TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker and becoming a Supporting Member. For more info: Support TMC

Long-Term Fundamentals of Tesla Motors (TSLA)

Discussion in 'TSLA Investor Discussions' started by Robert.Boston, Feb 24, 2013.

Tags:
  1. aubreymcfato

    aubreymcfato Member

    Joined:
    Sep 16, 2016
    Messages:
    556
    Location:
    Italy
    I know that, and you know that. Unfortunately not everyone knows that, and the article paints consistent albeit very skewed narrative: this is why I think it's insidious.
     
    • Like x 1
  2. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    2,148
    Location:
    Portland, OR
    A random thought I've had, but haven't really decided if I believe it or not. I wonder if the new car market (BEV) will bring with it higher ASP than the old car market (ICEv, diesel).

    My mental model here comes from two sources - today's televisions vs the old CRT televisions, and today's cell phones vs. the old pre-iPhone cell phones (maybe smartphones vs. dumb mobile phones).


    In these two markets, what I see (I'm open to correction) are markets where some incumbent technology gets replaced (for good reasons), and in the replacement, the new technology is enough different, and enough better, that it simultaneously drives more rapid replacement of the devices AND at sustained higher average selling prices than were previously common.

    In televisions, when I walk through my local Costco, I see bigger and bigger screens, at a variety of price points, up to and including $3k televisions with some of the really cool and neato latest technology. My wife and I recently bought a couple of Samsung TV's and spent between $500 and $1000 on each. More than we ever spent for a CRT TV (back in the 90's), and WAY WAY more capable than any of those old CRTs. Lots bigger screens, way more functionality.

    And as best I can tell, while the old TV's might have been on more like a 5-10 year replacement cycle, it seems like these newer TV's are on more like a 2-5 year replacement cycle. They don't NEED to be replaced that fast, but the technology is moving so fast that in practice, they DO get replaced faster.


    Similar dynamic with smartphones. Apple at least seems to be doing a good job of keeping their smartphone ASP's. I don't know as much about the business side for Android smartphones, though it does seem like my wife and I are on a roughly 2 year replacement cycle for the phones (and that seems reasonably common).

    Where the previous mobile phones, and especially the non-mobile land line phones, were closer to a buy-once-use-forever device.


    So this has me wondering - do the really good BEVs (which today means Tesla - presumably somebody will join Tesla in the future) change the profit characteristics of the industry? Are the product characteristics enough better that we see the whole industry increase ASPs and/or shrink the replacement cycle (at least for those manufacturers that are providing the improve product characteristics).

    If we look at the Tesla Owner community thus far (mostly the last 5 years, but you can stretch it back over 10 years), isn't this exactly the dynamic that we've been seeing? It certainly is within my household (admittedly, anecdote).

    My thinking is that if this market dynamic is indeed coming to cars, this is going to be a further tailwind for Tesla as a provider of the newer / better technology (first mover will be a particular big advantage), and will also be a big headwind to competitors that haven't crossed the chasm. The competitors will be competing with lower margins and shrinking volumes, against competitor(s) with bigger margins and growing volumes. I know which side of a fight like that I want to be on :)
     
    • Like x 6
    • Disagree x 1
    • Love x 1
  3. mspohr

    mspohr Active Member

    Joined:
    Jul 27, 2014
    Messages:
    4,303
    Location:
    California
    I tend to agree. My personal experience (FWIW).
    When I bought my Model S, I wasn't even in the market for a new car. I would never have spent that much money on an ICE car. I don't generally buy "luxury" cars... just transportation that meets my needs.
    However, the Model S was so compelling in performance, styling, economy and environmental benefit that I bought the car. I haven't regretted it a single day. Every time I drive the car I smile.
    So, yes, I think that this is compelling transportation technology that will get people to open their wallets and spend more money.
     
    • Like x 3
  4. Driver Dave

    Driver Dave Member

    Joined:
    Oct 10, 2016
    Messages:
    423
    Location:
    Boston, MA
    Whenever I had bought an AUDI or LEXUS, I was always thinking in the back of mind

    "With Audi and Lexus, okay, this is a luxury car, and I'm paying a premium, but you know, the tech feels dated, dealer scams me every chance they can, and it still feels just like any old car. What really am I paying all this money for???"

    But when I bought a TESLA, I finally thought:

    "Tesla, finally, finally! I feel like I'm actually getting what I'm paying for! This is totally worth it!"
     
    • Like x 6
  5. wdolson

    wdolson Supporting Member

    Joined:
    Jul 24, 2015
    Messages:
    5,381
    Location:
    Clark Co, WA
    I've never driven anything as fancy as an Audi or a Lexus. I drove a 1992 Buick for 24 years and had 3 Caprice/Impalas before that (two hand-me-downs from my parents and the third my "college car"). The Buick was IMO plush enough for me. It had all the bells and whistles I wanted and cost $21K.

    I got to a point where I needed to make at least a yearly trip to California, if not more (both family and work). We tried taking my SO's Subaru one time, but I ended up very stove up. There wasn't enough leg room for me on a long trip (it's OK for short trips) and my lower back was out of whack for a month. We took the Buick when it was around 20 years old, but even though the car was in good shape, I was leery of taking such an old car on a long road trip.

