Hertz orders 100k Teslas
bloomberg.com
bloomberg.com
A wedding that was 1 hour from an airport, ~100 miles RT.
A ski trip where I wanted to drive from Denver to my AirBnB near Winter Park Colorado, ~200 miles RT.
A hiking trip where I needed a second car for a point-to-point car shuttle (New Hampshire!), ~120 miles RT.
A bachelor party where I needed to drive from the airport to a trailhead then to an AirBnB then back to airport, ~150 miles RT.
A national park trip to the Grand Canyon, ~500 miles RT.
Each of those scenarios would have been 1 full charge of a Tesla round-trip, with the exception of the Grand Canyon. Maybe not the ski trip since it's mountainous and cold weather kills the battery so 200 miles might be a stretch, but I could have trickle-charged at my AirBnB. So basically I can see how many quick rental car needs are met by EVs, plus no dealing with filling with gas!
https://metro.co.uk/2021/09/29/more-petrol-fights-break-out-...
https://www.standard.co.uk/news/london/fights-petrol-station...
In the US, people constantly pull out a gun at fast food outlets because they've got the wrong type of cheese on their waffle, or because burger king don't take discover, or some nonsense.
https://www.msn.com/en-us/news/crime/waffle-house-employee-p...
So yes it's inevitable
I'll even pay a premium for a 100% guaranteed reserved charging spot at a hotel. This way I can just gun it and arrive at 1% charge, plug in, sleep, have breakfast and be on my way with a full battery again.
We had gov't grants available to build charging stations, and couldn't get them because of the power grid situation.
Charging overnight even at 2-3kW is plenty for most people, that's usually enough to get you a good 100-200km away from the hotel and to a fast charger (or your next destination).
That seems, well, stupid. Frankly, I'm not sure if most customers ever even see me in my rental car.
Sad but true in many parts of the world
People judge each other on what car they drive, regardless of how they got their hands on it.
Wonder how the pricing and will be affected by the juice left in when you return it. And how their scheduling manages it.
Also, will “FSD” be enabled or disabled? There’s an interesting liability chain.
The last three times I've rented a car it's been turned and burned and I've had to wait a few minutes for a clean/wash to be complete from the last renter.
Rental car depots have their own on site gas stations. Fuel on return is one of the highest profit margins rental companies have.
I know it sounds scary, but most of the fire stations, hospitals, business parks, and schools you drive past will have a few hundred gallons of diesel or LNG stored on site for backup generators. Your city or county public works, taxi yards, and larger post offices will have on site fueling. Large construction sites will usually have on site fuel, or a truck that comes every day or two.
Kind of like how the dealer networks, which SHOULD be a massive advantage for Ford/GM to place chargers (and shadow market cars) and build out a huge charging network... well, that's not happening because dealers hate EVs.
There are two issues at hand: accident liability and damage/theft.
For liability, it’s typical that states require rental companies to purchase stare minimum or sometimes a higher liability level than the state minimum as a base.
For damage/collision, there’s no requirement for anyone to hold coverage, so that’s on you. Many travel credit cards offer damage/collision insurance as a feature, and some individual car insurance plans extend coverage from your personal car insurance to rented cars, but don’t assume this.
You can generally rent a car if you don’t own a car and don’t own your own car insurance, and in most states you wouldn’t be obligated to purchase additional coverage from the car insurer.
A Tesla is no different than any other expensive car rental, the fact that it’s electric is irrelevant. It’s no different than renting an Audi Q7 from a rental car company.
But I now believe that they indeed are doing it and that we’re finally at the EV revolution.
I’m not an early adopter type and the Teslas don’t excite me at all, but I’m really delighted that the market is evolving. I’m delighted that I was wrong.
Of coarse there are other brands of smartphones, but not thing comes close to iPhone in terms of the brand, just like Tesla. There will always be metrics other brands can beat Tesla in, but the overall brand and product is unrivaled and will probably be so for the next 10 years. After that though, it's anyone's guess.
Most people cannot afford to drop 50k on a tesla.
Nissan Leaf $28,375
Mazda MX-30 $34,645
Hyundai Ioniq $34,650
https://www.cars.com/articles/here-are-the-11-cheapest-elect...
1. Nissan Leaf $28,375 - 150 Mile range for this price. (It is not advisable to drive this car long distances because the battery overheats and will reduce charging)
2. Mazda MX-30 $34,645 - ~100 mile range (ideal conditions)
3. Hyundai Ioniq $34,650 - 170 miles
Model 3 starts at 262 Miles and has the superchargers + most of the stuff Tesla is known for included (sentry mode, good UI software, games, etc). I don't know about you but it seems like a second gen car whereas the others are all on first gen.
All of the cars I listed are real street legal cars (no NEVs), available for purchase today (no concepts), that are plugin electrics (no hybrids) with a range in excess of 100 miles, with a price less than $40,000. These are viable inexpensive cars. That was the criteria. Arguing that these don't count because they're not comparable to one that costs 50% more, isn't fair.
The state with longest average commute distance is New Hampshire at 46 miles.[0] Even if that’s one way, that’s only 100 miles a day. Assuming you can only charge overnight, you’ll never use that extra range. You'll never even go below 50% if you can charge at work.
The software you’re citing for Tesla is gimmicks and cruel jokes. Why does someone need a game that only works when your car is parked and the screen faces the driver? When would someone use this? And even if you find the situation where you want to play a game in parked car, why would chose this rather than any of the games on your phone?
Tesla navigation last time I checked was Google Maps, but not Google turn-by-turn. That's odd. When I test drove a Model S, the salesman pitched some unknown streaming service as “like Pandora”. I’m sorry, but what? The car doesn’t even come with Android or Apple CarPlay.
I’ve used CarPlay, it’s heads and shoulders above any OEM infotainment system I’ve ever used. It’s so good, it’s a requirement for my next car. Assuming AndroidPlay (or whatever it's called) is just as good, why would anyone want anything else?
[0] Yes this is four years ago, and commutes have lengthened, but most articles I found expressed commute is minutes, not miles. Congestion and distance increase commute times. https://www.answerfinancial.com/insurance-center/which-state...
My argument is that the cars are priced the same as Tesla. You are paying less but getting a compromised car in many respects(range, charge time, reduced interior quality/size). You are basically buying Gen 1 tech at standard price.
>The software you’re citing for Tesla is gimmicks and cruel jokes.
I think we are not going to agree on this but these days they have an excellent UI experience. You haven't actually spent an extended amount of time in a modern Tesla have you? These other cars you cite have gimped infotainment compared to Tesla so they have to be augmented with Carplay. Some people would prefer to use their iPhone as it can be upgraded, fair enough. Tesla decided to go in another direction.
But Tesla also throws in nice to haves such as Sentry mode, games etc. These are non-existant on the other platforms even as an option. Why would you value something like Sentry mode at 0$? It is a value add for some even if you don't want to use it.
>The state with longest average commute distance is New Hampshire at 46 miles.[0] Even if that’s one way, that’s only 100 miles a day. Assuming you can only charge overnight, you’ll never use that extra range. You'll never even go below 50% if you can charge at work.
This is Gen 1 EV mindset. You are paying ~35K for a car that can't go long distances/cannot fast charge? The Mazda cannot even match the 2012 Nissan Leaf. I was researching the Mazda as a potential vehicle since I really like their cars but this is not something I could fathom paying for and not feel ripped off. It is not fast, not really luxurious, has short range. It has no redeeming qualities other than it is Mazda's first EV.
[1]:https://insideevs.com/news/452551/mazda-mx30-dc-charging-tes...
At that point you are not getting 35K worth of value out of these cars. A basic gas car is more competitive at this price range. The collection of people who would pay 35K for a 100-150 mile EV but not buy a gas car or pay more for a viable EV has got to be quite small. In fact I'd wager that the car shortage + Carpool lane access in some states + aggressive incentives is whats driving any sales of these cars. In the case of the Mazda they are only selling in CA from what I understand.
Tesla MSRP Price is $42k...
https://www.caranddriver.com/news/a35494747/2022-chevrolet-b...
https://www.consumerreports.org/car-safety/cadillac-super-cr...
They are probably a few other things, but this is the mystery of their valuation.
General Motors's old financial arm was GMAC, now Ally Bank. Under General Motors's ownership, they offered credit cards[+], mortgages, and were in the insurance market since 1939. This is not an innovation.
[+] This was the only credit card my parents had for over a decade.
So, if you want to compare GM and Tesla's market caps, you need to lump the appropriate fraction of GM's franchisees' market caps in with GM's in order to make them comparable.
As far as summing up dealerships, let's go!
Tesla has 438 stores worldwide. Toyota has 1500 dealerships in the United States alone. GM? 4500 in the United States.
Do you honestly think that if we summed up all the Toyota dealerships in the world, it would be worth $750 billion? I don't, but that's how much they'd have to be worth to give Toyota a market cap of 1 trillion dollars.
Or to flip it around, even if we spotted Tesla manufacturing 2x Toyota. (Toyota is the most valuable manufacturer by market cap at $240 billion.), that would mean those 438 stores have to be worth over a billion dollars EACH.
It's even worse for General Motors. Their market cap is only 84 billion. The entire worldwide network of dealerships would have to be 11x General Motors proper, or over $900 billion dollars.
