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It really depends on what you consider the "hard" part about making electric cars to be. Do you think that the design and engineering of an electric car is the difficulty? Or is it manufacturing millions of them at scale? If the former is the real difficulty, then you might be able to make sense of the Tesla stock price; if it's the latter, then the traditional auto-manufacturers should be able to easily come into the EV market transfer their brands crush Tesla on greater manufacturing quality and efficiency.



They already have come in. The Chevy Bolt has a 230 mile range, compared to 220 for the Model 3. You can go out and buy one today for $36,000.

The 3 and other models are also plagued by quality control problems. The Bolt is both more reliable and has a better interior. And a speedometer!


Dude, the Bolt is a compliance vehicle that loses a massive amount of cash every-time it is sold.

Secondly, the sales of the Bolt have already collapsed and all the Tesla car outsell it. The model 3 outsells it 7 to one and this month probably 10 to 1.

Just comparing range and not looking at the economy or the sales number is basically spreading FUD.

> The 3 and other models are also plagued by quality control problems. The Bolt is both more reliable and has a better interior. And a speedometer!

I'm sorry but that is ridiculous. The Model 3 has some quality control issues on the frame and GM does that a bit better. However if you go into the electronic, the software, the drive-train, the charging network, the suspension and so on its not even comparable in terms of quality.

See for some info on an independent evaluation of the Bolt:

> https://www.youtube.com/watch?v=Sl3cUMIX9Uo


>I'm sorry but that is ridiculous. The Model 3 has some quality control issues on the frame and GM does that a bit better. However if you go into the electronic, the software, the drive-train, the charging network, the suspension and so on its not even comparable in terms of quality.

The software in the Model 3 is famously buggy. Did you see the Edmonds review?

https://www.edmunds.com/tesla/model-3/2017/long-term-road-te...

Some highlights:

> Nav screen going haywire: zooming, scrolling, pinching, pixelating all at once.

> Audio system turning on by itself at full volume.

> Audio system came on and went to full volume all by itself while the car was off, locked and unoccupied. I heard it from 100 yards away. "Who is that joker playing his stereo so loud I can hear it from here?" Oh, it's Elon. I turned it down, but it kept wavering up and down as I started driving, working against my repeated attempts to dial it down. Then it blasted all the way to maximum. My ears are still ringing two hours later. Fixed after reboot. Not sure about hearing damage.

> Audio page leaping up and down rapidly like the up-caret button to expand the source menu was being played with by a kid who ate too much candy. Concurrent with the volume problem above. Same reboot.

> The passenger vanity mirror fell off completely. Installed and held on only by double-sided tape. Reinstalled by pressing really hard on the mirror.

> The screen went completely dark on startup, no music or operation. Restarted the car. The screen worked; the backup camera did not.

> The car will not shift into Drive or Reverse upon startup. "Vehicle Systems Are Powering Up. Shift Into D or R After Message Clears." Have to wait for it to power up. A loud click comes from the rear of the car as if a drive shaft is engaging and the message on the screen goes away.

> The car displays a new message: "Cannot Maintain Vehicle Power. Car May Stop Driving or Shut Down." No shutdowns yet, but keeping an eye out.


> The software in the Model 3 is famously buggy. Did you see the Edmonds review?

The Tesla software also way more better feature then most other cars. Compare Tesla software experience and the interaction of the car and the app is not even comparable to anybody else and most reviews reflect that.

Also, Tesla can update over the air and they are consistently fixing these bugs.

Clearly it has not hurt Tesla sales or the consumer rating they are getting.

Comparing that problem to the Bolt complete lack of integration of the different system and losing money on every car, are not even comparable in terms of how problematic it is.


Bolt is to Tesla as BlackBerry is to iPhone.

They are both products of the same class, but one of them just obliterates the other both in terms of technological sophistication and cool factor. Turns out that has an impact on market success.


The "hard" party is actually nothing you have mentioned. The hard party is to make it PROFITABLE. The simple fact of the matter is that no other car manufacture has a clear plan of how they will do that.

All of them are building up the technology base, at least in terms of the drivetrain, but they have failed to vertically integrate the electronic to the same extent and the do not have a reliable low cost battery access.

Lets do an example. The battery is a huge part of the cost of a car. If you have to buy this you have to pay a profit on that, not to mention that because all non-Tesla car buyers compete for the same batteries the margins will be huge.

Independent evaluation of the Bolt for example are showing that GM is losing money on every single Bolt that is produced. They have competently bought the battery and and the electronics part. Its a integrated mess in a GM box. That gone cost you a lot and GM will never built 300'000 Bolts. The Bolt is built for compliance and to be able to build more SUVs (because the strange fuel economy regulation system).

So the game that the other manufactures are basically waiting until they can build profitable electric cars while Tesla is hellbent on producing as much battery capability as they and that allows them already to have a cheapish car on the market and to make billions of $ selling it.


> Lets do an example. The battery is a huge part of the cost of a car. If you have to buy this you have to pay a profit on that, not to mention that because all non-Tesla car buyers compete for the same batteries the margins will be huge.

Panasonic is the one who manufacturers Tesla's batteries, that's not a operational advantage for them. Many other car companies have similar deals with other battery manufacturers, like Toyota/Mastushita. Also, I don't get why you think battery margins will be huge? What is the major reason that prevents significant supplier competition?

