"While Tesla’s market capitalization has swelled in size, Ford still overshadows the Palo Alto, California-based company in most other financial metrics. Over the last five years, Ford has posted net income totaling $26 billion, while Tesla has lost $2.3 billion. Last year, Ford had annual revenue of $151.8 billion compared with Tesla’s $7 billion.
And when it comes to car sales, Tesla sold 40,697 vehicles in the U.S. last year, according to researcher IHS Markit. Ford sells that many F-Series trucks in the U.S. about every three weeks."
Ford: "We have no idea how to invest this money. I guess let's just put it in the bank."
Tesla: "We have so many idea for investments, we're only constrained by cash. Let's go back to the capital markets!"
Ford investors: "Let me soberly evaluate the company's present and future financial situation before I make any commitments"
Tesla investors: "TAKE MY MONEY"
Tesla on the other hand is a darling of retail investors attracted to the marketing machine of "Silicon Valley disruption" and they have already priced in a belief that Tesla will win the global automotive market. DDM? What's a DDM?
Meanwhile Ford, GM, and all the other automotive incumbents are investing in the same technologies as Tesla. Is it more likely that Tesla never falters (even slightly)? Or is it more likely one of the 10+ incumbents surprises with a self-driving/electric success?
I know where I put my money. Interest rates will be climbing at the exact same time as Tesla will be attempting to expand their market to a larger audience who always purchase new cars with an accompanying loan. Oil prices are showing no indication of climbing again for years to come. Consumers have just replaced their aging vehicles in record numbers and won't be in the market for a new one for roughly 7-12 years. Good luck Tesla.
(Personally I have no idea whether this is likely or not).
> Tesla: "We have so many idea for investments, we're only constrained by cash. Let's go back to the capital markets!"
I think becoming as big as Ford already is, is one of Tesla's most positive possible futures if all of their many ideas play out. But they are already valued higher than that. How can this possibly work? There are so many car makers, there is no monopole they could get. Same for solar and batteries.
The automobile industry will contract as we move from individual ownership to mobility. But along with that transition some manufacturers will keep up and others will not. Tesla is hoping to be one of the winners, taking perhaps 25% of the mobility market as the car buying market dries up.
Tesla's valuation is also based on the idea that clean energy will replace fossil fuels. If that happens, the battery market will grow by orders of magnitude. Tesla will basically take the market from coal and petroleum.
They don't need a monopoly in either of these to justify their valuation. Simply get 10% of mobility and 10% of electricity storage and they'll have justified well above their current valuation.
Remember mobility services will subsume much of public transit and shipping too. The borders between industries are moving around. You can't just ask "how much of industry X will Tesla get?" because whole industries will ascent and others will wither as we transition to sustainable energy.
What does this even mean? People like to leave stuff in their cars (e.g. mug, gym bag). They like them to be at their preferred level of cleanliness or disorder. Some even use them as a means of personal expression.
If "mobility" were so desirable, ZipCar would have taken off 10 years ago. The "mobility" market will be about the size of the taxi, bus, and train market.
- A personal, individual vehicle which comes to pick you up where you are and take you to exactly where you want to go is a much MUCH higher value proposition than public transit.
- Add self-driving to the mix, and the cost of that service will plummet.
- When the car providing that service can drive itself, then there is little to no inconvenience to the vehicle owner to offer that service, and significant financial incentive.
- Because car owners will be able to make "rent" from their capital investment, owning a car will start to look more like property ownership than a depreciating investment-- especially as maintenance and operation costs fall for electric vehicles.
- There will be very strong financial incentive to use self-driving ride pools instead of putting up a large wad of cash to own a car. So total car ownership will go way down, and will be done much more by the wealthy and much less by the working/middle class.
- Cost of ownership is especially high in cities (parking), and the market for ride sharing is highest. So probably many fewer city dwellers will own cars.
- Families that own can shrink to one car instead of two, since the car can drop people off or pick them up.
I think there are a lot of pretty good reasons why the vehicle market is going to change significantly in the next 15 years.
- Cost. All of the (limited) Tesla automation technologies cost more than my last car.
- Liability. Who is liable for mishaps? As Uber has demonstrated accidents and traffic violations happen with automated tech.
- Utility. The majority of users aren't high income people in SFO and NYC. We have parking, getting picked up is cool, but not high ROI.
- Pool vs own. As we've seen with transportation services as varied as stagecoaches, cabs, railways, and airlines, service based transportation models aren't cheap. Service price is always demand driven, it will cost more when you need it.
- Owning a car in the US is one of the greatest values available in any market. I can be at any point in the CONUS in <3 days for under $500 with most cars.
I think self driving cars may put the bullet in some cabs for good after Uber and Lyft implode, and may bring train-like scale to intercity transit. But the fantasy being sold today is just that.
plus there will be additional benefits
Safety: Less drunk drivers on the road, less accidents from fatigue, etc.
Cost: at a minimum, it will bring cab prices down
Efficiency: Less traffic jams as autonomous systems won't slam on the brakes when they see a police car, etc. Smoother flowing traffic, higher legal road speeds if reaction time is shorter
And then there are other non-car transport which will benefit: logicistics, mail, deliveries etc. Minibuses that could pick you up door to door through automated route planning etc.
Maybe there will be a stratified market for rental self-driving cars; one for "just this trip" and another for "five days of exclusive use for a road trip."
Cost is a short term problem. Costs will go down. Liabilities can be insured against.
Here is where I see it going:
Stage 1: Taxis start being replaced by self-driving vehicles at much lower cost. Car rentals too - liabilities potentially go down once they reach a certain level of safety as you don't face the risk of a poorer than average driver. Usage skyrockets as costs drop, and as services can cut pick-up times drastically by more optimally having a larger fleet parked around town and/or driving around town.
Stage 2: We start seeing pooling options from more and more rental providers to deal with high demand situations. E.g. Rental company crunches their numbers and see that my road => the local train station always maxes out capacity during rush hour and decides that rather than buying more vehicles, surge pricing coupled with offering a discount that brings the price back towards normal for each rider as long as it at most takes X minutes extra will be popular and more profitable.
Stage 3: They put in minibuses on some of the most congested streches and/or team up with the local bus companies to launch apps where you can tell them you're at the stop and get guaranteed pickup within Y minutes by either the regularly scheduled bus or a car. You pay a slight premium for the guarantee, which covers the car when the bus won't be there and a profit share with the bus company. (For me the only reason not to consistently use the bus is that if I need to be somewhere urgently, I can't always risk waiting for a bus that might be full; if I had a guarantee that if I press the button and walk to the bus stop, I will get picked up in 5 minutes, it'd make me use the bus more)
Stage 4: As self-drive increase in general, cities put the thumb on parking spots. E.g. in parts of London you already won't get planning consent for housing with more than 1.5 parking spaces per living unit as a means to cap car ownership. Expect to see that gradually driven down, with the expectation that people will buy parking space for their self-driven car elsewhere and/or forgo having one. Driving down the limits on parking will allow for denser developments, making ride share options etc. even more viable.
Stage 5: Youth grow up without depending on their parents to drive them anywhere from the moment they are trusted to go by themselves.
Basically, I see it as a process where the convenience of apps to get you somewhere will keep increasing to the point where people will find themselves increasingly opting to check these apps first and find themselves needing a car less and less. Some transport apps are already combining route-finding with then offering to order an Uber for you.
Expect to see more of that making it less attractive to get a car over time.
Especially as youth get used to a greater flexibility and level of freedom using these type of apps before they can buy a car. Car ownership many places represents freedom from parents driving you around, but more and more teenagers can expect to be in situations were parents opt to order them a car instead of driving themselves.
Before long, a whole generation will experience car ownership as irrelevant to the ability of liberating their transport options from parental control.
Sure, some people will still opt to own one, but many already forgo car ownership, and that number will certainly rise rapidly.
It does not matter if a car is selfdriving or not. To be recognized as available by someone means a utilization of about 30% by the providing company. But a utilization of about 30% does not drive down costs. You still of costs for producing and servicing the vehicle, which is way higher than just the energy costs.
Tesla has no experience in free floating vehilce fleets. Uber has no experience in such thing. ZipCar has. Car2Go has. Car2Go as an subsidary of Daimler even has experience in car production.
Now think of that.
1 - the zip cars available to me are a few blocks away to walk which isn't convenient if I'm carrying something or lazy.
2 - high cost. Taking uber right now is so much cheaper. Imagine if cars were self-driving. Costs would plummet
3 - parking. This can be very hard depending on where I'm going
4 - I have to pay for the length of time I'm out, not for my ride. I also need to return the car when I'm done.
