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Comment by flexie | Hacker News Reader

Not only has Tesla created the greatest external challenge to the German auto industry that I can think of. They also have the nerve to attack them in their own backyard where they can take advantage of German suppliers etc. What will be next? A Gigafactory in Europe?

This is great news for people who like tech but must be worrying for the German automakers who have yet to come up with a trustworthy answer to Tesla.

I believe one of VW, Mercedes Benz and BMW will bankrupt in 5-10 years. None of them have taken EV serious yet and I fear it's soon too late. The EVs that they have come up with as answers to Tesla are almost cartoonish like vehicles. Take a look at this Mercedes EQ: http://www.autoblog.com/2016/09/29/mercedes-benz-generation-...

Or this VW I.D.: https://techcrunch.com/2016/09/28/meet-the-i-d-volkswagens-f... Same blue lights. I bet they will come with a space suit and a laser gun as well.

Both are still concept cars but they represent what they expect their EVs should look like. Mind you that this is something they plan to market in 2020 so it will probably be 2021 or later. And their planned 2020 EVs are inferior to Tesla model S, X and 3 in 2016/2017 in many ways, not just design wise. It is as though they think only hipsters will drive EVs in any foreseeable future.

So when in 2021 they realise that they underestimated that ordinary people want an EV that looks no more spacey than a combustion engine car, but comes with wireless upgrades, long range batteries, large trunk, fast acceleration, high safety rating etc., they will have to wait another 3-4 years until they have a real answer ready. By then, model 3 has been on the market for close to a decade and even better Tesla models with better range, faster charging etc. have been introduced. And the Tesla cars will have been trained with tens of billions of miles of self driving by then. How are the Germans going to catch up?

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At least VW and BMW have real, practical and selling EVs.

But those are huge companies. They cannot say "let's only sell EVs". They can't even say "let's downplay gas-driven cars and emphasize EVs".

What do you want them to do? Fire 95% of employees and sell 1% of the cars they are selling today?

Of course Tesla looks forward-looking. They are all-EV, they are fighting for profitability, they don't have existing business to protect.

And protect you must your existing business. "Pivoting" is one of the favourite words in VC and startup circles, but it's also fairy-land, not a plausible economic decision in this situation.

The conventional wisdom is that you must cannibalize your existing business yourself, otherwise someone else will.

Seems to me that VW and BMW are not really pushing for EVs as much as they should – at least, I don't know anyone who is buying them instead of a VW or BMW with an internal combustion engine. Then again, I live in Finland, where nobody has an EV anyway.

I live in Romania and why would I buy an EV? I cannot charge it over night because I live in a 10-stories-high building, not to mention that there are close to no public EV charging places spread throughout the country. On top of that an EV is expensive as hell. I've bought my SH petrol car around 2 years ago for 4,000 euros, and it's been a blast to drive it (I've done a 4,000 km European tour this summer with it). I don't see prices for SH electric vehicles going to under 5000 euros in the next 15 to 20 years. As a matter of fact, no-one is quite sure how reliable SH electric vehicles will be. As things stand out right now my iPhone4 might as well be from the stone-age (cannot install any new apps on it, almost all the existing apps on it have stopped working), and it's only a 4 to 5-year old piece of electronics.

An awful lot of people living in flats/apartments in older buildings in European cities are going to have similar problems. I'd like to try an EV or plug-in hybrid but the practicalities of living in central Edinburgh pretty much make it impossible.

If you only look at the part of the market that buys new cars (as opposed to second hand), the home charging problem becomes a lot smaller.

Once EV have reached a certain saturation amongst new car buyers, the second hand market might take some very interesting turns when that generation of cars is about to change ownership from original buyers with a high rate of home charging availability to second hand buyers with a low rate. If you are one of the comparatively rare second hand buyers with available home charging, you might see a very favorable market.

Self driving taxis solves that problem. Very few people will actually own cars.

You won't buy an EV, you will rent one or hire one.

I don't want to rent/hire a car, I want to own it.

If you're in the US this attitude is understandable, but in Europe, not so much.

I'm in Europe and you're wrong. Not everyone lives in a city, we have countryside here too you know.

Why would the level of renting/hiring be different for EVs than for conventional vehicles?

I think he's referring to the idea that you'll use an Uber-like app (either Uber or if Tesla builds their own then the Tesla version) to order an EV to use it's self driving AI to come pick you up, take you to your destination, then drive off to service other customers.

https://newsroom.uber.com/pittsburgh-self-driving-uber/

I think you're right, but that change in behavior will come (if it comes at all) with self-driving technology, which is entirely orthogonal to EV's.

Honestly this is a city/urban thing. It's simply not something that on a large scale people who live in the suburbs on in the country will want to do. My vehicle sits practically outside my door at work and in the garage at home. I like the fact that I can go spur of the minute anytime anywhere and don't have to summon the vehicle or do any planning.

I don't even think it's a city/urban thing - I live right in the middle of a city and walk to work but the car is for getting out of the city to walk/bike/ski and I can't see a glorified taxi working in those situations.

Would the parking situation not be amenable at all to metered chargers?

There's a lot of social conventions and what not to work out there, but I doubt any of it would be insurmountable. For overnight charging, a cord that you activate with your phone, with the activation locked to one vehicle, solves many of them.

Don't Europe's Uber drivers also live in tall apartment buildings?

I live in Seattle and electric BMWs are everywhere thanks to BMW's own ReachNow car sharing service:

http://www.bmwcarsharing.com/

Basically the cars are paid for by the minute and come with free street parking. You can unlock/lock through the app or a smartcard. This feels like BMW is trying to both figure out EVs and a possible post car ownership society.

Tesla will be similarly doomed when most people don't own their own cars (Tesla's most valuable asset is its brand and that means nothing when you aren't buying the car!).

1. Tesla is pivoting into an energy company that happens to make cars on the side. If it doesn't die because Model 3 flops (not saying that it will or won't, mind you) its future looks quite bright.

