How Tesla Fumbled
youtube.com
youtube.com
He says the cybertruk is late but did clearly no research on why (battery/material/chip constraints, waiting on bespoke gigapress to even be produced for them) and their competitors have produced laughable numbers of trucks.
And that's the general feeling I took away from this video. Not that Tesla is awful, or doomed to failure, but that they lost a chance to become undisputed king of the EV market. Instead, through a lot of small unforced errors they're probably just going to be one among many in the future. Maybe you think Tesla never had a chance to obtain a majority share of the market, or maybe you think Tesla still will end up being massively ahead of everyone else in the end, but I also tend towards believing that Tesla once had a chance to have more than 50% of the market and now will probably just sit in the 20% range when everything is done shaking out. Time will tell.
The USA and Japan and to a lesser extent the EU fumbled the EV transition badly.
This left a wide opening for China that it looks like they will profit immensely from.
They will make the batteries and the cars and motors and the renewables that power them and buy up the empty shells of western automakers.
edit: some valid points but it's mostly youtube spam not sure why it is on HN
I'm not really fan of Tesla, I don't drive (trains ftw) and I generally dislike cars and I would certainty never buy a Tesla even if I needed a car. I have invested in Tesla because I thought it was a good investment. This comment is not investing advice in any way, I am just point out some issues with the video from my analysis of the car market.
Before addressing some of these issues raised in the video. Lets just get some basic facts down. Tesla is the largest BEV manufacture on the plant. They are the biggest consumers of batteries on the planet. They one of the most profitable car companies. And the have less debt then all the legacy manufactures.
Tesla has grown fast every single quarter for many, many years now. During the Pandemic and chip shortage they grew. And not only did they grow, the retired debt, increase cash position and made major investments for future growth. Some of the worlds largest EV manufacturing facilities are still in the ramp and Tesla is very, very like to continue growing for quite a while yet. Tesla Semi in Nevada will be another major product that is also ramping.
So to say that a company who even in 2017 was seen a tiny upstart that would get 'crushed' when the legacy manufactures finally started moving on EVs. Bob Lutz from GM basically declared them dead and called EVs a 'bad' business. This was literally 5-6 years ago, that these thoughts were prevalent.
Here their revenue growth, and profit of course grew far better:
> Tesla's revenue growth for fiscal years ending December 2018 to 2022 averaged 49.5%.
To claim that such a company 'Fumbled it' requires really strong evidence, but the video doesn't really provide it at all.
Please show me a historical comparison where a manufacturing company grew faster (outside of war). There might be few, but not many.
The points raised:
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- Quality issue
Beyond the 'this is what I saw when I googled' nonsense. This is the most valid point raised, and even then it isn't great.
The only quantitative analysis was one consumer report. In that report Tesla didn't to great but many other of the supposedly luxury manufactures weren't much better. In fact some of those that did the best were just old cars that were in production for a decades mostly unchained. I believe if I remember correctly Jeep was on top.
Further, this was a US only report, testing cars from one plant and that was also already a while ago. Generally we get less reports of such issues reported from the plant in China and Berlin.
If you want to tell me that this is really a systematic large scale issue, please show me some better data. If their cars were so bad and they have to fix so many things, why is their service business not a huge cashleak?
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- Deliver issue
- Service issue
Service and Deliveries, these are signs of success. A company that is growing so fast its almost practically impossible to scale those things as fast. Opening Service centers, building supercharges and distribution centers is hard, they require local politics and a lot of people all over the world. Tesla has been ramping all of these things very, very fast just not quite as fast as their cars.
Lets look at the numbers yearly numbers up to last year:
Store and service locations 378 433 523 644 764 Mobile service fleet(2) 411 758 894 1,281 1,584 Supercharger stations 1,421 1,821 2,564 3,476 4,678 Supercharger connectors 12,002 16,104 23,277 31,498 42,419
How much faster realistically could they have grown these things? They are clearly trying to grow all these things quickly on all of these have accelerating growth. Maybe had they really pushed and focus they could have done a little better. But then again nobody else in the world is close to having a mobile service fleet that large or a supercharger netwrok.
