Posted on August 29, 2016 by Matt Pressman
This past week, the team at Bloomberg New Energy Finance* (BNEF) published a fascinating piece on electric vehicles. The lion's share of their analysis had to do with the knock-on effects of electric vehicles (EVs) across multiple industries. However, I found their commentary related to Tesla competitors especially on the money. BNEF notes that, "Much media attention focuses on Tesla Motors, the new entrant that parked EVs so firmly on the auto industry’s lawn." However, they argue, "While Tesla basks in attention, there has been far too little robust scrutiny of incumbent auto companies’ electric vehicle strategies."
Above: BMW's much-hyped plug-in hybrid vastly underperforms the Tesla Model S while being priced significantly higher (Source: Motor Trend)
We've covered this before in order to discredit the media's obsession with so-called Tesla Killers that often turn out to be half-baked compliance cars and auto show concepts. BNEF writes: "There is plenty of ooing and aahing over concept cars, electric model launches and press releases about ambitious plans; but which car companies are really committed to electric vehicles and which ones are going through the motions? Which ones are betting on battery-only vehicles and which ones on plug-in hybrids? Which ones are still waiting for hydrogen fuel cells to descend from on high, on a beam of light? You wouldn’t know by reading the mainstream business press."
Above: Competitive analysis (Source: Darden School of Business Tesla Strategic Analysis)
What are the fawning articles we typically see in the media? "Instead we get endless coverage of potential new entrants into the car business. Dyson makes a fine vacuum cleaner and has world-beating knowledge of batteries and motors, but is that really going to be enough to beat GM, Ford, [Tesla] and Toyota? Really? Faraday Future previews an electric Batmobile and the world’s press goes into hyperbole-drive." Indeed.
Above: Faraday Future's one-seater concept car was supposed to be competition for Tesla? (Source: Motor Trend)
However, what about the forthcoming competition for Tesla from the world's biggest tech giants? BNEF reports, "And then there’s Apple. In Abu Dhabi, I stay on Al Maryah Island, reclaimed from the sea in 2007; Apple Maps still shows it as a network of roads in the middle of the sea. If Apple can’t show my hotel car park, does anyone seriously think it can sell me a self-driving car? Even Google, while it appears to have established a very strong position in the machine-learning technologies that will underpin autonomous vehicle features, is unlikely to find that is enough to give it leadership of the car industry of the future."
Above: Google's self-driving test car doesn't exactly have the, ahem, handsome good looks of a Tesla either (Source: Google)
When looking at electric vehicles, BNEF writes: "The most important news this year is not which executive left Google, or joined Apple; it may not even be the launch of Tesla’s Model 3, it may instead be the $15 billion settlement of Volkswagen’s ‘Dieselgate’ lawsuits, which included a $2 billion commitment to promoting zero-emission vehicles in the U.S." We agree. In addition to Tesla's game-changing moves, this might have a bigger impact on the future of electric vehicles than any other over-hyped EV media story out there. Also important when looking forward, BNEF forecasts that, "As battery costs drop, electrification will spread into heavier vehicles too... Tesla, Mercedes and others are working hard to produce reference designs for heavy-duty trucks."
Above: Concept rendering of Tesla Semi (Source: Jalopnik)
Even though other companies are dragging their feet on vehicle electrification, the BNEF does see a bright future ahead for electric vehicles. They continue to cite dropping battery costs, echoing the International Energy Agency (who also cited Tesla as leading the industry in battery cost reductions) as a major catalyst in the transition to EVs. BNEF reports, "The reason for our bullishness on electric vehicles is not just the fact that battery costs are dropping... down 65 percent in the past five years. It is also that electric vehicles out-compete internal combustion cars in lots of important dimensions."
Above: Tesla Model S (Source: Auto Express UK)
How so? BNEF summarizes the advantages: "they drive more smoothly yet accelerate better, they can be charged at home or at the office, they require much less maintenance, they help solve air quality problems, they improve the energy autonomy of oil-importing countries... And it simply makes no sense to have an inherently analogue power unit – vibrating, volatile-liquid-consuming, hot-polluting-exhaust-producing – at the heart of a fully digital, sensor-pervaded, solid-state-electronics-controlled system."
Above: Tesla Model X (Instagram: @carnewsoficial)
Until others embrace the obvious, Tesla will continue to increase their ever-growing competitive advantage in the auto sector. And, now that Tesla is combining with SolarCity, it's clear CEO Elon Musk sees a larger transformation fast-approaching. BNEF concludes, "one thing is for sure: if our predictions for the uptake of electric vehicles are anything like correct, there is no part of the global economy which will not, in some way, be affected." If Musk is correct, it's likely that the energy industry as a whole, not just transportation, will undergo massive change. That said, Tesla is readying itself to seize the unescapable changes destined to come our way in the next decade.