These are the biggest pain points in my opinion. Also, not needing to drive myself is a huge bonus. The leverage of solving these pain points are huge, imo.
the bike shares solve this by driving trucks around, collecting bikes from areas where they aren't going to be needed and moving them to areas where demand is about to spike. it's hard to load up a truck full of cars to meet demand in the business district at 5pm, but it's very easy to send over all the spare capacity in your autonomous vehicle fleet.
Smoothing that out, so that you come to expect a car to be available very rapidly no matter what, with only minor inconveniences, may not end private car ownership but certainly will make a lot more people opt for alternatives - I know for myself (I don't own a car) the occasional lack of predictability in how soon I'll get picked up is the one aggravation that occasionally make me want one.
Comparing either of those or public transit to self driving cars misses the point entirely.
Self driving car networks basically can solve that.
But not necessarily shrinking the market. The cost of mobility goes down, consumption will go up. How high? I'm going to guess absurdly high. The reason US cities are sprawling messes is that they were built as the cost of mobility dropped off a cliff (cars and trucks replaced horses). Go read Clifford Simak's "City". People will live in self driving cars and commute in their sleep. It's going to be nuts.
If it's really self-driving it can go park wherever. Not very good for the environment, perhaps, but it completely solves that problem.
The end result is fewer cars owned by fewer people, but utilized much more fully, so the cars that do exist in cities spend more of their time driving and in-service, rather than sitting parked and empty for 98% of their lifetimes.
As someone who doesn't own a car, the only potential appeal to me of owning a car is shorter waits and predictability (always there). If the predictabiity and waits drop for rental services, my reasons for considering buying a car would rapidly drop. If the waits to use a car I own go up, my reasons for considering buying one would drop further.
It's like saying "I prefer my horse, I can feed it grass off the side of the road, but you have to find some fancy petro-chemical station for your auto-mobile? Insane! My gas grows next to the road!"
I get it, but try to put yourself in the place of someone younger who doesn't make decisions like "I would never replace my car because I keep spare diapers there!"
>If "mobility" were so desirable, ZipCar would have taken off 10 years ago. The "mobility" market will be about the size of the taxi, bus, and train market.
This is very Bill Gates "no one would ever need more than ..." argument. Come on!!
ZipCar has literally nothing on the future of mobility.
You (and many people your age, conditioned from birth to place massive value on personal car ownership) may never move past that paradigm. You might go to your grave in 50 years a proud owner of a vehicle in an era where almost no one owns.
I think, instead of sagely predicting failure, maybe try creativity, use that entrepreneurial mindset to solve future challenges.
You want to keep spare diapers nearby? Why not have a secure storage module in the vehicle, lets say the trunk can be split into 2 or 4 secure storage modules.
You order an autonomous electric vehicle to your location, ETA 5 minutes. You hit the "bring my secure storage container to my location" option, restricting the available pool of cars to meet your need to those close to your container, at a small additional fee.
Boom, the "insolvable" problem of personal storage in a vehicle is solved by commoditizing the storage and use the AI vehicle to transport it where you need.
I'm sure you could come up with a better solution if you tried.
I doubt I'll last another 50 years, but I'll probably live long enough to see the end of the current robot taxi fad.
Cars have not been. The earliest proto-human sought shelter from a storm. They did not seek personalized shelter during transportation.
I don't like the argument at all, and I think it's a cop out, a slippery slope argument.
>Do you AirBnB your bed (at hourly rates)? Do you AirPantsAndT your clothes? Most people don't.
This is just a very feeble slippery slope that ignores the very real differences.
Yes, clothing and shelter have been humans needs for far longer than civilization itself.
Can you say the same for micro-space in a personal transport?
Were humans owning personal space inside of pack animals 10,000 years ago?
It's a bad argument. There's no slippery slope here. Homes and clothes are fundamentally different than cars.
You cannot live a civilized life without a home and clothes. You can live a civilized modern life without a car. Obviously we approach higher order needs differently than lower order.
> Cars have not been. The earliest proto-human sought shelter from a storm. They did not seek personalized shelter during transportation.
Are you familiar with New World Economics' discussion of "really narrow streets"? One thing the author points out (in "Let's Take a Trip to an American Village") is that even in the 19th century, the US was very interested in what he calls "My Personal Means of Transportation" -- the fashionable thing to do was to have a carriage house, no matter how little you actually needed a carriage. I think you see less of this pattern elsewhere in the world (or else you just see less wealth; consider how "pedestrian" seldom has positive connotations and "equestrian" never has negative ones), but there's definitely an enthusiasm for personal transport in the US.
The need for transportation is just as ancient as the need for shelter. Before cars, it was a horse, or camel, or a chariot, or something else on wheels.
I think you underestimate the strength of car culture, and the value people place in personal space (at least in the US).
And as with so many things, why can't these unnecessarily-competing worlds coexist?
There are millions of overly confident entrepreneurs rationalizing millions of wacky, over-engineered money-grabs and only a few of those ideas have strength to be so culturally and socially transformative as the world you describe. Is the end of car ownership one of those lofty ideas? I am not so sure.
Edit: and on a more personal level, I see ideas like that -- the end of ownership, whether it be cars, software, or land -- as an attack on individual ownership, so that moneyed interests can instead own everything and lease it to the peasants at their leisure (and profit). The world needs the opposite: to make ownership easier and less costly, and to restore the the increasingly-stratospheric costs of everything* down to levels that put ownership within reach of the common man. Not owning cars is just another step towards feudalism.
* As for how, there could be much to gain simply by analyzing the cost structure of stuff and stripping out unnecessary middlemen, expenses, and materials. Adopting a more restrained form of capitalism, like what one sees in tight-knit economic communities or in idealized small-business environments, could perhaps foster a business culture centered around balancing customer, employee, and shareholder value. The current system of only maximizing shareholder value creates much of the turmoil, unnecessary innovation, and naked profiteering we see today.
Yes, it's great to have personal space. But you know what? People sacrifice personal space for spending less money all the time. And for convenience.
Consider e.g. London - a city awash with money, where a lot of even people who could afford to be driven around by a personal chaffeur will opt for public transport for convenience.
As another example for London: People will opt to smell someones armpit on the train in the regular train carriages rather than pay a few pounds extra for a seat in the First Class carriages all the time. The value of personal space when travelling, as it turns out, is deemed by large parts of the public to be very low.
People tend to opt for personal space mainly when the public transit options are unusably bad compared to driving.
Places like London are perhaps the areas where this transition is most likely to start: Places where those who even own cars often own cars as a "contingency" for those times when the bus doesn't arrive or you're going somewhere odd that just doesn't work well with public transport currently.
In those cases, for a lot of people, it'd be very attractive to e.g. pay a membership fee to guarantee a certain level of "contention" for cars to be able to just press a button and have one arrive "fast enough". Even more so with the ability to do that on either end of a train ride. For a lot of people this will make a car pointless.
And in environments like this "personal space" is moot, as almost everyone are already used to using public transport some or most of the time.
At the same time, it is somewhere where local authorities are clamouring for ways to reduce parking and make car ownership less desirable. Expect housing units to start coming without parking spaces or with very few parking spaces in high density areas as cost saving measures, or because they'll sell some of those parking spaces to ride share companies, or make residents who want them buy them separately.
Expect planning rules to start reducing the maximum allowable number of parking spaces.
Places with plenty of space, sprawl and a strong culture of cars as independence will certainly experience this change last.
But consider e.g. the impact of a generation of youth who will eventually grow up with a situation where they may be able to rent a self-driving car on demand from before they are able to (afford to) buy one, and where e.g. parents may opt to just order a journey rather than driving them somewhere once old enough, and who will grow up increasingly likely to get used to some car taking them somewhere without needing to take the step to car ownership to get that freedom from parents driving them around. The "liberation" may become to be able to sign up for your own account so your parents can't see your every journey.
I think that the whole culture where car ownership is seen as a rite of passage and signifier of liberation from your parents could change far faster than you think.
Different people have different values. Also I'm quite young, so I don't think age is a strict delineation.
Self driving shuttle services will be a great new way to transport us, especially in metro areas, but this won't work very far from the center of those so if the valuation of that market is too optimistic in regards to Tesla the holders of their stock will pay for it.
If you look at the number of US car companies that have started from scratch in the past 70 years you don't see many still standing (pretty close to none). Tesla has a very different model though so we can't lump them in with most all of the others.
In my own humble opinion, I think Tesla's fate will be decided by how fast they can produce a low end, very affordable and dependable car for the masses. If they can deliver that within the next 3-4 years they've got a very good shot at moving up to competing with Ford and GM.
If they instead try to compete with higher end cars they'll find that's a hard road to travel. At some point soon the big players will produce a car that's a competitive option and dilute their market and they'll die.
It's worth remembering that both Honda and Toyota captured market here with affordable dependable cars, not luxury cars. Those came quite a few years later.
