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For context $25,000 now in Europe buys a basic Volkswagen/Seat/Skoda city car that does about 150 miles to a battery charge. Though not a Tesla for good and bad

For context $25,000 now in Europe buys a basic Volkswagen/Seat/Skoda city car that does about 150 miles to a battery charge. Though not a Tesla for good and bad.

henrikschroder 6y ago
A Volkswagen ID.3 costs 25% less than the cheapest Model 3, and has a little bit more range on the WLTP cycle. You can't get the new e-up! yet, but it'll be half the price of the cheapest Model 3, with half the range. You can get a Polestar 2 for as much as a Long Range Model 3, you'll only get 80% of the range of the Tesla, but you'll get an actual, good-looking, car. Or you can get an Audi e-tron or Mercedes EQC for a bit more than a Model Y. They have less range and performance, but smoke the Model Y completely on everything else. There's plenty of competition for Tesla in Europe, and their sales numbers also reflect that, they got 9% of the new BEV sales in Norway in August, for example. Yes, Tesla is the world leader when it comes to extracting range and performance out of their battery packs, but their competition is better at everything else, and different consumers like different things.
- jillesvangurp 6y ago
  If you look at the Chinese market, basically the likes of Tesla and VW are an extremely lucrative but relatively small part of a market that is simply huge with an average sales price well below the cheapest cars in the EU or US. The US and much of the EU is simply not covering the low end of the market at all that exists in China and other developing markets. There are Chinese and Indian car manufacturers in the process of ramping up production of EVs that cost in the order of as little as 5000$. These replace similarly priced petrol cars that were never even on the market in the EU and the US. They're not going to be breaking any records in terms of range, premium features, etc. But they'll be affordable for the masses in developing economies. Basically it's cheap manufacturing and mass production of outdated but proven technology. Selling a 5000$ car in the EU or US is not a thing. It's not a technical problem but a problem of that market not making sense when you can also sell a 25K, 50K or 75K model to the same person and when you are essentially supply limited. Creating that market would erode the high end of the market. And this is where manufacturers earn their profits. This problem does not exist in developing markets where that high end is comparatively small because of the income distribution being different. Simply put there's a huge amount of people for whom 5K is about the maximum they are going to be able to spend on a car. Most of those people are not in the EU or the US. Hence the volume production of cheap EVs for that segment is happening in markets where these people do exist in large numbers. Even the differences between the EU and the US are kind of striking here. The US does not like small cars. The EU does not like big cars. There are a lot of cars on the market in the EU that are not even for sale in the US. And vice versa. There are dominant car brands in the EU that have 0 sales in the US. So, Tesla saying that they will go as low as 25K is basically a function of their growth plans in the US. They've nailed the high end of the market and are profitable there. They are now about to enter the middle segment of the market. They are literally ramping up production and new factories as fast as they can. Every kwh of battery they produce they can sell. So, dropping the price point of products only happens when the market for higher priced cars gets to the saturation point. There's no need for them to go any lower than that before that.

For context $25,000 now in Europe buys a basic Volkswagen/Seat/Skoda city car that does about 150 miles to a battery charge. Though not a Tesla for good and bad.

henrikschroder 6y ago

A Volkswagen ID.3 costs 25% less than the cheapest Model 3, and has a little bit more range on the WLTP cycle. You can't get the new e-up! yet, but it'll be half the price of the cheapest Model 3, with half the range. You can get a Polestar 2 for as much as a Long Range Model 3, you'll only get 80% of the range of the Tesla, but you'll get an actual, good-looking, car. Or you can get an Audi e-tron or Mercedes EQC for a bit more than a Model Y. They have less range and performance, but smoke the Model Y completely on everything else. There's plenty of competition for Tesla in Europe, and their sales numbers also reflect that, they got 9% of the new BEV sales in Norway in August, for example. Yes, Tesla is the world leader when it comes to extracting range and performance out of their battery packs, but their competition is better at everything else, and different consumers like different things.

jillesvangurp 6y ago
If you look at the Chinese market, basically the likes of Tesla and VW are an extremely lucrative but relatively small part of a market that is simply huge with an average sales price well below the cheapest cars in the EU or US. The US and much of the EU is simply not covering the low end of the market at all that exists in China and other developing markets. There are Chinese and Indian car manufacturers in the process of ramping up production of EVs that cost in the order of as little as 5000$. These replace similarly priced petrol cars that were never even on the market in the EU and the US. They're not going to be breaking any records in terms of range, premium features, etc. But they'll be affordable for the masses in developing economies. Basically it's cheap manufacturing and mass production of outdated but proven technology. Selling a 5000$ car in the EU or US is not a thing. It's not a technical problem but a problem of that market not making sense when you can also sell a 25K, 50K or 75K model to the same person and when you are essentially supply limited. Creating that market would erode the high end of the market. And this is where manufacturers earn their profits. This problem does not exist in developing markets where that high end is comparatively small because of the income distribution being different. Simply put there's a huge amount of people for whom 5K is about the maximum they are going to be able to spend on a car. Most of those people are not in the EU or the US. Hence the volume production of cheap EVs for that segment is happening in markets where these people do exist in large numbers. Even the differences between the EU and the US are kind of striking here. The US does not like small cars. The EU does not like big cars. There are a lot of cars on the market in the EU that are not even for sale in the US. And vice versa. There are dominant car brands in the EU that have 0 sales in the US. So, Tesla saying that they will go as low as 25K is basically a function of their growth plans in the US. They've nailed the high end of the market and are profitable there. They are now about to enter the middle segment of the market. They are literally ramping up production and new factories as fast as they can. Every kwh of battery they produce they can sell. So, dropping the price point of products only happens when the market for higher priced cars gets to the saturation point. There's no need for them to go any lower than that before that.