New car sales in South Africa recovered marginally off a low base in June 2017 with underlying weakness persisting in tough economic conditions. However, year-to-date new vehicle sales remained subdued with a decline of 1.3% for the first half of 2017. Take a look at the details below.
Although the automotive industry remains under considerable pressure, June 2017 reflected a ‘mixed picture’ according to the National Association of Automobile Manufacturers of South Africa (NAAMSA). Aggregate new car sales grew by some 0.9% year-on-year, largely due to fairly strong growth in Light Commercial Vehicle (LCV) sales which increased by 8.0% year-on-year. The new car market, however, declined by 2.2%. Exports grew by 1.4% year-on-year.
According to WesBank, the positive spin in June 2017 was driven by consumer activity in the dealer channel where the sale of passenger vehicles and LCV’s grew by 4.3% and 5.7% respectively. Demand for LCVs in the government and rental channels grew by 74.8% and 25.7% respectively, resulting in positive LCV growth.
“Growth in the dealer channel was clearly fuelled by aggressive marketing in the form of sales incentives and end-of-quarter deals,” said Rudolf Mahoney, Head of Brand and Communications at WesBank. “The strong LCV sales figure is attributed to these being both recreational vehicles for consumers as well as sought-after vehicles for businesses and government.”
New Car Sales Summary for June 2017
Aggregate new car sales of 45 369 units up by 0.9% (418 units) compared with June 2016
New car sales of 28 639 units down by 2.2% (630 units) compared with June 2016
LCV sales of 14 278 units up by 8.0% (1 062 units) compared with June 2016
Export sales of 31 631 units up by 1.4% (429 units) compared to June 2016
Best selling cars for June 2017
The Ford Ranger was the best-selling vehicle in South Africa in June 2017.
Toyota remains the most popular car brand in South Africa.
Brand
Sales
Market Share
1. Toyota
10 506
23.2%
2. Volkswagen
7 447
16.4%
3. Ford
5 371
11.8%
4. Nissan
4 104
9.0%
5. GMSA/Isuzu
2 924
6.4%
New car sales outlook for 2017
The outlook for the remainder of 2017 remains uncertain as political tension and subdued economic growth continues to have a negative impact on business confidence and consumer sentiment. Creating an investor-friendly environment in order to boost growth is essential and Business, Government and Labour play a key role in achieving this. New car sales are closely related to the performance of the economy and confidence levels and until change occurs, domestic new vehicle sales is expected to remain flat, at best, for the remainder of the year. Exports, however, should benefit from expectations of continued improvement in global growth to around 3.6%.
Carmaker Volkswagen has unveiled the Gen.E research vehicle at a Future Mobility Days event in Germany. What is this all about?
Usually, car companies make a big announcement at one of the motor shows or dominate the online space when it comes to concept vehicles. This Gen.E concept surprised everyone by making a relatively low-key arrival at the 2017 Future Mobility Days event.
Not much is known about the vehicle other than the fact it's used extensively for research. It resembles a Golf three-door hatchback with clever aerodynamics to enable it to slip through the air with less resistance. It features specialised alloy wheels, door handles that retract into the body and sit flush, futuristic LED running lights and a charging port on the bonnet.
It's built on a lightened platform, which Volkswagen claims is optimised for crash safety. Being an electric car, it has an advanced lithium-ion cell battery and a claimed range of 400 km.
The Gen.E forms part of Volkswagen's plans for the future. There's a massive plan afoot with autonomous driving and cleaner propulsion systems, but these will take time to be rolled out.
According to the Wolfsburg-based brand's press release: "electric automobiles powered by battery will naturally be the focal point for the coming years, but many new ideas are also being explored in the area of hybrid drives." Does this mean Volkswagen will go the route of Toyota and opt for petrol-hybrid engines?
Safety is also a massive focus for the Volkswagen Group and it came up with Vision Zero – the vision of accident-free driving, mobility without any traffic deaths. Autonomous driving is arguably the biggest topic in the transportation world at the moment and Volkswagen is not just focusing on the passenger vehicle market.
Meanwhile, Volkswagen AG's truck brands such as Scania and MAN, as well as its own VW Commercial Vehicles are working on autonomous cargo transportation systems.
