Tesla may be crushed by mainstream car companies in the future

In the past 2020, the American electric car manufacturer Tesla produced and delivered nearly 500,000 Tesla vehicles, and its stock price rose by more than 700%. Its market value was higher than the sum of the market values ​​of major automakers General Motors, Ford, Toyota, Fiat Chrysler and Volkswagen.

However, some analysts pointed out that Tesla is still far behind mainstream automakers. In the face of tens of millions of annual sales in the global auto market, Tesla's annual sales of 500,000 are difficult to resist the powerful force of mainstream automakers' transformation. At present, the development of electric vehicles is accelerating, and industry competition is becoming increasingly fierce. If Tesla cannot quickly "cure" the "growing pains" caused by the rapid development and maintain the competitiveness of its products, then when mainstream automakers catch up, it may be difficult to avoid the fate of being "crushed".

Production and sales volume is a "pain point"

Some analysts believe that the rise in Tesla's stock price is mainly based on investors' optimism about its electric vehicles and other technological development trends, but Tesla's performance is not enough to support such a high stock price increase. Its stock price has risen to an unrealistic level and is obviously overvalued. It will be difficult to see such a high increase again this year.

Tesla stock was included in the S&P 500 stock index in December 2020. The US media commented at the time that this meant that Tesla was one step closer to becoming a mainstream automaker.

However, Tesla still has a long way to go to truly become a mainstream automaker. Data released by Tesla at the beginning of this month showed that sales in 2020 increased by 36% to 499,500 vehicles, slightly lower than the previously set annual sales target of 500,000 vehicles. In the first three quarters of 2020, Tesla sold a total of 318,000 vehicles, with sales in the third quarter setting a record of 139,300 vehicles, and a new high in the fourth quarter, exceeding 180,000 vehicles.

Although it is still a step away from the sales target for 2020, Tesla CEO Elon Musk still regards it as a huge success. Musk said on social media that he is very proud of the Tesla team for achieving this milestone. Musk said that when Tesla was first founded, he thought it had only a 10% chance of survival.

Even if the annual target of 500,000 vehicles is basically achieved, Tesla's sales are still far from those of traditional large automakers. The latest data shows that although sales in the US market fell by more than 10% year-on-year in 2020, Ford, GM and Fiat Chrysler are still at the level of 2 million vehicles. In 2020, total car sales in the US market alone reached 14.57 million. Tesla's current production and sales are still low, both in the entire US market and compared with the three major US automakers.

To increase production, Tesla is expanding production capacity at its factories in California, the United States, and Shanghai, China. Tesla also plans to build new factories in Texas, the United States, and Germany.

However, the construction speed of Tesla's German factory has been repeatedly frustrated due to environmental issues. Tesla announced last year that it would build its first European factory in Grünheide, outside Berlin, and planned to start production before July 1, 2021.

It is reported that a German court asked Tesla last month to suspend the forest clearing project at the site of its proposed factory because local environmental groups were worried that it would harm hibernating reptiles. In early 2020, seven World War II shells were found near the site of Tesla's proposed factory, and the project was suspended. Subsequently, a German court again stopped the construction on the grounds of affecting wildlife and hindering drinking water supply. In October 2020, Tesla planned to collect opinions from local residents on the construction of the factory in three days, but it lasted for 8 days and received more than 400 complaints and suggestions.

In addition, the current starting price of Tesla electric vehicles in the United States is close to $40,000, which does not yet have an advantage in terms of price. If it wants to continue to expand sales, it needs to continue to reduce costs, and the new generation of battery technology may become the key to continuing to reduce costs.

According to foreign media reports, Tesla hopes to reduce the cost per kilowatt-hour by 56% through innovations in battery design, raw materials and production, while helping to improve battery performance, including increasing energy density, extending battery life, and increasing charging speed. Musk said in September 2020 that this would mean that the price of Tesla electric vehicles could drop to $25,000 in about three years.

