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Is Tesla A Game Changer?

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,353
    edited August 2013
    Interesting idea. If nothing else, more EVs in New York City might cut down on the incredible noise level in that city. I hope they do a better job of execution than they did with the CityBike program. The bike kiosks are ugly and utterly destroy the look of some of NYCs prettier streets. (Not that you go to NY for beauty, but...)

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  • hpmctorquehpmctorque Posts: 4,258
    edited August 2013
    Consumers Report says it's the best. The Highway Traffic Safety Administration says it's the safest. It's environmentally friendly and reduces our dependence on foreign oil. It's got great performance. Plus, it's also elegant and beautiful. Gosh, why would any luxury car buyer even consider anything other than a Model S?
  • anythngbutgmanythngbutgm Posts: 4,180
    "Gosh, why would any luxury car buyer even consider anything other than a Model S?"

    Because it'll probably get stranded in an inch of snow? It also has a very minimalist interior, not as striking or as posh as a BMW, Audi, Lexus or Merc... Lastly, there is that nasty dispute between Tesla and the Dealers union which is doing everything it can to make buying a Tesla as difficult as possible...

    Or am I missing a bit of sarcasm with your post?
  • hpmctorquehpmctorque Posts: 4,258
    edited August 2013
    Yeah, there's some sarcasm in my post. After all the accolades by what are generally regarded as reliable sources, I'm waiting for someone to claim that the Model S can also slice bread. Kidding aside, I'm a little conflicted regarding Tesla, the car, the company and Elon Musk, and whether or not they're game changers. I remain skeptical.
  • fintailfintail Posts: 34,013
    Still needs a lot more range, and less subsidy for people who have already made out like bandits over the past decade.

    Cool to see though, a company led by an innovator who is all about the product, vs ones with endless scores of useless execs and middle managers who can only think about costs and stocks.
  • anythngbutgmanythngbutgm Posts: 4,180
    Join the crowd. Lots of people are on the fence about Elon and his "Visions", just like people are on the fence about how Tesla continues to make a name for itself in an overly crowded market. But quality and safety are key values that others like myself find very valuable, now lets see how it holds up over the long haul.

    Toyota has millions of Prius on the roads and many with crazy mileages and few issues over the years. But that is after 15 years of history and reputation. Heck, look at Fisker, pretty much dead... For Tesla, the model S is brand new, the model X isn't even here yet. Still got a ways to go...

    Me, I'm still kicking myself for talking the wife out of buying shares in Tesla when it was trading in the 40 dollar range...

    At the moment it's got a "1" in front of that number. :(
  • hpmctorquehpmctorque Posts: 4,258
    Although I'm generally not a fan of subsidies, I can accept them for certain applications if there's an end point. My friend who owns a Model S certainly doesn't need the subsidy. Interestingly, he usually drives mass market cars. The test drive sold him on the S, however. I've ridden in it, and it's impressive and interesting, but it didn't ignite the "gotta have it" spark for me. I'd choose something like your E-Class over the Model S.

    I agree completely with your second paragraph.
  • fintailfintail Posts: 34,013
    I don't know if subsidizing cars for those who don't need the subsidy is a good use of funds. I can take it for cars that cost less than 40K or so.

    I'd pick my car simply because it costs nearly half as much, has a lease aided by the maker, and has potential for ~800 mile range. It's not as cool, but also more affordable, and for now, practical. Not really apples to apples with a Tesla though - the Tesla is its own thing. More interesting than a mid lux car, not a barge like a large lux car.
  • hpmctorquehpmctorque Posts: 4,258
    Yeah, I lament not having bought the stock much more than the car. At this level I think the stock factors in perfection, which usually doesn't happen, so I wouldn't touch it.

    Since the Tesla has far fewer moving parts than internal combustion engine cars, I expect it to be reliable. I could be tempted by the 3-Series competitor that Tesla plans to introduce around 2016.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,353
    edited August 2013
    The Tesla reminds me of the Tucker--it was a sensation, and a great performer, but not a game changer at all. Big American sedans never went to rear engine, nor did they abandon conventional automatic transmissions, nor did they even adapt a "pop out" windshield or the "safety zone" under the dash that you were supposed to dive into in case of a collision (LOL!). Moreover, the Tucker had plenty of quirks to work out.