An all-new Porsche Cayenne is on the way for 2018 and latest spy photographs show the new Cayenne virtually undisguised, sporting a wide grille.
Picture credit: S. Baldauf/SB-Medien
Porsche is gearing up for the introduction of the all-new Cayenne SUV which is expected to be officially revealed in September 2017 at the Frankfurt Motor Show.
These latest spy images show the Cayenne undergoing final testing with very little camouflage, giving us a good idea of what the production model will look like. The most notable change is its new slatted front grille which now spans the entire width of the front-end. The rear-end has also changed somewhat with newly designed taillights and a fresh wheel design rounds off the new look. The 2018 Cayenne is also expected to be some 100 kg lighter than its predecessor which will bode well for performance.
The new Porsche Cayenne can be expected in SA in 2018.
The new Cayenne will reportedly feature the same engines offered for the Panamera sedan including a 324 kW 2.9-litre biturbo V6 and 404 kW 4.0-litre biturbo V8. A 4.0-litre V8 turbodiesel engine, the same that powers the Audi SQ7 SUV with 320 kW and 900 Nm of torque, is also on the cards for the Cayenne. More than this, an electric hybrid version is likely.
The new Porsche Cayenne can be expected in South Africa in 2018 and we will keep you updated as soon as official details surface closer to the Cayenne’s reveal at the Frankfurt Motor Show.
The H2 is Chinese SUV brand Haval’s first foray into the South African market, in H2 1.5T Luxury guise, it represents a tantalising proposition: price wise, it undercuts popular compact crossover rivals, and in terms of size, it rivals family car/compact SUV offerings. What’s more, its standard specification offers features that many premium marques reserve for their options lists. Check out our video review of the newcomer…
Porsche used the 2017 Goodwood Festival of Speed to unleash its most powerful model yet. Meet the 2017 Porsche 911 GT2 RS!
This new 911 GT2 RS is the fastest and most powerful road-legal 911 ever. Featuring a twin turbocharged flat-six engine which pushes out 515 kW and 750 Nm of torque, the new Porsche 911 GT2 RS is able to accelerate from zero to 100 kph in just 2.8 seconds and if the road is long enough, it'll achieve a top speed of 340 kph. This new engine is based on the 3.8-litre unit found in the 911 Turbo S, but it features extensive revisions such as a unique exhaust system which is 7kg lighter than the standard exhaust. The new Porsche 911 GT2 RS features a dual-clutch gearbox with gearshift paddles on the steering wheel.
Porsche's 911 GT2 RS has never been about just straight line performance and it has the ability to be fast in all disciplines. The vehicle features large, wide wheels (265/35 ZR 20 at the front and 325/30 ZR 21 at the rear) as well as Porsche Ceramic Composite Brakes (PCCB) as standard. The entire car has been put on a weight-saving diet and there's extensive use of carbon fibre on the air intakes, wing mirrors and bonnet.
The cabin features red Alcantara black leather and carbon fibre weave finishes. There are full bucket seats as well as Porsche's Communication Management (PCM) infotainment system as standard. The Connect Plus module and the Porsche Track Precision app are also included as standard, enabling detailed recording, display and analysis of driving data on a smartphone. A Chrono Pack is available as an option which converts the PCM into a performance display and saves lap times.
At this stage, we believe a few of these ultra-high-performance Porsche 911s will be coming to our market. They're priced in Germany from €285 220, which converts to about R4.5 million.
Prominent Indian manufacturer Mahindra is hoping to expand further into the passenger car market with this: the TUV300. Do note, however, you should pronounce it "Tee-You-Vee-Three-Double-Oh". And as you'll see in the video, that's actually what the car calls itself…
It features 7 seats, a tough-as-nails cab-on-chassis configuration and a fair amount of spec. But it's real appeal is the price. With a new list price of R229 900 and specified with practically all the features the Indian manufacturer has at its disposal, the TUV300 represents impressive value for money.
However, a product in a compact family car segment, at this price point, has its limitations and drawbacks. And for details on those, you'll just have to watch our latest video…
Alfa Romeo's eagerly-awaited SUV is confirmed for introduction in the South African market early in 2018 and order books are already open. Here's what you can expect to pay for the Alfa Romeo Stelvio.