2. Teslas driving around right now are doing what they call fleet learning for self-driving purposes.

3. Tesla is absolutely getting ready for post ownership era of motorization, in fact the autopilot effort and announcements regarding for-profit car sharing only being available through Tesla network directly confirm that.

> Tesla is absolutely getting ready for post ownership era of motorization, in fact the autopilot effort and announcements regarding for-profit car sharing only being available through Tesla network directly confirm that.

This is why I chuckle when everyone says "Look how few Tesla vehicles are produced!". They don't have to replace every vehicle purchased, just the vehicle miles driven. Cars sit idle 90-95% of the time, which means if you increase utilization with the Tesla Network, they need only 20-30% of total worldwide manufacturing capacity to replace all cars.

Total cars sold in the US this year? Just shy of 18 million. How many does Tesla need to build to replace that capacity if they're self driving? 4-6 million cars/year to start, decreasing rapidly depending on rideshare uptake. Easily doable with their automated manufacturing efforts.

Gonna be a bitch when Tesla manufacturing curve hits vehicle miles demand, and existing automaker sales plummet.

Maybe cars sit idle 90-95% of the time, but isn't it the same 90-95% of the time? I would imagine the peak utilization is much higher. Furthermore, if self-driving cars become a reality, then I imagine utilization would dramatically increase. Now that I can just send my car to pick up the grocery, I'm much more likely to send it on random errands.

> Now that I can just send my car to pick up the grocery, I'm much more likely to send it on random errands.

I expect local governments to enact per mile taxes, replacing gas taxes, which at some point makes this unaffordable to constantly have your vehicle on the move for you (but still affordable if its part of a rideshare fleet generating revenue).

The idle time will not change by much anytime soon. Everyone commutes in the same hours and at night all cars stand still. Yes, society becomes more flexible and diverse but this is a very slow process.

5:30 PM in Seattle on a weekday is peak traffic, 1 in 5 daily use vehicles are on the road.

So in a hypothetical wherein Robotaxis have acheived full penetration, maybe we'll need 1/3 of the vehicles we use today.

There would likely be a lot less steel in those vehicles as well, since they'd largely be optimized for single commuters, and would need less of the redundancies built into current cars for safety.

Labor force participation rate will continue to decline quickly as all of the Boomers age out into retirement:

http://data.bls.gov/timeseries/LNS11300000

https://i.imgur.com/5YFhBpx.png

As well as the labor force declining in general:

http://www.factcheck.org/2015/03/declining-labor-participati...

"Still, Priebus’ comment, tying the entirety of the drop in the labor force participation rate to “the Obama economy,” ignores some of the demographic and structural forces that have been driving the participation rate down for more than a decade, and that are expected to continue to drive the rate down for decades to come."

I could see car sharing services being a route for having electric cars in older cities - we already have a City Car Club dedicated parking area close to us and I could see that getting chargers installed whereas I can't see them being installed generally for a long time.

Or maybe this is just their best effort at hitting fleet-average CO2 emissions goals without bolstering EV numbers by giving them away for free. It looks like cheating, but if this gets any kind of traction (and enable more non-poverty-driven carlessness), it will be a much better result for the environment than selling more, but slightly cleaner cars would have been.

Creative bookkeeping by selling to their own rental subsidies is nothing new in the car industry. The BMW carsharing fleets improve on that by not only creating favorable numbers, but also making them take part in a new market that might well be a significant part in future of car usage.

Considering only 1 of 3 models in ReachNow is an EV I doubt that's the case.

disclaimer: I work for Volkswagen.

that being said, Volkswagen certainly is pushing electric vehicles now, all internal talk, newsletters are about the MEB (modular electric "toolbox", same as the current MQB for our conventional vehicles). The next investment meeting for the following 5 years is this november, a lot of money will certainly go for investments in electric vehicles.

>Then again, I live in Finland, where nobody has an EV anyway

Because very few people buy $75,000 cars, period. I don't know a single person either, and I'm in Canada. I know people here act like Tesla has already built and sold all these $35,000 Model 3s, but the truth is nobody has built an EV for the mainstream yet. Because it's hard.

Batteries are still too expensive to be 'really pushing' electric vehicles.

In the US with our low gas taxes, neither the Bolt nor Model 3 make a great deal of financial sense, even after the swell $7500 tax credit.

Lots of people already buy cars that are not the cheapest possible car. Sure, if electric vehicles were cheaper than an equivalent gas-powered car, then that would be awesome... but even if that isn't true yet, there are a lot of people who'd like an electric car anyway.

Estimating from the 400,000 Model 3 preorders, that group is in the low millions.

Meanwhile US auto sales are 1 million+ per month. The larger automakers are all working on electric platforms, they aren't ignoring the market that is there, or more importantly, the market that will exist as costs come down. But the point is that they don't really have much to gain from getting way out in front of the battery costs.

This just isn't true. The cost of ownership of a Model 3 vs even a Civic will save almost $2k/year.

Cost of ownership wise nothing will be cheaper. Check your facts.

So I'm wrong because a car shipping in volume in 12-18 months will be cheaper than a car I can buy right now?

I also wonder about the math. Edmunds puts a Civic at about $5000 a year (for 15,000 miles):

http://www.edmunds.com/honda/civic/2016/cost-to-own/

To save $2000 a year over that, a Model 3 has to go ~10 years with minimal costs beyond electricity.

For me just the fact that they are not looking at gas cars as something to change as fast as possible and don't talk about its health problems mean that I don't want them to provide me with EVs in the future. I have a BMW, but it's my last gas powered car.

I would absolutely love to buy a reasonably priced EV from VW (be it under the VW, Audi, or Škoda brand). I have a Škoda, and it's going to be my last gas powered car.

So far, I haven't seen anything from VW or BMW that meets the performance, range, and cool factors anything like the Tesla does. I will not buy a hybrid, it seems like the worst of both worlds to me.

They wouldn't have to sell "only EVs". They could have continued selling EVs while selling their soon to be vintage cars.

