# What would make you decide to buy the new Tesla Model 3? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [March 22, 2016, 3:06pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862 "2016-03-22T15:06:12Z")\ **Posts on this page:** 20\ **Page:** 16
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [April 14, 2016, 11:42pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/301 "2016-04-14T23:42:30Z")
> [@YamatoTwinkie](#): > > I don’t think **Magiver** has any insight into a mythical 5-minute charge EV, just using that as an arbitrary requirement for when mass-market adoption of EVs will occur. > > Personally, I don’t buy it. I think there are two hurdle stages an EV needs to meet: > > Stage 1- The dedicated commuter EV. Needs to handle ~95% typical of daily work commutes (say \>120 miles total range), and to be able to charge overnight at home to full. Owner has a second ICE car for long distance/family trips. > > Stage 2 - the family trip EV. Needs to handle 6 hours of driving at highway speeds (~420 miles of range), with charging stops of \<45 minutes. This is roughly comparable to ICE trips, since people rarely drive more than 6 hours without stopping to eat somewhere. Charging network must be convenient and widespread along the highway system so that special trip planning is mitigated. > > Achieve both of those stages with cost parity to ICE cars, and you’ll start to see mass-market adoption. As total costs (including initial price, depreciation, maintenance and fuel costs) for EVs get substantially better than ICE cars, the range requirements for both stages lessen. Same thing with charge time. > > Right now EVs are maybe at Stage 1.5, and cost of batteries are dropping rapidly, but not yet close to the cost of an ICE. Mass market EVs are still a few years off, and even then there will still be people out there where EV’s don’t meet all of their needs. But 5 minute charging is not required for 95% of drivers, at least when the other benefits of EVs become self-evident. the issue with stage 2 is energy density. You’re adding a technological challenge (as is a fast charging battery). Now if the cost of batteries dropped to the point the EV is cheaper than ICE then it would be possible to carry an additional battery pack using a trailer hitch receiver and a rack system. Or add the batteries to the front storage compartment and use the rack as a trunk. ---
**Author:** ![The\_Niply\_Elder](https://avatars.discourse-cdn.com/v4/letter/t/8e8cbc/32.png) [@The\_Niply\_Elder](https://boards.straightdope.com/u/The_Niply_Elder)\ **Post date:** [April 15, 2016, 4:09am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/302 "2016-04-15T04:09:41Z")
> [@Magiver](#): > > the issue with stage 2 is energy density. You’re adding a technological challenge (as is a fast charging battery). Now if the cost of batteries dropped to the point the EV is cheaper than ICE then it would be possible to carry an additional battery pack using a trailer hitch receiver and a rack system. Or add the batteries to the front storage compartment and use the rack as a trunk. Gawd, you are looking for a solution in all the wrong places. The future of EV does not depend on majical future technology, but rather a new business process. Here, let me spell it out for you. A few years (by my educated guess 3-5 years) after the Model 3 debuts and obtains a solid market reputation, Tesla will introduce the following bomb into the market: -\>Buy an electric car (for a price highly competitive with ICE cars) -\>Lease a battery (for a price highly competitive with gasoline costs). When you divorce the costs in this way, you are able to show customers the following option: When you lease a battery, you are not leasing a physical specimen, rather the access to one of millions of batteries on the market. The way it works is you pay a monthly lease fee, then charge it up as much as necessary at home (which on average costs $.14/kwh placing the overall energetic costs at about 25% that of regular gasoline), plus access to the battery swap stations {which will be introduced alongside the supercharging network} where you can swap for a freshly-charged battery in under 90 seconds for a competitive price [competitive with a tankful of gasoline]. This way you get the best of all worlds, the convenience of charging at home, much faster pit stops at swap stations vs pumping carcinogenics into your tank, and the upfront costs of batteries are amortized smoothly over time. As batteries come into swap stations, full diagnostics are ran on every unit and rebuilt as needed. Again costs for maintaining high-quality, healthy, high-performing batteries is amortized over a fleet of millions of units and customers. Meanwhile production costs continue to drop steadily as the infrastructure to support an eventual fleet of ~1 billion cars worldwide, containing something of the order of ~10 trillion cells. ---
**Author:** ![swampspruce](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/swampspruce/32/261_2.png) [@swampspruce](https://boards.straightdope.com/u/swampspruce)\ **Post date:** [April 15, 2016, 2:20pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/303 "2016-04-15T14:20:53Z")
This is kind of being done in the UK with Renault’s [Zoe EV.](https://www.renault.co.uk/vehicles/new-vehicles/zoe/battery-and-charging.html) ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [April 27, 2016, 1:09am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/304 "2016-04-27T01:09:43Z")
