It seems like everyday a news article declares a new EV from an EV startup or a legacy automaker as the Tesla-killer. While certainly attention grabbing, it’s important to keep in mind that these new EVs are years from production and both startups and legacy automakers face an uphill battle.
It takes time to raise capital (or convince the board of directors allocate capital) towards building or reconfiguring a factory for EV production. It takes time to secure a supply of batteries. It takes time to build or secure access to a fast charging network (if they even bother to do that). It takes time to build a brand. It takes time to build the right leadership. It takes time to train dealerships and salespeople to actually sell EVs (and this is made more difficult when the same dealerships and salespeople continue to sell gas cars). Each of these steps takes years.
We’ve seen Coda and Fisker 1.0 fail. We’re watching Faraday Future fail. There’s a high probability Fisker 2.0 and Lucid Motors will fail too, not because they don’t have great concepts, but because Tesla is so far ahead on so many fronts. By the time the Fisker Emotion and Lucid Air actually reach production, Tesla will have deployed their 3rd generation Supercharger network across the country, will have Level 5 self-driving available on all cars, and will have the lowest $/kWh and highest density batteries of any battery manufacturer. While Fisker and Lucid fight hard for a small share of the $100k+ EV market in 2019-2020, Tesla owns that market now and will have captured the $35k EV market and everything in between. By 2019-2020, Fisker and Lucid will be lucky to have built a few thousand cars. Tesla on the other hand will have over a million cars on the road.
For the legacy automaker, the road to significant EV market share is just as bumpy. Nissan and BMW arguably have the most experience selling EVs and could most easily adapt to an expanding EV portfolio. VW group has less experience selling EVs but seem to be making an all-hands-on-deck push. But it is doubtful there will be enough culture change in any traditional automaker to actually sell significant volumes of EVs to the public. That is because the culture change has to occur throughout an entire network of independent, unrelated, self-interested parties. Dealerships continue to consolidate into larger and larger multi-brand, multi-city groups. Prospective car buyers are becoming more internet savvy. In the face of a growing portfolio of cars, financial pressures, and price shopping buyers, selling a new EV just won’t be a priority for the on-the-ground salesperson.
Legacy automakers might eventually reach some parity with Tesla in terms of range, new car price, and (maybe) styling, but Tesla still wins on all the critical tiebreakers including the charging network, self-driving technology, direct sales model, and brand. But perhaps the biggest obstacle of any startup or legacy automaker’s EV effort is not a new Tesla, but a used Tesla. By 2019-2020 timeframe, used Tesla’s will have flooded the market at just about every price point. You’ll be able to buy a used 2017 Model 3 for less than $12,500. A used, high mileage but fully functional 2012 Model S will be as low as $10,000. Even a top-of-the-line 3 year old used 2016 Model S or X P100D Ludicrous will sell for less than $65,000. Tesla’s commitment to ongoing software updates, extended warranties, and the Supercharger network is game changing with respect to the overall value and functionality of their used cars. Whatever price point an EV startup or legacy automaker tries to enter the market at, there will be better performing, better looking, fully warrantied used Tesla’s available for 1/3rd the price.