Is this the Tesla (TSLA) killer?

Could be.

Although, folks have written off Tesla more times than we can count in the past 10 years.

Even so. If it doesn’t kill Tesla… it will knock it off its perch.

It’s destined to become just another car company.

And there isn’t anything it can do about it. More below…

A Long Way From Mass-Market Success

By the way, when we say, “Tesla killer,” we’re being hyperbolic.

We don’t necessarily mean the company will go bust.

As noted above, we just mean it will become “just another car company” with just-another-car-company’s thin profit margins.

So, what is it that spells trouble for Tesla?

Two things. And they’re both related to the prospect that electric vehicles (EVs) aren’t destined to completely replace gas-powered cars.

We note the following two stories with interest, both from Bloomberg:

BYD Co. unveiled a new hybrid powertrain capable of traveling more than 2,000 kilometers (1,250 miles) without recharging or refueling, intensifying the EV transition competition with the likes of Toyota Motor Corp. and Volkswagen AG.

The upgraded tech, which aims to put more distance between BYD and its rivals, will be launched in two sedans immediately that cost under 100,000 yuan ($13,800), the automaker said at an event live-streamed Tuesday evening from China.

This is a big deal.

We’ve mentioned this before. Most folks likely drive no more than 50–100 miles per day. In fact, most folks probably drive well under that.

So why does “range anxiety” exist when even the worst EV has a range of 100 miles (the Mazda MX-30 EV, according to Ride and Drive Clean, a nonprofit campaign pushing for EV adoption) and most have a range of more than 200 miles?

The answer is simple.

Because once or twice a year, many folks may want to take a long road trip… a trip of 400, 500, or 600 miles.

For instance, a trip from Spartanburg, South Carolina, to Orlando, Florida, is around 523 miles, depending on the route.

Or a drive from Albuquerque, New Mexico, to Las Vegas, Nevada, is a nearly 600-mile trip… again, depending on the route.

Right now, it takes a brave soul to plan that trip in an EV without knowing or planning where you might be able to recharge.

If a hybrid can cover that journey twice over… that puts range anxiety into the “irrelevant” basket.

But companies like BYD aren’t the only threat to Tesla and other pure-EV carmakers. Again, from Bloomberg:

Toyota Motor Corp. revealed prototypes of internal combustion engines capable of running on hydrogen, along with gasoline and other fuels, seeking to popularize alternate technologies to reduce carbon emissions.

The world’s biggest carmaker, alongside Mazda Motor Corp. and Subaru Corp., said they’re making progress on developing smaller, more efficient engines that can work with electric-vehicle manufacturing platforms and capable of meeting strict emission regulations in the future.

Emboldened by robust hybrid-car sales, Toyota and its partners say fuel-burning engines have a role to play even as the industry shifts to battery EVs in a global push to decarbonize. The Japanese manufacturers have long been criticized for hesitating to fully embrace electrification, while BYD Co. and Elon Musk’s Tesla Inc. take the lead in battery-based EVs.

Many thought EVs would spell the end of the internal combustion engine. Some European countries have even gone to the extent of outlawing gas-powered cars by 2030.

But the demise of gas engines may be premature. The take-up rate for EVs is well below what governments expected. It’s likely to take many more years than previously planned for EVs to be relevant in the market.

According to another report from Bloomberg, U.S. EV sales will be 2.5 million in 2025. That sounds like a big number… until you compare it to the total predicted vehicle sales for 2025.

Annualized estimates from Trading Economics put total vehicle sales at more than 60 million… which leaves EVs accounting for around 4% of the total sales market.

The fact is, those who are excited about EVs – the early adopters in tech – have their EVs and probably like them. But as with any technology, it needs more than early adopters to make a market sustainable.

It needs the mass market to get excited about it. And that, dear friends, is a long way off from happening.



Kris Sayce
Editor, The Daily Cut