6 ms·

> Like Apple is not interested in selling cheap phones, Tesla may not be that interested in selling lots of cheap cars with much smaller margins. Except Elon M

> Like Apple is not interested in selling cheap phones, Tesla may not be that interested in selling lots of cheap cars with much smaller margins. Except Elon Musk stating his intention is the exact opposite. He sees ICE cars as a threat to the future of this planet and want them replaced by something less harmful as quickly as possible, and Tesla is the means to that end. Everything they’ve built so far has been done to prepare for decent mass-market EVs, like the Model 3. The high-end market is lucrative though and therefore this is where he’s starting to get competition from traditional auto-vendors, now that he has proven for them the viability of selling luxury EVs.

HeadsUpHigh 7y ago
But they have slowed down their drive towards lower priced cars significantly. The model Y was supposed to be ~25k. Instead they chose to go after the much more expensive SUV market. Makes perfect sense, Tesla needs to improve their financials before they can ask for more money to make new factories. Battery supply is limited and the costs are still fairly high so they are focusing on a higher margin product. At the same time I think they might be holding off for better autopilot before they make the truly cheap model.
jillesvangurp 7y ago
A funny thing with the Model 3 is that people seem to select the more expensive models where most of the differentiation with the lower priced models is software. Basically what that means is they build the same car and price it a few thousand more to toggle a few software switches. Turning off those features only makes sense when you can't sell at the higher price. Basically you sacrifice margins for volume. Turns out that so far they get away with not needing to do that and they definitely need the cash. So they built the 35K model 3 and then realized they could be selling it for 45K+. As long as they can sell as fast as they can build these things, why would they lower their prices?
- thedag2805 7y ago
  It isn't accurate to describe it this way at all. The low-end versions have a smaller battery pack, a smaller inverter, one motor and differential instead of two, AND software limitations that do things like disable some of the speakers. It's not a sound way of doing things at all, but it helps Teslas short-term objectives. Delivery takes a long time to Europe and China when the cars are made in California and Nevada. By limiting the hardware variation (but not eliminating it, as you seem to believe) you can make cars and ship them before they are ordered and be reasonably sure somebody will buy cars that match, perhaps with different software configuration (a different license, really). As you say yourself, it wouldn't make sense to sell the lower-priced versions unless you've run out of demand for the more expensive ones. Why you don't conclude like everyone else that they have indeed fulfilled the demand for the more expensive versions is unclear. I'm pretty sure they have. What's more, they now have the problem today their cheapest model is also the best. Model 3 is especially a much better grand tourer than the S or X, it's efficiency making it go farther and charge faster. A company improving its products so fast that they cannibalise the old ones isn't necessarily a bad thing, but it works better if you've made back the investment you made on the old product first! I really hope Tesla makes it through the storm (I own one, so it would be something of a catastrophe for me if they don't!), but it's much more important that regulators follow through and ensure EVs are adopted ASAP. They are good for the national economy as well as the environment, at least if you're not Germany.
thedag2805 7y ago
What Elon had said means nothing. He also said BFR would be great for point to point travel on Earth, in front of a cheering audience. I invite you to square that with his statements about "transitioning the world to sustainable energy". Or just with reality. We're talking here about transportation roughly a million times as risky as ordinary flight. The noise alone is one reason spaceports must be so far from civilization; the energy onboard being in the ballpark of the Hiroshima bomb, coupled with rickets tendency to explode fairly often, is another. Even if we disregard all that, it could only fly when the weather at the destination was clear, so you can't have a schedule. The logistical nightmare of boarding and disembarking would be another show-stopper. And even if ALL of these absolutely massive problems could somehow be solved, it just directly contradicts the goal of transitioning to sustainable energy. His hyperloop is similarly a scam, with massive technical problems nobody knows how to solve. It's also a 150 year old idea Elon just rebranded and pretended was his own! In 2013 he told investors, as Tesla CEO, they wouldn't need to raise more capital. Then they raised more capital. He did it again in 2016. And again in 2018. In his latest idiotic play, he says Tesla cars would appreciate and used ones would be worth $250,000. I own a Model 3, so I have every reason to wish it was true. But I'm not a moron. If he could demonstrate to financial institutions that his cars will no worth just $100k, why should he have Tesla pay 6-8% on the bonds Tesla issued in this last round (the biggest so far, three months after Elon said they didn't need any capital)? It makes no sense, and the reason is that it's nonsense. He said a Tesla would drive autonomously from coast to coast by the end of 2017. He said from the beginning the cars had the hardware to be fully autonomous; we now know for sure the version one, two, and two point five hardware can't, and don't know if version three can. He said Tesla's acquisition of SolarCity was a "no-brainer". It is still a drag on the balance sheet and the income statement. He said he had secured the funding for taking Tesla private. He hadn't discussed it seriously with anyone. He said a British diver taking part in the rescue operations in Thailand was a pedophile, seemingly to just say something hurtful back after said diver said Elon should put his sub where the sun doesn't shine. He's revealed in biographies and interviews that Tesla was very close to insolvency on several occasions. He never said so at the time, to his investors, whose money he is supposed to be managing in their best interest (that is the law, whatever the company might say about its goal being to save the planet). In short, Elon routinely says big things and note often than not it just isn't true, and pretty often it is sufficiently ridiculous that anyone with a skeptical bone in their body who does a minimum of fact-checking quickly comes to the conclusion he doesn't even believe his own words. Which is to say he is quite simply a liar. If you can somehow square his rocket talk with the sustainable energy tune, I think you may need to ask yourself if you are just a little bit too enthusiastic. Elon-rant done. The high-end market in the US has definitely felt the impact of Tesla. Here in Norway, too, but that hardly matters because it's about the same scale as the car market of Hamburg. But there's an important perspective missing in what you're saying. Nobody, including Tesla, which has the biggest scale, is yet making any money on making and selling EVs. (Just to be clear, I use EV in the only proper sense, which is BEV. Hybrids, including plugin hybrids, are hybrids, not electric vehicles.) The expectation of everyone is that electric cars will take over, as a matter of necessity because we all need to make huge cuts in our GHG emissions. If the external costs of vehicles are included, EVs are already much cheaper than ICE vehicles. Fossil fuels are at least as expensive to burn as they are to extract, refine, and distribute, but only the latter costs show up in the accounts. That will change, because the external costs are becoming obvious and much greater than they used to be. So while Tesla may be playing some role in pushing incumbents in the car industry towards EVs, there are very good reasons to think that the regulatory context and how that's expected to change has much more to do with it. Norway's parliament has adopted a resolution establishing as a goal that only zero-emission vehicles should be on sale from 2025 onwards. Sweden's parliament has outlawed fossil cars from 2030, and is trying to get the rest of the EU to follow its lead. The European commission has grown very impatient with the auto industry's all to successful lobbying and evading of regulation — first by gaming the NEDC norm and type approval system, and then by pulling new tricks out of the hat with the new norm WLTP, undermining the regulations enacted by the commission. It has even sued several member countries for failing to enforce emissions regulations, after dieselgate prompted investigations revealing far greater problems than the much-publicised VW scandal. If you want EVs to be adopted faster, you'd be a lot more useful if you placed the responsibility and your hopes for a solution where it actually belongs. It's the government's job to regulate markets so that capitalism works as intended — i.e. to ensure that it's profitable for corporations to do what's profitable for society. It's the job of corporations — by law, no less! — to maximize the profits to their investors. Being a fanboy for a company may not do much damage in itself, but the cultural norm that has taken hold where people are pointing fingers at corporations, and failing to hold regulators accountable, is a disease that paves the road for lobbying corporations keen to prevent any major changes.

