> "I wish we had put that car on the road and not Tesla," confided a senior engineer at Porsche. "We have to earn money at the end of the day though."
The article also talks about "how will the German brands win back customers from Tesla?", but really, if you look at cars like the Mercedes S-class, BMW 7 series or the Audi A8, their sales are unchanged or even increasing since 2012 when the Model S was launched. Audi has been setting record sales numbers in the US, which is Tesla's biggest market, for five years straight. So it's a bit hard to argue Tesla has taken many of their customers.
Maybe most Tesla drivers were never petrolheads in the first place, and drove a boring station wagon before the Model S came along?
The margins on Tesla's cars are actually very high, but Tesla is pouring an unimaginable amount of money into R&D and infrastructure right now. Gigafactories, superchargers, service centers, etc. Those are all things that VW doesn't have to worry about because they are already established.
Saying that Tesla sells cars at a loss is just another case of sour grapes by people trying to discredit what Tesla has done. Tesla could give up on the Model 3 right now, stop building superchargers and just rest on the Modle S and X to be plenty profitable. Funny though, I'm pretty sure every stock holder would prefer they keep "losing" money.
This is an often repeated media trope that seems a bit misleading. It makes it sound like they would loose more money if they sold more cars. That is not true. Tesla has positive gross margins.
Tesla is investing in future production and that is part of why it is losing money. I would also draw your attention to a strange fact about GAAP accounting principles. Some investments like the GigaFactory are depreciated and the expense is spread over the lifetime of the operation of the factory. However, R&D, although it’s an upfront cost that pays off over the long term, is not depreciated. You take the full charge in the quarter the money was spent. I suspect it’s because R&D has a less predictable payoff and timeframe than an investment in a hard asset like a factory.
Another factor in Tesla’s lack of profitability is their high sales expenses (SG&A). Currently SG&A is about 20% of non-gaap revenue. At most auto companies it’s about 10%. The number of Model 3 preorders indicates that their current sales infrastructure is scalable and can support much larger revenues. At scale SG&A is likely to be a lower percent of revenue.
I have not looked at the filings, but R&D expenses are usually amortized much like factory equipment. At least, activating R&D as an asset is often exercised in the IFRS world.
Nevertheless, ramping up R&D disproportionally to current sales like Tesla does also incurs disproportionate costs compared to rather static incumbents.
PS: The high SG&A figures are still confounding me. In other sources, Tesla's marketing budget was said to be negligible for the premium segment.
my understanding is gaap accounting charges r&d in current quarter.
Tesla does no marketing. They are supply constrained, so there is no need to generate more demand when they can't fulfill the demand they have generated.
however, they are opening up stores and galleries. that is an expense that is typically handled by car dealerships for legacy automakers. i assume that is a big factor driving up their sales expense, and as i stated... I believe the existing stores and galleries will be able to support a lot of model 3 sales.
The other manufacturers offload that cost onto the dealerships, who provide show rooms, sales staff, service staff, etc. AFAIK Tesla takes this on themselves.
Do Telstra split the costs of new leases, refits, transformer installs, super-charger installs - for showrooms?
Also I'd guess they are pouring a lot into training and development. Assuming they have a long term view, they'd want to retain their top sales and management staff to move them up to more senior roles in the future. This is the opposite of dealerships, where a high churn in sales staff is unquestionable doctrine.
What data do you have on this? How is such figure(s) being calculated?
Your claim also doesn't jive with the "Secret Tesla Master Plan":
"The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model."
The parent used that quote as an example of something that is often repeated but seems difficult to actually justify. In other words, they were not agreeing with the quote they were disagreeing with it.
> their sales are unchanged or even increasing since 2012 when the Model S was launched.
You need to look at 2014/2015 really, which is when the Model S started being produced in decent numbers.
The Model S outsold most other 'large luxury' vehicles in the US in 2015, including the Audi A7 and A8 combined, and the BMW 6 and 7 series combined, and the Mercedez S-class.
If you compare a Model S to a S-class Mercedes, you have never driven a S-class or be driven around in one. Just because Tesla is overpriced for hipsters doesn't mean you can compare it to other cars in the price bracket.
>Just because Tesla is overpriced for hipsters doesn't mean you can compare it to other cars in the price bracket.
Well, your prescription doesn't change the fact that magazine journalists, video bloggers, and prospective buyers do in fact compare them because they are roughly in the same price bracket.[1]
It might be possible that most Tesla buyers are only:
1) wealthy Prius owners who want to upgrade to something bigger and more technologically advanced and would never consider Mercedes S-Class
2) eco-green consumers who would only bicycle to work or hail Uber/Lyft if car travel was necessary and would never consider Mercedes S-Class
But based on forum discussions where prospective buyers test drove both and chose one or the other, it seems like there is a population of owners who seriously considered both cars. (Same type of comparison goes for BMW/Audi.)
Oh yes you can, because it's a price bracket. As in, the people buying them value Teslas and Mercedeses similarly, although not necessarily for exactly the same reasons.
And if you think a S-class Mercedes is incomparably superior to a Tesla Model S, but the Tesla S is still outselling it by a wide margin, just imagine what's going to happen when Tesla's next iteration of a luxury sedan gets even closer to the Merc!
Strange that you claim we don't have data then proceed to make bold claims that Tesla isn't a luxury brand, with weak supporting arguments... or close to no supporting arguments at all upon second reading.
Tesla is trying to pivot towards mass market, this is well known. Whether they keep the luxury/sports line or push those into a new brand (or sub-brand) is the big question. But I don't think anyone questions whether or not the currently available Tesla cars fall into the luxury category. Both design and price suitable fall into that category.
Mercedes might have an older and long-term luxury brand that is associated with the wealthy, which is helpful, but not an absolutely critical barrier for a brand/product to be put into the luxury category.
> Strange that you claim we don't have data then proceed to make bold claims that Tesla isn't a luxury brand, with weak supporting arguments... or close to no supporting arguments at all upon second reading.
my feeling is that parent comment wasn't claiming that tesla wasn't a luxury brand but that it was a "cool upper-class" luxury brand. Now, obviously, this is a very slippery distinction, and as someone who probably wouldn't spend that much money on a car at all, sure, it looks like a meaningless distinction... but I don't think it is, I mean, to the people who might buy the car. Tesla, clearly, is a brand for people willing to spend a lot more than the minimum on transportation, so I do think it can properly be called a 'luxury brand', but I think parent's point was that Tesla is a luxury brand that appeals to people for whom other luxury brands wouldn't appeal. I do know several people who would be vaguely embarrassed to purchase a Benz, who would seriously consider the Tesla, mostly for social reasons... and when you get down to it, social reasons dominate for cars in that price range. Hell, I might be in that group? I mean, if I came into a huge amount of money tomorrow and was looking for a luxury car... I'd probably consider the Tesla to reflect more positively socially on me than a S class or something.
Tesla is different from BMW or Mercedes just like Cadillac is different from those brands. (I mean, it has yet to be seen if Tesla will make BMW and Mercedes obsolete the way that Acura and Lexus made Cadillac obsolete. But the point being that there are big differences between the people who might buy the different luxury brands, even when the price range is similar.)
Now, i don't know that parent is correct in saying that Tesla luxury appeals to more people than Benz or BMW luxury, or Acura or Lexus luxury, but I do think that parent is correct in that the overlap between people who would buy a Benz and people who would buy a Tesla is not 100%, even though they are priced similarly.
Just for clarity, you were very likely downvoted for the attitude and divisiveness, not the content. What you said content-wise is mostly fine, hardly worth downvoting. But HN takes a hard line on civility.
> Tesla dont pay for advertising, so I'm not sure what marketing you are referring to. Or how they are reaching a larger market?
Marketing doesn't exclusively mean advertising:
The American Marketing Association has defined marketing as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large."[0]
Tesla has a clear marketing strategy in terms of what types of cars they sell and to what types of people. The fact that they don't pay for advertising doesn't change that. Musk/Tesla can be selective about who they do interviews with, or provide test cars to, etc. Those things are part of the marketing, even if there is no explicit purchasing of advertising.
Well fair enough. But given they dont actually advertise in the traditional sense, I dont see how the comment above can argue that they are 'aiming for a bigger market' than Mercedes flipping Benz.
Thats true. But given that they dont pay for traditional advertising, I'm not sure why you are saying that they are aiming for a bigger market than Mercedes Benz. Do you think more people of the appropriate income bracket have heard of Mercedes Benz, or Tesla?
So by virtue of giving your product a "feature" you've necessarily engaged in marketing? Sometimes people broaden definitions to such a degree they completely neuter the word.
Choosing which features to offer in which products absolutely falls into the widely accepted definition of "marketing." In fact, market segmentation is one of the most fundamental marketing strategies, and market segmentation is essentially just the practice of choosing a specific set of target customers and building features specifically for them.
Living in the Netherlands, the price of a Tesla is around 100.000 euros. However, if I can lease the thing, the actual cost (due to tax benefit, etc) drops like a rock to a level that compares to a small, cheap car. For full electric cars you hardly pay taxes because the government wants to stimulate this clean way of transportation.
Now comparing to a Mercedes with a similar price is wrong, simply because the Mercedes with a similar price is costing much, much more in day to day operation: more tax (heavy car = high tax), no green car, so more taxes).
I believe that at least for the Netherlands, most hybrid or full-electric cars are driven by people that have a company car. We just love tax refunds. We hate the hassle of charging, so many hybrid cars in 2015 (Mitsubishi Outlander is a good example) were driven on petrol - not electricity.
> For full electric cars you hardly pay taxes because the government wants to stimulate this clean way of transportation.
It's interesting that Netherlands seems to assume all electric cars are green. But Singapore actually calculates the carbon emissions per km and finds the Tesla Model S to be very environmentally unfriendly: the Model S attracts a surcharge of $15,000 while the BMW i3 gets a rebate of $30,000 [1].
Yes, since electricity is generally as environmentally efficient if not much more so than gasoline, it should imply that a larger battery is even more efficient. This should be a mistake.
Put it this way - it's not cheaper, but it's more affordable.
Say a price of a brand new Tesla is 100k Euro. If you got a loan from a bank to buy it, you might be paying back 1000-2000 euro a month just to pay it back in a few years. That is quite a lot. There are companies however, which let you part-lease or part-hire or however they call it, when you pay roughly 1/2 of the value of the car over 3-4-5 years, but you don't get to keep it at the end. So you might have a brand new Tesla S, for say 400 euro a month - which is very affordable. The only caveat is that you don't get to own the car at the end - but for a lot of people that's not a huge issue.
