It’s a business maxim that companies usually have a very hard time competing with themselves. Car companies make internal combustion engines. It’s what they’re good at, it’s what they know how to do. Manufacturing cars that don’t use internal combustion engines means going against their own institutional nature.
True, but you’d think that at least ONE out of all the big car manufacturers, of which there are about twenty others worldwide, would have pivoted and moved into EVs successfully, if they had so chosen.
I guess where I’m going is that I can totally envision several of them not successfully making the pivot into EVs and self-driving vehicles in years to come. But I don’t see all of them failing to do so, and I also feel like if they’re not pushing EVs already, there’s a good reason they’re not.
There are at least 3 major reasons that have limited demand:
- Price
- Charging infrastructure
- Tax credits
Industry experts cite a number of reasons for this, including vehicle price, lack of charging capacity and confusing tax credit rules.
The Calgary Express says it partially has to do with battery production:
The EV transition also faces another major hurdle — a shortage of minerals for EV batteries that can only be addressed by opening a massive number of new mines in record time. According to a 2023 study, to meet international EV adoption mandates by 2030, the world would need 50 new lithium mines, 60 new nickel mines, 17 new cobalt mines, 50 new mines for cathode production, 40 new mines for anode materials, 90 new mines for minerals needed to produce battery cells and 81 new mines for the body and motors of the EVs themselves, for a total of 388 new mines worldwide.
The Harvard Business School offers another view: charging station reliability.
One of the study’s main findings, discovered using customized artificial intelligence (AI) models trained on EV review data, is that charging stations in the U.S. have an average reliability score of only 78%, meaning that about one in five don’t work. They are, on average, less reliable than regular gas stations, Asensio said. “Imagine if you go to a traditional gas station and two out of 10 times the pumps are out of order,” he said. “Consumers would revolt.”
Finally, I don’t think anyone has posited one answer to the OP’s question, which is Tesla, and by extension, Musk, is a cult of personality.
Really good answer (until the end IMO).
The charging stations are a big source of revenue and are now open to all. It’s not just the cars as far as value. Is anyone even close to providing a significant number of stations for the masses?
The days of Tesla owners being some kind of cult of personality are long gone. They are regular ordinary cars now. Full stop. We love our cars but it’s just a car. Granted that I live in a very liberal area but I know and have talked to a lot of Tesla owners. I’ve yet to meet one who loves Elon. It ranges from don’t give a shit to hating him. Similarly on the various Tesla forums. A few respect him but they are in a small minority. This possibly excludes the Cybertruck owners. I’ve yet to speak to one. It’s a great product that suits my needs perfectly in a way that no other vehicle comes close.
People have a lot of different explanations for why this is. One I don’t see a lot of: that it’s basically a corollary of Conway’s Law:
[O]rganizations which design systems (in the broad sense used here) are constrained to produce designs which are copies of the communication structures of these organizations.
But it goes the other way, too. Organizations that produce a certain product are constrained to have a structure which reproduces the structure of the product. You can predict from how cars are put together that there must be a division for engines, and transmissions, and dashboards, etc. Along with subdivisions of those that match how those components are put together.
Which means that the company must have rigid internal boundaries which are hard to change. All the lines of communication, all the power structures both formal and informal, etc. reinforce the structure. Which makes it very, very hard to switch to a new product with a very different internal structure.
If you have no competition you might get away with faking it, just doling out new components by analogy with the old product. But there’s a good chance it’ll be worse than the old one, let alone what the competition comes up with when they aren’t so constrained.
For reference, there are tens of thousands of active mines around the world, so an extra 388 isn’t too extreme.
Much of that is bullshit, though. EV makers are dramatically reducing their dependence on cobalt and nickel. Medium-range vehicles (which are still >300 mi) use lithium-iron-phosphate cells, which don’t need cobalt or nickel. Only their long-range models use cobalt and nickel, and the cobalt content has been substantially decreased over time.
Of course it would help if the US and Canada could make mines easier to open, since it’s borderline impossible at the moment, despite having rich and untapped resources.
Their data doesn’t include Tesla chargers, which are known to be vastly more reliable than the alternative ones. There’s a reason why basically everyone has abandoned the old connector standard and wants access to Tesla’s network.
Exactly why no one else took the charge network seriously and made efforts to improve reliability is unknown.
On a side note I read just now that a Tesla “short squeeze” is going on and a few million “short calls” are being squared. It seems shorts are losing big money.
I’m totally ignorant on this financial lingo of shorts and squeeze and why they are losing money. Can anyone explain what is going on.
Thanks in advance and best regards.
A short position is borrowing a stock and then selling it, with a promise to give the stock back at some time in the future. If the stock goes down while you have been borrowing it, you buy it at the lower future price and make the difference in the prices as your profit.
Say I borrow 100 shares of XYZ corp. at $100 per share and then sell them on the market. I now have $10,000 dollars. If XYZ goes down to $80 per share, I can buy 100 shares at that price (for $8000) and deliver them back to who I borrowed them from, and I am $2000 richer.