Generally I'd expect service and repairs to be of the same order of magnitude as sales, because if you have to spend $5000 a year to service and repair a $20000 car, you'll probably junk it and buy a new car that breaks down less, while if it costs you $500 a year to keep it going you'll probably either keep it running or sell it as a used car. One revenue stream might be two or three times bigger than the other, of course, and the profit margins might differ, and the dealerships don't capture all the service and repair.
I'm not sure what the number of dealerships tells us about the relative earnings potential. B. Dalton had more dealerships than Amazon ten years ago. (Or do we count B. Dalton and Waldenbooks as "dealerships of Hachette and Penguin Random House"?)
We can probably do a reasonable Fermi estimate of total dealership profits, though; 1.3 million car salespeople in the US probably means about US$60 billion in car sales commissions per year, which is about US$250 billion in car sales per year and something like US$25 billion in dealership profits; at a reasonable P/E of 30 years, the capital stock of US auto dealers would be worth about US$750 billion in total. https://policyadvice.net/insurance/insights/us-auto-sales-st... says the number of new cars sold in the US is 17 million a year, which suggests that these figures are in the ballpark, since it would mean that the average car cost US$14700, which seems maybe a little low for the US but not absurd. However, used cars are an additional 40 million a year, so maybe US$1.5 trillion for the capital stock of US auto dealers. Adding in whatever they make on sales and service, say US$3 trillion.
The worldwide number is 74 million new cars per year, 4.4 times the US number, so if we just multiply the US number by 3 (probably the average car in the US costs more), we get US$6 trillion for the value of hypothetical worldwide car dealership capital stock.
So, yeah, it does seem plausible that all the Toyota dealerships in the world would be worth US$750 billion, with similar numbers for GM, Fiat, etc.
Another thing, though, is that Tesla's vertical integration goes both directions, and you're not counting companies like American Axle & Manufacturing, Mold Masters Co., Grand Traverse Plastics, and Bosch as part of GM's market cap either.
So, I think buying TSLA at a P/E of 161 years is a pretty daring bet, and there's a significant chance it won't pay off. But I don't think the comparison to other car companies makes it look nearly as crazy as you make it sound, even if TSLA doesn't end up running our power grid on its batteries.
Autonation is a publicly traded network of car dealerships. Market cap of $7.9bn for 545 locations. That's $14.5M per location.
Car companies already make huge money on service. Plus in sum, all dealerships combined make huge money on service.
Once Tesla has an large aging fleet they will make an absurd amount of money. Something people don't yet consider is that Tesla has been losing massive amounts money building out their global service network and because of having no fleet, making little money from it.
Tesla has industry leading margin now, while having negative margin on the highest high margin business for traditional companies.
It's not a problem for Tesla or Elon per-se, but we shouldn't assign intelligence to people basically voting for their favs with their wallets.
(Myself, if I had some funds that are not already earmarked for something more important, I'd dump some into TSLA just as an expression of support to Musk and electrification of transport. I'm sure many people did just that, with no expectations of return.)
They literally developed a completely new battery manufacturing factory and cathode plant from the ground up. Plus of course their own batteries with their own chemistries. No other car company comes even close to that.
They are vertically integrating to the point where they themselves are building their own battery manufacturing equipment.
They are even slowly getting into mining themselves. And of course solar, stationary storage and so on.
Hard to see what company is doing considerable more. Tesla is doing a pretty large amount of innovation.
[1] https://www.statista.com/statistics/566060/automotve-firms-b...
We will see if they sustain that, but it looks like that is their plan.
That risk is what made a lot of people rich of course, but investments in green energy companies in Denmark have seen a 15-35% increase in value, year by year, over the past decades without any real risk. It’s been safer than index funds here.
All energy companies have really, but you feel better when they are green.
Tesla may yet revolutionise batteries the same way the personal computer or the smartphone became something we all have, and thus be the best investment you could make right now, but it also might not.
The energy companies on the other hand aren’t going to stop selling a steady flow of energy to people. Why we let investors benefit from utilities is another discussion, but as long as we do, it’s going to be some of the safest investments you can get into.
[1] https://www.tesmanian.com/blogs/tesmanian-blog/teslas-market...
But my theory with petroleum is that it has so many HUGE economies of scale built into its production that a demand collapse will send it into a rapid tailspin.
A small version of this happened in the Dakotas when the Saudis started dumping oil to get it under a price, and the North Dakota oil industry collapsed. That was due to intentional oversupply, not necessarily due to collapsed demand.
But so much of the oil market is now pretty expensive extraction: tar sands, shale oil, fracking, deep offshore. The easy stuff is gone. That to me means that the industry rests on a certain price, and if it falls under that, the industry can't sustain it.
I think the big thing in this reverse economies of scale, where costs rise as the industry shrinks (and absorbs writeoffs) is that finance, already somewhat intimidated by the growing pressure to divest from fossil fuels, will rapidly abandon it once it becomes extremely risky due to collapsing demand and massive migrations of transportation modes to electric.
It's all vague decade-away prognostication, but you'll start hearing the violins playing for oil companies when some combination of this happens:
- charging infrastructure builds out (2 years to catch the current Tesla supercharger, probably another 5 years to get some semblance of every-50-miles availability)
- LFP chemistry hits a power density of somewhere around 200-250wh/kg (LFP is really cheap and has far less materials restrictions from cobalt) (probably in 1-2 years for mass production)
- various solid state technologies hit production (looks unlikely for 5 years)
- EV drivetrain cost (battery, motors, cooling, case, management systems, etc) drops to 2/3 of ICE (probably another 4 years)
- a carbon tax, a more substantial EV subsidy
The floor will rapidly fall.
I'm not saying Tesla isn't insanely valued. But the grim reaper is coming for all those oil companies.
I'm not sure what is the percentage of consumer sales for any if those companies mentioned, but I suspect that even if it was 0 it would not drastically affect anything but profits. Oil will be less profitable -- yes, but it will be widely used as long as energy required to mine it is less than what is produced. It is unfortunate, but these companies are on a very good long term business (hard to say really because I don't know what are the global untapped oil reserves).
Manufacturing components to produce renewables require a lot of fossil fuels as well. We are not yet at the point where we can create new renewables without using fossil fuels.
I'm not saying the floor will not fall, but I'm afraid that if the floor falls we are in quite big trouble, and it is not because if the EV market.
The Navy will lose a huge reason for its existence: securing the seas for supertankers. There are so many countries we won't care about anymore. Iran. Iraq. Venezuela. Nigeria. Really, by extension, Israel, Egypt, Jordan, etc. Then again they'll just keep building up the China boogeyman to keep their money, regardless of its validity.
As you pointed out, Russia will face an existential crisis, I think oil revenue basically keeps Putin afloat. A total collapse of Russia is pretty risky due to the nukes, but we'll see.
But this is lala-land thinking. As long as the United States remains on the UN Security Council (which is equivalent to saying as long as the UN continues to exist in any practical form), both Taiwan and Israel will remain our client states.
A lot of European/Asian countries would like to distance themselves from Israel but cannot due to US influence. Furthermore losing the US support loosens their investments into the country and siding with China or Russia would cut a lot of economic ties to the US for sure.
>But this is lala-land thinking. As long as the United States remains on the UN Security Council (which is equivalent to saying as long as the UN continues to exist in any practical form), both Taiwan and Israel will remain our client states.
Thats my point, if US leadership decides that Israel is no longer worth the liability, then that entails allowing the UN and its member states to start putting real pressure on Israel. Again, you might think this is lala-land but we are seeing small changes starting to happen as the internet has helped to expose Israel and act as a counterbalance to mainstream talking points.
With Millennials and Gen-Z starting to come into power we are seeing even more pushback. I don't realistically see meaningful reform until Boomers are pushed out. While all this is happening in the West, Israel has made a turn towards hard right wing and I feel this will be a strategic error long term as the pendulum is swinging back to hard left in the western countries.
Ukraine receives most of its nuclear services and nuclear fuel from Russia, but is reducing this dependence by buying fuel from Westinghouse in the USA.
Just do more of this. I doubt Russia will attack a US concession that's building a nuclear plant.
There are a couple other stand out problems I see with getting the industrial/manufacturing sector off fossil fuels. First, I don't think that we have the grid infrastructure to replace natural gas with electrification at the same time we do cars[1][2]. From what I understand its something of a problem already for electric car charging, and industrial use of gas for heat (and saying nothing of trying to replace the petrochemical industry, interesting read on all-electric ammonia production [4]) is pretty staggering as well; electric transmission is some substantial multiple less efficient then direct heating with Gas. I think this is kind of the opposite of electric cars which tend to be more efficient than ICE, but again I'm not an expert and am not at all sure that is true of cars, just my impression which seems reasonable intuitively, as turning fuel directly into heat has essentially 100% efficiency while turning fuel into motion can only be some fraction.
Second, super cheap electricity is extremely fungible, so it becomes a prime candidate for Jevon's Paradox[3]. I feel that there would have to be some "unfair" power rates for heating for electricity to supplant natural gas unless we implemented massive carbon taxes, in which case return to my first point about off-shoring.
I can see how it would theoretically make sense to put industry right next to large power generation sources, like dams, solar array/ battery installations, or nuclear power plants(lol), but a lot of these operations aren't exactly trivial to move, and our current climate of Environmental regulation makes moving these sorts of things that much more difficult. Also manufacturing requires a not insignificant amount of logistics/shipping so transplanting them to power generation sites has its own set of drawbacks.
