The New Players in the Electric Vehicle Space
The New Players in the Electric Vehicle Space
Needless to say, Tesla has by now proven that commercializing a fully electric vehicle and overcoming the associated infrastructural limitations is possible. This flagship electric vehicle (EV) company’s success has been compounded by the COVID-19 pandemic giving consumers a glimpse of what a world with less vehicle-borne emissions looks like. On top of this, federal tax credits continue to be offered to those who purchase a fully electric or hybrid vehicle (up to $7,500), increasing awareness of the effects of climate change has shifted consumer preference to Tesla’s favor, and the Biden presidency has spurred unprecedented investment in CleanTech. Tesla has grown to a massive valuation (currently over $630 billion), spurring new product lines from existing car manufacturers and the birth of new companies specializing in the production of fully electric cars. Evidently, EV is a booming vertical that is poised to fundamentally alter the automobile industry for the first time in decades.
So, who are the new players in this market? How have existing car manufacturers responded to this enormous shift? Let’s dive in.
New Arrivals to the EV Market:
Rivian offers adventurous completely electric vehicles. The company’s R1T truck model is $69,000 with 300 miles of range; their R1S SUV model is $72,000 with 310 miles of range. The company’s vehicles come with high power motors, durable 180 kWh batteries, and level 3 autonomy (levels of autonomy described in Figure 1). Its vehicles also have drive units, battery pack, suspension system, brakes and a cooling system all below wheel height, allowing for more storage space and greater stability. All of these features combined with Rivian models’ rugged yet streamlined appearances open the doors for Rivian to disrupt a large segment of the automobile industry. This company has received hundreds of millions in investment capital from Amazon’s Climate Pledge Fund, raising a total of over $5 billion in the last year and a half alone.
(Source: AutoProMag) The Audi e-tron has made a big splash recently, being Audi’s first fully electric SUV model. Priced at approximately $74,800 with a 204 mile range and a 95 kWh battery, it appears that Audi is charging a small premium when compared to the Rivian R1S’s superior technological capabilities. However, the e-tron is more competitive when compared with Tesla’s Model X SUV which likely attracts a more similar customer demographic. The Model X costs about $84,990 and has a 328 mile range with a 100 kWh battery, with the Model X and e-tron having similar charging speeds. The Model X does have better self-driving technology than the e-tron, allowing for a more leisurely driving experience for some. Audi’s advantage within its market will undoubtedly be its brand recognition. As can be seen below, the e-tron’s design is almost indistinguishable from a classic petroleum-fueled Audi SUV, making the transition to electric less of an adjustment for Audi customers. This will likely benefit Audi in capitalizing on the rapidly expanding EV market. The e-tron SUV is only the beginning of Audi’s “electrification” as the brand has already released an e-tron Sportback with plans for further expansion of this product line in the near future.
(Source: The Car Connection) Lucid Motors’ sleek Air Pure directly competes with Tesla’s sporty Model S. The Air Pure sells for about $10,000 less and has a slightly longer range (Air Pure: 406 miles; Model S: 373 miles). While the Model S has superior self-driving capabilities, Lucid Motors’s DreamDrive software does allow for 19 assisted safety, driving, and parking features. Lucid is also planning on equipping later models with level 3 autonomy. Fans of Lucid praise its vehicles for having better comfortability and design than Tesla’s. So far, the company has released four luxury sports cars with plans to launch a Tesla Model 3 sedan rival in 2024 or 2025. Lucid Motors is run by former Tesla engineer Peter Rawlinson, who appears to be following the same go-to-market strategy Tesla did in starting with a luxury car to communicate quality and build the brand, and entering the mass market after significant brand awareness is present. Lucid is currently in the process of merging with a SPAC called Churchill Capital Group at a valuation of $24 billion: a far larger valuation than previous EV SPAC deals like Nikola and Fisker had, at less than $4 billion each. While consumer excitement mounts for the company’s vehicles to hit the market, it is incredibly challenging to enter the automobile market as a new company. According to CNBC, “Lucid … expects negative free cash flow through 2024 and will need $600 million in bridge financing until the [SPAC] deal’s expected closure in the second quarter.” Rawlinson, the company’s CEO and CTO, is optimistic about the company’s future.
(Source: Yahoo Finance) The Mini Electric is perhaps the most affordable electric vehicle on the market, with a price of about $29,900. However, this low price comes with greater limitations, as the car has a range of only 110 miles, a 32.6 kWh battery, and a top speed of only 93 mph. Tesla’s most comparable car, the Model 3, is sold at just over $10,000 more, but has more than double the range (at 250 miles), a 55 kWh battery, and a top speed of 140 mph. Tesla’s Model 3 also has far more advanced self-driving technology, with the Mini having only basic safety features. In addition, the Model 3 charges faster. The Mini has three charging modes: Level 1 Basic Home AC Charging (charges 2% per hour), Level 2 Home / Public AC Charging (charges 20% per hour), and Level 3 Fast DC Charging Station (charges up to 80% in 36 minutes). While Tesla’s Model 3 is a better deal for many consumers, Mini has a loyal customer base and a reputation for making cars that are fun to drive, reducing the need for advanced self-driving technology and other features. Additionally, the fact remains that the Mini Electric is one of the most affordable electric cars on the market, allowing it to address a larger audience. BMW has made consistently strong sales on its Mini models, and remains poised for yet more with the Mini Electric.
