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Comment by save_ferris | Hacker News Reader

He might be more concerned about the sales prospects instead of operational expenses. Automakers are getting hit really hard by this pandemic, and they need a healthy economy to sell cars.

Many economic forecasts are saying that a full recovery is 2-4 years away, although there are many different opinions.

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Tesla relies on high volume to make money; the other automakers are pricing EVs based more on margin. An economic slow down hurts volume much more than it hurts margins.

Tesla also relies heavily on first-mover advantage to grow. With the virus stalling everything, all the more cash rich automakers get time to catch up on R&D, while Tesla is stalled from being unable to physically expand. Tesla also becomes more cash starved from falling stock prices than other automakers.

Then there's the drop in gasoline prices which naturally makes Tesla much less cost competitive vs ICE vehicles in its major markets (US/China). Added bonus of traditional automakers benefiting from low gasoline prices because historically consumers buy higher margin vehicles (truck/SUVs) when gas prices are low.

So it's multiple various disadvantages hitting Tesla all at once that's likely to continue for a couple of years.

Isn't China restricting the sale of new gasoline cars like what EU is doing? I agree US market could be hit badly as CA is still under lockdown and tech companies are laying off.

I don’t really think that any other automaker has a 25.5% margin on their mass produced electric vehicles.

Maybe the Porsche Taycan. The Porsche 911 was the most profitable car in 2019 with a 47% margin:

https://europe.autonews.com/automakers/porsche-911-most-prof...

Porsche is Volkswagen's most profitable brand.

>Porsche is Volkswagen's most profitable brand.

Which is pretty ironic, given the whole mess involved with Porsche trying to buy Volkswagen a few years ago.

Tesla relies on high margins, other automakers rely on volume.

Ford is in a much worse position than Tesla.

Ford for their current ICE lineup does rely heavily on volume and does appear to be in a hard spot.

Ford doesn't sell EVs yet. They have the Mach-E starting at $44k for 230mi launching in 2021. That does seem to have higher margins than a $40k Model 3.

> Tesla relies on high volume to make money; the other automakers are pricing EVs based more on margin.

This is just wrong. Tesla relies on margin. The other automakers don't make money with their EVs for the most part. They make money with their ICE vehicles.

> all the more cash rich automakers get time to catch up on R&D

Actually all the other automakers are stripping their R&D programs and dropping new EV vehicles to survive.

Tesla was stripping its R&D even before this pandemic though. They've cut R&D YoY from 2018 to 2019 which is basically unthinkable as a growth company.

I think R&D budget are a bit BS. The old companies still spend huge amounts on improving their ICE technology. Tesla is doing innovative stuff in production vehicles. For every other company half the tech in a Cybertruck would be R&D for most companies. Tesla just sees it as product development.

Can you name another growth company slashing its R&D budget?

Plus, the price of gas has gone down significantly, hurting one of the benefits of electric cars.

I don't believe the Tesla crowd bought theirs to save on gas anyway, so not sure if this is true.

Maybe not, but if gas had continued to go up in 2020 and 2021, you'd have to think that would help convince move people to shift over to electric.

I've somehow never believed that theory. There are tens of thousands who buy gas guzzlers, at whatever price of gas was/is. If only people were that rational, they'd stop buying them to save our planet.

You can tax cigarettes all you want, people are still gonna smoke.

Sure tens of thousands buy gas guzzlers because they can afford it / don't care. But there are also tens of thousands more that don't because they can't afford it.

I've always felt like the base Model 3 and base BMW 3 series were very comparable. Add in a couple of thousand, and the 3 looks like a bargain.

That becomes a harder sell when the Model 3 is actually more expensive to operate, as it is in some places now.

Its not that they are buying to save money vs the economical choices, but it does make a difference relative to their comps (RWD & AWD sport sedans).

Do customers really believe the current exceptionally low oil prices are going to be a permanent feature?

Last time the oil price went down this aggressively coincided with the massive uptick in people buying SUVs

Oil futures are under $40 all the way through the end of 2022: https://www.marketwatch.com/investing/future/clz22

I fully accept I may be wildly out of touch with the common man, but I tend to be thinking of 8-10 years product life when I'm considering the TCO of a new vehicle.

Oil futures don’t go that far out unfortunately

I personally don't, and I suspect a lot of others do not either.

Personally, I'd take an EV over even a high performance ICE car in terms of everyday driving fun. I used to drive a hardtop 335, and really loved that thing, but there's no throttle delay on the Model 3, let alone turbo lag.

It's always going to be a factor. Total cost of ownership is one of the biggest factors in car sales.

This is mostly the US because the externalities aren't taxed. In EU the taxes on gas are much higher. With VAT and everything Sweden currently has $4.5 per gallon, down from $5.8 last autumn, this makes any electric car much more compelling.

Sweden also has numerous tax breaks for buying electric vehicles, and does not properly tax the externalities of producing electric cars (running/refueling EVs, however, has very minimal negative externalities)

True, haven't looked at the data in some time but the breakeven point in regards to LCA comes fairly early though when comparing against ICE cars.

It depends greatly on the ICE car and driving assumptions. For someone who generally only makes short trips, a plugin hybrid is going to be a more environmentally friendly choice long term, given the significant amount of emissions needed to create the batteries for large range BEVs.

The other problem is chargers.

Before COVID-19 you were buying an EV knowing that there was a roadmap of chargers being rolled out. Now I would be wondering (a) are new ones going to be deployed at all and (b) are existing ones going to be maintained.

Everything non-essential is going to be deprioritised over the coming years.

Couple with this the massive glut of used cars thats about to get worse, the fact that many cities are seriously considering long term conversion of roadways to be pedestrian only and all the oil field pickups that are about to get repo'd (pertaining to the cyber truck).

What I'd really like to know is what will happen to Tesla's vehicles if the company goes under? Like will they get bricked essentially? I sincerely doubt Tesla will go under like that but, I'm curious none the less.

I wonder if cities will also start designating streets (or as a softer approach, significant amounts of parking) as EV-only.

A city that wants to electrify the vehicles driving there could do that very easily by converting a certain percentage of parking spots to EV-only every year. This will roughly ensure (at least) the same percentage of cars in the city being EVs (since if there's more, using a non-EV becomes extremely unattractive as you can't find parking).

Maybe but I doubt it, I feel like it would be all or nothing in regards to vehicles but who knows, would probably vary a lot. My understanding of the motivation is that it is only partially due to pollution and more to do with livability, comfort, health and that sort of thing.

BYD did just get the largest electric bus order in history from LA https://t.co/YaWN2ZKtBs?amp=1 as part of a green new deal, so you may not be far off in regards to cities moving towards focusing on accommodating electric vehicles.

Gov should require source-code escrow for certain technology and products...

Oil prices don't help the EV argument. However the main issue is that they have to deal with their products being priced high compared to the rest of the industry at a time when wages are likely to fall.

The EV argument != the Tesla argument.

Hasn't the Tesla argument always been that EVs are going to take over the entire auto industry? I don't see any version of Tesla's success without EV success.

I'm honestly surprised that Elon hasn't made some sort of tweet intimating that "Bioweapon Defense Mode" on Teslas may filter out covid-19.

its not on 3 or Y

He basically voiced this on the conference call, talking about how the Model S has HEPA filters and should filter out all COVID-19. Which was probably one of the more sane things he said on that conference call.

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