Luxury car makers are so screwed

[wdolson]

Sorry.
Just tired of Teslaowners riediculing other car makers ( when sitting in a glass house regarding car quality ).
My experience with Audi is the opposite of yours ; something you probably can live well with.
I wish you would try out more drab Audi interiors ; please go to a Audi dealer and check out an RS7 in the same
price range as your Tesla and be surprised.

The Model S and X competes in the price range with some high end European cars, but the reason it is that expensive is the batteries. If a BEV power train cost the same as an ICE power train, the Model S would start around $45,000 US. You are paying a hefty premium for the all electric power train and a massive battery pack. The electric motors cost a bit less than gasoline engines, but the batteries cost almost half the price of the car.

What the Model S/X gets you that comparably priced cars don't have are:

1) All electric
2) More cargo space
3) Inherently quieter (though a lot of luxury cars muffle the ICE noise well)
4) Some high tech features not available in any other car (though lacking some others)

A lot of cars out there have Tesla beaten hands down on creature comforts in the passenger cabin. Because of the price, Tesla has attracted some people from those brands, but that isn't really the market Tesla is competing in. I can't find a link to it at the moment, but a couple of studies have been done of Model S owners and they found that over half moved up from cars that cost less than $50,000.

I mentioned in another thread that I saw an exotic Mercedes coupe in our neighborhood a few weeks ago. Out of curiosity I looked it up online. The passenger cabin was quite plush, but looking at it, I wanted the car about as much as I want to live in Syria. I'm not into spartan interiors, but I'm not an ultra luxury buyer either. I've been driving s Buick for the last 23 years. It's quite elderly now, but in good running condition and the interior has held up quite well. It's comfortable, especially the seats, but it isn't on par with German luxury cars. I've been very happy with it. But then I'm one of those moving up from a much cheaper car. My car cost $22,000 when new.

 

[mspohr]

Sorry.
Just tired of Teslaowners riediculing other car makers ( when sitting in a glass house regarding car quality ).
My experience with Audi is the opposite of yours ; something you probably can live well with.
I wish you would try out more drab Audi interiors ; please go to a Audi dealer and check out an RS7 in the same
price range as your Tesla and be surprised.

I understand. I don't think any of us has enough experience to make definitive statements about the quality and reliability of any car. Consumer reports does a good job of this since they conduct a statistically significant survey. Any individual here will have an extreme bias as a result of their individual experience which is not statistically significant. "The plural of anecdote is not data."
I agree that we shouldn't bash car brands here... and that starts with not bashing Tesla when we don't have good data.

 

[Canuck]

I agree that we shouldn't bash car brands here...

I'll bash ICE brands every chance I can get. My kids', and their kids', futures depend in a large part on getting off our huge reliance on fossil fuels. I know coal is used to generate electricity in many places (my vehicle runs on 85% hydro) but even with high concentrations of coal as the source, it's still much better on the environment to drive electric.

I'll stop bashing when those other brands take EV's seriously, and produce a vehicle like Tesla has, and a supercharger network. Heck, if they did that, and it had a nicer interior, I'd consider buying one. This isn't about competion of EV vs. EV (really there is no competition there yet) but EV vs. ICE. And those ICE brands deserve all the bashing they get. I can't wait until they go the course of the horse and buggy. It's only a matter of time and good on Tesla to open its patents to speed up the process. Tesla has said it's not a competitiion but a transition. Shame on those other brands for having their heads in the sands: the tar sands and OPEC's desert sands.

 

[mspohr]

I'll bash ICE brands every chance I can get. My kids', and their kids', futures depend in a large part on getting off our huge reliance on fossil fuels. I know coal is used to generate electricity in many places (my vehicle runs on 85% hydro) but even with high concentrations of coal as the source, it's still much better on the environment to drive electric.

I'll stop bashing when those other brands take EV's seriously, and produce a vehicle like Tesla has, and a supercharger network. Heck, if they did that, and it had a nicer interior, I'd consider buying one. This isn't about competion of EV vs. EV (really there is no competition there yet) but EV vs. ICE. And those ICE brands deserve all the bashing they get. I can't wait until they go the course of the horse and buggy. It's only a matter of time and good on Tesla to open its patents to speed up the process. Tesla has said it's not a competitiion but a transition. Shame on those other brands for having their heads in the sands: the tar sands and OPEC's desert sands.

