Long-Term Fundamentals of Tesla Motors (TSLA)

[RobStark]

I would agree only if Model S would not have been a brand new car in 2013, the first full year of its sales. So i do not believe that Model S had any home turf advantage over Panamera in 2013.

There are different challenges for each company so now two will be exactly alike.

Model S had pentup demand being new to the market.

Porsche starting production in 2010. I think all automakers have an advantage in their domestic market.

- - - Updated - - -

Porsche sales exactly matched its demand for the year.

Tesla sales did not come close to matching its demand for the year.

Comparing sales is meaningless without taking that into context. If both companies were able to make as many cars as it wanted, Tesla would blow Porsche away (just like it would on a highway).

And Model S did not have demand cannabilized by a crossover twin.

 

[jhm]

Even more telling, considering that they are proclaiming the goal of taking on Models S, to look at Panamera sales in US. In the first full year of production for Model S (2013) Panamera sales plummeted from 7614 to 5421 - an almost 30% drop (Porsche Panamera Sales Figures - GOOD CAR BAD CAR). The same year Model S sold 22,442 cars outselling Panamera more than 4 to 1, while being in approximately the same price range. Pathetic showing for storied German brand IMO.

Their problem is that they are incapable of thinking in NOT in an ICE company terms. The engineering success of Model S was defined by starting from clean sheet of paper and optimizing car architecture to take full advantage of EV platform. This was highly necessary approach, as battery technology was merely advanced to make it into the compelling EV with compelling range. The adoption of an ICE platform just would not have cut it. Enter strategic geniuses from Porsche - they are planning to take Model S head on by coming up with a car that would have a shared platform between an electric and ICE variants! The sea will part to let another amphibian out! The truth is, in order to compete with Model S they will need to shed ALL hints of an ICE thinking and go all in with an "A" engineering team focused on optimizing the platform around purely electric car. Anything else is destined for a spectacular failure.

Interestingly, Autocar article about Porsche challenge to Model S, made reference to partnership with Audi, which is "in the throes of finalizing its first ever electric car, the R8 e-Tron". We are hearing about R8 e-thron, another half-baked effort based on an ICE car, for many years. According to the same Autocar, it was originally to be four motor all-wheel drive weighting 1600kg, then two motor rear wheel drive with weight going up to 1780kg, with 0 to 60 in 4.2 sec, priced above Audi R8 ICE variant. No wonder we still do not see R8 e-Tron sports coupe on sale on the floor of your friendly Audi neighborhood dealership - looks like that this sports coup was crashed even before entering market - by a 5-7 people five door family car, that matches this sports car performance, while costing less, and being actually useful as an everyday car. Oh wait, while Audi still "finalizes" the sports coup design, Tesla just put out a "D" variant of a family electric car that makes performance of the e-tron sports coup look like chopped liver, to borrow a phrase from well known around here but somewhat idiosyncratic analyst.

The truth is, anybody who is trying to make tentative entry into EV space using ICE shared platform should not have even remote hopes to compete head to head with Model S. They can only HOPE to compete with Model S if they put an "A" engineering team, backed by huge investment and set a goal to desighn pure electric car, with the whole architecture optimized for electric platform. On a face of it, Porsche is not doing this, so they might take on BMW 5 series, NOT a Model S.

Excellent commentary. If anyone wants to complete with a disrupter like Tesla, they have to become just as disruptive. They have to put forward their best effort to cannibalize their own line up and go after the market share of their conventional rivals. So if Porsche wants to survive, they will need a no compromise digital car that is clearly to every other car they have made to date. This will kill their own conventional line, but it gives them the product they need to get share from the likes of Audi and BMW. This is the market share they should be focused on.

 

[anticitizen13.7]

I posted about some of this in the short term thread, but the competition has recently been outlining future BEV plans:

http://arstechnica.com/cars/2014/10/porsche-mercedes-building-electric-cars-to-challenge-tesla/

Porche says to expect a Model S competitor based on its standard platform in 2018 at earliest.

Mercedes Benz says 2021 for its large BEV. I'm surprised at this because MB is one of Tesla's close partners, and MB uses Tesla powertrains in the B-series.

