Articles/megaposts by DaveT

[DaveT]

My view is that they may hold very strong biased view on ice vs ev, as ice is what gives them exceptionally good living. Bias is likely to direct their thinking and decision making process. Check BMW board of directors, it is full of people close to retirement age who spent a lifetime in the company or industry, often in highly technical roles. I can only imagine how much they might care about some new technology that will wipe out their lifetime achievements and that is superior to what they put their life into. Imho Tesla has posed the same challenge to established car manufacturers and car dealers, they have to negate part or the whole of their livelihood if they accept new technology and way of doing business. It is very difficult for anyone to accept being cornered like that and to welcome the change that corners them.

I look at it more as market dynamics. Currently auto makers make all their money by selling ICE cars. The EV market appears very small since EVs cost significantly more than their ICE counterparts. Most ICE makers are waiting for battery costs to drop and for the EV market to grow more significantly before investing a ton of money in producing EV cars. They don’t want to spend billions of dollars only to find out that the market is premature.

Every year the EV market will grow and this will encourage ICE makers to spend more effort on EVs. It’s more of a reactive approach. Some ICE makers (like Nissan and BMW) are taking somewhat of a proactive approach but they’re still not betting their future on mass EV adoption.

Many ICE makers think that electric adoption will grow over time and that they will invest more into it as the market matures. They’re fine with letting Tesla take the lead in EVs for the time being because they think that once the market matures they can enter with large economies of scale and have an advantage over Tesla. They also don’t see their ICE business dying out, ever. They typically think that the future is largely ICE engines with higher and higher gas mileage and aided with hybrid technology.

 

[772]

They typically think that the future is largely ICE engines with higher and higher gas mileage and aided with hybrid technology.

Don't forget the fool cells :tongue:

 

[surfside]

@DaveT, you may have already heard this, but when i read barclay's recent research report on the gigafactory, i thought of your earlier speculation re: how it would work. here is summary of what barclay's said about the structure of the gigafactory:

gigafactory will be like a supplier park - Tesla builds the building and cell making equipment; Panasonic provides capital, process controls and supply chain management (as well as precursor material suppliers). then when in operation the battery partners will then run the machines and Tesla will pay them for cost of goods sold.

they make reference to tesla's arrangement with the seat supplier for the model s (where the company manufactures seats at fremont as an example of this).

anyways, thought you would be interested to hear about it...

surfside

 

[clmason]

DaveT - you seem to be sold on the premise of a Gen IV ~$20K vehicle with millions of units per year. Normally when I read your posts I emphatically agree, usually with an mental *Amen!* thrown in for good measure. However, this time I really disagree.

Here is why I'm not in agreement.
1) Base Model Gen III is the ~$20K car when total cost of ownership is taken into consideration. $35K base Gen 3 less $15K in Gas, Oil and Maintenance over 10 years nets to about the same as ~$20K ICE + gas, oil and maintenance.
2) Economy Buyers will step up in price to get a Tesla Gen III just as flip phone & Nokia cell phone buyers stepped up for an Iphone.
3) Tesla will dominate every market segment they enter. Why continue with sedans when there are other segments to dominate?
4) Elon already discussed a Pickup Truck. As i recall, the pick up truck was discussed many more times than the Gen IV Sedan. The Tesla T-150, or the Ford F-150 competitor, would be another industry disrupt-er.
5) Tesla can become largest auto maker (by market cap) with solely a premium offering. In fact, Apple is a perfect example. There have always been computers, mp3's players, and phones available for less than Apple's prices. Tesla does not need to go down in price point the same way that Apple doesn't to become the biggest by market cap.
6) With millions of cars sold every year, why bother going after the lower price point segment. There is so much opportunity in other segments, it doesnt make sense to go after a semgnet that requires 10% margin when there are higher margin segments to dominate first.

Those are some of my thoughts. At this point, speculating past 2020 is not really relevant to IMO, but what do you think? Thanks.

