The New Mercedes ‘Tesla Fighter’ Lives Up to Its Name

Business

Barron's 30 June, 2021 - 01:37pm 30 views

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Mercedes’ new luxury electric-vehicle, dubbed a “Tesla fighter” by analysts, beats out the high-end Model S offering from Elon Musk’s company on two key fronts based on a road test, a team at Swiss bank UBS said.

Shares in Daimler, which owns Mercedes-Benz, slipped around 1.3% in Frankfurt trading on Wednesday, paralleling losses with the blue-chip German DAX index.

The back story. The EQS is Mercedes’ new flagship all-electric vehicle, which analysts at Deutsche Bank dubbed a “Tesla fighter” ahead of its launch in April, writing that it has the potential to improve the perception of the entire brand.

The full-size luxury sedan is the first of Mercedes’ new dedicated electric-vehicle architecture and has a range of up to 770 km (478 miles). That makes it the longest-range all-electric-vehicle on the market, according to Deutsche Bank analysts, with its only possible competitor having been the now-cancelled Plaid Plus upgraded version of Tesla’s Model S.

Daimler, like other European automobile makers, is leading a monumental shift to transition away from vehicles powered by internal combustion engines in favor of electric vehicles. Europe became the world’s largest market for electric vehicles in 2020 amid a pedal-to-the-metal push to increase EV adoption, with severe fines for car makers whose fleets don’t meet new emissions targets and generous incentives for buyers to trade in their gas guzzlers.

The pivot toward electric vehicles in Europe has benefited domestic manufacturers and largely come at the expense of Tesla. Tesla’s market share  in the 18 key European markets more than halved from 31% in 2019 to 13.2% in 2020, according to data compiled from official sources by automotive analyst Matthias Schmidt. Tesla controls 11.5% of the European market to Daimler’s 7.3% so far in 2021, according to Schmidt.

Plus: Tesla’s Target Price Got Cut By UBS. Here’s Where The Better Opportunities Lie.

What’s new. German magazine Auto Motor und Sport road-tested the EQS in a drive from Munich to Berlin, with the magazine concluding in an article published on Sunday that the vehicle was “the best electric car in the world,” as translated by Barron’s.

Analysts at UBS, led by Patrick Hummel, concluded in a note on Tuesday that Mercedes’ luxury electric offering beats out the comparable Model S from Tesla in terms of range and efficiency.

The EQS is able to reach a range of 300 km with just a 15 minute charge, and gets an average consumption of 15.8kWh per 100 km at autobahn highway speeds, according to UBS, “highlighting strong aerodynamics and powertrain efficiency.” 

“While EQS falls short of Tesla’s acceleration and top speed, the high range and the overall luxury experience make the car a very strong competitor to Model S,” the analysts said.

Also read: Tesla Cancels Model S Plaid +. Questions Remain.

And: Tesla Shows Off the New Model S Plaid. It’s a Sign of What’s to Come for EVs.

Looking ahead. The Mercedes EQS will go on sale this summer and is expected to hit U.S. showrooms in the fall with an estimated price tag starting at $110,000, while Tesla’s Model S has a base price of $79,990 with the upgraded Plaid version fetching $129,990.

So, all told, the two vehicles are comparable, and the UBS analysts’ conclusions suggest that the “Tesla fighter” EQS lives up to its name.

There’s a major fight ahead for Tesla and Mercedes in the high-end range of the electric-vehicle market, and it’s a battle that both brands have a lot of incentive to gamble big on. That’s because profit margins are wider in the luxury car segment. In a fast-growing EV space driven by billions of dollars of corporate investment, dominance in high-end vehicles has the potential to make or break a company’s strategy.

The UBS analysts did note that the EQS’ commercial success could be so strong that it cannibalizes sales of the S Class, which provides Mercedes with even better profit margins. UBS rates Daimler stock neutral, with a target price on the shares of €79 ($94). With the stock trading at around €75, that implies a near 5% upside. But once the EQS and Model S go head-to-head in showrooms, it’s possible that the landscape will change.

