The Tipping Point

The Tipping Point

Will there be a point at which it becomes cheaper and more convenient to own a Tesla than an ICE vehicle at most price points, and which starts a stampede of drivers toward Tesla? In my opinion, if Tesla starts shipping a $21K Model C which is has enough range to drive between Superchargers on a single charge, that would be the tipping point.

Boukman | 23. August 2014

I think that tipping point may be related to how fat your wallet is. People with a top of the line Benz, BMW, Jag or Aston Martin or any car in that class are already seeing the convenience and savings that the Model S provides, even a fully loaded one.( Time is more valuable depending on your $/Hr or Min count)...
As for the rest of us, a MC with a range of 200 miles in the mid or high 20's would in my opinion give a huge push in the BEV direction. The problem is charging. If charging is not made easy, now that you would have a larger number of cars competing for charging space, things might slow down and make people who would want to buy a BEV think twice. Tesla is trying. the Supercharger infrastructure has made leaps and bounds but the number of Teslas out there is still small...if only BMW, Nissan and Tesla would agree to cooperate and accelerate the spreading of superchargers or supercharger like stations...

Dwdnjck@ca | 23. August 2014

At the present time Tesla is focused in producing cars that are "compelling." Model three will be a $35K plus car that will also be compelling. It will compete with other luxury mass market cars such as C Class. and 3 Series. Like the model S and the model X, Tesla will be able to sell every model 3 they produce for several years after starting production. They are going to be "sold out" for many years to come. It will be a long time before Tesla considers offering a $20000 car. I can't think of a "compelling" $20000 car. Can you get an Accord or Camry for that? Do they have "compelling" performance. I don't think so.

centralvalley | 23. August 2014

I foresee the Model 3 as the start. For many families the Model 3 will be the daily driver and short-haul car where public charging will never be an issue. They will keep their ICE SUV or other cars for longer journeys and schlepping the kids all around.

Once the Model 3 becomes "generally accepted" by more families, charging infrastructure convenience and faster charging speeds will accelerate.

They will soon compare and contrast the costs and driving pleasure of a BEV to the more traditional ICE. They will realize that operating costs and inconvenient "routine" and "not-so-routine" maintenance for ICE vehicles just are not worth it any more.

When that happens, that will be the "tipping point."

vgarbutt | 23. August 2014

Well personally i think that as long as there were 20,000 dollar ICE vehicles available, there would still be a large market not addressed for EVs. If not Tesla, then maybe the big 3 or maybe Tatta. Without a relatively compelling , or affordable product available for this market, ICE cars will still be the only option for a massive market.

Al1 | 23. August 2014

I guess it depends what you call a tipping point. The writing is on the wall. Albeit not visible yet to many.

Assuming you spend 400 dollars on gasoline each month and its price grows 4% a year, (which is very modest) you will still be spending 279,000 just on gasoline over next 30 years.

Which means you are probably better off borrowing money today at about annual 3% to not pay a dime on gasoline any more.

Banks probably don't offer 30 year long car loans, but that's a different story.

Solar panels are still considered expensive, albeit their costs have fallen through the floor in the last decade.

But nobody has waited for a decade. There came Solar City to sell electricity to the users, rather than panels.

Nothing can prevent from establishing something like Tesla car sharing and start selling time / miles rather than cars. Except for they don't produce enough cars. And probably need a car much different from model S to avoid sales cannibalization.

Leasing is a similar model, but it is already on its way. Again as soon as Tesla has enough cars...

Remnant | 23. August 2014

For most of us, on the Tesla Forums, the tipping point is history.

For the rest of the world though, IMO, the tipping point will be the Gigafactory (GF) and Model Ξ (MΞ).

GF will be able to evaluate hundreds of battery innovations and adopt the best for production. Eventually, in a matter of 3-4 years, the Tesla-Panasonic product will supply enough power and convenience to defeat any and all ICE pretense of adequacy, in terms of range, payload, performance, and cost of operation.

