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Tesla Nabs 8% of the U.S. Luxury Car Market
- LAMike 13y agoHow will Elon pull off a 30k dollar Tesla in 2016? And will the range be more or less than the current Model S? (~250 miles)
- lelandbatey 13y agoThat is the billion dollar question, and it's what Elon is paying his engineers to answer. Because of that, I don't think we'll see an answer till 2016.
- scragg 13y agoThe base will likely be around ~35k after 7500k tax credit which I think is doable. I would guess it will be have 40 & 60 kwh offerings and a bit smaller than the S. The 40 should easily pull off 150 miles rated range. I have a 60kwh software reduced to 40. I get a rated range of 144 which has been plenty for my use.
- cheald 13y agoI don't know about new, but I get the sense from Tesla's buyback-and-upgrade program that they're looking to saturate the used car market with lower-cost Teslas to provide options more attractive to your typical car buyer. If I could get a 2 year old Tesla for the cost of a functionally equivalent new car, I'd be very interested.
- Too 13y ago2 year old lithium batteries? Buying new batteries would be as expensive as the car at that age.
- johnward 13y agoAre you suggesting the batteries won't last much more than 2 years?
- Too 13y agoAssumption based on experience from laptops, phones and other devices with LiPo/LiOn/Lixxx. Maybe teslas batteries are better? In 2 years we will find out...
- akgerber 13y agoCars generally cycle the batteries far more gently, as their weight and size constraints are far less tight. 10-year-old Priuses have NiMH batteries chugging along just fine (http://en.wikipedia.org/wiki/Toyota_Prius#Battery_life_cycle http://en.wikipedia.org/wiki/Toyota_Prius#Battery_life_cycle), but most 10-year-old gadgets are in pretty bad shape battery-wise.
- mistercow 13y agoHybrid vehicles have a significant advantage over PEVs when it comes to battery life, which is that they don't need to utilize the full capacity of their batteries. The control system on a Prius tries to keep its main battery at an average 60% charge, which significantly lengthens its life. That's not such a big deal when you can recharge the battery at any time off of the gas engine. Depending on heat, a fully charged Li+ battery will lose between 15-30% of its capacity per year. If you keep its charge between 40-60%, it will lose only around 4-10% per year. Tesla estimates that after 5 years, their battery packs will still have 70% of their original capacity, which would seem to indicate that this is indeed what they're doing (70%^(1/5) = 93%, or 7% loss per year). That sucks for a car which is entirely powered by its battery, since it means that a Tesla could, at a long-term cost to total capacity, potentially have at least twice the range its control system will allow. It seems like that would be a decent feature to give for people making occasional long trips.
- bathat 13y agoWhy would you base your assumption on experience with laptops when you have access (through the magic of the Internet) to perfectly good data about the Tesla Roadster? They've been on the road for over four years now. Here's the third link from a Google search for "tesla roadster battery degradation" (the first one not written by a "green car" website). http://wallstcheatsheet.com/stocks/tesla-low-balls-roadster-battery-life-model-s-to-follow.html/?a=viewall http://wallstcheatsheet.com/stocks/tesla-low-balls-roadster-... It says that the batteries have, on average, over 80 percent capacity remaining after 100,000 miles. 80% of the original 265 mile EPA range is still well over 210 miles of range.
- Shivetya 13y agothe bigger question, does he have the time to wait to 2016? The established brands are moving already, he could be entering a contested market, his current market is uncontested. First, I doubt that without incentives that there will be a 3 in first digit and second I am very doubtful he can provide the same level of service at that price point.
- christiangenco 13y agoThe more I hear about Tesla the more I fall in love with them. I think this may be the AAPL of the 2010s, gentlemen.
- ams6110 13y agoApple made products that were actually practical and useful to ordinary people. Tesla is a rich person's toy only made affordable by heavy tax credits. Edit: I would think they are more like NeXT right now. They are making something really cool, but very expensive and not practical for most people.
- beambot 13y agoCalling an automobile impractical and not useful is... misguided. FWIW, personal computers were "rich persons toys" to start with too.
- general_failure 13y ago> Tesla is a rich person's toy only made affordable by heavy tax credits. Apple is also a rich person's toy only made affordable by heavy carrier subsidy. Carrier subsidy is the primary reason why iphone sales are so high. Nobody would otherwise pay 600-700 USD. As opposed to android devices which are like 400 USD for no subsidy (nexus 4).
- ereckers 13y ago"In the first quarter of this, year Model S sales outpaced Audi A8, BMW 7-series and Mercedes S Class sales." If this is true, that's pretty impressive. I always saw Tesla as an enthusiasts brand, but this looks like the real deal.
- oinksoft 13y agoIs this car only regionally popular? I have yet to see a single Tesla on DC area roads.
