How Nio, Byton, Lucid, Rivian and others Emulate Tesla

Established Automotive Original Equipment Manufacturers (OEMs) were established at least 60 years ago. They operate in a low margin business, with complex products and supply chains, combined with high volumes. There has been significant consolidation among OEMs to bring economies of scale. Outsourcing shot up in the 80’s and 90’s to reach about 70% of sales. Their expertise is centered today on overall vehicle design, systems integration, powertrain as well as high volume supply chain and manufacturing. This has resulted in an industry that delivers incremental improvements focused on user experience and overall efficiency. The OEMs’ legacy and culture prevent them from inventing the “next big thing.”

Then comes Tesla with the introduction of its Model S in 2012. Incumbent OEMs downplayed the potential of the Silicon Valley-based startup. Only Nissan, Renault and Mitsubishi were selling battery electric vehicles (EVs) at that time, in low volume. It took about 3 years (2015), when Model X was launched and Volkswagen’s Diesel scandal came to light, for incumbent OEMs to initiate accelerated EV development programs. JLR was the first to market with i-Pace in 2018. The year 2019 will see the beginning of slew of new EVs by all major OEMs. Yet that’s not all, Tesla and the other emerging OEMs were developed from the get-go as software powerhouses with…