At the same time, within a couple of years, MΞ will ease these conveniences onto the mass of drivers of modest means, by creating a downsized version of her older sisters, MS and MX, which will however preserve all the enticing features of transportation by electric power: the silence, the torque, the low maintenance, and the freedom from the dirt and poisonous effusions of the ICE machines.

negarholger | 23. August 2014

"For most of us, on the Tesla Forums, the tipping point is history." - lol

The tipping point is when you can produce a compelling electric car for less cost then a comparable gasoline car. Gen3 is supposed to achieve that.

If you followed Elon... lately he sounds not like it is in the future but it is here now and all he has to do build the production capacity in Fremont and with the GF. The needed battery chemistry he has in his hand at least in test cars driving around, maybe already in the latest production cars ( the battery architecture allows him to reduce the actual numbers of cells in the pack on the fly ).

Gasoline cars you pay for engine options and associated performance and gas mileage. With electric cars you pay for battery size and range.

estephens001 | 23. August 2014

Apsley, "cheaper", really!

H. Eric Stephens
Marketing Expert

Benz | 23. August 2014

The price of an ICE car does not include a certain amount as a kind of a penalty for the pollution that comes out of its tailpipe. That should have been the case. Then there would have been a more fair and a more realistic competition between the ICE and the BEV. That means that the ICE car currently still has an advantage and the BEV does not have that advantage. I think that the government of each country should add some kind of an "Environment Tax" (to be used for good environmental purposes) on top of the current price of a gallon (or liter) of fuel. Game over.

Red Sage ca us | 23. August 2014

Even if gasoline in the US were reduced to 1990 levels in cost, at $0.11 per kWh for electricity a Tesla is more affordable than an ICE. If petroleum based fuel reaches "Six bucks a gallon, please pay before you pump!" levels in middle America, ICE vehicles will be put out to pasture. When a Tesla is released, in pretty much any configuration, that allows in excess of 400 miles range for $25,000 or so, no one in the market for a new car would likely want to buy anything else unless they simply loved oil companies.

Benz | 24. August 2014

@ Kleist

"The needed battery chemistry he has in his hand at least in test cars driving around, maybe already in the latest production cars (the battery architecture allows him to reduce the actual numbers of cells in the pack on the fly)."

That's very interesting.

So, you think that Panasonic already is producing higher density battery cells for Tesla Motors in Japan?

That would indeed be an important and significant step forward.

Remnant | 24. August 2014

@ Kleist (August 23, 2014)

<< ... Elon... lately he sounds not like it is in the future but it is here now and all he has to do build the production capacity in Fremont and with the GF. >>

Wow! It's Kleist v. Elon, ain't it? So, it's not just about price, volume, and percentages, as you implied at the top of your message, but also about vision, belief, determination, and timing.

Indeed, it's first and foremost in the mind. Why has every major automobile manufacturer been trying over the past couple of years to come up with EVs and hybrids of all sorts? Not because Tesla's concept and cars have won them over to the side of electric propulsion as the way of the future?

Where will history place the tipping point?

Elon might just be right. Your quest for a "compelling electric car" has already been satisfied by the suite Roadster, MS, MX. People will flock to the queues for MΞ because the tipping point has already conquered their minds, hearts, and pockets. They are raising the funds for it as we speak.

Bubba2000 | 24. August 2014

The tipping point may take place in stages based on market segments. Model S with 85 KW-hr battery priced at $80-120k competes with BMW 5/7, Audi 7/8, MB S, etc. Tesla will refine car with new features like ACC, autopilot, range increase to 400-500 miles, ubiquitous SC network, etc. Few reasons to buy ICE in that segment.

Same thing with Model X price segment. Model 3 segment will also want 300-400 mile range, SC network, etc. Then lower price ranges. Technically, there is no reason Tesla can not achieve those goals. Improved design, materials will result in lighter autos. Battery tech will also improve. Economies of scale will lower prices.

All this will take time, money and persistence. Elon does not give up! This is not some dot com web page biz model. For those who have been around, the PC revolution took 2 decades to hit global mass market scale. It needed the network effect of ubiquitous internet. Anybody who has invested in the TSLA IPO has made huge returns, or even later early last year. No real reason to complain.

