Tesla Nabs 8% of the U.S. Luxury Car Market
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"Electric car maker Tesla Motors helped Mercedes develop and is manufacturing parts of the new car's electric drive system, including the lithium ion battery pack, electric motors, on-board charger and other electronics. Besides producing its own car, the Tesla Model S sedan, Tesla already produces electric drive components for the battery-powered Toyota Rav4 EV."
http://money.cnn.com/2013/03/27/autos/mercedes-tesla-b-class...
1) Tesla loans Top Gear a Roadster'
2) Top Gear does a show showing it running out of power and being pushed back into the garage at the track and they state that its range is comically low.
3) Tesla claims it was all staged
Whether or not you believe Tesla or Top Gear (and it seems relatively clear that Top Gear probably did stage it) the timeline does not show a shift in attitude from Top Gear regarding Tesla. They've always made fun of it.
Comically low on the track, going full out. Which seems to be a pretty reasonable claim.
Also consider that Tesla didn't sue for over 2 years after the episode first aired. The episode was in late 2008, and Tesla sued in March 2011.
Well, except for the part where apparently they didn't actually manage to run it dry on the track.
This said, it's fucking Top Gear. Their idea of a "serious" car review of the Renault Twingo is seeing if a car (undoubtedly not stock) can do a flip in a sewer tunnel. Their review of the Reliant Robin was only about how the car (again, modified), only flips. Somebody should have clued Tesla in.
The one major concern that almost everyone has about electric cars is to do with the range anxiety and I thought they demonstrated that well. Sure, it was staged; but staged to demonstrate the point in an entertaining way (well, the amount of entertainment is personal preference I guess).
The "joke" being that the car doesn't have the range that Tesla claims and that you're likely to be stranded as a result. Top Gear is a joke.
Tesla should have realized their car was going to be the butt of some joke: it's what the show does. If Tesla can't handle being made fun of, then they shouldn't have given Top Gear a car to test.
edit: I also enjoy the fact that top gear is much more opinionated and un-PC than anything else out there. It's keeps it interesting. Yeah, so Clarkson hates EVs, hates Ford, and hates "caravans". Once you can get past this and accept you and him very well may have different viewpoints, he's hilarious.
It's a love/hate relationship. He bought a GT40 (and then had many problems with it, but loved it, from what I remember). From what I can gather from the series, Ford is fairly popular in the UK (with the Mondeo?), so it's an easy target.
Did you hear the one about the electric car? It ended up getting half it's promised range. HAHA!
Top Gear is a joke.
That being said, the problem is that EV battery technology is still young: Most manufacturers state the upper-limit instead or something realistic. For an example: smartphones nowadays usually go past their claimed battery life despite that before it was hard for them to stay on for an entire day.
I own a Nissan Leaf and am well aware that range depends upon a series of conditions like weather, excessive acceleration and braking, and climate control. THIS IS TRUE OF ALL CARS, but matters more in EVs.
That does not mean that anyone would be well-served by an automotive review that lists towns and distances traveled, but which then misrepresents the car's state of charge to pretend its battery is completely discharged when it's actually over one-third full.
I doubt anyone purchased any car based upon their recommendations or takes them seriously when they "review" cars.
http://www.coolest-gadgets.com/wp-content/uploads/mr_fusion....
Sure, not everything BMW sells is a luxury car, but the U.S. luxury car market is usually defined as much larger than 125,000 cars in a half year.
[1] http://www.theguardian.com/business/2013/jul/08/bmw-record-c...
Porsche (before they were purchased by VW) used to make rather expensive cars and they would always have a rather small percentage of the overall market. But no-one would accuse Porsche of being a failure, because they did very well in their rather lucrative price brackets. In fact Porsche is often called the most successful car company ever due to their big profit margins.
Porsche still does make "rather expensive cars". What are you referring to exactly?
Car companies love this, after all how many times do you see something like "The best [insert feature here] in its class" in their marketing? Because there are so many different definitions of car classes, no-one can prove their statement wrong!
