Didn't we go through some phase where many companies were vertically integrating and then somehow that went out of fashion and everyone reversed that. I vaguely remember learning this in a business class, but no details.
Yeah, like all the old American companies went through that process... Ford and GE come to mind. It's a good way to externalize some risks like labor and capital investment, and ramp faster by delegating some optimizations to natural contractor competition. There's a clear cost when it comes to all-up cost and velocity of innovation of tightly-integrated components.
What are the dangers exactly? That a once in a century event can disrupt your supply chain? Is that actually a reasonable thing to try to guard against?
Why do you think that a global pandemic is the only thing that can cause disruption? The ship stuck in the Suez canal was not pandemic related, and that kind of issue can happen at any time. What happens if the Suez or Panama canals are not functioning? Panama is already concerned about the water levels available. What about trade relations going to the extreme side and blocks all commerce with a major supplier? What if union dock workers all go on strike?
Thinking that it can never happen again is just wearing blinders
I'm not saying these events can't happen I'm saying they're rare enough that trying to prepare for them is wasteful. As you illustrated there's all sorts of things that can go wrong. Trying to anticipate them all is a fools errand. And if you spend the capital to try to protect against the rare supply chain disruption all your competitors will just roll the dice and save the money and odds are they will come out ahead.
What happened is big businesses wanted to get away from unions and pension obligations so they started outsourcing everything they could get away with. But this came with a loss of efficiency in the long run and ended up biting them in the butt.
> Didn't we go through some phase where many companies were vertically integrating and then somehow that went out of fashion and everyone reversed that. I vaguely remember learning this in a business class, but no details.
The primary advantage to vertical integration is when you need something but the market for suppliers is broken somehow, e.g. there isn't enough competition and then the suppliers behave like Comcast or Qualcomm. In that case entering the market yourself can be an advantage if you have the resources to do it, because you can cut out the crummy suppliers.
The risk of this is that you become the crummy supplier. The internal supplier has a captive customer because they're the same company, which means they're not exposed to competitive pressure. Corporate politics takes root, internal processes become wasteful and inefficient, but there is pressure to use the internal solution even if a third party offers something better. Internal systems become so integrated with each other that you can't switch to a competing supplier even when you should. One part of the company isn't allowed to improve their product in a way that cannibalizes the margins of another business unit, when non-vertically integrated competitors have no such constraints.
Basically it works well in the early years but then the lumbering dinosaur goes extinct at the next meteor because it loses the ability to adapt.
The secret is to enter the other market but then spin off the internal subdivision before the whole company becomes a festering bureaucracy. Or create an internal preference for the smallest suppliers in the other market to help them gain a foothold and increase their competitiveness, or provide them with startup capital or publish open source software that makes it easier for startups to enter that market etc. Commoditize Your Complement.
Unless you can do everything cheaper than the market cost, and better than what is on the market, forever, it’s going to become a problem at some point.
It’s not vertical integration it’s that’s they have significantly less bureaucracy and overhead compared to legacy companies. That advantage won’t last forever but for 10-20 years it will propel them ahead
I'd say it is that, plus the fact that they built their charger designs at a time when they had to do them cheap.
They had very little capital, and they knew that they couldn't sell cars without a charging network. So they put all their efforts into reusing as much as they could from their high volume cars to improve economies of scale.
Noone else had the same incentives. That part is changing fast, though.
Doors should instantly communicate 1) what side the door operates on, and 2) how the door operates. Similarly, an EV charger should instantly communicate
1) where and how to park (back in, pull through)
2) how to properly connect the cable
3) (optional) any additional steps to start charging such as payment etc.
In this Norman Charger, it's not clear where where to park. The charger is actually positioned so it's entirely in front of the adjacent parking slot. Additionally the routing of the charge cable is wonky, forcing you to awkwardly "shortcut" the cable behind a pole (especially hard for limited mobility users).
As part of the overall design of an EV charger, you ideally should accommodate charge ports in different locations. (1) and (2) should be clearly communicated wherever your car's charge port is located.
Charge ports have mostly settled in one "corner" of the car, with a few front/back. If your cable reaches left/right/center, it can accommodate all common charge ports.
I think this picture actually shows that the way it's meant to be used is really unintuitive. How can you see that and not agree it's a confusing design?
