GEN III - When will we see the first prototype

[SwedishAdvocate]

A big issue I see is that how to make a killer product that doesn't eat into the sales of the premium product./...

I’m sure this has been stated many times in several places across this forum… But anyways…

As I understand Elon Musk this is not what Tesla is about. He has clearly stated that the goal of Tesla (paraphrasing) is to get to a compelling mass-market EV: The GEN III car. Once he and Tesla are there and manages to sell that car in the quantities they want/need to sell, in order for the company to be profitable, I honestly don’t think they’ll care if the GEN III eats into the sales of the Model S. And by that time they’ll also have the Model X. And I don’t think that many people that either need or want (and can afford) a Model X are going to see the GEN III as a viable alternative. But even if I’m wrong about that:

…They (Tesla) are aiming for a BMW 3-Series entry price level at like what? Ballpark 37K$? I don’t see why Tesla will stop using the BMW pricing approach for the GEN III. And the top of the line 3-Series retails for what? Around 70K$? I’m guessing there will be quite a few that’ll be willing to pay even more than that for the top of the line GEN III AWD P+ with the biggest battery and ALL the bells and whistles. So I don’t really see any reason for Tesla to be concerned at all with the GEN III ‘eating’ into the sales of the Model S. And I don’t think Elon is either.

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Also, and probably pretty important, but something I somehow managed to leave out above: The reason that Teslas goal is to get to a compelling mass-market EV is: A more sustainable way of personal transportation. And a GEN III will be more sustainable than a Model S or X. Unless perhaps the S/X is carrying seven people…

 

[gregincal]

The Model S will always be able to have a larger battery, which not only means greater range, but also more power. And they can easily have luxury features on the Model S not available on the G3. And of course some people want a bigger car. I'm sure they can differentiate, but the Model S will of course be much smaller sales than the G3.

A big issue I see is that how to make a killer product that doesn't eat into the sales of the premium product. An ICE manufacturer can differentiate between models by adding horsepower and cylinders, whereas the savings Tesla can make by reducing the power/size of the motor and PEM would be marginal in terms of cost- similarly with size, the difference would be 100's of dollars not thousands.

And yet the Perf sells (really well) for many thousands of dollars more than the base 85. Go figure.

 

[aronth5]

A big issue I see is that how to make a killer product that doesn't eat into the sales of the premium product. An ICE manufacturer can differentiate between models by adding horsepower and cylinders, whereas the savings Tesla can make by reducing the power/size of the motor and PEM would be marginal in terms of cost- similarly with size, the difference would be 100's of dollars not thousands. What would you be prepared to lose (besides range) on a Model S to make Gen III feasible?

Agree with greginacal. When Gen3 comes out it will have improved battery technology so why not leverage that for an upgraded Model S battery pack with longer range. 400 miles? That would certainly help address your concern of eating into sales for the premium product. And by then I would expect the Model S would also have optional AWD.

 

[Grendal]

Agree with greginacal. When Gen3 comes out it will have improved battery technology so why not leverage that for an upgraded Model S battery pack with longer range. 400 miles? That would certainly help address your concern of eating into sales for the premium product. And by then I would expect the Model S would also have optional AWD.

Agreed. The Model S and X will always have a compelling story compared to the Gen3. They will always have a larger capacity pack and will always have more space.

To touch on some other points in this thread, other companies just don't seem to get it. This is excellent for Tesla and allows them the time to firmly establish themselves as the premier company selling EVs. The other companies will eventually have EVs but by the time they are competitive with a desirable EV it will be too late to knock Tesla down.

 

[TI Sailor]

Please forgive me for jumping into this thread without fully reading every reply, but I haven't seen mentioned in the last several that the margin of Gen3 will probably be considerably less than Model S & X, with Tesla banking on volume to maintain an acceptable ROI. If the margin on the 40/60kWh MS is 25%, and the Gen3 has a smaller battery, less weight (aluminum), and a smaller margin, I believe the target BASE price is doable. However, like the Model S, options will quickly drive up the price. IMO nobody buys a barebones 3 Series unless they plan to make it a track car.

