Prepare Yourself For A Tesla-Induced Paradigm Shift For Autos

The dream of an electric car future began to crystallize in 2010.

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Posted on EVANNEX on June 16, 2021, by Matt Pressman

That’s the year Tesla went public. Soon after, Tesla introduced its Model S sedan. By 2013, the company finished the year selling just 22,000 cars. Most industry observers predicted Elon Musk’s Silicon Valley startup would be the next DeLorean. Wall Street analysts widely predicted the company would go bankrupt. 

Fast forward to 2020. As the year came to a close, TheStreet praised Tesla’s “meteoric 731% rise year-to-date” to become one of the ten most valuable companies in the world. At the time, Tesla’s market cap grew higher than Volkswagen, Toyota, Daimler, BMW, GM, and Ford combined.

A few weeks ago, a report from Money UK noted Tesla was the most “Googled” investment opportunity in the world, “ranking as the most searched for investment in 82 countries worldwide.”

Tesla is at the vanguard of a paradigm shift unfolding in the automotive space. Just as the past 5-10 years surprised the majority of the market, the next 5-10 will shock everyone. EV adoption will accelerate far faster than anyone thought possible.

Zachary Shahan, the editor of CleanTechnica told me, “On the one hand, such rapid growth seems hard to believe in an industry as large, complex, and slow-changing as the auto industry. On the other hand, tech transitions aren’t slow once a technology becomes cost-competitive. The fabled S-curve of tech adoption looks much more like a steep rise than an S.”

He adds, “How many major companies have faced such moments of shock and disruption? Countless have, from Kodak to Blockbuster.”

Most agree, electric vehicles (EVs) are poised to replace internal combustion engine (ICE) vehicles over the next few decades. Traditional automakers, EV upstarts, and government initiatives all point to this future.

According to Marketwatch, electric cars currently make up around 2% of global auto sales, and estimates for a future market share vary from a low-end forecast of 10% to 20% of cars sold by 2030 to as much as two-thirds of the market by that time. “The EV party is just beginning, buckle the seat belts,” Wedbush analyst Dan Ives said recently.

TRADITIONAL AUTOMAKERS GO ELECTRIC

On the heels of Tesla’s stunning success, traditional automakers have aggressive plans in place to transition to EVs.

TESLA POISED FOR 50% ANNUAL GROWTH

While traditional auto and EV upstarts look to challenge Tesla, Elon Musk and Team Tesla isn’t simply standing still. The company is making significant investments to build and expand its gigafactories in Nevada, Texas, Shanghai, and Berlin.

Will Tesla’s bold investments result in accelerated growth? In Tesla’s Q1 Investor Update shareholder deck (on slide 10), the company forecasts: “Over a multi-year horizon, we expect to achieve 50% annual growth in vehicle deliveries.”

In the immediate future, the forthcoming introduction of the Tesla Cybertruck—a vehicle that currently has an estimated 1 million pre-orders—will prove to be a bold entry into the lucrative pickup truck market. Following Cybertruck, Tesla plans to introduce its first mass-market car, the so-called “Model 2” (in 2024) with an estimated price point of $25,000.

SO WHO WILL WIN THIS RACE?

Tesla is certainly a good bet. But keep in mind, overall global EV sales should top 12.2 million by 2025, indicating annual growth of nearly 52% (compounded), according to IHS Markit. Everyone is getting in. So get the popcorn, it’s going to be fun to watch this race.

This decade should mark a dramatic turning point for electric vehicles. The transition from outdated ICE technology to a battery-powered future will gain traction and accelerate. And with zero tailpipe emissions, we can all breathe a sigh of relief (and some cleaner air) as the auto industry embraces electrification.

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