Named after the iconic mountain pass in Northern Italy, the Alfa Romeo Stelvio is the brand's first SUV. There are high hopes for this product and it'll rival the likes of BMW's X3, Audi's Q5, the Mercedes-Benz GLC and the all-new Volvo XC60.
Thanks to a dealership bulletin issued by Penta Motor Group, we can get an idea of the Alfa Romeo Stelvio specification for the South African market. Officially the car can now be ordered, with the first deliveries potentially arriving in early 2018. Some demonstrator units will arrive in late 2017.
The model earmarked for South African market introduction is the 2.0 GME Auto AWD. It features a turbocharged 2.0 4-cylinder petrol engine, delivering 206 kW and 400 Nm. Power goes to all four wheels via the eight-speed ZF gearbox used in the Giulia sedan. The performance will be brisk as the Stelvio 2.0 will be able to hit 100 kph in a claimed 5.7 seconds and max out at 230 kph. In terms of fuel consumption, Alfa Romeo is claiming this Stelvio will consume 7.0 L/100 km.
Alfa Romeo Stelvio will be comprehensively specced, which is fair considering the asking price
SA-spec cars will come in a choice of six exterior colours, with three interior colours. Two alloy wheel sizes are available; 18-inch and 20-inch. It appears that the 20-inch wheels are standard on the First Edition model. Standard specification appears comprehensive, which is fair considering this price point. A quick browse through the bulletin highlighted equipment like adaptive cruise control, 2 zone climate control, heated front seats, heated steering wheel, power tailgate, auto wipers, rear parking camera with front/rear sensors, satellite navigation and full leather upholstery.
There's no mention of the potent Quadrifoglio or any diesel derivatives, so it looks like we're just getting the 2.0-litre turbocharged petrol for now. As always, we'll update you as soon as we hear anything.
Alfa Romeo Stelvio indicative price (July 2017)
There will be two Stelvios for our market, with the difference being trim level. Each dealership will receive an Alfa Romeo Stelvio First Edition demonstration unit for customers to check out in the meantime. The new Alfa Romeo Stelvio will come with a 3 year/100 000 km warranty and a 6-year/100 000 km maintenance plan.
Mazda recently bolstered its Mazda2 compact hatchback lineup with the addition of a highly-specced 1.5 Individual Plus Automatic derivative. We recently had it on test and this is what we thought of it…
If you’re in the market for a highly specificed Mazda2 hatchback, then this review will be of use to you!
We like: Interior and exterior styling, lots of standard features, comfortable ride
We don’t like: Engine labours under hard acceleration and lacks punch, no stability control.
Alternatives
Bang-for-buck: Consider the Renault Clio 88 kW Turbo Expression Automatic priced at R264 900. A healthy 190 Nm of torque is on offer from its 4-cylinder 1.2-litre turbopetrol engine and like the Mazda2, it employs a 6-speed automatic transmission. The Clio was updated earlier this year, so it’s fresh and ready to woo you with its vibrant French looks. If you want something sportier, then the Clio 88 kW GT-Line is going for the same price with more torque at 205 Nm, but you will have to settle for a manual transmission. Either way, it’s good bang-for-buck.
The safe, if pricey, bet: Consider the Volkswagen Polo 1.2 TSI Automatic priced at R292 300. Just bear in mind that the all-new Polo is expected to make landfall early in 2018 and the current car’s 1.2-litre turbo engine might be replaced with a 1.5-litre turbocharged unit (yet to be confirmed for SA). Nonetheless, the Polo 1.2 TSI is a safe, if pricey, bet… just take account that its standard specification is not as comprehensive as the Mazda2’s (it does have ESC, for example).
Rio grande: Consider the recently launched, all-new Kia Rio 1.4 Tec Automatic priced at R287 995. It closely matches the Mazda2 on features and price and is similarly equipped with a naturally aspirated engine offering 74 kW and 135 Nm of torque and mated to a decidedly old-school 4-speed automatic transmission.
There are now 7 Mazda2 derivatives on offer and this 1.5 Individual Plus automatic is the most feature-rich, petrol-powered Mazda2 available, slotting in below the range-topping 1.5 DE Hazumi diesel automatic. The Mazda2 sells relatively well in South Africa and competes in a hotly contested segment against formidable rivals such as the Volkswagen Polo, Ford Fiesta, Renault Clio, Kia Rio and Hyundai i20. Should you consider this new high-spec Mazda2 Individual Plus automatic over its rivals? Let’s find out…
The Good
Kerb appeal
Attractive exterior styling and a modern, well-built interior have contributed to the Mazda2’s relative success in SA.