All three companies have several brands (VW has Porsche, Audi, Skoda etc.) and each of their brands have several models. They are also produced in several factories in different countries.

4-5-6 years ago, when Tesla demonstrated to the world that an EV can have longish range and look attractive, the traditional car companies could have allocated resources and production lines to develop and produce competitive EVs. They would have been in a much better place to compete than tiny Tesla 5 years ago. But now, they are late in the game.

It's more a symptom of failed management than some function of a business law.

Tesla has a somewhat of a competitive advantage here not related to timing. Structurally EVs are giant battery packs with attractive packaging, therefore the biggest cost component is the battery pack itself. If you can commit to bulk orders (like Tesla did with Panasonic), you can get the price of the battery pack down.

Everybody else pays the market price, which explains either vehicles at higher cost (BMW i8) than Tesla or vehicles with severely reduced range (VW eGolf).

Hidden in your argument there is an even bigger one: traditional car manufacturers have outsourced almost everything to their high level suppliers except for the engines. When they switch to EV they give up on the only part where they have a considerable depth of added value. They could become their own cell manufacturers (and in fact almost all of them have tried, before learning that batteries are too much of a commodity for them to be competitive on the small scale of early EV introduction), but there is zero knowledge transfer opportunity from ICE to battery.

It's not difficult for them to build EV. But it is nearly impossible for them to do so earning money, when they are essentially repackaging third party batteries into shells consisting of all the other stuff they are buying from their existing suppliers.

I think you are overlooking the fact that very few people buy cars for the engine technology.

They buy on design, price, prestige, history and possibly other 'soft' aspects.

But if scale is key to winning here, can anybody compete with china - for mass market vehicles ?

We're already starting to see BYD aiming to have 34GWH battery manufacturing capacity in 2020, same as Tesla.

The i8 only has a small battery. It has a high price because it's a luxurious high-performance car.

My tesla 85D has better performance in every way. More horsepower, faster 0-60, more space etc. Etc.

> Fire 95% of employees and sell 1% of the cars they are selling today?

I am no expert at history, however, during the 1930's Henry Ford did something similar to introduce the Flathead V8. Factories were closed, hundreds of thousands made unemployed, then, in secret, Ford worked on the V8 and the factory to make the new cars. When he was ready the gates opened and new hires were made.

Great, now they just have to wait for the next bank crash and following economic depression and then they could try that tactic.

I think the point is not that VW should stop selling gas-powered cars completely yet, but that they should at least match Tesla in investments and strategy when it comes to EVs. Right now they are far behind, and that's beyond shameful - it could cost them the company in 10-15 years, because EVs are the future. And they are still not quite acting like they are.

They're still treating EVs as another "market segment" and that's a problem - for them.

In this market, even 3 or 5 years is not that far behind. People don't switch cars like they switch cellphones.

Even though you don't like it, EVs are still a market segment. There are still lots of use cases where EVs don't make sense.

Very true. There is a lot of information we re missing to just say all german auto makers are making the wrong decision. They could as well time their entry into EV market in order to make the most of it. Wait for battery price to go cheaper, infrastructure to get better and so on.

So... Innovator's Dilemma?

I'm pretty sure that all the members of the VW/BMW/Mercedes boards have read "Innovator's Dilemma" by now.

Buy plenty of people who have read it fail to act on it.

Yes, usually by rationalizing with the help of management consultants that somehow it isn't applicable to their particular situation.

> Not only has Tesla created the greatest external challenge to the German auto industry that I can think of.

The greatest challenge they faced is one they still face: the Japanese auto manufacturers. Toyota remains unbeatable on quality; the pursuit of Toyota is claimed as an element of VW's recent fall from grace. At this point Tesla is barely a blip on the radar in comparison considering volume (current and planned) or quality.

> I believe one of VW, Mercedes Benz and BMW will bankrupt in 5-10 years. None of them have taken EV serious yet and I fear it's soon too late.

Daimler took it seriously enough to invest in Tesla, and to use Tesla as a supplier in their own B-class EV sold in the US. The BMW i series feature some pretty innovative thinking with respect to construction, materials, and design. The payoff is that the BMW i3 is the most efficient EPA-certified vehicle, more efficient than any of Tesla's models: http://www.fueleconomy.gov/feg/extremeMPG.jsp (e: and the i series are likely produced under a more efficient and sustainable production process, but it's hard to find a single link in support of this claim)

> Both are still concept cars but they represent what they expect their EVs should look like.

They are concepts, and so are explorations of design elements, features, etc. DFM changes the design significantly, even if one tries to keep to the concept.

> How are the Germans going to catch up?

They already have, they are just much more conservative in releasing their products because of earned experience. e: When the demand is present, the Germans and other incumbent manufacturers will be ready. This article reflects Tesla playing catchup with respect to automation, something the incumbents have already figured out.

Toyota ought to be the big threat. But their management made a terrible mistake. They went for a car powered by hydrogen.

This is a real car, the Toyota Mirai.[1] You can buy one right now in California. They've sold about 700 cars. $57,500, including 3 years of hydrogen fill-ups. 312 mile range. 5 minutes to refuel, not including the drive to one of the few hydrogen stations.

Here's the only hydrogen station near San Francisco, on S. Airport Blvd.[2] Hydrogen stations are subsidized by the State of California through 2023, unless somebody stops that. (Remember Arnold and the hydrogen-powered Hummer?)

[1] https://ssl.toyota.com/mirai/fcv.html [2] https://www.google.com/maps/@37.6481529,-122.4056447,3a,42.5...

Is it really a mistake? I'm under the impression that automakers pursue FCVs because of the government incentives. I would think that a portion of the R&D could support other alternative fuel vehicle systems, so even if FCVs aren't the future (and it doesn't seem so) it perhaps isn't necessarily a mistake to investigate them if it's incentivized.

0 to 60 in 9.2 seconds. That is a deal killer for $50,000+ cars usually.

