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’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
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
Carbon Removal

Tensions Mount at Greenhouse Gas Protocol as Scientist Resigns in Protest

The move by University of Pennsylvania researcher Danny Cullenward intensifies a debate over integrity at the carbon accounting organization.

A handshake amidst smokestacks.
Heatmap Illustration/Getty Images

A well-known scientist has resigned from the independent oversight board of the Greenhouse Gas Protocol, renewing questions about the integrity of one of the world’s most important arbiters of carbon emissions standards.

Danny Cullenward, who is also an economist and lawyer, notified the organization’s leadership on Monday that he no longer has “any confidence in the Protocol’s governance structure,” according to his resignation letter, which he posted publicly. He had previously tried to sound alarms about the organization and its lack of transparency in a paper he published in April.

Keep reading...Show less
Yellow
Electric Vehicles

Rivian Did It

The U.S. electric vehicle maker’s make-or-break model, the R2, is finally here — and it’s pretty fun to drive.

A Rivian R2.
Heatmap Illustration/Rivian

The attainable Rivian is here, and not a moment too soon.

It’s been nearly a decade since the U.S.-based startup revealed its prestige R1T pickup truck and R1S SUV, earning plenty of “the next Tesla” hype and becoming lots of people’s favorite electric car brand. But with those R1 vehicles starting around $70,000 — and with nicer versions hitting six digits — lots of would-be drivers have been waiting for R2, the scaled-down vehicle first announced in 2024 and meant to take Rivian to the masses.

Keep reading...Show less
Blue
AM Briefing

Great Tokamak Mountains

On Chinese nuclear, Mongolian uranium, and screwworm spreading

A future fusion plant.
Heatmap Illustration/Getty Images

Current conditions: China has triggered emergency warnings across six provinces as heavy rainfall floods the countryside • A magnitude 7.8 earthquake struck the Philippines, leaving at least 32 dead and more than 100 injured in building collapses • Temperatures in Albuquerque, New Mexico, are rising near 100 degrees Fahrenheit.


THE TOP FIVE

1. Tennessee becomes the first state to officially regulate fusion energy

On Tuesday, Tennessee is set to become the first state in the nation with its own regulatory framework for nuclear fusion plants. You may be wondering, why Tennessee? The two-word answer: Oak Ridge. The Volunteer State has operated as a hub for nuclear energy research and development for more than 60 years, feeding off both the Oak Ridge National Laboratory and the Tennessee Valley Authority’s capacity to help commercialize new technologies. Now state regulators are establishing the first dedicated rulebook for building future fusion plants. “Tennessee has been named the top state in the nation for nuclear energy industry growth, and for good reason,” David Salyers, the commissioner of the Tennessee Department of Environment and Conservation, said in a statement. “This latest step supercharges our reputation as the global hub for nuclear innovation and positions us as the most responsive state to new advanced nuclear companies clamoring to call Tennessee home.”

Keep reading...Show less
Blue