Does anyone else have concerns regarding the Tesla truck? There seems to be some excitement around it, but likely from people that do not drive trucks. My concern is if they are able to appeal to the rural/suburban average Joe. The truck will need to appeal to someone that takes it on a hunting trip or construction/work site and have a masculine aura about it. A DIY type homeowner. Franz is a good designer but a pickup truck would not seem to be in his comfort zone (judging by the skinny jeans and slicked hair). I’m confident Tesla can design cars for families, performance lovers, everyday drivers, etc but pickup drivers are different and I’m not sure they know how to appeal to these drivers. Hopefully I am wrong.
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It's going to be very expensive, and the average worker isn't going to buy it.
But it would be nice if the pick-ups blocking the Superchargers were Tesla owners being ironic.
From what I am seeing, people are estimating unit sales over 1 million/yr in several years since the pickup truck market is so big in the US. In order to do that, they will need to convert ICE pickup drivers to EV drivers. This is a tall task. Perhaps these expectations are not grounded in reality though. Although Elon has stated he believes pickups could be a big market for Tesla.
My Brother drives a F-250 super duty as his work truck (owns a yard care business) IF he could get a truck that would run all day and haul all his stuff He would buy it. I am pretty sure that the ability of the truck will win people over.
The performance and functionality definitely would seem to be major selling points. Also for the heavy duty work trucks, often there are onsite diesel tanks to refuel. Diesel is not fun to work with since it stinks and can be a necessary evil. I believe there are permits required and extra costs, which for a small business owner can be difficult to afford. Being able to recharge onsite will be another big benefit. It is the design of the truck that concerns me.
What would TSLA be at right now if Tesla had not acquired Solarcity and did not try to over-automate Model 3 production?
Hey and at this point let's ask what if they skipped falcon wing doors on the X as well? The thing that will always bother me is how we were all talking $10 EPS (non-GAAP) once the X came out. Were we being overly optimistic or could that have been? The SolarCity acquisition still looks like a bailout to me especially seeing how much it seems to be a drag. I'll say $575 and $850 if the X had gone better.
I think Solarcity was a bailout too and the calculation at the time was that a Solarcity bankruptcy would have tarnished Elon and TSLA more. Over-automation on the 3 line hurt - can they learn the lesson this time with the Y? Hope so.
Some of Elon's risks are the reason Tesla still exists (and SpaceX) and have gotten this far, and some have held back their valuation. Hard to know at the time how things will play out (online sales, for example). TSLA clearly needs to share their strategies in ways that allows the bigger money in the market to see the future and want to own them - right now Elon is still perceived by many as a space cowboy.
Don't know on share price, 420?
$250. Tesla would have issued stock again, and had to make a more expensive acquisition of a solar panel installer, and would never have acheived their current Model 3 production costs.
Nobody seems to understand this, though I explained it at the time. The SolarCity purchase was a bailout but it was also a cash raise, and a discount purchase of assets at well below their value. SolarCity had a bunch of assets which were nonmarketable as part of SolarCity but marketable as part of Tesla. And Tesla needed to own solar farm installers.
Perhaps the major mistake came later: the SolarCity leasing was not shut down *nearly* fast enough (they still haven't quite stopped) and it took years to close down high-cost SolarCity retail sales channels.
As for "over-automation", about half of it succeeded, which has given a lasting advantage. If they'd just planned to leave more space between stations to fix mistakes, it would have massively benefitted the company (probably worth billions of dollars), but attempting the automation was correct.
The hugest mistake was trusting the outsourced company which built the battery pack assembly. That cost many billions of dollars, IMO. Had Tesla bought Grohmann a year earlier, the stock would probably be at >$360.
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Regulators tend to be conservative about safety and won't approve widespread full self driving cars until they are proven safe in just about every edge condition and that will likely take years. Full self driving tech might be available in 3-5 years from many different companies, but it could be 10-15 before it's legal except under limited conditions.
At least 1/2 the pick up market is commercial and government. Some are individual companies that have one or a few trucks for work, but a large number are corporate entities who own fleets of trucks. Fleet buyers are always interested in the cost of ownership and if an electric truck costs less than a gas or diesel, they will buy. The profit margin on loaded pickups for private use is the biggest profit center for the Big 3 car makers, but it's a relatively small segment of the market.