Mercedes’ new luxury electric-vehicle, dubbed a “Tesla fighter” by analysts, beats out the high-end Model S offering from Elon Musk’s company on two key fronts based on a road test, a team at Swiss bank UBS said.

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How Big Could Tesla Get by 2030? | The Motley Fool

Motley Fool 30 June, 2021 - 08:25am

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Ever since the launch of its first Roadster in 2008, Tesla (NASDAQ:TSLA) hasn't looked back. Over the years, the company has proved many of its naysayers wrong. Tesla can be credited for the ongoing transformation of the auto industry from internal combustion engine vehicles to electric ones. The company is already threatening the decades-long dominance of legacy car companies. Let's see where Tesla could be 10 years down the line.

Tesla sold 499,550 electric vehicles last year. It expects 50% average annual growth in deliveries over a multi-year horizon. It has two factories right now: at Fremont, California, and Shanghai, China. Moreover, it is constructing two more factories, one each in Berlin and Texas. The start of production at its Berlin factory got delayed from the end of this year to early next year while the Texas factory remains on track to start deliveries late this year.  

Between 2016 and 2020, Tesla grew its deliveries at an average rate of 65%. The EV maker's annual deliveries rose from 76,230 in 2016 to 499,535 in 2020. Assuming its annual deliveries grow at an average rate of 50% in the next four years, and the rate falls to an average of 25% beyond that, Tesla could be selling nearly 10 million cars by 2030. For some perspective, Toyota (NYSE:TM) sold 9.5 million vehicles in 2020 -- the highest of all automakers in the world. 

If we were to base this projection solely on its trailing four-year growth rate, Tesla's expected growth numbers look reasonable. However, the past growth was on a lower base to begin with. Ramping up production at such high rate may not be easy.

Tesla has a production capacity of roughly 1 million cars right now. With its planned factories at Berlin and Texas, it would likely double this capacity. Tesla might still need around 16 more plants to reach its 10 million target, assuming an average capacity of 500,000 units. Even if Tesla constructs bigger factories in future, it might not be feasible to increase capacity beyond a limit. For perspective, Hyundai Motor's (OTC:HYMTF) Ulsan facility in South Korea, one of the largest in the world, has an annual capacity of around 1.5 million units while Volkswagen's (OTC:VWAGY) Wolfsburg plant has a capacity of over 800,000 units.

A key constraint in Tesla's production growth could be the availability of batteries. The company plans to produce its own batteries, in addition to buying them from suppliers, to meet its high demand. 

Though challenging, Tesla's growth numbers are achievable. Tesla has maneuvered production challenges in the past, and it could well continue to do so. Even if we assume some more delays and lower numbers, Tesla could still be among the top five automakers in the world by 2030.

Apart from production challenges, Tesla needs to find enough buyers for its cars globally. It is the leader in electric vehicles right now. The International Energy Agency estimates that under current policies the number of electric vehicles globally could rise to 145 million by 2030 from around 11 million in 2020. Tesla is well positioned to capture this expected growth.

However, legacy automakers are also rolling out electric versions of their top car models. That could significantly amp up competition for Tesla in the coming years. Its brand image and product features are its key strengths. Its top EV models right now offer the longest range available.

Tesla is focused on ramping up production, removing bottlenecks, and improving battery range. The company is working on all fronts simultaneously and plans to expand rapidly. In short, despite competition and challenges, Tesla has the potential to become one of the largest automakers in the coming decade. 

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This new ‘Tesla fighter’ from Mercedes beats out the Model S on two key measures, UBS says

MarketWatch 30 June, 2021 - 06:24am

The UBS analysis is based on German magazine Auto Motor und Sport’s road test of the EQS on a drive from Munich to Berlin, in which the publication concluded, as translated by MarketWatch, that the EQS was “the best electric car in the world.”

