Toyota recently announced it was ending its electric vehicle parts contract with Tesla.
Yet there was very little discussion of what this seemingly ominous announcement about the future of electric vehicles seemed to imply.
Today, Morgan Stanley’s Adam Jones stepped up. In a new research note titled “EVs are Dead, Long Live TSLA!,” he explains what news like Toyota’s plug-pull on Tesla means: “The auto industry’s push into EVs has fallen far short of expectations.”
Jonas says that where analysts once believed EVs could comprise up to 10% of the market by 2020, reaching 1% penetration would now seem “respectable”. Ford Focus EVs, for instance, accounted for just 0.07% of the company’s Q1 sales. Jonas also recounts how Fiat-Chrysler CEO Sergio Marchionne recently explicitly told an audience they should not buy a Fiat 500e, since the company loses $US14,000 on each vehicle.
Despite all that, he is still bullish on Tesla. Why? Because Teslas are so cool that they alone possess the ability to outlive the broader EV sector — though there’s no guarantee it ultimately will:
Tesla’s true success is making compelling performance vehicles that just happen to be EVs. A true democratization of EVs? We don’t even expect the Gigafactory to turn that optionality into a reality any time soon. We’ll never know… but we believe if the Model S had 2x the battery range but was unexciting to drive, it would be far less successful than it is today. To be a winner, the Gen 3 must first and foremost be an absolute riot to drive. Electric range comes second.
To meet new emissions targets, Jonas says, traditional automakers are increasingly turning to fuel cell vehicles, and making improvements on the standard internal combustion engine.
“Autonomous technology takes fuel efficiency to entirely new levels, ultimately making a 100mpg ICE vehicle an attainable goal,” he says.
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