 

[kenliles]

Base Model Gen III is the ~$20K car when total cost of ownership is taken into consideration. $35K base Gen 3 less $15K in Gas, Oil and Maintenance over 10 years nets to about the same as ~$20K ICE + gas, oil and maintenance.

that might especially tip the scale if Tesla implements a similar pseudo-lease-own program as ModS. Monthly cost would likely put it in line with mid to upper $20. That might prove to be close enough to prioritize Truck/Super Car efforts. I think DaveT makes a good argument as well- I'm personally on the fence about it, but leaning to an aggressive lease option to fill down to that level given Elon's statements. just a guess at this point though- haven't thought it thru as completely as Dave for sure

 

[DaveT]

More thoughts on the case for GenIV

DaveT - you seem to be sold on the premise of a Gen IV ~$20K vehicle with millions of units per year. Normally when I read your posts I emphatically agree, usually with an mental *Amen!* thrown in for good measure. However, this time I really disagree.

I can understand why you disagree but I’ll try to lay out some additional points to shed light on my reasoning.

First, I never claimed GenIV would be a $20k vehicle, rather I said I think it’ll be $10k less than GenIII. If GenIII is $35k, then GenIV would be $25k. But it’s more complicated than this, since in my previous posts I said that I didn’t expect GenIV until 2022. That’s 8 years away. And if you account for inflation then the price in 2022 would be closer to $30k while GenIII would be $40k (ie., if you calculate inflation at 2.5% hypothetically, then $25,000 today would be $30,000+ in 8 years). So, what I’m implying is that in 2022 when GenIV is released the cost of the car will likely be $30k.

Here is why I'm not in agreement.
1) Base Model Gen III is the ~$20K car when total cost of ownership is taken into consideration. $35K base Gen 3 less $15K in Gas, Oil and Maintenance over 10 years nets to about the same as ~$20K ICE + gas, oil and maintenance.
2) Economy Buyers will step up in price to get a Tesla Gen III just as flip phone & Nokia cell phone buyers stepped up for an Iphone.

Alright, let’s address these first two issues which basically seem to be saying that GenIII will attract economy buyers.

First, GenIII is focusing on the luxury compact sports sedan market. The reason being is that this is the next logical step after the Model S. Going into the mass market family sedan market would be too difficult at this stage. However, the luxury compact sports sedan market (ie., BMW 3 series, etc) has higher margins than family sedans so Tesla will be able to get a foothold into this market if it produces a stellar car.

While GenIII might appeal to some economy buyers, the main focus is not the economy buyer. Tesla is unapologetically going after the BMW 3 Series market. This means that they will spend additional money (compared to a family sedan) to make a car than handles and performs as well or better than the 3 Series. This means a lot of extra money spent in suspension, handling, acceleration, etc. that wouldn’t go into a family sedan. This extra cost is necessary since GenIII needs to go head-to-head with the BMW 3 series and come out on top in order to capture lead position in this key luxury compact sports sedan market.

It is true that the GenIII will attract buyers from surrounding segments (ie., Prius, Camry, other luxury segments) but the focus of GenIII isn’t to go head-to-head with the Camry. The key of GenIII’s success is the BMW 3 series market and it must be significantly better than the BMW 3 series (not a Camry).

While GenIII will start out at $35,000, the reality is that the car will increase in price with inflation and if you include options the cost of the car will run over $40k. Also if you choose the larger battery pack (ie., 270 miles) and add leather, tech, and some other options (since the GenIII will come with less standard than the Model S), then you’ll looking at probably something around $50k and this is without adding in inflation. If you add the performance model, it’ll be over $60k inc. options. In other words, the reality is that GenIII isn’t going to be a cheap car, and appropriately so since the BMW 3 series isn’t cheap either.

If you factor in gas savings, then the cost of ownership over several years goes down and is comparable to a less expensive car (maybe 5-10k less expensive), but most people still will be concerned with the $40-50k price tag.

Regardless, GenIII will sell a lot since it’ll be an awesome car. It just won’t be a cheap, awesome car. It will be priced to match the luxury compact sports sedan market ($35k-65k).

