More Tesla Competitors Surface: Are They Worthy? Can They Succeed?

DEC 2 2018 BY EVANNEX 30

ACCUSED ‘TESLA KILLERS’ CLEARED OF ALL CHARGES

The myth of the “Tesla Killer” is a tempting one for mainstream journalists, who have learned that any article with the word “Tesla” in the headline, especially a negative one, is a sure-fire click generator.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Audi E-tron Quattro concept on display at the Frankfurt Auto Show (Image: South China Morning Post via EPA)

On the face of it, the thesis is sound: any major automaker that decided to get serious about selling (not just producing) EVs could use its advantages in economies of scale and access to capital to bury tiny Tesla. However, those of us who follow the EV market closely have never considered this a serious threat to the California carmaker. The would-be killers may have the weapons and the opportunity, but they lack the motive.

Tesla exists only to sell EVs, whereas legacy brands are producing EVs mainly because of pressure from government regulators (and increasingly, in response to competition from Tesla), and have shown a notable lack of interest in selling them in volume. The reasons for this are becoming apparent, as one carmaker after another concedes that it expects electrification to take a huge bite out of the record profits the industry has been enjoying for the past several years. The companies understand that the transition is inevitable, but it’s one that they’re in no hurry to make, and this fact is starting to sink in with auto analysts and the media.

As Simon Alvarez, writing in Teslarati, puts it, “With legacy automakers revealing their highly-anticipated Tesla competitors, and with each company running into challenges of their own, analysts are starting to retire the myth of the Tesla Killer.” Alvarez cites the examples of Toni Sacconaghi of Bernstein, a known Tesla skeptic, who recently stated that Model 3 faces “no credible competition” from legacy auto until at least 2020; and Berenberg Analyst Alexander Haissl, who reiterated a Buy rating on TSLA with a $500 price target, saying that fears of competition are “overblown.” Another convert is Andrew Left of Citron Research, formerly an outspoken TSLA short-seller, who recently said, “there is NO Tesla killer. Competition is nowhere to be found, and no electric vehicle is slated to launch at the Model 3 price point until 2021.”

Above: Between January and October of this year, Bloomberg reports that Tesla’s “Model 3 is now more popular than the entry-level luxury offerings of Audi, BMW and Mercedes-Benz combined.” (Source: Bloomberg via InsideEVs)

Additional evidence of the Tesla Killers’ innocence was presented in a recent report from Hamburg-based Berenberg Bank (via Forbes). “Tesla Inc will shrug off what was once thought to be the existential competitive electric car threat from the Germans because of its lead in range, design, engineering and cost,” wrote Berenberg analyst Alexander Haissl. “Tesla has already demonstrated its ability to outcompete incumbents and their ICE vehicles despite a higher price, as consumers are willing to pay a premium for a better product.”

Berenberg thinks the German and British EV-makers will face a pricing problem. “Newly launched EVs by traditional [manufacturers] will come to the market at a close to 80% purchase price premium before subsidies compared to their ICE counterparts, without offering meaningful incremental benefits to the consumer. Consumers’ willingness to pay such a premium could turn out to be limited, which puts the competitive position of these EVs at risk,” Haissl said.

The unfavorable market dynamic isn’t the only oil slick in Big Auto’s lane. Other attempts to take on Tesla have undergone a few unforeseen difficulties:

    • Mercedes recently announced that the EQC, intended to be a competitor for Model X, will have a gradual rollout thanks to concerns over the vehicle’s battery and other electric powertrain components.
    • Audi has also had to delay the release of its new e-tron, due to issues with the vehicle’s software and with battery provider LG Chem, which may be getting ready to raise its prices (as reported by German news magazine Bild). Audi also lost face when it revealed that it plans to make the e-tron a special order in the US.
    • Reviews of Jaguar’s I-PACE are coming in, and most agree that it’s a fine vehicle, but that it falls short of Model X in terms of efficiency, range and charging speed.
    • GM decides to completely shut down production of its acclaimed Chevy Volt as of March 2019.
    • Nissan postpones the much-anticipated launch of its long range Leaf.
    • BMW’s board member in charge of development has admitted he expects 85% of the company’s cars will still have internal combustion engines in 2030.
    • Porsche’s vaunted Taycan is expected to be a money-loser, and the company expects line-level workers to share the pain. A Porsche exec recently said employees at the Taycan’s planned factory would have to give up regular salary increases for the next few years.

