Well, this is a tried-and-true technique used to damage competition. I have personally been the subject of such attacks in a prior tech business when our product started to threaten that of one particular multinational.
What did they do? They had sales people go to every single dealer to communicate they were going to show a next-generation product at the next major trade-show. This was six months away.
What happened? Anyone who was on the fence and could wait, decided to wait. We had a major order (about $2.5 million in product) go on what I call "soft hold" because of this. Soft hold is when your customer waffles around instead of pulling the trigger. They want to hedge their bet, so they keep you in the loop and dangle a big order while they think it through or wait for an alternative.
It is hard to say how much money we lost through such a simple technique. Hardware products are very different from software. You have to preload supply pipelines and fill warehouses with components, assemblies and finished product. Your purchasing has to be predictive (a nice to way to say "you have to get good at reading crystal balls"). In some cases you have to make purchasing decisions 10, 12 or 16 weeks before you can ship any product.
As a small company with just a dozen people or so the tsunami they created really hurt us financially. This multinational's marketing budget in our niche was probably larger than our annual revenue. Which meant they could play all kinds of games.
Our product was very good but heavily funded FUD and dirty tactics served to delay revenue and cause financial damage.
Six months later they brought this "next generation" product to the main industry trade show. Of course, people trusted a well-known brand. And they placed orders. Our orders tanked. Some got cancelled. We lost tons of money. We survived, but it was very rough.
We knew their product wasn't good but customers didn't want to believe this. Delivery timeline was something like six months. Which meant we were denied sales and revenue for at least a year.
As product started to ship and now customers started to use it in the wild the reviews came in: The product was crap. Not good. Not usable. Overpriced. Not worth it. In other words, exactly what we told our customers a year earlier.
The problem at that point we had suffered so much financial damage that we simply could not spin things back up. And, to boot, this was at a time when money had dried up, which means there was no way to find a loan or an investor to get us healthy again to make a run for the market.
The end result was that this company played the market masterfully with a bullshit product, future promises and bad delivery yet succeeded to destroy it's main competitor. I think it was another year before they actually delivered a product people wanted. We were done. They won. Lesson learned.
I can't say with any degree of certainty Tesla is playing a similar game but announcing something that is two years away with a reservation date just a few months from now sure brings back painful memories.
Cars are a displacement market. This means that when someone buys a car that buyer is, generally speaking, no-longer in the market for another car. Whoever sold them that car effectively displaced that opportunity away from any other seller.
Promising something two years away and locking people in with a deposit is most-definitely a displacement move of the first order. That person will not buy another car and will wait two years to get their pre-order. Which means Tesla pre-displaces, BMW, Toyota, Audi and anyone else who might have a $35K-ish car in two years.
Thank you for the insight. I have noticed they have a habit of making big announcements very early and even if they end up being late a lot of the time, they continue this practice. So it must be worth it.
400 miles? Even Tesla's Model S doesn't go anyway close to that under normal driving conditions. Model 3 will get 200+ miles, at best maybe around 250 for the top model.
Edit: Yeah missed the k. Never heard that one brought up. Also doubt Tesla's will last much longer.
I think you missed the "K" at the end of the "400" in the post you replied to. The part I'm wondering about is why the Tesla could "conceivably" go 400K. A modern diesel could go 400K, but a Tesla will suffer the same problems the diesel would with rotting body panels and interior, and a whole host of problems not related to the drivetrain.
I have no idea what makes a diesel die. Can you give me details on diesel death and what the other problems not related to the drivetrain that one would expect are.
Mechanical wear, the rings don't seal as well against the cylinder walls as they used to. Valves don't sit in their seats as tightly as when new. And so on. As for other problems, I already listed a few. Think of the niggly things your last old car had. A Tesla, diesel, or any other car is not immune to those problems.
Unit commitment. Anyone can make a free reservation. Serious buyers put $5K up. It gives you better signals about what your production pipeline is going to look like.
EDIT: If you can't fork over the $5K, you probably should wait in line to get your Model 3 after priority orders are delivered.
They might have a Signature deposit offering, where the 3 comes fully loaded in return for you fronting most of the vehicle cost upfront. This hasn't been announced yet to my knowledge, but was done for both the S and the X.
Sidenote: If you can't afford a $5K deposit for a vehicle, you probably shouldn't be buying a vehicle new.
