Tesla Motors - America's Next Behemoth - New Article outlining Tesla' lead 12/12/2015

[farzyness]

Link:

http://www.degeneratestalk.com/posts/2015/12/9/tesla-motors-americas-next-behemoth

 

[ThortsMD]

Decent article, but it makes a couple of factual errors (Samsung vs Panasonic as battery partner) and doesn't understand the importance of the Supercharger network to EV adoption. But otherwise a good read. Thanks for posting the link.

 

[farzyness]

Decent article, but it makes a couple of factual errors (Samsung vs Panasonic as battery partner) and doesn't understand the importance of the Supercharger network to EV adoption. But otherwise a good read. Thanks for posting the link.

Good call out - looks like author fixed.

 

[ThortsMD]

And the author sent a nice reply!

 

[danielp]

Nice article!

 

[Polly Wog]

@farzyness, thanks for posting the link. Makes me want to buy even more Tesla shares!

 

[tftf]

The "disruption" analogy is once again wrongly wrangled upon the car sector imho:

The unfortunate part of it all is that by the time most automakers realize that their business is dying, it'll potentially be too late. I'm going to go ahead and list a couple once-great companies that have experienced this exact phenomenon due to disruptive innovation:

• Kodak (digital camera)
• Blackberry (smartphone)
• Radio Shack & Sears (Amazon and online shopping)
• Blockbuster (Netflix)
• Borders Books (Amazon, again)
• Myspace (Facebook, Twitter, every other social site basically)

In short, the Innovator's Dilemma is a real problematic scenario for any company, especially in industries where innovation hasn't occurred in a real long time.

The car sector is changing much slower than other sectors and examples listed above. There simply won't be a sudden disruption (especially because of battery production limits as well as possibly low oil prices). Also, longer-range PHEVs (real-world range of 30-50 miles) coming before 2020 could slow down the adoption of "pure" BEVs for years.

No major car maker or supplier is sitting like a duck (the only exception is maybe Fiat-Chrysler, but both brands have a history of poor financial and other strategic guidance for decades before the merger...) and not seeing that the car industry is changing to electric/electrified, more autonomous and digital/connected cars.

But over-investing in EVs today or since 2010 is not the magic solution (see market leader Nissan-Renault, lots of losses and write-downs on their early EV programs since 2011).

The main point is getting there profitably and seeing the right timeframe (which is coupled to changing regulation, customer demand and technology/infrastructure improvements).

And who can garantuee that Tesla isn't the next Blackberry or MySpace of the EV market once the dust settles in 2025 or 2035 and we know who "won" the race to the new personal mobility world in terms of market share and profitability?


PS: This reminded me of another recent article making similar mistakes in terms of timing imho (using 60 months instead of 120 or 240 months):

The Autowende has begun

25 November 2015

The Autowende has begun | Fastned

(Also small errors in mixing cell and module/battery pack prices when discussing the upcoming GM Bolt vs other EVs, but that's not the main point).

While many new PHEVs and EVs are coming to market by 2020, the combined market-share of "pure" EVs will still be in the single digits by 2020. That's not a disruption or revolution. The transition to electrified vehicles will be an evolution in my opinion and it will last 1-2 decades (not just 5 years).

New battery technologies (post Li-Ion) could for example reshuffle the entire battery supply chain as as well as devalue all EVs sold and already on the road by 2020 or 2025.

PPS: The real and only "disruption" in the car market in my opinion is the adoption of more autonomous or even fully autonomous vehicles (changes in ownership structure etc.), much more so than the upcoming changes in propulsion systems. But that too is probably decades away, at least for fully autonomous vehicles on a global scale.

PPPS: And quotes such as these make me wonder if the author of the first article (linked by OP) has really studied the upcoming product portfolios:

Luxury car companies such as Volvo, Jaguar, Lincoln, etc. are on the brink of bankruptcy.

