The bear thesis for Tesla has been something like, "Tesla might have an innovative EV-first design, but when the major manufacturers with a century of manufacturing know-how wake up to EVs, they will drown Tesla in vehicles."
I think part of what's driving the increase in Tesla's value is the realization that this thesis was wrong.
Tesla is now beating all the established manufacturers at gross automotive margins, and it's really not close. Toyota is around 18%, Ford and GM around 15%. Tesla is up at 27%.
Part of that might be demand-driven higher prices. But Tesla continues to reduce their cost of goods, and Tesla has emerged as the most innovative manufacturer, which we already see in teardowns of the Model Y, with huge sections cast as one piece, but particularly in the design of Cybertruck, and Gigafactory.
Tesla is far out in the lead on software. They appear to be rapidly improving on manufacturing. Tesla has paid down its debt with stock issuances, the company has $16 billion cash on hand, and the ability to go get a lot more nearly for free.
If the major manufacturers aren't going to catch Tesla with manufacturing prowess, or capital, what are they going to catch them with?
The major manufacturers still might catch up - once they really start caring. I agree with the posters elsewhere in the thread that predict the fossil fuel industries will collapse rapidly, rather than gradually - and the way I see it, major car manufacturers are still mostly trying to extract as much value now as possible from the ICE market.
But once the floor falls off? They won't go gentle into that good night. I expect a wave of bailouts, consolidation and rapid retooling (and playing every dirty trick in the MBA book there is). I wouldn't discount the possibility that some of the survivors will have enough infrastructure and engineering competence remaining to quickly become a serious competitor for Tesla. In parallel, Tesla itself may fall prey to one of many ways companies decay over time. And then, of course, there's China.
But all in all, as long as Tesla's current performance pushes EVs over the threshold of market acceptability (which I believe it did a few years ago) and gives it some serious momentum, it's "mission fucking accomplished", regardless of who's the market leader in 10 or 20 years.
The new all electrics from all the big auto companies are pretty good. As long as they do well enough to keep producing them, it will be incremental improvement year after year. I think Tesla has a good lead, but there is not going to be much value difference in a car that can go 600 miles on a single charge vs 300 miles. Or 0-60 even faster than 2.5 seconds. Once the big makers get within spitting distance of a Tesla EV (and I think they already are there). They will be able to really start eating into that market as their ICE market starts to fade.
Tesla clearly deserves a lot of credit but I think the EV space is a lot more fluid than some Tesla proponents would have you believe.
As EV adoption increases into more markets, buyers are going to be more price conscious, and plenty of makers (most of the big companies?) already have a foot in this space. Add missteps with safety or reliability in the long term (see: defrauding the Dutch government and the public about safety) and I think things might change quickly. Tesla isn't going anywhere but the idea that Tesla is the future EV market seems dishonest, naive, or both.
It's only a start for them when they'll start caring. Arguably, Volkswagen has been caring for a few years and they are just starting to produce decent EVs, somewhat comparable to Tesla.
> If the major manufacturers aren't going to catch Tesla with manufacturing prowess, or capital, what are they going to catch them with?
Brand loyalty or aspiration that predates EVs; cheaper entry price (already happening); build quality; better UI (the giant touchscreen is a negative for a lot of people).
There are lots of reasons to buy a non-Tesla EV. I know people who, being told that the Mach-E wasn't going to be available for a while bought another ICE to drive until it was ready. I know people who bought Hyundais instead of Teslas. Heck, one person even opted for a plugin hybrid because only the Tesla had the range he needed for work and he didn't want one.
A good chunk of people I know are already opting for not-Tesla EVs. It's a brand that seems popular with a subset of the population, but doesn't have the widespread love that people on HN seem to assume.
I also think it's weird that people are comparing margins on ICE vs EV cars. Obviously, those will different. You want to focus on their margins in the EV space.
It would be interesting to revisit these numbers after including warranty claims.
Toyota is someone that puts big emphasis on that part, so the difference when looking at something like a 3yr ownership might be a lot smaller, if not maybe even in Toyota's favor.
OTOH everybody is in a bit of an uncharted territory with the EVs and SW heavy cars. VW's new Golf has been riddled with SW bugs, and their EV line has not avoided it as well.
But the body panels, interior materials...
And Tesla (Musk) has said they need to improve the build quality and lower warranty claims.
So like I said- would be interesting to revisit these numbers, maybe not now, but in a year...
