So why hasn’t Tesla been crushed already?
That continues to be the question that can’t be answered. Or won’t be answered. If Tesla is so pathetic, it should have been trivial to smoosh them like a tiny bug. The incumbents have had a decade to do so; why haven’t they yet?
To be clear, I only used the term because you did.
I know you’re just trying to turn the tables on the RDF idea, but come on. Not being on the cutting edge of a major shift in automotive products isn’t “reality distortion,” in any sense of the term. Being risk averse and content to follow rather than lead is not in the same league as the phenomena we see around Tesla specifically and Musk generally. (Which is more or less, in a Mike Myers voice, “If it’s not Tesla, it’s crap!”)
that’s a patently stupid question. These are all public companies, you can’t “smoosh” another public company without regulatory scrutiny.
and besides, in terms of volume and profit, the incumbents are “smooshing” Tesla. Tesla shovels out poorly-built junk at a loss, and investors (who are nothing more than gamblers) throw money at them because said investors think they might make a ton of money at some point in the future.
nobody can buy Tesla because those gambler investors have artificially pumped up their market cap.
The “incumbents” profitably ship 14-18 million vehicles a year. Tesla is having trouble ramping up to a couple hundred a month.
Don’t forget, Honda was sticking some rechargeable D cell batteries in the back of a micro car in 1999. What’s taking Tesla so long? I guess since Radio Shack closed, they’re having trouble sourcing NiMH batteries.
stupid shit like this doesn’t contribute to your argument.
I was just quoting Balthisar, so don’t blame me :).
Look, I get it. Tesla does have a lot of hype around them, a lot of unwarranted optimism, and a lot of other stuff.
Hype, when it comes with a reasonable amount of backing, ain’t a bad thing. Even when the hype exceeds the reality, you (the “royal you”) can’t just scream “hype” and conclude the whole thing is bogus. Tesla does have a genuinely good product that does things you can’t get elsewhere. And it does so with a style you can’t get elsewhere.
On top of this, there is an aspect to the Musk “hype” that both goes beyond their products and is nevertheless real. I, and a lot of others, truly think that climate change represents a real danger and that to minimize the worst effects, we must transition to a largely electric economy based around clean generation. This is not some head in the clouds fool’s dream, this is actual reality and the solution is both technologically and economically possible.
To drive this vision forward requires… vision. Musk is one of a few visionaries that’s actually doing something about it. And it’s why I greatly respect the guy, even when he makes mistakes, and have nothing but contempt for VW executives who have done everything in their power to work against this, and something less than contempt but certainly not admiration for those other executives who have been sandbagging for years now.
This thread has become a joke.
They can release a car that does everything a Tesla does, but cheaper and with fewer defects, because of that century of experience and because it doesn’t come with that patented Tesla arrogance. Every potential Tesla buyer would then buy that instead.
They haven’t. You can’t claim volume, because there are many models which ship fewer units than Tesla. You can’t claim cost, because Tesla has great gross margins, which would be even higher with decent manufacturing aptitude. And you already excluded the possibility of Tesla having some exclusive magic technology. So what is it?
the Tesla magic technology so far has been the invention of un-profitability.
do you remember the Concorde? It was a truly spectacular marvel of money sucking technology. The US version died on the drawing board for that reason. Do you think Boeing couldn’t build a plane that lost money? I’m pretty sure they could.
Now, do I really need to explain to you AGAIN why there isn’t a stampede to lose money?
Whether or not Tesla gets squashed like a bug is up to Tesla. They are their own worst enemy. Anything they build that shows promise will find it’s way under the hood of a major manufacturer. Car manufacturers have been gravitating toward computer driven components for years so anything that’s remotely trendy is easily programmed and downloaded post-production.
Who knows, you might see a trip odometer in a Chevy Bolt.
Dr Strangelove, it’s fine that you’re a fanboy of Tesla. They’ve built some nice cars and nailed it with the Roadster. But you continue to act as if Tesla has created something unique that it can ride above economies of scale.
They cannot. GM demonstrated it can launch an EV to market with the same speed and precision used to build their other cars. There is nothing stopping other large car makers from doing the same thing. All it takes for them to do so is a profitable market.
Again, Tesla makes money on each Model S. They are unprofitable as a whole because they are at the same time building a new car company from scratch. No other car maker has those costs; even when building a new plant somewhere, it’s a tiny fraction of the whole and not the massive growth that Tesla is undergoing. Not to mention things like the dealer network and various fixed costs.
Combined with this is that, according to you guys, Tesla’s manufacturing incompetence means there is even more margin to be had. If it costs Tesla, say, $75k to build a car, then why can’t GM build the same thing for $65k with their massive efficiency?
If you’re right, any existing manufacturer should have been able to move in, avoiding all the things that put Tesla in the black, and make great margins because they have 100 years of practice. Since that hasn’t happened, something else is going on.
Let me cite some figures. Here’s a graph of Tesla’s gross margins in 2016 compared to other automakers.
The margins look fine! Not quite at the top of the pack, but Tesla’s 24% looks great compared to GM at 16%.
Things look worse when you include R&D, which brings it down to 10%. That’s still not horrific, but is at the bottom of the pack. Now, EVs do require plenty of research but if GM were trying to copy Tesla’s approach, they would share a great deal of R&D with their other lines and so the hit would not be so extreme. As jz points out, a ton of what Tesla does is just standard automotive stuff, the same for EVs and ICEs. Perhaps they would split the difference and end up at ~16%, which is still better than GM post-R&D.
