Loup Ventures

About the Author Loup Ventures

At Loup Ventures, research is in our blood. The spirit of our team has always lived on the curiosity to discover new insights that yield investment opportunities. For years we did this on Wall Street, focused on public tech companies. Now we invest in private frontier tech companies, but public companies like Tesla, Nvidia, and others are also meaningful innovators in frontier tech. These public companies are shaping the emergence of AI, robotics, autonomous vehicles, and AR/VR just as much as early stage startups. As a result, we’ve always kept a watchful eye on public market participants to inform our private investment strategy. Gene Munster is a managing partner and co-founder at Loup Ventures. Prior to Loup Ventures, Gene was a managing director and senior research analyst at Piper Jaffray where he covered technology companies including Apple, Amazon, Google and Facebook. During his 21-year tenure, Gene received many acknowledgements including: Top Stock Picker from Forbes, Best on the Street from The Wall Street Journal, and was widely recognized for his work on Apple. Gene holds a bachelor’s degree in finance and entrepreneurship from University of St. Thomas.

Tesla (TSLA): New EV Entrants Unlikely to Threaten Model 3


By Gene Munster

Over the past year, there has been increasing anticipation for the release of new EV models from the likes of Audi, Jaguar, Fiat, Hyundai, and Honda. This stoked concerns that Tesla’s (TSLA) year to date 75% US EV market share will quickly be diluted by established automakers that are already selling cars at scale. We took a closer look at what has changed in the EV landscape over the past year and compared available models by price, range, and delivery time.

There are now 17 EVs in the US market, compared to 11 a year ago. Next year that number should rise to 24. The majority of these models fall into two camps: those with starting prices above $70,000, and those with ranges below 130 miles. These two camps are largely ruled out as a mainstream option given the high price or limited range. We view a more mainstream option as priced below $40,000 with a range above 225 miles.  When filtering for prices below $40,000 with a range above 225 miles, the list narrows to five options, compared to three a year ago. Today, this list includes the Model 3, Chevy Volt/Bolt, Hyundai Kona, and Kia Niro. Within that group, there’s a wide range of design options, software functionality, and charging network availability. Considering those factors, Model 3 is the clear winner in terms of value.

Our conclusion: competition in 2019 and likely 2020 is not a measurable threat to Tesla. The Model 3 is unchallenged in its EV value proposition.

EV Models Available in the US Today

Not surprising, the US electric vehicle market is rapidly growing. In 2016, EVs accounted for less than 0.25% of cars sold in the US. In 2019, EVs will account for 2-3%. We’re likely 15-25 years away from 100% EV adoption. The table below outlines EV models that are currently available in the US sorted by starting price.

EV Models Expected in the US in 2020

The following table outlines expectations from automakers for new EVs in 2020 sorted by starting price.

Long-Term Market Share Expectations

As mentioned, Tesla’s year to date US EV market share is 75%. Over the next 10 years, we expect Tesla’s share to decline to 20-25%. As a point of reference, in 2018, GM had the leading market share in the US at about 17%. Factoring in a stable US auto market of 18m units a year (eventually, all cars will be electric) yields 3.6-4.5m annual Tesla sales in the US. This compares to what will likely be just over 200k US Tesla deliveries (of our estimated 360k global deliveries) in 2019.

Tesla’s 7 Year Head Start

The prevailing wisdom holds that OEMs are quite good at producing cars and switching the drive train to electric will be simple, allowing them to profitably scale EV production and maintain their market position. If this is true, it would dramatically lower Tesla’s market share and make the story less compelling overall, but we believe Tesla’s 7-year head start sets the company up to control a significant share of the market for a long time. Three key benefits from Tesla’s head start:

  • 92% more efficient batteries than four other EV manufacturers, adjusting for differences in range evaluation methods.
  • Vertically integrated Supercharger network is easier to use compared to generic charging stations.
  • More advanced self-driving capabilities.
Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. 

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