China's internal EV market is enormous, and by any reasonable metric Chinese manufacturers are already "winning that race". Several major cities have fully electrified their bus and taxi fleets for example, and most of those vehicles are made by BYD Auto, which was delivering more cars per year in 2012 than Tesla does now. But there's plenty of EV market to go around, both in China and elsewhere. BYD doesn't currently ship private cars outside China, only taxis and commercial vehicles like vans, buses, delivery vehicles, utility service vehicles, but this can change rapidly. The main reason this isn't currently happening is that they don't want to deal with consumer support outside their core market, and are more comfortable with institutional customers. However, I don't see it as a race. The main thing holding back EVs in both the Chinese and non-Chinese markets is infrastructure and obstructionism by fossil interests. I see that changing quicker in China than in the West (but I still have hope) so it's more likely Chinese EV manufacturers will expand more in China than internationally, until they see a more valuable market. Tesla is much more aggressively expanding in the West, and building out their own infrastructure to do so, and are the primary focus of the hate by western fossil interests.
If and when the landscape on the western markets changes to be regulatorily more favorable and provide sufficient charging infrastructure, I fully expect Chinese manufacturers to entirely own the lower half of that market, because even the cheapest Tesla can produce is way way more expensive than your average petrol car, whereas Chinese-made EVs are competitive with petrol on the Chinese market already now, and prices keep dropping. A new BYD e2 with extended (253 mile) battery sells for the equivalent of $25k. The Tesla model 3 sells for twice that on the same market. On the lower end, with smaller batteries, you have cars like the Levdeo i3 with 100 mile range which sells for the equivalent of $10k, and the phenomenally cute Wuling Hongguang Mini EV (75 mile range) which sells for the equivalent of $5k. Tesla still owns the luxury EV market everywhere, including in China, but there's simply nothing they offer in those price ranges, and that's where the big volumes are going to be in the future as infrastructure catches up. Still, because luxury cars have higher profit margins, I can see Tesla surviving and holding a large part of that segment.
There's also a huge market for EVs in the global South, where infrastructure is currently abysmal but there is extreme sensitivity to fuel prices. The market there can move very rapidly in response to even minor infrastructure improvements, and small cheap EVs would be the primary seller in those markets. Tesla has no chance there, but the Chinese EV vendors do.
If there's anyone losing the "race" it's traditional Western and Japanese car vendors. They fucked up time after time, and are the tail-end of the current EV industry. I don't see a path where they get their shit together fast enough to not be overrun by Tesla and a bunch of Chinese EV vendors, so they can only win by creating regulatory roadblocks.
It’s not really fair to be comparing Chinese domestic market EVs to US market EVs on price and range alone.
We can compare price and range alone among US market vehicles because they all meet relatively high standards of quality, performance, and regulatory compliance.
Developing nations have buyers and regulators willing to accept lower standards in exchange for accessibility, but the US market doesn’t.
BYD isn’t absent from the US market for any reason other than that they have chosen not to, because they’ve determined they wouldn’t be able to compete in that market.
Very little. First of all, a lot of cars are sold without this option, but most importantly, a large part the money isn't recognized as revenue yet, as the FSD isn't ready yet. A part of it is recognized due features like "summon" and "navigate on autopilot". But the large part of that money is still unrecognized revenue. There will be a boost to the revenue, when they can recognize the remaining part of the FSD payments in the future, but this will be a one-time effect.
This is interesting. You're claiming that the FSD money they collect isn't recognized yet? Can I ask you what leads to you thinking that? I'm sure it's in one of their financial disclosures, but you may be able to narrow it down for me.
I'm sure they were. I don't disbelieve you. I just don't quite get what to search for (or where) to find out how that policy works and what percentage of income they've already recognized.
I think part of what's driving the increase in Tesla's value is the realization that this thesis was wrong.
Tesla is now beating all the established manufacturers at gross automotive margins, and it's really not close. Toyota is around 18%, Ford and GM around 15%. Tesla is up at 27%.
Part of that might be demand-driven higher prices. But Tesla continues to reduce their cost of goods, and Tesla has emerged as the most innovative manufacturer, which we already see in teardowns of the Model Y, with huge sections cast as one piece, but particularly in the design of Cybertruck, and Gigafactory.
Tesla is far out in the lead on software. They appear to be rapidly improving on manufacturing. Tesla has paid down its debt with stock issuances, the company has $16 billion cash on hand, and the ability to go get a lot more nearly for free.
If the major manufacturers aren't going to catch Tesla with manufacturing prowess, or capital, what are they going to catch them with?