their electric vehicles. It would be foolish to overlook Toyota’s work in this field. And as Peter quite rightly points out in his article, Toyota make better cars than Tesla.

 

 

Quality and Styling

 

And this brings me on to quality and styling. The new electric vehicles being launched today make the Tesla range look just a little bland, and borderline ugly from certain angles. This is not a good characteristic when trying to tempt a potential buyer. Styling matters.

When we explore the rapidly growing EV marketplace, makers such as Hyundai, with their seriously good looking Ioniq 5, and Skoda with their similarly attractive (in certain guises) Enyaq iV, make for a more appealing alternative to the Tesla. This is only two new models, which have better styling than the Model 3 and Y, and the Skoda is likely to be a more cost-effective alternative to the Tesla Model X.

Anyone looking for a new car, who is considering an EV, may understandably have greater confidence in the quality of, say, a Mercedes or Toyota, than a Tesla. It would be natural to expect the more established icons of the industry to be better at making quality cars. Whether you agree with this viewpoint or not, it is one that potential car buyers will hold nonetheless.

It is also a view that I hold. The visible materials in a Tesla’s cabin are not as high quality as those found in any German car brand, and this is important. Living with a car day-to-day is influenced by all of these factors.

The one additional and very important factor that may set the Tesla ahead of its rivals is in its software. The self drive capability being developed does look awesome. But as mentioned at the start of this article, that also comes with some serious challenges. Perhaps Tesla are the industry leaders in this space too, but the risks are all too evident. I will not be trusting my car to ‘self-drive’ until every car on the road does the same.

 

Conclusion

 

So, to sum up – the electric car market is getting busier by the day, and the new cars being introduced are going to be of better quality and better looking than a Tesla. All of these electric vehicles are still too expensive, and the battery range is not quite there yet - range anxiety among customers is still very much a problem, despite Tesla’s investment in more than 2,100 supercharge stations around the world.

And if Solid State Batteries really do achieve their potential, your money spent today will be in vain.

And lastly, when Tesla CEO Elon Musk dismisses hydrogen power cells for cars as ‘staggeringly dumb’ (in a Tweet of course), this intrigues me. Perhaps hydrogen is a viable alternative and Musk is just being Musk. So as wonderful as Tesla has become, there will come a point where Musk’s zany and rather unhinged behaviour moves on from being quirky and a little endearing, to being, in Musk’s words, ‘staggeringly dumb’.