7 ms·

I just don't see Tesla becoming mainstream before traditional manufacturers fill the potential market opportunity. Volvo just announced they will only produce

by redm 9y ago

I just don't see Tesla becoming mainstream before traditional manufacturers fill the potential market opportunity. Volvo just announced they will only produce Hybrids in the future. [1] All the major manufacturers have hybrid programs they are bringing to the mass market. It's not that Tesla will or won't be successful, it's just that as it succeeds, it's changing the ecosystem around it. Traditional manufacturers offerings are becoming more and more attractive. I think Tesla is appealing to the tech/gadget market right now. For me, everything about Tesla cars and its buying process feels new and fresh. But.. When it comes time to buy my next car I'll probably end up going to traditional car dealerships, looking around, test driving, and picking something through a traditional channel. It's just the path of least resistance and there's a lot more variety. [1] http://www.yorkdispatch.com/story/money/business/2017/07/05/volvo-make-electric-hybrid-vehicles/103446460/ http://www.yorkdispatch.com/story/money/business/2017/07/05/...

ocdtrekkie 9y ago
I agree. I think a lot of the 'terms of use' that come with Teslas will be problematic for them, and things like the cost of repair, the strict lack of market competition, and other issues will leave a lot of room for conventional auto manufacturers to step in. The Model 3 will tell us a lot. If they can ramp up production fast enough, if they can fill orders quickly enough, if they can satisfy the 'ordinary' customer's service expectations, they may take their place in the long run as one of those 'traditional' auto manufacturers long-term. There's a lot that can be missing or not at scale in the luxury car market that won't fly at the Model 3's price point.
worldsayshi 9y ago
Even if large traditional car manufacturers switch to electric vehicles at scale, won't Tesla have quite a headstart at least when it comes to their battery production capabilities?
- krrrh 9y ago
  Markets are wonderful things, and it doesn't always pay to be first. https://www.greentechmedia.com/articles/read/10-battery-gigafactories-are-now-in-progress-and-musk-may-add-4-more https://www.greentechmedia.com/articles/read/10-battery-giga...
- scottLobster 9y ago
  Perhaps, but the traditional car manufacturers already have a massive head-start in profits. :) If it comes down to it they can spend some money/time to ramp up their supply lines to competitive levels and come out fine. It's also worth noting that the differences between Tesla and traditional car manufactures are much less than the differences between SpaceX and the traditional aerospace companies. There's no real business innovation on the Tesla side that the traditional manufacturers will have problems emulating aside from autopilot, whereas SpaceX introduces a whole new industry paradigm.
  - crush-n-spread 9y ago
    You think that money is the key to scaling up new manufacturing lines, when in fact new manufacturing lines scales up through really hard engineering, and no good, driven, or genius engineer is going to go work for Ford or GM regardless of pay. They want to work at Tesla where they can actually have autonomy and decision making power. Interviews of SpaceX and Tesla engineers show how much they've grown out of the conservative engineering molds they found at large, bureaucratic companies like Ford and GM. Edit: Basically Ford and GM are manager driven. They are about small, incremental change where you don't change too much too fast. And you are one cog in a line of 50 cogs. At Tesla it's cutthroat and bloody, so if you get recognition and clout early on, then you basically get to do whatever you want. At least that's my understanding and that's the understanding that good engineers have
    - scottLobster 9y ago
      So in your mind there are no good engineers who prioritize their families and don't want to work weekends? No good engineers with sick/infirm relatives who need care outside of work? No good engineers who are turned off by (according to you) the need to be "cut-throat and bloody" at what's supposed to be a constructive, team-based endeavor? No good engineers who can't or won't just uproot themselves and their families on a whim? Right now I work 60 hours a week between my current job and side projects, and while I'd love to work for SpaceX or Tesla from a professional standpoint (my 3rd-grader self literally drew "designs" in pencil for warp drives after watching Star Trek with dad), the fiancée and I are probably going to have kids in the next 3-4 years, and she has her own career to think about. At that point I imagine I'll cut back on the side projects as well as take time off from work here and there to help her out. From what I've heard I doubt I could do that at Tesla/SpaceX without professional consequences. But I guess that just makes me a shitty engineer who is simply incapable of doing something as god-like as helping scale a production line. :P The issue at the traditional manufactures is leadership, not talent. If the leadership reforms and adapts the talent will be there. That's a large if, but certainly not improbable if Tesla seriously threatens their core business.
btilly 9y ago
