Weekly Brief: Tesla Reaps Rewards of Traditional Automaker BEV Ads

Tesla smashed analyst expectations with a record $3.3Bn profit in the first quarter of 2022.

The EV maker delivered roughly 310,000 vehicles between January and March, almost twice what it delivered in the first quarter of 2021, leading to an 80% leap in total sales to $18.76Bn. Most of Tesla’s rivals haven’t divulged their quarterly results yet but expectations are tepid across the auto industry owing to the global microchip shortage and supply chain issues exacerbated by Russia’s war in Ukraine.

General Motors revealed that its US sales fell 20% in the first quarter of 2022. Estimates expect Ford to suffer a bottom-line year-over-year decline of 54% and, yet, Tesla just keeps on surging, despite operating below full capacity. One chart in Tesla’s Q1 shareholder deck particularly stood out. It showed Tesla vehicle gross orders in the US day-by-day in February 2022. Between February 12 and February 14, gross orders surged almost straight upward, as if the data analyst fell asleep at the machine with his nose on the up button. What happened between the 12th and the 14th?

As you may recall, this year at the Super Bowl legacy auto makers went all in on EVs. They blanketed the airwaves with million-dollar ads featuring Hollywood stars dressed up as everyone from Zeus to Dr Evil and heralding an all-electric future. In doing so they tried to position their brands as the vanguard of this new net-zero automotive reality. However, the surge in Tesla’s gross orders suggests that Super Bowl viewers drew a different conclusion: If familiar automakers are advertising EVs, this revolution must be legit. If it’s legit, maybe it’s time to check out the one company that didn’t spend a penny on Super Bowl advertisement but which consensus points to as the industry leader?

Tesla board member Hiro Mizuno said as much in a tweet last week. “It makes perfect sense. EV ads of their familiar brands (plural) give EV skeptical consumers comfort. Once convinced about EV as next car, they naturally check the leading brand.”

Last week Lexus debuted its inaugural EV for the global market, the RZ 450e. The vehicle is a crossover SUV built from the same blueprint as Lexus parent company Toyota’s bZ4X, with the addition of a sleeker interior, fancy front lights and grille pattern. Maximum range is a mediocre 225 miles per charge. Lexus hopes the RZ 450e will go toe-to-toe with Tesla’s Model Y. Pricing is yet to be announced.

Mercedes-Benz announced a Model Y competitor of its own, a new all-electric crossover SUV that will hit the US market in three different varieties: the EQS 450+, the EQS 450 4Matic, and the all-wheel drive EQS 580 4Matic. Max range is claimed at an impressive 613 miles per charge. Paul Myles has the details.

It’s easy to read these headlines as a sign of Tesla’s competition closing the gap. Every week, it seems, another carmaker announces its intention to go all electric by 2030 and invest billions of dollars toward reeling in Elon Musk. His leadership style is incendiary and unfocused. Scaling a car company is notoriously difficult. It’s only a matter of time before Tesla begins to surrender its first to market advantage. In reality, as Tesla’s Q1 and its Super Bowl bump reveal, every step the competition makes toward electric mobility boosts Tesla’s credibility and popularity, rather than diminishes it.

That epiphany should make every automaker trying to catch Tesla very worried. The more they invest, the more they legitimize. The more they legitimize, the more attractive Tesla becomes.