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Tesla Versus the Luxury Automakers

Does the introduction of luxury EVs from BMW, Cadillac, and Mercedes spell doom for Tesla?
July 25, 2013

Tesla Motors, the 10-year-old maker of high end electric vehicles, hasn’t had much direct competition. Tesla sells to wealthy people who want a high performance car. Other automakers seem to be going after a different target—people who can afford an luxury vehicle, but who are willing to buy an economy car with an electric motor instead. Ford, for example, lets you buy a Focus for about $20,000, or basically the same Focus for $35,000, battery included. (The strategy seems well-calibrated to allow automakers to meet California mandates without seriously cannibalizing sales of more profitable gasoline cars.)

Now BMW is about to unveil its i3 electric vehicle. Mercedes is coming out with a B-Class EV and Cadillac is rolling out the plug-in hybrid ELR (a luxury version of the Chevy Volt). And this has some industry watchers wondering if it’s all over for Tesla.  

It isn’t all over for Tesla. These luxury automakers still aren’t directly competing with the Model S—their models don’t come anywhere close to having the performance or the range of the Model S.

The i3 is a small urban vehicle with a range of about 100 miles that takes around seven seconds to hit 60 miles per hour. For extra, you can have BMW install a motorcycle engine to boost the range to 180 miles (see “BMW’s Solution to Limited Electric-Vehicle Range: a Gas-Powered Loaner”).

The ELR is a four-seater with only 35 miles of electric range and mediocre acceleration (once you get past that nice first second responsiveness that an electric motor gets you). The unremarkable acceleration of about eight seconds to 60 miles per hour is due in part to the fact that the car has to carry around both an electric propulsion system and and a gasoline powered one for longer trips.

The Model S, on the other hand, is a roomy sedan that seats five adults plus two kids, can travel 265 miles on a charge, and comes with free supercharging for long trips if you happen to live along certain corridors in California or the Northeast. And the car hits 60 in an impressive four seconds. Tesla has an edge in battery and charging technology that give it an advantage over more established automakers (see “Forget Battery Swapping: Tesla Aims to Charge Electric Cars in Five Minutes”).

That said, Tesla better watch its back. Although the new cars don’t compete with it head to head, there have got to be some people who would consider the Model S only because their only alternative is an expensive economy car like the Leaf or Focus. The new luxury cars could fit their needs.

And Tesla has one big technological disadvantage. Cadillac and BMW are pushing forward driver assist technologies, such as adaptive cruise control and systems that will help you park your car. The BMW will drive itself during a traffic jam on the highway, controlling speed and steering to keep the car in its lane. Tesla says it’s considering adding these sorts of things later, and focusing on the EV tech for now. 

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