It often seems that just about every new electric vehicle that is either launched, announced or showcased as a concept car for the future is called a ‘Tesla killer” by the mainstream business and automobile press.
I wish they’d just stop it.
I had my research assistant (my teenage daughter) Google “Tesla killer” and capture car brands and/or models that were included in articles listed in the search results. The following is just a sampling of brands and/or car models labeled as Tesla killers:
- Lucid Motors
- Faraday Future FF91
- Porsche Mission E
- Audi e-tron
- Mercedes EQ
- BMW i5
- Chevrolet Bolt
- Fisker EMotion
- Rimac Automobili Concept One
- Jaguar i-PACE
- Skoda Vision E
- Nissan LEAF
- Workhorse W-15
- Future Mobility
- WM Motor
The stories were either clickbait or written by ill-informed or misguided reporters. In fairness to many reporters, however, most do not write their own headlines and so blame may fall on copy editors and headline writers who are simply going for a catchy title.
But sure, Tesla has competition and in the coming years it is going to get intense especially as automakers including Mercedes-Benz, BMW, Audi, Volvo, Jaguar, Porsche, and others bring serious battery electric vehicles (BEVs) to market.
The reality, however, is what would most likely kill Tesla is not competitor offerings, but Tesla itself. Overly ambitious goals, quality and production issues, capital needs, leadership issues, lawsuits, battery supply/raw materials challenges, etc. could be some potential causes.
But competition is likely to only make Tesla better and more successful. Elon Musk has always been clear that part of the company’s goal was to “… move (the other automakers) more urgently with EVs to counter climate change.”
Even if Tesla sold 1 million EVs annually in the US, it would have less than a 6% market share. And if the company sold say 3 times that globally, its worldwide market share would be roughly 3.5% based on 2016 sales of 88.1 million light vehicles.
Many contributors and commenters on financial sites like Seeking Alpha seem to think that some new EV is going to put Tesla out of business. But consumer adoption of electric vehicles is so early that sales volumes are not a zero-sum game. More EVs becoming available will tend to increase awareness and choice, which also benefits Tesla as the auto company most associated with electric vehicles. While trite, the aphorism “a rising tide lifts all boats” is one that I believe applies to EVs and Tesla.
Now, we certainly might see a shift the next few years of some sales of the Model X, for example, to SUVs/crossovers from Jaguar, Volvo, Mercedes, etc., (not to mention Tesla’s own planned smaller and less expensive Model Y crossover). But Tesla sales overall should increase significantly.
The Apple iOS and iPhone Analogy
Launched in 2007, the Apple iPhone wasn’t the first smartphone, but its entrance into the market certainly helped create the global demand for smartphones. The current iPhone 7 models are in fact still the top selling smartphones globally, despite Android-based devices overall outselling iOS smartphones. (YOY sales of iPhones declined slightly in Q1 2017 after setting an all-time record in the quarter ending December 2016.)
Tesla is frequently compared to Apple, and for good reason. Tesla shares a similar brand affinity by consumers, design ethos, legendary CEOs (Steve Jobs when he was alive), and proprietary technology (think Superchargers and connectors).
If Elon Musk’s master plan works, in several years, the other automakers will sell many times more EVs than Tesla. But like these charts show, while Android devices outsell iOS devices, Apple’s smartphone sales have also grown steadily the last 10 years. Though, as the smartphone market has matured, growth is now flat.
Yes, Tesla still has to innovate and execute on launching new models and scaling production, but if it does so, the more competitor EVs that are available, the more Tesla should also sell. The reason is simply that it means that the market is growing along with consumer awareness and interest, which, like Apple, benefits the companies most associated with market leadership in a product category.
Android devices are akin to BEVs from the other automakers. Combined, they will outsell the number of vehicles from Tesla, but that doesn’t mean that Tesla won’t be wildly successful or might even have the top-selling EV, say in the upcoming Model Y, for example.
Tesla “Direct Competitor,” Not “Tesla Killer”
So, let’s be clear, there aren’t likely to be any “Tesla killer” cars in the near future. What is possible and perhaps likely in the next few years is for competitors (e.g., Jaguar i-PACE, electric Volvo SUV, etc.) to eat into the market share of the Model X. But the future of Tesla is all about the Model 3, Model Y, and other models, including a likely pickup and commercial semi truck.
So, rather than refer to current or future electric vehicles as “Tesla killers,” let’s call them what many will and will not be, “Tesla direct competitors.” These are models that are not just electric, but likely to actually compete head to head with Tesla for a buyer’s attention and purchase.
So, if you want to play along at home, here is a sample handy dandy scorecard to help assess whether a current or future EV should be considered a worthy and direct Tesla competitor. While I’ve probably missed some comparison factors, my point is simply that just because a proposed car is electric, quick, and maybe even good looking; doesn’t make it a key Tesla competitor, let alone “Tesla killer.”
An electric car with 200+ miles of range that costs around $40,000 does not automatically make it a Tesla Model 3 killer or a huge direct competitor. As we are likely going to see with the Chevrolet Bolt, for example, a lack of fast chargers, the Chevrolet brand itself, basic interior finish, and other factors simply don’t put it head to head with the upcoming Model 3. (That isn’t a slight against the Bolt, the cars have some overlap in buyer types because of the similar cost/range factor, but in general they will appeal to different demographics.)
The serious EV competition is starting to heat up, but won’t reach a fervor until about 2020 when a number of 200+ mile range BEVs are expected to hit the market. Tesla has to execute and do a lot of things exceptionally well to be successful, but can we please stop with the “Tesla killer” nonsense every time an automaker announces their future EV plans?