Most underestimated threat to Tesla?

[anticitizen13.7]

I like the Hayward fault earthquake answer. But to me the answer is really the next gen Nissan Leaf.

Everyone just assumes because the Leaf can't hold a candle to the S, there's no way Nissan can compete. But the difference between the next gen Leaf and the Model III might be a lot closer than anyone imagines.

Without a Supercharger-like network to support it, the LEAF would still be stuck in the restricted usage profile of a urban/suburban runabout. I don't discount Nissan, but I haven't seen any indication of progress on their end with an EV that can replace an ICE in the vast majority of usage cases.

 

[RobStark]

But to me the answer is really the next gen Nissan Leaf.

Everyone just assumes because the Leaf can't hold a candle to the S, there's no way Nissan can compete. But the difference between the next gen Leaf and the Model III might be a lot closer than anyone imagines. An Audi A3 eTron and a Model III might be true competitors by the time we see the III.

Anything is possible I suppose. But Ghosn is on record as saying next LEAF will be or have the option for double the range. That is 168 miles.

No evidence they are changing the platform. So a modified FWD Versa platform.

Model 3 is aimed at RWD and AWD BMW 3 Series.

Sounds far fetched. Then there is Supercharger Network vs Chademo.

Where is VW sourcing the Batteries to get the price/kWh low enough to make a $36k Model 3 competitor instead of a $36k eGolf?

Audi can't compete by just issuing press releases.

 

[Robert.Boston]

The more companies that make great EVs, the more the public will accept EVs. I reject the idea that "EVs" are a market, just as "diesel-engine cars" is not a market. Mainstreaming the EV is the best thing that could happen for Tesla.

 

[The Blue Owl]

As this thread shows, there are innumerable theoretical threats to Tesla lurking around every corner. This last conference call, though, made me think of another one. To us believers on this board this will sound like blasphemy, but that doesn't mean we shouldn't consider it.

So, here it is: Elon may change for the worse.

Not his level of ambition, not his style, not his goals. But anyone with his level of achievement, all attained against huge technological and business obstacles, countless cynics, shrewd political enemies, and vast numbers of rabid ideological haters, proving them all wrong in such a spectacular fashion, is constantly challenged from within by a silent and most insidious adversary: hubris.

Elon's larger-than-life presence is, of course, one of his strongest assets. But if the people around him ever start to feel it's unwise to say No to him, no matter how important that No is, it would be the start of a long deterioration, and it would play out in full view of everyone else but himself.

Let me state clearly that I don't think he's there by any stretch, and today I see the risk as only theoretical. But I don't think it is zero. Massive success brings massive self-validation, which can lead one to get lost in their own reality distortion field.

His strongest defense against this scenario is the fact that he is a brilliant physics-trained engineer, and the engineering mindset is to always look for the bad news first. He also trusts the engineers he respects, which are the only kind of people he wants to hire (he spoke derisively about the MBAs and sales-and-marketing types more than once). I hope they do not hesitate to tell him No whenever he really must hear it. As long as he keeps listening, and continues to look forward, and fights to forget his successes soon after he achieves them, he'll continue to make the world a better place (and make us a lot of money in the process).

 

[bxr140]

...there are a growing number of people in America, mostly younger adults, who view personal vehicles as a hassle, not just a big expense.

For sure there is a growing movement back into city centers...but I'd contest that's an infinitesimal percentage of the population. In the US and around the world, there is a VERY small number of people who have the means but not the desire to own a car, and for almost anyone who doesn't have but comes into the means, they want that car. More importantly, there's really no catalyst on the social/economic/political horizons to change that desire or decades to come...the hipster movement itself isn't enough to drive that change. For personal vehicle ownership to peak and start to trend back down we pretty much need a phenomenon that significantly increases vehicle density and significantly increases alternate transportation options. Basically, something that drives the cost of ownership way [back] up to elite status. The only things that come to mind is a significant rise in the world population.

Middle class to affluent people who want decent public schools for their children are generally going to have to go to the suburbs, where there is enough tax money to fund school districts.

Very fair point on the state of the American education system.

 

[Robert.Boston]

For sure there is a growing movement back into city centers...but I'd contest that's an infinitesimal percentage of the population. In the US and around the world, there is a VERY small number of people who have the means but not the desire to own a car, and for almost anyone who doesn't have but comes into the means, they want that car.

