This Should Terrify Tesla Motors, Inc. (NASDAQ:TSLA) Investors Everywhere

Tesla Motors, Inc. Investors Should be TerrifiedYesterday, Porsche Automobil Holding SE (OTC:POAHF) unveiled its first 100% electric model: the “Mission E.” Don’t let the name fool you; it really should be called the “Mission T” because it has Tesla Motors, Inc. (NASDAQ:TSLA) as its target. Judging by the prototype unveiled at the Frankfurt auto show, which opened on Tuesday, Tesla should be worried—very worried!

Porsche sold close to 190,000 luxury vehicles (those are very high margins) in 2014. Moreover, the company can count on a distribution and sales network just about anywhere in the world—except perhaps Burkina Faso and North Korea. Porsche enjoys the financial backing of parent company Volkswagen AG (OTC:VLKAY), which recently stole Toyota’s spot as the world’s largest car maker.

If that weren’t enough, VW is carving a huge market share for itself in the world’s fastest-growing car market: China.  In other words; Porsche has the research, engineering, and sales resources to blow Tesla out of the very luxury electric car market that the California-based car company created.

New Competition for Tesla

The original Tesla model was based on a Lotus Elise platform. Porsche can count on its own expertise and 70 years of racing experience in all venues to not only deliver straight-line performance, but also the kind of handling and breaking real sports car enthusiasts expect. Rather than appealing to a limited “green” environmentalist and trend-conscious poseur crowd, Porsche’s electric vehicles have the power to attract real driving enthusiasts across a much wider spectrum of social and political views.

Under these conditions, it is plausible to think that Porsche will be the luxury brand that will bring electric cars to millionaires around the world. Porsche will market its own concept of electric car with all the amenities and extras available on its current lineup. Porsche’s CEO Matthias Muller told Bloomberg that Porsche would not sell “a smartphone on four wheels or a large touch screen to control advanced functions […] in a Porsche there is no room for such things.”

Indeed, the Mission E looks like it’s worthy of playing the role of a Porsche; the car simply looks like a spirited sports sedan, electric or non-electric. It is as stylish and seductive as any of its regular gasoline-powered models, even as it boasts the prestige of being powered by the same two electric motors derived from the Porsche 919 racing model that races at Le Mans.

As for performance, this beauty should be able to go from zero to 60 mph in 3.5 seconds. While these numbers are impressive, they are lower than those announced by Tesla for the Model S in P90D “Ludicrous Mode” variant boasting 763 horsepower for a 0-60 mph in 2.8 seconds.

But, it promises to be much faster around a track or a mountain road—with better range to boot—thanks to Porsche’s seven decades of experience in designing and making real sports cars, not just drag strip queens. Porsche’s battery also distinguishes itself from Tesla as the company claims the Mission E can achieve an 80% charge in 15 minutes, compared to 30 minutes for the Tesla.

Beyond these features, for a four-door sedan, the car shows a beautiful flowing design worthy of a sporty two-door coupe. The interior is just as impressive with sobriety and a purposeful sports car feel rather than the excessive “smartphone” look of the Tesla.

Mercedes-Benz Unveils New Battery

While Tesla’s CEO Elon Musk is thinking about a mission to Mars, developing his Space Exploration Technologies Corp with plans to set off nuclear explosions on the red planet. Musk said as much during his interview on CBS’s The Late Show with Stephen Colbert while Daimler AG (OTC:DDAIF) started delivering of its own Mercedes Benz branded electricity storage system.

Featuring an elegant finish and the famous three-pointed star, a symbol of quality and prestige for over a century, the Mercedes home power unit is a direct competitor to Tesla’s Powerwall.

Daimler unveiled its Mercedes-Benz domestic power unit last June in Munich for private and industrial use. The German manufacturer has struck hard and fast thanks to Daimler’s Deutsche Accumotive division, which develops lithium-ion technology for its hybrid and electric vehicles.

Just like Tesla, whose equivalent battery manufacturing Gigafactory is still in the construction phase, the new energy storage system was “developed for demanding use in automobiles.” This, says Daimler, ensures “high standards of quality and safety” while delivering 2.5 kWh.

Here’s the catch: this is just a quarter of the power generated by Tesla’s 10 kWh Powerwall. The Mercedes batteries, however, can be combined. Up to eight can be joined together to reach a capacity of electrical storage of 20 kWh.

The electricity storage industry, which is said to have been valued at US$200 million in 2012, is expected to be worth US$19.0 billion in 2017 according to the IHS CERA consulting firm.

Is All This Competition a Good Thing?

Is it time to ditch Tesla because the Germans will crush it under the weight of their panzer-sized technology and market reach? Not at all. If anything, the effort made by Porsche and Mercedes to enter and invest in the electric car and energy storage markets is a compliment, validating the excellence of Tesla’s innovation capacity.

Competition allows businesses to develop better products and more efficient production methods, while also fulfilling consumers’ need for choice. Apple invented the smartphone concept, creating a new market which is now filled by a variety of models and operating systems. Competition also helps to lower prices and increase product quality. Finally, the search for products that stand out from others encourages businesses to invest more.

Tesla should be honored that no less than the likes of Porsche and Mercedes-Benz have challenged it on its own technological turf. In turn, Tesla’s future production will benefit from having to respond to the German challenge. This is one war where the people, in their role as consumers, can only benefit.