All in all, I try to be a techno-optimist, but seriously worry that humanity's ad-hoc system of organization (that's rife with corruption) will be our downfall in this global climate crisis we've created. So far I can't see a way out of this without a breakthrough in power generation and a breakthrough in carbon capture or some other unforseen-by-me break through. Really I just don't see our current tech stack as being capable of getting us out of this mess. So here's hoping that high-temp super conductors bare fusion fruit, and this gallium catalyzed CO2 splitting is the real deal.
[1]https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...
[2]https://www.nytimes.com/2021/01/29/climate/gm-electric-cars-... (has additional good links as well)
[3]https://en.wikipedia.org/wiki/Jevons_paradox (fun fact, I've used duckduckgo for many years now, and this required the rare !g to find without knowing what the paradox was called off the top of my head. my query was: "the cheaper something gets the more it is used", top hit on big G, nowhere to be seen in the DDG results)
[4]https://www.cleantech.com/green-ammonia-potential-as-an-ener...
You would need to generate more electricity, although this could be mitigated through improved insulation and smart control of heating systems (for example turning off the heating for 30 minutes during spikes in usage, assuming the temperature is above a certain level).
[1] https://www.edfenergy.com/heating/advice/air-source-heat-pum...
>Lower output temperature than conventional boilers – you may need to update your insulation and invest in bigger radiators too
is a pretty big problem when you are trying to heat industrial quantities of things up to industrial process temps at industrial rates.
Once you factor in the fossil fuels used to extract fossil fuels it all topples pretty quickly.
The main source of trouble will be people ignoring the issue until it becomes urgent and not planning a smooth transition, global procrastination rather than the actual task itself.
Actually, I would love to see a the real "energy footprint" of a solar panel. Like, how much mining, transporting, manufacturing and installing the panels consumed energy, and how many days it takes for a panel to produce more energy than the entire operation used. If anyone has such a breakdown I would be really happy to see it. If the numbers are good, maybe the future is still bright.
In a sense, this would be much cheaper and more convenient than supercharger stations - but what it trades in infrastructure saving, it costs in getting myriad of land owners and councils to make it happen.
This is myth. 35yr loan is pretty basic, most loan supports up to 50yr. We can see many houses built 35yr ago. Anyway, installing EV charger is easy task for own house. It just takes about from $200 if 200V line is available. I believe mostly available unless the house is very old.
More importantly, there are many condos and parking that's hard to install charger due to it need to be approved in condo committee.
Tesla has shown electric cars can be superior to gas cars in all but one metric (road trips) and they're closing in on that. Wind and solar are now cheaper than coal and in some markets cheaper than natural gas. At peak times electricity from renewables is so cheap its creating a gold rush to develop low cost energy storage to soak up all the dirt cheap electricity that's being produced.
Theres also companies who can produce synthetic liquid fuels with co2 from direct air capture using renewable energy. With a decent carbon tax they could compete directly with fossil fuel companies but eventually renewable energy should be cheap enough that they won't even need a carbon tax.
Fossil fuel companies are as good as dead. They just dont know it yet.
Honestly though, I think this is what they have going for themselves:
- a large amount of smart, if unprincipled, engineers.
- a huge apparatus for government lobbying
- maybe a lot of capital, or at least some window to invest in switchover?
- generator knowhow (turbines, etc)
- global logistics systems
The government lobbying is the key. If there is one industry that could get LFTR/NextGenNuclear off the ground it would be the oil/gas people. The legacy nuclear industry has no ability or desire to produce a nuclear power gen solution that is competitive not only with current day alt energy, but the alt energy that will be in ten years.
I'm the guy that tells every pro-nuclear post on HN that its infeasible to chase whatever gee-whiz design is being discussed because of the ten year lead time and that storage/wind/solar are still on nonlinear cost improvement curves.
But the oil/gas industry DOES have the political juice to chase that at the multiple levels of federal/state/local/military/civilian that it would require to get a cost-effective small-scale nuclear reactor solution like a LFTR/MSR.
But that really is a pipe dream. That would require foresight from the executives, and executives in fading industries almost always just ride the companies into irrelevance, and most importantly for the executives, retirement/pension, and of course huge out-the-door "retention bonuses" in the dying days.
THIS! Thank you for bringing this up. Few people talk about this coming death spiral. This is really going to mess up a lot of countries incomes and may have severe worldwide political ramifications. In your opinion when do you think it will trigger? It feels like when it does actually happen, its going to happen quickly. From my vantage point in the US it still seems like the majority are not realizing what is coming. Hell Companies like Ford are still introducing new vehicle platforms in ICE configuration only (Ford Bronco for example) and people are buying them up without any consideration as to the future so I suspect it won't happen this decade.
I don't know enough about the economics of the fossil fuels supply chain to make a reasonable calculation.
In terms of your other calculations your targets seems very reasonable. Its amazing at how Tesla is iterating so fast on things like Battery and Motor design. Its super sexy to see the new stuff they keep pumping out(even if the founder seems like a jerk)
Do you want to buy stocks in companies that have a strong future of growth, or who have always made a lot of money doing one thing, and expect to keep making money doing that same old thing, even though it's clearly not going to last.
While they're not going to die overnight, I suspect they're not going to be worth all that much by 2050, and ~nothing by 2075.
Example: the australian PM who repealed their carbon tax, is now working with his coal baron buddy on a green hydrogen plant. He's now calling for a ... brace for the irony ... carbon tax to help his new business.
edit: correcting myself, getting two PMs mixed up, Turnbull scrapped new Carbon Tax plans while PM, under pressure from Abbot (who he replaced as PM), who in turn had scrapped an existing carbon tax. Still demonstrates the slow shift of the well-connected politicians to follow the money.
Companies like Tesla are not for traditional value investors. Bonds and boring stocks or ETFs serve that purpose.
Goodwill is on the asset side of the equation.
Basically, Tesla stock owners consider the company to have ambiguous secret sauce of the right employees, IP, brand recognition/reputation that makes it more valuable than its current on-paper business activity.
Or, it’s just a stock that they believe they can find buyers for – a belief which has been proven to so far be true.
Tesla doesn't have nearly the size of the distribution network of any of the oil companies.
The fact is Tesla was trading at 1000x historic earnings, and 161x future earnings, or to put it another way, 10x any other car manufacturer, and this this was before this deal. [0]
This simply doesn't make any sense.
[0] https://www.tradestation.com/insights/2021/04/08/tesla-overv...
The other OEMs are laden with debt, which Tesla doesn't have so any comparison there would be at the EV level which doesn't make Tesla look that out of line considering it is about to overtake in 3-4 years most of the companies it is compared with. Also that debt the other OEMs have, was used to build ICE factories and technologies which are quickly becoming outdated.
If and its a rather big IF I'll grant you that Tesla manages to achieve what they aim for which is 20 million cars in 2030, thats effectively 1/5 market share globally. Add into that the energy storage, charging network, solar roof tiles, AI and FSD.
However any signs of growth weakness or interest rate changes will wreak havoc for sure.
Even if Tesla falters, the other LICE OEMs are destined to fail, maybe 1-2 survives (GM/VW), the cat is out of the bag and what looked like a totally entrenched industry has been blown wide open by Tesla, and loads of other startups are following through.
Sure they were late to the game, and but it’s not a foregone conclusion that Tesla (or any startup) is going to dominate this market.
As for AI and FSD, I’ll put my flag in the sand. We will not have production fully autonomous self driving cars (ie cars without controls) on uncontrolled surface streets in 20 years. From what I understand, the technology has hit a plateau, and there’s just way too many edge cases. If this wasn’t the case, you wouldn’t have people like Andrew Ng going around telling people to redesign cities to make it easier for robot drivers.
If it does happen, it’s not going to be Tesla. I don’t think they’re the technology leader here. Last time I read something, Cruise and Waymo were leading, and Elon’s insistence on not having lidars was holding Tesla back.
With regards to execution, I don't think anyone has done a better job of scaling physical production faster than Tesla? And you don't have to like Elon but he sure does know a thing or two about this.
I've heard both the quality argument and the Tesla killer argument for so long that I no longer believe it to be true. If they could, they already would - I would suggest that you drive a Tesla for a couple of days, then go back to ICE. All the revving of the engine and performance hooplas seems so last century after that. A comparison kills the ICE alternative (except for long ranges atm).
The consumer will if given a choice (Tesla supply is restriced) choose the best offering at the lowest price and everything is lined up for Tesla to be just that.
The big joker from my perspective is what the EU / US / Japan / Korea will do to ensure strategic production capacity / industrial strength capacity, enormous subsidies are definitely on the table.
China is all in on electric so they have nothing to lose.
Does he though? Elon's hand can be traced directly to production and safety issues. Lest we forget his hubris in trying to do final assembly with robots, a task that was tried and dismissed by multiple "legacy" manufacturers, and directly resulted in defects and manufacturing slow downs. He's not even technically a founder of Tesla. He partially financed the A round, and then started telling everyone he founded the company. Even SpaceX widely seen as Gwynne Shotwell's baby. I will say that he he's enough money and a fan base to make a bunch of meme stocks. That's something.
As far as driving a Tesla, I have. I test drove a Model S several years ago. I thought the regenerative braking was weird, but something I would have to get used to. I liked the exterior of the Model S, but I did not like the interior. I thought it was ugly and empty (a personal preference), and the infotainment system a cruel joke that not only lacked features common on cheaper cars (CarPlay), but was filled with knockoffs (Slacker instead of Spotify or Pandora, and Google Maps without Google turn-by-turn in particular) and pointless gimmicks (Paint). Even with their v10 update that brought Spotify to the US (finally a win), also brought a bunch of video streaming services that only work when the car is in park. (Why bother? Just use your phone.)
