Is the Rise of Tesla Changing the Future for Gas/Diesel Car Companies?

Source: tesla.com

The economic principle I’m exploring is “Because of scarcity, people choose. All choices have an opportunity cost”.

My research question to help me study the economic principle is “Why are car companies going electric?”

The article published in Mashable titled “If it seems like every carmaker is going electric, that's because they are”

demonstrates this economic principle by showing that car companies are being pressured by the government to go electric, the combustion engine is phasing out, and companies like Tesla have been very successful with their all electric cars. 

First, car companies are being forced to abandon the combustion engine. In an article published on Mashable, Brett Williams wrote, “Traditional car companies are also shifting to focus on EV production because they might be forced to abandon the internal combustion engine in the near future. There are multiple efforts around the world to restrict the use of cars powered by gas and diesel alone, encouraging the use of EVs.” Car companies might be forced to abandon the combustion engine due to greenhouse gases and other environmental problems. 

 Second, companies like Tesla are shocking the world with their electric cars. Tesla has led the US market in sales after the release of the Model S. People are interested in this car not only because of its luxury and comfortable interior or its aggressive exterior but because it is a cheaper alternative due to the fact that you don’t need to pay for gas. Along with not paying for gas, the Tesla Model S has roller coaster like speed and it has been seen beating the world’s fastest cars in a 0-60 race. 

Third, governments are pushing car companies to go electric. Gas and Diesel cars generate intense amounts of pollution and many countries, like China, are working on completely banning them. Other countries like France and the UK have stated that gas and diesel cars will be banned by the year 2040. This is a growing problem for big name automakers, so they are starting to work on an all electric lineup of cars. 

 In my next blog post I will research the question: How does going electric affect a car company?