Why are they focused on improvements in margins that are this small now? At autonomy investor day last year they promised a Robotaxi network this year that would give around a $150,000 margin on each car. They would quit selling the cars at current prices at that time, so they said customers better buy FSD early to get in on the action. Your car would generated you around $30,000 per year in profit according to the event.
These plans eventually lead to the stock price shooting up ten-fold in anticipation.
They could get battery cost down to zero and it wouldn't be as profitable as what they were talking about just last year.
The announcement at this new event of a $25,000 car available for sale to consumers because people don't all have enough for the model 3 doesn't make any sense given what was promised last year. It could add to the Robotaxi fleet, but would make no sense to sell to consumers without enough money when it could be operating as an automated taxi driver earning Tesla money instead.
One thing Musk says in this new presentation is that all manufacturers will eventually have autonomy, so this battery stuff is what really makes Tesla a valuable company. But the timeframe doesn't make sense. Either Tesla has some decent exclusivity period on autonomy, or autonomy isn't worth much to people buying FSD now, because there will be lots of Robotaxi competition. And in the case of a decent exclusivity period on autonomy, none of these margin improvements matter and the near term release of a $25,000 car to consumers is a huge mistake.
Go back and watch autonomy investor day and see if any of it holds up to scrutiny.
Robo taxi fleet is one business line that currently has 0 revenue.
Making cars is a business line that currently had a lot of revenue, and if mapped out to a 25k car could take a large percentage of the worldwide car sales business.
There is also the grid level batteries, or selling batteries to others if they pull far enough ahead in batter production.
You don’t just stop battery research and assign those scientists to AI driving. They are fundamentally different hard problems.
Go back and watch autonomy day and listen to the conviction that it would be ready this year. Obv. COVID may impact that, but no more so than advanced battery research would be impacted.
How does, say, the Cybertruck factory make any sense if there is a limited period of time that is immediately imminent where hey will be the exclusive car producer with autonomy?
In the end, I think Nikola and Tesla have a lot in common beyond their namesake.
Musk demoed non-functional solar shingles on the set of Desperate Housewives and basically got a billion in solar subsidies from New York and never delivered. The shingles are coming from China.
Near a billion in California subsidies for fast battery swapping, and they just did one or a few demo stations then canceled it. It probably just used some hacked factory equipment and would never work with normal wear and tear on the cars.
Tesla has delivered for New York what was contracted in terms of jobs and the factory is used for making solar panels. If they hadn't, they would have had to pay a penalty.
I believe they weren't on track to meet the goal before coronavirus and then got an extension ostensibly because of coronavirus (in reality it was more likely for the governor to save face):
They also did a nationwide hiring blitz of installers, so it's also possible that the hiring rush was so they could build product for sale and had little to do with the deadline.
They only announced that V3 product development was complete in late 2019, so ramping up it's production also happened around this time.
> Tesla's speed of iteration and degree of verticalization make leaks and learnings harder to apply to other companies.
This is a point that has more value than IP itself.
Being ahead allows you to protect your research about some new tech that no one is looking at, ok.
But just having to figure details in a factory is the real thing, it's what makes difference. Quality is a product of repetition with near perfection. Figuring it out is time consuming, see Intel x TMSC.
Tesla opened all their patents to competitors for this reason (under weird terms that no one has taken them up on, giving them more rights than the patent system itself ever gives, such as competitors can't copy their unpatented designs, even unknown future ones, if they take them up on the offer to use their patents for free).
According to them patents aren't valuable, it's the velocity of innovation. It made for nice sound bites of how the valley works differently than stodgy old companies. But in reality it seemed to be a sham of you can use our patents only if you don't use our stuff that isn't even patented.
I don't see why this is a bad outcome for consumers.
I don't care that other car companies cannot compete. There will be car companies that can, eventually. There may even be new car companies that doesn't exist yet competing!
