Tesla Is Screwed Once Luxury Carmakers Start Building Real Electric Cars

Elon Musk and Co. must learn to nail true luxury interiors before Mercedes, Audi, and the rest learn to make EVs with Tesla-like range. 

Justin Chin/Bloomberg via Getty Images

Have you ever sat in a new Tesla? It feels like something from Star Trek. Not in the traditional "Holy crap, I'm driving the future" sense; more in the sense that it feels like a vehicle from a world where traditional standards of wealth have been abolished, and luxury goods have lost cache in favor of technological advancement. 

Captain Picard always made that future seem like a nice place to live. But that's definitely not the world we inhabit today. And that fact is going to spell trouble for Elon Musk's growing electric car company unless Tesla can up its interior game post-haste. 

Tesla has carved out a nice little niche selling high-end EVs to wealthy customers in part because there's never been any other vehicle to directly compare them to. If you wanted to spend $100,000-plus today on an electric car that isn't a Tesla, your best bet would be a Chevy Bolt ... and another Chevy Bolt. 

But that won't be the case much longer. By around decade's end, Mercedes, Porsche, Audi, and BMW, among others, will have released full-blown EVs with Tesla-spec ranges and capabilities. And unlike Tesla, those companies take luxury seriously. They know the value of fine materials, of elegant interior design, of the little touches that help people rationalize spending six figures on a car when they know deep down that a $20,000 vehicle would function just as well. 

Just as importantly, those luxury car titans have massive resources and parts supplier networks already in place to buy those pieces in bulk. Daimler, Volkswagen A.G., and the BMW Group have been buying, building, and improving on their luxury cars interiors like their livelihoods depended upon it for decades—because they do—in order to woo the discerning well-off buyer. Tesla hasn't needed to worry about luxury features because it's been the only high-end EV in town for roughly a decade. But if Tesla wants to crack into the mainstream market, it needs to be able to compete on every level. 

Outside of the cult of Teslarati, how many high-end car buyers, given the choice, will choose the car with the cabin that looks like this:

Tesla

Tesla Model S

…over the one that looks like this?

Mercedes-Benz

Mercedes-Benz S-Class

Some might argue that Tesla’s advantages in other fields are strong enough that the company doesn’t need to waste time on frippery. They might say that, while Mercedes and Audi are working to match the Model S’s range and performance, Tesla is fast on the way to rolling out a true self-driving car—at which point all the old yardsticks for automotive success become obsolete. 

But a self-driving car will need more emphasis on interior comfort and luxury, not less. With no need to concentrate on the road, drivers will be left staring at the interior, wondering why they have to wedge themselves into an unnatural seating position to watch House of Cards on their projector-screen windshields. 

Think about it this way: If you’ve been on your feet all day at an auto show, where all the cars are static and you don’t have to worry about driving, in which car would you rather sit down and relax for a few minutes—the minimalist Model X, or the opulent 7 Series?

Tesla, on some level, must know this. Elon Musk’s wild imagination may spend most of its time spinning up cross-city tunnels, transonic vacuum-tube trains, and the potentially holographic nature of all existence, but some part of him has to be able to see a not-too-distant future where Tesla’s competitors will catch up to the brand’s technological lead, at which point other factors—like comfort, style, and quality—will come into play.

Indeed, the carmaker has already started to make moves suggesting it sees value in improving its interiors. Tesla recently poached Anders Bell, Volvo’s head of interior engineering, to run a similar team at the electric car company. Anyone who’s been in one of the newest Volvos, like the XC90 SUV for which Bell developed the front seat system, can likely see how good an idea that is.

But with every dollar that flows into Tesla’s coffers seemingly dedicated to boosting production capacity, developing new models, and moving the autonomy ball towards the end zone, it’s hard to see where the carmaker will find the capital, financial or political, to boost the car’s vehicles to true luxury-level quality any time soon. Ironically, the more success Tesla has in moving EVs towards mainstream acceptance, the larger this problem will loom.