The EQS gets an average consumption of 15.8kWh per 100 km at autobahn highway speeds, according to UBS, “highlighting strong aerodynamics and powertrain efficiency.” 

Also read: Tesla is under pressure from Nio, but these are the best electric-vehicle investments right now, says UBS

“While EQS falls short of Tesla’s acceleration and top speed, the high range and the overall luxury experience make the car a very strong competitor to Model S,” the analysts said in a note published on Tuesday.

The EQS is the newest all-electric luxury vehicle from Mercedes-Benz, which analysts at Deutsche Bank dubbed a “Tesla fighter” ahead of its launch in April, writing that it has the potential to improve the public perception of the entire brand.

The car is Mercedes’s first on its new dedicated electric-vehicle architecture and has a range of up to 770 kilometers (478 miles). That makes it the longest-range BEV on the market, according to Deutsche Bank analysts, with its only possible competitor having been the now-canceled Plaid Plus upgraded version of Tesla’s Model S.

Plus: Microsoft and American Airlines-backed flying taxi startup to go public in new $5 billion blank-check wave

Daimler, like other European automobile makers, is leading a monumental shift away from vehicles powered by internal-combustion engines in favor of electric vehicles. 

Europe became the world’s largest market for electric vehicles in 2020 amid a pedal-to-the-metal push to increase EV adoption, with severe fines for car makers whose fleets don’t meet new emissions targets and generous incentives for buyers who trade in gas guzzlers.

The pivot toward electric vehicles in Europe has benefited domestic manufacturers and largely come at the expense of Tesla. Tesla’s delivery volumes in the 18 key European markets fell by 12% in 2020 from 2019 levels, according to data compiled from official sources by automotive analyst Matthias Schmidt.

According to Schmidt, who publishes the European Electric Car Report, this saw Tesla’s market share of the key European battery-electric-car market more than halve — from 31% in 2019 to 13.2% in 2020. Tesla controls 11.5% of the European market to Daimler’s 7.3% so far in 2021, according to Schmidt, with the American company led by Elon Musk expected to capture more market share as the year progresses.

The World Health Organization is emphasizing its position that even fully vaccinated people should continue to wear face masks in public given the risk presented by the delta variant of the coronavirus-borne illness COVID-19, which is currently racing across the world.

Market has already decided the winner of the electric vehicle race, trader says

CNBC 29 June, 2021 - 03:47pm

The stock market has already picked a winner in the race to mass electric-vehicle production, one market analyst says.

Tesla's lofty valuation — 137 times forward price-to-earnings as of Tuesday's close — speaks volumes about where investors are placing their bets as legacy auto manufacturers rush to develop their own EV projects, TradingAnalysis.com founder Todd Gordon told CNBC's "Trading Nation" on Tuesday.

UBS Global Research weighed in on the competition in a Tuesday note, saying Volkswagen, General Motors and Hyundai were "likely to emerge as best EV re-rating stories." The firm also cut its price target on Tesla's stock to $660 from $730 and upped its targets for GM and Ford.

Ford is having its best year since 2009, and GM its best since 2013. Tesla is having its worst year since 2016.

The legacy automakers "will certainly gain market share in the near term on Tesla," Gordon said.

"But if you look at the billions of miles driven that Tesla has plugged into their major data centers compared to what the other EVs have, it's not even funny," he said. "The one who has the most data will ultimately be victorious. So, sure, they can gain some short-term market share, but I think longer term, ... I think the market is already voting who the winner will be."

Tesla's stock chart stacks up to the company's technological potential, Gordon said, adding that he bought on a recent dip.

Tesla shares were down just over 1%, at $680.76, on Tuesday.

Ford's chart does stand out as a short-term opportunity, however, Gordon said.

The stock has regained ground thanks to strong earnings reports in recent quarters, breaking above a significant long-term downtrend, he said.

Ford shares ended trading less than half of 1% higher, at $15.01.

Tesla found another fan in New Street Advisors Group founder and CEO Delano Saporu.