(Source: Top Gear) Nio is a Chinese electric car manufacturer with four models currently on the market, including a sedan model (ET7) and three SUV models (EC6, ES6, and ES8). Despite Nio’s popularity in the US stock markets, it does not sell any of its products in the United States. Geopolitical tensions between China and the US may make it difficult for Nio to gain any traction in the United States, especially given the distrust many Americans already hold towards self-driving technology. However, Nio likely does not need the attention of the US market given that it already has significant market penetration within China. As far as technology goes, Nio vehicles’ self-driving capabilities are at level 4 autonomy, making them competitive with Tesla. Nio’s cars are differentiated in their design for comfort and spaciousness. Additionally, Nio cars come with a digital assistant, called NOMI, which is the first use of in-vehicle artificial intelligence in the industry (pictured below). NOMI can be given verbal commands to, for example, open and close windows or adjust the temperature. However, NOMI also recognizes users and remembers their preferences while driving, adjusting seats and mirrors to meet these preferences as soon as the driver enters the car. Overall, Nio shows exemplary technology and design, poising the company to become a global leader in the EV space, particularly in Asia.
(Sources: Investors.com and Nio.com) Fisker’s Ocean SUV model will enter the market during 2022. On top of being fully electric, the Ocean is crafted with recycled materials without compromising on design or comfortability. The roof of the vehicle is solar, allowing for supplementary charging from the sun. Additionally, Fisker proudly advertises that none of the vehicle’s components are derived from animals. All of these features show that Fisker has designed the Ocean with sustainability as a unifying concept. Fisker’s broad estimate of the Ocean’s range is between 250 and 350 miles; the range in application may depend on available sunlight and the speed at which the car is traveling (highway vs. urban driving). According to Car and Driver, Ocean will be sold at a more than reasonable price of $37,499 and have a 80+ kWh battery and some assisted driving capabilities. Comparing the Ocean to the Audi e-tron and the Jaguar I-Pace (another SUV), the Ocean has a longer range with a far lower price, making Fisker’s flagship model a good deal for consumers. The Ocean will be compatible with most charging stations and Fisker has partnered with Electrify America to offer consumers an unspecified amount of complimentary charging. Fisker will also offer a lease-like subscription plan for an upfront deposit of $2,999 and a monthly cost of $379. Those who take advantage of this plan are allowed 30,000 miles per year, with maintenance and service included in this package. Fisker went public through a SPAC IPO in 2020 at a $2.9 billion valuation — a notably smaller amount than Lucid Motors’ more recent SPAC deal.
Lordstown Motors is perhaps Rivian’s greatest fully electric competitor, as it offers its 2021 Endurance pickup model at a $52,500 price with a 109 kWh battery and a 250+ mile range. While the Rivian’s R1T has a stronger battery, a longer range, and self-driving capabilities, the Endurance is a better price-to-range deal. The Endurance further solidifies its position as the more affordable option in the market by having the fewest moving parts of any motor vehicle. This minimizes maintenance costs, especially when compared to traditional automobiles. Lordstown further reduces lifetime ownership costs to customers by offering a generous three year bumper-to-bumper warranty and an eight year warranty on the truck’s battery and hub motors. Interestingly, the Endurance’s software prevents the truck from driving at speeds exceeding 80 mph. This may be a deterrent to some consumers, but it also likely extents the lifespan of the vehicle and its respective components. The Endurance’s built-in 4-wheel drive system specializes in getting the truck through sticky, slippery, or muddy conditions. Overall, Lordstown Motors offers a generous package complete with a high-quality good-value truck adapted to meet its target market’s needs.
Tesla proved that the EV market is a viable opportunity worth investing in. While Tesla maintains significant competitive advantages in many aspects, its competitors are poised to capture yet more of the automobile market that was held by traditional petroleum-ran car companies. Tesla’s success combined with the ideal conditions for a CleanTech upsurge have catalyzed an unprecedented richness of innovation in the automobile industry, led not by established car companies, but by startups leveraging new technologies and experimenting with new ways of delivering value to customers. While preexisting car companies can also seize this opportunity if they respond fast enough to changing consumer preference, they are being overtaken by smaller, less-established companies from a technological standpoint and in many cases, the less-established companies have better pricing as well. Nonetheless, the changes happening in the automobile market are good news for both consumers and the environment. Consumers are receiving vast improvements upon the last few decades’ iterative technologies and are being offered value in new, long-term oriented ways. The environment and society as a whole benefit from the trend towards all electric vehicles in that it is shifting the fossil fuel-run automobile industry in a more sustainable direction. No matter which players end up on top of the automobile market in the future, the trend towards electric vehicles will only continue to grow over time. As the automobile industry’s transformation takes place, the positive externalities we as a society serve to reap are innumerable.