Tesla has 'won' - who fights who now?

[Vitold]

All Tesla competitors are planning on using the same battery - literally - there is not enough batteries to make a difference.

Oil still rules and will rule until battery production catches up.

 

[Barklikeadog]

I dont agree here... I do think that Tesla will have to change, but that doesn't mean they will have to change to the traditional model. They could approach service like they do body shops and certify external companies to work on the cars. For inventory, they could follow their current model but have more inventory cars stashed in wharehouses around the country (like Amazon?). I'm not saying that either of these are the best answer, only that I dont think that HAVE to go down the road of traditional dealers.

Having said that, personally I don't have a problem with the concept of dealers in general, there are good ones and bad ones, Tesla could also approach this differently and utilize dealers more like apple's retail sales model... The "dealer" could resell the cars, but no discounting, and you have to use their marketing and training.



I also agree that gas powered will be around for a long time, bit I think the power issue will solve itself pretty quickly as more electric cars reach the market... Once there are enough potential customers, someone will decide to install power outlets on every street as long as they are allowed to keep the money from them, or we will come up with an entirely different approach to electric cars... as autonomous cars are more common, perhaps your car will just drop you off at home and take itself to the charging station to "top off".

I just base my opinion on volume. And I think Tesla peeps have admitted this in the past. If you are selling 500k cars per year, you just can't make every one of those to order and then ship it. Service centers will have to multiply enormously. The service/sales place near me always has a full lot of dusty cars. I read stories here about incredible wait times just to get a car in. Something has to give. I still prefer to walk onto a lot and look around and compare options. When I took a test drive I was asking about the different packages and what not... I was pointed to the website. They had just a couple of S to look at.

 

[McRat]

All Tesla competitors are planning on using the same battery - literally - there is not enough batteries to make a difference.

Oil still rules and will rule until battery production catches up.

It never has been about oil or batteries as a commodity. I can buy 1000 EVs in a 1 hour radius of me today with a little help on the phones and with the paperwork. There is inventory. There is no waiting list.

It has always been about acceptance. I'm going to say something very hurtful to the true EV zealots out there. The EV1 died because of the lack of interest from buyers. As did all the other brands of it's timeframe. And it is still the #1 problem.

We claim the resistance is range, but it is not. They developed cars that were EV for >75% of commuters, yet able to travel from Central America to Deadhorse Alaska, without a hiccup. So it was never range.

Price is a huge consideration, and the $22k rebates in China have pushed them to the #1 EV producer in the world.

When EV's are cheaper than ICE options, and it is coming, then the transformation is going to kick into high gear.

HOWEVER, many people today require 10 heated cupholders, crotch massage, 10E06 different music sources, IQ enhancement technology, baby seal dashboards, Swarovski crystal sunroofs, flatulence evacuation systems, etc.

You hear it in threads a lot. If it's not a Rolls, it's not a car. Since the current buyers of EV's are higher on the economic scale, it's understandable, even if they know it's hurting adoption. They want all the EV's to be luxury EV's so they have more personal choices. "Let Them Eat Camry!" is their answer.

I'm pretty sure they know when everybody can buy a $10k EV, then the number of EV miles a year will increase by an order of magnitude, like has happened in China.

 

[Saghost]

I'm going to keep playing devils adv here because these are great discussions...

I believe in the city to get the permits and then to have a charger installed... will run about 5k. And after that another electric vehicle could legally park in 'your spot'. It's not so much a dispute of rich v poor or new vs old... people here see it as a freedom issue where someone is getting a privilege.

Oh, absolutely. There's no way that a private citizen can personally solve the charging problem while living in a street parking neighborhood, as you just pointed out.

But if EV adoption rates become high enough, I could easily see the city electrifying streets block by block, and either charging a monthly flat fee to residents of the neighborhood with registered EVs or installing EVSEs that connect to a pay network like Chargepoint and letting them manage the money.

 

[Krugerrand]

When the Model 3 intro goes the same way that the Model X intro went, Tesla will lose the good will of a huge segment of the mainstream car buying public. The amount of debt Tesla is piling up gives it very little wiggle room to survive a screwed up Model 3 launch.

My prediction is that while EVs will survive the Model 3 launch, Tesla likely won't.

I fixed it for you.

