dmckinstry
Model X 2019
I guess they weren't a very enthusiastic owner in the first place. I've only got about 11k miles on mine in a little over 7 months. I'll carry anything in it that will fit (which is quite a bit), except garbage and compost.
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I guess they weren't a very enthusiastic owner in the first place. I've only got about 11k miles on mine in a little over 7 months. I'll carry anything in it that will fit (which is quite a bit), except garbage and compost.
For me, the Model S is my "commuter", "weekend", and "roadtrip/travel" car. I've had it for 50 days now, and it already has over 3400 miles on it.
I drive the it everywhere, not because I have to (I have 3 other cars), just because I don't want to drive anything else anymore...
That's not the best comparator, though; there's a HUGE number of markets and market segments that are included in that number that Tesla won't be competing against in 2017, and probably won't be competing against ever.
Let's look, instead, at BMW's sales figures. According to this link http://www.bmwgroup.com/e/0_0_www_b...te_news/news/2012/geschaeftsbericht_2011.html, BMW sold 332,000 5 series variants in 2011. "Sales of the BMW 5 Series jumped by 39.4% to 332,501 units (2010: 238,454 units), ensuring that it remained the market leader in its segment."
The 5 series is, I would argue, roughly comparable to where the Model E will likely end up, price-wise; everyone keeps using the $35,000 figure, but my guess is that number will slip higher in the same way that the price for the Model S did.
Add in 7 series figures, to compare with Model S numbers: 68,774 units (2010: 65,814 units)
And X5 numbers, to compare with the Model X: Sales of the BMW X5 climbed by 2.6% to 104,827 units
So, the combined total sales for BMW's 5, X5 and 7 in 2011, worldwide, were on the order of 500,000 units. Tesla is thus talking about moving about half as many cars as BMW does in similar segments. That's a lot of volume--and BMW does that, at least in the US, by aggressively marketing leases and other financing strategies, employing incentives, and so forth.
Again, I'm not saying that Tesla can't do it. The one thing that they have that none of these articles seem to understand is a truly revolutionary product. I've never met anyone whose driven a Model S that doesn't come away wanting one, and I don't doubt the Model E will have the same "it sells itself" qualities. All I am pointing out is that a lot of the advantages that Tesla has right now flow at least in part from the fact that it is selling a small number of cars in a supply constrained market to a wealthy subset of the population. The more "mass market" they get (and being half as big as BMW is pretty mass market), the harder it will be to maintain those advantages.
adiggs
Well-Known Member
Thank you JST for both of your comments. Now we have the basis for a serious conversation about how the future will play out
I think the financing for the sale of these vehicles is rightly a good thing to be looking and thinking about. I have intentionally steered clear of the automotive product and marketplace for the vast majority of my adult life, so I don't have much personal experience or knowledge of how these things work out in practice. We can readily agree that it sounds like there's something challenging here.
The solution that I see elsewhere in the automotive world is to get a whole bunch of 3rd parties into the middle. Those 3rd parties bring capital to finance inventory, and then use a variety of inducements and advertising to assist with the sales process. This is where the cash conversion cycle starts going south on the manufacturer, as well as some of the profit (the 3rd parties want to make money for their contribution). Is that seriously a better model? I don't really know (though my opinion and investment thesis is that no, that's not a better model). I believe Tesla can scale their approach by keeping individual transaction costs low, but this is an area that I'll be keeping an eye on.
Today's Tesla model is that the vast majority of vehicles are built to order, with a small subset of the cars being sold directly off of showroom floors and out of service loaner fleets. It seems like there are two dominant sales cycles - the "I-gotta-have-it-now,my-old-wheels-just-blew-up" where time is a dominant component of the purchase, and the second cycle that many of us went through - we were able to plan ahead and as long as it gets here, we're fine. At least to some degree, Tesla has a solution for the former while being primarily dependent on the latter. Will the CPO program help with this later on?
Will Tesla someday need to start the Tesla Financing company, or will they be able to partner with a leasing company to provide an actual lease? And which would be better, shorter and longer term?
