Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Electric Vehicles

Tesla Is Finally Doing the Smart, Obvious Thing

It’s not too late for “Redwood.”

•
A Tesla and redwoods.
Heatmap Illustration/Getty Images, Tesla

Elon Musk tried to soften the blow.

On a call with investors last week, the Tesla chief warned of a “gap year” for the company. Its tremendous sales driven by the Model Y crossover would slow, while Tesla’s promised next wave of success was at least a year away. That phase would be powered by “Project Redwood,” a new platform on which Tesla would build a new, smaller crossover starting in the middle of 2025.

It can’t come soon enough. Despite the company’s waning market dominance, it’s still true that as Tesla goes, so goes the EV industry — and frankly, the entire industry feels like it’s entering a gap stage.

Perhaps you’ve heard that the EV vibes are bad. Over the past several months, publications have reported that the world is entering an EV slowdown, and executives like General Motors CEO Mary Barra have given interviews warning of some EV winter. The emerging narrative is that buyer demand for electric is weakening, and that just maybe the automakers got ahead of themselves by racing to electrify their lineups. But as Heatmap showed, that notion is not quite correct.

There is worrying data, yes. Truck buyers, for example, may not have the appetite for electric Ford F-150s and Chevy Silverados to support a mass transition, at least not yet. Lagging charging infrastructure in many parts of the country certainly makes some potential buyers skittish. Yet the traditional automakers’ electric woes arise from more banal concerns, such as rising interest rates dinging all auto sales, and especially Musk’s big price war. Tesla slashed its prices multiple times in 2023, forcing the likes of Ford to do the same and lose money on its Mach-E electric crossover, for example.

The numbers don’t support the case that consumer EV demand has fallen off a cliff. Instead, it looks more like this particular stage of EV development is coming to an end while the next one isn’t quite ready to begin.

Just look at the electric vehicles on offer. Of the best-selling EVs in America that aren’t Teslas, most fit the mold of the industry-leading Model Y, a sleek crossover with about 300 miles of range, with a price tag in the neighborhood of $40,000. The Kia EV6, Hyundai Ioniq5, Volkswagen ID.4, and Ford Mustang Mach-E landed in the top 10 by following this pattern.

Heatmap’s Robinson Meyer has noted that Hyundai and Kia, in particular, have cracked the code of this particular EV moment by offering several varieties of electric (and plug-in electric hybrid) crossover and SUVs in this price range to meet America’s endless appetite for them. Seen in this light, Ford and GM’s struggles are less about waning consumer demand for electrics and more about the fact that Ford didn’t follow up the Mustang Mach-E by flooding the zone with EV versions of the Edge, Explorer, and Escape.

As EVs continue to improve, Meyer noted, more people will go electric not out of environmental concern or because of price shopping, but simply because EVs will be better cars than their combustion counterparts, cold stop. Yet there is another inescapable fact: No matter how long monthly payment plans get, not everybody can afford a $40,000 car, electric or otherwise. (The shifting nature of federal tax credits doesn’t help, nor does the tendency of the dealership system to slap on thousands of dollars of bogus fees on top of the MSRP.)

The next phase of electrification is the true entry-level EV. Price is the killer app, and nothing would reinvigorate EV demand in America like the realization of Musk’s long-teased dream — a $25,000 vehicle that could compete with compact cars like the Honda Civic and Mazda3, or even a $30,000 compact SUV that would go up against the Toyota RAV4s and Honda CR-Vs that patrol American suburbs.

This is, of course, maddeningly difficult to accomplish given battery economics and the tremendous costs involved in designing and manufacturing new vehicles. Tesla’s plan hinges on its “unboxed” manufacturing process that would slash the time its Gigafactories require to build a new vehicle, thus making it more profitable to sell a higher volume of cheaper cars.

As I’ve argued, Tesla could have been further along in this quest if it hadn’t wasted so much time and attention on Musk’s pet distraction, the Cybertruck. Indeed, the company’s future rests not in a stainless steel lightning rod, but in the more boring reality of selling cars to Americans that Hyundai and Kia have already figured out. Just give us various sizes of not-that-different crossovers, and try to keep the price down if you can.

Thanks to the Cybertruck distraction, and Musk’s adoration of the whooshing sound deadlines make as they fly by, it will be some time before Tesla’s car of the future can hit the road. It won’t doom the company — Musk has delivered bad news during earnings calls before that tanked Tesla’s stock price, but only temporarily. And when “Redwood” finally arrives (along with the return of the much-beloved and affordable Chevy Bolt), Tesla may yet again pull the industry along with it.