When the Model 3 intro goes as planned, Tesla will be inundated with Model 3 orders by the mainstream car buying public. The amount of money pouring into Tesla will allow them to continue to accelerate the advent of sustainable transport or energy at an even faster rate.

My prediction is that while EVs will survive the Bolt launch, GM likely won't.

 

[Krugerrand]

I've been mulling over this recharging scenario for a while as I realize that flat dwellers and street parkers will be the most difficult to 'satisfy' with EVs. And they mainly occur in cities where the push for clean air and EVs will be greatest............

Ultimately I suspect the solution will be super-rapid charging - say 20 mins for 80% of 200 miles - at 'Power Stops' with cafes attached. As well as 'ordinary' super-charging (2/3 to 3/4 the speed of charge) at malls; shopping centres; gyms etc.

Or at converted gas stations, or chargers at parking meters, or, or, or, or.

 

[Krugerrand]

Excellent article. The challenge for Germany, and the US to a lesser degree, is that the people in these companies have an entire career invested in the ICE. And to eliminate the ICE destroys the value of all of that knowledge. "Deer in the headlights" is precisely accurate. They simply can't believe this is possible.

They either adopt the Tesla approach, and do what has to be done to get ahead of the game, or they will slowly die. There is no option, and the sooner they come to realize it, and act accordingly, the more likely survival becomes.

It's not as hard as they make it out. Open a new division in one of those old factories you closed down and only do EVs there. Retrain workers and send them to the new division. Nobody wants to retrain? Fine, then let them go and hire new workers. As the new division ramps up and starts producing cars, close down the ICE line/s that are being cannibalized by your awesome EVs. Retrain those workers and send them to the new division. Rinse and repeat.

 

[sandpiper]

It's not as hard as they make it out. Open a new division in one of those old factories you closed down and only do EVs there. Retrain workers and send them to the new division. Nobody wants to retrain? Fine, then let them go and hire new workers. As the new division ramps up and starts producing cars, close down the ICE line/s that are being cannibalized by your awesome EVs. Retrain those workers and send them to the new division. Rinse and repeat.

Oh it's certainly technically possible. The workers are happy to build whatever, I'm sure. The issues will be with the management & engineering people who are among the world's best with conventional powertrains. You aren't going to retrain a 50 year old fuel systems engineer, or a cam shaft manufacturing engineer to now design inverters. You're asking the most senior people to throw out all of the experience that supports their high salaries and start over.

That won't happen easily. The entrenched management & senior technical people will fight to hang on, because in reality, they're far more interested their own self preservation than in the company's survival. Nobody will ever willingly say "Yep... this is the way to go, and there's no longer a place for me and all my compatriots." It's why large companies struggle with major technological shifts. People never want to consider a future that doesn't include a good place for them, no matter how obvious or inevitable it may be.

 

[Krugerrand]

Oh it's certainly technically possible. The workers are happy to build whatever, I'm sure. The issues will be with the management & engineering people who are among the world's best with conventional powertrains. You aren't going to retrain a 50 year old fuel systems engineer, or a cam shaft manufacturing engineer to now design inverters. You're asking the most senior people to throw out all of the experience that supports their high salaries and start over.

The only thing that stops the 50 year old fuel systems engineer from making EVs is him or herself. When confronted with options a) no job vs b) have a job, only those who are in a financially secure place will elect option b.

Knowing several people of that vintage, I'd say that there's more promise than not. Yep, there will always be people who are stuck and don't want to change and live with putting out constant negativity and self-pity etc... That's their personality more so than it's their age group.

Come on, have at least a little faith in people.

That won't happen easily. The entrenched management & senior technical people will fight to hang on, because in reality, they're far more interested their own self preservation than in the company's survival. Nobody will ever willingly say "Yep... this is the way to go, and there's no longer a place for me and all my compatriots." It's why large companies struggle with major technological shifts. People never want to consider a future that doesn't include a good place for them, no matter how obvious or inevitable it may be.

I don't generally disagree. The problem is we're getting to the point, very quickly, where they can't make excuses any longer if they want to keep a roof over their heads and food on their tables. They can't back up into the corner for much longer.

 

[sandpiper]

The only thing that stops the 50 year old fuel systems engineer from making EVs is him or herself. When confronted with options a) no job vs b) have a job, only those who are in a financially secure place will elect option b.

