Fiat can do it in 12!

[wdolson]

I don't know the book, but a highly profitable business doesn't rack up over $2 billion in net losses and only have a single profitable quarter.

I've pointed this the massive losses numerous times. Now with this latest software, there are reactions like dislike and funny to my post at Prediction: Model 3 Orders to reach 100k in 24 hours. Hmmm... is it that some people just don't like to hear reality and like to explain things away?

Let's see if Tesla is able to turn consistent profits (high or not) once Model 3 production is up at a healthy clip. If not, I don't think apologists and fanboys will have any more excuses about investment for R&D, future products, capital investment, etc. ALL major automakers do this ALL the time (and have WAY more models and product lines) and aren't standing still, yet they can and do turn profits.

There are companies like Amazon who didn't turn a profit for nearly 20 years, but I don't think many people would claim they weren't successful.

I suspect Tesla will do much better in Q1 16. The Model X has turned from a multi-year money pit into a money maker and they scaled back things like Supercharger expansion. I don't know if they will actually report a profit, but any loss will be much smaller.

Tesla runs in the red because they are choosing to spend heavily on R&D and expansion. If they pulled in the reins and cut out the voluntary expenses, they would be quite profitable. Once the Model 3 is being produced in good numbers, they will have five products producing incomes (3 cars plus two stationary storage products). The base supporting their expansion and R&D will be broader and they should be able to break even. Like Amazon, I doubt they will be turning much of a profit for some time to come. Anything they make will be plowed back into the company. But the red ink should trickle down to nothing within a year of the Model 3 launch.

That is if things go right. There are two things that could kill Tesla at this point: an economic collapse or a major screw up scaling up to build the Model 3. Those are about the only likely scenarios that could kill them at this point.

 

[FlatSix911]

This is how Fiat CEO Sergio will copy the Tesla in under 12 months ...

 

[wdolson]

The is the Kodak story, except it's the automotive sector. Kodak was fat and sassy selling film, and they thought it would never end. I expect GM, Fiat, Ford and most of the other ICE manufacturers to meet the same fate. They're all wearing blinders.

The Kodak example is brought up here a lot, but it's not quite accurate. My parents had a Kodak dealership and sold products to professional photographers all over California. They had the only direct dealership in Central California at one point. My father was also a professional photographer, but he was a frustrated engineer at heart. He studied the chemistry and technical aspects of photography and Kodak used him as a beta tester because he could give such precise feedback.

Kodak say the coming of digital photography and tried to pivot, but there just wasn't enough there to generate the kind of income film brought in. With film there is a very long logistical tail that Kodak made big profits supplying. Not just the film, but the chemistry to process it, various darkroom supplies, photographic paper, etc.

With digital photography, you have memory cards, batteries, and a limited amount of special printer paper. The majority of digital pictures never get printed and batteries are available everywhere from many manufacturers and there were a lot of memory card makers when Kodak tried to break into the business.

Kodak was in the position of Exxon-Mobil if the world suddenly switched to electric vehicles over the course of a couple of years. There is some market left as there would be some application for fossil fuels for many years to come, but if demand for oil cut in half or more in a short time, oil companies would be in a world of hurt. That's the position Kodak was in, the market shifted to a technology that didn't need them anymore.

There still is a small market for film, but the bulk of the photography market has gone digital because it is so much simpler and cheaper as well as flexible.

 

[Josh the German]

The is the Kodak story, except it's the automotive sector. Kodak was fat and sassy selling film, and they thought it would never end. I expect GM, Fiat, Ford and most of the other ICE manufacturers to meet the same fate. They're all wearing blinders.

This is it. The comparison hits the nail on the head. To survive is a question of realizing, implementing and being part of the vision of Elon as fast as possible. There are two options left: take it or leave it. But if you leave the vision there won't be a "Too big to fail" and your company will disappear. It´s a historical turning point.

Marchionne has his merits recovering Fiat and Chrysler. He prefers free spirited thinking and speaks out others don't even think. This is a very little bit comparable to Elon, maybe 1% similarity. He remains a former controller with brainpower and understanding. But to develop visions off the beaten tracks is not his strength so far.

