Which other car company do you think have the darkest future?

[electracity]

According to Tesla: They need the factory to lower costs (the promised 30+% Tesla keeps talking about) for 500k batteries, or about 35GWh on the cell level.

Otherwise, why not just increase production in Japan gradually and continue to import most cells?

Even if we assume up to 100k cars (S/X) continue to be equipped with Japanese cells with apparently worse margins (always according to Tesla), Tesla needs Nevada for the remaining 400k cells (Model 3).

I don't see how Tesla can churn out close to 500k cars/year without the entire factory, FlatSix911.

PS: But even that full output is a rounding error compared to the entire global passenger car production. I don't see how that best-case volume (in 2020) is a big issue for large ICE car makers.

I think Musk will use M3 orders to raise capital and announce an expansion of the current gigafactory. He has to be unhappy with the current planned battery growth. There no obvious reason why 60-70 GWh could not be done in Nevada.

By the time Freemont is producing 200K car/year, the Germans may be adequately worried to start produce sporty EVs. The Audi Q6, if produced as shown/specified, will be competitive with the MS/X. It is actually a good body type to compete with Tesla. Maybe even the second row will fold.

I can't calculate how raising a large amount of capital will affect stock price. One problem is that raising the capital will make it obvious that Tesla can't bootstrap itself into a capital intensive business. There is may be a bit of Instagram pricing logic in the current price.

 

[anticitizen13.7]

I can't calculate how raising a large amount of capital will affect stock price. One problem is that raising the capital will make it obvious that Tesla can't bootstrap itself into a capital intensive business. There is may be a bit of Instagram pricing logic in the current price.

Given that Tesla has already had 2 secondary offerings (one in 2013 and another a few months ago) and has issued a substantial amount of bonds, shouldn't this already be obvious to to the markets? It cost hundreds of millions to upgrade the paint shop to 500k/year capacity. It cost hundreds of millions to buy robots for the new production line. Based on Tesla's quarterly reports Model S sales net the company only several tens of millions of dollars or maybe as much as 100M per quarter, which is not enough for the rapid expansion that Elon and others want to achieve.

The Gigafactory will cost billions over the next few years.

This is a giant bet, that when Tesla completes its "secret plan" it will have tens of Billions in annual revenue. I'm betting that Tesla will be able to succeed, but I don't think it will be easy. I wouldn't have invested if I thought this business was easy.

 

[FlatSix911]

As I have stated many times a small trickle of EVs from the legacy automakers does not matter.By 2025 Tesla could be selling 2M vehicles.
Removing 500k sales then 2M sales of those most profitable vehicles luxury cars and full size pickups is a problem for the legacy automakers.

• VW Group gets ~80% of its profits from Audi/Porsche.
• For Daimler Benz the figure is even higher for Mercedes Benz.
• BMW sells a small trickle of Minis and BMWs below $30k.
• Toyota gets a significant share of its profits from Lexus and Toyota full size trucks.
• Detroit gets ~80% of its profits from full size trucks and luxury cars. Almost all full size trucks.
• 500k Teslas is an issue for the legacy automakers in 2020 and 2M in 2025 is more than an "issue."
• The luxury car market Tesla is currently challenging is ~7.5M vehicles.
• The full size truck market where Tesla will offer a product in 5-7 years is ~2.5M.
• That is 10M vehicle market currently not 100M. Disrupt that 10M vehicle market and you disrupt the automakers.
• A conquest sale of Toyota Yaris, VW Polo, or Ford Fiesta does almost nothing to their makers bottom line.
• Take a Audi A8, Lexus GS or a Ford F150 sale from their automakers then you are taking a cash cow.

And just like Tesla's future sales are not set in stone neither are future sales projections for the legacy automakers.

Rob, you are right on the money... Tesla is taking the most profitable part of the market away from other automakers.

 

[SebastianR]

Rob, you are right on the money... Tesla is taking the most profitable part of the market away from other automakers.

It is actually not just the most profitable segment - it is also the most prestigious. It must hurt, pain and humiliate VW that with all their money, size, power and government relations they never could make the Phaeton a success (neither sales nor financially). And yet Tesla walks in and sells much more than they ever did - even in Germany.

