Tesla's Asymmetric War Against the Auto Industry
thedrive.com
thedrive.com
Tesla is pretty much the first successful electric car brand in modern times, and there were many others that have failed. While they are here to stay, they aren't out of the woods yet. The Model 3 is pretty basic, and is selling for $35K at minimum. They didn't even put a speedometer on the driver side dashboard, it's just a touch screen in the middle that displays/controls pretty much everything. It's not bad by any means, but it's a far cry from the perfect affordable every man's car.
Meanwhile, Ford, GM, and VW also have very good self driving car systems in the pipeline. Pretty much every major car manufacturer is working on EV technology, and to claim the Chevy Bolt as a failure this year also does not somehow curse General Motors to some sort of permanent failure of an electric car manufacturer.
(2) AFAICT, the actual complaints are not what you state, but rather that Tesla won't be able to timely deliver on the flow of orders they are receiving before the cars become widely available, and that once the cars are in the hands of users, they will be disappointing, making further demand weak. These are not incompatible views.
No wireless. Less space than a nomad. Lame.
I'd argue Toyota's Prius Prime is a direct response to Tesla. They too have gone large 11.6" center touch screen, it has a HUD, it has a much higher speed in EV mode, better acceleration, it is a plug-in hybrid, and has a bunch of other high tech improvements.
So the car industry is definitely taking notice.
That's just matching feature-for-feature which is exactly what the article is arguing existing players are doing and won't keep up with Tesla.
It's a car. Nobody updates them. Certainly nobody drives to the dealership to get updates. Nobody outside of tech circles even know what that means.
> Can you buy it outside of the dealer?
So Tesla is going to win because they can do something their competition is legally prohibited from doing? If it actually started to hurt existing automakers you would see those regulations disappear faster than you can say, 'protecting the American auto industry'.
I'd like to introduce you to a giant lobbying organization called the NADA...
[Edit]
To flip that on you, the NADA has enacted laws that legally prevent Tesla from selling cars in certain states. But you know, the free market will sort all that out.
Exactly. You don't think people will get jealous when their friends and neighbors rave about how their Tesla just got this great new feature that installed itself overnight for free?
This is exactly what the author was talking about: automakers are still fighting the last war and trying to match feature bullet points. Tesla has changed the game.
> If it actually started to hurt existing automakers
Automakers are already aware of how much everyone hates buying a car because of the Stealership Experience (TM). This is just another way Tesla has changed the game and for structural reasons their competitors won't be able to catch up.
It has many parallels to cell phones and Apple with the iPhone: for years the old giants (Nokia, RIM, Sony-Ericsson) floundered without a competitive response. There were deep structural problems in the way the manufacturer-carrier relationship was setup that prevented them from responding. They also lacked the ability and will to develop a platform ecosystem - a feat only a few companies have ever really accomplished and almost all of them are on the US West Coast.
There is another parallel: for the first few years their profits and stock kept rising. In 2008 RIM had no idea they were about to be evicerated - they posted record profits! Ask them how well things turned out here in 2017.
That type of stuff is why you'll see Tesla succeed.
It might be basic - but that's what they said about Japanese cars in the 1970s, about anything in the classic Clayton Christensen sense of a disruptive product. It might be expensive - but demand overwhelms supply.
It's a war - the others just don't realise they are both in a war and have largely lost already.
and I am delighted that Tesla will win - the climate crisis we are in and entering into is terrifying enough without the prospect of pumping even more CO2e into the atmosphere.
Sure, others will make electric vehicles (at least I hope they will), but it will probably be smaller, more focused companies. Companies such as Pagani or Elio Motors will have a much easier time making the switch. Again, it's not about replacing the ICE with an electric motor, it's a whole mindset.
Someone else in this thread mentioned cell phones before the iPhone as a good analogy and I agree. Look at where RIM and Nokia are compared to where there were in the early 2000's. They simply could not adapt to the new way of thinking about a cell phone. GM, Honda, Ford, Porsche, they are the RIM and Nokia of the car world; dead but they don't know it yet.
Putting most of the current auto industry out of business by being way more awesome is "good" in the short term, but then comes the monopoly, which is never good for the customer.
And to the cell phone company argument, Look at LG, Samsung, and Motorola, all phone manufacturers that have been successful pre and post smartphone era.
