Fully agree with you. For my part, I think it's just fascinating to know that at some point this year there will be 100,000 Teslas driving around :smile:
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Long-Term Fundamentals of Tesla Motors (TSLA)
- Thread starter Robert.Boston
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- elon is an ass investing TSLA
RobStark
Well-Known Member
I don't think it is necessary to design cars in Europe to make them desirable for Europeans. Tesla's designers are an international group with international experience. It is not rocket science. Look at the top sellers in Europe VW Golf and Polo. Ford Fiesta and Focus. Audi A3, BMW 3 Series, and finally MB E Class.
The mistakes OEMs usually make thinking how their cars are different from the domestic competition is either wrong or unimportant. VW's insistence that cars don't need Big Gulp sized cupholders or mainstream American's preference for a softer more comfortable suspension. VW engineers insistence that their way is correct and American's wants are wrong keeps them with a tiny percentage of the market.
That Europeans prefer smaller to bigger cars, that Europeans prefer estates to SUVs and vans to pickups is not a secret. American car companies insistence on designing small cars for small people because bigger people should buy bigger cars has run them into some trouble. Designing Golf's and Mini's where 6'7" Germans and Brits fit has been a problem for American brand competitors.
The mistakes OEMs usually make thinking how their cars are different from the domestic competition is either wrong or unimportant. VW's insistence that cars don't need Big Gulp sized cupholders or mainstream American's preference for a softer more comfortable suspension. VW engineers insistence that their way is correct and American's wants are wrong keeps them with a tiny percentage of the market.
That Europeans prefer smaller to bigger cars, that Europeans prefer estates to SUVs and vans to pickups is not a secret. American car companies insistence on designing small cars for small people because bigger people should buy bigger cars has run them into some trouble. Designing Golf's and Mini's where 6'7" Germans and Brits fit has been a problem for American brand competitors.
jhm
Well-Known Member
bluenation
Member
all those allegoric metaphories about bunnies, etc are cute n all, but tesla is still selling in the five figures, per year.
come back when it's selling half a million. elon says 2020.
until then, all these analogies are just that:
cute.
come back when it's selling half a million. elon says 2020.
until then, all these analogies are just that:
cute.
adiggs
Well-Known Member
Certainly true.
This being the long term investing thread, the point to me is to see if we can understand the important forces at work in this system, and thereby arrive at a projection of what the industry, Tesla, etc.. will look like when Tesla is selling hundreds of thousands of cars, or 2020, or whatever point farther in the future makes sense to the different participants in the thread. Ultimately, if Tesla is going to be expanding like bunnies without a natural predator, I would rather buy today when it's not obvious, than wait 5+ years and buy when it has become obvious to more and more people.
jhm
Well-Known Member
Somehow I don't think that any traditional car maker is as clever or daring as this fellow.
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jhm
Well-Known Member
It's not just a cute little metaphor. The same sort of mathematical population dynamics model that an ecologist might use to understand and predict the invasion of bunnies in the Outback an econometric Ian such as me can use to understand and predict the diffusion of a new technology such as Teslas in the $10T auto industry. In fact we have posted and discussed such models upthread. For me, it is easy to see the world through mathematical models, but for many it is helpful to see some concrete examples of population dynamics at work to better appreciate the path Tesla is on. If cannot grasp how Tesla can go from making 33k cars in 2014 to making 2854k in 2025, then you do not understand how exponential growth at 50% per year works. We are here to help, and we can explain it in terms of cute little bunnies or brutal mathematics.
Come back in 5 years if you like, but remember that models are more than just metaphors or anologies; models are expressions of first principles thinking.
Don't forget that when the bunnies multiple, their predators do, as well:
Lynx-Snowshoe Hare Cycle | Environment and Natural Resources
Lynx-Snowshoe Hare Cycle | Environment and Natural Resources
I do appreciate how mathematical models can be used to explore the implications of the growth goals established by Tesla. Thank you, jhm, for your efforts here. While no one can definitively predict the future, what you have demonstrated is the plausibility of Tesla meeting its goals.
Of course, Tesla faces a multitude of risks. Putting aside for a moment the incredible challenge of increasing production by 50% per year, one can question whether demand growth will be as strong as hoped for. Clearly, Tesla is doing the right things to set the stage, by building a compelling product, developing the Supercharger network, promoting destination charging, fighting legislative battles (in the U.S.), and opening new stores. No other automaker seems to have the vision necessary to execute such a plan.
The biggest unknown in my mind is, how readily will consumers adopt a paradigm shift in "fueling" and driving? People can be very slow to change behavior, particularly in big ticket purchases, even when change is highly beneficial. For a great many car buyers, inertia favors simply returning to the Lexus, Acura, BMW, or Cadillac dealership and just buying another ICE; not much new thinking is required to do this. This is why Tesla is right to make their vehicles so compelling that they cannot be ignored. Mitigating this risk is the fact that, as demonstrated up thread, Tesla only needs to address a small fraction of the automotive market to reach its goals. Even so, there is a tremendous amount of demand growth that needs to happen. My guess is that it will happen, but not quite so quickly as hoped for, and demand could easily turn out to be Tesla's primary constraint. While my personal time available to post is limited, I'm very interested in what other investors think.