HeadsUpHigh 7y ago

But they have slowed down their drive towards lower priced cars significantly. The model Y was supposed to be ~25k. Instead they chose to go after the much more expensive SUV market. Makes perfect sense, Tesla needs to improve their financials before they can ask for more money to make new factories. Battery supply is limited and the costs are still fairly high so they are focusing on a higher margin product. At the same time I think they might be holding off for better autopilot before they make the truly cheap model.

jillesvangurp 7y ago

A funny thing with the Model 3 is that people seem to select the more expensive models where most of the differentiation with the lower priced models is software. Basically what that means is they build the same car and price it a few thousand more to toggle a few software switches. Turning off those features only makes sense when you can't sell at the higher price. Basically you sacrifice margins for volume. Turns out that so far they get away with not needing to do that and they definitely need the cash. So they built the 35K model 3 and then realized they could be selling it for 45K+. As long as they can sell as fast as they can build these things, why would they lower their prices?

thedag2805 7y ago
It isn't accurate to describe it this way at all. The low-end versions have a smaller battery pack, a smaller inverter, one motor and differential instead of two, AND software limitations that do things like disable some of the speakers. It's not a sound way of doing things at all, but it helps Teslas short-term objectives. Delivery takes a long time to Europe and China when the cars are made in California and Nevada. By limiting the hardware variation (but not eliminating it, as you seem to believe) you can make cars and ship them before they are ordered and be reasonably sure somebody will buy cars that match, perhaps with different software configuration (a different license, really). As you say yourself, it wouldn't make sense to sell the lower-priced versions unless you've run out of demand for the more expensive ones. Why you don't conclude like everyone else that they have indeed fulfilled the demand for the more expensive versions is unclear. I'm pretty sure they have. What's more, they now have the problem today their cheapest model is also the best. Model 3 is especially a much better grand tourer than the S or X, it's efficiency making it go farther and charge faster. A company improving its products so fast that they cannibalise the old ones isn't necessarily a bad thing, but it works better if you've made back the investment you made on the old product first! I really hope Tesla makes it through the storm (I own one, so it would be something of a catastrophe for me if they don't!), but it's much more important that regulators follow through and ensure EVs are adopted ASAP. They are good for the national economy as well as the environment, at least if you're not Germany.