This means the competition will have to stomach a loss per electric car sale until they catch up to Tesla’s price advantage or not be cost competitive. According to the author Tesla was 3-4 years ahead, with a growing gap given the battery day announcement (5+ years?).
This can already be seen when looking at existing competition. VW’s ID4 compact SUV will cost $40k pre-subsidy when introduced next year, vs Tesla’s model Y at the same price.
VW itself isn’t a luxury brand, unlike Tesla, and wouldn’t normally be compared. The audis, BMWs etc would likely produce a more expensive car. The most comparable luxury brand cars are Porsche’s taycan which starts at $100k vs Tesla’s model S at ~$75k, polestar (Volvos electric brand), Jaguar I-pace, Audi etron etc which are all substantially more expensive while typically delivering less range and a worse software experience (which i’d say is the new panel gap).
All in all this looks to me very much like the smart phone transition when apple and Samsung/google took over the market. Maybe 1-2 of the old guard will survive, with everyone else ending in the slaughterhouse.
> This means the competition will have to stomach a loss per electric car sale until they catch up to Tesla’s price advantage or not be cost competitive.
The Renault Zoe has outsold all Tesla models combined in Europe so far this year:
best guess is VW is particularly unpopular on this forum due to dieselgate. your comment would probably get voted back up eventually if you hadn't mentioned the downvotes though.
> So setting aside brand weight, how will the fit and finish on the VW compare to the fit and finish on the Tesla?
how can you set aside brand weight in this question? isn't VW's reputation pretty much the only thing we can take into account when speculating about a future vehicle?
based on VW's reputation and personal experience, I would expect the fit and finish on a VW to be a good bit better than the model 3. at the same time, I wouldn't be shocked if they cut a few corners to hit a competitive price point.
ah okay, I guess I'm not the target audience then. I kinda just expect flashy bling from tesla, though don't get me wrong, they can be really fun to drive. "attention to detail" is the first thing that comes to mind with VW.
If only setting aside brand was a legit thing car purchasers did. Cars are one of the prime places people assert their identity in a product. I feel like any car maker willing to make the most expensive SUV will immediately sell a ton, because there are so few options for doing so.
I have probably seen more Lambo SUVs in the last year than I had any other Lambo combined for my entire life.
The same was true for EV / Tesla early on, which helped establish their brand in a similar elite way. They’re still holding onto that for the moment, because cars don’t turn over as often and they have a production backlog — we’ll see if it lasts.
I think it’ll become more like Apple, where everyone of a certain class feels like they have to own the most expensive version, even if it only offers marginal benefits at double the cost.
I'm going at the idea that Tesla is a luxury car maker that is odd to compare to VW. Tesla is very comparable to mainstream brands if fit and finish are taken to matter.
As of yet, though, mainstream brands are nowhere close to Tesla when it comes to performance. And the UX of their cars is so different from mainstream brands that it feels like a unique experience you could easily define as luxury.
This might change if other automakers actually make a real effort to create proper EVs. But I'm not holding my breath. My experiences I've had driving even high-performance non-Tesla EVs, seem to indicate that they'll hold this advantage for some years yet, at a minimum.
I never understood why people make this comparison, they are in the same market at BMW 3s, Audi 3/4, and such. Sorry, but if you have been in them they are of similar quality, let alone road noise.
Spartan modern interior does not equate to cheap. When I first drove the TM3 home I was worried about the lack of individual controls but totally forgot the concern before my forty mile trip home completed.
Now each car I look at I wonder, what were we thinking, forty plus buttons and some combined with byzantine touch screen controls, as being a good idea.
My test to everyone is always the same. Put a sticky on every button in your car, you will be surprised how many there are, then take them off as you use the control. How many days if not weeks before even half are gone?
any feature I'm likely to use while driving should get a hard button that I can press without looking. if the tradeoff is that I end up with a bunch of buttons that I never use, I'm good with that.
