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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.

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Bruce Westerman, the Capitol, a data center, and power lines.
Heatmap Illustration/Getty Images

After many months of will-they-won’t-they, it seems that the dream (or nightmare, to some) of getting a permitting reform bill through Congress is squarely back on the table.

“Permitting reform” has become a catch-all term for various ways of taking a machete to the thicket of bureaucracy bogging down infrastructure projects. Comprehensive permitting reform has been tried before but never quite succeeded. Now, a bipartisan group of lawmakers in the House are taking another stab at it with the SPEED Act, which passed the House Natural Resources Committee the week before Thanksgiving. The bill attempts to untangle just one portion of the permitting process — the National Environmental Policy Act, or NEPA.

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Hotspots

GOP Lawmaker Asks FAA to Rescind Wind Farm Approval

And more on the week’s biggest fights around renewable energy.

The United States.
Heatmap Illustration/Getty Images

1. Benton County, Washington – The Horse Heaven wind farm in Washington State could become the next Lava Ridge — if the Federal Aviation Administration wants to take up the cause.

  • On Monday, Dan Newhouse, Republican congressman of Washington, sent a letter to the FAA asking them to review previous approvals for Horse Heaven, claiming that the project’s development would significantly impede upon air traffic into the third largest airport in the state, which he said is located ten miles from the project site. To make this claim Newhouse relied entirely on the height of the turbines. He did not reference any specific study finding issues.
  • There’s a wee bit of irony here: Horse Heaven – a project proposed by Scout Clean Energy – first set up an agreement to avoid air navigation issues under the first Trump administration. Nevertheless, Newhouse asked the agency to revisit the determination. “There remains a great deal of concern about its impact on safe and reliable air operations,” he wrote. “I believe a rigorous re-examination of the prior determination of no hazard is essential to properly and accurately assess this project’s impact on the community.”
  • The “concern” Newhouse is referencing: a letter sent from residents in his district in eastern Washington whose fight against Horse Heaven I previously chronicled a full year ago for The Fight. In a letter to the FAA in September, which Newhouse endorsed, these residents wrote there were flaws under the first agreement for Horse Heaven that failed to take into account the full height of the turbines.
  • I was first to chronicle the risk of the FAA grounding wind project development at the beginning of the Trump administration. If this cause is taken up by the agency I do believe it will send chills down the spines of other project developers because, up until now, the agency has not been weaponized against the wind industry like the Interior Department or other vectors of the Transportation Department (the FAA is under their purview).
  • When asked for comment, FAA spokesman Steven Kulm told me: “We will respond to the Congressman directly.” Kulm did not respond to an additional request for comment on whether the agency agreed with the claims about Horse Heaven impacting air traffic.

2. Dukes County, Massachusetts – The Trump administration signaled this week it will rescind the approvals for the New England 1 offshore wind project.

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Q&A

How Rep. Sean Casten Is Thinking of Permitting Reform

A conversation with the co-chair of the House Sustainable Energy and Environment Coalition

Rep. Sean Casten.
Heatmap Illustration

This week’s conversation is with Rep. Sean Casten, co-chair of the House Sustainable Energy and Environment Coalition – a group of climate hawkish Democratic lawmakers in the U.S. House of Representatives. Casten and another lawmaker, Rep. Mike Levin, recently released the coalition’s priority permitting reform package known as the Cheap Energy Act, which stands in stark contrast to many of the permitting ideas gaining Republican support in Congress today. I reached out to talk about the state of play on permitting, where renewables projects fit on Democrats’ priority list in bipartisan talks, and whether lawmakers will ever address the major barrier we talk about every week here in The Fight: local control. Our chat wound up immensely informative and this is maybe my favorite Q&A I’ve had the liberty to write so far in this newsletter’s history.

The following conversation was lightly edited for clarity.

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