Should This Keep Tesla Motors Up at Night?
For the past few years, automotive geeks, like myself, thought Tesla Motors Inc (NASDAQ:TSLA) was the only fully electric high-performance sedan on the market.
Like it or not, everybody can agree that Tesla has no competitors at the moment. Yet, everybody can sometimes be wrong. Indeed, another California startup wants to compete with Tesla. It has designed a family of electric vehicles and related products in the United States with the support of Chinese investors. This company’s name is Atieva, but Tesla stock will not be affected by its presence just yet.
Before the high priests of the religion of Tesla swarm to comment on this article—by all means comment and criticize if you like, but do read first—Atieva’s management has strong electric car technical credentials. Bernard Tse, who was a vice president and board member at Tesla from 2003 to 2007, led the original Tesla Energy Group (TEG). (Source: “Introducing Tesla Energy Group,” Tesla Motors Inc, May 22, 2007.)
Indeed, before anyone started hailing Elon Musk as some reincarnation of Thomas Edison, Henry Ford, or Nikola Tesla himself, there was Martin Eberhard. Members of his original Tesla team are now running the next big name in electric automobiles: Atieva. Musk, who was Tesla Motors’ biggest investor and chairman, ousted Eberhard in 2007.
Atieva’s headquarters are so close to Tesla’s that you could even use a “Model S” to get from one location to the other without running out of battery juice. Atieva has been working on its all-electric, blisteringly quick sedan in relative secrecy for the past eight years. But, it seems, the caterpillar is about to become a butterfly. Atieva wants to go to market in 2018. (Source: “Atieva Aims To Unroll All-Electric Premium Sedan In 2018,” Clean Technica, June 15, 2016.)
Atieva expects to build its new car, code-named “Project Cosmos,” at a new factory able to produce 20,000 vehicles per year. Two of Atieva’s main shareholders hail from China: Beijing Auto and a LEECO company subsidiary involved in funding an electric car project for Chinese executive Jia Yueting. The latter also controls Faraday Future, another California startup that plans to manufacture electric vehicles.
Atieva makes for an awkward name for a car company. Tesla Motors is catchier and hails back to an epic figure of 20th-century technology. Atieva sounds like something you take to get rid of indigestion. But, the kind of performance the new Atieva sedan will deliver is sure to fire up the imagination of drivers who like to experience jet-like acceleration.
There are significant Chinese capital resources behind Atieva, as noted above, which is no coincidence. More than one Chinese venture has decided to build a Tesla-like car in California. But as Atieva’s vice president of design, Derek Jenkins, told Reuters, this product will be different from the electric cars that other Chinese companies with California DNA are planning. (Source: “Electric car startups fueled by Chinese money aim to catch Tesla,” Reuters, June 15, 2016.)
Why is this important?
So far, Tesla has enjoyed a small but clearly dedicated cult-like customer base all to itself. Atieva has a chance to become its first real challenger. They started working on their first car years ago, which means when they enter the market, they will have a more mature car. Atieva has tested its forthcoming sedan’s power train and related software in a Mercedes van, suitably gutted and fitted for the task.
While the other Chinese Tesla chasers will likely assemble their cars in China, Atieva will remain in California. It wants to make 20,000 cars per year with an ultimate goal of reaching 130,000 units per year. The fact that Jenkins and Atieva’s manufacturing director, Brian Barron, have real car company experience—the former designed the latest Mazda “Miata” and the latter was a plant manager for BMW—will also help infuse automotive maturity to the sector. This is something Tesla Motors has lacked.
As some business books say, Tesla should not fear competition. In some ways, the arrival of Atieva, not yet listed, will fuel interest in the electric car market. Tesla will have the competition it needs to improve its product quality, because Atieva, thanks to a longer incubation, will come out firing on all cylinders.