OT: Tesla Model 3
Given that the Big 3 operate in the backyard of Ann Arbor, I wanted to hear everyone's thoughts around Tesla. Do you currently have one? Did you place a reservation for the 3? How do you see the Electric Car market in the future?
Growing up in a GM family (in Michigan), there doesn't seem to be any thought from many of them around Tesla. Living in Chicago, there seems to be a lot of buzz. What say you engineering folks?
Yes, I am aware that username does not check out.
August 1st, 2017 at 12:48 PM ^
I leased it for 2 years and liked it. Living in MI, it's not very practical, however; the EV range drops by 50% in cold weather months (i.e. half the year). I would get - maybe - 12 miles on EV during the winter, and the gas engine would always start because the car had to be heated.
August 1st, 2017 at 11:30 AM ^
I love Tesla. They've given me a decent chunk of change. But as far as what do I think about the product itself, I think Tesla and the electric car market in general have a ways to go before they become truly mainstream. But they are the future. No matter how much the Big 3 try to shut them out.
August 1st, 2017 at 12:39 PM ^
The future? Not when GM can make something like the Bolt. Toyota, BMW, Mercedes, etc. all have a crap ton of institutional knowledge and fine engineers. I don't think Tesla just crushes them.
I suppose what I meant to say is that the technology they employ will be the future. And alternative energy is where the market will eventually go, and it will drag everyone there kicking and screaming if it has to.
Tesla will not have some kind of monopoly on the automobile market, but I do think Musk is forcing the hand of a lot of auto makers to up their game when it comes to providing cars that run on alternative sources of energy. They can't risk not investing in this kind of technology, otherwise they risk falling too far behind to catch up.
Tesla won't rule the world, but Musk is a game-changer.
August 1st, 2017 at 11:44 AM ^
I recently turned in a Nissan Leaf on a 3-year lease expiraton.
The good points:
- Range --- The job I communted to was 45 miles RT. This was an ideal distance, given that it was well within the car's +/-80-mile range.
- Fuel --- In the evening I would plug the car into my in-garage charging station. The car's onboard timer would start the charging process at 3:00am and complete it by 6:00am, when I was ready to leave the house. Using our utility's super-offpeak rate, my electric cost for the vehicle ranged under $10.00/month. (Note: I only commuted 2 days per week, as I teleworked the other 3 days. But my wife had the car out on those at-home days doing in-town errands, so the miles continued to accrue.)
- Maintenance --- no oil change, no water/fuel pump, no timing belt, no transmission, among other things. With the lease I bought a contract to have all maintenance perfomed at the dealer. In 3 years that consisted of an every-6-months maintenance check, tire inflation/rotation, and a thorough wash job. That's it.
The bad points:
- Range anxiety. The 80-mile range limitation severely reduced the car's usefulness. No long trips, no even short day trips without having to account for a charging station somewhere. The Tesla 3's 200/300-mile range should greatly reduce this problem. And with the great strides already in battery technology, longer range batteries are probably not far off. The availability of charging stations and charging time should improve as well.
- Insurance. Plug-ins generally cost more to insure. Insurers argue that the lithium-ion battery means first responders at any crash site need hazmat suits, and that repair costs are higher than with gas-powered vehicles.
- Loss of value. With plug-in technology advancing so rapidly, yesterday's model depreciates rapidly. That low-mileage 2014 Leaf I turned in stickered at about $35k. My guess is it's on a lot somewhere offered for sale at around $10K. Leasing then becomes the preferred option, but without a business purpose, that too is pretty pricey.
Volvo has announced it's phasing out gas-powered vehicle production. Great Britain wants gas-powered vehicles off the road sometime in the next 15-20 years. My (fearless) prediction is that within the next 10 years ---or probably fewer --- most of you will have at least one long-range plug-in vehicle in your garage.
Just a note about the Volvo announcement -- they said that they would only produce electrified vehicles, but that just means hybrids and EVs. They won't make any conventional gas-only vehicles. Every automaker offers hybrids so they could all make this announcement. Wayyyy too many people got all excited and interpreted this as, "wow Volvo's only going to make electric cars. Gas engines suck!" Nope.