FWIW, neither of my children (ages 21 and 18) have a driver's license, by their choice, certainly not driven by lack of family finances. The New York Times had a very interesting piece on car ownership trends in the U.S. that makes the case, from statistics and interviews, for "the end of car culture" in America.

But America’s love affair with its vehicles seems to be cooling. When adjusted for population growth, the number of miles driven in the United States peaked in 2005 and dropped steadily thereafter.

 

[adiggs]

The more companies that make great EVs, the more the public will accept EVs. I reject the idea that "EVs" are a market, just as "diesel-engine cars" is not a market. Mainstreaming the EV is the best thing that could happen for Tesla.

I'm with Robert on this one. I wish with deep passion that the next Leaf is a 168 mile range EV. That isn't yet the 200 mile EV that Tesla feels is the minimum for a regular usable car, but I drive a 175 mile range Roadster (standard charge - 20-25 hidden miles, so really 200 miles), and I know with deep certainty that a 168 mile range EV would be a full substitute. Especially with CHADEMO charging in the Pacific Northwest, it would be MORE usable than the Roadster.

And that means CHOICE in the market. For my market segmentation definition, I have 1 out of production model, 1 in production model, and 1 promised-in-production model this year to choose from (Roadster, S, X). I don't really consider S or Leaf to be a choice, but if the Leaf were 150+ miles, there are plenty of applications where they're close enough that they ARE a substitute.

Note that in my personal market segmentation, BMW, Audi, Toyota, Nissan (incl Leaf), GM, and every other big car maker doesn't exist. So anytime one of them says they want to join the party, I see expansion of choice, and that leads to a massively growing market. Everybody can get involved and sell lots of EV's, and the more involvement, the more that everybody realizes a) it works b) it's ok c) there's money to be made etc..


A 150+ mile Leaf, a 200+ mile Chevy Bolt, and any other longer range EV with some kind of DCFC charging infrastructure / compatibility is nothing but good for Tesla. Even if today they come in the form of promises that may never see the light of day, even the promise and these companies taking their time to build concepts and TALK about a long range EV, is nothing but good for Tesla (and for the bigger problem of electrifying transport).

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.. The only things that come to mind is a significant rise in the world population. .

See http://www.gapminder.org/videos/dont-panic-the-facts-about-population/ for an excellent view on world population and related topics (as well as a fantastic example of storytelling with data). In the context of your comment, we have good evidence that world population will continue growing to 11B people and then go flat. That process is already under way, and in fact started decades ago when we reached "peak child". There are about 2B people between age 0 and 15 in the world, and that number has beel flat for many decades (60's or so?).

Good info, and Hans is an entertaining fellow - highly recommended.

 

[adiggs]

FWIW, neither of my children (ages 21 and 18) have a driver's license, by their choice, certainly not driven by lack of family finances. The New York Times had a very interesting piece on car ownership trends in the U.S. that makes the case, from statistics and interviews, for "the end of car culture" in America.

I didn't get my driver's license until I was 23. Just didn't need it.

The interesting generalization, and maybe your children will make for an interesting experiment to see how this plays out in practice. Does delaying acquisition of a driver's license lead some to not get a license at all? And more importantly, do those that delay acquiring a license elect to get the license, but not get a car (or 2, or 3, ..)?

When I was single and in college, I lived in a town where I could get around faster on my bicycle than I could in a car. I was also willing to ride my bicycle during rainy Oregon winters. Neither of those things are now true So though I was pretty late learning to drive and getting a license, I've still joined the car owning population. I'm also older than this generation that we are hypothesizing will drive a large drop in the number of cars needed.

 

[RobStark]

Everyone in my extended family over 18 has a drivers licence and has a car or wants one.

What Western populations tell pollsters/researchers and what they actually do can vary by a very wide margin. The US just purchased over 16.5M vehicles amid alleged less interest in autos and strong demand for Trucks,SUVs and gas guzzlers despite more Americans saying they make more choices with the environment in mind.

The Western population is falling and the rest is rising.

Even if demand slows in the West for automobiles(which I strongly doubt) it won't in China, non-Japan Asia, Latin America nor Africa.

 

[flankspeed8]

Everyone in my extended family over 18 has a drivers licence and has a car or wants one.

