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As Demand For Electric Vehicles Steadily Grows, Tesla Model S Wins 2013 ‘Motor Trend Car Of The Year’

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"As Demand For Electric Vehicles Steadily Grows, Tesla Model S Wins 2013 ‘Motor Trend Car Of The Year’"

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by Erin Auel and Matt Kasper

The Tesla Model S, the company’s first full-size sedan, won the 2013 Motor Trend Car of the Year on November 12, garnering a unanimous vote from the panel of judges. This is the first electric car in the 64-year history of the auto industry’s most coveted award.

“We’re going to look back and see this as a point at which the gears of history really turned,” said Tesla CEO Elon Musk.

It’s important not to read too much into this specific award. While electric vehicle demand continues to grow, the market has been choppy and companies still need to make important cost reductions in order to dramatically expand sales. But it does illustrate the outstanding performance and design of electric vehicles hitting the market — many of which are built in the U.S.

And as consumers get more comfortable with electric vehicles, hybrids, and smaller cars generally, it shouldn’t come as a surprise that sales of cleaner, “greener” cars are increasing due to shifting demands.

With high gas prices at the pump, fuel efficient vehicles and have remained resilient. In addition, the average fuel economy of new passenger vehicles for model year 2012 reached its highest average of 23.6 miles per gallon this year. This led the NRDC and Baum & Associates to declare that the 2012 model year was “The Year of the Green Car.” Here’s why, according their analysis:

  • Model year 2012 fuel efficiency for new vehicles hit an all-time high. The sales-weighted average fuel economy of new passenger vehicles for model year 2012 was 23.6 MPG, up more than 1 MPG from the previous record high of 22.5 MPG set in 2011.  This was the single biggest one-year increase in MPG in the past five years. Calendar year-to-date 2012 fuel efficiency is even higher:  an average of 23.8 MPG through September.  (Fuel economy data is derived from the research of Michael Sivak and Brandon Schoettle (University of Michigan) at http://www.umich.edu/%7Eumtriswt/EDI_sales-weighted-mpg.html.)
  • Higher average fuel efficiency for model year 2012 is a good thing for the American auto industry, rather than a reflection of falling sales. Auto sales for the 2012 model year reached 14.1 million units, an increase of more than 10 percent (1.7 million) from the previous model year.  In the recent past, major increases in fleet fuel efficiency were generally marked by rapid decreases in vehicle sales.  For example, the three-year period from 1980 to 1982 saw increases of 3.3, 1.3 and 0.6 MPG respectively, but vehicle sales declined by 2.5 million, 750,000, and 820,000, respectively.  Similarly, over the two-year period from 2007 to 2009, fleet fuel efficiency jumped 1.8 MPG, but annual vehicle sales dropped by over 5.7 million.  The uncoupling of rising average MPG and falling auto sales in model year 2012 was due in large part to much wider availability of vehicles with higher fuel economy.
  • The number of high-MPG vehicles available to consumers is rising rapidly. Popular vehicle nameplates with improved efficiency more than doubled from model year 2009 (28) to model year 2013 (61).   Fewer than a third (17) of the model year 2013 vehicles with higher MPG are compacts or subcompacts, contrary to the assumption made by many that the only high MPG cars are “small cars.”
  • Hybrids and plug-in electric car sales are on track to top half a million units for the first time in a calendar year (2012) and a model year (2013). This strong performance directly debunks the linked (and equally mistaken) notions that (1) consumers don’t want higher MPG vehicles and (2) there is no demand for the high-end technology that powers the highest MPG-vehicles.

After decades of manufacturing and employment in decline, the U.S. is seeing significant job growth anchored by a revival in advanced clean vehicle innovation and manufacturing. A wide range of businesses, from large auto-supply companies to small start-ups, are meeting increasing demands for fuel efficient technologies and electric vehicle components. The final fuel-economy and carbon-pollution standards for 2017 to 2025 will also continue to spur innovation, production, and job creation in the auto industry.

But for many consumers, the $7,500 federal tax credit incentivizes the purchase of electric vehicles. The Congressional Budget Office reported in September that the tax credits for electric vehicles aim to make the initial purchase less burdensome for consumers and therefore make these cars more competitive.

Ensuring that the U.S. is a global leader in electric and fuel-efficient vehicles will result in job-growth, consumer savings, and greater competitiveness in the world market. The auto success story demonstrates that the American industry can achieve dramatic cuts in oil demand and carbon pollution; however federal lawmakers must get behind this vision and find additional ways to support the transition to a cleaner economy.

Erin Auel is an intern on the Energy Team and Matt Kasper is a Special Assistant for the Energy Team at the Center for American Progress

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18 Responses to As Demand For Electric Vehicles Steadily Grows, Tesla Model S Wins 2013 ‘Motor Trend Car Of The Year’

  1. Zimzone says:

    Until mfg efficiencies get these vehicles into the $35-$45,000 range, most interested consumers cannot afford these cars, even with the $7,500 ‘credit’.

    On the other hand, congrats to Tesla…that’s one sweet looking hybrid!

    • RobS says:

      It saves ~$20,000 in fuel costs over its lifetime so financially its actually competing with cars whose sticker prices are $20,000 lower ie ~30,000-50,000.

      Secondly it is a pure electric not a hybrid.

      • Zimzone says:

        Thanks, Rob, I stand corrected…it’s not a hybrid.
        ‘Over a lifetime’ is one of the problems, in my opinion.
        Many consumers, regardless of a lifetime payback, just can’t afford this vehicle’s upfront cost.

