Tesla Inc (NASDAQ:TSLA) currently faces almost zero real competition in the electric vehicle space, especially at the luxury end of the market.
That big head start has allowed it to make headline after headline, capture the imagination of the public, and rise to become the most valuable U.S. automaker — despite only selling 100,000 vehicles a year.
Its high-end Model S sedan is hands down the most popular electric vehicle on earth right now, but its lower-priced Model 3 promises to become #1 very soon. Pre-orders for that car have now exceeded 500,000 units, with demand far outstripping its current production capabilities.
CNBC notes, however, that an onslaught of competition is just waiting in the wings to steal the company’s mojo:
Tesla will face a bevy of competitors in the next few years, especially among high end carmakers with strong brands of their own, said Barclays analyst Brian Johnson, who has been a consistent skeptic of the California electric car maker and renewable energy company, even though Tesla stock has risen more than 50 percent this year alone.
“We can just hear the Tesla fans objections to the volume of competitor launches – most of those are mass market cars, and many are compliance cars — and hence not appealing to the status-conscious Tesla target segment,” Johnson said in his note to clients on Friday.
Barclays recently hosted a powertrain conference in London, where several luxury carmakers touted their upcoming EVs. Johnson says that Mercedes’ strategy stands out as particularly compelling. “We were impressed by Mercedes’ plans for the EQ brand as a standalone platform for EVs from inception,” he said. “We think Mercedes’ strategy will stand them in good stead in the long run.”
Within the next few years, Mercedes and BMW will have four electric models each, Johnson predicts. Volkswagen, meanwhile, will have a whopping seven EVs in its lineup, while Audi will have three. Porsche will boast two EVs by then, and in the ultra high-end luxury market, Bentley will offer an electric car of its own. Maserati, Jaguar and Aston Martin also have plans for an EV in the next few years.
Even if none of these automakers have huge EV hits, they’ll no doubt steal EV market share away from Tesla, especially in the luxury market. That’s bad news for the Model S, and puts even more pressure on Tesla to ramp its production capabilities sooner rather than later.
Tesla Inc shares closed at $335.07 on Friday, up $0.61 (+0.18%). Year-to-date, TSLA has gained 56.80%, versus a 11.48% rise in the benchmark S&P 500 index during the same period.
TSLA currently has a StockNews.com POWR Rating of B (Buy), and is ranked #8 of 25 stocks in the Auto & Vehicle Manufacturers category.