Examining Tesla's Competition, Part 1: Model S Competitors

A common argument among Tesla Motors (TSLA 1.85%) bears is that while the Tesla Model S is a great car now, a wave of electric vehicles is on its way from the major automakers. At that point, the large-scale competitors would outproduce, outprice, and outperform Tesla, taking away the automaker's mass-market potential and containing it to a niche position.

In considering whether this is a valid point, we need to examine it from the perspective of how competition would affect each of Tesla's current and future models. In the first part of this series, let's look at how well the major automakers are positioning themselves to compete with the Model S.

Top-notch performance
The results are in, and Tesla has nailed its goals with the Model S, collecting MotorTrend's "Car of the Year" award, a 99/100 Consumer Reports rating, and some of the best crash test results in automotive history. Combining these accolades with the benefits of an EV, both in performance and efficiency, has helped Tesla to receive a constant stream of Model S orders. But are other automakers trying to swipe Tesla's top spot? It looks as if it's time to size up the competition.

Ultra-expensive
Porsche (POAHF 2.21%) has developed a powerful electric hybrid supercar. The Porsche 918 Spyder set a record at the famed Nurburgring circuit in Germany, can go zero to 60 miles per hour in less than 3 seconds, and packs nearly 900 horsepower.

If it sounds as if the 918 Spyder could crush a Model S in a head-to-head performance, that's because it could. But at $845,000, the 918 Spyder is hardly a rival to the Model S on a normalized basis, taking price into account. Prospective buyers would have a choice between the 918 Spyder and 10 Model S sedans if compared on a financial basis.

Price-competitive (relatively speaking)
However, the bigger electrically powered threat from Porsche is the Panamera Hybrid. Although not fully electric and still reliant on gas for much of its power, it could provide an option for buyers trying to get that green image but not determined yet to go fully electric. With a starting price a hair under $100,000, the Panamera Hybrid is more competitive on a cost basis than the 918 Spyder. But buyers who want go fully electric don't currently have an option from Porsche to compete with the Model S.

In an effort to develop more environmentally friendly technologies, BMW (BAMXF -3.91%) has launched two new EV offerings: the i3 and i8. With a far lower starting price than the Model S, the i3 shapes up as more cost-competitive with the Tesla Gen III Sedan than the Model S. We'll do a Gen III/i3 comparison in the final part of this series. For now, we'll look at the higher-performance BMW i8 and how it stacks up against the Model S.

Costing more than $130,000, the i8 already sells at a major premium to the Model S. However, despite the performance roots of both the Model S and i8, these cars are fundamentally different vehicles. The i8 takes an all-out performance approach similar to that of the 918 Spyder. With a sports-car body and 2+2 seating, the i8 is clearly not trying to take over the family sedan's spot in the garage, or even the sport sedan's. And like the 918 Spyder, the i8 can go only around 20 miles on electric power alone. After that it reverts to a gasoline-electric hybrid.

Other offerings
Analysts are searching for good Model S comparisons but so far have come up only with vehicles powered partially by gasoline or EVs targeting different price segments. With so few EV offerings compared with the number of gas-powered models from the major automakers, it's not entirely surprising that the Tesla Model S has no clear direct competitor now. As an added advantage for Tesla, the longer this situation remains, the more Tesla can solidify its presence as the top automaker for performance all-electric vehicles. This is a major positive for Tesla going forward, since it gives the automaker a chance to both build a brand name and ramp up production before the majors enter this space in full force.

In the next part of this series, we'll see how and whether the situation differs for Tesla's soon-to-be-released Model X SUV. After that, we'll examine what Tesla's planned Gen III sedan may find itself up against.