How Tesla Lost The Race For Affordable EVs To An Unexpected Rival

INAugust 2006, before Tesla had built its first electric car, Elon Musk published his first “Master Plan” for the company with a singular goal: transform the environmentally unfriendly auto industry into a friendly one by selling pricey electric cars that would underwrite the development of affordable ones.“When someone buys the Tesla Roadster sports car, they are actually helping pay for development of the low-cost family car,” Musk wrote. Tesla has since rolled out four models cheaper than the $98,000 Roadster it started with in 2008, but none have been priced affordably or achieved Musk’s often-repeated goal of becoming a true mass-market brand. Instead, the company has remained focused on cars with luxury prices: Teslas start at about $50,000 and their average selling price is $68,000, according to Kelley Blue Book. That’s well above the $30,000 to $45,000 price range most industry observers think is the sweet spot for “the low-cost family car” Musk envisioned—a sweet spot that one of Tesla’s unlikeliest rivals just hit. Tesla has now lost the affordable EV race to General Motors, which spurred Tesla’s creation after quitting the electric vehicle business 20 years ago. The Detroit-based automaker will offer its 2023 Bolt hatchback for only $26,600, slashing the previous sticker price by $6,300. The slightly bigger Bolt EUV loaded up with a high-end audio system, camera-based rearview mirror, sunroof and Super Cruise for hands-free highway driving costs just over $34,000. And GM is offering another cheap EV next year: An electric Equinox crossover that gets 300 miles per charge priced from $30,000, which is in line with gasoline-fueled rivals like Honda’s CR-V and Toyota’s RAV4.“GM was the first full-line manufacturer to bring a long-range, affordable EV to market with the Bolt EV when it launched back in 2017, and that remains a priority,” GM President Mark Reuss tells Forbes, without commenting on Tesla. Ruess says GM decided to reintroduce Bolt at the “lowest price point in market” to “help drive EV sales and adoption.”And they could soon get even cheaper. A proposed extension of federal EV tax credits is making its way through Congress in the so-called Inflation Reduction Act of 2022. The bill, if passed, could cut the effective base price for a five-passenger Bolt to less than $20,000 through a new $7,500 tax credit, available at the time of purchase. Making electric vehicles cheaper is vital as rising greenhouse emissions spur heatwaves, drought and increasingly intense storms. That’s because petroleum-powered cars and trucks are the top source of U. S. carbon emissions, accounting for more than a third last year. To dramatically cut them, EVs have to go mainstream—and making them affordable to the average American is a first necessary step. There are also potential bragging rights for companies that do.

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