I think you should compare a Model S to a Porsche Taycan. They're comparably priced plugin electrics, but the Porsche is well... a Porsche, a finely made automobile with attention to detail. A Model S is slapdashed together; but you're right, Tesla buyers don't seem to care. Also, for some reason Tesla owners purchase their cars instead of leasing them, the only electric car owners to do so. I can't explain either of these facts.
There is still a disconnect for me. First everyone outsources, apparently successfully for automotive, and that’s great, all these joint ventures between car makers etc. Then Tesl comes along, integrates everything, and poof that’s also good..?
Tesla started much later and didn't have this problem.
It feels to me that even taking the company at face value, this valuation is just silly. And I thought that for years, so clearly as a short-seller I’d be toast. But the more the price levitates, the more unreal it feels.
Tesla employees are payed just as well, and with stock options they actually historically have been paid WAY, WAY better.
The thing about Tesla is that its forward looking for a long time since they have a stable leadership with a clear long term plan. This leadership has been leading the company for more then a decade and all their plans have worked out.
Tesla now certainty is worth now what they were valued at a few years ago.
For myself, I would already consider electric flight as part of their future revenue. Its a logical next step but it will take 10 years. Of course I can understand that other people think this is crazy. But flat out, for me, I see them growing 50% a year for many more years with no end in sight.
I simply believe in leadership, no company with Elon as a CEO has really failed to grow. The closest is maybe Solarcity but he was not CEO.
Tesla threw Elon has strong connection with SpaceX. They already share material science. SpaceX uses Tesla battery technology. The connection is strong. Electric flight (not flying taxis) is a clear next step for both companies and Elon has been wanting to do it for a decade. It will take another 3-5 years before this is a serious project, but I don't think any other company is really up to it. Boeing and Airbus are not gone do it.
Until then I see continue 50% growth for a long while based on EV and Storage.
If Self-Driving works out, its massive. I am not counting on that. Even just as a advanced level 2 system its a great asset. But if it works out, the potential value is huge.
That's extremely unrealistic. The aeroplane industry is extremely complex, and there are heavy regulations where (hopefully) Tesla's "move fast and break things" + use commercial grade stuff and refuse warranty ( was it the chips in their screens or the screens themselves in some models that were not made for constant use in a car) approach won't fly. 10 years is a decent development time for a plane, if you skip the parts that Tesla have no experience with it and there'd be plenty of R&D to make them work. For reference, Bombardier, a company with decades of aeronautics experience and an established supply chain, started work on the C-Series in 2004. First flight was in 2014, first commercial service in 2016, and it nearly banrkupted them. Unless Tesla are already currently working on an electric airplane, i call bullshit on them having one in 10 years. Considering they already have the truck and semi which are oversold and underdelivered/delayed, do you think they have the capacity to tackle such a huge undertaking any time soon?
As to your other comment that Airbus won't do it - they've been on it since 2010:
https://www.airbus.com/innovation/zero-emission/electric-fli...
If one of the biggest companies in aviation has been working on it for a decade and doesn't have anything commercially viable yet to show for it, and estimate it will take them another decade for this, what makes you think a company with no aeronautics experience and history of overpromising and underdelivering can do it all in a decade?
People said the same about SpaceX. And yet they beat everybody. Tesla already works with SpaceX in a number of ways.
Do you think Musk or Tesla are not able to adjust to different industry? Are they so bull headed that they will say 'we make cars like this therefore we make planes like this'.
Tesla and SpaceX working together have the technologies required and the financials to do it, and just as important, the will to do it.
> was it the chips in their screens or the screens themselves in some models that were not made for constant use in a car
That this is still the example of 'look at this terrible company' is just embracing. A relatively young company on its first mass produced car made a mistake. Therefore for the rest of history they can never accomplish anything and they will forever be known as 'the company that selected the wrong screen'.
> it nearly banrkupted them
Tesla has better finances and ability to raise money.
> Unless Tesla are already currently working on an electric airplane, i call bullshit on them having one in 10 years.
Maybe that is the case, I don't have a fixed timeline. What I care more about is who will have it first, who makes the best and at what price can they produce them.
I don't think the existing companies will push hard enough.
I do think they are already working on battery chemistry needed for the airplanes. That is very much most difficult and unknown part about electric flight.
> Considering they already have the truck and semi which are oversold and underdelivered/delayed
The primary issue is battery supply. More products with a fixed amount of battery-supply does not mean you make more money. Overcoming battery supply and improving battery quality is the primary task right now.
> As to your other comment that Airbus won't do it - they've been on it since 2010:
Just as existing car manufactures had been working on EV since the 1970s. I think they are adopting some wrong strategies and they have very little intensive to kill their existing business.
The German car manufactures were still committing Disel gate when Tesla was producing EVs.
> estimate it will take them another decade for this, what makes you think a company with no aeronautics experience and
Maybe my estimate is wrong, but the earnings potential is there even if it takes longer. And Musk and SpaceX have lots experience.
How much experience did Tesla have in battery design and battery manufacturing 10 years ago? Almost non. 10 years later they literally have the highest output and fastest battery manufacturing line in human history producing their own cells with their own chemistries.
How much experience did SpaceX have with space capsule designs? Non in 2009 and in 2020 they launched humans. Lets consider relanding rockets, in 2011 they started working on it, they did it in 2016 and its totally routine now.
You can do amazing things if you have the will, the financials and the people to put behind an effort.
> history of overpromising and underdelivering can do it all in a decade?
People are so obsessed with that. They under-deliver because the promise insanely ambitious things. And even when the underdeliver, the results are still great. Should I be mad that they didn't deliver the Semi yet when instead the manage 50% YoY growth without it?
Why is nobody impressed that they are hitting their buissness targets WITHOUT interducing new products. That seem to be totally ignored, specially when 'lack of demand' was the main criticism of Tesla for a long time.
As it was with the Model 3, first people believe it want happen. Then when it does people say it wont scale. And then it will come on big. The Semi when it comes out will be just as demand constraint as rest of Tesla cars. Tesla will be a huge part of the global Semi market, I have little question about that. Its not like the other players in that space are rolling out massive amounts of electric semis yet either.
And anyways everybody will be battery constraint so for everybody Semi in large rollout will be tricky for everybody.
Again, I don't care if people don't agree with any of this. I don't give investing advice. Don't gamble with money I can't lose. There is a big chance this wont happen.
While these may be hits or misses, they underline the immense market penetration of Tesla. They're not just cars, which is why many investors project a much higher valuation for them in the coming years.
"Tesla the stock isn't being valued by any metrics that make sense and today investors are paying too much for their future growth which is dangerous."
So basically a car company. GM makes their cars in-house. They own their own parts supplier (acdelco) and charging/distribution network (Ultium Charge 360). Ford and Stellantis are working on the same.
Tesla's stock price is confusing because it cannot be explained, let alone justified, by any market analysis, results, or market price calculation. It's purely willingness to pay driven by meme stock speculation.
> They are also a car manufacturing supply chain, having brought much of their component production in house.
This assertion makes absolutely no sense given that Tesla's market value is currently greater than Volkswagen's market value, and by no means is Tesla even comparable with Volkswagen in terms of any of the criteria you've brought up.
Recommend some of those better ways to promote EV?
I think part of what's driving the increase in Tesla's value is the realization that this thesis was wrong.
Tesla is now beating all the established manufacturers at gross automotive margins, and it's really not close. Toyota is around 18%, Ford and GM around 15%. Tesla is up at 27%.
Part of that might be demand-driven higher prices. But Tesla continues to reduce their cost of goods, and Tesla has emerged as the most innovative manufacturer, which we already see in teardowns of the Model Y, with huge sections cast as one piece, but particularly in the design of Cybertruck, and Gigafactory.
Tesla is far out in the lead on software. They appear to be rapidly improving on manufacturing. Tesla has paid down its debt with stock issuances, the company has $16 billion cash on hand, and the ability to go get a lot more nearly for free.
If the major manufacturers aren't going to catch Tesla with manufacturing prowess, or capital, what are they going to catch them with?
So clearly the major manufacturers are not going to beat them on sheer volume either.
If and when the landscape on the western markets changes to be regulatorily more favorable and provide sufficient charging infrastructure, I fully expect Chinese manufacturers to entirely own the lower half of that market, because even the cheapest Tesla can produce is way way more expensive than your average petrol car, whereas Chinese-made EVs are competitive with petrol on the Chinese market already now, and prices keep dropping. A new BYD e2 with extended (253 mile) battery sells for the equivalent of $25k. The Tesla model 3 sells for twice that on the same market. On the lower end, with smaller batteries, you have cars like the Levdeo i3 with 100 mile range which sells for the equivalent of $10k, and the phenomenally cute Wuling Hongguang Mini EV (75 mile range) which sells for the equivalent of $5k. Tesla still owns the luxury EV market everywhere, including in China, but there's simply nothing they offer in those price ranges, and that's where the big volumes are going to be in the future as infrastructure catches up. Still, because luxury cars have higher profit margins, I can see Tesla surviving and holding a large part of that segment.
There's also a huge market for EVs in the global South, where infrastructure is currently abysmal but there is extreme sensitivity to fuel prices. The market there can move very rapidly in response to even minor infrastructure improvements, and small cheap EVs would be the primary seller in those markets. Tesla has no chance there, but the Chinese EV vendors do.