I’m expecting worldwide demand for GenIII to be over 1 million cars annually by 2020 and over 2 million cars annually by 2024. The luxury compact sports sedan market appears to be about 1.5m-1.75m cars per year currently, so if Tesla can sell 1 million GenIII cars annually by 2020-2021, then they will dominate this market.

However, the biggest challenge will be the $40-50k price tag. Even though you argue gas savings and such, still the price tag will be too high for most buyers of economy cars.

Regarding the analogy to people paying more for an iPhone… I think the point of the iPhone was actually that masses weren’t willing to pay more for a phone. In other words, Apple was able to sell the iPhone initially unlocked without subsidies for over $600 but their demand was limited because of the high price tag. It was only when Apple included carrier subsidies and made the price tag sub-$200 that the masses were able to adopt the phone.

In a similar way, a $40-50k EV will have limited appeal to the masses. Sure, it will appeal to the enthusiasts, eco-friendly folks, some commuters, and luxury car buyers. And that will be a great initial market for Tesla. But at some point, this market is limited because of the relatively high GenIII price tag compared to the Camrys/Corollas of the world.

If Tesla didn’t believe auto makers needed competitive pressure, then I would think GenIII would be enough to accomplish Tesla’s goal to accelerate the EV revolution. But if mass auto makers need competitive pressure, Tesla needs to expand from the niche luxury compact sports sedan market and they need to go even more mainstream. That’s what GenIV is all about.

Another point before I move on is that GenIV will likely only be possible if Telsa is able to sell 1-2M GenIII’s annually by the early 2020s. It will be this kind of momentum that allows Tesla the capital, the brand, and the demand to produce a cheaper GenIV car that targets truly the masses. Initially though, it’ll take time for production to ramp and for battery costs to go down.

Another way to look at it is consider what it’ll take for over half the new cars sold in the world to be electric by the year 2030. In other words, probably over 60M electric cars will need to be sold annually by then (assuming worldwide auto sales of 120M in 2030). Let’s say Tesla doesn’t produce a GenIV and only produces a GenIII car that by that time will be $40-50k base price. And let’s say Tesla produces 3M GenIII cars per year by 2030. Then, who’s going to make the other 57M EVs in 2030? To me it doesn’t seem realistic to rely on the likes of Toyota and Honda (ie., who are playing around with fuel cell vehicles and missing the EV boat currently). And other auto makers as well don’t have the conviction, focus, nor mission to lead the charge for 60M EVs sold annually by 2030. The only company in the world with enough conviction, focus and execution is Tesla.

The way I look at it is if 60M EVs are going to be sold annually by 2030, then Tesla will need to sell a lot more than just a few million cars a year by then. Tesla will need to be the clear market leader in EVs and will likely need to be selling at least 10-20M of those 60M EVs, or else the 60M EVs sold annually by 2030 is not going to happen.

If Tesla is going to sell 10-20M EVs annually by 2030, then GenIII isn’t going to cut it. They’ll need an even more affordable car. It doesn’t have to have the handling, suspension, performance of a luxury compact sports sedan. It just needs to go head-to-head with the Camry/Accord and come out ahead. By removing luxury/performance elements of GenIII, Tesla will be able to offer a more affordable car and since battery costs will likely continue to see yearly improvement of 7-8% per year, Tesla will be able to leverage super low battery costs to provide GenIV.

If Tesla is able to get battery costs under $100/kWh by 2022 (my expected GenIV release date), then a 45kWh battery pack would cost $4500 + pack costs (maybe $2000). That would be $6500 and would likely allow GenIV to go at least 200 miles. If GenIV costs $40k base price w/no options by 2022 due to inflation, then GenIV could debut at $30k base price with no options (who knows it could be even lower than $30k). A $6500 battery pack would make that possible. (Note: by 2030 cost of battery pack will be significantly lower as long as battery cost improvements continue at 7-8% rate.)

Now, here’s what might see in 2022. The Toyota Camry (or Honda Accord, Hyundai Sonata) will cost $25,000 (base model factoring in inflation) but the Tesla GenIV will cost $30,000 (base model). While GenIII will the BMW 3 Series killer, the GenIV will be the Camry killer. A Tesla GenIV at $30,000 will attract Camry/Accord/Sonata drivers by the masses as it’s close enough in price tag and gas savings will be significant enough to make it a no-brainer.

