Tesla's Edge

[CyberDutchie]

The Mercury model that they think will compete with Gen III is probably the MKZ Hybrid. I don't like the styling personally, but the interesting thing about that car is that the hybrid version doesn't cost extra compared to the standard version.

Kia and Hyundai both have offerings in the premium car segment, Kia with the K9 and Hyundai with the Genesis. The last one actually had the lowest number of problems of all midsize premium cars, according to J.D. Power. It's just remarkable how much progress these two Korean makers have made in terms of manufacturing quality and styling over the last few years.

 

[bonnie]

That's not how big companies work.

1. They all have many layers of management so the real story almost never makes it to the top (Snowballs chance...).

2. They have a vested interest in the status quo and will keep from changing until it's too late.

3. They all are slaves to the share price (because that's what the CEO's bonus and salary are tied to) and in almost all cases going with something new hurts the share price in the short run. CEOs have golden parachutes so they almost never care about the long-term viability of the company or its employees, only about their current pay.

The only thing they're waiting for is for Tesla to fail and the whole messy EV thing to go away so they can go back to business as usual.

Not always true - intel has managed to change more than once & it's not by accident. In fact, looking to the future and understanding coming changes is reinforced a number of ways.

 

[Cobos]

This is a good summary. Tesla designed an electric car from the ground up using people who understood electric technology.


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I don't think that's strictly true.

It's important to remember that Tesla's priority is not actually profit. Elon Musk has said outright that his goal is for electric cars to replace gasoline/diesel cars. He was asked what he would do if electric cars took over, but some other company outcompeted Tesla and became the big seller of electric cars.

He basically said he didn't care; he'd have achieved his goal.

Going somewhat far afield philosophically, this gets into what I think is wrong with the modern corporation; they're soulless operations focused on profit, or empire-building, or power, or something. Corporations were supposed to be chartered with a *purpose*, back when they were first established (build a toll bridge; provide electricity; etc.) Tesla has a purpose. This is another thing which makes it different from the big companies, which have long since ceased to have purposes.

An interesting point you can make from this is that Tesla actually has a genuine mission statement, in contrast to most other big companies. Where the de facto mission statement is make lot of money for the shareholders/CEO, which is probably why the whole idea of a mission statement always rubs me the wrong way...

Cobos

 

[hvb]

What about Mercedes Benz? Isn't Tesla creating its own competition by selling their technology to MB?

 

[VolkerP]

The established car manufacturers are in turmoil. If they put an EV with a reliably working drivetrain on its wheels now, people will compare it to their corresponding ICE model and it will disappoint in at least one category, be it performance, range, options, or cost.
Just read the reviews for the new Toyota RAV4 EV, MB B-Class E-cell., AMG SLS e-cell, or Renault Fluence. I could go on.
That hurts the brand image, a thing with potentially catastrophic financial consequences.

Even if battery prices drop by 50%, there will be sticker price shock. Private customers just don't like higher upfront cost. It takes some consumer education to see lower running costs, as is the case with gasoline vs. diesel engines.

From all the German car makers, BMW appears to do the boldest move into EV tech. A large part of the company is privately held by family Quandt. That might play in here.
I cannot judge MBs movement. They have enough money to play in all theaters at once, advanced ICE, CNG, hydrogen, hybrids, BEV. Perhaps they wait and pick the winner when time is ripe.
The rest seems to enjoy consumer backlash in the German EV market: "See, going nowhere, told you so!" and discontinues EV concept cars.
I am afraid we will see some of them getting wiped out in the next decades.

OTOH Tesla has nothing to lose as a startup with no ICE brand image. Hopefully their EV patents help them survive and grow until they are too big to get squished by the established car makers.

 

[Jaff]

Interesting post Volker...if MB was to cede EV developement / production to another company, I guess they could always set up their own "new" company or just increase their ownership share in TMC...might be easier to do the latter...

 

[hvb]

I was referring to the people who are already willing to spend the extra cash for an EV rather than those customers who are really only interested in an ICE. You know, the people who are unhappy with Tesla's spartan interior or the lack of luxury options like adaptive cruise control, etc. If Mercedes can simply put Tesla's technology in their fully tricked out cars, wouldn't that make it hard for TM to compete?

 

[Vger]

I think part of Tesla's appeal as a brand is that they are NOT BMW, MB, Lexus, etc. Those of us who are rugged individualists enjoy having something fresh and new, not just technologically but in terms of brand image. Before Apple was the consummate tech company, they were the scrappy outsider, competing against all odds with the likes of IBM. Look where it got them.

Having founded a tech company myself, that competed very successfully against the likes of GE, Siemens and Philips, I know it can be done.

 

[ElSupreme]

If Mercedes can simply put Tesla's technology in their fully tricked out cars, wouldn't that make it hard for TM to compete?

This is not easily done. The battery and drivetrain make up structural parts of the Tesla Model S. Mercedes would have to build a car from scratch, and then hope that Tesla sells them everything they want. MB would have to sink a bunch of money into a built from scratch car, and have Tesla commit to help and provide the battery and drivetrain.

