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Comment by kenrikm | Hacker News Reader

If Tesla continues to follow this route it will have lasting implications for the automotive industry. Instead of replacing" your car every 5-10 years you can "Upgrade" keeping existing chassis but replacing enough to make it "Like New" (Refurb vs Replace) Automakers sell a completely new car just to make a few thousand dollars every 5-10 years and that's only if the customer stays loyal (Also why some car companies have loyalty incentives) in this case Tesla can still make that income and the customer is locked in as a bonus this will help to keep resale values high since there will be less cars on the market because owners upgrade instead of selling.

Now more then ever I wish I bought Tesla stock before it went through the roof.

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>If Tesla continues to follow this route it will have lasting implications for the automotive industry.

No it won't.

This upgrade concept has been tried in many consumer products over the years and it hasn't caused any ripples let alone waves. The fact is that people like buying new products. It's an opportunity for them to re-evalute their product choice. They like the experience of having something different. Many reasons that aren't simply financial/practical.

And it especially doesn't work with cars. The interior of a car wears over time in a way that is impossible to make new unless you replace it. And many of the newer technologies e.g. autonomous require massive changes to the internal system. Add it all up and it becomes very cost prohibitive to upgrade rather than simply replace.

Can you give an example of where the upgrade concept has been tried before?

I can see it having difficulty operating on small or even medium sized purchases, but a car is a very different thing. Why make a large purchase when you don't have to. People already know new cars loose so much value the second they are driven off the lot, why would you subject yourself to that if you can upgrade your existing car.

From an environmental standpoint, isn't upgrading an existing car much more friendly to the environment that digging up new metals.

As far as things like the interior wear, why not be able to upgrade a new interior. Why trash an entire car just because part of the interior is worn. So you need a new headliner, get just that. You don't need to throw away the whole car.

I'd agree that large scale changes like completely autonomous control may be difficult to retrofit, but probably not impossible as many cars are being built with park assist which means autonomous control could be mostly a software change rather than hardware. At the same time, how often do we see massive technology changes like that in the automotive space. More airbags could be tacked on to older cars, brakes upgraded to ABS could have happened. Basically, anything that has happened in the automobile in the last 50 years could probably have been a minor hardware upgrade. Even carburator to fuel injection could be an upgrade.

I also think we're experiencing a cultural shift in why and how people buy. I think the idea of just buying something new, is becoming an outdated. I know I don't want to buy just to buy, I don't go "shopping", but I definitely did in my younger days.

Lastly, can you please not state as fact what is clearly your opinion. To say "No it won't" is a very abrupt and I'd say rude response and seems to attempt to shut down discussion rather than saying "I don't believe it will have implications because..."

Upgrading the Interior is going to be expensive, to the point that no one will want to do it. The older parts are going to be more expensive, because someone has to keep them in inventory; and then they are going to be much more labor intensive to install than they were originally; since the car is actually put together.

Modern cars are getting harder to repair (smaller spaces, closer quarters) than in the past.

I also think the entertainment electronics are getting much more tightly integrated. When I was in high school 15 years ago it was pretty common to replace your stereo (and get a CD player!); but now the whole system is so integrated into the look and feel of the car anything aftermarket will just look out of place.

I think you're looking at this with the 'innovators dilemma' problem of expecting cars not to be designed with the idea of upgradability in mind. Maybe Tesla has been thinking this way all along.

Upgrading an interior probably has too much diverse meaning to meaning (does it mean dashboard? seats, console? etc), so let's leave that one for now, but I think the rest of the issues you mention have possibly already been addressed.

Older parts don't have to be more expensive, because we'll be able to 3-d print metals, or assuming we're talking about an electric car, there are less mechanical parts anyway and a company could decide on a modular design that they stick to for efficiency purposes. For instance, Toyota could decide on a shape and size of their batter pack. Then as battery technology inproves, they don't have to create a bunch of stock to upgrade old cars, as the old cars would use the same design as the new.

I agree with you regarding smaller spaces and closer quarters, but technology is also constantly shrinking too, so I think it might be possible that replacement/upgrade parts could be smaller than the one they are replacing, so as long as they share a mounting structure, it won't cause a problem.

