Tesla Motors Inc. (NASDAQ: TSLA) did not do very well last quarter, and certainly less well than Wall Street expected. Tesla’s electric car business may become endangered as much larger manufacturers enter the business. None of them has a product line more dangerous than BMW’s, and with its massive balance sheet, brand and production capacity, it could badly hurt Tesla in the short term.
In the second quarter, Tesla delivered only 14,402 vehicles. The company described this as a victory:
In Q2, we delivered 14,402 new vehicles consisting of 9,764 Model S and 4,638 Model X, which was slightly higher than what we stated in our July announcement. Model S remains the market share leader in North America and Europe among all comparably priced four-door sedans, and Model X is quickly gaining ground against similarly priced SUVs in all regions.
Tesla also said production was 18,345 last quarter, only a modest increase over the previous quarter. Any delay in its Gigafactory launch could put the company’s progress back by several quarters.
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BMW already has two vehicles near Tesla’s sweet spots, and it says it will expand its suite of these shortly. The small BMW i3 has a retail price of $42,400, and this is before tax credits. It is not entirely electric, because it has a tiny gas engine. That fact may be lost on most drivers. It is a very modest part of the car’s energy capacity. BMW sold 1,479 of these in July, and that is just in the United States. It sells just over 1,000 a month in Europe.
The BMW i8 competes with the highest end Tesla Model S. Its base price is $149,700. It is also eligible for a rebate and has a tiny gas engine as well. BMW sold 166 of these in July in the United States.
While the BMW sales are modest, rumors are that it will release several more models in the price range between the i3 and i8. Its ability to ramp up productions is well above Tesla’s. Its ability to market the cars is in addition to its marketing money, dealer network and reputation.
Elon Musk, Tesla’s founder, could see a dozen competitors in five years. Based on current circumstances, none is more dangerous than BMW.
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