Tesla’s rivals reflect after its market cap soars

Beijing time on February 5, the morning of the news, during several years of turmoil, Tesla gave the bulls to believe the reason, but also give short reasons to doubt. True, Elon Musk has achieved the failed goal of traditional car companies – making electric cars cool – but the companies he leads are inexperienced and face the struggle sought after by established ones. While Tesla watchers are trying to understand why the stock has tripled in more than three months, analysts and Musk’s rivals are rethinking the idea that they can quickly catch up with the Model 3 maker.

Tesla's rivals reflect after its market cap soars

“Tesla is a leader in electric vehicle technology. “They’re way ahead of what we reported, and I think the gap is widening, not closing,” Peter Rawlinson, CEO of start-up Lucid Motors, said in an interview at Bloomberg’s San Francisco summit on Monday. “

The praise echoes recent comments by the CEO of Volkswagen, the world’s largest carmaker. Tesla’s market capitalisation on January 22nd exceeded that of the German manufacturing giant. Two weeks later, its $140.6 billion market value was even about $50 billion higher than Volkswagen’s.

Herbert Diess, VW’s chief executive, told executives at an internal meeting last month that the car would “be the most important mobile device”. He added: “If we look at this, then we will also understand from an analyst’s point of view why Tesla is so valuable.” He lamented that the public’s sense of technology was not so strong.

From automotive stocks to technology stocks

Mr. Rawlinson, who joined Lucid in 2013 and previously served as Chief Engineer of Model S, is not always so optimistic about Tesla than even talking about his former employer’s products.

“I don’t think Tesla is really a luxury,” he said in a September 2018 interview, when Lucid had just secured a $1 billion investment, less than a month after Musk’s privatization of Tesla. Mr Rawlinson said at the time that Tesla was “high-end and high-tech, but not a luxury.” He reiterated his view on Monday that Tesla Motors is lacking in the interior.

But since that interview, Musk has built a leadership position in the U.S. electric car market, which is still in its infancy, and the Model 3 has become one of Europe’s best-selling cars, including electric cars and others. Tesla built its first overseas assembly plant in China in just a year and began delivering locally made cars last month. It is preparing to hand over Model Y to customers by March, months ahead of the original plan.

“We think they’re ahead in battery and electric vehicle technology. Adam Jonas, an analyst at Morgan Stanley, said in an interview that “people don’t think of Tesla as a car stock now, they think of it as a technology stock”, “just like Amazon, Apple and Google.” “

The technology divide

From Volkswagen to GM, automakers around the world are pouring billions of dollars into electric vehicles in an attempt to capture the investment sentiment Tesla has created on the stock market while meeting stricter emissions standards around the world. But the poor range of recent new electric vehicles, including Audi’s e-tron crossover and Porsche’s Taycan, suggests that traditional carmakers are far behind, Mr. Rawlinson said.

“I’m not criticizing the Germans, it’s good that they build these cars and get into the market, but it does show that most of the technological divide still exists,” he said. “

Lucid’s first all-electric Air sedan is scheduled to start production in December, and the company hopes to deliver 15,000 vehicles in its first year. The pre-production version has a test range of more than 400 miles, Rawlinson said.

Musk said on a earnings conference call last week that the Model Y crossover, with a range of 315 miles, would easily beat the Audi e-tron and Porsche Taycan. The EPA estimates that the latter has a range of just over 200 miles.

Mr. Rawlinson says traditional automakers are at a disadvantage in making battery-powered cars because they must continue to spend money and resources on internal combustion engines, which affects their perceptionof of car design and battery pack efficiency.


Even if automakers such as Volkswagen and General Motors have the money to invest in dedicated electric vehicle platforms, they are not paying enough attention to developing their own electric vehicle technology and are lagging behind, he said. Not only traditional manufacturers, but even some electric car start-ups “think that electric powertrains have been commoditized and that this is not a differentiated element.” “

Lucid will soon announce a contract with a major battery manufacturer, but battery chemistry is only part of the battle. Packaging architecture, software, and thermal management are just some of the essential elements necessary to achieve superior range. The company is seeking funding to develop a new electric SUV with Air’s platform.

Meanwhile, Gene Munster, an analyst at Tesla, said that while it was too early for the electric car maker to get a valuation like Apple’s, the comparison would grow as soon as Musk continued to earn more.

“Tesla’s business miracle is rooted in the years when the company operates without virtually no competition,” Munster, a longtime Apple analyst, wrote in a note. Tesla has a nearly decade-old lead in electric vehicles because other automakers are under-invested in the sector. (Ding Hong)