Audi claims 2017 for its Q8 e-tron.

No competitor appears to have been specific about how they intend to address the battery cost issue or the need for DC fast charging networks for long trips.

The luxury automakers are worried first, because Tesla is stealing their market share first. The big mainstream brands like Ford and Toyota are not yet there in deciding to compete in the BEV space.

In summary, the established automakers anticipate having a Model S competitor in the 2018-2021 timeframe. By then, Tesla will likely have moved far ahead with both the S and X. It may take until Model 3 to make the higher volume mainstream brands realize that they are threatened. I don't think the people at Toyota worry that Tesla will eat their lunch… yet.

 

[Papafox]

I posted about some of this in the short term thread, but the competition has recently been outlining future BEV plans:

http://arstechnica.com/cars/2014/10/porsche-mercedes-building-electric-cars-to-challenge-tesla/

Porche says to expect a Model S competitor based on its standard platform in 2018 at earliest.

Mercedes Benz says 2021 for its large BEV. I'm surprised at this because MB is one of Tesla's close partners, and MB uses Tesla powertrains in the B-series.

Audi claims 2017 for its Q8 e-tron.

No competitor appears to have been specific about how they intend to address the battery cost issue or the need for DC fast charging networks for long trips.

The luxury automakers are worried first, because Tesla is stealing their market share first. The big mainstream brands like Ford and Toyota are not yet there in deciding to compete in the BEV space.

In summary, the established automakers anticipate having a Model S competitor in the 2018-2021 timeframe. By then, Tesla will likely have moved far ahead with both the S and X. It may take until Model 3 to make the higher volume mainstream brands realize that they are threatened. I don't think the people at Toyota worry that Tesla will eat their lunch… yet.

Anticitizen, this article really highlights what an advantage Tesla has over the competition. Thanks for posting! Imagine where Tesla sales and Tesla stock price will be by the time these two competitors have cars on the market. Tesla will have Model 3 available, and by then you will see Ford and GM scrambling, but again late to the party. Then they have to think about a supercharger network if they wish these electric cars to be practical as transportation devices. Again, Tesla holds a commanding lead. Checking the sofa for loose change in an effort to buy even more TSLA stock.

 

[Robert.Boston]

While some of these announcements may be real, at least some exist to prevent loyal customers from leaving. I held off on my Model S until it became clear that Audi wasn't going to have anything, so I imagine others might do likewise.

The Porsche announcement shows how tepid the company is about EVs. An EV "variant"? So, it's not built from the ground up as an EV, but instead they slot one drivetrain or another into the same body. Recipe for failure.

Another serious problem the established brands have is their dealers. We have lots of reports of Nissan, Ford and BMW dealers steering customers away from their EVs.

 

[FluxCap]

I'm a longtime reader of Ars Technica and generally appreciate their journalism on many topics closest to my interests. However, I find it fascinating that this kind of comment is one of the top-ranked for the linked article:

"Surprise surprise, new competitor enters mature, saturated market with new technology and mass appeal, old firms try to copy new product....consumers win.

Even if Tesla never pans out in the long-term, the effect it has had on mass-production electric vehicle R&D is a very good thing."

What this tells me is that even among the most die-hard techie / early-adopter crowd, there is still such a disconnect between the reality of Tesla not just "panning out," but achieving complete dominance of every product sector it enters (Model S/X), and much of the world still doesn't believe that the Model III car will literally be the best and most desired sub-$40k car ever made with potentially millions of people waiting in line to get one. It will shock the world, and change history.

And I would expect, the market will be equally shocked. Holding my core shares for TSLA $1000.

 

[Krugerrand]

...and much of the world still doesn't believe that the Model III car will literally be the best and most desired sub-$40k car ever made with potentially millions of people waiting in line to get one. It will shock the world, and change history.

And I would expect, the market will be equally shocked. Holding my core shares for TSLA $1000.

I have to pinch myself regularly. I can't believe 'they' don't get it yet. It's like a flashing neon sign from where I'm standing and it's blinding. So, I pinch myself to make sure I'm not the one dreaming this up, because it just doesn't make sense that 'they' can't see!

