Tesla Pickup Investor Thread

[jhm]

The tariffs that nobody wants to talk about

Behold the chicken tax! The holdover from a prior trade war sets a 25% tariff on imported pickup trucks. This is key to what keeps prices and profits high for domestic trucks. It also cross-subsidized fuel efficient vehicles via CAFE standards. If Republicans succeed in dismantling CAFE standards. Fuel efficient cars will become more expensive, and fuel hogs less expensive.

I think we need Tesla to enter the domestic pickup market quickly. The chicken tax makes this particularly attractive. But the lack of fuel efficiency in trucks makes this critical. Without CAFE, pickups could become more profitable and less fuel efficient. An electric alternative is very important for combating climate change.

 

[Tim]

The tariffs that nobody wants to talk about

Behold the chicken tax! The holdover from a prior trade war sets a 25% tariff on imported pickup trucks. This is key to what keeps prices and profits high for domestic trucks. It also cross-subsidized fuel efficient vehicles via CAFE standards. If Republicans succeed in dismantling CAFE standards. Fuel efficient cars will become more expensive, and fuel hogs less expensive.

I think we need Tesla to enter the domestic pickup market quickly. The chicken tax makes this particularly attractive. But the lack of fuel efficiency in trucks makes this critical. Without CAFE, pickups could become more profitable and less fuel efficient. An electric alternative is very important for combating climate change.

While the rationale for the EPAs modifications to Cafe are nonsensical, I believe they are a boon to Tesla. The alternative regulatory regimes available to the states who wish to incent fuel economy involve variable tax and rebate structures to modify consumer behavior. Unlike CAFE, these will flow across manufacturers such that consumers of gas guzzlers will subsidize Tesla and to a lesser extent fuel-efficient ice.

Furthermore since Ford, gm and Fiat have resorted to rent seeking to preserve their profits, they have essentially conceded being competitive in ev technology. This behavior inevitably leads to organizations who can't profitably exist because they've internalized these inefficiencies. There's literally no way they'll be able to compete with a $30k ev truck with a 300 mile range. That might sound fanciful now, but that's probably only 5 years distant. A death blow for those manufacturers.

This is a huge strategic mistake by the oil and especially the automotive lobby imo.

 

[jhm]

I think the unintended consequence of CAFE rollback is that Tesla will lock in more market share while competitors find it harder to make a break with ICE.

This post spells out my thinking. TSLA Market Action: 2018 Investor Roundtable

 

[Rarity]

You know, with Elon's Recode Decode interview, it really sounds like Tesla will start with the heavier end of the pickup truck range. I think a majority of the profits in the pickup truck business are in the heavier end, despite the lower volumes. Perhaps Tesla thinks of this as an extension of the Semi business.

 

[bhtooefr]

I've never heard of anyone doing that with a VW Golf diesel.

Hah.

The TDI community is overrun with coal rollers... cloud of vape out the driver's window, cloud of black out the tailpipe.

 

[wdolson]

You know, with Elon's Recode Decode interview, it really sounds like Tesla will start with the heavier end of the pickup truck range. I think a majority of the profits in the pickup truck business are in the heavier end, despite the lower volumes. Perhaps Tesla thinks of this as an extension of the Semi business.

The work pickup market is not all that profitable. Where the companies make the most money is in the highly tricked out 1/2 tons like the King Ranch version. Those things cost around $30K to build and sell for $70K.

But about 1/2 of pickup sales are to corporate and government buyers. They go for the basic trim versions, but those buyers are not brand loyal like the private pickup market. The private pickup market is one of the most brand loyal niches in the car industry. They might cross shop Toyota vs Honda vs Subaru for their kid's car, but when it comes to Daddy's truck it has to be Ford or Chevy or Dodge.

For industrial and government fleet buyers the #1 issue is cost of ownership followed closely by reliability. If a new brand comes along that is cheaper to run and still reliable, they will buy it. Once Tesla gets established there as the go to work truck, then they can start chipping away at the private pickup market.

