The automotive cosmos is ablaze with the latest news revolving around renowned carmakers, BMW and Nissan. If reports are to be believed, both these behemoths officially etched their names in the electric vehicle market. BMW revealed that within the span of the next eight years, the BMW Group, in all probability, will offer a range of 25 electric vehicles, inclusive of the 2020 X3 SUV. Nissan on the other hand, unveiled the revamped 2018 Nissan Leaf, that has been designed to deliver around 150 miles per charge – this estimate is almost double the number of miles delivered by its first-gen battery operated electric vehicle introduced in 2010. The propagation of both the aforementioned companies in the mainstream EV market is likely to establish grounds of fierce competition for Tesla. However, some experts have been speculating that despite the proposed competition, the penetration of rival carmakers in the EV market may prove advantageous for Tesla in the short run.
The conception of a mass EV market is quite a strategic initiative for all the players of the automotive market. In the long run though, for companies like Tesla, this may or may not prove to be beneficial. One of the primary reasons for the same is the fact that while other automakers have the advantage of scale, Tesla does not. For instance, Nissan’s valuation is more than 10 times that of Tesla’s, which naturally leads to a widened gap between the profit margins of both the companies. Currently, Tesla’s profit margin is -7.61%, while Nissan stands at 5.6%. Undoubtedly, Tesla’s revenue is likely to soar once the company’s sales increase dramatically, however, it seems very implausible that the profit margins would ever match up to the likes of Nissan or BMW within a short span of time. And this, according to experts, is exactly the point of dispute here – the company will need to switch competition tactics from innovation to prices, since it is the latter that will help EV market to penetrate the masses.
For the record, Tesla has been the dominant carmaker in the electric vehicle market for the first six months of 2017. The company’s Model S and X apparently accounted for more than 40% of the sales in the America EV industry.
With the exception of Tesla’s possible market status, analysts are of the view that this robust rise in EV production is a news that will bode well for EV industry entrants, as it will bring about extensive consumer awareness, which may eventually translate into sales, with profits pouring in. Also, turning the EV market from a niche business into a mainstream industry will lead to an abundance of investments from all quarters, thereby leading to an upswing in vehicle production and sales.
Saipriya Iyer develops content for Market Size Forecasters. A computer engineer by profession, she ventured into the field of writing for the love of playing with words. Having had a previous experience of 3 years under her belt, she has dabbled with website content writing, content auditing, tech w...