2015 was the year the Porsche Taycan was unveiled as the Mission E concept car. It was also the year that the Model 3 was announced. At the time, the Model 3 was little more than a promise on the horizon – a full six months before the car was launched and available for reservation. Since then, Tesla has delivered well over 50,000 Model 3s (28,000+ until Q2-18; 14,000+ in July ’18; estimated 20,000+ in Aug ’18.) The Porsche Taycan is still undergoing real-world tests shrouded in camouflage after three years.
How did a company with so little manufacturing experience move so fast compared to the 87 years that Porsche has been around? Why the stark difference in concept to production timelines? Is it a question of a younger, nimbler company outmaneuvering a juggernaut with multiple business lines and slow-moving internal parts?
Porsche has been dabbling in hybrids and electrics for the past 8 years, but they still have to prove themselves on the market with an all-electric vehicle under full production. The Porsche Taycan is that vehicle, and it’s a very critical one for the Volkswagen Group, which has committed to electrifying its entire vehicle portfolio by 2030 at the latest.
That’s the timeline they’ve set to have at least one electric variant for each of their 300 models. The Porsche Taycan will be the front-runner of that massive transition, so VW needs to tread carefully. They’ve already showcased the Mission E Cross Turismo, which is the concept car on which the Taycan is being built, and it was well received. Even the Taycan is seeing a healthy level of pre-orders. So, they’re stepping carefully and making sure that Porsche fandom approves their every move, and a lot of folks don’t appreciate that importance of that.
One related point to note here is that the Taycan is not by any means intended to be a “Tesla-killer”. That’s not going to happen with a starting price of around $75,000, and the company isn’t going head-to-head against Tesla on pricing. Right now, they can’t, and I suspect they won’t in the future either. The Porsche Macan is the only model available for under $50,000, and that’s excluding “taxes; title; registration; delivery, processing and handling fee; dealer charges”.
No, the Taycan is not going to be a Tesla-killer. What the company really wants to achieve is the Porsche experience on batteries. If they do that, they’ve won. It will set a precedent for Porsche to go all out on its parent company’s electrification plans. It’s not going to stop selling ICE variants for many years to come but, starting in 2020, the Taycan will set the tone for new variants and generations of electric cars from the premium sports car manufacturer.
As for Tesla, it doesn’t have that ICE baggage and the transition headaches that Porsche does so it can move faster and with more purpose. The bulk of the company’s focus is now on making more Model 3s, while some attention has been reserved for existing and future models, as well as its global service capabilities, which is critical now that the Model 3 is quickly approaching its 100,000th delivery. Once the Model 3 starts being sold overseas, they’ll need that infrastructure as much as they need supercharging stations in the world’s biggest markets.
Even though the Taycan’s timeline is so long, let’s not forget that VW will be infusing no less than 6 billion euro into the Taycan family by 2022. As part of its long-term goal of electrifying its entire line, it’s already put out a 50 billion euro tender for battery supply.
One of the main reasons Tesla is ahead of everyone else now is because of the partnership with Panasonic. It is also the reason most others are far behind. But Tesla won’t have that battery advantage forever. Developments in battery chemistries and superconductor technologies will make sure of that.
What the Musk-led company has now is the first mover advantage – and in a big way. It also has the fastest mover advantage, which will serve to increase the gap between itself and other EV makers. Three years from now Tesla could be offering a $25,000 EV with range and performance far ahead of anyone else.
Ark Investment’s Catherine Wood, in an open letter to Musk urging him not to take Tesla private, said this:
“In our view, given the right investment time horizon, TSLA is a deep value stock today.”
So true, because the upside is tremendous. Tesla is not going to stop with a $25,000 car and say “Okay, I think we’ve done enough. Let’s sit back and defend our market share.” No, absolutely not. Whether or not it will enter the MaaS (Mobility-as-a-Service) market remains to be seen, but there’s no doubt that Tesla will do everything to keep pushing the limits of sustainable technology.
That’s one of the reasons Musk wants to go private, so he isn’t bound by the quarterly tension of an earnings call; so he can build out his vision unfettered by shareholder opinion or market sentiment or the negative media spotlight.
VW doesn’t have the luxury of even considering that decision. Their shareholders are so entrenched in expectations of profitability and quarterly results that the company has to move slow on realizing its electric dream. They can talk about it all they like, but at the end of the day, they need to move with a measured caution that Tesla has never been able to relate to.
And that’s why Porsche is Taycan so long.
