FinanceDraft

Tesla holds 83% od battery-electric vehicle market as competitors flood market with EV

No matter what comes in the way of automaker Tesla, he manages to come out on top. Its been nearly a century since someone has shown such domination in the field of an automobile.

Despite the relatively disappointing earnings in the fourth quarter, Tesla managed to finish 2018 with an astounding 83 percent share of the United States battery-electric vehicle market.

Tesla is planning to increase the production of Model 3 along with launching three new product lines over the next year. Despite all this, it is said that Tesla can be facing some serious challenges in the coming years. Musk commented on the fourth quarter earning “Even if there’s a global recession, we’re expecting deliveries this year to be about 50 percent higher than last year. And it could be a lot more than that, but even with tough economic times to see 50 percent growth is pretty nutty.”

Many automakers like Acura to Zotye are trying to get into the electric car field. The analysts of the field say that it is expecting many new all-electric vehicles in the United States showrooms. Mercedes, Jaguar, and Volkswagen are making a direct bid for Tesla’s customer base. All three automakers are said to debut their all-electric luxury models, which will give Musk’s signature Model 3 sports sedan and Model X utility vehicle a real run for their money.

Epic pile-up

AlixPartners, a Detroit-based consultancy, in a study said that EV market released last year is heading for a pile-up of epic proportions. All the automakers want to get into the Electic vehicle category. That includes even General Motors. Mary Barra, the CEO of general motors, said that it is on a path to an all-electric future.

The risk involved here is that through the sale of battery vehicle is on the rise, they still constitute only a minuscule fraction of Europ, American, and Japanese markets. Though the sale is growing in China, they still comprise less than 4 percent of the market’s total.

A general manager of the Toyota brand, Jack Hollis, told to trade publication Automotive News that “The equations around electric aren’t making money.” He said statement at the National Automobile Dealers Association convention in San Francisco.

Game changer

On the other hand, Musk explained his plans of how sees the company’s sales increase by 50 percent or more this year alone.

The fact that need to be accepted here is that the Tesla Model X changed the way the entire market of the automaker. The launch of the Tesla Model S shifted the momentum. The sedan pushed above 200 miles per charge and then boosted that to more than 300 with an optional, long-range battery pack. Stephanie Brinley, a principle auto analyst at IHS Markit, said that “With only the rarest of exceptions, everything coming to market now and going forward is expected to deliver a minimum of 200 miles range.”

This shift in momentum caused all major Automakers to start investing in cars that run on battery. One of the major automobile company who is planning to invest big in this sector is Volkswagen. Volkswagen CEO, Herbert Diess announced plans to invest $800 million. During an appearance at the Detroit Auto Show, Herbert Diess said: “The U.S. is one of the most important locations for us and producing electric cars in Chattanooga is a key part of our growth strategy in North America.”

During an appearance at the Detroit Auto Show earlier this month, Volkswagen CEO Herbert Diess announced plans to invest $800 million in starting producing two of those products at its sprawling U.S. assembly plant in Chattanooga, Tennessee. That should create about 1,000 new jobs once production begins in 2022, he said during a news conference. Added to this he also claimed that “VW will spend an estimated $50 billion to purchase batteries by mid-decade.”

A recent study by AlixPartners estimates that “by 2023 a whopping $255 billion in R&D and capital expenditures will be spent globally on electric vehicles, and that some 207 electric models are set to hit the market by 2022.” The summary of the report concluded that “many of them destined to be unprofitable due to currently-high systems costs, low volumes and intense competition.”

Toyota North America’s CEO Lentz said, “It’s going to be a battle.” Longer range, declining costs and the increased availability of fast chargers may eventually help get buyers over to EVs. Despite Musk’s enthusiasm, everyone else believes, for the current market that EV will be, a recipe for losing money.

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