If there's anyone losing the "race" it's traditional Western and Japanese car vendors. They fucked up time after time, and are the tail-end of the current EV industry. I don't see a path where they get their shit together fast enough to not be overrun by Tesla and a bunch of Chinese EV vendors, so they can only win by creating regulatory roadblocks.
We can compare price and range alone among US market vehicles because they all meet relatively high standards of quality, performance, and regulatory compliance. Developing nations have buyers and regulators willing to accept lower standards in exchange for accessibility, but the US market doesn’t.
BYD isn’t absent from the US market for any reason other than that they have chosen not to, because they’ve determined they wouldn’t be able to compete in that market.
But once the floor falls off? They won't go gentle into that good night. I expect a wave of bailouts, consolidation and rapid retooling (and playing every dirty trick in the MBA book there is). I wouldn't discount the possibility that some of the survivors will have enough infrastructure and engineering competence remaining to quickly become a serious competitor for Tesla. In parallel, Tesla itself may fall prey to one of many ways companies decay over time. And then, of course, there's China.
But all in all, as long as Tesla's current performance pushes EVs over the threshold of market acceptability (which I believe it did a few years ago) and gives it some serious momentum, it's "mission fucking accomplished", regardless of who's the market leader in 10 or 20 years.
https://www.auto123.com/en/news/best-selling-electric-cars-w...
https://www.torquenews.com/1083/these-evs-declined-sales-ame...
Tesla clearly deserves a lot of credit but I think the EV space is a lot more fluid than some Tesla proponents would have you believe.
As EV adoption increases into more markets, buyers are going to be more price conscious, and plenty of makers (most of the big companies?) already have a foot in this space. Add missteps with safety or reliability in the long term (see: defrauding the Dutch government and the public about safety) and I think things might change quickly. Tesla isn't going anywhere but the idea that Tesla is the future EV market seems dishonest, naive, or both.
OTOH everybody is in a bit of an uncharted territory with the EVs and SW heavy cars. VW's new Golf has been riddled with SW bugs, and their EV line has not avoided it as well. But the body panels, interior materials... And Tesla (Musk) has said they need to improve the build quality and lower warranty claims.
So like I said- would be interesting to revisit these numbers, maybe not now, but in a year...
Brand loyalty or aspiration that predates EVs; cheaper entry price (already happening); build quality; better UI (the giant touchscreen is a negative for a lot of people).
There are lots of reasons to buy a non-Tesla EV. I know people who, being told that the Mach-E wasn't going to be available for a while bought another ICE to drive until it was ready. I know people who bought Hyundais instead of Teslas. Heck, one person even opted for a plugin hybrid because only the Tesla had the range he needed for work and he didn't want one.
A good chunk of people I know are already opting for not-Tesla EVs. It's a brand that seems popular with a subset of the population, but doesn't have the widespread love that people on HN seem to assume.
I also think it's weird that people are comparing margins on ICE vs EV cars. Obviously, those will different. You want to focus on their margins in the EV space.
That said, I don't understand their stock price either, even in the light of all that, so I don't own any of their stock.
But my next car will be a Cybertruck. Once you go electric there's really no going back. And that's how it ought to be in general: green options _must_ be better all around (perhaps with the exception of price, though I'm sure price differential will go down over time), not a fucking "tofurky" style garbage that no one would buy if it wasn't "green". Because you can make people tolerate things "for the greater good", but you can't make them like things that suck, at least not for long.
Can you explain what on earth that means? Apple makes good use of their device ecosystem, purchased app lockin and network effects to maintain an excellent position. Tesla has none of those benefits, other than their US (not EU etc. which is required to be open) supercharger network (which they promised to open to all EVs).
When I read your post (e.g. it's obvious as soon as you drive one, once you go electric you never go back) and both of those sound like arguments for EVs, not Tesla. Tesla may have made those two synonymous for a while, but I cannot believe it will last.
I will ask, are their departures from traditional manufacturing good? Even people I know with a Tesla that mostly has sat in a garage for its life (no need to commute during WFH because of COVID) say it's already showing extreme wear.
But the best explanation is to just go to a Tesla dealership and take one of their cars for a spin. It _feels_ like iPhone.
I have noticed it in few other industries, I just find it amazing that some companies just dont want to change when you can clearly see that your competitor has a better product.
If there genuinely is going to be a revolution, then Tesla can't own it all.
It seems like Tesla's success combination of a genuinely good product, the Musk hype (and troll) machine, early mover advantage, and most importantly access to cheap capital to build vertically integrated manufacturing and distribution operations that are unheard of in this industry.
Tesla's playbook is also unusual and contrarian to traditional wisdom on a number of things - unlike most tech companies, they outsource very little of their core manufacturing, making it an extremely capital intensive operation; they rely on their CEO trolling on Twitter for building hype for their products; they make promises which they almost always underdeliver and frustrate early adopters with quality issues; they make unsubstantiated claims about their self driving tech and yet are still making progress that skeptics are ignoring.
This is what keeps short sellers, stock analysts, economists and B-school profs on their toes when it comes to their predictions on Tesla. Reminds me of the early days of the iPhone era where a lot of folks were convinced it is going to fail.
Tesla as a company has basically retired all debt, they have 16 billion in cash and no debt. Their position is far better then other car companies.
> I doubt the Fed will be eager to bail TSLA investors out the way they did the banks in 2009 though.
Even if the Tesla stock dropped by 90%, Tesla would be perfectly fine. They do not really on raising money anymore. They create large amounts of free cashflow and enough profit to finance considerable future investment.
I know you can't compare valuation and production of a company, but still. If Tesla were making 10,000 dollar profit per car - and they don't - they would have to produce 100 million cars just to make a trillion. They produce less than 1 million per year. I know they also sell batteries etc. but it's still mainly a car company.
Their yearly profits might be a few billion. So their value is more than 100 times their yearly profits. This is insane for a manufacturing company. Currently their P/E ratio stands at more than 330. VW, a very well run auto manufacturer has a P/E ratio of less than 6, Ford 17, Mercedes-Benz 7, BMW 5, Hyundai 15.
These are all companies with electric cars on the road and a future that is totally committed to electric vehicles. These are all companies that already have production facilities, etc.
I like Tesla and their business model. I just think the stock is hyped way beyond what is sustainable.
We don't know if this was a decision after thorough analysis or just a quick money grab.
Retail investors, and particularly first time investors, in the market have been growing rapidly. These kinds of investors tend to be less careful with where they invest, relying primarily on the media, word of mouth and hype than on fundamentals. With enough people you have a critical mass, creating a chain reaction that's impossible to stop. This is literally free investment for a company. As a serious investor, you would be foolish to ignore this. Even if the company was not positioned to do well earlier, this new found cash flow gives them a huge edge. And thus this creates a sort of a self fulfilling prophecy where more and more people invest, because they believe everyone else is investing, and because everyone else is investing the company will surely become #1 irrespective of where they are today, and inadvertently propelling the company to become #1 in the process.
This applies to something like half the population right now (in the US). And we're on the path to alleviate issues for the other half of the population in the next few to several years.
The other major issue (which is probably the bigger one) is that car manufacturers other than Tesla can't seem to actually get out enough cars to do anything other than supply California and maybe NY. Teslas are expensive and have a litany of quality issues that push "regulars" away from them. Once Hyundai has an electric that has inventory nationwide at a reasonable price, then we have a revolutionary orderly transition on our hands.
https://www.drive.com.au/news/norway-to-hit-100-per-cent-ele...
I'd call that a revolution on a small country scale.
Or "like the car you hire, pay X and keep it". There would have to be margin in that as rental companies usually sell cars to dealers quite early in their life and dealers are only going to pay bottom dollar.
That should translate into savings and/or warm fuzzies for customers in the long-run, though it may take a minute before we get there.
There was no realistic scenario for rental companies to start competing on this axis with ICEs, petrol is an inherently hazardous chemicals royal PITA.
https://www.caranddriver.com/news/a38052601/hertz-buying-100...
So the time spent by a Hertz employee is 1 minute to plug and then unplug the car.
And if the car isn't fully charged and someone wants to rent it, they can either wait additional 30 minutes for full charge or get not-fully-charged car immediately and charge it at a later time.
Either way, it's effectively zero time and cost to Hertz.
I assume you’ll eventually see a $50 “recharge” plus electrical costs marked up 100%.
Or of course, you could just pre-pay and sign up for the $50 program and return it “empty”.
When you return a ICE car partially empty someone has to either bring gas to the vehicle or drive the vehicle to a pump.
Even though this is probably on-site it is very labor intensive and most rental places are pretty low staff. I could see future EV ones being entirely self service.
Anyway an EV can just be charged where you park assuming they wire each spot with an EV charger which I think makes sense since doing an n+1 charger is probably not much more.
I think the you will just pay whatever the normal charger electricity price would be.
Have you been to a rental car company lately? Most don't give the impression of being flush with cash. In order to get the best charging speed and turn your cars around, do you see them laying out $100K per vehicle/slot?
Otherwise you don’t need to have superchargers, you can just use a normal charger which is a few hundreds dollars, probably less at the scale of Hertz.
In any case, I know that regular charger's are very simple they are really just glorified relays so it might make sense to use non-superchargers if they are actually much more expensive.
Sure most rental places aren't cash heavy ATM but they aren't the ones buying 100k Tesla vehicles.
Other than that, you're going to have multiple hours of downtime where that car is not making you money.
