/Porsche’s Challenge to Tesla

Porsche’s Challenge to Tesla

After four years in development, Porsche has begun production of what could be the first credible threat to the Tesla Model S in the luxury electric vehicle space: the Taycan.

But the first models of this sleek, four door sports sedan come in at a considerably higher price—$153,310 for Taycan Turbo and $187,610 for the higher performance Taycan Turbo S. Porsche plans to build about 20,000 Taycans during the first year, eventually introducing less expensive versions.  

About half of the customers who have expressed interest in buying a Taycan are Tesla owners, according to Porsche North America CEO Klaus Zellmer. But the cars are not direct competitors, he said.

“Personally, I think Tesla has done a great job preparing the automotive world for battery-electric vehicles that we have respect for,” Zellmer told Fortune at the Frankfurt Motor Show. “But for us, as a sports car brand, there are different attributes that we look at when developing a car.”

“Our car needs to accelerate multiple times without any feel of decrease in power,” he added. “We come from the racetrack. It’s not about comparing ourselves to Tesla. It’s about having respect for what they established, and then finding our own path.”

Even if the company is remaining diplomatic, the state of Baden-Württemberg, where the factory is located, is ready to challenge the electric vehicle-maker from California.

“To Elon Musk,” Winfried Kretschmann, the state premier of Baden-Württemberg, said through a translator at the factory’s grand opening. “With green ideas, you can be in the black, not the red.”

The Taycan will deliver between 240 and 280 miles on a full battery charge—less than the Model S—but it will replenish faster, adding more than 60 miles of range in four minutes. When the Taycan reaches U.S. roads in December, its 800-volt system will be the fastest on the market.

The $770 million Porsche spent to develop the factory where the Taycan is built is part of the company’s $6.6 billion investment in electric mobility through 2022. The automaker plans to electrify half of its lineup by 2025, with the iconic 911 slated to be the last model to make the transition to a hybrid or battery-electric powertrain.

The Taycan is an important debut for Porsche’s parent company Volkswagen Group, which is spending more than $33 billion to electrify dozens of models across its portfolio in the wake of its diesel emissions scandal. At the Frankfurt Auto Show, Volkswagen introduced a compact EV, the ID.3, to challenge the entry-level Tesla Model 3.

The Taycan, however, will prove that Porsche EVs can keep their performance chops despite the extra weight of the battery pack. The automaker ensured the electric car would still clock track times and round corners like a Porsche. The flagship Taycan Turbo S can generate up to 750 horsepower and zip from 0 to 60 mph in 2.6 seconds, according to Porsche. The 617-horsepower Turbo model takes 3 seconds. Both can hit a top speed of 161 mph.

Despite Porsche’s relative late entry to the electric vehicle market, the Taycan is hitting a sweet spot, according to Jessica Caldwell, executive director of insights at Edmunds. Sales of battery-powered vehicles lifted 51% in the first half of 2019 compared with the same period last year, according to Edmunds data. That rise was driven largely by the introduction of the Model 3.

“The kind of person who buys high-end EVs is always after the latest thing, and Taycan makes the Model S seem ancient in comparison,” Caldwell said. “Ten years ago, no one could have ever guessed that two-thirds of Porsche’s sales would be SUVs, so the brand has proven that it can find success by stretching into new territory without cannibalizing its brand.”