I fully expect Tesla will produce an affordable car though, and it would make perfect sense if they called it a "Model T".
Yes I did point out that most Americans and many people are conditioned from birth to value car ownership, even when it's a poor financial decision.
"Perfect example where Uber fails - I can't take my dog anywhere
As I told the other guy: Stop predicting failure based on problems, put on your creator and builder hat, and solve the problem.
Why not have pet friendly vehicles available at a small charge, guaranteed clean?
It bothers me that these problems are so easy to solve and yet people are so willing to write off a future possible technology without so much as thinking through any of the solutions.
Regarding the dog, I'm just pointing out something that currently doesn't work for me. Until they fix it I don't care - right now their solution does not help me and nobody has done anything to address it.
My point is simple. Right now owning a car is better than not owning a car for me. Until that changes I will want to own a car. If you don't want to own a car then good for you - different people have different desires.
A teenager doesn't just "want a car." He wants that freedom that car gives him... to go somewhere without bugging his parents or friends for a ride. If you're in a big city or someplace where this is not the norm, I could see you believing otherwise.
(And I laughed at "guaranteed clean." Right. All that means is you get a refund when you find the dog turd in the back seat.)
Precisely, and this is why owning the car isn't that important. This teenager presumably still has to pay for the car and fuel, or bug his parents for it. Paying for the (cheaper) self driving ride is no different.
It is different. If you're relying on someone (or something) else, waiting around, you're not "independent."
Really, this doesn't seem like much of a stretch.
You might have noticed that people are hoarding a lot of stuff, that are of little value to them. It's probably an intrinsic value to most people to own things. It might vary a little between cultures, but it seems to be a common trait.
If you don't - great for you.
However. It might happen that you one day walk by a car on display in a mall, and notices the nice paint, a practical laptop holder, the particularly nice storage boxes for diapers and what not, and thinks to yourself - "I want that car."
And I was just pointing out that your personal experiences with today's ride sharing aren't relevant to a hypothetical discussion of an unrelated future transport technology.
I'm defensive because you're continually derailing a thread about futuretech to list your personal experiences with todaytech. I don't get why you derail this conversation to make it emotional and personal, so I get defensive about the track of the conversation of solving tomorrow's problems. Stop taking it personally, think bigger! Solve a problem!
I literally did share a solution in this post, and the one before.
- Commoditize storage and transport it to you on demand
- Offer pet friendly cars
As I also wrote: "I'm sure you could come up with a better solution if you tried."
Is this hackernews, where builders come to talk about exciting ways they're solving tomorrow's problems?
Am I on the wrong site?
You haven't solved anything until you've demonstrated a working solution. If it were so easy to fix problems in the real world, politicians would have our economy constantly booming, there would be more jobs than people, and the Middle East would be the most peaceful place on Earth.
Anyway, I don't think we're going to agree on anything. I'm exiting this thread.
By the same standard uber as a whole is not a working solution.
Why must some people see new inventions always as colossal destroyers of products they don't like instead of the more humble 'enriching ones freedom to choose'?
If self-driving cars has as massive an impact on car ownership as e-books have had on the paper book market, that will be a dramatically noticeable change in most cities.
I know many people who keep golf clubs in their car because sometimes a salesman is looking to round out a 4-some. I like going to walmart/lowes... over lunch and leaving my treasures in my car.
Car sharing won't actually work out anyway because everyone needs their car during rush hour. Everyone is driving then anyway, and then the cars sit idle.
Mom takes service to work, possibly carpooling. Dad takes uses family car to drop off kids and goes to work. Car drives itself to mom's work for her to use to pick up kids and commute home. Dad takes service home. Or whatever. The point is kids can always be in the car with the extra diapers, with safety features parents want, etc.
The other part of this that people ignore is that a car sharing service could open up a lot of flexibility. For example, maybe our dedicated family car is just a sedan, but on this particular weekend with the grandparents in town, we can use the car sharing service to get a minivan and have everyone ride together. Or I want to pick up a piece of furniture and request a truck from the service. Or it's my anniversary, and I can request a luxury sedan to drive us to the restaurant for a touch of opulence. I'm sure there are many other examples people can think of.
Like you say, car sharing won't cover everyone's need, especially at first, but eventually, the big players in the space will have enough sophistication to cover many cases, especially for a second car.
Car sharing starts to make sense when you want the car outside of rush hour. Want to go to the store for an hour at 2:30, no problem there are plenty of cars free. Want to get to work every day - you are paying peak rates for a car that will probably be used exactly twice that day, once to get you to work and once to get you home.
(This assumes that you're also from the US, for rhetorical convenience.)
At this point in time, I think it's wise to avoid laying costly new tracks with the dawn of driverless cars on the horizon.
In fact, this is a perfect use case for driverless cars. The problem with trains everywhere is the wasted time not on the train and the million stops along the way.
It gives us exactingly detailed information on what journeys people need. The dataset will be immensely valuable in allowing the companies that sit on them to first start doing quasi-bus services:
Order a bunch of minibuses. During peak hours, offer an option: Wait for the next dedicated car to be free, or ride share with quicker availability and a discount. Limit detours strictly - there'll be plenty of "Follow road X and pick up 6 people on the way to station Y" type stretches that will make people happy (little time lost; feels efficient if there's not lots of turning off).
Then you can see them partnering with bus providers to dynamically fill in during peak hours, or even bidding for bus franchises and proposing contract changes that would allow for more dynamic, demand-based scheduling.
Ultimately this can feed into planning train type services - companies offering these type of drive share will be able to e.g. let people order "end to end" journeys of the type "pick me up at address 1, get me to address 2" where they show journey options that include rail when it makes sense. The key beying that if they do so, they will know the entire desired journey, and would be able to offer insight into the most efficient interchange locations or other changes to train services would be most desirable.
The raving reviews you'd get the first times people order a car and are told instantly "your car is already waiting right outside your door" would be rather interesting.
Get in, and your favorite radio station or music is playing.
And for colder climates: Your car is already pre-heated. I remember too many winter mornings during winter in Norway when even ensuring our car would actually start in the morning was an annoyance (even with a garage, space heaters in the garage or motor heaters is sometimes necessary).
Yes they will; the magic trains you're thinking of are called streetcars. And, with the oddities in oil and the difficulties of maintaining suburbia, we'll be moving back to dense streetcar suburbs soon enough.
We still have typewriters around too, and some people ride horses. Old tech doesn't die, it just diminishes to a smaller niche.
Car seats will be a bigger problem: they are unwieldy, legally mandated, and require careful installation to be effective. Unlike diapers, even the small boosters used for older children can't fit in a shoulder bag.
A young couple expecting to have children in the next few years might balk at these inconveniences, and that could depress adoption of the 'mobility' model. You have to keep prospective purchasers in mind, who are evaluating their needs over the use-life of a car.
Maybe poor people will take the robocab from hell, with sick on the floor. Most people will not.
The difference being that poor people will have the "robocab from hell" alternative rather than have nothing they can afford, and that more people will afford said high end sedan when it's self-driving, and will be able to justify it more often, and more people will afford to trade up to even more luxurious services.
There is already a marked class difference in commuting in London: Low paid people take the bus four two hours+ for commutes that'd take less than half that if they could afford the train from the outer fare zones (bus-rides cost the same within the entire London fares area), so transport is already today segregated by income. A lot of the longer bus lines makes no apparent sense until you realise that low paid people often can't afford the train, or a car.
Please show your math.
>Tesla will basically take the market from coal and petroleum.
And you base this off, what, exactly?
Sometimes I think that half of HackerNews didn't even know solar or battery backups were a thing before Tesla. These are competitive spaces where Tesla has essentially no market share (just like cars).
I think Tesla will be successful, but I doubt they end up market leader in any of these things.
I'm genuinely curious if the numbers reported by SolarCity represent the full picture.  shows SolarCity with ~35% national marketshare while the closest competitor is at just over 10% (Vivint). This was in 2015, but it still appears to have a significant lead.
Last month Tesla sold 10,000 electric vehicles to Fords 2,500.
If we are serious about climate change, then sometime in the 2030s  we have to stop building new combustion engines.
The entire technology platform on which these 6,7 million Ford sales rest is about to be swapped out in little over a decade.
Or there might be a breakthrough in carbon capture, converting atmospheric CO2 into petroleum and we can drive combustion engines forever.
CO2 capture is an area of active research and it's entirely possible that advances there will make Tesla and Solar City moot.
I don't know how likely that is. Even if carbon capture comes through, the low hanging fruit of fossil fuels are gone so now we have to get more invasive in harvesting the hard-to-get ones (strip mining, fracking, etc). It's likely that even with C02 emissions taken care of that we'll want electric vehicles and renewable power in general.