I agree that it could be confusing for people not adept at spatial reasoning (though one could question why such a person should be allowed to operate something so inherently dangerous to others on public roads), but I immediately understood the geometry and still think that it's a completely reasonable design for the intended vehicles (while probably intentionally hostile to other vehicles that don't have their charge ports at the front left corner).
This feels like the start of a lawsuit. If Tesla is state of the art and requires 5x less funding per charger than competition; what is the reasoning behind picking the competitors?
Here’s a better question. Is Tesla leveraging their market cap and cash reserves to capture a monopoly position on chargers? I’d want to make sure that market competitiveness is a thing. Otherwise you have a company that turns its behavior on all fronts into rent seeking.
I don’t doubt their efficiency and scale effects stack up to an enormous advantage. Absolutely their ability to finance impacts the unit costs of chargers very few if any other company could match. However:
* being extraordinarily well positioned to compete isn’t a crime or legally anticompetitive. It might be if they had a non competitive market monopoly in another market they’re leveraging in this market. But they don’t.
* lose leading isn’t illegal or sanctionable unless it fits fairly narrow constraints in antitrust law
* probably most importantly they have the only proven ability to deliver a critical national infrastructure to meet national energy, environmental, and security goals. They will be afforded remarkable leeway for some time.
* they’re actually weakening their grip on the EV market by opening the charger adapter spec and licensing access to competitors. If the supercharger network were plausibly their money maker eyes might squint. But it’s not. It’s an enablement to the entire industry, including their competitors. And it’s not reasonable to say the EV market lacks competitors.
That doesn’t mean this won’t change in the future. But I fully expect a Standard Oil world where EV charging is owned by Tesla. Then, legal market remedies would be squarely on the table.
> being extraordinarily well positioned to compete isn’t a crime or legally anticompetitive
Actually, using profits in one sector to dominate a second is pretty classical monopolist behavior. I’m fine with competition but if the bid is insincere because they’re not going to do the work for that number - the winner typically pays what the 2nd bidder bid typically in such contracts - or because it’s to capture a monopoly position and recoup the rest of the investment through rent seeking over the long term, these are negative behaviors we should discourage through various means.
> And it’s not reasonable to say the EV market lacks competitors.
That was true of the internet too. Yet somehow we ended up with a handful of major tech companies.
> But I fully expect a Standard Oil world where EV charging is owned by Tesla. Then, legal market remedies would be squarely on the table.
Wait. So you agree this strategy that Tesla is employing is likely to cause a problem in the future but your position is to remedy it in the future after it’s obviously an even bigger problem with jobs tied to it making it more politically risky, the legal and political climate being a joke on antitrust at the moment?
Also the rest of what you wrote is basically “there’s no law against it”. I’m saying there should be laws against predatory pricing and simple ones like your penalty is paying a fine which is based on what a fair price would have been and how much you’ve cost the economy through that behavior which government regulators and academic economists get to determine independently (& pick the highest price). You don’t need to do this for all companies - just ones who have enough cash flow that such behaviors are possible in the first place (a startup that’s not turning over a billion or so per quarter has a hard time pulling this kind of shit). Oh and treat fundraising like revenue a bit in that it counts towards you being regulated (eg if you’re market cap in a private market is >1B you can’t have any loss leading products).
* You have to have a monopoly in the other sector for it run afoul. Many companies enter new segments by loss leading taking profits from their established non-monopoly business to subsidize their growth in another segment. That’s not illegal in the least and is extremely wide spread. In fact the opposite in this situation is true. The EV market is extremely competitive but the supercharger market is dominated by Tesla. The fact they’re opening it up for use by competitors in EV means they’re not leveraging their supercharger hegemony to kill off EV competitors.
* “the internet” isn’t a single market segment. There are a lot of monopolies though, and I would point you to the ongoing antitrust lawsuits.
* you can’t proactively take someone for violating a law in the future to court. Yes they’ll likely be standard oil given how things are playing out. But they are not now. They would rightfully complain they’re being punished for future behavior that they may not do, and there may very well be a large competitor that springs up along the way. The market is too new and the government doesn’t generally interfere in market dynamics in nascent markets; and they definitely don’t punish you for something that might happen in the future. It’s not minority report - you actually have to commit a crime to be legally culpable for committing a crime.