thedag2805 7y ago

What Elon had said means nothing. He also said BFR would be great for point to point travel on Earth, in front of a cheering audience. I invite you to square that with his statements about "transitioning the world to sustainable energy". Or just with reality. We're talking here about transportation roughly a million times as risky as ordinary flight. The noise alone is one reason spaceports must be so far from civilization; the energy onboard being in the ballpark of the Hiroshima bomb, coupled with rickets tendency to explode fairly often, is another. Even if we disregard all that, it could only fly when the weather at the destination was clear, so you can't have a schedule. The logistical nightmare of boarding and disembarking would be another show-stopper. And even if ALL of these absolutely massive problems could somehow be solved, it just directly contradicts the goal of transitioning to sustainable energy. His hyperloop is similarly a scam, with massive technical problems nobody knows how to solve. It's also a 150 year old idea Elon just rebranded and pretended was his own! In 2013 he told investors, as Tesla CEO, they wouldn't need to raise more capital. Then they raised more capital. He did it again in 2016. And again in 2018. In his latest idiotic play, he says Tesla cars would appreciate and used ones would be worth $250,000. I own a Model 3, so I have every reason to wish it was true. But I'm not a moron. If he could demonstrate to financial institutions that his cars will no worth just $100k, why should he have Tesla pay 6-8% on the bonds Tesla issued in this last round (the biggest so far, three months after Elon said they didn't need any capital)? It makes no sense, and the reason is that it's nonsense. He said a Tesla would drive autonomously from coast to coast by the end of 2017. He said from the beginning the cars had the hardware to be fully autonomous; we now know for sure the version one, two, and two point five hardware can't, and don't know if version three can. He said Tesla's acquisition of SolarCity was a "no-brainer". It is still a drag on the balance sheet and the income statement. He said he had secured the funding for taking Tesla private. He hadn't discussed it seriously with anyone. He said a British diver taking part in the rescue operations in Thailand was a pedophile, seemingly to just say something hurtful back after said diver said Elon should put his sub where the sun doesn't shine. He's revealed in biographies and interviews that Tesla was very close to insolvency on several occasions. He never said so at the time, to his investors, whose money he is supposed to be managing in their best interest (that is the law, whatever the company might say about its goal being to save the planet). In short, Elon routinely says big things and note often than not it just isn't true, and pretty often it is sufficiently ridiculous that anyone with a skeptical bone in their body who does a minimum of fact-checking quickly comes to the conclusion he doesn't even believe his own words. Which is to say he is quite simply a liar. If you can somehow square his rocket talk with the sustainable energy tune, I think you may need to ask yourself if you are just a little bit too enthusiastic. Elon-rant done. The high-end market in the US has definitely felt the impact of Tesla. Here in Norway, too, but that hardly matters because it's about the same scale as the car market of Hamburg. But there's an important perspective missing in what you're saying. Nobody, including Tesla, which has the biggest scale, is yet making any money on making and selling EVs. (Just to be clear, I use EV in the only proper sense, which is BEV. Hybrids, including plugin hybrids, are hybrids, not electric vehicles.) The expectation of everyone is that electric cars will take over, as a matter of necessity because we all need to make huge cuts in our GHG emissions. If the external costs of vehicles are included, EVs are already much cheaper than ICE vehicles. Fossil fuels are at least as expensive to burn as they are to extract, refine, and distribute, but only the latter costs show up in the accounts. That will change, because the external costs are becoming obvious and much greater than they used to be. So while Tesla may be playing some role in pushing incumbents in the car industry towards EVs, there are very good reasons to think that the regulatory context and how that's expected to change has much more to do with it. Norway's parliament has adopted a resolution establishing as a goal that only zero-emission vehicles should be on sale from 2025 onwards. Sweden's parliament has outlawed fossil cars from 2030, and is trying to get the rest of the EU to follow its lead. The European commission has grown very impatient with the auto industry's all to successful lobbying and evading of regulation — first by gaming the NEDC norm and type approval system, and then by pulling new tricks out of the hat with the new norm WLTP, undermining the regulations enacted by the commission. It has even sued several member countries for failing to enforce emissions regulations, after dieselgate prompted investigations revealing far greater problems than the much-publicised VW scandal. If you want EVs to be adopted faster, you'd be a lot more useful if you placed the responsibility and your hopes for a solution where it actually belongs. It's the government's job to regulate markets so that capitalism works as intended — i.e. to ensure that it's profitable for corporations to do what's profitable for society. It's the job of corporations — by law, no less! — to maximize the profits to their investors. Being a fanboy for a company may not do much damage in itself, but the cultural norm that has taken hold where people are pointing fingers at corporations, and failing to hold regulators accountable, is a disease that paves the road for lobbying corporations keen to prevent any major changes.