The race is on to become the next Tesla Inc. Tens of billions are riding on the outcome.
Investors from Wall Street to the Motor City are betting that a field of electric-car startups can emulate the rise of Elon Musk, who sits at the wheel of a company that is on track to sell 500,000 battery-powered vehicles this year and turn its first-ever annual profit. His Tesla—scheduled to join the S&P 500 next month—is now more valuable than Toyota Motor Corp. , Volkswagen AG , General Motors Co. and Ford Motor Co. combined.
It won’t be a smooth journey either for investors—which include the world’s largest money manager and the world’s second-largest private- equity firm—or these industry upstarts, which face numerous obstacles. Most haven’t yet successfully built or sold a car. Those that have have struggled to do so profitably. Some are still hiring a workforce or fighting accusations of fraud. One recently posted a loss of $1.6 billion.
Their fate hinges on a number of unanswered questions. Are consumers ready to buy a pricey electric vehicle other than a Tesla? Or is it a safer bet to sell workaday vans and trucks to companies? Is it smarter to build your own cars in your own factory? Or should you rely on outside contractors to produce them? Does it make more sense to focus on China, home to the world’s largest electric-car market, or stay closer to home? How much pressure will they face from old giants like GM, which said this week it would spend $27 billion through 2025 on the development of electric and driverless vehicles?
At stake is the future of transportation—and who gets to define it. There will be winners. And losers. There will be fortunes won. And lost. Here is our guide to the road ahead.