3) Tesla will dominate every market segment they enter. Why continue with sedans when there are other segments to dominate?
4) Elon already discussed a Pickup Truck. As i recall, the pick up truck was discussed many more times than the Gen IV Sedan. The Tesla T-150, or the Ford F-150 competitor, would be another industry disrupt-er.

I agree Tesla will go into the pickup truck market segment and probably even before GenIV. Pickup trucks are high margin and the electric powertrain w/instant torque will be awesome in a pickup truck. However, pickup trucks are a limited market (largely U.S.) and isn’t the end goal for Tesla.

Tesla’s end goal isn’t GenIII or GenIV per se. Tesla’s mission is to do everything it can to accelerate the complete transition of cars to electric, and this will likely mean it will play a strong leadership role in selling many of the 60M EVs sold annually by 2030. Exactly how many cars, I’m not sure (although I speculated just a few paragraphs earlier at least 10-20M a year by 2030) but I’m willing to bet it’s a far larger number than a few million cars. And in order to do so, it must sell more than just premium cars as that market is limited.

5) Tesla can become largest auto maker (by market cap) with solely a premium offering. In fact, Apple is a perfect example. There have always been computers, mp3's players, and phones available for less than Apple's prices. Tesla does not need to go down in price point the same way that Apple doesn't to become the biggest by market cap.
6) With millions of cars sold every year, why bother going after the lower price point segment. There is so much opportunity in other segments, it doesn’t make sense to go after a segment that requires 10% margin when there are higher margin segments to dominate first.

First, Tesla will only go into lower price market segments if it makes sense economically, meaning that they are confident they can make a healthy margin.

Tesla is already setting up a lot of key foundational elements that will allow it to compete well in the lower price segments in the future. First, by selling directly to consumers Tesla is removing the dealer margins (according to Log In - The New York Times, “dealer’s profit margin, which is anywhere between 10 percent and 20 percent of the suggested retail price.”). Further, Tesla is setting up their own super-efficient marketing/advertising machine with showrooms, social media, test drive events, and other methods. In other words, Tesla is setting up key elements of their business right now that will allow them to achieve costs savings that other auto makers won’t have. This will be advantageous in the future as well when they enter typically lower margin market segments as they will be able to achieve higher margins with GenIV than other manufacturers achieve with similarly priced cars.

I also agree that there is a lot of opportunity in the premium/luxury market segments, and I fully believe Tesla will target those markets as well (remember I’m forecasting GenIV to come out in 2022, that’s still 8 years away). Just like the Model S is a platform (Model S, Model X, etc), GenIII will also be a platform (GenIII sedan, GenIII compact SUV, etc). Add in a pickup truck or two and you’ve got some nice platforms to release various models that will hit various market segments of premium/luxury buyers. This will keep Tesla busy for some time to come.

However, my main point in articulating a case for GenIV is that we shouldn’t box Tesla in and expect them to stop at GenIII, especially even after Elon has mentioned a generation after GenIII to be released approx. 3 years after GenIII (Gen 4 mentioned by Elon).

And if you think through the huge numbers of EVs that will be produced/sold annually by 2030 (ie., 60M EVs a year), the numbers are daunting and it’s clear that Tesla will need to play a huge, active, and leading role to make that happen. Also remember that Elon has a bet going with a friend that half of all new vehicles sold annually by 2030 will be electric.

GenIII will be a great car and will sell a lot. But GenIV completes the picture and will allow Tesla to lead the EV revolution by selling (perhaps) 10-20M cars annually by 2030*. I don’t see any other way Elon wins his bet.

* As a point of reference, Toyota currently sells 10M cars a year. (http://online.wsj.com/article/BT-CO-20140129-702202.html)

- - - Updated - - -

I’m expecting worldwide demand for GenIII to be over 1 million cars annually by 2020 and over 2 million cars annually by 2024. The luxury compact sports sedan market appears to be about 1.5m-1.75m cars per year currently, so if Tesla can sell 1 million GenIII cars annually by 2020-2021, then they will dominate this market.

