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Tesla - why there is no real competition and why there won't be soon

Discussion in 'TSLA Investor Discussions' started by kishdude, Feb 19, 2014.

  1. kishdude

    kishdude P #130

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    There are many who say that Tesla’s meteoric rise in the auto industry can not continue because there will be competitors coming that will take a bite out of their market. Well I feel that there are no real competitors to Tesla at present and will not be for quite some time. Why? Well we really need to see what a real competitor to the Model S would have to have in order to compete. Here is a list.

    1) Fully electric - No hybrid can compete because a hybrid is poor with acceleration, carries unnecessary extra weight in the form of two propulsion systems and also has more moving parts that need to be maintained and repaired all at an increased priced as compared to an ICE car. I think hybrids appeal to buyers of ICE cars that want better gas mileage, not electric cars. Being a hybrid is why the Fisker failed and also why the BMW i8 won’t do well. Besides, hybrid cars have poor acceleration as compared to the fully-electric Model S.

    2) Design - Lets face it, at present an electric car is expensive due to the cost of the batteries. This will change in the future and when it does, Tesla’s car prices will come down, but in the mean time electric cars are expensive. Given the expense, no one wants to spend a lot of money on something that looks bad. This is one of many disadvantages of the Nissan Leaf and why it can’t compete with the Model S. Same with the BMW i3.

    3) UI - In 2007 When Steve Jobs introduced the iPhone it was a leap in usability in that any application can have any UI it wishes to and this can change dynamically with future updates. This is also exactly the reason that the 17-inch touch screen is a huge advantage for Tesla even if it was an ICE vehicle. Users love the touch interface and the ability to have remote updates with new features. This is the most under appreciated feature of the car. In the future all car interfaces will be like this.

    4) Super Charger network - If you are going to have a fully electric car, you need to have a way for people to go on long trips. Tesla is at least 2-3 years ahead of anyone else in this and building this network requires a lot of legwork. Getting the technology, permissions, construction, etc. By the end of 2014 the vast majority of the country will be covered. I think that this is the single biggest barrier to entry for a competitor. There may be a company that builds a car in every aspect very similar to the Model S, but without a supercharger network, why would anyone but it over the Tesla?

    5) Tesla Service - I’ve owned many cars including many expensive ones such as a Mercedes, BMW, and Porsche, but by far the Tesla service experience is so superior. First is the fact that with minimal moving parts, the amount of time the car needs to be serviced is much lower and the experience of the Tesla service is second to none.

    So whenever you read or hear that other companies will soon be competing with Tesla, please remember that any competitor must have all of these features. The lack of even one is really a deal breaker. This is why Tesla has no competition at present and not soon to have any in near future. The TSLA stock may well have gotten ahead of itself and we may see some pullback, but long term this company is a paradigm shift for transportation.
     
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  2. kenliles

    kenliles Active Member

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    good synopsis.
    I would add a Direct Sales model that current manufacturers can never deploy
    and a (nearly) fully vertically integrated model that others have chosen not to deploy yet requires a massive change to do so
     
  3. AnOutsider

    AnOutsider S532 # XS27

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    Really, only 4 and 5 can be seen as unique barriers, and even then, not insurmountable.

    That there is a big one, but not sure that a full EV sold at dealers couldn't compete. The Leaf seems to be doing fine.
     
  4. wcalvin

    wcalvin Member

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    I'd say only #4, Supercharger Network. Anything that isn't a 80mi commuter car is going to have to provide something equivalent or buy licenses from Tesla.

    But also Tesla has a 3-4yr lead on various aspects of the technology. It will now take deep pockets to make a run on Tesla's dominance.

    From Elon's statements about bringing along the industry, however, he might be willing to license a lot, running the risk of another Kodak.
     
  5. 772

    772 Member

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    How about the human capital that Tesla has? Elon, JB, et al. That's a very significant advantage that rarely gets mentioned.
     
  6. kenliles

    kenliles Active Member

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    +1 maybe the most important of all;
     
  7. sleepyhead

    sleepyhead Active Member

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    By far the most important barrier to entry.
     
  8. derekt75

    derekt75 Member

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    #8 derekt75, Feb 19, 2014
    Last edited: Feb 19, 2014
    I'm thinking the real problem is a lack of willingness rather than anything else.

    I was thinking about this with TSLA's market cap approaching half of GM's, which seems a bit ridiculous to me given how many more resources GM has at its disposal than TSLA. or does it? If I owned a majority of GM, how could I make a successful EV business with all of my resources? GM is taking in 155b in revenue compared to TSLA's 2b, but could GM use that revenue to invest in superchargers and EVs? They're saddled with little operating income, and they need to invest in things like the next Chevy Cruze, where you're just not going to be able to make a great EV for under $20k.

    So, while I might at first think that a $155b company would find it easier to roll out a supercharging network than a $2b company, I'm not sure that's true. Similarly, I'm not sure how much GM could realistically invest into battery technology for an EV Escalade.
    If they did, I think they'd have something. Cadillac owns a fair amount of knowledge in how to make some electronic gadgets work (like adaptive cruise control, blind spot warning, lane departure warning, etc.), and has a lot more firmware resources that they could put on those features.

    If they were willing to put their workforce into building a BEV competitor to Tesla, I don't think any of kishdude's elements could stop them. They could go fully electric. They could invest heavily on battery design and get a good contract from Panasonic. They could make a very nice UI. They could build out a SuperCharger network as fast as Tesla can, and they could probably build out a better service network than Tesla.

    but they won't because they're too busy trying to make a profit with today's (yesterday's?) technology and they don't have a huge surplus of funds to invest in the future.
    As my coworker says: when your boat's leak is forcing you to spend 100% of your time bailing water out, it's tough to justify the time to look for a plug.

