Elon Musk's challenge: Stay ahead of the competition
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[February 24, 2023] By
Joseph White and Paul Lienert
DETROIT (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 was the No. 1 EV maker worldwide in 2022, but China's BYD 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 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, whose shares plunged 16% on Thursday after
disappointing sales and financial results.
Over the next two years, rivals including General Motors Co, Ford Motor
Co, Mercedes-Benz, Hyundai Motor 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 Zeekr brand and Nio.
China's EV makers could get another boost if Chinese battery maker CATL
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.
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Tesla CEO Elon Musk arrives on the red
carpet for the automobile awards "Das Goldene Lenkrad" (The golden
steering wheel) given by a German newspaper in Berlin, Germany,
November 12, 2019. REUTERS/Hannibal Hanschke/File Photo
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."
(Reporting by Joe White and Paul Lienert in Detroit; Editing by
Matthew Lewis)
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