Knowing several people of that vintage, I'd say that there's more promise than not. Yep, there will always be people who are stuck and don't want to change and live with putting out constant negativity and self-pity etc... That's their personality more so than it's their age group.

Come on, have at least a little faith in people.

Well, speaking AS a person of almost that general vintage, I don't dispute the we're capable of learning and doing now things. But taking a high paid senior fuel systems engineer, retraining them as an electronics engineer and expecting the same level of productivity out of them (in a reasonable time frame), as you would get from somebody who's solidly experienced in that field is simply not reasonable. And no sane (or financially responsible) company would ever attempt it.

I don't generally disagree. The problem is we're getting to the point, very quickly, where they can't make excuses any longer if they want to keep a roof over their heads and food on their tables. They can't back up into the corner for much longer.

No debate. Anybody who doesn't see the storm coming has their head wedged firmly up their backside.

 

[AudubonB]

who fights who now?
I guess those of us who fight for "Who Fights Whom Now?" never have a chance.

~O tempora, o snippiness~

 

[Dstrohl]

I agree that there is a risk, but I don't put it that high. The risk was far greater with the Model S. And I think Tesla learned a valuable lesson with the X. They have a pile of top notch people that they've poached from the big auto makers. There's no real rocket science to doing a line startup. It takes time, money and talent. I think it's far more likely that the M3 slips a year, or has a very slow ramp-up. And I think Tesla has enough goodwill and resources to endure either of those.

I actually agree with Eclectric on this one, but not as much in the 5-7 year time frame, I think that the model 3 challenges will hit in the 2-5 year time frame, by 5 years, they will either have them fixed, or not be around to worry about the rest of the things.

However within that 2-5 year time frame, I think Tesla will have a HUGE problem in dealing with the model 3 roll-out. Not so much in terms of manufacturing, I trust that they will figure that out, but in terms of how to handle all the customers that EXPECT Tesla to be just like any other car company, and will get very upset when features disappear, or when it does something "weird",.. or when being told that they have to wait months for parts for repairs? or not being able to get access to service manuals... or not being able to change the wheels without getting turned away at a service center... or when features that are "promised" don't really appear... or... These are all things that current owners more or less put up with but the public in general would not, and would very quickly start appearing in reviews and reports, litigation and legislation, and overall lowering Tesla's reputation and scaring away customers.

Selling and servicing the mass market is a totally different thing that selling and servicing to a high end group of people who want to car for what it is, and are willing to put up with things that aren't perfect because they (we) love the rest of it enough and mostly believe in the overall concept.

However, if they can solve these problems, It will also get much better for the rest of us as well!

 

[Eclectic]

I fixed it for you.

When the Model 3 intro goes as planned, Tesla will be inundated with Model 3 orders by the mainstream car buying public. The amount of money pouring into Tesla will allow them to continue to accelerate the advent of sustainable transport or energy at an even faster rate.

My prediction is that while EVs will survive the Bolt launch, GM likely won't.

The problem with your fantasy is that Tesla already has more orders than it can handle. So more orders won't really do anything other than give Tesla comfort that it will have a ready market for the items it can't yet produce in that kind of volume. And the history of Tesla is that they screw up product launches. The Model X, for example, was what...two years late and when it finally started trickling out, it was riddled with flaws large and small.

Think about it. Tesla is leveraging the bejesus out of its financial position to build out capacity for hundreds of thousands of Model 3s. It's taken in deposits on hundreds of thousands of units.

If the Model 3 launch is like the Model X, a few fatal things will happen. First, the market will sell off Tesla stock and analysts will note that the very optimistic revenue numbers are not going to materialize. That will result in the equity and debt markets closing up for Tesla, and when it has to start paying the bills for its expansion there will be no money.

Second, a large number of the hundreds of thousands of pre-orders will be canceled. That means Tesla has to start sending out checks for $1,000 for each canceled pre-order. That means a massive cash crunch.

The core Tesla sycophant group was willing to put up with delays and flaws because it worshiped at the church of Musk and accepted anything thrown their way. That won't be the case for a large part of the 400,000 people who pre-ordered and who aren't Musk adherents.

