Can Tesla survive the surge of EV competitors from Jaguar, BMW, VW, and others?
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No one saw Tesla coming. A Silicon Valley startup putting electric motors into a handful of Lotus sports cars was about as niche as automaking gets. Then Elon Musk took over. Scarily smart and with the chutzpah to simultaneously bet billions on two industries with staggeringly high costs of entry—space and autos—Musk saw an opportunity. In the same year his other company, SpaceX, launched its first rocket, Tesla launched the Model S, a car that changed the way the world thought about electric vehicles.
Six years on, Tesla is in trouble. The much-anticipated rollout of the smaller, supposedly more affordable Model 3 is a mess. Musk’s team can’t figure out how to build the Model 3 in the numbers required to generate badly needed revenue, and early-production cars coming off the line are riddled with quality defects requiring expensive rework. Elon’s “building cars is hard” epiphany is coming at a critical stage in the game.
Tesla is burning cash, and alarm bells are ringing on Wall Street. Analysts at Jefferies, an investment bank, have predicted Tesla will need an injection of up to $3 billion this year alone. In April, Goldman Sachs cut its six-month share price target to $195, a 36 percent decline in Tesla’s valuation. S3 Partners, a financial analytics firm, reported the value of shorted Tesla stock—a bet the share price will decline—jumped by 28 percent in March to $10.7 billion.
But the Model 3 fiasco is not why Tesla is in trouble. Production problems can be fixed. The existential crisis facing the company is this: Tesla is about to be overwhelmed by electric vehicles from mainstream automakers. A swarm of Tesla killers is coming.
For now, Tesla’s product offering is unique. But if you take the public statements of mainstream automakers at face value, there will be more than 50 battery-electric vehicles (BEVs) in production by 2025—all with range and performance equivalent to comparable Tesla models. Volkswagen alone plans to be selling a million BEVs a year by then. Even if Tesla survives the Model 3 meltdown, the math is inescapable. One David. Many Goliaths.
Here is the list of entrants Tesla must overcome to stay alive.
Jaguar’s I-Pace is the first harbinger of doom. The attractive, perfectly pitched crossover is the first genuine rival to Tesla’s Model S and Model X from a mainstream automaker, offering similar range and performance to P75D versions of both at a lower price, with the entry-level model starting at just under $70,000. Plus, next to the bare Bauhaus aesthetic of the Tesla cabin, the Jaguar has an interior that for many consumers looks like it belongs in a high-tech luxury car.
JLR’s investment in a BEV platform isn’t simply about a single product. The company is already working on an all-electric flagship based on the I-Pace’s hardware. Positioned as an XJ sedan replacement, this full-size luxury BEV is expected in 2019 or 2020. Powered by the same permanent-magnet motors mounted front and rear as in the I-Pace, it will boast 394 hp, a smooth ride, and a quiet, roomy, luxurious interior.
One of the debates for automakers contemplating building Tesla fighters is whether to develop a bespoke BEV platform or create what is called a “convergence” platform, capable of accommodating internal combustion, plug-in hybrid, or battery-electric powertrains, potentially saving money.
In 2009, BMW bet the energy density of battery cells would double by 2020—allowing more compact battery packs to deliver competitive BEV range and performance on a convergence platform. “Battery energy density has already doubled,” says Klaus Frölich, BMW’s research and development chief. “From 2020 onward, I can get a battery that delivers more than 300 miles of range and good performance in vehicles based on our existing FWD and RWD architectures.”
BMW is spending heavily on developing its own electric motors and power electronics systems. Now in the fifth generation, Frölich claims BMW’s e-motors deliver the performance and efficiency of permanent-magnet motors but without the need for expensive rare earth elements, the vast majority of which come from China or hard-to-reach or politically unstable areas. The current lineup includes e-motors rated at 80, 120, and 148 hp
Frölich says BMW will launch more than 10 BEVs by 2025, including a larger, roomier i3 and an all-new coupelike sedan called i4. Also coming: the iNext, a BEV technology flagship designed to showcase BMW autonomous driving capability.
The i4, previewed by the i Vision Dynamics concept revealed at the 2017 Frankfurt show, will be a real BMW. The most powerful version is rumored to have one front- and two rear-mounted motors delivering a total of more than 440 hp, plus a 0–60 acceleration time of about 4.0 seconds. “We have worked 10 years on this,” Frölich says. “Small, very sporty rear-wheel-drive cars were our biggest challenge, but we found the solution a year ago. We had the target, but now I can deliver. In 2021, we will be ready.”
Daimler strategy and product planning chief Wilko Stark says the company will launch 10 BEVs by 2022, covering all segments from city car to SUV. Most will launch under the new Mercedes-EQ brand, a strategy consistent with branding performance Mercedes models Mercedes-AMG and ultra-luxury models Mercedes-Maybach.