> At this point Tesla is barely a blip on the radar in comparison considering volume

They're far more than a blip. They are easily outselling their Japanese and German competition in their segment. Luxury cars.

> Daimler took it seriously enough to invest in Tesla, and to use Tesla as a supplier in their own B-class EV sold in the US.

They did. However, they still do not have an EV sedan or SUV in the market.

> The BMW i series feature some pretty innovative thinking with respect to construction, materials, and design.

It does. However, they still do not have an EV sedan or SUV in the market.

> The payoff is that the BMW i3 is the most efficient EPA-certified vehicle, more efficient than any of Tesla's models

Because it's tiny. It's like a clown car.

The simple fact is that the Germans know if they put out an EV sedan or SUV, they will cannibalize their own market share and their investments in combustion engine manufacturing, which are massive, will be lost. They are trying to slowly transition to EV. Tesla is using that to their advantage and eroding their market share.

https://cleantechnica.com/files/2016/01/US-luxury-car-sales-...

That was last year. This year is going to be worse for them.

That sales comparison you're using is based on the assumption that the Model S competes with large luxury cars, and it ignores the overlap between similar models (e.g., S-class and CLS). On features and price however, the Model S more closely competes with midsize luxury cars. I think the Model S is unique and looking at either large or midsize comparibles alone isn't informative, but I think it's closer to midsize than large.

The i3 is efficient not because it is tiny, but because it is light weight. Weight reduction is hard and it is a lesson Tesla has yet to learn.

> The simple fact is that the Germans know if they put out an EV sedan or SUV, they will cannibalize their own market share and their investments in combustion engine manufacturing, which are massive, will be lost.

They haven't put out an EV sedan or SUV yet because the market isn't profitable yet. The trend for engines has long been towards becoming a commodity sourced from elsewhere and tuned in-house or a scalable design, i.e., except for models where the engine is a selling point you're not investing your money in engines. As to cannibalizing their own sales, I don't understand your point.

Strong weight reduction and safety are very hard together. You can have either one or the other, rarely both.

"It's like a clown car."

Out of interest, are you the in the US? As I don't think the i3 is that small in the context of car sizes in other markets.

NB I also think it looks rather cute - but I've vowed never to buy another BMW.

I agree with you, that is not a tiny clown car. For the first time seeing it on photos I thought the same, but when you put it next to other cars, it looks surprisingly big (however, I have never tried it if its interior is also so roomy as it looks like):

i3 vs BMW 1 coupe: http://insideevs.com/wp-content/uploads/2014/06/i3-active-e....

i3 vs Mercedes B class: http://assets.inhabitat.com/wp-content/blogs.dir/1/files/201...

i3 vs Chevy Volt: http://insideevs.com/wp-content/uploads/2014/08/IMG_20140817...

i3 vs Tesla Model S: http://4.bp.blogspot.com/-po2qhio3MHg/U-PtBsekEMI/AAAAAAAAFx...

I tried the i3. It has nice acceleration. Inside it's about the same size as a BMW 3 series.

It is very ugly, however. The mix of materials used... yuck!

Its smaller than a 3 series, it only seats 4, and the trunk is smaller.

It seems you have no clue about the industry.

> I believe one of VW, Mercedes Benz and BMW will bankrupt in 5-10 years. None of them have taken EV serious yet and I fear it's soon too late.

Then you have to believe that also Ford, GM, Toyota, and other will be bankrupt in 5 to 10 years.

VW is next to Toyota the biggest car seller in the world, with Toyota currently the leader. BUT they are not doing cars only, they are also in commercial vehicles.

Second, also those car manufacturer have one big difference to Tesla, they have working manufacturing plants that build cars at a much higher automated level than Tesla does. VW has manufacturing facilities where one car is a sedan with the VW brand and the next one a convertible with an Audi brand. Tesla can't even produce Model S and Model X on the very same line depending on demand. They have separated lines.

The very key knowledge of all the existing car companies is production, and running production lines. If they want they could easily produce also other products that requires comparable assembly.

Actually, the car companies do not really care about the type of drive train. They care about the profit. They could fit any drive train into almost any car easily, when they want and if this would provide profit. But electric cars are currently have no profit. That is the problem.

By the way, most automotive knowledge is also by the TIER1. Did you know that e.g. the Model X braking system is developed, build, and delivered by BOSCH?

Also that most of the design of the manufacturing plants is provided by German companies, which is an open secret in the industry.

> They have separated lines.

That's not quite correct. Tesla have at least one general assembly line that can do both Model S and X:

http://www.fool.com/investing/2016/09/19/tesla-factory-tour-...

I've seen other similar reports.

Their second line may be X only.

I'm always bemused when I see HN posters evaluating Tesla's finances like they were a mature company, instead of a fast-growing one. By the measure you're using for Tesla, almost all startups should be shut down.

"Fixed costs are too high, no sign that they will ever make a profit" is something you can say about almost all startups.

>>VW is next to Toyota the biggest car seller in the world

That may be so, but they are in deep, deep shit due to the emissions scandal. Especially now that it looks like Audis may also have defeat devices in them:

http://arstechnica.com/cars/2016/11/audis-may-have-cheated-o...

There are certain types of scandals that even huge companies cannot recover from. We'll see how things play out for VW...

People in Europe already forgot about it. Comments like "VW will be bankrupt in 20 years" is why I can't take HN seriously on Tesla related news.

EDIT: Oh it's actually 5-10 years and it's VW and BMW and Mercedes. And this is the top rated comment still...

Please don't talk for all europeans.

Remember Nokia?

Unfortunately a large portion of VW is state-owned so they will be bailed out anyway since a lot of jobs in that state depend on them.

VW should found a utility company for water and electricity and be awarded the contract for american occupation force bases. Then they do not have to get bailed out, but can charge it right back.

The BMW i3 is actually the best selling Electric car in Europe: http://evobsession.com/europe-electric-car-sales-september-2... And I believe it's top four worldwide. VW also has quite a few cars in the market, like the e-golf: http://www.caranddriver.com/volkswagen/e-golf

So you're basing your conclusion on a graph that's mixing EV and PHEV? And only for the month of August? BTW due to its seasonality you cannot make any assumptions about the car market by looking at only 1 month.

