At the end of 2016 there were about 2 million of electric vehicles worldwide, double of that in 2015. Encouraged by government incentives and growing worldwide consumer demand, almost every major automaker is currently working on the launch of electric vehicle (EV) models. Bloomberg Energy Finance forecasts that by 2025 EVs will be as cheap to buy and to run as gasoline vehicles and that by 2040 their number will increase to 530 million (or 54% of new car sales, 1/3 of total vehicles on the road).
Tesla is already well-established in the premium electric vehicle segment with its Model S (a large sedan), Model X (a full-size crossover SUV) and Model 3 (a mid-size sedan costing $35,000, with 215 miles range and 0 to 60 miles in 6 seconds). The latter is initially scheduled to be released in August 2017 with 100 cars, with production increasing to 20,000 by December 2017. But with almost 400,000 reservations for Model 3, Tesla will have to re-study its production strategies.
Volvo's announcement, that starting in 2019 it will only produce hybrid or electric car models, is a real challenge to Tesla. The plan calls for old models to be redesigned or simply retired, with complete conversion of the fleet to be completed within five years. Considering that Volvo sells about 500,000 cars per year - 7 times more than Tesla - its economies of scale will give it an advantage in scaling up production of electric vehicles.
Tesla is still ahead in battery production and technology as well as software, but other players are catching up rapidly. Responding to Tesla and Panasonic’s Gigafactory venture, Mercedes-Benz’s parent company Daimler has recently unveiled construction of its second battery factory for EV production. With an investment of €500 million and an expected 1,000 workers, the factory will facilitate Mercedes’ commitment to launch 10 EV models by 2022, from economy hatchback to electric trucks. In addition, Daimler has invested $740 million in a similar battery factory in China and is partnering with Korea’s SK Innovation.
Porsche, Jaguar, BMW, Volkswagen and other premium automakers are also planning releases of new long range EVs by the end of the decade. Audi has announced the e-tron quattro sports SUV (310 miles on a 90 kWh battery) coming in 2018 and the e-tron Sportsback in 2019. Porsche’s Mission E sports car (0 to 60 miles in 3.5 seconds, 310 miles range) is expected to enter production in 2019. To prepare for it, the German automaker has begun deploying 350 kW fast-charging stations. Porsche expects 50% of their production to be fully electric by 2023. BMW has already extended the range of i3 model from 118 to 186 miles and expect additional 60% boost in range in 2018/19 models.
While the early EV models were targeting high-end luxury vehicles, the major competition for mass market vehicles has begun. VW is touting its EV entry with I.D. Concept series as having better range (~250 miles on paper) than the Tesla Model 3 and lower cost (by about $7,000). However, the Tesla Model 3 is due to be shipped soon while the VW entry is still at least a year away from production and, at this moment, there are only plans to sell it in Europe and China. General Motors has released their fully electric Chevrolet Bolt hatchback with a 200 mile range and a $30,000 price range after $7,500 tax credit. The Nissan Leaf and Fiat 500e also cost about $30,000 although they have a limited 100 mile range.
Contributors are Elena V. Timofeeva, Carlo. U. Segre and John P. Katsoudas.