Musk endeavours

[BobbyD]

The hard part is creating a new car & then out selling iconic brands.

Given a sufficient supply of money absolutely anybody can design a new car and divine a price point at which it will sell 250,000 units.

The only requirement to get to that point is funding.

Selling cars at a profit is much harder. It's so hard that car companies often struggle to do it.

[BobbyD]

Profit is so last century.

The important thing is innovation, disruption and market dominance.

John

...and flamethrowers!

[odysseus2000]

The hard part is creating a new car & then out selling iconic brands.

Given a sufficient supply of money absolutely anybody can design a new car and divine a price point at which it will sell 250,000 units.

The only requirement to get to that point is funding.

Selling cars at a profit is much harder. It's so hard that car companies often struggle to do it.

Typing as a private inventor I can tell you that it is extraordinarily difficult to get anyone to fund something that has not got a proven concept & getting funding for something where many profitable competitors exist is virtually impossible.

If you can get the odd farthing of money it usually comes with them wanting at least 51% of the equity & for the inventor to put his/her entire skin in the game.

What Musk has done is extraordinary.

Regards,

[BobbyD]

Typing as a private inventor I can tell you that it is extraordinarily difficult to get anyone to fund something...

I'm not entirely sure your personal experience sheds much light on Musks's raises... the man is afterall the demon love child of Henry Ford and Steve Jobs, who wouldn't find his pitch persuasive?

...and it's completely irrelevant to the point.

Making cars and selling them is easier than making cars and selling them at a profit.

It's almost as if one is a prerequisite of the other.

[Howard]

Yes, of course one month does not a summer make, but the current direction is impressive: Tesla are closing on Porsche worldwide sales:

https://longtailpipe.com/2018/09/13/tes ... e-porsche/

Interesting article and worth a read.

Regards,

Yes, you are right the article does makes interesting reading and the production volumes of the Model 3 are becoming impressive. However I am not sure comparing this model’s sales with such a specialist manufacturer as Porsche is terribly helpful. As you have often said Tesla’s strategy is to be a much more mainstream brand.

So more impressive are its sales gains in the USA against Mercedes, BMW and other upmarket major car brands.

However, I would return to the question about Tesla’s reliability. The evidence isn’t yet clear. As you have said previously, in theory an all-electric car should be much more reliable than an ICE car. As Tesla penetrates the upmarket family car sector their reliability will be tested much more severely. Once they are supplying cars to hundreds of thousands of drivers who use their cars every day for business and family motoring their customers will be expecting a car which is as reliable or better than the competition.

I know one can’t generalise from a small sample, but I have been lucky enough to drive the type of cars which Tesla have to beat, including 3 years with a Porsche 911. I genuinely can’t recall having to take a car to a garage other than for a routine service or new tyres in the last 20 years. So that’s been once a year. My wife’s recent 3 series BMW went two years before needing a service. Will Tesla cars prove to be better than this, ie absolutely no problems over 20 years of owning different models? As you know, the surveys of the small numbers of Tesla owners in Norway and the UK are not promising at the moment. Tesla can argue that they involve small numbers of cars but coming bottom of the reliability league in owner surveys doesn’t encourage someone like me to lease or buy one of their cars.

Before committing to a BMW (delivered this week), I did look at the personal three year leasing cost of a Tesla and it was ridiculous: between £1,000 - £2,000 a month, excluding maintenance. This suggests that resale values after 3 years are not good relative to initial cost and cost of ownership is high. By comparison, a similar sized 7 Series BMW or an S class Mercedes can be leased from £600 a month upwards. And the German manufacturers are making profits selling quality cars at these prices.

I chose a more modest petrol-powered 5 Series and having driven it for 200 miles (less than a third of its range on a full tank) and finding it seriously quiet, smooth and comfortable with all the technology I need, I happened to park near a Tesla in Terminal 5 at Heathrow on Saturday and, frankly it looked a bit dowdy and oversized. Like other American cars, it just didn’t seem to have that wow factor.