The "luxury" class of cars is pretty narrowly defined and includes the A8 and the BMW 7 series. (No, it doesn't include the 3 or the 5, or the A6.)
Edit: According to wikipedia (https://en.wikipedia.org/wiki/Car_classification#USA.2C_UK_a...) - the British English "Luxury Car" is represented by: Audi A8, BMW 7 Series, Jaguar XJ, Maserati Quattroporte, Mercedes S-Class.
Hardly any Americans would place a BMW 550i in the "non-luxury" group, least of all BMW USA. It isn't the largest or most feature-jammed car in the fleet, but to Americans it is absolutely a luxury car.
I disagree with both of you. Your categories are all are artificial and for people with "new money". It's a concern for those who seek to differentiate themselves from the rest the middle class by burning cash on these silly toys. Those with true wealth find this mundane and even distasteful.
"PEV[1] sales, while not matching up with original sales targets laid out by some auto manufacturers, have been strong for a new entrant in a market that has been dominated by internal combustion engine vehicles (ICEs) for a century. Through their first 30 months in the marketplace (2011-2013), sales of PEVs have been more than double the sales of hybrid electric vehicles (HEVs) in their first years in the U.S. market (2000-2002) and the sales continue to grow—June 2013 saw the strongest PEV sales numbers yet, and more than 110,000 units have been sold to date. In the luxury segment, Tesla’s Model S has captured 8.4 percent of the market in the first six months of 2013."
So, the 8.4% is actually not "luxury" class cars at all. It is a subset.
1) plug-in electric vehicles
The overlap between the two communities is probably larger than you want to believe.
Only the 7-series is unambiguously luxury. Which aligns with my European view that a 3-series is your bog standard "large family car" or "small executive car".
Is the non-M 3-series considered sports?
BMW 5 series are the most-purchased company cars here in Austria, they certainly aren't luxury cars anywhere outside the 3rd world, although they might enjoy a certain brand image in the US ...
BMW is an expensive brand, but the 5 series is mid-range.
It's certainly possible they're equipped differently here, as so many cars are. If that's not the case and Austrians simply have a different sense of "luxury car" I wonder what you guys have that trumps the 5 series in that size category, as far as "luxury" is concerned.
A thought-experiment: say you wreck your car, and your insurance provider is going to give you a loaner.
They want this loaner car to impress you (the cost of one regular car, however nice, is not much skin off their back, especially if they get to amortize it over all the people they lend it out to; and they want to give you the impression that they've got enough money to cover any problem you might have, so that you'll keep paying your premiums--the same reason bank lobbies look so "stately.")
However, they don't want to spend too much, because there's a point where cars switch from regular goods, to being Veblen goods. (http://en.wikipedia.org/wiki/Veblen_good)
The optimum between impressing you the most, and avoiding spending way more than the car "should" be worth for an any marginal gain of impressiveness, should define the type of car they loan out (and it does, in my experience.) You can draw the "luxury" inflection point as being exactly the next-most-expensive models up from these, where the value proposition stops making sense to economically-rational actors.
I would hesitate calling those luxury vehicles, if only based on their ubiquitous use by working professionals.
I live in Manhattan (so maybe Tesla is not big here), but in the last year I've only seen 2 Teslas on the road. By comparison, I see about 5-10 Audi A8's a day.
At the end of 2014, they will start rolling out the Model X SUV that will offer dual engines. Some are speculating that it could give a 0-60mph time in under 4 seconds. That would be truly incredible for an SUV.
Then, Tesla is readying the long-awaited GenIII vehicle due at the end of 2016 or in 2017. Elon Musk recently stated that his goal is to sell the vehicle for $35000 (w/o incentives) and for the car to have a 200 mile range. Further, Gen III is targeting the BMW 3 series and many are expecting the Gen III to handle and perform better than a BMW 3 series. It could be the hottest car on the planet when it's released.