The cost of gas isn't $7.50/ga either, especially for a corporate account the size of Hertz. Doesn't mean they won't charge you that, though.
A car is a tool I use to get my family around from point A to B SAFELY. Its also a fairly significant chunk of debt, and I want it to last a long time and behave EXACTLY the way I expect it to. Every day.
Tesla really doesn't fit that bill atm
Once you know those truths, Tesla isn’t a bad choice as their computers are at least partially upgradeable and the interface changes have been decent from my perspective (although this is hugely subjective).
I'm willing to bet performance would drop substantially if you modified the test even a little - for example changing the collision angle from 0 degrees to 5 degrees.
Other car manufacturers also 'design for the test', but less so I suspect.
Any source for this claim?
They literally have data and video of every crash and update their cars to deal with real world crashes.
See for example: https://www.youtube.com/watch?v=9KR2N_Q8ep8
Teardown of the cars have reviled that they are very sturdy built, maybe even overbuilt at points.
I've driven a Tesla for over a year now, and this is the first time I've even heard about it, let alone experienced it.
(I have no Tesla investments or products.)
No wonder they’re beating everyone else at this game. These guys rule!
Renault Clio on spot #2 with 18k sold.
Interesting considering the price of the tesla….
If nothing goes wrong, the first two-three years are practically free for an EV. Home charging costs pennies and if you're really stingy you can use free public chargers.
Then you might need a new set of tires maybe a quick maintenance at the dealership and you're good for a few years again.
Unless you also have solar panels at home and want to have the hassles of making sure your EV only charges on sunny days, you're going to be paying rates for electricity close to rates for dinosaur-fuel, especially if you're comparing to a modern 60 mpg gas car.
[0] https://www.parkers.co.uk/best-cars/most-economical-cars/
Still a hell of a lot cheaper than gas over here (coming up to 2€/litre in some places). Even diesel is over 1.8€/litre.
At 15kWh/100km consumption it'd cost me under 4€ to drive 100km on my EV. My old Prius did around 5l/100km, which would be closer to 10€/100km.
It leads to a misleading number if not averaged over the other months.
> Normally, Tesla would deliver only a handful of cars during the first 2 months of a quarter and then deliver an incredible amount of cars during the last month a quarter.
https://electrek.co/2018/06/07/tesla-sales-norway-surge-stab...
Makes little sense for Tesla to sell at low margin when they are supply constrained.
Not too long ago Elon talked about Tesla making up to 20 million cars per year in 2030. That would make Tesla twice as large as VW, the currently largest car manufacturer. Of course this statement was treated as Elons typical optimism, but deals like this pave the way to that actually coming true.
I feel people have really short memory wrt. Elon's optimism. Not everything he promises pans out (autopilot being the prime example), but usually, it does, just slightly later than promised.
In 2012 Elon predicted 500k vehicles in 2020 and he was spot on. So lets see the 2020 prediction for 2030.
The reasons Hertz is considered to be getting a great deal here by investors is that EVs retain their value a lot better and are known to have much lower maintenance overhead. So, they'll get more miles out of them before they have to sell them on, get back more when they do, and be able to charge a premium for them at the same time. In a market where margins are razor thin, that's a big deal.
It's more a question of when than if their competitors will be lining up to buy some EVs. They'll have to. And then of course the next question is which one they'd be buying. The answer for the next few years is that Tesla is one of the few companies that has both product and manufacturing ready for volume production. Of course a few other manufacturers might make some nice money here too.
So, investors are thinking that Tesla could end up supplying many hundreds of thousands of vehicles for rental per year in the next few years. On top of their other business, which is also continuing to grow at a very nice pace. They'll likely need a few new factories for this but they've shown they can deliver those as well.
https://caredge.com/tesla/model-3/maintenance#schedule - Hertz could easily train 1 tech at every airport to do this entire maintenance with a basic lift and simple materials.
For a Toyota Camry, this work occurs 2x as often (downtime is a big deal for rental companies) and is not easily performed without a much more capable shop: https://caredge.com/toyota/camry/maintenance#schedule
Less moving parts, less fluids…now I want a Model 3.
I'd be interested to hear from a Tesla owner on this. Maybe it's a non-issue.
With these the big issue would be charging them - people might not know not to go to a gas station.
Also wonder how the “full tank” policy will work with EVs where ideally you want to hover around 80%
Where they might not be suitable rental cars is the reliability. There are some horror stories where people wait 6+ months for their cars to be fixed, based on parts availability, but Hertz probably has some service requirements built in the contract.
https://www.cnbc.com/2021/10/20/tesla-switching-to-lfp-batte...
I thought for electric cars, that's already baked in? in other words, the car displays 100% and stops charging, but the battery is actually 80% charged. Also, I think for electric cars, they'll waive the "full tank" requirement or charge you a reasonable amount to make up the difference (cost of electricity plus a small markup). I sure as hell don't want to spend 30 minutes at a charging station the morning of my flight.
TESLA
These Electric Vehicle Rental Terms (“Rental Terms”) are between The Hertz Corporation (“Hertz” or “us”) and You and apply to a rental of an electric vehicle (“EV”) from Hertz. An EV is defined as a vehicle that exclusively uses battery power rather than gasoline or diesel fuel. These Electric Vehicle Rental Terms are in addition to the Terms and Conditions of the Rental Agreement applicable to your rental.
CHARGE LEVEL AT PICK-UP AND RETURN– Hertz will endeavor to provide the EV at time of vehicle pick-up with a battery charge of 80%. You are required to return the EV with a minimum charge of 10%. You are responsible to maintain a sufficient charge on the EV during your rental. You will be responsible for the cost of any tow if the EV is not drivable due to a low battery. You are not authorized to call a private tow on Hertz’ behalf. All tows of the EV must be by flatbed and must be arranged through Hertz Emergency Roadside Assistance.
RANGE – Range is the estimated distance an EV can travel on a single charge. The EV information provided with your reservation that describes a range is not guaranteed. The battery life of the EV is impacted by a number of factors including weather, driving and road conditions. It is your responsibility to ensure the EV has sufficient remaining battery life to return the EV to Hertz or reach an EV charging station.
CHARGING DURING RENTAL – Subject to Tesla’s terms and conditions, Tesla EV’s are able to access Tesla Superchargers to recharge the EV. If You use a Tesla Supercharger to recharge the EV during your rental, that cost will be billed back to Hertz and added to your rental charges. These charges may not appear on the final invoice and may be added later due to processing time. Battery charging limit on a Tesla should be set at 90% maximum. You may recharge the EV at other public or private charging locations at your own cost. You may also have to register and incur a fee at certain of these locations. You are responsible for any registration (including accepting terms and conditions and privacy policy) and any fees. If You do not move the EV promptly from the charging stall when it is finished charging You may incur an Idle fee for the time the EV remains in a charging stall after it is finished charging. You are responsible for and will indemnify Hertz for any Idle or similar fee incurred when the EV is on rent to You.
DAMAGE TO CHARGING STATIONS – You are responsible for any damage to the EV, the charging station equipment or the charging location when charging the EV during your rental. You will indemnify Hertz for any charges, fines, or penalties You incur for any damage or loss to the EV, the charging station or location during your rental.
EQUIPMENT – The EV will be provided to You with certain equipment for which You are responsible. You are responsible to notify Hertz if any of the following equipment is not with the EV at the time of pick up. Otherwise, You will be charged for any missing equipment at return. Loss Damage Waiver (LDW) does not apply to damage or loss of the equipment provided with the EV.
Key card or fob – You are responsible to return the Key card or Key fob upon your rental return. If the Key card or fob is damaged or lost, You will be charged to replace the Key Card or fob and a service fee. The Key card or Key fob must only be used to charge the EV You have rented. Sharing the Key card or Key fob, using additional Key cards or Key fobs to charge the EV, or charging other vehicles is prohibited. Any misuse of the Key card or Key fob in breach of these Rental Terms will result in additional usage charges.
Tesla Charging Kit – The Tesla Charging Kit consists of 1 Mobile Connector; 1 Storage Bag; and 1 NEMA 5-15 Adapter. You are responsible to return all contents of the Charging Kit upon your rental return. If the Charging Kit, or any part of the contents are damaged or lost, You will be charged for a complete Charging Kit, as these items are not available to be replaced individually, and a service fee.
J1772 Adapter – You are responsible to return the J1772 Adapter on your rental return. If this Adapter is damaged or lost, You will be charged to replace the Adapter and a service fee.
DASH CAM AND PERSONAL DATA – The EV may be equipped with a Dash Cam which may record incidents involving the EV during your rental and privacy is not guaranteed. You are responsible at return to delete all personal data input by You or collected by the EV during your rental.
>I'd be interested to hear from a Tesla owner on this
Not a Tesla owner, but I did take one for a 30 minute test drive. There wasn't really any learning curve except for that when you let your foot off the accelerator (gas?) pedal, the regenerative braking kicks in, and you start slowing down very quickly. I didn't touch the brake pedal for the whole drive. Got used to it in a few minutes.
The hardest thing for me was the cruise control. Only a subset of autopilot features were enabled and I found it a bit difficult to operate.
Hence why many non-car electrified rides disable Regen braking in Eco mode when your not accelerating or braking as keeping that mechanical energy & momentum is much more efficient than paying the conversion penalty to turn it back into electricity.
You can "coast" with regen on, you just need to balance the accelerator at the point where you aren't adding power, but the car isn't taking power away.