August 1st, 2017 at 12:07 PM ^
Tesla read Intel Corporation's playbook in siting its Nevada plant. Where Intel played New Mexico (one of the poorest states in the country) against Arizona, Utah, Washington, Oregon and California for lowest common denominator taxation (like, hardly anything) and water rates (lowest offered in the US - go figure), what Tesla did about 20 years later was use NM as the straw man in order to get Nevada to go even deeper into its pockets. In both cases, the two companies knew what they intended to do, it was all a ploy for gullible, and seemingly desperate, local politicians to bend over backwards so they could then cry "jobs, jobs, jobs." Intel already knew, back in the 90s, that it would go ahead and site plants in most of those places following the construction of FAB 11 in NM. Tesla knew damned well it was going to Nevada and got NM to make special offers so in turn it could squeeze NV even more. Intel's FABs in NM have resulted in net loss to the state's economy and base of natural resources. Let's see what the outcomes are of this Tesla plant over in NV.
Some in NM called the whole process the "Tesla Hunger Games," and there were some great memes floating around in cyberspace related at the time.
Meanwhile, I suppose that those who don't have to deal with such realities can and will enjoy their Teslas. Putting all else to the side - an impossible task at least for me - I'm sure that I would.
August 1st, 2017 at 12:32 PM ^
I have a Tesla. Simply put, the best car we have ever owned. Not only is it the fastest car I have ever been in by far, it drives much better as well. We have never had a problem with "range" as we can go up to 235 miles and everything in Southern California is within that range. When we go to Vegas, we stop in Barstow for 30-minutes and we get to Vegas just fine. Not going to the gas station is awesome and I really have not noticed a higher engery bill at hom as the car only charges in the middle of the night. Once the cheaper model hits the market, I imagine Tesla's market share will go much higher -- especially in California and other warm states. Don't be afraid. Get one. You can lease it as well.
August 1st, 2017 at 12:32 PM ^
I have a Tesla. Simply put, the best car we have ever owned. Not only is it the fastest car I have ever been in by far, it drives much better as well. We have never had a problem with "range" as we can go up to 235 miles and everything in Southern California is within that range. When we go to Vegas, we stop in Barstow for 30-minutes and we get to Vegas just fine. Not going to the gas station is awesome and I really have not noticed a higher engery bill at hom as the car only charges in the middle of the night. Once the cheaper model hits the market, I imagine Tesla's market share will go much higher -- especially in California and other warm states. Don't be afraid. Get one. You can lease it as well.
August 1st, 2017 at 12:36 PM ^
So take this with whatever sized grain of salt you wish.
I like Tesla cars. They're neat and innovative.
I don't like Tesla as a company. Their valuation is insanely optimistic. The quality of the cars they have built has been really spotty; and they have some serious questions about their labor practices.
To me, Tesla is a company with cool cars experiencing start up issues, and some culture issues in terms of how to treat the auto workers; but it has the potential to do some really amazing things.
What annoys the living shit out of me is the damned near sychophantic hero worship given to the car.
At this stage, given the choice, I'd buy a Bolt or a Volt if I was buying in that price range because I'd worry less about it. But Tesla is coming along. They are not God's Gift to Auto Manufacturing bringing True Auto Knowledge to all folorn and stupid previous auto manufacturers.
August 1st, 2017 at 12:42 PM ^
- A good friend bought a Tesla and invited me to the factory pickup. We jumped in and had a clear stretch of road ahead of us. Holy shit. Linear acceleration as far as the eye could see. It was and is very awesome.
- When he pulls into his driveway and new software is available, it simply downloads and installs with no user involvement. Self-driving software was automatically downloaded! (He hasn’t enabled that for, uh, obvious reasons). I, on the other hand, am told that I must sit in my Ford Edge with the engine running for 30 minutes to get new SYNC software. Of course, Ford hasn’t issued any new SYNC software in 2 years, but they did let me know that I can buy a new navigation data file for $150. BS.
- We were out to lunch with the Tesla-owning friends on a very hot day. Just before we headed to the car, he instructed it, through the phone, to cool down the interior. On a 90+ degree day, the interior was 72 degrees when we got in. Sweet.
August 1st, 2017 at 12:54 PM ^
I am fairly environmentally conscious, but if I am being honest with myself, I am not going to shell out 10s of thousands of extra dollars for that reason alone (leaving aside how much better electric truly is, per your point). It needs to make economic sense and/or provide some tangible benefit in order for me to make a serious eco-friendly investment.
With that in mind, I really want what a Tesla offers and the Model 3 makes that a possibility. They're incredible to drive, beautifully designed and reasonably priced, not to mention fuel savings, tax credits, etc. In a nutshell, I want one because they're cool and at a great price point. That's what will make them a serious automaker. The electric vs gas stuff is relatively moot if you live in a place with ample charging stations. Sure, some people will buy for perceived environmental reasons, but most just want a cool car that drives better than anything at that price point.
