As @unk45 likes to point out, Mexico provides an entre into the MERCOSUR market, with which it has a free trade agreement specific to autos. Over the long run, it would probably make sense to manufacture in Brazil. But this would be a good method to dip the toe in and judge demand before doing so.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Gigapress
Trying to be less wrong
Yeah I'm pretty sure the biggest reasons for people not wanting Teslas now are:
1) Lack of real awareness of the product or EV ownership experience in general
2) The upfront price still being high
3) Service centers and charging infrastructure still not being filled out as much as people would like
4) Residual bad perceptions of the quality or reliability from FUD campaigns and the relatively poor build quality of early Model S, X and 3 compared to today's output
Awareness
Awareness is most likely increasing as publicity surrounding Elon Musk is increasing. However, the main factor here is and probably always will be simply the current size of the Tesla fleet, because word of mouth and test rides remain the primary way people really learn about the cars. The more Teslas Tesla sells, the more Teslas Tesla sells. And pretty soon, the more Vegas Loop expands around the Strip, the more butts it puts in seats every day and thus the more Teslas Tesla sells.
It's hard to overstate just how little awareness there actually is of even basic facts. In my travels across most of the US this year, including even people living in the Seattle area where Tesla adoption is higher than almost anywhere on the planet, I've seen very little evidence of widespread understanding. For example:
- Friend's dad in Cincinnati was concerned that we'd get stranded driving our Model S rental while driving around Kentucky, Tennessee and West Virginia. He had no idea there were chargers all along the route. Both of the guys I went on that trip with now are interesting in buying Teslas when they have enough money to afford it.
- Campground manager in Kentucky checking us in had never seen an EV before. When she asked what the make of the car was and I responded "Tesla" she asked "How do you spell that?" and then when she found out I was trying to charge the car (after wasps in the electrical box stung me and I asked her for help killing them) also later told me the regional manager had prohibited EV charging for blowing the fuses. I asked her the amp limit and she said 30 amps, told her the Tesla could be limited to less than that, and was met with a confused stare. I gave up and didn't charge.
- Family friend we stayed with in Nashville was amazed that the car didn't take any gas and we could just run an extension cord from the garage to charge it. He was very drunk but couldn't stop saying how cool it was for about 10 minutes straight, and he didn't even go for a ride.
- Random person in parking lot at Cumberland Falls was walking around our car staring at it, not realizing we were sitting inside because of the tinted windows. After we opened up and talked to him we explained that the handles are like that for aerodynamics and showed how they pop out automatically. He was impressed.
- In Oregon, a guy in campsite next to me was curious and asked about the frunk and where the motor is. Asked about whether the wheels spinning can recharge the battery and I explained regen braking and one-pedal driving. Was impressed with Camp Mode. etc.
- My brother and his roommate I stayed with in Texas started joking about wanting to split the cost of a Plaid after spending a week with my 3. He is also no longer considering an ID.4 for his next purchase and instead will wait for TSLA to recover and then hopefully buy a 3 next year with the gainz.
- Friend's mom visiting from India loved the car in general and was cracking up with Fart Mode
These examples were not isolated incidents I've cherry-picked, and the people ranged in all kinds of ages, personalities, genders, political leanings, and US immigration status. The frequency is high enough that clearly a pattern is there even though the sample size isn't huge.
Lastly, on awareness I would like to point out that Tesla still isn't advertising and they could if really needed to reach mainstream buyers. The advertising could just be simple, non-manipulative education campaigns, as we've discussed ad nauseam on this forum.
Price
Price will be addressed with the declining manufacturing, raw material and shipping costs as well as major subsidies coming in the US and most other major markets. Price will also be addressed as Tesla's production grows and they slowly sacrifice margins to massively expand sales volume. Finally, we still have ample opportunity for lower-cost models without any radical technology advancements from what the 3 and Y base versions with LFP cells currently have. Merely increasing manufacturing scale and removing most the luxury features could eliminate at least 10% of the cost, I think, as discussed in this post from October:
Service Centers, Quality Concerns and Charging
Service centers and charging infrastructure are still rapidly being constructed, and the mobile service fleet is rapidly expanding too. This will be less of an issue for buyers with every passing year.
Also, the amount people care about this will also tend to decrease over time for a few reasons. First, as knowledge and awareness increase, more prospective customers will learn that the cars don't need regular service and maintenance in the first place and will learn about mobile service being more convenient anyway. For charging, people will learn that they can wake up every morning with a full charge, which still today most people don't know or even if they do know, they don't really grasp the convenience of it compared to going to fuel stations. Then, for service the need for it is reducing over time as Tesla's quality improves, and over time customers will share these positive experiences with people they know and Tesla's reputation for not needing service will grow.
