Chinese Carmakers, Volkswagen, BMW Roll Out "Tesla Killers"

Tyler Durden's picture

The much anticipated Tesla Model 3 has yet to be released and already a groundswell of electric car competition is forming to challenge Elon Musk's upcoming offering. Start in China, where the Model 3 is not due to arrive until next year, but already Chinese-funded, smart, connected plug-in car start-ups are scrambling to launch "Tesla killer" cars to go head-to-head against Tesla "mass market" sedan.

In taking on the monopoly, yet cash-burning premium electric car juggernaut that is Tesla, the key for leading Chinese electric vehicle start-ups such as Future Mobility, WM Motor and Singulato Motors, is that they will produce their cars locally, making them better able to match the Model 3's price, Reuters notes. Tesla is expected to price its Model 3 from $35,000 in the United States. Buyers in China would expect to add 25% to that in import tariffs.

The Chinese strategy is simple: beat the Model 3 in China by making their cars more premium but cheaper than Tesla's mass-market all-electric battery car.

The three start-ups see Tesla's weakness in its inability to produce cars in China, the world's leading market for plug-in cars.

Speaking to Reuters, the founders and CEOs of Future Mobility, WM Motor and Singulato acknowledged the Model 3 is the car to beat. The first vehicles they aim to launch in the next couple of years will be priced around 300,000 yuan (roughly $43,500) or below, they said ahead of the Shanghai auto show, which opens to the public on Friday. "Between 200,000 yuan and 300,000 yuan," said Singulato's co-founder and CEO Shen Haiyin.

Daniel Kirchert, president and co-founder of Future Mobility, says his company plans to launch three models. The first, a premium midsize crossover sport-utility vehicle (SUV), will arrive "before 2020", followed within three years by a sedan and a 7-seater multi-purpose vehicle (MPV).

 

All will be based on the same vehicle underpinning architecture and share major components, "to achieve this very attractive entry price of about 300,000 yuan," Kirchert told Reuters in a telephone interview. 

 

"It's a bit more than $40,000, a very competitive price positioning ... because Tesla customers buying the Model 3 in China would have to shoulder the cost of a 25 percent import tariff on the car", unless it's produced in China, he said. "We will be competitive because we produce the car locally," he added.

For now Tesla has denied recent talk in China that it was considering manufacturing its cars locally. "Tesla is deeply committed to the Chinese market, however these rumors are not true," the company said. However, even without local production, Tesla will be no pushover. It this month overtook GM and Ford Motor in market value as investors focus on the "story", ignore the soaring cash burn and embrace Elon Musk's strategy of offering stylish, high performance cars that are continually upgraded (if delayed) with features that rival automakers are still only testing.

Tesla has to date competed only in premium price classes at relatively low volumes. The Model 3 will need to appeal to more price-sensitive consumers to reach its projected annual sales of 500,000 vehicles.

The Chinese automakers are winning to accept the challenge. As well as making its car in China, at a planned assembly plant in Nanjing, Kirchert said Future Mobility plans to make the SUV bigger than the Model 3 and more luxurious. "In the end, it's really about how premium you are. That's the real challenge."

Singulato Motors unveiled its first "mass-production" car, also a crossover SUV, in Beijing last week, and says it will be priced below 300,000 yuan. It has started taking pre-orders for a limited period from customers willing to put down a deposit of 2,017 yuan.

WM Motor plans to launch its first car, an electric plug-in crossover SUV, in the second half of 2018, again priced to compete with the Model 3, co-founder Freeman Shen told Reuters. The car will be the first of three electric vehicles the Shanghai-based firm plans to launch by 2020, by which time Shen says WM Motor should be selling around 100,000 cars a year.

* * *

It's not just Chinese competition that is coming: Germany's biggest carmaker Volkswagen, which plans to roll out four affordable electric vehicles in the coming years, also unveiled a battery-powered crossover at the Shanghai Auto Show. A mix between a four-door coupe and a sports utility vehicle, the new I.D. Crozz SUV is the third model which will be sold under the I.D. sub-brand.

The crossover will compete with Tesla’s Model X, which the US manufacturer started delivering in 2015. According to the head of the VW marque’s electric car project Christian Senger, the company has made “huge progress” in reducing production costs of its all-electric vehicles. VW has pledged that the I.D. line will cost about the same as its diesel models.

"Offering our electric cars for prices similar to combustion engine vehicles really is a game changer,” Senger said. “We’re using the need to step from combustion engine to electric cars to reinvent VW brand.”

A full charge will give the car a range of more than 300 miles. The I.D. Crozz can be charged up to 80 percent capacity from a fast charger in just 30 minutes. The vehicle can switch to an autonomous driving mode with a push on the VW badge in the middle of the steering wheel, which then folds automatically into the cockpit. The car then maneuvers around based on signals it gets via laser and ultrasonic scanners, radar sensors, and cameras.