 

[adiggs]

I have to pinch myself regularly. I can't believe 'they' don't get it yet. It's like a flashing neon sign from where I'm standing and it's blinding. So, I pinch myself to make sure I'm not the one dreaming this up, because it just doesn't make sense that 'they' can't see!

I find myself thinking a lot about paradigm shifts the last year or two. There are two areas where I'm on the other side of a paradigm shift - a new way of looking at the world that is so different, people who haven't yet experienced the shift just don't see it yet. The auto industry is unique, thus far anyway, in that these kinds of technology shifts happen so fast normally that there's no time to react. I'm willing to predict right now, today, that in 20 years, people will be looking back at Tesla and saying stuff like "if I had a time machine, I'd go back to October 2014 and put everything on Tesla; I'd be rich!". (Note - there are other paradigms where I'm on the pre-shift side of things too; the competing perspectives can be disorienting at times ).

This paradigm shift, and the inability of people to understand the world after, is the basis for my investment.

This gets into all sorts of interesting topics - why do people resist change and innovation, and how do you overcome it? Tesla's approach with the galleries / showrooms is exactly right - it's all about education. When people learn more, then they'll be better able to make the translation to their circumstances, and better able to put themselves mentally into one of these cars. Actually I'm with Flux - the number of people I meet who are ready to buy a Tesla today at $40k that can't act at $80k is astounding to me. I run into way more people that can't afford a Tesla but can't wait, than people who view Tesla ownership as an elitist thing.

If Model X is 25-30k reservation list on the day of the first delivery, I think 250k reservations for a 2 year reservation period for Model 3 is low; I'm taking the over on that one. My next prediction - if Tesla DOES take reservations for Gen 3 for a couple of years before initial delivery, then my prediction right now is that so many people will reserve a Model 3 and postpone buying a car because of that deposit, that we'll see Model 3's impact on auto unit sales in the 2 years leading up to initial delivery. Everybody else will see their sales for that vehicle class go down in the 2 years leading up to Model 3 because people will be waiting to buy. It will be that good and that big.

Heh - and we can sit here today, gaze out on the landscape, and see it all unfolding in slow motion. I find myself hoping for a "disappointing" Q3 earnings report and a subsequent drop in the stock price - I'd like to own a bigger piece of the company

 

[JRP3]

This gets into all sorts of interesting topics - why do people resist change and innovation, and how do you overcome it?

Many, maybe most, seem to fear change and cling to tradition, because it's comfortable and "safe". I suppose the rest of us find change interesting and challenging. We have to pave the way and show everyone that not only is doing something a different way better it's also "safe" for others to try. It may be better for a stable society for the majority to resist change, and could be why we've evolved in such a way. You don't want society as a whole jumping on every one of our latest and greatest ideas in case they don't pan out.

 

[anticitizen13.7]

I have to pinch myself regularly. I can't believe 'they' don't get it yet. It's like a flashing neon sign from where I'm standing and it's blinding. So, I pinch myself to make sure I'm not the one dreaming this up, because it just doesn't make sense that 'they' can't see!

I find that people who aren't in engineering/science fields and don't follow the automotive industry tend not to think about transportation issues too much. They don't see it because they aren't looking. Most people who use a car to get to work might think about the high gasoline bill once in a while, but don't know of any alternative.

I learned about Tesla in the mid-to-late 2000's because I was reading every car magazine I could find on the Internet, and I came across an article about a sports car powered by thousands of LiIon cells connected to an induction motor: the Tesla Roadster. I thought the idea was crazy. Although I was convinced that some form of electrification was the future for personal transport, I didn't think that the battery would prove reliable enough to work. This was probably around 2006 or 2007, when Tesla was also having development problems with the Roadster 2-speed transmission. I thought Tesla was most likely doomed at that time.