If 50,000 of the 400,000 pre-orders cancel, Tesla will have to immediately pay out $50,000,000. That will be at a time when it has no access to equity or debt markets. If closer to half of all pre-orders cancel when the Model 3 is delayed (something not out of the range of likelihood if the delay is significant, as was the Model X delay), that's $200 million that will be immediately due and payable. That's a recipe for insolvency.

This is close to a worst case scenario, but it's totally in line with the history of Tesla product launches. Given that Tesla hasn't even produced a final prototype the public or announced specifications and pricing of the various configurations, whatever they may be, and we're about 6 months away from the announced start of production.

 

[N5329K]

The problem with your fantasy is that Tesla already has more orders than it can handle. So more orders won't really do anything other than give Tesla comfort that it will have a ready market for the items it can't yet produce in that kind of volume. And the history of Tesla is that they screw up product launches. The Model X, for example, was what...two years late and when it finally started trickling out, it was riddled with flaws large and small.

Think about it. Tesla is leveraging the bejesus out of its financial position to build out capacity for hundreds of thousands of Model 3s. It's taken in deposits on hundreds of thousands of units.

If the Model 3 launch is like the Model X, a few fatal things will happen. First, the market will sell off Tesla stock and analysts will note that the very optimistic revenue numbers are not going to materialize. That will result in the equity and debt markets closing up for Tesla, and when it has to start paying the bills for its expansion there will be no money.

Second, a large number of the hundreds of thousands of pre-orders will be canceled. That means Tesla has to start sending out checks for $1,000 for each canceled pre-order. That means a massive cash crunch.

The core Tesla sycophant group was willing to put up with delays and flaws because it worshiped at the church of Musk and accepted anything thrown their way. That won't be the case for a large part of the 400,000 people who pre-ordered and who aren't Musk adherents.

If 50,000 of the 400,000 pre-orders cancel, Tesla will have to immediately pay out $50,000,000. That will be at a time when it has no access to equity or debt markets. If closer to half of all pre-orders cancel when the Model 3 is delayed (something not out of the range of likelihood if the delay is significant, as was the Model X delay), that's $200 million that will be immediately due and payable. That's a recipe for insolvency.

This is close to a worst case scenario, but it's totally in line with the history of Tesla product launches. Given that Tesla hasn't even produced a final prototype the public or announced specifications and pricing of the various configurations, whatever they may be, and we're about 6 months away from the announced start of production.

This is the "waterfall" I've spoken of before. It's possible Tesla doesn't hear that roar coming from around the bend. It's also possible that they do hear it and won't find a way to avoid going over the falls. Think Blackberry. Or Nokia.
I believe it's more likely they do know perfectly well what's coming, and are doing prudent things to avoid repeating past launch mistakes. I also know that one ill-timed promise or boast can undo a whole bunch of prudence.
Did you know GM's EV-1 was born from a management boast?
That said, the Model 3 is totally make or break for Tesla. They will either get it mostly right and triumph (perfect isn't necessary or possible) or they'll be riding the barrel down.
They must meet the expectations of a new and less forgiving market segment, not just posters on this forum.
Robin

 

[mspohr]

Excellent article. The challenge for Germany, and the US to a lesser degree, is that the people in these companies have an entire career invested in the ICE. And to eliminate the ICE destroys the value of all of that knowledge. "Deer in the headlights" is precisely accurate. They simply can't believe this is possible.

They either adopt the Tesla approach, and do what has to be done to get ahead of the game, or they will slowly die. There is no option, and the sooner they come to realize it, and act accordingly, the more likely survival becomes.

I think a good example here is Kodak and Fuji Film, the two giants of chemical photographic film. Both of them could see the advent of digital photography and both made feeble attempts to shift from film to digital but they were institutionally incapable of making the fundamental changes necessary to shift. They just had too much invested in chemical photography to abandon it and they ultimately faded away to irrelevance.
I think the German politicians see this coming and are trying to get Mercedes and BMW to change but they both have the same problem. A massive investment of intellectual capital in ICE powertrain technology which they do not want to abandon. I don't know if they can or will change but their future depends on it.

 

[Krugerrand]

Well, speaking AS a person of almost that general vintage, I don't dispute the we're capable of learning and doing now things. But taking a high paid senior fuel systems engineer, retraining them as an electronics engineer and expecting the same level of productivity out of them (in a reasonable time frame), as you would get from somebody who's solidly experienced in that field is simply not reasonable. And no sane (or financially responsible) company would ever attempt it.

