Are Other EVs Really Able to Compete with Powerhouse Tesla? (Probably!)

By April 9, 2020 Blog
A view from the driver’s seat of a Tesla.

A view from the driver’s seat of a Tesla.Tesla is the top dog in the electric market today. With a reputation for cars that are sporty, stylish, and just plain cool, Tesla’s electric car competitors have their work cut out for them when it comes to capturing market share from Tesla.

Today in the EV Connect Blog, let’s take a look at why we think Tesla car competitors really can compete with Tesla, even despite Tesla’s fantastic performance in the industry so far.

Tesla’s Performance Has Been Very Strong

The website CleanTechnica reported that Tesla consisted of 78 percent of all EV sales in 2019. That’s a little short of 190,000 cars, good for about 1.3 percent of all new car sales in the US last year (EV and otherwise).

These are amazing figures that have left Tesla’s electric car competitors in the dust in just a few short years. In fact, these trends are so strong that some industry experts have argued that Tesla has already won the war and will dominate the EV market for the foreseeable future, leaving Tesla car competitors to fight for the scraps.

Indeed, even though the overall market is holding steady, many non-Tesla EV manufacturers are struggling not to lose sales.

The EV Market Is Catching Its Breath

A closeup view of the rear of a Nissan LEAF.The news has not been great for Tesla’s electric car competitors: After years of breathtaking sales growth due to high gasoline prices, EV rebates and tax credits, and a strong social push toward zero-emissions vehicles, the non-Tesla EV market paused to catch its breath in 2019, with sales flatlining compared to the previous year. (For that matter, Tesla sales also flatlined in 2019.)

For instance, the best-selling EV in 2019 that wasn’t a Tesla was the Chevy Bolt, with over 16,000 cars sold. But the Bolt has declined in sales for two straight years. One of the other most popular Tesla car competitors, the Nissan LEAF, has seen its sales flatline in recent years.

Some of this is simply the market at work: The Chevy Bolt has only been on sale for four years, and initially exploded onto the scene. Now, as people log miles on the car, more nuanced opinions about it are emerging. (A similar trend has occurred with the wildly popular Model 3: The car exploded onto the scene and now sales have leveled off.)

But it’s also true that the market is getting more crowded, from new entrants to the market but especially from competition by Tesla. Electric car competitors to Tesla are almost certainly losing sales to Tesla, particularly the Model 3.

2020 Looks Grim for EVs

In the short term, the entire EV market, Tesla included, will face severe downward sales pressures:

First, there is an active oil price war between Saudi Arabia and Russia. This will push already-low gasoline prices considerably lower, and discourage consumers who might otherwise have considered making the switch to electric.

More seriously, there will also be a substantial drop in demand for new cars due to the COVID-19 pandemic. This emergency is already causing serious damage to the entire economy, and is almost certain to send the US into recession.

For these reasons, Tesla’s electric car competitors and Tesla itself will very likely report extremely poor sales this year.

But The Overall Picture for the 2020s Looks Good

The good news is that after oil prices recover from their recent collapse, and after the economy recovers from the impacts of the novel coronavirus, favorable tailwinds for the EV industry will resume. Technological advances will yield better cars, more EV charging infrastructure will be available, and pent-up demand will translate into sales growth once the economic recovery takes hold. This is good news both for the whole EV segment, including Tesla’s electric car competitors.

As we get later into the decade, the picture will improve even more: Most of the United States is moving toward a future where zero-emissions vehicles comprise all new car sales. Existing financial incentives, including tax credits and rebates, will help to make EVs attractive in price compared to gasoline-powered cars. Government policy and public opinion are likely to exert further pressure in favor of EVs.

Tesla Is Not Quite in the Same Market as Other EV Manufacturers

One of the keys to understanding the relationship between Tesla and Tesla’s electric car competitors is to understand that Tesla is not quite in the same market as other EV manufacturers. They cater to a largely different customer demographic: affluent, middle-aged men who are in their 40s and 50s and make well over $100,000 a year.

These customers are likely buying electric cars for somewhat different reasons from other EV customers, with an emphasis on having fun, owning cool tech, and getting to play with toys for grown-ups.

