The new 2018 Nissan Leaf was revealed this week with an EPA-rated 151 mile range. There’s lots of media outlets and reporters trying to compare the Nissan Leaf with the Tesla Model 3. However, there’s really very little to compare between the Leaf and the Model 3. In fact, here’s why I think the Nissan Leaf and Tesla Model 3 are not competitors and really shouldn’t be compared to each other.
The other issue with the Nissan Leaf is that it’s not a very good car in comparison to other cars out there. In other words, it’s below average. Handling is poor, ride quality is poor, and the car overall really is subpar. I’d rather drive a Honda Accord than a Nissan Leaf, any day.
And that’s where the Model 3 comes in. The Model 3 is in a completely different class of vehicle than the Leaf. The Model 3 is in the luxury compact sports sedan market, where it’s main competitors are the BMW 3 series, Mercedes C class, Audi A4, Lexus IS, Cadillac ATS, etc. The luxury compact sports sedan market is one of the most competitive markets in the auto world with many of the most venerable auto makers vying for position. And Tesla’s aim is to not just to compete with other cars in its class but to make a car that is clearly superior in every way.
And similar to how Tesla has managed to dominate the large luxury sedan market with the Model S, Tesla’s aim is to dominate the luxury compact sport sedan market with the Model 3.
Now, if Tesla wanted to make a cheaper car to compete with the economy cars, they probably could have. But it might not be that great since they would need to make a ton of compromises. Battery costs are still not low enough where they can make a great economy car. That’s why with battery costs where they are, Tesla chose to take on the low-end luxury market (of course this is after succeeding in the mid-high end market). The timing and costs were optimal where Tesla felt they could make a no-compromise amazing car for the $35k-$60k+ market.
And that’s where Tesla is different than other auto makers. Most other auto makers will make a compromised vehicle, especially as compliance vehicles. Take, for example, the BMW i3. Great car in concept. But when you drive it, it’s deeply flawed and compromised. The handling, comfort, performance and ride are all sub-par compared to the BMW 3 series. In Tesla’s view, what’s the point at making a car you know is flawed and sub-par?
This is also why it’s an error to compare most electric vehicles to Tesla. Most manufacturers of EVs are making sub-par, flawed vehicles that don’t compete well with their ICE vehicles. Their motives are more compliance to gain ZEV credits (zero emission vehicle credits) so they can sell more ICE cars.
As time goes on, we’ll likely see a true Model 3 competitor. But I don’t think that’s going to happen for another 5-8 years.
In the meantime, you’ll hear of a lot of EVs that the media portray as a competitor to the Tesla Model 3. But none of them are.
BMW is going to have to make an all-electric car that costs the same as their BWM 3 series but is superior in handling and performance (and also does long-range w/super fast charging). I just don’t see that happening within the next 5 years. I don’t see BMW doing it, and I’m not seeing any other auto manufacturer doing it within that time frame.
Part of the issue if they don’t need to. Their ICE vehicles are selling just fine. And it’s a pain to divert focus and attention to develop a whole different line of vehicles. But the other issue is costs. Battery costs still are high enough where it’s difficult to make an electric car that’s equal to an ICE car at the same price. Most ICE auto makers’ strategy is to wait until battery costs come down and demand for EVs rise, then they’ll take the EV market more seriously.
However, for Tesla waiting isn’t an option. Tesla has decided by imperative that they need to drive down battery costs by increasing scale and driving innovation. And by doing so, they’ve created a new market for their cars. The innovation Tesla is pioneering is not easy. Tesla is controlling the entire supply chain for battery production, from raw materials to finished battery pack, to ensure that costs are driven down enough where it becomes practical and cost-effective enough to include them in a luxury compact sports sedan. Other manufacturers just aren’t as motivated to take those risks.
So, over the next few to several years, the Tesla Model 3 will eat its competitors’ lunch. The car is just a better car in almost every single way compared to its competitors. BMW, Mercedes, Lexus, Audi, etc. will start to feel the pain of their luxury car sales decreasing, and when it’s gets painful enough they’ll start to try to make the effort to make a serious electric car. But by then, Tesla will be years ahead in their competitive advantage of cost, performance, service, and overall brand/experience.
Anyway, I’m not against the Leaf, or the Bolt, or the i3, or whatever EVs are out there. I just don’t think they’re the real thing. But the Model 3 is the real thing. And most people don’t realize it because so few people have driven it yet.
But once they have, word will spread. And the tidal wave will spread. It’s the beginning of the end for ICE. Thanks to the Model 3 and Tesla.