Tesla Motors: Model X Will Be a Hit in Europe
The electric car market of Europe has not yet caught up as much pace as it has in the US or China. The number of new cars registered in the European Union and the European Free Trade Association last year was 14,202,024. Out of this, only 186,170 were electric vehicles and 234,170 were hybrids as per the European auto association ACEA.
The growth of electric car sales in Europe has in fact slowed down in the current year. Last year, for the first six months, the sales of electric vehicles in Europe saw a 55 % surge.
After the Volkswagen emission scandal, we had been hoping that in the interest of environment, there would be a surge in demand for the zero emission vehicles in Europe as well. However, both the customers as well as the administrative bodies across Europe didn’t look that excited about the new energy vehicles.
Felipe Munoz, a global automotive analyst with JATO Dynamics says, "Some governments in northern Europe where most of the electric vehicles are sold have announced fewer incentives. At the same time there hasn't been any important new launch in the electric vehicle segment."
Lack of competition and the opportunity for Model X:
All in all, the above discussion about the European electric vehicle market indicates that it is one of those markets that are more open to entrants if not completely virgin. This market is still taking shape despite having all the potential to come neck to neck with the US and China. Further, the new launches have dried up. There is no electric SUV on the market and there is more craze for the hybrids rather than the pure electric cars.
This could prove to be a big opportunity for Tesla Motors’ (TSLA) Model X which has just arrived in Europe toward the end of the last month. It could become that much awaited pure electric SUV for the European EV fans. The madness for Model X was very tangible when the automaker had about 5,000 reservations for the all-electric SUV in Europe at the time when it was about to launch it in the US.
Tesla also has a new 78,000 square-meter (840,000 sq-ft) manufacturing unit in Europe which it had opened in Tilburg, Netherlands last year. The factory has a capacity to assemble round about 450 units a week and can cater to some important European countries such as the Netherlands, Belgium, France and Germany. The timing of setting up this plant could prove to be near perfect for Tesla as not many big players are eyeing the European EV market the way Tesla is doing.
Except for BMW, no German (or European for that matter) luxury car-maker has been able to develop a car to match the standards of Tesla’s cars. And Model X is accepted as the most advanced electric vehicle which can compete even with the conventional fossil fuel driven cars in its power, range, comfort as well as price. The major German players are nowhere on the charts when it comes to the annual sales of electric and hybrid vehicles. BMW ranks 12th, Mercedes-Benz ranks 14th while Audi ranks 22nd in that list. Hence, taking this lack of a comparable competitor into account, it seems Model X will soon be the boss in Europe.
However, things are actually brewing up inside certain car making giants’ R&D departments. And this means that the European EV market won’t keep just ambling for too long now. For instance, Volkswagen-owned Audi has announced that it aims to sell one electric car for every three IC engine based cars by 2025. It is now going to invest a third of its R&D budget into electric cars, digital services, and autonomous driving, as reported by Reuters. The company is also planning to reduce the number of conventional combustion engine and transmission variants in order to free up funds for its electric car mission. Audi aims to become a world leader in green transport by 2025.
Therefore, Tesla needs to stay wary of such developments and tighten its grip on the European market soon to maximize the window of opportunity for its Model X which his peerless at the moment.
Western Europe is already well covered by Tesla’s superchargers. Now the rest of Europe remains. Thus Tesla is planning an aggressive expansion of its Superchargers into southern, central, and eastern Europe in 2016. The company had announced its plans regarding this at the start of the year. According to that, new superchargers will be installed in many European countries starting with Poland, Czech Republic, Slovakia and extending the network to Spain, Portugal, Italy, Turkey, and Russia by the end of the year.
Tesla’s latest supercharger installation was done last month in Czech Republic right between the two largest cities in the country, Prague and Brno. This one can also charge vehicles having different charging standards than Tesla’s. Tesla has not yet started to sell its cars in the country. But this installation is indication enough that the company will do so in near future.
Tesla’s own supercharger network is a unique feature enjoyed by only Tesla owners. This feature single-handedly makes Tesla stand out among the competition. And then those cars! They are the best in class. If we talk of this moment, it should be easy for Tesla to conquer Europe. It will succeed in every country where it can set up a sizable charging infrastructure. Europe has the purchasing power and inclination toward clean energy.
The competition is going to grow and somebody might just catch Tesla unawares. But at the moment that somebody is not even in the picture and Model X has all the goods to make it big in Europe.