In 2010, the picture looked brighter for an electric-car revolution in the US.
Tesla had survived a major crisis in the 2008 to 2009 period and was gearing up for an IPO while selling the fast, sexy Roadster.
The major carmakers were introducing all-electric vehicles and new gas-electric hybrids. Numerous startup electric-car companies had burst onto the scene.
Fast forward to 2015 and the promise of 2010 has vanished. Electric cars from Nissan, Honda, General Motors, and Ford have meet with modest sales.
Most of the startups, from Coda to Fisker, have vanished or gone bankrupt. Tesla, however, has thrived, with a $33 billion market cap, rapturous coverage from the automotive media, and the elevation of Elon Musk to rock-star/superhero status.
Tesla has also had the EV market more or less to itself. It’s the only automaker that’s serious about building electric cars and only electric cars.
But that’s about to change, as several major car companies prepare to roll out vehicles designed specifically to compete with Tesla.
Bring on the Germans
At the Frankfurt Motor Show last week, Porsche and Audi presented high-end electric cars. Porsche introduced the star of the show, the E Mission concept, and Audi revealed its E-Tron Quattro SUV concept.
BMW also announced that it’ll continue to improve its i3 and i8 electric and hybrid-electric cars. These vehicles, when they come to the market, will compete directly with Tesla’s Model S sedan, Model X SUV, and Model 3 mass-market vehicle.
“Tesla’s competition is clear at this week’s InternationalMotor Show in Frankfurt,” Bloomberg reported, pointing to Porsche and Audi’s concepts as evidence that the Volkswagen Group wants to take Tesla down.
But while its true that Tesla now faces potential future competition at a level it hasn’t yet seen from the globe’s major automakers, it doesn’t follow that Tesla is going to be crushed by new cars from upscale marques such as Porsche and Audi.
In fact, Tesla is probably delighted that it won’t have the EV market to itself as much as it does now. Tesla spokesman Ricardo Reyes indicated as much in a comment to Bloomberg’s Mathieu Rosemain.
“When you hear companies like Porsche or BMW make very public commitments to this, it’s a vindication of what we’re trying to do,” he said.
But it goes beyond vindication. It demonstrates that the world’s automakers aren’t just taking Tesla seriously – they’re taking the entire EV market seriously. This should make Musk happy. His vision isn’t merely to make Tesla successful. It’s to replace all gas-burning vehicles with electric cars, striving to reverse and eliminate global warming in the process.
That’s why, last year, Tesla opened up all its patents, to spur innovation in the electric-car startup world – and even beyond startups. In theory, any major carmaker could now copy Tesla technology free of penalty.
Musk is aware that even if Tesla achieves its ambitious goal of selling 500,000 vehicles by 2020, in the US alone that only represents about 3% of the 17 million cars and trucks now sold annually. Tesla wants to sell about 50,000 cars in 2015, but even if it increases that 10 times, it will have merely scratched the surface of just one national market.
- Kevork Djansezian/Getty Images
Certainly, the arrival of more sincere competition means that Tesla could witness some erosion of future sales, but Musk doesn’t care. The long game that he’s playing is to see Tesla become one electric-car maker among many.
The auto industry isn’t one in which there’s only room for a few dominant players. This is a big way that it differs from other markets. It’s tough to create a monopoly when many millions of cars have to be constructed and sold each year. One carmaker simply can’t satisfy demand at that scale.
And if electric cars do replace what we’re for the most part driving around in now, one electric-car maker won’t be able to go it alone.
No one knows that better than the man who has made EVs a real business for the first time in the history of the auto industry: Elon Musk.