The competition is coming!
This is a statement we heard applied to Tesla for years. It was meant to convey the fact that legacy automotive were getting into electric vehicles. Once that happened, so went the thinking, the lead early advantage Tesla had would evaporate.
For the last 6 years, this was wrong. I maintain the failure to understand what competition means is the cause of this. To be a competitor, one needs to be in the same market as another. This is not the case with most companies that people refer to as "competition".
Understanding who the predator and who is the prey is vital.
In this situation, we have to frame what Tesla makes.
While most want to say automobiles, it is specifically luxury, premium vehicles. This means that an automaker such as Ford is not competition.
If you are going to name Ford, might as well throw in Home Depot or McDonalds. They do not make luxury autos either.
Tesla Is The Predator
By the end of the year, Tesla will have mopped the floor with the competition. This means that anyone in their segment is going to be crushed.
When we mentioned competition, it is coming. And the one who is doing that is Tesla.
It is the predator and the rest of the industry the prey.
Look at the chart above. When we discuss luxury, premium autos, Audi, BMW, and Mercedes are the category. Some might put Lexus or Cadillac in there. However, this sector was dominated by the European manufacturers for decades.
Now that is changing. This is global auto sales. Notice how Tesla has closed the gap quickly. Over the last couple years, the lead has diminished.
It is now to the point where Tesla surpassed Audi in global auto sales. Please note this is not EVs but total sales. For the quarter, Tesla is about 100K behind BMW and Mercedes.
So why do I say that Tesla will surpass the other two by year end?
The Berlin factory is slated to hit 10K vehicles manufactured per week. That is an annual run rate of 500K. Couple that with their other factories and it is easy to see how the numbers will flip.
That means the competition, i.e. Tesla, is bearing down on the leaders.
Two Biggest Sectors Next
What are the two biggest segments in automotive? That would be pickup trucks and medium priced sedans.
Do you know how many vehicles Tesla makes in these categories? Zero.
Over the next two years, the company is going to start manufacturing the Cybertruck and next generation EV. This is going to target the Toyota Corolla price range.
The first shot will come in the 4th quarter when the first pickup trucks roll out. Some question how many Tesla will sell. That, naturally, remains to be seen. However, this is going after the F-150 and Silverado buyers.
In other words, Tesla will be entering the stronghold of Ford and GM.
As the European automakers found it, Tesla, once going, can really put on a charge and close the gap.
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