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BMW Challenges Tesla with New Electric i3 Car

Electric vehicles remain very much a niche market. But as BMW, one of the world’s largest automakers, formally enters the fray, that may begin to change.

07.25.13 9:30 PM ET

The concept of electric vehicles is hardly new. But electric-vehicle technology is only now beginning to hit the mass market. Only a few companies have made serious efforts at producing EVs on a large scale; Tesla Motors is one of them. The company’s Model S is now a benchmark by which other EV’s are measured—a high-end, premium product that sells out quickly. Nissan’s Leaf, Ford’s C-Max, and Chevy’s Volt are all selling modestly at lower price points.

But Tesla is now getting some serious competition. BMW is poised to introduce its new i3 all-electric coupe in 2014. The new car, which will be offered at almost half the price of the Model S, is seen as the first serious foray into the luxury EV market by a large automaker.

With a range of up to 100 miles—without the optional gas-powered extender—and an engine that can produce 170hp and 184 lb/ft of torque, the electric coupe has generated some serious buzz. Cheaper by $30,000 than the Tesla Model S, the i3 will be a more accessible alternative for those in the market for a high-end EV. BMW says its production capacity is 40,000 units for the i3. (Tesla sells about 20,000 vehicles per year.) With over 300 independent dealers nationwide, deep pockets for R&D, and a well-established brand, BMW could become a serious EV player if it wants to be.

Some Tesla enthusiasts fear the company may lose some of its market share as the i-Series gains traction. But those with a longer-term view may take solace in the possibility that a little healthy competition might be just what the EV industry needs. When Apple released the iPhone, the effects were felt throughout the mobile communications industry. Samsung and other companies began innovating rapidly to keep up and remain relevant. Now consumers have an array of ever-cheaper smartphones to choose from. The same forces that have driven rapid market penetration in the smartphone industry could revolutionize the auto industry.

In the words of industry guru Carlos Ghosn, the chief executive officer of both Nissan and Renault, “The time is right for electric cars.” Thus far, the price tag for cars like the Model S has kept many middle-income buyers out of the EV market. But as charging technologies improve and are made more available, as production volumes increase, and as more competitors enter the market, industry watchers may see more and more customers going electric. If so, the rising tide may float all EV manufacturers’ boats.