People don't really understand what is involved in producing electricity. Only 10% of the US grid is generated through renewable sources such as solar, etc. The rest is largely from coal burning power plants that require vast amounts of water as part of the generation process. Electricity is NOT environmentally friendly unless it is produced renewable means.
The internal combustion engine is the most cost efficient engine we produce. And gasoline should be stable for years as we are awash in oil now (thanks US fracking innovation!).
Electric vehicles also have end of life disposal problems with the batteries they utilize.
This has been discussed repeatedly above, but worth mentioning again. Even if the electricity is 100% coal powered EV's still have significantly less emmisions than equivalent gasmobiles per unit power. You also have the option to run your car off 100% solar by installing it on your roof when you buy the car. Tesla will be happy to help you with this as they are a sustainable energy company, not an auto company. You can get both gas and electric bills out of your life simultaneously!
With the model 3 we enter a new and better world not a moment too soon. Fossil fuels are dead man walking because the alternatives are more fun to use and getting dramatically cheaper every year. Plus, they literally empower individuals from monopoly. EV's and solar are like PB&J and the most conservative choice ever.
How is this a 'get off my lawn' post? It seems like just the opposite.
The automatic software updates feature is cool, but it makes me uneasy. Imagine the chaos (or worse) that could ensue if Tesla ever botched a software update in a way that caused the car to malfunction in some signifcant respect. Remember when Microsoft ignored its own history of never getting anything right the first time and implemented an automatic update feature in Windows 10, which predictably caused headaches for millions of users and ended up bricking some devices? The potential consequences of a botched software update are a lot more dire for your car than they are for your computer.
August 1st, 2017 at 12:46 PM ^
The Model 3 is a big gamble because, as few people seem to remember, Tesla has never made a profit. So now they're going to ramp production way up (to be seen) and offer a much cheaper product. If you can't make a profit with most of your vehicles being around $100k, can they really make this work at $35k? And yet the stock price keeps rising and rising and....
All that said, I'm still a little frustrated that the established automakers aren't farther ahead on producing battery EVs. It makes sense though, given that most EVs are sold at a loss (including for Tesla!). I'm eager for the day when EVs are commonplace and all automakers are participating. Putting aside the snarky things people derisively say about the Big 3, you'd be crazy if you think companies like Mercedes, Toyota, VW, Hyundai, etc etc are going to let Tesla dominate. There are hundreds of thousands of supremely talented automotive engineers the world over, many of them working in subsidized or financially advantageous conditions (Hyundai/Kia for example). Tesla is not going to put anyone out of business, especially if the $120k Model X we had in our department for benchmarking purposes was any indication. No two panels lined up, and I could stick my entire pinky finger between many of them. I honestly haven't seen a car so shoddily assembled in many decades. That was an eye-opener. If anyone else did that they would be laughed at and derided as the stupid old dinosaur company that should've been put out of its misery long ago. And they still can't make a profit???
The larger battery pack version of the model 3 is rated at 310 miles. We are getting there.
I drive about 600 miles this past 4 day weekend. Spending 10-15 minutes at gas station almost a burden- making that trip with EV would be an adventure.
I'm not a "car guy" by most standards, but it was time to get a new car and we wanted to go electric this time around. We ended up spending a lot more than I care to even think about. For the price, there are a lot of little things that I find irritating: Panel alignment issues, interior lighting, etc. But I gotta tell ya - if you're even a little bit geeky, it's a game-changer. It's really amazing how they were able to produce this thing that's so revolutionary in so little time with essentially a start-up company.
"We ended up spending a lot more than I care to even think about. "
Just imagine how expensive it would've been if Tesla had the crazy requirement to make a profit on it! (Like every other company)
Stock market: unconcerned with profit since NASDAQ. Tesla is doing exactly what contemporary capitalism asks.
Here in the SF Bay Area, you see so many Teslas around that people who live in the Silicon Valley bubble genuinely think that there's now a "Big Four", with Tesla being the fourth, and that the Big Three are perpetually on the verge of collapse. That's despite the fact that each of the Big Three produces at least 5 million cars a year and all of them are now booking record profits, whereas Tesla has yet to crack 100,000 cars a year or turn a profit of any kind. As a native Michigander who now lives here, I find their cluelessness to be quite amusing.
Having said that, I plan on buying a Tesla when my current car calls it quits.
The Big 3 sell as many trucks and SUVs as they can build with many approaching near 50% profit margin. We're talking 20 to 30k profit PER VEHICLE.