Even if that chart is only for one month, the website does include sales data for longer periods. Back in August 2016, they published an article claiming there are now 500,000 EVs on European roads.[1]

I think one interesting point to keep in mind is that German manufacturers aren't the only European game in town. The Renault Zoe is the overall best selling European EV. Also, addressing an earlier comment, the Zoe EV doesn't look exceptionally futuristic. It really is an almost exact copy of the petrol Zoe. I find myself just looking for the exhaust in order to distinguish the two from a moderate distance.

Smaller, city going vehicles have a history of being more popular in Europe (Fiat 500, Mini, Polo, Smart etc), where roads don't tend to be as wide. I see quite a few Zoes and i3s in my moderate sized European city. They feel like the perfect commuting vehicle and second car, even if not particularly suited to long motorway miles.

[1] http://evobsession.com/500000-electric-cars-now-european-roa...

Mixing in PHEVs doesn't hurt anything. Just ignore those. The conclusion remains.

Mainly because of price. When Model 3 arrives it will probably sell 4x as many in Europe, both because it will be a bit cheaper, but also because it will be a much better car.

You are misinformed. They are priced pretty much identically. I can get a new BMW i3 for 36.500€ here in Germany. I bet the Model 3 will be just as expensive.

And as always it will also be a battle for the engineers. I'm German and have only seen a few German companies really fight for engineering power. Only example I can think of is Zalando. The reason probably is that the average engineer is better educated than in many other countries, maybe better than in the US. But in exchange we don't have as much exceptional talent. This influences hiring preferences a lot, since a team of (high) average people can outperform a rockstar and can still be cheaper.

But here it doesn't apply, since it's a vastly new technology on all levels of production. You really need the rockstars since they will be the one building the new technologies. So when the big car companies realize what they need to do all the great engineers who can do it will already work for Tesla.

So I have to agree. The battle hasn't really begun yet, but the war already seems over.

The German car companies already have hired great engineers, but thankfully they couldn't care less about the "rockstar" label. You draw a direct line from software engineering to automobile engineering, without honoring the fact that those two branches are fundamentally different in Germany.

That automobile engineering is different from software engineering in Germany is kind of agreeing with what I say. That people still think that is one of the major reasons why German car companies will fall behind. And you also agree that a car companies would worry about hiring great car engineers (i.e. the people who build great old-style cars) instead of great software engineers (the people who automate the machines to build the new-style cars).

You need to have 50-50 car engineers and software engineers and they need to work together to make that move happen. Do you think a guy with a black Star Wars t-shirt and an Arch Linux running Thinkpad could get any meaningful say in product development at any big German company, car companies and banks especially? If you would answer that with "no" we basically have the same view on how the German industry looks like. What we may not agree on is if that can succeed any longer in the automobile market.

You have very, very obviously never been inside a german car factory.

Wait, wasn't Tesla just telling that they are buying a small GERMAN company to get factory automation knowledge? I read that somewhere...

What is the point you trying to make? Yes they are buying the smart engineers and somehow a lot of German car companies didn't buy them first. Pretty much the problem as described above.

The point is: the German factory automation business already exists and is huge. Germany already sells this world-wide. Tesla just bought a tiny share into it.

Industry 4.0 - Germany's 4th industrial revolution https://www.youtube.com/watch?v=Y990kaGbJD0

Industry 4.0 in the Volkswagen Group https://www.youtube.com/watch?v=JTl8w6yAjds

"Industrie 4.0" - Bosch plant in Blaichach, Germany https://www.youtube.com/watch?v=GKhSTjraHlU

CAR FACTORY: Mercedes-Benz Industrie 4.0 https://www.youtube.com/watch?v=fdXRTKy_TrM

German car companies and their suppliers (Continental, Bosch, ...) have already lots of smart engineers in this domain. Their current factories are among the highest automated in the world. Volkswagen invested $15.3 billion in R&D last year, Daimler $7.6 billion, BMW $5.5 billion. Number one, three and seven in the automotive world.

Tesla was spending $0.7 billion for R&D in 2015.

The whole "rock star" notion was/is silly enough in IT, where qualifications differ wildly, and automotive engineering has a much more level playing field.

It's changing, cars are quickly turning into digital appliances and moreover there is a huge push to "connected services", meaning huge amount of real-time data and ML. I have seen slightly above average engineers landing senior architect roles there just by being close to Big Data/ML, in Germany of course.

Hint: do Big Data & ML and let BMW, Audi and M-B fight each other to get you. 140k/year base. Externally BMW will tell you that not even managers have 80k but that's just public BS. They are pretty much in a war for talent.

This is an assumption from what would be logical or real life hiring experience? I would agree with the logical foundation, but none of the big data & ml people I know work at a car company.

As I said I only remember Zalando being active on the hiring front, and they don't do cars (yet).

Magic word is "connected services" if you want to earn big bucks in automotive working on ML/Big Data. It's a real life experience, basically in the past year all big German car manufacturers are hiring like crazy in these fields.

Maybe in the US. In germany that's a senior manager salary. Independent of how good you are as a SW developer (or data scientist, ...) you will always get a normal engineer ("Sachbearbeiter") salary, which is pretty much regulated through IG Metall. And that maxes out at about 100k€ (which you will have more chances to get when you are decades of years in the company than when you are new but have a great knowledge). Source: Have worked long enough for one of those companies. And always wished salaries would have been more skill/talent based.

C'mon, I would appreciate comments or discussions, ideally about real life (personal) experiences instead of downvotes. What I tried to give here was also only my personal experience (and what I know from lots of friends also working in the industry).

I think the trick was to be hired outside unionized jobs - those had some cut off (I don't remember exactly, like 130k-140k/year), basically like the whole higher management is.

I am sort of a Tesla fanboy but you're clearly living in the bubble. I am rooting for Tesla because I like electric driving, but the hype is far removed from reality.

