Will the Tesla Model 3 Upend the Global Auto Industry?

[22522]

There is an hour long white board presentation from some one with an English(ish) accent here:
Why Tesla Model 3 Will Upend The Global Auto Industry (Cleantech Revolution Tour Video)

He states, at 45:25, that the 5 year total cost of ownership of a Tesla Model 3 before incentives might be $26,000.

Do you agree with the person with the English(ish) accent and a smart phone connected to the Internet?

 

[Tiberius]

(Sigh) I guess you're not taking my previous advice.

To answer your question, I'm going to guess NO, as discussed at length in your other thread. Also, I honestly doubt very many people will be watching that video.

 

[strykeroz]

That video is quite the slog, but did get through it (1.5x so I digested the last half). When the biggest running cost of a car in his maths is depreciation it's a brave call to make at this distance out, not knowing what the competitive landscape for other EVs will be after a 5 year lease...which starts in 2 years.

To answer your question, I'm going to guess NO, as discussed at length in your other thread.

For some reason that link came through as just an underline, but keen to check that out now...

Also, I honestly doubt very many people will be watching that video.

Only the most dedicated few of us

 

[22522]

That video is quite the slog, but did get through it (1.5x so I digested the last half). When the biggest running cost of a car in his maths is depreciation it's a brave call to make at this distance out, not knowing what the competitive landscape for other EVs will be after a 5 year lease...which starts in 2 years.

Yes, early on if I recall, someone said the Bolt will depreciate faster than the tax incentive?
So the key financial knob is desirability, or demand.

Then there was the part about a million mile (battery?) life.
Skepticism about battery life is also going to drive the first owner cost up. I don't know how state of charge impacts battery life - heard rumors that fully charged does not deliver longest life.

Maybe Tesla is attacking actual life, and second customer skeptism, by over provisioning in a way that leaves the batteries topped off at the perfect state of charge for long life as the first owner charges each night? That way the CPO process is charge history and turning on the extra range.

Tesla financials are better if they are in that repeat customer business, I would guess?

 

[EaglesPDX]

If you look at total cost of ownership figures at Cars.com or Kelly Blue Book for a Toyota or Ford at $45,000 (Hybrid Avalon or Ford Fusion Energy) and take out the fuel costs and lower the maintenance costs by 25%, you'll get a good idea of cost of ownership of the Tesla 3.

The EV is a nice technological advance but its not going to upend the auto industry. The industry Tesla might upend as it makes EV's an alternative to gasoline engines is the oil industry which will see 70% of its customer base disappear.

 

[AB4EJ]

Most people I talk to pay little attention to most of the decision criteria being discussed here. Regarding EVs, they have the same concerns people always have had (regardless of the M3):

• Range, and how to use the car for long trips (210 miles still not enough)
  
• Difficulty & cost of a home charging solution
• The car is more expensive to buy than a Toyota Camry, and cost of fuel is a non-issue

The M3 will not upend the global auto industry. Even if Tesla produces 500k vehicles/year, this is still too small a percentage of global car manufacturing to move the needle.

 

[kzod]

This guy is clueless. Depreciation in a Tesla Model 3? It will be an immediate collector's item and will probably sell for double it's MSRP in a few years. It will be a gold mine! Who cares that many Model S owners have been hit with extremely large service costs to date. This will be the Model 3 man. It will be flawless. I'm especially looking forward to Autopilot 3.0 which will have wings pop out of the doors so it will really fly! Yahoo!

 

[JeffK]

Saw the video yesterday and was completely annoyed at the slowness. Like strykeroz I viewed it at 1.5x and still almost fell asleep. If that man checks his cell phone for data one more time we should throw it across the room. Be prepared, if you're going to give a presentation and the figures don't have to be exact.

Reality is that the TCO is going to be above the purchase price. Depreciation will be a real worry because most manufactures are going to have competitors within five years. Tesla will come out with a new/better model and if the Model 3 is not fully autonomous then I'm sure there will be fully autonomous cars available five years from 2018.