Tesla depends on taxpayer subsidies to drive demand for their vehicles...and they have no proven history of reliability in large numbers. I suspect quality issues will be a problem for them (like everyone else) when they scale up.
Tesla makes peanuts per vehicle compared to the Big 3. Tesla also depends on taxpayer subsidies to drive demand. If the subsidies are ever eliminated that $35,000 car goes up to around $42,000+. What other vehicles can you buy for $42k?
Any business student can assess the probability of success in both scenarios.
Not only do they not make 'peanuts per vehicle', they actually lose money. They have yet to turn a profit in any quarter they've sold cars. Somehow, Elon's force of personality keeps convincing investors to give him money even though he hasn't yet made them a cent of profit. Tesla vehicles do have some great attributes, no doubt. But they also have some glaring issues, and they all lose money. I've now worked for two competitive companies to Musk's (Space-X and Tesla), and the fanboy adulation gets on my nerves. That said, he has done a lot of impressive things; I just get annoyed when masses of people take it way too far and treat him like a god.
Well....some clarification on the two posts above is necessary here.
I don't sit in a place to know exactly what the profit margins are on a Big 3 car, but they sure as hell ain't 50%, or my bonus would be a lot bigger. If anything, maybe gross profit (revenue vs. cost of materials only) might approach 50% on something like a King Ranch F-150 or a Yukon Denali. Net profit is more like in the 10%-20% range, topping out at maybe 25% for the biggest. Small cars sell at profit margins more resembling those of a grocery store, if not smaller.
Tesla doesn't lose money per vehicle, or they'd go out of business, but their capital costs are so immense that they have yet to turn a yearly profit and only have something like two quarterly profits in their lifetime. And I think they were both from selling carbon credits.
It certainly is the case they're in part propped up by government subsidies. The figurative bottom line for the Model 3 is this: If Tesla can keep selling them without the subsidies, fix their quality issues, and maintain their high level of customer service with 10x the customers, they'll probably start being profitable. All of those things come with a list of complications ten miles long.
Agreed on your points about conventional automaker's profitability. 10% is pretty strong, and though larger vehicles (and especially luxury vehicles) can double that, most cars sold are nowhere near 50%, or even 10%.
I don't think it's reasonable to discount capital costs for Tesla, though. Their capital expenditures are necessary to produce their products. In fact, I didn't think they were all that high considering they bought the former Toyota-GM factory for next to nothing. All costs are important and count. All the other automakers are in a constant state of building and re-fitting factories around the globe, too. In fact, I thought we were supposed to believe that a saavy start-up with overworked recent-grads that work way harder than the rest of us should have much lower costs!
I can't find anything online about Tesla ever making a quarterly profit. I did find that Musk claims that they will achieve profitability by 2020, so take that for what you will.
Correction, it looks like they posted small quarterly profits in 2016 Q3 and 2013 Q1. I don't think that really changes anything, though.
I don't mean to discount capital costs, just that the gross profit on a Tesla is similar to its competitors. But those competitors can amortize their capital costs over wayyyyy more volume.
Again, not a defense of Tesla's business model. The comparisons to the "dinosaurs" ignore the fact that that Tesla is essentially freed (for now) from the obnoxious burden of making money and held to a very different standard of quality. There are probably six traditional automakers that could mimic what Tesla is doing right now. GM, Ford, Toyota, Honda, Nissan, and VW, at a minimum, could build a Tesla-like machine if they wanted to. They don't want to because it's a money-losing venture and they're sort of expected to not lose money.
Classic case of disruption is now in the second inning. EV's are more fun to drive and that is why they are going to win. Profit at this stage of the game is not important but rather who is wasting pitches. Gasmobiles are an inferior technology. The model 3 just took one deep. By 2022 EV's will be leading 5-1 in the fourth and Ausmus will be on the phone. Do you trust the internal combustion engine's bullpen? Nobody else will either and things will change much quicker than we can imagine.
Took one deep - hardly. Tesla just blew trumpets and patted themselves on the back for coming out with a tooling tryout prototype. They've built 50 "production" Model 3s. 30 have gone to company employees (read: engineers) to try out. 20 more are testing vehicles. In other words, what they've done is built all this tooling and now they have to find out if it works and can build cars at a mass scale. Or really, find out what doesn't work.
And Elon's numbers don't pass a smell test. He claims:
- Tesla has taken almost 500,000 deposits on Model 3s.
- He wants to produce 5,000 a week.