The I.D. line models will be partly developed in China, and will also include a mid-size sports utility vehicle, a hatchback, and a sedan.

The concept of electric cars is part of Volkswagen’s new business strategy to take a leading position in the green transport niche by 2025. In the wake of its diesel emissions scandal, VW announced last year it's phasing out up to 40 vehicle models. The company pledged to invest €10 billion into ride-sharing technology, electric cars, and automated driving. The automaker said it hopes to launch 30 new electric car models within a decade.

And then there is BMW whose “iNext” or “i5” will be a sedan sized between BMW’s 3 Series and 5 Series to compete with the Tesla Model 3 across global markets.

In short: while Musk may still enjoy a near monopoly in the premium and - soon one hopes - the highly coveted mid-range EV space, the competition is rising. Meanwhile, as the WSJ calculated over the weekend, to back into its valuation, Tesla will have to quintuple the number of cars it sells, earn margins equivalent to those of its highly efficient competitors and not sell new shares." It is also priced to perfection: should any of these variables be adversely revised, be it lower sales, lower margin, lower selling price, and Tesla doesn’t come close to earning enough to get to 10 times the multiple of its bigger rivals by the end of 2018.

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hsun85's picture

looks like another Zune Player

mily's picture

Or Microsoft Windows Mobile 6.5, "We're selling millions" (c) steve ballmer

Richard Chesler's picture

Competition?

Obongo must be soooo pissed.

BaBaBouy's picture

Invest In The BATTERY Tech...
They all Need It...
Everything today NEEDS L-Ion..

Got COBALT ???

Mercury's picture

Someone please explain to me:

When I drive my electric car north for four hours to go skiing in January, where does the heat come from?

Anopheles's picture

The heat comes from you sweating when you have to walk to find the nearest tow truck when your car runs out of power after 3 hours of driving... 

jcaz's picture

Hey look- another snowflake CEO who believes that his savior is the Chinese market...

China will have the 3 knocked off and be selling "The Tres" by the time Tesla finally admits the real price point is closer to $65K than $35K.....

Four chan's picture

hybred is the way to go 50k 918's for every american.

SilverRoofer's picture

The USA should put that 25%tarrif to use on all China products and cars sold in the us.if they can do it we should

Arnold's picture

Your comment deserves some sort of special recognition.

napper's picture

There is only one Sun in the solar system, man.

clade7's picture

..Elon Musk is a social warrior out to save Mankind from themelves and eventually the Planet from us....I took one for a test drive once...pushed the cigarette lighter and the damn thing went into autopilot and drove me straight over to Yul Benners gravesite!

EvilScientist's picture

I suppose the best way would be to incorporate  something like an (bio)ethanol burning independent vehicle heater / park heating that runs while you are driving. These things already exist and are kinda important in winter in colder areas if you don' t want to drain the batteries to rapidly and forego maybe 1/3 or even half of your reach.

FireBrander's picture

Great News! I was just thinking the other day that what the world reeeeaaaly needs is $45,000 electric cars!

FireBrander's picture

Sub $15k electric cars:

>Off the shelf:

1. compact car body.

2. industrial electric motor.

3. high end, lead acid batteries.

4. 10hp liquid cooled gas engine to charge the batteries (if they fall below a certain %), the AC pump, and generate heat for cold climates.

Bingo; super cheap, clean running commuter vehicle that uses very little gas and is perfect for sitting in traffic as the engine uses no energey, and does not pollute, when idle.

Anopheles's picture

Bingo !!!

That's been my though all along.   A small generator, even diesel, running at a constant speed is very efficient, and would only be used as needed, and to extend range.   On the highway, most cars today only need about 10 to 20 horsepower at 60mph. 

FireBrander's picture

The car could be designed for warm climates only and skip the liquid cooled engine, heat exchanger plumbing, and just go with an air cooled lawnmower engine to lower the cost even more.

Anopheles's picture

Yes, but water cooled are more efficient and quieter because of the water jacket.  There's also more flexibility mounting the engines.  Air cooled you still need ducting and fans for air circulation for cooling.    Look at snowmobiles today, a lot of them are water cooled now.   

ClassicalLib17's picture

Only ignorant leftists buy BEV's. Why not wait and buy an Elio when they come out? Much more practical IMHO.

https://www.eliomotors.com/fleet/

FireBrander's picture

Elio has been taking "Pre-orders" forever...are they ever going to ACTUALLY deliver a car?

If, one day, that website goes "404" and the "Pre-order" money goes with it; I won't be surprised...

asteroids's picture

Looks like an interesting way to die on the highway when you get run over by a Model-X

jcaz's picture

Good idea, FireBrander-  in fact, I already own one- it's made by Club Cadet-  mine even has a hand-powered ball washer.......