It wasn't until the car mags reviewed working Roadsters that I began to think that Tesla's model of implementing an EV just might work. However, the Roadster was still in my mind a toy car, like a Porche 911 or Honda S2000: fun but generally impractical. The Model S concept really got my interest in 2009, because it represented an automobile that would be useful to almost anyone, but it wasn't until Elon revealed the Model S Beta in late 2011 that I was thoroughly convinced that Tesla would mostly likely succeed. I was paying attention and I have a decent amount of intelligence (not quite MENSA material, but not far off), and it took me 4-5 years to get it, even when I already had a preconceived notion that electrification of some kind was necessary in order to break the dependency between oil and personal transport. In this context, I'm not surprised that the median person of median intelligence, and probably most people within 1 standard deviation of this, likely doesn't get it and won't get it for many years. Even many smart people won't get it. That's the bad news. The good news is that if you do get it, you have likely made a lot of profit on shares, and will continue to see large future gains :biggrin:

 

[Johan]

Many, maybe most, seem to fear change and cling to tradition, because it's comfortable and "safe". I suppose the rest of us find change interesting and challenging. We have to pave the way and show everyone that not only is doing something a different way better it's also "safe" for others to try. It may be better for a stable society for the majority to resist change, and could be why we've evolved in such a way. You don't want society as a whole jumping on every one of our latest and greatest ideas in case they don't pan out.

Status quo bias. It's a huge problem with current level human intelligence and society. Even when you do "get it" (with regards to electrification of transport and TSLA's way of doing things) you still have to actively resist being sucked back in to the black hole that is status quo bias.

On a related note my "discovery" of Tesla, TSLA, Elon Musk and actually this bulletin board has coincided (or prompted?) personal growth for me in my life in a big way. I try to apply the principles that are the opposite of status quo bias namely open mindedness, thinking without imposing unneccesary limititations on my thinking and always looking for good outcomes in other aspects of my life and it is really working out well!

 

[ecarfan]

I find myself hoping for a "disappointing" Q3 earnings report and a subsequent drop in the stock price - I'd like to own a bigger piece of the company

I also am hoping that a less than stellar Q3 report will cause the stock to tumble to below 200 and then I can buy more.

I have a high degree of confidence that Tesla will wow the world with the Model 3. After the Model X is out the company will have a seasoned design and production team that can apply their knowledge and experience to ensuring the Model 3 meets its price, quality, and design goals. I expect they will introduce a sedan, coupe, and small SUV all at the same time on the same platform. And by 2017 the Supercharger network will be everywhere in North America, Europe, and East Asia. There will still be no comparable long-range EV competitors and certainly none with an extensive fast DC charging network. The demand for the Model 3 will be huge and Tesla will continue their "take deposit, build to order, deliver upon full payment" model for years to come. By 2018 the stock will be over $400 and keep rising.

 

[hcsharp]

I learned about Tesla in the mid-to-late 2000's because I was reading every car magazine I could find on the Internet, and I came across an article about a sports car powered by thousands of LiIon cells connected to an induction motor: the Tesla Roadster. I thought the idea was crazy. Although I was convinced that some form of electrification was the future for personal transport, I didn't think that the battery would prove reliable enough to work. This was probably around 2006 or 2007, when Tesla was also having development problems with the Roadster 2-speed transmission. I thought Tesla was most likely doomed at that time.

That's funny because I first read about the Tesla Roadster in '06 and immediately thought "That's my car. That's the future. I need to start saving for one of those."

... Actually I'm with Flux - the number of people I meet who are ready to buy a Tesla today at $40k that can't act at $80k is astounding to me. I run into way more people that can't afford a Tesla but can't wait, than people who view Tesla ownership as an elitist thing.

This. Since buying my car almost 4 yrs ago, a lot of my friends, neighbors, etc have seen how well it's worked out. Almost half the people I talk to now want one "as soon as it's affordable." Model 3 will get the first yr of production reserved in about an hour. OK, maybe a day. If you think Tesla is production constrained now, you haven't seen anything. I've said it before, Elon has said it, I'll say it again: Tesla's biggest hurdle going forward is ramping up fast enough.

 

[MartinAustin]

(sorry for big post) Porsche and Mercedes can manufacture all the electric cars they want... but they can't get hold of enough batteries.

Tesla already uses up about half of the world's supply of Li-ion batteries. (thanks to Panasonic's re-opened factories) This is to make just 35,000-50,000 BEVs per year at present.