With the torque and power the Tesla pickup will be able to deliver, it will probably be able to replace semis for some delivery jobs. That would be a great selling point down the road for those who want the most powerful truck, even though the most they ever use it for is hauling home a new TV.

Hah.

The TDI community is overrun with coal rollers... cloud of vape out the driver's window, cloud of black out the tailpipe.

Good to know. I don't know when I wrote that though. It must have been a while ago.

 

[bhtooefr]

But about 1/2 of pickup sales are to corporate and government buyers. They go for the basic trim versions, but those buyers are not brand loyal like the private pickup market. The private pickup market is one of the most brand loyal niches in the car industry. They might cross shop Toyota vs Honda vs Subaru for their kid's car, but when it comes to Daddy's truck it has to be Ford or Chevy or Dodge.

To illustrate how brand loyal truck buyers are... I've heard claims that a significant percentage of GMC Silverado buyers would not buy a Chevrolet Silverado if GMC went away, because they think that GMC's trucks are a superior product. Allegedly, that's a significant part of why GMC still exists (it also serves to give Buick dealers a full lineup to sell, and Buick was a sacred cow due to the Chinese market).

 

[bhtooefr]

Gah, GMC Sierra, not Silverado, of course. (Double-posting because I missed the edit window.)

 

[mongo]

Gah, GMC Sierra, not Silverado, of course. (Double-posting because I missed the edit window.)

It some cases the GMC version is better. The Canyon for instance has an auto setting on the transfer case whereas the Chevy Colorado does not. If the GMC nameplate went away, but the feature set transferred to Chevy, the buyers might transfer also.

 

[bhtooefr]

The other thing I left out is that it apparently worked IN THE OTHER DIRECTION, too - that is, people being partisan to Chevrolet and refusing to buy GMC.

 

[neroden]

And with this irrational loyalty to essentially phony brands, Al Sloan's evil ghost lingers on.

 

[wdolson]

I've never smoked (allergic to tobacco which was a strong incentive to never consider it), but I've heard smokers are often extremely loyal to one brand, even though there is virtually no difference between most brands. Whenever I see undying loyalty to one brand of truck I think of that.

People used to be that loyal about car brands, but that has softened in the last 20 years. My father was loyal to GM from 1929 (his father's car) to 2013 when he bought a Ford Focus.

 

[RobStark]

People are brand loyal for many reasons.

A friend of mine only buys Toyotas.

Because he really likes his Toyota dealer.

Free car washes for as long as he owns the Toyota he purchased there.

Free non transferable lifetime powertrain warranty. As long as he does all oil changes/scheduled maintenance there.

Some people join car brand specific clubs. Changing brands means changing a subgroup of friends. Or you can be the weirdo Camaro owner at Mustang meets.

A gay neighbor only buys Subaru. Because Subaru supports gay causes/events, for many years before several brands had a "pride" product.

Then again others just find a tribal identity they don't want to change.

 

[wdolson]

People are brand loyal for many reasons.

A friend of mine only buys Toyotas.

Because he really likes his Toyota dealer.

Free car washes for as long as he owns the Toyota he purchased there.

Free non transferable lifetime powertrain warranty. As long as he does all oil changes/scheduled maintenance there.

Some people join car brand specific clubs. Changing brands means changing a subgroup of friends. Or you can be the weirdo Camaro owner at Mustang meets.

A gay neighbor only buys Subaru. Because Subaru supports gay causes/events, for many years before several brands had a "pride" product.

Then again others just find a tribal identity they don't want to change.

The people who belong to any kind of car culture are a minority. I never heard of cars and coffee until I started following Tesla. But then I was the weirdo who bought a new Buick at 26. I went from being the only Buick owner for many blocks to being the only Tesla owner for many blocks.

