Articles/megaposts by DaveT

[JST]

My post on Model 3 competition will come later in my series as I plan to lay a framework to understand the competition.

However, I'll give a quick preview.

Many people group EVs into one category or separate EVs from ICEs. However, I think the correct way to look at it is to look at the current market segments of cars and just place EVs under the current market segments and not to treat them differently.

That said, the Model S competition is any premium large luxury sedan regardless of its fuel source.

Model 3 will go after the luxury compact sport sedan market, where the current market leader is the BMW 3 series (others include Audi A4, Lexus IS, etc).

Currently I haven't seen any auto maker (besides Tesla) reveal plans for an electric vehicle to take on the market leader of the luxury compact sports sedan market.

In order to understand the motivations/goals of current EV manufacturers (besides Tesla), one need to look at and understand the Prius market and the city car market.

The Prius market (high mileage mid-sized economy car) is what has motivated most EVs to date. The Leaf/Volt were cars that were intended to take market share of the Prius market. Even the BMW i3 was intended to go after the Prius-type market or rather I should say the luxury Prius market, looking for Prius-type buyers who wanted a bit more luxury. The big challenge of current EVs in the Prius market is that of range. Further, the Prius market is getting crowded with new high-mileage hybrids like the Accord or Camry hybrid.

There's also the city car market of very small cars (ie., Fiat 500) where some EV makers are looking to take market share.

Most (if not all) EV manufacturers or going after one of these markets - Prius, luxury Prius, or city car.

No one is going to say the Leaf or Volt is competition to the BMW 3 series. Nor are many people going to say the i3 is competition to the BMW 3 series. The BMW 3 series is just in a different league in terms of performance, handling, etc.

So in the same way, the Model 3 doesn't really have any electric car competition (because no auto maker is trying to make an EV that's better than the 3 series at the same price besides Tesla). Rather, the Model 3 competition is the BMW 3 series market.

There are going to be some auto makers that try to make a 150 mile (or even 200 mile or more) range EV. And people are going to clammer that it's competition for the Model 3. But chances are is that 150-200 mile EV from another manufacturer is not going to be in the same market as the BMW 3 series. Rather, it probably will target the Prius-type market of high-mileage mid-sized economy car which is totally different than a compact performance sports sedan.

Also, I don't think any auto manufacturer thinks it's possible to make an EV that's better than a BMW 3 series at the same price. And because they don't think it's possible, they aren't even trying to make an EV as a BMW 3 series competitor. Rather, they're content with trying to pluck away at the Prius market and city car markets.

So that's what is so revolutionary about the Model 3. It's a car that most auto makers think is not possible (a 200 mile range EV at $35k with performance/handling/acceleration as good or better than the BMW 3 series).

So, when you hear about people talking about the next great electric car by an auto maker, you should ask what market segment is that EV shooting for? If it's not aiming to be better than the BMW 3 series at the same price, then it's probably not going to be competition for the Model 3.

A final note, I personally don't think it's the right time for an electric car to displace the Prius in the high mileage mid-sized economy car market. It's going to take more time for battery costs to drop. But when it's the right time (ie., maybe 2022?) I think Tesla will release a compelling vehicle in that market, ie., the Gen4 vehicle (which I'll talk more about in my series as well).

These are all good insights, though I would make one modification--a lot of the EVs out there now aren't trying to take market share from anyone. They're built purely to satisfy regulatory obligations, and the automakers take a variety of steps (from limiting the number of markets in which they are sold to disparaging them in public) to ensure they sell no more than they have to. The Fiat 500 fits into this category, as Marchionne has candidly acknowledged.

But you are correct that the popular press still misperceives "EV" as a single category in which the same people cross shop. That's why we see comparo tests like the one in C/D that put the Focus EV and Fit EV up against the Smart EV and 500 EV. Almost no one would cross-shop the ICE versions of those cars, so why should the EV versions be seen as serving a single market?

 

[Robert.Boston]

The Investor Discussion forum arose about two years ago to help categorize the posts more naturally. Clearly, discussions about Tesla Motors' financials and stock price is on-topic in a forum called "Tesla Motors Club," but we could see from posting patterns that there was clearly a constituency that focused on those threads, and less about the products. Nigel and I have been trying to avoid sliding too far down the slippery slope into non-Tesla investments, however, as that keeps moving us further from the core mission of TMC. We've got the SCTY thread, because of the link to Elon, and a chatty "what other cool tech" because we have a lot of people who are interested in sharing ideas.

btw, Dave very thoughtfully notified the TMC moderators about his intention to start his newsletter. I'm a subscriber!