Above: Along with legacy automakers, MKBHD also looks at some of the new, so-called “Tesla Killers” getting a lot of buzz (Youtube: Marques Brownlee)

Tesla has a technical lead of several years on the legacy automakers, an advantage Teslarati’s Alvarez ascribes to “Elon Musk’s long-term play on electric car batteries and the company’s vertical integration.” Tesla’s policy of producing its own battery cells with partner Panasonic spares it the problems currently plaguing Audi and Mercedes. The Apple-like integration of Tesla’s hardware and software creates a unified user experience, and helps to avoid the sort of issues that Jaguar is facing with the I-PACE.

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Written by: Charles Morris

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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30 Comments on "More Tesla Competitors Surface: Are They Worthy? Can They Succeed?"

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REXtoCheckMate

That title: Genius. “Cleared of all charges.”
Pun of the Decade.

Warren

Except simple math and actually reading the Bloomberg report will tell you that the Model 3 only beat the combined sales of it’s competitors for a few months. Not “Jan through October.” Big difference.
As far as the e-tron, put them side by side and 80% of the mainstream audience would pick the 800v Audi or Porsche over the Tesla. And how is a $150k Tesla that much cheaper than these high end competitors?

Elon Milord

Some 80% made up stats you got.

Richard

I doubt 80% would. Maybe in Germany.
We don’t know what Tesla will be offering in S form when the Taycan actually hits the market but if it is using the new battery architecture it will probably keep up with the Taycan on the track while destroying it at the lights. It will probably charge nearly as fast in terms of km/hour and have significantly longer range.
And that is before considering the exclusive super charger network, superior autonomous technology and a car improves itself over time.

The other problem that was pointed out above is that Porche doesn’t want to sell too many because it undermines their ICE business.
Porche EV’s will sell well. The difference is Tesla will be producing a lot more electric performance cars than Porche

REXtoCheckMate

The Audi e-tron is amazing, in how you can wrap sheetmetal.
But, ugly does sell in the USA, just look at the flood of SUV and Pickups.

No, but a high quality, low volume competitor is just what Tesla needs.
This may help Tesla get the funds to ramp up production of the new Roadster and get production rolling.

Also, it’s interesting that Audi placed this car at the top of the line.
That’s exactly where the premium drive experience and responsiveness of an EV go.

REXtoCheckMate

As your review of the current market show.
The only competition for Tesla is Tesla.

Cypress

I never see article using the term “Tesla Killer” except from EV blogs in articles like this or you tube videos from Tesla fans.

ffbj

Try typing it into you search bar, and press enter.

Taylor Marks

I ran a Google News search for that phrase. First three results were from The Verge, Popular Science, and Tech Node. They were referring to the Audi E-Tron, various at the LA auto show, and Faraday Future, respectively, when using the term.

Scrolling through the results, there’s a big mix of news organizations using the term, although I do notice that Clean Technica appears particularly guilty of using the term a lot.

InsideEVs does show up twice with the term in the last month, both referring to the Jaguar I-Pace. This article doesn’t show up – the title more accurately calls them all “Tesla Competitors”, which still overstates their significance, but not by as much of a degree as “Tesla Killer” does.

bwilson4web

Bob Lutz in a moment of hubris claimed traditional makers can compete by adding EV costs to the price of their pickups. This reveals:

1) No goal of price-performance in their EV designs.
2) No commitment to EVs except as mandated.

Bob Wilson

ffbj

Yes, that was the most clueless theory of all. Oh they can afford to lose money on the evs because they will make it back on their ice vehicles.

John

What’s lost in the endless “Tesla Killer” debate is the simple fact that ICE manufacturers have to directly compete against themselves when they release a compelling EV. The benefits and high-points of EV’s directly refutes ICE (efficiency, lower cost of maintenance, convenience of fueling, etc) and salesman that have to sell both are stuck in the dilemma of talking down about their ICE products by simply pointing out the strength of EV’s. Factor in the lack of back end maintenance that ICE dealerships are so heavily dependent upon and you have a situation that appears hasn’t been solved by ICE manufacturers after all these years. And I don’t see how it can be solved. I don’t see how a car manufacturer can successfully live in both worlds.

ffbj

A concrete example of what you’re saying is evidenced in the Death of the Volt, which may presage the Death of Car Salesmen, like Willie L. over at GM, who does not really want to sell you a Volt. .
For one salesmen, not all, but by and large did not want to sell it. It would be like cutting their own throats, as people move into the Volt, like it, and then get an ev next. They don’t want that. They want to maintain the status quo, things as they are. A house divided against itself cannot stand.
It’s not an original idea, but one that has not received as much emphasis as it should have.