The Mazda2 is arguably one of the better looking compact hatchbacks in our market; it shares its Kodo design language with other Mazda products such as the CX-3, CX-5, Mazda3 and Mazda6. The Mazda2 offers a sophisticated and elegant look and rides on (standard) 16-inch alloy wheels. We like the Mazda2’s styling, but any aesthetic appreciation is subjective.
Performance and ride quality
This Mazda2’s propulsion comes courtesy of a naturally aspirated 82 kW/145 Nm 1.5-litre engine that drives the front wheels via a 6-speed auto transmission. The test unit’s in-gear acceleration was linear and smooth; we found a driver could get the most from the power unit by steadily feeding in the throttle, but it’s not a particularly entertaining way to drive.
Similarly, measured driving inputs enable the transmission to work through its gears unobtrusively and the driver can execute manual shifts by using the steering-wheel-mounted paddles. What’s more, performance can be sharpened further by flicking the “Sport” switch found on the centre console, but, in truth, we found the difference to be barely perceptible.
Performance is adequate, but the 1.5-litre naturally aspirated engine can’t match the punchiness offered by the Mazda2’s rivals.
Meanwhile, despite riding on larger-than-average wheels and a suspension predisposition that is sportier than most cars in its segment, the Mazda delivers a comfortable ride quality. The suspension copes well over bumpier surfaces, yet it’s just firm enough to endow the Mazda2 with an immersive, sure-footed driving experience.
In terms of fuel consumption, Mazda claims 5.7 L/100 km and during our test period, the fuel consumption monitor returned an average figure of 6.8 L/100km, which is acceptable.
Interior quality and features
The Mazda2’s cabin is attractively styled with a premium look and feel. There are some welcome soft-touch surfaces and the quality of the switchgear and general build quality is good. The instrument cluster has a sporty look to it and an adjustable heads-up display provides information such as speed, navigational information and safety alerts without having to take your eyes off the road. This is a feature that none of the Mazda’s direct rivals can match.
The Mazda2 Individual Plus’ minimalist interior is both comfortable and well-stocked with features.
The seats (upholstered in a combination of leather and cloth) are reasonably comfortable, but some testers found them a bit too firm. A 7-inch floating touchscreen infotainment system is fitted, which can also be controlled using the rotating dial in the centre console, and its menu layout is intuitive to use. Navigation is standard and the system easily syncs with your smartphone via Bluetooth, which can then be controlled using the steering mounted controls. You will be happy to know that 2 USB ports, as well as an auxiliary port, are standard,
Other standard features on this derivative include cruise control, climate control, electric windows, electrically folding side mirrors and a rake and reach adjustable steering wheel,
The bad
Practicality could be better
Luggage space is on the small side, but more space is available once the 60:40 split rear seats are folded down.
The Mazda2’s luggage bay is claimed to offer 280 litres of space, which is the same purported for the Polo and marginally larger than that claimed for the Fiesta (276 litres). By comparison, the Kia Rio offers a notably more sizable luggage bay (325 litres) and even the Renault Clio (300 litres) and Hyundai i20 (294 litres) are more capacious.
Because the Mazda2 is on the smaller side of the spectrum in terms of luggage capacity, it may deter buyers who require more practicality from their compact hatchback. The rear seatback can, however, be folded down in a 60:40 configuration to accommodate larger items. All the door mouldings have bottle holders and 2 front cup holders are also included for the front passengers. Leg- and headroom for rear passengers are just about adequate, but taller passengers may start experiencing bouts of claustrophobia, especially on longer journeys.
Does not like to be hustled
Mazda claims a leisurely 10.4 seconds for the 0 to 100 kph sprint, but under full acceleration, the engine sounds anything but relaxed. It labours and becomes noticeably louder while the transmission hangs onto each gear, squeezing every ounce of acceleration from the engine. You get the sense that this Mazda2 automatic doesn’t like to be driven hard.