What Western populations tell pollsters/researchers and what they actually do can vary by a very wide margin. The US just purchased over 16.5M vehicles amid alleged less interest in autos and strong demand for Trucks,SUVs and gas guzzlers despite more Americans saying they make more choices with the environment in mind.

The Western population is falling and the rest is rising.

Even if demand slows in the West for automobiles(which I strongly doubt) it won't in China, non-Japan Asia, Latin America nor Africa.

The average age of the U.S. vehicle fleet continues to set records. It is over 12 years now which means people are holding on to their cars longer. Is this a net positive or negative for new car sales? Western population may be falling as a whole, but not in the U.S. I would not discount long term structural change in how we view transportation and personal vehicle ownership.

 

[kenliles]

another report with some details on Apple possible long term Automotive efforts...

"
But people familiar with the company said that the background of the people Apple is hiring — including automotive designers and vehicle dynamics engineers — and the seniority of the executives involved suggest a car could be in the works.

“Three months ago I would have said it was CarPlay,” said one person who has worked closely with Apple for many years, referring to Apple’s infotainment system. “Today I think it’s a car.”
"

Also relates to competing for employees between the two companies

Apple Recruiting Automotive Experts to Work in 'Top-Secret Research Lab' - Mac Rumors

 

[RobStark]

The average age of the U.S. vehicle fleet continues to set records. It is over 12 years now which means people are holding on to their cars longer. Is this a net positive or negative for new car sales? Western population may be falling as a whole, but not in the U.S. I would not discount long term structural change in how we view transportation and personal vehicle ownership.

The US population as a percentage of global population is falling.

That the average age of a registered car is older means cars are more durable.

The fleet keeps getting bigger. People don't send road worthy cars to the junk yard.

I strongly discount long terms structural change in how we view transportation and personal vehicle ownership.

It is a Utopia constructed in the minds of social engineers with little bearing on the aspirations and wants of most people.

 

[ecarfan]

“Three months ago I would have said it was CarPlay,” said one person who has worked closely with Apple for many years, referring to Apple’s infotainment system. “Today I think it’s a car.”
Apple Recruiting Automotive Experts to Work in 'Top-Secret Research Lab' - Mac Rumors

I remain skeptical that Apple has plans to design and produce a completely new car. I do think that Apple is serious about becoming more involved with car companies and integrating their Apple car software into other vehicles.

 

[kenliles]

I remain skeptical that Apple has plans to design and produce a completely new car. I do think that Apple is serious about becoming more involved with car companies and integrating their Apple car software into other vehicles.

me too

 

[kenliles]

some more interesting details; 1000s of employees, an electric car code named Titan

"Apple CEO Tim Cook reportedly green-lighted the project almost a year ago, and company executives have already begun to meet with potential contract manufacturers, including Canadian firm Magna Steyr. Apple iPod and iPhone designer Steve Zadesky, formerly of Ford, is said to be running the project. "

Apple has - report

 

[Auzie]

I remain skeptical that Apple has plans to design and produce a completely new car. I do think that Apple is serious about becoming more involved with car companies and integrating their Apple car software into other vehicles.

Me too. My guess is that they wish to get into car tech market because it is huge and no one is seriously there apart from Tesla.

some more interesting details; 1000s of employees, an electric car code named Titan

"Apple CEO Tim Cook reportedly green-lighted the project almost a year ago, and company executives have already begun to meet with potential contract manufacturers, including Canadian firm Magna Steyr. Apple iPod and iPhone designer Steve Zadesky, formerly of Ford, is said to be running the project. "

Apple has - report

The things that come to my mind, that Apple could be considering:

Car infotainment system - car iPad that could be fitted to any car, front and back seats
Car central control system - similar to Tesla's large screen. Fitting these to existing cars might be a hurdle, but it could be sold to car makers to be fitted to new cars
Car self-driving system - retrofittable (??? doubtful, too difficult) or to be sold to car makers to be fitted to new cars
Car to phone, car to car, car to home communication and traffic integration system - retrofittable gadgetry, enormous market, my bet is on this
Making electric cars

Perhaps Apple team is at this stage just contemplating their potential products. They might be just speculating at this stage on the best way and products with which to enter this market.

 

[kenliles]

Me too. My guess is that they wish to get into car tech market because it is huge and no one is seriously there apart from Tesla.