Benz | 24. August 2014

@ Bubba2000

"The tipping point may take place in stages based on market segments"

I totally agree with that.

negarholger | 24. August 2014

@Benz - would you publicly plan a $5B factory if you have no product to produce in it? Think about it. For me it has to be well beyond the prototype stage... at least in the low volume production stage and actual road testing.

negarholger | 24. August 2014

@ Bubba2000
Water doesn't boil at at 80C, 90C and then again at 100C...

negarholger | 24. August 2014

@Remnant - the vision was there in 2006. Determination is ongoing. But yes, that is exactly what Elon sounds lately that all what is left is the execution. "Point of no contest" he did not say a year ago.

Bubba2000 | 24. August 2014

Keist: The auto market is segmented with distinct products and price points. Like crude oil, the different fractions have different boiling points!

Al1 | 24. August 2014


Indeed Elon was quite assertive at the latest call. He outright dismissed the questions about demand as irrelevant.

Tesla sells every single car it can produce and it will remain so. This may or may not mean paying 100 K upfront.

JeffreyR | 24. August 2014

Tesla Model S Cost of Ownership vs. Honda Odyssey: How the least-likely person to purchase a Model S became an owner. A study by Harvard MBA on Net Present Value of a Model S. He publishes a spreadsheet to show his work too.

The cost tipping point is already here if you can afford the payments (+1 on market segment concept!). Most everyone on this forum agrees the performance tipping point was passed a long time ago (take a test drive!). The daily-driver/200-mile-or-less convenience tipping point was passed w/ the intro of the Model S. The family holiday/500-mile-per-day tipping point is being taken down now w/ the Supercharger roll out. Some are lucky enough to have enough near them now. In the US by 2015 there will be enough for no-worry long-distance traveling. Europe and Asia will not be far behind.

As some have shown not everyone agrees that 200-mile range + a Supercharger is enough. But I think there are only two things remaining for a total tipping point:

Battery Production Capacity - the Gigafactory will cover 500K Tesla vehicles by 2020, and that assumes no glitches. That will also double current world-wide capacity! Which brings me to point two...
BEV Production Capacity - Tesla Motors has shown the way forward, but not everyone has seen it. Until other car makers put full weight into BEV production, plenty who see the total tipping point will simply not be able to buy a BEV.

Al1 | 24. August 2014


"The auto market is segmented with distinct products and price points. Like crude oil, the different fractions have different boiling points!"

That is correct and it makes sense to go after higher profit first.

But this is also the world as we know it. Why you can have a 30 year mortgage, but can't have 30 year car loan?

Because you can't drive the same car for 30 years. There are miles per gallon standards, emissions standards, you won't find spare moving parts for cars that old.

But this is all about ICE cars!

100 K upfront is Tesla's choice. It is not Tesla's limitation.

Benz | 24. August 2014

@ Kleist

You do actually have a good point there.

Both Elon Musk and JB Straubel have already said before that they are confident that there will be higher density battery cells. And that they don't need some kind of a miracle to get there. But that they actually would be making new battery packs using these higher density battery cells in 2014 already, that's a kind of a surprise to me.

Elon Musk and JB Straubel were talking about the lower weight of the Tesla Model S on the Conference Call. But they didn't say that that was because of different battery cells. Maybe they deliberately didn't want to say that because they don't want to show all their cards?

I remember that somebody in the US posted a video a few weeks ago about when his Tesla Model S stopped in the middle of the night. Tesla called him, came to him to take the car to a service center, and then returned his car with a brandnew battery pack. The man was delighted about the service. But the point is that his old battery pack was labelled with an "A" and the new battery pack was labelled with a "B".

So, maybe you are right. They could indeed already be using those new higher density battery cells in their new battery packs. Which will contain fewer battery cells, and therefore will be lighter.

But at some point in the near future they will have to reveal the existance of these higher density battery cells and some of the technical details of these higher density battery cells. Next year already, or maybe in 2016?

negarholger | 24. August 2014

@Benz - we are already at least pack version D.

