Tesla competition: The problem of cannibalism

[rcc]

If it were just creative use of existing technology, the big car companies could move, build their own 200+ mile range EV's and knock Tesla out.

What most car journalists and business writers don't understand is that Tesla is on version 2.0 of the battery pack + drivetrain. They're an integrated whole and represent years of engineering experience turning thousands of unreliable little cells to one big reliable battery pack and tuning the charging system and drivetrain to work hand in glove with the battery pack.

This is not engineering that can be duplicated overnight. Or even quickly. Tesla probably has a 3-5 year headstart.

 

[Darko]

There was a wired article about some of the engineering Chevy was doing on electric cars that came out like 10 years ago. It was amazing. Motors in each wheel with the wheels able to turn 90 degrees (imagine parallel parking). Of course, does that go anywhere? No... Because management lacks vision. Just take the baby-step and compromise filled Volt. I actually like the Volt but it's a complicated as hell machine. The engineering is incredible but that's because they built a hybrid where both the electric engine and gas engine run the car (yes at highway speeds the gas engine turns the wheels). That's a complicated beast.

Contrast that with the Model S which is an incredibly simple drive train. Very little to go wrong. The technology is all in the battery. Nothing else is all that revolutionary. However, the overall stellar quality of the product is desired from simplicity. You have the skateboard and then everything up from that is taking what's already available and making it their own. Crumple zones, aluminum frames, touchpads, 3g connectivity, regen braking... I could go on and go but the point is you have a pure, simple approach and that gives you such power.

If it were just creative use of existing technology, the big car companies could move, build their own 200+ mile range EV's and knock Tesla out.

What most car journalists and business writers don't understand is that Tesla is on version 2.0 of the battery pack + drivetrain. They're an integrated whole and represent years of engineering experience turning thousands of unreliable little cells to one big reliable battery pack and tuning the charging system and drivetrain to work hand in glove with the battery pack.

This is not engineering that can be duplicated overnight. Or even quickly. Tesla probably has a 3-5 year headstart.

ZestyChicken and rcc, I think the combination of your two posts sums up nicely Tesla's incredible advantage: it's both elegantly simple and incredibly complicated.

Elegantly simple - from the manufacturing standpoint once battery prices fall, which are 7% per year, an electric car is relatively simple to manufacture compared to the Baroque complexity of an ICE car, with its thousands of moving parts - also why hybrids won't have much of a future. I imagine in 10 years entry level electric cars by Tesla or others will cost 10k, and kids will look back at the ICE and marvel at the Rube Goldberg contraptions their parents designed and drove.

Incredibly complicated - from the standpoint of all of the research, testing, and engineering to make the battery-to-drivetrain so flawless and compelling - as you say, hand-in-glove. Tesla's been at this for 10 years, asking the right questions and approaching problems from first principles. The industry is going to have one hell of a time catching up and making anything nearly as compelling for awhile.

I have to say I am continually amazed at how intelligently they have designed both a car and a business plan.

 

[igotzzoom]

I'll put it even more simply. Tesla builds electric cars that don't suck. All of the full EVs currently on the market are compromises. The Leaf, Fit EV, Focus Electric and Mitsubishi iMiEV are all either weird-looking, have compromised practicality or interior space, and/or a limited range. The Model S, although admittedly much more expensive than any of those, is handsome, roomy, has plenty of range, and is plenty fast. If the Gen-III can distill the virtues of the Model S in a lower-cost, more attainable package, Tesla will continue to dominate in the full EV sector.

 

[Soflason]

It's not only that the other car manufacturers (from a tech-standpoint) cannot eventually create a compelling EV and cannibalize Tesla's dominant marketshare, it's that it doesn't make sound business sense. In their view, it can damage their own business if they move too swiftly into EVs... hence, they "half-step" into it with hybrids.

To look at another industry that went through a transformation - think photography: going from film to digital. What happened to Kodak? The story is eerily familiar to what we're seeing with ICE manufacturers as they continue to deny the reality of EV superiority. Forbes presents the case study and every ICE manufacturer should read it:
How Kodak Failed - Forbes

Tesla has been able to out-maneuver it's competition as it relates to business realities, not just on the tech front. The ICE manufacturers are stuck, like Kodak was, for a different reason.

This most salient point (often overlooked) was most clearly described in a recent Julian Cox Seeking Alpha piece "On Elon Musk and Tesla Motors: The Art of Modern Warfare with a Noble Cause" -- I've included (with the author's pull-quote) over in the article's thread here:
Even Better Seeking Alpha Article! - Page 2

 

[djplong]

It reminds me when Chrysler came out of nowhere to blow everyone into the weeds when the Dodge Caravan and Plymouth Voyagers were introduced. Suddenly, you had "the minivan" defined. This was no underpowered VW Microbus. This was something real. It took the market by storm.

