This is what I've been thinking for awhile. A huge number of the detractors predicted that Tesla would get crushed by commoditized goods that they spent the R&D dollars on, namely batteries. But I don't think the capacity is even remotely there for other manufacturers to come in and just buy up energy storage on the open market.
Eventually it'll show up due to demand but the flywheel is slow to turn. I think a 3-4 year head start is about right and also in line with most technological head starts (Bezos famously talked about it some time ago and why AWS is the reason they are winning since it had no viable competitor for 7+ years), but like Amazon/AWS, if it takes any longer than that... you're handing Elon a huge amount of time.
It'll be a few more years before you can realistically start talking about failure.
No one reasonably expected the old car companies to leapfrog Tesla in a year or two. This is going to be a long battle for market share. It'll take a while for the "newcomers" to get the consumer trust in their electric cars that Tesla already enjoys.
Agreed. Tesla is a young auto company, who eventually wants to be an energy company. It might happen faster than we all think or expect, but it's not there yet.
At this point I think Tesla's future in the automotive market depends on just two factors. Their DC fast charging network, and their supply of batteries.
I'm confident they currently hold the upper hand on both fronts right now and for the next couple of years most likely. I am not at all confident that they can hold onto either advantage much longer than that.
The biggest problem is the one the author mentioned at the end of the article: If Tesla takes too long, they might be outpaced by more mature competitors. That demand will move elsewhere or dissipate if it isn't capitalized on.
I don't think so either, but the hoops the big auto companies need to jump through are a lot lower. Once they have the design, they have the supply chains, assembly lines, and logics networks in place to go from 0 to 100 in months not years like Tesla.
The entire car part of Tesla’s business could disappear and it would still have a story for shareholders in stationary storage alone. They’ve said half of their battery production will go there. Think about what that means for revenue.
The Semi is a huge market.
And even if Model 3 didn’t exist and Tesla pushed itself as developing Model S as the number one car for self driving mobility services, they’d still have a claim at the lions share of the automotive market. Vehicle cost is a much smaller concern in the post-self-driving world.
Let’s imagine Model 3 only pulls Model S numbers, and their annual production only goes to 200k by 2020. I don’t think that’s enough to see a total collapse of the stock the way you seem to be suggesting.
I think Elon has many more cards in play than you let on.
Yup. But it may be that some people with enough information and time to watch the stock and relevant data on it literally second by second could make a killing. And some people might be in a position to influence the time of the turning point and stimulate an avalanche of a fall.
Broadly, no way do I believe that many people, not even fleets, especially not individuals, will put up with the charging time of a battery powered car. It's just so darned much more convenient to fill up a 20 gallon tank with gasoline.
My guess is that the promise of electric cars was boosted by both the anti-fossil fuel push and the self-driving push. IMHO, with Trump, the anti-fossil fuel people just lost, big time, for a long time. E.g., we won't have carbon taxes, the theme will be "drill, baby, drill", and US gasoline prices are on the way down. For self-driving, my view is that the lawyers will make the insurance rates too high and more lawyers will pass some very restrictive laws. Then self-driving will be for some special cases and/or will need a lot of highway engineering that will take a lot of time and money and won't happen for years. For more, no way can Tesla do something significant that GM, Ford, Chrysler, Toyota, Honda, BMW, MB, Kia, etc. can't do just as well or better. E.g., there were electric cars ~100 years ago, and the story has been the same since then or as a Ford exec once said "You build me a good battery, and I will build you a good electric car." For a while there was some hope for a capacitor, which can be charged as fast as the electric power connection permits, but that approach seems to have flopped. Finally, I'm guessing that Musk has had a lot of subsidies, and I have to guess that Trump will turn off that faucet. Net, I see no real hope for Tesla. IMHO, Tesla is going down, soon. So, some smart and/or lucky short sellers stand to make a bundle.
I too have been surprised at the slow pace (and poor quality) of EV deployment by traditional manufacturers. That's why I bought a Model 3. However. It's pretty much inevitable that the traditional manufacturers will have to make significant inroads into the EV market in the next ten years, if only to deal with increasingly stringent EU regulations (and not to handle the market demand that Tesla has created.)
It may take competitors five or eight years to begin making serious inroads into the EV market, but let's say it does happen on that timescale. What is Tesla's moat that is going to allow it to compete with manufacturers who have almost infinitely more production capacity and a much larger customer base than Tesla? Better battery tech? Superchargers? Rapid year-over-year growth that makes Tesla too big and successful to compete with [note: there is no evidence of that growth in the Tesla earnings report]? I'm pretty skeptical right now.
