Supercar Maker McLaren Wants to Beat Tesla’s Roadster at Its Own Game - Barron's

McLaren wants to get into the electric vehicle game. McLaren Automotive / Beadyeye

Privately held supercar company McLaren wants to build all-electric vehicles, or EVs, in the near future. Just not quite yet. But when they get around to it, McLaren’s offerings will compete with the high-end Tesla Roadster due out in 2020 or 2021.

The McLaren threat, however, isn’t an existential threat to Tesla (ticker: TSLA). In fact, the more EVs gain traction in each segment of the automotive market—including the supercar niche where vehicles sell for hundreds of thousands of dollars—the better it is for all electric vehicle manufacturers. More electric cars being produced means falling EV battery costs, as well as more research and development money pouring into advanced battery technologies.

At a press event last week, McLaren said the reason it doesn’t want to rush to build an all-electric supercar is performance. That doesn’t mean the Tesla Roadster isn’t a high-performing automobile. Elon Musk’s new Roadster will rocket a passenger to 60 miles an hour in less than 2 seconds. That’s incredibly fast. But the batteries are heavy, and that represents a performance penalty, according to McLaren anyway.

McLaren has a history of focusing on car weight. The McLaren GT, for instance, which starts at $210,000, is made from carbon fiber and weighs about 3,300 pounds. A Model S sedan, for comparison, weighs up to 5,000 pounds. And the batteries in a Model S can weigh 1,200 pounds, far more than an internal combustion engine.

That comparison, however, is only rough illustration. And most automotive enthusiasts will be quite happy with the 1.9 second required to hit 60 miles an hour in a Roadster. But McLaren has its own reputation to worry about. It isn’t your typical car company.

For starters, McLaren hand-builds about 20 cars a month and competes, for the most part, with the likes of iconic sports car brands Ferrari (RACE) and Aston Martin Lagonda Global (AML.London). Tesla isn’t a direct competitor today, even though the new Tesla Roadster starts at $200,000.

And McLaren consists of an automotive technology group, a high-end car company, and a Formula One racing team. Its racing heritage is likely responsible for McLaren’s eschewing excess weight.

A Formula One car weighs less than 2,000 pounds and generates about 1,000 horsepower—and can hit 60 miles an hour in about 1.6 seconds. That’s very fast. It can also stop from 60 miles an hour in under 50 feet.

McLaren’s goal is to produce hybrid and all-electric sports cars by 2025. Its business plan calls for battery development to be “McLaren-like,” meaning driving weight out of the batteries. To meet its targets, the company plans to spend almost $1.6 billion between 2020 and 2025 developing automotive technologies, including lighter batteries.

Any investors excited about another publicly traded luxury car company will have to wait. McLaren isn’t publicly traded—Mumtalakat Holding Company, the sovereign wealth fund of the Kingdom of Bahrain, has a controlling stake. The company, however, didn’t rule out the possibility of selling shares in an initial public offering when asked by Barron’s. Still, there is no timeline and no prospectus for investors to read.

Investors can buy into high-end racing though. Formula One is a publicly traded entity— Liberty Media Formula One (FWONA)—with a market value, including debt, of more than $43 billion. Shares are up more than 43% year to date, outpacing returns of the S&P 500 and Dow Jones Industrial Average.

Perhaps that can satisfy investors’ need for speed, even if they can’t afford the highest-end sports cars that cost more than an average American house.

Write to Al Root at allen.root@dowjones.com

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