The battery is the thing that makes an electric car "expensive" today, but it's following a consistent downward price curve. In ~5-7 years, it will cost more to make an ICE car than an EV car, and then ICE dies. Simple as that.
Energy density. Jet fuel has about 25x the energy per kg as the best lithium batteries. Perhaps batteries will be able to match carbon fuels some day, but it's a long way off.
CCS + Power2Gas + synthetic fuel is unlikely to be cost competitive. It's not like climate scientists don't consider that option. In fact the only half way plausible scenarios for reaching the two degree target involve going carbon negative after 2050. And synthetic fossil fuels are probably the only way to make airtravel carbon neutral.
Full de-carbonisation requires a multi-pronged approach, and cars are at a point where electric vehicles are already very close to conventional vehicles. Within a factor of two or three for range, so totally sufficient for most needs, and not much more expensive. It's one of the better options we have to de-carbonize a huge sector. Second only to the energy production sector itself.
Compare to food production which looks absolutely hopeless (the two degree pathways often assume we manage to implement massive dietary changes see e.g. here http://tool.globalcalculator.org )
Any likely method of CO2 to petroleum is likely to be below 50%, more like 15-30% efficient. Round-trip efficiency an entire order of magnitude worse than battery. That's why batteries are better for ground-based applications and will remain so.
Regardless, if any of the biological/algal methods of CO2 to fuel techniques become successful, why would we care if 5%, 50%, 100% of the solar energy received makes its way to the end product. It's basically free energy at that point. The only thing that would matter is real estate to house the facilities.
But predicting the future is hard.
> Dozens of other companies around the world have battery-powered cars on the market, and more are in development. Investors “act as if Tesla has some sort of patented product that cannot be replicated,” said Dave Sullivan, an analyst at researcher AutoPacific Inc.
> “By the end of this decade, there’s going to be some significant choice for consumers looking for an electric vehicle,” he said, calling Tesla’s valuation outpacing Ford’s “mind boggling.”
Ford doesn't have any good ideas for the future, they are too busy with the here and now and haven't shown an ability to do anything but incremental improvements with their R&D spending. Like we don't expect much more from IBM, we don't expect much more from Ford, but we do from Tesla.
according to who? your average HN reader who basically hates cars? yeah, sure. the guy who hates cars is bearish on ford, shocking.
what about all the people buying raptors and gt350s and fgts and fists and fosts, hand over fist?
do you even know what i'm talking about? do these insanely popular cars even register on your radar?
it sounds like you're not-a-car-guy-but-a-tech-guy which makes up for a huge portion of tesla fans. and you're exposed when you make shit up like "ford doesn't innovate" or whatever your thesis is.
-not even a ford guy. porsche, there is no substitute.
I will also avoid buying a car connected to the Internet/which has a tablet-like dashboard for as long as I could, and I say that as a guy who has done web-programming for the last 10+ years.
People who "just want to get to work" aren't buying cars that start at $35,000, either.
People misunderstand post car like post PC: it doesn't mean the market is going away, but merely that it is no longer growing. Therefore, WYSIWIG on earnings, because they aren't going to change dramatically. Ya, Ford might have record earnings that are slightly more than last year, but no one sees them doubling before inflation makes that happen naturally.
> do you even know what i'm talking about? do these insanely popular cars even register on your radar?
I have to admit, I prefer Japanese cars and would never consider buying an American brand. I found them unreliable in the past, and got burned more often than not. But I still don't see the Japanese companies pulling a Tesla in the future, they are fairly stable companies with stable market share and profits. They don't change the game.
> -not even a ford guy. porsche, there is no substitute.
German cars break down too much. Ya, you can get one, but after the warranty is up, you are toast. Better to lease instead.
india and africa will be china in 20 years. this is the market that tesla is fighting for a fraction of, not the other way around. you're out of your mind.
people like cars. people will spend an irrational amount of money on their cars. they don't give a shit if it pollutes, or kills people, or doesn't because it drives itself sometimes. the trends show this, decade after decade. guess what? teslas pollute also. how many tons of CO2 was emitted extracting all of the rare earths and other super toxic shit that makes a tesla?
i'm sure tesla will be super successful. the rest of the brands aren't going anywhere either. and toyota was the first tesla. look at the prius figures. someone will do it again with electric cars. it won't just be tesla. you can't be serious if you think that.
India and Africa are going to buy Fords?
China has been really nice to Ford, it has kept them afloat while the American market tanked at home, BUT let's not delude ourselves about how Chinese JVs work. Also, China has some weird tax games going on, so its not clear where demand will eventually settle (disclaimer, I lived in Beijing for most of 2016). Other countries have and will follow similar home-grown biases.
You seem to have a bullish outlook on Ford, I don't know. I don't see them as a tech company, they make cars, they always have and always will, nothing will change for them. They aren't aiming for a shot at more greatness than they already have.
do yourself a favor and never own or run a business. record breaking numbers do not happen by accident or because of inflation. you have a fundamental misunderstanding of what is actually going on here.
the analogy you are looking for is "right before the car showed up the record sales of horses looked unstoppable." but you're not putting the pieces together in a coherent manner.
also, ford will make whatever the car is. doesn't matter if it's electric or gas or diesel or bio.
Ford Focus is insanely reliable. I have a 2002 with a bazillion miles on it and it's still running like new.
To be fair, Japanese cars are generally great as well, especially Hondas.
Ford's P/E ratio is 9.89.
IBM's P/E ratio is 14.02.
Facebook's P/E ratio is 40.79.
Tesla's P/E ratio is infinity since the E is negative.
I'm sure Ford has done many incremental innovations, I didn't say they didn't. IBM does the same thing, and has "record profits" every few years also. Its just the market isn't expecting the next big thing to come from Ford, while they are expecting that from Tesla.
If you think the market is wrong or too irrational, you can make a killing by shorting Tesla and buying cheap Ford stock.
I don't short stocks because I don't believe in trying to time the market. I actually think Tesla could move well north of where it is currently trading. Not because I think they are going to grow to justify the valuation, but because I think lots of people will look at the $45 billion valuation and will incorrectly compare it to Amazon, Facebook (as you just did), Alphabet, and Apple and think $45 billion is low.
However I am long Ford. In fact it comprises the largest percentage of my personal portfolio. I continue to add more to it with every drop and just added more a few days ago. While the value has been dropping over the past couple of years, I've been collecting healthy dividends along the way ($F pays out now over a 5% yield), and am happy to sit and wait to see how long people will wait for Tesla to move beyond a niche auto maker and into the mainstream market.
Edit: One other point- this recent run-up is attributable to Tesla delivering more cars this quarter than expected, not because they just unveiled some new technology the market wasn't previously aware of. TSLA has been extremely volatile whether you've been long or short over the past 2-3 years. All it takes is one missed earnings report and it'll send this stock down at least 25%.
The only thing happening now is that investors seem to be extremely worried of 'missing the boat' on automated driving. See the big investment in Uber, a taxi company with an app that essentially anyone can copy. But they raised billions on the promise of automated driving.
The only thing here is the idea that the organisation that perfects automated driving first will dominate every transport sector. That seems far fetched to me though.
But hey, I'm just a regular person too. So maybe I'm dead wrong.
Shorting is the way you capitalize on a stock that you think is overvalued. It is an advanced maneuver but can be done for the long term as well.
IBM...man, IBM is a tech company that got rid of most of its R&D to focus on consulting and accounting tricks. But ignoring that, IBM has a huge R&D division but has been unable to come up with any breakthroughs for quite some time now, it is the canonical mature tech company that isn't going to have rapid growth like a startup.
And it makes sense: a high P/E ratio indicates high potential. The lower the earnings, the higher the P/E ratio. But if earnings went negative, then the P/E ratio would automatically go negative (since that is how math works, as you say). So if my stock price is $100, and I earn $1, my P/E ratio is 100...so much potential! If I accidentally lost a dollar instead, my P/E ratio automatically becomes -100 even though not much changed in my earnings.
the market can remain irrational for longer than you can remain solvent!
The likely long-term outcome is for Tesla to be bought out for a pittance (maybe $20-$30 a share? $10 would be surprisingly low, $50 surprisingly high), by a mature automaker interested in the marque; in the meantime, the way to make money off Tesla is to realize that all the people who are zealously pumping their money into Tesla are leaving everything else under-valued.
Tesla is making larger swings and potentially accepting larger risk. Ford is... iterating.
Plenty of other manufactures are doing innovative things with automation, technology, etc. Not to mention most of them can build a higher quality interior/driver experience for far less than what Tesla wants for a Model S
Seems like the most basic, obvious, easy to implement feature but they still can't manage it. Apparently because it's "illegal in Germany" to have a car running without an operator behind the wheel. What a joke.
Tesla will wipe the floor with them.
