Tesla's Challenge: Leaving Behind The Lap Of Luxury Tesla is finally turning a profit selling premium electric cars. But CEO Elon Musk doesn't want to make money just selling luxury cars to the world's elite. He's still aiming for the masses.
NPR logo

Tesla's Challenge: Leaving Behind The Lap Of Luxury

  • Download
  • <iframe src="https://www.npr.org/player/embed/688180319/690230762" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Tesla's Challenge: Leaving Behind The Lap Of Luxury

Tesla's Challenge: Leaving Behind The Lap Of Luxury

  • Download
  • <iframe src="https://www.npr.org/player/embed/688180319/690230762" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


Tesla sells electric cars - expensive electric cars - and it's finally making money doing that. Yesterday Tesla announced its second quarterly profit in a row, which might be great for the company if CEO Elon Musk wanted to make money just selling expensive cars. He doesn't. NPR's Camila Domonoske explains.

CAMILA DOMONOSKE, BYLINE: Musk called it his secret master plan. The secret part is a joke. He talked about it all the time. But the master plan, he was serious about. Step one was selling a super-fancy electric sports car, the $100,000 Roadster. Step two was using that money to make cheaper and cheaper cars. Musk spoke directly to his customers at the unveiling of the Roadster back in 2006. The video was posted by Netscape and Autoblog.


ELON MUSK: Anyone who's considering buying this car is - you know, you're not just buying a sports car. You're actually helping pay for development of the mass-market vehicles.

DOMONOSKE: Cheap electric cars - and a lot of them - that would sell so well, it would push all carmakers toward going electric. That was always Musk's goal because what he really wanted was to save the world. The master plan was to fight climate change. Here's Musk at the unveiling of the Model X in 2012.


MUSK: The world desperately needs sustainable transport. If we don't solve this problem this century, we are fracked.

DOMONOSKE: So that was the vision. But making mass-market electric cars is really hard. Tesla is producing a less-expensive car, the Model 3. But the process of ramping up production was painful, and the Model 3 is still only sold for way more than the target of $35,000. Brian Moody is the executive editor for Autotrader. He thinks Tesla should just admit that it's a premium carmaker.

BRIAN MOODY: We can just be honest and call them luxury cars. And I don't think there's anything wrong with that.

DOMONOSKE: Tesla has shown it can turn a profit off cars that cost $50,000 and up.

MOODY: They've created something great that people love. Good. Congratulations. You should enjoy your success and keep doing more of that.

DOMONOSKE: Tesla is not interested in doing more of that. The company recently announced it's laying off thousands of people.


MUSK: We have to be relentless about costs in order to make affordable cars and not go bankrupt. That's what our headcount reduction is about.

DOMONOSKE: That was Musk on a call with investors yesterday. And Tesla's building a new factory in Shanghai in addition to its factory in Fremont, Calif., again, to help make that affordable car. We should note this is not only about fighting climate change.

JESSICA CALDWELL: At the end of the day, Tesla is a for-profit company, right? It's not a nonprofit.

DOMONOSKE: Jessica Caldwell is the executive director of industry analysis at Edmunds. She says, yes, the company is idealistic.

CALDWELL: Elon Musk and Tesla having this grander vision for humanity and civilization is certainly different than the way that other auto companies, you know, run their business day to day.

DOMONOSKE: But making cheaper cars would also be good business. It means a bigger pool of potential customers. And if it's going to happen, it's got to be soon, she says.

CALDWELL: Tesla's up against the wall. There are some real business pressures.

DOMONOSKE: Tesla has said for years that the cheap car was just around the corner. But it never actually turned that corner. Now traditional automakers are investing serious money in bringing new electric cars to market and would-be Tesla buyers are waiting to see if the company can keep its promises.

MARK VIDAURRI: Instead of getting an Infiniti, I would rather get a Tesla. You know what I'm saying?

DOMONOSKE: Mark Vidaurri (ph) in San Antonio, Texas, test drove a Model 3 a few weeks ago. He loved it, but he felt let down by the fact that the price is still much higher than $35,000.

VIDAURRI: I mean, even if you were to go with all the cheapest options, you're looking at, like, $600 to $800 a month. With a monthly payment like that, you know, in everyday life, with me and my wife working - I mean, we work full-time jobs - it's just not in the cards.

DOMONOSKE: He hopes that cheaper car is coming.

VIDAURRI: I believe advancements in technology shouldn't be a luxury. It should be something that is discovered and being able to distribute across every class of citizen.

DOMONOSKE: Including people like Vidaurri, who dreams of a Model 3 in his driveway someday. Camila Domonoske, NPR News.

Copyright © 2019 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.