 

[donhorton]

Car companies get government price support in indirect ways. You might consider suppliers.

 

[tftf]

As I have stated many times a small trickle of EVs from the legacy automakers does not matter.

By 2025 Tesla could be selling 2M vehicles.

Removing 500k sales then 2M sales of those most profitable vehicles luxury cars and full size pickups is a problem for the legacy automakers.

Trickle? Look at the sales chart from Norway posted earlier in this thread. VW went from zero sales in the EV segment to market leader within a few months. How come "legacy" car maker VW is leading the EV sales charts in Norway in 2015?
By 2017-2021 a flood of PHEVs and EVs will be offered from most car makers in all price categories - read any EV website or any car magazine; these cars will come because of stricter emission regulations and thanks to cheaper batteries, regardless of Tesla's moves.

Given this upcoming competition, making predictions for 2M units in Tesla sales by 2025 is next to impossible today.
In any case, Tesla will need billions (billion in the double-digits) to achieve this goal, for example four full Gigafactories the size of Nevada (and I have to repeat once again that the GF1 currently occupies just one out of seven planned builings, Tesla is missing 86% of battery capacity output).

I have to ask once again: If Tesla is so optimistic and wants to sell 500k cars soon, why not build the entire GF asap?

Finally, the majority of the planned 500k 2020 cars will be Model3 cars. These aren't luxury cars nor pick-ups. To model in pick-up revenues given Tesla's continued delays and future roadmap (Model Y small CUV and Roadster 2.0 likely planned first after the Model 3) is wishful thinking at this point.

(Even TSLA investor Baron made a similar simple error. Baron simply multiplied Tesla's current S/X revenue per unit and extrapolated this number for 500k cars by 2020. A rather embarassing error for a huge mutual fund manager given the high-end ATP the current S/X cars fetch compared to the promised Model3 prices starting around $35k.)

To sum up, people looking at other industries/sectors are once again severely underestimating how much time and money (especially because TSLA decided to vertically integrate battery production) it takes in the car industry to add one additional dollar of revenue.

 

[electracity]

What BEV's have been announced? I have:

Bolt : Late 2016
Q6: Early 2018
Porsche 717: ???

I'm surprised the specifics surrounding the Q6 haven't been a point of discussion for TSLA investors.

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I have to ask once again: If Tesla is so optimistic and wants to sell 500k cars soon, why not build the entire GF asap?

I think you and Musk agree. I think he wants to have a quarter of neutral cash flow before increasing spending again.

 

[Johann Koeber]

I think we have a pretty good early warning system:

If any manufacturer is planning to produce a greater number of long range BEVs to compete with Tesla,
they will need to have batteries.

So battery factories will have to be built (not neccessarily by the auto manufaturer).

Are we seeing any big battery factories being built? I mean in addition to the Gigafactory. Can this be conceiled from the public (maybe in china)?

How long does it take to set up a really large battery factory? 2 1/2 - 3 1/2 years?

So when we hear about any large company setting up a really large battery factory,
we can guess they are planning to build a lot of BEV no earlier than 3 years later.

So far I can only see Tesla doing this. 3 years after announcing the site for the GF (it was summer of 2014) will be 2017. Without the GF the mass production of Model 3 seems inconceivable.

 

[renim]

Can this be conceiled from the public (maybe in china)?

Chinese companies will go to the extent of discreetly using Western companies for engineering due to their desire to conceal their forward plans from fellow Chinese competitors (as well as their Korean and Japanese competitors) - Don't ask how I know.

I can't speak from experience for Korean or Japanese firms, but my intuition is that between optimised co-locations (ie the cathode production being performed within Ni refinery) and general language issues, its entirely plausible for a multiple gigafactories to be built without any clarity in the latin script countries.

 

[tftf]

I can't speak from experience for Korean or Japanese firms, but my intuition is that between optimised co-locations (ie the cathode production being performed within Ni refinery) and general language issues, its entirely plausible for a multiple gigafactories to be built without any clarity in the latin script countries.

