That's right folks, a non-existent future Tesla (NASDAQ:TSLA) vehicle has convinced me to get one of their competitor's current vehicles. Why? Because it exists today, makes economic sense right now, is currently affordable, and makes sense enough that I want to get them while supplies last - before everyone else gets one after seeing the logic of it all. And it didn't have to be a Nissan (OTCPK:NSANY) Leaf. It could've been a Ford (NYSE:F) Focus EV, or a Honda (NYSE:HMC) Fit EV.
By now most readers have probably already heard how great the model S is (range not-withstanding), and how affordable the gen III will be, so I won't rehash their attributes (existing or otherwise). But why settle for a range-crippled version of what an electric vehicle could be in the above listed cars?
The catch is with the automotive Lease. Starting just a few months ago, every manufacturer that produced an electric vehicle started slashing their lease terms to (what appears to be) unprofitable rates. So low that consumer reports thinks "it is the most enticing way of getting into zero emissions motoring virtually risk free"
Since I spend over $300 per month ($400 if gas prices rise to $5 a gallon) in gasoline alone (commuting in a minivan sucks), those leases make huge financial sense. And I didn't have to give up range to gain this reduction in consumption either. The minivan sits over at my parent's place (they have the driveway space) for the times when we need to drive further than 40 miles. Commute in the EV during the weekdays, and the minivan during the weekends. This math would work for anyone in a similar situation.
There were over 550,000 minivans sold last year. And about that many every year back to a long time ago, of which ~20% are Toyota Sienna's. If you believe Toyota's claim that "80% of Toyotas sold in the last 20 years are still on the road today", then that translates to 800,000 Toyota (NYSE:TM) minivans from the past decade alone! If we assume 1 in 10 commute to work alone in their guzzling minivan, then we have a ready market for 80,000 commuter ev's ... just from the Toyota minivan drivers (I drive a Honda). I'm sure the SUV commuters would benefit from the same gas savings and would only contribute to the EV demand. Year-to-date EV sales are at over 40,000 and rising (June saw 500 more ev's sold than May).
So why bring up minivans and leases in a long article about Tesla? And how does this relate to the number crunchers who have analyzed (ad nauseum) the p/e ratios, bookings, gross margins, etc (I defer to Sal's article for the Long's, and Marko's for the Shorts? Because, minivan and suv soccor-moms & dads represent a significant portion of the gen III market. Based on the above minivan sales numbers, there will be over 10 million that can be retired by 2017, with 1 million more every year following. We have toddlers now that won't need car seats in 3 years. When I go on road trips with my kids, stopping every 2 hours for a bathroom break is a must, why not charge up while we're at it (especially for free, since every penny counts!).
Continuing on the line of costs, I bought my minivan for $28k in 2008. Over the past 5 years, I've spent over $20k on fuel alone. Maintenance and tune-ups were pretty low at $2000 (haven't hit the 100k-mile tuneup yet). Add them all up, and I've already spent $50k on my vehicle, and will most likely spend another $20k in the next 5 years. So for future families cross-shopping a $20k gas minivan/suv (or even a $25k gas sedan) to a $40k sedan is a no brainer. The math worked for me up to $50k.
When I decided on the lease, I did it with the intent of ditching the Leaf and getting a gen III (or whatever's cheaper AND better at that time). I'm sure all other lease signers had the same intent. The lease represents a bridge that we're using to get to the EV world without any commitment to stay in it. And if we stay, it will be in whatever's available at the end of that lease ... maybe it'll be a gen III, or maybe something else.
Regardless of how you look at it, the market for the gen III or similiar competitor vehicle is huge, but the only ones that would be relevant are either made by Tesla or licenses Tesla's superchargers, since even the level 3 quick-charger fails to compete - recharges "only" 65 miles in 30 minutes.
The only downside to this is if there are no ev's that are under $40k with 180+ mile range. If that's the case, then my plan B is go back to spending $300 / month on gas ... or lease another commuter ev for $200 / month.
Of course, there's also the option of the model X?!
Disclosure: I am long TSLA.
Additional disclosure: But I've also hedged my position on the way up.