Tesla as a company is doing very well. They're expanding like crazy. And they're managing their cash flow well. They will report Q2 earnings this Wednesday, 8/7 and they could report another quarterly profit as well.
In another area, Elon Musk has promised to achieve 25% gross margin on the Model S by the end of the year. So, it will be interesting to see how far they've come along when Q2 earnings are reported on Wednesday. Further, it could be possible Tesla is shooting for 30% gross margin on the Model S next year (which would be incredible). In the 2012 Elon Musk ceo incentive plan, reaching 4 consecutive quarters of 30% gross margin is one of the key milestones.
disclaimer: long TSLA
- Tesla recently halved the deposit required to order a Model S, an indicator of weakening demand.
- Tesla is raking in up to $35K in profits per car by selling ZEV credits earned through a CARB loophole which may soon close (http://www.plugincars.com/will-likely-loss-zev-credits-hurt-...), reducing ZEV profits considerably.
- Tesla has repeatedly promised to increase its gross margin, but has so far failed to do so.
- While Nissan has invested in their own battery manufacturing plants (in Japan, US, and UK), Tesla buys their batteries from Panasonic. While they design and assemble their own battery packs, they haven't made raw battery manufacture their core competency, which could hurt their ability to compete on cost, or to innovate in lithium ion battery technology.
- The BMW i3 will soon be entering production.
- Tesla recently closed another round of funding, the cash for which will be used to bring new models to market, meaning they're about to take hit to earnings for R&D. This is fine, but the stock may collapse in the short term.
Let's also not ignore the obvious conflict of interest in a group promoting electric vehicle sales trying to speak about actual statistics. As mentioned, BMW sold 172k cars, Mercedes Benz 182k, Audi 87k for total of 441k. Tesla at ~10k, 2% of above (though all ~$100k).
If you want model to model comparison, the model S clearly doing fine though, all depends on the headline you want I guess: http://money.cnn.com/2013/05/13/autos/tesla-sales-bmw-merced...
Luxury Car: A car that offers a full array of luxury features and an outstanding level of refinement, starting at a base price over $40,000. Examples include the Bentley Brooklands, BMW 5-series, Mercedes-Benz CL-class, Jaguar XF, Lexus LS460, and Infiniti M45.
If this is true, that's pretty impressive. I always saw Tesla as an enthusiasts brand, but this looks like the real deal.
If I could get a 2 year old Tesla for the cost of a functionally equivalent new car, I'd be very interested.
Depending on heat, a fully charged Li+ battery will lose between 15-30% of its capacity per year. If you keep its charge between 40-60%, it will lose only around 4-10% per year.
Tesla estimates that after 5 years, their battery packs will still have 70% of their original capacity, which would seem to indicate that this is indeed what they're doing (70%^(1/5) = 93%, or 7% loss per year). That sucks for a car which is entirely powered by its battery, since it means that a Tesla could, at a long-term cost to total capacity, potentially have at least twice the range its control system will allow. It seems like that would be a decent feature to give for people making occasional long trips.
Here's the third link from a Google search for "tesla roadster battery degradation" (the first one not written by a "green car" website). http://wallstcheatsheet.com/stocks/tesla-low-balls-roadster-...
It says that the batteries have, on average, over 80 percent capacity remaining after 100,000 miles. 80% of the original 265 mile EPA range is still well over 210 miles of range.
First, I doubt that without incentives that there will be a 3 in first digit and second I am very doubtful he can provide the same level of service at that price point.
I guess they did it because they couldn't reach the quality they wanted at that price point in that timeframe. That's fine, but I wish they started getting more market share sooner, and get more people to use electric vehicles. 2017 is quite a lot of time from now.
Edit: I would think they are more like NeXT right now. They are making something really cool, but very expensive and not practical for most people.
Arguably a lot of their range still is still unaffordable for most people.
Apple is also a rich person's toy only made affordable by heavy carrier subsidy. Carrier subsidy is the primary reason why iphone sales are so high. Nobody would otherwise pay 600-700 USD. As opposed to android devices which are like 400 USD for no subsidy (nexus 4).
