Newest Tesla faces challenges, but sends hopeful signal for EV market

The Tesla Model 3 has surged onto electric vehicle (EV) scene, with more than 325,000 hopeful customers placing $1,000 deposits in less than a week.

The new all-electric vehicle has inspired phrases like “game-changer,” “simply extraordinary,” and “a tipping point.”

Since all-electric vehicles can significantly reduce greenhouse gas emissions in the second largest emissions sector, greater interest in EVs could result in meaningful progress in addressing climate change. Looking past the initial wave of excitement, though, what does the Model 3 really mean to the EV market?

The Tesla Model 3 is a next-generation EV with a base price of $35,000 and an expected battery range of 215 miles. The vehicle is noteworthy because it reduces two primary barriers to EV adoption: price premium and range anxiety. Currently, all-electric vehicle models only allow prospective owners to reduce one of those barriers – you can choose between a relatively inexpensive vehicle with a limited range or an expensive luxury vehicle with a long range. The Chevy Bolt, which is slated for production in late 2016, will be the only vehicle with comparable range and performance when the Model 3 is released.

So how much of a game-changer is the Model 3?

Well, 325,000 deposits for a vehicle that will not begin production for another 18 months is surely an eye-opener, given that the number of deposits equals about two thirds of global EV sales for all of last year. Domestically, the leading all-electric model so far this year has been the Tesla Model S, accounting for just over 6,000 vehicles. So far this year, consumers have bought just over 15,000 all-electric vehicles that they could drive now, without an 18-month waiting period, which speaks volumes about the excitement for the Model 3.

US cities offer diverse incentives for electric vehicles

Cities and states are deploying a wide variety of incentives to promote more adoption of electric vehicles to reduce emissions and improve our energy security.

Consumers in Houston can get a state subsidy for buying a new EV. In the Phoenix area, EV buyers get registration fees waived and single-occupant HOV lane access. EV drivers in Portland receive fewer city and state incentives, but benefit from more publicly available charging infrastructure.

EV incentives vary by the amount consumers can save, how the incentives are applied, and who is offering the incentive.

A new report sheds light on how the 25 largest U.S. cities stack up in promoting EV deployment. These cities together represent more than half of the public electric vehicle charging infrastructure in the U.S. and about two-thirds of new electric vehicle registrations.

The white paper published by the International Council on Clean Transportation with input from C2ES and C40 and support from the 11th Hour Project, catalogues data on policies and actions by state agencies, municipal agencies, and local utilities that promote EV sales and analyzes the benefits to consumers.

Electric vehicle consumers - beyond early adopters

Sales of electric vehicles (EVs) in the United States nearly doubled last year—and with consumer acceptance broadening, sticker prices dropping, new models on the way, and policy support growing, the outlook is even better for 2014.  

In 2013, EVs increased their market share by 70 percent from 2012 levels, while all-vehicle sales grew 8 percent to reach a six-year high. Still, EV sales continue to lag forecasts made when these cars hit the market in late 2010, accounting for less than 1 percent of new light-duty vehicle sales. The strong growth in vehicle sales is mostly due to rising sales of gas-guzzling pickup trucks.

Optimism for EV market expansion is warranted, however, not only due to steady sales growth but also due to three key developments in 2013.

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