No. A sane company would ship all their jobs to another country because that's the easy money thing to do.

 

[mspohr]

The problem with your fantasy is that Tesla already has more orders than it can handle. So more orders won't really do anything other than give Tesla comfort that it will have a ready market for the items it can't yet produce in that kind of volume. And the history of Tesla is that they screw up product launches. The Model X, for example, was what...two years late and when it finally started trickling out, it was riddled with flaws large and small.

Think about it. Tesla is leveraging the bejesus out of its financial position to build out capacity for hundreds of thousands of Model 3s. It's taken in deposits on hundreds of thousands of units.

If the Model 3 launch is like the Model X, a few fatal things will happen. First, the market will sell off Tesla stock and analysts will note that the very optimistic revenue numbers are not going to materialize. That will result in the equity and debt markets closing up for Tesla, and when it has to start paying the bills for its expansion there will be no money.

Second, a large number of the hundreds of thousands of pre-orders will be canceled. That means Tesla has to start sending out checks for $1,000 for each canceled pre-order. That means a massive cash crunch.

The core Tesla sycophant group was willing to put up with delays and flaws because it worshiped at the church of Musk and accepted anything thrown their way. That won't be the case for a large part of the 400,000 people who pre-ordered and who aren't Musk adherents.

If 50,000 of the 400,000 pre-orders cancel, Tesla will have to immediately pay out $50,000,000. That will be at a time when it has no access to equity or debt markets. If closer to half of all pre-orders cancel when the Model 3 is delayed (something not out of the range of likelihood if the delay is significant, as was the Model X delay), that's $200 million that will be immediately due and payable. That's a recipe for insolvency.

This is close to a worst case scenario, but it's totally in line with the history of Tesla product launches. Given that Tesla hasn't even produced a final prototype the public or announced specifications and pricing of the various configurations, whatever they may be, and we're about 6 months away from the announced start of production.

The scenario you describe could happen but there is clear evidence that Tesla understands the problems and is taking steps to avoid a duplication of the errors of the past. If you don't learn from your mistakes, you deserve to die. The greatest threat is delay. If they don't deliver cars in significant numbers by the end of 2017 as they have forecast, they I think people could start to cancel. but even a large number of cancellations is only a rounding error compared to the financing and cash flow of the entire enterprise. As long as progress is being made, I doubt Tesla will lose access to capital and they do have an existing profitable business making the S and X.
Predictions are hard, especially about the future, but this failure scenario is unlikely.

 

[Saghost]

If they don't deliver cars in significant numbers by the end of 2017 as they have forecast, they I think people could start to cancel. but even a large number of cancellations is only a rounding error compared to the financing and cash flow of the entire enterprise. As long as progress is being made, I doubt Tesla will lose access to capital and they do have an existing profitable business making the S and X.

Exactly. From what I've read, Tesla is showing a 20+% gross margin on the S and X, twice the industry average. I'm not an expert in the business, but as I understand it the only reason they aren't showing massive profits is that they are plowing all of the money back into developing the 3 and expanding all of their facilities.

 

[Magus]

Calling the Model 3 the downfall of Tesla is a gross misunderstanding and extremely unlikely. Tesla has been through more challenging times than this. The worst case scenario - which will not happen- is that Tesla undergoes bankruptcy and rebirth, or bought out but the products continued under different management. The people in management are experienced. The less from Audi is a strong example. I feel sorry for those of you in short positions and in the oil industry. Tesla, Model S, X, and 3 will never die.

 

[Magus]

There are a number of other reasons Tesla will not fail. Tesla'a and the upcoming electric cars are going to be superior to their combustion counterparts. Watch Model S and X demand increase when the 100kwh pack come out. Then see what happens when Tesla beats the market for fully self driving tech by a factor of years. Elon is not done with those demand levers referenced previously. If a lowered corporate tax rate occurs, Tesla will benefit. If EV tax credits are scrapped, Tesla will again stand to benefit in terms of EV competition.

My parents stated to me they would never purchase any car this expensive (over 60k). Guess what is coming to their garage just in time for Christmas?