Long-Term Fundamentals of Tesla Motors (TSLA)

[mongo]

I don't think it's true. While the number of registered vehicles may drop because of higher utilization rates the number of miles traveled per person may not. That means the same number of miles per year must be covered by the smaller fleet of vehicles which will translate into more miles per vehicle and faster replacement cycles.

Yar, trying to deal with children who need car seats is a hard one to solve under transportation as a service. Along with pets and cold season...

 

[wdolson]

Watching that video brings up a couple of questions. First, he suggests that the market for new cars will drop by as much as 80%. Private ownership will all but go away. It will be replaced by Transportation as a Service from self-driving cars. If that's true, what will happen to Tesla when the new car market drops by 80%?

The issue I have with him is he's very urban-centric. Car ownership in urban areas may drop significantly as autonomous ride sharing makes car ownership too expensive, but that won't be true in rural areas.

Additionally he says that tech shifts when the new tech gets significantly cheaper than the old. However people will still hold on to expensive tech when it is prestigious or there is some other perceived benefit to do so. In the fashion industry people pay 100X for "designer" stuff that is the same quality and utility as very cheap options. They do it for prestige.

New York City probably has the most disincentives to won a car and the most extensive public transit options, yet around 1/2 of New Yorkers own a car. People own cars despite it being much more expensive (parking costs) and more of a hassle to drive in the city than walk, bike, or take some form of transport.

 

[hcsharp]

I don't think it's true. While the number of registered vehicles may drop because of higher utilization rates the number of miles traveled per person may not. That means the same number of miles per year must be covered by the smaller fleet of vehicles which will translate into more miles per vehicle and faster replacement cycles.

You may not have watched the video. He assumes that the number of miles per person per year will remain the same or trend higher. He goes on to discuss how self-driving EVs last 4x longer because they are less likely to crash or wear out. I see them becoming more like airplanes that just keep getting rebuilt. He makes a good case for the number of new vehicles manufactured every year being a lot less than now.

 

[hcsharp]

The issue I have with him is he's very urban-centric. Car ownership in urban areas may drop significantly as autonomous ride sharing makes car ownership too expensive, but that won't be true in rural areas.

Additionally he says that tech shifts when the new tech gets significantly cheaper than the old. However people will still hold on to expensive tech when it is prestigious or there is some other perceived benefit to do so. In the fashion industry people pay 100X for "designer" stuff that is the same quality and utility as very cheap options. They do it for prestige.

New York City probably has the most disincentives to won a car and the most extensive public transit options, yet around 1/2 of New Yorkers own a car. People own cars despite it being much more expensive (parking costs) and more of a hassle to drive in the city than walk, bike, or take some form of transport.

I was going to make a similar comment about rural areas. Self-driving tech is not going to replace private ownership nearly as easily as it will in urban areas.

I also think the 50% ownership rate you see in NYC will drop significantly with self-driving cars. You'll still be able to ride your favorite car when you need to without having to own it, maintain it, and pay for a parking space. Seba might be slightly influenced by the fact that he hasn't owned a car himself in 5 years. But 50% of the male population in So Cal are car guys. Pretty sure that's a proven fact.

 

[JRP3]

Watch from about 36:30 and the 20:00 mark

You may not have watched the video.

I have.

He assumes that the number of miles per person per year will remain the same or trend higher. He goes on to discuss how self-driving EVs last 4x longer because they are less likely to crash or wear out. I see them becoming more like airplanes that just keep getting rebuilt.

I've considered the same, but only for those made of aluminum or composite materials. Steel still rusts in EV's, suspension parts, of any material, wear out, metal fatigue eventually takes it's toll. So I agree that EV's will outlast ICE's but not to the degree he does. I also think there will still be a high percentage of people who want and can afford their own individual vehicles.

 

[abasile]

Yar, trying to deal with children who need car seats is a hard one to solve under transportation as a service. Along with pets and cold season...

I think a substantial fraction of the population is going to continue to own private vehicles (hopefully Teslas) for quite a while. Speaking of cold season, snow will be another challenge.

"We're sorry for the delay in the ride you've summoned. Our contracted snow removal provider has a backlog and has not yet serviced the vehicle depot nearest your location. In addition, our all-wheel-drive vehicle category is currently oversubscribed."

