Winning the electric car race is just the beginning of Elon Musk's plan for Tesla

insider@insider.com (Matthew DeBord)
·10 min read
Elon Musk
Elon Musk has put — and kept — Tesla far ahead of the competition. But delivering on his master plan demands something more.

FREDERIC J. BROWN/AFP via Getty Images

  • The electric car race has been on since 2010, but it's now essentially over, and Tesla has won: CEO Elon Musk's automaker dominates the EV market

  • But that market remains tiny, at just about 2% of global sales.

  • Musk knows that for Tesla's grand vision to succeed, that share has to grow exponentially.

  • Winning the EV race means that for Tesla, the real work of eliminating the internal-combustion engine has just begun.

  • Visit Business Insider's homepage for more stories.

The idea that automakers are racing to commercialize electric cars — and that one or some of them will come out on top — has always been flawed. 

For starters, the auto industry is huge: More than a billion passenger vehicles are roaming the planet, with another 80 million or so joining them every year. No single victor could satisfy that level of demand.

This was obvious even in the early days of the auto industry, when scores of carmakers, engine-makers, and coachbuilders were competing to put Americans and Europeans behind the wheel. Yes, there were obvious winners and losers: Henry Ford captured a huge amount of market share early on with his Model T, then General Motors grew itself into a competitor and took the lead. But more than a century on, both are carrying on, more or less fine. That's not how races work. 

In the 20th century, plenty of other famous names got in on the action. Vanished marques, such as Studebaker and Nash. Mid-century upstarts like Chrysler. The Europeans were always a factor: Mercedes, BMW, Fiat, Ferrari, Rolls-Royce, Aston Martin, Rover, Vauxhall, Renault, Citroën. Mighty Volkswagen. After World War II, a surge of Japanese nameplates rolled in: Toyota, Honda, Mitsubishi, Nissan, Mazda, Subaru.

The point is that on a planet populated by billions of people, a significant percentage of whom aspire to personal mobility, you need a lot of automakers to satisfy demand and to share the risks of trying to meet it. 

That was the internal-combustion era, however. Which still makes up roughly 98% of the global market. Meanwhile, on the electrified front — 2% of worldwide sales — there's already a clear winner: Tesla.

A single statistic tells the story. Nissan's Leaf, an EV that arrived in 2010 before Tesla's Model S followed in 2012, had sold just over 400,000 units, all time. Tesla is now closing in on a million, for the five vehicles it has marketed since its founding (the original Roadster, Model S, Model X, Model 3, and Model Y).

Tesla has a near-monopoly of a tiny market, then. The race, such as it is, has ended, and Tesla can declare victory. But here's the thing: CEO Elon Musk knows the race is the wrong narrative, the one that doesn't matter. Here's why:

After Elon Musk sold his stake in PayPal to eBay in 2002, he took his personal payday — hundred of millions — and sunk it into several companies, including Tesla, which at the time was barely making any cars.

elon musk driving roadster
elon musk driving roadster

REUTERS/Rebecca Cook

Electric vehicles weren't unprecedented. They had been around since the dawn of the auto age, and in the 1990s, General Motors took the bold step of launching the EV1, an EV with slightly more than 100 miles of range.

GM EV1
GM EV1

GM

The EV1 used a nickel-metal hydride battery design, the best option available at the time. GM only leased the EV1 to customers, and eventually ended the program.

1997 EV1 Phantom Rendering 033175
1997 EV1 Phantom Rendering 033175

GM

Tesla's battery design was rather different. It wired together thousands of lithium-ion cells to create a battery pack that required an intricate cooling system. But it yielded a range that was competitive with gas vehicles.

Tesla Model S battery module
Tesla Model S battery module

Yutong Yuan/Business Insider

The original Roadster was Tesla's first product, and it was impressive. Based on a Lotus chassis, the two-seater could do 0 to 60 mph in 3.7 seconds, with double the range of the EV1.

