Focus: Elon Musk's challenge: Stay ahead of the competition
24/02/2023 06:00
By Joseph White and Paul Lienert
DETROIT, Feb 24 (Reuters) - Elon Musk will confront a
critical challenge during Tesla's Investor Day on March 1:
Convincing investors that even though rivals are catching up,
the electric-vehicle pioneer can make another leap forward to
widen its lead.
Tesla Inc TSLA.O was the No. 1 EV maker worldwide in 2022,
but China's BYD 002594.SZ and others are closing the gap fast,
according to a Reuters analysis of global and regional EV sales
data provided by EV-volumes.com.
In fact, BYD passed Tesla in EV sales last year in the
Asia-Pacific region, while the Volkswagen Group VOWG_p.DE has
been the EV leader in Europe since 2020.
While Tesla narrowed VW's lead in Europe, the U.S. automaker
surrendered ground in Asia-Pacific as well as its home market as
the competition heats up.
The most significant challenges to Tesla are coming from
established automakers and a group of Chinese EV manufacturers.
Several U.S. EV startups that hoped to ride Tesla's coattails
are struggling, including luxury EV maker Lucid LCID.O , whose
shares plunged 16% on Thursday after disappointing sales and
financial results.
Over the next two years, rivals including General Motors Co
GM.N , Ford Motor Co F.N , Mercedes-Benz MBGn.DE , Hyundai
Motor 005380.KS and VW will unleash scores of new electric
vehicles, from a Chevrolet priced below $30,000 to luxury sedans
and SUVs that top $100,000.
On Wednesday, Mercedes used Silicon Valley as the backdrop
for a lengthy presentation on how Mercedes models of the
near-future will immerse their owners in rich streams of
entertainment and productivity content, delivered through
"hyperscreens" that stretch across the dashboard and make the
rectangular screens in Teslas look quaint. Executives also
emphasized that only Mercedes has an advanced, Level 3 partially
automated driving system approved for use in Germany, with
approval pending in California.
In China, Tesla has had to cut prices on its best-selling
models under growing pressure from domestic Chinese
manufacturers including BYD, Geely Automobile's 0175.HK Zeekr
brand and Nio 9866.HK .
China's EV makers could get another boost if Chinese battery
maker CATL 300750.SZ follows through on plans to heavily
discount batteries used in their vehicles.
HOLY GRAIL
Musk has said he will use the March 1 event to outline his
"Master Plan Part 3" for Tesla.
In the nearly seven years since Musk published his "Master
Plan Part Deux" in July 2016, Tesla pulled ahead of established
automakers and EV startups in most important areas of electric
vehicle design, digital features and manufacturing.
Tesla's vehicles offered features, such as the ability to
navigate into a parking space or make rude sounds, that other
vehicles lacked.
Tesla's then-novel vertically integrated battery and vehicle
production machine helped achieve higher profit margins than
most established automakers - even as bigger rivals lost money
on their EVs.
Fast-forward to today, and Tesla's "Full Self Driving Beta"
automated driving is still classified by the company and federal
regulators as a "Level 2" driver assistance system that requires
the human motorist to be ready to take control at all times.
Such systems are common in the industry.
Tesla earlier this month was compelled by federal regulators
to revise its FSD software under a recall order.
Tesla has established a wide lead over its rivals in
manufacturing technology - an area where it was struggling when
Musk put forward the last installment of his "Master Plan."
Now, rivals are copying the company's production technology,
buying some of the same equipment Tesla uses. IDRA, the Italian
company that builds huge presses to form large one-piece
castings that are the building blocks of Tesla vehicles, said it
is now getting orders from other automakers.
Musk has told investors that Tesla can keep its lead in EV
manufacturing costs. The company has promised investors that on
March 1 they "will be able to see our most advanced production
line" in Austin, Texas.
"Manufacturing technology will be our most important
long-term strength,” Musk told analysts in January. Asked if
Tesla could make money on a vehicle that sold in the United
States for $25,000 to $30,000 - the EV industry's Holy Grail -
Musk was coy.
"I'd probably be asking the same question," he said. "But we
would be jumping the gun on future announcements."
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FACTBOX-Tesla CEO Musk signals Part 3 of Master Plan is ready
urn:newsml:reuters.com:*:nL4N34P2JV
Where Tesla stands? https://tmsnrt.rs/41otVWs
Where Tesla stands? https://tmsnrt.rs/3ZaE47g
INSIGHT-Chips, EVs power Biden's big bet on America's industrial
policy urn:newsml:reuters.com:*:nL1N348159
Eureka! Tesla says California is still home - for its
engineering HQ urn:newsml:reuters.com:*:nL4N35248Y
ANALYSIS-Tesla's search for Mexico location shows bumps on
nearshoring road urn:newsml:reuters.com:*:nL1N34W2K6
Tesla recalls 362,000 U.S. vehicles over Full Self-Driving
software urn:newsml:reuters.com:*:nL1N34W21O
EXPLAINER-What's known about Tesla's "Project Highland"?
urn:newsml:reuters.com:*:nL1N34W0G4
Tesla to open U.S. charging network to rivals in $7.5 bln
federal program urn:newsml:reuters.com:*:nL1N34V1YX
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(Reporting by Joe White and Paul Lienert in Detroit
Editing by Matthew Lewis)
((Joe.White@thomsonreuters.com;))