Best regards from Germany

Josh

 

[FloridaJohn]

We sure are a confident bunch, aren't we?

I don't think the traditional automakers are "shaking in their boots" or having emergency meetings in their war rooms over the number of Tesla Model 3 preorders. At most, they are raising their eyebrows and watching (for now).

Those companies are profitable right now, selling what they make today. They aren't ignorant nor stupid. Right now, they still see the EV market as extremely small. Hell, even if Tesla builds a million cars a year, that is still considered a niche manufacturer in the car business. That's how big the global automobile industry is.

However, if they start to lose enough sales to Tesla, they will react to the market forces and start to develop competing products. If you recall, the same hing happened with the minivan in the '80s. Chrysler was the only one making them, and the other auto makers thought they wouldn't sell. They did, and then everyone had one to sell. Same with SUVs.

Granted, the roll out of an EV is more difficult now than just making another ICE car, but it is not an impossibility. The traditional auto makers have far more resources available than Tesla, and they can move faster than you would think (although certainly not instantaneously).

Sometimes the second mouse gets the cheese.

 

[Vitold]

Basically Fiat says there isn't as much profit in electric cars as it is in fossil fuel vehicles, and they are comfortable with their opinion (even if they are wrong) because EV infrastructure and battery production is limiting EV market.

Tesla's SC network and plentiful destination charging is the tipping point. That's why Model 3 reveal started with the announcement of plans of doubling SC and quadrupling destination charging points.

 

[WarpedOne]

However, if they start to lose enough sales to Tesla, they will react to the market forces and start to develop competing products. If you recall, the same hing happened with the minivan in the '80s. Chrysler was the only one making them, and the other auto makers thought they wouldn't sell. They did, and then everyone had one to sell. Same with SUVs.

It's the batteries, stupid.

And years of building the plants to produce them.
And patents to be allowed to produce them.
And know how to even know what patents to ask for.

Analogy with SUVs is just plain wrong.
SUV differs from sedan in what exactly? Shape and *nothing* else.

EV differs from ICE car in one big item: battery.
One must build one before he can sell one. It is no problem to build 100k electric motors or 100k controlers. It is a big problem to build batteries for 100k real usable EVs. It is called 6 GWh of batteries.

Want to sell 300k real EVs? Go build 18GWh factory.

Don't even mention LG or Samsung as a battery source.

 

[AUSinator]

We sure are a confident bunch, aren't we?

I don't think the traditional automakers are "shaking in their boots" or having emergency meetings in their war rooms over the number of Tesla Model 3 preorders. At most, they are raising their eyebrows and watching (for now).

Those companies are profitable right now, selling what they make today. They aren't ignorant nor stupid. Right now, they still see the EV market as extremely small. Hell, even if Tesla builds a million cars a year, that is still considered a niche manufacturer in the car business. That's how big the global automobile industry is.

However, if they start to lose enough sales to Tesla, they will react to the market forces and start to develop competing products. If you recall, the same hing happened with the minivan in the '80s. Chrysler was the only one making them, and the other auto makers thought they wouldn't sell. They did, and then everyone had one to sell. Same with SUVs.

Granted, the roll out of an EV is more difficult now than just making another ICE car, but it is not an impossibility. The traditional auto makers have far more resources available than Tesla, and they can move faster than you would think (although certainly not instantaneously).

Sometimes the second mouse gets the cheese.

Large traditional auto companies can't move fast, there is too much politics going on inside the company and there view is mostly "short term profits" too satisfy shareholders dividend. All there manufacturing facilities and know how is based on fossil fuel not BEV's they would need completely change that. And also lay off a lot of people, build super large giga factories, build 1000's of supercharges. Negotiate with governments for assistant. It would take them 1 year to design a car but more than 2 - 3 years to test reliability and function. The longer they start the harder it will be for them to compete in the BEV market. The model 3 will enjoy several years of no real competition before anybody releases a competitor at similar level and then the model 3 will be at the next level.

 

[FloridaJohn]

So you're contention is that only Tesla is capable of building a battery factory?

I didn't say it would be easy for a competitor to get into the market, but if there is consumer demand and money to be made, there will be competitors.