You are right about entertainment systems, previously there was a standard (I think it was called DIN) size and there was only one size. Then they added 1.5x and I think 2x sizing. But upgrading your entertainment system used to mean getting an aftermarket system, not a system from the same manufacturer. Now, it seems to me, that manufacturers use the same or a very similar system across their brands. They aren't stocking 100s of different systems, they are stocking 5 or 6 and those are used across all of their designs.

If upgradability is thought important from the design stage, I think all of this is possible, and more.

Strongly disagree.

Every part of the car interior can be replaced if it is designed from the ground up with that purpose of retrofitting. For instance you look at a dress shoe and think that the shoe has to be thrown once it is worn out, but Allen Edmonds shoes can be re-crafted once they are worn. They look as good as new. If something as tightly coupled as a shoe can be re-crafted, the interior of a car surely can be.

Also - with an electric motor most of the complexity is in the software - which can be easily upgraded. Autonomous driving - needs massive changes to the internal system ? Like what ? From what I can see - the physical changes needed are in the steering department - that's about it. Rest is all software.

I can bet any money that one day Musk will upgrade a Model S into a driverless car. Perhaps in the next 5 years.

> but Allen Edmonds shoes can be re-crafted once they are worn.

As someone who only wears Allen Edmonds shoes, there is a limit to recrafting. I have a pair of shoes that I absolutely love, and they have been rebuilt once. But I fear that the insoles are quickly approaching the point of no return, such that Allen Edmonds won't/can't rebuild them.

Everything can be rebuilt, but there is a point of depreciating returns with things like car interiors.

Agreed. There is a limit but you can't dismiss the upgrade option as infeasible.

Even on your standard car seats can usually be swapped out in under an hour (Four bolts per seat, disconnect one power cable - Reverse to reinstall) carpet + seats takes longer but still only a 3-4 hour job when I've done it in the past. Usually dealers will charge an insane markup replacement parts though "bundling" them into an upgrade package (for less then the sum of purchasing individually) seems to make sense.

Automakers lock consumers into rebill programs via debt, i.e. a car loan. Tesla locks consumers into rebill via equity, i.e. a nice car, conveniently iteratively upgradeable. Thus Tesla gains capital advantage because it has no liability after disposing of a car asset, while automakers generate debt liability. For every car manufactured, automakers create a liability for themselves, while Tesla creates an automated income stream. Consequently cash flows better in Tesla than in its competitors. Relative to that of automakers, Tesla cash flow increases exponentially. Tesla is competing on a different level. The automakers will be lucky to earn a spot on Tesla's platform. At the very least, Tesla has a first-mover advantage in a surprisingly new market.

You're saying people don't debt-finance Teslas?

Sure they do, but someone who bought a Roaster in 2008 surely has it paid off by now. However unlike every other manufacturer that forgets about the vehicles it used to make (unless there's a recall), Tesla is improving existing products.

I have a 2004 SUV with a 7" satnav in it and some god-awful software package. Does Acura offer an upgrade path for this? Other than a way to update the roads database, no. Buy a new SUV.

>Does Acura offer an upgrade path for this?

Neither does my iPhone 1. Lets hold off on this comparison until Tesla is still supporting 11 year old vehicles.

The new-for-old replacement cost of an iPhone 1 is peanuts compared to an SUV. Pinot makes a legitimate point that some car components could be made upgradeable by their manufacturer -- like entertainment units -- but they don't, and they're missing out on those aftermarket dollars as a result.

I've owned a number of cars for which I would have spent thousands of dollars with the brand upgrading them if options were available.

>some car components could be made upgradeable by their manufacturer -- like entertainment units -- but they don't

Almost every single car part can be "upgraded", courtesy of the aftermarket. It's not necessarily a worse system.

Do the automakers still finance car loans directly? I know GMAC turned into Ally and is no longer owned by GM. I'm not so familiar with the other automaker's financial arms.

In my experience buying a VW and a Mazda, the financing I've been offered has been through another company. I don't remember who the VW bank was (financed through my credit union at the time), but the Mazda financing is a co-branded Chase loan.

According to Wikipedia[1] Ford is the only one of the big three Detroit manufacturers to still have it's own financing arm. As you noted, GMAC spun off into Ally, and Chrysler Financial was bought by TD Bank.

