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> 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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