As for large scale evacuations (wildfires, impending hurricanes and floods, etc.):

"Due to mandatory evacuation orders, we regret to inform you that our minimum vehicle occupancy in your area is five persons. To conserve luggage space, please carry only the most essential items. Further, be advised that all of our vehicles must leave the area and no transportation services will be available if you choose to ignore evacuation orders."

 

[wdolson]

I was going to make a similar comment about rural areas. Self-driving tech is not going to replace private ownership nearly as easily as it will in urban areas.

I also think the 50% ownership rate you see in NYC will drop significantly with self-driving cars. You'll still be able to ride your favorite car when you need to without having to own it, maintain it, and pay for a parking space. Seba might be slightly influenced by the fact that he hasn't owned a car himself in 5 years. But 50% of the male population in So Cal are car guys. Pretty sure that's a proven fact.

I expect car ownership in NYC to decline a bit, it already is the lowest on the continent, but my point is that NYC is the closest to the ideal Seba is envisioning and you still have around 50% car ownership.

Rural poor will need to own cars because there will be no other options. Traveling between cities in this ride sharing economy would be difficult. There may be some services that do it, but the urban ride sharing services aren't going to want their cars tied up for many hours on a one way trip, especially if odds are the car will be dead heading (running empty) back. People with resources can rent a car for that purpose, but the poor can't rent cars, they don't have credit cards.

I've considered the same, but only for those made of aluminum or composite materials. Steel still rusts in EV's, suspension parts, of any material, wear out, metal fatigue eventually takes it's toll. So I agree that EV's will outlast ICE's but not to the degree he does. I also think there will still be a high percentage of people who want and can afford their own individual vehicles.

Aluminum has its long term drawbacks too. Put steel under load and as long as the load isn't too much for the structure to hold, it will sit there and hold the load until the steel corrodes too much. It could hold the load forever if well enough maintained.

Aluminum doesn't do that. Put aluminum under load and it will start to crack over time. Eventually anything made of aluminum is going to collapse under its own weight. Aircraft need regular structural inspections and repairs if the aluminum is beginning to crack. Some old aircraft worth preserving have had large parts of their structures replaced.

Most aluminum cars will be retired for other reasons before their structures fail, but it will be something that will plague old Teslas eventually.

I think a substantial fraction of the population is going to continue to own private vehicles (hopefully Teslas) for quite a while. Speaking of cold season, snow will be another challenge.

"We're sorry for the delay in the ride you've summoned. Our contracted snow removal provider has a backlog and has not yet serviced the vehicle depot nearest your location. In addition, our all-wheel-drive vehicle category is currently oversubscribed."

As for large scale evacuations (wildfires, impending hurricanes and floods, etc.):

"Due to mandatory evacuation orders, we regret to inform you that our minimum vehicle occupancy in your area is five persons. To conserve luggage space, please carry only the most essential items. Further, be advised that all of our vehicles must leave the area and no transportation services will be available if you choose to ignore evacuation orders."

Autonomous, privately owned cars can provide for faster emergency evacuations. The cars can drive much faster and closer together on highways, but you have a point in a ride sharing economy, getting out of the way of a hurricane becomes a lot more difficult. The traffic jams evacuating the affected areas are so bad because you have a very high percentage of all the operational vehicles in an area on the road at once.

In mass transit calculations, there are certain densities of population needed to make certain modes worthwhile. Light rail needs a fairly high density, buses need less. If the population is below that density, the cost of building and maintaining the system costs more than people driving private cars.

There are buses out here on the edge of our county, but they only run a couple of times a day and they are mostly empty. I calculated that it would burn less fuel to have six passengers drive Priuses instead of those 6 people ride the bus, and that doesn't take into account the wear and tear on the pavement from the heavier vehicle or the other costs of running the bus.

Autonomous ride sharing lowers the density needed to be profitable as well as the cost of running the system, but there still are costs involved and there still needs to be some kind of density to keep the system afloat.

I also think the slob factor is going to put some people into private cars even though they cost more. I once had a gig for the Seattle area's bus authority (King County Metro). As a perk, I had a free bus pass. I tried using it, but it took longer to get to work and there were sometimes some unsavory people on the buses. The last straw for me was when some drunk guys were riding the bus and decided to use the back of the bus as a urinal. The stuff was flowing down the bus. The hem of one woman's skirt got wet and some got on my shoes too.