Just want to clarify that this forecast/expectation is in regards to the GenIII sedan (not including the GenIII compact SUV or other cars built on the GenIII platform).

 

[c041v]

Just the megapost I needed before bed. Thanks Dave.

 

[DaveT]

GenIII will be a great car and will sell a lot. But GenIV completes the picture and will allow Tesla to lead the EV revolution by selling (perhaps) 10-20M cars annually by 2030*. I don’t see any other way Elon wins his bet.

A quick clarification on my 2030 unit projections. 2030 is a long way off. So I'm sharing these numbers as more general ideas to give a picture of the potential of Tesla and the huge shift in vehicles from ICE to EV required to get to mass adoption of EVs. While I think it's possible for Tesla to sell 10-20m units annually by 2030, I fully expect Tesla to be selling at least 5-10m units by 2030.

I have a lot more thoughts on this and will share more about how Tesla can fund this expansion and also what kind of valuation Tesla might have in 2030 if they can sell 10m cars annually by then.

 

[Mario Kadastik]

While I agree with you most of the time, the following is something I doubt will actually happen:

The way I look at it is if 60M EVs are going to be sold annually by 2030, then Tesla will need to sell a lot more than just a few million cars a year by then. Tesla will need to be the clear market leader in EVs and will likely need to be selling at least 10-20M of those 60M EVs, or else the 60M EVs sold annually by 2030 is not going to happen.

Expecting the EV's to make up 60% of the global car sales in 16 years is utopic I think. Somewhere along the lines of 5-10% is realistic and that makes it ~5-10M cars making 2-3M Gen-III cars a realistic goal with ~30+% of the EV market share being Teslas. If Tesla could sell 10-20M cars by 2030, then the valuation is waaay off at the moment (too low) and the switch over to EV's will happen far faster than even my wettest dreams could have put it. I think the breaking point for an evolution to turn into a true paradigm shift is at around 10-20% of all new car sales, but I don't see it happening in this industry as fast as 15 years. Then again, who knows. But a switch to 60% I'd say is in my books under 5% probability.

 

[DaveT]

While I agree with you most of the time, the following is something I doubt will actually happen:


Expecting the EV's to make up 60% of the global car sales in 16 years is utopic I think. Somewhere along the lines of 5-10% is realistic and that makes it ~5-10M cars making 2-3M Gen-III cars a realistic goal with ~30+% of the EV market share being Teslas. If Tesla could sell 10-20M cars by 2030, then the valuation is waaay off at the moment (too low) and the switch over to EV's will happen far faster than even my wettest dreams could have put it. I think the breaking point for an evolution to turn into a true paradigm shift is at around 10-20% of all new car sales, but I don't see it happening in this industry as fast as 15 years. Then again, who knows. But a switch to 60% I'd say is in my books under 5% probability.
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Actually in my forecasts I'm estimating 50% (not 60%) of new cars sales to be electric by 2030 (60 million out of projected 120 million annual sales in 2030).

Elon is actually more optimistic. Last year he was quoted as saying (more than once) that he thinks in 15 years (2028) that at least half the new cars sold will be electric.

I'm convinced this is going to happen (at least 50% new vehicles sold will be electric by 2030) and not just because Elon says so. It's because battery efficiency/costs are improving by 8% a year. Compounded that's a doubling of efficiency every 9 years. So if in 2013, Tesla reached $200/kWh for their batteries, then in 2022 it will be $100/kWh, which cuts the price of the batteries (assuming range is the same) in half. Add another 9 years of 8% annual improvements (probably with new chemistries and approaches, perhaps even beyond typical batteries), you see another doubling in efficiency in 9 years (ie, 2031), which could take the cost down to $50/kWh. A 50kWh pack would cost $2500 for the batteries (or alternative) and add $1500 for the pack and you have a $4000 battery pack that takes a small car 200 miles on a charge. No way that ICE can compete with that. That's why it's officially game over for ICE somewhere between $50/kWh-$100/kWh.

