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Tesla and BMW are not rivals, but role models to each other

During the second quarter earnings conference call on Wednesday, Tesla (TSLA) chief Elon Musk confronted a tricky question – whether he sees BMW or Amazon (AMZN) as a bigger competitor. Musk shrugged it off saying neither is a major competitor to Tesla. Certain analysts, meanwhile, feel there is a lesson or two for both Tesla and BMW to learn from each other.

While one dominates the electric vehicles market, the other has the ability to make SUVs profitably. This year, BMW continued to outperform by reporting record revenues, but higher investments were visibly burning profits.

BMW My18i car and Tesla Model 3
Picture Courtesy: BMW, Tesla

The scale at which both the companies – Tesla and BMW – generate revenue can be witnessed in their financial statements. Last year, BMW generated revenue of $111.5 billion, while the US counterpart managed $12.5 billion.

In the second quarter, Tesla said it sold 40,768 vehicles, while BMW has sold more than 637,000 vehicles during the same period. Tesla is betting on its Gigafactory to churn out 500,000 vehicles per year.

Related: Strong deliveries lift Tesla’s Q2 revenue to record high; loss widens

Looking ahead, BMW has a line-up of 25 EVs, including all-electric X3 SUV and an i4 sedan set for launch in the coming years, but the heavy investment is required to outstrip rivals, including Tesla, in this new segment. With Model S, Model X and Model 3 already on the market, Tesla clearly has a good head start over BMW.

And now both the companies have their eyes fixed on China to improve sales. China has been widely welcoming towards EV technology.

A few experts believe that in some ways, BMW is following Tesla’s footsteps in the EV technology, while Tesla is trying to emulate BMW’s strategy of establishing itself as a luxury carmaker. Well, it doesn’t hurt having a good role model!

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