Chime’s Slowdown Highlights Limits of Bank DisruptorsRead more

In the 1910s and 1920s, the Ford Model T cracked open the automobile market for the masses. Photo: Courtesy William Creswell/Creative Commons

Tesla and Its Rivals Don’t Want to Make Cheap EVs. That Choice Will Come Back to Haunt Them

Photo: In the 1910s and 1920s, the Ford Model T cracked open the automobile market for the masses. Photo: Courtesy William Creswell/Creative Commons

Welcome back to The Electric!

Be sure to register for the live chat at noon on Thursday: “The Straight Dope on the New Oil—Lithium.” My guest will be Joe Lowry, CEO of Global Lithium and one of the world’s foremost experts on the metal. Is there a shortage of lithium? Joe says the answer is yes—and that it will last through the decade. Tune in and find out what that means for the electric vehicle race. Register here.

This week, we turn to the probability that neither Tesla nor other carmakers will produce inexpensive electric cars this decade. They don’t even want to because the profits are so high on premium EVs. But putting off the release of mass-market EVs will have destructive consequences for many of the very same companies.

In 2006, Tesla CEO Elon Musk published a “master plan” to put as many people as possible into affordably priced, clean vehicles and forestall climate change. So far, Musk has succeeded beyond what almost anyone anticipated: Tesla sold almost 1 million electric vehicles last year and has put the fear of bankruptcy into virtually all the world’s major automakers, which are racing to catch up.

But Musk is unlikely to fulfill his vow of affordable EVs for the masses until the 2030s. The reason is simple: Automakers including Tesla are by and large earning too much money selling high-middle- and premium-priced EVs loaded with extra features to pivot to economy models with thin profit margins at best. But putting off the development of mass-market vehicles is likely to backfire, causing even more trouble for the industry than it already faces, as I will explain below.

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