One of the points in the article made in a variety of ways - company dynamics change when you're talking about 100k vehicles / year. I think that's a reasonable conclusion. I imagine that as sales volume increases, we need service centers everywhere. The Portland/Vancouver metro area (2-3M people?) probably needs 2-4 service centers instead of 1. That means they're all over the place in California. Is that a ramp Tesla is thinking about and executing? I think that using existing auto manufacturers and dealers as the standard for how things change can be highly misleading, as one fundamental principle of that view is that more sales means more capital tied up in inventory. That will happen to Tesla, but at such a small fraction that I believe it to be effectively 0.
At the core of it all, I see these as solvable problems. Part of what makes it solvable is the company having cash in hand so close to the completion of each car, as the profits from each built car can be used to grow the business, rather than growing inventory that needs financing. Worth noting that inventory won't be 0 - there will always be inventory in the form of showroom cars (they're for sale, at least in OR) and service loaners. That means that inventory will have some cash conversion pace, but that inventory is also being used to provide a certain service experience (sure you can work on my Roadster while I drive your Model S - take your time!).
So today my conclusion is that I don't know, and that you don't know - nobody knows. There are things to be watching for, but this is a conversation I believe I can have with you. I don't believe that this particular magazine brought anything interesting to the table.
Audacious growth plans will stretch Tesla beyond its comfort zone - Automotiv...
That statement from the article merely illustrates the speakers inability to grasp the fact that the Model S is "not just an EV", it's a bloody fantastic car that is BETTER than the ICE cars in its class and obviously is fully capable of serving as a daily driver and primary vehicle and serves as exactly that for the majority of owners.
That "automotive executive" is stuck back in the prehistoric age of the infernal combustion engine.
For my wife and I, our S85 is our primary car. I prefer driving it over my '09 Porsche Cayman. Now I want a Roadster...
That statement from the article merely illustrates the speakers inability to grasp the fact that the Model S is "not just an EV", it's a bloody fantastic car that is BETTER than the ICE cars in its class and obviously is fully capable of serving as a daily driver and primary vehicle and serves as exactly that for the majority of owners.
That "automotive executive" is stuck back in the prehistoric age of the infernal combustion engine.
For my wife and I, our S85 is our primary car. I prefer driving it over my '09 Porsche Cayman. Now I want a Roadster...
Agreed that this article was thin on useful information. I think the conversation about particular challenges and how they can and can't be overcome is a lot more interesting than quotes from "insiders" that amount to little more than "ZOMG IT'S HARD YOU GUYS."
As for whether Tesla can do it...well, I remember pretty vividly dismissing the Roadster out of hand as a pipe dream when first word of it leaked out back in the day. As a died-in-the-wool car enthusiast and devotee of the ICE, I'd have laughed at you if you'd told me in a few years I'd be driving a 7 seat electric car that was more fun than anything with a reciprocating engine. So, I'm not going to bet against Tesla...and I'm certainly not going to take the word of US auto industry insiders, who after all have not clothed themselves in glory over the past decades.
But I also think there are very serious issues that aren't going to be easy to tackle, and it's not a good idea to be too dismissive of those with experience "moving the metal." After all, I don't think any major automaker WANTS to be in a position where they have terrible cash conversion cycles, nor do they want to build cars that don't sell without incentives. How many of those issues are structural, and how many can be avoided with deft execution by building from the ground up using a revolutionary product? Time will tell.
I don't think comparing a $35,000 EV (or even a $45,000 EV) to a $45,000 ICE is very fair... once fuel and maintenance costs are included, that EV would be more comparable to mass-market family sedans (with higher end trims) like Toyota Camry, Honda Accord, Ford Taurus, etc, and the market for those cars in much larger than for a 5-series. To be honest, I think it's more fair to compare the Model S to a ~$50-70k 5-series. With the amount of Model S sold right now, it's a small fraction of 5-series sold worldwide and that's why they can sell them so quickly.
adiggs
Well-Known Member
I tend to think that you're right - automakers don't WANT the extended period from building the car to selling it. At least in the USA, I think that the dealership model was important early on in the history of the automobile as an education and maintenance source as the car was entering the mainstream, and that they've been able to hold onto that position in distribution by getting it written into law. That doesn't mean that I'm right of course
If I'm right, then I'm of two minds about that. As a TSLA owner, I like feeling like even if the competitive auto makers get it together and become competitive, that competitive auto makers will still have a business model disadvantage due to needing to work through their dealer networks. NADA, in my view of the world, is an actual millstone about the neck of the automakers and is a source of TSLA's competitiveness.
