Los Angeles — Tesla Inc. didn’t use a press conference or roll out a big new SUV to generate buzz here. All the California-based automaker had to do was park a locked bright-red Model 3 sedan at one corner of its small exhibit at the Los Angeles Auto Show and wait.
As expected, talk of electric vehicles dominated the West Coast’s premier show, the greenest show in the greenest state in the union. California is the home of Tesla, and CEO Elon Musk is a living legend here who is casually referenced as the real-life “Iron Man” Tony Stark.
Tesla’s booth — strategically located inside the entrance of the luxury-focused South Hall of the Los Angeles Convention Center — was swarmed all week by the curious who were eager to see a Model 3, perhaps the most talked-about car in autodom. With a backlog of 450,000 orders — more than the 2016 sales of the entire BMW model lineup in the United States — Tesla is the industry’s brightest comet.
Losses to Tesla’s bottom line have mounted, due in part to Model 3 production problems. (Photo: Mark Ralston / AFP/Getty Images)
The Model 3 could be an inflection point or it could be the end of Tesla, says Karl Brauer, executive publisher with Cox Automotive. Consumers are starting to get serious about buying an electric vehicle, even if they’re not buying a lot of them yet. Those vehicles still won’t be mainstream for several years.
“You have to sell cars today that people want to buy in large volumes,” he said. Sales of those conventional cars and SUVs will support ventures into new propulsion systems like advanced batteries.
A Tesla Model X on display at the 2017 LA Auto Show (Photo: Ian Thibodeau / The Detroit News)
Yet, even as Tesla has a chance to bring electric cars into the mainstream, it is encountering some of the strongest — and most publicized — headwinds since it began making vehicles. Production of its $35,000 mass-market Model 3 has been delayed with bottlenecks reported at its battery plant in Nevada and problems with welding and assembly at its Fremont, California, production facility. Losses to the company’s bottom line have mounted, due in part to those problems.
The Los Angeles Auto Show might as well be Tesla’s home field, which puts the struggling automaker in even more of a spotlight. Green-car initiatives have traction with California politicians, and here of all places electric vehicles stand a chance of early adoption.
Still, Tesla’s appearance at a major auto show is rare. This is the electric automaker’s first presence on the floor of an car show since January 2015 in Detroit. Musk prefers to make news outside of auto shows.
Two weeks ago, just a half-hour drive from the LA Convention Center, he held his own one-company show with the debut of Tesla’s battery-powered big-rig semi-truck and the Roadster 2.0 with a claimed top end of 250 miles per hour. That introduction was webcast to Tesla believers around the world.
A Tesla Model S on display at the 2017 LA Auto Show (Photo: Ian Thibodeau / The Detroit News)
In Los Angeles this week, three vehicles — the Model S luxury sedan, Model X SUV and mass-market Model 3 sedan — were parked on artificial grass around a model home. The home was equipped with Tesla’s solar roof panels and powered by a battery pack that representatives said had been charged by the sun.
Despite only three cars in the market (and the Model 3 is barely in the market), Tesla’s influence was felt throughout the show. And that meant the company was a target.
BMW and Mercedes-Benz both highlighted their Tesla-fighting EV brands at their respective LA press conferences. BMW rolled out three versions of its electric i-badge, including a show-stopping i8 Roadster, an updated i3 S compact and the futuristic i Vision concept.
And Mercedes announced it would offer electrified versions of its entire lineup within five years, as it debuted the third generation of its CLS coupe with a new mild-hybrid system that supplements the regular engine.
BMW executive Klaus Frohlich even felt the need to take a crack at its American rival. “We don’t just Twitter, we deliver on our promises,” he said in a clear reference to Tesla’s Model 3 production delays.
When was the last time a German luxury brand felt the need to put a Yankee in his place? Automakers typically avoid trading pointed barbs at trade shows. But Brauer believes the German carmakers don’t really feel threatened by Tesla.
Bloomberg recently reported Tesla has spent nearly $8,000 per minute for the last year. Two weeks ago, Musk asked customers for down payments on the Roadster — which won’t be available for years — in an apparent effort to generate cash. The company continually misses self-imposed deadlines, pushing back production ramp-ups on the Model 3 by multiple quarters.
In early November, Barclays analyst Brian Johnson wrote that “finally some of the magic of Tesla is wearing off.” All of this likely has automakers looking at Tesla differently.
“They probably see Tesla as weak,” Brauer said. “BMW did that because they are confident they’re getting close to Tesla’s EV status.”
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