MaartenV NL

The dealers have solved this dilemma. They just don’t sell EVs.

rey

That has been the talking point of Stinking Alpha website all these years,oh, and I wish somebody would interview Bob Putz again but he’s probably too busy driving his Volt.

Get Real

John and ffbj nail it!

The mostly non-innovative, laggard, legacy LICE makers deny, resist and slow-walk the inevitable transition to superior fully electrified vehicles because their plug-ins will cannibalize their own LICE profit centers in sales and stealership maintenence and they lose the only real IP they have anymore which is in ICE power plants.

MoMac

“salesman that have to sell both are stuck in the dilemma of talking down about their ICE products”

No, the salesman doesn’t care about the reduced maintenance. The dealership owner cares. The manager probably cares. But the salesman cares about commission, not maintenance.

In a general sense, dealerships aren’t doing as good as a job with EVs as with ICE. There was a report about it a year or so ago. But the problem was NOT that customers asking for a specific EV model were being redirected to a different model. The problems were that they weren’t unable to answer all the questions about an EV model, and on some occasions they only had 1 EV on their lot and it was being charged (or needed to be charged).

Richard

It sounds like they are hanging on until the costs and performance of batteries
comes down further.

VW overall strategy appears to be pouring a lot of money into EV’s but are very slow to the party. A lot of the money will go into cars for the Chinese market too where the EV mandates are huge.

ffbj

I think what amazes me the most about legacy automakers concerning Tesla is their temerity.
Their statements in regard to Tesla remind me of a famous leader who pounded his shoe on a desk and said we will bury you.

rey

Looks like now that Tesla has released the mod3 and it has been on the market for over a year Europes Old Auto are soon releasing “Tesla Killers” in earnest ,but a a bit late , and these are no weapons” Mass destruction ” againsnt the mass-market Tesla mod3. Tesla is about to declare war on the European continents Auto manufacturers, the battle is about to begin Opponents ,choose your weapons , PHevs,Hybrids, ICE,BEVs ,Hydrogen, Let the battle begin!

F150 Brian

The biggest threat to the EV movement is not ICE or big oil.
It’s the problem of over supply.
If too many companies declare that high volume is the only way to go (ie follow Tesla) and flood the market with offerings that are significantly more expensive that their ICE competition, then they may find there are not enough early adopters with high salaries to buy them.
Slow and steady is the way to go. Pick markets that have few offerings, mature and cost reduce the components.
Elon himself admitted that Tesla almost failed trying to get to volume production. If BWM, Audi and others were trying the same thing at the same time, all trying to pull on the same customer base, Tesla may not exist today.
We don’t need a tesla killer, or even a tesla competitor. We need more market coverage.

Richard

Hyundai seem to be ramping up pretty quick.
Germany and Japan better watch out or the centre of gravity of the car industry will shift to the US and Korea. Now wouldn’t that be disruptive.

Ek

Tesla didn’t just build a car. Tesla built infrastructure

Question to all these other guys.. “your cars are great but how will your cars be recharged?

Darko

They are not Tesla competitors and Tesla killers, they are Tesla copies and Tesla-inspired EVs whose aim is the rest of the ICE car population and they are actually ICE killers. The market demand is so big that there is enough place for all good EVs!

Elon Milord

I think if you charge at 800v at your home you’ll get a blackout!

Mark R Lidstone

It doesn’t really matter if Tesla has no competition until 2020. That is only 2 years away. Model S was released in 6 years ago and the 3 is brand new after 6 years. What kind of competition will there be in 2026? As long as Model 3 still costs over $70k here in Canada, they won’t sell many and the only thing to make EVs more accessible (cheaper) is competition. Plus, those companies already have robust after sales programs, logistic solutions, parts distribution online, etc. Tesla has a lot of work to do before the competition gets here. If they can get it done, they will continue to grow and dominate because their product is desireable but don’t discount the ones who already have 100 years of technological leaps, a loyal customer base and the pockets to get it done eh.

MattG

When are we going to learn? Every current and future EV is not a Tesla competitor/killer. They are ICE competitor/killers and only promote Tesla.

TomArt

Well, the I-Pace and e-tron are good at what they’ve already been good at: traditional luxurious interiors that people tend to want. The high charging capability is really great, as well. Some, like the Taycan, might prove better on the track. But, that’s about it.

The Tesla’s are faster and more efficient, the safest production vehicles ever tested in the US, and have the best Level 2 self-driving capabilities on the road today.

All of these models should sell just fine, with no negative net effect on Tesla.

Steven

And the elephant in the room asks “Will they only be sold in CARB states?”