The things that come to my mind, that Apple could be considering:

Car infotainment system - car iPad that could be fitted to any car, front and back seats
Car central control system - similar to Tesla's large screen. Fitting these to existing cars might be a hurdle, but it could be sold to car makers to be fitted to new cars
Car self-driving system - retrofittable (??? doubtful, too difficult) or to be sold to car makers to be fitted to new cars
Car to phone, car to car, car to home communication and traffic integration system - retrofittable gadgetry, enormous market, my bet is on this
Making electric cars

Perhaps Apple team is at this stage just contemplating their potential products. They might be just speculating at this stage on the best way and products with which to enter this market.

Agree. I think all of the above are being evaluated. Including making electric car, but very early of course and with a different take than Tesla even if it comes to pass. Regardless I beleive the two efforts will eventually complement, validate EV, and leverage against each other (including Apple Store dealerships). Anyway, gonna be a blast to follow. I can't think of a better catalyst for a Tesla frankly

 

[Auzie]

Agree. I think all of the above are being evaluated. Including making electric car, but very early of course and with a different take than Tesla even if it comes to pass. Regardless I beleive the two efforts will eventually complement, validate EV, and leverage against each other (including Apple Store dealerships). Anyway, gonna be a blast to follow. I can't think of a better catalyst for a Tesla frankly

I just struggle with the idea of Apple breaking into new frontiers that are very remote to its core capabilities. Making electric cars would be such new frontier. Such frontiers may be more likely to be broken by newcomers rather than well-established businesses or individuals. It takes a lot of hunger and drive to be a pioneer.

 

[anticitizen13.7]

I just struggle with the idea of Apple breaking into new frontiers that are very remote to its core capabilities. Making electric cars would be such new frontier. Such frontiers may be more likely to be broken by newcomers rather than well-established businesses or individuals. It takes a lot of hunger and drive to be a pioneer.

10-11 years ago, people were skeptical that Apple would break into mobile phones. I remember articles being published saying Apple had no expertise in phones or dealing with mobile phone companies.

EVs are of course a much greater leap for Apple than the leap from iPod to iPhone. Automobiles require incredibly high Capex, and the regulatory red tape is far far worse than for a mobile phone. Apple would also face very tough questions from investors accustomed to 40% gross margins.

In the near term, I don't see Apple as a threat to Tesla. If Apple just started its automotive program late last year, as the rumors indicated, I doubt we would see a finished product before 2020. An established major automaker like Honda or Toyota needs about 5 years per generation of car, and that's with established factories and supply chains, and institutional knowledge of design requirements. If Tesla is already way out ahead from GM and Nissan with the Gigafactory and Supercharger network, they are light years ahead of Apple.

I see Apple entry into the EV market as more of a threat to GM, Nissan, and others, who might see employee defections. Working for Apple on a brand new project (without a lot of baggage, and with a virtually unlimited budget) has to be a seriously tempting prospect.

In the long term, an Apple EV would help build the market for EVs and legitimize the move away from ICE.

I am skeptical that Apple would move into automobiles, given the high risk and low margins, but anything could happen.

 

[The Blue Owl]

I just struggle with the idea of Apple breaking into new frontiers that are very remote to its core capabilities. Making electric cars would be such new frontier. Such frontiers may be more likely to be broken by newcomers rather than well-established businesses or individuals. It takes a lot of hunger and drive to be a pioneer.

Apple is established in consumer electronics, but when it comes to cars, they are a start-up. As far-fetched as it sounds, in the medium-to-long term Apple might prove to be a much stronger competitor to Tesla than all other car companies.

First, the very fact that they have no car-making history is a tremendous advantage, one which Tesla also enjoyed. When you have no legacy car business to protect, you are free to be as bold and innovative as you need to be. Second, if there is one thing that is truly Apple's core expertise, it is marrying software and hardware for an almost flawless user experience. Third, Tim Cook is a logistics god. Very few companies, if any, can match Apple's logistics prowess. And fourth, what other market is there that Apple can go into that would allow them to keep growing at their current rate? The global consumer electronics market had total revenues of $253.9bn in 2013. The automotive market in 2014 was $4 trillion.

Apple certainly has the resources; they have more available cash than all automakers combined, and they are hungrier than ever. If they want to do it, they can do it.