The car industry is not sitting still, like Nokia. They are gradually preparing for the EV revolution. Just like Tesla is preparing for mass production.

> They also have the nerve to attack them in their own backyard where they can take advantage of German suppliers etc. What will be next? A Gigafactory in Europe?

Maybe. They allready have a factory next door from Germany, in The Netherlands, just like the German manufaturers have factories in the US.

Tesla is just going after the talent they couldn't find in the US. Nothing wrong with that. If BMW acquired a manufacturing specialist, noone would notice. But for Tesla it's still special.

> Both are still concept cars but they represent what they expect their EVs should look like.

No, they are concept cars. Concept cars have always looked a little ridiculous. Yes, the production i3 looks quite ridiculous in my opinion, but BMW never meant to sell them in any meaningful quantities. It's an experiment that sells better than expected.

BMW have also announced fully electric mini's and X3's. They will be a little later to the game when compared to Tesla. But this is historically not a winner takes all market.

> And the Tesla cars will have been trained with tens of billions of miles of self driving by then.

We all don't know how this market is going to develop (legally and technically) and which companies will be cooperating / sharing data. There are still a lot of ways to catch up. Maybe new technology comes along that will slash the amount of required training data, obliterating Tesla's advantage. We don't know.

> How are the Germans going to catch up?

They have the knowledge and infrastructure to scale up manufacturing across a broad line of models. They also have loyal customers who trust their brands. In a lot of markets, VW's cars were still selling even during / after the software debacle.

Nokia wasn't sitting still either, they just refused to be yet another brand repackaging a third party OS. In that sense, there is actually quite a lot of similarity: where Nokia was reluctant to repackage Android, car manufacturers are reluctant to give up their engines as the central value-adding component. An EV drivetrain is trivial except for the battery and the charging infrastructure, access to which is implicitly sold with each Tesla. Both of them are about as alien to a company that is good at making engines as becoming a Google, Amazon or Facebook would be.

Tesla needs to push for EV only, they need to disrupt, otherwise nobody would even take notice. Keep in mind that they still have to prove real profitability.

Meanwhile the german built very economic high tech cars, ever sat in a new Audi with their Virtual Cockpit ? Teslas interiors with the monstrous LCD look and feel like toys in contrast, it's not even close.

Modern diesel and petrol engines are super efficient and quiet, the infrastructure is everywhere, there is just no case for an EV only reality right now, it does not exist. Yet, they are working on EVs, trying different things and you can bet they will be ready when they have to.

I love Tesla and Musks Masterplan, but i also realise that he is a marketing and PR genius and it remains to be seen where Teslas will end up in the next 10 years. Realistically you should worry about Teslas future in the next 10 years as opposed to VW/Merc/Bmw.

A combustion engine is not quiet when compared to EV. Besides, the Volkswagen scandal has erased a lot of goodwill and eroded trust in Diesel technology.

I disagree, what they've done is externalized many of the risks (battery fires, unforeseen supplier bottlenecks, etc) and maintained focus on building cars that people want right now. They haven't been able to keep Tesla from entering the market and becoming a competitor. Perhaps the next disruptive innovation in transportation will prove to actually be disruptive but so far EVs haven't. Most people don't up and buy the newest car as soon as it comes out, so 3 to 4 years might not be as damaging as all the risks could have been.

The issue is going to be what they do over the next 3 to 4 years. It will be extremely difficult for a major automaker to make a major push towards electric vehicles right now. It isn't so much technical limitations as it is internal business problems.

They would have to expend billions building out a competitive charging infrastructure and building a marketing machine that would advocate for "the car of the future". That car would be a minority of their sales and yet the marketing message would immediately make their other cars seem obsolete.

Basically, noone can take the market seriously until very late in the game (maybe 5 - 10 years from now). I agree with your point that this may not hurt them that much in the long run, though.

They would have to expend billions building out a competitive charging infrastructure

Love the way my car is tied to refills only from the car manufacturer's brand of gas station because it's the only one with the right shaped nozzles.

:rolleyes: for an annoying future.

Tesla uses the standard Type2 plug in Europe. You can also charge any Type2 equipped car with the Tesla home charger (EU model). Most Tesla owners I know have the CHAdeMO adapter as well, so can pretty much charge from every fast charger available.

Well, at least internal business problems should be considered "ruled out" by now at Volkswagen...

I fully agree on the difficulty and importance of infrastructure, this is something where it would be really difficult to match Tesla, at the volume of a mainstream brand. When Tesla says that their cars are sold at a profit, the wording seems to be very carefully chosen to avoid admitting that the package of car plus charging network access is not.

I don't know (m)any company as innovative and disruptive as Tesla. Apple, maybe.

And if anything, Tesla is internalizing risks with the strategy of vertical integration.

Do more Teslas catch fire than ordinary cars? I doubt it.

Tesla has some 400,000 buyers literally paying $1,000 for the honour of getting in line for years to pay Tesla another $35,000 for a model 3. Which other automaker has customers that passionate? Sure, Apple had a few thousand waiting for days in front of their stores before every iPhone. But that was college kids. But show me an automaker that can excite people as much as Tesla.

I hope that there will serious competition for Tesla, but I think VW and Mercedes are not the ones.

> Tesla has some 400,000 buyers literally paying $1,000 for the honour of getting in line for years to pay Tesla another $35,000 for a model 3. Which other automaker has customers that passionate?

Lada.

Back in the Soviet Union, this is how every car was bought. Except the wait would sometimes be decades.

The major manufacturers have a huge amount of engineering talent and resources, they have plenty of the `rockstars`, as you call them.

This is about automation of production, and you can be sure that the manufacturers with their highly optimized supply chains and production lines have done a lot to make them very efficient.

Going as automatic as possible is often not the cheapest solution, and not the best decision with regards to public relations, lobbying power, etc. And probably not where we want to go. People need jobs after all...

Of course, big corps are also cautious and slower to move.

