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It's an old PR truism that bad news gets released on Friday afternoons. People don't pay much attention to the news on Friday nights, the thinking goes, so announcements made late in the day on Fridays tend to fade away quietly.
Some of us tend to pay attention to the business news on Friday afternoons for just that reason -- looking for bad-news stories that folks might otherwise miss. But last Friday brought news of a different sort, courtesy of the folks at Nissan: A sketch of an upcoming all-electric luxury sedan, to be sold in the U.S. as an Infiniti starting in 2013.
You might think that doesn't qualify as bad news -- and from Nissan's perspective, I'm sure it doesn't.
But the folks at Tesla Motors (Nasdaq: TSLA ) might feel a bit differently.
You thought the competition would be sleeping?
Every week, it seems, brings new details on upcoming electric and hybrid cars from nearly all of the major global manufacturers. While there aren't any mass-market electric vehicles available here yet, that's about to change: Nissan's Leaf will begin showing up here late this year; Ford (NYSE: F ) will be launching an electric version of the upcoming new Focus sometime next year; and Toyota (NYSE: TM ) , Volkswagen, Honda (NYSE: HMC ) , and just about everybody else has announced that they'll have EVs at U.S. dealerships within three or four years.
So far, though, most of the electric vehicles announced by manufacturers have been either compact cars like the Leaf, or small commercial vehicles like Ford's Transit Connect van. While Tesla has said that they plan to move into the sub-$35,000 market in time, their upcoming Model S -- the car that the company expects to carry them to profitability -- is being positioned as a luxury model, with a price tag starting around $50,000 (and an array of expensive options that can add significantly to that number).
The Model S is currently scheduled to begin production in 2012, according to Tesla. With a 160-mile range in the base model -- the battery pack can be upgraded, at a price, to one with a claimed 300-mile range -- it'll have a sizable range advantage over the first Leafs, at least on paper, plenty for most commuters.
But the news of this upcoming Infiniti raises the big question: Will those commuters choose to buy a Tesla over a roughly similar product from an established carmaker?
A real competitor
Nissan hasn't released much in the way of details on the Infiniti yet, but we can make a few assumptions. We know that it'll hold five passengers, that it's being described as "high performance," and that the impressionistic, airbrushed-looking sketch shows a swoopy sedan with a nose somewhat reminiscent of recent Audis.
It seems reasonable to assume that it'll offer an upgrade over the Leaf in terms of both size and range, making it more closely comparable to the Model S. I think it's certainly reasonable to assume that it'll be competitive on price -- maybe very competitive. And it's coming in 2013 -- after the scheduled launch of the Model S, but not long after.
What's more, I doubt the Infiniti will be the only electric car aimed at the Model S's intended market once 2013 rolls around. Will you be surprised if the next few months bring news of an upcoming EV from Lexus, or Lincoln, or Audi, with five-passenger capacity, a 150ish-mile range, a full array of high-tech luxury trimmings, and a price around $60,000?
I'll be surprised if they don't. It's the natural next step in this market. Will Tesla's offering be competitive -- in terms of quality, price, reliability, and public acceptance?
This is the problem with Tesla
I've thought for a while that the big problem with Tesla boils down to this: It's hard to build competitive cars at a competitive price. The auto business, particularly in developed countries, is absolutely brutal -- quality expectations are extremely high, margins are thin, and competition for every sale is fierce.
Tesla's pre-IPO road show and things said by CEO Elon Musk and some of the company's investors suggest that the company grossly, almost laughably underestimated the challenges facing them -- as if locating Tesla in Silicon Valley was enough to ensure that they'd outsmart the best minds in Detroit and Japan. Never mind that all of the major players have budgets and resources that dwarf anything available to Tesla.
And that's why I've been skeptical that the company will be able to compete once the big names start aiming at them. Yes, some of those big names -- Daimler and Toyota -- have invested in Tesla. And Toyota looks to at least be experimenting with Tesla power trains in a few of its vehicles, and has said that it will show a Tesla-powered SUV sometime this winter.
It's possible that that's the real way forward for Tesla -- as a provider of technology and power trains to a company like Toyota, rather than as a full-on mass-market automaker. But does Tesla's power-train technology really provide an edge over whatever Toyota has brewed up on its own?
That would surprise me. If Toyota actually decides to bring a Tesla-powered model to market, we'll have to start taking them seriously. But as of right now, I'll believe it when I see it.