As many of you know, I have of recent become a proud Tesla owner, and the car impresses
me beyond all my expectations. But having also been new to electric vehicles in general,
I wanted to see how Tesla compare to the competition. I like doing my own first hand research, for
example I often ring around car dealerships in the US, to get a feel what is going on
in the industry. Like what is happening about chip shortages, and how much extra they are
overcharging for Mustang Mach Es. I am not one to rely on information, just because someone
I may consider an authoritative on a matter says so. I think it's great they point me
in the right direction, but I want to see the information for myself. Especially when
it comes to investing. Like people who say the Chinese EVs will flood the market with
cheap EVs, I want then to tell me how, and show me real evidence, especially if it's
going to make people start investing in XPeng or some other Chinese EV company.
Now where I live there are limited options as to what is available in the way of EVs.
But for my first comparison I went to Mercedes, so I thought we could research what Mercedes
are doing in the way of EVs. They have an EQA and EQC, of which both were out at the
time, with potential customers getting to experience them, in fact I had to put my name
and number down to arrange a an appointment for a time to come and test drive the cars.
I did however speak to the salesperson for a while, and try and get as much information
as I could, not about the cars so much, but more about the way the market is reacting.
It would seem that Mercedes, at least where I live, have no problem selling these electric
cars. The salesperson told me how much she used to love the Mercedes AMG series, and
the noise of them and the power of the V8s, but now she has experienced electric, she
prefers electric on a whole other level. She has also sold quite a few of them already.
The EQC comes in about US$15,000 more than the Model Y, and obviously has less performance
and range, yet with a larger battery. At 220 miles on an 80 kWh battery, compared to 318
miles with a 75 kWh battery for the model Y. Obviously that is a huge discrepancy. But
we know that Tesla are ahead of everyone when it comes to battery efficiency. Tesla will
always get the most range and performance for the money, even when the competitors sell
their vehicles at a loss.
And this is Mercedes, a company very good at making high quality vehicles, with exceptional
engineers. Anyway, it is what is, we know this, and possibly that within time, this
kind of range will be acceptable when charging is ubiquitous, and as they research further
they can improve their range. Like I say, no one is competing with Tesla. But Mercedes
need to compete with their ICE vehicles in the meantime, before they lose their customers
to Tesla. Now it could be argued that Mercedes are beating Tesla on luxury, except that with
their smaller screens, compared to Tesla, these days screen size does feel like a large
part of what luxury should offer. Perhaps they will learn and get the balance right,
unlike they did on the EQS. I fee like the widescreen, iPad control center is an imperative
element to an electric vehicle.
But some consumers really want Mercedes, and are willing to forgo longer ranges, in order
to stick with their loyal brand. The 0 to 60 time is still 4.6 seconds, which is good
for a Mercedes SUV. They have to realize though, that their aim is to cannabalize their own
products, and not compete with Tesla. They have differentiate themselves from Tesla,
and stick to what it is their existing customers love. Just like how Apple cannabalized their
iPod with iPhone. If they didn't them someone else would. You didn't want to carry a phone
and an ipod everywhere you go, if others offer them both in one.
But clearly Mercedes customers really want electric Mercedes. It's a real shame I didn't
get to drive one yet, as I can't wait to see how they go. There is a real demand for legacy
autos EVs. I think this needs to be acknowledged more, so we can draw more inferences as to
how the future of this EV industry will play out. Of course they have their issues of expensive
batteries, car dealerships and unions. And the fact that they make a loss on every vehicle,
despite how much more they sell them for than Tesla. If they can produce cheaper batteries,
remove dealers and unions, then they can make a profit. Of course with their future battery
technology their ranges should be approaching close to 300 miles hopefully. On the other
hand 220 miles, really is a long way to go. Perhaps 250 miles might be closer. Which for
specifications would place it closer to a standard Model Y, rather than a long range,
which makes that much more expensive, relatively, to a Tesla.
But Mercedes are already this price point, so like I say, Mercedes are competing against
themselves, for the equivalent ICE SUV that Mercedes offer, perhaps the AMG equivalent.
