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As he says in short the masterplan is to: "Build sports car. Use that money to build an affordable car. Use that money to build an even more affordable car.

by madads 11y ago

As he says in short the masterplan is to: "Build sports car. Use that money to build an affordable car. Use that money to build an even more affordable car. While doing above, also provide zero emission electric power generation options. Don't tell anyone."

jakobegger 11y ago
They clearly underestimated the cost of the Model S (it's a luxury car, not a "sporty affordable family car"). But overall their strategy seems to be working out beautifully.
- MrFoof 11y ago
  No, I think they changed the strategy somewhat. Who has the best margins in the automotive industry? Porsche. In fact, it's almost always been Porsche since their recovery from the mid-90s. Porsche's margins are so good, investors are complaining that the high-volume Macan is dragging down margins to a "terrible" 16% from their typical 19-20% -- which (the 19-20%) is double what Audi's (#2 for industry margins) margins are. To put this in perspective, Porsche brings in as much profit (in Euros) as the Volkswagen brand, despite selling 2% as many cars. Porsche commands their premium by finding a niche and trying to be the most desirable in it. They have competitors, but they offer a package people are simply willing to pay a lot more for. There were never a lot of competitors to Porsche's sports cars in their price range -- Corvette aside, Porsche still commands a huge chunk of the traditional $50-150K sports car market, and has a very devoted fanbase. They also carved out a significant chunk of the high-end SUV market. What competes with the Model S and Model X? Nothing from a powertrain perspective. Add in clever packaging and other features that are largely exclusive and they've created a niche for themselves. The Model 3 is Tesla's Cayenne/Macan. The volume play to ensure their top-end electric vehicles can continue to command their prices, and to provide cash for general operations. Being the mass market player is admirable, but if someone (or several companies) outplay or match you, you could be in for a rough ride. To me, Tesla made the smart play by focusing on higher-margin vehicles.
  - zhte415 11y ago
    Porsche make an exceptional amount of money from their hedge fund. Their car-production income really should be split from their investment fund operations.
  - dingaling 11y ago
    > Who has the best margins in the automotive industry? Porsche. You can't really split Porsche off from the rest of the Volkswagen group; their margins derive largely from taking commodity VAG platforms* and adding bespoke engines, tuning magic and brand cachet. If they had to return to the pre-1990s stand-alone operating model they'd be as unprofitable as, well, Tesla. If you do want to compare them to another car company it'd be AMG or Alpina who operate in the same manner and enjoy the same benefits of mass-produced chassis. * which are developed with a lot of Porsche input but are made on common production lines before being shipped to the 'brands' for completion
agumonkey 11y ago
Trying not to be too much of a fan boy I smiled at the fact that, on its way to develop EV market recognition and infrastructure they made cars that topped anything else in safety and speed. 'if you want to have EV, all you have to do is buy the best cars we just made' kind of.
- prawn 11y ago
  Agree - it's incredible. How Time have not managed to throw him Person of the Year yet, I cannot understand. The cars, the solar network and SpaceX. They're huge undertakings.
  - agumonkey 11y ago
    read the article here: https://news.ycombinator.com/item?id=11419772 https://news.ycombinator.com/item?id=11419772 may be a reason why Musk isn't there yet.
    - warfangle 11y ago
      Rather not give the daily beast ad revenue, thanks
      - agumonkey 11y ago
        They're not to be trusted ?
    - prawn 11y ago
      I didn't see anything there that would preclude him from topping some recent Person of the Year candidates. His companies have achieved impressive things already - including a car already launched to very strong reviews. The article compares the Model 3 to the Bolt. I think in the second phase of his unveiling, Musk will announce that the Model 3 will be self-driving. There were strong indications in his Twitter AMA yesterday that it won't be driven like a normal car.
- forgetsusername 11y ago

by madads 11y ago

jakobegger 11y ago

They clearly underestimated the cost of the Model S (it's a luxury car, not a "sporty affordable family car"). But overall their strategy seems to be working out beautifully.

MrFoof 11y ago
No, I think they changed the strategy somewhat. Who has the best margins in the automotive industry? Porsche. In fact, it's almost always been Porsche since their recovery from the mid-90s. Porsche's margins are so good, investors are complaining that the high-volume Macan is dragging down margins to a "terrible" 16% from their typical 19-20% -- which (the 19-20%) is double what Audi's (#2 for industry margins) margins are. To put this in perspective, Porsche brings in as much profit (in Euros) as the Volkswagen brand, despite selling 2% as many cars. Porsche commands their premium by finding a niche and trying to be the most desirable in it. They have competitors, but they offer a package people are simply willing to pay a lot more for. There were never a lot of competitors to Porsche's sports cars in their price range -- Corvette aside, Porsche still commands a huge chunk of the traditional $50-150K sports car market, and has a very devoted fanbase. They also carved out a significant chunk of the high-end SUV market. What competes with the Model S and Model X? Nothing from a powertrain perspective. Add in clever packaging and other features that are largely exclusive and they've created a niche for themselves. The Model 3 is Tesla's Cayenne/Macan. The volume play to ensure their top-end electric vehicles can continue to command their prices, and to provide cash for general operations. Being the mass market player is admirable, but if someone (or several companies) outplay or match you, you could be in for a rough ride. To me, Tesla made the smart play by focusing on higher-margin vehicles.
- zhte415 11y ago
  Porsche make an exceptional amount of money from their hedge fund. Their car-production income really should be split from their investment fund operations.
- dingaling 11y ago
  > Who has the best margins in the automotive industry? Porsche. You can't really split Porsche off from the rest of the Volkswagen group; their margins derive largely from taking commodity VAG platforms* and adding bespoke engines, tuning magic and brand cachet. If they had to return to the pre-1990s stand-alone operating model they'd be as unprofitable as, well, Tesla. If you do want to compare them to another car company it'd be AMG or Alpina who operate in the same manner and enjoy the same benefits of mass-produced chassis. * which are developed with a lot of Porsche input but are made on common production lines before being shipped to the 'brands' for completion

agumonkey 11y ago

Trying not to be too much of a fan boy I smiled at the fact that, on its way to develop EV market recognition and infrastructure they made cars that topped anything else in safety and speed. 'if you want to have EV, all you have to do is buy the best cars we just made' kind of.

prawn 11y ago
Agree - it's incredible. How Time have not managed to throw him Person of the Year yet, I cannot understand. The cars, the solar network and SpaceX. They're huge undertakings.
- agumonkey 11y ago
  read the article here: https://news.ycombinator.com/item?id=11419772 https://news.ycombinator.com/item?id=11419772 may be a reason why Musk isn't there yet.
  - warfangle 11y ago
    Rather not give the daily beast ad revenue, thanks
    - agumonkey 11y ago
      They're not to be trusted ?
  - prawn 11y ago
    I didn't see anything there that would preclude him from topping some recent Person of the Year candidates. His companies have achieved impressive things already - including a car already launched to very strong reviews. The article compares the Model 3 to the Bolt. I think in the second phase of his unveiling, Musk will announce that the Model 3 will be self-driving. There were strong indications in his Twitter AMA yesterday that it won't be driven like a normal car.
forgetsusername 11y ago