The Attack of the Tesla Hunters

Dear Shareholders,

So far, Tesla has largely dominated the market for luxury electric cars on its own. With the Jaguar I-Pace there is actually only one serious competitor. The fully electric SUV costs around $90,000 and is therefore in Tesla’s price segment. In the Netherlands, Jaguar even sold more of its EVs in 2018 than Tesla. However, the British car manufacturer has underestimated demand and is not able to keep up with production, the market says.

However, the competitive situation will soon change. The Audi e-tron is to be launched this year.  Soon afterwards, the EQC from Mercedes will be launched. Both EV SUVs play in the same league as the Tesla Model S (sedan) and Model X (SUV). The Taycan from Porsche, whose roll-out is also planned for this year, ranks slightly higher.

Conversely, Tesla now also wants to occupy the mid-range segment. The Model 3 will finally be available with a smaller battery and less equipment at the originally announced price of $35,000 before tax. Tesla’s Model 3l initially cost $70,000 at the start of production in 2017. But also in the middle class segment Tesla will soon have a lot of competition. In 2019/2020 VW wants to start the production of the I.D.. The first original Volkswagen electric car will build on the success of the VW Golf and cost around 30,000€, i.e. less than $35,000. At the same time BMW wants to attack soon with a fully electric Mini.

Competition from all sides

However, the market for electric cars is not only mixed up by the established car groups. Rather, companies from outside the industry or completely new enterprises are also entering the market. These include Byton, for example. The Chinese company is headed by the German Carsten Breitfeld, who was previously responsible for the i8 electric hybrid sports car, as head of development at BMW. Production of the M-Byte is scheduled to start at the end of the year. The first cars will be available in China by 2020, and then in the USA and Europe from the middle of next year. Byton is targeting a price of around $45,000. Investors include the founding team, which is still fully on board, Apple’s contract manufacturer Foxconn and China’s Internet giant Tencent.

Tencent also holds a stake in NextEV, the parent company of Nio. Other investors include the Chinese tech groups Baidu, Xiaomi and Lenovo. The company is already supplying the Nio ES 8 in China, which at $68,000 is only about half as expensive as the Tesla Model X for which high import duties are due in China.

As a newcomer to the industry, James Dyson wants to break up Tesla & Co. The billionaire inventor of bagless vacuum cleaners and hot-air hand dryers is investing almost $5 billion in a production facility for electric cars in Singapore. Unlike its competitors, Dyson wants to equip its EVs with solid state batteries that perform better and charge faster than current lithium-ion batteries. However, these batteries are not yet in series production. But, Dyson should not be underestimated. The self-made billionaire has years of experience with batteries from his vacuum cleaner business and already produces around 100 million battery cells annually. Dyson also took over Sakti3, a developer of solid-state batteries in the USA, about two years ago.

In addition, there are numerous already established Chinese companies that already serve the small car and mid-range segment with electric vehicles. The BAIC EC180 is the most sold electric car in the People’s Republic. The car costs only around $23,000 and has a range of 200 kilometers. The BAIC EC180 has already been sold more than 150,000 times. The manufacturer is the fifth largest automobile group in China.

Second bestseller from Germany?

Although the German car industry is lagging behind when it comes to electromobility, there are still innovative concepts that could mix up the market: Günther Schuh, Professor at the University RWTH Aachen, is currently developing the e.GO. Depending on the battery, the small car has a range of 120 to 180 kilometres, i.e. around 100 miles, and is expected to cost between 16,000€ and 20,000€

($18,000 to $23,000). Since the costs for lithium-ion batteries are currently rising disproportionately with size, smaller electric cars currently make sense economically, and not the big SUVs. That’s why Schuh is focusing on the small car segment. With the Streetscooter delivery van, the professor has already brought a bestseller onto the market, which he later sold to Deutsche Post.

For lithium companies like Rock Tech, it is irrelevant whether large SUVs or smaller vehicles dominate the EV market. The decisive factor is that electromobility makes the breakthrough. This is imminent.