* Note: 7% per year improvement would slow doubling rate to approximately every 10 years.

 

[mrdoubleb]

Just my 2 cents...

- I'm with Dave on Tesla entering the mainstream market. Call it Gen IV if you will, but I think they could do it sooner than 2022 - battery costs permitting. It would make sense to "pull a Volkswagen" and use the Model E platform for a cheaper model, like VW does with Audi->VW->Seat->Skoda. Replace the expensive sports/air suspension, the premium materials, even some aluminum parts (think Model E frame with steel doors, bonnet, etc.) and you can already cut costs. If the Gigafactory ramps up by 2018ish, and battery prices permit, they could do a 20-25k car. Performance would be lower, just enough to beat everyone else, but limited to optimize battery life, carry the heavier weight and prevent cannibalizing Model E sales. And I would fully expect that to be under a sub-brand, to keep Tesla as premium. Again, think VW. Same goes for a future BMW 1xx competitor and its VW Golf killer counterpart under the mainstream brand.

- When you think about it, save for the battery, making an EV should be much cheaper than an ICE. You guys know what I mean: no transmission, a much more simple engine, hell, I bet the LCD based UI is MUCH cheaper than all those instruments, switches and buttons in an ICE, once you start ordering LCDs by the hundred thousands, as touchscreens already have a huge CE market and factories, volume production.

- To everyone suggesting Model E is mainstream and cheap, please check your Western, middle class mindset at the door. I am also considered upper-middle class in my country, but I do have to acknowledge for the majority of the world, and the global car market, a BMW 3 is still a luxury car. Yes, once you add fuel and maintenance, the EV becomes a lot cheaper, problem is most people won't have the funds or credit (next to their mortgage or rent) to make that initial investment.

- There are around 100 million cars sold worldwide. The luxury market is a nice slice of that, with probably a disproportionate size of profits, but why would they want to leave 80% of the market for others? Think about their huge R&D advantage! VW is now introducing the e-Golf with a 100 mile range and 40k+ retail price in Hungary. By the time they get to their Gen 2, and can go down with price/up in range, Tesla will have had hundreds of thousands of EVs on the roads for trillions of miles... I say they should go for the jugular and recycle Gen 3 for a truly mainstream model as soon as they can. That would be the final blow to ICE.

- And as a consequence, even though this is an even more capital intensive industry for manufacturers and product for the end user too, once we break the mainstream price barrier and Tesla establishes their charging infrastructure (supplemented by local, city chargers built by others), the EV revolution will be much like the smartphone revolution. Ask the cellphone divisions of Motorola, Ericsson and Nokia what their projections were for smartphone penetration 5-10 years ago... Just make sure you change the numbers you want to call to Google's, Sony's and Microsoft's first, so someone actually picks up.

 

[AlMc]

While I agree with you most of the time, the following is something I doubt will actually happen:


Expecting the EV's to make up 60% of the global car sales in 16 years is utopic I think. Somewhere along the lines of 5-10% is realistic and that makes it ~5-10M cars making 2-3M Gen-III cars a realistic goal with ~30+% of the EV market share being Teslas. If Tesla could sell 10-20M cars by 2030, then the valuation is waaay off at the moment (too low) and the switch over to EV's will happen far faster than even my wettest dreams could have put it. I think the breaking point for an evolution to turn into a true paradigm shift is at around 10-20% of all new car sales, but I don't see it happening in this industry as fast as 15 years. Then again, who knows. But a switch to 60% I'd say is in my books under 5% probability.
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DaveT: Love your optimism (and hope your are right) but I agree with Mario. Ground has not even been broken on the first Giga battery factory and when fully operational in 2+ years it will produce only enough batteries for 500K cars/year. Since Elon stated goal is to drag the world into sustainable transportation I believe you will see Nissan (put in other manufacturer's names in if you wish...possibly even Kandi) coming out with the mass market segment car that is compelling enough to convince Elon to focus more on Truck/Van (business) transportation.
Based on the most recent Google chat with CapOp I feel TM will be battery (supply) constrained for years (10+) and unable to have sufficient CapEx dollars to be able to build the battery factories at a rate to allow for your numbers.
TM and Elon will be successful in their quest to pull the world towards sustainable (energy) transportation. I just believe other manufacturers will be more of a factor than you project.

