To investors,

To the average American, it seems like the US EV industry is exploding. Teslas are popping up on city roads all over the country, EV charging stations are now common sights at local malls, community centres, and even large corporate offices. On top of that, American icons like Ford and GM have announced plans to electrify much of their existing vehicle line-ups. Seems like things are going great for EV enthusiasts.

But if we peel back the layers of America’s EV industry, we see that there are two distinct components. Tesla EVs, and non-Tesla EVs. Conflate the two at your own risk. Their results tell very different stories.

It’s clear that Tesla vehicles are a massive hit both in America and abroad. Tesla sold an estimated 27,000 Model 3s in America during the month of December, over 150,000 in 2019, and the Model 3 landed firmly in the top 10 rankings for all American car sales last year.

But that’s where America’s EV story ends. I wrote an article last week about what America’s EV industry would look like without Tesla, and the findings aren’t good.

This is a chart of the best-selling Tesla models in America by year:

And this is a chart of the best-selling Non-Tesla EVs in America by year:

In 2012, the Chevy Volt was America’s best-selling EV with over 23,000 sales that year. But 8 years later, the Toyota Prius Prime (America’s best-selling non-Tesla EV) is still only doing 23,000 sales per year.

4 different EVs have claimed the title of “best-selling non-Tesla EV of the year" since 2012, but none of them have sustained a meaningful level of success.

In fact, the 30,200 US sales that the 2014 Nissan Leaf generated that year hasn’t been topped by a single EV (except the Model 3) in the last 5 years.

To side-step this concerning stat, traditional automakers have chosen to grow through EV line-up expansion. In 2012, only 9 EV models were for sale in America. Today, over 46 are for sale. And while I recognize the value of having more EV models for sale in America, it doesn’t address the core problem. They all suck.

On the surface, more EV models makes it look like the EV industry is growing, but the average sales volume of non-Tesla EVs continues to decline each year in America. And I suspect much of the problem has to do with vehicle range.

There still isn’t a single non-Tesla EV in America that has as much range as the 2012 Model S had. 265 miles was an achievement 8 years ago, but now that’s table stakes for anyone who wants to compete in the EV market.

And while some traditional automakers are showing off promising EV prototypes, it doesn’t seem likely that 2020 will yield meaningful improvements to non-Tesla EVs. Rivian’s EVs are expected to arrive towards the end of 2020, Volkswagen’s ID3 isn’t being released in America, and Ford’s Mach E Mustang isn’t set to launch until early 2021.

Eventually Tesla will have to face some level of competition in America, but the burden of proof has shifted from Tesla to all the other EV competitors. Enough talking, it’s time for all other automakers to start shipping great EVs.

Because until another automaker releases an EV with a 265-300 mile range, I expect Tesla will continue eating everyone else’s EV market share with their Model 3 and upcoming Model Y. Great news for Tesla, bad news for the rest of America’s EV industry.

Book Of The Week

Last week I read The Square And The Tower. It’s an excellent take on the different ways that networks form, and why certain types of networks are more prone to spreading ideas, revolutions, diseases than others.

The book also focuses on a certain type of network, the hierarchy - and explains why these top-down networks rule so much of the world around us, and how they’ve been toppled throughout history.

It also pairs well with last week’s book - Guns, Germs, and Steel - the two books even offer different viewpoints of some of the same defining moments throughout human history.

- Kevin