The reason why they haven't aggressively tackled EVs is because the market is not there. It's tiny. (for now)

Almost everyone is working on EVs and building up know how, but why would they go into it aggressively? They do just fine with gas guzzlers.

There are also big challenges with scaling up to large numbers, as seen by Tesla's issues with available batteries.

I admire Tesla for pushing innovations and creating a market. But that's almost always the role of newcomers, not the big, entrenched players.

My biggest fear is that Tesla will get chewed up in pushing technology and innovating, to the point of going bankrupt. Then the old manufacturers will swoop in and take over. (and buy up the know how)

>I believe one of VW, Mercedes Benz and BMW will bankrupt in 5-10 years. None of them have taken EV serious yet and I fear it's soon too late.

None of them are taking it seriously, huh? You should try reading news other than this board, where everybody thinks that Tesla is dominating the entire industry, when in fact they have a tiny market share and competitors are coming on strong from all angles: Ford, GM, BMW, Apple, Google...companies that are printing billions in profits. But the German majors will be bankrupt in 5 years? Okay.

Why is it that the Tesla fans have to wish ill on the competition? It's better for all of us if everyone produces good EVs.

At least, you can see, that they are working on it. For example mercedes/daimler is working on energy storage near Dresden [1] for homes [2]. Mercedes is pushing this fab with €500mil [3]. Furthermore, there is another fab right next to it, which startet a few years earlier [4].

As for the bankruptcy speculation: they are too big to fail - whatever the consequences might be for the german taxpayer.

[1] http://www.accumotive.de/de/home-englisch.html [2] https://www.mercedes-benz.com/en/mercedes-benz-energy/ [3] http://www.heise.de/newsticker/meldung/Elektromobilitaet-Dai... (german) [4] https://www.li-tec.de/en

Might not a full-blown bankruptcy. Rather, a slow march into irrelevancy.

I don't expect BMW to die. They seem highly adaptable and build great cars with first class engineering, and have invested in building EVs as well.

> This is great news for people who like tech but must be worrying for the German automakers who have yet to come up with a trustworthy answer to Tesla.

Don't get me wrong, I love Tesla and really admire the amazing work they are doing. I would love a Tesla Model 3. Howerver, I'd rather have a Mercedes GLE Coupe [1]. There is really nothing like owning a luxury German automobile. Also, while I am sure Tesla is on their radar, their sales are still a fraction of sales of BMW, Mercedes, Porsche, Audi, etc.

[1] https://www.mbusa.com/mercedes/vehicles/class/class-GLE/body...

> I believe one of VW, Mercedes Benz and BMW will bankrupt in 5-10 years. None of them have taken EV serious yet and I fear it's soon too late.

"None of them have taken EV serious yet"? You must have not pay attention to the news for the past few years.

BMW is ALL IN on EV!!! [1][2]

[1] https://cleantechnica.com/2013/10/01/bmw-electrify-entire-li...

[2] http://evobsession.com/bmw-still-aiming-models-go-electric-n...

What will be next? A Gigafactory in Europe?

Yes: https://electrek.co/2016/11/08/tesla-location-gigafactory-2-...

> Tesla CEO Elon Musk and CTO JB Straubel are in Germany today to announce the acquisition of a German engineering group, Grohmann Engineering. Following the announcement, they held a press conference during which Musk emphasised that Tesla is planning “significant investments” in Germany and the conversation quickly moved to Tesla not only investing in engineering in Europe, but also in production.

Musk confirmed that Tesla plans to choose a location for ‘Gigafactory 2’ in Europe next year and he added that the factory will combine both the production of batteries and complete cars.

https://electrek.co/2016/11/08/tesla-location-gigafactory-2-...

"Greatest external challenge to the German auto industry"? Do you mean "electric auto industry"? Because that's a tiny fraction of the whole and the growing rates don't seem that exciting, despite subsidies and hype.

>I believe one of VW, Mercedes Benz and BMW will bankrupt in 5-10 years.

In 5-10 years EU won't even have comfortable infrastructure for EVs, so no, no, petrol car makers will be fine.

GM pretty much proved that the idea that big automakers will be left behind as very very wrong. the German manufacturers aren't going to fare badly. they just don't toot their own horn with undelivered products as much if at all.

the real truth is Tesla is the one who has to watch out, the large makers have the resources to do what they want and when they want too, again look at GM and how quickly the Bolt came to market and came to market done right.

    > concept cars[...]represent what they expect
    > their EVs should look like.

You're greater point about German automotive manufacturers is good, but I don't think it makes any sense to point to how ridiculous looking concept cars are as an argument.

Most auto companies have ridiculous looking concept cars, the silly designs almost never make it to production, or if they do are significantly amended.

To extend on your point: they have been presenting ridiculous concept cars for decades, if there is anything to read into the observation that the current crop of ridiculous concept cars tends to be electric it is that they are serious about phasing out their dependence on the business of building internal combustion engines.

Which will still hit them hard, because the value of wrapping a giant battery in a car is about as low as wrapping a combustion engine in a car. The difference is that they made the engines in-house, whereas the batteries will most likely be third party commodity parts. They tried setting up their own battery production lines, but utterly failed at making them at competitive prices.

I'd love to agree with you, but major European car manufacturers have excellent relationships with the EU and the national governments and they will lobby whatever is necessary to keep their industries running.

Even though there are initiatives to sell only electric cars in Germany by 2030, I doubt this is going to happen. The switch from ICE powered cars to electric ones is being observed with great uncertainty as the car industry keeps warning the public that the eventual switch is not going to come without losing jobs since it's apparently simpler to manufacture electric cars.

And the average German employee (Arbeitnehmer) who accidentally happens to work in the automobile sector will not be considering buying an electric car for the fear that it might cost him the employment.

German automakers actually worry about the trends in the US, the southeast Asia & China, and it's realistic to expect that their image/sale numbers is going to suffer if they don't offer viable electric cars and not unpractical and expensive concept cars.

At home, their power is unrivaled.