All true, it will take a while for EV supply to catch up with demand, and Tesla is in a very good position, they seem to have locked in a lot of battery supply, their production is very efficient and they have much better margins than all other manufacturers. Most traditional manufacturers sell EV´s at a loss, and talk about 50% EV´s in 2030, which seems far to little too late, I think they´ll need to move much faster if they want to avoid bankruptcy.
I do think Tesla´s position is very similar to Ford´s position over a hundred years ago. Ford initially had all the same advantages with the T model. Yet Ford was overtaken in the 1920´s by GM who started segmenting the market, giving customers different brands, models and options to choose from.
For the coming years no manufacturer will be able to really compete with Tesla, but I do think Tesla will need to introduce more models and start covering more niches in the car market.
If you believe that they will sustain 50% annual unit growth for another 5 years or so, then it probably is.
It certainly seems plausible. People talk of competition, but the competition has been full of mistakes and missteps so far. I don't think its obvious that the next few years will be any different.
Then again, we don't really know Teslas roadmap beyond the CT, other than vague hints. We know something smaller is coming and we know something bigger is coming. That's basically all we know of their roadmap. :)
No, no, no, no, no. Tesla is going to make about half a million cars this year. Its goal for later in the 2020's is to be selling 10 million. And soon it is going to be facing huge competition as the mainstream companies start building EV's in large numbers. And the whole market is going to start swinging to EV's in about 4 or 5 years when plunging battery costs lead to EV's having sales prices equal to ICE's.
When there is a huge technological revolution like that, many if not all of the incumbents fail to make the transition and go out of business, and the market is taken over at least partly by new firms. Tesla is well-positioned to be one of the ones that succeeds. So rather than settling down, it needs to scramble and grow as fast as possible, which is just what it is doing.
It is perfectly possible that Tesla will be marginal or out of business within a decade.
Tesla did a good job hyping electric cars and selling them to an early-adopter market when they had no real competition. But now that the market is proven and the discussion has shifted, every major car company and a bunch of other players, possibly including Apple, are going after the much bigger mainstream market. If you look now at Consumer Reports and their recommended BEV cars, Tesla only has 1 of the 5 models listed, and its score is a middling 78, behind the 91 for the Kia EV6 and the 84 for the Genesis GV60. Once the rest of the competition has a few years to iterate, the picture could be significantly worse for them.
It's possible that Tesla could be the Google of electric cars, where first-mover advantage leads to decades of dominance. But it's also possible that they could be a Groupon or a Pebble: companies that were initially leaders and darlings, but that couldn't keep up over the long term.
I don't expect Tesla to catch up in a short time. It has already been decades almost, and I would expect it to be decades more. Without doing any real math, 2040, 2050 seems like a good mental calculation result for when I would expect Tesla to be a larger company that matches or surpasses the outputs of their competitors in terms of car production. Yes, it takes a long time to build a car company. Tesla isn't going anywhere, production issues or not. They will find a way, and they will do it more efficiently than previous car companies.
> The "previous industry" are no dummies
I don't agree with this, but I wouldn't use the word dummy exactly either. I would say stubborn, and they are very very stubborn. It will take them longer to pivot to winning and sustainable strategies like Tesla's than it will for Tesla to resolve its production and scaling issues.
Tesla has made mistakes...especially Elon's timelines. Those have gotten better of late.
That aside, one has to also consider the limited number of stores that Tesla has at this point in time. As they increases the number of stores their market reach will increase. Combine this with new global markets and it is clear that they will do fine for at least the next couple years.
Tesla has only been around for 16 years. Given most car companies have a good start already, they should easily replicate what Tesla has done in 5 at most 10 years.
I'd like to second this, and by that, I mean scream it from a rooftop.
As /u/GuiA says, "I feel like Tesla might be worth it in the long term." Tesla isn't going to be Apple in my opinion though, they're going to be Google for mobility and energy storage. If you're an automaker who isn't stupid enough to go after fuel-cells, you're going to need automotive cells, and Tesla will be waiting to sell those cells to everyone.
Renewables continue to deploy at an increasing rate, but base load is still a problem. Would you rather install new nuclear or combined cycle natural gas plants? Or lithium (ion, polymer, whatever) cells stacked in cargo containers at critical power grid locations to smooth out supply and demand? Tesla will be there to sell you those too, as well as the battery packs for your home (made from repurposed Tesla vehicle packs that are no longer feasible for mobility, but are just fine for stationary applications).
Eventually it'll show up due to demand but the flywheel is slow to turn. I think a 3-4 year head start is about right and also in line with most technological head starts (Bezos famously talked about it some time ago and why AWS is the reason they are winning since it had no viable competitor for 7+ years), but like Amazon/AWS, if it takes any longer than that... you're handing Elon a huge amount of time.
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