While Media Tries To Make Tesla Look Like Prey, It’s King Of The Jungle

SEP 13 2018 BY EVANNEX 26

IN THE AUTO INDUSTRY JUNGLE, TESLA IS PREDATOR, NOT PREY

How would you react to a news story like this: long-established print newspapers such as the New York Times and Washington Post have finally figured out how to make money on the internet, and they’ll soon be rolling out their own online offerings, which will quickly put those annoying online news sites out of business. The new internet-killers will be introduced in just a couple of years, so you’d better sell your Google and Facebook stock now!

*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: Tesla’s Model S (Instagram: @dylankinnisten)

As much as some of us would like this scenario to be true, we know it isn’t. However, for the past couple of years, a similarly silly narrative having to do with Tesla and the legacy automakers has been making the rounds. The theory is that, this time, the old-line OEMs really are serious about producing and selling EVs, and they’re going to take Tesla right out of the game.

On the face of it, the argument has some logic behind it. Big Auto can leverage economies of scale and vast marketing resources that Tesla can only dream of. More importantly, most of the companies have practically bottomless financial resources – they could afford to lose money for years while developing the market for their new vehicles.

However, the argument falls apart when you consider the issue of motivation. Yes, Big Auto could do all these things, but over the past decade it hasn’t done so, for reasons that I’ve already written about at length. Despite the breathless warnings in the popular press, industry incumbents aren’t likely to substantially change their strategies until it’s far too late. In fact, looking at the facts about the vehicles, the companies and the overall industry, the informed conclusion is that Tesla is more likely to be the predator than the prey (BMW is likely to be the first victim).

It’s true that there’s a wave of new EVs coming from the German luxury brands. Furthermore, while all of these automakers have produced low-volume compliance cars in the past, they certainly appear to be a little more serious this time around.

Mercedes plans to invest €10 billion in its upcoming EQ line of EVs over the next few years. The first of these will be the EQC, which is expected to go on sale in the US in 2020. Audi is building up its in-house electric expertise – it developed the battery technology and drive system for its new e-tron quattro, which is to be launched in San Francisco this month (the launch event was moved from Belgium after the company’s CEO was arrested in connection with the latest diesel emissions scandal), and is to go on sale in Europe soon. The Porsche Taycan, scheduled to go on sale late in 2019, has a number of exciting features, including 800-volt fast charging. Even BMW, which was an early EV pioneer but later lost interest, has announced plans to get back in the game with an electric crossover called the iNEXT that’s scheduled to go into production in 2021.

Above: A strange design decision from Mercedes with its latest ‘Vision URBANETIC’ electric vehicle concept unveiled in Copenhagen (Source: Electrek)

The advent of these new EVs is excellent news, and speaking as someone who has driven most of the plug-in vehicles out there, I am confident that they will all be excellent cars. In terms of range, performance and price, most are roughly comparable to Tesla’s offerings. However, there is no reason to believe that any of them will take any substantial number of sales away from the California carmaker. The Mercedes and BMW offerings won’t go on sale for a couple of years, by which time Tesla will have further upgraded its products. As for the Jag, Automotive News says JLR “can’t duplicate the media fascination and consumer passion for Tesla, and they don’t plan to try. There won’t be comparisons to the Model X in I-Pace ads or dealer communications.” In any case, Jaguar is a fairly low-volume brand – its US volume leader, the F-Pace, has been selling about 1,200 per month, about a fourteenth of Model 3 sales. The Audi is expected to hit the US next year, but Electrek, for one, thinks it will be a tough sell, with the company’s gas-powered SUVs sitting next to it on the lot with price tags about 50% lower.

And that brings us to the real reason that Tesla need fear no murderer in the night – the murder weapons are available, but the motive is lacking. What many writers of mainstream news articles don’t realize, but everyone in the EV industry does, is that the legacy automakers are only producing EVs because governments are forcing them to (and to a lesser extent, because they perceive a long-term threat from Tesla). While they tout their electric cred to journalists, in practice they produce just enough vehicles to satisfy regulators, advertise them little or not at all, and work diligently behind the scenes to water down or eliminate the fuel economy and emissions regulations that caused them to build the EVs in the first place. Unlike Kia and Fiat, most automakers don’t come right out and say, “Don’t buy our EVs,” but there’s little doubt that, if governmental pro-EV measures were to go away (as is likely to happen in the US, at least at the federal level), the carmakers would quickly cancel their EV programs.

Allow me to indulge in another hypothetical metaphor: suppose that a dozen contestants showed up on American Idol or some such talent competition. Eleven are elderly, established entertainers who have been badgered into appearing, make it clear they don’t want to be on the show, and deliver warmed-over rehashings of old hits. One competitor is a young and attractive upstart who is totally committed to winning the prize, and delivers a virtuoso performance, leaving every scrap of talent and energy on the stage. Who’s going to be eating whose lunch that evening?

