Against the odds of the current pandemic, Tesla announced that it had had its fourth profitable quarter in a row in Q2 2020, making a $104 million profit after delivering around 90 thousand vehicles and having produced 82 thousand. Most of the registered deliveries were for the Model 3, Teslas cheapest and best selling vehicle so far. This was impressive news, most automakers announced significant losses during the same period and many were surprised the Californian carmaker was able to stay profitable.
Proving that the company can stay profitable through hard times is a big challenge but, changing a century-old habit of using gas cars is something much harder to achieve. Having already accomplished many feats that people thought were impossible, we have to believe that Tesla will eventually pull off this goal. Nevertheless, they still lack a few important achievements in order to achieve this. We will be exploring what Tesla could use or develop to help reach worldwide sustainable transport.
The first important step towards this may sound obvious but it is being sustainable:
Currently, Tesla uses cobalt inside their batteries, a material sourced from Africa, more precisely in the Democratic Republic of Congo. Cobalt is often mined in dangerous conditions by underpaid workers and even sometimes children. The world's stock of cobalt, almost entirely located in RDC, is projected to significantly decrease and may even be exhausted by 2050. Even if Tesla tries to use a very small amount of it inside it's cells, in order to become fully sustainable it must switch to cobalt-free chemistry, something that may be announced on battery day.
But, lithium, the core component of Tesla's current chemistry is also a material that is sourced questionably and may be exhausted. This is why Tesla needs to work towards a full circle battery recycling system enabling materials to be reused indefinitely and have many life cycles. Again, some changes regarding this could be revealed on the September 22nd Battery Day.
The second area they could improve on is pricing. Currently, the Model 3 is priced, at the cheapest version with no Autopilot, at just around $38 000. This is a budget most people cannot allocate to car buying even in richer countries. So it needs to be significantly decreased to make Teslas widely available and have a chance to capture all of the vehicle markets. Tesla is indeed defined as a luxury automaker but, it seems like the trend they are following is to start at the most expensive part of the market and then work their way down into lower-priced segments. We have seen this during the past decade, with Tesla first selling the Roadster, an expensive luxury sports car, and now they are selling the Model 3.
This is were the teased china mini-model comes into play. Expected to be sold at around $20 000 a unit with a good range for the price, It has serious potential to remedy this budget issue. We are yet to see the design of this new car but, it is expected to be revealed within the next two years. It was recently discovered that Tesla was hiring for some car design posts in China to work on the new Model. These job opportunities include a Design Manager, Creative Manager, Senior Car Designer, and Graphic Designer. The new car is predicted to be first available in China and Europe and US production is projected to happen a little later.
Lastly, what a lot of people tend to forget is that most of the electricity used to charge up the battery of a Tesla comes from non-renewable sources.
In 2019, more than 60% of the world's energy was made from coal and oil. You may think this makes EVs useless and that the main focus should be to switch to renewable energy production but, the truth is current Tesla buyers are almost all from countries who have been making big improvements in renewables. These include Germany, with over 40% of energy production being green, France who produce more than 70% of their energy through nuclear (although nuclear is not considered renewable it does not impact climate change).
The US produces 20% of its total power from renewables and China 27%. It is difficult for Tesla, a single company, to make a change in worldwide energy production but, they could source the energy used in superchargers from renewables whenever possible. This leaves the issue of charging at home, where the only impact Tesla can have on the sourcing of the energy used is if it convinces the user to buy Solarglass and a Powerwall, which are both expensive products and not handy in apartment buildings.
Supercharger availability, in general, is also a constraint to Tesla globalizing. They need to build a supercharger network throughout each country they expand so that long trips can be made without having to stop for the night in a place with only a wall socket to plug into. Maybe in the future, all supercharger stations will come with a solar farm and energy storage, enabling clean energy to be produced independently from the grid. A few of these stations currently exist but, they are far from being common.
Tesla still has a way to come to achieve their goal, but the pace of change is quickening and with countries imposing deadlines on carbon neutrality, the goal no longer seems impossible and it is even starting to look probable that it will be achieved.
Let's discuss this in the comments section please, and see our latest Tesla story, discussing 4 probable things that may happen at the Tesla Battery Day as well as how Tesla Energy and vehicles can be complimentary.
Guillaume Humbert a Torque News automotive journalist covering Tesla news. \"The way he first heard about Tesla was when he accidentally found a livestream of one of Tesla's cars back in 2018. It may sound boring, except this car was cruising in space. Since then Humbert has been following the EV automaker closely. Any of Tesla's innovations make the future look environmentally more friendly. \"I am now trying to share the hope Tesla spread and inspire others through my articles,\" says Humbert whom you can follow on Twitter at Thinking Enthusiast.