Tesla, one of the world’s most notable car brands, is projected to face hard times. This is all tied to the current global pandemic. The pioneering automaker is facing strong competition from both the electric vehicle market as well as low oil prices.
Tesla Isn’t The Only One In The Rodeo
The start of 2020 showed promise for the electric auto industry. With countries like Germany purchasing electric vehicles like hotcakes, this put Tesla in a good spot. Currently, the German market boasts a whopping 10% of vehicle sales as electric. A large number of them being Tesla.
Unfortunately, with any auto market, 2020 also brought large competition from traditional auto makers. Most large name car manufacturers had put their electric line out to the public. From Ford’s Mustang Mach-E to GM’s entire electric line, Tesla had now had to deal with something it never had before: Competition.
Low Oil Prices Reduce the Need For Alternatives
With the oil industry now facing a total collapse, gas prices have dropped. They have dropped so far down, that many big oil companies have to pay for another company to take their supply. It comes down to the basic principles of supply and demand. With so much oil being produced and limited buyers, the price has dropped radically. This puts the future of standard ICE’s slightly further out. Since barrels of crude oil are stacking up as well as no limit to production mixed with nobody buying, the cost of gasoline will remain low enough to keep the market in favor of ICE cars.
These two factors put Tesla stuck between a rock and a hard place. On the left, you have a newly emerging (and drastically encroaching) competition, and the other, Tesla loses one of its main factors that appeal to the market: the cost of refueling. If gas is cheap, it doesn’t outweigh the cost of buying a new car.