Tesla Roadster
Tesla Roadster

Scott Olson/Getty Images

Tesla never sold a lot of Roadsters, but the price was high enough to generate revenue to build the company's first "clean sheet" design, the Model S, unveiled in 2012. (Tesla also had a Department of Energy loan, plus equity investments from Daimler and Toyota adding to a 2010 IPO that raised about $260 million).

Tesla Model S
The Tesla Model S P85D won the highest rating Consumer Reports has ever awarded.

Johannes Eisele/AFP/Getty Images

The Model X SUV followed in 2015. For Musk, it was imperative to sell high-priced, luxury EVs to fund his Master Plan: an affordable EV for the masses.

2019 Tesla Model X
2019 Tesla Model X

Tesla

That car arrived in all-important Model 3, which hit the streets in 2017. By 2020, it made up the bulk of Tesla's sales, which had hit more than 250,000 annually.

Tesla Model 3
Tesla Model 3

Hollis Johnson/Business Insider

The Model Y was next, revealed in 2019. With this car, Tesla was taking on the booming market for crossover SUVs in the US. Musk expected it to outsell the Model 3 in the long-run.

Tesla Model Y
Tesla CEO Elon Musk views the new Tesla Model Y at its unveiling in Hawthorne, California on March 14, 2019.

FREDERIC J. BROWN/AFP/Getty Images

Tesla also announced a new Roadster, this time with a 0 to 60 mph time of under two seconds. Tesla hasn't yet built it, but for loyalists who took a chance on the original Roadster, it's going to be the must-have "halo" Tesla.

tesla roadster
tesla roadster

Tesla

And in late 2019, Tesla showcased the wild Cybertruck, a massive departure from its design language. The goal was clear: GM, Ford, and FCA sell around three million full-size pickups every year. Replace them with electric pickups and you've made a major dent in the internal-combustion engine's hegemony.

The Cybertruck, Tesla's first electric pickup truck, is seen in this undated handout picture released by the company. Tesla/Handout via REUTERS.
The Cybertruck, Tesla's first electric pickup truck, is seen in this undated handout picture released by the company

Reuters

While all this was going on, the rest of the auto industry was gradually figuring out its own EV agenda. The Nissan Leaf had launched in 2010, before the Model S. It was basically the only long-range EV available for several years.

Nissan Leaf
Nissan Leaf

Hollis Johnson/Business Insider

Designer Henrik Fisker was seen as a direct Tesla rival in the early 2010s, with his Karma sedan. But the company went bankrupt in 2013.

fisker karma
fisker karma

Fisker

General Motors launched the Chevy Bolt EV in 2016, beating Tesla's mass-market Model 3 to market. That didn't concern him — with GM back in the game, his vision had a far better chance of becoming a reality.

2020 Chevy Bolt EV Premier
2020 Chevy Bolt EV Premier

Matthew DeBord/Insider

The Jaguar I-PACE was in the first wave of luxury EVs that took on the Model S and Model X. It arrived in 2018 and offered about 250 miles of range.

Jaguar I PACE 2
Jaguar I PACE 2

Hollis Johnson/Business Insider

Audi rolled out its E-tron SUV in 2018, as well; it now delivers just over 200 miles of range.

Audi etron
Audi etron

Mark Matousek/Business Insider

Porsche unveiled its Taycan in 2019, and announced that it would have close to 300 miles of range, and — more importantly — be a proper high-performance EV. It would also be priced accordingly: $185,000 for the top-dog Turbo S version.

Porsche Taycan Turbo S 3
Porsche Taycan Turbo S 3

Porsche

New startups also entered the fray. Rivian took the auto show circuit by storm in 2019, showcasing an ell-electric SUV and pickup truck, angling to capture the same buyers Tesla was targeting with the Cybertruck.

Rivian
Rivian

Hollis Johnson/Business Insider

Post-Chevy Bolt EV, General Motors committed to an ambitious electric strategy. The automaker revived the Hummer nameplate, making it an electric pickup to be sold under the GMC brand.

