Wednesday 24 February 2021
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Everyone comes for Tesla’s crown
Tesla (TSLA) is synonymous with electric vehicles, but a new generation of motorcycle manufacturers inspired by CEO Elon Musk’s electrified empire is possibly coming after his crown.
Lucid Motors, led by former Tesla engineer Peter Rawlinson and promising better performance than Tesla, announced Monday its plans to make it public. Meanwhile, Rivian, backed by Amazon (AMZN), which is also planning an IPO this year, is taking on Tesla in the truck space. Traditional car manufacturers such as Ford (F) and Volkswagen also pose a threat to the world leader in EV sales. And then there is possibly Tesla’s biggest ultimate competitor: Apple and its own EV ambitions.
Tesla has made its way to the top of the EV market through the sheer will of outspoken and often mercurial CEO Elon Musk. And while Tesla’s share price has fallen to 18% since Tuesday last month after the $ 1.5 billion bitcoin bet, the company has continued to rise by 319% over the past twelve months.
But it’s going to need a lot more than a charismatic leader and rabid fans to maintain its lead in the years to come. According to Deloitte Insights, EVs will account for 32% of new car sales by 2030, compared to just over 2.5% in 2020, which means there is plenty of room for competitors.
“Tesla has a lot of … competition,” Craig Irwin of Roth Capital Partners told Yahoo Finance. ‘There are companies that have autonomous technology, and there are companies that have superior technology in batteries, and there are companies that have technology in electric vehicles. Tesla has amazing cars, do not get me wrong, but you are going to see some very exciting developments over the course of the next year. “
How can Tesla keep its lead? By continuing its global expansion into India and ensuring that its secret sauce – its technical prowess – stays ahead of its competitors. But the increasingly tight market for EV vehicles could throw some obstacles in Tesla’s path.
How Tesla can maintain its lead
For Tesla, global expansion is the easiest way to keep up with the new crop of competitors, and it has made progress in that area. The company has already rolled out its vehicles and built a factory in China and is building its first European plant in Germany.
Tesla also has the advantage of understanding the difficulties of bringing its own manufacturing capability online. The company went through the Musk ‘production hell’ when its Model 3 assembly line was launched in 2018. The business was only a few weeks away from its business during the build-up, and in a recent tweet, Musk revealed that during the build-up, he tried to contact Apple CEO Tim Cook to sell the carmaker.
Although Tesla to China was crucial because the country has the largest car market in the world, the next move to India, also one of the largest markets in the world, will be almost as important for the continued growth of the company.
“The most important development this year is the start of sales in India,” Irwin notes, adding that he ‘chatted’ when he heard that Tesla had already selected a site for the Indian factory.
Tesla, which has fallen just over 2% near the market since Tuesday, must also ensure that it does not get caught up in its recent move to bitcoin (BTC-USD). The company has poured $ 1.5 billion of its cash into the cryptocurrency, helping to make bitcoin rise even higher. And while he saw about $ 1 billion in profits on paper, Musk’s subsequent statements about the cryptocurrency may have helped lower the price.
However, Wedbush analyst Dan Ives warns that Tesla’s crypto game should not distract investors from the company’s overall efforts.
“This is a golden age of EVs and we predict that $ 5 billion will be spent over the next decade,” Ives told Yahoo Finance. “EV, led by Tesla, is changing the way investors value these companies going forward. This is no longer your grandfather’s car industry, as Detroit shows on EVs. ”
In addition, there are many other companies that Tesla envisages in the meantime.
Tesla’s upcoming competition
Lucid Motors revealed on Monday that it will be announced via a reverse merger with special acquisition company, or SPAC, Churchill Capital IV (CCIV). The deal values Lucid at a whopping $ 24 billion and will provide the emerging automaker with $ 4.4 billion to expand its Arizona plant.
Lucid aims to get its luxury sedan, the Lucid Air, on its way this year, and eventually the Arizona plant will pump as many as 365,000 units a year. The company is also working on the production of its luxury sports utility vehicle, the Lucid Gravity, which will be launched in 2023.
The Lucid Air Dream is a top model from Lucid that costs $ 161,500, well above the $ 119,900 Tesla Model S Plaid. “Our first product is unashamedly a luxury car that will compete with the Mercedes Benz S-Class at the top table,” CEO Peter Rawlinson told Yahoo Finance Live Monday. “And currently there is no EV offer in the real luxury arena.”
What makes Lucid so impressive is that, according to his own number, he already surpasses Tesla in terms of battery performance. With an estimated range of 503 miles per charge, the Dream’s battery can also be charged to 300 miles in just 20 minutes. Tesla’s long-range Model S, meanwhile, gets just 412 miles on a charge and can be charged to just 200 miles of power within 15 minutes.
Lucid is obviously not the only contestant coming after Tesla. Rivian will also launch its long-awaited electric truck this year, backed by heavyweights, including Amazon, which is preparing a fleet of electric delivery vehicles in Rivian. Rivian also has the support of Ford, which will use Rivian technology in its own offering. The company promises more than 300 kilometers of distance in its R1T truck with a starting price of $ 67,500.
According to Bloomberg, Rivian is also expected to take an IPO at a valuation of $ 50 billion this year. The company is getting out of the gate with an electric truck and setting up the competition for Tesla’s upcoming Cybertruck, which will also be launched this year.
Tesla even managed to inspire an electric truck company called Nikola (NKLA) – Tesla was named after the inventor Nikola Tesla – although the firm exploded in a report by the short-selling Hindenburg and accused it of being a fraud is. (Nikola denied the report and called it a ‘striking task’.)
Traditional carmakers entering the space include Ford, which will launch its expected Mustang Mach-E crossover in the coming months at a starting price of $ 42,895 and more than 250 miles per charge. Patrick Moorhead of Moor Insights & Strategies says that Volkswagen could also become a Tesla competitor, noting that a major carmaker could become the number 2 EV carmaker in a few years after Musk’s venture.
Then there is Apple, which is rumored to be working with an established carmaker such as Hyundai, on its own electric vehicle. Still, details on how Apple will actually manufacture the car are few, and it is expected to hit the market only in 2024.
But Apple is just one part of the bigger picture, that is: the EV field is getting crowded. Tesla may have the best-selling EV of all time, by a wide margin, as my colleague Rick Newman remarked, but the spate of new competitors could expose its weaknesses.
The flaws include an unpredictable CEO being sued by the SEC over a tweet in which he said he had funding to take Tesla privately, as well as fatal car accidents that provoked investigation into his car driver. Tesla may still be the EV leader despite these flaws – but this is not the time for Elon Musk to take his empire for granted.
By Daniel Howley, technical editor. Follow him @DanielHowley