- spicyj 13y agoIt's amazingly popular in the SF Bay Area; I see several each day on my 2-mile commute to work (right next to Google, but still). However, I also saw one when I was in New Orleans a couple weeks ago, so it's not just SF.
- general_failure 13y agoI don't think you can generalize it to Bay area.
- spicyj 13y agoI see them all the time on 101 as well.
- sliverstorm 13y agoSo, near the Bay Area?
- spicyj 13y agoYes, I believe general_failure meant, "you can't generalize 'near Google' to 'Bay Area'", so I elaborated to say that I've seen many in the Bay Area, not just near Google.
- sliverstorm 13y agoAh, I totally misunderstood.
- thrownaway2424 13y agoThere's 5 within two blocks of my house in Oakland.
- twoodfin 13y agoThat's defining the U.S. luxury car market very narrowly. BMW alone sold 172,000 cars in the U.S. in the first half of this year[1]. 8% of that is more than 13,000 cars, and the report is claiming Tesla sales of roughly 10,000. Sure, not everything BMW sells is a luxury car, but the U.S. luxury car market is usually defined as much larger than 125,000 cars in a half year. [1] http://www.theguardian.com/business/2013/jul/08/bmw-record-car-sales-first-half-2013 http://www.theguardian.com/business/2013/jul/08/bmw-record-c...
- tptacek 13y agoI'm curious where the model cutoff would be for "luxury" BMWs. They're all luxury cars, from what I can tell.
- mrkurt 13y agoEverything above a Mini.
- twoodfin 13y agoIt's debatable whether you'd call a Mini a "luxury car". They're certainly priced like they are!
- sk5t 13y agoMinis are often sold alongside BMWs but they are not branded BMWs. Otherwise... is a Bentley a Volkswagen, or vice versa?
- soperj 13y agoBMW makes vehicles other than cars(SUV, Motorcycle..)
- thrownaway2424 13y agoFor the purpose of this headline, "luxury" appears to have been defined as "expensive".
- tvtime15 13y agoTheir stock has risen 263% in the last six months. Sustainable?
- sliverstorm 13y agoYou won't get anywhere with that argument. When Bitcoin tripled in value over the course of 1-2 weeks, if memory serves HN by and large had zero sustainability concerns.
- nonchalance 13y agoEven further, those that were suggesting it was a bubble at 120 or 140 or 160 or higher were downvoted to oblivion. Kinda sad, given that the price right now on mtgox is 105
- pjscott 13y agoIf you know better than the stock market, you can make some serious money. How confident are you?
- joakleaf 13y agoThe current valuation would be very good if they sold around 60000 Model S/year: They have a Market Cap of $16B. Estimated longer term profit per Model S sold is around $15000 (as far as I remember); I think they are aiming for around 15% profit margin for Model S. So at 60000 cars/year they would profit around $0.9B or trading at around 17x profit. Which wouldn't be terrible for a growth-company. Problem is that they are currently only on target for around 20-25000 model S/2013 and they didn't have that big a profit margin last quarter. As always, the next quarterly reports will likely tell if they are on track or not. Last quarter was just the first profitable quarter for Tesla ever, so it is hard to say anything. Nobody even knows if demand for the Model S is sustainable, as Tesla received around 20000 preorders. It isn't an outrageous valuation compared to e.g. Amazon, but it is definitely based on the company achieving massive growth, so if the next quarterly results do not reflect that, the stock will likely take a 10-15% dive over night. On the other hand, if the Model S is the new Prius (as some people believe), they might sell 200000 cars/year within a few years. Musk is definitely aiming for this, and the factory they have has a capacity for something in that ballpark. They also haven't tapped into the European market yet. E.g. Scandinavia has high taxes on petrol based cars, so the Tesla S is significantly cheaper than other "luxury" cars in Scandinavia. I suspect Europeans in general have shorter commutes, so perhaps electric cars are doing better here. Then there is Asia... It is a high-risk investment at this point, but it could go either way. The stock price currently reflects optimism.
- drinkzima 13y agoHere is the actual report: http://electrificationcoalition.org/sites/default/files/EC_State_of_PEV_Market_Final.pdf http://electrificationcoalition.org/sites/default/files/EC_S... Let's also not ignore the obvious conflict of interest in a group promoting electric vehicle sales trying to speak about actual statistics. As mentioned, BMW sold 172k cars, Mercedes Benz 182k, Audi 87k for total of 441k. Tesla at ~10k, 2% of above (though all ~$100k). If you want model to model comparison, the model S clearly doing fine though, all depends on the headline you want I guess: http://money.cnn.com/2013/05/13/autos/tesla-sales-bmw-mercedes-audi/index.html http://money.cnn.com/2013/05/13/autos/tesla-sales-bmw-merced...
- twoodfin 13y agoNot to mention Infiniti, Lexus, Cadillac...