They did a pseudo-release to employees only, as the article mentioned, that never even gave the final specs out to customers with existing orders. Not a single order has been delivered to a real customer nor have they even accepted orders yet. Sure reservations can continue to climb but we're still waiting around for an actual delivered car. If you are adding more orders in a week than you expect to produce in a week at the end of next year, those reservations are pointless.
Reading through Tesla forums, you'll quickly find out that Tesla has a service problem. A lack of centers, parts and awfully slow turnaround times. It doesn't appear that they really figured this one out yet. Sure they may be doubling stores, but they will be more than doubling cars in that same period. How will they manage all their new cars, with new customers who aren't as welcoming as the early S/X owners?
I feel like I just sound like one of the doubters mentioned in the article now, just slightly longer term. Oh well, I guess we'll see if Tesla can actually manage it soon.
Per Musk's tweets this week, they're going to deliver 100 in August, and 1,500 in September, and they're aiming for a monthly rate of 20,000 by December. If you give them the benefit of the doubt and say they'll ship 10,000 in October and 15,000 in November, you're only looking at ~45,000 in total this year. The plant capacity is allegedly 35,000/month, so it'll take several years to work through their backlog.
https://www.recode.net/2017/7/28/16053662/how-to-watch-live-...
Around the 3:42 time mark, they seem to hand it over to the first 30, aside from the 20 for the internal testing.
Unsurprising since there really isn't any way for people to work on the car themselves or have an independent mechanic do it.
I suspect that the Model 3 is going to bring that to a head. I predict a lawsuit in Massachusetts.
It was a very "soft launch" though, that's true.
Musk's masterplan "Enable your car to make money for you when you aren't using it" seems like a feint, considering that individual car ownership might go the way of the dodo, outside the luxury segment.
Then again, if residential solar and utility installations can coexist so maybe can different autonomous car utilization models.
* Reliable transportation that is there for them instantly 24/7. A fleet service can not possibly offer this, since they would have so much capacity in reserve for peak usage that they would replicate the whole "cars are only used 4% of the time" inefficiency from the eradication of which they are supposedly going to get their price advantage.
* A status symbol to both feel validated and to "keep up with the Joneses".
* Not share their vehicle with unknown other - possibly "smelly" or "dirty" - people.
* Be able to modify their car as part of expressing themselves.
* The option of driving their car hard on a winding road or taking it to autocross.
Not everyone will care about everything to the same degree an there will be people who will be willing to compromise, if the price is good enough. But you will not see the majority of people stop at least desiring to own a car. I could see the mass market, i.e. the "appliance cars" that are only used to get from A to B, errode away and be replaced by some form of fleet model (ride hailing, leasing, whatever...), while the premium, utility vehicle and sportscar markets are unlikely be threatened.
That's at least one sedan that could be replaced with a ridesharing or 1/2-seater commuter vehicle (based on preference and how shared the route is) and freed up once they're at work. The one that needs to pick up kids can call one a N minutes in advance when they leave work.
Also consider that kids may need to be picked up less often as they grow up and might even be allowed to call their own vehicles as needed, thus freeing up the parents and the need for a sedan. So as the time-window becomes shorter where a family vehicle is needed to be available 24/7 it may become a lot cheaper not owning one.
Autonomous vehicles might also have an indirect impact on shopping behavior if delivery to the home will become cheaper, again reducing the need for large vehicles to transport groceries and other purchases.
There is a lot of optimization potential. But I'll grant that this might take more time to percolate through society longer than tesla can ride on debt, so in the near term they certainly will have to keep delivering owned vehicles.
What I was really aiming for is that the timeframe for tesla to become a global player holding a large fraction of the market share may also be the timeframe for autonomous vehicles to transform the entire transportation sector.
Just like all technology: wait for the independent tests and reviews before making judgements.
I assume this does not include any of the "reviews" thus far, which come across more as PR than reviews of a car people will buy?
Service is definitely a big problem they need to solve. Appointments for non-urgent issues are several weeks out at my local service center. I'm hopeful that they'll solve it, but it's going to take a lot of work. Drowning because you're inundated with customers is sort of a good problem to have, but it's still a problem.
And even if the first 30 truly weren't real customers, whatever that means, what is the point of that assertion from the OP? Is that supposed to imply that no Model 3's will ever be delivered? Musk said they're starting the ramp now. Does OP think he's just straight-up lying? What does the fact that deliveries are just starting have to do with anything at all? They're exactly on schedule.