* there are lots of laws about pricing. But in a competitive market companies are allowed to loss lead. But to your point there a lot of ways that can happen that’s structurally unfair. Using one monopoly to predate in another market is potentially illegal. Competing on price in multiple competitive markets is not. And it shouldn’t be, because that’s almost always how companies break into new markets and gain market share against established competitors.
I’d note regardless in this situation I will wager they do have an enormous cost advantage over everyone without loss leading. They have a scaled industrialized operation that generates revenues. No one else does.
> Many companies enter new segments by loss leading taking profits from their established non-monopoly business to subsidize their growth in another segment. That’s not illegal in the least and is extremely wide spread
Again, you’re arguing that something is legal when I’m saying the law should be changed. There’s no economically beneficial reason to allow anyone to loss lead by taking profits from one space and using it to capture market share in another, regardless whether you’re a monopoly to start with or not. That’s literally one of the well established mechanisms for a monopoly to start with. And once they get entrenched, they repeat that pattern to protect themselves from competitors, lowering the price until new entrants leave.
There’s cases where loss leaders I’m more OK with, but that’s usually around when you’re selling multiple “fungible” items and you have a loss leader on one to drive traffic & it’s not the manufacturer of the item giving you a deal to make it a loss leader. Think grocery chains, outlets, etc.
> you can’t proactively take someone for violating a law in the future to court
No where did I propose this. All I suggested is that there’s enforced regulations to make sure that Tesla is behaving here in a way that won’t result in needing an anti trust case in the future. Microsoft’s anti trust lawsuit went nowhere. Sure it’s not as entrentched, but if they hadn’t built their monopoly position in the first place & stuffed their coffers, they wouldn’t have been able to survive the massively bad decisions they kept making for a decade or more.
You seem to be taking on faith here that this is purely because Tesla has leveraged vertical integration to get a 5x savings cost. I’m skeptical though - if that were the case they wouldn’t need to be going after government bids for charger networks in the first place & could undercut on price. There’s just no way vertical integration in the car manufacturing space is yielding such impressive dividends in the charge manufacturing / operating space.
I think the key is I think the law is largely well thought out in this space if often poorly implemented. There is a balance between exerting control over markets and letting markets run rough shod over us. Not every practice that’s distasteful need be controlled nor every whim fulfilled. Loss leading is a way for monopolies to be broken too - imagine a world where Tesla is well established with super chargers everywhere and has become complacent. It’s fat and inefficient, doesn’t use the best tech anymore, and rests on its market dominance. Startups just get crushed under foot. You could do some sort of antitrust thing then but that doesn’t ensure competitiveness. See Netscape vs MSFT, the action was way too late to be effective. It wasn’t until another adjacent company with a huge war chest loss led their way into the browser market that internet explorers illegally monopoly was actually broken up.
So in the Tesla case, imagine now CATL sees an opportunity to leverage their battery dominance to enter the charger network business. If they don’t loss lead they face insurmountable penetration challenges even with superior technology that integrates better with their batteries. The capital and operational overhang is too great to immediately be profitable with a starting from 0% market share. The margins would have to start at infinity and work down as share grows to not loss lead. No one would pay a near infinite amount of money to charge their car. So A way to gain market share quickly would be to subsidize the bootstrap of their market share by pricing way under the cost covering margin required, and probably one that’s much lower than Tesla and is more in line with their at scale margin in the future if they’re successful.
Is that fair? Maybe not in some very strict sense of the word. Does the same technique work in less established markets? Absolutely. What do you think startups are doing with VC money? Are the financiers of startups adorable small business owners trying to make it in a tough world of hard nosed business so deserve special carve outs? Because they’re the ones subsidizing the loss leading startups do to establish themselves. The startups are just the workers, the capital is coming from ugly megawealthy folks with near monopolistic control over capital deciding who wins and loses, seeking to create more and more monopolies from the winnings of their prior monopolies.
