Who Has the Winning Edge in The Ongoing EV Race? The Oldtimers or The Startups

November 20, 2023 Author Articles 0

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Author: Alwin Antony

The race to dominate the electric vehicle market is on, and the competition is taking place on a global stage. With the push for a more sustainable and environmentally friendly future, EVs have become the centrepiece of the automotive industry’s transformation. 

Last couple of weeks we were talking about ‘How To Win The EV Race as a Country and a Company’. This week we are looking at the EV race from a different angle.

How to Win the EV Race – Blog Series

This is the second part of How to Win the EV Race blog series

  1. As An EV Maker, What Does It Take to Win the EV Race?
  2. What Does It Take To Win The EV Race As A Country?
  3. Who Has the Winning Edge in The Ongoing EV Race? The Oldtimers or The Startups

Two main contenders have emerged in this race: established, legacy automakers and innovative startups. But who will ultimately prevail in the EV market? In this article, we’ll explore how Startups and legacy companies can capitalise on their strengths and weaknesses to win the EV Race.

Initially let us look at the old companies, their strength and how they can capitalise on their strengths. 

The Old Timers: What Gives Them The Edge?

The giant players in the automotive industry, such as General Motors, Ford, Volkswagen, and Toyota, have been industry titans for decades. They have the advantage of experience, deep pockets, and a well-established customer base. 

Here are some key advantages old companies bring to the table. Also along with these advantages the old companies have the wisdom of ages gathered by witnessing many of their models being crushed or being enthroned in the market.

Manufacturing Expertise

The old companies have a deep understanding of mass production and supply chain management. They’ve honed their manufacturing processes over many years, resulting in efficient and cost-effective production.

One of the barriers to mass EV adoption is the upfront cost of the EV and manufacturing costs are a major contributor to the upfront cost. This is an area startups struggle because setting up and commissioning a manufacturing plant of large capacity and state-of-the-art technology( EVs can’t be manufactured on sweatshops) will put a large hole in their pockets. This is a major issue because startups cannot raise the price of EVs since the automotive industry is very price-sensitive. 

Moving on to the next important factor.

Global Presence & Influence

Another edge the old-timers have against the newbies is their global presence and influence. These companies have a worldwide network of dealerships, service centres, and customer relationships. They can leverage this global presence to market and sell EVs in various regions.

Also, this global presence allows them to gather the necessary raw materials and other components for manufacturing EVs. The startups cannot compete with them in the global presence combined with shallow pockets.

Now let us look at a factor which is the most important but the most difficult to achieve.

Brand Recognition

Being recognised as a brand, especially in the auto sector is not a piece of cake. Established automakers have a long history and strong brand recognition, which can instil trust and confidence in consumers transitioning to EVs.

Brand recognition plays a vital role in the buying habits of customers. People might be hesitant to spend thousands of dollars on a car designed and manufactured by a startup.

To gain recognition and confidence among the customers, the new companies have to put their ‘A’ game in all areas such as product development, manufacturing, design performance, customer service, and sales experience all while being profitable or at least not being sunk.

The next important factor which gives the old-timers an edge over the newbies.

Deep Pockets

Anybody with some expertise in automobile engineering and electrical engineering can put together an EV. But making your product safe, efficient and desirable is a different game altogether.

In our previous article on ‘How To Win The EV Race As A Company’ we have explained what all the areas companies have to pay attention to. The majority of them were related to research and development and to run a proper R&D wing you have to pour money and resources in continuously.

Unfortunately, most of the startups will be suffering just to stay afloat thereby being forced to bypass thorough testing of their products. This lack of R&D and thorough validation of their product’s performance causes their products to perform poorly in the market questioning their reliability and tampering with customer’s confidence in their product.

Legacy companies have the financial resources to invest heavily in research, development, and production, giving them a competitive edge in innovation and scaling up.

Now, let us look at another important factor

Regulatory Compliance

Legacy automakers have experience in navigating the regulatory landscape and can adapt to changing emissions standards and government incentives more effectively. Also, they have the power to influence the regulatory body to create and change norms to support their causes.

Regulatory compliance is required not only in the final product but throughout the production line there are strict regulatory rules companies have to follow. This might be a problem for startups as they may struggle to find their way through the stringent regulatory rules.

The Startups: Innovation Meets Audacity

When it comes to startups, Innovation is the key here. To outperform the giants, startups have to depend solely on their innovative ideas. Relatively new companies like Tesla, Rivian, Lucid Motors, and NIO have already disrupted the traditional automotive landscape with their innovation and fresh perspectives. 

Let us look at some of the advantages startups have over legacy companies.

Agility and Innovation

Startups are unburdened by decades of legacy technology and infrastructure. They can design and manufacture EVs from the ground up, leading to cutting-edge designs and technology.

When it comes to agility, the old companies struggle a lot. From their design boards to the production shop floor, they follow systems, procedures and specific process flows and you cannot bypass those systems. While these systems are highly helpful in the traditional automotive landscape they are less effective or even detrimental in the EV landscape. 

Here is one more advantage startups have over legacy companies.

Faster Decision Making

Unlike traditional vehicles, an EV is a large computer on wheels and new powerful technology solutions scream at you every day. Smaller, newer companies are often more agile, making it easier for them to adapt to market changes and quickly implement innovative solutions.

In startups, you don’t have to convince a thousand people before implementing a new technology or solution to your product. Tesla became the pioneer in the EV sector only because of their agility and alertness in identifying the trend and implementing it in their vehicles. Of Course, glitches are going to be there but the customers will forgive you for the couple of glitches over the hundreds of improvements and better experience you offer them.

Moving on to the next point.

Unwavering Focus

EV startups often have a singular focus on electric vehicles, allowing them to concentrate all their resources and efforts on perfecting their products. A startup may have to consider a lot of things but their burdens are limited. The legacy companies have to fulfil a lot of commitments as they have to keep on running their existing petroleum-powered product lines.

Moving on to the next important thing.

Sustainable Practices

Since modern startups are based on the green philosophy, their culture will be developed around the sustainability motto. Many startups have a strong commitment to sustainability, not only in their product but also in their operations, appealing to eco-conscious consumers.

Let us look at another important factor.

Disruption Potential

I suppose it is safe to say that Tesla disrupted not only the EV industry but at least the entire automotive landscape in the USA and the giant companies are trying to catch up with Tesla. This is evidence that startups have the potential to disrupt the market and challenge traditional automakers to adapt and evolve, fostering healthy competition and innovation.

Let us conclude shall we? 

Conclusion

The winner of the electric vehicle race remains uncertain, and it may not be a matter of one side completely triumphing over the other. Both old companies and startups have their unique strengths and challenges. Legacy automakers are catching up by investing in EV technology, while startups are working to scale up production and establish themselves as formidable competitors.

The key to success in the electric vehicle race may lie in collaboration and learning from one another’s strengths. The old-timers can benefit from the agility and innovation of startups, while startups can leverage the experience, resources, and global reach of legacy companies. 

In the end, we will be the ultimate winners, as the competition between these two groups will lead to more diverse, innovative, and affordable electric vehicles for us to choose from

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