Posted on October 04, 2016 by Matt Pressman
The Paris Auto Show demonstrated that many automakers are working hard to play catch-up with Tesla Motors [NASDAQ: TSLA]. The Wall Street Journal reports, "Elon Musk has long had the stage to himself as he championed zero-emission vehicles, and his upstart company, Tesla Motors Inc., became the touchstone for battery-powered cars. When nearly half a million Tesla fans paid $1,000 each this spring to reserve the company’s next-generation Model 3 ahead of its late-2017 launch, many auto executives scoffed. 'Let’s see if they can build them,' Thomas Weber, board member in charge of research and development at Daimler AG, said at the time. Now, the enormous hype around Tesla’s Model 3 preorders, slowly rising consumer demand and looming emissions regulation appears to have jolted conventional auto makers into action."
Above: Tesla pulls ahead of Mercedes (Image: Motor Trend)
One conventional automaker beginning to take action is Mercedes. Last week, "In Paris, Daimler’s Mercedes-Benz unveiled a battery-powered [concept car]... competitor to Tesla’s Model X, which will have a range of 310 miles on a single charge and is slated to launch in 2020. The vehicle will be part of a new sub-brand of Mercedes called EQ." In a revealing admission, "Daimler CEO Dieter Zetsche acknowledged that manufacturers were still suffering from... a lack of charging stations." Without a pre-established, worldwide fast-charging infrastructure (like Tesla's Supercharger network), it's certainly reasonable to assume other automakers could have trouble establishing a foothold against Tesla Motors in the electric vehicle space.
Above: Mercedes new Generation EQ sports an odd front-end grille design that could be trying too hard to communicate a "techy" look (Source: New Atlas)
Furthermore, CNBC asked if the German automaker was fighting back against Tesla and its growing hold on the luxury electric car market. "If you want to interpret it that way it's fine," Zetsche responded. "Tesla is a successful electric automotive company... [but] we want to be No. 1 by latest 2025 in the electric premium segment." Zetsche was also quoted in Marketwatch proclaiming that, "The emission-free automobile is the future." But Zetsche's most revealing comments came in a Bloomberg interview (see below).
Above: Daimler CEO Dieter Zetsche responds to questions about Tesla and Mercedes' plans for electric vehicles and autonomous driving (Youtube: Bloomberg)
The Bloomberg reporter commented on Zetsche's newfound Silicon Valley "tech-look" — complete with jeans and sneakers. Zetsch later commented that, "We are seeing the digital world taking possession of the automotive world." Asked if Tesla is the key competitor in the luxury space, Zetsche responds, "At this point in time, obviously yes." He admits that based on targets five years ago, Mercedes is "tracking behind" — therefore they've readjusted their target to be the leader in electric vehicles by 2025. He also refers to new adversaries in the autonomous driving space as "non-automotive competitors" — likely a reference to the Silicon Valley companies now taking center stage as it relates to self-driving cars.
Above: Generation EQ's interior design includes gloss piano black seat backs, a large touchscreen console, and a 'Big Sky' panoramic roof — all of which are signature design features inside the Tesla Model X (Source: New Atlas)
Earlier this year, the Financial Times reported that, "Shareholders at Daimler... expressed concern at the threat posed by Silicon Valley companies including Tesla, with one complaining the German group had no alternative to the electric carmaker’s models." One shareholder warned the automobile industry faced 'a radical upheaval, driven by attacks from Silicon Valley'. Another Daimler shareholder complained to management: 'We don’t really have a product for this competition from Tesla. In the long term we have some great vehicles … but they are virtual at this point.' A third shareholder said there was no adequate European competitor to Tesla’s latest model. He asked management: 'What is the reason for that?'"
Above: Mercedes playing catch-up with Tesla (Above: Auto Motor and Sport)
Perhaps Daimler's recent "EQ" initiative is Zetsch's answer to these shareholders' questions. Possibly Mercedes' recent electric vehicle overtures are a reaction to the Tesla Model S topping the Mercedes S-Class in sales in both the U.S. and Western Europe. And, Mercedes also appears to be losing a battle for customer loyalty to Tesla. That said, Zetsch needs to do more than flashy concept cars and media interviews, he needs to buckle down and bring a viable electric vehicle to market.