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The EV Marketplace Heats Up As “Tesla Killers” Are Rolled Out

Tesla

The much anticipated Tesla Model 3 has yet to be released and already a groundswell of electric car competition is forming to challenge Elon Musk's upcoming offering. Start in China, where the Model 3 is not due to arrive until next year. Already, Chinese-funded, smart, connected plug-in car start-ups are scrambling to launch "Tesla killers" to go head-to-head against Tesla "mass market" sedan.

In taking on the monopoly, yet cash-burning premium electric car juggernaut that is Tesla, the key for leading Chinese electric vehicle start-ups such as Future Mobility, WM Motor and Singulato Motors, is that they will produce their cars locally, making them better able to match the Model 3's price, Reuters notes. Tesla is expected to price its Model 3 from $35,000 in the United States. Buyers in China would expect to add 25 percent to that in import tariffs.


(Click to enlarge) 

The Chinese strategy is simple: beat the Model 3 in China by making their cars more premium but cheaper than Tesla's mass-market all-electric battery car.

The three start-ups see Tesla's weakness in its inability to produce cars in China, the world's leading market for plug-in cars.

Speaking to Reuters, the founders and CEOs of Future Mobility, WM Motor and Singulato acknowledged the Model 3 is the car to beat. The first vehicles they aim to launch in the next couple of years will be priced around 300,000 yuan (roughly $43,500) or below, they said ahead of the Shanghai auto show, which opens to the public on Friday. "Between 200,000 yuan and 300,000 yuan," said Singulato's co-founder and CEO Shen Haiyin.

Daniel Kirchert, president and co-founder of Future Mobility, says his company plans to launch three models. The first, a premium midsize crossover sport-utility vehicle (SUV), will arrive "before 2020", followed within three years by a sedan and a 7-seater multi-purpose vehicle (MPV).

All will be based on the same vehicle underpinning architecture and share major components, "to achieve this very attractive entry price of about 300,000 yuan," Kirchert told Reuters in a telephone interview.

"It's a bit more than $40,000, a very competitive price positioning ... because Tesla customers buying the Model 3 in China would have to shoulder the cost of a 25 percent import tariff on the car", unless it's produced in China, he said. "We will be competitive because we produce the car locally," he added.

For now, Tesla has denied recent talk in China that it was considering manufacturing its cars locally. "Tesla is deeply committed to the Chinese market, however these rumors are not true," the company said. However, even without local production, Tesla will be no pushover. It overtook GM and Ford Motor in market value as investors focus on the "story", ignore the soaring cash burn and embrace Elon Musk's strategy of offering stylish, high performance cars that are continually upgraded (if delayed) with features that rival automakers are still only testing.

Tesla has to date competed only in premium price classes at relatively low volumes. The Model 3 will need to appeal to more price-sensitive consumers to reach its projected annual sales of 500,000 vehicles.

The Chinese automakers are winning to accept the challenge. As well as making its car in China, at a planned assembly plant in Nanjing, Kirchert said Future Mobility plans to make the SUV bigger than the Model 3 and more luxurious. "In the end, it's really about how premium you are. That's the real challenge."

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Singulato Motors unveiled its first "mass-production" car, also a crossover SUV, in Beijing last week, and says it will be priced below 300,000 yuan. It has started taking pre-orders for a limited period from customers willing to put down a deposit of 2,017 yuan.

WM Motor plans to launch its first car, an electric plug-in crossover SUV, in the second half of 2018, again priced to compete with the Model 3, co-founder Freeman Shen told Reuters. The car will be the first of three electric vehicles the Shanghai-based firm plans to launch by 2020, by which time Shen says WM Motor should be selling around 100,000 cars a year.

It's not just Chinese competition that is coming: Germany's biggest carmaker Volkswagen, which plans to roll out four affordable electric vehicles in the coming years, also unveiled a battery-powered crossover at the Shanghai Auto Show. A mix between a four-door coupe and a sports utility vehicle, the new I.D. Crozz SUV is the third model which will be sold under the I.D. sub-brand.

The crossover will compete with Tesla’s Model X, which the U.S. manufacturer started delivering in 2015. According to the head of the VW marque’s electric car project Christian Senger, the company has made “huge progress” in reducing production costs of its all-electric vehicles. VW has pledged that the I.D. line will cost about the same as its diesel models.

"Offering our electric cars for prices similar to combustion engine vehicles really is a game changer,” Senger said. “We’re using the need to step from combustion engine to electric cars to reinvent VW brand.”

(Click to enlarge)

A full charge will give the car a range of more than 300 miles. The I.D. Crozz can be charged up to 80 percent capacity from a fast charger in just 30 minutes. The vehicle can switch to an autonomous driving mode with a push on the VW badge in the middle of the steering wheel, which then folds automatically into the cockpit. The car then maneuvers around based on signals it gets via laser and ultrasonic scanners, radar sensors, and cameras.