On a typical $35k vehicle depreciation is around $25,000-27,500 plus five years worth of insurance costs (probably ~$5k), plus any interest on financing, plus $2500 is energy costs assuming home charging, wall charger and installation costs, preventative maintenance and at least one new set of tires.

The real question is if in the future electric cars will have their values determined mostly by the health of the battery instead of assuming normal wear and tear of an ICE. As battery prices come down you could replace your battery in the future and assuming normal maintenance and care (suspension, tires, brakes, air filters etc) you'd basically have a new car.

 

[Tiberius]

For some reason that link came through as just an underline, but keen to check that out now...

It was just an underline... I should have used bold to emphasize my point. I could never advocate for anyone to go back and read the thread I was referring to. It was torturous and of course it never got through to OP.

The real question is if in the future electric cars will have their values determined mostly by the health of the battery instead of assuming normal wear and tear of an ICE. As battery prices come down you could replace your battery in the future and assuming normal maintenance and care (suspension, tires, brakes, air filters etc) you'd basically have a new car.

Exactly... I don't know why there is so much focus on depreciation. The model 3 at its core is going to be a nice practical car. You buy it and keep it until the wheels fall off (not literally). Sure, something better will come out but anyone planning to replace it within 10 years is missing the point, in my opinion.

 

[ggies07]

The real question is if in the future electric cars will have their values determined mostly by the health of the battery instead of assuming normal wear and tear of an ICE. As battery prices come down you could replace your battery in the future and assuming normal maintenance and care (suspension, tires, brakes, air filters etc) you'd basically have a new car.

Yep! This is what I'm banking on for my daughter's first car....which is in 10 years. My plan is to get the Model 3 for me now and then buy a new battery for her to put into the car. I expect with 10 years a new battery with at least 200 miles will be cheap to buy from Tesla. Hell, even for $7,000 it's a great deal for buying a child's first car. No 16 year old needs a pretty looking new car, so she will get mine and I will get a new Tesla.

 

[eSpiritIV]

I don't plan on selling my M3 for over 10 years. It will be a great investment.

I agree with the 1 million mile statement. I am an electrical engineer and see many electric motors running in an industrial setting (harsh environments for 15 years continuously. What goes out is not the winding, but the bearings. That is maintenance that will need to be done. The M3 wont be a zero maintenance machine, it will be much less daily/monthly maintenance. Most likely the Battery will get replaced in the next 10 years with much improved technology and refresh it completely. Very easy swap out.. You cant say the same for an old Honda civic that can or will never have improvements in efficiency.

Other key points to consider that this guy was spot on with is that ICE cars WILL have a poor resalve value as soon as the BIG manufacturers see Tesla is stealing market share, and that they will be forced to start selling better quality, less expensive electric cars to compete. This move will ultimately lead to there demise because of there low profit margins and POOR resale value in the the ICE market.

Do i want a comparable 3 Series BMW or a Tesla M3? Id go with the Tesla any day!

 

[N5329K]

Tesla has already upended the global automotive industry by changing how people think about electric cars. Say "electric car" and the immediate image that pops into many (but not yet all) people's minds is, "Tesla." And that picture is beautiful, sleek, expensive, futuristic and blindingly fast.
Contrast that to the mental picture summoned up before, say, 2003: electric cars were cheap golf carts, milk floats, weirdmobiles, and punishment vehicles for people who hated cars and thought you should, too.
That change alone means TMC has altered history (in exactly the way it's founders hoped). The Model 3 just expands that wave of change down towards the middle of the market. If they succeed there even more people will see EV's as a great choice now (not "someday"), and oil-burners as so last century. And so will end the Age of Oil, because hacking transport means hacking oil. The good news there is that, more than likely, we won't ever have to worry about running out of the stuff. The oil folks know this. One of their own, a Saudi oil minister, once said, "The Stone Age didn't end because they ran out of stones. It ended because something better came along."
That's what Tesla has done.
Robin

