Electric car industry grows more competitive

By Norman Rozenberg, Contributor

Electric cars in recent years have had resurgence in the automobile industry with Tesla Motors, but they haven’t caught on much beyond the confines of tech-centric cities such as San Francisco.

These automobiles, with their minimal emissions, largely have remained on display in showrooms rather than on the streets due to regulatory hurdlesand costs.

The Tesla Model S base model, for example, costs $70,000, while its competitors’ base models go for $20,000 to $30,000. Smaller traditional vehicles such as the Nissan Versa with high miles per gallon ratings cost a fraction of the Model S car’s price, less than $15,000, offering a better option for both consumers and automakers.

The tides may be turning, however, as new technologies and increasing demand can turn electric cars into a mainstay of highways across the United States.

Cheaper alternatives, better design

Since Elon Musk founded Tesla, the company has been known for innovation in the auto industry, but its greatest challenge has been attracting big spenders to its vehicles.

For a while, Tesla catered exclusively to affluent clientele, while other automakers jumped at the chance to attract a wider customer base. BMW, for example, priced its electric BMW i3 at $40,000. The 2014 BMW i3 has a 124-combined mileage rating, while the Tesla Model S hovers around a 96-combined mileage rating.

To compete directly with cars such as the BMW i3, Tesla announced a new Model 3 with a $35,000 price.

Tesla was able to lower the cost of its electric vehicle thanks to more efficient and technologically advanced manufacturing methods. Tesla’s “Gigafactory,” for example, will be able to build more lithium batteries in a year than the entire world can produce in a year, the company claimed.

“In cooperation with strategic battery manufacturing partners, we’re planning to build a large-scale factory that will allow us to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead,” according to Tesla’s website.

These cheaper alternatives and technological advancements may lead to increased demand for the electric car.

Are new cars and infrastructure increasing demand?

The Model 3 has received significant media attention as the next model in Tesla’s impressive lineup and as a disrupter in the electric car industry. BMW, its primary competitor, has also ramped up production in this space, as demand seems to be increasing for more luxury electric cars.

BMW has announced that it would increase its i3 production by 43 percent to meet demand, which has exceeded company expectations. The current production rate for BMW is almost twice as much as initially forecasted; the company produced about 5,000 cars in the first half of 2014.

“Following the market introduction in Europe, we’re now rolling out the i3 in the United States,” Harald Krueger, BMW production chief, said in astatement. “The United States will be the largest market for the i3.”

The United States has become the world’s leader in the electric car industry, with a 45 percent share of global sales, according to Forbes. This can be partly credited to increased funding for charging stations and attention from the federal level to this industry.

As this continues, along with manufacturing and technological advances, perhaps electrical cars will become a major force in the automobile industry in the coming years.

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