 

[CapitalistOppressor]

Please forgive me for jumping into this thread without fully reading every reply, but I haven't seen mentioned in the last several that the margin of Gen3 will probably be considerably less than Model S & X, with Tesla banking on volume to maintain an acceptable ROI. If the margin on the 40/60kWh MS is 25%, and the Gen3 has a smaller battery, less weight (aluminum), and a smaller margin, I believe the target BASE price is doable. However, like the Model S, options will quickly drive up the price. IMO nobody buys a barebones 3 Series unless they plan to make it a track car.

Frankly, once Tesla is able to sell the Gen III at scale they wouldn't have a competitive reason not to produce it with a lower margin. In the rarefied market that the Model S sells, knocking $7-$8k off of the price (and reducing margins to a more standard level) might not have improved volume enough to make up for the lost revenue. Worse yet, it would have made the company much less attractive to investors.

Plus, because of the inherent advantages of the all electric architecture of the Model S, Tesla doesn't face competitive pressure to lower their price. The car is already better than similar ICE vehicles sold in that price range, so why underbid yourself? By selling at high margins Tesla also ensured that they would have the ability to self finance their development of Gen III.

However, in the case of Gen III, Tesla has a clear incentive to shave margins in order to drive down cost, because once you get down into the $30k range the potential sales market rapidly scales, and replacing higher margins with volume becomes a compelling argument.

 

[brianman]

However, like the Model S, options will quickly drive up the price. IMO nobody buys a barebones 3 Series unless they plan to make it a track car.

I was thinking about this a bit more during Tesla time at Exotics@RTC today.

I think the $30K vehicle will be more like a spartan business class car while the top end ($75K?) will be more like a 3 series. In other words, I don't expect the "finish" and "polish" of the $30K vehicle to compare well with a 3 series. I'm not saying that's a bad thing; I'm saying that's, in part, how they deliver the lower sticker price.

 

[vfx]

...

The skateboard has to fit in between the car edges and wheels. in the back it sits just in front of the wheels, while in the front it extends to in between the wheels. And in the back, the motor also needs to find space.

View attachment 22522

And the battery can't extend all the way to the edge of the width of the car, given that there are other surrounding parts that can't so easily be squeezed...

JB said on the recent video that they could have made the S's battery bigger but chose the size as optimum.

Look at look at the picture above. The lump at the front is more batteries. No reason the doubling up could not continue in the front or under the rear seats, whatever.

 

[PopSmith]

I think the $30K vehicle with be more like a spartan business class car while the top end ($75K?) will be more like a 3 series. In other words, I don't expect the "finish" and "polish" of the $30K vehicle to compare well with a 3 series. I'm not saying that's a bad thing; I'm saying that's, in part, how they deliver the lower sticker price.

I haven't been in a recent BMW but is the fit-and-finish on a 320i (starting price is ~$32,550) really that much different than a M3 (starting price is ~$63,000)?

 

[brianman]

I haven't been in a recent BMW but is the fit-and-finish on a 320i (starting price is ~$32,550) really that much different than a M3 (starting price is ~$63,000)?

Ditto, dunno.

Note that I wasn't referring to any BMW/MB/Audi/etc. in my "spartan business class car" description. I was referring to something more generic of the Ford/GM variety.

 

[PopSmith]

Ditto, dunno.

Note that I wasn't referring to any BMW/MB/Audi/etc. in my "spartan business class car" description. I was referring to something more generic of the Ford/GM variety.

Ah, I gotcha. Apparently I have reading comprehension issues when it's late. :redface:

 

[tlo]

I haven't seen mentioned in the last several that the margin of Gen3 will probably be considerably less than Model S & X, with Tesla banking on volume to maintain an acceptable ROI.

If I remember correctly, Tesla has stated that they are aiming for 20% margin on Gen3. I think I remember it from one of the stockholder presentations from a while ago.

Sent from my Nexus 4 using Tapatalk 2

 

[Hache]

I think the $30K vehicle with be more like a spartan business class car while the top end ($75K?) will be more like a 3 series. In other words, I don't expect the "finish" and "polish" of the $30K vehicle to compare well with a 3 series.

It would mean they would developp 2 interior finish, and maybe 2 "production lines" for the interior.
It's not the way they choosed for the supercharger option: it's installed in every 60KwH Model S (and they hope users will opt for it during the life of the car).