Ok, I would like to drive a non-polluting electric car, but Tesla haven’t persuaded me yet. If they can carry on growing and delighting customers with the Model 3 and get leasing costs down to sensible figures they may be successful in markets other than the USA, but they have a long way to go. I wish the brand and the employees well, not sure about Musk as a brand ambassador though. Let’s hope they can persuade other manufacturers to produce really good electric cars too so that the charging process is improved and maybe we’ll all be driving electric in a few years!

regards

Howard

[odysseus2000]

Hi Howard,

Yes, you are right in many things.

But, lets not forget the politicians. Sure Porsche have learned how to make essentially the same car over decades, but unless something comes out of left field that I don't know about the days of the ICE are imho very limited.

This means that all motor manufactures will have to make electric creating a series of potential problems that will have to be ironed out as Porsche did over many years with ICE motors.

As I have outlined this means that all legacy auto will have to write off big investments in hybrids, hydrogen etc and meanwhile make big investments in electric cars and batteries and at the same time suffer declining sales and lots of inventory that in a few years will be unsellable. It is not a happy situation for them. Worse all their best engineers and makers will now be taken off the ICE lines and put on to the electric lines likely leading to less quality ICE cars.

Sure Tesla will have faults but they are currently with the believers and will iron out these faults before they hit the larger market of folk who care about nothing but price.

imho it is a most interesting tactical battle the winners of which are far from clear to me.

Regards,

[PeterGray]

Hi Howard,

Yes, you are right in many things.

But, lets not forget the politicians. Sure Porsche have learned how to make essentially the same car over decades, but unless something comes out of left field that I don't know about the days of the ICE are imho very limited.

This means that all motor manufactures will have to make electric creating a series of potential problems that will have to be ironed out as Porsche did over many years with ICE motors.

As I have outlined this means that all legacy auto will have to write off big investments in hybrids, hydrogen etc and meanwhile make big investments in electric cars and batteries and at the same time suffer declining sales and lots of inventory that in a few years will be unsellable. It is not a happy situation for them. Worse all their best engineers and makers will now be taken off the ICE lines and put on to the electric lines likely leading to less quality ICE cars.

Sure Tesla will have faults but they are currently with the believers and will iron out these faults before they hit the larger market of folk who care about nothing but price.

imho it is a most interesting tactical battle the winners of which are far from clear to me.

Regards,

I think that's a complete misunderstanding. Firstly, Tesla are not even the largest manufacturer of electric cars, Nissan, one of the biggest (if not the biggest) of big auto is. Secondly, all the major car producers have large assets - both of cash and a wealth of good engineers with years of experience of manufacturing, and of making things that run reliably on wheels for long periods of time.

Sure an electric drive train is something different, though most of the large manufacturers are already making at least some cars using them, but it's just one part of the car (a big one true). They can adapt very quickly. Plus the idea of some sort of overnight change over is a myth, there will still be ICE cars being bought and sold for 10, maybe 20 years, so inventory is simply not a significant issue. I doubt we've even yet seen the last of new, profitable, ICE based models of car.

[Meatyfool]

Plus the idea of some sort of overnight change over is a myth, there will still be ICE cars being bought and sold for 10, maybe 20 years, so inventory is simply not a significant issue. I doubt we've even yet seen the last of new, profitable, ICE based models of car.

Certainly not overnight, but I'd be surprised if it took the 20 year outlier you suggested.

https://www.bbc.co.uk/news/business-45786690

The photos of New York in 1900 and 1913 are from Tony Seba's business disruption seminar (worth a watch).

When it finally clicks with the masses that electric cars are more reliable, don't need servicing and are way cheaper to run, the transition could be very quick indeed. If battery pack prices drop quicker than Musk is proposing ...

We should start getting an indication of the way big auto sees things going when the leases/PCPs start rising in price.

Meatyfool..

[Howard]

When it finally clicks with the masses that electric cars are more reliable, don't need servicing and are way cheaper to run, the transition could be very quick indeed. If battery pack prices drop quicker than Musk is proposing ...

We should start getting an indication of the way big auto sees things going when the leases/PCPs start rising in price.

Meatyfool..

But the problem is that Tesla cars are less reliable and more expensive to run at the moment. They are at the bottom of the reliability tables in the UK and are running into problems in Norway, where they made some impressive early sales.

Would you lease a Tesla for £2,000 a month?

regards

Howard

[odysseus2000]

When it finally clicks with the masses that electric cars are more reliable, don't need servicing and are way cheaper to run, the transition could be very quick indeed. If battery pack prices drop quicker than Musk is proposing ...