Porsche Taycan, Audi e-tron, Jaguar I-Pace, Mercedes EQC. While Tesla arguably still makes the best EVs, these are all certainly good EVs with proper luxury interiors and features.
They don't compare to the 3 and Y in price, though. Or even in range, the most basic technical specification. While at the same time being much closer in other performance measures than the price difference should imply. So I'd say it's still quite a stretch to make the comparison, other than regarding interior or UX preferences.
IMHO, the discussion about interiors is just a distraction. It doesn't matter when the technological gap is so wide, with no signs of closing. If making nice seats and dashboards is all the traditional automakers have going for them when EVs eventually become the obviously best choice....
What is the nature of Tesla's relationship with Panasonic the days? To what extent is this Tesla's battery technology, and to what extent is it Panasonic's?
Panasonic still occupies a portion of the Nevada gigafactory, manufacturing cells that Tesla puts into packs which go into their cars. They are ramping up production capacity further, in fact. The new batteries are entirely Tesla's design, based on work by their research partners. So the new factories they're building in Germany, Texas, and possibly an addition to Shanghai will produce these new batteries.
The twitter poster is delusional. There is no such tech gap, in fact, building electric vehicles is much easier than ICE vehicles, the only reason the traditional car makers are not heavily invested in EVs is because there is not much profit in this segment at this time.
Easier when you know how. It might be easier to cook dinner then to write a web app. But not for me :)
Might be easier to build a digital camera then a film camera. But where is Polaroid now? Kodak also did not fare well in the transition to digital.
It is certainly easier to run an online marketplace then a gazillion stores you have to restock everyday, right? Yet, Walmart has a hard time in the ecommerce landgrap.
Kodak wasn’t that notable as a camera maker when the transition happened. The companies that dominated the film camera market, Nikon and Canon, also dominate the digital camera market.
Not surprising considering that the vast majority of people just use their smartphone as their digital camera. Both companies did just fine in the transition to digital, it was the transition to mobile that they lost out in.
I can very well see similar statements in 20 years:
"Not surprising considering that the vast majority of people just use robo taxis now. The ICE manufacturers did just fine in the transition to EVs. It was the transition to self-driving they lost out in."
You're using the word 'iPhone' where you mean 'smartphone'. Don't do that, you wouldn't call any car a Ford or any vacuum cleaner a Hoover either. Nor do you call any iPhone a Nokia, for that matter.
Kodak was the undisputed king of digital photography from the moment they invented it until about the year 1999, when Nikon finally came out with the D1.
The idea that Kodak somehow ignored digital is a weird silicon valley fairy tale. Kodak shipped a 6 megapixel digital camera in 1995, years before anyone even came close (arguably, the Nikon D1X was the first comparable competitor, and it hit the market in 2001). What killed Kodak was not resting on their laurels, it was actually overspending on R&D that went nowhere, like their disastrous entrance into the pharmaceuticals market.
Was going to ask if you knew the history of Kodak wrt digital, but I see you edited your comment ;o)
For those who don't know, they developed [one of?] the first digital camera very early on but IIRC they didn't want to cannibalise their market dominant position (why compete against yourself?!) so instead rested on their laurels and ultimately lost to digital.
Does Volvo and Volkswagen (Group) count as traditional car makers? Both of these have defined EVs as a significant part of their strategy with many models in the pipeline.
Yes, EV’s have fewer parts so the actual building of an EV should be easier than ICE in a general sense.
That doesn’t automatically mean that legacy auto can build EVs better and more profitable than Tesla can. In fact the switching costs will be quite high and trying to do both at the same time may be a boat anchor on many of the legacy companies.
The legacy companies that are mostly run by the finance types are the most in trouble. This transition will require a significant pivot back to engineering focus from the top down.
Battery price declines are driven by volume. There's been a marked plateau in other electric car makers' volume in the United States, at least, so it makes sense there'd be a plateau in prices as well absent action by Tesla (or someone else) to increase volume.
