Even Audi Thinks Tesla Motors Nailed It Strategically

By Markets Fool.com

Image source: Tesla.

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In recent years, traditional automakers have really started to take Tesla Motors seriously. During the company's early years, it was conveniently brushed aside and ignored; but a few years ago, the larger OEMs started to invest heavily in developing EV technology. Due to the long development cycles that characterize the industry, we're just now about to see the General Motors Chevy Bolt in 2016, which is built off much of the same technology from the Chevy Volt.

European manufacturers have lagged their American peers on the EV front. The Big Three German OEMs mostly offer compliance vehicles, but Tesla has now gotten their attention in a big way, in part by stealing the most profitable customers. For the longest time, the German automakers were hoping that diesel was the answer, aggressively pushing diesel vehicles in the U.S. We all know how that's played out.

As parent company Volkswagen AG struggles with the ongoing fallout from its Dieselgate scandal, an Audi exec has now conceded that Tesla nailed it.

"Tesla did everything right"
EETimes reports (via Electrek) that, at a recent industry conference, Audi's Director of Battery Electric Vehciles, Stefan Niemand, had some unqualified praise for the Silicon Valley upstart. For starters, the internal combustion engine is plateauing in terms of what types of efficiency gains it can realize. A Porsche (also owned by VW) exec acknowledged that electrification is really the next step for the industry, pointing to the Mission E concept that the company showed off last year.

Porsche Mission E concept. Image source: Porsche.

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But Niemand didn't pull any punches regarding where the majority of EVs stand today: "These cars are slower than those with conventional drive and they have a much lower range, and in [cost] they are more expensive." Niemand blamed this approach for the slow uptake of EV adoption thus far.

This echoes my own sentiments, where true bottom-up disruption would have taken too long because performance and costs are not improving fast enough. Tesla's top-down approach is truly accelerating the secular shift to EVs.

Niemand also underscored the need for DC-charging infrastructure in order to enable long-distance travel. DC charging is necessary for faster charging rates, dramatically reducing charging times. Niemand added, "We need awesome cars and a seamless infrastructure."

This is another area where Tesla took matters into its own hands. While the rest of the industry was paralyzed with debating which standards to adopt, Tesla went ahead and built its own Supercharger network.

Supercharging is an important benefit to Tesla owners. Image source: Tesla.

Tesla's Supercharging technology is the fastest DC charging standard in the world right now, and is a key strategic benefit for its vehicles. While the company uses a proprietary port standard, Tesla has always maintained that it is open to sharing the network, provided that other OEMs help share the costs (proportionate to their expected usage), and that the vehicles can withstand the current.

During a presentation last year, Tesla CTO JB Straubel noted that, because Superchargers are so far ahead of other charging technologies, there would be a "negative lead time" associated with becoming interoperable with other standards. Tesla would have to wait for everyone else to catch up.

Niemand concluded, "I hate to admit it, but Tesla did everything right."

The article Even Audi Thinks Tesla Motors Nailed It Strategically originally appeared on Fool.com.

Evan Niu, CFA owns shares of Tesla Motors. Evan Niu, CFA has the following options: long January 2018 $180 calls on Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.