We should start getting an indication of the way big auto sees things going when the leases/PCPs start rising in price.

Meatyfool..

But the problem is that Tesla cars are less reliable and more expensive to run at the moment. They are at the bottom of the reliability tables in the UK and are running into problems in Norway, where they made some impressive early sales.

Would you lease a Tesla for £2,000 a month?

regards

Howard

People said all these things about Japanese cars and motorcycles and folk laughed at the cars and their included luxuries like heaters and radios. Punters though liked them and suddenly they didn't want British made and within a few years the British car industry was in dire trouble, had to be nationalised and then it was no more, save for the odd bits and pieces run by foreigners.

I doubt any politician other than the few who have car manufacturing plants in their catchment with voters care about ICE engines and would like to see them gone. If they can also cut the accident rate so much the better for re-election.

The world continually changes and I can not see anyway that ICE have a future for new sales beyond 5 years. If I am right all kinds of things happen as I have outlined.

Regards,

[Howard]

When it finally clicks with the masses that electric cars are more reliable, don't need servicing and are way cheaper to run, the transition could be very quick indeed. If battery pack prices drop quicker than Musk is proposing ...

We should start getting an indication of the way big auto sees things going when the leases/PCPs start rising in price.

Meatyfool..

But the problem is that Tesla cars are less reliable and more expensive to run at the moment. They are at the bottom of the reliability tables in the UK and are running into problems in Norway, where they made some impressive early sales.

Would you lease a Tesla for £2,000 a month?

regards

Howard

People said all these things about Japanese cars and motorcycles and folk laughed at the cars and their included luxuries like heaters and radios. Punters though liked them and suddenly they didn't want British made and within a few years the British car industry was in dire trouble, had to be nationalised and then it was no more, save for the odd bits and pieces run by foreigners.

I doubt any politician other than the few who have car manufacturing plants in their catchment with voters care about ICE engines and would like to see them gone. If they can also cut the accident rate so much the better for re-election.

The world continually changes and I can not see anyway that ICE have a future for new sales beyond 5 years. If I am right all kinds of things happen as I have outlined.

Regards,

Yes, you are right about Japanese cars taking a big market share. But you omitted to say that they came in at a lower price than their UK competitors. The Datsun Bluebird, if I remember rightly, was a cheap car but with loads of extras which British Leyland cars didn't have. Datsun, then Nissan, gained an excellent reputation for reliability and topped the charts for customer satisfaction. They then gradually moved upmarket.

Tesla are trying to gain market share by offering expensive cars, and so far, are not doing very well in customer surveys for reliability in the UK and Norway. Yes, they do have their fans in the USA amongst early adopters, but will they succeed as their sales grow?

The latest news on Tesla's pricing/increases appears to be a little confusing for their disciples who are waiting for their $35,000 cars. Will they arrive in due course? See link below for the latest Tesla price increases/model changes:

https://electrek.co/2018/10/18/tesla-mo ... structure/

As a potential customer, reading about Tesla's policies on upgrades, I'm not sure I'd want a car which went out of date quickly and the idea of upgrades being downloaded to my car's electronics wouldn't fill me with confidence. The thought that my car might be upgraded whilst in the garage overnight with electronic "extras" which I don't need would concern me. This is like the bad old days of Windows upgrades which didn't improve desktop computers' performance and Apple upgrades which meant my Ipad ran slower and "junk" was added to it which I will never use.

It's nice to own a new (German ICE) car which has everything I want and the re-assurance that I won't have to visit a garage for two years if it is as reliable as my previous cars. Perhaps there will be an electric car which can match it when it is changed in three years?

I know I'm repeating myself but it's going to be interesting to see if the average Tesla buyer is really delighted in two year's time. I hope the deposit payers waiting for their $35k sedans will not be disappointed.

regards

Howard

[BobbyD]

The latest news on Tesla's pricing/increases appears to be a little confusing for their disciples who are waiting for their $35,000 cars. Will they arrive in due course? See link below for the latest Tesla price increases/model changes:

https://electrek.co/2018/10/18/tesla-mo ... structure/

Three versions with three different ranges sounds vaguely familiar...

