This is one thing that is strongly in Tesla's favor. A pivot to SUVs and trucks has essentially zero geopolitical/oilprice risk, unlike every other domestic automobile maker which is gambling big time that gas prices don't continue to increase. I'm not sure Ford (focusing nearly exclusively on trucks) could survive a sustained $4/gallon gas price again, let alone whatever the gas price would be if the "$300 per barrel" scenario [0] happened (even for just a few months).
Gas prices are about $1/gallon higher than they were when the Model 3 was unveiled and Tesla got a huge backlog of orders. That's about $5000 in additional gas savings over the life of the vehicle (some of that in the form of residual used value). OPEC is still cutting back, and they want oil at about $80/barrel, up from the current ~$65. Gas prices arguably still haven't reached equilibrium for the current price of oil, and continued under-investment in oil capacity during the last slump could lead to significantly higher oil prices going forward, particularly if the global economy stays fairly strong. This is incredibly good for Tesla.
So I think Tesla has more going for it than a lot of people give credit. Theoretically, other car makers could've switched to electric tech, too (it's fairly simple, although it takes investment), but just about the only car makers who are TRULY serious about it (versus talking about it) are in China. Certainly when compared to other domestic car makers.
I don't feel like the risk is very high for Ford. The Ford Edge CUV gets 21/29 mpg. It isn't like in 2008 where a Ford Excursion got maybe 12 mpg. Giant SUVs just don't sell these days. Another factor is that Ford will continue to produce stuff like the Fiesta and Focus in Europe. If gas prices start climbing, they should be able to retool some factories and pivot back.
GM's CEO Mary Barra also just announced they are still committed to sedans and more efficient vehicles. They don't have much choice in the matter if I recall correctly due to the terms of their re-org / bailout.
I've no idea what Fiat-Chrysler is doing, as they seem to only produce gas guzzlers. They seem to have no plans whatsoever to produce a normal vehicle and just keep adding variants of models subject to the EPA gas-guzzler tax.
The US has a radical cost difference in gasoline prices vs most of world.
Some reference per gallon prices right now: China $4.41, India $4.47, Japan $4.93, S.Korea $5.46, Spain $5.90, Germany $6.45, UK $6.59, Finland $6.83, France $6.99, Denmark $7.22, Italy $7.29, Netherlands $7.48
The US by contrast is at $2.99.
The US is now exporting immense amounts of oil and that is set to grow by a lot in the coming years. That hasn't occurred since the export law restrictions in 1975. The US is heading to 2 million plus barrels per day of exports this year. Chart:
More likely the price of US gasoline will continue to drift slightly higher toward the rest of the world, as the exports bring the US closer to a normalization with everyone else (emphasis on closer). Those exports are seeking higher prices internationally, which will result in at least somewhat higher domestic prices (dramatically less domestic captive supply).
Further, the dollar is on a longer term trajectory down, due to the vast US budget deficits that are set to continue perpetually. That will push up the price of commodities priced in dollars, ie oil, which will also push up domestic gasoline prices as a consequence.
Tesla is going to sell a lot of cars as domestic gasoline prices gradually head toward $5 as a normal level (combination of less captive oil supply, and a perpetually eroding dollar value base).
> More likely the price of US gasoline will continue to drift slightly higher toward the rest of the world, as the exports bring the US closer to a normalization with everyone else (emphasis on closer). Those exports are seeking higher prices internationally, which will result in at least somewhat higher domestic prices (dramatically less domestic captive supply).
Crude oil prices are not that dissimilar, European Crude Oil trades only $5/barrel more than WTI (US Oklahoma) Oil. The main reason for the huge difference in prices is taxes. The US has hardly any tax on gasoline whereas in many European countries, taxes make up 60-80% of the fuel price (fuel taxes plus VAT). If you strip out taxes, gasoline in Europe isn't much more expensive than it is in the US. That's also why gasoline prices in the US react sharply in the US if crude oil prices fluctuate whereas in Europe, they usually don't move by more than 10-20%.
Gas prices are about $1/gallon higher than they were when the Model 3 was unveiled and Tesla got a huge backlog of orders. That's about $5000 in additional gas savings over the life of the vehicle (some of that in the form of residual used value). OPEC is still cutting back, and they want oil at about $80/barrel, up from the current ~$65. Gas prices arguably still haven't reached equilibrium for the current price of oil, and continued under-investment in oil capacity during the last slump could lead to significantly higher oil prices going forward, particularly if the global economy stays fairly strong. This is incredibly good for Tesla.
So I think Tesla has more going for it than a lot of people give credit. Theoretically, other car makers could've switched to electric tech, too (it's fairly simple, although it takes investment), but just about the only car makers who are TRULY serious about it (versus talking about it) are in China. Certainly when compared to other domestic car makers.
[0] http://www.businessinsider.com/300-oil-is-not-impossible-say...