I know it's not very innovative but if the incumbents can't even do this then how are they going to leapfrog Tesla at, say, self driving?
Electric vehicles prior to the Telsas where research projects and low torque ultralight budget vehicles. Listing the differences between a Telsa and its closest successor, if you could pick one is not an easy task. Listing the difference between an F-150 and and F-150 with and aluminum was already done this sentence the hardest part was spelling aluminum.
You can pick an threshold for choosing what is evolution and revolution, I am just trying to choose a reasonable one.
That's what I'm kinda waiting for - I don't want a car; I like having a pickup. Ideally, it would be 4WD (and my next pickup will be - right now my off-road vehicle is an Isuzu VehiCROSS that I'm pouring money into). I would love it if my next pickup truck was a self-driving, off-road, 4WD electric beast.
But I don't see that happening any time soon - at least not before I get to the point of replacing my current truck.
The market could be wrong, Tesla could fail to achieve their vision, Ford and other existing big companies could somehow turn themselves into organizations that aggressively pursue ambitious new visions.. but the market is betting not. You're welcome to make an opposing bet.
Suddenly we believe in a rational market when it comes to Tesla? Everytime I ask basic valuation questions in these threads, I get touchy-feely answers about "potential". And HackerNews is supposed to be a data/tech place. Imagine what average Joe thinks?
I don't know about 'we', but I don't believe in an irrational market - the market may well be wrong, but it's not usually wrong for unreasonable reasons. And potential is all investors ever care about: they're looking to put their money where it has the most potential to turn into more money. Predicting the future is necessarily uncertain and involves ambiguous judgment; you can call that touchy-feely if you want to be dismissive, but there is no such thing as data on things that haven't happened yet.
In the case of Tesla vs Ford, there is probably a sense in which the longer the market is 'irrationally' convinced of the value of Tesla, the less irrational it actually is - it's a bet on Tesla's viability and vision, and the longer it seems like a good bet to most people, the more likely it is that it is a rational bet to have made.
That said, it's not like they are exactly just making small refinements to gasoline engines, while SV companies are the only real innovators, chasing electric and self-serving vehicles. We just tend not to talk about it as much on HN (compared to Tesla, for example):
Ford does normal science , Tesla does revolutionary science .
Tesla on the other hand, has millions of potential customers who would and will buy one once they become a little more affordable and the charging infrastructure becomes more built out. We already saw how fast the pre-sales for the Model 3 went. And that was just people who were willing to put down money on a car that wasn't even available yet.
It's not just about innovation or not. Tesla has a lot of room left to grow. Ford is about as big as it's ever going to get.
Yeah but it's not like people buy one car, and never buy one again. Ford sells over 800,000 units of just the F150 every single year.
Now it's true that they don't have as much potential for growth because they've reached a sort of stable place in the market. Maybe sales can grow a few percentage points year over year but Ford is unlikely to jump by 20% the way Tesla can.
But that's not really saying much as Ford is a mature company with a complete lineup and Tesla is only on its 4th model of car.
But they are already trading at a higher valuation than Ford.
So unless you think that Tesla can command much higher margins than Ford does, then shouldn't Tesla only trade at a similar valuation when they are making similar amounts of cash?
Sounds like they may be trying to compete with Android, Apple, and Tesla on the software side. And QNX has a good microkernel architecture for an automotive OS.
Incremental changes is what most senior management folks at places like Ford can do because that is what they teach at MBA schools using linear growth graphs.
Self driving tech is really novelty thing now. And nobody expects it to work anytime soon.
The real deal now is mind-blowing battery tech. Batteries that are rugged, can charge quickly and a car that can give a big range on a charge.
Meanwhile talking of how efficiently somebody can build an ICE based car is really like someone talking about how quickly they can produce horse carriages. Doesn't really matter because that disruption is happening else where.
Apple was making billions in profit on the iPhone at launch. Tesla has never made a profit and sold 70k vehicles last year. Companies like Ford and GM have huge numbers of loyal customers and move millions of vehicles a year and quite profitably. So while it sounds great to pretend that the automobile industry is dying and Tesla is capturing their market share by sheer innovation, the numbers tell a different story.
It's based on nothing other than the weird contempt you see for large, established corporations in the SV crowd. Big established corporation = big established rule book and management hierarchy = stifled innovation. Nevermind the fact that most of the major technological breakthroughs of the past 100 years were developed by the research wings of big corporations (Bell Labs, defense contractors).
Based on committed capital, I think this is at least partially correct.
As anyone who has every used software will attest to: Most of the time, we can count our lucky stars if our commercial software 'works' for a year and a half.
Cue all the: "If Microsoft/Apple/Google/Facebook/Snapchat made cars" jokes.
I've contemplated the idea of my next pickup being a commercial vehicle, if I can get one (as a single unit and not a fleet sale) - which I probably won't be able to, but I can dream.
It seems like that's the only way (except for going used) that I'm going to be able to get what I want: A standard-cab, short-bed pickup, ideally 4WD.
I don't have kids, and won't have kids. I have no need for four doors and an extended cab. I don't need a long bed. I want a short wheelbase. So far, it's either buy a used pickup (back when they made and sold these kinds of trucks) or go with a commercial vehicle (where you can still sometimes find them - sometimes).
The other perk about a commercial version is that they are stripped down to the bone. Nothing fancy in the cab, just the bare basics for a radio, cloth interior, non-electric controls for windows and seats. Basically, eliminate all the fru-fru stuff to make that much more reliable for work-based usage.
In other words, I want a truck to be a truck - not some fancy "I only go to the mall to show off" substitute for a minivan. Add in some basic 4WD with manual hubs (again - nothing to break) - and there ya go. That's my dream truck (ok - if there were a Raptor version of it that'd be nice, too - but I can't afford that, so who really cares).
But you're right -- there are no Chevy S10 or Ford Ranger type pickups anymore. The closest you'll find is probably the Toyota Tacoma, which has more than I would want or need.
So I just got another Corolla. It does have some fancy features I enjoy, but luckily they aren't reliant on the internet to function. And it's cheap.
I, for one, kinda like driving a car that doesn't require an internet connection, doesn't have forced OTA updates, doesn't send analytics data back to base, and won't potentially be bricked if someday the manufacturer goes out of business. Other manufactuers are starting to do the same thing but I'm going to enjoy my "dumb car" for as long as it lasts. Hopefully when fully electric vehicles become more mainstream and affordable there will still be an option to get a "dumb" version.
How? Uber has passed as a software company by making its drivers pay for capital and depreciation. Tesla currently sells physical cars to individual people. They may be aiming for "self-driving," but if they ever get there, there's still the question of who pays to build and maintain the cars. Compared to that, the value of the controlling software seems fairly small.
I think you just don't read about it because you don't care about Ford, but you read about it for Tesla. And it's not entirely your fault; there is definitely publication bias as well.
Here is an article from literally today:
However changing from petrol to electricity doesn't seem to be a drastic change. An important part of car making is changed (engine and energy), but it's not a radical shift (the rest of the car is still the same).
Today, Tesla represents a very small fraction of the number of cars produced in the world. There are still quite expensive, even Model 3, and there are not as convenient as current gas cars (long recharge time and lower autonomy). EV are definitely interesting but they are still in their infancy.
It's still to early for big car markers to shift completely. But the shift will come in 5 to 10 years, then it will be an interesting moment, we will see which companies have prepared enough to jump in the good wagon, and which companies will die.
As a side note, cars, either gas or electric have always amazed me, and not in a good way, from an energy and ecology standpoint. A 1500Kg vehicle to move on average 1.5 persons or 120Kg seems a huge waste of energy.
I do see their usefulness in low density environments such as rural areas as it's a system that doesn't require a complex infrastructure. But in dense environments like cities, transports needs could be far more efficiently provided by public transport and coherent urban planning. I truly hope that cars will not be as common in the second half of the XXI century as there are today.
Ford bet $1 billion on Argo.ai to build self-driving cars, and they also acquired Chariot. They are planning on using these to roll out self-driving vans in 2021 to compete with Uber, Lyft, etc.
Is that true? $100 is such a small amount of money that you're completely at the mercy of the supply chain. When you have $100B to spend, you are the supply chain (or at least a major part of it). Big money always makes the rules. They're either making money off of you now or planning to in the future.
Now you might say, "but wait, plenty of products/companies have done poorly because I wouldn't give them that $100." But that's not true. In reality, product success is always in terms of big money -- it's just spread out over enough consumers who individually have the $100 buy/don't-buy option.
Another objection: "yeah, but I always hear about big money wasting $30M (for example) on something stupid." Maybe so, but remember the scale. $30M waste on $100B is the same as $0.03 on $100. Moreover, the stupid thing they're wasting money on may not be that stupid -- you just might not be privy to all the details.
