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Is Tesla A Game Changer?

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  • bwiabwia Boston Posts: 1,059
    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
  • MrShift@EdmundsMrShift@Edmunds Posts: 43,641
    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.
  • anythngbutgmanythngbutgm Posts: 4,159
    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.
  • 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?
  • bwiabwia Boston Posts: 1,059
    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: 4,159
    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.
  • MrShift@EdmundsMrShift@Edmunds Posts: 43,641
    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.
  • hpmctorquehpmctorque Posts: 4,118
    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: 32,907
    I seem to recall the MB column mounted gear selector is used by Tesla.
  • hpmctorquehpmctorque Posts: 4,118
    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.
  • hpmctorquehpmctorque Posts: 4,118
    Sorry, but I don't know where Tesla sources the gear selector.
  • Tesla may end up a successful company indeed, but not just making expensive electric cars. That, to my perhaps limited vision, is a dead end road.

    In any event, Tesla is going to have to "make a move" somewhere...either downscale or sideways into hybrids, or more diversification.

    Look what Amazon did to stay alive. Now they sell toilet paper.
  • hpmctorquehpmctorque Posts: 4,118
    True, adaptability is a key ingredient for success. Amazon is a good analogy.
  • hpmctorquehpmctorque Posts: 4,118
    edited August 2013
    Is scaling to mass market status easier said than done for Tesla, given the financial, technical, distribution and competitive challenges? Or, is Musk and his team likely to pull it off, and eventually join the ranks of major automotive manufacturers. Read on...

    (Bloomberg) --"Tesla Motors Inc. CEO Elon Musk said the electric-car maker intends to add factories in Europe and Asia, anticipating volume gains from a planned mass-market battery car.

    The company this year plans to make at least 21,000 of its $70,000 Model S premium sedans at its Fremont, Calif., plant, and double that in 2014.

    While the factory has capacity to produce as many as 500,000 vehicles a year, the addition of a smaller electric car priced about half that of Model S will require additional plants, Musk said.

    'We'll try to locate those close to where people are, close to where the customers are, to minimize the logistics costs of getting the car to them,' the Tesla co-founder said in an interview with Bloomberg Television. 'I think long term you can see Tesla establishing factories in Europe, in other parts of the U.S. and in Asia.'

    Tesla, named for inventor Nikola Tesla, has been an automotive phenomenon this year, with its shares surging more than fourfold and its market value exceeding some established carmakers such as Fiat S.p.A., the majority owner of Chrysler Group.

    Tesla expansion

    Musk provided no details on how much or when Tesla would invest in more factories.

    The company has opened a small facility in Tilburg, Netherlands, where it's assembling Model S components shipped from California to Europe, for cars it has begun selling there.

    While Tesla's next vehicle, the Model X electric SUV, goes into production at Fremont late next year, the timing of the smaller, lower-priced vehicle, isn't firm.

    'Certainly, within five years we'll have our mass-market electric car available,' Musk told Bloomberg. 'We'll start seeing hundreds of thousands of electric cars going to market every year.'

    Musk, in previous interviews, has said the lower-priced car would arrive in about three or four years.

    Trademark application

    The company this month filed an application with the U.S. Patent and Trademark office to use the name Model E for an automobile.

    Shanna Hendriks, a Tesla spokeswoman, declined to comment on whether that's intended for the still-unnamed mass-market electric car."

    Your thoughts?
  • MrShift@EdmundsMrShift@Edmunds Posts: 43,641
    edited August 2013
    Well it speaks to the ambitions of a brilliant man, but when I actually analyze these statements, after the intoxication has worn off, I still have to wonder where the profits come from to fuel all this---if the business plan is to keep jacking up the stock price with this hype, and make the money that way, then I do fear for the future. This all sounds like a mighty ferocious burn rate of capital--and this to be replenished by profits from 21,000 heavily subsidized cars?

    Also, I'm still not "getting" how he plans to produce an entry-level car without reducing the range of it, given that the number and type of batteries are a major production cost, nor how he plans to fund a major marketing campaign against increasingly efficient plug-in hybrids.

    If plug-in hybrids could double their EV range in the next few years, Tesla is toast IMO.

    OHHHH----"MODEL E"....no, no, in the name of all that is holy, don't use that name! (E= Edsel, once championed by Ford as the "E CAR")
  • fintailfintail Posts: 32,907
    I wonder how many Model S actually cost the 70K used by the media in nearly every blurb. A loaded model can easily shoot past 100K. Maybe they are trying to lessen the bad taste of someone receiving a subsidy to buy something so expensive?
  • Well the media is lazy about things like that.

    Tesla has been silently raising the cost of options on the S, so the price is creeping up as we speak.
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,947
    Seems like too many people want to build a $100 million dollar company. But lots of those outfits could still make as much profit as a $100 million dollar company just by focusing on their niche. And $1 million in year in profit sounds a lot better when your company gross is "just" $10 million instead of $100 million.

    I'm sure Musk wants the number to be $100 Billion though.
  • hpmctorquehpmctorque Posts: 4,118
    Well, keeping the stock on a boil, then issuing new shares at inflated prices to finance expansion, then resetting and doing it again, is one way to do it. One could argue that he did that to pay off the federal loan. It's all legal, and it works as long as enough people keep believing in Musk's magic touch.

    Notice that hardly a day goes by without an important announcement, always very positive. Some are warranted, but there seems to be a good dose of PR too.

    If the X and the E are as good, adjusted for price, as the S is purported to be, then I'd become a solid Tesla fan. I might even buy an E. Also, if the E is really good no one would make the connection with the Edsel. Only a tiny percentage of car buyers even remember the Edsel.
  • albanytimalbanytim Posts: 18
    edited August 2013
    "S", "E", "X"
    Good marketing strategy.
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