By Joseph White and Paul Lienert

DETROIT (Reuters) – Elon Musk will confront a vital problem throughout Tesla (NASDAQ:)’s Investor Day on March 1: Convincing traders that though rivals are catching up, the electric-vehicle pioneer could make one other leap ahead to widen its lead.

Tesla Inc was the No. 1 EV maker worldwide in 2022, however China’s BYD and others are closing the hole quick, in keeping with a Reuters evaluation of world and regional EV gross sales information offered by EV-volumes.com.

In truth, BYD handed Tesla in EV gross sales final yr within the Asia-Pacific area, whereas the Volkswagen (ETR:) Group has been the EV chief in Europe since 2020.

Whereas Tesla narrowed VW’s lead in Europe, the U.S. automaker surrendered floor in Asia-Pacific in addition to its residence market because the competitors heats up.

Graphic 2: The place Tesla stands?, https://www.reuters.com/graphics/TESLA-MASTERPLAN/CATCHUP/egpbyoyglvq/chart.png

Essentially the most vital challenges to Tesla are coming from established automakers and a gaggle of Chinese language EV producers. A number of U.S. EV startups that hoped to journey Tesla’s coattails are struggling, together with luxurious EV maker Lucid, whose shares plunged 16% on Thursday after disappointing gross sales and monetary outcomes. 

Over the subsequent two years, rivals together with Basic Motors Co (NYSE:), Ford Motor (NYSE:) Co, Mercedes-Benz, Hyundai Motor and VW will unleash scores of recent electrical automobiles, from a Chevrolet priced under $30,000 to luxurious sedans and SUVs that prime $100,000.

On Wednesday, Mercedes used Silicon Valley because the backdrop for a prolonged presentation on how Mercedes fashions of the near-future will immerse their house owners in wealthy streams of leisure and productiveness content material, delivered by way of “hyperscreens” that stretch throughout the dashboard and make the oblong screens in Teslas look quaint. Executives additionally emphasised that solely Mercedes has a complicated, Degree 3 partially automated driving system accredited to be used in Germany, with approval pending in California.

In China, Tesla has needed to minimize costs on its best-selling fashions beneath rising strain from home Chinese language producers together with BYD, Geely Car’s Zeekr model and Nio (NYSE:).

China’s EV makers might get one other enhance if Chinese language battery maker CATL follows by way of on plans to closely low cost batteries used of their automobiles.

HOLY GRAIL

Musk has mentioned he’ll use the March 1 occasion to stipulate his “Grasp Plan Half 3” for Tesla.

Within the almost seven years since Musk printed his “Grasp Plan Half Deux” in July 2016, Tesla pulled forward of established automakers and EV startups in most essential areas of electrical automobile design, digital options and manufacturing.

Tesla’s automobiles supplied options, corresponding to the power to navigate right into a parking house or make impolite sounds, that different automobiles lacked.

Tesla’s then-novel vertically built-in battery and automobile manufacturing machine helped obtain increased revenue margins than most established automakers – whilst larger rivals misplaced cash on their EVs.

Quick-forward to immediately, and Tesla’s “Full Self Driving Beta” automated driving remains to be labeled by the corporate and federal regulators as a “Degree 2” driver help system that requires the human motorist to be able to take management always. Such methods are widespread within the trade.

Tesla earlier this month was compelled by federal regulators to revise its FSD software program beneath a recall order.

Tesla has established a large lead over its rivals in manufacturing expertise – an space the place it was struggling when Musk put ahead the final installment of his “Grasp Plan.”

Now, rivals are copying the corporate’s manufacturing expertise, shopping for a number of the similar gear Tesla makes use of. IDRA, the Italian firm that builds big presses to kind giant one-piece castings which are the constructing blocks of Tesla automobiles, mentioned it’s now getting orders from different automakers.

Musk has instructed traders that Tesla can preserve its lead in EV manufacturing prices. The corporate has promised traders that on March 1 they “will be capable of see our most superior manufacturing line” in Austin, Texas.

“Manufacturing expertise will likely be our most essential long-term power,” Musk instructed analysts in January. Requested if Tesla might become profitable on a automobile that bought in the US for $25,000 to $30,000 – the EV trade’s Holy Grail – Musk was coy.

“I might in all probability be asking the identical query,” he mentioned. “However we might be leaping the gun on future bulletins.”