 

[JRP3]

While GenIII will start out at $35,000, the reality is that the car will increase in price with inflation and if you include options the cost of the car will run over $40k. Also if you choose the larger battery pack (ie., 270 miles) and add leather, tech, and some other options (since the GenIII will come with less standard than the Model S), then you’ll looking at probably something around $50k and this is without adding in inflation. If you add the performance model, it’ll be over $60k inc. options.

This reminds me a bit too much of the bear tactic calling the Model S a $100K car. Just because you can option something out to a much higher price point does not negate the fact that it is also available at a much lower price point.

 

[tslafan123]

This reminds me a bit too much of the bear tactic calling the Model S a $100K car. Just because you can option something out to a much higher price point does not negate the fact that it is also available at a much lower price point.

Yes, I hope the media doesn't screw it up again. In a shareholder perspective though, higher the asp better it is. I think $50K will be the average, just as $100K is the current average.

 

[clmason]

DaveT- thanks for the reply. Its hard to craft rebuttals to your megaposts because you write so much content. I just want to clarify a few things from my previous post. I think Gen III Base Model is the GEN IV you are describing because:

My definition of the "base model" is a minimally optioned Gen III. It will not actually compete with the BMW 3 Series. It will not be a performance car. It will not have premium components (sports car performance, high end brakes, high end suspension, tech package goodies; power liftgate , daytime led lights, etc). However, it will have the same skateboard, body, chassis, and thus be a variation of the Gen III.

I think the "base model" (minimally optioned) Gen III will not actually hit production for a long time. More than a year after Gen III launch there will still not be any Base Model Gen III's on the streets. There is a huge demand in the BMW 3's Series class and Tesla will be busy building high end Gen III's for a long time, probably more than 2 years.

The Gen III 3 Series competitor will be a $50K car. No doubt about it. However, the Base Model (minimally optioned) Gen III will be a $35K car. Net savings from Gas, Oil and Service over 10 years its just a bit higher in price than the super mass economy car segment. I believe buyers will step up, save up, stretch up, understand total cost of ownership. And by 2020 Gas will likely be higher as well , maybe national avg. of $4.50 a gallon+, plus inflation, its all lined up for there not to be a need for the Gen IV as you describe it.

I'm not sure about your 2030 estimate of 50% of new cars will be electric. Elon is a visionary-super genius and I am among his his biggest and most obsessed fans. Definite Man Crush on my part, however he does have a tendency to exaggerate. Sure he has made good on most of his claims but he has under-delivered and over-promised on timelines on many occasions.

The existing auto giants may be dinosaurs but they are also freight trains. It takes a lot of force to slow a freight train. For the auto giants to stop producing enough ICE cars by 2030, to the point where half of all new cars are electric, a % of auto giants would either have to go out of business or start making EV's in huge volumes. It don't think either will happen by 2030.

You really have your heart set on half of all new cars will be electric by 2030 and Tesla is the only one who can make that happen. I think that is swaying your position too far. I personally don't think half will be electric by 2030 and i don't think Elon can make it happen to win his bet. It will likely happen eventually, but not over the course of the next 16 years.

Lastly, the Tesla T-150 Pick Up Truck, the Ford F-150 competitor, will sell in ridiculous quantities. The F-150 averaged 700,000 unites per year over the last 10 years. Do not forget the business case for an EV is stronger when its competitor gets a low MPG. Like the Model X vs. the Cayenne, the same will hold true for the T-150 vs the F-150. The Cayenne should be very scared with the launch of the Model X. Likewise the T-150 will gobble up the F-150 in quick fashion.

Thanks again for your reply, much appreciated. Its great to share these discussions with you and the other contributors.