[1]: http://en.wikipedia.org/wiki/Ford_Motor_Credit_Company

I bought a VW earlier this year and financed it through VW Credit, which is part of the Volkswagen Group.

The 'new' GM bought a bank. They do a bunch of financing:

http://www.gmfinancial.com/

Is there any evidence what so ever that the financing arm of automakers is causing a systemic problem in their business ? Because I haven't seen it. And if it was a problem they would simply spin off a company like BMW does (BMW Financial Services).

And it's a bit early to be taking about how fantastic Tesla's cash flow situation is when they have been losing so much money in recent years. And they have so much cash locked up in a Supercharger network that has a questionable future (proprietary standard, embrace/extend model, no interest from other automakers).

The interest from other automakers is irrelevant, because that's expected. No car maker is going to cooperate with any other in a way that makes the other look good. BMW electric car owners could desperately want to use the supercharger network, but there is no way in hell BMW would ever let them.

They would if the basis for all of it were open standards. Many car components are standard sizes and can be used regardless of manufacturer. However because it is a proprietary standard and Tesla leads in adoption car manufacturers would be susceptible to the embrace and extend tactic. They would never stand for that.

Not disagreeing (edit: well maybe I am, a bit) but with a Tesla the "upgrade" is pretty much mandatory as the battery packs have a limited life. So even if you don't need to upgrade to get the extended range, you still need to replace the battery pack every so often. Also other components on the car will wear: brakes, suspension, interior. A lot of people trade/replace cars even if the car is still running and reliable, just because they are tired of them, the interior is worn or falling part, the seat springs are flat, etc. Or they just want something different, bigger, or with different utility.

You could take most cars of the last couple of decades, and a complete interior update, engine/transmission replacement, and suspension rebuild would still be cheaper than a new car. But few people do that.

Keep in mind dealers are not the ones who offer the Update/Upgrade you are dependent on aftermarket services which tend to be more expensive (It's easily more expensive to restore a "normal" car then buy a new one) However in Tesla's case they can roll the restore into a easy to perform upgrade because of their limited number of models and prior engineering of things like battery swaps to be quick/easy. While it might take a hundred hours to do a restore of a normal car Tesla can swap a pack, some body panels, electronics and interior in a days labor.

I do agree that if, as seems to be the case, Teslas are designed for upgradability, that is a key difference. However I still maintain that from a purely financial perspective it's cheaper to maintain an old car than buy a new one, especially when you account for depreciation. You can keep an old car going almost indefinitely if you do the maintenance. Most people don't WANT to keep their old car forever though, and I don't see any clear reason why Teslas will be any different in that regard.

>While it might take a hundred hours to do a restore of a normal car Tesla can swap a pack, some body panels, electronics and interior in a days labor.

Any source for this?

I spend some time on the Tesla forums. There are threads of people get into minor collisions and receiving estimates of 100+ hours of labour to replace some front end parts and paint, along with bills over $20,000[1][2].

So, I don't think it's as simple to replace these parts as you suggest.

[1]http://www.teslamotorsclub.com/showthread.php/26326-Cost-of-...

[2]http://www.teslamotorsclub.com/showthread.php/39325-Owning-a...

Replacing undamaged body parts is orders of magnitude easier then replacing something that's been in a crash. Most bumpers or fenders can be removed in under an hour and install time is similar. (Source: I worked at a body shop while I was a teenager and I used to build AutoX/Drift/Rally cars after that) You can charge insurance insane amounts for parts if the value of the car is high enough that it's not going to be a total loss. That "cost" is separate from the actual cost of the parts/labor. Along the same lines MRIs really don't have to cost $10,000 regardless of what your hospital puts on the bill. When you can go to the phone book and get the same MRI for $500 from many sources.. but you're not going to be price shopping when you're in the ER with a broken leg. What's the real market rate?

>*What's the real market rate?"

Considering you have to go to a Tesla certified dealer, I'd say that is the market price. It's not like there's a shop on every corner.

And, no, replacing undamaged parts is not "orders of magnitude" easier. Of course, it depends on how badly parts are mangled, but that's exaggeration.

Read the threads, they're interesting.

I completely agree with you. My car looks like it's going to last a little over 10 years and then eventually it won't be worth fixing.

I wonder what the cost of this Tesla upgrade is going to be though.

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