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Tesla Competition - A business discussion

Grendal

SpaceX Moderator
Moderator
Jan 31, 2012
6,650
9,176
Santa Fe, New Mexico
I wrote this post on the Motley Fool board over the weekend and it was chosen as The Post of the Day, so you can all read it without cost (I get no money, btw):

Tesla Competition

I put the link here since it's a business/investing oriented blog, not from a technology perspective. Hope you enjoy it (and recommend it on the MF site).

Very well written article. You made your points very well then drew your conclusions in a concise manner that should sway anyone not familiar with Tesla and what it has done.
 

lolachampcar

Well-Known Member
Nov 26, 2012
6,214
7,873
WPB Florida
smorgasbord,
A very long and nice read. You cover a lot of bases.

WRT when to cut your loses-
Copy F1. There comes a time in the season when management realizes the current car is a dog with fleas. Sure, they soldier on with the season as they are obligated but all meaningful resources go to next year's car. It is an ugly necessity.

WRT the future and competition-
If you take Tesla at their word wanting to build 500K G3s a year, someone needs to be raising $20B - $30B now to build the battery capacity to supply production. A BMW, MB, Toyota or even Sony could do that but not Tesla; or at least not at today's (high) market cap. If Tesla pulls off G3 in the same way they have done with MS, they are not going to be in a position to control demand. If they do not have the batteries, they will fall prey to another tech innovator trap; they will have created expectations and demand they can not meet. I am saying this as a big fan of the idea of a "3 Series MS with 200 mile range". I do think there is 500K a year demand for that product.
 
Congratulations.
Best single comprehensive article I have read on Tesla's current positions and directions for potential future growth.
TWO THUMBS UP!!!

Not a perfect car or car company, but certainly they have keen vision where they are headed, and are doing enough things right to demand respect and attention from the other manufacturers.
As the company matures, some of the inconsistencies and small delays will be better finessed to be seamless with the rest of the process.
 

EVNow

Well-Known Member
Sep 5, 2009
15,001
37,452
Seattle, WA
There is no competition to Model S now. But TSLA evaluation is based on Gen 3 - coming out in 17/18. So, the question is what do we expect the competition to be in 17/18. The article doesn't answer that question.

Do you really think Leaf will still have the same range 7 years after it's introduction ? Will Infiniti LE be delayed for more than 4 years ? Will i3 be the same car in 4 years ?

To answer some of these questions we need to figure out what is cooking in the labs at Nissan or GM (Envia ?) or BMW/Samsung or LG now - that may get commercial in 3 years. We can't find that out easily ...
 

VolkerP

EU Model S P-37
Jul 6, 2011
2,464
27
Germany
niced work, smorg! One thing to add to the list of
bunch of unlikely things that have to happen
5) The board must decide to take up the fight with their established sales channel - the dealerships - and sell the new technology to the people. I have no idea how they could accomplish this in the states where laws protecting the dealers - oops - customers are in effect.
 
Brilliant piece. Thanks. You are saying the same things I have been thinking since before I invested, but I never even thought that it could be this hard for established companies to turn the ship around. This will be classical innovator's dilemma, and there is nothing anyone can do to stop it. Daimler and Toyota are currently in the best position, with an ownership stake in Tesla. Everyone else...it'll be interesting to see what happens in the next decade. You're almost making me feel bad about hedging my position ;)
 

30seconds

Active Member
Feb 28, 2013
2,389
6,334
SF
I think the software behind the Model S / future cars is another large separation from the established companies. it took BMW how long to make idrive usable? meanwhile telsa can upgrade you entire car's firmware at any time? the massive touchscreen in the middle is one aspect of how far ahead they are on this front as well. I think this is another key reason why the entire Tesla platform is built to scale and built to be reused on all the models they will produce.
 

ItsNotAboutTheMoney

Well-Known Member
Jul 12, 2012
12,210
10,611
Maine
There is no competition to Model S now. But TSLA evaluation is based on Gen 3 - coming out in 17/18. So, the question is what do we expect the competition to be in 17/18. The article doesn't answer that question.

Do you really think Leaf will still have the same range 7 years after it's introduction ? Will Infiniti LE be delayed for more than 4 years ? Will i3 be the same car in 4 years ?

To answer some of these questions we need to figure out what is cooking in the labs at Nissan or GM (Envia ?) or BMW/Samsung or LG now - that may get commercial in 3 years. We can't find that out easily ...

And will the other manufacturers commit to build a national fast-charging network? Will it be as fast as Tesla's? Will the car cost the same or less than Tesla's? Do you to buy it from a dealer and have to deal with an unnecessarily long process after ordering the car?
 
There is no competition to Model S now. But TSLA evaluation is based on Gen 3 - coming out in 17/18. So, the question is what do we expect the competition to be in 17/18. The article doesn't answer that question. Do you really think Leaf will still have the same range 7 years after it's introduction ? Will Infiniti LE be delayed for more than 4 years ? Will i3 be the same car in 4 years ? To answer some of these questions we need to figure out what is cooking in the labs at Nissan or GM (Envia ?) or BMW/Samsung or LG now - that may get commercial in 3 years. We can't find that out easily ...

If there's a common thread in my post, it's that while the technology is important, it's not the biggest long-term key to Tesla's success. Only Tesla approaches Electric Drive not as something to be shoe-horned into an existing ICE-based structure, but as something that's inherently better. No other company in the world is thinking this way. All the major car companies are thinking is how to be "as good as ICE," and all except Nissan and BMW are thinking about reaching Compliance with the law. But even those two have such limited vision for how good an EV can be - their vision is city cars for people who want to be green.

Tesla's thinking is so disruptive because they approach it from a "electric is better, how do we leverage that" mentality that affects all aspects of what they do. And because of that, there's no reason to believe that Nissan, GM, or BMW will catch up on Tesla's half a decade technology lead in less than half a decade. And even if their BODs had the mentality, there's no way they could reinvent their decades old company within a half decade. You think that given the limited success of the Leaf that Ghosen is popular within Nissan BOD or with his management team so much that they want to do more EVs?

I worked at a high tech company in the 1990s that went through two shifts in the company's main product and goals. I saw how marketing, product management, and even engineering fought the new direction for the first change, and how upper management tried to kill the second change multiple times. Only our strong CEO was able to continually push his vision and eventually make the new directions successful, which was really good since the previous products quickly peaked and the company would have gone down the tubes. Change is not easy, and even if Ghosen really still believes in EVs and even if BMW's BOD believes in EVs, they have management teams with oil in their veins and a company mentality that runs on gasoline. The Innovator's Dilemma is a history lesson that shows us that history repeats itself and even companies that want to make the transition most often can't.

So, what would be a warning sign? If one of the big car companies starts a new brand that is exclusively electric. If I were Carlos Ghosen or Norbert Reithofer I would spin off a new car company, like Toyota did with Lexus or GM did with Saturn. I'd give them autonomy and money and let them compete with my offerings. That would take billions of dollars, hundreds of engineers, and years of a depressed stock price to live through. I predict that unless we see that happening Tesla is in little danger of being overtaken.
 

lolachampcar

Well-Known Member
Nov 26, 2012
6,214
7,873
WPB Florida
and if they chose this path, they could bring their market cap (albeit depressed), purchasing, supply chain management, etc. to the table to solve the battery problem. This is the real magic that will be required by Tesla or anyone else if a G3 type product is to be delivered in volume.

Very nice work and thinking smorg.
 

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