> Independent evaluation of the Bolt for example are showing that GM is losing money on every single Bolt that is produced.

Yes, it was mainly built for compliance reasons as a compromise vehicle, but it isn't that Tesla has been able to construct a vehicle for less price than Chevy constructs the Bolt.

> So the game that the other manufactures are basically waiting until they can build profitable electric cars while Tesla is hellbent on producing as much battery capability as they and that allows them already to have a cheapish car on the market and to make billions of $ selling it.

What cheapish car? The Model 3 is $49,000 as you can configure it currently?


> Panasonic is the one who manufacturers Tesla's batteries, that's not a operational advantage for them. Many other car companies have similar deals with other battery manufacturers, like Toyota/Mastushita. Also, I don't get why you think battery margins will be huge? What is the major reason that prevents significant supplier competition?

There is a shortage of battery production. As I have already said, the reason EV are not sold is because the large manufactures can not make a profit on it.

Tesla has massive internal work on everything from the pack to the chemistry on the cell and that is licences technology by Tesla that Panasonic can not sell to anybody else. Tesla is simply ramping up production because they know demand will exists.

As with many industries, EV are not profitable and the car manufacturers or not gone order millions of battery packs, so there is not quite the large scale investment there yet. What you say is simply not true, the integration battery tech and production into Tesla is far deeper then for the other manufacturers.

And the video I provide is by a company that is reputable for cost analysis and that is the conclusion they come to.

> Yes, it was mainly built for compliance reasons as a compromise vehicle, but it isn't that Tesla has been able to construct a vehicle for less price than Chevy constructs the Bolt.

It is not relevant to compare direct production cost. The question is how much does it cost to product to how much you sell. Tesla can make 20-30% margin on the avg Model 3. While the Bold loses GM 5-10k per car sold.

> What cheapish car? The Model 3 is $49,000 as you can configure it currently?

Fair enough, cheapish is not the right word. Lets say a mass market car, meaning a car they can product 300k to 500k off and make a healthy profit on each car sold.

For the class that they are operating in that is competitive price and that is why they have 50% market share already, and that is gone jump up quite a bit more. It simply makes sense for them to focus on high value cars for now, ramping production on higher value cars gives you better cashflow in a time where you need it.

Even at 35k its not really a cheap car, but independent analysis and their own guidance has shown that they can make and expect to make a profit on that and they will have to do this in the next half year or so.


They are essentially unopposed. But they are also solving the problem that the other car manufacturers have already solved: Mass producing cars.

Why would Mercedes or BMW or Audi try to compete with Tesla directly right now? They have combustion engines that are mature, known tech with sunk R&D costs that they want to sell as long as possible. This is of course Teslas chance. The others are just doing R&D while Tesla is selling cars. But it's still hard to see Tesla having a market share in EVs in 15 years time that justifies it's current valuation.


> They are essentially unopposed. But they are also solving the problem that the other car manufacturers have already solved: Mass producing cars.

No. Wrong. Sorry.

Tesla is not just trying to mass produce cars. They are trying to mass produce profitable EVs, something that the others simply can not do.

> Why would Mercedes or BMW or Audi try to compete with Tesla directly right now?

My very argument is that they are not competing at the moment.

> The others are just doing R&D while Tesla is selling cars. But it's still hard to see Tesla having a market share in EVs in 15 years time that justifies it's current valuation.

Why? Unless you believe Tesla makes somehow fundamentally worse cars then everybody else, there is no reason why the other manufactures should have an easy time boxing Tesla out of the market once the have major mass production of their cars set up. They are not magic.

Tesla will have a huge established direct to end user sales force, a massive charging network, a well integrated app and software stack that will help costumers to their brand and a positive public image.


> My very argument is that they are not competing at the moment.

And my argument is that that's by choice rather than by inability.

Also there is a large amount of overlap between mass producing electric cars and mass producing combustion cars.

Finally, there is no question that Tesla has the potential to be a competitive car manufacturer. Let's say they are super successful and gain a market-share comparable to BMW. I'd say that's a top end scenario for Tesla. It has a good Brand but so do its competitors.

But Tesla is valued at the same level as BMW _right now_. I just don't see that. There certainly is downside risk, but I just really fail to see the upside potential. What should enable Tesla to grab a larger market share than BMW? Or Audi? Or Toyota? Nevermind the Chinese battery manufacturers that might want to push into the low end of the EV market.


> What is the major reason that prevents significant supplier competition?

That it's hard. Lithium ion batteries at scale is a difficult manufacturing process. All the R&D is going into battery. Essentially the electric engine is easy, but the battery is hard. It's exactly the other way around than in classic cars. Imagine if all major car companies would be buying engines from a few Asian tech giants.

There is quite some debate on how much of the profits will go to the battery manufacturers eventually, but I've seen 30-70% from serious analysts. I think nobody really believes the top line number, but even the more reasonable 30% would be massive.


> Panasonic is the one who manufacturers Tesla's batteries, that's not a operational advantage for them. Many other car companies have similar deals with other battery manufacturers, like Toyota/Mastushita.

Panasonic = Matsushita

AFAIK, Toyota does not currently have a battery partnership (other than the R&D-based old partnership with... ahem, Tesla), but in December last year they + Panasonic started a feasibility study to see if Panasonic could become their main supplier.


Panasonic and Matsushita are different names for the same company. Panasonic also makes Toyota’s batteries




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