If that means the start of a new phase, in which most Americans can actually afford an EV, then it’ll be worth the delay.

Green
🔒

You’ve reached your free article limit

Subscribe to Heatmap News for unlimited access to daily energy and climate coverage.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Q&A

Why the Wilderness Society Backs a Data Center Moratorium

Talking with Dan Hartinger, the land conservation group’s senior policy director.

The Q&A subject.
Heatmap Illustration

This week’s Q&A is with Dan Hartinger, senior policy director for The Wilderness Society, a prominent land conservation organization in D.C. that this week called for a moratorium on data center development on public land. The public statement was relatively scant on details about the group’s stance, and a decade of reporting on policy in Washington has taught me that its positions are quite influential, especially in more traditional outdoor recreation and conservationist circles that are also often bipartisan. So I reached out and asked if someone could further explain the society’s position, and Dan obliged.

The following chat was lightly edited for clarity.

Keep reading...Show less
Yellow
Hotspots

Data Center Outrage Catches Up to Renewables Outrage in Michigan

Plus more of the week’s biggest development fights.

The United States.
Heatmap Illustration/Getty Images

1. Central Michigan – I regret to inform you of this back-and-forth between candidates running for Congress and a would-be constituent because it’s a warning sign for the renewable energy sector (and sort of broke my brain).

  • This week brought the first and likely only debate between Rep. Tom Barrett and Sunrise Movement cofounder Will Lawrence, who are locked in a tight contest over the Michigan 7th congressional district. As I’ve written, their race is a must-watch not only for control of the U.S. House but also the political fortunes of the data center sector.
  • The debate contained a remarkable exchange: Moderators played taped remarks from Paula Caltrider, identified as “a local resident” in the city of Mason to ask the candidates a question about data centers. Instead, she offered a comment. “You know, you can’t be a part of this no data center movement without renouncing the large solar farms and dangerous battery storage facilities that power these data centers.” (Quick TL;DR on Caltrider: She’s been quoted in national media coverage of the data center backlash and last year won a legal settlement after allegedly being fired for refusing a vaccine mandate.)
  • Barrett then ran with Caltrider’s baton. “I appreciate Paula linking these together, the stripping away of local control that took place in pursuit of this Green New Deal agenda in Lansing that took away control from communities” – a reference to the state’s primacy law that other Michigan Republican candidates have opposed.
  • Lawrence, whose support for a federal data center moratorium made him a national political test case, did not take the bait, nor did he criticize renewable energy. Instead, this part of the debate became a tit-for-tat about whether the sitting congressman once backed tax breaks for data centers. “He stuck his finger up into the wind, saw which way it was blowing, did a complete 180 on this issue,” Lawrence said. Then Barrett and Lawrence got into a confusing back-and-forth about whether the Inflation Reduction Act was a giveaway to data centers.
  • To the best of my knowledge, this is the first time the Data Center Trojan Horse has reared its ugly head on any kind of prominent debate stage, but it won’t be the last. For example: The Wisconsin gubernatorial debate is Oct. 21, and we’ve warned you about that one.

2. Doña Ana County, New Mexico – I suggest you pay closer attention to the federal permitting fight playing out over Oracle’s Project Jupiter.

Keep reading...Show less
Yellow
Spotlight

The Data Center Backlash Is Coming for Permitting Reform

The Senate’s compromise bill enters the chat at a moment when federal land and anti-pipeline advocates are already quite activated.

The Capitol and a data center.
Heatmap Illustration/Getty Images

The AI data center backlash is getting louder in D.C. ahead of the midterms – and it’s poised to collide head-on with the new permitting reform deal being negotiated in Congress.

This week, major environmental advocacy organizations are taking large public steps to lean in on the data center fight. The League of Conservation Voters and Natural Resources Defense Council, I’ve been told, are imminently announcing a $250,000 ad buy in the Washington, D.C. market focused entirely on decrying fossil fuel-powered data centers and Trump administration policies to speed up their construction. The Wilderness Society, a prominent land conservation organization, announced it now supports a moratorium against data centers on “public lands” focused on the roughly half billion acres under the Interior Department’s stewardship. And Earthjustice on Thursday did a detailed report claiming that 80% of the data centers under development “bringing their own power” are going to rely on gas generation.

Keep reading...Show less
Yellow