Tesla received a lot of reservations for its mass-market car Model 3, and this can be seen as a potential threat to German automakers such as Audi, BMW, Porsche and Mercedes-Benz, which have long dominated the world’s premium automotive ranks. The Model 3 debuted in April, and more than 325,000 customers deposited $1,000 with the company in that week alone.
Tesla a threat to German brands
Tesla’s Model 3 stands to threaten German automakers in a way that Toyota’s Lexus never did, says Bloomberg. Stats such as 200 miles on a single charge and the $35,000 starting price align it with GM’s Chevrolet Bolt. Tesla’s most affordable car to date should be considered capable of competing with luxury mainstays such as BMW’s 3 Series or the Audi A4, said CEO Elon Musk. Car shopping data indicates that there is more to Musk’s claim than just bravado.
Automotive research firm Edmunds.com reports that before making purchase decisions, Tesla buyers shop German luxury brands more than any other car lines. According to Edmunds, almost 30% consider a BMW, and about 20% look at Audi and Mercedes models, while merely 12% shop for a Porsche. Fewer than 6% of Tesla buyers consider a Dodge.
This suggests that customer defections are most likely to affect German brands as Tesla grows. Håkan Samuelsson, CEO of Volvo, said, “Technology-wise, things will probably move back to the U.S. to an extent after Europe was the center of premium carmaking for the past 30 years.”
German electric cars still far away
Tesla has a poor track record in terms of manufacturing delays and persistent financial losses, and this has been a topic of discussion among rival automakers. However, even they cannot deny the fact that Musk’s products excite consumer passions in a way that incumbent automakers have not been able to do for decades.
“The decisive factor is what’s happening inside people’s heads,” Bankhaus Metzler analyst Jurgen Pieper told Bloomberg. “Many see in Tesla the innovation they’re missing from the Germans.”
As Tesla advances and Apple also enters the car business, German brands are under immense pressure of losing market share. For this reason, they have shown off lots of electric concept vehicles recently. In December, Porsche said within the next five years, it will build a fast-charging, four-door luxury sports car called the Mission E. Audi is also planning to directly compete with Tesla’s Model X with its electric E-tron Quattro SUV. Mercedes intends to take on Tesla with four EVs.
However, these cars are years away for now, and Tesla plans to begin delivering the Model 3 in late 2017.