Recently, a relative sent me an email urging me to buy Tesla stock because he said that he read it’s going to hit $6,000 soon. Turns out he was referring to an article from last year – and while $6,000 still seems like a pipe dream, Tesla’s stock did increase from about $590 in May 2021 to a peak of $1,225 in November of that year, leveling out at about $1,000 as of late April 2022.
Why is Tesla stock approximately $1,000 per share? Well, as the top electric vehicle (EV) manufacturer in the world, they will soon be opening another plant in Berlin, in addition to their Texas facility, and as we all know, EVs are a rapidly expanding segment of the auto market.
Tesla’s impact on the automotive market is undeniably amazing. They control 14% of global auto sales, and in 2021 sold 936,000 vehicles. But… the question I pose this month is: Is the NYC transportation industry ready for EVs?
About a year or two ago, I looked up the cost of the cheapest Tesla, and at that time it was about $36,000. The base price of the cheapest model today is about $46,000, almost double the cost of a base model Toyota Camry.
In an industry where every penny counts, a cost-per-mile analysis and comparison between vehicles points to: We are not quite there yet.
Although there are a couple notable companies in NYC that are exceptions to the rule, the charging infrastructure simply isn’t where it needs to be yet. Also: Although a couple of EV manufacturers have been able to achieve a 1,000-mile range on a single charge, a typical EV – one that a TLC driver can afford to drive – has a range of about one-third of that… often less.
One of the big upsides of EVs is that they are cheaper to maintain and operate on weekly or monthly basis, since they don’t require gas, oil changes, spark plugs, fuel filters, etc. But I always look at worst case scenarios if I’m making a financial decision, and the cost of replacing a Tesla battery can be upwards of $20,000. You can buy a slightly used, fuel efficient, reliable gas-powered vehicle for that price.
Even if the battery lasts 10 years (Tesla claims they are designed to last between 300,000 and 500,000 miles), few people are likely to be able to deal with a $20k repair in one shot. You’d essentially just walk away from it and start over. When you do the math over 10 years, it comes out to about $2,000 per year, when comparing it to the fuel and maintenance of a standard car.
The website RepairPal claims that Tesla maintenance costs about $832 per year, but that’s for standard use. While Teslas are getting better every year, currently RepairPal gives the company the third lowest rating for reliability against all other automakers. There are also reports of random power losses when driving, which is not something anyone wants to hear when they are considering a new vehicle.
There are other downsides to Teslas – extreme cold weather reduces battery life and most mechanics have never worked on one, making the timeline for even minor repairs unclear – but my goal is not to trash Tesla. I think they make a great vehicle that could one day become the standard in the automotive world. The question is: Is our industry ready for EVs?
My answer is: Not until NYC dramatically expands its EV charging network and not until EVs have a much longer range on a full charge. It appears change is coming, we’re just not quite there yet.