Luxury Automakers Are Coming Hard After Tesla Motors Inc (TSLA)

Tesla Inc (TSLA) Store in Southern California

Tesla Motors Inc (NASDAQ:TSLA) should start taking the competition seriously. Rival Daimler, made its message loud and clear at the Paris Motor Show on Thursday, when CNBC asked if the German automaker was competing against Tesla and its increasing hold on the electric car market. At the event, Daimler revealed the Mercedes-Benz’s concept electric SUV.

In reply to CNBC’s question, Dieter Zetsche – Daimler chairman – said, “if you want to interpret it that way it’s fine. Tesla is a successful electric automotive company…[but] we want to be No. 1 by latest 2025 in the electric premium segment.”

Tesla Motors Inc. (TSLA) Store in Southern California

Rising competition on all fronts

Mercedes is planning to release ten new electric models. In addition, BMW says it will introduce an electric version of every car it sells. Also, Audi is planning for 25% of its sales to come from electric cars by 2025.

Also, its getting competition at the lower end. At the Paris Auto show, French automaker – Renault – also announced that its fully “electric vehicle ‘ZOE’ “will be available for immediate sale with the Z.E. 40 battery enabling it to travel 400km NEDC.”As per New European Driving Cycle (NEDC), the 400km range of ZOE translates to around 250 miles. The French automaker, however, states that the number is equal to a real-world range of 300km [186 miles] in suburban or urban areas on a single charge.

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Additionally, ZOE is the first electric vehicle that delivers a gasoline-like range at an affordable price. Renault’s ZOE starts at $19,360 (EUR 17,490) including tax. The French automaker says the car is already the best-selling electric vehicle in Europe, and its range increase supersedes any affordable electric vehicle available in the auto-market today.

So far, its Tesla only

Last week, UBS told investors that Tesla Motors Inc (NASDAQ:TSLA) is very likely to lose its top position. UBS even described the coming wave of electric cars from several established luxury automakers as a “tsunami.” The automaker will feel some pressure, said Stephanie Brinley – senior auto analyst for IHS Markit. “The mainstream luxury brands can really reach beyond the early adopters in a way Tesla cannot,” Brinley said, adding they have the strong brand recognition, strong customer loyalty, and the dealer network.

Brinley and other analysts make a reasonable case for why the customers would want an electric BMW or Mercedes. But, so far only Tesla Motors Inc (NASDAQ:TSLA) has shown that it is the only automaker capable of grabbing attention of rich buyers, who want an electric car, notes CNBC.

According to Inside EVs, the automaker sold nearly 26,000 Model X and Model S cars in the U.S. last year. As per research firm Autodata, the next closest automaker to sell electric cars was BMW, which sold over 13,000 i8 and i3 cars. Brinley notes that the EV firm found a niche, and they have achieved more than what many expected.

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Aman Jain

Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.
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