Dh10,000 deposit for a Tesla Model 3 in the UAE

DUBAI: Tesla electric vehicles are fun, fast and sexy. It’s the Apple of EVs.

Now, the more “affordable” Model 3 is already available in the UAE in three trims — Standard Range Plus (Dh159,900, $43,216), Long Range (Dh189,900, $51,324) and Performance (Dh215,000) — but only on pre-order basis.

To book your unit, give a Dh10,000 deposit, or earnest money, online. Then wait for delivery due in “early 2020”.

At the moment, the bigger siblings of the Model 3 are even more prohibitively priced, and they command a Dh20,000 deposit in the UAE.

Tesla commands an elite pedigree, though compared to other premium European EV brands, Teslas are more affordable, with better range.

Would EVs go the way of mobile phones? The first cellfones were bulky and pricey — and no apps. With most iPhones made in China, and the iPhone XR now made in India, would the Tesla price/performance story go the same way?

Tesla’s $2 billion Gigafactory in Shanghai is almost done, and slated to begin producing vehicles by April 2020.

A test production run could start any minute now. On October 21, Monday, China’s Ministry of Industry and Information Technology added Tesla to a list of approved automakers, clearing the EV maker to begin production in the country, Reuters reported.

With that greenlight from Chinese authorities, Tesla’s Shanghai factory will debut with the Model 3, enabling the company to sell its domestically-produced unit in China at a much lower price.

The China-made Model 3 Standard Range Plus will reportedly cost $47,529, less 13% than what Chinese consumers are currently paying to import basic Model 3s from the US — but more than the $43,216 price tag in the UAE (units produced in Fremont, California).

That’s still a far cry from the $35,000 promised by Elon for a base Model 3.

Shanghai could make the price drop to a $25,000 to $30,000 price range for a Tesla EV possible, but it’s hard to say when that would happen. And that also depends on few key conditions:

• Tesla’s Shanghai Gigafactory run rate: How soon would it match the US factory (about 7,000 unit per week)?
• Would the US factory hit a 10,000/week production rate target soon?
• Would the planned European Gigafactory follow closely on the heels of the Shanghai factory?
• Tesla’s Lithium-ion battery: How much performance can be squeezed into the pack, enough to last 1,000 km on one charge??
• Would Tesla’s purchase of Maxwell, Hibar Systems and DeepScale result in better EVs?
• Would EV batteries continue to improve in power density (from current 207wh/kg to 300 W/kg) and cost?
• Autonomous: How soon would Tesla reach the top (Level 5) autonomy, which requires no human intervention, and when?

But with the minimum EV standards already set by Tesla, with the Model S, X, and 3 (Model Y reportedly promised some time in 2020) setting off an explosion of global demand, it’s not hard to envision a possible disruption in the global transport industry.

As for the Shanghai factory, drone footage from the most ardent Tesla watchers shown what’s happening there.

Ignore EV technology at your own peril

Despite its production kinks and an army of Tesla-haters betting on its banktruptcy, the company has proven its resilience, thereby capturing the imagination of Wall Street.

In 2013, when Tesla’s stock stood at $121 a share, Bank Of America’s analysis team had set a “price target”, expecting it to drop to $39.

A year later, in 2014, company issued a guidance estimating that “a $120 share price implies over 321K vehicle sales in 2020, which is a full 300K units higher than our current 2013e and would represent a 7-year CAGR of 48%.”

In 2017, Tesla produced 120,000 vehicles. A year later, in 2018, Tesla smashed its own target, when the company ramped up production to 350,000, a nearly 3x jump from previous year.

On October 21, 2019, Tesla stock stood at $253 in mid-day New York trade, after hitting a 52-week high of $379. The company is en route to a 380,000- to 400,000-unit production guidance by end-2019. With the Shanghai factory, 2020 run rate would be interesting.

Tesla’s growth, an average of 48 per cent CAGR from 2013 to 2020, and compelling (though overpriced) products — are part of a new narrative whose rubber-on-the-road existence would be so dumb to deny.

And the company’s stock price has killed “Tesla is going brankrupt” thesis, peddled by the shorts.

Latest data also show how Tesla, specifically the Model 3, has been eating into the market share of every other sedan sold in the US market, while a similar story is also playing out in Europe.

Given the climate change challenges facing the world, primarily the ICE car manufacturers, to will or predict Tesla and EV makers would go bankrupt is to bury your head in the sand.

Indeed, some EV makers (400+ EV companies in China alone) may fall by the wayside, but the change and new customer expectations created by battery electric vehicles can longer be denied.

Digital disruption, cost drops

Amidst the digital disruption — which is turning every industry from media and banking to retail and transport upside down — things are in a flux.

There’s neither a textbook nor a guru around to show us the absolute way forward, other than making informed guesses.

Pollsters, however, are good teachers.

Research outfit J.D. Powers this past week published a report showing a “mere 4% of respondents” have owned an EV the US, while almost 70 percent have never been in one.

In another study, the Edison Electric Institute shows that EVs had 2.6% share of new US car sales in September 2019 (the EV share in California is much higher at 8%).

Nothing is static

Seeing, however, that nothing’s static and tech is moving at a crazy speed, price drops for EVs could become as predictable as Moore’s Law (since 1965, computing power has doubled roughly every 18 months, and price subsequently dropping), which will then hasten EV adoption.

In 2018, Musk told The Verge that cost savings, process and manufacturing improvements could push them to hit the $25,000 (Dh91,750) Tesla EV price target by 2021.

At that price point, it’s game over for a big chunk of internal-combusion engine industry.

So it’s certainly an exciting time for those of us to see it happen. I guess the best attitude is: keep our eyes open and enjoy the ride.