I forget which of The Innovator's Dilemma and The Innovator's Solution had the section on electric cars. But back in the 1990s it was projected that on current trends, electric cars would become viable around 2020. And explained why it was likely that traditional manufacturers would fumble the ball, all offer hybrids, and in the end most would go out of business because they couldn't make the transition. It is worth reading those books and understanding the thesis. Because it is directly relevant to the current situation. We are looking at the gas -> electric conversion, in about the projected time frame, and all of the reasons for why traditional manufacturers were likely to fumble are all there. And the creation of hybrids that you point to is as relevant to the survival of traditional car manufacturers as the creation of sail/steam hybrids was to sailboat manufacturers roughly a century ago. (News flash, the big ones all made those hybrids, and none successfully made the transition to pure steam ships.) This is not to say that Tesla will be a big player in the all electric age that is coming. But its odds are better than Ford, Toyota and GM.
- redm 9y ago
  Maybe. A few thoughts: 1) Automobile efficiency has moved dramatically since the 70's and that's due to government regulation. That regulation continues to push the industry as a whole. 2) The regulation goes beyond automobiles, were moving to alternative fuels as a people. Auto's will be drug along with that shift. 3) Automobiles and selling cars, in general, are a lot more than JUST the drivetrain. All that was really talking about with electric is a drivetrain. It's not clear to me yet that everything about a car has to be rethought to simply make it electric.
  - trhway 9y ago
    >It's not clear to me yet that everything about a car has to be rethought to simply make it electric. it isn't "has", it is an opportunity to rethink what hasn't changed in the last 100 years. Google/Apple (and probably Uber) can attach drivetrain to their platform while Ford/GM just aren't capable of producing a platform to attach to their drivetrains. Tesla is an intermediate step in that direction and it looks like a good [though far from sure] candidate to make it successfully into the future of electric connected self-driving cars.
digikata 9y ago
I wonder how many of the traditional manufacturers will have as secure a supply chain as Tesla for the battery capacity needed to build much more than a hybrid dominated lineup.
- gordon_freeman 9y ago
  VW and GM are investing heavily in building infrastructure for the electric cars they'd come up with in near future.. That means battery manufacturing facilities, testing infra and tweaking/creating new factories.
MichaelApproved 9y ago
> When it comes time to buy my next car I'll probably end up going to traditional car dealerships, looking around, test driving, and picking something through a traditional channel. It's just the path of least resistance and there's a lot more variety. I believe Tesla is gearing up for the car purchase after your next one. You're currently thinking in terms of a car that you'll be driving. For those cars, you're right, there are other car manufacturers that will be more successful. However, once cars are fully automated, the entire game will change. Market leaders of today will be up-ended. That's when I believe Tesla, Google, and anyone else who has driverless technology will take over the industry. That goes double for the taxi companies like Uber, Lyft, Juno, etc.
- meddlepal 9y ago
  Will I even be buying the next car after this one? Most people own cars for 8 to 10 years. We could be looking at rental cars in the future by that point rather than outright ownership.
  - lambda 9y ago
    From what Elon Musk writes, his plan is that either you'll be renting other people's cars, or making some extra money by renting out your own: https://www.tesla.com/blog/master-plan-part-deux https://www.tesla.com/blog/master-plan-part-deux
  - jsemrau 9y ago
    Already now Leasing contracts enable exactly this. Every odd years you will get a new car but you pay basically for the access to the vehicle not the car itself.
- redm 9y ago
  I've read plenty of traditional manufacturers working on self-driving cars too. They just don't seem to be as visible as Google/Uber/Tesla etc. I've been following Audi for some time. [1] [1] http://www.democratandchronicle.com/story/news/politics/albany/2017/05/31/audi-test-self-driving-car-ny/102356622/ http://www.democratandchronicle.com/story/news/politics/alba...
scottLobster 9y ago
Honestly I think the biggest hurdle for breaking into the mainstream is still charging infrastructure and the all-electric nature of Teslas. Sure superchargers are a lot more common than they used to be but they're nowhere near the saturation of gas stations (the need for which will ramp-up if the model 3 sells) and good luck if you go out into a rural area. For the time being EV/Gas hybrids like the Volt are a lot more practical and cheaper. I could walk off the lot with a lightly used Volt for half the price of a Model 3 and get the vast majority of the benefits (autopilot simply isn't a big selling point for me at the moment) with none of the downsides.
- brianwawok 9y ago
  You cant compare the two. Ever car needs a gas station a few times a month. An ev owner could charge at home and literally never use a supercharger. You dont need a supercharger in every tiny rural town.