 

[Tiberius]

Tesla has already upended the global automotive industry by changing how people think about electric cars. Say "electric car" and the immediate image that pops into many (but not yet all) people's minds is, "Tesla." And that picture is beautiful, sleek, expensive, futuristic and blindingly fast.
Contrast that to the mental picture summoned up before, say, 2003: electric cars were cheap golf carts, milk floats, weirdmobiles, and punishment vehicles for people who hated cars and thought you should, too.
That change alone means TMC has altered history (in exactly the way it's founders hoped). The Model 3 just expands that wave of change down towards the middle of the market. If they succeed there even more people will see EV's as a great choice now (not "someday"), and oil-burners as so last century. And so will end the Age of Oil, because hacking transport means hacking oil. The good news there is that, more than likely, we won't ever have to worry about running out of the stuff. The oil folks know this. One of their own, a Saudi oil minister, once said, "The Stone Age didn't end because they ran out of stones. It ended because something better came along."
That's what Tesla has done.
Robin

While I totally agree, the title of this thread is incredibly misleading. 22522 is fixated on model 3s costing no more than $26k because that is the only way he can afford one (as he/she stated in another thread).

 

[N5329K]

As Tesla's founders said, "Every company that started off trying to build an inexpensive EV went bankrupt." That's why they didn't do that. They used the home refrigerator model of technology adoption, where the first units were wicked expensive "toys" for the wealthy, which financed the next, less expensive wave of fridges, and so on until now they're everywhere.
Good plan. You probably can't build zillions of electric Civics until you've sold out a few hundred thousand electric BMW 3's.
Robin

 

[ZachShahan]

LOL. This is Julian Cox. Very well known in Tesla circles over the past several years. I guess Tesla circles these days are much bigger and many people don't know a lot of the details of its long history, stock discussions, viability discussions, projections, etc.

We'll be publishing articles on various matters discussed in the presentation eventually. Julian will be writing them.

Also, this wasn't the full presentation. More coming eventually as well.

 

[JeffK]

LOL. This is Julian Cox. Very well known in Tesla circles over the past several years. I guess Tesla circles these days are much bigger and many people don't know a lot of the details of its long history, stock discussions, viability discussions, projections, etc.

We'll be publishing articles on various matters discussed in the presentation eventually. Julian will be writing them.

Also, this wasn't the full presentation. More coming eventually as well.

Can you get him to ditch the cell phone? I'd love to hear more if it were energetic and a little faster paced.

 

[ZachShahan]

Can you get him to ditch the cell phone? I'd love to hear more if it were energetic and a little faster paced.

Yes, that is definitely in the plans. He just had a baby and ended up preparing the presentation on the flight over and in the hotel. I was a bit shocked at the style and lack of prep, but aim to have him turn it into a sharper, quicker presentation with slides and give it in large cities across Europe and maybe the US.

 

[JeffK]

Yes, that is definitely in the plans. He just had a baby and ended up preparing the presentation on the flight over and in the hotel. I was a bit shocked at the style and lack of prep, but aim to have him turn it into a sharper, quicker presentation with slides and give it in large cities across Europe and maybe the US.

sweet!

 

[22522]

Yes, that is definitely in the plans. He just had a baby and ended up preparing the presentation on the flight over and in the hotel. I was a bit shocked at the style and lack of prep, but aim to have him turn it into a sharper, quicker presentation with slides and give it in large cities across Europe and maybe the US.

Please keep the stuff he said about the Corolla not being real demand. I think it is related to the structure of the distribution channel in that dealers are treated as the customer, and point of demand.

So marketing and design efforts are aimed at the middle of a pipe. They obtain products that provide margin for dealers (lowest cost on a 'market' price) that nobody wants to buy.

A lot of work with no created demand.