Tesla Motors has the lead in the electronic vehicle market so far but that lead might not continue indefinitely if new entrants in the EV market continue to target its major markets. Tesla has become synonymous with electric cars and traditional automakers such as GM and Daimler AG are not being forced to build EVs of their own in order to stay relevant in the fast-changing automobile industry.
Faraday Future is reportedly working on a deal to build a second facility in Vallejo, California. Faraday Future made headlines earlier in the year when it made plans to break ground in Sparks, Nevada for a billion dollar factory that would rival the Gigafactory that the firm is building in the Nevada desert. Faraday Future apparently takes Tesla as the perfect example of how to build a successful EV firm and it is acting out everything in Elon Musk’s playbook. If imitation is the highest form of flattery, Faraday Future is showing itself to be a masterful flatterer.
Taking a spot in Tesla’s strongest market
Faraday Future is planning to nab and develop a 157 acre waterfront property in Mare Island as a second production plant for its EVs. Nevada city officials noted that “in recent months, [Faraday Future] has introduced a first concept vehicle, displayed a vehicle platform designed to enable rapid development and production of an entire line of electric vehicles, and kicked off development of its first U.S. manufacturing facility in North Las Vegas,”.
Faraday Future’s foray into the Bay Area is strategic because it would help the firm to access a labor pool of skilled folks that can be trained to build EVs. The Bay Area is also a strong market for new technologies and innovations such as electric vehicles because of its large number of upwardly mobile, tech-savvy, and eco-conscious buyers.
Good intentions with unintended consequences
Tesla Motors is on the forefront of the EV revolution where it is trailblazing an adoption of EVs over cars that burn fossil fuels. However, new entrants into the EV space are playing by the book and the fact that Tesla is an open book is really helping rival EV firms. Many of them are wisely adopting the same principles that brought the firm success while making sure that they avoid many of the pitfalls that has troubled Tesla along the way.
Elon Musk welcomed competition during the early days of the EV revolution and he opined that the entry of the big three auto firms or other giant tech firms into the EV industry could trigger the growth of the industry. In the spirit of welcoming competition, the firm gave out all of its patents in order to promote an enthused interest that would lead to faster development of the EV sector.
However, it is doubtful that Elon Musk knew that the move to welcome competition into the EV industry might end in unintended consequences despite the best of intentions. To start with, Chinese manufacturers didn’t waste time before they started cloning the firm’s technology and designs to build knockoffs of the Model S to be sold in China. China is Tesla’s second biggest market outside the U.S. and the presence of cheaper EVs that look like the Model S from Tesla Motors is cannibalizing sales in the country.
Secondly, new entrants into the EV market in the U.S. are making moves that could erode Tesla’s competitive advantages. Faraday Future is one of the newcomers that are giving Tesla the biggest of headaches. Faraday Future has poached talent from Tesla’s executives and from its rank and file; and now, Faraday Future wants to have a presence in the same locations as Tesla.