Christian Senger, VW’s Head of Product Line for E-Mobility, told Auto Express, “We will have three different ranges of I.D. hatchback, to allow for people with different budgets. The entry-level car will have a WLTP range of 330km (205 miles), and it will also have more limited performance. If people want a faster car then I don’t want them coming back after three months telling me that it’s fast but that the range is too short. So if you want a fast car, you’ll need a bigger battery - simple.”

Auto Express understands that the most modest I.D. hatch will get a 48kWh battery and that it will be available for the price of a well-specced diesel Golf - or around £27,500 after the UK government’s plug-in vehicles grant is applied.

- https://www.autoexpress.co.uk/volkswage ... tric-hatch

I wonder who will sell a £27,500 ev first, VW or Tesla?

[redsturgeon]

https://www.youtube.com/watch?v=Lj1a8rdX6DU&t=5s

This is a very interesting tear down of a Tesla Model 3 with analysis of just how good/bad it is.

John

[odysseus2000]

https://www.youtube.com/watch?v=Lj1a8rdX6DU&t=5s

This is a very interesting tear down of a Tesla Model 3 with analysis of just how good/bad it is.

John

Yes, nice analysis, but the points that Munro didn't comment on was safety and performance.

Tesla argue the model 3 based on US government tests, is the safest car ever built and if true that safety presumably comes from the body strength.

Additionally if the car is too heavy as Munro argue then why does it out perform its peer group?

As a driver having the safest car surrounding me is something I would want and coupled with the best performance is a super nice package but I am too cheap to buy one!

Regards,

[redsturgeon]

https://www.youtube.com/watch?v=Lj1a8rdX6DU&t=5s

This is a very interesting tear down of a Tesla Model 3 with analysis of just how good/bad it is.

John

Yes, nice analysis, but the points that Munro didn't comment on was safety and performance.

Tesla argue the model 3 based on US government tests, is the safest car ever built and if true that safety presumably comes from the body strength.

Additionally if the car is too heavy as Munro argue then why does it out perform its peer group?

As a driver having the safest car surrounding me is something I would want and coupled with the best performance is a super nice package but I am too cheap to buy one!

Regards,

As you have just demonstrated yourself, the manufacture of a car is about many trade offs in reliability vs features vs safety vs performance vs cost. Munro merely points out that the way the body shell is made is more complex than necessary and is also heavier than it needs to be. These things may make it safer (or not) but it is a choice and the Tesla could be made safe enough for most customers and more simply and therefore either cheaper or at a greater profit.

Hey they could even make it cheap enough for you to want to buy one...

John

[dspp]

It is interesting to compare that strip report and other Tesla info with other carmakers' plans that appear to be very real:

https://insideevs.com/volkswagen-orders ... batteries/
https://ev-database.uk/car/1127/Volkswagen-ID-Neo
https://www.autocar.co.uk/car-news/new- ... esign-boss

‘We have pulled out all the stops over the past months to implement the Roadmap E swiftly and resolutely,’ chief executive Matthias Mueller said at a news conference earlier this week."

https://www.volkswagenag.com/en/news/20 ... map_E.html
https://www.volkswagenag.com/presence/i ... e_Bock.pdf
https://www.volkswagenag.com/en/news/st ... nergy.html

This sector is going to scale very quickly over the next few years. Dieselgate may have had unanticipated consequences.

Out of technical interest does anyone know what is the cell & pack arrangement that VW are using ? Is it many small cells (per Tesla) or different ?

regards,
dspp

[odysseus2000]

redsurgeon[pAs you have just demonstrated yourself, the manufacture of a car is about many trade offs in reliability vs features vs safety vs performance vs cost. Munro merely points out that the way the body shell is made is more complex than necessary and is also heavier than it needs to be. These things may make it safer (or not) but it is a choice and the Tesla could be made safe enough for most customers and more simply and therefore either cheaper or at a greater profit.

Yes, of course you could, but the whole point of a Tesla is the Apple model: Better than everyone else to justify the extra margin. In a time of recession this may not always work, but in a time of prosperity with many having significant disposable income the age old love of the best always brings buyers.

Maybe in 10+ years if they depreciate enough I might think of buying one!

