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Published on October 27th, 2014 | by Steve Hanley


European Auto Makers Target Tesla

October 27th, 2014 by  

Tesla Model S

Originally posted on GAS2

Tesla has only sold about 50,000 of its Model S sedans, but the shock waves set off by Elon Musk’s upstart car company are reverberating throughout the board rooms of auto makers around the globe. According to Germany’s Manager Magazine, Porsche, Mercedes and Audi are working overtime on new models to fend off the challenge from Tesla. All three companies want their new electric models to have at least 400 kilometers/240 miles of range.

Porsche’s new electric vehicle will be a smaller version of its Panamera sedan. Since the Model S is roughly the same size as the Panamera, Porsche must believe the power of its nameplate will be enough to offset the Tesla’s advantage in interior room. The electric Porsche will not be in showrooms until 2018 at the earliest.

Mercedes CEO Dieter Zetsche is anxious to see his company offer a car that can compete head to head with the Model S, one that is about the size of the current E Class or S Class sedans. The problem for the Stuttgart team is their battery is too big to fit into any of its current models so they must engineer a completely new car for the task. Don’t look for the anti-Tesla Benz anytime before 2021.

Over in Ingolstadt, Audi is not planning to tackle the Model S head-on. Rather, CEO Rupert Stadler is focusing his company’s efforts on building a car to compete with the soon to be launched Tesla Model X. The electric Audi SUV will not be available until late 2017 at the earliest, it’s believed.

Surely Elon Musk and his management team must be snickering up their sleeves to think their tiny company is causing industry giants such as Porsche, Mercedes and Audi to spend billions developing products to compete against them. In an interesting side note, Daimler sold its remaining stock in Tesla just this week, realizing a $780,000,000 windfall. Some analysts think the sale marks the end the Mercedes/Tesla partnership that saw Tesla contribute its technical skill to the development of the Mercedes B Class electric vehicle, as the two companies move into a more adversarial role in the marketplace.

Will Porsche, Mercedes and Audi be able to meet the Tesla challenge? If you are in the car business, these are interesting times.



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About the Author

Steve writes about the interface between technology and sustainability from his home in Rhode Island. You can follow him on Google + and on Twitter.

  • EV docmaker

    Only 50,000 ! That is 50,000 with an average price of $90K from a company that does NOT advertise and did not exist 10 years ago !!

  • Nathanael

    They’re only 10 years behind. Ha! Tesla still has first mover advantage….

    That said, this is exactly what Elon Musk *wanted* them to do. His goal is to eliminate gasoline & diesel cars entirely.

  • Michael G

    I can’t stand German cars. They are boring and poorly made. They mostly trade off fake prestige – the car equivalent of Botox. And “German engineering” which means nothing when you look at their repair records. I knew one Benz owner who said he should have bought two – one to drive while the other was in the shop.

    The BMW drivers all seem anxious to prove they can beat me to the next red light. I never see Teslas being driven so aggressively.

    Teslas are beautiful.

  • Shane 2

    Given the capital and engineering talent the big players can mobilize, Tesla may not survive the next decade. However, Tesla will have left a legacy just as Netscape left a legacy.

    • Bob_Wallace

      The other manufacturers had better get busy if they want to catch up. Tesla has probably already acquired most of the ‘best and brightest’ when it comes to EV design. They have a company where all the concentration is on EV and not EVs as a compliance car. And they are producing a very high quality and innovative vehicle. Were I a young engineer interested in EVs Tesla, and not Ford/Daimler/Toyota is where I would want to work.

      It’s going to be interesting to see what GM is going to bring to market to compete with the Tesla 3. I have a feeling the wizards at Tesla have a few tricks up their sleeves.

      • Larmion

        That’s an odd assertion to make. If you have a quick peek in a scientific database like Web of Science, you’ll find that an extremely large proportion of tier 1 research into electric engineering is being done in Europa, Germany first and foremost. And don’t underestimate Japan either.

        And guess what? The days that the best and brightest in Europe and Japan left for the US are long gone.

        • Bob_Wallace

          It’s a weird assumption to make that a highly innovative company like Tesla would attract some of the best brains in the field?

          Come on. Don’t let your reasoning be blinded by your hate of Tesla, your European ego, or whatever is distorting your views.

          • Larmion

            It’s a weird assumption to make that Tesla would have acquired ‘most’ of the best and brightest. Most of the best and brightest in the US, certainly. But countries like Japan, Germany and France have stronger engineering traditions and a graduate population that is extremely reluctant to move abroad.

            I don’t hate Tesla; I want EV’s to succeed as much as anyone and if Tesla is going to do that, more power to them. However, the German luxury car makers are growing year after year after year and certainly have the technology to build an EV if needed (don’t forget Daimler was an EV pioneer over a century ago). Saying that they are in any way threatened by Tesla is like saying that Ikea is threatened by your local cabinet maker – a cabinet maker that surely makes better closets than Ikea at that.