    But Tucker himself was a great showman, that's for sure.

    Musk does not seem to share Tucker's arrogance or talent for making enemies, however.

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  • hpmctorquehpmctorque Posts: 4,258
    Yes, Tucker made enemies, but I wonder how much was due to his character and demeanor rather than the Big 3s' dislike of innovation and innovators. I'm wondering whether Tucker was vilified by Detroit executives who feared that he was a disruptor, in a time when the major domestic manufacturers were much more dominant than they are today. The fact that Toyota and Mercedes invested in Tesla enhances Tesla's standing and credibility in automotive circles. Would Musk be suffering a similar fate as Tucker if Detroit still ruled?
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,353
    edited August 2013
    I don't think so. Tucker was small potatoes to Detroit, hardly a blip on the radar. That's like saying Carroll Shelby (low tech) was shut down by Porsche (high tech). Makes no sense.

    Tucker antagonized the Big Three, then ridiculed them, and he started annoying some very powerful people in Washington with his provocative big mouth.

    Tucker's worst enemy was only himself. The little mouse can only pull the tiger's tail so many times.

    Telsa is cutting edge hi-tech. Tucker's *dreams* were innovative but not his actual cars.

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  • steverstever Viva Las CrucesPosts: 41,318
    edited August 2013
    How many cars did Tucker actually make? Fifty odd? Elon probably crash tested that many.

    The CBS This Morning camera crew came to the 3rd floor at Edmunds today to speak to Jessica Caldwell for a feature due to air tomorrow morning about Elon Musk and Tesla. Film at, I dunno, 7?

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,353
    He built 51 cars, Tucker did.

    By "normal" automaker standards, Musk is a very small player. And to some, he's cheating at cards. Between tax breaks for each car and the emissions credits, it's pretty clear that the company can only make money at this point by living off taxpayers and other automakers.

    And at $80K a pop, vast increases in sales aren't that likely.

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  • bwiabwia Boston Posts: 1,275
    edited August 2013
    And at $80K a pop, vast increases in sales aren't that likely.

    According to a Tesla sales manager, they expect prices to drop to the $40K range in a year or two.

    By the way, I posted this on another thread but I just wanted to share my experience with the Tesla acolytes and skeptics.

    Last Friday, I spent about an hour at the Tesla showroom in Natick, Massachusetts (the Natick Mall). I must say it was a pleasant experience. There was only one Model S on display as well as the bottom frame and skeleton of a second car displaying the battery pack, suspension system, and electric motor, etc.

    Our host, an electrical engineer, explained every facet of the car from the tires to the onboard electronics. Oops, I forgot to ask if one has to be an engineer to sell these cars. Nonetheless, until recently they could only show the car but now they have a license to sell cars in Massachusetts, completely bypassing a dealer network.

    And that makes sense as the car does not require routine maintenance as is common with cars with an internal combustion engine. He said, if the car is damaged in an accident, they have an arrangement with Audi to do repairs since Audi is highly skilled with working on aluminum frame vehicles.

    To say I was impressed would be an understatement because the Tesla Model S is perfect in every way--just the right size and feel. Too bad there were no cars available for a test drive.
  • anythngbutgmanythngbutgm Posts: 4,180
    Wow, that's the first I heard of Audi doing repairs. That's pretty cool IMO. Never owned an Audi but I can see why they would be called upon, they know their stuff (if it's a bit overly-complex).

    I visited that place in Natick about a year ago. Sure, it seems kinda tacky (to me) to have a dealership in a mall but it was pretty neat to be able to check the car, see how the thing actually works, browse the options, etc all without any sales pressure at all.

    I'm looking forward to the Model X myself. My wife loves the idea of electric cars and to have the utility and the bonus of AWD is a huge plus for us.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,353
    edited August 2013
    "According to a Tesla sales manager, they expect prices to drop to the $40K range in a year or two."

    That's simply not possible unless they offer a) a vehicle other than the S model and b) this model has a much shorter range OR c) there is a startling breakthrough in battery technology that nobody right now knows about.

