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Well, I certainly appreciate it, but like a lot of people dismiss it, at least currently, as toys for rich people. I can't afford a 90k car, no matter how aweso

Well, I certainly appreciate it, but like a lot of people dismiss it, at least currently, as toys for rich people. I can't afford a 90k car, no matter how awesome it is. All these breathless Tesla testimonials are great, but in my head its like listening to some guy talk about how wonderful the leather is in his Maserati. It is so far outside my economic world that it might as well not exist. I know there's this mythology that Elon will magically deliver a 25k electric that changes the world, but if anything, they've double-downed on the luxury market with that giant non-city friendly SUV and, more complexity and cost, with their driver assist stuff. Meanwhile, the Leaf and Volt keep dropping in price. VW has moved into the market, as well as BMW. Oh, low price leaders like Kia haved move in as well. 2015 EVs are still pricey, but no where in the same league as Tesla. At this point I'm finding it very hard to believe Musk will ever leave the profitable premium car market. A 25-30k Tesla would hurt the brand and he'd be competing with larger companies with the scale and know-how to get Joe Everyman on-board, and worse, coming to the low-end game very late.

jp555 12y ago
Due to toughening CO2 standards, ICE automakers are going to see their costs rise over the next decade. Meanwhile Tesla's gigafatory will reduce the cost of batteries ~30%, which will significantly increase the gross margin on the Tesla S & X, while simultaneously enabling a high-margin mid-market auto offering; the Tesla 3 or whatever it'll be called. Also, does buying cars have a future at all, or are we going to lease them or even just use them JIT via proxies like Uber? The depreciation of an electric car is very different from an ICE car, and so I think there's a need to reboot our perspective about what car-ownership means back to to first principles, just as Tesla has done.
mediaman 12y ago
Tesla is using the luxury market to finance the rollout to the mass market. It was the only way they could do it, because to achieve the economics needed for the mass market, you need a lot of money. It would have been essentially impossible for them to do it from the start, because they're not Nissan and they didn't have the ability to invest billions pre-revenue. Witness, for example, the $5 billion gigafactory they're building, of which Tesla is contributing $2 billion. This only could happen because they now have access too good financing (their recent convertible bond issuance) which could only happen because of the success of the Model S. And the other $3 billion being contributed by partners? That wouldn't have happened if they didn't have the credibility coming from making the Model S a success. And in any case, the gigafactory would make no sense to build if they truly intended to keep to the "luxury EV's for rich people" market because it's too much capacity for that segment. I don't know that Tesla will ever compete in the $25-30k market as you state, or at least not for a while -- their stated goal is a $35k car for the Model 3, and I wouldn't be surprised if that goes up to $40k at release, but that's still worlds apart from an $80k car in terms of affordability. Especially factoring in consumers' savings from gas (NPV of $10 - 15k), that gets to the point where they can sell serious volume, even if it's on the high end of the "everyman's car" that a $20 - 25k car would be.

jp555 12y ago

Due to toughening CO2 standards, ICE automakers are going to see their costs rise over the next decade. Meanwhile Tesla's gigafatory will reduce the cost of batteries ~30%, which will significantly increase the gross margin on the Tesla S & X, while simultaneously enabling a high-margin mid-market auto offering; the Tesla 3 or whatever it'll be called. Also, does buying cars have a future at all, or are we going to lease them or even just use them JIT via proxies like Uber? The depreciation of an electric car is very different from an ICE car, and so I think there's a need to reboot our perspective about what car-ownership means back to to first principles, just as Tesla has done.

mediaman 12y ago

Tesla is using the luxury market to finance the rollout to the mass market. It was the only way they could do it, because to achieve the economics needed for the mass market, you need a lot of money. It would have been essentially impossible for them to do it from the start, because they're not Nissan and they didn't have the ability to invest billions pre-revenue. Witness, for example, the $5 billion gigafactory they're building, of which Tesla is contributing $2 billion. This only could happen because they now have access too good financing (their recent convertible bond issuance) which could only happen because of the success of the Model S. And the other $3 billion being contributed by partners? That wouldn't have happened if they didn't have the credibility coming from making the Model S a success. And in any case, the gigafactory would make no sense to build if they truly intended to keep to the "luxury EV's for rich people" market because it's too much capacity for that segment. I don't know that Tesla will ever compete in the $25-30k market as you state, or at least not for a while -- their stated goal is a $35k car for the Model 3, and I wouldn't be surprised if that goes up to $40k at release, but that's still worlds apart from an $80k car in terms of affordability. Especially factoring in consumers' savings from gas (NPV of $10 - 15k), that gets to the point where they can sell serious volume, even if it's on the high end of the "everyman's car" that a $20 - 25k car would be.