Member preview

Why are legacy car manufacturers so slow to respond to Tesla?

Electric car barriers for traditional manufacturers are internal

The Tesla Model S has been in production since 2012. It’s now 2018 and we are only just seeing the first announcements of apparently competitive products from legacy manufacturers.

Jaguar is first out of the gate with its I-Pace SUV actually delivering units in the second half of 2018. Porsche’s Taycan sports car is expected to arrive in 2019. The Audi e-tron SUV is expected in 2019 as well, as is the Mercedes EQC. The Volkswagen I.D. Crozz crossover and I.D. compact hatchback are expected in 2020, as is BMW’s iX3 SUV. Aston Martin is promising to deliver a limited production run of 155 of it’s RapidE luxury sedan in 2019, so is not really coming to market so much as glancing at the market in a bar. Some of those dates will undoubtedly slip.

That’s six to eight years to come to market with anything somewhat comparable to what Tesla delivered in 2012 and again with the Model X in 2015 and the Model 3 in 2018. It’s yet to be seen if the legacy manufacturers will be able to compete with Tesla, which is racking up market share after market share win. The August scorecard had them selling more cars (not trucks) than any of Acura, Audi, BMW Car, Infiniti, Jaguar, Lexus Car and Mercedes in the USA.The Tesla Model 3 was the fifth best selling car by volume in the US and first by revenue. The Tesla Model S took tremendous market share away from the competitors with all of them seeing year-over-year declines for several years in the US and now in Europe.

It’s also yet to be seen if they will be able to come up with a comparable set of differentiators such as Tesla has with its keyless everything, Supercharger and Destination Charger networks, best-in-breed semi-autonomous features and the like. Certainly Tesla has shown that a good electric car will be snapped up by people in preference to gasoline and diesel cars. It’s proven the market that the legacy players are trying to capitalize on. But this market has been obvious for years.

So why are the legacy manufacturers so slow off the line?

Legacy car manufacturers have a ton of problems:

  • Intellectual — They were incapable of seeing electric cars as an issue, a threat or an opportunity. It’s just foreign to automotive engineers and executives to consider drivetrains without internal combustion engines.
  • Dealerships — The legacy car companies’ distribution model is independent dealerships that hate electric cars, or at least disdain them. In addition to the same intellectual blinders as the manufacturers, they have a pure business model problem. They make profit on cars after they are sold, so want to sell as many cars as quickly as possible. At this point, electric cars take some education, which often the salespeople don’t have and the sales process takes longer. Then electric cars require less post-sales maintenance, so profits are down. Lose-lose. So dealerships aren’t selling electric cars.
  • Expertise — Electric cars aren’t just a matter of taking an internal combustion motor out and putting an electric motor in. The entire car frame geometry changes. There is a ton of engineering and intellectual capital around the battery, power management system and motor which car companies don’t have. BMW and Mercedes aren’t getting that, as two obvious examples of trying to keep their gas-flavored cake and eating it with electricity too.
  • Chicken and egg — Tesla looked at the charging problem and decided to be the egg. They built Destination Chargers and Super Chargers around the world and made it extremely easy for their buyers to find them. And they made them reliable. Other car companies decided to go with the chicken strategy and depend on other organizations to build the charging networks. In part this is because car companies don’t own gas stations today and so can’t imagine owning the equivalent tomorrow. Non-Tesla charging networks are much less reliable and harder to find. This nets out to Teslas being much easier to drive and charge.
  • Many more innovations such as over-the-air-updates including performance 0–60 time improvements, warranty model, service model, safety focus and air filtration. Tesla is an app with wheels. Legacy manufacturers are still mostly stuck in the era when cars had no computers. The difference in perspective and results is stark.

The first stumbling and limited steps and the various plans are mostly promising — not BMW’s, it still has to learn lessons itself it seems — but there is no doubt that legacy manufacturers are coming, grudgingly slowly and sometimes poorly, to the road that Tesla has paved.

Like what you read? Give Michael Barnard a round of applause.

From a quick cheer to a standing ovation, clap to show how much you enjoyed this story.