How about putting up the money for the entire run to resell it at a markup to all the people who were willing to put 5K down? Surely they can afford more than 35K if they can let 5K sit around for the opportunity to pay another 30K to get the car when it is actually produced?
Ah, I mistook your first post as saying you could jump to the front in a previous offering. It seems you were only saying that you might be able to purchase from the more expensive pool.
I would argue that a car with fewer than one hundred thousand moving parts is less complex than many pieces if software out there. I can't say whether they are more or less prone to failure, but they can be fixable.
Of course these things are fixable but not with an over the air software update. Getting your car fixed, especially if it takes a day or more is a problem I wouldn't want to deal with.
For the reason that gaming pre-orders used to exist: your name goes on a list and then you get one of the first off the line. They're not necessarily charging the full $35k for that either, and Tesla can use it to gauge demand.
I was sort of hoping the brand would stay in the elite space and not make an everyman's car. A 35k electric car is cool, but I like the wow factor that Tesla currently has. Like saying "I bought a Porsche" and it turns out to be a Boxster, not a 911.
EDIT: I'm not saying this is a bad strategy for Tesla - it's great for them, I'm saying it makes it less valuable to me, one lone consumer since a Tesla will become less and less of a status symbol. That's it.
The fundamental strategy of Tesla is to start with high end cars while costs are high, drive down costs through volume, and gradually get to the point that low cost cars are possible. That's why they built the Gigafactory, they want to drive volumes.
This is in stark contrast with the electric cars attempted by the traditional car companies. They would build an ugly and expensive econobox.
Starting out elite, and gradually growing the market worked great for Facebook. First they were Harvard only, then Ivy League, then gradually all colleges. Existing users didn't like the changes, but if Facebook had stayed elite they wouldnt be worth $250B.
Looks like a great car but not sure it belongs to the future. I think the future is mostly in rented car services à la Uber/Lyft, most people live in big cities where the cost of owning a car is getting closer to just taking a cab, not to mention the hassle. And this will accelerate once self driving cars become more common. So yeah, buying cars especially $35k ones doesn't seem like a business I'd invest in but I may be totally wrong here. The battery part of it is great though.
TL;DR Based on Elon's response, they're considering released an Uber competitor with their own self-driving electric cars.
EDIT: Uber has an app and drivers. Tesla is going to have enough manufacturing capacity to build 100K cars/year. Numbers I've found indicate that 90-95% of the time, cars are in a garage or parked. That's a lot of idle capacity society doesn't need out there.
What does that mean? Tesla doesn't need to churn out enough cars to replace existing cars being sold; they just need enough that can replace current miles traveled by people.
Demand for cars is still huge during rush hours. Lots of cars sit idle during low demand times, but that capacity is still needed to meet high demand times.
The problem isn't getting people into the same car. The bigger problem is getting people into the same car at the same time. Sure, self-driving cars can work with each other in ways human drivers can't to minimize congestion, but until you start removing cars from the road, it will still be an issue.
Uber Pool and Lyft Line are already paving the way for car sharing along popular commutes. In the future, you will face the option of a ride home in a self-driving car either alone for $15, or with two other passengers for $5. The decision will be pretty easy for most people.
Or Google Now will simply suggest people in your area you could commute with, based on its aggregation of your daily commute data with the data of others, based on the time you leave every day.
Or perhaps Google Maps will do that. It supports Uber internally as a travel option, no? Wouldn't it be interesting if that dropped away and was replaced with Google's self-driving car scheme one night?
Excellent point. The actual service providing this transportation shouldn't matter. Passengers just want to arrive at their destination. Let the system figure out how to get them there.
Is there any indication or evidence that this will be successful at a massive scale?
Quite frankly, at those prices, I'm not sure either has an appeal greater than my own car, sitting in my garage, available whenever I want.
I'm extremely sceptical that all the people I see driving on the freeway every day would rather sit in a Prius with three strangers twice a day on their morning and evening commutes.
I think driverless cars are the future of transportation, I'm just not certain that driverless cars and car sharing will be married at the hip from day one. There is lots to figure out to make car sharing appealing at a larger scale than it already is. Most of the things I see suggested just don't have enough appeal to convince me that people will change their current behaviors for them.
If you're paying to keep a car sitting in your garage, you're already paying more than it would cost to rideshare to and from work. If you value your time at all, not having to drive yourself for 60 minutes each day easily covers the direct cost associated with the ride.
