Tesla is toast

Ben Washburn

Ben Washburn

Member
I'm completely new to the 'EV' world, and for that matter, almost the new car world--the last new car I bought was a BMW in Germany in 1999. I'm not a 'car guy', nor am I particularly an ideological environmentalist or any of that. Politically I'm basically a libertarian, I'll do my thing, you do your thing, and let business do its thing. A car for me is literally nothing but Point A to Point B for best value--as I mentioned somewhere else, that all look the same to me because they're simply utilitarian for me.

So I'm probably not representative of the general tone here. But that's maybe good because I'm just a normal guy looking for a good car, with no mandates or prohibitions beyond good value, and probably more representative of 'the average guy'.

So here's my conclusion after about a month: Tesla is toast.

First, EVs are fantastic--and again, not because they're EVs, but because they're good cars. Just plain good cars--comfortable, peppy if that's what you want (ok, it's not a BMW, but that's a niche anyhow), silent, just plain fun to drive like a BMW but in a different way. And of course, they're great value, with the rebate but even without the rebate.

So as a guy with absolutely no predisposition at all to go this way, it seems obvious to me now that the car-buying market is going to absolutely flood into EVs and PHEVs. I honestly think it's just a matter of knowledge and comfort level, and that critical mass will be exceeded in the next two years. I'll never buy a gas car again--why would I?

So three years from now when all this technology is one increment better, and you can get a 'mid-range' car like the Clarity--or hopefully a hatchback version of something like a Civic--for a net of $25k - $30K, who's going to pay $60k - $70K for a Tesla? It won't be new or unique or different any more. And if you really do want an upper level tier EV like that then Mercedes, BMW, and all those companies will have great EVs, one technology notch better, all subject to the credits for a long, long time. And those sorts of companies can buy into the market with low margins or even losses on those EV cars because they're supported by all their other sales, trucks, bigger SUVs, things not quite so fitted for electric just yet. So what if 10% of their sales are at no profit for the short term?

It's a little unfair I guess to companies like Tesla or Nissan or GM who sort of popped the top on these cars, bit I think the companies that held back a little bit, like Honda or Hyundai or maybe even Ford are going to crush them with better cars for significantly less cost.
 
Ben Washburn said:
I'm completely new to the 'EV' world, and for that matter, almost the new car world--the last new car I bought was a BMW in Germany in 1999. I'm not a 'car guy', nor am I particularly an ideological environmentalist or any of that. Politically I'm basically a libertarian, I'll do my thing, you do your thing, and let business do its thing. A car for me is literally nothing but Point A to Point B for best value--as I mentioned somewhere else, that all look the same to me because they're simply utilitarian for me.

So I'm probably not representative of the general tone here. But that's maybe good because I'm just a normal guy looking for a good car, with no mandates or prohibitions beyond good value, and probably more representative of 'the average guy'.

So here's my conclusion after about a month: Tesla is toast.

First, EVs are fantastic--and again, not because they're EVs, but because they're good cars. Just plain good cars--comfortable, peppy if that's what you want (ok, it's not a BMW, but that's a niche anyhow), silent, just plain fun to drive like a BMW but in a different way. And of course, they're great value, with the rebate but even without the rebate.

So as a guy with absolutely no predisposition at all to go this way, it seems obvious to me now that the car-buying market is going to absolutely flood into EVs and PHEVs. I honestly think it's just a matter of knowledge and comfort level, and that critical mass will be exceeded in the next two years. I'll never buy a gas car again--why would I?

So three years from now when all this technology is one increment better, and you can get a 'mid-range' car like the Clarity--or hopefully a hatchback version of something like a Civic--for a net of $25k - $30K, who's going to pay $60k - $70K for a Tesla? It won't be new or unique or different any more. And if you really do want an upper level tier EV like that then Mercedes, BMW, and all those companies will have great EVs, one technology notch better, all subject to the credits for a long, long time. And those sorts of companies can buy into the market with low margins or even losses on those EV cars because they're supported by all their other sales, trucks, bigger SUVs, things not quite so fitted for electric just yet. So what if 10% of their sales are at no profit for the short term?

It's a little unfair I guess to companies like Tesla or Nissan or GM who sort of popped the top on these cars, bit I think the companies that held back a little bit, like Honda or Hyundai or maybe even Ford are going to crush them with better cars for significantly less cost.
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Tesla designs fantastic cars but it is terrible as a car company. Their biggest problem is that they piled on many billions in corporate debt that is due soon. They don't simply need to be profitable but wildly profitable in order to avoid bankruptcy. Couple that with the tax credit phasing out for Tesla before they even sell a single base Model 3, there is no way they can compete with the very attractive models launched by Jaguar, Audi, Mercedes, and soon Porsche. VW will launch several models that will be in the affordable range--all the these companies will have their $7500 tax credit quotas fully operational for years to come. With margins thin for cars, you're dead without the tax credit when your competitors have theirs. Besides, these companies can dig in and spread any losses over their entire range of profitable vehicles. Tesla does not have that cushion.
 
Exactly. Their basic problem is it just took them about two years too long. All these issues would have arisen anyhow as the first one out of the chute, but if they'd been able to smoothly ramp up production and get some sort of market dominance with a true $35K car like they initially advertised they'd have a great chance. But they've drug it out too long, actual costs are too high, and they've essentially squandered the lead they had 3 years ago. It may not look quite like it now, but in three years when 250 mile ranges are common for cars costing $30K or less they'll be relegated to a niche high end market competing with all those manufacturers you listed selling deluxe EV cars for very low margins under the credit scheme. By the time all those guys have exhausted their 200K limit Tesla's debt and margins will have destroyed them.
 
This thread should be moved to the Tesla forum.

However, I just wanted to say that the dealerships don't really want to sell EVs in any large quantities so I'm not so sure that Tesla is dead or that Ford or Hyundai is going to crush Tesla.
 
Tesla is going to crush the other makers as they will have the lowest costs. Notice all the complaints from BMW, VW, etc, that are starting to complain how expensive EVs are. Read the teardown report from Munro on costs of Model 3.

Look at the new competition from Audi, MB, Jaguar for competition for Tesla. They claim they compete with Model X, but in reality they are smaller class cars. The Model Y will come out in a couple years and undercut them by $20,000. Efficiency is paramount for EV costs and the new luxury SUVs from those makes are so inefficient that they drive up their battery costs immensely.

Debt for revenue and Tesla is comparable to other auto manufacturers, so they aren't as bad off as it seems given Model 3 ramp was successful.

The Model 3 was the 4th best selling car last month in the US. As they roll out cheaper model this will continue. All their competition is looking at 1/10th the volume, and they don't make money on those. Look at the Clarity. A car that should cost $45k based on build, costs $37,500, but sells for maybe 15% off that price. Honda is losing money on that.

Honda won't even update software on your car unless you pay the dealer (or it is a warranty problem). Features like OTA updates will drive people to Tesla in droves.
 
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