Today was another exciting day for the electric drive aficionados. Volkswagen presented its ID. sub-brand to the world, with the first model, the ID.3, ready for reservation. The times that VW was short for VaporWare are over.
My colleagues are covering everything there is to say about today’s announcement from a VW perspective. This article is about the impact on the competition.
Who are the competition? We have seen announcements from PSA about the Peugeot e-208 — and its siblings for the Opel, Citroen, and DS brands. We expect the Renault Zoe and Nissan Leaf to become mature with larger batteries and usable DC fast charging. In the upper regions of the market, the Jaguar I-PACE, Audi e-tron, Mercedes-Benz EQC, Polestar 2, and Porsche Taycan are all trying to get a piece, and the 900 pound gorilla out of Fremont, California, is extending its market to the rest of the world.
What the competition is not doing (yet) is launching a big marketing campaign. This afternoon’s presentation will be a big news item on the evening news in much of Europe, followed by repeated segments on all the mobility and auto shows on television and numerous articles in the car segments of major newspapers and in auto magazines.
What VW is doing with this introduction of its ID. sub-brand is giving electric cars a seal of approval that no other carmaker has provided. It is not that VW has something new for a few enthusiasts (most of you reading this). However, VW is saying that electric vehicles will replace their fossil fuel models in the coming years, likely in the next decade, and transfers the story we enthusiasts know so well to the broader public. VW is clearly all-in, which means a lot more to the average Joe (or Jürgen) than Tesla predicting the industry will go electric. It also means a lot to all of VW’s conventional auto industry colleagues.
Thank You, VW
The impact on the competition can go two ways in the eyes of many critics and followers. Those who see the electric car space as a limited space will argue that VW will push the competition to the margins. VW will crush the ambitions of PSA, Renault, Nissan, and most of all Tesla, according to these people. The competition is here — go home, Tesla. No doubt Seeking Alpha and Wall Street will see this as another sign of the coming demise of the upstart from California.
The market researchers who see the auto market as one market where all powertrains are competing for a bigger slice think differently. The battery electric powertrain is still mostly unknown and misunderstood. The biggest problem is still convincing customers that fully electric cars are real cars, better cars. Able to do everything one expects from a normal car, but better.
This media campaign by VW will not only sell a lot of ID.3 cars all over Europe. It will also sell a lot of Leafs, Zoes, e-208s, i3s, Konas, Niros, and most of all, very many Tesla Model 3s. It is the perfect example of a rising tide lifting all ships.
The competition in the luxury segment from Jaguar, Audi, Mercedes, and Porsche is mostly sold out for over 12 months. Some have stopped taking new orders. It will be frustrating for automakers to see this tide wash away fossil fuel sales without having the capacity to profit with their own new electric offerings. The interest VW is generating can only be turned into orders by Tesla, because it’s the only company with the production capacity and maturity to profit right now from this rising tide.
It is great to be the only one that can deliver in volume when the competition starts a media campaign. Tesla (investors) must thank VW for this present. Other automakers in the top half of the EV market — Renault, Nissan, Peugeot, Hyundai, and Kia — should also thank VW for the long-term benefit, for the extra demand and interest they get from VW’s public push.
Editor’s note: One thing I found interesting from the Q&A after the presentation was that journalists repeatedly referenced Tesla without saying “Tesla” — but everyone knew what company was being referenced. Something I learned long ago in a sociology class was that unspoken shared assumptions are often the most powerful — they are so clear that no one has to speak them. It is clear that Tesla is setting the high bar for this competition. And not only were the questioners clearly referencing Tesla — many of the highlights of VW’s presentation were essentially VW’s copies of what Tesla had done, what Tesla had shown consumers like and want.
This is, honestly, not a knock on VW. To the contrary, I think it’s very big of VW and a sign of strong long-term vision that the gigantic company swallowed its pride and rolled into its doors and policies numerous lessons it learned from Tesla. Sure, it threw some shade here or there to try to place its evolution a foot above Tesla’s. Perhaps that fooled some people, while it surely didn’t fool others, but much more important than that is that the company has studied Tesla and is trying to be flexible, innovate, and evolve quickly in order to try to maintain its position on top of the world’s auto market (in terms of sales). The journalists recognized the similarities, felt confident getting up and asking questions about other puzzle pieces that were lacking or didn’t match Tesla’s example, and Mr. Stackmann politely and graciously answered the questions to — I think — honestly explain where the company thought it was smart to copy Tesla and where the company thought it was smart to do something else — without mentioning “Tesla.”
In the end, we’ll see how the automaker’s approach serves the German giant. We’ll also see if the departures from Tesla’s path are smart or are strategic mistakes. To me, though, VW’s new focus is long-delayed (very long-delayed) leadership, the kind of honest leadership that does not pretend to invent the wheel but instead learns from prior leaders. And the good news, as Maarten insightfully shows us, is that it will push less thoughtful, less humble, less ambitious, less in-need-of-a-brand-revival fossil automakers to follow the growing excitement down electric avenue.
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