- sk5t 13y agoRange Rover, Jaguar, Porsche, Aston Martin, Maserati, Bentley... I hesitate to mention Lincoln as their designs have sucked bigtime for a really disconcertingly long while.
- chiph 13y agoLincoln knows what they need to build (a modern version of the 1963 Continental) but has failed to commit design and manufacturing resources to do so. So they end up badge-engineering Ford products.
- tracker1 13y agoI believe the comparison is to similar models... You wouldn't compare a Mercees SLK to a BMW 3 series... in this case, I'm pretty sure they are comparing against large size luxury sedans alone...
- InclinedPlane 13y agoThe fact that Tesla has been even remotely successful is kind of a side benefit. The biggest thing they've done is transform the electric car market in the popular consciousness from being a joke. Ultimately that means that a lot more consumers are going to start considering electric vehicles when they are looking to buy a new automobile. Also it means that there are likely to be a lot more new entrants into the electric car market (both existing automotive manufacturers and new companies), because it's becoming a place where companies can make money. All of which will put the electric car market into the same sort of profit -> R&D -> better vehicles -> profit feedback loop that the internal combustion car has benefited from for over a century. One way or the other we'll find out whether the potential of electric vehicles matches the promise.
- valgaze 13y agoFWIW, Mercedes & Toyota license Tesla technology "Electric car maker Tesla Motors helped Mercedes develop and is manufacturing parts of the new car's electric drive system, including the lithium ion battery pack, electric motors, on-board charger and other electronics. Besides producing its own car, the Tesla Model S sedan, Tesla already produces electric drive components for the battery-powered Toyota Rav4 EV." http://money.cnn.com/2013/03/27/autos/mercedes-tesla-b-class-electric/index.html?hpt=hp_t2 http://money.cnn.com/2013/03/27/autos/mercedes-tesla-b-class...
- tehwalrus 13y agovery very interesting. Top Gear is scathing of Tesla cars, and yet they raved about the new electric version of the Mercedes. (Admittedly, they did still take the piss out of its range...)
- adwf 13y agoTop Gear are only scathing of Tesla due to being sued by them over a joke. Prior to that, they were actually being quite fair and reasonable from what I could see. So in exchange for a failed lawsuit, Tesla lost the backing of the largest motoring TV show in the world. Probably the biggest mis-step they've made so far.
- dave1619 13y agoTesla has found it's groove. Not only is demand robust for the Model S, they are expanding production as well. So far it looks like they will surpass their 21,000 cars they've given guidance for 2013. They're starting rollout in Europe this month, and Asia later this year. At the end of 2014, they will start rolling out the Model X SUV that will offer dual engines. Some are speculating that it could give a 0-60mph time in under 4 seconds. That would be truly incredible for an SUV. Then, Tesla is readying the long-awaited GenIII vehicle due at the end of 2016 or in 2017. Elon Musk recently stated that his goal is to sell the vehicle for $35000 (w/o incentives) and for the car to have a 200 mile range. Further, Gen III is targeting the BMW 3 series and many are expecting the Gen III to handle and perform better than a BMW 3 series. It could be the hottest car on the planet when it's released. Tesla as a company is doing very well. They're expanding like crazy. And they're managing their cash flow well. They will report Q2 earnings this Wednesday, 8/7 and they could report another quarterly profit as well. In another area, Elon Musk has promised to achieve 25% gross margin on the Model S by the end of the year. So, it will be interesting to see how far they've come along when Q2 earnings are reported on Wednesday. Further, it could be possible Tesla is shooting for 30% gross margin on the Model S next year (which would be incredible). In the 2012 Elon Musk ceo incentive plan, reaching 4 consecutive quarters of 30% gross margin is one of the key milestones. disclaimer: long TSLA
- mhartl 13y agoExcellent comment. You're clearly following Tesla closely. N.B. Should be "its groove".
- codex 13y agoOn the other hand: - Tesla recently halved the deposit required to order a Model S, an indicator of weakening demand. - Tesla is raking in up to $35K in profits per car by selling ZEV credits earned through a CARB loophole which may soon close (http://www.plugincars.com/will-likely-loss-zev-credits-hurt-tesla-127916.html http://www.plugincars.com/will-likely-loss-zev-credits-hurt-...), reducing ZEV profits considerably. - Tesla has repeatedly promised to increase its gross margin, but has so far failed to do so. - While Nissan has invested in their own battery manufacturing plants (in Japan, US, and UK), Tesla buys their batteries from Panasonic. While they design and assemble their own battery packs, they haven't made raw battery manufacture their core competency, which could hurt their ability to compete on cost, or to innovate in lithium ion battery technology. - The BMW i3 will soon be entering production. - Tesla recently closed another round of funding, the cash for which will be used to bring new models to market, meaning they're about to take hit to earnings for R&D. This is fine, but the stock may collapse in the short term.
