Published on May 8, 2019 |
by Maarten Vinkhuyzen
8. May 2019 by Maarten Vinkhuyzen
Today it was another exciting day for electric stations. Volkswagen presented its ID. Underworld to the world, with the first model, ID.3, ready for reservation. Times like VW were short for VaporWare over.
My colleagues cover everything that is to say about today's announcement from a VW perspective. This article is about the impact on the competition.
Who is the competition? We have seen announcements from the PSA about the Peugeot e-208 – and the siblings for the Opel, Citroen and DS brands. We expect Renault Zoe and Nissan Leaf to mature with larger batteries and usable DC-fast charging. In the upper areas of the market, Jaguar I-PACE, Audi e-tron, Mercedes-Benz EQC, Polestar 2 and Porsche Taycan are trying to get a piece, and the 900-pound gorilla from Fremont, California, is expanding its market to the rest of the world.
What the competition does not (yet), launches a great marketing campaign. This afternoon's presentation will be a great novelty on evening news in pretty much Europe, followed by repeated segments of all mobility and auto shows on television and many articles in the car segments of major newspapers and in auto magazines.
What VW does with this introduction of its ID. Undermarket gives electric cars an approval set that no other car manufacturer has provided. It's not that VW has anything new for some enthusiasts (most of you read this). However, VW says that electric vehicles will replace their fossil fuel models in the coming years, likely in the next decade, and transfer the story we enthusiasts know so well to the wider audience. VW is clearly all-in, which means much more to average Joe (or Jürgen) than Tesla predicts that the industry will go electric. It also means a lot to all VW's conventional automotive colleagues.
Thank you, VW
The effect on the competition can go two ways in the eyes of many critics and supporters. Those who see the electric car space as a limited area will claim that VW will push the competition to the margins. VW will crush the ambitions of PSA, Renault, Nissan, and most of all Tesla, according to these people. The competition is here – go home, Tesla. There is no doubt that Alpha and Wall Street will see this as another sign of the upcoming California downturn.
Market researchers who see the car market as a market where all the fuels compete for a larger piece think differently. The battery's electric drive unit is still largely unknown and misunderstood. The biggest problem is still convincing customers that fully electric cars are real cars, better cars. Could do everything one expects from an ordinary car, but better.
This VW media campaign will not only sell many ID.3 cars across Europe. It will also sell many Leafs, Zoes, e-208s, i3s, Konas, Niros, and most of all, many Tesla Model 3s. It is the perfect example of a rising tide that lifts all ships.
The competition in the luxury segment from Jaguar, Audi, Mercedes and Porsche is mainly sold out for over 12 months. Some have stopped taking new orders. It will be frustrating for automakers to see this tide wash away fossil fuel sales without having the capacity to serve with their own new electrical offerings. The interest VW generates can only be converted to orders by Tesla because it is the only company with production capacity and maturity that deserves right now from this rising tide.
It's great to be the only one who can deliver in volume when the competition starts a media campaign. Tesla (investors) must thank VW for this time. Other top manufacturers in the top half of the EV market – Renault, Nissan, Peugeot, Hyundai and Kia – should also thank VW for long-term benefit, for the added demand and interest they receive from VW's public press.
The editor's note: One thing I found interesting from Q&A after the presentation was that journalists repeatedly referred Tesla without saying "Tesla" – but everyone knew what the company was referred to. Something I learned a long time ago in a sociology class was that unspoken common assumptions are often the most powerful – they are so clear that no one has to speak them. It is clear that Tesla sets the bar for this competition. And not only were the questioners clearly referring to Tesla – many of the highlights of VW's presentation were mainly VW's copies of what Tesla had done, what Tesla had shown consumers as and will.
This is honest, not a knock on VW. On the contrary, I think it is very big of VW and a sign of strong long-term vision that the giant company swallowed its pride and rolled into its doors and politics many lessons learned from Tesla. Sure, it threw some nuance here or there to try to place its development one foot over Tesla. Perhaps it tricked some people, while it certainly did not fool others, but much more important than that is that the company has studied Tesla and is trying to be flexible, innovate and evolve rapidly to maintain its position on top of the world car market (in shape of sales). The journalists recognized the similarities, felt confident in raising and questioning other puzzles that were missing or inconsistent with Tesla's example, and Mr. Stackmann politely answered the questions – I think – honestly explain where the company thought it was smart to copy Tesla and where the company thought it was smart to do something else – without mentioning "Tesla."
Finally, we see how the automaker's approach serves German giant. We also want to see if the departures from Tesla's path are clear or strategic errors. For me, however, VW's new focus is far behind (very long delayed) leadership, the kind of honest leadership that doesn't pretend to find the wheel, but instead learns from previous leaders. And the good news, which Maarten deliberately shows us, is that it will push less thoughtful, less humble, less ambitious, lesser need for fossil car manufacturers that comes with the growing tension down the river.