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Forget the Germans, Tesla should be more worried about cheap Chinese clones

BMW could beat Tesla, but I doubt it will, particularly if you look at the German company’s first EV. Tesla’s biggest threats are itself, and the possibility of subsidies drying up – not any competitor. So far, virtually all of them have placed their bets on low-powered electrics (like the Nissan Leaf) or weak electric hybrids (like the Chevy Volt). BMW could have stepped up with a Tesla-S-like speed demon to give the Californian company a drag race for its money, but the BMW i3, appears to be just another compromise. You can order it as a relatively slow, limited-range electric, or a crappy hybrid with a higher price, worse performance, and only about 86 more miles’ worth of range.

This lack of good competition for Tesla isn’t good for the company, or for electrics. You need several companies pushing electrics hard to get adequate investment in the related technology, particularly batteries at automotive scale, and you also need several companies in case one of them fails, like Fisker already did.

BMW vs. Tesla

This is starting to remind me a bit of how traditional cell-phone companies reacted when Apple introduced the iPhone. Initially, they all seemed to think Apple was nuts, and continued to try to sell phones that didn’t step up to the iPhone’s standard. This strategy sent major firms like Nokia, Motorola, Palm, and Blackberry into a slide. They could have built a solution like Apple’s, because Apple clearly got it done with a lot less experience, they just didn’t understand that Apple’s approach was more optimal. As a consequence, Apple rolled over them, at least up until recently.

If Tesla doesn’t make it, I expect the real birth of electric cars will happen in China.

What makes Tesla different is that it treats the electric car like a real car. The Tesla S stands alongside its gas-powered peers from major brands in size, performance, and (unfortunately) price. It even beats them in some areas, which makes it a true choice.

Now look at the BMW i3: It’s expensive for a compact car, it’s slow for a BMW, and when you add the optional engine to give it decent range, it gets even more expensive and slower. I look at the i3’s 7- or 8-second 0-60 time and wonder who at BMW missed the performance meeting. BMW’s first electric should be a flagship product like the Tesla S, but instead it’s a performance dog like most other electrics. The coming i8 is a competitor, but that car seems to be a long way off. (But it looks really hot.)

In appearance, the i3 is an interesting-looking car, but nowhere near as good looking as the Tesla, I think it’s butt ugly from the back. It performs better than the Nissan Leaf, but even accounting for the higher price, I still think folks would be far happier with the Tesla S unless they couldn’t deal with its size. (Tesla has a smaller sedan due within two or three years that should solve this last issue.)

BMW could have challenged Tesla by releasing a more expensive (but more capable) car than the i3 first. It could have been much closer to the performance and range envelope of the Tesla S, only smaller, making it a more practical commuter car. But the company didn’t do that, and I doubt the i3 will sell as well as the Tesla has in markets where they both exist in volume.

Tesla in China

One of the big challenges for Tesla will be its effort to go into China. I took some time a couple of years ago looking at the Chinese car market, and to sum it up, they are still in the “rip off and sell copies” phase. There is actually a blog dedicated to showcasing Chinese clone cars; some are hard to tell from the originals, others not so much. They seem to particularly like luxury cars. Granted, once they see a picture of Sergey Brin’s pink Tesla Batmobile (not a color choice I’d want on my car) they may think twice about cloning the Tesla.

The tendency for major car companies operating in China is to go in, open a plant, then discover another plant you don’t own producing knockoffs of your popular cars without your consent. That is painful for a company like Toyota, but it could be deadly for a smaller firm like Tesla. Think of the money invested in setting up the charging infrastructure, which a clone company could pirate.

Sergey-Brin-pink-Tesla-Batmobile-

China needs to go electric desperately: The country has virtually no domestic oil production, but now has the leading position in solar-panel manufacturing and should now be close to the lead in lithium-ion batteries. If Tesla sets up shop in China, I not only doubt it will sell many cars there, I think there will soon be Tesla knockoffs flowing out to the rest of the world. Since Chinese companies continue trying to buy Fisker to gain access to the US market, it’s possible these clones would even come under the Fisker brand.

This will be the bigger problem for Tesla than BMW will be near term. I haven’t seen a single electric prototype (other than the i8) that can match the Tesla S, but I expect we’ll see a lot of cheap knockoffs once Tesla goes to China.

Tesla is the Apple of cars

I mean this in both a good and a bad way. On the good side, Tesla has so far taken on everything the big car companies have done and shrugged them off. On the bad side, China is likely its Achilles heel, as it has so far proven to be for Apple. If Tesla isn’t careful, its move into China could result in a market awash with unauthorized Tesla clones. We need at least one more large company to jump on the quality electric bandwagon if electrics are going to survive and prosper into the next century. We need somebody before silly things like this charging trailer (yes, you can now basically buy an engine to strap on the back of your electric so you can drive distance) don’t become more common.

If Tesla doesn’t make it, I expect the real birth of electric cars will happen in China. That will leave the United States positioned like Great Britain was with cars last century: looking overseas at the market leaders. I’d just as soon that didn’t happen.