The new factories have much better quality than Fremont so the perception of bad quality will gradually improve just as it did for the Japanese automakers 50 years ago.
What Customers Actually Want
The elephant in the room really should be gas prices, safety and features, not Elon's politics and craziness. Here's why: People care about gas prices and what the car offers to their lifestyle, and it profoundly influences their vehicle purchasing decisions within a given market segment.
Here's the results of the 2022 annual global consumer survey conducted by Statista on what American adults rate as the most important factors in car shopping. It's only a survey, so it's of somewhat limited usefulness, but these are pretty basic survey questions that avoid much of the problems that often come with surveys. Notice how fuel efficiency is the most popular deciding factor. Not listed, but probably implied, is that the car has the body type and features the customer wants to make it even be under consideration in the first place. Tesla does not yet pass this implied gate for the majority of car-buyers yet simply due to only having 4 models.
Source
I can't find more recent data online, but ten years ago Consumer Reports published very similar survey results ranking fuel economy, safety, value for money, quality and performance as the top priorities, and in 2010 a similar survey had again yielded similar results.
Consumer Reports Survey: Americans Say Fuel Economy Most Important Car Buying Factor - CR Advocacy
Nearly three-quarters of drivers would consider an alternative fuel vehicle for their next car May 22, 2012 YONKERS, NY — With fuel prices at near…
advocacy.consumerreports.org
Survey: Car buyers most influenced by quality and fuel economy
Car buyers don't switch brands easily. According to a new Consumer Reports survey, 73 percent said they were somewhat or very likely to purchase the same make they currently drive the next time they shop for a new car....
www.consumerreports.org
The representativeness of the survey results is more credible when viewed in the context of what non-Tesla car companies choose to highlight in their advertisements. It's almost always some mix of these same factors listed here.
For instance, look at what Honda highlights in their web page for the CR-V:
- Base MSRP
- Most important features
- Horsepower
- Fuel economy
How about the Toyota Camry? Again it's base MSRP, fuel economy, and some key features.
Here's the first ad on Honda's Youtube channel that's about the Honda Pilot. Again, they're selling features, price, horsepower, and fuel economy, plus an example of the car bringing the family together around music and offroad adventures, making the parents happy with their purchase.
And the Honda Fit ad. Wow, this one is also about features that enable lifestyle choices, and safety!
Let's delve into gas prices in particular, which has been identified as the most important factor. I'm focusing on US here because that's the place with maximum interest in US politics, though of course our stuff does leak out internationally, and because that's Tesla's biggest and most profitable market.
The Google search trend data still shows a strong correlation between gas prices and interest in Tesla and EVs, especially in the first few weeks following a large change in gas prices. The all-time high search interest on Google for Tesla since 2020, when Elon's political activism increased, occurred in the 2nd week of March 2022. This spike was 50% higher than even the one following the viral Cybertruck reveal event in November 2019.
Data sources: US EIA and Google
The outlier point in March is especially informative, as this was the week that the Russian invasion's effects suddenly spiked gas prices to the highest inflation-adjusted level Americans had faced since 2008, followed by another spike in Tesla interest in June as gas prices began to surpass even the March levels and set all-time records for prices at the pump. Furthermore, these interest spikes correspond precisely with the timing of Tesla's 2022 price hikes, as detailed in these posts I published in June.
The same kind of pattern occurred during the 1970s Oil Crisis. This was in a period in history when:
- A brutal war with Japan that ended with nuclear bombs being dropped on millions of civilians had ended only three decades prior, with many of the buyers at prime car-buying age having fought in that war or had friends and family who did
- Being openly racist towards non-whites and especially Japanese was socially acceptable in most of the US and there had recently been protests and violence simply over ending legally mandated racial segregation
- Japanese cars had a reputation for crappy quality and reliability, which was largely deserved given their historical track record in prior decades
- Americans had predominantly wanted big muscle cars with gas-guzzling V8 engines
None of this stopped the rapid market invasion of Toyota, Honda, Nissan, Datsun, and Subaru from approximately 1973 to 1983. The market share of Japanese imported cars in the US market more than tripled to capture about a quarter of the car market in the US by the early 80s, while the domestic car companies saw major declines in sales.
As Tesla prepares to move into mass-market segments for the middle class, the operational cost savings of owning a Tesla vehicle relative to an ICEV will be a greater portion of the overall total cost of ownership, and these buyers are also more cost-sensitive than Tesla buyers have been up to now. Gas costs and maintenance costs are approximately the same for luxury cars as for economy cars of the same size, weight and horsepower.