Regards,

[BobbyD]

https://www.youtube.com/watch?v=Lj1a8rdX6DU&t=5s

This is a very interesting tear down of a Tesla Model 3 with analysis of just how good/bad it is.

John

Bearing in mind Tesla were going to show the auto industry how to build cars cheaply and efficiently using full automation I'd say that accusations that the model 3 are overly complicated and not designed for manufacturing were pretty damning... and the idea that if that car were built on a conventional line it would be a good profitable car supports the argument made here from time to time that when it comes to assessing a car manufacture expertise and experience in the manufacture of cars is not something that should be undervalued.

It's also worth noting that Munro's 30% profit margin estimate which has cropped up in this thread before is dependent on a traditional manufactory without the malinvestment in Tesla's automation and using 40% fewer staff, and is not indicative of Tesla's actual return on a model 3 as may have been suggested previously. It sounds like in a fit of idealised zeal Tesla have significantly over-engineered both the car and the factory, paying no heed to the realities of production.

Dieselgate may have had unanticipated consequences.

VW announced their intention to use Dieselgate to pivot heavily in to EV's very quickly,

NOW THAT THE Volkswagen diesel emissions scandal is a month old, the new VW Brand Board of Management is beginning to publicly discuss its plans for the future—and how they've changed.

Step one: Use emission control systems that actually control emissions. Step two: Go electric.

- https://www.wired.com/2015/10/vw-plans- ... -electric/

I think it was fairly clear which way the wind was blowing very soon after Dieselgate,

Out of technical interest does anyone know what is the cell & pack arrangement that VW are using ? Is it many small cells (per Tesla) or different ?

They've signed contracts for $10's of billions worth so far this year with Samsung, LG among others.

These are Samsung cells: http://www.samsungsdi.com/automotive-ba ... -cell.html

I've seen suggestions this implies hundreds of cells rather than thousands, but I have no idea if that is accurate.

[odysseus2000]

BobbyD
Bearing in mind Tesla were going to show the auto industry how to build cars cheaply and efficiently using full automation I'd say that accusations that the model 3 are overly complicated and not designed for manufacturing were pretty damning... and the idea that if that car were built on a conventional line it would be a good profitable car supports the argument made here from time to time that when it comes to assessing a car manufacture expertise and experience in the manufacture of cars is not something that should be undervalued.

It's also worth noting that Munro's 30% profit margin estimate which has cropped up in this thread before is dependent on a traditional manufactory without the malinvestment in Tesla's automation and using 40% fewer staff, and is not indicative of Tesla's actual return on a model 3 as may have been suggested previously. It sounds like in a fit of idealised zeal Tesla have significantly over-engineered both the car and the factory, paying no heed to the realities of production.

Let us not forget that Munro don't make cars or anything, they just try & reverse engineer what others have made & then estimate what it cost to make, as such their comments are necessarily based on assumptions & guesses.

That Tesla have been outselling leading German Marques in the US tells any investor that the punters like their motors at least for now & part of the package is how safe the car is. Munro are just considering what they believe to be the cost & saying you can make an inferior car for less, but can it be sold?

The history of the automotive business has been a relentless focus on cost & minimal concerns about the folk who ride in the car, safety happening only when forced by governments.

If punters were that focused on cost they would be rushing to buy android phones & Tata cars, but in the prosperous West they don't. Price alone is not what sells a car or many other products.

German marques in particular have been peddling poor engineering & design as being the best in the world & they got away with it for ages, but now they have a problem.

Regards,

[Howard]

Thanks RS for the very interesting link to the Munro video.

What it indicates to me is that the unique features of a Tesla are its motor and its battery. At the moment they have a lead in these two areas over other manufacturers. Otherwise, they appear to be lagging in the expertise of the major manufacturers in building body shells etc. I have been lucky enough to visit major car manufacturers and have seen Mercedes, Porsche and Jaguar production lines at close quarters. Their body shells looked much better designed and finished to me as a layman. The rear assembly of the Tesla model 3 looks a bit "botched" in the video.

So, Tesla (and their battery suppliers) must keep ahead in battery and motor design, otherwise the established quality brands are going to catch up. Once they do, their more advanced manufacturing techniques are going to give them a price and quality advantage which will challenge Tesla's lead.

As always, the next two years are going to be interesting to see how the established players react.

regards

Howard