- mtgx 13y agoI was very disappointed to hear that Tesla pushed the launch of the $30,000 Bluestar to 2017, from the initial 2015 date. I guess they did it because they couldn't reach the quality they wanted at that price point in that timeframe. That's fine, but I wish they started getting more market share sooner, and get more people to use electric vehicles. 2017 is quite a lot of time from now.
- InclinedPlane 13y ago2017 is only 3.5 years away...
- CamperBob2 13y agoI'm more concerned about the Model X, myself. An SUV that can't be used with a roof rack doesn't exactly strike me as something that will set its market sector on fire.
- johnward 13y agoI think you misunderstand who the average SUV buyer is. Most people never use an SUV to it's potential. That includes the roof racks. They basically replaced minivans.
- CamperBob2 13y agoI agree with you in the general case, but the Model X isn't targeted at the "average" SUV buyer. They need to appeal to younger, more active buyers -- people who are more likely than most SUV owners to hit the bike trails or ski slopes. We'll see, I guess.
- secabeen 13y agoThey will have a solution to the roof rack problem. No one knows what it is, but they've been asked about it enough, and are aware that they will need a solution. What that solution will be is less clear, but there are plenty of possible solutions.
- mje__ 13y agoDid anyone else notice the stock price? From $35 in March to $138 today; that's pretty impressive growth
- kayoone 13y agoThis article has a big flaw imo, as the Model S is not a luxury car as defined here. It competes with the likes of 5/6 Series BMW, Audi A5/A6 and Mercedes E Class. The 7 Series, S Class and Audi A8 are not among its direct rivals, in fact the Tesla only rivals them in price. That doesnt lead to the conclusion that the Model S is eating away market share from the "real" luxury cars though.
- eitally 13y agoI don't think the target market (or at least the people actually buying them) are necessarily the same people who would have bought 7 series, S class, and A8s. At least for the BMW & M-B, the demographics skew toward older, more conservative buyers (http://online.wsj.com/article/SB10001424127887324235104578241481012862470.html http://online.wsj.com/article/SB1000142412788732423510457824...). Tesla, I suspect, is getting the folks who previously bought Priuses to make a statement, or who would otherwise be looking at M3/5 BMWs or AMG M-Bs.
- NoPiece 13y agoFrom Car and Driver: Luxury Car: A car that offers a full array of luxury features and an outstanding level of refinement, starting at a base price over $40,000. Examples include the Bentley Brooklands, BMW 5-series, Mercedes-Benz CL-class, Jaguar XF, Lexus LS460, and Infiniti M45.
- josefresco 13y agoI'm struck by the comparison between what Tesla can be and what Apple is now within it's own industry. Who cares about market share when you're making the highest profit margin? Many comments here are regarding BMW's or Mercedes global sales numbers. I'm sure both manufacturers would trade most of those lower margin sales for the kind of cream that Apple sees on every sales of a Mac. I'm guessing Tesla isn't there yet (profit margin wise) but if I were Elon I'd rethink my goal to build an everyman car, unless he's thinking it will be Tesla's iPad moment.
- MrFoof 13y agoWell, the reason is because auto manufacturers are notorious for chasing volume, and still are. For example, although they're not a luxury marque, VW specifically (not the VW group) decontented their cars in what is referred to as the "beigekrieg". By decontenting -- and then drastically lowering the price -- of the Jetta and Passat, they are gaining significant volume to meet the goal of increasing U.S. unit sales from 250,000 a year to 800,000 a year. So far they've managed to increase it to > 400,000 a year. Why is Audi bringing over the A3, BMW the 1 series (though that's not gone terribly well) and FWD cars, and Mercedes the FWD CLA? These are cars at lower price points, meant to increase volume and to get new customers into the fold of the brand. On the entry-level luxury market, buyers are price sensitive. Not as price sensitive as the mainstream compact and mid-size sedan markets (who have been decontenting cars to keep prices from moving), but still price sensitive. If the cars get too expensive, or if times get tough, these buyers abandon their plans first. Regardless, all three marques are seeing record sales in the U.S. Even Porsche, one of the most profit-oriented marques on the planet, has the sub-Cayenne crossover being launched at the L.A. auto show. It may break the "we make at least $10K on every car we sell" informal rule for the first time in over a decade. Why? Volume, which admittedly, allows it to fund other versions (and entirely different) of existing sports cars which bring in very high margin. The only manufacturer I can think of that's genuinely attempting to be exclusive is Ferrari, who is now trying to limit global sales to 7,000 vehicles per year, which will raise prices. ----- Regardless, I think Tesla's strategy is the correct one. To say it worked for Porsche is an understatement -- hell, they used it to nearly buy VW from under the planet's nose.