Where are you getting that? Global electric car sales, despite covid, are already higher for 2020 now than they were for the whole of 2019. If anything, Tesla’s sales look more plateau-y then the market as a whole.
That would only really be relevant if the US was the only market that existed (or if the industry was really balkanised, I suppose). As it stands, the US is the third largest electric car market, and proportionately shrinking fast; the behaviour of the US market isn’t super relevant to market dynamics as a whole. If the US market is stagnating but the global market is growing fast, the demand for batteries continues to grow fast.
To be clear, I don’t think it’s at all inevitable that the US continues to stagnate, but even if it does, he global market should be expected to grow.
True and a valid point when talking about overall price reductions of batteries, but Tesla is doing really well considering almost all the supports for electric cars have been removed, from removing federal EV credits (no extension), super low gas prices, and a general lack of urgency on addressing climate from a federal level. The US would be without industrial capacity for battery production, which would mean we'd be further behind the Wright's Law curve (as industrial knowledge and capacity isn't this fluid thing that can sprout up easily anywhere... industrial capacity can atrophy in a region, making it very difficult to catch up to the world).
> "Had Tesla not made an awesome and compelling electric vehicle, battery prices may not have fallen as quickly because battery production would have been lower."
> "[Tesla] will [drive the cost down] itself and others will be brought along. "
> "We believe the auto industry will follow Wright's Law for battery cost declines, but delayed relative to Tesla"
Nope, never was promoted as $25k but instead as $35k car, not $25k. Also, you can apparently still buy the $35k car (same as the $38k Standard Range Plus but with some of the range locked out at autopilot features reduced--but you still can get that 200 mile range Model 3 if you really want it), but you have to call them about it. Only 8% less money, though, for like 20% less range and fewer features so probably isn't worth it.
I thought the really interesting part was the vertical integration from “ore “ through production to recycle plus the manufacturing streamlining / integration of the cells. If they pull this off and eliminate all the margins otherwise involved they will put themselves at a $/kWh point that only those with very deep pockets will have a chance of matching. So a lot of consolidation to come and remaining others going niche / upmarket.
All of that integration can be done by a battery supplier like SVolt. There is no need for vertical integration with a car company to get that savings.
If you follow that guy's logic, then BYD would've been steamrolling every competition left, and right, Musk included, but it doesn't happen.
There are quite a number of laggards in the market making decent money, and some probably have better margins than the competitors at the bleeding edge.
As written, the twitter thread is basically augury. Fitting a curve does not make it true; the processes of science, reality, academic research, and human discovery do not follow neat lines. They are messy. Even economics is a hell of a lot more complex than "logarithmic increases have linear returns". You need actual engineers and scientists doing research; "cumulative kWh" is just an extremely rough proxy.
There is value in plotting data like this: to dispel anecdotal notions of progress or stalls. Progress has been incremental for a long time. The future expectations are incremental. It's probably going to stay incremental for now. There is little evidence of a stall, or that Tesla suddenly tore down the walls of physics.
Given that Tesla's battery capacity is a small fraction of that already purchased by legacy OEMs, any pricing advantage will accrue to these larger OEMs.
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[ 2.6 ms ] story [ 164 ms ] threadThese plans eventually lead to the stock price shooting up ten-fold in anticipation.
They could get battery cost down to zero and it wouldn't be as profitable as what they were talking about just last year.
The announcement at this new event of a $25,000 car available for sale to consumers because people don't all have enough for the model 3 doesn't make any sense given what was promised last year. It could add to the Robotaxi fleet, but would make no sense to sell to consumers without enough money when it could be operating as an automated taxi driver earning Tesla money instead.
One thing Musk says in this new presentation is that all manufacturers will eventually have autonomy, so this battery stuff is what really makes Tesla a valuable company. But the timeframe doesn't make sense. Either Tesla has some decent exclusivity period on autonomy, or autonomy isn't worth much to people buying FSD now, because there will be lots of Robotaxi competition. And in the case of a decent exclusivity period on autonomy, none of these margin improvements matter and the near term release of a $25,000 car to consumers is a huge mistake.