> [@Dewey\_Finn](#): > > So is it realistic that Tesla can make their price target? Wikipedia also says that the list price of a replacement battery for the Model S sedan was $44,000 in February 2015, and the Model 3 has a range of roughly two-thirds of the Model S. So that would put the battery cost for a Model 3 at about $30,000, way too much for a car expected to sell for $35,000. [Some actual information on this front](http://electrek.co/2016/04/26/tesla-model-3-battery-pack-cost-kwh/). In short, Tesla’s price for assembled packs is already under $190/kW-h, and the Model 3 will achieve its 215 mi target with less than 60 kW-h. If that means 55 kW-h @ $190, then we have a $10.5k pack price. This is current, pre-Gigafactory prices. Tesla claims elsewhere they can cut prices by a further 30% with the GF. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [April 27, 2016, 1:41am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/305 "2016-04-27T01:41:08Z")
I’m glad to hear that. And if Tesla can make an affordable EV like that, I hope the old-line auto companies do so as well. ---
**Author:** ![eschereal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eschereal/32/18939_2.png) [@eschereal](https://boards.straightdope.com/u/eschereal)\ **Post date:** [April 27, 2016, 3:37am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/306 "2016-04-27T03:37:01Z")
There was an article somewhere about researchers coating absurdly thin wires with a polymer gel that made the wires less fragile, resulting in a battery that they were able to run through over two hundred thousand charge/discharge cycles with a net capacity/performance loss of something like five percent. I imagine this tech is probably five to ten years to becoming accessible, but it would be a major improvement: we would be able to use more battery capacity without being worried about wear. I think contemporary electric cars use about the middle 60% of their batteries, so increasing the durability significantly would effectively increase the capacity, by as much as +50%. Obviously, Tesla will not have this kind of battery onboard until well into the next decade, if then, but it could amount to a major improvement to all electric cars. I feel like the time to wait is now. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [April 28, 2016, 1:46am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/307 "2016-04-28T01:46:08Z")
There are all manner of battery breakthroughs that made the news but never panned out. My excitement has been tempered to items that are for sale. ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [May 21, 2016, 3:51am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/308 "2016-05-21T03:51:59Z")
Well, I guess Tesla better throw in the towel because it looks like they’ll go bankrupt before they can ship the Model 3. Just kidding. [They raised $1.46 billion](http://fortune.com/2016/05/20/tesla-finance-production/) by selling some stock, just like I said they would. That, plus the $1.46B they already had (not to mention the pre-order money) seems like a good start. They should have \>$3B in cash at this point. ---
**Author:** ![Whiskey\_Dickens](https://avatars.discourse-cdn.com/v4/letter/w/9fc348/32.png) [@Whiskey\_Dickens](https://boards.straightdope.com/u/Whiskey_Dickens)\ **Post date:** [May 21, 2016, 5:19pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/309 "2016-05-21T17:19:45Z")
> [@Dr.Strangelove](#): > > Well, I guess Tesla better throw in the towel because it looks like they’ll go bankrupt before they can ship the Model 3. > > Just kidding. [They raised $1.46 billion](http://fortune.com/2016/05/20/tesla-finance-production/) by selling some stock, just like I said they would. That, plus the $1.46B they already had (not to mention the pre-order money) seems like a good start. They should have \>$3B in cash at this point. That’s not really the behaviour of a company with a healthy balance sheet. From the same article: > [@](#): > > The company reported a net loss of $282.3 million for the first quarter, and said in its prospectus it must “deliver significant cost reductions” to avoid future losses. On track to lose a billion dollars a year would give me pause if I’d entrusted them with my deposit. ---
**Author:** ![Whiskey\_Dickens](https://avatars.discourse-cdn.com/v4/letter/w/9fc348/32.png) [@Whiskey\_Dickens](https://boards.straightdope.com/u/Whiskey_Dickens)\ **Post date:** [May 21, 2016, 5:24pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/310 "2016-05-21T17:24:28Z")
> [@Dr.Strangelove](#): > > Just kidding. [They raised $1.46 billion](http://fortune.com/2016/05/20/tesla-finance-production/) by selling some stock, just like I said they would. That, plus the $1.46B they already had (not to mention the pre-order money) seems like a good start. They should have \>$3B in cash at this point. Also “selling some stock” is half the story. It’s actually new stock issued. Depending on what you think of the situation, this is either the company satisfying demand for their shares, or is like the central bank of Zimbabwe printing money to solve problems. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [May 21, 2016, 6:45pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/311 "2016-05-21T18:45:59Z")