        • Addicted says:

          You are absolutely right. However, Elon Musk has stated the cheaper models will be coming in 2014 in the Gen3 model. They are starting with the high end (the 110k Roadster, followed by the 89k Model S, which will be followed by the 60k Model S next year).

          This is a standard early adopter strategy (think HDTVs costing 5k 5-10 years ago, but now available for nearly 500). The high prices subsidize R&D costs and helps them ramp up to becoming a high volume manufacturer.

  2. petero says:

    Zimzone.I agree with you. Just like the first models of digital calculators, watches, plazma TVs, etc. were very expensive the prices will come down. Teslas Gen III will have a base price of approx. $35K.

    One correction. That sweet looking model “S” is not a hybrid it is a BEV (battery-electric-vehicle).

  3. NJP1 says:

    The ‘credit’ factor on electric cars comes (by a circuitous route) from taxation derived from conventional (ie hydrocatbon burning) industries.
    We are using the profit on oil to reduce the prchase price of electric cars
    Tesla make a beautiful car though

  4. Gerald says:

    This award puts the Tesla (which I wish I could afford) in the same catagory as the Chevrolet Corvair (1960), Rambler American (1963), Chevrolet Vega (1971), Chevrolet Citation (1980), and the Renault Alliance (1983). I sure hope it fares better…

  5. mjohn says:

    Musk is all hype but hasnt delivered as promise per government loan. He is supposed to produce an electric car for the masses and not for the well heeled. “we will get there.. .we will get there”… its not gonna happen, he knows it and that’s why he’s not doing it. The reason is the battery cost. Just give the taxpayers money back if you cant do it Musk.

    • petero says:

      mjohn. Musk is NOT hype. From the beginning he said there would an expensive sedan followed by a similar priced cross over (Model X). Tesla is designing model, Gen III which will have a base price of approx. $30K which is due in about 3-4 years. The government loan was used mostly to set up a Fremont, CA factory where the hired several thousand workers to build the Model S.

      Three last points. Telsla will NEVER be the low cost provider. Large manufacturers like Ford, Nissan, Toyota, Honda will build the lowest priced cars – eventually. Tesla will be situated similar to BMW as the best of a category not the cheapest in price. A base “S” at $50K ( 57,400-7,500 rebate) is not that far out of reach when you consider what Volts are going for. By the way is it OK with you that GM loses about $49K for every Volt it sells? Affordable or BS. Lastly, the loan is already being paid down and will likely be paid off early. Musk didn’t get a gift he got a loan.

      P.S. Perhaps you are confusing Tesla with Fisker. They received government loans and built their Karma in Finland. Their affordable model is in limbo.

      • madhaus says:

        petero, the Volt does NOT lose $49K per vehicle. That figure came from the ludicrously wrong math of dividing the entire research, startup and tooling cost of the Volt by how many have been sold so far. That only makes sense if there won’t be any more being built, which is certainly not the case. Since they’ve only been on the market for 2 years, the cost appears artificially high, but no licensed accountant would ever express the car’s manufacturing cost that way.

        You could do the same bad math for any vehicle and find out it costs some eye-popping amount to build them, unless they’ve been in production for 10 years. Since the Tesla S is even newer, that would mean of the several hundred that have been sold, the manufacturing cost is a million each.

    • Addicted says:

      Well, I think it is hard to call someone whose company beat out Boeing, Lockheed, etc. for a NASA contract to send shuttles to the ISS, and actually delivered on it less than a month ago “all hype”.

      And as petero said, the loan was to buy the factory. They always planned on gradually reducing prices, and there was no obligation to deliver a low cost model for the masses immediately (which would frankly be impossible right now).

      Also, Tesla is already diversifying beyond the Model S and is providing the drivetrain for electric car models for companies like Toyota and BMW.

    • Zech says:

      Are you kidding? He got a loan and he’s living up to his end of the bargain and delivering the Model S ahead of schedule. The first Tesla was $110k. Now the base price is $50k. When generation 3 rolls around, it will be $35k. Tesla is also on track to repay the loan on time. This is the man who built the Falcon 9 from scratch for far less than it cost the government to do one mission on a pre-existing vehicle. Do not bet against Elon Musk. You will lose.

  6. Allan deLaubenfels says:

    This is a transitional car like my plug in Prius which is averaging 111 mpg. Both are demonstrating that there are workable alternatives to depending on petrol.

    It is not likely that there will be just one “car of the future”. It is more likely that there will be a range of cars to choose from which will evolve as the world changes.

    The choices are looking better and better!

  7. Chris Logan says:

    Interested in Tesla. Chris Logan

  8. madhaus says:

    I have a Nissan Leaf, also a pure battery electric (BEV) vehicle. Cost less than the Tesla S, definitely nowhere as cool, less room, most importantly way less range. On the other hand when I was shopping EVs I could have the Leaf immediately and had to wait 6-12 months for the Tesla, and that was when nobody had an S yet.

    The Leaf is still awesome to drive. If you haven’t driven an electric car, take the time to try one. They’re so quiet that once you drive a gas vehicle again, it feels too noisy and smelly. Some of the newer ones have a program where you can take a longer test drive, even overnight. The more you drive an EV the more you want to keep driving one.

    • I agree-electric cars are really fun to drive. We bought a Volt to get off fossil fuels (by running on our house’s rooftop solar panels). But the smooth, quiet, fast acceleration and handling are way beyond gasoline cars. If you can take advantage of 3.5% interest rates, the savings on gas make the car competitive with cars costing less than $20,000. (2 cents per mile!)

  9. Peter Flemming says:

    Looks like a great car. Will most likely attract the buyer who would have spent the money on a high end Mercedes or BMW. Why not have the styling and luxury and be green!