Tesla and Uber Unlikely to Survive...

[hyphen]

jamoor said:

Witchfinder said:

It's a bit of a Marmite brand isn't it?

The first real Model-3 rivals will be the VW ID.3 and (albeit in lower volumes) the Polestar 2. This will be the true test.

The problem with "Tesla Killers" is the issue with the business model of the competitors.

VW and Volvo have a massive dealer franchise network to look after. Dealers make their money on servicing and parts not selling cars.

When they are asked to sell these electric cars that require no regular maintenance they aren't going to be best pleased. They are killing their own revenue stream. In addition they want to make a profit on the sale, increasing the selling price of the vehicle. They really are stuck,

Musk did a U-turn on closing Tesla retail stores, Tesla are actively expanding their service locations.

So the demand from buyers for a physical network is there for EV cars.

If current revenue models don't apply then they will change it to work for the Franchise Dealers, for as long as customers want to buy new cars from them.

[UnderSteerD]

Dave Hedgehog said:

it would be interesting to know what the drivers are for the average tesla buyer

the ID3 may steal some M3 buyers from those who stretched to buy one, i doubt anyone after the LRM3 would give one a second look

the polestar 2 is defiantly charging the model 3 head on, interesting times

I have a Model 3 on order (for whenever they can be bothered to let me know when I can actually expect to receive it), and my motivation for doing so is the 26k miles I cover each year. I could never justify the running costs of an even remotely comparable car.

[hyphen]

Sambucket said:

Makes me chuckle. how angry Tesla enjoying, even moderate success, makes some people.

I'm sure Freud would have a field day with it.

Being angry that a niche car company is selling a few cars!

That's the thing you see.

You can't have just 'moderate success' when you have most of a market to yourself.

You need to dominate and be so far ahead that as the market grows you can continue to enjoy moderate success or more.

And Tesla are not in this position so the big boys could make all their hard earned gains count for little.

[anonymous-user]

Maybe the idea is, you have to aim at Mars to stand a better chance of hitting the moon.

This binary thinking, dominate vs bankrupcy, fuels this thread, but is nonsense really.

In the long run, I'm sure Tesla Inc would be perfectly content with 5% of global sales. At a CAGR OF 40%, that should happen around 2025 and value the company at around 50BN.

[jamoor]

hyphen said:

Musk did a U-turn on closing Tesla retail stores, Tesla are actively expanding their service locations.

So the demand from buyers for a physical network is there for EV cars.

If current revenue models don't apply then they will change it to work for the Franchise Dealers, for as long as customers want to buy new cars from them.

How would they change it to work for franchise dealers apart from increasing their margins to cope for the shortfall. Don't remember these dealerships have huge overheads, for example the new sytner premises in Sheffield is huge.
The dealers traditionally provided a less capital intensive form of scalability, a manufacturer could open new locations with minimal investment. The scalability has been replaced with the internet.

There is a demand for physical stores sure, I don't hear anyone crying out for a franchised dealership though. Further down the line when electric cars are much more common and consumers readily accept buying a car online then its possible to begin closing stores, which is alot more difficult with Franchises.

Edited by jamoor on Friday 16th August 14:43

[DragonflyTrumpeter]

Sambucket said:

Makes me chuckle. how angry Tesla enjoying, even moderate success, makes some people.

I'm sure Freud would have a field day with it.

Being angry that a niche car company is selling a few cars!

You need to define succes then, if that what Tesla are currently enjoying. But don't make the mistake of taking sales as success.

Keep in mind that the more vehicles Tesla currently sell, the bigger the their losses. Your Freud bit is funny.

[Dave Hedgehog]

hyphen said:

And Tesla are not in this position so the big boys could make all their hard earned gains count for little.

I suspect its a race, can Tesla get the model Y to market in volume before the main stream manufacturers get their products out in volume, if they can i think they will keep a good % of the market.

If tesla do fail i suspect they will be purchased pretty much instantly by one of the tech giants, all of whom have spent a lot of money developing autonomous vehicles and have 10x the amount of cash needed stuffed in tax havens. What a gift, modern manufacturing plants, huge battery production capacity and a massive charging infrastructure. The one thing Tesla has shown to Google, Uber etc, is how difficult and expensive it is to setup mass production on any meaningful scale from a startup company.

regardless of what happens Ol' Musky has changed the world

[hyphen]

Dave Hedgehog said:

The one thing Tesla has shown to Google, Uber etc, is how difficult and expensive it is to setup mass production on any meaningful scale from a startup company.

Apple doesn't build its own phones, it farms it out.
Google doesn't build its phones, they don't build there laptops, they don't build the CPU's they use in their data centres. All left to others.
Uber didn't build a car for autonomous development, they bought a few Volvos.

Did Tesla need to make the cars themselves...

[anonymous-user]

DragonflyTrumpeter said:

Keep in mind that the more vehicles Tesla currently sell, the bigger the their losses. Your Freud bit is funny.

That's very obviously not true. Tesla has positive gross margins. The more cars they sell, the lower the loss.

DragonflyTrumpeter said:

You need to define succes then, if that what Tesla are currently enjoying.