Tesla could easily get into the commercial and government fleet pickup market first. The only barrier there is cost of ownership. Once establish there they could move up market into the private pickup world.
This is going to be a bit of a longer post, but it will be useful to highlight the competitive dynamics that Tesla is putting incumbent automakers in. This type of change and leadership can only be found in a founder driven company, and the analysts on the street are completely missing the larger picture.
The competitive situation (today):
There are currently 2 areas where Tesla is closing the walls off from the competition. Let’s briefly analyze them.
1) Electrification- No need to go into detail. Of all the ways that Tesla is shaping the auto industry, this is ironically the “weakest” advantage. Other automakers know how to make cars, and while EV drivetrains do differ in quality, build, and cost parity, it’s not unreasonable to assume some other automakers will reach effective parity eventually. Even Chinese startups can compete well, so while electrification is an advantage for Tesla, it is not an insurmountable advantage.
2) Software value-add and autonomy- This is arguably 1.5 barriers for Tesla (1 for autonomy and 0.5 for the connected car piece). Connected cars will be an advantage for Tesla, but others will eventually catch up. And if they don’t themselves, another technology company will develop a robust OS (e.g. Android). Autonomy is a different story. You need the data, you need the hardware, and you need a strong engineering team, and thus far nobody else has all three. But we can’t count autonomy until it truly arrives, and it will arrive in 3-5 years (adjusting for regulation and Elon time).
Here is where it gets interesting. Elon, by getting rid of the sales network, is forcing other automakers into an impossibility trinity. A common example is given for college students: sleep, play, study. Choose 2. For ICE automakers, it will be: electrify, autonomize, or reorganize your sales. Choose 2.
Let’s see why it’s inherently difficult to do all three. Let’s say a major premium automaker decides it wants to try to do all three at once. What happens? Well, when they close their dealerships, which they can’t legally do anyways, the vast majority of their ICE inventory will be at a disadvantage in comparison to their electric offerings. With no in person sales force to push ICE cars, online shoppers will gravitate towards electric, which they are not producing enough of to compensate for the Osborne effect, much less Tesla. Now, with decreased revenues, where will they get the money to complete autonomy and electrification? They can’t get rid of their dealership network, because the dealership model is their transition ramp to electrification and autonomy.
Let’s consider the next best case, which is an automaker chooses to do 2 of the 3. Well obviously, they can’t choose to reorganize and electrify. Even the bears would say that no autonomy in an autonomous world would be a death spell for an automaker, so we won’t analyze that. Let’s say a reorg and autonomy are chosen. Not only will the vast majority of buyers be looking to buy electric cars, but in an autonomous world, the per-mile cost savings of electric over ICE will crush, and ICE cars will be economically incompetent. Finally, the “least” bad case for incumbent automakers is that they electrify and autonomize their vehicles. But a legacy retail network will always give Tesla a price advantage, rendering it extremely difficult to compete.
What analysts don’t realize is that Tesla’s existential advantage is that it only has to do 2 of the three, while every other incumbent automaker has to do 3 of 3. Tesla was gifted with electrification from the start, thus allowing it to turn its business model into an advantage and avoid the impossibility trinity. People are mistaking Tesla’s latest move as a one-time demand booster, where in reality it is a way for Elon Musk to go on the offensive, and create the impossibility trinity for incumbent ICEs. When you have two leads like Tesla, the best thing is to add a third. The next 3-5 years will be truly exciting.
The competitive situation (today):
There are currently 2 areas where Tesla is closing the walls off from the competition. Let’s briefly analyze them.
1) Electrification- No need to go into detail. Of all the ways that Tesla is shaping the auto industry, this is ironically the “weakest” advantage. Other automakers know how to make cars, and while EV drivetrains do differ in quality, build, and cost parity, it’s not unreasonable to assume some other automakers will reach effective parity eventually. Even Chinese startups can compete well, so while electrification is an advantage for Tesla, it is not an insurmountable advantage.
2) Software value-add and autonomy- This is arguably 1.5 barriers for Tesla (1 for autonomy and 0.5 for the connected car piece). Connected cars will be an advantage for Tesla, but others will eventually catch up. And if they don’t themselves, another technology company will develop a robust OS (e.g. Android). Autonomy is a different story. You need the data, you need the hardware, and you need a strong engineering team, and thus far nobody else has all three. But we can’t count autonomy until it truly arrives, and it will arrive in 3-5 years (adjusting for regulation and Elon time).