People do things on public transport they would never do in their own vehicles and all it takes is one slob to mess things up for everyone. When people know a human is watching them and is physically there, people are less likely to do things. In the case of that bus, it was running mostly empty and all but the drunks were in the front of the bus.

When there isn't a live human there, people feel more emboldened, even when there are cameras. The guys who monitored Seattle's bus tunnel via camera had all sorts of stories of things people had done down in the tunnels. They were caught on camera and a fair number were later caught by police, but it didn't stop them in the moment.

Cars can be cleaned after someone does something in one, but it will never be the same again in many cases.

I think private car ownership will go down as people who aren't as easily grossed out switch, or those who can barely afford a car now switch. But anyone earning enough to own a car will have at least one. With autonomous cars, some households will be able to get rid of one car and have the car do more work dead heading between tasks.

I think a lot of these people who are predicting a zero car ownership future are underestimating how inconsiderate and slobby some humans can be. It's overall a small percentage, but a few slob's can mess up a lot of the transit system. Mass transit seats tend to be made of non-absorbent material for a reason.

 

[RobStark]

 

[RobStark]

I think a lot of these people who are predicting a zero car ownership future are underestimating how inconsiderate and slobby some humans can be. It's overall a small percentage, but a few slob's can mess up a lot of the transit system. Mass transit seats tend to be made of non-absorbent material for a reason.

I predict Singapore and Tokyo will have a lower car ownership rate than New York and London.

 

[wdolson]

I predict Singapore and Tokyo will have a lower car ownership rate than New York and London.

In Japan, definitely. Singapore is an interesting place. The powers that be there want to turn Singapore into the Switzerland of Asia, and they have managed to go along way in that direction, but they did it with pretty several laws about things like chewing gum and traffic laws. When I was there I think there were places to drink, but it doesn't seem to be much of a drinking culture. The underlying culture is very chaotic though.

Singapore is a lot like Manhattan, mass transit and taxis work well now. Autonomous cars would probably be popular and there won't be any gum in them.

 

[RobStark]

 

[kenliles]

then again now that CR has improved their AI predictive abilities beyond the need for actual testing, puts their own actual test results in a different light- and a dimmer one in my limited view

 

[ValueAnalyst]

then again now that CR has improved their AI predictive abilities beyond the need for actual testing, puts their own actual test results in a different light- and a dimmer one in my limited view

ROTFLMAOYSST!! I blame you for all the weird looks I'm getting from people around me.

 

[RobStark]

CR has been predicting all new car reliability based on past automaker performance for over a decade now.

All new Toyota likely to be above average and all new Dodge likely to be below average reliability doesn't take cutting edge AI computing power.

 

[kenliles]

CR has been predicting all new car reliability based on past automaker performance for over a decade now.

All new Toyota likely to be above average and all new Dodge likely to be below average reliability doesn't take cutting edge AI computing power.

Hmmmm... taking both of those facts together;
CRs own reliability compared to, well.... anyone,
would be, well... average.
So really what’s the point in CR?

 

[RobStark]

Hmmmm... taking both of those facts together;
CRs own reliability compared to, well.... anyone,
would be, well... average.
So really what’s the point in CR?

About 25% of new car buyers consider their ratings when buying a car.

Doesn't take a genius to predict most new cars but it takes large surveys to measure changes over time to make those predictions for next year.

Like the sad fall of Acura from stellar ratings in the 90's. Honda has fallen from being consistently in the top 3 in the 90's and 00's

There is JD Power, Auto Pacifica, True Delta, and Strategic Vision. And there must be a few more I don't know about.

But consumers overwhelmingly trust CR with JD a distant second. And the rest don't really register.

 

[kenliles]

About 25% of new car buyers consider their ratings when buying a car.

Doesn't take a genius to predict most new cars but it takes large surveys to measure changes over time to make those predictions for next year.

Thanks for that. Yes
And hence their methods worthless for Tesla evaluation since large surveys over time for a tiny segment of past owners isn’t consistent with the available Tesla data ownership matrix.
This ‘new territory’ for CR (evaluating brand new cars, of brand new platforms, from brand new makers) create tension between Tesla management and CR.

IMO CR should be ignored by potential Tesla buyers, until their current methods of ‘large surveys to measure changes over time’ have any significant resultive meaning. Certainly for M3 and using MSX as any sort of predictor of such, given the clear lack of ‘large surveys over time’ which by definition can’t exist.