Conclusion
Considering that Tesla still dominates at energy efficiency, safety, value for money, features and performance, I think that consumers will keep wanting to buy them in ever-increasing numbers. Government policies, infrastructure, improving EV awareness, and other macro factors will continue to drive EV demand in general, providing a tremendous tailwind.
The fact that Tesla is winning in every category that most people actually care about might have something to do with why the Model Y is the best-selling vehicle of any kind in all of the markets that are ahead of the curve on EV adoption (except China where a smaller percentage of the population can afford the price of a Y). This is occurring despite all the temporary roadblocks to EV adoption and despite Tesla having the ability to cut prices by $15k and still earn margins somewhat better than comparable crossover SUVs. I'm just saying...
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FSDtester#1
Large Member
thesmokingman
Active Member
It was a helluva battle going at the close though.$137.50, a red day for TSLA on what was a very green day for the market.
Phooey.
Attachments
Blame the late downturn on our buddy Fred for the FUD he just published on a Tesla hiring freeze and layoffs in the 1st qtr. according to a reliable source familiar with the matter.$137.50, a red day for TSLA on what was a very green day for the market.
Phooey.
Sigh...
it has been acknowledged
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There is an odvious reason why the next master plan focuses on raw materials supplies.
After a while, the ramp of Tesla energy is likely to be self sustaining.
We will still eventually get to the point where Tesla is making money faster than they can spent it.
It looks like the typical 2 pm EST margin calls kicked in, resulting in a TSLA walk-down during the final two hours. Slightly weakening macros were also not helpful. Considering that TSLA barely closed down today, margin calls may not be much of a factor tomorrow.$137.50, a red day for TSLA on what was a very green day for the market.
Phooey.
Because Tesla wants to grow 50% per year. So need to start building new factories pretty soon (takes 1.5 years realistically to build, probably longer in Mexico and other places).
4 hr MP $1.77 million to $1.74 million each (qty 1 to 100)
2 hr MP $1.88 to $1.84 million
Installation adder (if selected):
2hr
$720k for single unit
$2.6 million for 10, $260k each
$17.4 million for 100, $174k each
4hr
$340k single
$2.18 M @ 10, $218k each
$11.1 M @ 100, $110k each
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Artful Dodger
"Neko no me"
... post you've ever made on TMC? Do you want a word count?
Can I have a link to your blog when it's posted there? TIA.
The more you spread it out, the more evenly it will bake. If you catch my drift.
I agree, it’ll take time to ramp and I wouldn’t plug $31b into any spreadsheet! That said, the ramp seems to be going quite well based on the drone shots we’ve seen previously. I think these are a lot simpler to build than a car. I’d love to see some factory footage.
Yeah, my numbers were 30 second back of the napkin. We have no history on margins and other costs may well be negotiated.
Hopefully we’ll find out next quarter what the actual margins are on these beasts a little more accurately.
Another thing here. It seems like Tesla is deploying a significant number of these for various in-house applications at Superchargers and using them to sell power to utilities in Texas (I think) so possible a number of these are never actually sold unless they “sell“ them internally. Maybe someone with more accounting experience than I have can address that.
We should have a bot that just uses ChatGPT to auto-summarize GPs posts.... post you've ever made on TMC? Do you want a word count?
Can I have a link to your blog when it's posted there? TIA.
Getting back to the Amazon comparisons, Tesla and Amazon are similar in that, during a zero interest rate environment, they were companies that could absorb more or less endless amounts of free capital and efficiently deploy it. I never feared that Bezos or Musk would lack for good ideas about what to do with the incremental dollar, whereas AAPL, GOOG, and others seemed a bit aimless.
We are no longer in a zero interest rate environment, so I have been looking for clues about whether this advantage will continue for Tesla and Amazon.
The thought has occurred to me that the period between Q423's P&D report and earnings might be a uniquely good buying opportunity if - for whatever reason - Q4 deliveries simply "whelm" us, but Tesla Energy is able to delivery a positive surprise. Just idle speculation.
That's one way to look at it, or the Russia-Ukraine war ends, China covid continues to be less of an issue, China backs off any Taiwan aggression, Fed moderates its policy, EU economy picks up, Elon done selling and Cybertruck comes on line!
Stopped at the liquor store today and picked up some moonshine. I'm planning on staying drunk until TSLA hits $300. Someone dump a bucket of water on me when that happens.
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