  - s0rce 9y ago
    For EV to replace cars you need to have superchargers along the main roads (already getting there) for long trips and also some place for visitors to charge in small towns (either superchargers or chargers at hotels, campgrounds, rest stops, etc. There will still probably be areas of the country where it will be hard to find charging stations (although gas stations are infrequent in those parts currently, its much easier to bring some extra gas in a can then an extra battery).
  - scottLobster 9y ago
    I'm thinking more about travelers passing through. Even if I owned a Tesla I literally couldn't take it to see my relatives in rural North Carolina, or go camping in many locations. Right now supercharger station coverage is about as effective as cell service was 10 years ago. It's there, but there are noticeable dead zones that lots of people (although perhaps not people in the HN bubble) will care about. Hopefully Tesla can continue making money and build out the infrastructure further, but right now for anyone on a strict budget, even a Model 3 is paying a large premium for an ultimately less capable vehicle. At their current rate of expansion, maybe in 5 years I'll start thinking about an upgrade. :)
primigenus 9y ago
> It's not that Tesla will or won't be successful, it's just that as it succeeds, it's changing the ecosystem around it. I invested in Tesla because I wanted this to happen. For me, Tesla is not successful unless it changes the ecosystem around it. If, while doing that, it goes under as a car manufacturer, but in the end changed the ecosystem for the better, that's great! Sometimes a thing only exists in order to make itself redundant. I doubt this will happen, though. Instead, I expect it to be like the iPhone vs Android: there will continue to be a premium electric car by the people who launched the first real contender, but other companies will outscale them and eventually provide really competitive products. That's also fine. (Note that Android was a newcomer as well....)
HiJon89 9y ago
There's good reason to believe that electric cars are the future and will soon be a massive market. I think there's also good reason to believe that Tesla has a big head start on the competition and has the opportunity to dominate this market if they execute well. For example, just look at the battery packs which are essential to an electric car. Tesla was unable to find a supplier that could meet their requirements, so they designed and produced their own batteries and now have a $5 billion gigafactory to increase production volume and decrease costs (with more gigafactories on the way). If you're another car company trying to enter the EV market, what are your options? Buy inferior battery packs at a higher cost from a different supplier? Try to replicate Tesla's battery technology and then convince your board to build a gigafactory so you can produce them at the required volume and cost?
- k-mcgrady 9y ago
  >> Buy inferior battery packs at a higher cost from a different supplier? Try to replicate Tesla's battery technology and then convince your board to build a gigafactory so you can produce them at the required volume and cost? Why not another option - battery manufacturer notices that if they build an equiv. battery they can sell to every car manufacturer in the world. With the higher volume they'll be able to do it for less than Tesla if they are only building for their own cars.
  - HiJon89 9y ago
    How long will it take them to catch up with Tesla (while Tesla is simultaneously advancing their own battery tech)? And even if they can hit that milestone, they'd presumably have some amount of profit margin built into the prices. So to actually compete with Tesla on battery price (and why would they even want to) they'd need to advance beyond Tesla in terms of manufacturing efficiency and/or volume. I don't know of any company poised to fill this gap in the foreseeable future.
- underwater 9y ago
  It's called a factory. Gigafactory is a made up word.
sillysaurus3 9y ago
There's one area that traditional car manufacturers can't compete in: software. pg said it best when he said something like "Traditional manufacturers vs Tesla is like Microsoft in 1997 vs Apple in 2017" It's debatable whether software is important enough to matter, but when the most valuable feature of most cars is that you can turn off their horrible software, that's an opportunity.
Tiktaalik 9y ago
Yeah I think it might be easier for the traditional car companies to slide into making electrics than people think. I could easily imagine the traditional car companies making the exact same successful models as now, but with the electric engine being a checkbox option. The 2017 Electric Volkswagen Golf is apparently quite good. https://www.theglobeandmail.com/globe-drive/reviews/new-cars/review-2017-volkswagen-egolf-is-an-excellent-affordableev/article34732787/ https://www.theglobeandmail.com/globe-drive/reviews/new-cars...
- jcheng 9y ago
  They make them--besides the Golf, there are pure electric versions of the Ford Focus, Audi A3, Kia Soul, BMW 3-series, Fiat 500, and Smart, and some of those have been around for years. People seem to prefer electrics (and hybrids for that matter) that are unique--or maybe, dedicated electric platforms make for better electric cars than do ICE cars with a drivetrain swap.