Yes, the make subdued announcements. Why shout from the rooftops and alert the competition in advance? Still, following the likes of Samsung SDI and/or LG Chem provides the necessary clues, major news items are available in English:

Samsung SDI has become an electric vehicle battery pure-play. It now owns 5 production lines in Korea and China with total capacity of 4.5GWh. But by 2020, it will bring its capacity to around 35GWh. Analysts are not missing a beat – this capacity is “interestingly the same ‘cell’ capacity” of Tesla‘s (TSLA) Gigafactory...

Hello, Gigafactory! Samsung Moves To Compete With Tesla - Asia Stocks to Watch - Barrons.com

Therefore Samsung SDI will have the same cell output as Tesla. Maybe Baron (one B) should follow Barrons more closely?

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If any manufacturer is planning to produce a greater number of long range BEVs to compete with Tesla, they will need to have batteries.

So battery factories will have to be built (not neccessarily by the auto manufaturer).
(..).

So far I can only see Tesla doing this. 3 years after announcing the site for the GF (it was summer of 2014) will be 2017. Without the GF the mass production of Model 3 seems inconceivable.

Yes, see for example my Barrons link above. Other battery suppliers are building several smaller plants in various locations (sometimes together with or for car manufacturers, e.g. in Europe: LG Chem to build EV battery plant in Poland - Pulse by Maeil Business News Korea ) instead of one giant plant.

And of course the same limitation / visual confirmation also goes for Tesla: At the moment, the Gigafactory in Nevada is only built to a fraction of its total planned size (see my previous posts for details).

Unless more buildings are constructed (which will of course be visible by drones or because of regulatory documents thanks to Tesla's various subsidies in Nevada etc.) until 2020 there's no way that Tesla can make the promised output numbers.

Tesla will again need 2-3 years to add these six or more buildings, fill them with machinery (or have them filled by Panasonic) and train additional workers.

PS: Finally, since Tesla's competitors also make long-range PHEVs such as the Volt 2016, they will need less battery capacity per car than Tesla (long-range BEVs only). The numbers therefore can't be compared directly, competitors can build many more PHEVs with the same battery output obviously.

 

[anticitizen13.7]

Yes, the make subdued announcements. Why shout from the rooftops and alert the competition in advance?

Because car companies like to be perceived as tough and better than the competition. Why else does a company like Ford brag about its next-generation Mustang years in advance? Why does Honda flaunt a 500+ HP NSX Hybrid long before anyone can buy it?

I've been watching this industry for years. Automakers don't want to surprise. They want to brag, intimidate, and leave the others in the rear view mirror eating exhaust fumes, haha.

 

[renim]

Samsung SDI is not competition to Tesla, that is clickbait.

Tesla is about 10% of the plugin vehicle market, both Tesla and the plugin vehicle are growing at about 50% annual rate.

For Tesla to have 10% of the plugin vehicle in 2020, will require Tesla to have its gigafactory with about 35 gWh devoted to EVs.
The other 90% of the market will have access to plenty of low cost batteries, but what the EV/PHEV ratio is at 2020, I don't know? but the difference between a 45kWh - 60kWh EV battery and a 12 - 16kWh vehicle PHEV battery is significant in battery required, and irrelevant for a premium manufacturer who possibly uses 60 kWh - 120 kWh EVs.

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Because car companies like to be perceived as tough and better than the competition. Why else does a company like Ford brag about its next-generation Mustang years in advance? Why does Honda flaunt a 500+ HP NSX Hybrid long before anyone can buy it?

I've been watching this industry for years. Automakers don't want to surprise. They want to brag, intimidate, and leave the others in the rear view mirror eating exhaust fumes, haha.

Agree, the automakers in general like to disclose plans years in advance, but that does not mean that east asian suppliers do.

 

[anticitizen13.7]

Agree, the automakers in general like to disclose plans years in advance, but that does not mean that east asian suppliers do.

This is true, but if the suppliers are gearing up, they must be reasonably confident of a customer. Building expensive factories is a dangerous bet because buyers might not show up.
Audi might be such a buyer. The company has put more emphasis on BEV concepts than other automakers, and the Volkwagen Auto Group diesel emissions cheating scandal is devastating enough that they almost have to embrace true clean technology to save face with the public. The wild card is Apple. Apple is not like the car makers. Apple's culture is based on secrecy, internal firewalls, and deceit. If someone is having battery plants built in advance with no public chest thumping, it is probably Apple.