You won't see any green or black on the power usage bar.
Coming down long mountain roads, it's somewhat easier than coasting in an ICE and having to continually shift down gears or ride the brakes (which is obviously bad).
You're still thinking of pressing the accelerator as "open the throttle on the carburetor this much". On modern cars these days, pressing the accelerator is really more like "I'd like to go this fast", especially in electric cars. Its a vastly different experience.
I don't think I've actually touched my brake pedal in the last 2,000mi in my electric car, and I drive almost exclusively city driving on it.
I have not seen coasting modes to be more efficient than single pedal on my own electric car.
I'm hoping their car was actually broken in some way, because I'm assuming they had owned a license for decades at that point.
However, I'm pessimistic and curious if some people just learn to drive with the constant coasting on and off the throttle? Maybe it's an international thing? I'm not sure but I will never forget that ride!
Can't be good for their gas mileage (and hence profits!)
Imagine you've been playing on a 60hz refresh rate monitor forever. Then, you play your favorite fps on a 120hz refresh rate monitor.
That's what the difference feels like.
Gas automatic cars :)
Mostly I'm thinking of the situation where you break to a stop. In a manual, you have pushed in the clutch so the wheels are completely disconnected from the engine, giving zero creep when you release the brake, whereas in an automatic the car will start to creep.
Me too. I actually looked into that a few months ago. In Boston Massachusetts, there is this place: https://www.teslarents.com/
But we were going to San Francisco not Boston, and there was nothing that I could google up. With the exception of Oslo, Norway; I've never seen so many Teslas as I did in the Bay area, but it seemed really hard to rent one for a few days.
Maybe by the next time that I'm there a Tesla 3 will be standard at Hertz, but in 2021 you'll be lucky to get a Nissan. The competence and availability of even that, was low.
In any case, I don't think it would have worked for us, we handed the car back days later, in a different city. Which is fine for Hertz, but probably not for a Turo "host"?
It's likely that by the next time we're there, things will be different.
https://support.turo.com/hc/en-us/articles/203991040-Choosin... says:
> You’re not able to set one location for pickup and a different location for drop off when you book your trip. But once the trip is booked, you can request to change your delivery pickup or drop off location. Once the trip is in progress you can still request to change the drop off location. The new location must be one where the host already offers delivery, or it must be within their custom delivery radius.
In my area there are multiple Chrysler 300Cs that are "available" to rent for $600/day.
Except they're not available. They're actively being rented for weeks on end.
Would be a great plan if you were a dealer. Have one of your customers rent your car for $600/day (no legit customer will pay that for a 300C), and you launder cash. Best part is you don't even need to actually rent out your car - they're not going to complain that they didn't get a car, because they never needed it.
It is so choice. If you have the means, I highly recommend renting one.
I also suspect they will have lower backend operating costs and potentially cost drivers less on additional insurance since they can operate in FSD and put the liability on Tesla.
Tesla's navigation software will show charging locations, as well as add stops automatically if you're planning a route that's too far for the current state of charge.
Plugshare is a good site for finding chargers of all types.
The driving with regen is if anything similar to a dodgem car.
I have a model 3 but I forget this crap all the time. They'll need to provide decent documentation beyond the touch screen (and I'm sure they will).
And I kind of doubt they’re going to let you pair it with a phone key to the normal Tesla app like you own the car.
Having to do a full reset of the head unit after every customer isn't really a good option.
And I'm pretty sure they'll tap in to the car telemetry and they WILL know if you've been doing quarter mile runs on their car =)
Their lots really aren't "always full of cars". A lot of rental companies, especially franchises, have sold a lot of their cars due to reduced demand and insane used car prices.
sales dude: you want to prepay for that full tank of gas, super cheap only for you my friend, just today
me: no
sales: if it's not full it's going to cost 50% more
me: no
sales: look at the gas station prices
me: I never return with completely empty tank so whatever savings get wasted on the fuel I gift you on return
sales: but it's so much cheaper
:%s/gas/electricity/g
And perhaps if you're a customer picking out Model 3 cars on the lot and you pick one not fully charged.. you could decide to wait it out or just drive.
rent the car in the morning, keep it for a while, you bring it back some evening, it gets rented out the next morning.
It's like hotel rooms. Sure you could clean them in 5 minutes after someone steps out the door, but is someone actually there to take the room afterwards?
If you don't require your customers to return a full vehicle, they don't need to deliver them full to the customer either. I experienced this in Croatia when I discovered they are actually not allowed to require the car be returned full (some local legislation apparently). So they delivered it about 3/5th full and I returned it back in the same state. They just eyeballed it and it was fine. Actually annoying like this because I had to remember when to fill it up (and by how much) in order to return it with that quantity. In the end I put about 10 liters in it when it was about 2/5th and then drove another 20km.
They'll probably do a quick top up using their own chargers while they are cleaning the car. No need for them to charge to anywhere close to 100%. It's actually bad for the battery to do that regularly. So, it's also not something they'd want their customers to do. Anything over 10% is fine and can be topped up in 20 minutes or so to about 70-80% if you have the right charging infrastructure. But probably lower once they start cutting cost a bit. I wouldn't be surprised to get a Tesla rental with 40-50% charge only. Plenty of range on that and I can fix it at the next super charger in 20 minutes. For free because its included in the rental price (also announced). They just eliminated fuel as a variable cost for the driver. They'll probably charge per mile instead.
That may just be to help avoid people planning poorly and running out of battery trying to just barely make it back to the return. There's almost certainly nothing magical about 10%, and charging the car from 5% will be almost no difference. It wouldn't surprise me if they don't charge a fee as long as they can still get it over to the cleaning bay or a parking spot with a charger.
They're likely just setting ground rules for people who have never used EVs. It's not quite as easy to solve if you run out of juice half a block away from where they want it to be returned. Or if it won't start but you got it parked in a spot out front without a charger. "It doesn't need to be full but please leave 10%" is a fair rule of thumb.
> If you don't require your customers to return a full vehicle, they don't need to deliver them full to the customer either.
Every U-Haul I've rented in the US works the way you're describing: you fill it to where they tell you. Not to a full tank.
That does sound crazy that they re doing it while they ll be still in pandemic, which bankrupted them in the first place. I guess in the US people can always find a charger. I wonder how many people will rent those cars for the novelty factor, and novelty only works once. And it will be interesting to see what people think after they have rented one
Personal anecdote but I already am generally willing to pay a slight premium for Hertz over other rental companies and would be willing to pay slightly more still if it meant renting a Tesla.
> it will be interesting to see what people think after they have rented one
They will absolutely love it, just like I did when I rented one on Turo and then bought a new one the very next day. Also, the Hertz crowd is exactly the right target customer for Tesla. All of which shows how brilliant this deal is for Tesla, and how incentivized they must have been to make it happen. Which likely answers the question above.
There are companies offering EVs for short-term rentals by the minute or hour, but not as many of the big companies which seem to treat EVs more as a curiosity and group them with Maseratis or Luxury SUVs in terms of price and availability.
I hope this news is enough to shake up the leadership at the other car rental companies.
Of course, the answer with most electric car charging questions is "charge it at home", which is great when you own the car, but when you're on a trip who knows what the hotel's infrastructure will be like.
(I mean a charging point that can charge the car in 5-8 hours, which I assume should be straightforward for a new commercial installation with a 3-phase supply etc.)
Though I think another issue could be wear and tear on the battery as you're not supposed to charge to full - can rental companies software lock the charge rate? Not yet as far as I know.
https://electrek.co/2021/05/24/tesla-found-guilty-throttling...
"Only Model S and Model X vehicles with 85 kWh battery packs, which were discontinued in 2016, seem to be affected at that point."
That being said I also don’t know what the turnaround on a returned car is when on a busy lot. Minutes? Hours? Days? They gotta wash and vacuum it at minimum.
My guess would be a couple hours. They could start charging them right when you park at the return line…
With gas cars, there's a clear cost to having an employee go out and refuel it if its not returned full. This is much less justifiable if the company can just charge the cars on-site, either quickly or slowly.
A compromise could be that if a car is returned with less than x%, where it must be charged before going out to the next customer, then charge more but if its returned with 80-100%, don't charge extra because it could go out to the next customer easily. I've rented plenty of cars without a full tank.
Non-Tesla (i.e., cheaper) EVs have been in the same boat - the ones that people want just flat out haven't been available in most locations.
Though, he has also tweeted many other things that have yet to become reality...
He told me that the deals the rental companies have with the manufacturers are along the lines of "you will buy 5000 cars at a large discount, but you can't sell them until they have 5000 miles on the clock". So they buy lots of cars at a HUGE discount and then later sell them for MORE than they bought them for.
If this is true, then it makes sense for the rental companies to invest in EVs, because (a) there is customer demand for them, but more (b) because the market for second hand EVs is good.
https://www.teslarati.com/tesla-model-3-hertz-full-price-ord...
I think rental cars have a lower value/prestige compared to single-owner used cars (the idea being people are rougher and more careless with a rental they only use for a few days).
But I’ll definitely be checking the battery and motors before buying a used EV.
Hertz just declared itself bankrupt a year ago, now they have 4bn cash to spare? Both things cannot be true in such a small timespan.
Either the 'bankruptcy' was a fraud, or the Tesla deal has some small letters like "of which we will acquire 1,000 per year for the next 100 years".