There is inherent flexibility in the Tesla battery system... in a very simplistic view the original battery is an array of let's say 100 rows and 77 columns. Improve the energy density by 10% of the individual cell and you can leave 7 columns empty or the array is now 100x70, but has the same 85 kWh capacity. The beauty is Tesla could utilize every 2% of improvement and immediately take the cost advantage and the customer would never know about it.

In a situation where you are battery cell constraint it is even better - 10% less cells allows you build 10% more cars. 10% more cars has the same financial impact as reducing the cost of the car by about $3k... I am sure Tesla knows of the inherent advantage of their battery design ( that is manufacturing 101 ) and uses it when it makes sense. We often put next products components in current products... typically gains a little yield and has the advantage that the component ramps to full production before the next product hits the market. The next product has unexpected good market acceptance... no problem our component pipeline is already fully populated.

Fluvio | 24. August 2014

Many good points so far. There's also the tipping point for those needing utility, which I admit is a small proportion of drivers. I'm a homeowner - I need a vehicle that can carry landscaping supplies, lumber, tools, make runs to the dump, etc. I'm also an outdoor enthusiast. I travel frequently to, from, and through remote areas that are far, far away from Supercharger locations. My day job places me on mountain roads well outside of cell phone coverage.

So - reliable and inexpensive to own and maintain ICE sport wagons (e.g., Subarus) and trucks (e.g., Toyota Tacoma) fit my current needs very well. I'd love a Tesla version of a Tacoma or Outback that I could drive and charge across the areas of the western United States where I work and play. It will come, but it will take time.

For short errands/commutes (say less than 5 or even 10 miles), I try to pedal or walk when possible. I'd use public transit, but the infrastructure mostly sucks and is inconvenient in most of our small to medium-sized cities. Something like a Leaf would handle short, daily commutes and errands well, but that means owning more than one vehicle. My concept of sustainable transport includes using human powered transport whenever possible and owning as few cars as possible.

On the other hand, my girlfriend is retired and seldom needs to travel outside of town. She needs one car. She loves her Model S and I''m delighted she has one even though her odometer is now pushing only 5,500 miles after a year of ownership.

Guy2095 | 24. August 2014

@Red Sage;

I hate to post info on the "wrong" side of the argument but as of July 2014 the average U.S. cost of electricity is no longer $.11 but has risen to $.13.

It seems recently that gas prices are actually declining while electricity rates have been climbing faster than inflation for several years and the next few years look even worse.

The new electric utility consensus toward solar has become to fight it as hard as they can unless they own and control it while pushing to make as much as they can for as long they can, letting the next CEO worry about the future.

Bubba2000 | 24. August 2014

Looking at the battery specialists Tesla is hiring per the web page, they are no standing still. Improvements may have been done on the electrodes, Li-ion electrolyte, polymer stabilizer additives, etc. The mechanics, thermodynamics, electrical efficiency of the battery pack could all be improved at the margins, along with weight reduction. The high power inverter efficiency has increased with time over the years, and the size+wt reduction is impressive. The software that controls the frequency, current, voltage, etc could be continuously improved, thus improving the efficiency of the motor. Even motor design, winding geometry mods could improve EMF efficiency.

I think the tipping point for Model S and X will happen within 12 months. Tesla will refine Model S, X including electronics like ACC, auto pilot, etc. most important will be the critical density of the SC network and local charging. Once range anxiety is gone, the network effect will drive demand and maintain pricing power. Just like ubiquitous internet broadband drove demand for PCs starting in 1995. Yes, the range may not be as good as a A7/8, or S class... But fuel cost will be just a fraction for Model S, X. Again, we are not comparing with stripped Honda Fit, Prius, etc, a very different segment. Very disruptive... Like discussed in Innovator's Dilemma book.

negarholger | 24. August 2014

Couldn't resist

negarholger | 24. August 2014

Sorry - but there is only tipping point for the industry: when you can build a electric car for less cost then a comparable gasoline car - it is of no relevance in what market segment it happens.

