Tesla Motors Inc (TSLA) German Sales Cast Long Shadow

Tesla Motors, Inc vs Mercedes

Tesla Motors Inc is having a swell time in the U.S. markets as its Model S demand continues to outpace the supply. The same is true for the Model X whose pre-orders has fetched Elon Musk more than $1B even before the first one is out of the factory. However, Tesla Motors doesn’t appear to be having the same good fortune in Germany where car buyers tend to place their faith in tested and trusted brands. Tesla’s inability to win in Germany raises questions about its ability to survive when European carmakers start making EVs.

Tesla Motors, Inc vs Mercedes

The Detroit News reports that Tesla Motors sold less than 1,000 cars – 958 Model S to be precise, in Germany from January through August 2015. It was reported that data from the motor vehicle office KBA shows that by the 81,800 Euro ($92,000) Model S sold less than Mercedes Benz’ S Class Sedan, which recorded 5,149 sales within the same period. More so, BMW’s pioneer i3 EV car had 30% more sales than Tesla.

Tesla is swimming with the sharks naively

Tesla Motors is currently swimming with the sharks in the automobile industry but it does seem to have a naïve smile on its face. During the Frankfurt Auto Show, Audi unveiled its E-tron Quattro concept SUV that promises to beat Tesla’s Model S and Model X combined. Porsche said it would have its Mission E on the market in 5 years, and BMW said more “iGreen” models are on the way. In contrast, Tesla Motors didn’t have its Model X on display at the show and it only managed to attract a few visitors with the three Model S cars that it displayed.

However, Tesla seems to think that the rivalry with  German automakers is good for its business. The firm’s spokesman, Ricardo Reyes, was quoted saying, “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 goes on to say, “For us to achieve our long-term goal, which is to get people driving electric vehicles, we need the cooperation of traditional carmakers.”

The Germans are not smiling

It is hard to understand how Tesla thinks that the entry of German carmakers into the EV space is an act of cooperation. If they wanted to work with Tesla Motors, Audi, Porsche, BMW, or Benz could make a deal to acquire Tesla, thought they might feel the pinch in their financials. The fact that they are not interested in buying Tesla (Apple is also not interested) and they are building their cars puts Tesla in a precarious position.

Tesla Motors needs to do  better in Germany if it wants to maintain its lead in the EV space; otherwise, the firm might end up as a niche player in the U.S. market.

Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany notes that Tesla can’t rely on its success in Norway as an indication of its success in Europe. He says, “It’s not enough to be successful in Norway; you have to be successful in the big markets … “If you make it in Germany, you can make it everywhere.”

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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