Tesla Inc’s success in pushing the Model S into the luxury car market is a key example of how new brands can make a name for themselves, according to electric vehicle (EV) rival Lucid Group Inc.
Following a meeting with Lucid’s management, RBC brokers noted that the company felt technology and performance were more important than history and heritage in the luxury car space, as shown by Tesla’s rise.
“Lucid believes its internally developed electric motors and inverters are the best in the industry,” the bank wrote.
“We do wonder, however, how much of Tesla's success had more to do with it being the only game in town with EVs initially.”
Founded four years after Tesla in 2007, Lucid has struggled to make leeway in the sector as legacy brands such as Ford Motor Company move to offer new ranges of electric models.
Lucid’s 900 volt chargers could give it an edge over Tesla’s 400 volt version, according to the company, though the latter’s already-expansive network “can always be upgraded,” RBC said.
Growing competition from Chinese manufacturers is also unlikely to pose too much of a threat to US firms, RBC noted, echoing Lucid that the cars are “inferior on battery range.”
European producers such as Audi, Mercedes and BMW AG may be required to produce batteries capable of a “more robust range” though, RBC continued, with mileage being more important in the States than on the continent.
Lucid could look to license technology to mass-market manufacturers including Toyota Motor and Honda Motor, RBC added, providing a “great way […] to subsidise growth aspirations,” especially given older companies’ stronger balance sheets can fund the move toward EVs.
RBC tipped Tesla with an ‘outperform’ rating, offering a share price target of US$212, down almost 1% on Friday’s close.
“Unlike retail luxury products like handbags and watches, auto buyers can be swayed by technology and performance to purchase a new brand over an incumbent,” the bank reiterated.