A lot of people claim that large automakers can compete with Tesla whenever they want, whenever they feel like it’s time to go electric. I don’t buy that — for reasons explained here, there, here, and everywhere.
But if you assume that automakers can turn on a dime and can all of a sudden roll alongside Tesla in the electric car world, then you should assume approximately half a million reservations for each new model, right?
Rather quickly, compelling new electric cars, SUVs, CUVs, and pickup trucks would demolish these carmakers’ non-electric business, right?
So, the question then arises: Why not going fully electric? If you can quickly have demand for 5 million electric cars per year, perhaps it’s time to put polluting, non-electric offerings in the memory bank.
Again, I’m not actually in the camp that believes automakers can quickly change their game and compete with Tesla. I think Tesla has huge head starts in batteries, software, perhaps even electric motors, sales channels, charging, and electric car demand. And I think there are several reasons why large automakers don’t want to enter an electric future quickly anyway. So, I think it will take years for a serious competitor to catch up to Tesla in this market — if anyone ever does. Nonetheless, I do think the future is electric and that many automakers will switch 100% to electric vehicles in time.
Some automakers will go under because they are too slow to adapt. Some will transition ahead of the pack and grow their market share as a result. And some will keep up with the pace enough to stay on their feet but will lose a chunk of their market share if they lag too much.
Aside from just asking which companies will be semi-leaders, which will be surviving laggards, and which will go bankrupt or be acquired, a question that came to my mind this week was: “When will leading car companies go 100% electric?”
Let’s go through some auto companies and brands to consider this question.
smart is Smart
Actually, Daimler’s smart brand has already announced its transition, so it will seemingly be first. Smart is not often mentioned since it’s a small brand, a rather niche brand, and a quirky brand. Nonetheless, this small-car division of Daimler is taking up a leadership role. By 2020, smart cars in Europe will only be available with fully electric powertrains, and this is already the case for smart cars in the USA.
Jaguar is another rather small brand in a niche segment that will probably electrify faster than most. Jaguar Land Rover sold over 600,000 vehicles in 2017, but the actual Jaguar brand sold just 178,601 vehicles. Tesla expects sales of the Model S and Model X to hold steady at approximately 100,000 per year (combined), whereas it soon plans to hit a production run rate of 20,000/month for the Model 3. Furthermore, demand and production could potentially run much higher than that in the coming months or years. The companies are basically in the same class and have a similar lineup if you ignore the differences in powertrains, but Tesla has basically already passed up Jaguar in sales volume.
In theory, Jaguar could be one of the first brands to bite the dust if it doesn’t electrify fast, but it also appears that the company has been taking the shift seriously and wants to grow its market share by moving quicker than most. Its relatively small size, like in the case of smart, does make it more nimble and easier to adapt in that regard.
As it turns out, model year 2018 of the Jaguar I-PACE — Jaguar’s first fully electric vehicle — is already sold out, and deliveries of the 2019 I-PACE apparently won’t begin till April 2019. A CleanTechnica commenter a couple of days ago noted, “Jaguar swiftly allocated 4,000 I-PACE’s for the Dutch market. Jaguar normally sells around 1,500 cars across all Jag models in The Netherlands.” Norway, meanwhile, is said to be getting 1,500 I-PACE electric SUVs and all of those were accounted for via pre-orders. Jaguar reportedly prepped to produce and sell 25,000 I-PACE SUVs in the car’s inaugural model year, but it has far more demand than that. Sound familiar?
It depends on leadership, but I would not be surprised to see Jaguar follow smart as the next brand to go fully electric. Two challenges in that regard, though, are with batteries and charging.
Jaguar would need to secure a hefty, secure supply of batteries for long-range luxury vehicles. Does it have that worked out? Would the battery producer believe in Jaguar enough to dedicate the necessary supply? Would both sides of the equation be willing to take a leap of faith on consumers rushing to Jaguar in the new market?
Jaguar buyers probably also want cars that can go on road trips. While the I-PACE has long range and better charging capability than most electric cars, it doesn’t have superfast charging or a solid network that would provide that. I’ve long thought Jaguar might be one of the first/only companies to partner with Tesla on Superchargers, but it appears that’s not actually in the works. If Jaguar doesn’t, that will mean a longer wait until someone can buy a Jaguar essentially anywhere in Europe or the US and be able to comfortably go on a road trip with it. That could slow down the brand’s transition to 100% electricity.
