Where is Tesla’s EV competition?

After a decade of being trounced by Tesla Inc., this was supposed to be the year that traditional automakers finally put up a fight for electric cars. General Motors was committing its biggest brands to a new line of electric models; Ford and Volkswagen were ramping up production of EVs designed for the masses. It was, many predicted, time for the automotive world order to re-assert itself.

Things haven’t turned out that way. Ford’s vaunted F-150 Lightning has been outsold by the R1T from Rivian, a startup that sold its first vehicle just two years ago. GM’s lineup of new EVs has suffered crippling setbacks in battery manufacturing. In July, Volkswagen Chief Executive Officer Thomas Schaefer succinctly summarized his own company’s EV competitiveness: “The roof is on fire.”

With just three months remaining, 2023 has been less a redemption story for legacy automakers than further evidence of their quagmire. In the US, Tesla has been expanding production about as fast as all of its competitors combined. The Austin, Texas-based EV maker accounts for 61% of fully electric cars ever sold in the US, making it more dominant in EVs than Apple is in smartphones.

No one can keep up with Tesla’s price cuts

Tesla started the year with a dramatic salvo of price cuts that reset customer expectations across the industry. Before the changes, the cheapest version of Tesla’s Model Y SUV cost nearly $20,000 more than the average selling price of a new car in the US. By April, that differential had evaporated.

The latest shot fired in Tesla’s price war came on Oct. 1, when it introduced a new Model Y variant that starts at $4,000 less than the average selling price of a new vehicle in the US. The Model Y is on track to be the best-selling car in the world for 2023 — even after the price cuts, it’s doing so with higher profit margins than most automakers make on their gasoline vehicles.

Ford was first to respond with dramatic price cuts of it its own. But even a reduction of up to $10,000 for the F-150 Lightning wasn’t enough to keep Ford’s EV expansion plans on schedule. By July, CEO Jim Farley throttled back production targets through 2026, saying the company expects to lose about $4.5 billion on EVs this year. “The pricing pressure has increased dramatically,” Farley said.

GM, the biggest US automaker by vehicle sales, is also spinning its wheels. The company’s hopes are pinned to new batteries made by its Ultium LLC joint venture with Korea’s LG Energy Solution, which are expected to reduce costs. But delays have put in limbo the availability of GM’s new electric Chevy Blazer, Equinox and Silverado.

Ford, GM and Stellantis, meanwhile, are now locked in contract negotiations with the United Auto Workers union, which may lead to higher labor costs during the cash-torching catch-up phase of the EV transition. (Stellantis doesn’t plan to make its first electric Ram trucks and Wrangler Jeeps until the end of next year.)

Tesla’s only real competitor

There’s only one company that competes at Tesla’s scale on electric vehicles: China’s BYD. It’s also the first example of an incumbent that successfully transitioned from selling gas-powered cars to profitable electric vehicles.