- He says if you order now, you'll have to wait until "at least the end of 2018."
https://www.recode.net/2017/7/29/16061320/elon-musk-tesla-live-event-mo…
In other words he wants to build 260,000 Model 3s in 2018, which means if you order now you ain't getting one til late 2019 or into 2020, unless he either doubles the rate of production or is bullshitting the world about how many deposits he has. It's the latter, because there are only two cars in this country built at the rate of >500,000 a year - F-150 and Silverado. And that requires more than one plant.
The Model 3 hasn't hit any home runs. It just got called up from the minors. For the next three months it's taking batting practice.
Thank you for playing with my analogy. I don't think EV's are going to dominate because Tesla builds them all, I think EV's are going to dominate because they are more fun to drive than gasmobiles so other manufacturers will be forced to build them as well. Regardless, the model 3 is a major influence on the future; this is a big step for Tesla and was projected as such from the very beginning. These are exciting times and even if we are only looking at a hot-shot prospect he is very fun to follow. No question a potential titan of the game.
August 1st, 2017 at 10:00 PM ^
I do think we're moving in the direction of electrification. I don't think it's as fast as the Tesla evangelists believe, because I think what has to happen is that electric cars have to stop requiring trade-offs before they become mainstream. People understand they have benefits. But they also have trade-offs, and range anxiety is still a real thing. Evangelists always say things like "the average commute" and so on, but people typically buy cars for their maximum expected use, not their average use. They don't have minivans because they expect to ferry 7 people around every time they drive....but they think they'll need to at some point.
Right now, gas-powered cars can drive you 350-400 miles down the road and fill up in five minutes. They can power a heater without costing you mileage. Gas cars are still the superior option for towing and probably will be for a while. There's still a myriad of things gas-powered cars can do that electrics can't. Electrics can't just be better in some ways, worse in some others, and more expensive, which is where they sit now. They'll start to hit the mainstream when the trade-offs start to disappear.
August 2nd, 2017 at 11:16 AM ^
I agree with most of your points. Electric cars are at a disadvantage because fundamentally fuel has a much better energy density. Unfortunately gasmobiles are also heating the planet much faster than expected and many natural buffers (like Arctic ice) are in dangerous decline.
If miles driven of EV's acclerates much faster than models sold, I will be perfectly happy. I suspect that will be the case as many households will move to having one of each but will use the EV as first priority.
I'm an auto supplier who and have been in most of the Big 3 plants in North America. A full sized, fully loaded 4x4 SUV does, absolutely, clock in at near 50% profit. The assembly plants who produce these vehicles are the money makers for the corporation. Small vehicles with single digit, and low, profit margins are produced strictly to get fleet mileage averages down for CAFE standards.
Anyway, the F-150 loaded, Cadillac SUV loaded, top end Chrysler SUVs is exactly what I was referring to by the way.
He does have as impressive a track record as any entrepreneur in American history and a very compelling personal narrative (grew up middle-class in South Africa, was bullied as a kid, left South Africa to avoid having to serve in SADF, worked crappy odd jobs when he first arrived as an 18-year old in Canada, etc). But I agree that Tesla's reputation as a company poised for great success and its ever-increasing stock price is built more on hype and the quality of its products rather than the feasibility of its business model.
Not to get political, but Elon Musk might have joined Trump's business advisory council more as a shrewd pre-emptive move to keep Trump from ending the tax subsidies for buyers of EVs (which is what the conservatives who have Trump's ear favor) rather than any sort of admiration for Trump or his policies. His withdrawal from the council may have been due to mounting pressure from the board and/or shareholders due to the, umm, increasingly controversial and polarizing nature of the Trump presidency.
Neg away.
EV subsidies are volumetric not permanent so I doubt Elon is all that concerned with them. He has stated many times his goal is not to dominate the auto sector, but to transform it. The entire strategy of Tesla (roadster, S&X, now 3) was to make the 3 a high-performance affordable EV that would dominate the gas option without subsidy. Other manufacturers then will be forced to also revolutionize their offerings...which is exactly what is happening.
Your ideas are intriguing to me, and I wish to subscribe to your newsletter.
Are you serious or joking?
Thought it was high brow humor glad to see I was right!
Nice joke but I would say peak oil is still a real thing, it just turns out it is going to be demand-related rather than supply-related.
I drive a BMW i3 electric car and it is a blast.
My Tesla 3, reserved on day 1, should be here before Valentine's Day. I can't wait.
As for the many posters who think that my electric car is powered by coal:
you are wrong.
My Juicebox home charging station uses Watt Time technology to avoid dirty (i.e., coal) electricity.
And my i3 was made in a factory powered by wind.
Electric cars are the future mostly because they are more fun to drive than ICE vehicles.