And to explain how wrong this is in more detail, having to relay on Dealers and 3rd party service is a huge benefit for Tesla. And literally ever car company in the world to kill to have it. People who don't know the car industry don't understand this, dealers make a lot of money that not going to car companies. Car companies already make a large share of their profits on service parts (without most of them couldn't survive) and would make even more if they had control over it. Basically most car companies are basically copying Tesla and is fighting its dealers.
Telsa had to do Service under warranty as a lose, and only last year that Service finally was not below zero. As increasingly more Teslas come of warranty, this former weakness of Tesla will turn into a hugely profitable business of its own. That it is already profitable despite there being so few old Tesla on the road is actually remarkable.
- Costumers unhappy/burning threw customers
This is just factually untrue, more reddit research then real data. Tesla has high consumer satisfaction and high retention. In fact industry leading.
Funny that he sites those kind of reports on Quality issue but then not on consumer happiness.
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- Didn't build pickup truck fast enough
The reality is quite simply, adding more different products when you are fundamentally limited by batteries and chips doesn't make any sense. They had enough demand for their lineup that they saw now pressure to rush out new products.
He then hypes up, Rivian, GM and Ford. The GM Hummer has sold in hilariously small numbers, its a mostly a marketing stunt. Rivians numbers are still very low very low and their financials are not great, way worse then Tesla at the same time in their production. Rivin might just make it, or not, but hyping them up when the only produce a few 10000s of vehicle and are losing billions of money the raised in the easy money period. Ford has done reasonably well with the F-150 but it also took all their focus.
If you want to see the effect, look at the Ford Mach-E. Hyped as superior Tesla Model Y. Ford barley gets out 50k a year, and is unlikely to make any money on that. Tesla Model Y is going toward 1million per year and becoming the most profitable car in the world because of industry leading margin.
What people are missing is the size of the market, the demand and the limitation in regards to battery materials. Getting out a couple 1000s trucks isn't worth much, it doesn't even really make money. The real challenge is not take an F-150, modify it a bit and throw some batteries in it. The challenge is building the supply chain and manufacturing to build many 1000000s of these very battery hungry trucks.
GM has done a terrible job with its EV. The have been hyping up Ultium for years now. Their battery manufacturing is already massively delayed and their ramp will be delayed even more. GM is barley selling any EV. Neither the Hummer nor the Lyric are in serious production. And the Bolt production (they cheap car) hyped in the vehicle is still pathetically small. They have broken their partnership with SK apparently and some of their future plans are up in the air.
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- Cybertruck is bad engineering
Whatever you believe about the design or pick-up trucks, this claim is hard to prove, specially before we get the teardown.
Any rational analysis of what Tesla has planned with the Cybertruck is a really good idea economically speaking. I don't want to make this post even longer. But paint shops are incredibly capital intensive. For 500k a year F-150 style pickups, they Paint Shop alone would basically be more expensive then the whole production line for the Tesla Cybertruck. The whole inner structure of Cybertruck will be cast with the largest aluminum casting machine in the world. This machine is being built in Austin right now. We don't know all the engineering of the Cybertruck but there is lot promising tech, Tesla has been working on next generation wiring and power system that should make its debut on Cyberruck.
Cybertruck will also have the newest generation batteries from Tesla own production, literally produced in the same building. This will be produced in one of the largest car manufacturing plants in the world and will be the most most vertically integrated EV production line in the world. Basically materials, including battery materials, going in on one end and full trucks coming out on the other side.
- First Mover matters.
I predict, that for all the 'oh they were not first' in 3 years Tesla will outproduce Ford, GM and Rivan combined in terms of trucks. What actually matters is having the materials supplies and manufacturing facilities you need. And no just because GM own a bunch of old plants doesn't mean they can magically make drive trains for 200k pickup trucks.
