Tesla Motors Inc could be under pressure from Audi in the EV space by 2025, after reports have emerged that Audi is aiming for 25% of its sales revenue in 2025 to come from the sale of electric vehicles. Last year, they sold nearly 2 million vehicles, so in 2025, they are aiming to sell around 500,000 electric cars. The CEO of Tesla, Elon Musk, has said that his firm needs to sell around 500,000 vehicles per year (mainly their new Model 3 car) to turn a profit.
The Model 3 was unveiled on the 31/03/2016, and it is one of the Tesla’s cheapest vehicles ever made (with a starting price of just $35,000 before incentives.) The car has proven to be widely sought after, with nearly 400,000 potential customers paying a $1,000 reservation fee just a few months after its unveiling.
Audi Moving into Tesla Motors Inc (TSLA)’s Market to Improve Image
Audi’s parent company, VW, saw its reputation tarnished in September 2015, when it emerged that the car maker had cheated emission tests. By entering the EV market, the firm is looking to demonstrate that they are Eco-friendly & ethical. The move could be bad news for Tesla Motors Inc , as they will face more competition.
Most Germany car manufacturers have stayed away from the EV market. An article published on Fortune gave more details on why Audi is entering the market & why others haven’t done so. The article read “With the exception of BMW, Germany’s luxury automakers have been late to develop electric vehicles, a market which is still loss-making. But Audi’s parent Volkswagen is under pressure to clean up its image in the wake of its emissions-test cheating scandal. Audi CEO Rupert Stadler plans to outline details of the new business roadmap to more than 2,000 managers on Wednesday at a closed-door conference in Munich, the sources said.”
Audi Will Spend More Than 30% of Its R & D Budget on Electric Cars & “Autopilot Systems”
It has also been reported that Audi will spend more than a third of its research & development budget on electric cars and autonomous driving systems, similar to Tesla Motors Inc’s autopilot system. In 2015, Audi’s R & D budget was $4.7 billion. Although other companies may have access to more funding than Tesla, they do not have a reputation of building high-quality electric automobiles (whereas Tesla does.)