What Tesla’s new crossover teaches us, and what Detroit doesn’t get

Once again defying critics who accuse them of being just another piece of Silicon Valley vaporwear, electric-car upstart Tesla motors unveiled their second mainstream model, the 2014 Model X crossover. The sleek, shark-like X is, naturally, all electric, using the same three-phase AC induction motor and rear-drive fixed gearbox to drive the rear wheels as the Model S sedan.

That’s not all it shares with its sedan brother, the crossover shares 60 percent of the Model S’s components, along with its ability to seat seven passengers and produce neck snapping acceleration. Tesla founder and all-around Internet genius Elon Musk says the X will hotfoot from a stop to 60 in 4.4 seconds, or faster than many sports cars including the Porsche 911.

Tesla motors model x crossover

Also like the Model S, the Model X will be offered at different prices and battery configurations, with an estimated 200 or 270 mile range depending on which battery pack you opt for. Expect it to ring up between $60,000 and $90,000.

Tesla motors interior

Also like its low-slung brother, it will also include the ridiculous (in a good way) 17-inch capacitive touch screen for all your cabin controls, just like the S.

Unlike the Model S the Model X will also offer a dual motor all-wheel drive option, which adds an additional electric motor to drive the front wheels rather than a single motor driving only the rear wheels.

However, the bigger, heavier Model X plots its own course on styling, with the most dramatic flourish being the planned “Falcon” doors that open vertically. While certainly cool, I’m sure I’m not the only one having DeLorean flashbacks – which is unfortunate considering the upstart Irish automaker only made a few thousand of the Back to the Future stars before folding under and collapsing in a legal firestorm. But I’m sure that won’t happen to Musk.

2014 Tesla Motors Model X crossover falcon wing doors

Why not? Tesla prides itself for being more Silicon Valley than Detroit, and they are backing that up with a markedly different electric car strategy.

How Tesla Motors Plays the Electric Car Game

There are two strategies in the nascent electric car game today. One way is to take a compact car that would normally retail for around $20,000 and pack it with several grand worth of electric car guts. The result is a tepid performer with severe range limits, long charge times, or a sticker price about $10 grand more than a comparable fossil burner – or all three. (See: The Nissan Leaf, and the sticker-shock inducing Chevrolet Volt, which rings in at over $40,000 before incentives)

The other way is Tesla’s way. Rather than try to shoehorn in the electric penalties into a piddling econocar, Tesla plans to roll that price premium into a premium car. The Tesla Model S and Model X, though they have yet to be built (the Model S ships mid 2012), neatly sidestep the extra costs encumbered by electrics by including those costs into a much more expensive car. A $7,000 battery is far easier to absorb into the cost of a $60,000 premium crossover than a compact car that otherwise would retail for under $20,000.

The problem with budget minded-electrics like the Leaf is that people willing to spend that much money have an appealing array of other options for their $25,000 (with incentives). That money can buy you a bigger car, a car with longer range, a sportier car, and even a car with great gas mileage; often all of those, and buyers on a budget want a car that can do it all.

Tesla Motors Chairman and CEO Elon Musk showing off Model X crossover

Where Tesla succeeds is with people who have money to throw around, people who don’t want to cram themselves into an electric version of the compact car they drove in college. These are people who were already going to spend $60,000 to $90,000 on their next car, and Tesla is offering them a no-compromise electric option with sexy cars that can go around 300 miles between charges.

The mistake of the other automakers is this: it’s not about the money. It can’t be. Electrics will not pay for themselves with energy savings over anything approaching a reasonable amount of time. You don’t have to do the napkin math to figure out the gas savings of a Volt are going to take a long time to recompense you for its $20,000 premium over Chevy’s gas-fired compact, the Cruze.

To their peril, the same automakers ignored hybrid technology for the same reason; figuring it was just a fad because hybrid technology could never pay for itself. Then Toyota caught everyone flat-footed with the Prius, and 10 years later they still dominate that market. They didn’t realize that hybrid technology is as much about image as it is economic savings (which explains why hybrid versions of gas-cars don’t sell as well as dedicated hybrid body styles).

Yet Nissan and GM insist on packing their expensive electric technology into small car packages, as if downsizing and simplifying the car will make the economic argument for going electric that much stronger. It won’t. The Leaf should have been a sexy Infiniti Sedan, and the Volt should have been a hot-rod Cadillac.

Until battery prices come down, the primary electric buyers are interested in the novelty and the image. These people don’t ask how long it takes for a sunroof or foglights to pay them back, and they certainly don’t require the same calculation of electric technology. The savings are just a bonus. Tesla knows this and has created exciting, attractive, luxury products for just these image-conscious buyers, instead of trying to attract a hidden market of people just dying to pay Lexus-style prices for something closer to a dorky, range-crippled Corolla.

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