Do you have any evidence that buying an electric car is costing an automobile employee the employment? Provocatively: If I would buy an i3 while working at BMW I might lose my job?

Try different perspective: if in the next decade German automakers don't make an electric car(s) for the masses, while at the same time it becomes very convenient buying one, would the German employee who still works in the car industry (that, BTW has continued relying heavily on ICE cars) consider buying an electric car from Tesla or Nissan/Toyota that is clean, has great millage and costs a fraction to maintain?

this statement is wrong.

Nobody buys EVs because they are not an alternative yet. However this may change in 3-8 years. And then there will be german automakers with the best EVs in the world.

The i3 is a fantastic alternative for short to medium range already.

However the Model 3 will beat it on range. Most people think they need the range (even if they don't). Plus BMW doesn't have a Supercharger network.

That might change until the 3 is being delivered in Europe. BMW has a network called ChargeNow or something. However, it is not sufficiently large yet.

no. It's still too expensive.

Okay, I can see that. One could then argue that Tesla is too expensive as well. From that I'd say that high premium EVs are too expensive in general.

Not when you look at the used car market or lease options. Here's an article describing how you can get one for 130/month on lease: http://leasehackr.com/blog/2015/11/8/californians-lease-a-bm...

That's just not true, especially the part about warning the public and people fearing to lose jobs over buying electric cars. Sounds completely made up to me.

I think there is a misunderstanding here about the "lose their job" part. This is not about a factory floor worker getting fired for buying the wrong brand of car (they might even take public transport to work), it's about a general fear that if the car industry breaks down, everything breaks down. Imagine how people in silicon valley would feels if there was a risk of all forms of electronic communications getting phased out. They might be quite reluctant to adopt that newfangled form of messaging by avian carriers that some Hogwarts company is bringing to market.

Sources: https://www.washingtonpost.com/business/report-vw-sees-elect...

Speaking of the fears: http://www.spiegel.de/wirtschaft/soziales/studie-was-den-deu....

Maybe Germans are afraid of many things, but none of those listed things in the article have something to do the buying electric vehicles. Regarding "warning the public", from your statement I would have assumed a larger effort than simply mentioning a possible loss of jobs in production in an interview.

The report in the Post may appear soft, however, this is how German media treated the same report: http://www.focus.de/auto/elektroauto/auto-vw-personalchef-we...

The title translated: "The awful truth: Electric cars destroy jobs".

That's just clickbait, it's not something that the guy actually said.

Just two paragraphs in the article says that they expect at least every 4th car to be electric by 2025, and that this of course means different supply requirements which they have to start planning for now. That's just regular market forecast planning.

They will face tougher times if they have to rely on their home market. They are already operating on razor thin margins as it is.

Nokia, Ericsson, Siemens, Alcatel were large, and valued EU companies producing cell phones. Where was the EU when the iPhone happened? Luckily, EU stayed out of it.

> They will face tougher times if they have to rely on their home market.

They don't do that.

> They are already operating on razor thin margins as it is.

Porsche's profit margin is over 16%, BMW at 8.5%, Mercedes at 11.4%, Audi at 6.9%.

> I believe one of VW, Mercedes Benz and BMW will bankrupt in 5-10 years. None of them have taken EV serious yet

Notwithstanding the somewhat muddy relationship between car brands and their business entities (Wikipedia has a helpful reminder that Volkswagen Group owns Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Škoda, Volkswagen marques; motorcycles under the Ducati brand; and commercial vehicles under the marques MAN, Scania, Neoplan and Volkswagen Commercial Vehicles), in defense of VW, people are not currently choosing between a Volkswagen and a Model S/X.

You're right about BMW and Mercedes (with the caveat that their parent Daimler AG owns quite a few brands for various submarkets that are unlikely to stop selling all at the same time) competing in luxury space - Tesla vehicles with their (comparable) lack of maintenance and cost of fueling offers a very attractive deal to luxury sedan and luxury SUV submarkets. BMW, MB, Lexus, Inifiniti, Jaguar and Land Rover would be the main brands competing for that submarket.

Ordinary people want an EV that looks no more spacey than a combustion engine car, but comes with wireless upgrades, long range batteries, large trunk, fast acceleration, high safety rating etc.

That describes the Chevy Bolt.[1] It comes off the same production line as the Chevy Sonic and looks about the same. At one assembly station, either a gas engine or a battery pack and motor go in. Reports are that every fourth or fifth car off that line is a Bolt. GM has the option of adjusting that ratio based on sales. That one line can make 90,000 cars a year per shift. They're only running one shift right now. So Chevy has, running right now, the capacity to make as many Bolts as they can sell, and can adjust output as needed.

[1] http://www.autonews.com/article/20161105/OEM04/161109897/gm-...

And yet, no one stands in line to reserve a Chevy Bolt, or to buy one for that matter.

Eh. I was just talking to someone this weekend who was calling around trying to find a Bolt they could test drive but there're apparently in very tight supply. I think GM will do fine.

Even as a Tesla investor, I hope so. I don't care who wins, as long as EV uptake proceeds quickly. Otherwise, humanity is boned.

The thing is, this are big German Cooperations and they will be late to the Game for ~ 20 years. As is tradition.

German banks just launched their own PayPal with way, way more bureaucracy for their customers and way less features.

VW and Mercedes had electric car prototypes when I was a kid in the 90s but they never did anything with it.

We are seeing the Innovator's Dilemma playing out in real time for all to see. Interesting.

if they are really at risk of going out of business you have no idea how fast they will change. Major OEM's and oil companies just don't want to change now.

Tesla will do to the legacy auto companies what Apple did to flip-phone companies. But it's not because legacy auto companies are bad at design (which they are), it's because they all, without exception, suck at software.

Here's a reminder re: Toyota's coding practices: https://news.ycombinator.com/item?id=9440094

Not one of them will be able to touch where Tesla will be in a few years from a software perspective, and that's where all the differentiating value will be in the coming wave of new automotive technology.

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