Tesla probably won't cannibalize its own car sales to do this.

 

[VolkerP]

This is not easily done. The battery and drivetrain make up structural parts of the Tesla Model S. Mercedes would have to build a car from scratch, and then hope that Tesla sells them everything they want. MB would have to sink a bunch of money into a built from scratch car, and have Tesla commit to help and provide the battery and drivetrain.

And they are trying hard to do this with Smart, A-Class, and B-Class. We won't see a S-Class with a Tesla drivetrain soon. Consider the power consumption of all these assistance systems, the hit on range might be too hard to make a viable luxury class EV.

Tesla probably won't cannibalize its own car sales to do this.

Tesla will be more than happy to do this. Selling drive trains is easy money when compared to selling cars. As the EV market is right now, the competition to beat are ICE cars not the other EVs. Tesla pointed out several times that Toyota and MB selecting Tesla as a drive train supplier is a bold statement.

 

[vfx]

Wouldn't that mean $29,999 then?

I see your point but don't belive that will be the case.

As a future E owner, I hope to be pleasantly suprised!

 

[dsm363]

Assuming the tax credit is still in place, I'm going to guess $37,400 so they can advertise $29,900*

*after $7,500 federal tax credit

I agree that it will be tough but not impossible for the big players to catch up with Tesla quickly. Tesla has a good lead and needs to keep their foot on the accelerator so to speak.

 

[cinergi]

And they are trying hard to do this with Smart, A-Class, and B-Class. We won't see a S-Class with a Tesla drivetrain soon. Consider the power consumption of all these assistance systems, the hit on range might be too hard to make a viable luxury class EV.

I can't think of any system that would come anywhere near the power consumption of, say, sustained HVAC use.

 

[jerry33]

I can't think of any system that would come anywhere near the power consumption of, say, sustained HVAC use.

Perhaps that electric winch...:smile:

 

[cinergi]

:smile:
I had to look -- A Superwinch 18,000-lb vehicle recovery winch is 6 HP; 415A @12v (5kW)

 

[Doug_G]

I can't think of any system that would come anywhere near the power consumption of, say, sustained HVAC use.

Agreed. Any electronic device would have a trivial draw compared to the drive train.

 

[VolkerP]

MB S-Class alternator output is 14V 150A (~2kW). And that is going somewhere. To sustain 60mph a Roadster needs 15kW. I agree that power usage of non-drivetrain systems is minor but it will make a dent in range.

Consider the fuss here when motor trend range tested Elon's Model S to 238 miles, falling short of 265 miles EPA range. So there is some sensitivity even to minor range reductions. :biggrin:

 

[daniel]

Hi All,

I think clean tech and EV would be the future and I'm long on Tesla as well.

Having said that, I'm not quite sure how Tesla can maintain their edge when big players get in. Now Tesla is the leader in the premium EV niche but soon will face competitions.

If a BMW i-series is on par with Tesla in terms of performance, range, price, quality etc, will people still choose Tesla?

Any unique technologies or "patents" that would make Tesla ahead of competition? Unique Battery management? or drive-train maybe?

Perhaps the big boys are just waiting....


Thoughts welcome. Thanks for sharing!!!

Like you, I'm optimistic on Tesla. I think that with Elon at the wheel (pun intended) Tesla can overcome the challenges. However, unlike most of the replies above, I don't think it's a foregone conclusion. As Tesla becomes more successful and demonstrates a market for electric cars, the big boys will take notice. Already, a number of auto makers have electric offerings or plans for them. Those offerings up to now all fall short, but the competition is real and there are deep pockets out there with the capability, if they choose, to compete head on with Tesla. Tesla has a clear lead right now, and nimble and very bright management. But I think they also have a real challenge ahead. The good thing is that I think they know that and will not become complacent.

As for Korea, don't write them off. When I was a kid, "Made in Japan" meant "crap." Japanese consumer products were cheap and poorly made. Basically worthless. Then Japan got its stuff together and now Japanese products are top quality. (Except for those actually made elsewhere!) Korea is rising and their car companies are not linked to oil as the big three U.S. car makers are. China also. I would not buy a Chinese car today (oops, well, I did drive a Chinese-made EV for 4 years --the Zap Xebra-- but it only went 35 mph, which is in itself a safety feature :wink: ) but China is evolving rapidly and has a lot of coal but not much oil, and if it follows the Japanese trajectory in technology (and it has a governmental style that could impose such a trajectory if it chose) it could be a real competitor in the EV market in a decade.

I believe that Tesla will succeed, and will become a big player, able to hold its own against all the others. But I don't think it's a foregone conclusion. It has a tough road to hoe. I think it can do it. But I think your question points to the primary challenge that Tesla faces over the next decade or two.

 

[vfx]

I bet at least 100 of the Model S' on order are going to auto manufacturers worldwide.

*cut to" opening sequence of Six Million Dollar Man.

 

[T@oo]

I bet at least 100 of the Model S' on order are going to auto manufacturers worldwide.

*cut to" opening sequence of Six Million Dollar Man.

I know for certain that they do this.