> Demand for cars is still huge during rush hours. Lots of cars sit idle during low demand times, but that capacity is still needed to meet high demand times.
That's a bit easier to solve. Congestion pricing along with economic incentives to employers who employee remote workers. Traffic is an externality; if you absolutely need workers on site somewhere in a dense urban area, you can do so, but you're going to pay for the privilege of all that infrastructure you're tying up.
The reality is that public transport will always be the superior solution. No matter how big you make the highway some trains are always going to beat traffic. Combine that with some Park&Ride places on the outskirts and bus/subway/tram in the city.
Google is still light years ahead, also, self-driving cars are expected to drastically reduce the number of cars being sold as they will be used much more efficiently and now one will own a car, at least when self-driving cars will be a majority which admittedly won't be for another 15 to 20 years.
Remember how computers were supposed to eliminate paper in the office? Now we have more paper than ever thanks to computers.
With self-driving cars people can have their cars out running errands for them during the day. Need to pickup something two hours away? No problem, send your car to get it while you are at work. The car that was sitting idle in the parking lot is now out on the road during the day.
By eliminating the driver the number of cars on the road might increase dramatically.
Right. Looked at a different way, self-driving cars increase the utility provided by cars, so -- since people will only buy self-driving cars if the price premium over non-self-driving cars is less than the added utility -- can be expected, all other things being equal, to increase the number of cars sold and in use.
OTOH, because self-driving cars decrease the number of cars needed in society to deliver a given degree of utility, they could facilitate a reduction in the number of cars, but some other changes would need to occur to realize that reduction. Tax, regulatory, and/or urban design policies which disfavor individual ownership of vehicles in favor of centralized on-call services would have to reduce the number of cars on the road.
Google also had a gentleman's deal with Elon to buy Tesla and allow him to continue operating it if they were unable to get their financing together. They have shared goals (electric transportation, reduced/eliminated mobility fatalities).
> self-driving cars are expected to drastically reduce the number of cars being sold as they will be used much more efficiently and now one will own a car
Agree completely. Google is excellent at software. Tesla is excellent at hardware.
> at least when self-driving cars will be a majority which admittedly won't be for another 15 to 20 years.
Google's head of their self-driving vehicle team has committed to general availability of their self-driving cars in 4 years
Apple has hired everyone under the sun to work on their rumoured car project and they already have decades of experience in global supply chain management. That is what I would be expecting from Google today if they were planning on shipping a car in 4 years.
Far more likely they will license their software to Tesla. Which would be one of the only car companies interested since everyone has had autonomous systems project in place for many years.
Miles driven since start of project in 2009
“Autonomous mode” means the software is driving the vehicle, and test drivers are not touching the manual
controls. “Manual mode” means the test drivers are driving the car.
* Autonomous mode: 1,158,818 miles
* Manual mode: 877,477 miles
* We’re currently averaging ~10,000 autonomous miles per week on public streets
(my note: over a million miles without an accident caused by software)
Don't let their track record on consumer hardware fool you. Apple makes nice phones and laptops, while Google has built an entire simulation of where their vehicles drive, continually updates that data with vehicles in the field, and runs their self driving algorithms against those world simulations. This ain't no Apple Maps.
Software is just one very small part of the work involved in building and selling a car globally. Not sure why you are fixated on it. At this point in time there is no evidence Google has put in the necessary steps to be ready to sell a car in 4 years time. And yes their absymal record on consumer hardware counts.
I'm fixated on reducing traffic deaths to zero and eliminating fossil fuel use by any means necessary. If that means I'm obsessed, so be it.
Google, Tesla, whomever doesn't need to sell the cars. They just need to provide you the option of transportation through your smartphone. You don't own a 777, and yet, you can travel across the country for a few hundred dollars with a purchase on your smartphone.
> At this point in time there is no evidence Google has put in the necessary steps to be ready to sell a car in 4 years time.
Their Robo-taxi patent, their existing services (Street View, Express) that could use them, etc., suggest that when they ship self-driving cars, it may not be as a mass-market, sold-to-consumer product.
Either way, that still doesn't address the complexity of manufacturing cars at scale. How's Google planning to do that? Common sense says they're going to OEM it, but I haven't seen any hints to that.
> Google's head of their self-driving vehicle team has committed to general availability of their self-driving cars in 4 years
Yes, but I said "self-driving cars will be a majority" in 15 to 20 years. The internet was invented in 1983, made available to the public in 1990 and took over 10 to 15 years later, even today there's a good proportion of the population that do not use it.