Where do Porsche and Mercedes expect to get the batteries for their cars? (Mercedes got its B Class batteries from Tesla)

+1 to the commenters who say that the Porsche "EV variant" won't be an effective competitor. The key to success for the Model S is its efficiency. Everything from chassis weight and aerodynamics to battery mass, location, center of gravity, motor and power electronics are critical. The Model S was designed with every one of those components fresh off the designer's desk, each one specified to complement the other components it will unite with to create a great car. If Porsche, or anyone for that matter, hopes to compete... taking a gasoline car and converting it into an electric one is nuts. Porsche makes great cars, and they're custom-built to be exactly as they are. They didn't take a Panamera and convert it into a 918, for example. Neither is the Panamera simply a stretched 911. So far, Porsche's advantages have lain in the combination of a large number of original parts that are incrementally better than those in inferior brands' cars. When put together, the car is amazing. It would be highly irregular and surprising if Porsche veered away from this philosophy for its first pure BEV.

But, perhaps its first pure BEV may simply be a test, to see how popular it will be. If it sells like crazy, they will replace it with a ground-up BEV design that has much lower center of gravity. Like one chap said above, he decided to go for the Model S when he became convinced Audi was not going to produce anything - after they had said they would. There are a lot of Porsche fans who are heartbroken about having to buy an American car! (not surprising) If they could get something from Porsche that has the same advantages, they would. So... perhaps this sort of announcement delays the process of brand loyalty destruction via customers jumping the fence over to Tesla - while they scramble to create BEV variants of the Panamera. Or perhaps they really haven't started yet at all.

One thing to consider is that Porsche makes out-and-out sports cars. The Cayenne is certainly a family hauler for some people, but Porsche don't shy away from the vehicle's sporting capability, and honestly, the Cayenne doesn't have that much storage space unless you fold the rear seats down. Porsche may opt to convert a Panamera to BEV operation, and not really do anything to improve the cargo space. Think about it... people who complain about the cargo space in the Panamera are going to be met with confused looks However, Tesla does not market itself as a sports car company, and tries to appeal to as many people as possible, part of the task of switching the entire planet to BEVs. One thing about the Tesla Model S is that its mechanical packaging allows for massive interior space. More than the Panamera or Cayenne in fact... it truly gives the Tesla universal appeal. It just happens to be really fast, too, and has stolen customers from Porsche. Maybe Porsche can match the 3.2 0-60 acceleration, but it's going to take them a lot more work to match the interior space - will they try? Or just give up and ignore that problem? Even with mediocre storage, it will still be marketable as a Porsche, and please the brand loyal (who never had that much cargo space anyway). Elon will still be pleased no matter what, as there are more BEVs on offer.

I noticed this...
Porsches baby Panamera delayed until 2019 or later - Autoblog
No doubt these plans are in turmoil, raging due to the "Tesla problem."

Finally, the subject of fast DC charging. Porsche is backed by Volkswagen and has the wherewithal to install proprietary fast chargers of their own design around the world. But would they? It would take ages and ages to put them all in, and Tesla's Superchargers lie everywhere already, available to use. It would be the best solution for the planet for other brands to adopt the Tesla Supercharger. I can't say if these corporate entities will get that, but I hope they will!

 

[green1]

Traditional manufacturers don't even realize that EVs don't have ICE engines inside them, so who knows what they'd actually come up with anyway. Things like the i3, i8, volt, ELR are all marketed as EVs and claim to be "Tesla killers", but not one of them has the appeal of a Tesla, and I don't think the manufacturers even grasp why.

 

[adiggs]

(sorry for big post) Porsche and Mercedes can manufacture all the electric cars they want... but they can't get hold of enough batteries.

Tesla already uses up about half of the world's supply of Li-ion batteries. (thanks to Panasonic's re-opened factories) This is to make just 35,000-50,000 BEVs per year at present.