Edit: on Tesla’s efficiencies I actually wouldn’t be too surprised if their relative cost covering margin is closer to 5x than not. However, expansion requires enormous capital investment and charging networks even at maximized margins can’t compare to return on investment to car sales. It’s an enabler for car sales scale, and a rising tide for EV lifts all boats. Every car maker wants to sell cars before charging services for that reason. So if they have $10 of capital for car making or $10 for charging infrastructure the cars get the money. So why does Tesla want the government to subsidize capital investment? Because they would rather deploy their earned and fundraising capital on their core business. The government wants the infrastructure and frankly other car makers want it too. Tesla takes operational risk, covers a non trivial amount of the capital commitment, and everyone gets the charger infrastructure we need in the present. The optimization of the competitive market would come later - once there’s a market to optimize. Frankly at a certain point Tesla would almost certainly spin off their charger network as it become a commodity and a capital distraction. Other car makers might compete then when their margins in cars are saturated, but I would put my money on gas station chains and oil companies deciding to get out of the age of fire and getting with fundamental forces and maxwells equations.
> Is Tesla leveraging their market cap and cash reserves to capture a monopoly position on chargers?
No. They are simply the only company that takes charging seriously.
I was helping to go through DCFC manufacturers' bids in 2021, and most of them had a "large sunlight-readable screen" listed as a fucking advantage. Because you can use it to show freaking ads or "branding".
Because that's certainly what I want to do: stare at even more ads as the charger does the slllllooooowwww negotiation process.
This would be a very large concern I would have about trying to enter into any kind of an agreement with him specifically, but it is a criteria considered by pretty much everyone. Will this person or anyone in leadership be a problem later? It has an effect on decisions when making long term contracts.
This was in 2022 and at least the common Superchargers deployed now don’t accept credit card payments and only recently were opened up to other manufacturers. A municipality could choose another manufacturer that supports more vehicle models.
> Now the program has announced the distribution of the grants, and unfortunately for Tesla, it didn’t make the cut and it’s not clear why. Having just moved its headquarters and new factory to the state should have at least levelled the playing field.
But the linked article does explain why: it was first come first served and only around $20 million for the program in Texas, as part of a settlement for dieselgate.
If moving their factory and headquarters into the state gave them higher priority in line wouldn't that be against the settlement terms that created the program? It would be weird for a settlement to have a provision like that.
This is the linked Forbes article that seems to be the earlier source:
Some numbers show in there that it gets cheaper the more stations are in one place (N-plex), and Tesla's applications had the highest at 17-plexes of chargers.
They also mention a 20% limit on electrical service upgrades, though I don't know if that would effect the 17-plex differently, or if it was already in a place with enough service, if they overprovision.
So if the max request could be 70%, does that necessarily mean that Tesla is asking for all 70%? It seems like it would be a natural think to request the most free money possible, but it could done intentionally to obfuscate the actual costs (as unlikely as that might be).
Also, one has to wonder why the others are charging so much. I know less than nothing about other companies involved. Does Tesla sale the chargers at a loss intentionally? Are the others just so out of touch? Are the others just grifters?
"as unlikely as that might be" would indicate to me that it's not the direction of my understanding. so other than that, care to actually respond with something that moves the conversation along with the other questions regarding why the vast disparity between vendors?
Tesla has economies of scale because they manufacture more or less the same equipment globally. They are passing less money to suppliers. And they have more technicians going around so they can use connectors that are replaced more frequently. They don't have screens and have starlink for backup comms and car comms. When they lose connectivity with the mothership they charge at full speed for free.
Regardless of that, if thier costs are the same, by asking for less money for more outlets they are more likely to get money. When you show you're willing to put up your own cash or just ask for less money in general while offering equal or better performance, you're more likely to win bids.
Politicians prefer to say they brought 10000 chargers than 4000.
The subsidy request is just you asking for money and doesn't represent your costs just what you want to ask for. You can ask for more than you need i.e make a profit on building costs
The question is how much do you want to do this, not how much will it cost you
You seem to be skipping the part of the grant request (free money) that they had a limit of 70% of the charger's cost. So even by asking for the max allowed, they still would be required to put up their own money. No business person I have ever talked to would leave free money on the table.
My original question was asking if they are were requesting less than the maximum allowed, and you quibbled with the premise, yet here you are suggesting that's exactly what they did. You're suggesting it was due to altruistic reasons. I just did the thought exercise of knowing people will assume you requested the max allowed, then do the math to come up with a price that's not correct just to F with people. Seems exactly like something Musk would do.
This is not a good article. It makes an extrapolation that's not justified. Tesla made 4 separate grant applications. Two of them included "17 activities" and requested $500,000 as eligible reimbursements. Two of them included "9 activities" for around $375,000.
