
Tesla envy grips Germany’s giants - Corrado
http://www.autonews.com/article/20160905/OEM05/309059949/tesla-envy-grips-germanys-giants
======
semi-extrinsic
The money quote:

> "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?

~~~
codeulike
_> 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.

[http://gas2.org/2016/02/15/tesla-model-s-outsells-
mercedes-b...](http://gas2.org/2016/02/15/tesla-model-s-outsells-mercedes-bmw-
audi-and-porsche-in-us/)

edit: re: rates of change: Model S sales increased 50% during 2015, Audi
A7,A8, BMW 6,7 Mercedez S all down 5% or more.

~~~
_Codemonkeyism
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.

~~~
PietdeVries
There is price, and there is cost...

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.

~~~
paulddraper
How is leasing cheaper than buying (due to tax benefit, etc.)?

It seems the rent/loan/buying tradeoff would be independent of the choice of
car.

~~~
gambiting
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.

------
urlwolf
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.

I live in Germany.

~~~
tome
> There have been entire German companies operating without marketing and
> sales departments

Very interesting! Are there any case studies on that?

~~~
ThePhysicist
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.

~~~
raverbashing
Also "mittelstand"

~~~
Jugurtha
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.

~~~
sumedh
How long will it take for the Chinese companies to copy the German tech and
make the machine inhouse?

~~~
ThePhysicist
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.

~~~
Jugurtha
> _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.

~~~
patrickk
> 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.

~~~
germanier
> my insurance provider picks up the bill

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).

~~~
patrickk
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.

------
nl
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.

[1]
[https://en.wikipedia.org/wiki/BMW_i8](https://en.wikipedia.org/wiki/BMW_i8)

~~~
martinko
Its a pity they cant just make a normal, fully electric 3 series or 5 series.
These are beautiful cars, yet the decide to go for the i3 and i8.

~~~
luca_ing
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.

I know what you mean though :-)

~~~
martinko
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.

~~~
gambiting
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.

~~~
izacus
Interior is actually a bit worse - it has those tiny screens with huge bezels
just bolted on somewhere randomly.

------
kennell
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.

~~~
Vik1ng
> they have been incapable of streamlining this

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.

------
pipio21
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.

~~~
dmoy
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.

~~~
mulcahey
Yeah that's why Elon split his between two.

------
DaGardner
I think this sums the situation up quite well and explains why Mercedes, BMW,
etc. have not put a serious Tesla competitor on the streets yet:

> We have to earn money at the end of the day though.

~~~
varjag
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.

~~~
jacquesm
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.

~~~
varjag
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.

~~~
jacquesm
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.

------
kayoone
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.

~~~
krait
The canonical reply from Elon Musk on profitability is that they hope to
profitable on a GAAP basis in 2020. Let's see if external investors hang in
there long enough to allow this. (
[http://www.bloomberg.com/news/articles/2015-03-04/as-
tesla-g...](http://www.bloomberg.com/news/articles/2015-03-04/as-tesla-gears-
up-for-suv-investors-ask-where-the-profits-are) )

It will be very interesting to see what happens to the used Model S prices now
that Tesla took away the buyback guarantee for new cars.

~~~
Retric
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.

------
fuzzy2
> 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.

~~~
snarfy
They'll all be using Tesla batteries.

~~~
dangrossman
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.

------
OliverJones
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.

------
alimbada
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?

~~~
ThePhysicist
Does the BMW i series not qualify as real EV?

[http://www.bmwusa.com/bmw/bmwi](http://www.bmwusa.com/bmw/bmwi)

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:

[http://www.mercedes-
benz.de/content/germany/mpc/mpc_germany_...](http://www.mercedes-
benz.de/content/germany/mpc/mpc_germany_website/de/home_mpc/passengercars/home/new_cars/models/b-class/w242.html)

They probably don't get hyped as much as Tesla, but they seem pretty real to
me nevertheless.

~~~
robterrell
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.

~~~
kuschku
> They're buying from Tesla because they don't have their own technology yet.
> Tesla only sells them 30-something kilowatt battery packs, though.

No, they’re buying from Tesla because they invested heavily in Tesla in return
for being able to use that IP later on.

------
electriclove
If these companies actually deliver any of these hyped future EVs, then IMHO,
Tesla has fulfilled it's mission.

------
spodek
> zero-emission

I wouldn't call emitted-somewhere-else zero-emission.

Zero emission is deciding not to take the trip.

~~~
m_mueller
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.

~~~
scott_karana
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.)

~~~
m_mueller
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.

------
legohead
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.

[1] [https://www.tesla.com/blog/all-our-patent-are-belong-
you](https://www.tesla.com/blog/all-our-patent-are-belong-you)

~~~
kuschku
> Tesla has released their patents[1] so this would appear possible.

Tesla has released their patents in the same way Facebook or Google have: only
if you in turn release all your patents to Tesla.

No one will do that, and the actual solution will likely end up with the EU
enforcing a standardized plug in one or two years time.

~~~
jeromeflipo
> Only if you in turn release all your patents to Tesla.

Could you provide a source?

------
aerovistae
God I hope Tesla makes it through the merger and following year up to when
Model 3 enters production. It's going to be a rough 5 quarters until then.

------
Cthulhu_
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.

~~~
gambiting
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?

~~~
onion2k
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.

~~~
Doctor_Fegg
Dongfeng owns just 13% of PSA Peugeot-Citroen. They haven't bought the whole
company by any stretch.

------
boothead
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?

Should I do it?

~~~
tonyedgecombe
£72,000 for an entry level model? That seems a lot to me (although I don't own
a car at all now).

~~~
boothead
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.

------
MichaelMoser123
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.

Fascinating and very enjoyable talk:

[1]
[https://www.youtube.com/watch?v=rHdS_4GsKmg](https://www.youtube.com/watch?v=rHdS_4GsKmg)

~~~
mtgx
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.

~~~
MichaelMoser123
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;

------
ablation
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.

------
waldrews
Are we going to get a Longgermancompoundword to describe this form of envy?

------
mirekrusin
Looks like another cycle of "X killers". Too little, too late.

------
untilHellbanned
#ad

------
uxdrEntreprneur
Tesla is a startup compared to these giants...yet fear has gripped them
strong.

------
mtgx
> "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.

You don't say?

[https://electrek.co/2016/07/29/mercedes-pull-self-driving-
ca...](https://electrek.co/2016/07/29/mercedes-pull-self-driving-car-claim-
advert-tesla-autopilot/)

~~~
jacquesm
Well, they _did_ pull the ad.

~~~
mtgx
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?

~~~
jacquesm
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).

~~~
kuschku
> 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).

~~~
jacquesm
The CEO stepped down but claimed he didn't know anything. He was _not_ fired.

~~~
kuschku
That’s the second CEO. The first CEO was forcefully resigned right after the
EPA learnt of the scandal, in mid-2014.

The second CEO stepped down after this scandal became public.

~~~
jacquesm
[http://www.cnbc.com/2015/09/23/martin-winterkorn-resigns-
as-...](http://www.cnbc.com/2015/09/23/martin-winterkorn-resigns-as-
volkswagen-ceo.html)

You're trying to re-write history here.

Winterkorn resigned claiming he did not know anything about the whole affair.

