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The Hare and the Tortoise - the race for US EV sales

Updated: Feb 8, 2021

Beating TESLA in the US Electric Vehicle race. It's all to play for.

On January 8th, 2021, TESLA’s market capitalization rose to $820 billion - the company now trails only Amazon, Microsoft, Apple, and Alphabet in the large-cap benchmark. In 2020, a year when most automakers saw sales decline because of COVID-19s impact, TESLA sold almost 500,000 vehicles globally, a 35.8% increase on 2019. The business is also investing in new plants in Austin, Texas and Brandenburg, Germany to supply a further surge in growth.

Tesla made its name in the luxury vehicle market but is now migrating to more mainstream, large volume vehicle segments and with EVs accounting for just 2% of the US auto market there is plenty of room to grow especially with a new administration creating the conditions for EV sales to accelerate; Tesla have every reason to expect success.

The competition is warming up

Tesla is synonymous with EVs and no other recent car market entrant has had the impact that they have achieved but spurred on by Tesla’s success many new vehicle makers are joining the race.

Among a crowded field of would-be challengers seeking to take Tesla’s crown, three appear to have good potential - LA based Fisker will bring its Ocean crossover SUV to market in 2022 at a price point $10,000 below Tesla’s model Y. In the summer of 2020, they secured $2.9 billion in private equity and they intend to go public.

Fisker appear ready for the fight. So too does Rivian, with investment from Ford and Amazon and an additional $2.5 billion in recent funding they are set to introduce to the US market during 2021 both their R1T off road capable truck and their R1S SUV.

Perhaps the most intriguing challenger is Lucid Motors who have been around since 2007 and have as their CEO a former Tesla chief engineer – well funded, they will deliver the first Lucid Air luxury vehicle in Spring 2021, and with a range of more than 400 miles and zero to 60 miles an hour in 2.5 seconds it is certain to attract consideration from potential Tesla buyers.

Winning in the mainstream

Fisker, Rivian and Lucid will compete largely in the luxury vehicle market where Tesla made its name, but serious volume and profits lie in the mass market.

When TESLA entered the market the long-established auto brands were arguably slow to react; ICE demand remained strong, none of them were agile enough to swiftly pivot and while government emissions legislation forced them into longer-term consideration of EVs, they did not appear to identify the same potential in the market that Elon Musk spotted.

All that has now changed – long established Auto manufacturers have now pledged to spend more than a quarter of a billion dollars on the near-term development of EVs, prompted in part by increasingly restrictive emissions and fuel-efficiency regulations around the globe, but also by recognition of the role the auto industry must play in stabilizing Green House gas emissions at 1.5 degrees above pre-industrial revolution levels by 2050.

As GM’s chairman and CEO, Mary Barra recently said, “Climate change is real, and we want to be part of the future by putting everyone in an electric vehicle”.

As a result, GM will have 30 EVs available globally by 2025 and every other automaker’s new product development plans are now geared towards electric vehicle fleets: Ford intend to have 40 EV models in their 2022 model lineup, Toyota expects that half their sales will come from EVs by 2025, Volkswagen expects 40% of their global fleet to be electric by 2030 and every other OEM has similarly aggressive goals.

The mass market is where the race for EV dominance will be fought and won and it is the market these traditional auto brands understand best.

GM, Ford, Toyota, Honda and almost every other traditional vehicle maker know how to build reliable, well-constructed, safe products at affordable prices, i.e., precisely what buyers seek in the mass market when they invest hard earned cash in a new car.

Tesla may always have a vehicle styling edge but unless they become equally adept at the fundamentals of high-quality vehicle production, they will struggle to grow mass market share in competition with EVs from trusted and respected brands. And for now, Tesla are not in the same league.

Tesla’s quality issues have been well publicized, and they are serious – in JD Power’s 2020 Initial Quality Survey, Tesla ranked worst of 32 brands for things gone wrong in the first 90 days of ownership.

Build quality issues predominated, a finding amplified when Motortrend identified an alarming range of failures in Tesla’s Model Y midsize SUV, including gaps between vehicle panels where there should be none, misaligned trims and also paint defects, all issues that the mainstream auto industry eradicated more than twenty years ago.

A Tortoise may yet win the race

If Tesla are to maintain their commanding lead in the race for US EV dominance they will need to expand their core competences, otherwise while GM and the other traditional auto brands were slow out of the blocks, it would be no surprise to see one of them cross the line first.


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