Tesla, Inc. is onto something. The firm’s bleeding edge approach to the auto industry has grabbed more attention than any automaker since DeLorean, and investors are reaping the benefits. Fame and riches like that are bound to attract imitators, however, and the firm has got a whole slew orbiting it. One in particular, Nikola Motor, has stretched the Tesla comparisons a bit too far. In recent weeks, in fact, things have started to look silly.
Tesla, for those non-obsessives reading this, is named after stories Serbian-American scientist Nikola Tesla. Nikola Motor, like Elon Musk’s firm, is explicitly named after him. The firm started off with a focus on hydrogen powered trucking. In recent weeks, due to an abundance of creativity or a lack of funding, the firm’s ambitions have spread wildly.
Interestingly, its plans for the future look a whole lot like those out of Tesla, Inc. Read on to find out what Nikola Motor is up to.
Here’s a $35,000 Tesla Model 3 alternative
Musk’s claim to fame right now is the Tesla Model 3. That’s the mid-market electric sedan his firm says will eventually, once the margin problems are figured out, sell for $35,000. Nikola Motor just announced something like a rival to that.
Starting at $35,000 the Nikola Zero is an all-electric UTV. The firm says that they’re doing all they can to make the car street legal. That means that some time next decade you’re going to be have to choose between a Tesla Model 3 and a Nikola Zero. Here’s the full press release (PDF Download)
There are, however, some problems with the Zero. First of all it’s primarily meant for off roading and may not be street legal in every state. Secondly there is no delivery date for the car. Thirdly a lot of the claims being made appear to be a little bit off.
Fred Lambert over at Electrek.co pointed out that Nikola is promising a bigger battery pack than that in the Model S. That, according to Lambert, simply doesn’t make physical sense unless Nikola has made some breakthroughs in energy density.
Nikola also says that it’s going to be test driving the Zero in December. That’s interesting given that the firm has not yet unveiled a production model. We do, however, have some video footage of the vehicle moving slowly indoors.
We’ll see when the firm is truly going to be able to deliver its $35,000 electric car, but it looks like they’ll be a lot slower than Tesla, even with that company going through production hell.
Tesla Energy meet Nikola Energy
At this point Nikola Motor begins to look like a parody. On August 16 the firm announced Nikola Energy. The firm says that “Nikola Energy specializes in large scale solar and off grid battery, solar and hydrogen systems.”
There is another firm out there called Nikola Power that is either affiliated or a law suit waiting to happen.
Just like Elon Musk, the firm got into the solar business after acquiring a solar installer, in this case Alternative Power. Musk managed to convince Tesla stock holders that Solar City, a firm he owned a large stake in, was worth acquiring last year.
The name of the Nikola Energy division seems almost designed to garner a response. Besides the name and a vague description, we really don’t know what the segment is going to do. Right now, according to a press release (PDF Download) it’s just a run of the mill solar installer. That could possibly be a good business to be in, but it’s not clear what connection it has to its truck or affordable EV market or trucking.
Nikola Motor may be onto something
We really don’t know too much about Nikola Motors’ ability to execute on these projects. Though the firm may seem overly ambitious, we have seen this behavior before.
When Tesla, Inc. sprung to national attention in 2012, it all looked a bit silly. The firm’s claims about the plausible demand for its cars seemed off, and its ideas soon morphed into battery factories and Autonomous cars.
It was all, and many people said to at the time, a story much like those of Pets.com and Amazon.com, Inc. in the . 1990sThe firm’s modus operandi hasn’t really changed either. We’re still waiting for solar roofs, the Tesla semi truck, the Model Y and a whole lot of other products that are still years away.
Nikola Motor has, similarly, run ahead of itself with publicity. The truck that the firm unveiled appears to be fantastic, but it’s not going to enter mass production any time soon. It seems that we’ll be in the next decade before its hydrogen powered Nikola One is on the road properly. There’s plenty of time for other firms to jump in between now and then.
We also don’t really have outlines about what its is doing with the Nikola Zero and Nikola Energy. We’ll have to wait some time to discover where they will go with those Tesla-following parts of its business.
There’s nothing either illegal or immoral about copying a business strategy. It’s the way the free market should work, and the reason many think Elon Musk’s 25 percent gross margin is unachievable. If Nikola can actually deliver on the projects it has outlined here it could have a huge impact on the future of transportation and energy.
Don’t worry about Nikola’s effect on Tesla stock
Despite the potential, now is certainly not the time to worry about a rival like Nikola Motors hurting Tesla stock. The firm is very small, and simply doesn’t have the resources to take on Elon Musk right now. Though it could become a true rival in the future, currently it’s just a phantom.
The fact that a company like Nikola with very little in the way in resources is trying to follow Tesla should tell you something about the risks, however. The ideas that Tesla has are copyable and the infrastructure can be erected in less time by a resourceful firm.
The only thing Tesla, Inc. is holding on to is its intellectual property and brand name. Without being a technical expert it’s impossible to assess the extent to which the Palo Alto firm has a lead. Its branding is superb, but who knows how that will hold up in the long term?
Nikola Motor certainly looks silly, but the firm’s behavior seems drawn directly from the Tesla playbook. Execution, rather than vague promises about the future, is what matters.
So far we have seen little enough evidence that Elon Musk can deliver on that front. With the Tesla Model 3 on the way right now, it’s likely we’ll find out soon enough.
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