However, Tesla still faces many obstacles in its battery research and development. According to foreign media reports, Tesla's current main battery technology is NCA (nickel cobalt aluminum battery). In the next-generation battery technology research and development plan, the new generation of iron-lithium batteries is the focus, because iron-lithium batteries do not rely on cobalt. Tesla has been studying how to reduce the use of cobalt in batteries for many years, but has not yet achieved a major breakthrough.

Strong enemies coming in force

While Tesla has achieved high growth and won the favor of investors, other automakers are also accelerating their pace of electrification. In addition to the traditional sedan market, some automakers are trying to accelerate their advantages in the electric vehicle field through SUVs, pickup trucks and freight, and Tesla is facing increasing competition.

Data shows that in 2020, sedans accounted for only 28.3% of the entire US auto market, while trucks and SUVs accounted for as much as 71.7%. In the United States, Ford's F-series pickup trucks are still the most popular model, with 787,422 units sold despite a sharp drop of 12.2% in sales throughout the year. It is reported that Ford is currently planning to launch more electric vehicle products around the world, including delivery trucks and F-150 pickup truck electric models.

General Motors is also accelerating its transition to electric vehicles. On January 12, GM said it would produce electric trucks under the new BrightDrop brand, aiming to build a new cargo delivery ecosystem, including electric products, software and services. GM CEO Mary Barra said BrightDrop will provide a smart way to deliver goods and services. GM will also work with logistics giant Fedex to continuously accumulate experience in electrification and mobility applications, jointly test new vehicles, and provide one-stop solutions to provide consumers with better and more sustainable ways to deliver goods.

GM said the BrightDrop EP1 model will be put into use in early 2021 and will be used to transport goods over short distances, such as from vehicles to consumers; the first electric truck, the EV600, will be on the road by the end of 2021.

GM also showed a new fast charging system, the Ultium platform. It is reported that the EV600 is expected to have a range of 400 kilometers. GM also showed the Cadillac electric and Bolt electric models on January 12.

The electric truck business will build a bridge from warehouses to retailers for goods and services, and can also be used for home transportation. GM said that with the promotion of e-commerce, the logistics industry market, including parcel and meal delivery, will reach $850 billion. In addition to GM, US retail giant Amazon is also optimistic about the electric freight market and is preparing to cooperate with electric truck startup Rivian to launch electric trucks.

As electrification develops, the trend of intelligent development is advancing in tandem. At present, both automobile manufacturers and technology companies are planning to enter the autonomous driving car market, and autonomous driving and electrification are closely integrated, and the competitive environment facing Tesla is becoming increasingly complex.

According to foreign media reports, at the end of 2020, in order to help sprint to achieve the annual sales target, Musk said on Twitter that consumers who picked up their cars in the last three days of the year would receive three months of "full self-driving" service for free, and the price of purchasing this service alone was $10,000. It is reported that Tesla is currently selecting some car owners to test this feature on public roads, but car owners still need to control the vehicle when using this feature. Some critics say that Tesla still lacks the relevant sensor technology to achieve fully autonomous driving.

Currently, almost all mainstream automakers and large technology companies are accelerating their progress in autonomous driving technology. General Motors and Amazon have both announced autonomous driving models and have entered the testing phase without the need for a driver.

Last week, the share price of South Korea's Hyundai Motor surged by nearly 20% due to a piece of news. It was reported that Hyundai Motor was negotiating with American technology company Apple to jointly produce driverless electric vehicles. This means that the driverless technology of large technology companies may be commercialized faster.

According to Korean media reports, Apple is discussing with Hyundai Motor about developing electric vehicles and batteries. A Hyundai insider said that the negotiations are at an early stage. Apple's Titan project focuses on driverless technology, but no related business plans have been disclosed yet.

Currently, Hyundai Motor has launched several pure electric vehicles, including Ioniq and Kona electric models. Hyundai Motor said it will launch 10 environmentally friendly vehicles, including electric vehicles, hybrid vehicles and fuel cell vehicles by the end of 2022. According to AFP, Hyundai Motor said that it has received cooperation inquiries from several companies in terms of autonomous electric vehicles.