Model S is still a slightly overweight (30%) and slightly expensive (50%) date. (note: in terms of the propulsion system ) Model X will be the same. But both are worth it.

MS and MX will be on a weight and cost diet, but that alone will not get them there. Only a new design can achieve it.

Remnant | 25. August 2014

@ Bubba2000 (August 24, 2014)

<< The mechanics, thermodynamics, electrical efficiency of the battery pack could all be improved at the margins, along with weight reduction. >>

Indeed, here is such an instance:

"Win Inertia's SHAD® hybrid control technology (international patent pending) [is able] to integrate batteries and Maxwell ultracapacitors to increase energy recovery efficiency and reduce stress on the batteries, thereby extending battery life."

Tiebreaker | 25. August 2014

The tipping point for me is when the TCO of a Tesla becomes equal to the TCO of my current ride. Either gasoline prices go up, or Tesla's EV price goes down, probably both.

For the current S60, it is if gasoline price goes between $7 and $8 a gallon. For M3 at $35-45K, it will already be beyond the tipping point.

jonlivesay | 25. August 2014

Let's make it simple. Tipping point was when Model S started rolling off line , every other moment is just Tesla moving down their path while picking up momentum. By 2017 the momentum will be amazing! Patience it's coming.

jordanrichard | 25. August 2014

jonlivesay +1. After 4 1/2 months of ownership, I have flat out lost count of how many people stopped to comment how gorgeous the car was and of course who makes it. When I tell them it's an electric car they essentially say WTF!!! The car did and continues to do what Elon and company set out to do, completely re-write what an electric car looks like.

Tiebreaker | 25. August 2014

No need to wait for a $21K Tesla.

I know everything about the car, I know how gorgeous it is, I know all the benefits. Yet I still cannot justify/afford the purchase. Same for the vast majority of Americans. It needs to compare favorably with a mainstream $25K ICE family car.

At $35-45K, it is a slam dunk. For a $40K Model 3, with $5K down and a 5 year 3% $35K auto-loan, the loan payment increase over a $25K ICE would be comparable to the ICE's gas expenditure for 2,000 miles/year. And then some more. TCO becomes comparable to a lowly Honda Accord LX, or Camry LE.

Tiebreaker | 25. August 2014

I know everything about Model S, it is...

Red Sage ca us | 25. August 2014

Which is why I say people will 'run the numbers' and choose to keep their old cars a while longer, save a little more cash up front, put in a reservation, then put through an order, and wait for delivery of a new Tesla, instead of getting another Accord, Camry, Altima, or Fusion...

Tiebreaker | 25. August 2014

Cr@p no edit: 2,000 miles/month, not year.

Al1 | 25. August 2014

"Which is why I say people will 'run the numbers' and choose to keep their old cars a while longer",

And then others will run the numbers and decide to buy a used rather than a new car. And then ICE car manufacturers will start feeling the urge to reduce prices.

They need to sell new cars and at a higher margin to remain in the business.

jonlivesay | 25. August 2014

Let's make it simple. Tipping point was when Model S started rolling off line , every other moment is just Tesla moving down their path while picking up momentum. By 2017 the momentum will be amazing! Patience it's coming.

Red Sage ca us | 25. August 2014

And then car dealerships will run the numbers and realize people are selling their old cars just to get cash to buy a Tesla. So the resale value on every ICE will drop like a rock.

Rocky_H | 25. August 2014

The fuel cost savings has a bigger and bigger impact the farther down you go, because it's a much bigger percentage of the car's price. Most of the people I know just don't/can't buy $70K+ cars. But we talk about the upcoming Model 3, and when I talk about how much cheaper a vehicle is to run on electricity versus gasoline, then I make the comparison that a $40K electric car to a $30K gas car is pretty much even. All the people I've told about that get the comparison and agree with it. So electrics don't even have to reach less than or equal to on the car's price. That "electric fuel discount" effectively puts it into price consideration with the Accords and Camrys (Camries?) that are about $28-32K.