Of course, Tesla faces a multitude of risks. Putting aside for a moment the incredible challenge of increasing production by 50% per year, one can question whether demand growth will be as strong as hoped for. Clearly, Tesla is doing the right things to set the stage, by building a compelling product, developing the Supercharger network, promoting destination charging, fighting legislative battles (in the U.S.), and opening new stores. No other automaker seems to have the vision necessary to execute such a plan.
The biggest unknown in my mind is, how readily will consumers adopt a paradigm shift in "fueling" and driving? People can be very slow to change behavior, particularly in big ticket purchases, even when change is highly beneficial. For a great many car buyers, inertia favors simply returning to the Lexus, Acura, BMW, or Cadillac dealership and just buying another ICE; not much new thinking is required to do this. This is why Tesla is right to make their vehicles so compelling that they cannot be ignored. Mitigating this risk is the fact that, as demonstrated up thread, Tesla only needs to address a small fraction of the automotive market to reach its goals. Even so, there is a tremendous amount of demand growth that needs to happen. My guess is that it will happen, but not quite so quickly as hoped for, and demand could easily turn out to be Tesla's primary constraint. While my personal time available to post is limited, I'm very interested in what other investors think.
JRP3
Hyperactive Member
That sort of misses the point of the bunny/Australia metaphor, where apparently there aren't enough predators to combat the growth.
stealthology
Member
Could it be possible that Tesla could be churning out cars faster than they currently are? I know Musk says no, but what if they just always want to ensure they have a backlog, thus never admitting they have a demand problem?
The Blue Owl
Endangerous Herbivore
Your scenario would mean Tesla is willingly giving up revenue to maintain the illusion of scarcity, while simultaneously pouring billions into building a huge battery factory to help them meet a demand they know isn't there. That doesn't make any sense.
And there's your answer right there.
That punchline deserves visual display
I agree with the jhm's bunny analogy. I do not see Tesla's growth hampered by competition in the foreseeable future. Also, I do not see much risk in their ability to sell cars or have a sufficient demand.
I see the real serious obstacle to growth is the car business ability to grow at such steep rate. I am amazed to read on these threads how casually people assume that Tesla can "just put on extra shift" or similar to increase the output.
Business of manufacturing and delivering cars is a complex system with many equally complex components that must work in almost perfect synch to produce and deliver cars. The growth of such complex system requires many synchronous changes to system components.
Some of these changes are physical changes to plant and equipment. Physical changes, like building new facilities or incorporating new machinery, is a long and risky process, with many steps involved.
Some of the changes are not physical, yet they may be equally complex and risky to pull through and commission.
Most of the changes involve people. Each person carries a risk of disrupting the complex system by a small misstep. Hence each component system must have overseeing control system which must be developed and put in place.
So far Tesla have been doing amazingly well in scaling up the output. I will be very happy with 50% growth y/y. Growth may not be so linear as at some stage they will build few new plants.
Regarding TSLA, 10-20% sp y/y growth will make me more than happy.
jhm
Well-Known Member
Let me put the question differently. What do any of us think that Tesla could do to grow production any faster? I think the Gigafactory is the fastest path to scaling up the battery supply chain, but maybe in the interim Tesla could buy cells from other than Panasonic. Or maybe that is too expensive or too risky. How about the auto factory? They're going to need more of those too. Should they already have projects lined up? Should they outsource the manufacture of chassis? Would that be risker or more expensive?
So I don't know what would really speed things up, but here's something to consider. Tesla has open sourced all their patents. If an entrepreneur saw a shorter path than the one Tesla is taking, she could run with the patents, hire smart people to design new models on this, and even collaborate with Tesla on charging infrastructure and developing critical supply chains. With all this she could grow her business faster than Tesla and gain a bigger share of the new EV dominated auto market. She'd be a faster bunny than Musk. I'd really like to see it, and I would love to invest in it. I think it's a pretty tall order, however. Just having another entrepreneur who can come close to keeping up with Tesla would make for a fantastic investment. If someone had a plan to follow Tesla's technology and grow capacity at just 30% per year for the next 15 year, I'd be right there, and I think Musk would like to have a few more bunnies in the patch.
Another angle on this is simply if an entrepreneur saw a better way to solve any hold up Tesla faces, they could make a business around solving problems for Tesla. Tesla wants to encourage a lively ecosystem. So there are huge opportunities for budding entrepreneurs.
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You nailed it. I've been saying the same thing since the beginning of this thread. Growing a complex manufacturing business by 50% yr over yr for many years in a row is virtually impossible. Tesla has executed exceptionally well at handling this growth. They've had a lot of hiccups, for sure but not the chaos I would have expected. Elon has consistently said managing extreme growth is Tesla's biggest challenge. As for demand for 500k cars by 2020? It will far exceed that. It probably already does but nobody offers a compelling affordable EV.
It may be difficult to understand complexities or complex systems without being a part of such complexities.
I think there were chaotic moments in Tesla around D Introduction, no doubts there will be more chaos as Tesla grows in complexity. It is extraordinary to witness how chaos turns into a symphony as people learn to deal with problems and take control.
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