You are here
Home > Business > Electric Mercedes opens German assault on Tesla

Electric Mercedes opens German assault on Tesla

FILE PHOTO: A Tesla Model S electric car is seen at its dealership in Seoul, South Korea July 6, 2017. REUTERS/Kim Hong-Ji/File Photo

 

Mercedes-Benz is set to unveil its much-anticipated electric SUV on Tuesday, marking the start of a German onslaught against Tesla’s dominance of the fast-growing market for premium battery cars.

Daimler-owned Mercedes, BMW and Volkswagen’s Audi and Porsche divisions are all gunning for the $52 billion Californian upstart, with early publicity efforts emulating its tech-industry halo.

The market for upscale electric cars is Tesla’s to lose, with sales of its entry-level Model 3 sedan expected to reach about 50,000 cars this year and almost double that in 2019.

The Mercedes EQC – whose launch program in Stockholm features yoga in a direct appeal to the Millennials who have flocked to Tesla – is the first production model under the carmaker’s electric EQ sub-brand. It will be closely followed by similarly hyped debuts for BMW and Audi.

“While Tesla currently has a strong hold on the luxury electric market, I don’t think this will be the case after the arrival of the German premium offerings,” said Wajih Hossenally, an automotive powertrain analyst with IHS Markit.

“Tesla has virtually zero competition – but this will change from 2019 onwards.”

Mercedes Is Quietly Becoming Tesla’s Biggest Rival

Rival forecaster LMC Automotive agrees, predicting a steady decline in Tesla’s share of an exploding electric-car market over the next decade, from today’s 12.3 percent to 2.8 percent, even as its absolute sales continue to rise.

The Germans’ combined market share will surpass Tesla’s to reach 11.8 percent in 2020 before increasing further to about 19 percent three years later, according to its projections.

The new Mercedes, due to reach its first customers next year, will be priced close to the fuel-burning GLC to compete in the same bracket as Tesla’s $49,000 Model 3, helped by its hotter-selling SUV form.

An affordable Model Y SUV is slated to join Tesla’s high-end Model X crossover and Model S car, but not before 2020-21.

TECH BUZZ

The EQC softens its higher-riding proportions with sporty curves and a distinctive full-width rear light, while the interior resembles that of the Mercedes C-Class – a reminder of economies of scale that electric-only Tesla cannot match.

Well aware that their earlier battery-car offerings have failed to get anything like Tesla’s level of public attention, the German brands are doggedly courting Silicon Valley-style buzz for the coming product blitz.

Executives including Mercedes Chief Executive Dieter Zetsche have taken to appearing in jeans and sneakers, responding to a broader tech-industry incursion into areas such as autonomous driving and connected services.

When it came to the EQC launch, Mercedes picked the city of Stockholm for its startup scene and green credentials, then began firing off teasers on Instagram as well as Twitter.

Like Tesla, Mercedes is announcing EQC orders in Norway even before its price. It has amassed more than 2,000 refundable deposits of 20,000 crowns ($2,400) in Europe’s biggest electric-car market, where Tesla sold 8,500 vehicles last year.

The launch is the centrepiece of a three-day event that features DJ sets and yoga with a YouTube star – almost literally bending over backwards to telegraph 21st-century kudos.

Audi on Monday began production of its e-Tron SUV ahead of a Sept. 17 sales launch jamboree in San Francisco, just 40 miles from Tesla’s Fremont assembly plant. It also plans to begin taking reservations backed by refundable $1,000 deposits.

The e-Tron is due in showrooms early next year, followed in 2020 by two more electric Audis and the Porsche Taycan sports car from its Volkswagen Group stablemate.

WOW FACTOR

Not to be outdone, BMW has hired a Lufthansa cargo jet to fly its electric Vision iNext – still just a concept car – from Munich to Beijing via New York and, of course, San Francisco. Events are planned in all four cities over five days.

In another Tesla-inspired move, the three German carmakers are developing their own network of fast-chargers along major highways in a partnership with Ford.

While some experts doubt the Germans can ever match the wow factor around Tesla and its founding boss Elon Musk, many also wonder whether they need to.

“German manufacturers have highly desirable, fun-to-drive premium cars in their DNA,” said Nicolai Mueller, a McKinsey partner based in Cologne. “That’s a very good starting point.”

Tesla used its powerful tech aura to persuade early adopters to pay a premium for an all-electric car from a relative unknown, with no quality track-record or physical dealerships for servicing and support.

But the German carmakers have a century of manufacturing behind them, with sterling brands, well developed global sales networks and an existing customer base in the millions.

BMW’s i3 mini and an earlier Audi e-Tron failed to shift large volumes, but the electric-car market has matured since. LMC sees China driving global sales growth above 50 percent annually as the German offensive gets underway in 2019-20.

By then the Model S flagship will be eight years old. Musk, by tweeting then withdrawing plans to take Tesla private, has sharpened doubts about the company’s ability to keep expanding and updating its lineup.

“Tesla is potentially facing a product shortfall starting in 2020,” Jefferies analyst Philippe Houchois warned investors in a note last week.

Tyler Martin, a Tesla owner in Tucson, Arizona, said he had yet to decide whether to buy a Model 3 next – after his current Model S suffered from “build quality” issues requiring several trips to the repair shop each year.

One big question is whether competitors can offer a viable alternative to Tesla’s proprietary fast-charging network, the 28-year-old software entrepreneur said.

If they can, Martin added, “I would definitely consider another brand.”

  • Reuters (STOCKHOLM/PARIS)

.

Similar Articles

Top