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- BYD is better
BYD is focusing overwhelmingly on China, of course they are doing well there. Tesla is doing fantastically in China and absolutely beating everybody ass. They continue to have really high demand and the other manufactures (outside of BYD) are having serious issues. China is price sensitive and with recent price drops Tesla can create huge pressure on Chinas car brands.
If you are gone say 'look at how well BYD does in China', maybe mention how much more dominate Tesla is in the US.
Using sports as an analogy, this is like saying 'look how much Kevin Durant sucks he is doing slightly worse then LeBron James' what a loser.
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- China market is somehow special
It isn't really. Western car manufactures have made good business in China for a long time and the market there isn't all that special. Yes its different from the US, but so is Europe. Tesla brand is positioned incredibly well in China.
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- Musk is a liability
Again evidence? Consumers in China don't care about US culture war slap fighting. And even most people in Europe or the US barley know who Musk is. Most people are not on Twitter.
If Musk is such a liability, why is Tesla continuing to grow and doing record profits? Can you give me any concrete exampes.
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- Tesla is losing market share
This is just the old 'competition is coming', anybody remember all the 'Tesla Killers'? This is the same type of argument, as when BMW was gone dominate with the i3. Or 3 years ago when VW was gone dominate Tesla with the ID.4. Turns out just because you know how to weld aluminum together, doesn't make you good at managing a global battery supply chain, or chip supply chain or help you produce electric motors, or equipment for advanced driving assistance, or good car entertainment systems, or good apps, or good charging infrastructure. Its almost as if switching from petrol and petrol infrastructure to electric isn't easy, even VW is struggling.
The battle has moved on beyond 'EV market share', its now about global market share in the whole car industry. And in that much more important race, Tesla is actually doing really. While most others, even companies that are gaining market share in EVs, their legacy business are doing badly and they are stack with debt to finance EV investment.
Tesla return on capital invested is fantastic, they have no debt, they have lots of product in the pipeline, they have great relationships will all major battery producers and make their own batteries, the make large profits and best of all, don't have a legacy business that is collapsing.
In total, this video is basically just a bunch of common myths and talking points about Tesla. Some might have some relevance, but more importantly it misses by only telling only one side of the story. All the bad things about Tesla but totally ignoring the much more systematic issues about all their competitors.
For example, he points to the Lucid and how superior it is. This is a fucking joke. Like seriously, Lucid produced like a few 1000 vehicles and they are planning on producing like 12k this year. They have massively undershot their guidance on production and they are losing money like crazy (Again compare it with Tesla when they produced a few 1000 vehicles). Their hope at this point is literally 'maybe Saudis give us more absurd amounts of money'.
If Tesla has 'Fumbled' then I don't know how you define success?
This picture sums it up:
By becoming the richest man in the world, and now the most notable man in social media, Elon has brought huge brand awareness of Tesla.
And most people aren’t so politically tribal that they would choose an inferior BEV because “elon bad”
[0]https://www.tesmanian.com/blogs/tesmanian-blog/tesla-autopil...
https://www.theverge.com/2023/1/27/23572942/mercedes-drive-p...
Probably the kind of people to buy a Tesla as a virtue signal more than anything else
But, like all situations...you hear about the people who make a decision based on this sort of stuff. The vast majority aren't going to talk about what they didn't care about when making a decision after all, and I think it's reasonable to say that most people just don't care.
People on Twitter obsess all the time about what is "insulting", but most of the market could not care less about Twitter crowd sensitivities. Indeed, it is remarkable how little effect do all these shitstorms have; and, vice versa, the fact that some corporation has loudly joined the woke bandwagon, does not cause any jumps in their revenue or even stability. Many of the DEI-infested tech companies are now laying off people by the thousands.
TL;DR: An average consumer does not care the slightest bit about the latest outrages on the fronts of the culture wars.