First to appear will be the Mercedes-EQ C compact SUV in 2019, followed by the Mercedes-EQ A compact hatchback in 2020 and the seven-seat Mercedes-EQ B in 2022. These will ride on a Daimler convergence platform based on the front-drive MFA2 architecture that underpins the current A-Class and B-Class models. The top-of-the-line EQ C will feature two 201-hp e-motors and an 80-kW-hr battery pack. The EQ A and B models, which will be built on a modified version of Daimler’s MFA2 platform, get a single 201-hp e-motor, a 60-kW-hr battery pack, and a 300-mile range.
Daimler will roll out its bespoke BEV platform by the end of 2020. Code-named EVA2, it is highly modular, able to accommodate 60-, 80-, and 110-kW-hr battery packs and 188-, 241-, and 335-hp e-motors, and it should deliver driving ranges of 250, 300, and 360 miles. The first products on EVA2 will be the EQ S (a large sedan) and the EQ E (a midsize sedan), with SUV variants to follow.
“The new platform will give us the ability to cover all segments,” Stark says. “And it will be a real Mercedes, the absolute benchmark.”
Audi’s Q5-sized e-tron SUV is scheduled to arrive in U.S. dealerships next year. In 2020 it will be joined by the e-tron Sportback (another SUV but with a fastback roofline) and the e-tron GT, a swoopy four-door hatchback that resembles Audi’s Q7. All feature e-motors mounted front and rear, a 95-kW-hr battery pack, and a 250-mile range.
The e-trons roll on a heavily modified version of the MLB architecture that underpins current Audis from A4 up, as well as Porsche’s Cayenne and Bentley’s Bentayga. But Audi CTO Peter Mertens confirms Audi and Porsche engineers are working on an all-new bespoke BEV architecture known as PPE. This platform, which will be ready in the early 2020s, replaces the convergence platform used for the e-trons, as well as Porsche’s J1 platform.
Why the change? “You give up too much potential if you try to build a platform that does everything,” Mertens says. “It’s too expensive, too heavy, and it has proportions that do not fit either BEVs or vehicles with internal combustion and hybrid powertrains.”
Audi is the engineering lead on two of the PPE platforms, while Porsche will have responsibility for one. All three variants will incorporate technology modules developed for J1. The first BEV Audi scheduled to come off PPE will be an A6-sized car. For Porsche, PPE enables it to build a high-floor electric SUV, not possible with the low-slung J1, which has been optimized for sporty on-road dynamics.
Porsche’s Mission E is scheduled to launch in 2019, and we expect the Mission E Cross Turismo variant to follow not long afterward, possibly in 2020. Both are built on J1, a bespoke BEV platform developed in-house at Porsche, and will be powered by Porsche-specific permanent-magnet electric motors developed in conjunction with an external partner, rumored to be Hitachi.
Like most state-of-the-art BEV platforms, J1 is essentially a skateboard with a central lithium-ion battery pack forming a structural element of the central floorpan and the ability to mount e-motors at the front and rear axles. This structure allows for flexibility in mounting the vehicle body—or top hat—to provide numerous model variants.
Porsche’s head of BEV development, Stefan Weckbach, says both the Mission E and the Mission E Cross Turismo will be true to the Porsche brand. “Basically the target of differentiation between Porsche and the competition is the same as with our conventional cars,” he says. “We want to have the sportiest offer in the segment.”
The Mission E will be able to complete multiple 0–60 acceleration runs without performance loss and drive at top speed “until there’s no more energy,” Weckbach says. He insists they will be able to lap the 12.9-mile Nürburgring Nordschliefe in “typical Porsche” style. Some context: Although a Tesla Model S P100D is the quickest sedan to 60 mph we have ever tested, we have yet to complete a single hot lap of the 2.2-mile Laguna Seca circuit before the Tesla’s control system cuts power.
Top-spec models will be dual-motor, all-wheel-drive vehicles. Entry-level versions will have a rear-mounted motor driving the rear wheels. Weckbach confirms J1 could underpin a two-door coupe or convertible and that Porsche is discussing the idea of an all-electric 911. But, he says, “this will take a couple of years’ work to realize a car that’s within the 911 package with the racetrack performance and with the weight everyone is expecting of a 911.”
Geely-owned Volvo has reinvented its Polestar performance brand as one dedicated to BEVs, though its first car will be a plug-in hybrid. Polestar’s first pure electric vehicle, the Polestar 2, is aimed squarely at Tesla’s Model 3 and will make its public debut in the second half of 2019, with production ramping up in 2020.