Here is where it gets interesting. Elon, by getting rid of the sales network, is forcing other automakers into an impossibility trinity. A common example is given for college students: sleep, play, study. Choose 2. For ICE automakers, it will be: electrify, autonomize, or reorganize your sales. Choose 2.
Let’s see why it’s inherently difficult to do all three. Let’s say a major premium automaker decides it wants to try to do all three at once. What happens? Well, when they close their dealerships, which they can’t legally do anyways, the vast majority of their ICE inventory will be at a disadvantage in comparison to their electric offerings. With no in person sales force to push ICE cars, online shoppers will gravitate towards electric, which they are not producing enough of to compensate for the Osborne effect, much less Tesla. Now, with decreased revenues, where will they get the money to complete autonomy and electrification? They can’t get rid of their dealership network, because the dealership model is their transition ramp to electrification and autonomy.
Let’s consider the next best case, which is an automaker chooses to do 2 of the 3. Well obviously, they can’t choose to reorganize and electrify. Even the bears would say that no autonomy in an autonomous world would be a death spell for an automaker, so we won’t analyze that. Let’s say a reorg and autonomy are chosen. Not only will the vast majority of buyers be looking to buy electric cars, but in an autonomous world, the per-mile cost savings of electric over ICE will crush, and ICE cars will be economically incompetent. Finally, the “least” bad case for incumbent automakers is that they electrify and autonomize their vehicles. But a legacy retail network will always give Tesla a price advantage, rendering it extremely difficult to compete.
What analysts don’t realize is that Tesla’s existential advantage is that it only has to do 2 of the three, while every other incumbent automaker has to do 3 of 3. Tesla was gifted with electrification from the start, thus allowing it to turn its business model into an advantage and avoid the impossibility trinity. People are mistaking Tesla’s latest move as a one-time demand booster, where in reality it is a way for Elon Musk to go on the offensive, and create the impossibility trinity for incumbent ICEs. When you have two leads like Tesla, the best thing is to add a third. The next 3-5 years will be truly exciting.
Elon Musk wasn’t wrong about automating the Model 3 assembly line — he was just ahead of his time
Techcrunch with a nice article on this from earlier today.
Some here have described the advantages as "moats". Tesla has some other moats you don't talk about. The biggest I think is they are way ahead in batteries. Their chemistry may be ahead of the competition, but that is an area tough to evaluate. They are currently the only company outside of China with a secure and vast battery supply. That is a staggering advantage. It would be like having control of the oil market when ICE cars are beginning to take off.
Tesla today is the only company outside of China that can mass produce an EV and it will be for another few years. By the time the competition is able to mass produce 1 EV, Tesla will be mass producing at least 2 and will have 2-3 car factories open and mass producing cars.
I claim this is the deepest moat because it's the toughest to breach. The only way across it is to invest billions in your own gigafactories and some of the European makers are going that direction, they are currently where Tesla was in 2013-2014.
Another advantage that plays into the battery volume is Tesla has no internal political resistance to electrification. There are die hard ICE fans in every legacy car company and they are fighting electrification. Every legacy automaker also has billions invested in ICE tech development and they can leverage that with hybrids, but they need to chuck it all out with EVs. Imagine if the computing industry was having to completely scrap integrated circuits made with silicon for something else that required completely different manufacturing processes. The computing industry in its current form only dates back to the 60s when integrated circuits were invented and they are used to constant reinvention, but even there would be a lot of resistance to a complete change.
The car industry is far older and has evolved for more slowly than computing. Most of the top management has seen cars change throughout their 40 years careers less than computing devices have changed in the last 10, so they are going to be very reluctant to throw out the company's bread and butter in favor of something completely new.
Autonomous driving could end up being like flying cars, lots of promise, but never quite gets there. A couple of government agencies are involved in investigating autopilot crashes:
Feds looking for answers in fatal Tesla crashes
I don't think the article is completely fair to Tesla as Tesla has the most AP units out there. Other car companies have some kind of system roughly in same general category as Tesla, but all of them have vastly fewer systems on the road than Tesla. But regulators are going to be very cautious about signing off on any kind of autonomous system that eliminates the driver. They may never sign off on that, which makes all the predictions about completely autonomous roads moot.