Good safety spec, but…
There is a plethora of safety features in the 1.5 Individual Plus, including 6 airbags, ABS with EBD, brake assist and lane departure warning. Rear park distance control with a reverse camera is also standard and ISOfix child seat mounting points are fitted. Curiously, Electronic Stability Control (ESC) is missing, which is a pity on car that costs close to R300k.
The Mazda2 1.5 Individual Plus Automatic is priced at R286 200 and is sold with a 3-year/unlimited km warranty and a 3-year/unlimited km service plan.
Verdict
Overall, the Mazda2 1.5 Individual Plus Automatic is a well-packaged product; it is almost ideal for those who want a self-shifting, luxuriously-equipped compact hatchback. It may not be the most spacious or punchy offering in its segment, but the Mazda2 has enough charm and sophistication to warrant your attention – it’s packed with features that its rivals can’t quite match. We found it delivers sufficient performance for both city and highway driving, although it lacks a degree of excitement and zesty punch that some of its turbocharged rivals offer. Having said that, if outright performance isn’t a priority for you, then the Mazda2 Individual Plus automatic has much to offer.
Yes, the Mazda2 is still sold new in South Africa. The facelifted model was launched locally in 2023 with an updated design and a streamlined model lineup.
What engine is in the South African Mazda2?
All models of the Mazda2 in South Africa are powered by a 1.5-litre, naturally aspirated petrol engine that delivers 85 kW and 148 Nm of torque. This engine is paired with either a 6-speed manual or a 6-speed automatic transmission.
What is the safety rating of the Mazda2?
The Mazda2 has a 4-star Global NCAP safety rating for adult occupant protection and a 3-star rating for child occupant protection. The car comes with standard safety features like driver and passenger airbags, ABS with EBD, and stability control.
What are the main competitors of the Mazda2 in South Africa?
The Mazda2 competes in the B-segment hatchback market against rivals such as the Volkswagen Polo, Toyota Yaris, and Suzuki Swift. It is often praised for its upmarket feel and stylish design.
2018 will be a busy year for the compact hot hatchback segment: the South African market will see the introductions of the next-generation Ford Fiesta ST and all-new Volkswagen Polo GTI. While both cars have been revealed internationally and we have some details, it's too early to tell what the local market's cars will be specified with. However, the recent introduction of the Polo GTI now makes a like-for-like comparison worthwhile…
Developed from the ground up using Volkswagen's MQB AO platform, the new Polo measures 4 053 mm in length, 1 7511 mm in width and 1 446 mm in height. Compared with the outgoing Polo, it is 81 mm longer, 63 mm wider and 7 mm lower.
Meanwhile, over at the Blue Oval, the new Fiesta looks similar to its predecessor, but it's 71 mm longer and 12 mm wider. The bonnet loses its centre bulge, the grille is wider and the headlamps smaller and more elongated.
Whereas the Fiesta ST features a 1.5-litre 3-cylinder turbopetrol, the Polo GTI Volkswagen has a 2.0-litre 4-cylinder engine.
Ford is sticking with a manual gearbox, while Volkswagen is standing by its DSG dual clutch transmission.
Engines
We have an interesting battle on our hands as the two brands are headed in different directions when it comes to engines. Ford is continuing with its downsizing ethos, while Volkswagen is doing the opposite and upsizing.
Let's start with the Ford Fiesta ST. Under its bonnet is a 1.5-litre 3-cylinder turbocharged petrol engine that produces peak outputs 147 kW and 290 Nm of torque, plus Ford is claiming a 0-100 kph sprint time of 6.7 seconds. This newcomer is the first Ford Performance model to feature a 3-cylinder motor and it'll be the first time we will see a Fiesta ST with selectable driving modes. They are: Normal, Sport and Track, each one of which is pretty self-explanatory. As if 3 cylinders aren't few enough, the motor features cylinder deactivation to save fuel.
In the red corner, Volkswagen has wedged a 2.0-litre turbocharged motor into the new Polo GTI. Engineering aficionados may be interested to know that this mill is essentially a detuned Golf engine. It has outputs of 147 kW, but Volkswagen has not yet announced a maximum torque figure.
The previous generation 1.8-litre motor boasted 141 kW and 250 Nm, so we predict that it'll have between 260 and 290 Nm. Performance figures have not yet been confirmed either, but based on claim for the previous generation's car of 6.7 seconds for 0 to 100 kph, we'd be surprised if it doesn't do at least 6.5 seconds to 100 kph.