As somebody that shares Elon's dream of an EV future, I believe we need many makers and sellers of EV's, and NADA as a force that slows that process down bothers me.
What is the future I would like to see? A Supreme Court ruling holding state dealership laws to be a violation of the Constitution as a restraint on free trade. That'll be bad for TSLA, but good for our species, and that'll work for me. Level the playing field and get everybody playing based on their technology and design skills.
But I've got more of a consumer view of automotive dealerships. I'm in the camp that has managed to avoid them with 2 exceptions in my life - once fresh out of college, and once >10 years ago. I don't remember the first experience, and the last one was bad enough to be worth not repeating for more than a decade. Regardless of the business value dealerships create for automakers, the ill-will they create in this potential consumer has kept me away. I believe my feeling here is closer to the norm than the exception.
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Get the Roadster!
/bias
Worth noting - many Roadsters ARE that weekend driver. A serious source of shock to me when I was looking for my used Roadster was the number of cars available, as much as 4 or 5 years old, that still didn't need 5 digits to report their odometer. Roadsters with 30k+ miles were so rare, it was like they were well used or something, instead of being barely broken in. I also know there are plenty of people who drive their Roadsters for any and every excuse, but daily driver isn't the norm. That leads to some excellent deals in the used market ... Just sayin!
adiggs
Well-Known Member
True dat, but I take the long view of things. Whether that took 5 years or 50 years to dismantle, the process and inevitable outcome would be started. I don't see it as being underway today (so back to my investment thesis, that's something I'll keep an eye on, but that portion of the story is intact as I see it).
Krugerrand
Meow
There are just some people you never say 'it can't be done' to their faces, behind their backs, or in your dreams. I have to assume these 'insiders' have been living in a hermetically sealed box these last 10 years. There's no other possible explanation.
As I wrote in the article's comment section... this was my favorite piece since Motor Trend's unanimous car of the year article.
Why? well... it's a bit like the i3 launch, an attempt from the incumbent auto industry to expose Tesla as over-rated which fails so stunningly it makes you wonder how good Tesla really is if the competitions best shot is such a clunker.
Yes, out of the ten or so pieces of spaghetti they flung at the wall two or so are valid challenges worth examining. Valid challenges worth examining, capital might need to be raised, production levels may take longer to be reached, but challenges laughably far from the "Tesla on the brink of failure" theme running through the article.
Why? well... it's a bit like the i3 launch, an attempt from the incumbent auto industry to expose Tesla as over-rated which fails so stunningly it makes you wonder how good Tesla really is if the competitions best shot is such a clunker.
Yes, out of the ten or so pieces of spaghetti they flung at the wall two or so are valid challenges worth examining. Valid challenges worth examining, capital might need to be raised, production levels may take longer to be reached, but challenges laughably far from the "Tesla on the brink of failure" theme running through the article.
About the Giga-factory in Texas statement: I don't think so. Elon is a practical guy and putting a factory thousands of miles away from where you are building the cars is ridiculous. Find the space near the factory so you have access to your product ASAP. There is plenty of empty factory spaces around. What the difference with moving a huge amount of product over thousands of miles of land versus moving it over an ocean. It would be wasteful and polluting and I can't see it being practical. Maybe Elon has mentioned Texas simply to pressure California into giving him a sweetheart deal.
I think placing the Giga-factory in Western Arizona or Southern Nevada makes a lot more sense. It's only hours away from Hawthorne, yet still has the benefit of not being in California. Land there is cheap, plenty of space, and if you want to power it with green energy there is plenty of solar out there.
RobStark
Well-Known Member
Tesla plans at least one more US factory in the foreseeable future. Maybe Texas would be halfway between new plant and Freemont?
