August 8, 2020

Tesla won the electric-car race — but Musk knows it doesn’t matter

Tesla won the electric-car race — but Musk knows it doesn't matter

  • The electric car race has been on since 2010, but it’s now essentially over, and Tesla has won: CEO Elon Musk’s automaker dominates the EV market
  • But that market remains tiny, at just about 2% of global sales.
  • Musk knows that for Tesla’s grand vision to succeed, that share has to grow exponentially.
  • Winning the EV race means that for Tesla, the real work of eliminating the internal-combustion engine has just begun.
  • Visit Business Insider’s homepage for more stories.

The idea that automakers are racing to commercialize electric cars — and that one or some of them will come out on top — has always been flawed. 

For starters, the auto industry is huge: More than a billion passenger vehicles are roaming the planet, with another 80 million or so joining them every year. No single victor could satisfy that level of demand.

This was obvious even in the early days of the auto industry, when scores of carmakers, engine-makers, and coachbuilders were competing to put Americans and Europeans behind the wheel. Yes, there were obvious winners and losers: Henry Ford captured a huge amount of market share early on with his Model T, then General Motors grew itself into a competitor and took the lead. But more than a century on, both are carrying on, more or less fine. That’s not how races work. 

In the 20th century, plenty of other famous names got in on the action. Vanished marques, such as Studebaker and Nash. Mid-century upstarts like Chrysler. The Europeans were always a factor: Mercedes, BMW, Fiat, Ferrari, Rolls-Royce, Aston Martin, Rover, Vauxhall, Renault, Citroën. Mighty Volkswagen. After World War II, a surge of Japanese nameplates rolled in: Toyota, Honda, Mitsubishi, Nissan, Mazda, Subaru.

The point is that on a planet populated by billions of people, a significant percentage of whom aspire to personal mobility, you need a lot of automakers to satisfy demand and to share the risks of trying to meet it. 

That was the internal-combustion era, however. Which still makes up roughly 98% of the global market. Meanwhile, on the electrified front — 2% of worldwide sales — there’s already a clear winner: Tesla.

A single statistic tells the story. Nissan’s Leaf, an EV that arrived in 2010 before Tesla’s Model S followed in 2012, had sold just over 400,000 units, all time. Tesla is now closing in on a million, for the five vehicles it has marketed since its founding (the original Roadster, Model S, Model X, Model 3, and Model Y).

Tesla has a near-monopoly of a tiny market, then. The race, such as it is, has ended, and Tesla can declare victory. But here’s the thing: CEO Elon Musk knows the race is the wrong narrative, the one that doesn’t matter. Here’s why:

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