All that may sound like it's bad, but I think it's pretty great system. I sell my products at a markup to get small money, then have the discretion to buy or not buy somebody else's stuff with the money I made. En masse, I form a part of the "big money" consumer group at Home Depot, Amazon, etc. that has power over the more centralized big money.
You can skip to 3:00 for an answer.
Make no mistake, as much as Tesla is loved by the Tech crowd they are currently nothing compared to Ford and other established auto makers.
Tesla ships nowhere near as many cars as Ford. Doesn't matter what you may see locally or what "blends in", but there is nothing generic about the number of cars Tesla produces (which is very small compared to Ford, and other major Auto companies). Tesla has nowhere near the level of business as the other major auto companies.
As mentioned elsewhere in the thread, there is nothing generic about:
"Tesla sold 40,697 vehicles in the U.S. last year, according to researcher IHS Markit. Ford sells that many F-Series trucks in the U.S. about every three weeks"
Ford sells that many trucks every three weeks. Every three weeks, versus an entire year for Tesla.
Maybe the Model 3 will change that, but I do not have high hopes with how thinly spread Elon is.
Ford has been in business for almost 120 years, and has contributed untold billions to the economy. What a terrible company, am I right?
Rainy day funds look like such a waste of money until the roof starts leaking.
1. Telsa has many investment ideas
2. Tesla spends massive amounts of CAPEX
3. Tesla incurs large amount of depreciation
4. Tesla's net income goes down
How do they spend in relation to the other car makers? Do you think that auto manufacturing capex simply turns off one day? It's a capital intensive industry.
Ford share holders, presumably, received a return on their investment in the form of a dividend. While Telsa haven't and won't in the "foreseeable future".
So your overly simplified analysis is complicated somewhat by the individual investor carrying out a risk assessment and deciding which companies should or shouldn't be in their share portfolio.
Look at the sad tale of post-bankruptcy Kmart, and how they used hype, valuation and newly available credit to gobble up Sears. Predicable trainwreck ensued.
Tesla is alike and different. They have an amazing management team, Apple-like religious fervor/hype machine, but a marginal product category. Their continued growth is only possible as long as they can convince people that they aren't a commodity like any of the 50 other car companies.
However, Tesla today is an integrated energy company. They make Solar Cells (the part of the business formerly called SolarCity), Stationary Battery Systems (generally referred to as Tesla Energy) that range in size from residential to grid sized and of course cars (which ultimately also use batteries).
Comparing them to car companies is like comparing Amazon with bookstores. Yes Tesla is a car company and yes Amazon is a bookstore. But both both of them are so much more than those simple comparison.
In fact I suspect the Amazon comparison here is rather apt because Amazon is now in the situation where Amazon Web Services is essentially able to prop up the retail business. I suspect Tesla Energy will be able to prop up the car business in the near future.
End of the day, even with all they have achieved, the whole machine blows up once the hype train pulls to a halt.
Come to think of it, that almost sounds like what Tessa is beginning to achieve with large scale electrical storage. 
People love the machines they make.
Ford can add body stylings all they want, but they can't match tesla or spacex or solar city.
I just don't think they have it in their DNA - I'm actually surprised we haven't heard of any of the big three going all out attempting to acquire tesla.
What would be a very interesting event would be when Tessa builds a long haul delivery truck/trucks in general. There is no way they haven't thought of a general platform chassis which can have modular tops put on them.
Wouldn't it be great if tesla sold a chassis to boutique shops like there were in the 20s...
I'm not. The big three don't have enough cash to pay the market cap multiple needed to gain control, especially now that Tesla is bigger than Ford.
No sane lender would loan the money to one of the big three to do it either - first, the money would be better spent just buying Tesla stock and second, there is no way that Tesla would be run better by pulling it into one of the big three car comnpanies, none of which have a strong non-incremental innovation culture.
When electric has a positive ROI, it will be just another drivetrain from Ford.
But Apple won people over with the actual product, not with a great product promise that has been implemented haphazardly.
Market cap is the value of the equity. Enterprise value is the value of the business (ie including debt). Tesla's EV is $52bn. Ford's EV is $150bn.
Not even Warren Buffet thinks this. In economics, the correct measure of a value of a business is the future discounted expected value of cash flow and external utility. There's almost no way to measure this directly so major simplifying assumptions are made when applying this definition in practice.
The market cap is closest to its value representing what it takes to control/own/sell the company.
Enterprise value is also market cap + net debt, not its cumulative present value DCFs.
DCF is indeed a method to estimate the fair value of a company's EV, not it's market cap. People will usually do a DCF, then subtract net debt in order to get an estimate of equity value from the DCF. Here's a citation: http://macabacus.com/valuation/dcf/overview
It isn't the EV either, though
The significant extra value of Ford is ignored when you focus the cost of getting control of a company rather than total value.
Ford has all the infrastructure that Tesla is attempting to build now (aside from the batteries, but that is something that Ford could easily partner with another manufacture to get). They know how to mass produce cars (granted right now, ICE cars). That's not an easy feat. They have a large manufacturing and maintenance base that, frankly, Tesla can't replicate. The bet is that Tesla will be the first successful company to market, or that they will hold some patents which will prove valuable in the future. The market is not betting that they'll beat Ford or GM.
> Nearly everything changes when you opt for a fundamentally different power train, so GM’s greatest advantage—more than a century of experience building cars—was all but moot. Car structure was different, since they were building around a battery, not an engine. The brakes, steering, and air conditioner were powered differently. New systems, from electromagnetics for the motors to onboard and off-board charging, each came with its own learning curve. The engineers didn’t have established tests to follow. Just turning on the car required finding the perfect sequence of electrical signals from more than a dozen modules. “Oh my God, it took us forever to get the first Volt to start,” Fletcher says.
This is why Ford is unlikely to succeed at pivoting into the electric car market. The power and pull inside their company doesn't want them to. It will take superhuman leadership to overcome that force.
Start with a hybrid Ranger billed as "torque+" marketing slogan "it'll tow a mountain"
By your logic Tesla would have been locked out of the VC/investment market due to Big Oil. Money flows like water.
I guess you could say the same for Kodak, Blockbuster, and Borders?
“The reason is that good management itself was the root cause. Managers played the game the way it was supposed to be played. The very decision-making and resource-allocation processes that are key to the success of established companies are the very processes that reject disruptive technologies: listening carefully to customers; tracking competitors’ actions carefully; and investing resources to design and build higher-performance, higher-quality products that will yield greater profit. These are the reasons why great firms stumbled or failed when confronted with disruptive technological change.”
 - https://www.goodreads.com/work/quotes/1468535-the-innovator-...
Ford has primarily focused on hybrids and there EV offerings are either fleet-only or compliance cars.
Oh wait sorry this is HN. Ya, those idiots at ford will die to the great Elon. hahahahaha any company older than 25 years is worthless old school idiocy and will die within 5 years of a startup coming in.
History is littered with companies that refused to pivot into new technology until far later than they should have, because they were too heavily invested in the old way. American car companies suffered from this in the 70s, where they got thrashed by competition from small imports for quite a while before they could be convinced to stop concentrating on land yachts.
Companies seek to outperform themselves relative to the last quarter and year. Long term strategy like this takes a backseat, if it gets attention at all. It certainly doesn't get the luxury of a whole company pivot that could tank short term value.
Need proof? Look at all of the American companies that got caught with their pants down shipping nothing but bigger SUVs when the price of oil shot up back in 2008.
They've also ditched the high-end SUV market right as that market exploded all over the world, thus missed out on massive profits because they no longer sold an Expedition. They openly admit to ceding the market to GM in their annual letters to shareholders specifically because they don't see gas-guzzling SUVs as long-term investments.
They also lead the market in fleet and industry-oriented products. They offer both technology and core-products designed to keep the incredibly lucrative fleet buyers happy.
In this regard, Ford is akin to Microsoft: their consumer products aren't mind blowing, but their corporate products are so well entrenched that they will be a practical ATM for the next decades. Ford sells six times as many F150s as Toyota sells Tundras and they own the entire small cargo van market.
I would highly recommend the book "The Innovator's Dilemma." It provides case studies of disruptive innovations across many different industries -- from farm tech to disk drives.
I think the economics aren't really there yet for them to bother with an electric platform (vs retrofitting electric drive into an existing platform). If they thought it made sense, they would be able to be producing at large volumes in a few years.
That's an incentive not only to produce an electric car, but to produce one that people buy instead of buying petrol/diesel cars.
Also, don't discount the importance of the cashflow from pickups. The only reason Chrysler and Dodge still exist is because of their anchorage to Jeep and RAM. Ford could eliminate their entire car division and still retain like 80% of their profits.