    Which major car company is willing/able to invest in the EV future at the expense of their current operating income?
    None.
    That's the only reason why Tesla has no competition.
     
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  9. EV2BFREE

    EV2BFREE Member

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    If there is another car company that decides to start producing as many EVs as Tesla will in the coming years, where will they get the batteries from? Also, will consumers buy another brand of EV that doesn't have its own network of Superchargers?
     
  10. Ludus

    Ludus Member

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    I think there are a lot of engineering decisions that also are critical to Tesla getting it right.
    The "skateboard" containing the entire drivetrain with a flat battery pack that acts to enhance rigidity while making the center of gravity supernaturally low and at the same time positioning the battery pack for rapid automated swaps is major. The patented details of the Tesla battery pack using large quantities of simplified laptop batteries give both a cost advantage and an advantage in controlling thermal runaway.

    Tesla Model S is made of a few high level modules. It's elegantly simple in a way no ICE design or hybrid can be. Ultimately that modularity will make Tesla's easier to maintain, repair, and remanufacture reducing their depreciation compared to ICE cars and reducing their cost of ownership over ICE cars despite higher prices.

    Will traditional car companies eventually emulate those decisions? Sure, but it won't be until their market share is seriously eroded because any Tesla-killer models they produce would mostly cannibalize sales from their own ICE product lines. BMW i3 and i8 are niche products carefully designed to not cannibalize any existing product sales so they also end up not competing with Tesla which is aiming squarely at 7 Series.
     
  11. SCW-Greg

    SCW-Greg Active Member

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    #11 SCW-Greg, Feb 19, 2014
    Last edited: Feb 19, 2014
    It's only now that the others are taking TM seriously. So more than a year later after the first Model S rolled off the line, are some of the competitors likely starting to deploy resources to this alternative.

    Yet the R&D it will take, just to catch up, just to understand some basics in battery technology, will take them a year ( and whopping financial diversions from their already week profit line). And they'll need people with true chemical understanding of Li and other forms of bat tech. These people are already hard to come by, let alone getting them innovating/forward thinking on the cutting-edge solutions they'll need. Think pack design, form factor, cooling, charging rates, limits, discharging, etc, etc.

    The whole design (car eco system) has to be well thought out. Manufacturing, maintenance, lifetime/longevity testing, not only the pack, but also new electronic management systems.

    Then you get into real software development, as in OS level first. Then core drive systems. And let's face it, this is *not* Detroit's forte. And not likely for Japan or Germany either. This is Silicone Valley turf.

    They'll have to find talent, assemble teams, and start at ground zero, setting overarching objectives before they even start. And the internal work environment (thinking big corp. entrenched silos and egos) is likely to be challenging at best. They won't be operating like a true (hungry) startup.

    Each of these are multi-year projects, if you have the stomach and drive to get them done. If you're not motivated, and only dabble in it, timelines could double. Product design efforts could be compromised. Can you envision a new EV only version of the Volt, to come out 2 years from now, with a whopping 110 mile range?!

    And if you get any of these wrong, it could be a billion $ write-off.

    By then TM's Gen III will be taking off. On the back drop of the of the Model S and Model X.
     
  12. VolkerP

    VolkerP EU Model S P-37

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    Renault/Nissan has a sound EV strategy. Why they chose to go electric in the very price sensitive market of small/medium cars and light duty vehicles, I don't know.

    BMW is tasting the waters with the i3 and a new sub brand BMWi. This was not a decision of the board of directors but the BMW owner family (Quandt) instead. It was forced upon the existing BMW organization and there were bruises all around.
     
  13. tftf

    tftf Member

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    Hmm. Nissan-Renault has invested around 4 to 5 billion EUR over the years in various EVs and several large battery plants. They are the global EV unit market leader. Given recent announcements, they will continue to invest heavily in the sector in the coming years. (I also see Nissan as a leader in autonomous vehicle research together with Daimler, GOOG and TSLA).

    Given the valuations, I see Nissan-Renault as the most interesting mass-market car maker (expertise in EVs and driverless cars vs market cap).
     
  14. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    My guess would be that the profit margins on small cars is already slim so there wouldn't be as much of a hit on their bottom line.
     
  15. kenliles

    kenliles Active Member

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  16. AnOutsider

    AnOutsider S532 # XS27

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  17. dsm363

    dsm363 Roadster + Sig Model S

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  18. richkae

    richkae VIN587

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    Won't it be funny if 5 years down the road the manufacturers go to congress begging them to overturn all the dealership protection laws because they are crippling their ability to get new products to market?
     
  19. kenliles

    kenliles Active Member

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    No- In fact I believe Tesla would rather eliminate all dealership laws. It was the Tesla protesters that pressure that got the exception written into the law (so they could continue it at all). The Tesla supporters also did call for an exception, but my point is this is how the politicians twist into a paid agenda without causing a major storm that will halt the whole deal.

    But Yes- I believe the Tesla direct sales model did in fact cause this legislation - One of the House sponsors said exactly so- that the purpose was to 'save dealerships'- doesn't get much clearer for me I guess

    - - - Updated - - -

    +1 to that; The problem is the Dealers are the ones in control of state politics not the manufacturers - that's why I see Tesla winning this direct sales model battle a very important strategic advantage against existing manufacturers (and possible new ones if this WA law become adopted). I'm guessing if Elon had his way, he'd just as soon have all manufacturers able to direct sale though
     
  20. richkae

    richkae VIN587

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    • Informative x 1

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