Getting 30 cars out at the end of July wasn't a last-ditch attempt to make a deadline (the way the Model X seemed to be), it's actually getting things moving a little early.
How do I know this? Because Musk has too perfect of a record on taking care of every important detail in his projects. He didn't develop the world's most advanced space program, in a decade, from scratch, by accident.
He didn't create a car company and scale it to 100k cars annually, all to the tune of spectacular reviews and overwhelmingly positive customer reception, in a decade, from scratch, by accident.
And I really think people undervalue the fact that he did these two things simultaneously, as though it were an unimportant detail. It's perhaps the most important detail. It drives home the sheer quantity of problems he can take on all at once without dropping any balls.
He's not about to forget about reliability for the Model 3, or fuck it up, and throw all his efforts to waste. The idea of it just doesn't make any god damn sense when held up against his record. It's total nonsense and I just don't buy it.
At the same time, I think what happened with the X is actually promising for the 3. Musk has said that they went overboard with the X, and it was a lesson learned for the future.
They will fix the problems, and investors will understand.
This is simultaneously hilarious and absurd. It's as if we're back in 2010/2011 again and Tesla has yet to ship the Model S; except that's not the reality, the Model S succeeded and here we are anyway with some people attempting to pretend the Model 3 might just be quasi-vaporware and that there will be very little buyer interest and that Tesla can't mass produce electric vehicles (which they already do).
[1] http://www.motortrend.com/cars/tesla/model-3/2018/exclusive-...
[2] https://www.bloomberg.com/news/articles/2017-07-31/driving-t...
As the author states, the auto industry is acting like the allies in the early parts of the second world war. We all know how that ended.
We haven't gotten to the beginning of the end for this "war", in fact I don't think we've gotten to the end of the beginning. We're witnessing opening feints in the battle for supremacy in a nexus of advanced automation, sharing economy, and high availability networks.
Musk is the first one to couch the automotive industry in these terms. He won't get it perfectly, no one will, but the others will catch up. This is going to be a very interesting space for the next few decades.
Oh that premise again. I remember that exact same line being used repeatedly on HN against the model S.
[1] http://www.reuters.com/article/chrsyelr-ceo-evs-idUSL1N0O71M...
[2] https://www.ispot.tv/ad/AWs5/2016-dodge-charger-when-it-rain...
[3] http://futurefuelstrategies.com/2017/07/20/ev-sales-projecti...
[4] http://www.telegraph.co.uk/business/2016/06/17/volkswagen-be...
[5] https://electrek.co/2017/06/26/porsche-electric-vehicles-mis...
[0] https://www.washingtonpost.com/business/economy/americas-bes...
Wanna make your shitty Honda Civic sound fast? Just put a big bore exhaust on it.
It's just that they've decided to be considerate (and probably cheaper) and use speakers in the car.
I'd go one step further WRT trends in the next 30 years. Sales won't matter much and car ownership is going to nosedive. Self-driving cars make too much sense as shared resources and are wasteful to own individually. Electric vehicles, absent the expense of an actual driver, are just way too inexpensive. Internal combustion engines, by comparison, have a lot higher TCO on a per-mile basis. We're seeing the nascent stages of the AWSification of automobiles. Today's cost considerations for automobiles are currently MSRP/monthly payment, $/gal gas, $/mo insurance and $/service. In the future, only $/mi will matter and Tesla/Google are best equipped to comfortably break $0.10/mi/passenger.
Tesla is building towards a future where dealers, customer preference and the entire sales process is largely obsolete. Traditional car companies have a lot invested in these areas. They have diverse lineups of vehicles (economy, sedan, crossovers, SUVs, etc) targeting all consumer preferences. Their chief advantages are in matching consumer desire for vehicle type, manufacturing that diverse lineup of vehicles, and distributing them to consumers.
Tesla is building towards a future where none of that matters. Where no matter whether I want to go across town or the entire state, I pull out my phone and hire a car. The color and style of the car don't matter. The range and charging time of the car don't matter...there will be intermediate charging locations along the way where a fully-charged car is waiting to resume the journey (think modern day post horses.)
