- With the launch of the Porsche Taycan, an all-electric high-performance sedan, we’re going to start hearing a lot about the battle between Porsche and Tesla.
- But there really isn’t any competition in the electric-vehicle market, which remains tiny relative to the global market for gas-powered cars.
- Tesla and Porsche will be happy to benefit from all the competition chatter, but with the first versions of the Taycan priced well above the most expensive Tesla Model S sedans, the automakers are playing in different parts of the market.
- But don’t get discouraged by reality; as more and more electric vehicles arrive, attacking different market segments, consumers should benefit from innovation and enjoy more choice.
- Visit Business Insider’s homepage for more stories.
Last week, Porsche officially launched its much-anticipated Taycan all-electric car.
The German sporting brand, famed for the legendary 911 and more recently the Cayenne SUV, will initially offer a pair of staggeringly expensive versions of the vehicle, which bears more than a passing resemblance to Porsche’s Panamera sedan.
Incongruously, both Taycans bear the “Turbo” moniker, but that’s because Porsche perhaps hopes to fit the Taycan into the overall naming logic of the portfolio (being electric, neither has a turbocharger). The Taycan Turbo stickers at $US153,510, while the Turbo S rises to the stratospheric level of $US187,610.
If that sounds like a lot, given that EVs such as the Chevy Bolt and the Nissan Leaf sell for a lot less than $US50,000, well, welcome to Porsche. The priciest Panamera, the wagon version of the hybrid four-door, comes in at nearly $US200,000. There are literally dozens of other Porsches that crack the $US100,000 ceiling. There’s a reason Porsche posts some of the juiciest and most envied profit margins in the car business. If you want a daily driver, look to Volkswagen (Porsche has long been entwined with VW and is now part of the gigantic VW Group).
Taycan versus Tesla, a ‘rivalry’ that goes way back
Ever since the Taycan was first touted as a concept car, known then as the Mission E, it’s been pitted against Tesla, currently the dominant all-electric automaker, with 2018 sales of nearly 250,000 vehicles. There’s something to this: The EV market, even in the affluent and early-adopting, tech-giddy US, is tiny relative to the gas-powered realm. But Tesla has shown that an upstart brand can validate the prospects of cars that run not on incinerated dinosaur remains but on electrons.
That has given the world’s established automakers a legitimate excuse to pursue electrification, despite the general lack of receptivity among the buying public. (The 10-20% sales penetration that car companies were throwing around for EVs back in 2010 has manifested as something more like 2%.)
But take it all with a grain of salt. Porsche sold only about 8,000 Panameras in the US last year – a perfectly satisfactory result because the vehicle is so expensive. The alternative-propulsion versions of the car make a marginal contribution to that total and are priced accordingly. Even a cheaper version of the Taycan would most likely cost more than the least expensive Panamera, which already costs about as much as the most fully blinged-out Tesla Model S (if you maximally trick out the highest-spec Model S, you’re looking at something like $US115,000).
Sales volumes matter to Porsche, but bear in mind that the company isn’t trying to sell to everybody. In fact, it’s ultimately trying to sell to almost nobody – nobodies who would joyfully cough up six figures to be able to quote Tom Cruise in “Risky Business,” from behind the wheel of a 928: “Porsche – there is no substitute.” Porsche sold about a quarter of a million vehicles in 2018, so it’s not breathing the same rarefied air as Ferrari (fewer than 10,000 in total 2018 sales), but when one goes shopping for a Porsche, one does not bring a lightweight checkbook.
The finest cars made by human hands on planet Earth
What you get for the hefty outlay is the best-driving car on the planet. And it doesn’t matter if you choose the 911 or the Cayenne. I’ve driven a lot of Porsches, and something special always happens when you fire up, for example, the legendary flat-six boxer engine in a 911 and apply throttle: On the asphalt, Porsches are magic. In a recent test of the new Cayenne SUV, it took me all of five seconds to be transported to that transcendent Porsche state of mind. I like to say that if I had to drive for my life, I’d want to be driving a Porsche.
Another reason for Porsche to throw down an electrified gauntlet with the Taycan is that the company, like all automakers, is up against a future of more stringent fuel-economy and emissions regulations. EVs help with overall fleet compliance, enabling continued sales of big-ticket petrol cars. The VW Group overall also has run smack into a major problem with its diesel strategy, in the gloomy wake of its 2015 emissions-cheating scandal. As a result, the group has pivoted to electrification in a major way.
So what should Tesla make of the Taycan?