Tesla’s electric car competitors’ sales also skew in this direction, but not to the same extent. And the traditional automobile manufacturers are marketing their electric vehicles to a more traditional audience. These buyers were much more likely to focus on affordability and the greatly reduced maintenance of EVs compared to traditional cars, and were much less likely than Tesla buyers to focus on the cool factor and the smooth ride. (You can read the entire CleanTechnica report here.)

Still, it’s not fair to call these two demographics completely unrelated. Both Tesla owners and non-Tesla owners appreciate the environmental statement of switching to an EV, as well as the national security benefit of reducing our reliance on foreign oil produced mainly by hostile powers.

And to the extent that these two markets do overlap, we have to give Tesla its due.

Giving Credit Where Due

A Tesla sits parked at a Tesla charging station.A Tesla car, especially the Model 3, is an incredible product—one that Tesla’s electric car competitors can barely touch on any metric:

  • It has outstanding acceleration and range (though, as with any car, one comes at the expense of the other).
  • Its national network of branded fast charging stations is enormously appealing to drivers.
  • It has a 5-star overall NHTSA safety rating, meaning that it performs very well in all types of collisions and is extremely unlikely to roll over.
  • It has all the bells and whistles you expect in modern cars, including 360-degree camera views, ultrasonic sensors, all-wheel drive, and fancy cupholders.
  • Its autopilot system handles steering, accelerating, and braking. There is also a full self-driving capability, which handles all driving functions for you, from parking to lange changing.

Tesla’s Self-Driving Capabilities Could Disrupt the Automobile Industry

In particular, Tesla’s electric car competitors simply cannot match Tesla’s self-driving technology. Nor is this likely to change soon, with one Japanese automobile engineer estimating that it would take six years for other manufacturers to catch up with Tesla’s in-house technological innovations.

A potentially bigger problem is the nature of Tesla’s improvements. To make a long story short, Tesla’s innovations bypass the traditional automotive components supply chain that manufacturers have cultivated over a period of decades. If other manufacturers followed suit, it would ruin many of these suppliers and cause disruption in the wider automobile industry.

Self-driving cars and electric cars are two different categories, so Tesla car competitors need to be mindful of causing harm to their non-EV sales by implementing self-driving improvements in order to make their own EVs more competitive with Tesla.

This Is a Temporary Problem

While it helps to explain Tesla’s current advantage over the competition, this is ultimately a temporary problem. Tesla car competitors will continue to make improvements to their own processes, eventually yielding competitive self-driving capabilities. In the meantime, Tesla’s electric car competitors are probably less focused on capturing market share from Tesla and more focused simply on growing their own sales.

The Bottom Line: Other EV Makers Can and Will Continue to Compete

With the long-term trend for the EV market looking solid, the question becomes: Does the future of EVs belong to Tesla alone, or do Tesla’s electric car competitors have a chance to become major competitors again?

While it’s clear that Tesla has gained a hard-earned edge in the market, it’s also an overstatement to say that other EV makers are done for. Tesla has dominated the market in a very short time, by capturing market share both from Tesla’s electric car competitors and from traditional internal combustion models. This kind of volatility suggests further volatility in the future as the EV industry continues to figure itself out.

Moreover, Tesla appeals to a somewhat different demographic than its competitors do. The average Tesla buyer comes from a fairly narrow demographic, and this market is likely to max out sooner. The general American motoring public is still largely waiting for a good enough reason to switch over to EVs, and that argument is anyone’s to make.

Lastly, the strong fundamentals of the non-Tesla EV manufacturers haven’t really changed. All of Tesla’s major competitors are solid companies with well-engineered products and a lot of staying power.

Tesla car competitors have by no means lost the war. We say: Don’t count out those Tesla electric car competitors!

Bringing It Home to EV Connect

All growth is good growth in the EV industry. At EV Connect, we specialize in helping businesses, government agencies, and vehicle fleet managers integrate the EV charging stations on their parking lots into a single, streamlined network.

Our charging network solutions and EV Cloud Platform are robust, resilient, and highly customizable, putting you firmly in control of the EV charging experience on your parking lots.

Whether it’s Teslas, or anything else, the EVs of tomorrow will need a place to stop and plug in. These are your customers, your employees, your residents, and your citizens. Now is the time to think about bringing EV charging infrastructure and networking solutions to your lots.

Contact us today to begin the discussion!

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