Porsche vs Tesla: False Equivalence
by Jean-Louis Gassée
With its just-announced Taycan 4-door sedan, Porsche got tongues wagging. Ultra-fast at the Nürburgring, ultra-refined — and ultra-expensive — it’s a clever entry in the EV race, one that some see as a threat to Tesla.
Ending months of speculation, Porsche picked Germany’s Frankfurt Auto Show (officially, the International Motor Show) to unveil the Taycan, the automaker’s entry in the Electric Vehicle race. To make the Taycan’s unveiling even more print- and click-worthy, weeks before the Frankfurt intro, Porsche headed to the famed Nürburgring track where the Taycan broke the 4-door EV record (video inside) with a 7 minute, 42 second lap.
For Monday Notes readers who aren’t into carnography, the legendary 20.8 km (12.9 mi) Nürburgring track has become a reference venue where automakers and tourist drivers attempt to break speed records in various categories.
(A brief historic digression: the first vehicle to break the 100km/h (62 mph) barrier was an electric car, yes, in 1899, La Jamais Contente (The Never Satisfied) managed to exceed 105km/h (65.8mph). This was the last time an EV drove faster than a gasoline-powered car.)
Before the Taycan, the Volkswagen ID R, a cousin EV in the Volkswagen Group, managed a 6:05 lap, an impressive feat but one that, unlike the Taycan’s, doesn’t belong in the Production Vehicles category. Earlier in the year, a modified ID R broke the Pikes Peak Hill Climb record.
The Volkswagen group, or VW AG, is a colossus that includes Porsche, Audi, Bugatti, and many others. It surpassed Toyota as the world’s largest auto maker by sales in 2016 and seems to have held the title since. By shattering EV speed records at historic venues, VW AG wants everyone to know that they’re not only big, they’re dead serious about their EVs, and about owning the performance crown in the category.
Furthermore, the giant German auto group has clearly decided to take the very high end of the production EV category. The Taycan starts at a theoretical $150K but, in Porsche tradition, it will easily exceed $200K in more desirable configurations.
For years, automakers have complained about the impossibility of generating any kind of profit by making EVs. Most of the models we’ve seen so far have either been “halo cars” meant to burnish a maker’s EV bona fides, or, as in the case of Fiat Chrysler electric Fiat 500, a way to gain CO2 emission credits. As an example, at the Frankfurt Auto Show mentioned above, Jaguar let it be known that its iPace had done its job and wouldn’t be iterated in the near term. BMW said very much the same about its carbon-fiber i3.
For “real” EVs, meaning models produced in hundreds of thousands or more per year, we must proceed with caution: Look at Tesla hemorrhaging $24B in free cashflow since 2011…
With this in mind, one can look at Porsche’s Taycan as a doubly cautious move: a very expensive vehicle, produced in modest quantities. In 2018, Porsche sold about 250K cars, with the Macan and Cayenne leading the way with 86K and 71K units, respectively. With the evergreen 911 selling about 35K units, one could expect Taycan 2020 sales to be in a low 10K multiple. A fine addition to the very profitable Porsche business — but not an invasion.
Unsurprisingly, the kommentariat was prompt to position the Taycan as a Tesla rival, a killer, even. Elon Musk helped by announcing an attempt to outdo the Taycan’s Nürburgring’s time “any day now”, perhaps with a new three engine configuration. Rumors aside, nothing so far. No one should second guess Musk’s ability to promote the Tesla brand (and himself), nor should we underestimate the value of the Nürburgring crown, but a Tesla-killer the Taycan isn’t.
To start with, there’s scale. Give or take a few thousand in the end-of-quarter rushes, Tesla will approach 400K deliveries this year and get close or exceed 500K units in 2020 when the company’s Gigafactory 3 comes on line in China (assuming, of course, that the economy is willing and investors continue to feed cash into Tesla).
Second, Tesla and Porsche operate in different price ranges. The Model 3, Tesla’s best selling car, now costs less than $50K; the Model S is less than $100K and the Model X is a bit more. There’s a big jump up to the Taycan’s $150k+ minimum price tag, certainly far too large for a faithful Model 3 adherent, and probably too big for even a Model X owner.
That said, many Porschephile connoisseurs think the real Tesla killer will be an EV Macan. The gasoline powered Macan is a best-seller today, and could be a best-seller tomorrow as a new, designed-from-the-ground-up EV sporty SUV that will compete more directly with the still-gestating Model Y Tesla SUV.
But a more immediate threat to Tesla is likely to come from elsewhere in the VW AG product portfolio. At the Frankfurt show, Volkswagen announced the ID.3, a car that many see as the EV equivalent of the iconic Golf, a vehicle that managed to span 45 years in seven generations without losing its soul. Production of the ID.3 is slated to start this coming November with deliveries for existing reservations in the Summer of 2020, albeit limited to 30K units for the “1ST” edition (or so we think…it isn’t entirely clear). The price is likely to exceed 40K€ (close to $50K).
Stepping back a bit, while the ID.3 should offer some competition in the Model 3 price range, it isn’t yet a full-bore assault on Telsa. Today, the Model 3 is a top seller in several European countries and neither VW nor Porsche threaten this position for the near-to-medium term, meaning 2020. After next year, things could get interesting as EV models from other makers (Mercedes, BMW, Renault…) garner praise when compared to Tesla’s sometimes lackadaisical finish and inattention to creature comforts.
Unless, of course, Musk’s “million robotaxis” prediction comes true — but no one took him seriously, right?
— JLG@mondaynote.com
