Startups, old-line automakers aim to take bite out of Tesla
PLYMOUTH TOWNSHIP, MICH. — In a renovated old cash register factory in suburban Detroit, 300 engineers are toiling away on an all-electric pickup truck and an SUV that they hope can take on Tesla.
All of them work for Rivian, which on Monday will unveil the two vehicles ahead of the Los Angeles Auto Show. It is among a growing line of startups and established automakers looking to enter the fully electric vehicle market.
The influx of vehicles that run solely on batteries almost certainly will pull buyers from the current leader, Tesla, which likely will deliver over 300,000 vehicles worldwide this year.
Established automakers such as Audi, BMW, Mercedes, Porsche, Jaguar-Land Rover, Volkswagen, Hyundai, General Motors, Ford and even vacuum cleaner maker Dyson have promised to roll out new electrics in the next few years. The luxury automakers compete directly with Tesla’s higher-margin vehicles, the Models X and S.
There also are electric car brands in China. The two biggest brands by sales — BYD Auto, a unit of BYD Corp. in Shenzhen, near Hong Kong, and stateowned BAIC Group in Beijing — are making inroads into foreign markets.
BYD sells battery-powered buses in the U.S., Japan and Europe. BAIC announced plans in April to manufacture electrics in South Africa.
Michael Ramsey, senior analyst for Gartner, says Tesla “will unquestionably lose market share as more competitors come in.”
What is unknown, though, is whether the demand for electric vehicles will rise enough so that there’s room for everybody. Currently the market is tiny. In the U.S., electric vehicles only amounted to 0.8 per cent of new vehicle registrations through August this year, according to data from IHS Markit. But that’s substantially more than the 0.5 per cent at the same time in 2017. Automakers in the U.S. sold just over 155,000 fully electric vehicles through October, about 1 per cent of total sales, Edmunds.com says.
Yet globally, Navigant Research predicts huge growth in the next seven years, from just over 1 million sales this year to 6.5 million by 2025.
As competition ramps up, prices are gradually coming down, edging closer to cars with internal combustion engines. At the same time, electric range is on the rise.
For instance, Rivian is promising that the top version of its R1T pickup will have more than 644 kilometres of battery range per charge when it goes on sale in late 2020. The five-seat pickup is aimed at a market Tesla is not yet in, an off-road capable truck with outdoorsy features.
The small startup still has a long way to go to sell vehicles, even though it says it has $500 million in funding. It has to develop a sales and service network, announce a battery cell supplier and start producing vehicles in a former Mitsubishi Motors plant.
Tesla CEO Elon Musk has said many times the competition is good, fostering the company’s goal of sustainable transportation.
“It is impossible for Tesla to build electric cars fast enough to address the carbon crisis,” Musk wrote in a 2014 blog. “Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.”