> [@Dr.Strangelove](#): > > Well, I guess Tesla better throw in the towel because it looks like they’ll go bankrupt before they can ship the Model 3. > > Just kidding. [They raised $1.46 billion](http://fortune.com/2016/05/20/tesla-finance-production/) by selling some stock, just like I said they would. That, plus the $1.46B they already had (not to mention the pre-order money) seems like a good start. They should have \>$3B in cash at this point. We had this discussion before. You have a serious problem separating your love of their product with the realities of producing the product. I like Tesla’s cars. I also .liked the Bricklin and DeLorean cars. It’s not easy to start a car company from scratch. Tesla has a history of production delays and financial shortfalls. The need for pre-order money is not the sign of a healthy company. Tesla is bleeding money. This is a fact and not the result of some internet opinionated pissing match. Your churlish “Well, I guess Tesla better throw in the towel” remark has never been presented by anyone in any of the threads. NOBODY wants it to fail but there is no point pretending it’s in good financial shape. It’s nothing but a rant and it ignores the nature of the situation. Tesla has gotten a lot further than either of those other companies but it’s still in a financial hole. Tesla is not in good financial shape and that can go in 2 directions: - The model 3 generates enough money to stem the flow of red ink in their automotive group and the company becomes profitable. - The model 3 is delayed and sales are lost to competitors. it loses money until investors lose faith. Tesla reminds me of Apple. A company that put out a great product but would have gone under if not for the help of it’s competitor. That was an unusually event. Most competitors would absorb a failing company or let it fade into history. ---
**Author:** ![The\_Niply\_Elder](https://avatars.discourse-cdn.com/v4/letter/t/8e8cbc/32.png) [@The\_Niply\_Elder](https://boards.straightdope.com/u/The_Niply_Elder)\ **Post date:** [May 21, 2016, 7:27pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/312 "2016-05-21T19:27:52Z")
The fact that you believe when companies make capital expenditures to increase production counts as them “bleeding money” sums up pretty nicely how much you understand how business works, ie about the same as how much you understand chemistry, ie not much. :rolleyes: ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [May 21, 2016, 7:58pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/313 "2016-05-21T19:58:13Z")
> [@The\_Niply\_Elder](#): > > The fact that you believe when companies make capital expenditures to increase production counts as them “bleeding money” sums up pretty nicely how much you understand how business works, ie about the same as how much you understand chemistry, ie not much. :rolleyes: Losing a billion a year is bleeding money. It’s not a belief, it’s a fact. Tesla is underfunded and must compete on that basis against companies who are not. they have not increased production. they’ve increased the time it takes to deliver a product. ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [May 22, 2016, 3:17am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/314 "2016-05-22T03:17:14Z")
> [@Whiskey\_Dickens](#): > > Depending on what you think of the situation, this is either the company satisfying demand for their shares, or is like the central bank of Zimbabwe printing money to solve problems. The fact that their stock didn’t take a dump meant that the price already accounted for future dilution. In other words, it was pretty clear that Tesla would need to raise a few billion to pay for capital expenditures, and that the obvious way to do that would be to sell newly issued stock. If investors had thought this was a really bad idea, the stock would have already been in the pits. Printing money is a fantastic idea when you can get away with it; i.e., if you have some degree of credibility. Most companies, at least here in Silicon Valley, dilute their stock all the time by issuing stock options and various stock grants to their employees. When not taken to excess, it’s taken as a positive since it’s one way to attract the best employees. At any rate, my point wasn’t that losing $280M a quarter is healthy. It’s that Tesla is obviously capable of raising enough capital to survive the next couple of years and build the Model 3. If Tesla wasn’t a Wall Street darling, they’d be in trouble since they couldn’t raise that kind of capital. But they are, and so they can. ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [May 22, 2016, 3:33am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/315 "2016-05-22T03:33:35Z")
> [@Magiver](#): > > Your churlish “Well, I guess Tesla better throw in the towel” remark has never been presented by anyone in any of the threads. NOBODY wants it to fail but there is no point pretending it’s in good financial shape. You’ve consistently presented Tesla as being on the hairy edge of survival due to their negative cash flow. And yet again you say they’re “underfunded”. Based on the current numbers, Tesla will have enough cash to survive another couple of years–long enough to start shipping the Model 3. And since they’ve demonstrated that they can raise $1.5B without much trouble, it’s not hard to imagine that they could do it again, within limits. Yes, the Model 3 will have to be profitable in the long term. Investors want to see a return eventually. However, the risks in shipping the car do not appear to be financial in nature. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [May 22, 2016, 4:26am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/316 "2016-05-22T04:26:28Z")
> [@Dr.Strangelove](#): > > You’ve consistently presented Tesla as being on the hairy edge of survival due to their negative cash flow. And yet again you say they’re “underfunded”. Yes, when a company continually issues stock because they can’t stem their losses then that’s underfunded. > [@Dr.Strangelove](#): > > Based on the current numbers, Tesla will have enough cash to survive another couple of years–long enough to start shipping the Model 3. And since they’ve demonstrated that they can raise $1.5B without much trouble, it’s not hard to imagine that they could do it again, within limits. the operative word here is “survive”. > [@Dr.Strangelove](#): > > Yes, the Model 3 will have to be profitable in the long term. Investors want to see a return eventually. However, the risks in shipping the car do not appear to be financial in nature. The model 3 will have to be profitable in the short term to stem the negative cash flow. This is Tesla’s plan A. ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [May 22, 2016, 8:15pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/317 "2016-05-22T20:15:21Z")