UBS' own survey found that 43% of respondents in China who intended to purchase an electric vehicle considered Tesla, Saporu noted in the same "Trading Nation" interview.

"That brand is still strong, even with some of the negative sentiment," he said. "The other thing that I really like is it's nearing levels that are pretty low and that growth trade is starting to come back into play now."

That could make for a catalyst in Tesla's stock, Saporu said, adding that even though Tesla is comparatively expensive, Ford and GM are also "a little bit overbought at this point."

"I think we still have a bit to go when it comes to Tesla, and I'm still very bullish on Tesla," Saporu said.

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Tesla’s Top Electric Vehicle Challengers in the U.S.

TheStreet 29 June, 2021 - 08:30am

Given the firm’s status as an early mover into the space and the marketing genius of its “technoking” Elon Musk, the company’s market share dominance is unsurprising. Indeed, the company currently holds a 16% global market share of the EV market, comfortably outpacing its nearest competitors in Volkswagen (13%), SAIC Motors (9%), Groupe Renault (7%) and BMW (6%).

However, a more aggressive crop of American automakers, adding to existing competition from Europe and Asia’s industry leaders, might yet have room to threaten Tesla’s top spot.

Presented at an investor day in late May, the company’s Ford F150 Lightning has been termed a breakthrough for America’s oldest automaker. The new offering due to become available late this year brings its best-selling truck into the EV age, enticing customers with a stunningly low starting price tag of just under $40,000.

“Ford F-150 Lightning is likely a watershed moment for Ford and the industry (as it is the best-selling vehicle),” RBC analyst Joseph Spak wrote in a recent note. “For Ford, it not only protects their golden goose, but potentially expands the F-150 franchise opportunity via unique features like Intelligent Backup Power.”

The latter function, an answer to Tesla’s Powerwall product, is capable of providing 9.6 kilowatts of power, enough to power home appliances and necessities for a few days in the event of a blackout. Essentially, Ford is now disrupting not only the EV market, but the market for home generators it conducts as an ancillary enterprise as well.

Spak added that while Ford will still need to execute on its audacious EV strategy to compete, its dominance in commercial fleets and embrace of electrification of its top products should bode well for investors. Thus far, over 100,000 reservations for the Lightning less than a month after its launch suggest palpable excitement about the product.

TheStreet founder Jim Cramer is certainly among those excited about the offerings already, calling for Ford’s new autos to outclass Tesla’s competing Cybertruck, which he likened to a Pontiac Aztek due to its peculiar, angular design.

"I think Ford is going to absolutely crush Musk when they do the F-150 electric,” he said on Thursday. “Ford's product versus the Aztek product that Musk has for pick-ups...they're going to run circles around it."

Not satisfied to be bullish on just Ford in the EV space, Cramer also signaled that General Motors  (GM) - Get Report, the manufacturer of the new and popular electric Chevrolet Silverado, is undervalued given the early success of its battery business.

The company currently manufactures Ultium batteries, which CEO Mary Barra touted as a key initiative not only in terms of powering their EVs, but as a major cost save, both for GM and industry competitors it is eager to sell those batteries to.

“We will realize a 40% battery cost reduction with our first-generation Ultium platform compared with today’s Chevrolet Bolt EV,” she explained in a call with analysts in May. “And we’re already on the road to delivering a 60% cost reduction compared to the Bolt EV, with the next generation of Ultium, and we expect costs will continue to decrease from there.”

Thus far, GM has already inked a deal to provide batteries to Honda’s latest EV models under the Honda and Acura brands.

“I believe Mary Barra has created a situation where the battery business is worth just as much if not more than the actual auto business,” Cramer commented recently from the floor of the NYSE. “The stock is undervalued. I know the stock’s been a winner, but winners win.”

Indeed, Barra is betting quite a bit of cash on the company’s ability to keep winning, pledging to invest $35 billion in its EV and autonomous auto endeavors through 2025.

