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TheStreet Open House

BMW i3 vs. Tesla Model S: The Ultimate Comparison

Stocks in this article: TSLA NSANY GM

NEW YORK ( TheStreet) -- Having followed BMW's i3 electric car project for two years, I finally got some time to examine the i3's interior in detail. The BMW i3 goes on sale in the U.S. in the first half of 2014.

With so relatively few plug-in electric cars in the market, it's not a major exaggeration to say that in many cases they all compete against each other -- from those that cost under $30,000 to those that cost over $90,000. That, of course, never happens with "regular" gasoline/diesel cars.

Let me explain: I have seen plenty of examples of people who, one or two years ago, bought a Nissan (NSANY) LEAF or Chevrolet Volt, but previously only purchased much more expensive cars --$100,000 and up. Likewise, more recently I have seen plenty of examples of people paying $100,000 for a Tesla where they had never previously thought of buying a car that's over $30,000.

The first implication of this phenomenon is that all the market-sizing estimates for electric cars are wrong. The market for electric cars is a lot larger than people think, even in the short run: People who can afford expensive cars buy cheap EVs; people who never thought about buying expensive cars before, now buy expensive EVs. This is why the Tesla (TSLA - Get Report) skeptics have been wrong at every turn.

This also has implications for the electric car intramural. Unlike in the old-world gasoline/diesel market, where there are numerous choices for every automotive segment, the EV world has only a handful of cars broadly available across the geographies, i.e., outside California where there are a few more choices.

Then you look at the sales statistics, you see that there are really only three significantly electrified cars -- those that run on electricity a vast majority of the time, or 100% of the time -- that have sold in meaningful quantities: Chevrolet Volt, Nissan LEAF and Tesla Model S. World-wide, Nissan has sold over 50,000, General Motors (GM) approximately 50,000, and Tesla little over 15,000.

All in all, sales of all plug-in cars in the U.S. grew from 18,000 in 2011 to 52,000 in 2012 to an estimated 100,000-125,000 for 2013. It is in this context that BMW is starting to deliver the i3 in the coming months.

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