I think you mean to say legacy automakers have been underpricing.
I haven't heard of a single legacy manufacturer selling their EVs for more than they cost to make (aside from vague predictions about future margin targets).
Before anyone says it: new Chinese EV makers are not "legacy."
> Even now the legacy companies are held up by few EV models, bad range, bad software, bad dealership experience, and bad charging networks.
I’m not so sure. At least from a European perspective it looks like traditional car makers have caught up and even overtaken Tesla in the low price segment (VW eUp)
> especially EVs as the competitions is catching up.
I want to ask "are they though?".
A while ago Tesla slashed prices by close to 10% for some models, which caused quite a stir and weird statements from their competitors, like "we won't be doing the same because we care about resale value".
As it stands their offerings are roughly on par in pricing to non-premium brands offering the same(or less) features.
Their only real competition in terms of pricing are Chinese brands, who have ample capital to play the race-to-the-bottom game.
> Both BMW and Mercedes have EV platforms, have you done your homework?
Of course I know they "have" platforms, but look at the price of the actual cars. They're at least a generation behind Tesla on platform cost.
Legacy automakers' dirty little secret is that their cheap EVs aren't profitable, and their profitable EVs aren't cheap. They failed to invest in lowering EV build costs.
I find non-Tesla/non-China automakers (including Europe) very in denial about how far behind they are.
> Tesla relies on high volume to make money; the other automakers are pricing EVs based more on margin.
This is just wrong. Tesla relies on margin. The other automakers don't make money with their EVs for the most part. They make money with their ICE vehicles.
> all the more cash rich automakers get time to catch up on R&D
Actually all the other automakers are stripping their R&D programs and dropping new EV vehicles to survive.
Of course not! I expect legacy automakers to commit financial resources towards charging networks if they want to encourage their development. Less share buybacks, more investment to move the EVs they supposedly want to sell.
Tesla is used as an example because they don’t fuck around. No network existed, so they built the supercharger standard and then went and built the charging network. Legacy automakers just flail about half heartedly. Innovator’s Dilemma and all that jazz.
The lower half economically speaking will be waiting for some time for an affordable EV unfortunately, until the manufacturing flywheels pickup steam, pushing down costs. The evidence clearly shows folks will stretch to buy more expensive EVs (like Teslas) versus buying Leafs and Bolts.
> Their market cap is higher than most other car manufacturers (pumping out many times more vehicles than Tesla is), most of whom have caught up on EVs (is Toyota the only big manufacturer still lagging on EVs? I think they are)
Tesla is a top 5 car manufacturer by earnings at $14B for 2022.
Toyota is next up that list at earnings of $20B.
Tesla sell almost 0.5 million EVs a quarter and has a 60% EV market share in the US, it sells more than everybody else combined currently, and is growing very fast. Hard to know how it will all shake out but so far nobody has caught up. Doesn't mean they can't but they are chasing. EV share of the US market is only 7% but is clearly the future, and again, Tesla has 60% (!) share in that market segment.
Looking forward there is the Gigafactory in Mexico and the Cybertruck release. If that is a hit Tesla will maintain its market leader position in 2024 and surpass Toyota in earnings. And they keep dropping prices. With smaller earnings than Tesla, and no institutional knowledge of making EVs it is hard to come up with a reason how and why Toyota can end up with a larger share of the EV market - suddenly they will find themselves in the position of the scrappy startup and Tesla the incumbant. That is the reason for the market cap, not mean tweets or dank memes - investors don't care about that.
Probably the list of EV leaders will be mostly new companies like Tesla, not legacy brands. Maybe some Chinese companies. Whatever the case it will look very different than today.
>While they have a sticker price implying luxury, they justify the price on the grounds of electricity being cheaper than petrol and diesel, not on build quality.
Yes, certainly Tesla isn't known for build quality. But they don't even try to enter the low cost or budget EV market. High sticker prices for bad cars screams failed luxury to me.
> > Tesla has accomplished something no other automaker can claim: It's made a relatively affordable electric car.
That quote doesn't even make sense. The Model 3 isn't even the cheapest all electric car...
The Smart Fortwo Electric ($26K), Nissan LEAF ($29K), Volkswagen e-Golf ($30K), and Mitsubishi i-MiEV ($23K).
So Tesla is the only automaker that can claim they made a "relatively affordable electric car" by producing one that's more expensive and has sold fewer units? I do not understand.
>Chinese cars are barely being imported in the U.S. (Three models so far). It has taken many years to get this far, and will take longer for them to have a similar reputation as, say, Korea.
Yes, but the US is a mere 5% of the global population and about 20% of global GDP (down from decades ago). You can be a huge player and not even play in the US market. The Chinese are already selling their cars in many global markets.
>Tesla has done well in the luxury car market, but they've been late and had quality issues. The Tesla 3 is not out yet and there is still a big risk they'll fail.
Tesla doesn't have Apple's half a trillion in the bank though. And which established car maker didn't have quality issues at various times (and still today)?
I assume you mean in units sold rather than revenue acquired via EV sales? Because what GM is selling in China is just one step above a golf cart and can’t bring much money in. Also, I wonder if the product is more SAIC than GM, these are still Chinese majority owned JVs after all.
> Tesla has done an amazing thing by showing that electric cars can match ICE ones and even be better than them in several regards.
What? I've been following the market and Tesla has not brought no new innovation in any aspect of the car (engine, battery technology etc). They've just hired some great designers and invested a lot in marketing. You can't even say that their cars are competitively priced. I've seen way more innovation from Chinese electric car builders.
Also, wrt to software, Teslas are basically hacked together, according to multiple reports and analyses, teardowns.