This is like when your carrier pays for the phone, lets say you pay 10 EUR per month for a mid class phone and 20 EUR per month for a premium phone. Looks like a small difference
(+ a "price" for the phone)
If you buy both without a carrier, you might pay 400 EUR for the mid class phone and 800 EUR for the premium phone. The price difference no looks huge.
(The difference in acucmulated prices is the "buying" price of the phone)
It's all well and good to "hardly pay taxes" on EVs when hardly anyone is driving them. It's not sustainable however, as revenue from road and fuel taxes will need to be replaced by some other tax at some point.
Washington state charges an extra $100 a year on evs because we don't pay road taxes through buying gas and paying the normal percentage of a gallon of gas.
You're just misunderstanding the parent post. He mentioned that the Tesla is tax beneficial because it's electric and the Mercedes selling at around the same price isn't because of its weight.
These two statements are not mutually exclusive.
In The Netherlands cars are taxed on multiple factors[1] including CO^2 emission, type, and very significantly on weight.
In Tesla's case the weight is being heavily offset by the lack of CO^2 emissions, whereas the Mercedes gets all the taxes of a normal gasoline car and the weight tax on top of that.
but, at least in the Netherlands, they are taxed way differently. I also heard people that leased them, and in the end the price over a few years is comparable to a €30K car, not another €100K car.
Presumably this comes from the fuel efficiency per manufacturer fleet, which tends to discourage heavier vehicles as they usually are less fuel efficient. So heavier, more polluting vehicle counts against you not strictly heavier.
If you can point out the human being who follows no trends at all, I'll accept that your definition has use. I don't believe that you are correct, however.
My father-in-law had an S class which I drove from time to time. I hated the driving experience; it felt like driving a 5-ton tank. It had so many features that I counted nearly 100 buttons within reach of the driver. He had it in the shop annually for $5000 worth of work. He couldn't wait to sell it and switch to a Lexus.
I truly feel the S class is inferior in driving experience than the model S. To me it's like comparing trucks to airplanes. It's probably mostly a question of taste.
"The Model S has the S Class beat in acceleration if you drop the extra $10k for ludicrous mode, but the S Class interior is worlds better. Not even in the same league."
You could have just as easily said:
"... the C class interior (or the 3series or A4) is worlds better. Not even in the same league."
It's stupefying how poor and sparse the Model S interior is. Setting aside issues of taste (that is, adjusting for the fact that it is a minimalist design) it's just completely out of place in a 100k+ car.
> wooden panels, leather seats and all the bling bling
every high end german car interior is completely customizable. all that wood can be replaced with plastic, or carbon fiber. all the leather can be replaced with alcantera. all the bling bling can be replaced with lightweight alternatives, or just omitted entirely from the build. you can literally change the seatbelt colors on a porsche, or the color of the stitching in the leather.
you wouldn't know this, because you probably never actually shopped for one, you decided on tesla because you like the fact that it's electric and are a fan of the company. there's nothing wrong with this, that's how many buyers of porsche, audi, etc, operate -- but it shows that you aren't really the target market for the german stuff.
"Not everybody likes wooden panels, leather seats and all the bling bling. I really feel good in the model S."
That's why I said "adjusting for differences in taste".
The A4[1] has a very tasteful, restrained design that is also extremely high quality with high end materials. It also is much, much nicer than the Model S.
The Model S has the S Class beat in acceleration if you drop the extra $10k for ludicrous mode, but the S Class interior is worlds better. Not even in the same league.
But I say this as a millennial with an engineering degree, so I don't really know if the marketers particularly care about my opinion on what is stylish or not.
Another millennial here. Your S Class interior image looks great to me. I'd go black over brown but still looks great. I just looked at some pictures of the Tesla and my god that looks awful inside. The inside of a luxury car should be a lot nicer than that. Also why the giant screen? Knobs and buttons make so much more sense - they're easier to use without looking while driving. I've also heard various stories about people rebooting their cars essentially because everything is baked into that screen. It just seems like a downside to me in every way.
Go sit in both, they're not even close. I'm a millennial too, but that has nothing to do with being able to appreciate a luxury car interior. FWIW neither the S Class or Model S appeal to me because I like going to the mountains and drive on sketchy forest roads.
> The Model S has the S Class beat in acceleration if you drop the extra $10k for ludicrous mode, but the S Class interior is worlds better. Not even in the same league.
You don't need to pay anything extra to beat an s-class, based on their website. The slowest Tesla, the station wagon/suv x version on the slowest/lowest end battery (75kwh) was 0 to 60 in 6.0 seconds, beating all model s's-class mercedes. This was the easiest comparison site I could find, the various models of both cars makes it a little hard to pick one spec model to compare. Never the less, the low end tesla suv beat all s class.
The s class interior is nice. My dad has one, so many buttons, but it's smooth, etc. Soon, Mercedes will start advertising that the new s class is not like your dad's oldsmobile, i mean mercedes.
this. cars are not comparable because they cost similarly, but because the driving experience/comfort/luxury/etc are similar.
does any tesla cut corners as sharp as BMW? is the luxury feel of being inside comparable to S class? and so on.
the only positive feedback on Teslas i've heard compared to those germans is acceleration. part of the whole experience, but personally not the most important one - that would be handling for me, BMWs are out of this world
Saying it's just "acceleration" is an oversimplification. It's hard to describe what it's like driving a good electric car. It's not just that it accelerates faster, but the acceleration starts exactly when you want it to. Everybody i've let drive my S has been skeptical, and then blown away.
Yeah, the interior is not as nice as a top end BMW or Mercedes. I don't care, driving the car is amazing. I drove a $150k Audi RS7 the other day. The whole time i wanted to be back in my S.
> the interior is not as nice as a top end BMW or Mercedes.
The interior is not as nice as our 328 wagon. It's no where close to a high-end model. They are fascinating cars, but the fit and finish and range are still lacking (from my perspective, anyway). And sedans are boring.
I've driven the model S on two different occasions. It was incredible. However, I went with my second BMW because of how incredibly awful the tesla interior was in terms of fit and finish. The car had 30k miles and there was constant rattling and noises coming from various areas of the interior made worst by the fact that the car was completely silent. I'll revisit Tesla in another 5 years when they've had time to work out their quality issues.
Given what Tesla have achieved, and the engineering hurdles they have overcome, it's kinda strange that they neglected the interior so much. I would have though that this would be one of the easiest parts of a car to get right.
Hire some established car interior people from existing companies, and work with existing suppliers of luxury manufacturers. The interior is the one part of the car that doesn't need to try to be innovative, so they could have basically just copied their German rivals. Am I missing something about how hard this is?
Also, is it really that bad? I've never driven or ridden in a Tesla, but I've looked inside one in a showroom and thought it looked pretty nice inside.
I think a lot of it is psychological and about branding and luxury signaling, but I also think that build quality is one of those things where you have to get everything right, it really is a case of the whole being larger than the sum of the parts, so you can't just subcontract out the parts and slap them together.
And at the end of the day, quality costs, and the price of the Model S is high enough already.
My soon 3yo Mercedes E-class doesn't squeak, rattle, flap, wobble, dinkle, pop or waffle anywhere. Nothing.
Meanwhile, the Tesla I test-drove felt much cheaper. It's nice enough, but it really feels like the cheapest entry-level German luxury cars, while it's priced like their highest-end cars. I've also seen reports that build quality is hit-and-miss, they start to squeak and rattle after a while if you're unlucky.
Almost same story here, I picked a Mercedes E-class instead of the Tesla, the interior completely blows the Tesla away at half the price.
Yes, the Tesla is super fun when you get to push the speeder, but the rest of the time it's just not. This was also a year before Tesla launched their "autopilot", and I picked an E-class with Mercedes' self-driving tech which had already been on the market for years at that point...
> They, too, can give you acceleration exactly when you want it.
> My biggest gripe about driving in the US. No manuals to rent -.-
This comparison is not even in the same time zone. The average American drives a car with gearing technology at least two or three entire generations beyond manuals. Electric cars feel like a couple generations beyond even the best automatic setups.
A car with a good CVT, for example, doesn't even switch "gears", it's one continuous acceleration from 0 to speed. My current car, a hybrid with a primary motivating electric motor, makes my wife's CVT feel like a steam-punk jalopy.
A good electric car, on the other hand, makes even the best automatic feel like the engine is dragging, or you're pulling a trailer or something.
Manuals, even great ones, feel like some stone-aged anachronism. After riding around in an electric, then getting in a manual, you can't believe that cars are still being made with such terrible gear shifting contraptions. It's like that car from Chitty Chitty Bang Bang with all the lever pulling and pedal pumping.
I must not have driven any good automatics then. They all felt sluggish and unresponsive. Biggest problem being that they downshift after I press the throttle, not before.
I don't see how they could know in advance that I'm going to accelerate unless I tell them. Hence the sluggishness can not possibly be removed.
Unless you count flappy pedal gearboxes as automatics as well. Then yes, far superior to traditional manuals.
Mind you, even Formula E has a flappy pedal 5-speed gearbox despite being all electric.
I haven't driven a fully electric car yet, and I'm sure their power output is impressive, but I have driven hybrids and they were crap in terms of fun-to-drive.
I drive a Prius. If you don't jam on the accelerator, it responds instantly. If you try to accelerate very quickly, it pauses to let the engine spool up, causing that sense of hesitation. But a little tap on the pedal at low speeds can provide quite sudden acceleration, something a conventional car really can't do.
However, my mom's (fully-electric) Leaf is worlds apart. No matter how hard you step on the accelerator, it always responds immediately, fully, with seamless, continuous thrust.
A Tesla? I've never driven nor ridden in one, but I can only imagine it being like a launch-type roller coaster: immense, terrifyingly sudden acceleration.
The only way a manual can hope to compare is if you rev the engine and drop the clutch, which probably isn't something you do everyday.
Probably not. Modern autos like CVTs don't actually even shift, not in the way that a manual or very old fashioned automatic. They can feel a little mushy, but on modern generation vehicles power is pretty instantaneous and about as continuous as you can get in a non-electric vehicle. They aren't "fun" though and tend to be built to maximize efficiency over speed or power. But they're mathematically more responsive than any manual could be and they're effectively always in the "right" gear, up/down shifting doesn't really make sense.
Other than the occasional rental or when riding in my friend's cars, and between our household cars and the occasional electric I've been in, I haven't felt a gear shift in a couple years. It actually feels a little alarming these days when you do feel one. Manuals are worse, they don't feel fun anymore, they feel like there's something mechanically wrong with the car.
Because of these qualities, most racing leagues have banned CVTs, since a performance oriented CVT would outperform any other shifting strategy in most kinds of racing. It was tried out by Williams decades ago for F1 and is said to have been astonishingly faster since it kept the engine in peak torque. https://www.youtube.com/watch?v=x3UpBKXMRto
But the industry is starting to move beyond CVTs now and direct drive is starting to hit cars. Teslas are like this, but even some consumer hybrids don't have any sort of gearing anymore. CVTs beat manuals for shift speed, but direct drive, because there's no such thing, beat CVTs. These are both the correct answer, manuals are some sort of weird vestigial technology that clings on because of all kinds of weird myths about performance and efficiency and notions about what's "fun".
I'll toss this out, a ludicrous launch in a Tesla is much more fun than any ICE engine transmission system.
>>I don't see how they could know in advance that I'm going to accelerate unless I tell them
You can learn to drive an automatic, just like you can learn to drive a manual. In mine, I just blip the throttle down a bit to force the car to downshift if I'm anticipating an overtake soon - it's something you learn if you drive long enough. Besides, I drive a car with an AMG 7-speed Dual Clutch transmission, where the shift takes fractions of a second - I could not possibly change that fast in a manual. No chance.
I've forgotten about dual-clutch transmissions. The Bugatti Veyron, for example, uses a dual-clutch with a fully-automatic mode for performance. I think VW produces a dual-clutch with something like 8ms shift times.
> I don't see how they could know in advance that I'm going to accelerate unless I tell them. Hence the sluggishness can not possibly be removed.
That's the thing... any trace of that sluggishness is gone in a Tesla (or other quality electric). From the moment your foot starts moving even the tiniest amount on the accelerator, you feel your back being pushed into the seat. There is zero delay.
A comparison I thought of... It's the difference between pressure-sensitive touch screens and capacitive.
> I haven't driven a fully electric car yet, and I'm sure their power output is impressive, but I have driven hybrids and they were crap in terms of fun-to-drive.
Yep, hybrids are nowhere close to a Tesla. Go take a test drive, you'll see in the first few seconds what I'm talking about.
No, they can't. :)
Seriously, driving fuel powered cars -- manual or not --, do not get close to the experience of driving an electric car.
Caveat: I am from Germany, have driven manuals all my life.
Every time I even drove a Citroen C-Zero shared car from Multicity for 10mins, getting back into a manual car -- even one of the nice CLA Mercedeses that car2go now offers --, feels like going back from the 21st to the 19th century.
outsold is a different claim than what the GP claimed. It also doesn't say anything about profitability. A lot of startups outsell the competition at a loss per unit. And then try the "just sell more" approach. Things may work out for Tesla if they can ensure their funding helps them reach the end of the runway and lift of - or not. And then "outsold" will be a sad feather in the cap.
My link shows that Tesla sales increased and all the others went down (comparing 2014 to 2015).
If Tesla just sold the Model S, they would be profitable. Margins are pretty good for each Model S. But selling just the Model S is not the plan, hence the huge cash burn.
>If Tesla just sold the Model S, they would be profitable. Margins are pretty good for each Model S. But selling just the Model S is not the plan, hence the huge cash burn.
I'm curious where you draw this conclusion from. Tesla definitely burns a ton of cash, but it's primarily capex ($1.6bn in 2015), which doesn't directly affect their profitability.
2015 R&D was $718 million. Even if we assume none of that is related to the model S and add it back, they still would have lost $170 million (net profit). And this is the marginal profitability, ignoring all the R&D expense from prior years that went into the model S.
Telsa are loss leading, hoping to grow their brand and technology to the point and out compete their rivals by the time the vehicles are truly profitable. If the capital markets remain favorable to them for a long enough time, they might just do it. Or established brands may acquire their technology once they deem the market to be sufficiently mature for them. Or we may have a problem in the markets, and Tesla's continuing cash requirements might lead them into difficulty.
The thing is, anyone who wants a Tesla model S probably bought it last year or this year. Anyone who wants an S class or a nice Audi or BMW may have bought one three or four years or more years ago. A spike in sales in the first year or two of real availability, resulting in "outselling" other luxury cars, is not really surprising. It will be more interesting if it keeps up after all the people who want an EV already have one.
They said that in 2013. I got mine in 2012 (when there really were few model s). Then they said 2014 was the top, then 2015. We'll see if 2016 is the top.
"I wish we had put that car on the road and not Tesla,"
We have seen the exact same (lame) process from BMW/audi/porsche for 12 years now.
First they announce an "e/i/tron/whatever" initiative, then they roll out some concept cars, then they test market a half-assed hybrid with a lanwmower engine hidden somewhere inside ... and then wait four years.
Then repeat.
We've seen at least three cycles like this from all of those high end manufacturers. All they have to show for it is million dollar cars from mercedes and porsche and a half-assed hybrid i8 from BMW. Oh, and I guess audi now has a small sized hybrid.
"All they have to show for is an i3, the e-up!, the e-Golf, and basically a Mercedes Tesla."
Exactly - a pair of onion-parody electric car models (the kind of design you would come up with if you were trying to make fun of electric cars and the people who buy them).
I have no idea what the mercedes tesla is that you speak of - all I know of is the B class. Again, a bubbly e-car for people that aren't interested in cars.
What I want is either an electric A8 (having previously owned two gas A8s) or an electric Porsche Panamera. Two electric motors. Identical interior / cabin design.
I've been ready to throw money at that for 10 years now, as are, I suspect, many Tesla drivers.
If you put miles on your car, the gas and maintenance difference covers most to all of the difference. Especially if you get lesser deals to ride the upgrades in battery tech
I drive a 7 year old Prius, and would never dream of buying a 7 series/S class/A8. TBH if I didn't live in London I'd buy a Model S. I am on the waiting list for a Model 3.
What the incumbent car companies don't get, and this article gets right, is that Tesla are operating on a different plane. Yes, I've drunk the Musk Kool-Aid, but it's the only thing that appeals to me that is on offer. The big OEMs just don't get it, and I'm not sure they ever will.
Like, how long will it be before one of the big 3 German OEMs has a > 200 mile range, fully electric car for sale? 2018? That's nuts
What about London is it that makes the Model S untenable? (I used to live in London, but didn't have a car then.)
And, assuming you can afford it and you don't need a station wagon, why on earth would you not buy a 7 series/S-class/A8? They are, after all, some of the very best luxury cars in the world. If it's good enough for royalty, why isn't it sufficient for you?
Just for context, 2015 numbers for the US:
Tesla - 25,202 units sold;
Mercedes - 380,461 units sold
Of course not all Mercedes cars are in the same class, but it just goes to show that Tesla is still relatively small for now and its captured market share does not necessarily need to have a significant effect on other brands (for now).
Benz makes over 50 distinct models, BMW over 40. Tesla has 2 or 3 models and can focus all its attention and expenses on one big thing. It's a classic fast-moving competitor upsetting the dinosaur uber-brands with their huge legacy factories and market base.
It baffles me how German manufacturers continue to put more and more models on the market each year. VW for example is actively offering more than 30 different base models right now, each with 4-6 additional variations. Plus new updates and revisions every year or so. How many choices does a consumer really need?
It seems impossible to hit a top price–performance ratio with so much overhead.
There is not much additional overhead to those extra models. Each manufacturer has only a handful of basic platforms and drive trains. They can come up with a new model by just combining existing components and doing a little further customization. So it's worth doing if it allows them to capture some marginal additional sales.
Sure, that's the traditional analysis, but I think some companies (Apple) are showing that a simpler product line can lead to more sales. Customers are less likely to buy if they have too many options in some cases.
You're talking about extremely successful global companies - perhaps catering to the needs of their customers is something that sells more vehicles.
At least the major German manufacturers regally outsell the competition in EU because they actually let people choose what kind of car and equipment suits them. Being shoved down a few lanes Apple style is a common complaint for Asian manufacturers here ("Want that active cruise control? Tough luck, it's +8000EUR and you MUST get leather seats and bunch of other crap as well!" type deals).
Car manufacturers have tried that. It doesn't work, at least not at the high end of the market. There's always another competitor willing to eat your lunch by giving customers something closer to what they actually want. Their products are 1 – 3 orders of magnitude more expensive than Apple's so the market operates in a totally different way.
You can all other manufacturers and in the end, you have the choice between a metallic grey car and a metallic grey car. Or, for the last 2 or 3 years, a white car or a black car. With the same shapes. Yippee! Variety, originality, Hosanna!
In Silicon Valley, the Model S is one of the most common cars. It's taken this area by storm. If that's any indication of future trends, the other companies should be reacting about now.
Yeah. In my west European country, Tesla represents about 3% of the EV market and... 0.03% of the whole market! This, despite electric vehicles being heavily subsidised (which infuriates me because the equivalent of a whole year of minimal wage, or 2 years of minimal income, is given, for each car, to the car buyer (or car manufacturer, depends how you see it)).
For a comparison point, in the modestly-wealthy part of northern New England I call home, midnight blue 328 diesel wagons with saddle brown leather interiors are as common as all teslas (I know of four of each).
> And outside of the valley Teslas are very rare by comparison with any other brand.
i'm not a tesla fanboy, but this isn't true. LA has more. LA has more of everything car-related, because it's LA.
most people that live in the bay area have never actually been to los angeles so they don't comprehend the size of the metro area. it dwarfs the bay in terms of population and sheer size, which is why a lot of people don't like it.
I spent the second half of my childhood there. Haven't been back since. I'll note that quantity is different from density (e.g. per capita) of ownership.
But the reason for it is that EU countries are giving extremely generous tax breaks for EV buyers. In some countries you literally pay half the price of an Audi A8 for a Tesla, even though they both have the same sticker price. Those benefits are ending in many places too, so while right this second buying a Tesla S might seem like a smart choice financially, it's not going to last forever. Model 3 might change that once again by being positioned in the different part of the market entirely, but it's still long time away.
> But the reason for it is that EU countries are giving extremely generous tax breaks for EV buyers.
All the more reason the German car giants should've been in the game all along. They are just to tied to their internal combustion investments, such as deeply established knowledge about turbos, advanced gearboxes and so on.
I'm the former owner of two Mercedes cars. I won't buy another because their engineering quality is poor, as well as being anti home mechanic. I'm much happier with my Ford I've owned for 25 years and is very well engineered, easy and friendly for a home mechanic to repair, and inexpensive to repair. It also has had an order of magnitude fewer random problems than Mercedes.
Getting off topic but I was pleased how easy it was to tinker around with a recent-ish Ford Escape (2014). Mostly standardized size screws, rivets and body clips throughout the body. Easily accessible service guides/manuals. It's too bad about their head unit system (Sync) but I hear it got better after 2015.
I have a 2015 Fusion, and I agree the car is excellent and, alas, Sync is pretty dire.
Being Ford, natch, it's impossible to upgrade the Sync that shipped with the car with whatever they're shipping now, which I also heard is much better. My $500 tablet I can upgrade, my $30000 car I cannot.
To me the huge draw of Tesla is that the company actually seems to understand how computers work. Tesla updates their computers over-the-air. Meanwhile, Ford wants to charge me $150 to mail me a SD card, hah.
You basically summarized why large companies often get disrupted by small up-and-comers: the only way they can sustain their operations is to serve the current needs of the market.
This phenomenon is explained in Clayton Christensen's well-known book Innovator's Dilemma.
This is because there is no Tesla directly competing with the entry to mid level German luxury cars. That is until the Model 3. The German auto makers are definitely going to take a hit once the 3 comes out. That is why they are scrambling.
Right now, the only issues holding people back from buying a Tesla is:
1) Range
2) Price
3) Habits
With the new upgrade, the largest model S can drive 613 km on a charge. And this year or next year Tesla covers basically all of North America and Europe with their chargers.
Already now, the range covers what people need 99 percent of the time. I drive more than 600 km once every 2-3 years. So for me a Tesla would already cover 99.9 percent of my use cases. Some people take long hauls more often, but most of them pass superchargers on the way. Once the batteries exceed 7-800 km and the supercharger network is slightly more expanded in the American Midwest, Southern and Eastern Europe, Tesla will cover 99.9 percent for everybody. I simply cannot think of a scenario, in which an American or European in 2021 would drive 800 km and not pass several superchargers on the way, unless they drive outside of Europe and North America or go to arctic regions.
Price is another thing. Model 3 is priced like a midsize car. A lot of buyers cannot afford that even when incentives and money saved on gas is included. But from mid size class and and up, you basically get a car
- that is much safer
- that unlike gasoline cars is upgraded for free on a regular basis after you purchased it
- that unlike gasoline cars can be upgraded modularly for small investments (buying better batteries etc.)
- has much more luggage space
- that drives more smoothly (due to electrical engine)
- with better acceleration
- that to some - ever increasing - extent can drive itself
- that you can buy in the city center or a mall
- with longer range between charges/fill ups
- with cheaper fuel
for the same price as a gasoline car.
But mostly, Tesla buyers will get a car where the digital stuff is integrated in everything. Tesla learns from usage just like Amazon or Google learn from usage. And just like Amazon and Google use that to get an edge from their competitors, I have a hard time seeing how Mercedes or Audi are going to be able to compete in the mid to large size class unless they too integrate digital into everything.
Habits die hard, and for some people, gasoline cars are the only cars. But if the market for Tesla has been high income 30-60 year old first movers on the American coasts and Northern and Central Europe, it will soon be medium income people all over Europe. The demographics of potential Tesla buyers will be 100 times larger in a couple of years.
I truly hope the large car manufacturers introduce their own fully electrical vehicles in production soon, and not just a concept car here and there. Competition is best. But if they don't do it in the next 2-3 years, they are going to be gone from everything except very high end and cheap cars, and for cheap cars as well after a decade or so, when Tesla can produce $20,000 cars.
I don't think they fully understand how grave their situation is. They focus on the fact that Tesla is losing money. But Tesla basically hasn't played all their cards yet. Tesla is still 1-2 years from selling a mid size car, 5-10 years away from selling cheap cars. They haven't upgraded batteries to bury the range issue yet. They haven't integrated solar in the cars yet to further kill any range anxiety.
The autopilot is learning from around a million driven km per day at the moment and soon that will be from tens of millions of km driven.
Any day Tesla can license their battery technology and superchargers to any of the large car companies. And if bankruptcy threatens, they can sell to Apple, Google or another tech company.
Heck, I bet I am just one of hundreds of thousands of people who would gladly pay $5-10,000 for their shares in a future round just to save them, even if I thought there was a good chance I would lose it all.
The traditional car companies should be much more worried. We are in a situation like when Apple introduced the iPhone and changed the cell phone industry.
This comes off as pretty out of touch with reality.
> [Electric car] that is much safer
It's way too early to tell, we need a decade more of statistics before you can say that. As of now, there are many gasoline cars that have better safety records than the Model S; in terms of fatalities per mile it is only on par with the NHTSA average.
> [Electric cars] that unlike gasoline cars is upgraded for free on a regular basis after you purchased it
Gasoline cars have similarly complex ECUs and entertainment systems and are already being updated for free (usually at regular services).
> [Electric car] has much more luggage space
The Model X "SUV" proves that electric cars with decent range are so far restricted to the "liftback" body shape. Let me know when there is an electric equivalent of a Chevy Suburban or Volvo V70 (which really have much more luggage space).
> unlike gasoline cars, [electric cars] can be upgraded modularly for small investments
You've seriously never heard of the $300 billion-a-year market for aftermarket car parts? Never heard of the SEMA show? Gasoline cars are much better suited for modular upgrades: everything from better air filters to chiptuning to a bigger turbo is easily available and can be done by anyone with freely available tools in their garage. Unlike electric cars, which are inherently much less hackable.
> They haven't integrated solar in the cars yet to further kill any range anxiety.
You clearly haven't done the basic math here: a solar panel the size of a car roof will take several weeks to charge an electric car.
> Any day Tesla can license their battery technology and superchargers
Tesla does not own the IP for the battery tech nor the superchargers
Due to dealerships, most cars can _only_ have their software upgrades during services. Tesla can push it out over the air. I'm not aware of anyone else doing that, and they probably can't due to dealership rules.
Yep we can agree on this one, solar wont help on cars.
> Licencing
> Tesla does not own the IP for the battery tech nor the superchargers
Do you have a source for that? Tesla batteries are damn complicated, its not just a load of laptop batteries glued together, there are very complex support systems around the battery cells. Are you telling me they dont own the IP for that?
The "Safety Rating" may be fantastic, but if it translates into an average fatalities per mile, it's likely the metric is inadequate and shouldn't be lauded too greatly (at least, by itself).
Of course it could be that reckless drivers purchase Teslas, confounding the statistics. But given the safety ratings only account for how likely a passenger (or pedestrian) is to die/be injured in certain kinds of impact, it is a very incomplete picture.
Even if the metric is perfect at measuring this, the average result for fatalities per mile would seem to then suggest an increased number of high-risk collisions per mile.
Also, just counting cubic feet with two luggage compartments is only helpful in some situations. You wouldn't be able to fit a washing machine in a Model S, for instance, or a dog cage, nor most baby prams (without significant disassembly).
Tesla does own some patents on the battery pack assembly, but Musk famously declared a while back that these are free for all other car companies to use in good faith. (He "open sourced" them.) Also, Tesla is the only electric car manufacturer going for the 18650 cell as the basis, all others are going for much larger individual cells in their packs, so most of Tesla's battery pack IP doesn't apply to others since it's specific to the cell form factor.
You don't understand. Most car manufacturers have agreements with dealerships that will prevent OTA updates from being possible.
> Musk famously declared a while back that these are free for all other car companies to use in good faith
Yep, but 'good faith' means opening up their IP in return, more or less, so not many companies are taking that up. Anyhow Tesla still own the IP, so your original statement is incorrect.
> You don't understand. Most car manufacturers have agreements with dealerships that will prevent OTA updates from being possible.
There are also legal frameworks that make OTA updates edgy. Tesla is being investigated in germany because pushing additional features ("auto"pilot) might substantially alter the car from the approved version, leaving it without approval to drive on german roads.
OTA also suffers from all the beautiful issues that networked updates suffer from, most notably security, authentication, encryption. I for one prefer updates done via good old fashioned removable media.
So yes, OTA updates are nice, but I'm not certain I really really want that in my car.
There's also the problem all software updates can suffer: a code change breaking something in production. In this case it would be a car carrying humans.
sure, but thats a different argument. I am arguing with semi-extrinsic who claimed that Gasoline cars have similarly complex ECUs and entertainment systems and are already being updated for free (usually at regular services).. I'm arguing that no-one else comes close to what Tesla are able to do with updates. e.g. in the next month or two autopilot 8 will be pushed out, bringing significant new functionality to the 30,000+ autopilot equipped Teslas already on the road.
I'm not sure what type of software updates we're talking about but BMW allows idrive updates (nav/media) via the USB port. They provide the updates for free on their site.
I drive a Hyundai that has a navigation system. I purchased it in 2010. I have to dish out $250 or something at the dealer to get updated maps. The nav system's update process is password-locked so I can't just do it myself.
I don't want there to be any possibility of my car changing its behavior unless I take the deliberate action of bringing it into a dealership for that purpose. It's one thing if an update bricks my laptop, it's quite another if it bricks my car. Let alone if one day a malicious update somehow gets pushed out.
It's not just you, there are a bunch of people like you, but you are a minority.
I see four categories of people here:
1) People who really don't want to think about it, and fully trust Tesla to take care of them. This is the vast majority of people.
2) People who understand security, and want security patches applied as quickly as possible by a professional. This group also likes OTA updates, but is admittedly quite small.
3) People who want to minimize their security surface area entirely. These people wouldn't buy a Tesla, nor would they allow their dealer to plug into their car. They buy a car that's carefully vetted to have a small attack surface, and do the maintenance themselves (or by a trusted contractor). This is, like, the Secret Service, etc. This is a tiny group.
4) People who need some degree of "control theater" so that they can maintain the sensation they are in control of the status of their vehicle, but who aren't actually applying any sort of rigorous security protocol (as evidenced by leaving their car unattended at a random dealership). It's is a bigger group than #2 or #3, but much smaller than #1.
> maintain the sensation they are in control of the status of their vehicle
Hopefully it's more than the sensation. Anyone who's ever had a Windows update take over right before a presentation, or an Apple update brick their phone, wishes they had more control over when and if to accept an update.
Being able to upgrade/downgrade helps a lot. "Bluetooth for my headphones broke, after I upgraded. I'll downgrade, until they've fixed that bug."
I believe Tesla's idea behind solar panels is to extend the range a bit (5 percent or so) in order to alleviate the range anxiety drivers have, not to charge the batteries fully. At least not before the batteries and panels get much more efficient.
As for IP, Tesla doesn't need to own all IP from lithium ion batteries to chargers. Just to have the necessary licenses for whichever part of the the base IP which is not already in free use and to have licenses or patents to the way they have put it all together (the way they combine the batteries, their charger etc.). Take Volvo: For them, building a network of chargers covering their markets would mean an investment of billions of euros that they don't have. Buy batteries from Tesla instead, and they can pay as they go.
Changing modules in an electric will eventually be like changing RAM or a fan in a computer. Something most people can't do themselves but that an expert can do in half an hour. Electric cars can be built like PCs where one module can replace another. Gasoline cars are not as modular. Also, the 300 billion dollar market for gasoline car parts is mainly because there are many and many old gasoline cars and because their moving parts need to be repaired and replaced often, not because they are upgraded. You rarely upgrade a gasoline car - you mainly fix broken stuff. I never heard of anyone handing in their gasoline car and picking it up a few days later with faster acceleration and longer range, just like Tesla now offers with their new battery.
> You rarely upgrade a gasoline car - you mainly fix broken stuff. I never heard of anyone handing in their gasoline car and picking it up a few days later with faster acceleration and longer range, just like Tesla now offers with their new battery.
Ever seen "The Fast and the Furious"? I am pretty sure people upgrade their gasoline cars all the time. People already replace modular parts on their cars similar to computers. OEM upgrades that increase acceleration, etc may not be common, but aftermarket upgrades that increase acceleration or horsepower are extremely common.
I'd bet there are many more options for upgrading an old 90s model Toyota Supra or Mitsubishi Eclipse than there are for a brand new Tesla Model S.
Um PCs are module because there is a history of competition going back to IBM using off-then-shelf parts. Basically everything from technology companies since is more anti-modular and anti-competative.
Excluding markets where serviceability is at a premium. Server hardware is often highly modular, but then the modules are quite proprietary. IBM is doing that themselves nowadays.
>>I never heard of anyone handing in their gasoline car and picking it up a few days later with faster acceleration and longer range, just like Tesla now offers with their new battery.
It's really pretty standard. I have several friends who "chip-tuned" their diesel engines for significant HP boost, people regularly change suspension parts, exhausts, they add intercoolers to the engines, order a turbo etc.
Those are pretty standard things and there are many specialized shops when you can drop your car for a few days to get those done.
You shouldn't trust your opinions on the topic if you haven't heard about it because those are really common things among car enthusiasts.
Range is absolutely the biggest issue for me. It's not really about total range either, but about convenience too. I often drive close to or just above the mentioned 600km limit.
As an example, I live in Graz, Austria, where there is just one supercharger. It's not massively convenient for where I live in the city, but it's a small city, so it's possibly reasonable. However, last week I drove to Budapest and back, via Slovenia, which is motorway/freeway/autobahn the entire route. Total journey distance is approximately 800kms.
There are no superchargers in Budapest. I could have returned via Vienna, adding another 50kms to the journey, but there is only one, inconveniently located, inner city supercharger in Vienna. I would lose a substantial amount of time leaving the motorway and ring road, to navigate to this sole supercharger.
Instead, I drive my Hyundai diesel and top up at any one of the multiple service stations enroute.
Superchargers need to be a lot more ubiquitous and located much closer to major arteries before this becomes a compelling proposition.
So, I don't think the supercharger network needs to be "slightly more expanded" in Eastern Europe, but greatly expanded and much more convenient.
Counterpoint: I just return from a 7,000km trip across Austria, Italy, France, Spain, Germany, and it was fine. No problems at all in France and Germany. I had to drive slightly slower in one part of Italy to reach a SC (unplanned for detour). I drove 1,500km in South-West Spain where there are no Superchargers, charging at hotels or non-Tesla public stations. I added 30 minutes to the journey, once, because I preferred to charge at a nice restaurant and not a (charging-equipped) gas station.
It requires extra planning, yes, but I was actually surprised how it wasn’t constraining. YMMW obviously.
BTW, that 600km range is very theoretical. The real range of 85D is ~420km (driving at 110km/h) and while P100D has better range, it doesn’t have 50% better range.
There are other things holding people back. I would buy one, except that I live in a rented apartment and park my car in the residential car park, which has no facilities for charging the car overnight, and no capacity for me to add one.
This sort of limitation applies to pretty much anyone who doesn't live in a house with a driveway or garage. Many people park their cars on the street, and would have the same problem I do.
> And this year or next year Tesla covers basically all of North America and Europe with their chargers.
We must have very different definitions of "covered". Looking at the supercharger map on Tesla's website, I'm not sure that even the SoCal area is close to fitting that definition. Most east coast state have only 5-10 stations for the entire state. Unless Tesla is planning to increase the rate of supercharger installations at an exponential rate, it will probably be another decade before the US will be covered to the point that you could reasonably expect to take off on a long distance trip without needing to plan around charger availability.
The Supercharger network ensures you have at least 200 miles of range to the next Supercharger. Only another 10-20 stations are required to completely cover the US.
I had always taken for granted that electric cars were cheaper to fuel the gasoline cars, but I ran the numbers for my father recently and I was surprised to discover that right now form him it would be basically the same price.
This post is overly optimistic and largely fails to address the 800 pound gorilla in the room: Tesla is selling cars at a loss. Once Tesla has to operate like a normal company and sell cars to make a profit, it is almost certain that pricing will rise dramatically.
It is possible that other branches of the business could subsidize car sales indefinitely, but highly unlikely.
Tesla is operating at a loss, but Model S and Model X are sold at a high margin comparable to other cars in their category. Source: share holder letters.
They are selling cars at loss because of large capital investments in the future. If you look at R&D department of BMW, it won't be profitable, but it has rest of the established business of BMW to support it. Tesla now is a large R&D department, which waits for rest of the company to grow up.
Tesla would be profitable if it just sold the Model S. Its burning through cash because of R+D and capital expenditure. e.g. building the biggest factory in the world in order to make batteries cheaper.
It's remarkable to look at the numbers indeed. Would be interesting to factor in the turnover of each of the models as used cars as well, assuming that this would bring us closer to an analysis what could be a loyal potential customer base.
The trend of Tesla is there - question is, if typical buyers addressed by the Model 3, Tesla itself claims as essential for the success of its business model, wouldn't as well change to every other vendor bc of price, quality, etc.
"Tesla is a battery company" - well, I guess a company is that kind of company, according to what it does to an utmost.
When Tesla' sales will show visible dent in their sales it might be already too late to start acting on it, so they probably will want do it preventive.
There are a few "what did you drive before" threads on the Tesla forums, and it's all over the place, from Hummers to Jaguars to Maseratis to Nissan GT-Rs, but surprisingly many seem to be coming from Prius or a Volvo of some sort.
I wouldn't be surprised by Prius owners going Tesla, the Prius already was the "comfortable progressive" car of choice with its hybrid efficiency, so a Tesla is the natural progression. Volvo has similar brand connotations, making cars for people who care more about features and comfort than status symbol.
Hummer, Jaguar and Maserati though, those are further away from the natural "ideological core" of potential Tesla owners.
There is the joke/anecdata about the affluent two car families with a porsche and a prius (apparently Lexus were appalled that 'their' customers were going downmarket to signal eco-credentials). One of the original founders of Tesla talks about spotting this target market in a video talk which most HN readers would enjoy (the relevant bit is around 10 minutes in, explaining how rich the people who bought the EV-1 were and why it's silly to target EVs at the people who want to save money on gas)
Tesla is taking customers from the german manufactuers, if you look at 2015 figures. Parent post is talking about 2012-onwards which isn't really relevant - the Model S wasn't made in significant volume until 2015.
> "I wish we had put that car on the road and not Tesla," confided a senior engineer at Porsche. "We have to earn money at the end of the day though."
Yes, after 100 years of polluting the planet with gasoline- and diesel-powered automobiles, the established companies cannot spare a few billion dollars to help us end our dependence on fossil fuels. This is why climate change will not be solved anytime soon.
Bosch, a German company that serves the auto manufacturers, seems to have bought patents on a battery technology that could be a breakthrough. Remember that 'the German way' of doing business is not to make noise at all. There have been entire German companies operating without marketing and sales departments, and there still are.
Google for "hidden champions". That's the name given to many of the companies that are actually world & technology leaders in their respective markets but that are unknown even to most people in Germany.
I love the way Germans use that word, which is the equivalent of Small and Medium-sized Entreprises in the U.S. (I'm from Algeria, it's PME here).
I was watching a segment on these companies the other day that addressed the importance of small companies, which constitute the backbone of the German economy. They took one such small company and chatted with its founder. He started talking numbers and I believe he said his small company builds tunnel boring machines and had a turnover of about 5 billion euros.
They also mentioned how they're not worried about China because Chinese companies mass produce stuff using German machinery. And how German companies make "the thing that goes into the thing that goes into the thing". Anyway, it was of course an oversimplified CNN-MSNBC-like segment, but it's interesting to see what they consider small company.
> They took one such small company and chatted with its founder. He started talking numbers and I believe he said his small company builds tunnel boring machines and had a turnover of about 5 billion euros.
I think it's more useful to think of innovation as a continuous process instead of something static. Following that line of thinking, even if your competitor is be able to fully replicate your product, he will still be unable to follow your pace of innovation. In addition, the services and expertise around a given product are usually as important as the product itself, and harder to replicate than the product.
>In addition, the services and expertise around a given product are usually as important as the product itself
Exactly. A friend and I were chatting (he's a dental surgeon) and it came up that in dental care, many things that cost in the 2-4k in the US or Europe cost about 200 bucks here (Algeria) - same techniques, same materials, same hygiene standards, etc -.
Naturally, I asked him why there weren't people flocking from Europe (it's about 100 euros round trip from here). He said that even if dental care is cheap, everything around it sucks. He said that neighboring countries built the infrastructure to allow this to be possible (specialized resorts that have deals with clinics, etc). Tourism is thought with this in mind.
He said that if you compare that with our country, there's too much friction for your average European.
On a cost based analysis, it's still worth it. Many Algerians who reside abroad get all their medical/dental care and their children's done here when they visit, but they know the country and have family. They're not in a completely unknown territory.
It's not enough that something is technically possible, there are many parameters (even social parameters) that enter into consideration.
> Naturally, I asked him why there weren't people flocking from Europe (it's about 100 euros round trip from here). He said that even if dental care is cheap, everything around it sucks. He said that neighboring countries built the infrastructure to allow this to be possible (specialized resorts that have deals with clinics, etc). Tourism is thought with this in mind.
> He said that if you compare that with our country, there's too much friction for your average European.
> On a cost based analysis, it's still worth it.
I'll try to explain why this wouldn't be worth it to me, even if it would cost x100 less for dental care.
I'm in Germany, and I'm obliged to pay for a private health insurer provider (almost €300 per month), even though I'm a healthy late twenties individual. It doesn't matter that I barely use medical or dental services at all, I am obliged to pay that by law, even though I just use it for the occasional checkup, getting my teeth cleaned, etc.
I don't care if my dental work costs €5 or €500, my insurance provider picks up the bill. I don't care at all. In this case, the entity using the service and the entity paying the bill are completely separate.
My free time is very limited, I have a full schedule, working full time, social life, gym, hobbies, etc. I don't really have time to take time off for medical tourism to Algeria, I want to enjoy my free time. There is also the perception issue, I have no idea if I can trust anyone there.
Also, I wouldn't compare dental care costs between the US and Europe. From what I've read, the US is in it's own special price category for a lot of things related to dental/medical expenditures. Look at EpiPen fiasco, Turing Pharmaceutical, and many more. That stuff doesn't happen in Canada, Europe, Australia, or if it does its much rarer than in the US.
In that case you are in a lucky situation due to being privately insured. The vast majority in Germany is in the public system which only pays for the most basic of dental care. If you want more eloberate work or better material you need to pay out of your own pocket (which of course is still much less than in the US).
Dental care combined with a vacation in Poland, the Czech Republic, or Hungary is a thriving market. Some health insurers even cooperate with providers abroad and many doctors there speak German.
Similiar, many people opt for eye laser surgery (which you need to completely pay out of pocket) in Turkey or in-vitro fertilization in the Czech Republic (where a wider range of methods are legal).
Yes, the private/public system depends on your income level and I'm lucky that I have the choice. So far I'm fortunate that I don't need much dental work beyond the standard stuff.
I've heard stories from my home country about people going to Poland and other places for dental tourism like you mention, which has the advantage of being in the EU (visa-less travel, some level of trust, likely similar standards).
Whether you become a medical tourist or not likely depends if you are in a public health system or not, and if so, what is covered by the public system and how much you must pay out of pocket to make the travel cost-effective.
Well, they do that because their circumstances might be different from yours. It only makes sense that different people have different needs, or fulfill the same need by different means.
I don't think China can't build the technology. The most known brands in industrial robots for example are the Swiss ABB and the German KUKA. These are ubiquitous (even in the U.S.) the same way Siemens (German) is in Programmable Logic Controllers. So I don't think it's a matter of being unable to make it, maybe the comparative advantage lies somewhere else.
You can look things up by country, by product, etc. What country exports to what other country, and what does it export or import. There's also the "economic complexity index" of each country. Pretty neat.
As I said in my previous comment, I don't think that China can't. It's a launch capable country and I think it's safe to assume that if they're launching rockets and and putting stuff into orbit, tunnel boring machines are well within their adjacent possible.
We're talking about a nation that had ships 450 feet long and 150 feet wide 600 years ago. If Noah was real, he was probably Chinese, lived in the 15th century, and the animal pairs he took with him were fast robotized arms from Germany.
Wouldn't that have more to do with the company serving businesses rather than consumers, and so have less need for general brand awareness, and focus their sales and marketing efforts entirely differently?
I have done IT consulting for a company like this. Even though they were the world market leader they were so low profile that the CEO would usually pick up the phone when I called them.
There was no big secret behind it. It's just that their whole market was like 20 companies worldwide served by maybe 7 providers of which 2-3 actually counted.
A friend worked for the market leader in "rivets and rivet punching machines", and they did very little/no marketing from what he said. They didn't seem to understand the web at all, or maybe it simply didn't matter, as much as that sounds like heresy on HN. They had a huge contract with a household name German car company, and the rest of their sales with from a catalogue sold directly to smaller manufacturers. There's countless German companies like this, scattered all over Germany. If you're in a particular industry, you likely know the highest quality manufacturer in your segment, and there's a good chance that it's a German company.
Nope, sorry. This was an informal conversation with a German friend. He probably doesn't know for sure what patent this is. It's not something that is on the news.
They are not large. Maybe a hundred employees, eight digit revenue and very few products. In the south-west you see them at every corner, relying on word of mouth and the occasional trade fair. But they mostly have someone working on that full time nowadays.
In line with the topic I'd like to plug Mennekes (which does have a small public relations department and is larger than the companies mentioned above). They supply plugs for practically every electric car.
Or take the Walterwerke, making machines for Ice Cream Cones, and being the global leader in that industry.
50 employees, tiny amount of machines they produce, but without them, the world would be far worse as everyone could only eat ice cream in those tasteless paper-like ice cream cones.
This has the potential to be a really good article, and it almost starts going down some promising lines, but then misses out on the interesting bits.
Take this quote: BMW hopes its fully autonomous iNext, due in 2021, will revolutionize the industry but in the meantime it will continue to promote its poorly performing i3 as the best option for those looking for a premium zero-emissions car.
Yes, the i3 is a wacky, kind-of ugly design, and it isn't surprising (to me) that it hasn't been a big seller. But the BMW i division is one of the most interesting things happening in the car industry today, and is making cars[1] that are just as innovative as Tesla.
It's a pity that it didn't explore this a bit more.
They needed to capture attention first, and also make sure they don't damage their brand if they mess up their first generation e-vehicle. I think this strategy makes sense.
Fair enough, but most people I know that would be interested in a fully electric car are just turned off by how the 'i' series look. I your point, they could have just made them look somewhat nicer.
There seems to be no middle point with the i-series and it's its biggest problem. You either have to go for the affordable but incredibly ugly and bare i3(seriously, look at this car from the side - front, middle and back all look like they've been designed by different teams and then stitched together), or for the gorgeous i8, which is incredibly expensive and very impractical.
Because the typical 3-Series buyer is unlikely to buy a i3, but the get new customer segments with the i3. So overall more sales without cannibalizing existing ones.
there might be engineering constraints: does the frame need to be redesigned to store all the batteries? How is the 50/50 weight distribution affected? How is handling affected?
I think the differences in the drivetrain might be so much that they would need to create a fundamentally new car. It would have to be a new model.
The i3 is ugly, but it's a lot of fun to drive. The only reason I don't own one is that it doesn't have enough range. I make 120-mile trips fairly frequently and it's just not practical for that.
Also looking at an i3, and it looks like the range is too small for me. I think the new models have about 300km/186mi (ideal conditions probably), but for a vacation one would need at least 500km IMO.
It's not really any more fun to drive than every other EV in this class (KIA Soul, Nissan Leaf, VW E-Golf). However it costs more and is really spartan inside.
For me it is. Where I live there are multiple EV car-sharing services so I got to try them all: between the i3, the leaf and the renault zoe the i3 is by far the nicest to drive and most fun to be in, in my experience. Zoe is also nicer than the leaf, though underpowered.
I'm really into the i3's interior though: the steering wheel and the screen just look like they're floating and the dashboard looks so sleek.
In Copenhagen we have: letsgo.dk, gomore.dk, drive-now.dk (the latter also exists around Europe). I've never used Gomore though; it's the other two how I got to try the cars.
edit: I should mention that gomore isn't EV exclusive, drive now is EV exclusive here though.
I've not tried the Kia or the VW, but I enjoyed it a lot better than the Leaf and found the interior to be nicer. It may be spartan in how it looks, but a great deal more thought was put into the layout than in the Leaf.
My only complaint with Leaf really is that it has more torque than its bobbly chassis can handle. Traction control has to kick in way too often if you are not accelerating carefully.
The i3 interior is.. bizarre. Two tablets in a plywood holder? But I guess it can have its own novelty appeal. Still I'd suggest the electric Mercedes over this, if one gravitates towards premium German makers. Just my two cents.
From a technical point of view, i think all the big German manufacturers are perfectly capable of building full EV models. It's not technology that is stoping them. It's the stale, inflexible, slow moving corporate culture that comes along with a 100 year old company like Volkswagen or BMW. Add to that the deep goverment-ties and you have even more nonsense involved.
Just look at how many models VW is building. Right now, they have more than 30 different base models, each with 4-6 additional variations. With the their full and semi EV models, they are heading for the same chaos. For the last 30 years, they have been incapable of streamlining this, so i really doubt we are going to see a EV with a competitive price–performance ratio anytime soon.
Because it's not the goal. The goal is to offer many variations to have the perfect fit for every customer. Why do you think all German manufacturers have been building more and more SUVs in the last decade. Because that's exactly what American customers want.
Why would they have to streamline this? They actually are building cars that fit their (very loyal and wide) customer base. Some people want the sporty Passat CC, others want the Allroad version. We don't need Appleization of all markets :/
I think you are exactly right, the traditional automobile manufacturers don't stand a chance in the "new world". I liken them to carriage makers in the early 1900s and the likelihood that they could make the transition to a completely new way of life. Sure, some of them did make the jump and you can even find a few modern day carriage makers, but for the most part they all died out when the Model T came to town. They just couldn't adjust & adapt as their whole world was wrapped up in the traditional way to make a vehicle.
Long time ago I invested all my savings in Tesla stock after having contact(worked) with European and American car manufacturers.
The reason? You can't imagine how big the facilities for building car components are. There are billions and billions invested on facilities with decades to be paid off.
This is a big advantage once cars are standard, and all the same,and don't change, but becomes a huge liability if you change the technology.
If you invest on a plant a billion dollars to build engines to be amortized in 25 years and engines become obsolete by the way... you have thrown to the trash 1.000 million dollars as your expectations for the future became wrong.
Now multiply this billion for 20 or so and there you have the car industry. They don't want change because change means them losing billions.
Then there are other minor issues: electric means no mechanical reviews which is a huge business. Electric means mechanical engineers without work.
Any change has to come from newcomers and the same way Elon did: You do your sales yourself so car manufacturers-dealers(who profit any time a mechanical piece fails) do not sabotage you.
I don't see any conventional car company doing it, maybe Toyota that advanced what the future would wring before the others that are late to the party.
I don't mean to tell you how to live your life, but investing all of your savings is very risky - putting all your savings in one company is extremely risky.
Even if everything you state about existing car companies is true, Tesla could fail for a multitude of reasons, leaving you with nothing.
If pipio is prudent, he has sold a third or so of his shares at this point, which would leave him with a guaranteed profit even if Tesla goes bankrupt tomorrow. Even after the ~35% decline in Tesla share price during the last years, the stock is at >10x the IPO price and 7x the price in 2012.
An engine plant set up to build combustion engines doesn't become worthless if the demand for combustion engines goes away. Yes it will need retooling if they are going to make something else, but it's not a complete write-off.
On the other hand, they didn't need to create the company, the product and distribution network from scratch in a competitive environment. They had R&D and testing facilities, engineer workforce, factories and supply chains in place.
They are just excusing themselves out of this blunder. They sat on their asses changing the grill shapes and let an upstart undercut them.
It's easy to undercut another company if you're willing to make a loss.
If Tesla reaches profitability you can bet there will be a lot of other EVs on the road within two years from that point precisely for the reasons you listed in your first paragraph.
There been some dry spells for Porsche as well, when it was losing on the order of billions within a year. This does not reflect to maturity of internal combustion engine technology or viability of luxury vehicle business of Porsche.
That statement connected two non contradicting issues. Porsche could make that premium electric car, and it could stay in black.
Yes, they probably could. But the question really is whether or not they'd make a profit on that premium electric car. In other words, if they'd cross-subsidize from other income then quite probably Porsche as a whole would still be in the black but that doesn't mean they're turning a profit on the EVs, you'd have to break it out in order to establish that.
Based on the quote from the article my guess would be that they would not be making a profit on the EVs.
Tesla is as much a manufacturing upstart as it is a charger network upstart. Both parts can grow side by side. Shoehorning a charger network that is starting from zero into an existing, massive manufacturing and development organization that is perfectly tuned to the well trodden path would face a whole class of difficulties that simply don't exist in the all-new company.
> Shoehorning a charger network that is starting from zero into an existing, massive manufacturing and development organization that is perfectly tuned to the well trodden path would face a whole class of difficulties that simply don't exist in the all-new company.
But Mercedes would be ideal for that.
They own shares in most taxi companies in Europe, so they can start by electrifying them.
And the taxi companies HQ could each get a bunch of superchargers.
Which would immediately create the densest supercharger network in the world. And it would be profitable from day one.
>They sat on their asses changing the grill shapes and let an upstart undercut them
Or...maybe no one has figured out how to produce an economically viable electric car yet, Tesla included?
I mean, if already having the company, product and distribution is such a huge advantage, then the competitors have massive leverage, no? Or do you think Tesla has "already won"?
They did have massive leverage, the whole point of my post was they did not manage use it and are blame-shifting.
Tesla loses money due to continuing massive capital investment into production facilities, they still sell each car for more than what it costs to produce.
It is a rapid growth problem, certainly one of those things that Porshe executives are not familiar with.
But isn't always the game with ground-breaking technologies though? At first you don't make as much money, but you're laying the road for the big thing. And when the revolution begins, you're the one making the big bucks.
Not always at all. Also often, the forerunner disappears when other companies jump in at a later, proven, profitable stage of the technology, when both technology and the market are ready for mass production.
This. Ever heard of Myspace? Altavista? When making a market, watch out for well equipped and funded upstarts going to get you. Next victims of their own success: Docker.
I think in those cases, it was a matter of a better-designed, clearer-headed product taking space from a not-so-well-designed product. That's not what would happen here, because Tesla is already the creme de la creme. In fact, Tesla executing so well is the only reason EVs have seen their recent "resurgence" in the first place. And remember that Tesla isn't the first company to make electric cars.
I also think people underestimate by a lot how hard making new things is. It's not just a matter of coming in with more money. It's almost deceptive on Tesla's part that the cars seem simple. But if it really were so simple the Model S would already have competition. And when you're talking about someone who has raised a company that lands rockets in the middle of the ocean, competitors are fooling themselves if they think even just a superficial copy is going to be easy. This is something they have to bring their A game to at all levels.
Look back at 100 years of automobile manufacturing. The big companies we have today are the survivors. As recently as this century, Rover Group, a company that was around for a century and made a great product ceased to be.
The tax perks in many countries that have buoyed up Tesla sales are ending. So perhaps manufacturers don't see now as a good time to enter a market containing risk. Better to wait it out and plan accordingly.
They had some excellent ones too. Rover 600 & 75 were good cars. Many major manufacturers have had life-threatening failures in recent years resulting in recalls. Some surviving brands were much, much worse than Rover Group at quality. Lancia still exist, Alfa Romeo exist. Fiat in the 1980s, no thanks, I'm not paying for rust.
The Italian cars did rust at the slightest hint of damp weather but you soon forgot about that when you got behind the wheel. They had flair, style and driver engagement in abundance.
When I look back at the Rovers my dad drove they were as dull as dishwater and very poor quality.
They own Here maps, have laser-mapped all of Europe, work on self-driving cars, and own several european Uber-competitors and have stakes in many smaller taxi companies.
Tesla needed to have something groundbreaking like the Model S, otherwise they would never have gotten the attention and sales that they got. The germans already had an established business and didn't need to take risks. Also their sales are strong and even increasing, so i don't buy the argument the press is spinning that Audi/BMW/Merc/Porsche are being left behind by Tesla. They have some very impressive technology in the works and Tesla still has to prove that it can be really profitable.
Still i love Tesla for what they did and the movement they started.
Nokia and Blackberry unit sales rose for 3.5 years after the iPhone debuted.
Tesla is making enormous investments in their business. (For example their enormous gigafactory will provide scale advantages). When these investments start bearing fruit the Germans may find it difficult to compete
Compared to shorter range cars I think they are going to do much better. A 90 mile Nelson leaf is ok, a 60 mile neon leaf on the other hand. A 5 year old model S likely has more range than a new leaf and if it bothers you getting a new battery will drastically boost that range.
So, at resale a model S is probably well north of 30k.
Tesla is eating into their luxury sales: The 70-100K+ car market segment is smaller and the USA/Japanese dominate the lower end.
Every rich guy buying a Tesla instead of an Audi or Merc is taking away market share the euro car makers are unlikely to get back. I don't hear many stories of people "upgrading" from a Tesla to an Audi or Merc.
> But Porsche, Audi, BMW and Mercedes are ready to respond
But are they? It’s repeated every time this topic comes up: They supposedly have ready-to-manufacture blueprints stashed away in some dusty cabinet. But what about ramping up actual production? What about building production lines?
You can’t just pull a blueprint out of a drawer and cars start rolling from the production line the next day. All I see (from an outside perspective) is the big three (BMW, Mercedes, VW) failing to prepare for the future.
Of course, customers aren’t really demanding it either. Everybody just complains that electric car X cannot travel 1000 km with a single charge and then goes on to buy a Diesel.
It seems unlikely that Panasonic, LG Chem, Sony, Samsung, etc will cede all their current market share in EV battery production -- that is, 100% of the market -- to a company that currently has none whatsoever. Tesla doesn't make batteries right now... they make battery packs composed of batteries produced by Panasonic and LG Chem.
The Gigafactory is basically space sharing: Panasonic's contracted to produce some billions of batteries there, while Tesla has space for assembly lines to package Panasonic's output into packs for cars and homes.
Fast forward two years into the future: why would BMW definitely opt to buy Tesla packs of Panasonic batteries, instead of producing their own packs of Panasonic batteries, or Samsung batteries, or an integrated product from LG?
LG has the US's largest battery factory in Michigan, which opened in 2013. They have production lines going for the Chevy Volt, Spark EV, Cadillac CT6, and several unnamed customers... and expect to grow production capacity at least 5x in the next 2-3 years. Like the Gigafactory, their output will be measured in gigawatt-hours per year.
They also offer more than just batteries to EV makers. LG is providing the battery cells, battery packs, charging systems, motors, control software and infotainment system software for the Chevy Bolt for example. Tesla's unlikely to offer such a suite of components to other auto makers since they're competing in that space. That may make Tesla a less appealing potential partner, meaning they don't get revenue streams from everyone else's EVs as you imply.
Benz and Audi and BMW can sell their products into an existing transport system. Fuel of the correct octane is generally available. The dealer network can support itself on maintenance fees as well as sales commissions.
Telsa has to build the transport system. They need to get people interested in deploying charging stations. They need to build a distribution system that doesn't depend on US$5000 per year in maintenance fees from each customer. They need to overcome range anxiety.
In this they have common cause with Nissan (Leaf) and GM (Bolt and Volt). But they're head-to-head with the big European high-end carmakers. A car maker switching to electric power is like a computer hardware maker switching to software: it disrupts the sales process so dramatically that it's very hard to do successfully.
As a (well-to-do hipster) Tesla Model S customer, I hope I don't end up getting stuck with the Betamax of charging connectors. I hope the various EV makers can sort out the J1772 / ChaDEmo / Tesla connector issue pretty soon.
They're all full of hot air until they actually deliver a real EV that can compete with the Model S. I saw an article on a Mercedes-Maybach EV concept car the other week which made me roll my eyes. I've always felt concept cars are a silly idea; a waste of talent and resources. Why can't they spend that on creating a real car and delivering it instead?
The range is a little less than what Tesla offers (150 miles), but here in Berlin I see quite a few of them on the road already. Mercedes has a similar model btw:
Neither of those cars get 150 miles of range. They're both squarely in the under-100 miles category. The BMW only reaches 150 if you get the "range extender," i.e. a motorcycle engine in the trunk that charges the battery. The MB has a "extended charge" mode where you get get a little over a 100 miles, at the expense of using some of the battery overprovisioning.
Also, humorously, that Mercedes B-Class you linked to is, under the body, a Tesla frame and propulsion system. They're buying from Tesla because they don't have their own technology yet. Tesla only sells them 30-something kilowatt battery packs, though.
Because concept cars are combining efforts into a prototype to test those concepts with. Also, to get a reaction of press and potential customers. Concepts very often contain elements which are adopted by later production models and pointing the way ahead for a whole brand in terms of design language, automotive philosophy and technological advancements. It is far from a waste of talent and resources. Actually, it is necessary for top automakers to stay ahead of the game.
Concept cars are similar to haute couture in fashion. Somewhat far-fetched and sometimes ridiculous, but they're a way to communicate and test concepts and ideas, as well as give a sense of direction and vision. Not a waste of time at all.
Because concept cars are actually pretty cheap, and could even be paid from a marketing rather than engineering budget. Creating a new "real" car to the point where it can actually be manufactured, serviced and sold efficiently is incredibly expensive. It's probably at least a 1000x difference in cost.
One thing is the actual car. I think at least BMW should now know how to build a proper EV. But that still doesn't mean people will buy it. It would need a charging network that can help people out when traveling long distances. Tesla has the supercharger network - no other network can come anywhere near it when it comes to performance and coverage.
That depends on your grid. Electricity in quite a few countries is effectively zero emission, thanks largely to hydro and nuclear power, increasingly also solar and wind.
Hydro isn't exactly zero emission either. What do you think happens when a dam is created, and kills tree life? What do you think the underwater vegetation emits as it decomposes?
Sure, once the back filled area is thoroughly decomposed, you're at 0 ongoing emissions, but there's a big divot needing to be repaid already.
(And that's to say nothing of loss of habitat, arable/liveable land, etc.)
I think this misses the point. With that thinking virtually everything produces carbon emissions - the question is how much, and what is it a function of. Hydroelectric (which doesn't just include dams btw.) may have a positive CO2 balance, but it doesn't scale linearly with the amount of electricity you produce from it. The same goes for all other renewables. Battery manufacturing is trickier - it does scale its footprint with number of miles driven (because it has a limited service life), but I'd assume the term has a fairly low multiplier compared to directly burning gasoline to get ahead.
So my point is: The devil is in the details, blanket claims like "X is bad because CO2" doesn't really help. "Zero emission" may be a bad approximation, but I'd postulate that if you live in a place with very low fossil energy mix and use a car that has negligible direct and indirect emissions for each mile driven, you can claim "Zero emission" - otherwise the term becomes rather useless.
> Electricity in quite a few countries is effectively zero emission
Isn't the reality that that is the case with extremely few nations? I'm not aware of more than a few that can claim to be at zero emissions on electricity.
Found a good source [2] on this and made a spreadsheet, so look for yourself [1]. There's a second sheet attached that shows the countries with below <30% fossil fuel in the electricity mix for a better overview.
Edit: Have a look at Norway - they could burn their own oil cheaply, but they are a bit smarter than that. Noteworthy is also Brazil - before someone comes in and says you need to have a fully developed rich economy to do this.
So about the charging stations. Is the end goal going to be charging stations all over your city for each car manufacturer? Or are they willing to copy Tesla's plug and make some kind of "charging alliance"? Tesla has released their patents[1] so this would appear possible.
I think Tesla will make money regardless of whether the established car companies come up with a good or better car; they're investing heavily in battery technology, and within 5 years, Tesla will be the world leader in that respect, undercutting the competition and managing to buy up most of the world's raw materials for batteries. See it as them becoming the oil industry, instead of the car industry - designs, efficiency, laws etc are fickle and tend to vary a lot, but oil and petrol has remained relatively unchanged for a long time (as far as I can tell).
Battery tech could still face a huge revolution though; if Tesla isn't able to acquire that and go with that, they might see themselves out of the battery business very quickly.
Tesla doesn't really have a big investment in battery technology, Panasonic owns the technology and manufacturing process IP. What Tesla is investing in with the Gigafactory is taking economy of scales to the extreme (Musk has freely said as much publicly). That's not something which is difficult for others to replicate once it's proven to be a profitable venture.
The thing is, that while Tesla cars might be the coolest thing on the market, but it won't matter one bit if they run out of money. The question is - can they make themselves profitable before that happens?
The question is actually "Will they run out of money before being able to access more money?" That might be from revenue exceeding costs (eg profit), but it might also be from loans, more investment rounds, an exit, etc. A business only fails when all the available funding avenues have been exhausted.
I don't see Tesla ever actually 'failing' in the sense of ceasing business - if they run out of money then a big manufacturer will very likely step in with buyout. Toyota already owns a stake in Tesla, so it'd make sense for them to buy the rest if they can. Many famous brands have done this in the past - Peugoet-Citreon and Volvo were bought by Chinese led groups, Rolls Royce is owned by BMW, GM owns Vauxhall (Opal), Ford owns a stake in Mazda, and VW owns Audi and others.
Behind the scenes the motoring industry has been consolidating for a long time. Tesla has a brand people like, so someone would buy it.
I wonder what exactly will happen to all the cars if Tesla goes completely bust. I remember when SAAB fell over, their cars took ~10% depreciation and a noticeable insurance bump overnight.
For a car company that vehemently blocks third parties from doing maintenance on their cars, and with a big complex software at the heart of the vehicle, I wonder just how big of a financial loss it could end up being for Tesla owners. Might we see 50% value loss overnight? If no garage has the tools, software and knowhow to fix it, what do you do when it breaks?
I used to own a Saab, and a lot of the time they could cram in generic parts instead of needing special saab parts. Why get a hideously expensive Saab radiator when the mechanic can pull a generic radiator off the shelf and be installing it right way?
I don't see that working quite as well with a Tesla.
Model X has arrived in the UK recently. As a UK company director (contractor), I seem to be able to tax efficiently buy one of these things and get rid of my gas guzzling family 4x4. Anyone done this, I'm still a bit hazy on how the BIK tax and finance costs work?
Yeah it is a lot. I wouldn't consider buying a brand new car normally. However As currently structured it seems to be a fairly tax efficient way to extract money from the company (vs just buying one from after tax earnings). I was wondering if anyone went down this route with the model S or is going to with model x.
Clayton Christensen argues here [1] that Tesla is going to have a problem with BMW etc. - he says that it has been easier in the past to disrupt existing markets from the low end and with low margin products; the field of high margin cars has a lot of sophisticated players that might give Tesla considerable trouble in the long run - on the high end.
I think Clayton Christensen is wrong here for the same reason he was wrong about the iPhone.
First off, I think Christensen has been narrowing his disruption theory too much - pretty much to the "low-end" disruption strategy. But if I remember correctly, the original theory was a little more flexible, and it was more about the "next paradigm" technology/product, although it still put a lot of emphasis on the disruptor having lower cost structures than the incumbents.
However, at the same time, I was reading Blue Ocean Strategy, which is somewhat similar to the disruption theory, but a little more flexible, and it applies to pretty much any industry, not just the technology ones.
What I get from these two theories is that Tesla's cars are a "next-paradigm", which will at the very least make Tesla a "market builder," where it's the leader in that market, but unless Tesla also decides to make the lowest-end cars, then it will not end up dominating the new + old markets.
So in this way, it's similar to what happened to Apple. Apple was clearly the leader in "touchscreen smartphones" for a long time, but because it refused to make $200, and $100, and $50 touchscreen smartphones, it made it impossible to remain the leader in terms of sales.
So from that point of view, Christensen would be right that Tesla will not end up dominating the EV market in terms of sales, when companies like Renault/Nissan/GM will start making $12,000 EVs with 200-mile ranges in 10 years.
But that doesn't mean Tesla will not be successful. It will probably remain the market leader in terms of "who makes the best EV," for a long time, because EVs is what Tesla lives and breathes, and they already have more than a decade of expertise in making production EVs, which will be hard to catch-up to (just like it took most OEMs at least 5 years to even approach the iPhone in quality).
I'm actually quite disappointed myself that Musk said Tesla will never make a lower-end car than the Model 3. I was hoping they would at least make a $20,000 one in 5 years or so. I think he may be overestimating how fast self-driving taxis will be adopted by the majority of the population in a way that it makes sense to not have a car anymore (for people who would supposedly not have the money for a Model 3).
Will Americans really do 20-30 miles commutes in self-driving taxis, every day, twice a day? I don't know if that math will add-up anytime soon. I mean, even if it does happen, but it's 15 years from now, does it really make sense to hold-out on making a $20,000 EV and getting much more market share in the meantime? I don't think it does, but who knows. I think it's a "safer" strategy to build that $20,000 car than not to do it, though.
i think Apple is doing find because it still is known as a friendly and otherwise great UI; it also creates a lock-in effect because you can't just get a phone from a different vendor with the same UI;
Unless I'm much mistaken, the Porsche Mission E hasn't actually run the Nurburgring yet. It's a non-functioning concept that was shown at the motor show, too.
Is this article implying it already has in the first two paragraphs? The only mention of a lap time from Porsche is a "proposed" sub-eight minute Nurburgring time.
> "We made the very conscious decision to be conservative in our marketing since it's not in our interest for the assistant systems to be used in circumstances they should not," said the Mercedes official.
But he made it sound as if that was their "well-thought-out strategy", when it was just a reaction to all the bad press Tesla was getting for its "Autopilot." The move was out of fear more than anything.
They did create the "we're making self-driving cars" ad in the first place, didn't they?
Yes, mistakes happen, even at that level. But how you deal with a mistake after you've made it is what makes all the difference.
Mercedes seems to 'own' the problem, they admitted that they did wrong and seem sincere in that. They could have responded a lot worse in this particular case and I don't see how they could have responded better.
Compare to VW who initially attempted to blame a bunch of engineers (trying to distance the brand from the action instead of owning up to what they full well knew they did, the details of which are only now emerging and are in direct contradiction to what they initially said and wrote).
> Compare to VW who initially attempted to blame a bunch of engineers
That’s quite a misinformation.
VW US said "rogue engineers".
VW DE fired the CEO and suspended 20 top engineers, several of whom were on the board of the company (VW mostly recruits managers from their own engineers).
> "I wish we had put that car on the road and not Tesla," confided a senior engineer at Porsche. "We have to earn money at the end of the day though."
The article also talks about "how will the German brands win back customers from Tesla?", but really, if you look at cars like the Mercedes S-class, BMW 7 series or the Audi A8, their sales are unchanged or even increasing since 2012 when the Model S was launched. Audi has been setting record sales numbers in the US, which is Tesla's biggest market, for five years straight. So it's a bit hard to argue Tesla has taken many of their customers.
Maybe most Tesla drivers were never petrolheads in the first place, and drove a boring station wagon before the Model S came along?