Bubba2000 | 25. August 2014

How come nobody talks about the Tipping Point of Mercedes S Class? I mean that thing in popular configuration costs around $120K ASP. Is the price of this car supposed to fall to the range of a Toyota Camry? Of course not! It is totally different kind of car and is judged by the features it offers in the price range relative to other cars in the same class. The market for cars, SUVs, etc is segmented. Each with separate price vs specs.

As Tesla expands the SC networks, local HPWCs are added, features, range, charge times, etc improve perceive value of Model S. X will increase driving demand and profit margins. Some of this is already happening.

Suggest reading "Gorilla Game" by jeffrey Moore. The books discusses disruptive technology, proprietary tech, crossing the chasm, explosive tornado growth. Some of this discussion may not apply to Tesla, but helps understand the market.

Grinnin'.VA | 26. August 2014

@Red Sage | AUGUST 25, 2014

"And then car dealerships will run the numbers and realize people are selling their old cars just to get cash to buy a Tesla. So the resale value on every ICE will drop like a rock."

I don't expect any time in the BEV transformation when "... the resale value on every ICE will drop like a rock." Rather, the transformation will be gradual. At least a full decade will go by as ICE market share drops slowly.

Ron :)

Rocky_H | 26. August 2014

Yes, it probably will be gradual. We know how many people make their decisions based on thoughtful analysis of the relevant data, especially when it comes to car purchasing. *rolls eyes*

There's a lot of resistance to the new and different.

ghillair | 26. August 2014

As much as we all would love to see every new car made be a BEV by 2020 or at least 2025, we must look at the facts.

Tesla has been and still is limit in their production by battery supply. The giga factory when in full production (2020?) will produce enough batteries for 500,000 cars a year. That is less than 1% of new car sales.

That says that if we want half the new car sales to be BEV, you need somewhere between 80 and 100 giga factories. It will take a major effort by the entire industry (automotive and Battery) to built that kind of infrastructure. Maybe 2035 - 2040.

Anemometer | 26. August 2014

As others have said the typing point is part. On a cost by cost comparison you would be mad not to choose a Tesla. The Roadster was a bit over priced when you ciliate it to say a lotus Elise but still a unique car. The S however is an executive class performance EV that covers most of people's needs. As they add more models they will be price comparable.

I think everyone forgets you can't just stay off and expect to sell a car that everyone can afford. Tech starts in high spec cars and works it way down to lesser cars. Think of ABS, Power steering, Sat navs, ESP. When first introduced they were luxury features, but now offered on entry level cars like the Ford Fiesta.

I reckon you'll see a Ford Fiesta EV when a 22kWh pack adds less than a 30% premium, or Tesla sell a sub $20,000 compact. Not for a while I expect but maybe early 2020's.

Anemometer | 26. August 2014

Aargh I hate the lack of edit. I give up.

negarholger | 26. August 2014

If the transition would be gradual then there is no tipping point.

The used car market is larger then the new car market in terms of number of cars... once used gasoline cars sell for a discount compared to used electric cars then it will also affect the new car market as leases for gasoline cars will be more expensive. Guess what will happen then...

Benz | 26. August 2014

Probably there isn't just only one tipping point, but several. Maybe at least one tipping point every year?

Al1 | 26. August 2014

ALG estimated that the average new vehicle will retain 49.4 percent of its value after three years by 2017... By 2019, the average residual value might dip to 46 percent, where it was before 2008, the TrueCar unit said.

How many of you actually believe, that ICE cars will indeed hold 46% of their value by 2019? The biggest variable here is progress electric cars will make in the next five years.

Run the numbers for total cost of ownership for a five year old Camry five years from now versus new Model 3. Now rerun them for seven years, cause most likely you won't really be able to sell it.

Then try to do the same for Mercedes S class.

Tipping point is not in technology revolution. That is already taking place. It is in people's minds.

Al1 | 26. August 2014

PS: I think giving how old technology is nobody should be even considering buying a new ICE car without resale value guarantee.