by redm 9y ago

ocdtrekkie 9y ago

I agree. I think a lot of the 'terms of use' that come with Teslas will be problematic for them, and things like the cost of repair, the strict lack of market competition, and other issues will leave a lot of room for conventional auto manufacturers to step in. The Model 3 will tell us a lot. If they can ramp up production fast enough, if they can fill orders quickly enough, if they can satisfy the 'ordinary' customer's service expectations, they may take their place in the long run as one of those 'traditional' auto manufacturers long-term. There's a lot that can be missing or not at scale in the luxury car market that won't fly at the Model 3's price point.

worldsayshi 9y ago

Even if large traditional car manufacturers switch to electric vehicles at scale, won't Tesla have quite a headstart at least when it comes to their battery production capabilities?

krrrh 9y ago
Markets are wonderful things, and it doesn't always pay to be first. https://www.greentechmedia.com/articles/read/10-battery-gigafactories-are-now-in-progress-and-musk-may-add-4-more https://www.greentechmedia.com/articles/read/10-battery-giga...
scottLobster 9y ago
Perhaps, but the traditional car manufacturers already have a massive head-start in profits. :) If it comes down to it they can spend some money/time to ramp up their supply lines to competitive levels and come out fine. It's also worth noting that the differences between Tesla and traditional car manufactures are much less than the differences between SpaceX and the traditional aerospace companies. There's no real business innovation on the Tesla side that the traditional manufacturers will have problems emulating aside from autopilot, whereas SpaceX introduces a whole new industry paradigm.
- crush-n-spread 9y ago
  You think that money is the key to scaling up new manufacturing lines, when in fact new manufacturing lines scales up through really hard engineering, and no good, driven, or genius engineer is going to go work for Ford or GM regardless of pay. They want to work at Tesla where they can actually have autonomy and decision making power. Interviews of SpaceX and Tesla engineers show how much they've grown out of the conservative engineering molds they found at large, bureaucratic companies like Ford and GM. Edit: Basically Ford and GM are manager driven. They are about small, incremental change where you don't change too much too fast. And you are one cog in a line of 50 cogs. At Tesla it's cutthroat and bloody, so if you get recognition and clout early on, then you basically get to do whatever you want. At least that's my understanding and that's the understanding that good engineers have
  - scottLobster 9y ago
    So in your mind there are no good engineers who prioritize their families and don't want to work weekends? No good engineers with sick/infirm relatives who need care outside of work? No good engineers who are turned off by (according to you) the need to be "cut-throat and bloody" at what's supposed to be a constructive, team-based endeavor? No good engineers who can't or won't just uproot themselves and their families on a whim? Right now I work 60 hours a week between my current job and side projects, and while I'd love to work for SpaceX or Tesla from a professional standpoint (my 3rd-grader self literally drew "designs" in pencil for warp drives after watching Star Trek with dad), the fiancée and I are probably going to have kids in the next 3-4 years, and she has her own career to think about. At that point I imagine I'll cut back on the side projects as well as take time off from work here and there to help her out. From what I've heard I doubt I could do that at Tesla/SpaceX without professional consequences. But I guess that just makes me a shitty engineer who is simply incapable of doing something as god-like as helping scale a production line. :P The issue at the traditional manufactures is leadership, not talent. If the leadership reforms and adapts the talent will be there. That's a large if, but certainly not improbable if Tesla seriously threatens their core business.