 

[FluxCap]

I'm in, great news Dave!

 

[eepic]

Subscribed as well, keep up the great posts Dave!

 

[chickensevil]

The Investor Discussion forum arose about two years ago to help categorize the posts more naturally. Clearly, discussions about Tesla Motors' financials and stock price is on-topic in a forum called "Tesla Motors Club," but we could see from posting patterns that there was clearly a constituency that focused on those threads, and less about the products. Nigel and I have been trying to avoid sliding too far down the slippery slope into non-Tesla investments, however, as that keeps moving us further from the core mission of TMC. We've got the SCTY thread, because of the link to Elon, and a chatty "what other cool tech" because we have a lot of people who are interested in sharing ideas.

btw, Dave very thoughtfully notified the TMC moderators about his intention to start his newsletter. I'm a subscriber!

Oh, to be clear I was NOT advocating for Dave, or anyone else, to really share their ideas about other stuff prominently here it was more directed toward the newsletter. But thank you for that information, because as stated I really appreciate some of the freeness that you all have allowed in this subject

I would have thought that most people on these forums talking about TSLA either own or plan to own one of their products. There are very few that I have seen come here who have no intention of owning the product and just want to bash the company (and most of them get scared off pretty quickly anyway.) I guess I just like this more than what I have seen over in Reddit or Seeking Alpha or whatever. But anyway, you answered my inquiry, so thank you!

 

[The Blue Owl]

I'm now a charter member! Where can I buy the T-shirt?

Looking forward to receiving your newsletter.

 

[ongba]

Dave,

Just subscribed. Many thanks!

 

[glhs272]

Dave, I too subscribed. That said, I hope you still intend to keep posting regularly on TMC!

 

[Lessmog]

Dave, I too subscribed. That said, I hope you still intend to keep posting regularly on TMC!

I just want to second this.

 

[Johan]

I just want to second this.

I want to third it. Also I subscribed, thanks Dave!

 

[DaveT]

Don't worry guys. I'll keep being active here.

 

[stoebs]

I'm in. Thanks Dave!

 

[GLDYLX]

I've subscribed... and I almost NEVER subscribe to anything...
Thanks for all your hard work and generosity in sharing it.

Happy Monday!

 

[jhm]

IMO, Tesla should go for the jugular. They should focus on competing with this biggest gas guzzlers out there. This will drain the profit margin out of the auto industry the fastest and for competitors to make cementing EVs just to survive. Competing with compliance cars is a waste of time. These vehicles are low margin and cross-subsidized by higher margin guzzlers. So the economics are bad, and the environmental benefit is not compelling. Moreover, it is wholly unnecessary. Once the the industry has been transformed such that the most profitable cars are EVs, compliance cars will cease to exist. That is, they will be unnecessary for anyone to make because compliance problems are better solved with high performing EVs.

In this light, I actually think that the Model X will prove to be Tesla's most important model. A very powerful truck would come next. Then the Model S and lastly the Model 3. Personally, I want to drive a Model 3, but this is not competing in a gas guzzling space. If you want to make the auto industry divest ICE assets, take away their SUVs and trucks.

 

[chickensevil]

How is a mid size car not competing? Globally the mid size and compact cars are certainly the largest. They aren't going to make a compact (at least not anytime soon) so the biggest market is the mid size.

This is Camry, 3 series, A3, Accord, etc... It is a big space cars priced from 25k to 40k... I can't think of a much better market than that.

Trucks, while popular, you can't hit that market on just one truck... There are different trucks for different jobs. And even the SUV/CUV market is very diverse. By having the X and S and the 3 and mini X (which will most likely happen) you are destroying the middle class market while allowing your rich/luxury buyers continue to float the company on high margins.

 

[ggies07]

Subscribed as well!

 

[DaveT]

Why I'm Starting Tesla Weekly

Thanks everyone for signing up for my upcoming free weekly newsletter, Tesla Weekly. First edition goes out this Friday.

I wanted to take a few minutes to give some background on this project.

The purpose of my free weekly newsletter is to reach a broader audience with clear insights on Tesla. I’d like to play a role in helping people understand the company better and keep up to date with key events and developments. There are a lot of articles spreading shallow and often incorrect analysis on Tesla, and I’d like to point that out and direct people to clear, deep and thoughtful analysis.