I agree! It's fine to bash ICE cars. They are the problem. EVs are the solution.

 

[SebastianR]

I agree! It's fine to bash ICE cars. They are the problem. EVs are the solution.

Indeed. And next time, anyone tries to pass-off their ICE as "oh so environmentally friendly" I suggest we highlight that ICE car makers have been caught cheating on passing environmental standards...

 

[MichFin]

The main point of this thread is that a $35k Model 3 that performs to level of the BMW 3 series and that's what Elon said he expects. If that's the case... a $35k BMW and a $35k Tesla with comparable specs. I think the BMW sales will suffer big time!!!!

 

[jaguar36]

The main point of this thread is that a $35k Model 3 that performs to level of the BMW 3 series and that's what Elon said he expects. If that's the case... a $35k BMW and a $35k Tesla with comparable specs. I think the BMW sales will suffer big time!!!!

There is just no way thats going to happen. The Gigafactory will drop the cost of the batteries by 30%, which is quite substantial but in no way would allow them to build a 250mile car with a similar interior and build quality to a 3-series. They're either going to miss the 35k mark, the car will be more comparable to a Focus than a 3-series, or its only going to have a 100 mile range. Or quite possibly all three.

 

[ItsNotAboutTheMoney]

There is just no way thats going to happen. The Gigafactory will drop the cost of the batteries by 30%, which is quite substantial but in no way would allow them to build a 250mile car with a similar interior and build quality to a 3-series. They're either going to miss the 35k mark, the car will be more comparable to a Focus than a 3-series, or its only going to have a 100 mile range. Or quite possibly all three.

That's _another_ 30%.

$35k x 90% = $31.5k
55kWh x $200/kWh = $11k.
55kWh x $150/kWh = $8.25k.

If the base model has modest performance, say 0-60 in 7s, and OK performance at highway speed limits, and the Gigafactory can actually bring costs down 30% more, I can definitely see a base Model 3 at $35k. And Elon Musk has already hinted at pushing the limits on aerodynamics with his "not just a weirdmobile" comment, which means they might even shrink the battery more than 5kWh.

Are the base 3 Series models (which sell at and are leased at less than the advertised MSRP) really that special?

 

[sandpiper]

There is just no way thats going to happen. The Gigafactory will drop the cost of the batteries by 30%, which is quite substantial but in no way would allow them to build a 250mile car with a similar interior and build quality to a 3-series. They're either going to miss the 35k mark, the car will be more comparable to a Focus than a 3-series, or its only going to have a 100 mile range. Or quite possibly all three.

I disagree. If, as is generally expected, battery costs come down to the $100/kwh range then a 70kwh battery is only $7,000. So it's not prohibitively expensive. Even now, the battery is not the only, and maybe not even primary, reason that the model S is expensive. The biggest reason that the model S is expensive is simply volume. Because of the low volume (and aluminum construction) every single part of the model S is significantly more costly that it would be if they were making 250K+ of them per year. The assembly processes are more costly than they would be for a 250K per year vehicle. And of course the engineering & development costs have to be absorbed across many fewer units.

If you produced a more conventionally constructed vehicle out of steel, and produced it in more more normal volumes that would allow you to engage the high volume parts suppliers, then the vehicle cost would drop dramatically. EVs are much simpler machines than ICEVs and once the initial design and production processes are sorted out, I suspect that EVs will be significantly less expensive than equivalent ICEVs.

I'll go one step further and predict that, in 20 years, all econoboxes will be EVs and only mid and luxury cars will be available as ICEVs.

 

[Drucifer]

I'll go one step further and predict that, in 20 years, all econoboxes will be EVs and only mid and luxury cars will be available as ICEVs.

I agree. I believe within 10-15 years that the 200+ mile range BEV version of a vehicle will be the same price or less than the ICE equivalent, due primarily to the complexities of the ICE engine and supporting accessories. Over a bit of time, simpler has to be less expensive, just like now at Home Depot where an electric or battery line trimmer or leaf blower is cheaper than the gas version.