          • Bob_Wallace

            Yeah Europe!!!

            Hip, hip, hooray!!!

          • Joseph Dubeau

            Pardon me, I didn’t see this morning at Tesla Church services.
            What make you think Europeans can built a better car. Volkswagens are made in Mexico.

      • Philip W

        I really hope Tesla will do some R&D in Germany in the future.

    • As much as Tesla has created a highly desirable brand, akin to Apple, I can’t see it going away. People are going to buy Teslas for years because they’re Teslas.

  • tmac1

    Great article
    As many have said thousands perhaps millions of us are itching to buy Model s or model III so Tesla seems to be doing something right!
    The no advertising, no middleman, internet ordering, on the go updates and fantastic customer service all add up to disruptive game changing way of doing business appealing to younger demographic

    Furthermore the philosophy of all electric car no range extenders really drives me and others itching for an EV revolution their way at least philosophically !

  • Matt

    This is what Mr M. said he wanted. He wanted to transform the industry, not just make a company that made lots of money. So no matter how these new cars turn out, he is winning.

  • ThatsJustHowISeeIt

    Well, too late for us when we have our P85D delivered in December. It displaces a Mercedes S class we would have bought otherwise but after driving a Model S, anything made by Mercedes with an internal combustion engine seems archaic and crude.
    I’m surprised it took them this long to realize how superior the Model S driving experience is to anything they sell with a gasoline engine. It was obvious when we test drove a Model S in 2012 and just had to wait for AWD which we will have in the P85D.

  • David in Bushwick

    Tesla has lead the world into the 21st century and while they may never rival Audi, it’s very possible they will provide millions of batteries and drivetrains to various other automakers around the globe in the future.

    • Larmion

      – Toyota created the market for cleaner vehicles with the Prius. Nissan built the first commercially succesful EV. Those two lead carmakers into the 21st century – Tesla isn’t nearly as influential.

      – Tesla’s batteries are built and designed by Panasonic, its drivetrains by Magna and others. So being a supplier is a long way off.

      • David in Bushwick

        Then I take it all back.

  • Even Proberen

    Once upon the time Apple’s iPhone was a blimp on Nokia radar. And look how that turned out.

    • Larmion

      When the iPhone was as old as the Tesla Model S is now, it had a far, far larger market share.

      The key difference is that Apple was early to the party – the smartphone was still an emerging product with very few consumer-centric offerings – Nokia’s Symbian was (and imo still is) an excellent and remarkably powerful OS, but it wasn’t nearly as intuitive and easy as iOS.

      Tesla on the other hand is entering a mature market that is shares with dozens of established luxury brands that all have a loyal following and a strong brand image. A loyal following that according to surveys is fairly technology neutral: they don’t choose the greenest luxury sedan, they choose the one that they perceive as the most prestigious and the most elegantly designed.

      Make no mistake, Tesla is great. But so far, it’s not a serious competitor to the German giants and its unlikely to become so in the near future – even if Tesla could double its sales year after year, it will still take a very long time for it to catch up.

      However, they are succeeding in showing that there is a small but significant niche for electric luxury cars. The likes of Audi and BMW will want to enter that niche too – not because they have to defend themselves against Tesla, but because they are all looking for ways to distinguish themselves from their peers.

      At the moment, Audi, BMW and Mercedes all offer a product that is more or less interchangeable, which explains why their relative market shares are fairly constant. If they want to change that equilibrium in their favor, they need something different. And I for one hope (and believe) that EV’s could be that something different.

      • Bob_Wallace

        Actually, Tesla is kicking butt in the US.

        Tesla Model S is the best-selling car in eight of the 25 wealthiest ZIP codes in America — outselling the usual crowd of luxury models from BMW, Mercedes, Lexus and Audi.


        It would be interesting to see how the numbers stacked up if Tesla was able to build to match demand.

        • Larmion

          1) The US is a very small part of the global car market.
          2) The wealthiest 25 ZIP-codes form a very small part of the US luxury car market.
          3) It’s not surprising that the Tesla outsells the far more expensive S-class or A8 – two models that account for a very small part of their respective brand’s sales.

          Given a sufficiently selective sample, one can prove virtually anything without actually being able to draw a statistically significant conclusion.

          Just compare Tesla’s sales to that of the traditional luxury brands. It’s small change in comparison.

          Tesla is doing well, no argument there. But to claim that is posing a significant challenge to its more established rivals is wrong.

          Much as I admire Tesla, I can’t help but wonder how it managed to create such a reality distortion field that some of its fans see it as a company well on its way to world domination. Traditional car makers aren’t going anywhere – their massive R&D budgets will allow them to evolve towards whatever the market demands.

          • Bob_Wallace

            You’d rather compare how well Tesla is doing against European cars in Europe? You could do a good job of showing how much better European cars sell there given that Tesla has only recently entered that market.

            Did you look at the cars in the table? They are in the Tesla price range.