Naturally Ford and Chevy came out with their versions about 2 years later. ...except they stank on ice. They were rear-wheel-drive, scaled down models of their existing vans and they were *awful*. Not even when Chrysler showed them how to do it, were they capable of doing it. It was many more years before the now-familiar FWD configuration made it to GM & Ford.

Toyota and Mercedes are on to something in buying Tesla drivetrains.

 

[ShortSlaver]

I sort of think Tesla is open to them joining them. The easiest path is for these companies to create their own branding's, software and stylings and buy Tesla supercharges and drivetrains. Tesla could potentially be the standard platform everyone builds on as it's so ahead of the game it's easier to jump on their bandwagon than try something entirely new and risky.

 

[yobigd20]

The problem with other companies starting now is that Tesla is at least 4-6 years ahead of them in technology. I mean Tesla's already patenting the next gen stuff with metal air batteries that we wont see for a few years yet. The competition is just so far behind. They just don't have the expertise to make something better than Tesla has yet, and Tesla's of course patenting their technology as they go so it can't be straight up copied. I think it's going to be really difficult for someone to top Tesla. I'm not saying it can't be done, I'm just saying that it's unlikely to be done for 10 or more years at least. As long as Tesla keeps staying ahead of the curve it's really hard for someone else to catch up unless they know something technical that Tesla doesn't. I mean look at how long Tesla the company has already been R&D'ing this tech...other companies might need 5-10 years just to catch up to today's Tesla and by that time Tesla's already going to be another Gen or two ahead again.

 

[Darko]

This most salient point (often overlooked) was most clearly described in a recent Julian Cox Seeking Alpha piece "On Elon Musk and Tesla Motors: The Art of Modern Warfare with a Noble Cause" -- I've included (with the author's pull-quote) over in the article's thread here:
Even Better Seeking Alpha Article! - Page 2[/QUOTE]


Thanks, that was a tortuous read from a strict essay-structure point of view, but a lot of insightful points...

 

[Darko]

I sort of think Tesla is open to them joining them. The easiest path is for these companies to create their own branding's, software and stylings and buy Tesla supercharges and drivetrains. Tesla could potentially be the standard platform everyone builds on as it's so ahead of the game it's easier to jump on their bandwagon than try something entirely new and risky.

Yeah, totally. I think Musk and the rest of Tesla have a lot of pride in what they do and are interested in delivering compelling cars, but as soon as the EV market fully matures and consumers are demanding the full gamut of stylings, options, and various bling that happens once a technology reaches maturity, I think you'll find Musk and maybe others of Tesla heading for the exits. That's a long way off, but when that begins to happen I can imagine Tesla provides the proprietary platform and "car companies", or whatever is left of them provide the skin - the skateboard platform Tesla has developed is tailor-made for this.

 

[Grendal]

I'd say one of the biggest reasons for Tesla's success is Elon Musk. His vision drives the company and he has his eye on the prize. He is willing to take risks and sacrifice profit (the Supercharger network) for long term gain. He can be flexible enough to take advantage of a short term gain (the recent stock offering to pay off the Federal loan is an example of this) when that enhances the long term goal as well. A large corporation like GM and Ford just can't do anything like that. His goal is mass EV adoption while the big boys are all about making money. The big boys can copy his moves after they are proven successful but they are just not risk takers when they are constantly watching the bottom line. I'm not saying that Elon is against making profit but that is just a result of achieving his goals, not the goal itself. Elon is looking at the larger picture as saying to himself "how can I make an EV a compelling car that someone will want more than a gas car?" and then he focuses on that. The established automakers are saying to themselves "where can I save money?" and "where is the profit in this?" When going up against Elon the established automakers are destined to lose unless Elon loses sight of his goal. Elon will always be trying to make a compelling electric car that people will want to buy.

 

[WarpedOne]

When going up against Elon the established automakers are destined to lose unless Elon loses sight of his goal.

Exactly, Tesla is only going to fail because of their own missteps or wrongdoings. What everyone else does affects them only slightly. Others would matter if Tesla struggled with sells, had poor brand image, mediocre cars etc. As long as they are producing cars on this level (== don't let the price compromise the car) there is no real fear of failing.
Of course failure is always an option but I'd say vws in 10 years will be very very different companies from today's vws, both in numbers and image. vws meaning all companies producing good old people carriages.

How would one order companies on EV preparedness from every POV that matters?

My take:
1. Tesla, of course
2. Renault/Nissan: they have in-house EV platform, first gen already on the road, second gen in development
3. Toyota and their hybrid tech - it is not EV but it smells on electric propulsion and it gave them some insight
4. Honda and their hybrids, first gen EV
5. GM (Volt, Ampera, ..), PSA (Citroen, Peugeot),
6. BMW, Mercedes with their EV conversions
8. companies that haven't produced or sell a single EV or hybrid vehicle (Audi, VW, Skoda, ...)