 

[mrdoubleb]

Lastly, the Tesla T-150 Pick Up Truck, the Ford F-150 competitor, will sell in ridiculous quantities. The F-150 averaged 700,000 unites per year over the last 10 years. Do not forget the business case for an EV is stronger when its competitor gets a low MPG. Like the Model X vs. the Cayenne, the same will hold true for the T-150 vs the F-150. The Cayenne should be very scared with the launch of the Model X. Likewise the T-150 will gobble up the F-150 in quick fashion.

Thanks again for your reply, much appreciated. Its great to share these discussions with you and the other contributors.

Yeah, I`m still not sold on Tesla doing a pick-up truck under the Tesla brand. It`s a bit as if Porsche, Mercedes, BMW or Audi did that. Just doesn`t work with the brand for me.

Not saying they should not do a pick-up truck at all, I know it would be a huge hit in the US. Pick-ups gotta be the most gasoline hungry things ever created. Imagine all that torque of the electric motor with zero or minimal fuel costs for a pick-up! Also, I bet most pick-ups are used for relatively short distances which works too. BUT, at the risk of sounding like a broken record, I`d much rather have them do it under that mainstream sub-brand too.

 

[clmason]

Yeah, I`m still not sold on Tesla doing a pick-up truck under the Tesla brand. It`s a bit as if Porsche, Mercedes, BMW or Audi did that. Just doesn`t work with the brand for me.

Same can be said about Tesla offering a ~$20K super mass market economy car.

 

[mrdoubleb]

Same can be said about Tesla offering a ~$20K super mass market economy car.

And that's why I was suggesting something like that should be done under a sub-brand. Both the truck and the mass market car. Tesla may be revolutionalizing a lot of things, but I think people's perception of exclusive/premium vs standard aint't one of them. Releasing a 20k car under the Tesla banner could damage the brand perception - think Models S positioning. If you look at Mercedes and BMW, even their cheapest, smallest cars start at around $30k in Germany (22-25k EUR).

- - - Updated - - -

You guys may want to check out this 2013 study by KPMG on global car sales. VERY interesting.

Relevant to the conversation above is their segementation and sales projections.

For vehicle classes they have 4 categories:

Super premium: Lambo, Bentley, etc.
Premium: BMW, Mercedes, Lexus (and, I would add Tesla), etc.
Sub-premium: Volkswagen, Skoda, Chevrolet, Ford, etc.
Economy: Dacia, Tata, Suzuki and the like.

For regions, they call North America, Western Europe and "Mature Asia" the Established markets. Ther rest is "Establishing".

So for 2013 they say the Premium catgory is 13% of global sales, with Sub-premium being 86% and Economy 1% for EstablishED markets.
For EstablsihING markets the figures are Premium 4,5%, Sub-premium 75,5% and Economy 20%.

PS: I found the fully study: Part 1 Part 2

 

[TSLA Siempre]

This is my favorite thread on the forum currently. Thanks all.

I too think the Gen III base model is the Gen IV. Also, would love to have 50% new car sales as ev's in 15 or so years, but think that is a bit too optimistic. Would love to be proven wrong.

I also became temporarily more pessimisstic after watching capop's breakdown of the giga-factory and the capex challenges that tesla has going forward. it is a difficult task for tesla to scale up production. however, the harder it is for them to do, the harder it will be for their competitors. tesla is building a bigger and bigger moat each day that the ice manufacturers play the strategy of hoping tesla will fail.

i don't think that the existing automakers can just take out large loans and spend their way into the EV race in a meaningful way. the know how and experience will take some time. tesla's been in existence for a while now. the model s is the product of expertise gained over many years. moreover, tesla is currently going after some of the most profitable parts of the car market. bmw will take a big hit if model E and S take big chunks out of the 3,5,7 series (and all the new even number series' too). if tesla takes a bite out of the ford f-series pickups, that would be a big deal for ford as it is their cash cow. the car companies can recover, but the longer they wait, the bigger the threat tesla poses. when their lunch is being eaten by tesla, they will have to raise capital at the worst possible time....and then still be behind in development by years.

 

[JRP3]

As batteries become more energy dense and less expensive it becomes easier to make a good EV, and the barrier to entry is lowered. Just remember that it is quite possible that some other company besides Tesla will have access to better cell chemistry at some point.