Having several levels of finish allows you to spend less money on the entry-level finish, but also bring costs (conception, ordering, stocks, installation). So, I doubt they'll have 2 levels of finish...

 

[brianman]

So, I doubt they'll have 2 levels of finish...

Examples from Model S:

• cloth and leather seats
• perforated and non-perforated seats
• performance piping and not
• performance-only carbon fiber décor
• heated seats, non-heated seats

 

[EcoHeliGuy]

Why are we being so narrow minded here, no insult intended. But Tesla looks at a much larger picture then what you guys are giving credit for.

We need to stop thinking about the end result, that's not how this company has changed the game. There is a lot more to the mass produced car then a few items in a wish list.

The R&D team isn't building a 3-series sedan to sell, BMW already does that. If Tesla wanted to they could have built a M3 competitor already. The R&D team is building a platform to assemble cars on top of, when designing the platform, they need to consider all future possible configurations. If they want a Gen 3 CUV, sedan, coupe, roadster, wagon, truck, van, ect, ect, then they need to design a platform that accommodates all of those seamlessly while still being marketable and profitable.

Everyone is also forgeting that Tesla could build a Gen3 car tomorrow. But with today's part and design there would be no profit margin. This is the true reason we will be all waiting. Tesla like any good business can't survive with out profit margins, and they only come from design, experience, and contracts with suppliers. Once they can prove they are viable to the suppliers, I bet they will get better margins on parts, batteries, metal, ect.

We will see a Gen 3 platform once Tesla knows they can obtain a profit margin building one, and once they can, watch out because the Electric car will go on an Ass kicking return. :biggrin:

 

[Hache]

Examples from Model S:

• cloth and leather seats
• perforated and non-perforated seats
• performance piping and not
• performance-only carbon fiber décor
• heated seats, non-heated seats

My thoughts were more towards the screen size, I admit... :wink:

 

[JRP3]

Everyone is also forgeting that Tesla could build a Gen3 car tomorrow.

Ahem, not everyone :wink: http://www.teslamotorsclub.com/show...irst-prototype?p=347235&viewfull=1#post347235

 

[brianman]

Ahem, not everyone :wink: http://www.teslamotorsclub.com/show...irst-prototype?p=347235&viewfull=1#post347235

There's that word again. This reminds me of the discussion of words like "genius" and "impossible" in another thread recently.

 

[ipdamages]

Ahem, not everyone :wink: http://www.teslamotorsclub.com/show...irst-prototype?p=347235&viewfull=1#post347235

Yes, but nobody has discussed that point TODAY. Your post and my postulation of a Gen 3 for $75k were three full days ago. :smile:

Happily, I think just about everyone around here agrees with Eco's point that it is possible today, but cost is the issue (consistent with Elon's interview on Bloomberg last week). I think that there will need to be some meaningful technology advances to get the price way down there, which is why I'd be fine with a car that didn't quite get all the way down to $30k after incentives, when I think the car can still be a game changer at $5k or $10k higher. I just don't think they can get there on quantity savings and the mere passage of time cost reductions alone.

 

[Grendal]

Yes, but nobody has discussed that point TODAY. Your post and my postulation of a Gen 3 for $75k were three full days ago. :smile:

Happily, I think just about everyone around here agrees with Eco's point that it is possible today, but cost is the issue (consistent with Elon's interview on Bloomberg last week). I think that there will need to be some meaningful technology advances to get the price way down there, which is why I'd be fine with a car that didn't quite get all the way down to $30k after incentives, when I think the car can still be a game changer at $5k or $10k higher. I just don't think they can get there on quantity savings and the mere passage of time cost reductions alone.

Elon and Tesla could make a $47,400 car today and still technically be a $30K car. With this large infusion of cash it really does change the dynamics of what Tesla can do. Since the Gen3 car will be using 18650 batteries no matter what then Tesla should be building the skateboard now with the type of battery they've got. If and when the battery improvements are made then they can just switch out the batteries when that happens. That would give them prototypes to begin testing with.

It would be crazy, but Tesla could even create and put out an "S" battery Gen3 for customers with a limited range today that in 2 years you switch the battery pack for the new generation of batteries. I'm sure there would be a few people with money to burn that would be willing to go for it.