Sure, the official story is "we were bankrupt but we found new investors at the most convenient time", but that could've easily planned beforehand. Also, they raise 1.65bn [1], but suddenly spend 4bn? The math doesn't add up.
1: https://www.foxbusiness.com/markets/hertz-funding-stock-soar...
where did you get 4B from? presumably $40k per car multiplied by 100k cars? The cars are probably financed, so they don't really need the entire $40k upfront. Using the tesla leasing calculator https://www.tesla.com/support/tesla-leasing, a $40k model 3 only costs $19,299 for the first 36 months.
>Also, they raise 1.65bn [1],
the source you linked says the 1.65B is from coronavirus relief. It doesn't preclude them from raising more through other channels, eg debt/equity.
>the source you linked says the 1.65B is from coronavirus relief. It doesn't preclude them from raising more through other channels, eg debt/equity.
Sure, but I doubt they raised more than 4bn. Even if they did, don't you think is a bit fishy to suddenly spend your whole lifeline in (not a few, but) a hundred thousand electric cars?
I didn't see any details on the purchase deal, but maybe they'll come out later. There's probably provisions to change the amounts, and certainly these vehicles will be financed in some form, whether that's Tesla financing or otherwise.
On Turo (like Airbnb for cars), Teslas are unique in how disproportionately expensive they are relative to their purchase value. When I last checked, a Tesla Model 3 worth 50K would rent for up to $200/day. Compare that to a comparable $50K BMW which might rent for $80. I imagine the reason is that people just want to rent a Tesla to see what all the hype is about.
Also, rental companies only keep their cars for about a year, so this situation doesn't have to last long for it to be profitable for Hertz.
But a Model 3 is absolutely a perfect rental car. Compact, zippy, comfortable, and makes you look good if you pull up to a meeting out of town in one.
Rental companies buy cars on leverage, and sell them used after a short lifespan. They sold off their inventory at the start of the pandemic and now can’t refill due to chip shortages, etc.
The used market is also crazy inflated, currently, but these companies couldn’t take advantage of that appreciation.
In fact, electrics open up a whole world of pricing and customer ripoff models.
Instead of charging you $5 a gallon, they can even charge $.50 per kWh (or translate it to miles) and that's something like a 3x markup. Even more if they use a renewable energy source.
In my rough calculations, it costs something like $5-$7 to charge from empty to full on my Model-3 mid-range.
The standard Model 3 has a 50kWh battery, so the cost is roughly $13.
If you charge between 23:00-07:00 the cost is reduced to $7 [2], though presumably that incurs the cost of installing an extra meter. It would be $9.50 sticking with a single meter for house + car.
(For what it's worth, in Denmark the lowest I'm charged is currently double the night rate for PG&E, although the peak day rate is similar. It varies depending on demand and how windy it is forecast to be [3]. But petrol is $2.10/L, so the other commenter's 100L car would be $210 to fill — though at 12.5L/100km, it's pretty inefficient. New vehicles in the US use 9L/100km, in the EU new vehicles average under 5L/100km.)
[1] https://www.bls.gov/regions/west/news-release/averageenergyp...
[2] https://www.pge.com/en_US/residential/rate-plans/rate-plan-o...
And having a charger at the hotel you stay out won't be enough considering how many times I have filled up the tank the night before, but they could still tell that I used gas just driving from the hotel to the airport.
GM barely makes (made) 20k of Bolt per year.
You might argue about what number constitutes scale or philosophically argue that "can" means some future, not current, ability.
But if you're Hertz and want 100k cars within a year, Tesla is the only company that can deliver that.
That's because they mostly make disposable compact hatches and the demographics that buy disposable compact hatches are not the demographics that spend a premium on an EV. They buy an ICE Mitsubishi Mirage or something. Telsa makes money hand over fist because they're the only one making EVs targeted at white collar demographics who drop 30-50k on a car.
Nissan could crank out 100k Leafs/year if they felt like it. But Hertz doesn't want 100k leafs/yr because they're not trying to fill a hole in their economy hatch portfolio. They want 100k sleek fancy sedans with some brand image to go with them. And Tesla is the only people making that right now.
https://insideevs.com/news/371826/amazon-electric-delivery-t...
[1] https://www.statista.com/statistics/470829/us-car-rental-ave...
Hertz is just out of bankruptcy, and immediately they order 100,000 Tesla to be delivered, and so paid I guess, in just 1 year!
Let's imagine that they have the Tesla with a very good discount: 30000$ a piece.
That would cost them:
100 000 x 30 000 = 3 000 000 000 $
I have hard time to believe that they have that cash in hand, or that they can borrow that much!
In my opinion, this might be the long awaited event that will finally blow the bubble:
Like for Evergrande, market will discover that Hertz can't afford that, then the stock of Tesla will tank, then panic and crazy stock crash will follow.
What do you think about that?
It’s not a bet concerning whether or not Hertz has $3B cash on hand, it’s a bet if the lender thinks Hertz branding is good enough to pay the note. I would bet so.
Finally, there may well be a cross-collateralization with the Hertz family to make this deal pencil out.
In financial reports of Tesla, there are more and more cars that are "leased" by Tesla, and maybe they are thinking of "outsourcing" that to Hertz.
But still, Hertz is not so financially solid, and one has to remember that a car, as an asset, loose value very fast on the after market.
Details will come forth but I would not be surprised if Tesla's terms were pretty harsh to Hertz, as in a profit sharing from Tesla rentals in exchange for ongoing tech support for making Teslas work on the rental market. So Tesla's upside could even far exceed the value of the car sold + financing terms.
A fleet of Tesla cars in a glorified cave taking tourists from point A to point B which was marketed to be a Boring company project with that concept video that blew everyone's mind off. It may as well be an underwhelming private transport facility that resembles a lazy river [0] being marketed as revolutionary public transport system [1].
[0] https://techcrunch.com/2020/10/16/elon-musks-las-vegas-loop-...
[1] https://electrek.co/2021/06/09/boring-companys-las-vegas-loo...
https://www.theverge.com/2021/10/20/22737228/elon-musk-borin...
I enjoyed this video which reflects my pessimism of Las Vegas Loop: https://www.youtube.com/watch?v=QvK2i9Jxy5c
I think there are better options for public transport.
"To be clear, cars sold to Hertz have no discount. Same price as to consumers."
https://twitter.com/elonmusk/status/1452794619410927625?s=20
That doesn't happen in business, ever, unless something weird is going on.
Traditionally car makers offer volume discounts because they have excess capacity i.e. they can make more cars that they can sell.
Currently Tesla is sold out 6 months in advance on Model 3 SR (the one that Hertz is buying).
Currently Tesla doesn't care if Hertz buys cars from them or not because they are sold out for the foreseeable future either way.
So if Hertz wants 100k EV to be delivered within a year, their only option is Tesla, because no other company can even make that many EV cars.
And if Tesla doesn't want to give them discount, they have to pay full price.
Knowing you have a 100k order gives you more confidence to increase production for the medium term, even if it's not that useful in the short term.
What if the loan is secured by $5 billion in assets from their current fleet?
While I daily-drive an EV, I'm pretty sure I wouldn't want one for a rental just yet. Charging infrastructure isn't quite to the point that you can teleport to some random place and not need to think at all about anything. Tesla is closer to that than anybody else.
I also tend to just drive more when I'm traveling, and so the range limitations will be much more meaningful under those circumstances than normal. My Bolt gets me about 240-280 miles of real driving per charge and it's totally fine for everything I normally do.
Of course I applaud Hertz for supporting consumer choice in this regard. Different folks will have different needs on different trips, myself included.
American car makers dug themselves a hole because there were a few populations that would buy American cars no matter how bad they got: refugees from WWII (e.g. old Italians, Poles, Jews and Veterans who would never buy a German or Japanese car), police departments, and rental cars. In a case like that the Ralph Naders and the Consumer Reports can be pointing out how bad your product is but they can point to people who still buy it, cover their ears and sing "la la la".
In principle renting a car could be an experience like "I drove a Buick and I liked it" (happened once to me) but more often the vehicle has been trashed, things like the controls for the seat position are busted, etc.
Car rentals move some metal in the short term but they damage the brand in the long term.
I asked about refunding my pre-paid rental then, and started finding an Uber to Enterprise.
"Oh, sorry sir. Prepaid rentals are non-refundable."
Right, so you take my payment, and then decline to rent to me, and then refuse to refund me? They did, eventually.
That being said I’ve never had a bad experience with national or enterprise. I dunno why other companies haven’t copied the Emerald Isle concept yet. It makes so much sense. The customer gets to feel like they had control over the car they picked, the time spent in line is non existent, etc. Its a win all around.
Also life pro tip: unless your employer can do better, always use Costco Travel for rental cars (and hotels for that matter). They always include multiple drivers, and have very competitive pricing… sometimes lower than what I can get using my employer’s corporate rate. The Costco membership almost always pays for itself just by renting a car for the week.
You don’t drive to the charging station. Those are essentially for road trips.
No doubt the charger situation is rapidly improving, but it seems there's still a long way to go to match the convenience of gas. Long charge times can be mitigated by "destination charging", but if a major hotel chain like the Sheraton only has a single charger at a tourist hot-spot location like Sand Key (by Clearwater), then it seems we've still got a ways to go.
Tesla basically rides on their marketing propaganda. I'll stick to my 35mpg Toyota SUV thank you.
Even if there were a 50% loss in efficiency the car should still be able to travel over 150 miles, the notion that the weather would drop the range to less than 80 miles is absurd.