On the other hand, if XYZ goes up to $200 per share, I now have to pay $20000 for those shares to deliver them to the one who loaned them to me, and I am out $10000 on the deal.
(One underappreciated effect of short-selling is that you can’t make more money than the amount that you put in, but you can lose literally unlimited amounts of money. This, along with the maxim that “the market can stay irrational longer than you can stay solvent” is why I stay away from short-selling.)
In the previous example, where I lost $10000 on the deal, the person who loaned me the shares could get nervous that I might not have the money to buy the shares back to deliver them to him. So he’ll probably write into the loan contract that I must maintain a certain amount of assets somewhere to be able to cover the short (i.e. pay for the now more-expensive shares).
This is what your “short call” refers to. In some circumstances, I might have to sell other stocks to cover. So when XYZ went above $150 per share, I might have had to sell 500 shares of PDQ at $10 per share so that I would have enough cash to be able to keep the contract alive.
A “short squeeze” happens when there are a lot of short contracts out (i.e. many shares must be delivered to those who loaned them out at some point) but the number of shares available for purchase are low. This means the stock can start going very high as short sellers acquire shares at whatever price they can get in order to cover their shorts. Which means that short sellers can lose their shirts - remember that the amount of money you can lose is literally unlimited - while the stock soars on a fairly low volume of trades.
Going back to our example, on the day I need to deliver the shares, XYZ is at $180, and I’ve got $15000 in cash to cover the short at the current price. But, when I try to buy those shares, I find that there are only 50 shares available at that price. I spend $9000 on those shares, and then the asking price for shares jumps to $210 per share. I buy the 20 shares available at that price, and the asking price jumps again to $250 per share. I have paid $13200, leaving me with $1800, and was already forced to sell those 500 shares of PDQ. With all that loss, I still need 30 more shares to deliver at now-high share prices.
Hope this helps! All the lingo can get confusing, but at the bottom its simply a loan of shares and a repayment in those same shares, and the more total people have borrowed shares, the greater the upward pressure on the share price when they have to pay them back.
Jaguar have announced that they are going to become an EV only company. They stopped selling new vehicles earlier this month and released a divisive advert and a polarising concept vehicle.
Their new all EV vehicles are set to be launched in 2026. So that’s likely 18 months to restructure the company and the factories. Sounds like they’re taking it seriously.
Two drowning automakers holding onto each other before they sink below the waves:
Japan’s Honda and Nissan to begin merger talks, Nikkei reports | Reuters
Dec 17 (Reuters) - Japanese auto giants Honda Motor (7267.T), opens new tab and Nissan Motor (7201.T), opens new tab will start negotiations to merge as they face growing competition from bigger global electric vehicle makers, the Nikkei newspaper reported on Tuesday.
But who is this great threat? Oh, right…
The carmakers have increased ties in recent months as they wrestle with the changing EV landscape. Heavy competition from Tesla (TSLA.O), opens new tab and local rivals in China, a nation rapidly adopting EVs, and stalling demand in Europe and the U.S. have intensified the pressure traditional automakers face.
On one hand, yes, they seem to be making serious moves. On the other hand, this is their advertising campaign and concept car…
At least they’ve promised that the car will not actually be produced.
Thank you Sunup. That was a great explanation for a lay person like me.
I wonder if this short selling or buying thing is legal or it’s done behind the scenes in a not very legal way ? And who allows anyone to “borrow” their shares/stocks for this purpose?
Is it individual share holders or financial institutions ?
For me it looks (as an outsider with zero knowledge of stock markets) as greed and reckless speculation and taking unnecessary risk.
I mean who else roots for a car company like it’s their sports team and cheers bad news for other companies?
Tesla becomes a core part of their personality.
Both. In fact it’s very likely that shares that individuals hold will be loaned out to short sellers without their knowledge. They never know the difference since the brokerage gets them back eventually, but unless they go through extra effort, the shares are supporting the short seller market.
It’s all perfectly legal.
Have you ever met a human?
No matter how many times you repeat this dimwitted bullshit, it still isn’t true. Lots of haters seem to be rooting for Tesla to fail. For nearly all owners, it’s just their car.
You have to admit it’s a bit weird. I don’t give my friends hi fives in the bar to celebrate Subaru’s new press releases. We don’t gloat when Honda posts a negative financial statement. We don’t taunt Toyotas as sissymobiles.
For the record, I’m not cheering anything. Mainly sad that we see the same pattern as so many other failed businesses that somehow could not adapt. I like to see competition.
But no, it’s not weird in any case. Maybe that’s because I grew up around working-class gearheads, and “Ford vs. Chevy” was as strong a tribal affiliation as any sports team. Maybe even more so. But it’s hardly uncommon even in other cases. Nevermind that many automakers are literal sports teams…
I don’t want to get off topic, but this all just shows why Tesla has the high market cap. Everyone knows how fanatical and valuable it’s fanbase is.
Thank you Dr Strangelove for the explanation