Right the GLC AMG is about the same size, and is $75,000, and has the same 0 to 60 time
as the EQC. And the AMG costs a lot more to run in fuel.
So my point is don't compare the price and specs of a Mercedes EQC with a Model Y, compare
them to the equivalent Mercedes. Mercedes have established a brand that their customers
are willing to pay a certain price point for.
Where I live they didn't have the Mercedes EQS yet, but were expecting it in soon, and
supposedly have had a lot of interest already. I would love to try that car out, I am sure
it will be incredibly luxurious, and supposedly hitting over 400 miles of range too. And I
think at around $120,000. It's not a great looking car, I think Mercedes could have done
better, at least on the exterior, especially compared to the concept cars. But they should
know the luxury car market better than Tesla. But this car is competing heavily against
Mercedes S Class range.
I mean don't get me wrong, I am not saying this is enough to stop any of these companies
going bankrupt. Of course they can't make enough of these cars, they can't make a profit,
and they can't easily remove their ICE business which will soon turn into a liability.
I think we need to look at these brands more like a phoenix. They will go bankrupt, then
out of the ashes, might come some EV business that has a market.
They don't have to beat Tesla, they don't have to even be as good as Tesla. Tesla can't
make enough cars for their own customers as it is. But like I say, they don't make any
profits selling these cars, so they will be relying on the value of their brand. And obviously
Mercedes can get away with higher priced vehicles than a Volkswagen, consumers will pay more
for it. Of course Mercedes also have to have high quality vehicles, which in turn costs
more too.
Remember they are competing at Mercedes price points, offering similar features, quality
and performance. But factor in too, the running costs, no fuel, a Mercedes of equal performance
uses a V8, which might previously put people off. Not to mention no servicing. It is not
cheap to service some Mercedes's.
But Mercedes might be a brand that will survive the EV transition. Remember I said brand,
not company.
They are also spending almost an insane $50 billion in EVs, with ambitions to be all electric
by the end of 2030, and plan on building 8 battery factories with capacity of 200 GWh
a year. Which might be enough for nearly 3 million electric Mercedes a year.
I am getting my head around this more. They need to replace their ICE business, with electric,
obviously. But they can only ramp up so fast. The market and competition may not wait for
them to get there. But Tesla is really going to be the only competition. A Mercedes customer
is not looking for a budget Chinese car. They identify with owning a Mercedes, they appreciate
refined luxury and heritage, along with prestige. Oh and they need to make these cars at a profit.
I am hearing that legacy may be paying around $250 a kWh for batteries, and it sounds like
they have targets to get down to $100 per kWh. If a Mercedes is using 70 kWh, then that
is over a $10,000 saving, which likely could put them at a profit.
But the current model range they offer, they are not going to replace in time. Perhaps
they can pick up to 10 of their best selling types of vehicle, and refine them into some
great electric vehicles, and just concentrate on refining these handful of vehicles. They
seem to have got the message, and once they have electric vehicles up and running, with
enough supply of batteries, then it will come down to getting costs down. They may take
on Tesla's manufacturing techniques like diecast molds, at least within time. But it's possible
the market might support them through the whole transition, judging by what we are seeing
from Rivian and Lucid's market valuations, even the likes of NIOS or XPeng's too. If
the market believes Mercedes can make the transition, and perhaps become an upmarket
EV company, or perhaps the upmarket EV company, then they may be willing to put a $200 billion
valuation on it. Sound absurd?
Imagine if Mercedes make $10,000 per vehicle, gross profit. If they can sell 2 million a
year, then that's $30 billion gross profit. Remind me again how Rivian justified their
valuation?
There is the little issue of FSD of course, and I believe Elon when he says just about
everyone will have to have it, I only have autopilot in my Tesla, and I already think
that is amazing. If there was full FSD, no doubt I would use that all the time. But this
is easily solved by Mercedes adopting Tesla's FSD, and charging network too of course.
Anyway, I thought that was interesting, and may not be RIP all legacy autos, at least
it's perhaps too early to tell just yet.