Tesla will disrupt the automotive industry only if it is able to achieve scale, according to a new study by Gabriel Collins, the Baker Botts Fellow in Energy and Environmental Regulatory Affairs at Rice University’s Baker Institute.
Ford and Tesla both earned their reputations through what Collins describes as a “revolutionary vehicle type” – the Model T and Model S-X-3 suite, respectively – and as market makers. Comparing their sales growth trajectories, Collins hypothesizes, can offer insights on how electric vehicle (EV) sales are scaling up as well as how EVs can reshape automobile and oil markets.
The modern world, saturated with automobiles, provides a different battle for Tesla than Ford faced. For Tesla, scalability is essential and “holds the keys to lasting structural change in the energy and transportation spaces,” Collins wrote in his report, “Ford vs. Tesla: What Does a Transformational Automobile Scale-up Look Like?”.
Without scale, he says, Tesla cannot compete with the legacy brands that have built from Ford’s vision for decades. Scale would allow EVs to create the operational infrastructure that can support pure-battery EVs and become more affordable, Collins says.
So can EVs reach market-transforming scale within the next decade?
“Possibly,” Collins says. “One overwhelming reality leaps forth from the past decade of data and anecdotal evidence alike: at the global level, EVs have thus far been evolutionary, not revolutionary, factors in the transportation sector.
“Tesla has been ‘evolutionary’ in that the changes they have introduced to the car market to date are thus far incremental …” Collins writes. “A ‘revolutionary’ change, such as the introduction of the Model T, would cause palpable shifts on even a short-term basis. … EVs are not yet impacting the market with sufficient mass to trigger that compounding, deep, high-velocity change necessary for a revolution.”