> Everyone else is just competing for supply from LG Chem and Panasonic, which is why no other manufacturer has come close to Tesla's volume or performance/price.
But LG Chem is spending billions to expand production capacity in Michigan specifically to supply the legacy brands.
This isn’t a sideshow. If Ford, GM, and VW follow through on their commitments Tesla will be 4th or 5th place in EV market share. Now... I’d be willing to believe that none of them will follow through, but I certainly wouldn’t assign a high probability to it.
The EV market has grown but it is still small. Tesla has a big piece of a small market. Tesla is leading in this small market, but there is no way that Tesla can put as many cars on the road as some of the "legacy" manufacturers. The company is constrained by capacity, by cost demographic, and by electrical infrastructure.
Sales may also be affected by the antics of Elon Musk.
As for the "legacy" manufacturers right now, Ford, GM, Toyota, Hyundai, and Kia sell respectable BEVs.
GM had the Volt PHEV and then discontinued it (https://en.wikipedia.org/wiki/Chevrolet_Volt). By all reports, the car was a winner. "Until December 2018, the Volt/Ampera family of vehicles was the world's all-time bestselling plug-in hybrid vehicle. As of December 2019, the Chevrolet Volt is listed as the all-time top-selling plug-in hybrid in the American market." Then GM made exploding Bolts, unfortunately...
We can reasonably say that the hybrid solution is still a good solution for many buyers. So Toyota hasn't been wrong.
Also keep some doubt in mind about laws being passed in some large markets that aim to constrain and eventually eliminate sales of ICE vehicles. It's reasonable to be skeptical about the economics of such laws. EU manufacturers are trying (and succeeding) to include some form of ICE in the legal framework of future transportation. It would not surprise a skeptical observer to see them succeed in the end.
The F150 Lightning was not priced realistically at the outset (perhaps for marketing reasons). It is hard to see people outside the North American market buying many F-150 Lightnings.
Toyota has debuted a BEV and has the depth to gain more of the market. Its BEV is #2 in Norway, for example. Toyota is selling more models and roughly three times more vehicles than Tesla. Its PHEVs have been successful. Toyota can recover in the US BEV market... It might help if Toyota found a name more appealing than "bZ4X" for its first large-battery BEV. Then there was the problem with the wheels not staying on... Oops.
> That's also an outlier, but less than 30k isn't which makes this post somewhat misleading (at best).
I don't disagree that this _isn't_ misleading in a way but it's also important to consider that most EVs are subject to what you said right after:
> Ford's cars are probably too expensive because they ignored the EV market for a decade and it takes time to scale up production and reduce costs.
Notably that Tesla still isn't at a scale of production where walking off the lot with a < $30k vehicle is possible! There usually isn't a lot to walk off of, but its rare that the base model will be available at all!
Most of the cars they are producing are not the base package, and likely will never be. The thing about supply chains here is that the "base model" is a much smaller percentage of actual manufacturing. Most of the time if a manufacturer were to produce 1M units a year, less than 30% will be the very base model. I'm not sure there are clear numbers published anywhere, but you can bet that while the "base model" might seem affordable you're unlikely to find it due to the same supply chain constraints — Tesla would much rather up-sell you to some package above the base model and availability is restricted as-is, so which customers do you think they'll prioritize? Tesla isn't even producing millions of units yet (I think last year was just over 600k?), and this is just a drop in the bucket in the number of cars purchased each year.
> I'd guess this is because Ford can't profitably make an affordable sedan (they can't do so without losing a lot of money) so they need to make a more expensive vehicle with better margins, Tesla did this too of course - they just had a decade head start while the legacy manufacturers did nothing.
They don't "need" to make larger vehicles with better margins, they just prefer to have better margins. A lot of this is a downstream effect of CAFE exemptions on "light trucks," which applies to both SUVs and modern pick-up trucks. I guess my disagreement here isn't that they "can't" make sedans unless you're defining "can't" in terms of "what the shareholders said." We can absolutely regulate these things and it would probably be beneficial to do so.
As for why Tesla isn't making massive trucks? EV physics (weight of batteries vs. amount of energy to move said weight) somewhat preclude this, but counterpoint there is that Tesla is making a truck and wants to be on top of that market. Sedans are in a weird space with EVs since the added weight kind of puts you in a range<->weight arms race. While most people probably don't need as much range as they think they do, you end up picking between the atrocious Hummer EV or a Model 3 (which is still very large for most of the trips you'd take with a sedan!!!).
A trillion dollars? For a niche/luxury car company? What fantasy is that based on?
> it's biggest current hurdle is getting it's production up to meet an enormous demand
While enormous to Tesla, actual demand is pretty small compared to other car companies.
It doesn't help that even the most "affordable" Tesla is far more expensive than the average competitor's EV or hybrid vehicle[1][2], let alone it's base price (not final sale price) starts off above the average new car purchase price (final sale, after upgrades, etc) for the entire industry[3].
There's a lot of hype around Tesla, but that doesn't mean they're going to take over the auto industry, let alone become larger than the largest auto makers around who produce "Everyday Joe" cars for the rest of the population.
>Tesla is the auto giant leaving behind all the legacy manufacturers while also branching into energy products
Tesla has sub-1% market share in the global auto market and rapidly declining energy product deployment (they deployed 4x more MW 4 years ago than the did last year). Let's not pretend Tesla has taken over anything yet.
I think you mean to say legacy automakers have been underpricing.
I haven't heard of a single legacy manufacturer selling their EVs for more than they cost to make (aside from vague predictions about future margin targets).
Before anyone says it: new Chinese EV makers are not "legacy."
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