Not much, to be honest. Tesla proved that EVs could be more than glorified golf carts when it rolled out its sexy original Roadster, and the Performance trim of the Model S can be configured to outrun supercars from zero to 60 mph. But the Model S is rather long in the tooth at this juncture, dating back to 2012 with only a few modest refreshes since then. With the less-expensive Model 3 and the forthcoming Model Y crossover, Tesla is moving away from the Mercedes-Audi-BMW-Lexus luxury sedan market and concentrating more on a kind of tweener space, just above the mass market.
Porsche has no interest in those segments, leaving them to Audi and VW. Porsche also leads with performance, so typical EV fixations such as range are less important. That’s why Porsche is using an 800-volt design and a 93 kilowatt-hour battery architecture for the Taycan, aiming to optimise dynamics and recharge times rather than raw distance-per-charge. A Taycan owner is unlikely to care about range if their Porsche doesn’t drive like, you know, a Porsche.
Tesla owners don’t care about Nürburgring laps, while Porsche owners most definitely do
That implicit standard means that Taycan and Tesla occupy different cognitive regions, beyond the basic distinctions of a $US188,000 EV versus a $US115,000 one. Tesla Model S owners don’t care that their car hasn’t lapped the Nürburgring in 7 minutes, 42 seconds (the Taycan’s impressive time), or even lapped the Nürburgring at all (a Model S hasn’t, at speed, and Tesla has never officially taken on the famous German track). Porsche Taycan owners, meanwhile, would be dismayed if the Taycan hadn’t conquered the “Green Hell.” They’re deeply aware that much of Porsche’s history was forged and its credibility nurtured in motorsports.
The tricky thing here is that because the EV market is so small, there’s a lack of meaningful competition. Tesla, understandably, has the market more or less to itself. And that’s no bargain, because in 15 years of existence, the company has posted less than a handful of profitable quarters.
In that time, of course, Tesla has sold its cars for about $US100,000 on average, and that’s what garnered the attention of the Porsches. Established luxury automakers figure they’re much better at building vehicles than Tesla and can effectively “create” new market share in EVs, with very high prices converting to rich margins. Tesla, after all, has bungled its way to 250,000 in annual sales, adding a point or so of share to a US market that prior to 2018 had looked pretty well locked up in terms of market-share expansion.
Tesla bulls and bears always make the same error
Of course, Wall Street short-sellers cheerleading for Tesla’s demise will herald the Taycan’s arrival as a watershed moment when Tesla’s luxury-sedan business collapses as all the Model S customers jump to Porsche. Likewise, Tesla bulls will argue that the Taycan is too expensive and not tech-y enough to unsettle the Model S.
They’re both making the same error: assuming the cars are attempting to capture the same customers. Sure, there could be some overlap, but for the most part if you seek high-performance four-door electric driving, and you have the cash, the Taycan is your ride. If you want an electric alternative to something like a BMW 5- or 7-Series, the Model S has always been for you. Though with the Model S ageing and no redesign on the horizon, it’s not out of the question that Tesla may let the car wither as it shifts further downmarket with the Models 3 and Y. So get your Model S while the getting is good!
You’re going to hear a lot about Tesla-Porsche competition now that the Taycan is a reality, and that’s fine. But it’s also the script that both automakers want to hear everybody reading from, yielding as it does a welter of free advertising (especially valuable for Tesla, where the ad budget is CEO Elon Musk’s Tesla feed). There’s also some reflexive truth to Tesla versus Taycan; car people are raised on the concept of competition as central, and by the time they rise to the executive ranks, they dutifully recite the shibboleths in the same way that major-league ballplayers tell reporters that they’re taking things one game at a time and are in it for the team.
That rhetoric masks what is often a healthy absence of competition, particularly when you’re dealing with something esoteric, such as high-performance electric sedans. Nobody needs a $US115,000 Tesla Model S or a $US188,000 Porsche Taycan Turbo S (reliable motorised transport can be obtained for $US20,000).
But there’s a significant number of people who want a Tesla or a Porsche, and their mindshare tends to be well-capitalised. Auto execs who hope to live well have few qualms about creating products that will separate those people from a percentage of their net worth. Porsche has been doing it for decades.
The bottom line is that in the battle between Tesla and Taycan, there’s really no contest. Everybody wins. Especially wealthy consumers, who now have in Porsche not just more all-electric choice, but an EV that’s based on the explicitly hedonistic values of driving performance, while simultaneously borrowing Tesla’s save-the-Earth ethics.
That said, I must admit that after driving every Tesla ever made – and quite enjoying them all – I’m personally looking forward to some Taycan seat time for something entirely different.