    If the Tesla plan is B (shorter range so as to cut production costs), then they should look first to the fate of the Nissan Leaf.

    EVs with 75 mile range don't sell.

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  • jpp5862jpp5862 NCPosts: 362
    We stopped there on vacation over Memorial Day and actually got to do a test drive. Very impressive, but definitely a price premium. Like fintail if I had the money I'd get one for an around town car, but it's a bit of a stretch right now.

    Musk has the vision to bring a smaller car to market in 3 years or so at a better price point, will be interesting to see if it happens.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,353
    He'll have to cut the range, though. Batteries are mighty expensive, so the more you put in the car, the more it's going to cost you to build it.

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  • bwiabwia Boston Posts: 1,275
    Top 10 Electric Cars 2013 (6 months of sales)

    The price estimates factor in the EV $7,500 tax credit. Starting at the bottom.

    #10 The Honda Fit EV. With about only 300 sold, you can only lease it. It's $259 a month with unlimited mileage. It's 82 mile electric range is higher than some of the pure EVs on the list. It may be available only in select markets.

    #9 The Toyota RAV4 EV. With about 400 sold it starts at about $43,000. It has a Tesla battery giving it a decent 103 mile range. It does not have four wheel drive.

    #8 The Mitsubishi Imev. With about 900 sold, you can get one for about $21,000. The range is 62 miles. The Nissan Leaf is tough competition for the I with greater range and a similar price.

    #7 The Ford Focus EV. With 900 sold and a price tag starting around $29,000, it has a 76 mile range. It looks very similar to the gas powered Ford Focus with a top speed of 84 mph.

    #6 The Ford Fusion Energi. This plug-in hybrid has sold close to 1,600 units. You can get one for about $38,000. Because the battery is smaller, the tax credit also is smaller. It has a decent initial 21 mile electric range and seating for 5.

    #5 The Ford C-Max Energi. Another plug-in hybrid from Ford with a 21 mile electric range. This $30,000 hatchback has sold about 2,500 units. It competes with the Plug-in Prius liftback in price.

    #4 The Toyota Plug-in Prius. The hybrid king now has a plug-in. With about 4,200 sold, you can get one for about $30,000. The EPA rated electric only range is 6 miles. You have to look closely at the window sticker. Many people believe the EPA rated it as 11 electric miles but that rating involved using gas.

    #3 The Nissan Leaf. With about 9,800 sold, a 75 mile electric range, its one of the cheapest electric cars out there for about $22,000. The Leafs sold in the states are now American made.

    #2 The Chevy Volt. It's the plug-in hybrid king with about 9,900 units sold. It has a 38 mile pure electric range before the engine comes on. The Volt's larger battery size gives the full $7,500 EV tax credit. You can get one for about $32,000. The average Volt driver gets about 120 mpg and drives most of the time in electric only mode.

    #1 The Tesla Model S. What is said to be one of the world's greatest cars happens to be all electric. Tesla has sold 11,000 in six months despite it's high price. You can get one for $63,000 to $73,000 depending on the chosen battery size. The EPA electric ranges are 208 or 265 miles. Tesla owners have free car charging for life at any of the Tesla Supercharger stations. You can charge 200 miles in 30 minutes.

    Source: http://www.youtube.com/watch?v=cetRkwUg7Q8
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,353
    edited August 2013
    All well and good, but:

    a. Honda and Toyota don't need to sell a lot of EVs to survive. They don't need to sell any EVs to survive

    b. Teslas do not compete with plug-in hybrids. Different market.

    c. Teslas are still heavily subsidized by federal and state tax credits and by emissions credits. Once all this dries up, then what?

    3. The # of supercharger stations right now is under 20 for the entire country

    4. Tesla cannot survive selling 21,000 cars a year under their current business plan. Given their stock price and current products and time line for future plans, it simply doesn't add up.

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  • anythngbutgmanythngbutgm Posts: 4,180
    edited August 2013
    "4. Tesla cannot survive selling 21,000 cars a year under their current business plan. Given their stock price and current products and time line for future plans, it simply doesn't add up."

    Sure, but what is stopping them from selling the platform to other carmakers like say, Audi which at the moment is in its infancy with Electric tech and is already familiar with it due to the above mentioned accident agreement? or Toyota, who sold them the NUMMI plant from which the Teslas are built?

