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Posted on EVANNEX on February 20, 2021 by Charles Morris

Ever since Tesla’s founding, pundits (and never solely pundits, however a few of the firm’s founders) have assumed that, as soon as the legacy automakers obtained critical about promoting EVs, they’d bury (or purchase) the California upstart. “Thanks for displaying us the best way, Elon, we’ll take it from right here.”  

Above: Tesla fleet is being joined by EVs from upstart and conventional automakers (Supply: EVANNEX; Picture by Casey Murphy)

I witnessed a comical manifestation of this in 2018 once I attended a press occasion for the launch of the Audi e-tron. I had breakfast with a bunch of Audi sellers, and considered one of them mused about how attention-grabbing it will be to see Tesla fade away and fold over the subsequent couple of years, now that the massive boys had gotten into the sport. I needed to restrain myself from laughing aloud on the time, and no…I’ll simply say that that’s not the best way issues labored out.

As I and different EVangelists have written so many occasions, the explanation this Goliath-beats-David story isn’t going to come back true has little to do with skill, and all the pieces to do with motivation. The e-tron is a high-quality automotive, and so are the Porsche Taycan and Mustang Mach-E that I not too long ago examined—however these corporations are dedicated to a sluggish and orderly transition that enables them to protect their ICE property, and Tesla is dedicated to creating each automotive on the planet electrical, even when most of them aren’t Teslas.

Lately, a extra fashionable model of the Tesla-fades-away state of affairs has been making the rounds. The premise: okay, we all know that legacy Large Auto won’t ever beat Tesla, however nimble startups comparable to Rivian and Lucid simply may.

Zac Cataldo, the producer of the Now You Know podcast, is extraordinarily educated about traits within the EV business. In a latest chat, we talked about the Fantasy of the Tesla Killers. “We’ve recognized for years that that’s simply not true,” Zac instructed me. “These corporations [Big Auto] should not revolutionary, in order that they’re not capable of truly make a automotive that’s something greater than a compliance automotive. The one actual rivals are going to come back from exterior. They’re going to come back from corporations—maybe Lucid, or maybe Rivian—which can be trying on the drawback from a special angle.”

Zac is happy concerning the upcoming Rivian R1T—he has one on order—nevertheless it appears like he’s much more enthusiastic about Tesla’s Cybertruck.

As Zac factors out, it’s going to be thrilling to comply with the brand new wave of EV startups over the subsequent couple of years, as a result of they would be the first viable competitors that Tesla has confronted. Like Tesla, these corporations are devoted to constructing EVs, they usually don’t have legacy product traces or stranded property to defend. Nonetheless, some within the media have gone a bridge farther, predicting that the rise of Rivian and Lucid is a risk to Tesla. As I write this, TSLA inventory has had a tough week, dropping in worth by double digits, and a few pundits are pontificating that the reason being Rivian’s announcement that it’s going to go public later this yr.

Will some patrons who have been taking a look at a Tesla go for a Rivian (or a Lucid, an Aptera or an Xpeng) as an alternative? Most likely. Does that imply that the arrival of those new automakers is a risk to Tesla’s gross sales? Simply the other—it’s an enormous alternative. Each time one other automaker broadcasts a brand new mannequin, or elevated funding in its EV program, Elon Musk tweets out his congratulations, and this isn’t out of bravado. It’s as a result of, as he has mentioned a number of occasions, Tesla’s true competitors shouldn’t be different EVs—it’s the tens of millions of gas-powered automobiles which can be nonetheless rolling off the traces.

The concept that extra entrants to the EV phase will dilute Tesla’s gross sales relies on the false concept that there are two separate markets, one for EVs and one for gas-burners. In different phrases (as legacy automakers have usually implied of their advertising and marketing supplies), there’s a sure demographic that buys EVs, and no one exterior this group of kale-munchers ever will. That is nonsense. Merely put, as EVs get higher, and as extra folks turn out to be conscious of EVs, extra folks will purchase EVs. Their buddies will try their cool new rides, and a virtuous circle will begin spinning up its magic.

A couple of years from now, proudly owning a gasoline automotive shall be like proudly owning a horse, as Elon Musk not too long ago quipped. Within the meantime, each compelling new EV that comes available on the market will broaden the pool of EV-buyers, and a few of them will select Teslas.

For instance what I’m speaking about, enable me to inform a bit story from my private expertise. In 2014, I wrote a guide about Tesla, and self-published it as an e-book (and revised and up to date it in 2020). For a shocking size of time, mine was the one guide about Tesla available on the market. I scored a gentle stream of gross sales, though my numbers would have been thought-about a rounding error by any main writer.

In 2015, a widely known writer named Ashlee Vance launched a superb biography of Elon Musk. To match his guide to mine could be like evaluating a Mannequin S Plaid to an EV1. His was a slick hardback guide that was reviewed in retailers just like the New York Instances, and offered at airport bookstores everywhere in the nation. Uh-oh! The massive children are right here! Dangerous information for little self-published Charles Morris, proper?

Mistaken. Shortly after his guide got here out, my gross sales took off like a rocket, and for about three months, I loved the best gross sales I’ve ever had. He in all probability offered (and continues to promote) extra books in an hour than I do in a yr, however his entry into the market didn’t harm my gross sales—it vastly elevated them. Many readers purchased each books. Now clearly, this little parable isn’t instantly similar to the EV market—few patrons are going to love their EV a lot that they purchase a second one (some simply may), and in contrast to your favourite EV journalist, Tesla can’t actually be thought-about an underdog at this juncture. However the level is that, in a market that’s simply starting to develop, the entry of extra rivals doesn’t slice up a finite pie into smaller items—it makes the pie greater.

The e-mobility pie continues to be tiny. Within the US, EVs at the moment symbolize lower than 2% of complete auto gross sales, and even in Europe and China, they nonetheless account for a fraction of the market. Contemplating all the pieces that’s happening—quickly enhancing know-how, falling costs, tightening regulation—it’s all however sure that the pie goes to broaden quickly over the subsequent decade, and there’s loads of alternative for Tesla, for startup automakers and for legacy manufacturers that may be quick followers. The one ones who’ll find yourself with no pie on their plates shall be those that refused to come back to the kitchen when the dinner bell was rung.


Written by: Charles Morris