Well that's what you get for buying a car that has Microsoft software running in the infotainment system. The MS-designed Sync system had all kinds of terrible reviews at the time, and it was so bad that it brought Ford way, way down in the "initial quality" surveys, from #1 down to near the bottom IIRC. Do you not do any research before spending a giant amount of money on a car? I spent several months researching my last purchase, a Mazda (I didn't actually spend several months continuously researching it, but I was doing research and test-drives for several months before committing).
To be fair to Ford, though, my understanding is that the latest generation dumped Microsoft and switched to QNX, and should be much improved. While they were using MS, there was no way in hell I'd buy one of their cars. After they switched, I did look into a Focus, but was deterred by all the reports of problems with their DSG transmission.
What about a Bolt?
My sleeper is MB though, overall.
You mean largely trouble-free engines that run on ultra-cheap gas?
ICE has environmental issues, of course, but the idea that electric is universally superior is questionable. There's no range anxiety with gas and any backyard mechanic can fix most issues. Your locked down $100,000 IoT car is a completely different beast.
>Much of this will be of zero value in the near future.
Says who? If anything everyone is bearish on electric since gas prices have fallen and how range and recharge times will always be less convenient. Electric might replace gas but it won't be in the near future and nothing stops Ford from launching an electric line of its own. Electric cars are a solved problem if you can convince people to pay the premium and deal with the range anxiety and long recharge times. Ford has already announced an electric Mustang and F-150 on top of the $30,000, pre-rebate, 2017 Focus you can buy today. Tesla has no monopoly on electric tech. The barrier to entry is non-existant for other car companies.
edit: saying that the government will ban ICE isn't a market statement its a regulatory hope and for most nations a far off proposal. The idea that Tesla can only succeed with the government literally making their competitors illegal isn't actually a pro-Tesla argument. You guys are much less convincing than you think you are.
It is foreseeable that ICEs will become banned, at least in Europe. Right now there is still too much lobbying by the traditional car makers, but long term there is no other choice for reaching climate goals.
Edit: See e.g. http://bigthink.com/scotty-hendricks/the-end-of-the-internal...
He uses the thing as a commuter vehicle and to tow boats every now and then. The reason he gets a new one is that the dashboard computer systems on these things get updated from year to year and he prefers to stay up with the most current technology.
For most vehicles, 100K miles is nearing end-of-life. For an F series truck, 100K miles isn't even the halfway point.
Copied from another comment I made on HN:
Nobody really understands lithium-ion batteries. One production run might have substantially higher or lower capacity. Some batteries might explode. Some batteries are high discharge and some are low discharge. The "explanation" for all of these things is 'heat'.
Imagine that happening to any other industry (for example the auto industry.)
- "Why did my car just explode!?" "Heat"
- "Why does this car last a tenth the lifetime of this car?" "Heat"
- "Why does this car go a thousand times faster than any others?" "Heat"
- "Why is this entire production run of cars not working?" "Heat"
People say "heat" for two reasons: 1) because nobody understands li-ion batteries and 2) because yes, the real answer does have something to do with heat.
Batteries are one of the most important industries and critical to every company on HN. But the state of the art of batteries is putting together random metals with a bunch of random chemicals and watching which ones don't explode.
Imagine talking to the CEO of Boeing: "We just did our millionth test, engines made of cheese and wings made of coconut shells. It crashed during takeoff, of course. We haven't had any improvements in over a decade, but we're sure we'll get there eventually - we've spent billions on research so far. Wanna come watch test 1,000,001? We're trying engines made of cheese and potato-chip wings next!"
Engineering takes time, Tesla has spent a lot of time building and testing battery tech that works. And they are using it across multiple applications.
If you get reliable electronics in, then without frequent oil changes, and tubeless tire. A electric quite literally is a zero maintenance car.
And EVs are absolutely not zero maintenance, that's just a fantasy. Even in dream-world where we have tires that never need to be replaced and no oil changes, batteries are always going to be a large part of the car's cost and only last a few hundred charge cycles.
The basic premise of an electric "engine" is simpler than that of an ICE, but when you actually make the car, it's nowhere near as simple on paper. Just look at the issue people have had with getting Tesla's repaired... the "mechanics" don't even know that you have to keep the battery charged.
Also, don't ignore the fact that we have 100+ years of experience with ICE.
Also, I would argue electric motors have been around far longer than ICE because it is simpler. https://en.m.wikipedia.org/wiki/Electric_motor
I've been through the CRT -> Flat screen television phase in India.
Arguments were typically like these. How will TV repairmen fix these new TV's which have move like plug and play internals. Therefore new flat screen TV's won't sell?
In the end it didn't work out well for TV repairmen. If its easier to identify and swap the malfunctioning part, you need lesser and lesser skilled professional to service these goods. You can dumb down the process to a point anybody can do it.
If that is done so "easily," why is Tesla building a Gigafactory?
The bet is that Tesla will be the first successful company to market, or that they will hold some patents which will prove valuable in the future.
Patents? Have you been following?
You are right about some of their resources, however I think it is a mistake to glibly discount the importance of the battery supply and manufacturing (and by extension, the charging infrastructure) -- that is arguably the hardest and most important part of an electric vehicle, and with Tesla's Gigafactories, that could represent an important advantage of Tesla.
Hypothetically, it would cost Ford/GM much less to put a "SuperCharger" at every existing dealership than it would for Tesla's entire basic roll out.
Tesla has been successful at marketing thus far, not manufacturing.
As matter of fact, that was my whole point: Rather than growing "a lot" they may end up just holding on to their marketshare. Whether that is a mark against them or not is for you to decide, when researching investments.
Ok true, but Ford is way past "post-ipo". Growth is not the metric to measure them by (they will grow, but no where near as much as Tesla). That's pretty much agreed upon by market analysts.
All of the existing manufacturers have better infrastructure than Tesla and are getting into the hybrid, electric, and autonomous car marketspace. Even if Tesla survives long enough to make a profit I see no way this company ever justifies it's current valuation. Long term I expect huge price drops in Tesla stock.
Ford also maintains an extensive dealer network which can disincentivize some painful adjustments that otherwise might need to be made to be more aligned with future sales, etc. People talk about direct sales for Tesla usually in a negative connotation due to institutionalized friction (re: lawsuits / political favoritism), but I think it's a strong asset in a savvy marketplace, and can illustrate how established infrastructure isn't always for the best. One less mule for the cart to pull, IMO.
I also think there are some signs that existing manufacturing practices can be / need to be rewritten around an all elective drivetrain. For instance, Tesla plans to operate its lines at full-speed using some new "invasive" robotic procedures that the full-glass roof of the model 3 will afford. This has dramatic labor and capital consequences for an automaker with a diversified fleet. Might be costly to rebuild the machine that makes machines.
We're also making the assumption that charge-battery-drive-the-car is the future
Battery power is an evolution of car tech but it isn't a revolution. Tesla is building wired telephones when the majority of the market is using wired telegraphs. A substantial improvement to be sure, but to suggest a company such as Ford is not able to grow is very short sighted-- they aren't standing still either. Tesla could increase production and sales by an order of magnitude and still have a minuscule market share.
Of course Tesla will grow, but they don't have a monopoly. The future value of Tesla is certainly greater than today's value, but to discount everyone else because we are analyzing this through a specific lens of perception is a folly.
Even if it would work out for them, Tesla is pushing really hard to be a major battery supplier, so they could end up benefitting either way.
It's true, but I don't think it matters. Traditional automakers rely on suppliers for all kinds of parts on cars: headlights, wipers, tires, glass, airbags, and many electronic modules (auto-dimming mirrors, blind-spot radars, etc.). However they do tend to always keep the body/chassis and the drivetrain in-house (sometimes they'll outsource the transmission, like to ZF).
I don't see how this would affect them moving to EVs. Going from ICE to EV means two giant changes: the chassis (to make room for an entirely different layout, esp. because of the batteries), and the drivetrain. Well, the automaker controls both of those. All those other things, like glass, headlights, electronic safety add-ons, etc., are going to be the same either way. You don't need a different blind-spot monitoring system or windshield wipers or tires just because the drivetrain is electric.
Tesla building its supercharger network was a brilliant move because it means that Teslas are comparable to most petrol-fuel vehicles (as far as where you can go), and everybody else isn't.
If I buy a Ford, can I drive it to see my family in Northern Minnesota? Because I know that I can take a tesla.
That's a really big deal.
I know there are 3rd parties in the US trying to compete with tesla's superchargers (a very close friend of mine was an engineer at probably the largest one until they went bankrupt), but as far as I can tell they're nowhere close to Tesla.
Originally I said North Dakota, but it looks like even Tesla doesn't have chargers there yet. BOO! Well luckily I have plenty of family in Northern Minnesota too!