This makes one project have a ratio of "$30,000 reimbursement request per charger." The other has a ratio of "$41,000 reimbursement request per charger." So there's two very different rates based on circumstances that are not in the published table.
This is a one time program using settlement money. You're only going to get 60% to 70% of the funding through the program. It's not clear what Tesla's goal was here or if these program numbers truly reflect a wholesale price of the charger for them.
A cost is a price paid to acquire, produce, accomplish, or maintain anything. It would appear these chargers cost $30,000 and $41,000 respectively. The article makes no mention of the wholesale price of Tesla chargers—only that the author have seen prices above $100,000 for some charges.
Does it? Say the program normally awards to small companies to improve competition. Tesla could underbid reducing their take home if they win but given they don't think they would win that isn't a problem.
Similarly if they want to contest the result underbidding gives them justification.
This is a 2022 throw-away rewrite article about a 2022 article about a grant program that ended in 2021. There's no evidence at all that Tesla's costs were any less than the competition, only that they were asking for less in subsidies, possibly because they were interested in establishing a network effects setup and were happy to subsidize it themselves.
A more recent article in the WSJ mentioned Tesla’s charging sites were both cheaper and offered more chargers:
> Five states—Ohio, Hawaii, Pennsylvania, Maine and Colorado—have selected winners at this point, and full details on sites and designs aren’t yet available. Tesla’s bids averaged around $392,000 a site compared with an average of $795,000 from others.
> In most cases, Tesla plans to install 8 chargers, and in some cases a dozen. Most companies are sticking to the minimum required by the federal government—at least four fast-charging ports at a station.
The Nation Electric Vehicle Infrastructure Project spawned by the Federal Highway Administration and the Build America, Buy America Act has picked open standards required for federal funding, but articles like this make me wish government would also fund open innovation to create open infrastructure knowledge how & solutions.
The government is funding installations, who in most cases buy and have some role in deploying typically off the shelf solutions. It just seems like it's been such a long sad slow movement, with so many reports of flakey reliability and poor systems. It doesn't feel like the industry is really on a positive treadmill or whatever towards success, towards getting better. Private industry doesn't seem like it's doing a good job serving this infrastructure need. I kind of just want the government to fund some open research & development with public access clauses to figure out how to do the job well and cost effectively. A couple hundred million spent making the industry not suck & have an healthy open baseline for competing atop seems like it's quasi necessary if EV charging is going to ever mature past the stagnancy point it's been stuck at for so long.
That said, it's been 9 months since the FHA passed the rules for how charging systems need to work for federal money. Maybe the industry can self correct, will be incentivized to muster up, and can start meeting reliability requirements specified for funding. Maybe these incentives are enough. But it sure seems like something that feels uncompetitive, that Supercharger alone is playing to win & most of the rest of the industry has accepted meh only sort of works deeply un-integrated barely effective multi-organizational hacking it out.
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[ 3.1 ms ] story [ 153 ms ] threadThese mega companies that are contractors all the way down are like microservices - useful for some situations but probably not yours.
Thinking that it can never happen again is just wearing blinders
The primary advantage to vertical integration is when you need something but the market for suppliers is broken somehow, e.g. there isn't enough competition and then the suppliers behave like Comcast or Qualcomm. In that case entering the market yourself can be an advantage if you have the resources to do it, because you can cut out the crummy suppliers.
The risk of this is that you become the crummy supplier. The internal supplier has a captive customer because they're the same company, which means they're not exposed to competitive pressure. Corporate politics takes root, internal processes become wasteful and inefficient, but there is pressure to use the internal solution even if a third party offers something better. Internal systems become so integrated with each other that you can't switch to a competing supplier even when you should. One part of the company isn't allowed to improve their product in a way that cannibalizes the margins of another business unit, when non-vertically integrated competitors have no such constraints.
Basically it works well in the early years but then the lumbering dinosaur goes extinct at the next meteor because it loses the ability to adapt.
The secret is to enter the other market but then spin off the internal subdivision before the whole company becomes a festering bureaucracy. Or create an internal preference for the smallest suppliers in the other market to help them gain a foothold and increase their competitiveness, or provide them with startup capital or publish open source software that makes it easier for startups to enter that market etc. Commoditize Your Complement.