Volvo has one of best line-ups in terms of electrified vehicles, every car model from on will be offered in a PHEV option (and they will introduce pure EV versions of their PHEVs by 2019). Jaguar too is working on EVs, maybe already launching in 2017: Radical electric Jaguar SUV planned for 2017 | Autocar etc. And why use Lincoln just days after Ford announced a $4.5 bn investment in electrified vehicles until 2020?

If one assumes a bullish scenario for EVs/PHEVs until 2020, the author should have used laggards like Fiat-Chrysler.

 

[farzyness]

@farzyness, thanks for posting the link. Makes me want to buy even more Tesla shares!

You got it!

- - - Updated - - -

The "disruption" analogy is once again wrongly wrangled upon the car sector imho:



The car sector is changing much slower than other sectors and examples listed above. There simply won't be a sudden disruption (especially because of battery production limits as well as possibly low oil prices). Also, longer-range PHEVs (real-world range of 30-50 miles) coming before 2020 could slow down the adoption of "pure" BEVs for years.

No major car maker or supplier is sitting like a duck (the only exception is maybe Fiat-Chrysler, but both brands have a history of poor financial and other strategic guidance for decades before the merger...) and not seeing that the car industry is changing to electric/electrified, more autonomous and digital/connected cars.

But over-investing in EVs today or since 2010 is not the magic solution (see market leader Nissan-Renault, lots of losses and write-downs on their early EV programs since 2011).

The main point is getting there profitably and seeing the right timeframe (which is coupled to changing regulation, customer demand and technology/infrastructure improvements).

And who can garantuee that Tesla isn't the next Blackberry or MySpace of the EV market once the dust settles in 2025 or 2035 and we know who "won" the race to the new personal mobility world in terms of market share and profitability?


PS: A similar article in my opinion makes similar mistakes in terms of timing (using 60 months instead of 120 or 240 months):



The Autowende has begun | Fastned

(Also small errors in mixing cell and module/battery pack prices when discussing the upcoming GM Bolt vs other EVs, but that's not the main point).

While many new PHEVs and EVs are coming to market by 2020, the combined market-share of "pure" EVs will still be in the single digits by 2020. That's not a disruption or revolution. The transition to electrified vehicles will be an evolution in my opinion and it will last 1-2 decades (not just 5 years).


PPS: The real and only "disruption" in the car market in my opinion is the adoption of more autonomous or even fully autonomous vehicles (changes in ownership structure etc.), much more so than the upcoming changes in propulsion systems. But that too is probably decades away, at least for fully autonomous vehicles on a global scale.

This is a great point - however the argument I would make is that Tesla is going to be able to make changes to car sector at a considerably faster pace than usual, due to the fact that building EVs is a fundamentally easier tasks than building an ICE due to a) lower number of suppliers providing parts and b) inherently less parts in an EV.

 

[dakh]

This is a great point - however the argument I would make is that Tesla is going to be able to make changes to car sector at a considerably faster pace than usual, due to the fact that building EVs is a fundamentally easier tasks than building an ICE due to a) lower number of suppliers providing parts and b) inherently less parts in an EV.

I think we can add to this:
- the same basic skateboard design can be used in a lot of different applications with only minor tweaks.
- Tesla already stated they're working on reducing the gap between design and production from 2 years that is common in the industry now. I wouldn't bet against them on this one.
- Tail winds from improving batteries that have exponential cascading effects on cost and other critical parameters of EVs
- Self driving will reduce vehicle count by about an order of magnitude
- Combine that with 1M mile drivetrain and who's making ANY money in this business then?

 

[farzyness]

I think we can add to this:
- the same basic skateboard design can be used in a lot of different applications with only minor tweaks.
- Tesla already stated they're working on reducing the gap between design and production from 2 years that is common in the industry now. I wouldn't bet against them on this one.
- Tail winds from improving batteries that have exponential cascading effects on cost and other critical parameters of EVs
- Self driving will reduce vehicle count by about an order of magnitude
- Combine that with 1M mile drivetrain and who's making ANY money in this business then?

The second point is a very good one I completely forgot about. Vertical integration is the key differentiator between Tesla and other OEMs.