That said, Tesla is pursuing the angle of enabling customers to install their own charging station requiring negligible maintenance, and no supply; charing networks are only needed for longer trips which most customers don't need. That is a game-changer for many industries.
>Ford has all the infrastructure that Tesla is attempting to build now
As for the charging stations, that's an investment that ford would have to make to stay viable, which they would do
I really don't think there is any difficulty in making EVs now, its finding enough to support the market. While 200 is great for a base range I find it the absolute minimum for any pure EV and to be honest I won't go pure EV till I see 400+ (Drive a Volt now). Not all want/need two cars and even many families are constrained based on size/packaging of the car which led to my surprise when the 3 was a sedan which is not a growing market.
> Ford has all the infrastructure that Tesla is attempting to build now
* no battery production facilities
* no charging infrastructure
* no vertical integration (unlike Tesla, Ford has to sell through the dealershits - I see it as a big disadvantage)
> They know how to mass produce cars
Yes - but can they produce the car the public will want in three years from now, when affordable all-electric, high-performance, autonomous Model 3s will redefine what modern car means?
> They have a large manufacturing and maintenance base that, frankly, Tesla can't replicate
I admit that they have some hurdles ahead, but what would stop Tesla from being more efficient at manufacturing than Ford? It is one of their objectives - and their track record is pretty good, to say the least.
My, what a strong argument.
>> How much is Ford expected to grow?
> If they can properly pivot into the electric car market, a lot.
I don't think anyone has any trouble telling a story in which Tesla is ultimately a more valuable company than Ford. And I agree that's a big deal. But this comment thread suggests the market cap comparison is some kind of milestone. It's hard to articulate what that milestone would be.
I'm a huge fan of Tesla and think that they will succeed, but saying that the stock is "priced for perfection" is putting it mildly.
Realistically they more often invest on their perception of others perception of the promise of future value. How those perceptions get linked together is interesting but it is not nearly as objective as you imply.
How much stationary energy storage did Ford sell last year?
"Tesla CTO: our energy storage is growing as fast as we can humanly scale it [Gallery of new Powerpack station]"
Disclaimer: Own a bunch of TSLA.
Fuel has a marginal cost. Stationary battery storage soaks up power when power is cheap, releases it when the cost is higher and energy demand is higher and has a 10 year minimum life.
You must be a blast at cocktail parties then.
>Stationary battery storage soaks up power when power is cheap, releases it when the cost is higher and energy demand is higher and has a 10 year minimum life
I think you're making a few unsubstantiated assumptions here. Primarily that the cost differential in electricity (or the availability of renewables) is broad enough for the Tesla tech to be significantly profitable.
I ran the numbers: a Tesla PW2 gives you ~20.3MWh throughout it's useful life for $5500 limited by power availability and recharge rate. A slightly more powerful Ford generator at $1500 with $4000 worth of diesel fuel would yield ~8.9MWh of anytime power with the ability to run on waste oils and a comparatively perpetual lifespan.
So, 44% the power cost with a power wall but a substantially higher upfront cost, a considerably lower salvage value, and a number of restrictions on it's usage (hope you don't need power during sustained outages in the Northeast).
Any more chuckles?
"The Kauai project consists of a 52 megawatt-hour battery installation plus a 13 megawatt SolarCity solar farm. Tesla and the Kauai Island Utility Cooperative, the power company that ordered the project, believe the project will reduce fossil fuel usage by 1.6 million gallons per year."
"On Thursday, Tesla announced that it had been chosen “through a competitive process” to supply utility company Southern California Edison with 20 MW (or 80 MWh) of battery storage. In May, regulators ordered Southern California Edison to invest in utility-scale battery networks after natural gas provider SoCal Gas leaked 1.6 million pounds of methane into the atmosphere when a well ruptured at its Aliso Canyon Natural Gas Storage Facility."
"California will shortly bring more Tesla energy storage systems online in Southern California Edison’s (SCE’s) service area.
The 50 MW projects (utilizing Tesla’s Powerpack 2) are conducted by Macquarie Capital, the corporate advisory, capital markets and principal investing arm of Macquarie Group (a global finance corporation)."
"With the confidence of a well-oiled pizza shop, Elon Musk “seriously” said that Tesla could deliver a more than 100 MWh Powerpack project to Australia in 100 days – or it will be free."
"Considering a large part of the 100 days will be for shipping the Powerpacks and other equipment from Nevada to Australia and then installing those packs, I wouldn’t be surprised if it means that Tesla and Panasonic already have a capacity of over 100 MWh per month at the Gigafactory. That’s a significant 1.2 GWh annualized rate."
Chuckles remain firmly in place ;)
Combining the 5 largest auto manufactures on earth and you are still well short of a trillion dollar company.
Or at least that is how I understand it.
A trillion dollars? For a niche/luxury car company? What fantasy is that based on?
> it's biggest current hurdle is getting it's production up to meet an enormous demand
While enormous to Tesla, actual demand is pretty small compared to other car companies.
It doesn't help that even the most "affordable" Tesla is far more expensive than the average competitor's EV or hybrid vehicle, let alone it's base price (not final sale price) starts off above the average new car purchase price (final sale, after upgrades, etc) for the entire industry.
There's a lot of hype around Tesla, but that doesn't mean they're going to take over the auto industry, let alone become larger than the largest auto makers around who produce "Everyday Joe" cars for the rest of the population.
That's a big IF.
Also, it ignores the fact that every car manufacturer already has a plethora of fully electric, or hybrid models available (and they are, on average, far cheaper than the cheapest base model Tesla can offer), and the markets still don't buy them.
This also ignores the fact that many companies make great batteries, and Tesla is only recently sitting down to that table. Why wouldn't Panasonic be that "trillion dollar" company? Or Sony? Or Fujitsu?
Edit: No, really. Ford sold over a million vans, pickups and heavy trucks last year, a market that Tesla has no apparent interest in entering. The Toyota Camry alone sold 428,000 in 2014, the Honda Accord 328,000, the Corolla 340,000, the Ford Fusion 306,000, the Nissan Altima 336,000, and the Honda Civic 326,000. The Tesla Model 3 will presumably be in that latter market (although those are roughly $10,000 cheaper), and if Musk is right about scaling his factory to 500,000/year, it will take a big chunk of it (but still, it's $10,000 more). (If it's in the BMW 3-series/Merc. C-class/Lexus range, 500,000/year would eat all of that market.)
It didn't take Apple much to take Nokia out of the game. Nokia had smartphones on the agenda for a long time. The problem was that wasn't their only focus. Apple went all hands into the iPhone.
But I mean, couldn't GE do that too? Or Samsung/Murata/Vishay/Maxwell/Panasonic/etc.? It kind of seems like the stocks are trading largely on the strength of Musk's vision. I am kind of okay with letting mad scientists-cum-Bond villains like Musk and Bezos run amok with billions of dollars, though. I mean why not, it's a bit of a wildcard and it makes about as much sense as anything else that's happening right now.
Sure. So could Martha Stewart, or Jeff Bezos.
That hard part is actually doing it and doing it well. Is GE better positioned to do it than Tesla? Not really. It's a complex problem involving advanced software, engineering, branding, customer service, talent retention, supply chain, and myriad other challenges. Tesla is better at some of these things, worse at others. But they're going for it. GE, GM, et al don't appear to be moving aggressively towards these goals at all.
Or space elevators, or flying cars.
This is the goal:
All made/sold by Tesla.
If Apple can be a multi-billion dollar company making laptops, phones, and an app store, I don't really see the Tesla "could be a trillion dollar company" as too far-fetched.
I mean this is the era when SnapChat is "worth 25 billion".
Anything could be anything. The challenge for Tesla is that they validated the electric car market and managed to carve out some market share, but now they are in the sights of every car manufacturer in the world. It's a different ball game for them. Car companies know how to make cars at scale, Tesla doesn't. It's a big challenge.
Tesla is reminding me a lot of early Apple—equally rapid supporters and detractors. If anything, that means people find your work interesting. (Wonder if Elon will send out a staff note mirroring the note Jobs sent when Apple first passed Dell in market cap.)
Nothing is everything. That doesn't negate the fact that:
Tesla Passes Ford by Market Value.
"Ford tops list of automated driving leaders in Navigant study. Tesla ranks 12th"
Like parent said, market cap isn't everything.
I worked for this lovely company once where we paid hundreds of thousands of dollars to a consulting company to "research" how we were the dopest, only to have pretty much written the entire document for them. Go figure...
The 3 is going to be a real test here. Not that they can make the car but that those expecting to get one at 35k actually get one and on a timely basis. Then throw in, is there any profit at that price point when factoring in all related costs?
There's no sane scenario where a car company that sells cars in the tens of thousands over-values a car company that sells cars in the millions.
It was true if you held Google stock.