August 25, 2019
Expert Reviews

Tesla Becomes an “Enormous Burden” on Porsche

The market for electric vehicles has been dominated by Tesla over the years, but Porsche wants to have a share of the pie, a move that is proving to be a huge burden for the German Automaker. Porsche is looking forward to grabbing a part of the market share from Tesla by releasing its long-range, all-electric Mission E in 2019.The model is arguably seen as one of the strongest rivals for Tesla. Porsche is counting on its many years of manufacturing expertise and backing from its parent company, Volkswagen AG—the German motor vehicle manufacturer famous for high-performance vehicles. However, Porsche will not achieve this without several cost implications, as they will face some financial headwinds in an effort to produce electric vehicles.

Tesla dominates the EV market

Currently, the electric luxury vehicles market is quite small, and Tesla dominates and firmly controls the small market that exists. According to data, Tesla enjoys 45% of US electric vehicle sales through its Tesla X and S models.

With the demand for Tesla’s cars on the rise, other automakers are dying to get a share of the market and channel some of the proceeds from that demand into their bank accounts. One of these automakers is Porsche, who is stopping at nothing to grab a piece of the lucrative market. However, Porsche is just realizing that obtaining a share of the EV market will not be a walk in the park, as it will be rather costly.

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Enormous investment needed to catch up with Tesla

One thing that all automakers are cognizant of is that the EV segment is growing,so they want to take advantage of the growth and get their share. Unfortunately, it is clear that the investment they need to make to be at par with Tesla, the market leader, is mind-boggling.

In a past talk on Automotive News Europe regarding how Porsche plans to stay profitable as it puts in billions into its EV program and plug-ins, company CFO Lutz Meschke disclosed that Porsche intended to invest $3.5 billion. This investment was to be carried out as Porsche continued its gas and diesel propulsion. The company planned to implement cost-cutting measures across its departments to retain its profit margin at 15%. The CFO remarked that the investment was a huge burden, and Porsche could not help but wonder if it would have been necessary without Tesla having already entered the automotive market.

Only time will tell

The strategic entry of Porsche into the EV market dominated by Tesla is one match that many cannot wait to see, as they are wondering which of the two automakers will come ahead in the race to achieve electric mobility.In the end, the winner is the consumer, since competition encourages innovation, higher growth, and efficiency, which are all for the better of the buyer.

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