Tesla Staggers, Nio Pivots; No Easy Road to EV Mass Adoption

Tim Grejtak, Analyst

The promise of cheap and convenient electric transportation is shaping up to be more difficult than even the EV leaders realize. After 13 years, Tesla has finally achieved what it set out to do - manufacture an affordable electric vehicle - culminating with the announcement of the $35,000 base price for the Model 3. Tesla is far from finished, however; to hit its goals the company had to find other ways to reduce costs, like close its brick-and-mortar stores. Tesla is also finding itself playing catch-up with other automakers deploying 350 kW fast chargers, and plans to roll out its own 250 kW upgrade complete with a necessary software-based battery conditioning step to improve charge acceptance. Although roughly 70% of Tesla's vehicle sales occur without a test drive, it remains to be seen if Tesla's altered return policy (vehicles are returnable within seven days or 1,000 miles) will be able to comfort potential buyers.

Tesla Model 3 - Lux Research

Tesla isn't the only leading EV company being challenged on its commercialization pathway. Faced with lower sales of its 350 km-range ES8 SUV, Nio has announced it will abandon plans to manufacture vehicles itself and instead rely on automaker JAC for production capacity. Even established cell manufacturers like A123 are finding it challenging to keep up with the rapidly changing market; while the company has built its business on LFP batteries, it is finding itself joining the same nickel-rich NMC strategy as its competitors.

Lux Research - Nio ES8

It’s challenging for leaders in any field to retain the advantage they built their primacy on, especially as conditions change. Each of these companies took a different strategy to try and hold onto its respective position: continued cost reduction with Tesla, strengthening of partnerships with Nio, and adaptation to new businesses with A123. Time will tell which strategy bears out.