Regulators may sign off on fully autonomous systems that work within very fenced in environments. For example the parking lot and rental car buses at the airport, which operate in a very limited set of conditions might end up automated. Especially if they can be put into their own system separate from other traffic. Fully autonomous vehicles might be allowed in places where there will be few pedestrians like freeways. But we may never see fully autonomous vehicles everywhere.
Look at the airline industry. Airliners, with far fewer edge conditions than ground transport, has had fully autonomous tech for close to 20 years. Airliners are completely capable of flying themselves in all but a few extreme conditions and regulators still require two pilots. There have been a couple of crashes due to co-pilot error and most of the accidents in the last 20 years have been due to human error or acts of war than any kind of machine problem.
The commercial airline industry is required to have very well trained pilots who are drilled in emergency procedures and have drilled into them that they can't just fall "asleep at the wheel" even if the plane is doing everything. People driving cars have nowhere near the training. Even professional drivers don't have the level of training to drive as airline pilots have. You can't expect the level of professionalism from car drivers that you see with airline pilots, so there are going to be more human mistakes.
I wouldn't count on automation to save any company in this race. Somebody may crack the problem and convince regulators, but we may never see vehicle drivers eliminated or it may take 20 years for regulatory approval.
Here are some initial thoughts on Model Y before the reveal.
First, I’m glad (or actually relieved) that the Model Y will have no falcon wing doors. I think if the Model Y had them it would be a disaster.
Second, the challenge with the Model Y is two-fold. First, the Model Y will cost 10% more than the Model 3, but also will “slightly” less range. Exactly how much less range is unclear, but let’s say it’s 12% less range (if we use the Model X vs Model S as a comparison). In that case, the Model Y is actually a lot more expensive than the Model 3, because it’s not just the 10% more but also you’re getting less range. So, to get similar range as the Model 3 you’ll need to pay even more.
It’s the same reason that the Model X might sell slightly more than the Model S, but not as much more as some people expected.
I sure hope that Tesla sells a ton more Model Y than Model 3, but in reality I’m cautious regarding this. Perhaps it’s more likely that Tesla will sell slightly more Model Y than Model 3. I know this won’t be a popular opinion on this forum though. Oh well.
I’m probably wrong, as is everyone regarding this kind of forecast, but I’d expect Model 3 demand worldwide over the next few years to be 500k units/year and Model Y demand worldwide to be 550-600k units/year.
First, I’m glad (or actually relieved) that the Model Y will have no falcon wing doors. I think if the Model Y had them it would be a disaster.
Second, the challenge with the Model Y is two-fold. First, the Model Y will cost 10% more than the Model 3, but also will “slightly” less range. Exactly how much less range is unclear, but let’s say it’s 12% less range (if we use the Model X vs Model S as a comparison). In that case, the Model Y is actually a lot more expensive than the Model 3, because it’s not just the 10% more but also you’re getting less range. So, to get similar range as the Model 3 you’ll need to pay even more.
It’s the same reason that the Model X might sell slightly more than the Model S, but not as much more as some people expected.
I sure hope that Tesla sells a ton more Model Y than Model 3, but in reality I’m cautious regarding this. Perhaps it’s more likely that Tesla will sell slightly more Model Y than Model 3. I know this won’t be a popular opinion on this forum though. Oh well.
I’m probably wrong, as is everyone regarding this kind of forecast, but I’d expect Model 3 demand worldwide over the next few years to be 500k units/year and Model Y demand worldwide to be 550-600k units/year.
As a comparison, the Honda Civic and CR-V are manufactured on the same platform. In the US,the Civic sold about 325k in 2018. The CR-V sold about 380k in 2018. So your initial Y estimates make a lot of sense to me. But the ratio may change in the future, if the trends continue for CUVs.
If it is larger, the increased wheelbase and/or width could allow a larger pack for range parity. Extra cells have a disproportionate increase on range due to the base anti-brick buffer.
Or it may share the pack dimensions and the LR has less range than a 3 but the MR and SR have the same (again due to more cells).
We shall see
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