Gearboxes
There are no surprises here: Volkswagen will be sticking to its dual clutch transmission (DSG) with steering wheel-mounted shift paddles for the Polo GTI and Ford will only offer a 6-speed manual gearbox exclusively in its Fiesta ST.
Interiors
From a quick glance to compare the interiors of the ST (top) and GTI (above) it is clear that the ST retains its "working class hero" appeal (well, at least to an extent). Apart from the obligatory racier ST detailing (and sporty aluminium pedals), a colour touchscreen infotainment system and climate control console are the only overt nods to luxury in the Ford. The Polo GTI's interior, however, is dominated by piano black trim, metallic inserts, the Active Info Display (instead of a conventional instrument panel) and the fascia's integral touchscreen.
Predictions
Based on the current models where the Ford Fiesta ST has impressed due to its fun-to-drive traits and old-school analogue feel, while the Volkswagen Polo GTI delivers quick performance with ease of use and daily drive comfort, we expect nothing to change.
Ford is determined to stick with a manual gearbox for the ST, but by offering additional driving modes, the Blue Oval demonstrates its belief that Fiesta owners would like to tailor their cars' performance characteristics. Those who know what they're getting into will undoubtedly adore the new Fiesta ST: it is still all about unfiltered driving fun.
On the other hand, the Volkswagen Polo GTI will continue doing what it does best. It's a brisk car and while it lacks that involvement that comes with a manual transmission, it'll outshine the Fiesta in the comfort and daily driving stakes thanks to its refinement and convenience of an automatic transmission. The Polo GTI will be the sensible choice as it comes in four-door hatchback, while the Fiesta ST is only available in 3-door body shape.
We're keen to put these two against each other when they finally arrive in South Africa at some point in 2018. It's certainly going to be a close call!
In June 2017, Tesla was named the 4th-most valuable car company in the world, ahead of BMW. Is the California-based automaker/energy storage company/solar panel manufacturer, led by arguably the most charismatic CEO in the motor industry, really superior to the Bavarian firm?
If you were going to invest your own money in a car company, chances are, it would be BMW, a company synonymous with impeccable engineering, tremendous brand equity and an array of desirable products serving all those trendline customer demands. BMW is a most remarkable entity: a car company that combines marketing genius with obsessive engineering.
BMW has also forged ahead with its own electric car (EV) brand. Both i3 and i8 have proven to be successes, with i3 delivering zero emissions mobility for drivers seeking a clever urban motoring solution and i8, the traditional, immersive, supercar experience. Strangely, despite its portfolio of in-demand products and successful differentiation into EVs, a rival car company – which manages to sell only 3% of BMW’s total sales – is now calculated to be more valuable.
Making money without making money
The highly-anticipated Tesla Model 3 will go into full production soon and is expected in SA in 2018 or 2019.
That upstart rival is, of course, Tesla, founded by former Pretoria Boys high school pupil and global technology disrupter-in-chief, Elon Musk. Despite manufacturing issues delaying the launch of its Tesla 3 and a reported driver fatality caused by a malfunction of the brand's autopilot feature, Tesla has converted anticipation into money, with a share price which has ballooned by 1 200% in 5 years. Comparatively, an investment in BMW, an established business profiting from an avalanche of juicy-profit-margin SUVs and crossovers, only grew by 54%. BMW also pays a 4% dividend, while Tesla is wolfing down investor capital to fund its expansion projects into the home electrification and power supply markets.
The current market worth of Tesla is a whisper more than BMW’s $61.3bn, at $85 a share. A crucial difference between these two, beyond the huge discrepancy in sales volumes, is that BMW reported a profit of $7.7bn last year, while Tesla recorded a loss of $725m. How does that work? Elon Musk’s cult of personality has imbued Tesla with near-mythical status as the "only" car company with a sustainable business model for the 21st century. Investors. Analysts. Rivals. Government. They are all in awe of anything Musk says or Tesla does, which reflects in its astronomically overvalued share price.
