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How Big Auto is responding to Tesla
The little car company that could is making its larger rivals squirm
Tesla's innovative cars are drawing crowds.
Tesla's innovative cars are drawing crowds.

Jordan Strauss/Getty Images

T

esla, the Muggsy Bogues of the auto industry, hasn't let its small size keep it out of the big leagues.

The California-based automaker delivered only about 10,000 cars in the last two quarters of 2013, compared to the record 2.5 million vehicles Chevrolet sold globally. But big automakers like BMW, Porsche, and Lexus have reason to fear the electric car startup, with Tesla's sales nibbling away at their market share.

Though the auto industry in general is on the up and up, those brands saw sales fall for certain models between 2012 to 2013, just as Tesla's Model S started to flood the roads in California, says Forbes.

In the Golden State, where the majority of Model S's are sold, Tesla in June outsold Buick, Cadillac, Chrysler, Fiat, Jaguar, Land Rover, Lincoln, Mitsubishi, Porsche, and Volvo, notes Todd Woody of Quartz. The feat is even more impressive when you consider that "Tesla sells a single model while most of those old-line automakers have showrooms full of different cars, from compacts to sport utility vehicles," says Woody.

So how is Big Auto reacting?

Toyota
Toyota is the global leader in hybrid vehicles with 22 models that use an electric-gas engine combination, including ones from its luxury Lexus line. But it is working on more "sporty, fun-to-drive hybrids in a push to broaden the appeal of the vehicles and counter upstarts such as Tesla," says The Wall Street Journal. Their new hybrids will be "less frumpy in the future."

Behind the push is CEO Akio Toyoda, who wants the brand to be less bland, and more "waku-doki," which means heart-pumping in Japanese.

"Hybrids are 16 percent of our sales but frankly we think it should be much higher," Bob Carter, Toyota's group vice president of North American operations, told the Journal.

General Motors
GM, which owns Buick and Cadillac and Chrysler doesn't want to be left in Tesla's tail-smoke (or lack thereof). In the first quarter, Tesla's Model S, priced from $69,900, outsold the the Chevy Volt, a GM hybrid priced from $39,145.

CEO Dan Ackerson took note, and earlier this summer assigned a small team to study the burgeoning brand.

"History is littered with big companies that ignored innovation that was coming their way because you didn't know where you could be disrupted," GM's vice chairman told Bloomberg.

Porsche
High-end foreign brands are releasing their own luxury green vehicles.

"[I]t's in the BMW 7-Series and Porsche Panamera that the presence of the Model S is probably being felt most acutely," says Forbes. "Both are performance luxury sedans capable of seating families comfortably and both are fairly commonplace in the wealthy neighborhoods of the San Francisco Bay Area."

In 2014, Porsche will release the Porsche Panamera S E-Hybrid, its first-ever plug-in hybrid, says Green Car Reports. At $99,000, it's still almost $30,000 pricier than the S Model. But it has certain perks, like a larger rear seat.

Tesla, meanwhile, plans to expand to Europe and Asia next year.

Carmel Lobello is the business editor at TheWeek.com. Previously, she was an editor at DeathandTaxesMag.com.

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