btilly 9y ago

I forget which of The Innovator's Dilemma and The Innovator's Solution had the section on electric cars. But back in the 1990s it was projected that on current trends, electric cars would become viable around 2020. And explained why it was likely that traditional manufacturers would fumble the ball, all offer hybrids, and in the end most would go out of business because they couldn't make the transition. It is worth reading those books and understanding the thesis. Because it is directly relevant to the current situation. We are looking at the gas -> electric conversion, in about the projected time frame, and all of the reasons for why traditional manufacturers were likely to fumble are all there. And the creation of hybrids that you point to is as relevant to the survival of traditional car manufacturers as the creation of sail/steam hybrids was to sailboat manufacturers roughly a century ago. (News flash, the big ones all made those hybrids, and none successfully made the transition to pure steam ships.) This is not to say that Tesla will be a big player in the all electric age that is coming. But its odds are better than Ford, Toyota and GM.

redm 9y ago
Maybe. A few thoughts: 1) Automobile efficiency has moved dramatically since the 70's and that's due to government regulation. That regulation continues to push the industry as a whole. 2) The regulation goes beyond automobiles, were moving to alternative fuels as a people. Auto's will be drug along with that shift. 3) Automobiles and selling cars, in general, are a lot more than JUST the drivetrain. All that was really talking about with electric is a drivetrain. It's not clear to me yet that everything about a car has to be rethought to simply make it electric.
- trhway 9y ago
  >It's not clear to me yet that everything about a car has to be rethought to simply make it electric. it isn't "has", it is an opportunity to rethink what hasn't changed in the last 100 years. Google/Apple (and probably Uber) can attach drivetrain to their platform while Ford/GM just aren't capable of producing a platform to attach to their drivetrains. Tesla is an intermediate step in that direction and it looks like a good [though far from sure] candidate to make it successfully into the future of electric connected self-driving cars.

digikata 9y ago

I wonder how many of the traditional manufacturers will have as secure a supply chain as Tesla for the battery capacity needed to build much more than a hybrid dominated lineup.

gordon_freeman 9y ago
VW and GM are investing heavily in building infrastructure for the electric cars they'd come up with in near future.. That means battery manufacturing facilities, testing infra and tweaking/creating new factories.

MichaelApproved 9y ago

> When it comes time to buy my next car I'll probably end up going to traditional car dealerships, looking around, test driving, and picking something through a traditional channel. It's just the path of least resistance and there's a lot more variety. I believe Tesla is gearing up for the car purchase after your next one. You're currently thinking in terms of a car that you'll be driving. For those cars, you're right, there are other car manufacturers that will be more successful. However, once cars are fully automated, the entire game will change. Market leaders of today will be up-ended. That's when I believe Tesla, Google, and anyone else who has driverless technology will take over the industry. That goes double for the taxi companies like Uber, Lyft, Juno, etc.

meddlepal 9y ago
Will I even be buying the next car after this one? Most people own cars for 8 to 10 years. We could be looking at rental cars in the future by that point rather than outright ownership.
- lambda 9y ago
  From what Elon Musk writes, his plan is that either you'll be renting other people's cars, or making some extra money by renting out your own: https://www.tesla.com/blog/master-plan-part-deux https://www.tesla.com/blog/master-plan-part-deux
- jsemrau 9y ago
  Already now Leasing contracts enable exactly this. Every odd years you will get a new car but you pay basically for the access to the vehicle not the car itself.
redm 9y ago
I've read plenty of traditional manufacturers working on self-driving cars too. They just don't seem to be as visible as Google/Uber/Tesla etc. I've been following Audi for some time. [1] [1] http://www.democratandchronicle.com/story/news/politics/albany/2017/05/31/audi-test-self-driving-car-ny/102356622/ http://www.democratandchronicle.com/story/news/politics/alba...

scottLobster 9y ago

Honestly I think the biggest hurdle for breaking into the mainstream is still charging infrastructure and the all-electric nature of Teslas. Sure superchargers are a lot more common than they used to be but they're nowhere near the saturation of gas stations (the need for which will ramp-up if the model 3 sells) and good luck if you go out into a rural area. For the time being EV/Gas hybrids like the Volt are a lot more practical and cheaper. I could walk off the lot with a lightly used Volt for half the price of a Model 3 and get the vast majority of the benefits (autopilot simply isn't a big selling point for me at the moment) with none of the downsides.