(And of course the whole point of Tesla Motors is to make an affordable EV, but let's not give credit too early. To loosely quote Elon Musk's response to criticism like this, "many people are under the mistaken impression that we made the Roadster because we thought there was a dire shortage of sports-cars for rich people.")
this isn't my analysis. Elon has mentioned it in various places:
http://www.extremetech.com/extreme/156959-elon-musk-discusse...
They have a Market Cap of $16B.
Estimated longer term profit per Model S sold is around $15000 (as far as I remember); I think they are aiming for around 15% profit margin for Model S.
Problem is that they are currently only on target for around 20-25000 model S/2013 and they didn't have that big a profit margin last quarter.
As always, the next quarterly reports will likely tell if they are on track or not. Last quarter was just the first profitable quarter for Tesla ever, so it is hard to say anything. Nobody even knows if demand for the Model S is sustainable, as Tesla received around 20000 preorders.
It isn't an outrageous valuation compared to e.g. Amazon, but it is definitely based on the company achieving massive growth, so if the next quarterly results do not reflect that, the stock will likely take a 10-15% dive over night.
On the other hand, if the Model S is the new Prius (as some people believe), they might sell 200000 cars/year within a few years. Musk is definitely aiming for this, and the factory they have has a capacity for something in that ballpark.
They also haven't tapped into the European market yet. E.g. Scandinavia has high taxes on petrol based cars, so the Tesla S is significantly cheaper than other "luxury" cars in Scandinavia. I suspect Europeans in general have shorter commutes, so perhaps electric cars are doing better here. Then there is Asia...
It is a high-risk investment at this point, but it could go either way. The stock price currently reflects optimism.
For reference, check out Renault (http://markets.ft.com/research/Markets/Tearsheets/Summary?s=...), Fiat (http://markets.ft.com/research/Markets/Tearsheets/Summary?s=...) or Peugeot (http://markets.ft.com/research/Markets/Tearsheets/Summary?s=...)
Market-cap wise, Tesla is approaching the size of Renault ($25B) and larger than Fiat and Peugeot combined ($13B)
That shows how many early adopters live in the SF Bay Area.
They are not as commonplace on the eastern side as they are in California. Back in June, there were somewhere between 300 and 400 in the New England area. Probably about the same in the states surrounding DC.
For example, although they're not a luxury marque, VW specifically (not the VW group) decontented their cars in what is referred to as the "beigekrieg". By decontenting -- and then drastically lowering the price -- of the Jetta and Passat, they are gaining significant volume to meet the goal of increasing U.S. unit sales from 250,000 a year to 800,000 a year. So far they've managed to increase it to > 400,000 a year.
Why is Audi bringing over the A3, BMW the 1 series (though that's not gone terribly well) and FWD cars, and Mercedes the FWD CLA? These are cars at lower price points, meant to increase volume and to get new customers into the fold of the brand. On the entry-level luxury market, buyers are price sensitive. Not as price sensitive as the mainstream compact and mid-size sedan markets (who have been decontenting cars to keep prices from moving), but still price sensitive. If the cars get too expensive, or if times get tough, these buyers abandon their plans first. Regardless, all three marques are seeing record sales in the U.S.
Even Porsche, one of the most profit-oriented marques on the planet, has the sub-Cayenne crossover being launched at the L.A. auto show. It may break the "we make at least $10K on every car we sell" informal rule for the first time in over a decade. Why? Volume, which admittedly, allows it to fund other versions (and entirely different) of existing sports cars which bring in very high margin.
The only manufacturer I can think of that's genuinely attempting to be exclusive is Ferrari, who is now trying to limit global sales to 7,000 vehicles per year, which will raise prices.
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Regardless, I think Tesla's strategy is the correct one. To say it worked for Porsche is an understatement -- hell, they used it to nearly buy VW from under the planet's nose.