Musk’s true genius with Tesla has not been in its formation as an EV car company. His masterstroke has been positioning it to operate within the channels of enormously generous government incentives, totalling $2,3bn. Plainly, Elon Musk is making American citizens pay for Tesla’s R&D and production ramp-up, reducing the company’s risk to virtually zero. If BMW had access to anywhere near the incentives that Tesla currently has, there’d probably be a range of i-cars numbered from 1-to-20.
In certain US states, which total most of Tesla’s market, you’re eligible for a tidy $10 000 back on every Tesla bought. That’s a great purchasing incentive. It’s also one that the US government is now recognising as ridiculous because most Teslas are bought by very wealthy customers – the calibre of people hardly in need of a rebate. The 115 000 people who have paid deposits for the Tesla 3, which is due for delivery this year, might find themselves without the benefit of these rebates, as American tax authorities will only allow the credits to function for the first 200 000 units of any EV built by a manufacturer, per battery size.
This alludes to the troubling issue with both Tesla’s business model and market valuation. It fails to make money despite selling expensive cars (both current models are $100 000-plus cars) and has most of its risk and start-up capital provided by the American government. How is it possibly going to make money with the Tesla 3, which it promises will cost half of the current Teslas, and be without the benefit of tax rebates?
Whose batteries are they?
The Nevada Gigafactory 1 will supply lithium-ion batteries for the production of the upcoming Tesla Model 3 and other products.
Tesla’s battery technology is also a joint venture, with Panasonic. Ordinarily, a company being valued at Tesla’s current levels, without any profits, would be considered to have proprietary technology – enabling extraordinary future profits. Curiously, Tesla’s batteries are lithium-ion, like many other EVs, and it has been Panasonic’s huge investment – not Tesla’s – in the first Gigafactory, that Musk hopes will help contain costs for the Model 3. There’s also the small matter of Tesla owing Panasonic $1.7bn for tooling and various infrastructure bits the Japanese company provided for the Nevada Gigafactory.
Musk has defended Tesla’s government incentives by saying they accelerate the car-buying public into a post-oil future they desperately want to enter. But why should one company be assisted so handsomely in the development of its products, to make that future a reality? Perhaps more pointedly, why should middle-income American taxpayers, be subsiding the narcissistic hashtag factor of wealthy Californians with their Teslas? Government incentives are great for those who benefit from them. But they’re not a forever strategy. Especially not with Mr Trump as president.
The true champion
BMW's i3 proves that the Munich-based firm has a strong future in electric mobility.
Despite the South African context pun, Tesla has the Midas touch in everything it does, shielded from risk by US government incentives and seen as a darling investment destination for high-earning millennials keen to champion its zero-emissions cars – and recognising much of what they’d dream to be in the company CEO, Musk. Some of the disruption Musk has wrought in the automotive space will unlock value. This is a man, it is worth remembering, who spent his first multi-millionaire profits on a McLaren F1 back in 1999. A principled car bloke.
Would BMW have delivered its i-cars if Tesla had not built the Roadster, followed by the Model S and promises of world domination? Perhaps not. But they have. And without fanfare or a celebrity CEO. BMW is furiously courting researchers and committing engineers to make lithium-air batteries – the true future energy density breakthrough – work in their cars by the next decade.
The most pronounced issue for Tesla, as a mobility company, is that it's awfully bad at building enough automobiles. With a Gigafactory in Nevada, it will have the capacity to deliver an immense inventory of batteries, but it has consistently under delivered in its production promises when assembled cars are required. Industry incidents and industrial engineering issues at its Fremont facility, where all Teslas are built, are above industry average.
Tesla's vehicle production and sales numbers can't match BMW, yet Tesla's market worth is significantly higher.
You’d have to be awfully ignorant of its history, and the ability of Germany engineers and component manufacturers, to think that BMW could not do what Tesla can by producing a range of EVs. Ironically, BMW already does. BMW’s i3 and i8 also have sophisticated carbon-fibre structures, while Tesla is reverting to traditional steel construction for its Model 3, it’s not even attempting aluminium! Hardly the mechanical platform engineering of the future…
BMW builds more than 2 million cars each year and builds them impeccably well. Tesla struggles to make 80 000. Which do you think is easier to do: build more cars for the batteries you have, or build more batteries to go into the cars you are producing? Exactly. That's why the BMW’s market valuation is real value and Tesla's is, well, a fair bit of speculation.
