Six automotive giants to pass Tesla in the electric car market by 2021

25 July 2018 6 min. read
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While at present Tesla is unparalleled in the market for electric cars, the company can expect to come up against stiff competition in the coming years, as large car manufacturers previously uninterested in the electric vehicle (EV) market invest hundreds of millions into the sector. According to new research, a number of keystone automotive names will have surpassed Tesla by 2021, with Daimler and BMW expected to take pole position in the e-mobility market.

A new PA Consulting Group report has analysed how well car manufacturers are performing within the electric vehicle segment. In order to rank the competitors, the researchers assessed the parties with respect to six key success factors, which together determine the e-mobility potential of the car manufacturers. It concerns the aspects of technology and strategy (weighting factor 30%), battery technology (20%), culture and incentives (10%), financial performance (10%), supplier network (15%) and ecosystems and partners (15%).

An analysis of the scores awarded by the most important car manufacturers shows that Tesla will still be the market leader in the electric vehicle segment in 2019, but will fall back to seventh place by 2021, as mainstream manufacturers enter the arena prompted by policy changes across major markets such as France and the UK. Daimler, fifth in the ranking in 2019, is expected to take the lead by 2021. German manufacturers will do well in the next three years: German players Daimler, BMW, and VW are expected to arrive in the first, second and fourth place by 2021.

Electric is the future

In the coming years the larger car manufacturers will invest billions in the further development of electric vehicles. The expected number one in the ranking in 2021, Daimler, will invest some €10 billion in electric cars in the coming years. This investment will have to ensure that every type of Mercedes-Benz gets a fully electric or hybrid variant by 2022. In 2018 Mercedes will open its sixth battery factory again.

Renault Nissan Mitsubishi, in second place in 2019, is expected to drop a place in 2021, to third. The three car manufacturers, who together form the Franco-Japanese strategic partnership 'Alliance 2022', announced plans at the end of last year to produce twelve fully electric models until 2022. They also want to develop forty self-driving models. As of January 2018, the Alliance, if taken as a single entity, became the world's leading plug-in electric vehicle manufacturer, while also at the start of this year the three parties announced that they would invest around €1 billion in a fund for start-ups in the coming five years. The fund will invest in new developments in the field of electric driving, self-driving cars and artificial intelligence.

Six automotive giants to pass Tesla in the electric car market by 2021

The current number three, BMW, will rise by one place come 2021. At the end of 2017, the German car manufacturer announced that by the close of play in 2019 it would already have sold half a million electric cars (fully electric and hybrid models). BMW Group expects that by 2025 about 15% to 25% of sales will consist of electrified models. BMW recently signed an agreement worth €1 billion with China's largest manufacturer of lithium batteries.

Volkswagen – which also owns Audi, Seat and Škoda, among others – is now ranked seventh, and is expected to be at number four by 2021. The famous German corporation announced in late 2017 until 2022 a total of €34 billion will go into the development of electric and self-driving cars. VW also announced that it would have an electric version available for each of its three hundred models by 2030. Volkswagen CEO Matthias Müller said he would like to launch more than eighty new models with electric propulsion over the next eight years; fifty fully electric cars and thirty plug-in hybrids.

Volvo, which looks set to rise one rank to fifth by 2021, recently announced that by 2019 all its new cars will be fully or partially powered electrically. Volvo Cars and owner Zhejiang Geely Holding Group also invested around €640 million in the first phase of the product, brand and industrial development of the Polestar electric vehicle brand.

Strong competition

Due to the fierce competition from established car manufacturers, it is not surprising that Tesla is predicted to slide to a middle position in the automotive stakes in 2021. Commenting on the prospective seventh position Tesla faces, Thomas Goettle, Head of Automotive at PA Consulting Group, said that the uncertainty with which Tesla currently has to deal is a major problem for it. For example, the company faces production problems related to their long-awaited Tesla 3 model and there is a low profit forecast. At the same time, workforce satisfaction is at a historic low, with relations between staff and CEO Elon Musk strained at best. Things reached a notable low last year at the company, following a memo in which the tycoon notoriously suggested he would see staff receive frozen yoghurt if they rejected unionisation efforts.

In any case, it is certain that electric driving and, in a broader sense, e-mobility will receive more and more emphasis in the coming years, especially in view of the set objectives in the climate policy initiated by the EU, but also the call from consumers and companies to more sustainability. At the European level, targets for reduction of CO2 emissions, energy saving and the development of renewable energy are set for 2020, 2030 and 2050. In April 2018, the European Parliament adopted, by a large majority, new climate legislation to meet the Paris climate goals.*

Goettle commented: "Achieving CO2 targets and improving the future mobility performance of car manufacturers go hand in hand. However, this challenge has enormous consequences for the human resources of the companies. Our research shows that the roles of 267,000 employees at 16 brands across Europe come under pressure, 141,000 of whom need to be retrained or retrained - all in the next decade... In order to improve their future mobility performance score and meet the CO2 targets by 2021, car manufacturers need not only to speed up and adjust their new product development, but also create value in their supply chain and increase sales through customer focus."

* The legislation focuses specifically on the emission of greenhouses in the agricultural, transport, waste, and construction sectors and buildings. Member States are obliged by this legislation to reduce emissions from 2021 through annual targets. In 2030 emissions in these sectors should be on average 30% lower than in 2005. In June 2018, the Member States and the EP also agreed that in 2030 32% of the energy generated in the EU should be sustainable.