The future is hard to predict. It depends on two things:
* Regulations
* Manufacturing capacity
The world auto fleet is replaced pretty slowly. Perhaps its turned over quicker for every self-driving car released onto the roads. If I recall correctly, for every Zipcar shared car in a neighborhood, ~20 cars are no longer kept by owners in the area. Self-driving vehicles could have the same effect, limited to only how fast they can be built and shipped on rail to their final operational region.
Regulations. These are important. Self-driving cars will kill less people than human drivers. Full stop. If you incentivize people to use self-driving cars (insurance rates skyrocket for human drivers), you'll push people to automated vehicles faster. Less deaths, less capital outlay for humanity as a whole for buying cars, lots of efficiency all around.
If you want to make a gentleman's Long Bet [1] on it, I'd be down for that (token amount donated to the winner's charity of choice).
That's not a commitment, and neither does it imply 4 years, since only 50% of 17 year olds currently have a license and that figure has been dropping anyway.
I have a hard time believing that, considering Tesla has only existed for 12 years, and is already producing 50K vehicles a year that are rated as the best car ever built.
Not sure who is saying it is the best car ever built.
It's long term reliability has been marked as questionable to say the least and the interior build quality is to put it mildly embarassing. There are budget Hyundais that are more luxurious.
The below are results of a quick google search. I could go get references about the Model S being one of the safest cars ever produced as well, but I don't think that's necessary.
"Tesla’s Model S breaks Consumer Reports rating scale"
Do you mean the U.S or the whole world. Either ways, cars are embraced a lot in the U.S (and the rest of the world too) to make sense of what you are saving.
But that contradicts the "most people live in big cities"; it is "most people live in cities", but of them most of them live in smaller cities.
And it only deals with the urban/rural distinction, which subsumes suburbia into "urban". This has value for lots of uses, but isn't particularly useful for discussing transit, where suburbia is -- while still very distinct from rural areas -- very different from narrow-sense urban.
You are thinking like someone who lives in a major metro.
Sure, for SF/LA/NYC/Chicago/DC this will happen. However, pretty much anywhere that doesn't charge you for parking you are simply not accurately portraying the costs.
If I need to drive 6-7 hours a week, a rented car service is not going to be cost effective outside of a handful of metros. I've run the numbers for my life and Uber/Lyft is the TCO for my car in 6 months.
I live in Europe where the cost of a car is prohibitive, most young people and even older don't own a car and most live in cities. This is worldwide, most people especially young people are moving to big cities. And then self driving cars.
Ah, but assume you are an Uber/Lyft driver/owner ('owner' if the car is autonomous), who drives 6+ hours a day. Now assume oil prices don't stay where they are right now and taxes for oil start going up as alternatives become viable. Then, wouldn't it make a lot of sense to drive a $35k electric car that will cost you less over 3-4 years of ownership than a $20k hybrid car or even a $12k gas car?
How about self-driving cars though? No need for an owner. Besides making oil tax that prohibitive probably won't happen until there is a solid alternative which there is not for now given that the majority of electricity is produced in an unclean way.
Self-driven cars still consume energy. In fact, since you don't need to pay for labor, the percentage of the cost for the operation of a self-driving car represented by energy is larger. So, if grid electricity is cheaper than gas, you still win in proportion to how much time the car spends moving around, driver or not.
Regarding adding a tax for gas cars, well... even termoelectric plants are more efficient/cleaner than in-vehicle combustion engines[1]. Also, cities might decide that they prefer the pollution happening somewhere else for air quality purposes, even if it's all the same at the global warming level.
Keep in mind that when we are talking about the "carless, on-demand, self-driving" future, we are probably not talking about 2017. Optimistically, we are talking about 2027. But keep in mind how many of the cars you see on the road now a days are models older than 2005 or even 1995... that's how long a new mass produced Tesla is going to be with us, at the least.
[1] Of course, electricity storage and distribution adds costs in the other direction... so we'd need to calculate which has a lower environmental impact per Watt. My bet is still on huge power plants being cleaner than millions of power tiny power plants on wheels...
No. Everyone is seeing photoshop renderings and thinking it's the Model 3. Tesla is supposed to unveil the vehicle next March (but we need to convert from Elon time to human). I'm anxious.
edit: I'm guess that within this community it's quite possible someone has seen at least early company renderings.