The companies that will be doomed are those who cannot attract the best people with talent relevant to EVs. Tesla is a company that people want to work for. Apple is a growing black hole sucking talent away from the other automakers. Then there are mystery companies like Faraday and Atieva. My guess is that the surest way to see who is doomed is to see who isn't getting the best talent.

 

[tftf]

Because car companies like to be perceived as tough and better than the competition. Why else does a company like Ford brag about its next-generation Mustang years in advance? Why does Honda flaunt a 500+ HP NSX Hybrid long before anyone can buy it?

I've been watching this industry for years. Automakers don't want to surprise. They want to brag, intimidate, and leave the others in the rear view mirror eating exhaust fumes, haha.

Did you even follow my links and read my post in detail? It's about major battery suppliers, not the car companies (a supplier like AESC within Nissan is still an exception to the rule, most suppliers "only" are strategic partners).

They often have mutual NDAs to follow, otherwise we get reactions like these:

LG Chem With GM For Disclosing $145/kWh Battery Cell Pricing - Video

PS: Any why is Samsung SDI's plan to deliver 35GWh by 2020 considered "clickbait" now? When Tesla announced the same cell level output goal (which is still unproven, because the GF in Nevada is incomplete at the moment) by the end of the decade it was hailed by bulls as a huge advantage / leap forward for Tesla.

 

[anticitizen13.7]

Did you even follow my links and read my post in detail? It's about major battery suppliers, not the car companies (a supplier like AESC within Nissan is still an exception to the rule, most suppliers "only" are strategic partners).

They often have mutual NDAs to follow, otherwise we get reactions like these:

LG Chem With GM For Disclosing $145/kWh Battery Cell Pricing - Video

See my response to renim above.

Even if suppliers like to sneak around, their customers, the automakers, can't help but brag. NDAs are useless. What's LG going to do to GM? Tell them to pound sand and then lose GM's business? GM is too big of a client. If GM demands that LG's president dress up like Santa Claus and fly in Reindeer from the North Pole, LG will do it.

 

[tftf]

LG Chem has a special relevance because of its recent advances in battery technology, it is not just another supplier:

LG Chem Says Its Ready To Supply 300 Mile, 120 kWh Batteries

Have you seen LG Chem's customer list for EV batteries? It is very impressive.

Except for BMW (Samsung) and a few others (Japanese or Chinese companies going with domestic suppliers) they signed up most of the big brands for future battery (at least on the cell level) supply.

GM may be an early adopter for LG Chem's new batteries, but it will be just one of many clients by 2020.

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What BEV's have been announced? I have:
Q6: Early 2018
Porsche 717: ???

It's not just these two. VW Group will dedicate an entire platform (MEB) to EVs in the future:

Volkswagen Brand CEO Talks New Electric Platforms

It is not just VW. You will get longer-range EVs and PHEVs from virtually all smaller and larger car brands until 2020.

It is easier to list large car companies not planning for many EVs until 2020: Fiat-Chrysler and Toyota will probably stick to PHEVs and not ship many EVs with current-gen batteries. Ford is still an unknown (fewer public announcements than most competitors so far). That's about it.

 

[electracity]

It is easier to list large car companies not planning for many EVs until 2020: Fiat-Chrysler and Toyota will probably stick to PHEVs and not ship many EVs with current-gen batteries. Ford is still an unknown (fewer public announcements than most competitors so far). That's about it.

What has Mercedes and BMW said about long range EV?

Also, I should have written Porsche 718.
It is good to read about flat battery packs and charging networks from VW/Audi.

 

[dalalsid]

LG Chem has a special relevance because of its recent advances in battery technology, it is not just another supplier:

LG Chem Says Its Ready To Supply 300 Mile, 120 kWh Batteries

Have you seen LG Chem's customer list for EV batteries? It is very impressive.

Except for BMW (Samsung) and a few others (Japanese or Chinese companies going with domestic suppliers) they signed up most of the big brands for future battery (at least on the cell level) supply.

GM may be an early adopter for LG Chem's new batteries, but it will be just one of many clients by 2020.

