Today's BEV topic: Myth Busting!
** WARNING: major business nerd analyst stuff ahead **
As an investor and car lover I've been fascinated to watch the electric auto market; it appears to at least "rhyme" with history, i.e., transition from horses & trains to autos & trucks ... and here we are at the beginning of a new revolution!
Since I've already posted BMW's corporate roadmap & financials, I'll switch to Volkswagen as a proxy for "the Bigs": all content is directly from VAG, mostly from the last 3 months.
As a preface, a few points:
• VAG chops up their brands into segments (which is important to their BEV strategy) - 2018 content:
• VAG like most has gotten blasted by COVID (ouch!):
• VAG is building 2 BEV platforms: PPE for the premium markets and MEB for volume markets (from 2018, so that strategy is still in play!):
• And, waaay back in 2018 VAG realized their BEV platforms weren't traditional autos, but rather complex internet devices:
On to the myths:
(1.) ICE is soooo much cheaper than BEVs! Mmm No.
First a few business truisms:
• High-volume products are cheaper to produce than low-volume products
• Mature technology products are cheaper to produce than nascent technology products.
Well, BEVs are relatively new tech and low volume products,
yet despite that, BEVs are ALREADY comparable in ownership costs to ICE.
This is like a pre-assembly-line Ford being equal in ownership costs to a horse!
i.e., it's pants-shitting time for anyone in the ICE business. Which why VAG is including this brown-pants slide - this ain't greeny propaganda, this is VAG saying this, i.e, this is best-case-for-ICE stuff:
And the technology is getting better and cheaper exponentially - battery technology will drastically improve over the next 10 years:
And everyone is already planning on how to profit from battery materials recycling across battery "lifetimes" and ultimately back to the beginning:
In other words, BEVs have almost zero consumable parts (just tires & batteries), and the batteries have completely separate businesses and revenue attached to them. (and this is all ignoring V2G utility revenue)
(2.) Tesla is teeny-tiny auto manufacturer! Mmm No.
I've already posted
a visual of Tesla deliveries vs other brands and it's pretty obvious Tesla is already out-delivering many legacy auto brands, but here are the VAG delivery numbers through Sept:
Tesla, at ~320k total yearly deliveries in ~Sept, is:
• ~1.5x larger than Porsche (anybody want to argue Porsche doesn't have market power?),
• Equal to SEAT,
• Half the size of Skoda,
• And within horizon-sight of Audi
And that's comparing to ALL legacy deliveries, not just BEVs. So, yes, Tesla is relatively small, but "relatively" is the operative word.
If sales trends continue, Tesla is on target to get within eyeshot of Audi deliveries in 2021.
(3.) The bigs are soooo far ahead of TSLA! Mmm No.
Key point: The Bigs are scrambling to build new BEV platforms ... and they need new factories to produce those BEVs!
But first, the Bigs have to scramble to woo a limited set of BEV parts companies into strategic partnerships/JVs - again, this is from Sept! Tesla has has already been doing this for a decade and is moving to in-house w/vertical integration; that's a MASSIVE head-start, possibly unassailable, and similar to Amazon's logistics advantage.
Next the Bigs have to build the factories -
notice how closely VAG's plan resembles what Tesla is already doing (and done)!
And it's not lost on VAG that their top competitor is Tesla! They're designing their vehicles to directly compete with Tesla's products:
Product Nerd Bonus: Customer Segmentation
So who is VAG targeting and who do they think their new BEV customers are?
High education, high income urban males coming from ... Tesla!
One might wonder ... what happens if VAG can't woo over these "conquest" low-resistance buyers?
Well, then VAG is probably left with trying to sell YOU a BEV 
DISCLOSURE
I have no position in TSLA and never have; I don't own a Tesla and never have; I'm not considering a Tesla in the near future, rather a Porsche Macan. So basically I don't give a shit about Tesla other than it's a fun company to analyze from an industry and investor lens, especially since so many people get it wrong and have gotten it wrong.