Sizing up the competition: Is Tesla’s product unique?

William Lowry, CFA

Making sense of Tesla: An investor's guide to a unique company (Part 2 of 7)

(Continued from Part 1)

Tesla’s competition

Tesla (TSLA) is significant in terms of technology and finance, with its $26 billion market capitalization. Let’s take a look at Tesla’s competition.

Tesla’s investor presentation shows the above vehicles to be Tesla’s competitors, defined as “large luxury vehicles.” The luxury brands include Mercedes Benz, Lexus, BMW, Audi, and Porsche, owned by Daimler AG (DAI), Toyota (TM), BMW Group (BMW), and Volkswagen (VOW). Volkswagen owns both the Audi and Porsche brands. For context, I’m going to include the offerings from Ford (F) and General Motors (GM).

The key attributes of Tesla’s best-selling Model S are range, acceleration, and affordability, at a $62,400 starting price. For comparability, I’ll also look at the overall length, which, for the Model S, is 196.0 inches. The range of Tesla’s model S is 265 miles, and its acceleration is 0–60 mph (miles per hour) in 4.7 seconds. This is what the company presents as the defining aspects of the Model S.

Competing products

Here’s a quick sampling of competing products available now on the market.

Starting from the left of the chart, the Mercedes Benz S-class car is presented as a competitor in this segment, with a length of 206.5 inches, acceleration of 0–60 mph at 4.8 seconds, and a range of 358 miles city driving. However, the S-class engine is old-school, with neither electric nor hybrid available. The S-class starting price is $94,400.

The Lexus LS is 200 inches long, accelerates 0–60 mph at 5.3 seconds, and has a range of 374 miles. Interestingly, Toyota, which owns the Lexus brand, doesn’t offer a hybrid or electric version of this vehicle. The base model is offered with a gasoline engine.

The BMW 7 series is on the chart, but the 5 series is also a close competitor to Tesla’s Model S. The BMW 7 series is 200 inches long, accelerates 0–60 mph in 5.6 seconds, and has a list price beginning at $84,300. The hybrid series has an mpg (milage per gallon) of 22 in the city versus the gas version’s only 19 mpg. This is a surprising lack of difference, considering you pay thousands more for the hybrid option.

The Audi A8 is 202 inches long with acceleration of 0–60 mph in 5.5 seconds and a 418 mile range with its 23 gallon gas tank. No hybrid model is offered. Audi does offer a hybrid A6 model, but it’s not competitive against other hybrid options. The A8 starts at $75,100.

The Porsche Panamerica e-hybrid is a 197-inch-long vehicle with 0–60 mph acceleration in 5.2 seconds. Its list price starts at $99,000. The MPGe (miles per gallon gasoline equivalent) is 50. The hybrid’s electric-only range is 22 miles and, with gasoline, it will get you over a 500 mile range.

At this point, let’s look at some of the offerings that focus on on electric or hybrid models. Ford’s Focus Electric offers an MPGe of 110 and initial range of up to 76 miles per charge. The starting price is $35,170. It’s 171.6 inches long. Toyota’s Prius Plug-in 2014, a hybrid with a plug, has an 11 mile range in electric-only mode and an overall range of 540 miles. The Prius plug-in is $30,800. The Chevy Volt is a hybrid with electric-only range of 38 miles and a total range of 380 miles. It’s advertised at $34,185. The Chevy Volt is 177 inches long.

Tesla’s unique product

Tesla’s product is unique.  There are no all-electric vehicles offered in the luxury segment.

Continue to Part 3

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