Jun 11, 2020 | Featured, Magazine, Technology | 0 comments

Tesla “Killers” Won’t Be New Entrants To The Market

Tesla is the first automotive company to pioneer mass electric vehicles into the market with a well thought out charging network to maximize efficiency during long distance travel and fast charging capabilities. Tesla has no doubt become an industry leader in electric vehicles with many people now referring to the European giants as “dinosaurs”, companies such as VW, Daimler and BMW. What many people have failed to recognize is the experience held by these companies over many years in producing automobiles.

Porsche has just recently introduced the Taycan, the company’s first electric sports sedan that embodies the quality and engineering expected from the brand. It boasts one of the most efficient and smallest electric motors inspired by their Le Mans racing car. Many European manufacturers typically have racing teams in many divisions which act as an arm of R&D for road going versions of the vehicles they produce. This results in a more optimized product as demonstrated by the much smaller ICEs (internal combustion engines) that are capable of delivering performance comparable to that of supercars. The reality is that Tesla is leading at this current moment in time but could all be short lived as the European “dinosaurs” play catch up.

VW, Daimler, BMW and others have come together to develop a universal charging network for what is next to come from these brands. The move is not only interesting (to say the least) but, this allows consumers to have freedom of choice for the brand of their choice and have guaranteed access to charging stations with no proprietary limitations. When combined, these efforts along with the experience of producing motor vehicles for decades leads to a product that is more superior than that of what Tesla currently offers. A key indication to Tesla losing the clout they have built up over recent years comes from Daimler and their EQ technology division to build electric vehicles. Currently the EQ division has released the EQC which is fully electric and the AMG Project One which is assisted by an ICE from the Formula 1 division. Now we start to get a clear picture of diversification that Daimler/Mercedes is trying to achieve. Currently, Tesla offers only 4 variants of vehicles, namely the Model S, Model Y, Model 3 and Model X. What the EQ division is aiming to do is to bring the electric platform to already existing models offered by Mercedes which would in turn offer more choice to the market than what Tesla already has. Many European manufacturers seem to be tending towards this approach of electrification as it is cost effective as compared to developing brand new vehicles from the ground up. This move would build the electric car market to numbers comparable to ICE sales globally. Not only would there be better quality electric cars but, a network of infrastructure that would support all of them as they roll out to market due to a universal charging platform by manufacturers.

Tesla is considered new to the “game” and they have much to learn especially when it comes to quality control. A Model S starts at $80,000 (R1.4M) which is not too expensive but definitely not cheap by any means, whereas the performance version starts at $100,000 (R1.7M) which is where things get interesting. It is difficult to justify a Tesla at this price point given the build quality, the unnecessary freak control behaviour of the company (deactivating certain features by software), the limitations of charging when universal platforms become more mainstream and lastly Elon Musk.

If the majority of the population could afford a vehicle for $100,000 (R1.7M) their first option is definitely not a Tesla if electric is not a requirement on their list. At that price point one would be looking at vehicles that fall under the “luxury” category such as a BMW 5/7 series, a high end Mercedes E-class or S-class and maybe SUVs such as a Range Rover or Audi Q7. What happens to Tesla when all these variants of automobiles offer an electric platform at a similar price point? A compelling comparison is Ford motorcars. Ford (in theory) should have been the largest automotive company in the world given its position with the success of the Model T at the time; however, European manufacturers have always been at the forefront of innovation and are able to give industry leaders a good run for their money. We can already see this with the Taycan that already has a vastly superior electric motor than that of Tesla, not to mention the overall build quality and aesthetics of the interior, although more expensive than a Tesla.

Tesla may need a new strategy in the future if they want to be able to compete in the market they pioneered. If you think Tesla is the best money can buy then take a look at the small electric vehicles being put out to market in the near future. A favourite so far is the Fiat 500 electric and the electric Smart Car. Both these vehicles are far better value and would argue also better than the Model 3 which was marketed for the masses but came out much pricier after options.

As a software engineer, marvelling at the piece of tech that a Tesla inherently is is what many would do and I know many people will argue that no other company comes close in terms of technology compared to Tesla. You would be incorrect to jump to that conclusion. BMW’s iDrive system has been voted best in class for years and Mercedes has just recently introduced MBUX with a virtual assistant and AR aided navigation. Many other manufacturers also spend billions of dollars in developing the technological aspects of their vehicle line-up. In the autonomous driving space, Tesla is leading; however, it will not be long until other manufacturers worldwide are able to not only catch up but surpass Tesla’s system due to the scale at which other manufacturers can expand their electric car lineup which I outlined earlier in this article. With all the data being captured from more vehicles on the road from more countries than before, a more robust system can be built for autonomous driving for many more markets that are suitable to that particular environment.

Tesla is well established and won’t be challenged too heavily by new entrants to the market. Factors such as brand loyalty are also a reason why Tesla has not been able to completely monopolize the electric car market aside from from only offering 4 variants of vehicles with relatively high price points. Tesla is definitely a household name but it won’t be winning over the majority of people. So maybe the “dinosaurs” were never really behind but slightly ahead as their first generation electric vehicles have more of an edge compared to Tesla’s latest offerings. Tesla is good. Not great, but, definitely here to stay.

Currently in South Africa, these vehicles will not be brought into the market as the infrastructure needed for these vehicles is still not yet in place. The big question that needs to be answered is how will energy generation in the country be able to keep up with ever increasing demand for electricity. South Africa is the second biggest economy in Africa just behind Nigeria but failing infrastructure threatens to leave the country behind in terms of innovation.

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