——— in furtherance of my point, here is CRs response to Tesla and their own description of how they evaluate Reliability-Dependability
“
First, Tesla appears unhappy that CR expects the new-to-market Tesla Model 3 to be of average reliability, which is generally a positive projection for any first model year of a car. This expectation is based on CR’s 2017 Annual Reliability Survey, measuring the dependability as opposed to the satisfaction, of more than 300 car models, model year 2000 to 2017, using the responses of individual owners of more than 640,000 vehicles. We provide this information to help people make informed purchasing decisions as new products reach the market.

Here’s how we make the prediction: CR uses survey data it receives from car owners to predict the expected reliability of new cars being introduced to the market by looking across a manufacturer’s historic results (akin to how a weather forecaster predicts it will be sunny) – separate from the hands-on road tests we use for our overall score.

For the Model 3, we looked at more than 2,000 consumer survey responses about Tesla models. In fact, the Tesla Model S is now reported as having above average reliability for the first time ever. The Tesla Model S is also currently CR’s top rated car, period. (Kudos on both, Tesla!)
“

 

[RobStark]

Thanks for that. Yes
And hence their methods worthless for Tesla evaluation since large surveys over time for a tiny segment of past owners isn’t consistent with the available Tesla data ownership matrix.
This ‘new territory’ for CR (evaluating brand new cars, of brand new platforms, from brand new makers) create tension between Tesla management and CR.

IMO CR should be ignored by potential Tesla buyers, until their current methods of ‘large surveys to measure changes over time’ have any significant resultive meaning. Certainly for M3 and using MSX as any sort of predictor of such, given the clear lack of ‘large surveys over time’ which by definition can’t exist.


“

This and similar is the contrived rationalizations of all fans/investors/employees of companies that rank low in CR surveys.

Tesla fans thought it was fantastic when CR rated Model S 103 out of 100. But not when Model X owners report many bugs with Model X.

CR didn't collect statistically significant data for Tesla model years 2008-12.

5 years of data is significant and will only grow as we move forward.

CR doesn't and shouldn't care what Tesla management thinks about their surveys.

Americans that trust CR will continue to do so despite what Automakers and their fans think of CR.

You don't see Acura spokespeople going ballistic. If anything it brings more attention to bad scores.

 

[kenliles]

This and similar is the contrived rationalizations of all fans/investors/employees of companies that rank low in CR surveys.

Tesla fans thought it was fantastic when CR rated Model S 103 out of 100. But not when Model X owners report many bugs with Model X.

CR didn't collect statistically significant data for Tesla model years 2008-12.

5 years of data is significant and will only grow as we move forward.

CR doesn't and shouldn't care what Tesla management thinks about their surveys.

Americans that trust CR will continue to do so despite what Automakers and their fans think of CR.

You don't see Acura spokespeople going ballistic. If anything it brings more attention to bad scores.

Yep, CR should not care what Tesla management thinks, and as I said, should also be ignored by both potential Tesla buyers and Tesla management as well. I believe their methods are destined to be modified if they want to stay relevant for EV testing.
I agree it’s overblown - but it’s overblown in both directions. This is clear from all evidentiary. The sales, reputation, and stock price are virtually never effected by CR. Fits CR’s own narrative they require large numbers over many years to even rate themselves as good as a weatherman. Again as I said, CRs reliability is more I question here than Tesla. And in both directions, good or bad. IMHO

 

[RobStark]

Yep, CR should not care what Tesla management thinks, and as I said, should also be ignored by both potential Tesla buyers and Tesla management as well. I believe their methods are destined to be modified if they want to stay relevant for EV testing.
I agree it’s overblown - but it’s overblown in both directions. This is clear from all evidentiary. The sales, reputation, and stock price are virtually never effected by CR. Fits CR’s own narrative they require large numbers over many years to even rate themselves as good as a weatherman. Again as I said, CRs reliability is more I question here than Tesla. And in both directions, good or bad. IMHO

Approximately a quarter of Tesla buyers in Canada/USA care about CR ratings and will continue to do so for the foreseeable future whatever Telsa management,investors or fans think.

GM,Ford, and FCA employees,investors,and fans have hated on CR for over 30 years claiming a pro Japanese bias as their US/Canada market share have been haved.

CR influences the taste makers. The people that really care and recommend cars to friends and family. Tesla ignores reliability problems as measured by CR at its peril.