GMC HUMMER EV Quiet Revolution Grille
The teaser photo for the new GMC Hummer.

GMC

In fact, GM has declared that its future is electric. In early 2020, CEO Mary Barra announced a new "Ultium" battery technology and said the company would introduce 22 new electrified vehicles by 2023.

GM EV Barra
GM EV Barra

GM

Crosstown Detroit rival Ford wasn't sitting entirely still. Last year, it announced that it would extend its Mustang brand for the first time since 1965. The all-electric Mustang Mach-E was the result. It goes on sale later this year.

Ford Mach E
An electric Mustang Mach-E car is displayed during its launch in Oslo, Norway November 18, 2019. Picture taken November 18, 2019.

Lefteris Karagiannopoulos/Reuters

But of course, the big news from Ford was that an all-electric F-150 pickup was on the way, hitting the road in 2022. A game-changer? Possibly. The gas-powered F-150 has been the bestselling vehicle in the US since 1982. In 2019, Ford sold nearly a million F-Series trucks.

Ford electric F-150 prototype
Ford electric F-150 prototype

Ford

Despite all these new entries, Tesla's lead remains huge. It's currently opening, building, or preparing to build three new factories on three continents. Its market capitalization, at about $260 billion, is more than those of Ford, GM, and Fiat Chrysler Automobiles — combined.

tesla shanghai factory model 3
tesla shanghai factory model 3

Costfoto/Barcroft Media via Getty Images

Musk has taken the company from essentially nothing to be the most valuable automaker in the world, in less than 20 years.

elon musk nasa demo 2 demo2 celebrates astronauts launch celebratory cheers cheering happy excited hands arms up raised air 2020 05 30T000000Z_1135458588_RC29ZG90LKEG_RTRMADP_3_SPACE EXPLORATION SPACEX LAUNCH
SpaceX founder Elon Musk celebrates the launch of NASA astronauts Bob Behnken and Doug Hurley from Florida on May 30, 2020. The two men rode the rocket company's Crew Dragon spaceship on a Demo-2 mission to the International Space Station.

Steve Nesius/Reuters

But he wasn't allowing himself to think that winning the EV race meant that his work was done. He was, at best, only at the beginning of fulfilling his master plans.

Elon Musk
Elon Musk.

AP Photo/Susan Walsh

With the US and European markets mature, the China market was the world's major growth opportunity. It could have 40 million in annual vehicle sales at some point in the future — more than twice the size of the US market.

Electric cars road China
New electric vehicles parked in a parking lot under a viaduct in Wuhan, central China's Hubei province.

STR/AFP/Getty Images

Electric vehicles are considered a key alternative to adding millions of polluting cars and trucks to the country's fleet.

China Pollution
China Pollution

REUTERS/Stringer

If they replace enough gas vehicles, EVs could slow climate change, an important goal for Musk. Transportation and energy generation are two of the biggest generators of greenhouse emissions.

california fires
Firefighters battle to save one of many homes burning in an early-morning Creek Fire that broke out in the Kagel Canyon area in the San Fernando Valley north of Los Angeles, in Sylmar, California, U.S., December 5, 2017.

REUTERS/Gene Blevins

For Musk, the master plan isn't to be the biggest manufacturer of EVs — it's to accelerate humanity's exit from the fossil-fuels age, and to convince other automakers and innovators that the market for electric cars is viable.

oil derrick
oil derrick

Joe Raedle/Getty Images

Tesla could be selling millions of vehicles every year by the end of the decade, staying far ahead of its sundry rivals. But what matters more is that those millions in annual sales grow the EV market from 2% today to more than 50% by 2030 — and possibly far more than that.

Tesla cars
In this Sunday, July 8, 2018, photograph, 2018 Model 3 sedans sit on display outside a Tesla showroom in Littleton, Colo.

AP Photo/David Zalubowski

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