I haven’t been able to find a plug-in vehicle share for Porsche’s sales in quite a while, but it was at 5% in the US in early 2017, near the top of the pack. It now has the Mission E sedan and Mission E Cross Turismo coming, with both looking to have strong demand. Porsche has been a leading partner on the Ionity superfast charging network. We actually had someone from Porsche Consulting scheduled to give a presentation at our EV charging conference in Warsaw in November, but he became an Ionity exec a couple days before the conference when Ionity was freshly announced, so he ended up presenting about Ionity.
In February, Porsche announced that it was doubling its e-mobility investments by 2022, to €6 billion. (We somehow missed that story at the time.)
In April, the company announced an aggressive new fast charger network planned for the USA. Again, it’s not on par with Tesla’s Supercharger network, but it goes a step further than just about anyone else is going.
Like with Jaguar, Porsche is under particular pressure from Tesla — possibly even more so. It is known for sporty luxury, or perhaps luxurious sport is the better way to put it. Tesla is embarrassing formerly powerful Porsche models in sprints to 100 km/h (60 mph), and it is surely landing a lot of sales from buyers who would have otherwise been Porsche customers.
I expect Porsche could even beat Jaguar to a fully electric transition. Though, enough of a market may remain for its internal combustion engine (ICE) cars for years to come that the company quickly rises to 70–80% electric sales but maintains its ICE business for 20–30% of its customers.
Now we’re getting to a serious mass-market player. Again, BMW is under special pressure to transition because it directly competes with Tesla. While the company has stepped back its outward optimism in recent years, I think it has been more focused on prepping for the transition than Volkswagen, Daimler, GM, Honda, Ford, or Toyota. It has enough solid experience with the i3, i8, iPerformance models, and its old ActiveE program to have a good sense of where it wants to go and how to join the rEVolution.
The BMW brand is already seeing a rather high percentage of its sales coming from plug-in models. In May in the USA, they accounted for 6.6% of the company’s sales, and the figure was over 7% in April. Globally, the figure was 5% in April, while it was 9% in the UK, 25% in Scandinavia, and over 50% in Malaysia. Clearly, in certain smaller markets, BMW can see how it works to transition up the S-curve of the electric revolution.
In Europe, BMW sees a lot more plug-in vehicle sales than in the US, and it’s actually the #1 brand on the continent for plug-in vehicle sales — above Tesla, Nissan, Volkswagen, everyone. It has 16% of the European plug-in vehicle market, Volkswagen has 13%, and Renault and Nissan each have 10%.
Also, the 3 Series and 4 Series are about to get their brunch eaten, maybe even their lunch and dinner eaten, by the Model 3. And the brand’s popular small SUVs have the Model Y around the corner. Oh yeah, there are also the electric models Jaguar is bringing to the table, in case you want a more traditional luxury car from a legacy automaker.
BMW is in a tougher place than smart or Jaguar due to its tremendous investments in engine factories and its grand scale. Nonetheless, if you have to cut off your legs to save your life, you do it … right?
Among non-premium brands, I still think Nissan is the most prepped to switch to electric cars and SUVs. The rumor that it is cutting a deal with CATL, the largest EV battery producer in the world in recent months, is a strong sign that the company finally has a solid, clear, affordable path forward for mass-produced EV batteries. Of course, that assumes CATL will be able to deliver, but I assume it will — in Europe, in the USA, and of course in Asia.
Nissan already highlights the LEAF as its top, most premium model in many markets. The company doesn’t push its record-holding electric vehicle 100% and it still has limitations on the charging front, but it seems prouder than most to be electrifying, it surely doesn’t want to lose its first mover’s advantage, and it has a stable, dedicated chairman who wants to see the world stop global warming.
Furthermore, the company is now looking to slide into the more affordable realms with mid-range (~150 mile) electric cars. It’s one of the only companies that sells its top electric option all over the world (not everywhere, but in niche markets in all kinds of places).
As we’ve pushed for years, if Nissan took the bold move of partnering with Tesla on Supercharging, we think the company could break out the champagne and see its market share skyrocket. Alas, assuming pride and … well, pride … prevents Nissan from doing so, the question is how long it will be until Nissan believes all of its customers are ready for a fully electric life. When will customers be able to buy an electric Rogue, electric Juke, or electric Altima and go on a road trip with it?
Who First? When Exactly?
You may have noticed that I didn’t forecast the year that each of these companies will switch 100% to electric vehicles. That’s the tough part. I’ll go out on a limb and project the following:
¤ Jaguar — 2023–2024
¤ Porsche — 2025 above 80% of sales, 2027 above 90%
¤ BMW — 2027
¤ Nissan — 2027
Of course, Daimler already put down its markers for the smart brand.
As far as other companies/brands, good options include MINI, Volkswagen, GM, Volvo (which I’m tempted to really put in the running, especially with leadership from Geely), and Daimler. What do you think?
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