1 Auto Company Tesla Motors Should Be Afraid Of

BMW is the only company that can compete with Tesla Motors on performance, quality, and price and it's making a big push into the electric-vehicle market.

Feb 24, 2014 at 2:19PM

Bmw I

BMW i3 and connectivity app. Consumers will be able to monitor battery levels while their vehicle is charging. Image courtesy of BMW. 

Tesla Motors (NASDAQ:TSLA) has taken the auto world by storm by developing electric cars from the ground up, and in the process creating a new category of automobile that didn't exist just a few years ago. The success of the Model S, and anticipation for the Model X, have wowed the market and rewarded investors with a 486% gain in the last year alone.

Automakers like Nissan, General Motors (NYSE:GM), and Ford (NYSE:F) have halfheartedly followed suit, creating short-range electric vehicles that are often augmented by a gasoline-hybrid power train as well. But Tesla has mastered the EV market so far.

Tsla Battery Image

Model S batteries are incorporated into the chassis, lowering the center of gravity of the vehicle.

Why Detroit can't compete with Tesla
While GM and Ford have demonstrated an interest to play in the EV market, they're not the players to contend with Tesla in the high-five-figure auto market. The problem is that neither of these automakers provides a performance product to match a Tesla vehicle, nor do they offer much appeal for the affluent buyers who can afford electric vehicles, which is where the market is right now.

Not only is a Tesla Model S an EV that can appeal to the most environmentally conscious consumer, it's a performance machine that stacks up against some of the best sports cars in the world -- that's the key to its success.

From a design standpoint, the big reason automakers aren't making headway against Tesla is that they aren't yet building EV chassis and drive trains from the ground up the way Tesla has done. Tesla built its batteries into the car's floor to lower the center of gravity to increase performance and save space in the cabin. Instead, competitors are jamming battery packs into the existing vehicle design. 

But one company is taking a ground-up approach to EVs and it could be a big competitor to Tesla.

The one company Tesla should worry about
One company that is starting its EV design from scratch and has the ability to meet or exceed the performance of Tesla's Model S is BMW (NASDAQOTH:BAMXF). The BMW i3 has batteries integrated into the floor of the vehicle, opening up the cabin for passengers. It also incorporates carbon fiber that lowers the curb weight to just over 2,600 pounds. That's a ton less than the 4,600-pound Model S (although the i3 is a smaller vehicle).  

Where BMW will be able to compete long term is in performance. Below are highlighted the performance specifications of the Model S and three BMW models: the M5 (BMW's closest conventional competitor to the Model S), i3, and i8.


0-60 mph

Top Speed


Base Cost

Tesla Model S

5.4 seconds

125 mph

265 miles


Tesla Model S Performance

4.2 seconds

130 mph

265 miles



3.6 seconds

190 mph

422 miles 


BMW i3

7.2 seconds 

93 mph

100 miles


BMW i8

4.4 seconds

155 mph 

22 miles electric

310 miles total


Source: Tesla and BMW data sheets

You can see that the i8 stacks up well with the Model S in performance, although it isn't an all-electric vehicle. The i3 isn't quick, but it extends range further than either Ford, GM, or Nissan have done in an all-electric model. It's also priced at an attractive level for many buyers.

At the very least, BMW has created a small line of vehicles that are a viable alternative to Tesla's.  Orders seem to reflect this fact: There were 10,000 orders for the i3 in place by late 2013 and BMW expects to sell out of the model this year. The i8 will be a much smaller production run, but it's also showing well with customers.  

Bmw I

BMW i8, the high-performance EV hybrid. Image courtesy of BMW.

BMW is now Tesla's long-term rival
BMW probably isn't going to take a significant number of customers from Tesla this year or next, but what's important is that it's building a platform that will compete in the future. Look at this as the same stage of development that Tesla was at when it launched the Roadster. It's the next-generation i3 and i8 that will be the real competition because engineers will have the ability to add range and improve performance.

The reason this is important to Tesla is that BMW has the scale and balance sheet to build true competition much faster than Tesla is expanding. If the i-series sells well, and BMW makes a big bet on the future of EVs, then Tesla will have a formidable competitor on its hands -- one that could very well exceed Tesla when it comes to vehicle performance.

There's even an outside chance that BMW could produce more electrified vehicles in 2015 than Tesla, based on current projections. That has to be causing a little worry at Tesla's headquarters in Silicon Valley.

The next frontier for automakers
Tesla and BMW are both eyeing growth in Asia and it's a huge opportunity for products like electric vehicles. As Chinese consumers grow richer, savvy investors can take advantage of this once-in-a-lifetime opportunity with the help from this brand-new Motley Fool report that identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.

Travis Hoium manages an account that owns shares of Ford. The Motley Fool recommends BMW, Ford, General Motors, and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers