
Musk: Osborning His Model 3 - KKKKkkkk1
https://mondaynote.com/musk-osborning-his-model-3-5e7c76fbaf8b
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mehrdada
Model Y was a known character before the announcement, so its official
unveiling if anything had kind of the opposite effect. It put a pin to hoping
for it to be available soon enough to hold off buying a Model 3 today and it
is sufficiently advertised at a more expensive price to deter some more.

Tesla's currently in a weird situation where it is in a local minimum of US
purchases that it needs to book to make the quarter, while it has unsatisfied
demand in EU and elsewhere but the delivery pipeline is not mature yet. Once
that global shipping pipeline starts to fire on all cylinders (pun intended),
it probably gives them enough runway to get to the Model Y without too much
worry of shrinking demand in the US.

~~~
bryanlarsen
Exactly, the stock market's reaction to the model Y showed that many people
were expecting "one more thing" from the announcement.

And if you read the reddit thread, you will find exactly what you suggested;
there were several people waiting for the model Y announcement who decided to
order the 3 immediately instead.

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taneq
The Model S was their flagship mass market car, and the Model 3 is a "Budget
Model S". The Model X is their flagship SUV, and the Model Y a "Budget Model
X". I don't get why this is "Osborning the Model 3". They serve different
market segments.

~~~
dagw
_They serve different market segments._

Do they really. They're basically the same size and visually quite similar
(There seems no reasonable definition of SUV where the Model Y would qualify).
I cannot think of many scenarios where the choice between a Model 3 and a
Model Y is an easy and obvious choice (assuming both are actually available at
roughly the same price point).

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davedx
The Model Y has a 7 seat option, the Model 3 does not.

~~~
mprev
That is only relevant if you expect most Model Ys to be sold as seven seaters.
The point of the analysis piece was that CUVs are more popular than
traditional sedans.

Their popularity, at least here in Europe, has nothing to do with their
similarities to true SUVs. Instead, people buy them because they want
something that _looks_ like an SUV (or true off-roader) but they can't afford
the purchase or running costs. The Nissan Qashqai, Citroen C-Crosser, VW T-Roq
etc sell well not because they have seven seat options, or whatever, but
because they look sturdier/safer than their traditional rivals.

That's the point of the Monday Note piece: the market has shown that there's
strong demand for crossover cars and, in the author's opinion, buyers might
wait for their prefered format of car rather than settle for the sedan today.

~~~
varjag
Hatchback is simply more practical than sedan if you want to fit a large
stroller, bring a few items from Ikea or even a smaller kitchen appliance.

~~~
benj111
Crossover/suv doesn't really imply hatchback though, at least not in Europe, 4
door cars aren't as popular, so the primary reason to buy an suv, isn't to get
a hatchback.

~~~
varjag
Lots of these are SUVs in name only (small, underpowered, often 2WD and no
towing hitch) and are really good old hatchbacks with facelift.

~~~
benj111
Agreed.

I read your previous comment as suggesting the reason why people bought SUVs
was because they were hatchbacks. Did I misunderstand?

~~~
varjag
I called them hatchbacks because most of them are same type car and bought for
same reasons. Very few people get to actually tow boats or drive to ski
resorts with them.

~~~
benj111
My point was its like saying people are buying SUVs because they have 4
wheels. Nearly all cars have 4 wheels, so the presence of 4 wheels isn't a
reason to buy an SUV.

Your original parent was talking about SUVs and crossovers specifically. Not
all hatchbacks are SUVs / crossovers, so it gets confusing when you start
mixing the 2

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flexie
I doubt that Tesla needs much more demand at the moment. The demand for Model
3 already exceeds Tesla's production capacity. Until the Chinese Giga Factory
3 is up and producing large numbers, Tesla cannot use an increase in demand
for much. Next year, Giga Factory 3 will be producing significant numbers, but
that may still only be sufficient to meet the demand from the Chinese market.

So Tesla will likely have to build a Giga Factory 4 in Europe or America to
really meet the Western demands. Such factory, which is still not formally
announced, needs to be built first and will not produce large numbers until
3-4 years from now.

Apart from the obvious production constraints, Tesla has the constraint of
expanding the supercharger network and the constraint of expanding their
workshops, so that they can service the huge amount of new cars on the roads.

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dvh
I can only read first two sentences of the article. How am I supposed to
comment it?

Edit: I think I'll write link based rss filter, it seems that all medium links
are either from medium.com or they match this regexp:
/^http[s]+:\/\/[a-zA-Z0-9]+\\.[a-z]{2,3}\/[a-zA-Z0-9-]+-[a-f0-9]{12}$/

~~~
iainmerrick
Try turning off Javascript.

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elisharobinson
I disagree with a few of the assumptions made here.

> germans will never come out with cost-competitive electric cars

1\. because they don't have a Giga factory

2.because they would cannibalise their own petrol car demand

3\. they want to push hybrids as the future but its never going to be cost
effective as a pure electric tesla

4\. china could level the playing field but due to large tariffs, it is
unlikely they would make a significant impact in the next 5 years in US and
EU.

> tesla stands to make the most amount of money from its performance variants
> of the model 3 ( which is a cheaper porche in terms of performance).
> producing cheaper model 3 puts pressure on the balance sheet by unveiling
> the model y it reduces some of that pressure but keeps the company
> profitable for longer.

~~~
zapnuk
A Model 3 costs 53000€ in Germany. A VW e-Golf with half the range of a model
3 starts at 35000€. VW (+Toyota and others) are late, but are investing
billions to make electric cars available to the mass.

Unless Tesla is able to cut the Model 3 price by about 50% they won't be of
much relevance in the grand scheme. They will remain a luxury brand similar to
Apple in the customer electronics market.

However, they won't be as successful. Apple's products are still cheap enough
that many low-income customers who realistically don't have the money to
afford an iphone still buy one. I don't think this will happen with cars. For
most people cars will always be a tool first and an accessory second.

~~~
TheTruth1234
Apart from meeting publicly stated goals (e.g. the $35k Model 3), why would
you even think twice about trying to compete with VW on price, when demand for
your current products, at the current price, outstrips supply?

~~~
mprev
How about because your company's valuation demands that it become more than a
niche player?

~~~
TheTruth1234
If you can't supply enough product to satisfy the demand at lower price
levels, you keep the price high for the current demand.

Especially if you're in Tesla's position where they're seeking economies of
scale and efficiency over time.

That is the path to becoming more than a niche player, in this case.

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newnewpdro
One could argue the future Y buyer wouldn't have bought a 3 anyways, this
could be keeping them out of competitors CUVs in the interim.

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kumarvvr
One is a 7 seater, one is not. One is costly, one is not. One is not a
replacement for the other. What is the Osborne effect here exactly?

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cm2187
You may have missed that part of the article:

> _Once derisively called Cute Utes, CUV’s have become a wildly popular car
> genre, so much so that Ford will stop selling conventional sedans — with the
> exception of the still-loved Mustang — due to the “unstoppable crossover
> onslaught”._

The author doesn't argue that they are the same, but that one is cannibalizing
the other.

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agumonkey
slightly different market, very common infrastructure and design

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brisance
Tesla is done. They have not done a capital raise and CapEx is too low for
Model Y. You can't produce cars without first investing in plant & equipment.

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rcMgD2BwE72F
>CapEx is too low for Model Y

Source?

They said multiple times that they have enough cash already to start and ramp
up Model Y production.

NB: the Nevada Gigafactory is already built (that's where Model Y will be
assembled), they already got the money for the Shanghai factory (enough for
3K/week vehicles and battery packs at end of this year). They will soon
announce the European factory (hints of European production for end of 2020 in
the Model Y press releases, probably financed with local bank loans just like
in China).

We've heard "Tesla is done" since 2009 and yet, they keep eating into the
competition's profits, and keep increasing their market share in the EV market
at an evergrowing speed.