    Could be a brilliant next step towards building the Tesla portfolio.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,353
    That's a very good point and may be the way it all turns out.

    No matter how you cut it, it's a tough row to hoe.

    Many a brilliant, capable and wealthy man has put his arm in the automotive shark tank, with predictable results.

    Did Henry Kaiser know how to build machines? You bet. Did John Delorean know about marketing and manufacturing? Sure did.

    Even successful indie car makers fail, because their corporate structure falls down around them----Zimmer comes to mind.

    The automobile business eats men alive, always has, always will. Is Musk up to the challenge? Well, he's an impressive guy, what else can I say?

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  • bwiabwia Boston Posts: 1,275
    edited August 2013
    Sure, but what is stopping them from selling the platform to other carmakers...

    That's a bad idea as it will irreparably dilute the Tesla brand. Tesla is a development stage company where losses are common in the first five years of development. In the last quarter, excluding one-time items, the company did turn a profit. Yes, the magic word, PROFIT.

    Tesla cannot be a Toyota overnight in terms of sales volume, nor should it be. It has developed a profitable niche market in BEV's and that's where it should play. So far, its model is working just fine. High margin and high turn-over, thank you very much.

    And this brings me to a common business mistake, following the advice of pundits who know very little about Production, Marketing and Finance. Too many a successful small business (e.g. bakery, flower shop) fail because of the unreasonable expectation to be a big business overnight. Stay the course Tesla, you are over hump in terms of technical feasibility, now execute with precision.
  • anythngbutgmanythngbutgm Posts: 4,180
    edited August 2013
    I see what you are saying, but I guess I should expand my point by saying that I don't know why Tesla couldn't sell, say an older, maybe less MPC version to other exclusive automakers like Audi who sells limited numbers of names like Bentley. Imagine what the Tesla drivetrain would do in a supercar like Lamborghini. Heck Lexus and Acura have both proposed hybrid supercars in the future, a Tesla Supercar would make them non-starters...

    I guess I was too quick to name Toyota, because I recalled when they sold the HSD to Nissan for the Altima hybrid.

    I don't think Tesla will see Toyota volume in my lifetime, they are just too small and niche and I don't think they can even produce enough vehicles to hit 2.25 million that Toyota is predicting in the US alone... And I agree that their current path is working.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,353
    edited August 2013
    Tesla already does sell to Toyota, Benz and Smart.

    The high margins are worth examining. If you take away the tax credits, the current gross margin is 2.3% says the Motley Fool.

    Also, in addition to tax credits, Tesla benefits from a low marketing budget due to great publicity.

    But note---these benefits are not scaleable. If Tesla wants to ramp up production, it will a) lose all the tax credits and b)need to advertise heavily and c) increase production costs and investment.

    By any stretch, a company that has a market capitalization of over $13 billion dollars should be producing at least 50,000 cars a year, I'm guessing.

    The P/E forecast for Tesla next year is 243 !! (Nasdaq)

    By any rational standard of measurement, this company makes no sense whatsoever to me.

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  • hpmctorquehpmctorque Posts: 4,258
    edited August 2013
    Good Points! I think the company makes a lot of sense, but not the stock at these prices. Of course, the stock seemed overvalued long before it recently exceeded 150/share. If it's a bubble, it can go to any price before declining.

    Toyota and Mercedes have ownership stakes in Tesla, although neither stake is major. Actually, it's not clear to me whether Mercedes' stake is in the Tesla company or in a major supplier to Tesla.
  • fintailfintail Posts: 34,013
    I seem to recall the MB column mounted gear selector is used by Tesla.
  • hpmctorquehpmctorque Posts: 4,258
    I would add that while the company makes sense, I agree that it's competing in an industry that's difficult to enter, an industry that's very capital intensive and one in which scale is a huge advantage, an industry with numerous battle hardened and established major competitors, and an industry where many have tried and few have succeeded. Notwithstanding these headwinds, I believe that brilliant design and skillful execution can overcome the odds. It'll certainly be interesting to watch, and it's encouraging to see that a domestic startup is willing to challenge the status quo.
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