brianwawok 9y ago
You cant compare the two. Ever car needs a gas station a few times a month. An ev owner could charge at home and literally never use a supercharger. You dont need a supercharger in every tiny rural town.
- s0rce 9y ago
  For EV to replace cars you need to have superchargers along the main roads (already getting there) for long trips and also some place for visitors to charge in small towns (either superchargers or chargers at hotels, campgrounds, rest stops, etc. There will still probably be areas of the country where it will be hard to find charging stations (although gas stations are infrequent in those parts currently, its much easier to bring some extra gas in a can then an extra battery).
- scottLobster 9y ago
  I'm thinking more about travelers passing through. Even if I owned a Tesla I literally couldn't take it to see my relatives in rural North Carolina, or go camping in many locations. Right now supercharger station coverage is about as effective as cell service was 10 years ago. It's there, but there are noticeable dead zones that lots of people (although perhaps not people in the HN bubble) will care about. Hopefully Tesla can continue making money and build out the infrastructure further, but right now for anyone on a strict budget, even a Model 3 is paying a large premium for an ultimately less capable vehicle. At their current rate of expansion, maybe in 5 years I'll start thinking about an upgrade. :)

primigenus 9y ago

> It's not that Tesla will or won't be successful, it's just that as it succeeds, it's changing the ecosystem around it. I invested in Tesla because I wanted this to happen. For me, Tesla is not successful unless it changes the ecosystem around it. If, while doing that, it goes under as a car manufacturer, but in the end changed the ecosystem for the better, that's great! Sometimes a thing only exists in order to make itself redundant. I doubt this will happen, though. Instead, I expect it to be like the iPhone vs Android: there will continue to be a premium electric car by the people who launched the first real contender, but other companies will outscale them and eventually provide really competitive products. That's also fine. (Note that Android was a newcomer as well....)

HiJon89 9y ago

There's good reason to believe that electric cars are the future and will soon be a massive market. I think there's also good reason to believe that Tesla has a big head start on the competition and has the opportunity to dominate this market if they execute well. For example, just look at the battery packs which are essential to an electric car. Tesla was unable to find a supplier that could meet their requirements, so they designed and produced their own batteries and now have a $5 billion gigafactory to increase production volume and decrease costs (with more gigafactories on the way). If you're another car company trying to enter the EV market, what are your options? Buy inferior battery packs at a higher cost from a different supplier? Try to replicate Tesla's battery technology and then convince your board to build a gigafactory so you can produce them at the required volume and cost?

k-mcgrady 9y ago
>> Buy inferior battery packs at a higher cost from a different supplier? Try to replicate Tesla's battery technology and then convince your board to build a gigafactory so you can produce them at the required volume and cost? Why not another option - battery manufacturer notices that if they build an equiv. battery they can sell to every car manufacturer in the world. With the higher volume they'll be able to do it for less than Tesla if they are only building for their own cars.
- HiJon89 9y ago
  How long will it take them to catch up with Tesla (while Tesla is simultaneously advancing their own battery tech)? And even if they can hit that milestone, they'd presumably have some amount of profit margin built into the prices. So to actually compete with Tesla on battery price (and why would they even want to) they'd need to advance beyond Tesla in terms of manufacturing efficiency and/or volume. I don't know of any company poised to fill this gap in the foreseeable future.
underwater 9y ago
It's called a factory. Gigafactory is a made up word.

sillysaurus3 9y ago

There's one area that traditional car manufacturers can't compete in: software. pg said it best when he said something like "Traditional manufacturers vs Tesla is like Microsoft in 1997 vs Apple in 2017" It's debatable whether software is important enough to matter, but when the most valuable feature of most cars is that you can turn off their horrible software, that's an opportunity.

Tiktaalik 9y ago

Yeah I think it might be easier for the traditional car companies to slide into making electrics than people think. I could easily imagine the traditional car companies making the exact same successful models as now, but with the electric engine being a checkbox option. The 2017 Electric Volkswagen Golf is apparently quite good. https://www.theglobeandmail.com/globe-drive/reviews/new-cars/review-2017-volkswagen-egolf-is-an-excellent-affordableev/article34732787/ https://www.theglobeandmail.com/globe-drive/reviews/new-cars...

jcheng 9y ago
They make them--besides the Golf, there are pure electric versions of the Ford Focus, Audi A3, Kia Soul, BMW 3-series, Fiat 500, and Smart, and some of those have been around for years. People seem to prefer electrics (and hybrids for that matter) that are unique--or maybe, dedicated electric platforms make for better electric cars than do ICE cars with a drivetrain swap.