Finally, let’s look at the overall auto industry. To buy into the Tesla-killer fable, you need to believe that there’s a “car market” and an “electric car market,” and that every EV sold by Big Auto means one less EV sold by Tesla. This scenario might have made sense as long as EVs were less capable and more expensive than ICE vehicles. However, the tipping point of price and performance parity is fast approaching, thanks to Tesla’s innovations, and by the time the current crop of Tesla-taunters arrives at dealerships, that point will probably have been passed. As more Model 3s, Chevy Bolts, Prius Primes and Clarity PHEVs hit the road, more consumers will see them, and more will start making the switch. Consumer awareness of EVs is still quite low, but if Big Auto really does start advertising and marketing its electrified vehicles, that will change. Demand for Teslas will grow along with demand for EVs in general. Arguably, far from presenting a threat to Tesla, the new crop of competing EVs presents a huge opportunity.

Above: Model 3 fleet is growing rapidly as the automaker deploys customer deliveries to hundreds of thousands with pre-orders (Image: InsideEVs)

Elon Musk has always known this. He’s said many times that he welcomes competition from the major automakers. In fact, he doesn’t even care whether your new car is a Tesla, as long as it’s electric. What are you waiting for?

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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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26 Comments on "While Media Tries To Make Tesla Look Like Prey, It’s King Of The Jungle"

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REXisKing

The proof these legacy companies are not going to effectively compete with Tesla, is GM.
The Bolt, with a plastic interior, poor seats, and a poor rear suspension, was supposed to be a “Tesla Killer”. Well, GM set up a factory to produce 30,0000 is selling 20,000. And GM has not bothered to advertise the car. If you were truly trying to sell, you’d advertise to at least get demand up to 30,001.

If they don’t do that, they’re not ever going to produce a “Tesla Killer”.

But, you have to give GM credit, all during the Volt process, they invested in every promising battery chemistry. They sure looked like they were going to compete.

But, at the end of the day, if you’re not building EV’s to REPLACE your gas engined vehicles, you’re actually not competing, you’re dying.

Windbourne

In fact, I have no doubt that if Merkel was not pushing the German Car makers to go EV (and heavily subsidizing it), than the German car makers would have ZERO EVs. Ford has nothing. Japan has the leaf and that is it .

Totally agree.

Salem

Merkel? The women who not too long ago called internet “the new territory for Germany”? She has absolutely no idea and nothing to with this.
The credit goes to China for their EV mandates, which makes up >50% of VWs market.

Pushmi-Pullyu

Where China is leading, the rest of the world isn’t following. China is pretty much an isolated market. If and when China starts exporting cars to first-world countries, then things might start to change. But China is going to have to improve its car safety standards, and improve its quality control, quite a lot before they can compete on a level playing field with established first world auto makers.

Even in China, if my understanding is correct, most BEVs are bought by government fleets — not by private citizens. There are a lot of barriers to ordinary, apartment-dwelling Chinese to own and drive a BEV. And there will have to be some significant changes to Chinese culture in order for that to change; cultural changes that China has resisted for centuries.

https://asia.nikkei.com/Business/China-s-electric-cars-stuck-on-low-charge

Rolando

Angela Merkel was receiving 600k Euro election donation from the BMW owner family (Quandt) to fight hard in the EU for watering down the emission targets, so that still several years long 250% of the target value can be exhausted until 2025. So Merkel is not pushing hard, she is being pushed from German Big-Auto.
The chief lobbyist (VDA = association German automobile ) Mathias Wissman was previous transport (auto) minister, is Merkel’s party mate and close to Merkel on first name basis.

Speculawyer

On the contrary…GM is proof that they have a chance. The Bolt clearly has a lot of issues…it looks like an econobox, the DC-fast-charging ability is too slow (54KWH), the aerodynamics are OK but not great….but it is a solid long-range EV sold at affordable price. They can refine that start and be more competitive.

If you want to see legacy companies that fail, look at Fiat-Chrysler, Mazda, Subaru, etc. They got almost nuthin!

James P Heartney

Chevy is selling a bit over 1000 Bolts per month. Tesla is building over 5000 M3s per week. And Tesla has the battery supply to build many more than that, and it plans to. Meanwhile GM is constrained by whatever battery supply they can wrangle out of LG Chem, which has lots of other customers.

Bottom line: GM is barely in the EV game. And Tesla is scoring point after point. In a couple of years, with all their customers awash in the much more desirable M3, GM is going to wonder where all their business went.

I’ve driven the Bolt; it’s a nice car, if not flashy. I’m afraid to test drive an M3, because I know I’d really want one afterwards (and I have three kids to put through college, so it’s not a possibility).