 

[CaptainKirk]

There are also other components to the cost of a vehicle that one has to bear in mind. I fully intend on trying to get in on the Model 3 because there hopefully won't be an import duty of 6.1% if it's using gigafactory batteries, hopefully there's an EV credit in Ontario still, and not to mention a lower cost of ownership. In the last 3 years of owning my current ICE, I've spent over $11K of after-tax money on gas, and that's quite a bit!

 

[wdolson]

I agree. I believe within 10-15 years that the 200+ mile range BEV version of a vehicle will be the same price or less than the ICE equivalent, due primarily to the complexities of the ICE engine and supporting accessories. Over a bit of time, simpler has to be less expensive, just like now at Home Depot where an electric or battery line trimmer or leaf blower is cheaper than the gas version.

The cost driver for ICE are the engine and transmission. The drive train on an EV is cheaper, but the batteries are very expensive, especially if you're going to have any decent range. The one factor in the whole thing that is seeing a price change are the batteries which are getting cheaper. According to a lecture from one of Tesla's senior engineers that I saw, battery prices have been dropping steadily at about 7% a year for over a decade, but Tesla hopes to accelerate that curve with the Gigafactory.

In a decade we should have a 400 mile EV that is cheaper than an equivalent ICE. Once the range gets up to around 400 miles and the price gets down below ICE cars, the market will probably go for EVs in a big way. There will still be a niche for ICE with people who want to drive 1000 miles in a day and not stop except to get gas. But for the bulk of people getting range on a charge close to an ICE will be fine. That would erase the last negative for EVs.

When batteries get cheap enough, we will see demand go up, but there will still be a bottleneck in production. To produce 10% of the cars produced today with battery packs equivalent to the Model S, it would require building 13 Gigafactories. And the charging infrastructure as well as the electrical grid have to be expanded to support all those cars. I think building enough batteries will be the likely bottleneck. The traditional car makers are probably going to drag their feet until it's too late and they will be caught selling ICE cars when the public wants EVs. Just like the American car makers were caught selling the wrong type of cars twice when gas prices went up.

 

[Bangor Bob]

The ICE is doomed. Much sooner than a lot of people expect.

I'm just going to put this here:

And maybe this as well:

 

[Drucifer]

Go back 2 years. The $ difference between an 85 and a 60 was $10k retail, but that also included SC access, so knocking off $2k for that leaves $8k. $8000 / 25 = $320 per kWh at retail price. If Tesla wanted at least 20% margin in that, cost to Tesla had to be, at most, $256 and that was in 2013 - which corresponds to those open circles below the line on the graph in the previous post.

 

[MichFin]

There is just no way thats going to happen.

There are 3 things Elon Musk has said about the Model 3

- Range of 200+ miles
- Price of $35k for base model
- Performance on par with a 3 series BMW

Assuming he delivers on his promises that's a very competitive car without any government incentives or gas savings or maintenance savings.

 

[Drucifer]

a very competitive car without any government incentives or gas savings or maintenance savings.

It will need to be. I would guess that Tesla may run out of $7500 credits slightly before Model 3 or within 1-2 quarters of it's release (with the normal tapering off / run-out of credits over the subsequent 4 quarters). That would leave only Tesla and Toyota out of credits. The other makers will still have them.

 

[jaguar36]

There are 3 things Elon Musk has said about the Model 3

- Range of 200+ miles
- Price of $35k for base model
- Performance on par with a 3 series BMW

Assuming he delivers on his promises that's a very competitive car without any government incentives or gas savings or maintenance savings.

For one thing, Elon says alot of things that don't come true.

That being said, he says nothing about interior quality, features, build quality, or even size. Performance likely will only be 0-60 time, which means the rest of it could very well be on par a base Mazda 3 or a Cruze. A $35k Tesla thats similar to a $16k ICE is not going to cause Luxury car makers any concern.

Personally I don't think it will be, I think they will just completely miss the price target. I think it will compete in the 3-series/A4 class at a premium just like the Model S does.

 

[Jaff]

A couple of things...