And his vehicles just drive off the assembly line and into service with no intermediate sales process. Just running some SWAG numbers, if he can get to a $25k/vehicle with a useful life of around 5 years and around 400k miles @ $0.025/mi in electricity costs and those miles average half-full occupancy at $0.10/mi, each car will return around $45k in profit over those 5 years, or roughly 23% annual rate of return. For as many vehicles as he can churn out. That's a lot of money, especially considering many of those numbers are really conservative. As a consumer, run your own numbers on a $/mi basis with amortized purchase price/lease cost, gas, insurance and service factored in. It'll be much higher than $0.10/mi, so Tesla will probably have room to charge even more.
And I believe Musk's vision goes beyond that too...with his Boring Company, he'll be building congestion-free conduits full of nothing but self-driving vehicles to all but guarantee travel times. If you think about our road networks like our internet networks, he'd be building an Akamai- or Google-like CDN where only the last-mile traverses the public network and the long haul is private.
If you're looking for a reason to be long on Tesla despite all the money they're burning now, this vision is it. I believe that traditional car companies are myopically focused on building the kinds of cars that tomorrow's consumers will want to buy while Musk is focused on getting tomorrows customers to where they want to go. One of these visions is going to be very wrong and Tesla's makes more sense to me.
That said, the fundamental message is a good one, which is "Don't look at what a mature market does, look at what it could be." My first experience with this was the iPhone introduction by Apple. Like others, I scoffed at the "Jesus phone" where Apple PR claimed to have invented phones. And I thought, really just a glittery phone that you can run some games on or listen to your music?
What I completely missed was that Steve Jobs didn't see it as a phone so much as an entirely new nexus of interaction in our lives. Where before that might have been the television set, this was changing the rules at a very fundamental level about how people would think about a phone going forward. I could not see that at the time. Looking back I can see it, but at the time I could not.
When the first Tesla Roadsters started showing up at Google[1] I started looking at what Elon was trying to achieve and I got the same feeling of "really? this is just a car with batteries and a Lotus body, sort of the rich person's version of the Bradley GT[2]" But as I looked at what he was trying to achieve I recognized that he, like Steve Jobs, was thinking about cars in a way that wasn't even in the same ballpark as I was.
Knowing that, and knowing people who don't understand things bet against them, made it pretty straight forward to arbitrage that disconnect into money.
[1] I have a photo of four parked in a row in the Google colors and tagged, "yes you are working among the crazy wealthy types."
An electric Honda is just a Honda without gas. I'm sure I'd be a great car.
But you still have to go through the dealer system to buy it. And it won't get software updates without dealer involvement (so basically never outside safety recalls).
When I read this article the author disclosed that they don't own any Tesla stock and so in that spirit when I commented I disclosed that I have made money off options on Tesla stock.
That said, this comment was also fairly subjective, the comment on batteries more quantitative. I've read the press on how much capacity the Gigafactory has and really do wonder how much of its output constitutes the 'world' output.
For every person nice enough to declare their position there are 100's that won't.
ChuckMcM's comment was the top in this thread when I commented on it, and so was his comment in the Li-ion battery thread for a while. Then simonsarris is at the top of both of these threads:
https://news.ycombinator.com/item?id=14919074
https://news.ycombinator.com/item?id=14914310
At least those were declared but really Hacker News can be better than that. I'm sure the bitcoin threads are even worse with conflicts of interest, but if I saw someone doing what ChuckMcM did in those threads I'd call it out there as well.
As far as I'm concerned you didn't call anything out, merely pointed out that some forum commenters may have positions in the companies they talk about, which as far as I'm concerned is their good right and which they do not have to disclose. It's not as if they are in the employ of the companies and regardless, Chuck volunteered that information.
See also: every other thread about listed companies.
If HN required disclosure of positions in companies being discussed I'm sure they would add it to the rules of conduct. I see no such requirement. And any disclosure is voluntary, gracious and yet could still not be true, so you still can't base any decisions on it.
I don't.
>merely pointed out that some forum commenters may have positions in the companies they talk about, which as far as I'm concerned is their good right and which they do not have to disclose.
Agreed and agreed.
>If HN required disclosure of positions in companies being discussed I'm sure they would add it to the rules of conduct. I see no such requirement.
I never said HN required it. Our difference of opinion is in the difference between is and ought. Posters don't have to disclose but they ought to, why else would Chuck have done it in this thread?