Andy

You’re falling into the trap that the article is talking about. “In a couple of years” non EV enthusiasts will be buying EV’s. The market is expanding, companies aren’t chasing a small number of customers. Someone wanting to buy the ICE equivalent of a Bolt is not going to be buying a Model 3 – it’s too expensive. They’ll be buying a cheaper EV vehicle – assuming EV prices become more comparable to ICE vehicles in the future.

If prices don’t become comparable EV takeup is going to dry up very quickly and they’ll only be available to enthusiasts and the well off, with everyone else buying ICE and Hybrids.

earl colby pottinger

But as volume goes up, cost keep going down.

Andy

I agree, and as costs go down GM will build and sell more BEV cars, but at $20k rather than $35k. That’s at some point in the future, just like future production.

Get Real

LMFAO, dream on and look at the EV scoreboard.

Arve Aleksandersen

Seems like you forgot the BMW iX3.

achikokaxeli

+++1

YVES LAURIN

I wish I had billions of dollars to invest, I would buy all the stocks from Tesla and smile at those short sellers.

YVES LAURIN

If Tesla start making money, they could use part of the money to advertise, that way the TV market will not bash Tesla anymore, you cannot byte the hand that feeds you.

Vinay R

Totally agree, Tesla need to throw a bone at Media outlet , doesn’t have to be big budget, even though they don’t need to advertise but they should do it to protect brand integrity.

Henry

I would love to see a Super Bowl ad where these things occur:

1. A Model S P100DL against a Ferrari/Lamborghini/McLaren and a Dodge Hellcat in a 1/4 mile run
2. A Model 3 Performance against the BMW M3, MB C63S, … around the track
3. A Model X versus an F-150 truck in a tuck of war

And a bonus clip of the Tesla Semi going uphill over the Donner’s Pass, leaving behind a trail of other semis.

Sunny Minnesota

Actually, it would be more impressive if they set something like a Kona or Niro on the quarter, just to see if that electric boost would beat the muscle cars off the line.

Andy

Not sure what any of those are really going to prove? Especially the last one. Not everyone is interested only in 0-60 or instant torque.

How about 4. The F150 towing a 5001lb trailer, while the Model X sits in the carpark unable to legally tow the same trailer. That’s a far more realistic proposition for practicality. 😉

Andy
That initial analogy was awful, but I do however agree with the premise. There is no “Tesla Killer” just as there was/is no “iPhone killer”. The market is big enough for everyone and everyone takes their niche. The sooner the “killer” moniker dies the better. To be fair to all manufacturers so far, AFAIK none have directly comared their models to Teslas, but then none have released directly comparable models (most choosing the small/mid size SUV – the most popular market segment – or the smaller city style car). The car market in 20 years is likely to look very similar to today, the vast majority of current manufacturers will be around, producing similar volumes as they are today. The exception being Tesla, who will probably be selling a couple of million vehicles, a similar size to the other Premium marques. The only real difference being that there will be a lot more EV vehicles in manufacturers ranges and pure ICE vehicles will be a lot rarer. If you want a fast, sporty, expensive sedan/saloon then you’ll have the choice of a Tesla, BMW, MB, Audi, Lexus. If you want a a modestly priced family SUV then you’ll have the… Read more »
rog

All carmakers have one bottleneck: battery.
If only one carmaker builds a own gigafactry, the they will come with a teslakiller. No battery factory, no e-car. Or just a litte bit.
They invest billions into research for e-cars. But how many more billions do the invest into ice research? Hmmm.

earl colby pottinger

Great examples are Porsche and Jaguar, they will sell every single BEV that they make, but both are likely to only produce 20,000 each. It is hard to kill Tesla if you have the demand for the sales but have no produce to sell.

Andy

Have Porsche mentioned that? They have VAG behind them, with tens of billions in battery contracts. And they have the benefit that it’s not coming out for another couple of years.

magama52

Agree. And don’t forget the charging network and dealerships that the last thing they want to sell is an EV. No money in it for them.

Counterpoint

I found it amusing that the article said, in reference to long-established car companies “More importantly, most of the companies have practically bottomless financial resources – they could afford to lose money for years while developing the market for their new vehicles.” That’s exactly what Tesla has been doing!

Xaoc

There’s another dimension to why Tesla is such a game-changer and why the old car manufacturers are dragging their feet in the USA. All other car companies in the USA are beholden to their dealers.

Car dealers have been highly averse to electric cars in the US because of their lower servicing costs- decreasing the dealer’s revenue from the service department- along with the cost of retraining their employees to the new technology.

Traditional car manufacturers first and foremost make cars for their dealers- they are the “true” customers of car manufacturers. Tesla eschewing the dealership model for company-owned stores is not only a boon to the customer experience but it’s also allowed them to avoid built-in dealer bias against electric cars.