Where do Porsche and Mercedes expect to get the batteries for their cars? (Mercedes got its B Class batteries from Tesla)

+1 to the commenters who say that the Porsche "EV variant" won't be an effective competitor. The key to success for the Model S is its efficiency. Everything from chassis weight and aerodynamics to battery mass, location, center of gravity, motor and power electronics are critical. The Model S was designed with every one of those components fresh off the designer's desk, each one specified to complement the other components it will unite with to create a great car. If Porsche, or anyone for that matter, hopes to compete... taking a gasoline car and converting it into an electric one is nuts. Porsche makes great cars, and they're custom-built to be exactly as they are. They didn't take a Panamera and convert it into a 918, for example. Neither is the Panamera simply a stretched 911. So far, Porsche's advantages have lain in the combination of a large number of original parts that are incrementally better than those in inferior brands' cars. When put together, the car is amazing. It would be highly irregular and surprising if Porsche veered away from this philosophy for its first pure BEV.

But, perhaps its first pure BEV may simply be a test, to see how popular it will be. If it sells like crazy, they will replace it with a ground-up BEV design that has much lower center of gravity. Like one chap said above, he decided to go for the Model S when he became convinced Audi was not going to produce anything - after they had said they would. There are a lot of Porsche fans who are heartbroken about having to buy an American car! (not surprising) If they could get something from Porsche that has the same advantages, they would. So... perhaps this sort of announcement delays the process of brand loyalty destruction via customers jumping the fence over to Tesla - while they scramble to create BEV variants of the Panamera. Or perhaps they really haven't started yet at all.

One thing to consider is that Porsche makes out-and-out sports cars. The Cayenne is certainly a family hauler for some people, but Porsche don't shy away from the vehicle's sporting capability, and honestly, the Cayenne doesn't have that much storage space unless you fold the rear seats down. Porsche may opt to convert a Panamera to BEV operation, and not really do anything to improve the cargo space. Think about it... people who complain about the cargo space in the Panamera are going to be met with confused looks However, Tesla does not market itself as a sports car company, and tries to appeal to as many people as possible, part of the task of switching the entire planet to BEVs. One thing about the Tesla Model S is that its mechanical packaging allows for massive interior space. More than the Panamera or Cayenne in fact... it truly gives the Tesla universal appeal. It just happens to be really fast, too, and has stolen customers from Porsche. Maybe Porsche can match the 3.2 0-60 acceleration, but it's going to take them a lot more work to match the interior space - will they try? Or just give up and ignore that problem? Even with mediocre storage, it will still be marketable as a Porsche, and please the brand loyal (who never had that much cargo space anyway). Elon will still be pleased no matter what, as there are more BEVs on offer.

I noticed this...
Porsches baby Panamera delayed until 2019 or later - Autoblog
No doubt these plans are in turmoil, raging due to the "Tesla problem."

Finally, the subject of fast DC charging. Porsche is backed by Volkswagen and has the wherewithal to install proprietary fast chargers of their own design around the world. But would they? It would take ages and ages to put them all in, and Tesla's Superchargers lie everywhere already, available to use. It would be the best solution for the planet for other brands to adopt the Tesla Supercharger. I can't say if these corporate entities will get that, but I hope they will!

Regarding Porsche - some unit sales numbers I was looking at over the weekend for class research tells me that Porsche's US sales are roughly double that of Tesla's this year, in the US. A big hunk of that double units comes from their SUV. If Porsche's response to the Model S and X is a 2018 car, the Porsche of 2018 might not be recognizable. I don't really think Tesla will pass Porsche is unit sales next year, but the year after? And a decent hunk of that increasing Tesla market share is going to come from Porsche. They should be worried.

 

[daniel Ox9EFD]

Daimler, Porsche and Audi are planning a long range EV

Original article:
Daimler und Porschen setzen eigene Elektroautos gegen Tesla - manager magazin

English media:
Porsche, Mercedes building electric cars to challenge Tesla | Ars Technica

All things considered, if this is true, this is great news!

 

[30seconds]

you do know that two of those three companies are actually the same company?

 

[rexmakesbeats]

Traditional manufacturers don't even realize that EVs don't have ICE engines inside them, so who knows what they'd actually come up with anyway. Things like the i3, i8, volt, ELR are all marketed as EVs and claim to be "Tesla killers", but not one of them has the appeal of a Tesla, and I don't think the manufacturers even grasp why.

exactly, and they are really hybrids, gas/electric

 

[MSEV]

The BMW i3 is all electric if you don't add the range extender (something over $4000 add on).