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It's not just these two. VW Group will dedicate an entire platform (MEB) to EVs in the future:

Volkswagen Brand CEO Talks New Electric Platforms

It is not just VW. You will get longer-range EVs and PHEVs from virtually all smaller and larger car brands until 2020.

It is easier to list large car companies not planning for many EVs until 2020: Fiat-Chrysler and Toyota will probably stick to PHEVs and not ship many EVs with current-gen batteries. Ford is still an unknown (fewer public announcements than most competitors so far). That's about it.

And how will these be priced compared to their gas counterparts? VW is the king of press releases. Where is that 2009 R8 eTron? How many of those has VW sold? 1? 5? Even BMW sold a lot more i8s than that, which came much later. Powerpoints are not cars. So the Q6/Mission E, I'll believe it when I see it. As of now they are pie in the sky powerpoints. Maybe Audi will make 5 of them in 2018. My prediction is that if it even shows up in 2018, it will be laughably low volume even compared the Model X in 2015. So far it is a VW pipe dream. The other cars on the horizon in volume are Bolt and Leaf 2. That's it. And neither of those are Tesla competitors. We've been hearing about "Tesla killer" EVs for several years now. Compared to their gas counterparts, current EVs, sell what 1%, 5%? Is there any EV that outsold its gas counterpart globally? The Model S on the other hand is outselling all but the Merc S class globally. And it is potentially on track to outsell that too next year.

 

[tftf]

And how will these be priced compared to their gas counterparts? VW is the king of press releases..

VW Group already sells more EVs than Tesla in many countries (e.g. see Norway sales in 2015) and it's only getting started.

They will offer BEVs in all price categories in the future (the BEV plans even accelerated "thanks" to Dieselgate):

The next Volkswagen Phaeton will be an all-electric luxury flagship - CNET

The A8 was a pure EV laboratory test and halo car. It was never intended for mass production (same for the ICE version, see the very elevated price tag). Audi leadership also changed (same for GM, by the way), the old guard left well before the Diesel scandal), new management is in favor of more R&D into EVs.

Daimler and BMW have lots of PHEV and EV cars coming in 2018-2021. See any car magazine or online blog. If you don't believe all this PR and the efforts at large battery suppliers such as Samsung and LG, feel free to go long TSLA even more and short the car industry. We will see how things turn out in a few years.

 

[dalalsid]

VW Group already sells more EVs than Tesla in many countries (e.g. see Norway sales in 2015) and it's only getting started.

You keep repeating this same old stuff without even one single time answering my question which EV outsells its gas counterpart. Not which EV outsells a much larger and much more expensive 70-150k large premium sedan. In fact, that you bring it up is a testament to how poor those EVs are compared to a Tesla.

They will offer BEVs in all price categories in the future (the BEV plans even accelerated "thanks" to Dieselgate):

The next Volkswagen Phaeton will be an all-electric luxury flagship - CNET

The A8 was a pure EV laboratory test and halo car. It was never intended for mass production (same for the ICE version, see the very elevated price tag). Audi leadership also changed (same for GM, by the way), the old guard left well before the Diesel scandal), new management is in favor of more R&D into EVs.

The new management is the same as the old management (minus a few people). The guy in charge of Porsche is now in charge of all of VW. If they got someone from the outside, I would agree on the "new" part. Phaeton. Ha. I'll believe when I see. They couldn't even sell a gas Phaeton. Now they want to sell an EV Phaeton. New Tech into an old name that nobody wanted. And more PR from VW is worthless with their poor track record.

Daimler and BMW have lots of PHEV and EV cars coming in 2018-2021. See any car magazine or online blog. If you don't believe all this PR and the efforts at large battery suppliers such as Samsung and LG, feel free to go long TSLA even more and short the car industry. We will see how things turn out in a few years.

Yes and the volume will be laughable. I heard this "few years" bit in 2012, 2013, 2014 and now in 2015. In 2018/19/20, when we see low volume high priced EVs that nobody wants, we'll hear the same old stuff. I have higher hopes from Apple and Google than VW. Maybe Nissan will make that Infiniti LE that they scrapped to compete with the Model 3.