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Apple "should" have made a low-end phone, but couldn't bring themselves to (iPhone 5C is their best try), because it's against their market image externally, an

by 6ren 13y ago

Apple "should" have made a low-end phone, but couldn't bring themselves to (iPhone 5C is their best try), because it's against their market image externally, and their self-image internally. They have to keep inventing great new product categories - a tough way to make a living! But Musk doesn't want to be high-end. He wants to change the world, get us to all buy electric cars. That means more affordable cars, which is the direction he's going. He only started high-end because that was the best place to start. Of course, there are many challenges before he's done. (Goodness, why is this being downvoted?)

potatolicious 13y ago
We know Musk wants to go low-end and affordable - he's explicitly stated as such. The question isn't whether or not Tesla will make a play for the low/mid-end market, it's whether or not they can win it. The consumer car market is very different from the luxury car market. It's a world where it's not enough to execute well, but also do it with razor thin margins. Tesla has proven their ability to concoct grand ideas and bring them to life when money is no object - it remains to be seen if they can do it to the tune of $20-30K, or even lower. Tackling the high end first was absolutely the correct strategy, but now the market is heating up. Are we so confident that Musk can lay waste to every single major automaker out there that people think they will be worth the entirety of Fiat, or half of GM?
- 6ren 13y ago
  Of course you're right (and I agree - that's why I said there's many challenges). I was questioning your analogy with Apple. I'm sure they could win the low-end; but they don't want to. Addressing the question of whether Musk can win it... well, firstly it is uncertain (and he might get hit by the proverbial bus), so we have to factor that in. But, some first mover factors in his favour: he's further along the engineering learning curve than anyone else; and further along winning market headspace; and further along getting every little business thing right to make it all happen. That is, he has a high probability of succeeding. Secondly, I think Toyota or General Electric are better comparisons than with GM (whose cap reflects its terrible shape), which are 5 times bigger. (see the figures in my other comment: https://news.ycombinator.com/item?id=6567057 https://news.ycombinator.com/item?id=6567057) That is, the potential prize is larger than given in the article. Whether Tesla is over-priced or not I couldn't say - except that the market overreacts to both good news and bad news, so it's probably best to wait for a dramatic stuff up that doesn't actually affect its real business prospects, and buy the depressed stock.

by 6ren 13y ago

potatolicious 13y ago

We know Musk wants to go low-end and affordable - he's explicitly stated as such. The question isn't whether or not Tesla will make a play for the low/mid-end market, it's whether or not they can win it. The consumer car market is very different from the luxury car market. It's a world where it's not enough to execute well, but also do it with razor thin margins. Tesla has proven their ability to concoct grand ideas and bring them to life when money is no object - it remains to be seen if they can do it to the tune of $20-30K, or even lower. Tackling the high end first was absolutely the correct strategy, but now the market is heating up. Are we so confident that Musk can lay waste to every single major automaker out there that people think they will be worth the entirety of Fiat, or half of GM?

6ren 13y ago
Of course you're right (and I agree - that's why I said there's many challenges). I was questioning your analogy with Apple. I'm sure they could win the low-end; but they don't want to. Addressing the question of whether Musk can win it... well, firstly it is uncertain (and he might get hit by the proverbial bus), so we have to factor that in. But, some first mover factors in his favour: he's further along the engineering learning curve than anyone else; and further along winning market headspace; and further along getting every little business thing right to make it all happen. That is, he has a high probability of succeeding. Secondly, I think Toyota or General Electric are better comparisons than with GM (whose cap reflects its terrible shape), which are 5 times bigger. (see the figures in my other comment: https://news.ycombinator.com/item?id=6567057 https://news.ycombinator.com/item?id=6567057) That is, the potential prize is larger than given in the article. Whether Tesla is over-priced or not I couldn't say - except that the market overreacts to both good news and bad news, so it's probably best to wait for a dramatic stuff up that doesn't actually affect its real business prospects, and buy the depressed stock.