Perhaps the next Gigafactory will be built by someone we aren't even thinking about right now. Who makes Duracell batteries? Do you think they might want to get into the EV battery market?

 

[wdolson]

Anybody with some capital can build a GigaFactory, but nobody else has the will to do it right now. That's the key element: the will to do it.

If somebody was even planning to build a GF, the world would know it because an industrial project that big can't be hidden. There would be some government entity somewhere involved and in most parts of the world, that's on the public record. China might be the only place you could hide such a project, but even there it wouldn't be easy.

Tesla's GF 1 is going to be the largest building on Earth (or close to it depending on how you measure). Someone could build a whole lot of smaller factories and hide them in a country the size of China, but the reason the GF was made so big was economy of scale. A bunch of smaller factories can't compete economically with a GigaFactory because it will be so efficient at making batteries.

 

[FloridaJohn]

Anybody with some capital can build a GigaFactory, but nobody else has the will to do it right now. That's the key element: the will to do it.

I agree. My only point is that Tesla's success does not mean the end of the existing car industry. Other companies will feel the market pressure and adapt. Some faster than others.

Most companies are taking a wait and see attitude. When they have seen enough, they will react. Yes, they will be far behind Tesla at that point, but their resources are greater than Tesla's and they will be able to accomplish more in less time. Such is the way of the "second mover."

Tesla's success (which in itself is not a sure thing) does not mean the demise of everyone else.

 

[Topher]

However, if they start to lose enough sales to Tesla...

That may not be their sign. Tesla can only build so many cars, so fast. It is unlikely that they will keep ramping up at huge increases in volume for long periods (that is awfully risky). So when Tesla is making all the cars they can they still won't be taking a huge chunk out of the car market. But, if the Tesla vision infects large numbers of people (or gas prices rise back to $5/gal), they will want an electric car, and if there isn't a viable one available, they may choose to wait another year or two. So the sign might just be a slump in ICE car sales. People with a vested interest in ignoring electric cars could well miss that (especially if it is accompanied by a gas price rise). There could well be a bunch of auto execs with confused expressions on their bankrupt faces.

It is not clear that this isn't already happening. There are 400,000 people willing to wait 2-3 years for an electric car rather than buy another gas car. Elon may be doing all those car companies a favor by demonstrating just how strong that demand is. 1.3% of the US car buyers are willing to put down $1,000, two years in advance, on a car they have never seen, and for which there is a risk they might never see, rather than buying an obsolete gas car, even when gas prices are low. There are many more people who aren't able to do that, that still want an electric car (the right electric car). 30,000 Bolts per year isn't going to fulfill that demand.


Thank you kindly.

 

[Josh the German]

About 350.000 reservations are 350.000 A4, 3series, C-class and others that aren't sold or produced.

Best regards from Germany

Josh

 

[ElectricTundra]

Anybody with some capital can build a GigaFactory, but nobody else has the will to do it right now.

In March Daimler announced plans to build a $500m battery factory. Whether they actually will or not we don't yet know.

 

[Topher]

About 350.000 reservations are 350.000 A4, 3series, C-class and others that aren't sold or produced.

Maybe. Firstly, I am not a A4 customer. I don't know how many others are in my situation, willing to push the budget in order to get an electric car (since fueling it will be MUCH cheaper). Secondly, if cars are having an up year (which is the prediction) it might not be noticed right away. Regardless, BMW, Audi, et al have already been given their sign. If they haven't seen it...

Thank you kindly.

 

[SebastianR]

About 350.000 reservations are 350.000 A4, 3series, C-class and others that aren't sold or produced.

This - we will start feeling some effects. Not a lot at first. But there will be effects. I don't think the effects will be drastic from today. But think about companies like VW: the most recent scandal has already weakened them. If we have about 2% less cars in the Audi A4 segment, this will not hit them hard. Neither will be a few less Audi Q7 / VW Touareg / Audi A8 / Audi A7 etc. But it will add up. So for them, in future a great year will not be just as great as it was in the past. And a bad year will be slightly worse. And nobody will say "it was the electric car" but they will point to other (more obvious/immediate) issues: wrong management execution, more scandals, adverse regulatory frameworks, increasing fuel prices, Diesel cars being kicked-out of a number of cities, global economic cool-down (watch how the China business is going!) etc. To me the effect of Tesla on the incumbent industry is not that traditional companies go bust. But I think they will slowly get less profitable / more risky (and thus we will see a number of bankruptcies in the coming years).