    I started shopping and was amazed at how little cars had truly advanced since the early 90s. Sure they had nicer infotainment systems, but there really were no fundamental advancements. For the size of vehicles I was looking at (because of my long legs), the gas mileage was about the same, or they were very underpowered compared to the Buick.

    Then I checked out the Model S on a lark and knew it was what I was looking for, though much more expensive than what I had budgeted. I made it work in the end, though had to save up a bit longer. Tesla fundamentally changed car design.
     
    • Like x 5
  6. aubreymcfato

    aubreymcfato Member

    Joined:
    Sep 16, 2016
    Messages:
    556
    Location:
    Italy
  7. neroden

    neroden Model S Owner and Frustrated Tesla Fan

    Joined:
    Apr 25, 2011
    Messages:
    11,047
    Location:
    Ithaca, NY, USA
    • Funny x 2
    • Helpful x 1
    • Like x 1
  8. electracity

    electracity Active Member

    Joined:
    Jun 8, 2015
    Messages:
    3,583
    Location:
    60606
    Tangentially, I expect Tesla is considering making the semi panels out of plastic. Fleet buyers probably don't care, and that choice would simplify production. Both initial painting and later body shop repairs has been painful for Tesla for years.
     
    • Informative x 1
  9. EVNow

    EVNow Active Member

    Joined:
    Sep 5, 2009
    Messages:
    2,800
    Location:
    Seattle, WA
    Its not a "bear article". Its actually the common criticism of Musk from the left.

    The idea essentially is that climate change can't be tackled with cars at all - only with public transport.

    I personally think both are needed. Its unfortunate that Musk completely ignores public transport (except one could say for hyperloop).
     
    • Like x 2
    • Disagree x 1
  10. JRP3

    JRP3 Hyperactive Member

    Joined:
    Aug 20, 2007
    Messages:
    14,231
    Location:
    Central New York
    No, it's quite fortunate that Elon doesn't try to solve all issues at the same time. Public transport is more a policy issue than technological.
     
    • Like x 4
    • Disagree x 1
  11. mspohr

    mspohr Active Member

    Joined:
    Jul 27, 2014
    Messages:
    4,303
    Location:
    California
    What did the Romans ever give us... except the hyperloop, shared auonomous cars, and 45 minute travel to any point on Earth via Space X.
     
    • Funny x 2
    • Like x 1
    • Love x 1
  12. aubreymcfato

    aubreymcfato Member

    Joined:
    Sep 16, 2016
    Messages:
    556
    Location:
    Italy
    With the BoringCo he's going in a direction of hundreds of tunnels just for private transport. I think he's putting too much emphasis on private pods there (as @neroden says all the time).
     
    • Like x 2
  13. mongo

    mongo Well-Known Member

    Joined:
    May 3, 2017
    Messages:
    6,623
    Location:
    Michigan
    The recent direction of Boring has been to focus on pedestrian/ bicycle traffic, not private vehicles.
    Elon Musk's Boring Company to prioritize pedestrians over cars
     
  14. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Well-Known Member

    Joined:
    Jul 12, 2012
    Messages:
    7,428
    Location:
    Maine
    From 2016:
    Can 4K Drive Replacement Cycle Growth in TV?

    TV replacement cycle is now 6-8 years. Was 8 to 10 years for CRT.
    The digitization of TV has seen introduction of new technologies, which has been a key element to maintain price.

    An important part is size. People will pay more for larger.

    But:
    If you follow the price of a specification, you'll see that it's falling.
    If you follow the specification for a price, you'll see that it's improving.

    In July 2010 we bought a 40" LCD TV for about $790.
    In December 2012 we bought a 40" LED TV for about $600.
    In November 2014 we bought a 40" LED TV for about $300. (Dumb TV, but still good picture).

    Now a generic 40" LED TV is under $200 and you can get branded 43" (is the new 40") 4k for $300-330.

    What you don't see in that list is how much a 40" LCD TV would have been in 2005. I bought my TV only after they were mass-market.

    I think that you're see a similar thing for PEVs. Swap range for size. think we're still in the early stages of the market.

    First they're all expensive, and you choose between short range and eye-watering price. Then the costs come down, they're still expensive, but you see better range at the low end. But at a certain point the range is enough to satisfy the market, and falling costs allows for falling prices that translate into much greater scale and it becomes like the TV market from the late 200s onwards.

    Apple can sell more broadly because their top phones are $1k. They're not $35k.

    But Android is 85% to 86% of the global market and 60% of the US market. There are lots of cheap Android phones. My phone is a Moto E Gen 1. It cost about $110. I bought it 4 years ago. But the E Gen 1 was very limited, with some significant compromises (camera has no flash, 4GB built-in storage). The Moto E Gen 3 is $130 with _much_ better specs. There are much cheaper Android feature phones available in other markets.

    Previous mobile phones could have longer lives because they were dumb phones. I had my flip phone for 7 years and it was still performing fine. I replaced it to converge on a single device for music and phone, with the benefit of occasional wifi Internet.

