Elon Musk has announced the rollout of the Tesla Model 3, which he claims is the car for the masses. But what he really means is that it is a car paid for by the masses.
Tesla prominently features the various incentives and credits available to prospective buyers. Purchasers of the $35,000 Model 3 get a $7,500 tax credit—21 percent. In addition, some states provide tax credits or rebates that can range from $1,000 to $5,000, with Colorado at the high end. Plus, owners of electric vehicles (EVs) often get to use HOV lanes without charge, free parking, and rebates on home chargers. A recent study from management consultant firm Arthur D. Little (ADL) concluded that the 20-year total cost of ownership of an electric vehicle is substantially higher than that of a gasoline vehicle, excluding these government subsidies and incentives. This is due primarily to differences in manufacturing costs and the cost of alternative transportation for trips beyond the EV charging range.
Rebates and credits are incentives intended to stimulate the use of zero emission vehicles. However, while EVs don’t produce emissions, the production of them and their batteries do. The ADL study concluded that electric vehicles are not as green as the marketing suggests. The battery pack needs to be charged using charging stations that are on the electrical grid, which is primarily powered by coal and natural gas. In addition, the battery manufacture requires energy to produce. ADL concludes that these emissions are higher than emissions from manufacturing a similar sized conventional vehicle—“12 thousand to 17 thousand pounds more CO2 emissions” than for a compact and mid-sized gasoline car. For mid-size cars, EVs have higher total emissions through year 3 due to these higher manufacturing emissions.
The list of things that are not what they appear to be does not stop there. The Model 3 is advertised to go 215 miles between charges. That range is under optimum driving conditions. Professor Jeremy Michalek, a mechanical engineer at Carnegie Mellon, conducted a study of climate factors that affect EV efficiency. Although the study was based on data from 2012 and 2013 Nissan Leaf drivers, the results can be generalized to all lithium-ion battery powered vehicles. He found that on average EVs consume about 15 percent more energy per mile when driven in Minneapolis or Phoenix. Driving with either the air conditioner or heat running drains the battery faster because batteries are less efficient in extremely cold or hot conditions. Professor Michalek’s study concluded, “during peak days where the temperature is at its extreme, the range could drop by 40 percent or more."
There is more bad news to contend with. If a Tesla has a flat tire or malfunction on the road, it has to be serviced by a Tesla service center or truck. This can mean hours of being stranded until a service truck arrives. For example, Tesla has a service center in Northern Virginia. If a Tesla has a flat tire in the Williamsburg, Virginia, area, the driver has to wait for a truck to drive about 145 miles to fix the flat. In rush hour, that could take upwards of 4 hours. In 2016 Tesla had fewer than 100 service centers nationwide.
Driving an environmental status symbol might make Tesla owners feel good about themselves, but it is doubtful that most Americans are willing to pay the real cost of going green until battery technology greatly improves. Lithium-ion batteries are the technology that has made the current generation of EVs possible. However, many researchers believe they are rapidly approaching their technical limit. Although breakthroughs in lithium technology have taken place, it can take years to go from the laboratory to the marketplace.
Despite Tesla’s marketing, EVs are on the distant horizon rather than around the corner.
William O'Keefe is the former CEO of the George C. Marshall Institute and president of Solutions Consulting. You can follow him on Twitter here.
Interested in real economic insights? Want to stay ahead of the competition? Each weekday morning, e21 delivers a short email that includes e21 exclusive commentaries and the latest market news and updates from Washington. Sign up for the e21 Morning eBrief.
Photo by iStock