“GM is targeting annual global EV sales of more than 1 million vehicles by 2025, and we are increasing our investment to scale faster because we see momentum building in the United States for electrification, along with customer demand for our product portfolio,” Barra told investors recently. “There is a strong and growing conviction among our employees, customers, dealers, suppliers, unions and investors, as well as policymakers, that electric vehicles and self-driving technology are the keys to a cleaner, safer world for all.”

Selling one million vehicles annually would double Tesla’s total global deliveries in 2020, a record-breaking year for the automaker. Further, the company stands to challenge Tesla on not one, but two fronts as it pursues ambitious innovation in autonomous driving.

Of course, the secular trend of electric vehicles, much like autonomous driving, may be a large enough wave to lift many boats and not necessarily damage Tesla’s top position.

It is true that the demand for electric vehicles in the United States has never been higher. This fact is perhaps the most important reason that the companies are piling into the space in the first place.

For reference, from 2008 to 2010 only 5,000 EVs were sold across the entire United States. Since that modest beginning, electric vehicles have grown into a massive market with over 10 million of these vehicles now on the road. Even in the past year, a time in which overall auto sales were hurt badly by the pandemic, electric car registrations increased by 41%.

Still, with 276 million total cars on the road in the United States, the total addressable market for all of these competitors remains vast. In contrast to early adopters among the public in Europe, especially among the Nordic nations, and the rapid adoption among the Chinese public, the American market is certainly not oversaturated.

As such, with the secular trend of electric vehicles showing no signs of braking, the overall pie might be big enough pie that each automaker can have a decent enough slice.

“I think that Tesla is going to sell all of the EVs they can build and I think Ford and GM are going to sell all of the EVs they can build over the next several years,” Jennison Associates Managing Director Owaraka Koney said. “We don’t think we’re at the stage of a real fight for market share just yet.” 

Tesla is still the king of EVs — but rivals will catch up fast, Wall Street analysts say

Business Insider 29 June, 2021 - 12:00am

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Elon Musk's automaker is by far the favorite among buyers who would consider buying an EV, according to the bank's survey of 11,380 people in the world's biggest electric-car markets. Among those surveyed, 43% would consider buying an EV from Tesla. BMW was the next most favored brand at 31%. 

A quarter of respondents said a Tesla would be their top choice, blowing every other brand out of the water. BMW came in second with 9% of the vote, while Toyota snagged third with 7%. UBS also found that consumers consider Tesla to be the global leader in EV technology by a wide margin. 

However, UBS analysts said, Tesla's lead over other carmakers has stopped growing, and legacy OEMs are poised to start closing the gap as they double down on electrification.

"Tesla remains the most favored BEV brand globally and the technology leader in the eyes of consumers, the survey shows," the analysts said. "However, the German premium incumbent brands Audi, Mercedes and BMW, are still preferred vs. Tesla in a face-to-face competition, and in light of their EV product offensives this year, we expect the positive trend to accelerate."

Given big electric pushes from Volkswagen, General Motors, Ford, and Hyundai, UBS expects Tesla's lead to shrink as time goes on. Going beyond consumer sentiment, Tesla's lead in technology has become less pronounced, too, UBS said. Recent EV launches show that traditional automakers can build EVs that are on par with Tesla's range, charging, and value. 

"We take this as hard evidence that legacy OEMs and also Chinese EV pure-plays are narrowing or even closing the gap vs. Tesla in what defines an attractive EV," the analysts said. 

Car companies have piled into the EV market in recent years, many of them pledging to put tens of billions toward their electric initiatives. And plenty of non-Tesla EVs have gotten a great reception from the public. The Ford F-150 Lightning, the battery-powered version of Ford's popular truck, scored more than 100,000 non-binding preorders within weeks of its debut, for instance. 

The survey also found that interest in EVs globally is growing fast, with 43% of consumers now likely to consider buying an electric car, up 6% from 2020. In the US, that figure has jumped 15% in the last year to 37%.

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