MEFOBILLS's picture

The Nautilus engine would be perfect for a small generator, since it runs most efficiently at one speed:

(Homogeneous Compression Ignition)
(Homogeneous Charge Compression Ignition)

http://nautilusengineering.com/nautilus-cycle

If this engine works out, and it looks like it will, then it is a big step up in efficiency and emissions for internal combustion.  The engine is lightweight, simple, and could be built at low cost.


Wrenching Away's picture

That already exists, but even better. Its called buying a used Chevy Volt, that's what I did recently. I got a 2012 with 45k miles on it for $13k. I can go 38 miles on battery power (which is far enough to get me to work and most of the way home), and then the engine kicks on and it continues to drive normally. The car can be used for a road trip or whatever, just like a normal car.

FireBrander's picture

the battery is 5 years old...8 years is the life number being kicked around...and ~$10,000 is the number I'm finding for a new Volt battery install...I think you made a bad investment.

aliens is here's picture

Wow, 10 grand for a battery just to save a few miles each day. No thanks.

Wrenching Away's picture

8 year 100k mile warranty on battery, I will be only keeping it for a few years and then will buy a used version of the new model. No worries. Plus I own a repair shop, so can replace the battery myself if i had too, we do Prius batteries all the time here. Oh, and by the way, cars are not investments, they are depreciating assets.

There is one reason only that I bought it, for security. I could care less about the cost of gas for driving back and forth to work, but I do care if I'm not able to buy gas at all. I know most people don't think the fuel shortages of the '70s could happen again. If they do, it gives me a little piece of mind to be able to go 38 miles without gas.

de3de8's picture

Good luck with that considering packaging and weight

Anopheles's picture

Do you realize the battery in a Tesla Model S weighs over 1200 pounds?   And you think a 100 pound generator is heavy when you can reduce battery size? 

FireBrander's picture

For a gas/battery commuter car, 60 miles worth of stored electricity is probably overkill. since the engine can charge the battery, 25 miles of stored energy is probably enough. If the gas engine can maintain the battery level (at a predetermined minimum) in city driving until it runs out of gas; you're good to go.

Mind blowing amount of gasoline is burned just sitting still across this country...that is where an electric car wins hands down.

FireBrander's picture

Guys have been building crude lead acid electric cars in thier garages for decades; surely a real car maker can build a commuter electric for sub $15k.

Offthebeach's picture

Long coal!

( you know, until those disruptive windmills thingajigs take off.  Those and tide catching dams across the Gulf of Maine.  Whales, Eagles schmegles!  We're talking environent here.  What's mire green than rotting eagle, hawk, whale, seal carcasses?)

MAAAHM's picture

Might as well flood the oversaturated market with useless overpriced autos. Thankfully our government motors never tried this and failed, oh wait..

Fisherman Blue's picture

Thes eshits cost 70 before .Gov subsidies . I will pay 20 but no more.

giovanni_f's picture

Looks like the US strategic industrial-economic warfare team has to pull yet another volkswagen-diesel trick to avoid superior products from Germany take too much market share.

Hey Trump, you goddam Kushner-flipped, war-monger turned GS puppet - wake up already and let the EPA stage some hilarious multibillion lawsuit attack against those ruthless  Nazi car producers who most unfair violate our regulations by this inflicting enormous harm on our citizens.

Oldwood's picture

So much for protectionism....25 percent tariff into China? Free trade....Oh yeah.

clade7's picture

Great!  Another ZH "Car" article!  Que up the usual old bastards getting '65 mpg off a 96 Geo Prizm!'  We love those stories!

yarpos's picture

and in reality not one let alone a queue ( I assume that was supposed to be queue)

DavidC's picture

Yup, that'll be why Tossla is up 1 1/2 % today.

Sheesh.

Davidc

Arnold's picture

Chevy Bolt.
If you must drive a golf cart.

FireBrander's picture

The Chevy Volt...LOL.

Years back, the CEO pronounced that the Volt was "The Future of GM"...then it was reported to be a $45,000 car...lol...yeah, that's GM"s future...failure to build what the market really wants...the Volt is a monument to the EGO of the executives...if they really wanted to build a "future electric car" it wouldn't be as complicated as a spaceship and cost ~$45,000....

ToSoft4Truth's picture

"future electric car"

 

Saving GM doomed us to 1940's technology. 

 

BMW and the Chinese cars will cost 35% more so no help there. 

Arnold's picture

It'll be ok, we have 500 years of coal reserves.

I believe I saw my first and last Volt at Epcot, back when I had dark brown hair, and lots of it..

http://www.motortrend.com/cars/chevrolet/bolt-ev/2017/2017-chevrolet-bol...

Arnold's picture

I'm a vintage HiLux with the twin MaDeuce option fanboy, myself.