Go back and watch autonomy investor day and see if any of it holds up to scrutiny.
Making cars is a business line that currently had a lot of revenue, and if mapped out to a 25k car could take a large percentage of the worldwide car sales business.
There is also the grid level batteries, or selling batteries to others if they pull far enough ahead in batter production.
You don’t just stop battery research and assign those scientists to AI driving. They are fundamentally different hard problems.
How does, say, the Cybertruck factory make any sense if there is a limited period of time that is immediately imminent where hey will be the exclusive car producer with autonomy?
In the end, I think Nikola and Tesla have a lot in common beyond their namesake.
Milton (Nikola) just flat out made stuff up all the time that had no basis in truth.
Near a billion in California subsidies for fast battery swapping, and they just did one or a few demo stations then canceled it. It probably just used some hacked factory equipment and would never work with normal wear and tear on the cars.
https://en.wikipedia.org/wiki/Giga_New_York#Jobs_commitment
https://www.bizjournals.com/albany/news/2020/01/30/tesla-fac...
They only announced that V3 product development was complete in late 2019, so ramping up it's production also happened around this time.
This is a point that has more value than IP itself.
Being ahead allows you to protect your research about some new tech that no one is looking at, ok.
But just having to figure details in a factory is the real thing, it's what makes difference. Quality is a product of repetition with near perfection. Figuring it out is time consuming, see Intel x TMSC.
According to them patents aren't valuable, it's the velocity of innovation. It made for nice sound bites of how the valley works differently than stodgy old companies. But in reality it seemed to be a sham of you can use our patents only if you don't use our stuff that isn't even patented.
I don't care that other car companies cannot compete. There will be car companies that can, eventually. There may even be new car companies that doesn't exist yet competing!
This can already be seen when looking at existing competition. VW’s ID4 compact SUV will cost $40k pre-subsidy when introduced next year, vs Tesla’s model Y at the same price.
VW itself isn’t a luxury brand, unlike Tesla, and wouldn’t normally be compared. The audis, BMWs etc would likely produce a more expensive car. The most comparable luxury brand cars are Porsche’s taycan which starts at $100k vs Tesla’s model S at ~$75k, polestar (Volvos electric brand), Jaguar I-pace, Audi etron etc which are all substantially more expensive while typically delivering less range and a worse software experience (which i’d say is the new panel gap).
All in all this looks to me very much like the smart phone transition when apple and Samsung/google took over the market. Maybe 1-2 of the old guard will survive, with everyone else ending in the slaughterhouse.
The Renault Zoe has outsold all Tesla models combined in Europe so far this year:
https://ev-sales.blogspot.com/2020/09/europe-august-2020.htm...
And the Porsche Taycan and the Audi e-tron (both Volkswagen brands) have outsold the Model S and Model X.
Is it gonna be full of cheaper materials and be poorly assembled?
Edit: Why is this downvoted? :-))
how can you set aside brand weight in this question? isn't VW's reputation pretty much the only thing we can take into account when speculating about a future vehicle?
based on VW's reputation and personal experience, I would expect the fit and finish on a VW to be a good bit better than the model 3. at the same time, I wouldn't be shocked if they cut a few corners to hit a competitive price point.
The eGolf got good reviews on this; standard VW quality interior.
I have probably seen more Lambo SUVs in the last year than I had any other Lambo combined for my entire life.
The same was true for EV / Tesla early on, which helped establish their brand in a similar elite way. They’re still holding onto that for the moment, because cars don’t turn over as often and they have a production backlog — we’ll see if it lasts.
I think it’ll become more like Apple, where everyone of a certain class feels like they have to own the most expensive version, even if it only offers marginal benefits at double the cost.
