Richard Engdahl sits down with The Motley Fool's senior auto analyst John Rosevear to discuss the auto industry. Today he offers an in-depth look at Tesla (TSLA -2.04%) and the electric vehicle market, as well as Chrysler's unique situation with Fiat (NASDAQOTH: FIATY).
Are electric vehicles here to stay? In this video segment, John points out that while personal vehicles will certainly use less gasoline in years to come, it's too soon to say whether electric cars will be the final answer.
A full transcript follows the video.
Richard Engdahl: Do you think that the future for electric vehicles is inevitable at this point?
John Rosevear: No. I think that cars that don't use as much gas are inevitable. Whether that's no gas, or whether that's because they're burning hydrogen in fuel cells, or whether it's because they're just ever-improving hybrids, I don't think a move to pure electric vehicles is inevitable.
I think it's one of several paths, and I think it could be a decade or two or three before we know what "the path" is going to be for personal mobility. As Ford (F -1.15%) talks about it, personal mobility is really the challenge.
It's not necessarily even cars. As you get away from a steel car that you drive with a V8 gas-powered engine, and more toward things that may be autonomous... you get in the car and you say, "Take me to grandma's house," and you mix yourself a drink and you sit back while the car does the driving.
There are people who dream of this. Then there are people -- quite smart people -- who will tell you that consumers don't really want that. They don't want to completely give up control of the car because it's scary to do that, and it will be a long time before people trust that.
Using that as an example just to say that the path forward is unclear, and it depends on how fast the technology moves, and how consumers respond to that. I think those are still unknowns.
I think Musk would tell you, Elon Musk would tell you, that he's doing his part to push things in the electric car direction by selling a cool electric car. I think he's -- obviously he wants to make a lot of money -- but I think part of his mission here is kind of beyond that, that he's trying to see how far he can push a social change.
For him to say, "Cadillac's coming for you with an electric car," well, that's kind of delightful, that this maker of big old gas-powered barges is coming at you with something they really want to compete with you. Well, OK. He's made a big statement if he's doing that.
Richard: It strikes me that Tesla may never make the $15,000 electric vehicle for college kids, but he'll probably be thrilled if somebody's making that, and if he's spread that change.
John: Yeah. Yeah. I think Tesla, as a brand, wants to keep the premium electric vehicles thing going. I think, in terms of pricing, they've done a pretty good job of benchmarking BMW.
That's why when they talk about their entry level car, people talk about it being in the $35,000-$40,000 range. Well, that's what a BMW 3-Series goes for. They'll say that'll have a 200-mile range and it'll be smaller than a Model S.
Well, I'm thinking it's going to be sort of a Tesla-styled take on a BMW 3-Series, an Audi A4, a Cadillac ATS, that class of car; the compact car, and it won't be a $15,000 car for college kids. You'll get that from Chevrolet or Honda or Nissan or Scion or somebody.
Tesla's going to be -- unless they really want to get into making 10 million cars a year, which I think is not what their business plan actually is -- it's going to be, when you want to step up to the cool option. You can get an Android phone for free, but you want an iPhone you go pay for it, and people are willing to pay for it. I think it's going to be the same kind of thing.
You want the Tesla, the Tesla's a little cooler. It comes with the feeling of community and the most sophisticated technology, and the really well done design, and the interiors are nice, and it's got the huge screen, and they're fast.
A top of the line Model S is actually a seriously fast car; the Model S Performance. It's a shame it's $100 grand or I'd be considering buying one. But they have gotten legit credentials in the car-geek community, and it's the first electric... like I said, it's not a Birkenstock. It's cool. It's cool for a car, in and of itself.
You've got a Tesla, you can drag race that guy in the Mustang over there and you might have a chance at staying with him, and he's going to be surprised when the battery-operated car next to him... except that everybody's heard about Tesla now, so there won't be too many surprises.