Because he's a decent human being. But that doesn't mean that people that do not disclose their positions are not decent human beings. And that's where we really differ, Chuck went over and beyond the call of duty here, it would be a mistake to assume that others in the same position would do the same because you feel they should. They don't and they probably won't.
Holding HN to some kind of imaginary standard when it comes to discussing public companies is both unproductive and likely will not illuminate but will merely give the illusion that if someone does not disclose their position that they don't have any. After all, who will verify what anybody writes?
full disclosure: I hold about 2 billion worth of Tesla stock...
I don't assume that.
>people that do not disclose their positions are not decent human beings.
Decent human beings is a bit broad, but I do think they're engaging in an unethical action, yes.
>Holding HN to some kind of imaginary standard when it comes to discussing public companies is both unproductive and likely will not illuminate but will merely give the illusion that if someone does not disclose their position that they don't have any. After all, who will verify what anybody writes?
I don't expect to illuminate it and I don't think the community would fall for the illusion you think that it would any more than it already does. Perhaps the root disagreement comes down to doing what you can when you can even if the effect is only a small one, which is kind of what I'm doing here.
>full disclosure: I hold about 2 billion worth of Tesla stock...
I don't know whether you do or not (EDIT: do or do not disclose that is, for clarification) but I think if you post about Tesla without disclosing that holding, that's unethical. Whether it's against the rules or not.
Why do you think that?
Disclosing whether or not someone holds a position in a stock they are discussing is unethical in a professional setting, but this is not a professional setting.
Disclosure is a courtesy, not an obligation, and might not be truthful whether positive or negative and therefore should not be assigned any value.
>Disclosing whether or not someone holds a position in a stock they are discussing is unethical in a professional setting, but this is not a professional setting.
Maybe you could tell me why you believe it's unethical in a professional setting and what the difference is in a more personal setting like this forum which makes it not unethical anymore.
Anyway, I don't think I'll be able to change your mind on this no matter how much time I put in so I'll just wish you good luck with your crusade.
Funny I feel the same way. Maybe we'll just be able to go a few days without a Tesla thread.
Were we to decide tomorrow that we did not want 7 year olds to be forced to mine, Tesla as a company would disappear!
Tesla as a company does not exist without government intervention or exploitation.
The US gov definitely plays favorites anyways (including with existing automakers) so if you're going to do business, you might as well try to build political favor for your industry as a cost of doing business.
Labor conditions in the war torn Congo in which literal slaves mine Cobalt is a little different than adults working in awful conditions.
Surely this thread will come to possess the very army of Tesla fans that the writer talks about, which will serve his very point: when was the last time any car company got the public at large to be downright elated about their product?
$5 per day not hour :)
Terrible historical references. France did not lose in Algeria, it was winning militarily with no contest at all, but lost the political side and mindshare in the international community. Nothing to do with the situation in Indochina at all.
In the end, IMHO, there isn't going to be a winner- (according to the articles hope - tesla) -take-all. It's going to be a middle ground.
You're not going to get your openmoko/n900. You're going to get your Android.
http://www.goodcarbadcar.net/2011/01/chevrolet-volt-sales-fi...
I love the acceleration from my Model S.
Looks like it's down to 7.1.
The 0-40 time is in Sport mode is very good.
Whole point for me was being able to go on a long trip and be able to refuel in under 5 minutes though. Knowing it's an all-purpose vehicle is what makes it a winner for me.
The other car makers are led by elder statesperson types. They're all slow moving, they've come up through the old car industry, and they have no vision for the future that looks different from the past. Tesla is the only major car company on earth with its founder at the helm.
- Offer "self-driving OS" for cars, via Waymo
- Introduce "open-battery" standards for various manufacturers. Then also offer supercharger stations for batteries confirming to those standards. Other players can join the pool of superchargers by adhering to the same standard.
Basically, offer "Android for cars" to counter "iPhone of cars" (which is Tesla).
Why only car companies? Any party with enough cash is a potential buyer. Google, Apple, Facebook, any large VC consortium, super rich individuals, ...
you mean like getting sycophants from thedrive.com to write articles that far longer than I'm willing to read to get to the point.
I am so sick of the cult of Elon.
Lets be realistic, negative feelings about Musk aren't going to gain me much credibility on HN no matter where I post it from.
I failed to see any arguments.