Built on a convergence platform based on the CMA architecture that underpins the new XC40, the Polestar 2 will look a lot like the Volvo 40.2 concept shown in 2016, and it features a glamorous interior that makes the Model 3’s cabin look cheap and dull. Volvo sources say top-end Polestar 2 models will offer similar range and performance to Model 3—up to 300 miles between charges and 0–60 mph in about 6.0 seconds. Prices will start at about $45,000.
In 2022 the Polestar 2 will be joined by the Polestar 3, a rakish SUV built on a bespoke BEV version of the SPA2 platform that will underpin the next generation of 60- and 90-series Volvo models. The Polestar 3 is big, about the size of an Audi Q7 but much roomier inside. Top versions will be all-wheel drive, with two motors at the rear and one driving the front wheels, and have a bigger battery pack than the largest currently offered by Tesla.
We’ve heard from the luxury players. But what about BEVs that are priced more affordably?
Volkswagen Group is shaping up to be the 900-pound gorilla of BEV makers. In terms of the sheer number and scope of the BEVs it has slated for launch by 2025, it has the muscle to overwhelm Tesla on its own.
VW Group’s ambition is to build more than 10 million vehicles on its new, highly flexible MEB platform—a bespoke BEV architecture that will underpin future VW, Seat, Skoda, and compact Audi electric cars. “When Volkswagen does something, it is large scale,” says Christian Senger, the company’s e-mobility boss. “We are making electric cars for millions, not millionaires.” Senger says VW aims to make an electric vehicle no more expensive to buy than a comparable conventional car with a diesel engine.
Think of MEB as the electric vehicle equivalent of VW’s versatile MQB architecture, which underpins more than 25 VW Group vehicles across four brands. The first VW-brand production vehicle based on MEB will be the I.D., a Golf-sized BEV that goes into production late 2019. The I.D. Crozz, an all-electric SUV, will be the first MEB-based vehicle available in the U.S., arriving 2020, and will be followed in 2022 by the I.D. Buzz, a funky, Microbus-inspired electric minivan. The I.D. Vizzion, a sedan the size of a Passat but with the interior room of a Phaeton, also arrives 2022.
MEB is basically a skateboard platform that can be built in different wheelbases and widths and topped with bodies with different cowl heights and overhangs. Top-spec MEB models will be AWD, with e-motors mounted front and rear. But entry-level versions will be RWD with the motor mounted at the rear. Fitted with the biggest battery pack, they will have a range of more than 300 miles.
Rear-engine, rear-drive: VW is returning to its roots. But there’s no whimsy in the decision. Conventional FWD cars have at least 60 percent of their weight over the front wheels, while most BEVs, with their heavy battery pack between the axles, have a 50/50 weight distribution. That, says Senger, combined with the instant-on torque of e-motors, means FWD electric cars struggle for traction, especially on wet or snowy roads. RWD is safer, more secure.
And for enthusiast drivers, RWD means more enjoyment. “Switch off all the electronic systems, it’s such fun,” Senger grins. “The electric motor is so precise in torque, it’s easy to keep the car on a steady sliding angle.” Yes, electric Volkswagens will drift.
Then there are the other mass-market automakers, whose specifics about future BEVs are vague but whose promises are huge enough to create an existential crisis for Tesla.
Nissan was the first volume EV player with the Leaf, and it expects global BEV sales to jump from 163,000 to 1 million a year by 2022, thanks to eight all-new vehicles to be introduced in the next five years—likely with help from alliance partners Renault and Mitsubishi.
Ford’s $11 billion R&D spend will include launching 16 BEVs by 2022. GM has said it plans to launch 20 all-electric vehicles by 2023, including two crossovers by 2020.
Toyota doesn’t offer any BEVs, but it plans to have 10 BEVs by the early 2020s. The automaker is also working with Panasonic on a solid-state battery, which it says will revolutionize BEVs.
BEVs are not an option for the world’s automakers; they are the future. And China is the reason. Although demand for BEVs is growing in Europe, the Chinese government is betting big—spending an estimated $60 billion to promote sales of electric vehicles and billions more on a nationwide network of fast-charging stations. “In China, you are electric, or you are not in China,” says VW’s Senger. Automakers want and need to be in China—a lucrative market that will be larger than the U.S. and Europe combined within a decade.
That’s why the world’s automakers have produced—or are actively working on—electric vehicles. Not all will rival Tesla in terms of range and performance, but not all have to. BEVs used to be split between short-range commuter cars and exotic toys. But the near future will see BEVs becoming a core piece of the mass market. En masse, their collective volumes will dwarf Tesla’s aspirations.
When BEVs become mainstream, Tesla will be forced to confront the same realities as traditional automakers. Does it have the research and development budget to keep pace with the industry’s giants? Can it build vehicles with the performance of a Porsche or Jaguar, the refinement of a Mercedes or BMW, and the factory efficiency of Volkswagen or Toyota? Tesla’s survival lies in the answers to those questions.