This might change if other automakers actually make a real effort to create proper EVs. But I'm not holding my breath. My experiences I've had driving even high-performance non-Tesla EVs, seem to indicate that they'll hold this advantage for some years yet, at a minimum.
Spartan modern interior does not equate to cheap. When I first drove the TM3 home I was worried about the lack of individual controls but totally forgot the concern before my forty mile trip home completed.
Now each car I look at I wonder, what were we thinking, forty plus buttons and some combined with byzantine touch screen controls, as being a good idea.
My test to everyone is always the same. Put a sticky on every button in your car, you will be surprised how many there are, then take them off as you use the control. How many days if not weeks before even half are gone?
IMHO, the discussion about interiors is just a distraction. It doesn't matter when the technological gap is so wide, with no signs of closing. If making nice seats and dashboards is all the traditional automakers have going for them when EVs eventually become the obviously best choice....
Might be easier to build a digital camera then a film camera. But where is Polaroid now? Kodak also did not fare well in the transition to digital.
It is certainly easier to run an online marketplace then a gazillion stores you have to restock everyday, right? Yet, Walmart has a hard time in the ecommerce landgrap.
I think with Canon it is similar - I can't find a long term chart right now though.
"Not surprising considering that the vast majority of people just use robo taxis now. The ICE manufacturers did just fine in the transition to EVs. It was the transition to self-driving they lost out in."
The idea that Kodak somehow ignored digital is a weird silicon valley fairy tale. Kodak shipped a 6 megapixel digital camera in 1995, years before anyone even came close (arguably, the Nikon D1X was the first comparable competitor, and it hit the market in 2001). What killed Kodak was not resting on their laurels, it was actually overspending on R&D that went nowhere, like their disastrous entrance into the pharmaceuticals market.
For those who don't know, they developed [one of?] the first digital camera very early on but IIRC they didn't want to cannibalise their market dominant position (why compete against yourself?!) so instead rested on their laurels and ultimately lost to digital.
Oh so they're waiting before prices fall so they can be caught "unprepared" and be eaten by Tesla or cry for another bailout from the government?
"Profits are not there yet" is like saying a wall is not there yet when driving directly towards it.
And I'm glad not all manufacturers subscribe to that naive view
That doesn’t automatically mean that legacy auto can build EVs better and more profitable than Tesla can. In fact the switching costs will be quite high and trying to do both at the same time may be a boat anchor on many of the legacy companies.
The legacy companies that are mostly run by the finance types are the most in trouble. This transition will require a significant pivot back to engineering focus from the top down.
To be clear, I don’t think it’s at all inevitable that the US continues to stagnate, but even if it does, he global market should be expected to grow.
https://www.ev-volumes.com/
Strong sales in July and August, particularly in Europe.
> "Had Tesla not made an awesome and compelling electric vehicle, battery prices may not have fallen as quickly because battery production would have been lower."
> "[Tesla] will [drive the cost down] itself and others will be brought along. "
> "We believe the auto industry will follow Wright's Law for battery cost declines, but delayed relative to Tesla"
> ... said Musk, and in about four years will have developed a truly “mainstream” car that will cost $30,000.
2018: https://www.cnbc.com/2018/08/18/elon-musk-tesla-could-produc...
> Elon Musk: Tesla could produce a $25,000 car in around 3 years
2020: https://www.caranddriver.com/news/a34112343/tesla-battery-da...
> Tesla Promises $25,000 EV in Three Years
There are quite a number of laggards in the market making decent money, and some probably have better margins than the competitors at the bleeding edge.
There is value in plotting data like this: to dispel anecdotal notions of progress or stalls. Progress has been incremental for a long time. The future expectations are incremental. It's probably going to stay incremental for now. There is little evidence of a stall, or that Tesla suddenly tore down the walls of physics.
Tesla needs as much driving data as possible.
Every of order of magnitude makes it that much harder for competitors to reach.
Once they get a critical amount, the AI of driverless will fall into place.
They will be subsidizing low cost vehicles just to get the driver data.