    There were of course many people who'd replace their high-end dumb phones every 2 years.
    But once you get to a smartphone, it's a "computer phone" and there are more tangible benefits to additional processing power and bigger screens.

    The shfit to CUV/SUV has already changed the car industry and raised prices. And it's been the premium segment that's maintained growth even as the mainstream segment has begun to struggle, although that may say more about the society than consumers.

    But I don't think that BEV will specifically remain with high ASPs unless battery costs reductions stall. Car manufacturers might like to keep PEVs as premium products, but battery and electronics manufacturers have far too much to gain from taking over.
     
    • Like x 1
  15. neroden

    neroden Model S Owner and Frustrated Tesla Fan

    Joined:
    Apr 25, 2011
    Messages:
    11,047
    Location:
    Ithaca, NY, USA
    I mean, I also think both are needed and we need a lot more electric rail. But this Medium article -- which consists entirely of empty invective attacking Musk -- doesn't make that case. (See below for an article which does.)

    By "invective laden" I mean, well... let's Fisk it.

    The entire first paragraph is invective. No content, but a lot of insults.
    The entire second paragraph is invective. No factual content apart from the quote of Tesla's mission statement, but a lot of invective making hostile unsourced claims.
    The entire THIRD paragraph is invective. No content.
    The fourth paragraph manages to repeat the false "cash incinerating" slander, and then accurately describes investor expectations of Tesla (so nothing new).
    The fifth paragraph consists of a reference to another article and more invective.

    The sixth paragraph, the first one to start to make an argument, makes very silly and essentially false arguments. First claim: that having "unnecessarily powerful powertrains... do not advance the efficient use of energy". This shows a failure to understand how electric powertrains work; even the Leaf has a powerful, fast-accelerating powertrain; this feature comes "for free". Second is a complaint about the falcon-wing doors, claiming that this is a waste of resources; well, maybe, but it's not significant -- you might as well say that having meat in the employee cafeteria is a waste of resources. There's an allegation that skipping beta production ensures later inefficiencies -- the writer is contradicting his own arguments here, given that beta production normally means crushing thousands of perfectly good cars, which actually is a waste of resources.

    The seventh paragraph is pure content-free invective.

    At that point I stopped reading.

    After seven paragraphs of which six are meaningless invective and one is tendentious, contradictory, and irrelevant claims... I'm not giving the writer any more time.

    ------

    You want a good indictment of Musk? Specifically in relation to public transit? Read Jarrett Walker:

    Does Elon Musk Understand Urban Geometry? — Human Transit
    Elon Musk Doesn't Understand Why Mass Transit Succeeds - CityLab
     
    • Informative x 4
  16. neroden

    neroden Model S Owner and Frustrated Tesla Fan

    Joined:
    Apr 25, 2011
    Messages:
    11,047
    Location:
    Ithaca, NY, USA
    Regarding replacement cycles for cars (and other things): I will note that Musk has specifically been telling Tesla to engineer all the Tesla cars to last *longer* than planned-obsolescence ICE cars last. (This makes sense if you think about the mission -- replacing an EV with an EV is unhelpful to the mission). So he's *not* planning to shorten the replacement cycle, he's planning to *lengthen* it. Big contrast to what's happening with phones and TVs. And Musk/Tesla are making the environmentally sound choice there.
     
    • Like x 8
  17. EVNow

    EVNow Active Member

    Joined:
    Sep 5, 2009
    Messages:
    2,800
    Location:
    Seattle, WA
    Currently what EM has given us is 50k+ cars. The initial boring ideas were to speed up the time those cars took to travel.

    Neither of them help the median income person in anyway.
     
    • Like x 1
    • Disagree x 1
  18. neroden

    neroden Model S Owner and Frustrated Tesla Fan

    Joined:
    Apr 25, 2011
    Messages:
    11,047
    Location:
    Ithaca, NY, USA
    Well, except by reducing carbon pollution. :) And probably reducing gas prices. The effect of this many EVs (Tesla's put 200K+ on the road) should be measurable by now.
     
    • Like x 1
  19. EVNow

    EVNow Active Member

    Joined:
    Sep 5, 2009
    Messages:
    2,800
    Location:
    Seattle, WA
    I didn't say that article was Pulitzer prize worthy. I said it is not a bear article - as in it is not trying to make the case for a lower SP.

    But the underlying theme is familiar, once you take out all the fluff.
     
  20. EVNow

    EVNow Active Member

    Joined:
    Sep 5, 2009
    Messages:
    2,800
    Location:
    Seattle, WA
    This should be done by people riding bikes & taking public transport (so the criticism goes).
     

Share This Page

  • About Us

    Formed in 2006, Tesla Motors Club (TMC) was the first independent online Tesla community. Today it remains the largest and most dynamic community of Tesla enthusiasts. Learn more.
  • Do you value your experience at TMC? Consider becoming a Supporting Member of Tesla Motors Club. As a thank you for your contribution, you'll get nearly no ads in the Community and Groups sections. Additional perks are available depending on the level of contribution. Please visit the Account Upgrades page for more details.


    SUPPORT TMC