Ford at one time owned coal and iron mines.
(Hint: You cannot.)
Tesla also benefits from horizontal integration, sharing a common charger module between vehicle and Supercharger. This improves scale and cost.
They had very little capital, and they knew that they couldn't sell cars without a charging network. So they put all their efforts into reusing as much as they could from their high volume cars to improve economies of scale.
Noone else had the same incentives. That part is changing fast, though.
https://www.outofsightdesigns.com/norman-doors/
Doors should instantly communicate 1) what side the door operates on, and 2) how the door operates. Similarly, an EV charger should instantly communicate
1) where and how to park (back in, pull through)
2) how to properly connect the cable
3) (optional) any additional steps to start charging such as payment etc.
In this Norman Charger, it's not clear where where to park. The charger is actually positioned so it's entirely in front of the adjacent parking slot. Additionally the routing of the charge cable is wonky, forcing you to awkwardly "shortcut" the cable behind a pole (especially hard for limited mobility users).
As part of the overall design of an EV charger, you ideally should accommodate charge ports in different locations. (1) and (2) should be clearly communicated wherever your car's charge port is located.
Charge ports have mostly settled in one "corner" of the car, with a few front/back. If your cable reaches left/right/center, it can accommodate all common charge ports.
It's designed for Rivian cars and you wouldn't want the cable to be on the ground for no reason.
Here’s a better question. Is Tesla leveraging their market cap and cash reserves to capture a monopoly position on chargers? I’d want to make sure that market competitiveness is a thing. Otherwise you have a company that turns its behavior on all fronts into rent seeking.
* being extraordinarily well positioned to compete isn’t a crime or legally anticompetitive. It might be if they had a non competitive market monopoly in another market they’re leveraging in this market. But they don’t.
* lose leading isn’t illegal or sanctionable unless it fits fairly narrow constraints in antitrust law
* probably most importantly they have the only proven ability to deliver a critical national infrastructure to meet national energy, environmental, and security goals. They will be afforded remarkable leeway for some time.
* they’re actually weakening their grip on the EV market by opening the charger adapter spec and licensing access to competitors. If the supercharger network were plausibly their money maker eyes might squint. But it’s not. It’s an enablement to the entire industry, including their competitors. And it’s not reasonable to say the EV market lacks competitors.
That doesn’t mean this won’t change in the future. But I fully expect a Standard Oil world where EV charging is owned by Tesla. Then, legal market remedies would be squarely on the table.
Actually, using profits in one sector to dominate a second is pretty classical monopolist behavior. I’m fine with competition but if the bid is insincere because they’re not going to do the work for that number - the winner typically pays what the 2nd bidder bid typically in such contracts - or because it’s to capture a monopoly position and recoup the rest of the investment through rent seeking over the long term, these are negative behaviors we should discourage through various means.
> And it’s not reasonable to say the EV market lacks competitors.
That was true of the internet too. Yet somehow we ended up with a handful of major tech companies.
> But I fully expect a Standard Oil world where EV charging is owned by Tesla. Then, legal market remedies would be squarely on the table.
Wait. So you agree this strategy that Tesla is employing is likely to cause a problem in the future but your position is to remedy it in the future after it’s obviously an even bigger problem with jobs tied to it making it more politically risky, the legal and political climate being a joke on antitrust at the moment?
Also the rest of what you wrote is basically “there’s no law against it”. I’m saying there should be laws against predatory pricing and simple ones like your penalty is paying a fine which is based on what a fair price would have been and how much you’ve cost the economy through that behavior which government regulators and academic economists get to determine independently (& pick the highest price). You don’t need to do this for all companies - just ones who have enough cash flow that such behaviors are possible in the first place (a startup that’s not turning over a billion or so per quarter has a hard time pulling this kind of shit). Oh and treat fundraising like revenue a bit in that it counts towards you being regulated (eg if you’re market cap in a private market is >1B you can’t have any loss leading products).
* “the internet” isn’t a single market segment. There are a lot of monopolies though, and I would point you to the ongoing antitrust lawsuits.