The format of the weekly newsletter will be a collection of the week’s most notable events and articles. I’ll sift through all the major articles and news sources and pick out what I think are the most notable and add some brief commentary. By following Tesla Weekly I hope people will be able to easily keep updated on Tesla and be exposed to clear and thoughtful analysis. Hopefully Tesla Weekly will be a voice of clarity and reason among the clammer and noise of the media world.

The inspiration of Tesla Weekly goes back to my megaposts here on TMC. Originally, I wrote my megaposts to share my in-depth thoughts on Tesla/TSLA. Over the past 2 1/2 years I’ve spent an inordinate amount of time researching and exploring Tesla (a natural result of having a majority of my assets invested in TSLA), and I’ve often spent a portion of each day really trying to think deeply on Tesla-related matters. The result was what I shared on this thread just flowed naturally.

A few months ago I decided to write a series describing in detail my long-term investment thoughts on TSLA. One of the reasons I decided to write the series was because I felt that there was a need to present a well-rounded, deeply insightful case for TSLA as an investment. Also, I helped my parents invest a portion of their retirement into TSLA (back in May 2013) and they often reach out to me confused at TSLA’s volatility and how to interpret news events. I wanted to give them a framework to understand Teslas as a company and TSLA as a stock.

However, as I was writing my series I also realized that people like my parents were being influenced by lots of shallow FUD articles in the media. Thus, even if they read my investment series, they would still be influenced and confused by the various voices in the media. So, as a follow-up to my investment series I felt that I could add value to people like my parents by providing a weekly summary of key news events and brief thoughtful commentary.

There are many options to publishing, but I decided on a free weekly newsletter mainly because of a few reasons. First, it’s easy for people. All they need to do is sign up and they receive the newsletter via email every Friday morning at 8am PST. Second, it’s something that I would look forward to as a receiver. A well-organized weekly newsletter could curate the best Tesla news articles from the past week and if the editor provided thoughtful commentary, I think it could add a lot of value. If the editor was good enough and added unique value, I would even pay a subscription fee. Third, a weekly newsletter is something manageable I can do. Since I’m already combing through and analyzing all the latest news on Tesla, I just need to add a step of organizing and commentating on the most notable news items/articles and sending them out as a newsletter.

Over time, I’m unclear the exact direction of where this will lead. I first want to see how much value I can add via a weekly newsletter and also gauge people’s feedback. If you have any ideas/comments/suggestions of what I can be doing or how you see potential in this, you can add your feedback via this form, Tesla Weekly feedback.

Lastly, as RobertBoston noted I let the moderators know last week of my intentions to start a weekly newsletter since I felt they deserved the respect to know what I was planning to do in advance. Also, I wanted to assure them that I don’t intend on advertising this newsletter outside of this thread or my signature on TMC. I intend to keep participating at TMC as usual, and hopefully I’ll have opportunities to even promote TMC as well. I think TMC will remain the best place for Q&A and thoughtful discussion of Tesla on the Internet.

 

[MikeC]

You're the man, Dave. The newsletter is a great idea and you are a true asset to the TSLA community.

 

[Raffy.Roma]

You're the man, Dave. The newsletter is a great idea and you are a true asset to the TSLA community.

+ 1

 

[adiggs]

IMO, Tesla should go for the jugular. They should focus on competing with this biggest gas guzzlers out there. This will drain the profit margin out of the auto industry the fastest and for competitors to make cementing EVs just to survive. Competing with compliance cars is a waste of time. These vehicles are low margin and cross-subsidized by higher margin guzzlers. So the economics are bad, and the environmental benefit is not compelling. Moreover, it is wholly unnecessary. Once the the industry has been transformed such that the most profitable cars are EVs, compliance cars will cease to exist. That is, they will be unnecessary for anyone to make because compliance problems are better solved with high performing EVs.

In this light, I actually think that the Model X will prove to be Tesla's most important model. A very powerful truck would come next. Then the Model S and lastly the Model 3. Personally, I want to drive a Model 3, but this is not competing in a gas guzzling space. If you want to make the auto industry divest ICE assets, take away their SUVs and trucks.

I haven't been able to put this idea as clearly as you, but I'm thinking the same way. I agree with chickensevil's comment about needing a variety of trucks, but the direction of going after the biggest gas guzzlers with a competitive alternative, I like that. Whether that's really how it plays out in other markets, I DO see Model X doing exactly this to the luxury SUV / crossover market. This is one reason for the license plate I have reserved for Model X - L0L MPG. If you can have it all (and more), and NOT have the associated gasoline bill... that's going to be a compelling car.