Is It Just Tesla, Or Are Things Really Changing?
Is the car industry changing or is it just reacting to competition?
We're sure by now you have heard that a large portion of car manufactures have said that they're switching their lineups completely to electric in the near future. Companies like GM, Volkswagen, Audi, Cadillac, Ford, and even Ferrari plan to be partly or completely electric by a certain time each of them have set. It seems like we are in the times the industry is going to begin to change. The question needs to be asked though, is the industry really changing or is the industry just reacting to Tesla?
Tesla is the company you think about when you imagine an electric car. It has become the poster car for what an electric car is and can be. Tesla has shaken up the industry by offering luxury paired with software and *ehem* gull wing doors on an SUV. They have been smart about how they market their electric cars, it's not just about what drives the car, it's about luxury, performance, exclusive features, and styling. If you aren't attracted to them for being eco-friendly, then you could be attracted to them because of its unique software for example. Then if the car itself doesn't sell you, then you could even be attracted to buying a Tesla because of the personality of the companies CEO, Elon Musk, who has rewritten the book on what influence a CEO can have on his company. He's a man with a dream of what the world could be in the future and he wants to make it happen. It's a story that many people love to align with which has allowed Tesla to thrive. Everything about Tesla is over the top and pushing the boundaries of what was industry, and even world standard before. Even the companies stock price is over the top, which again shows how Elon Musk and Tesla have been able to not only attract peoples attention, but their money too.
One thing we have to keep in mind though is that despite the attention of everyone and the disturbance to the industry standard, Tesla's sales were just shy of 500,000 units and just passed the mark of producing 1 million units in 2020. Compare that to 6.8 million units that GM sold in 2020 and Tesla is no where near the size of sales that an established manufacturer has. Yet Tesla as the top manufacturer of electric cars in North America who only sells 500,000 units per year has caused a big enough stir to make GM change their whole lineup to electric. It is completely baffling that so many manufacturers in the industry are after the same market share. The reason could be that, "Electric cars are the future", but that does not mean that GM's 6.8 million units sold will follow them into their switch to electric cars just because it is the future.
On March 16, 2021 a Toyota representative testified in front on U.S. congress on the switch to electric vehicles. He made three important points that are valuable to consider. The first was that the cost to switch over to electric vehicles as fast as states, like California, want is too high. The second was that the switch would put affordability out of the reach of many consumers. The third was that Toyota came out with the hybrid Prius in the early 2000's. In the 20 years that they have sold it, they have managed to sell only 4 million units in the U.S. The point being, is that the switch to that technology has taken a long time and has been no where close to full market adoption.
Is the industry really changing or are they just reacting to Tesla? It seems like they are reacting to Tesla. From a sales perspective it seems like a full lineup switch is absurd, but from a competitor and market share perspective it seems like they are moving in on Tesla's market share. Ultimately the greatest test of if the switch is worth it or not, is if people buy it. If GM can't match their 6.8 million units sold in one year, then they might reconsider a full switch. Either way, Tesla has come a long way and has changed the industry which has to be admired. Whether that is toward a more green industry, like some have hoped, that is still to be seen. One thing is certain though, Tesla has made everyone ask, "Why can't I summon my Ford to me?" or "Why does my Mercedes-Benz not have auto-pilot?" If we are really honest with ourselves that is the main draw to Tesla isn't it?