Tesla is Racing Ahead of the EV Competition. Can Major Automakers Like BMW Catch up?

During the first quarter of 2018, Tesla’s Model 3 production ramp enabled it to steal the top EV producer crown from BYD and BMW. But with Tesla now building as much as 3,500 Model 3s and 5,500 EVs in total per week, it appears to be set to establish a major lead in the critical clean energy auto segment.

(Other automakers appear to have been caught somewhat flat-footed by Tesla’s high-quality EV surge. Traditional manufacturers like BMW have got a lot of work ahead of them if they want to catch up.)

Overall, total electrical vehicle production from all automakers is surging during 2018. And BMW is a credible part of that surge. During early 2018, it established a goal of producing and selling 140,000 EVs for the year. This would be almost 40 percent growth on its sales during 2017 — which hit just over 103,000.

Pretty impressive. But it’s nothing compared to what Tesla is now doing. During 2017, the high-quality EV manufacturer sold just over 101,000 electrical vehicles. But during 2018, that number is likely to double to around 200,000 — driven by a very rapid ramp in Model 3 production. The effects of this ramp are clear as day. It will propel Tesla into the position of global EV sales leader for at least the next 1-2 years.

(Tesla Model 3 Production appears to have surged to around 3,500 during mid-May. This is evidence of Tesla hitting its targets. Model 3 production is likely to surge to around 5,000 during June. No other automaker presently produces EVs in such high volumes. Image source: Bloomberg.)

Tesla’s advantages in the early stages of this race are multiple. It owns a massive supercharger network that is presently without parallel. It owns a very large battery and growing battery production capability. And it presently produces the fastest, longest range, easiest to recharge EVs in its market segment. Not only that, hundreds of thousands have reserved Tesla vehicles for purchase — so a huge chunk of future demand is in the bag.

Traditional automakers like BMW presently possess none of these advantages. BMW must contract out with other battery producers to guarantee its electrical vehicle ramp. This makes it less able to respond to demand signals than Tesla. BMW’s charger network is also third party — and it presently lags behind Tesla in supercharger capability. And BMW won’t be producing EVs capable of competing directly with high-spec Tesla cars until 2020 at the earliest. This due, primarily, to the fact that Tesla has a leap or two ahead in battery tech. BMW, in other words, is waiting on lower cost batteries from Samsung.

(Tesla has a luxury that most other EV manufacturers don’t — owning battery production allows it to rapidly ramp its EV offerings. Only BYD possesses a similar capability. And, presently, Tesla battery tech appears to have achieved economies that are 1-2 years ahead of the competition. Image source: Building Tesla.)

Moreover, automakers like BMW will see increasing competition coming from Model 3 for their high-margin luxury and sport ICE vehicles. Model 3 performs as well or better than pretty much all of these cars, has a lower cost of ownership by far, and doesn’t spew nasty fumes.

In short, Tesla has established for itself a top pole position in the race to provide win the future of automobile manufacturing. The rest of the pack is pretty far behind at present. And if we know one thing about Tesla, it’s very good at acceleration.

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