> [@Magiver](#): > > Yes, when a company continually issues stock because they can’t stem their losses then that’s underfunded. The stock market is a source of funding. That’s the whole reason for companies to go public. The only reason, actually. If you think that selling stock is a bad sign, then you can level that critique at every other public company out there, because they only do it for the investment money. Tesla has a source of funding that will allow them to develop their next project. Hence, not underfunded. They would be underfunded if they were low on cash, _and_ they couldn’t get a loan, _and_ they couldn’t sell stock, _and_ they couldn’t attract private investors. But none of those things are true. In my industry, our main competitor has taken quarterly losses for almost as long as I can remember–like a decade. But they’ve survived, because they’ve always been able to get a loan or sell some shares or sell off a subsidiary. I can laugh at their inability to make a profit, but I certainly can’t say they’re underfunded. > [@Magiver](#): > > The model 3 will have to be profitable in the short term to stem the negative cash flow. This is Tesla’s plan A. I’d be surprised if Tesla was profitable in the first year of Model 3 production. They’ll still be ramping up production and hence have high capital expenditures. If it’s two years in and they still aren’t profitable, I’d start to get antsy–that is, unless Tesla announces a $20k car that they plan on selling 5M/yr of, and need yet more capital for factories. ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [May 22, 2016, 8:33pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/318 "2016-05-22T20:33:14Z")
> [@Whiskey\_Dickens](#): > > Also “selling some stock” is half the story. It’s actually new stock issued. Depending on what you think of the situation, this is either the company satisfying demand for their shares, or is like the central bank of Zimbabwe printing money to solve problems. Another thing–there is a sense in which issuing stock is not actually dilutive. Suppose a company worth $1000 has one share of stock, which you own. The company wishes to raise money, and so they issue an additional share–selling it for $1000. Did you just get screwed out of $500? No, actually–because although you now own only 50% of the company, the company is now worth $2000: $1000 from the original assets, and $1000 in cash from the new sale. Your share is still worth $1000. The question is really what the company plans on doing with that cash. If the market expects them to spend it on hookers and blow, then the value of the company will probably lower. But if they plan on making some capital expenditures that will increase their profits, then there’s no reason for the market to “punish” that. It’s not magic, but it can be kept up as long as it looks like the money will be put to productive use. Tesla couldn’t raise $100B this way because it’s obvious they couldn’t spend that kind of money, but a couple of billion is easy (as they demonstrated). The opposite happens when companies issue dividends. If you own a $100 share, and the company issues a $1 dividend, then the next day the share price is $99 and you have $1 in cash. The only reason for the stock price to change any further is if the market thinks the company really needed that cash for something. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [May 23, 2016, 12:04am UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/319 "2016-05-23T00:04:45Z")
> [@Dr.Strangelove](#): > > The stock market is a source of funding. That’s the whole reason for companies to go public. The only reason, actually. If you think that selling stock is a bad sign, then you can level that critique at every other public company out there, because they only do it for the investment money. No, I think it’s a bad sign that they’re losing a billion dollars a year. The selling of stock is the result of those losses. > [@Dr.Strangelove](#): > > I’d be surprised if Tesla was profitable in the first year of Model 3 production. They’ll still be ramping up production and hence have high capital expenditures. The model 3 represents a significant increase in expenditures. If it fails then their losses will be greater. > [@Dr.Strangelove](#): > > If it’s two years in and they still aren’t profitable, I’d start to get antsy–that is, unless Tesla announces a $20k car that they plan on selling 5M/yr of, and need yet more capital for factories. The company has been losing money for 13 years. Not only is the model 3 a significant risk for the company the gigafactory is also a big risk. It needs to be flexible enough to switch over to the next generation of batteries which I suspect is 4 or more years away. It’s success affects both their car and their power storage businesses. This makes Gigafactory a major cog in their machinery. It’s a bold move on Musk’s part. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [August 16, 2016, 10:35pm UTC](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862/320 "2016-08-16T22:35:43Z")
Tesla needs to get WAY ahead of the [recent fire in France](http://www.mlive.com/auto/index.ssf/2016/08/reports_tesla_model_s_bursts_i.html). To Summarize, a car caught fire while it was being test driven. They were able to pull over before complete destruction. The market is too young for any stumbling out of the gate on the eve of the affordable electric. [Previous page](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862.md?page=15) [Next page](https://boards.straightdope.com/t/what-would-make-you-decide-to-buy-the-new-tesla-model-3/749862.md?page=17)