* you can’t proactively take someone for violating a law in the future to court. Yes they’ll likely be standard oil given how things are playing out. But they are not now. They would rightfully complain they’re being punished for future behavior that they may not do, and there may very well be a large competitor that springs up along the way. The market is too new and the government doesn’t generally interfere in market dynamics in nascent markets; and they definitely don’t punish you for something that might happen in the future. It’s not minority report - you actually have to commit a crime to be legally culpable for committing a crime.
* there are lots of laws about pricing. But in a competitive market companies are allowed to loss lead. But to your point there a lot of ways that can happen that’s structurally unfair. Using one monopoly to predate in another market is potentially illegal. Competing on price in multiple competitive markets is not. And it shouldn’t be, because that’s almost always how companies break into new markets and gain market share against established competitors.
I’d note regardless in this situation I will wager they do have an enormous cost advantage over everyone without loss leading. They have a scaled industrialized operation that generates revenues. No one else does.
Again, you’re arguing that something is legal when I’m saying the law should be changed. There’s no economically beneficial reason to allow anyone to loss lead by taking profits from one space and using it to capture market share in another, regardless whether you’re a monopoly to start with or not. That’s literally one of the well established mechanisms for a monopoly to start with. And once they get entrenched, they repeat that pattern to protect themselves from competitors, lowering the price until new entrants leave.
There’s cases where loss leaders I’m more OK with, but that’s usually around when you’re selling multiple “fungible” items and you have a loss leader on one to drive traffic & it’s not the manufacturer of the item giving you a deal to make it a loss leader. Think grocery chains, outlets, etc.
> you can’t proactively take someone for violating a law in the future to court
No where did I propose this. All I suggested is that there’s enforced regulations to make sure that Tesla is behaving here in a way that won’t result in needing an anti trust case in the future. Microsoft’s anti trust lawsuit went nowhere. Sure it’s not as entrentched, but if they hadn’t built their monopoly position in the first place & stuffed their coffers, they wouldn’t have been able to survive the massively bad decisions they kept making for a decade or more.
You seem to be taking on faith here that this is purely because Tesla has leveraged vertical integration to get a 5x savings cost. I’m skeptical though - if that were the case they wouldn’t need to be going after government bids for charger networks in the first place & could undercut on price. There’s just no way vertical integration in the car manufacturing space is yielding such impressive dividends in the charge manufacturing / operating space.
So in the Tesla case, imagine now CATL sees an opportunity to leverage their battery dominance to enter the charger network business. If they don’t loss lead they face insurmountable penetration challenges even with superior technology that integrates better with their batteries. The capital and operational overhang is too great to immediately be profitable with a starting from 0% market share. The margins would have to start at infinity and work down as share grows to not loss lead. No one would pay a near infinite amount of money to charge their car. So A way to gain market share quickly would be to subsidize the bootstrap of their market share by pricing way under the cost covering margin required, and probably one that’s much lower than Tesla and is more in line with their at scale margin in the future if they’re successful.
Is that fair? Maybe not in some very strict sense of the word. Does the same technique work in less established markets? Absolutely. What do you think startups are doing with VC money? Are the financiers of startups adorable small business owners trying to make it in a tough world of hard nosed business so deserve special carve outs? Because they’re the ones subsidizing the loss leading startups do to establish themselves. The startups are just the workers, the capital is coming from ugly megawealthy folks with near monopolistic control over capital deciding who wins and loses, seeking to create more and more monopolies from the winnings of their prior monopolies.
Edit: on Tesla’s efficiencies I actually wouldn’t be too surprised if their relative cost covering margin is closer to 5x than not. However, expansion requires enormous capital investment and charging networks even at maximized margins can’t compare to return on investment to car sales. It’s an enabler for car sales scale, and a rising tide for EV lifts all boats. Every car maker wants to sell cars before charging services for that reason. So if they have $10 of capital for car making or $10 for charging infrastructure the cars get the money. So why does Tesla want the government to subsidize capital investment? Because they would rather deploy their earned and fundraising capital on their core business. The government wants the infrastructure and frankly other car makers want it too. Tesla takes operational risk, covers a non trivial amount of the capital commitment, and everyone gets the charger infrastructure we need in the present. The optimization of the competitive market would come later - once there’s a market to optimize. Frankly at a certain point Tesla would almost certainly spin off their charger network as it become a commodity and a capital distraction. Other car makers might compete then when their margins in cars are saturated, but I would put my money on gas station chains and oil companies deciding to get out of the age of fire and getting with fundamental forces and maxwells equations.
