Will I Buy a Tesla Model 3 and Why Does It Matter to Infrastructure Asset Management?

A few days ago the American electric car maker Tesla announced details of its Model 3 car, priced from USD $35,000. The Model 3 will also be available in some more countries, including New Zealand where I live.

Seating 5 adults, and with a range of 215 miles (346 km) per charge the Model 3 is potentially a breakthrough vehicle for electric vehicles (EV’s)

The projected release of the Tesla Model 3 in 2017/2018 coincides roughly with my next planned car replacement, and it got me thinking – would I replace my current car with a Tesla Model 3.

The price is in the right bracket, the range is just enough for my 2 major uses without a recharge, and there are significant annual savings in the cost of petrol, and associated servicing and operating costs.

So the answer is – I will definitely give it serious consideration at the time. Tesla has taken 276,000 in preorders in less than a week, so it seems plenty of others are interested in this car as well.

This is the first time I can say this, because much as I admire the current Tesla Model S, the price is far too high for my budget or uses – so it hasn’t been a practical consideration.

So, why does my thinking and consideration of the Tesla Model 3 matter to infrastructure asset management practitioners?

The answer is – the world is changing very quickly, possibly more quickly than you realize. If you manage a transportation network – where does your revenue come from?

In most OECD countries, a significant proportion of transportation revenue comes from fuel taxes.

Here in New Zealand, we spend about 1% of GDP on our transport networks each year and the petrol tax funds just over 50% of our National Land Transport Fund. In many countries, the amount funded by petrol taxes is higher.

As more fuel-efficient vehicles and/or electric vehicles are added to national vehicle fleets, the amount of fuel tax revenue will inevitably decrease, unless corrective measures are taken.

The arrival of the Tesla Model 3 and other like vehicles around 2017 means this issue is likely to accelerate.

Politically, taking corrective measures to address transportation network revenue and funding issues can be problematic.

In New Zealand, the potential impacts of these changes have already been studied in a number of research reports including the Future Funding Summary Report with a particularly useful supporting review of international transportation planning and funding frameworks.

We are fortunate in New Zealand to have already had a number of alternative road-use taxation mechanisms in place including the widely used distance-based Road User Charge, which will make the transition to new transportation network revenue and funding mechanisms more achievable.

The International Review notes that altering funding mechanisms is definitely more difficult in countries with federal structures like the USA and Germany.

Alternative fuels vehicle use, including the use of EV’s, is accelerating in OECD transportation fleets.  As part of your infrastructure asset management analysis, do not forget about the implications of this change on your fuel tax-based revenue streams.

Altering taxation revenue and funding has a long multi-year lead time and much public and political debate – particularly in countries with Federal structures. Not having enough revenue to effectively manage your transportation network also has long-term implications.

If you are involved in managing a transportation network, do you need to get involved in the analysis and conversation around transport network funding and the changes that are impacting this?