The mission Elon Must, Chief Executive of Tesla, has to turn the global auto industry electric is starting to evolve from merely an idea to something that is happening. Unfortunately for him, the mission to expand the technology could end up hurting his own company.
The market is opening up for electric cars after competitors have seen their potential. Luxury car makers are at the front of the line as they try to capture tech-savvy consumers who would likely consider the Tesla brand. Tesla is a relatively new company to Silicon Valley and it hasn’t dealt with this level of competition just yet.
Stephanie Brinley, an auto industry analyst from IHS Markit, expects that Tesla will be going up against companies that have a larger global market, large-scale manufacturing, and companies that have more networking capabilities. This doesn’t mean that Tesla is doomed to failure, but does indicate that the company will need to shift their focus from development of a unique concept to one that accounts for growing competition.
This competition is striking while Tesla struggles with its Model 3 launch. Even with the 10-year compensation plan for Musk, they still aren’t able to satisfy the volume of production they’re aiming for although they’re striving when it comes to sales revenue and capitalizing the market.
A few companies that Tesla needs to keep their eyes on are BMW as they release the X3 in 2020 and Jaguar, as they plan to release their I-PACE battery-powered SUV in the fall of this year. The Mercedes EQ C and Audi e-Tron Quattro are expected to make their debut in 2019. These releases are all intended to compete with the Model X, the first electric SUV.
The automobile market is changing significantly now as more companies are trying to comply with emissions standards world-wide and the potential ban of gasoline-powered engines in the future. Every company is thinking about and working on hybrids, plug-in hybrids, and fully electric cards with the majority being destined for China as they push towards complete electrification. Europe and the United States aren’t too far behind.
The consumer market isn’t exactly demanding electric vehicles. It’s more expensive to own an electric car, the battery range is insufficient for many peoples’ traveling needs, and charging stations aren’t prevalent enough for consumers to trust in purchasing an EV. Globally, the total electric and hybrid vehicle share combined is less than five percent for all vehicles on the road.
The tipping point will come soon. Regulations are changing the market, and battery costs are expected to decrease. The Boston Global Consulting Group estimates that by 2030 more than half the vehicles in the world will be hybrid or electric. The market for luxury brand electric vehicles is expected to continue to increase as more auto companies create electric models.
Whether Tesla will be able to keep up with the competition given their lack of ability to keep up with the current demand is still yet to be determined. Their lack of ability to create the high-volume production for the Model 3 is the most significant obstacle that they need to tackle for the Model Y, S, or X to take off.