Back when I was a kid, most of the adults I knew were loyal to one brand of cars or the other, even if they really had no further interest in cars. I saw that soften a bit when Japanese cars became more popular, but many people switched loyalty to a Japanese brand. In recent years I have seen less stringent loyalty to a particular car brand, though I have seen the same sort of fanatical allegiance to truck brands I saw with cars when I was a kid.

Though I generally agree with your overall point. People do still have car loyalties for different reasons.

 

[electracity]

You know, with Elon's Recode Decode interview, it really sounds like Tesla will start with the heavier end of the pickup truck range. I think a majority of the profits in the pickup truck business are in the heavier end, despite the lower volumes. Perhaps Tesla thinks of this as an extension of the Semi business.

Well, this is confusing. They can't make a pickup out of a semi. They can make a nifty medium duty truck out of the semi.

A third party could probably buy a semi, stretch the frame, and produce "Tesla Pickup" that Musk originally showed.

There's no market for a high end unimog-like truck in the U.S. The unimog has (had?) a commercial market in European markets where it is not legal to take farm tractors on public roadways. Mercedes tried to sell the unimog in the U.S., but there was no business case for a complex and expensive four wheel drive smallish medium duty truck.

It could be a great marketing idea to build a Tesla pickup monster truck, but its nothing they would sell in volume. But it's disappointing if the plan is not to compete in the F150 market.

 

[electracity]

Another thought:

The Tesla semi uses super singles on the rear. (These are wide single tires that can replace dual rear tires on semis). The rendered Tesla Semi Pickup shows the same rear hubs used for super singles. But super singles would not be used on a Tesla semi "pickup". A Class 7 vehicles designed as a mud and snow capable 4x4 would not use super singles (or dual rear tires). It would use the ~42" tall tires designed for unimogs and military vehicles.

So little thought went into the initial "pickup" rendering that Elon showed.

 

[mongo]

From rewatching a bunch of times to make a rough transcript, I'm not getting the feeling that the concept art semi-pickup is the mass market pickup.

Just for interest sake, we created a pickup version of the Tesla semi. It's a pickup truck that can carry a pickup truck.

By the way you can legally drive that, well it shouldn't be legal but. You will be able to drive that with only a normal driver's license. It's kind of wrong but...

At about 9:25

 

[electracity]

More thoughts:

Tesla is rumored to be working on a CTIS "for the semi". A CTIS isn't needed for the semi, but it is for a semi based "pickup". The tall offroad truck tires are aired down for offroad. The tires are huge and airing up the tires with, say, a 12v portable compressor could take more than an hour.

In the U.S., a CDL is required for air brakes unless the vehicle is registered as an RV. So Musk saying "regular drivers license" suggests a class 7 with hydraulic brakes.

But if it's going to have CTIS it is still going to have the air compressor that the semi uses for air brakes. It may or may not have the air tanks that air brakes require.

Solid pickup sides of a truck with 42" tires really reduces utility. Most trucks this tall have sort sort of side access to the bed.

If Tesla is doing a semi based "pickup" that vehicle is to trucks what the new roadster is to cars. It is also Tesla's "placeholder" for the light/medium duty truck market that they are not ready to enter in a meaningful way.

 

[electracity]

 

[wdolson]

I don't see much market for an open bed truck in between pickups and full sized dump trucks. However there is a huge market for enclosed trucks that size. Fedex and UPS would gobble up all the supply if an electric delivery truck had enough battery for an entire delivery day and was cheaper to run than the ICE vehicles they have now. The postal service would be interested in a slightly smaller, enclosed truck.

A heavy duty pickup chassis equivalent in size to an F-350 or F-450 would be popular as the chassis for local utility support vehicles. Electric companies need cherry picker trucks for line and street light maintenance. Municipal service trucks need all sorts of utility beds for various services. I see them around town all the time maintaining the storm drains, storm water collection ponds, sewer stations, and weed control.

Scaling down the semi a little and stretching the chassis would be a good basis for larger delivery trucks. The sort used by furniture stores, smaller market delivery, and freight service to homes and small businesses. A trash truck could be made on this chassis too.