It is a bit like global warming: we will not have all our cities flooded tomorrow. It is a gradual change. But the change is there. Insurance companies like Munic Re are already feeling the global effect of (man made) more extreme weather: so while we can't say any one draught is certainly caused by global warming, we know that costs to insure against weather are rising.

 

[AUSinator]

In March Daimler announced plans to build a $500m battery factory. Whether they actually will or not we don't yet know.

Yes they are going to build it but it's only going to produce 50 000 batterie packs a year and it's still a few years away for completion.

 

[WarpedOne]

Yes they are going to build it but it's only going to produce 50 000 batterie packs a year and it's still a few years away for completion.

And they will only assemble the packs out of korean cells.
Yes, they will be buying, not producing the cells.

I am waiting for LG to see the light and start selling EVs branded as LG. They are already making them, just not selling directly...

 

[wdolson]

It is not clear that this isn't already happening. There are 400,000 people willing to wait 2-3 years for an electric car rather than buy another gas car. Elon may be doing all those car companies a favor by demonstrating just how strong that demand is. 1.3% of the US car buyers are willing to put down $1,000, two years in advance, on a car they have never seen, and for which there is a risk they might never see, rather than buying an obsolete gas car, even when gas prices are low. There are many more people who aren't able to do that, that still want an electric car (the right electric car). 30,000 Bolts per year isn't going to fulfill that demand.

Thank you kindly.

Though 400,000 is a drop in the bucket for an industry producing 100 million cars and light trucks a year. It is a warning of things to come though. The car companies are looking at their own data and concluding people don't want electric cars, but they haven't groked people don't want their electric cars!

In March Daimler announced plans to build a $500m battery factory. Whether they actually will or not we don't yet know.

$500m is a pretty small factory. Someone down thread said this was going to be making battery packs for 50,000 cars a year. No company making EVs in that volume is going to be serious competition for Tesla. They are on track to make more than that this year.

Maybe. Firstly, I am not a A4 customer. I don't know how many others are in my situation, willing to push the budget in order to get an electric car (since fueling it will be MUCH cheaper). Secondly, if cars are having an up year (which is the prediction) it might not be noticed right away. Regardless, BMW, Audi, et al have already been given their sign. If they haven't seen it...

Thank you kindly.

I work at home, so the cost of fuel isn't a major consideration. I'm only filling my car about once a month now. However, I am stretching my budget by about 2 1/2 times to get a Model S. I was looking at what was available in the $30K to $40K range and the cars that get good gas mileage have poor acceleration and the cars with good acceleration get poor gas mileage. I wasn't looking for any kind of acceleration you get with even a 70D, I just wanted something as good as my 1992 Buick. Getting on the freeway in an under-powered car can be terrifying.

Additionally most hybrids put the batteries in the trunk, so they have no cargo space. The Ford Fusion PHEV only has 8 cu ft of cargo space.

The Model S met every one of my criteria, or exceeded it by a wide margin except a couple of caveats. The cost was way more than I was planning and I was initially concerned about the range. I need a car capable of road trips to California (I have family there as well as work and it looks like my SO is going to be doing work for a company in Sunnyvale soon) and the range on an EV is shorter, but the supercharger network makes that workable.

 

[artsci]

Fiat Chrysler CEO says can build Tesla Model 3 rival if makes business sense

Marchionne said he did not understand how the Model 3, Tesla's first mass-market car, could be sold for 35,000 euros ($39,600) at a profit.

"If he can show me that it can be done, I will do it as well, copy him, add Italian style to it and put it on the market within 12 months," he added.


[sprays coffee all over the screen, and everyone else's, while reading]
Oops, sorry about that guys, let me grab a tissue....

"Adding Italian Style" to it means making it totally unreliable.