Tesla's currently strategy is to prioritise volume over margin to increase market share. So I would define success as a million car sales per year by 2022 and 5BN cash in the bank. Which would be CAGR of 40%.

Edited by anonymous-user on Friday 16th August 15:21

[anonymous-user]

hyphen said:

Apple doesn't build its own phones, it farms it out.
Google doesn't build its phones, they don't build there laptops, they don't build the CPU's they use in their data centres. All left to others.
Uber didn't build a car for autonomous development, they bought a few Volvos.

Did Tesla need to make the cars themselves...

Total tosh. Apple is probably the closest thing tech has to a vertically integrated tech company.

Job's himself said Apple was the "only vertically integrated technology company left"

Part of Apple's ability to pull off something like the online music store is due to its vertical integration, he explained. "Other computer makers provide one part of the solution; we're the last company providing everything," ....

Apple take control of as much as the process as they possibly can.

[Dave Hedgehog]

hyphen said:

Did Tesla need to make the cars themselves...

a very interesting question

would they have got where they are on the same scale and as quickly using a third party maker? Musk was bang on about one thing, the cars, battery production and charging infrastructure are all equally critical

[jamoor]

Sambucket said:

Total tosh. Apple is probably the closest thing tech has to a vertically integrated tech company.

Job's himself said Apple was the "only vertically integrated technology company left"

Part of Apple's ability to pull off something like the online music store is due to its vertical integration, he explained. "Other computer makers provide one part of the solution; we're the last company providing everything," ....

Apple take control of as much as the process as they possibly can.

I dont think you quite understood, apple don't do any manufacturing.

[oop north]

Sambucket said:

DragonflyTrumpeter said:

Keep in mind that the more vehicles Tesla currently sell, the bigger the their losses. Your Freud bit is funny.

That's very obviously not true. Tesla has positive gross margins. The more cars they sell, the lower the loss.

Edited by Sambucket on Friday 16th August 15:21

Unless your overheads are increasingly more rapidly - which is what the most recent accounts showed...

[anonymous-user]

jamoor said:

I dont think you quite understood, apple don't do any manufacturing.

Fair enough. But I read they make their own phone chips? And hope to make their own mac chips in future too, in order to more tightly integrate their product range? Not an expert, but find it interesting.

[anonymous-user]

oop north said:

Unless your overheads are increasingly more rapidly - which is what the most recent accounts showed...

Sure, but those overheads don't figure in gross margin, so if they built/sold less cars, the loss would have been even greater...

[Burwood]

oop north said:

Sambucket said:

DragonflyTrumpeter said:

Keep in mind that the more vehicles Tesla currently sell, the bigger the their losses. Your Freud bit is funny.

That's very obviously not true. Tesla has positive gross margins. The more cars they sell, the lower the loss.

Edited by Sambucket on Friday 16th August 15:21

Unless your overheads are increasingly more rapidly - which is what the most recent accounts showed...

They did make a Record Gross margin of almost 1B, however look at their other expenses. 117M restructuring, which is not exceptional given it's prevailed every quarter for some time, 173M interest expense, ouch. Selling and admin costs. This will be marketing, rent and dealer/customer incentives, oh and stock awards. It's increasing. They give away a st load of money to employees and this won't stop. Musk himself is still creaming it despite Tesla denying it.

Without any further detail they need to increase Revenue(sell more cars) to the tune of +80%. Most likely twice as much to counter the increase in selling/admin costs. That is a tall ask. And that assumes margins stay the say. They might have years of limited restructuring and slash R&D but then what?

I see absolutely no path to profitability for years at current growth rates. In fact when China is operational they will have to pay even more in 'rent' (however that deal was structured). I bet it's punitive. You can forget about Solar. It's a basket case and losses money too. It's Self Drive or bust so to speak.

[jamoor]

Sambucket said:

Fair enough. But I read they make their own phone chips? And hope to make their own mac chips in future too, in order to more tightly integrate their product range? Not an expert, but find it interesting.

Do they manufacture them in house? I doubt it.

[anonymous-user]

jamoor said:

Do they manufacture them in house? I doubt it.

Tesla outsource manufacture of the new AW3 chip to Samsung it seems. So it's designed by Tesla, built in Asia, same as Apple. It's not that Tesla is philosophically opposed to outsourcing manufacture where practical.

Maybe it makes more sense to build batteries and drive units under one roof. Chips are easily shipped to central location and plugged in.

[Burwood]

jamoor said:

Sambucket said:

Fair enough. But I read they make their own phone chips? And hope to make their own mac chips in future too, in order to more tightly integrate their product range? Not an expert, but find it interesting.

Do they manufacture them in house? I doubt it.

No they don't. Taiwan Semi do the physical manufacturing. Samsung still produce some but this will likely change. It does seem crazy they use Samsung(necessity but that will change). Their storage(Nand Flash) comes from Sandisk and Samsung, screens from LG and Samsung, NVDA and various other vendors supply the GPU. Qcom as well hence delay in 5G if you recall the dispute.

[Trophy Husband]

Is it not possible that Tesla will become like a Bosch or Siemens type tech business? Batteries and drivetrains and tech sold to other manufacturers to load their models with? Surely that's their trajectory? They're just doing it with their own mule for now.