The I.D. line models will be partly developed in China, and will also include a mid-size sports utility vehicle, a hatchback, and a sedan.

(Click to enlarge)

The concept of electric cars is part of Volkswagen’s new business strategy to take a leading position in the green transport niche by 2025. In the wake of its diesel emissions scandal, VW announced last year it's phasing out up to 40 vehicle models. The company pledged to invest €10 billion into ride-sharing technology, electric cars, and automated driving. The automaker said it hopes to launch 30 new electric car models within a decade.

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And then there is BMW whose “iNext” or “i5” will be a sedan sized between BMW’s 3 Series and 5 Series to compete with the Tesla Model 3 across global markets.

(Click to enlarge)

In short: while Musk may still enjoy a near monopoly in the premium and - soon one hopes - the highly coveted mid-range EV space, the competition is rising. Meanwhile, as the WSJ calculated over the weekend, to back into its valuation, "Tesla will have to quintuple the number of cars it sells, earn margins equivalent to those of its highly efficient competitors and not sell new shares." It is also priced to perfection: should any of these variables be adversely revised, be it lower sales, lower margin, lower selling price, and Tesla doesn’t come close to earning enough to get to 10 times the multiple of its bigger rivals by the end of 2018.

By Zerohedge

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Leave a comment
  • Jhm on April 20 2017 said:
    Wow, so Tesla is a "monopoly" and "juggernaut" these days! Interesting how the term "Tesla-killer" has been downgraded from being a completion that pushes Tesla out of the auto industry to merely being able to compete in a market with Tesla.

    There is of course the usual riffs about Tesla's legendary cash burn. But how much cash must the likes of Ford and GM burn just to show up 5 years late for the party. Any would-be competitor is going to have to burn cash like a drunken Valley VC. There is no virtue in any of them remaining profitable this late in the game, unless their plan is simply to go out of business as demand for gas powered vehicles dry up. If an automaker is profitable right now, they are not investing aggressively enough in EVs. The clock is running out.
  • Mario Neiva on April 21 2017 said:
    Please change the Title with something other than "Tesla Killer". Until a car rolls out of the factory or at least has a prototype actually on the road testing, its just vaporware. There has been a Tesla killer every year for the past 6 years or more and nothing to show for.
    "Normal" car companies take 5 years from auto-show "Prototypes" to factory if they ever get done. Keep to the reality Like "The EV Marketplace Heats up as new companies invest in electric cars that promise better millage and prices than Tesla".
    Some of these say by 2018, I bet they meant they will show the prototypes and then roll out in 2019 or maybe 2020.
  • prada on April 21 2017 said:
    I have seen too many ambitious articles stating Tesla would be dead soon or at least in serious trouble because someone has rolled out a prototype of an electric car that is similar to Tesla.

    Well. What truly matters is ability to massproduce these Tesla killers at a cheaper price than Tesla. The key component of an electric car is a battery. If you don't have battery with competitive price you are going to loose. Also, while Tesla has already sold about 300 000 cars that production hasn't started yet, any other competitor has to show up with similar trust in buyers, before its prototype electric car can be taken seriously.
  • Mike on May 01 2017 said:
    I guess the author forgot about the Chevrolet Bolt which is already out, being produced and sold as we speak.
  • Dan on May 03 2017 said:
    ZeroHedge should do a little investigating before they report. Elon has opened the door for any patents Tesla has. Anyone can see them and use them, Elon wants competition, And I would bet that all of these electric car companies are using one or more of Tesla's patent's.
  • DrRJP on May 07 2017 said:
    Oh, goody. The frauds at VW are building an EV that they can also screw up and falsify its data (like their diesels) to fit whatever specs and emission requirements they promised. No thanks. Ever since I bought a VW-built Audi 100 that spent more time up on a rack than down on a road, I'll never buy another VW vehicle again.

    How many Chinese cars with gas engines are there on American roads? I've yet to see any or hear about them from someone who drives one. If I had $35k to spend on an EV, the Chinese "Tesla-killer" would have to take off vertically and fly 200 miles to even pique my interest in it let alone dissuade me from getting a Tesla Model 3.

    I'd like for the author to visit Tesla's gigafactory before making any more gloomy predictions.
  • purr10 on May 10 2017 said:
    Can't Wait to Buy an EV~!!!
  • owlafaye on May 12 2017 said:
    "Competition?" Tesla's name recognition alone puts it far far ahead of the competition. If you mention any current (BOLT) or proposed (ID) electric automobile, 99% of the people don't recognize that it is an electric car. Mention Tesla and almost ALL of the people recognize it for what it is.

    Tesla is creating the market and will be far far ahead for many a day.

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