Pascal Le Segretain/GettyTesla CEO Elon Musk
Mercedes will compete with Tesla in 2018 in three key areas: electric SUVs, at-home batteries, and electric trucks
- Tesla has generated brand loyalty and excitement for sustainable tech, but Mercedes thinks it can win on execution
It’s hard to go a day without seeing a headline about a company that’s going after Tesla.
But it’s far from surprising that so many are looking to emulate the Tesla secret sauce. For a company that built 83,000 cars last year, a fraction of what GM and Ford sell in a quarter, Tesla has witnessed meteoric rises in its stock price.
People are enamoured with the Tesla storyline: Elon Musk’s commitment to building a company that can profit while ultimately serving the good of the planet.
So while Musk continues to thrive on the premise of selling the future, many are hoping to beat Tesla when it comes to execution. Daimler, the parent company of Mercedes, has already said so much.
Musk ‘isn’t threatening us’
Musk is a certifiable professional at popularising concepts that have already existed and failed to gain mainstream appeal. The electric car is the obvious example; Tesla was the first to prove an EV could be sexy.
But it’s apparent with other nascent technology as well, like the solar roof. SunPower and Dow Chemical all tried, and failed, to make the solar roof a reality. It’s not clear what kind of demand Tesla has seen for the solar roof, but it certainly got more media attention than any attempts of the past.
Mercedes took a direct shot at Tesla’s solar and battery push in May when it announced its partnership with Vivint Solar. The German automaker will use the partnership to introduce its at-home battery option to the US market, while Vivint will provide solar installation.
This is the same model first coined by Tesla when it acquired SolarCity last November, allowing it to combine solar installation with its Powerwall sales.
Now that Musk has gotten people’s attention about certain products, Mercedes is looking to adopt Tesla’s strategies and win by exploiting Tesla’s biggest weakness: a lack of infrastructure to support Musk’s big ideas.
Boris von Bormann, CEO of Mercedes’ energy division, made that much clear in a previous interview with Business Insider:
Mercedes is “not a startup. It’s not a stock-value-driven company with some velocity behind it that can go one way or another. It’s really a mature company that will be there — and will be there for the foreseeable future. That way, you feel trusted and have a quality brand where you get support whenever you need it.”
Von Bormann’s comments echo those made by Marc Llistosella, head of Daimler Trucks Asia, when asked how he feels about the competition Tesla poses in the electric trucking space.
Mitsubishi FUSO, a Daimler trucking brand, is launching a limited series production run of its electric semi-truck this year with plans to begin mass production in 2019. Tesla plans to unveil its own semi in September.
“In trucks, of course [Elon Musk’s] stepping into it, but we don’t see him as someone who is threatening us because you need a whole infrastructure,” Llistosella previously told Business Insider. “You need dealerships, you need infrastructure, you need maintenance. It’s not so easy like a consumer good, it’s an industrial good, so it will be very difficult for him.”
Daimler is positioning itself to go head-to-head with Tesla on all fronts. Not only in nascent spaces, but also in the luxury car market: Mercedes will release an electric SUV in 2019.
Both Daimler execs reveal that the company plans to beat Tesla by exploiting its greatest weakness: an inability to launch products on a mass scale.
Manufacturing arms race
Tesla does have a noticeable weakness when it comes to manufacturing cars.
As Business Insider’s Matt DeBord has pointed out, this is primarily due to two issues: breaking into the car manufacturing business is genuinely difficult, with most automakers investing billions to produce in a month what Tesla can in a year; and Tesla has shot itself in the foot by making overly-complicated car designs, as was the case with the Model X.
Tesla has started hitting its stride with vehicle manufacturing, but bringing a Tesla semi to life requires the construction of a completely different assembly line at a time when Tesla is contending with Model 3 production.
For a company that has struggled to execute on manufacturing, throwing a semi in the mix seems like a massive distraction. That doesn’t even touch upon the infrastructure needed to support trucks, as Llistosella said.
Tesla seems better equipped when it comes to battery production.
The Gigafactory will be highly automated, capable of churning out cells “faster than bullets from a machine gun,” Musk has said. The plant is already producing batteries, but full production will begin in 2020.
Daimler, however, broke ground on its second massive battery plant in Germany in May, Motor Trend reported. The facility will begin production in mid-2018.
Naturally, the main purpose of both battery plants is to support ambitious electric car plans; the home battery division is just a small slice of both companies’ portfolios.
But what’s apparent is that Daimler is trying to beat Tesla on all fronts simply by having the better supply and infrastructure.
Tesla has had quite a run as the only valid contender in the luxury, electric space. That’s bound to change as early as next year as major brands like Mercedes pose competition on all front, from electric SUVs to at-home batteries, with better supply and distribution.
If Tesla can’t supply the demand for the products Musk has generated excitement for, Daimler is poising itself to step in as the next best luxury provider.