            I don’t see Tesla as a company on its way to world domination. But I do see Tesla as a company that is in the process of shaking up the world car industry. And if other companies don’t get serious about matching what Tesla is producing and is likely to produce in the near future Tesla may well end up being one of the world’s leading car manufacturers.

          • Nathanael

            Traditional car makers are 10 years behind on designing and building electric cars. Yes, they can afford to throw money at the problem in an attempt to catch up. I wish them luck. So far they have shown a blinkered attitude which prevents them from doing so.

            Tesla’s been hampered in sales by being production-constrained. Also, lack of 4-wheel-drive has hurt sales in the snowbelt markets (which are large). But Tesla is well on its way to eating the luxury car market whole.

            Downmarket, only Nissan has made a decent model.

          • Larmion

            The question is: are they 10 years behind because they cannot offer a proper EV or because they feel market demand just isn’t there?

            Given the massive amount of market research a big carmaker does, you can bet it’s the second explanation.

            Few people care about the environment. Many people still (misguidedly) feel range anxiety.

      • Adrian

        Tesla is currently eating the collective lunch of the S Class, A8 and 7 Series in the US, with the X5 and Q7 as their next target, and E-Class, 5-series and A6 next up. So yes, they should be worried. Will the C-Class, A4 and 3-series competitor be far behind?

      • Nathanael

        Actually, Tesla’s creating the market. There are no other electric cars except the Leaf.

        Tesla doesn’t need to catch up. The *other* companies need to catch up. They’ve proven to have a slow learning curve. Even Nissan is only just starting to implement some of the things Tesla got right back in the Roadster.

        The others are starting from square one. They could just make Tesla knockoffs, but think about that — they’ll be knockoffs. And people will know that they’re knockoffs.

      • “When the iPhone was as old as the Tesla Model S is now, it had a far, far larger market share.”

        That argument doesn’t hold a lot of value, since the consumer electronics market operates at a far higher pace. Phones see a new generation every 6 months or so. Cars every 5-6 years. When accounting for this difference in product lifetime, Tesla is actually far ahead of Apple.

        To grab so much market share in a few years in a slow and mature market like the car market is rightfully worrying other manufacturers. Even more so since Tesla does not show any signs of relenting. It is actually speeding up with the gigafactory.

        Oh, and the competitors understand exponential growth, and why it is foolish to shrug off their current market share as a ‘blip on the radar’. It is not about the size of Tesla, it is all about the speed at which they are moving.

        • Philip W

          very well said!

    • Quote of the day…

  • Larmion

    Who says the Germany luxury brands design those cars just to ‘fend off Tesla’?

    More likely they want to invest the windfall from their rapidly growing sales in the developing world in R&D that will allow them to pull ahead from their direct competitors – their German rivals that is, not Tesla.

    So far, Tesla is nothing more than a blip on their radar – just compare Tesla’s sales volume with those of Audi, BMW or even Porsche. In fact, their growth in sales last year was larger than the total sales volume Tesla achieved so far.

    • Tom Capon

      Tesla has had waiting lists for their product since inception, with many more potential customers likely deterred by the waits. Their sales are entirely limited by production, not demand. Tesla have proven the existence of a new market without fully satisfying it, and now bigger automakers want to tap this market and steal market share by providing a larger volume of cars to meet demand.

    • Zach

      Porshe Sold 42,000 cars in North American in 2013. Tesla sold 11,000 Model S in the US alone this year to date (according to Inside Evs) and will probably get close to 15,000 by year end. When they introduce the X they expect to double sales to about 30,000 in the US so they will be within shouting distance of Porshe. In markets like California they already outsell Porsche.

    • Mint

      For the $100k car market, Tesla is more than just a blip:


      Luxury car sales had a good year overall. The S-Class Mercedes reached 13,303, the BMW 7-Series chalked up 10,932, the Lexus LS managed 10.727. No other sedan in the Tesla’s class reached the five-figure mark, with the Audi A8 at 6,300 and the Porsche Panamera plummeting 29% to 5,421. We won’t know precisely how many of the 22,300 Teslas the company delivered wound up in the U.S. until the company’s earnings report in a couple of weeks. But conservatively it outsold the nearest competitor by more than 30%.

      Tanking Panamera sales are more than likely due to Tesla. The Model S is quicker, costs less (especially when considering gas), and looks way better.

      • Larmion

        1) Your sample is hugely selective: it’s limited in time (Q1 only) and in space (US only).
        2) How many of those sales are influenced by the generous subsidy mechanism for EV’s? A mechanism that is itself proof of the (sad) insignificance of EV’s – if they ever reach a decent market share, no government could afford to pay that level of subsidy.

        • Bob_Wallace

          Why would it make sense to include the European and Asian markets when Tesla has just begun selling there? Look at the numbers where Teslas are being sold, not where they aren’t.

          Here are some Tesla comparisons. You’ll note that the Tesla is outselling some cars that are even cheaper than the Tesla with its subsidy.

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