It is not easy being an automotive executive today… from government pressure to produce safer and more efficient cars to customers needs to increase connectivity levels and reduce prices at the same time. Let’s not forget about competitive pressure either: startups are entering the space fueled by technology changes such as the electric powertrain. How does an automotive executive go about keeping at least constant profit margins to satisfy investors while investing in R&D to satisfy customer desire through innovation?
To keep up with today's fast paced automotive environment, the ability to innovate quickly is critical. OEM executives rank each other’s innovation ability on different metrics. KPMG, a global consulting firm, surveys automotive execs once a year for its annual automotive report. Last year, they asked automakers to rank leaders in the field of connectivity and autonomous driving to capture that innovative capital. Connectivity and autonomous driving are among the five most important enablers for future success as identified by Mckinsey 2014. Last year, 24.5% of automotive execs believed that BMW was leading the field, followed by Daimler and GM. Tesla was 6th in the list, getting 6% of the votes and Google was last with 0.5% of the votes. Oh and by the way, 0.5% means they received a single vote from one brave car executive… a single vote from the leaders in the car industry... Chery has received two...
This week may have been the most exciting week in the short electric vehicle (EV) history. The Tesla Model 3 was finally announced... and much more was shown than I would have expected from the first of three Model 3 launch events. The promises that were made are exciting: Autopilot standard, 215+ miles range and <6sec acceleration to 60mph... for $35,000. When taking Tesla's quality and brand perception into account, the Model 3 has the potential to become the best car you can buy for $35,000. Well, taking into account that you have already reserved one. With >200,000 orders lined up, you would be waiting over a year after start of production for your Model 3 to arrive if ordered now.
The are three points I want to make today, to prove that other car manufacturers need to start producing competitive vehicles now (maybe with a newly positioned brand). First, current product supply in the full electric car market is so poor that it leaves customers basically with a single option to buy. Second, demand for full electric vehicles is high and will only increase in future. And finally, the decision tree for car manufacturers has changed with the Model 3 introduction.
Sini Ninkovic analyzes the EV market and its customers since 2012. He helped bringing BMW's i3 and i8 to market and currently works as Product Planner for Lucid Motors.