...Folks who buy $35-$50,000 vehicles are nowhere near concerned about the interior of their vehicle as (some) luxury car buyers...it will have little impact on potential Model III buyers imo... the "cool factor" / thrill of driving electric / environmental benefits / mid term to long term economic benefits will easily outweigh nits about the interior...

...0-60 mph times are very important because they mostly encompass the majority of normal driving speeds...they are "everyday use" road speeds for an "everyday" vehicle...remember, the overwhelming majority of vehicle owners do not "track" their cars, so they won't give a flying fidoo about top end performance...

Although Elon Musk utters some statements that can easily be viewed as "very optimistic", remember his past record of achievements...a lot of things he has said have come true... I for one would certainly not bet against him...

For one thing, Elon says alot of things that don't come true.

That being said, he says nothing about interior quality, features, build quality, or even size. Performance likely will only be 0-60 time, which means the rest of it could very well be on par a base Mazda 3 or a Cruze. A $35k Tesla thats similar to a $16k ICE is not going to cause Luxury car makers any concern.

Personally I don't think it will be, I think they will just completely miss the price target. I think it will compete in the 3-series/A4 class at a premium just like the Model S does.

 

[wdolson]

A couple of things...

...Folks who buy $35-$50,000 vehicles are nowhere near concerned about the interior of their vehicle as (some) luxury car buyers...it will have little impact on potential Model III buyers imo... the "cool factor" / thrill of driving electric / environmental benefits / mid term to long term economic benefits will easily outweigh nits about the interior...

...0-60 mph times are very important because they mostly encompass the majority of normal driving speeds...they are "everyday use" road speeds for an "everyday" vehicle...remember, the overwhelming majority of vehicle owners do not "track" their cars, so they won't give a flying fidoo about top end performance...

Although Elon Musk utters some statements that can easily be viewed as "very optimistic", remember his past record of achievements...a lot of things he has said have come true... I for one would certainly not bet against him...

I also think the same phenomenon will happen with the Model 3 that happened with the Model S, a lot of buyers will be upsold from cheaper cars. Around 50% of Model S buyers upgrade from a car that sold for less than $50,000. I suspect a lot of Model 3 buyers are going to be upgrading from $20-$30K cars and any trim niceties will be a bonus.

People who moved sideways to a Model S from a car that cost around $100K find the interior lacking. Most who moved up from much cheaper cars think it's just fine. You aren't paying a premium for the trim in a Tesla, you're paying for the battery and drive train. And the fact it's a lot volume production car at this point. When producing 500,000 Model 3s instead of 50,000 Model Ss a year, Tesla can afford to make less revenue on each car. $20,000 average revenue on the Model S at current production volumes leaves them with $ 1 billion a year revenue to pay all their capital expenses. $5000 a car for the Model 3 generates $2.5 billion in revenue for 500,000 cars a year. And that will be on top of the $1 billion a year each for the Model S and Model X if they are still producing 50,000 of each.

Most people don't buy the base model, it's a loss leader to get people in the door. I doubt there are many stripped S70s out there. Tesla probably makes very little on the base models, but makes much more on the top of the line models. The P90DL carries a $13K premium for the bigger battery plus Ludicrous mode. I doubt the upgraded fuse costs them anywhere close to $10,000, though the extra 5 KWh of batteries probably costs them around $1K. There are rumors all 90KWh battery packs have the Ludicrous fuse already installed. So it's just a firmware change.

Back to my point, I think part of the price target for the Model 3 is a lowered revenue target per car. Additionally, they are talking about an almost immediate 30% price reduction in batteries once the Gigafactory is online. That may mean a price reduction for the Model X and S too. That price reduction is critical to the plans for the Model 3.

 

[AustinPowers]

I'll bash ICE brands every chance I can get.

Now that is the unbiased way to go about things.

- - - Updated - - -

I agree! It's fine to bash ICE cars. They are the problem. EVs are the solution.

As long as most countries electricity is not produced the Norwegian way (i.e. almost 100% hydro - or other alternative method), EVs are only part of the solution.
And the problem is not ICE cars, but affordable yet sustainable personal transportation. EVs might be driven sustainably already, but most of them are far from affordable for the average Joe - even factoring in lifetime savings in fuel - especially in Europe where electricity is expensive very much like fossil fuel is.