No. They are simply the only company that takes charging seriously.
I was helping to go through DCFC manufacturers' bids in 2021, and most of them had a "large sunlight-readable screen" listed as a fucking advantage. Because you can use it to show freaking ads or "branding".
Because that's certainly what I want to do: stare at even more ads as the charger does the slllllooooowwww negotiation process.
The CEO of the company is unhinged.
But the linked article does explain why: it was first come first served and only around $20 million for the program in Texas, as part of a settlement for dieselgate.
If moving their factory and headquarters into the state gave them higher priority in line wouldn't that be against the settlement terms that created the program? It would be weird for a settlement to have a provision like that.
This is the linked Forbes article that seems to be the earlier source:
https://www.forbes.com/sites/bradtempleton/2022/04/14/teslas...
Some numbers show in there that it gets cheaper the more stations are in one place (N-plex), and Tesla's applications had the highest at 17-plexes of chargers.
They also mention a 20% limit on electrical service upgrades, though I don't know if that would effect the 17-plex differently, or if it was already in a place with enough service, if they overprovision.
Also, one has to wonder why the others are charging so much. I know less than nothing about other companies involved. Does Tesla sale the chargers at a loss intentionally? Are the others just so out of touch? Are the others just grifters?
Regardless of that, if thier costs are the same, by asking for less money for more outlets they are more likely to get money. When you show you're willing to put up your own cash or just ask for less money in general while offering equal or better performance, you're more likely to win bids.
Politicians prefer to say they brought 10000 chargers than 4000.
The subsidy request is just you asking for money and doesn't represent your costs just what you want to ask for. You can ask for more than you need i.e make a profit on building costs
The question is how much do you want to do this, not how much will it cost you
My original question was asking if they are were requesting less than the maximum allowed, and you quibbled with the premise, yet here you are suggesting that's exactly what they did. You're suggesting it was due to altruistic reasons. I just did the thought exercise of knowing people will assume you requested the max allowed, then do the math to come up with a price that's not correct just to F with people. Seems exactly like something Musk would do.
But I won't be assigning motivations wrt altruism or effing with people. There's a lady running the charging division.
This makes one project have a ratio of "$30,000 reimbursement request per charger." The other has a ratio of "$41,000 reimbursement request per charger." So there's two very different rates based on circumstances that are not in the published table.
This is a one time program using settlement money. You're only going to get 60% to 70% of the funding through the program. It's not clear what Tesla's goal was here or if these program numbers truly reflect a wholesale price of the charger for them.
Similarly if they want to contest the result underbidding gives them justification.
All hyperbole of course.
> Five states—Ohio, Hawaii, Pennsylvania, Maine and Colorado—have selected winners at this point, and full details on sites and designs aren’t yet available. Tesla’s bids averaged around $392,000 a site compared with an average of $795,000 from others.
> In most cases, Tesla plans to install 8 chargers, and in some cases a dozen. Most companies are sticking to the minimum required by the federal government—at least four fast-charging ports at a station.
Tesla: $392k/8=$49k Others: $795/4=$199k
49/199 is roughly 1/4th
Non-paywalled version: https://www.msn.com/en-us/money/companies/tesla-leads-race-t...
The government is funding installations, who in most cases buy and have some role in deploying typically off the shelf solutions. It just seems like it's been such a long sad slow movement, with so many reports of flakey reliability and poor systems. It doesn't feel like the industry is really on a positive treadmill or whatever towards success, towards getting better. Private industry doesn't seem like it's doing a good job serving this infrastructure need. I kind of just want the government to fund some open research & development with public access clauses to figure out how to do the job well and cost effectively. A couple hundred million spent making the industry not suck & have an healthy open baseline for competing atop seems like it's quasi necessary if EV charging is going to ever mature past the stagnancy point it's been stuck at for so long.
That said, it's been 9 months since the FHA passed the rules for how charging systems need to work for federal money. Maybe the industry can self correct, will be incentivized to muster up, and can start meeting reliability requirements specified for funding. Maybe these incentives are enough. But it sure seems like something that feels uncompetitive, that Supercharger alone is playing to win & most of the rest of the industry has accepted meh only sort of works deeply un-integrated barely effective multi-organizational hacking it out.