Most of the rest is eaten by SG&A expenses, as you can see here. This is not directly comparable across manufacturers and Tesla may include things here which don’t exist for others or may be counted differently, like their storefronts or Superchargers. These are real expenses but they don’t necessarily scale linearly, and overlap with stuff that others handle differently (like via dealers).
So those costs would come down as well had another maker done the same thing. Service is certainly bundled in here, so if another maker can make vehicles with a lower defect rate, those costs are going to come right out of SG&A. There’s obviously a ton of overhead in here that a more efficient manufacturer can work with.
GM, Ford, and even Daimler would love to have the same gross margins as Tesla, and if they could get those without incurring massive R&D and SG&A costs (as they should, if the claims are correct) then a Tesla killer should have been an utterly obvious choice. And yet we still don’t see one. Weird.
Do I understand correctly that Tesla’s income is great than its variable costs? That the red ink comes from capital costs? If so, growth in bonds/stocks could keep that going for a long while, perhaps long enough to permanently shift the industry. That’s a common trajectory in technology firms; Accept to be in the red for many years to lead the transformation of the industry. I think Musk’s goal is to have make ambitious leaps of creative destruction in making transportation cleaner. Is he succeeding?
How much integration will Tesla have with clean energy generation like solar? How much with driving assistance and self-driving?
CapEx (capital expenditures) is the big one right now with the Model 3. However, it’s not the full story–they’d still be in the red (depending on the quarter, etc.) without that.
However, there are a lot of growth-related costs that aren’t in capex. Furthermore (and more important, I think), there are a lot of costs which are either fixed or scale sublinearly.
The Supercharger network is a good example. See a map here. Now, there are definitely some clusters in cities and they need enough stations to cover the demand. But look at big swaths of the midwest. You can easily see what’s happening–they have a station every 160 miles or so, regardless of population or anything else.
That is of course what makes the network work–there is a threshold effect where if you have a station every so many miles, then you can go basically anywhere in the country. It would not work with half as many stations–they would either be too far apart, or they would not cover the whole country (they’re still missing some areas of course, but they’re doing pretty good).
Most of those stations have hardly any uses, but they still have to be there because people want the ability to drive wherever.
If Tesla had 10 times as many cars on the road, they wouldn’t need 10 times as many Superchargers. Maybe 3 times as many, mostly in urban areas where Superchargers are already pretty crowded. You wouldn’t need any more in the midwest unless there were a completely different route that you wanted to cover.
Tesla certainly wants to be a one-stop-shop for electric needs, with their SolarCity acquisition and PowerWalls. However, I don’t follow that end of things much so I don’t really know how it’s going.
I’ve started a thread about electric cars, explicitly excluding discussion about electric car companies. Those so inclined, please join me there.
http://boards.straightdope.com/sdmb/showthread.php?t=843870
jz78817, So far in this thread you’ve taken potshots at:
[ul]
[li]independent rear suspensions[/li][li]Car and Driver, motortrend, and I’m assuming the entire “enthusiast” car magazine industry in general[/li][li]sports sedans, and I guess whatever else doesn’t cater to the typical US autobuyer[/li][/ul]
I’m scratching my head as to what you think acceptable sources of information for someone looking to buy a new car are, and what you value in a vehicle, other than <10% initial factory line reject rates, beam axles, and manufacturers without hubris.
They’re unprofitable because they’re losing money. The claims of profitability made on the Model S exclude R&D. And I imaging they exclude the charging stations which should be built into the cost of the car if it’s offered as part of the package.
I’d always heard it thrown around that they lost money on each Model S, and (wrongly?) assumed that it was on the incremental cost—they sell one for $100k, but it cost them $120k to build that particular car. So, not including the research cost that went into developing it.
As has been said here before, Tesla is a technology company, people are investing in it because they think the stock might go up 1200% in the next 15 years, not because it is going to pay a 4.2% dividend. I’m sure the current investors would be very upset if Tesla took any extra money they had and gave it away through dividends or a buy back. All of the money they can find needs to be going back into the company to fuel the needed growth. Could this be mismanaged so that too much is put into growth, and not enough into maintaining revenue? Absolutely, it happens all the time.
Musk has thrown out a cost number of about half the selling price of a Model S. He’s certainly leaving out some of the costs associated with it.
As far as a technology company I’m not sure I understand that. His rockets are certainly in that category but the cars? As I said before, car manufacturers are going to computer driven parts. Everything from windshield wipers to lights and climate control are now all driven off a computer. Any innovation along these lines are going to be software updates that anybody can integrate in their own car. I’m not sure how much innovation this involves. Once you have electric steering then it’s possible to create all manner of auto steer options like backing a boat trailer up or parallel parking.
I get what your saying, but I think we’re talking past each other a bit. I should have been more clear, I don’t mean “technology company” in that everything they’re doing is so radical that it completely upends the industry. Yeah sure, wipers controlled directly by the ECU instead of a switch? No big deal. Rather it’s “technology company” in the sense that investors aren’t backing it in the expectation of a small, steady return, like they might get from GM, but from the hope that they see a huge return (with higher risk), like from a “real” technology company. The chance of any large automaker growing 1200% is almost zero, even if they’re profitable for the next 20 years, but the chance of a small company growing 1200%, maybe?
Look at Amazon, they’re what, a mail order company? Sears was doing that in the 1890s, where’s the chance for innovation and growth? Sometimes what isn’t needed is something paradigm shifting (uggh) but just better than anybody else, even if only a marginally better.
And Tesla doesn’t need all of their technology to be better, just a few bits that really count, such as the drivetrain, battery, and associated software.
