> "I wish we had put that car on the road and not Tesla," confided a senior engineer at Porsche. "We have to earn money at the end of the day though."
The article also talks about "how will the German brands win back customers from Tesla?", but really, if you look at cars like the Mercedes S-class, BMW 7 series or the Audi A8, their sales are unchanged or even increasing since 2012 when the Model S was launched. Audi has been setting record sales numbers in the US, which is Tesla's biggest market, for five years straight. So it's a bit hard to argue Tesla has taken many of their customers.
Maybe most Tesla drivers were never petrolheads in the first place, and drove a boring station wagon before the Model S came along?
The margins on Tesla's cars are actually very high, but Tesla is pouring an unimaginable amount of money into R&D and infrastructure right now. Gigafactories, superchargers, service centers, etc. Those are all things that VW doesn't have to worry about because they are already established.
Saying that Tesla sells cars at a loss is just another case of sour grapes by people trying to discredit what Tesla has done. Tesla could give up on the Model 3 right now, stop building superchargers and just rest on the Modle S and X to be plenty profitable. Funny though, I'm pretty sure every stock holder would prefer they keep "losing" money.
> their sales are unchanged or even increasing since 2012 when the Model S was launched.
You need to look at 2014/2015 really, which is when the Model S started being produced in decent numbers.
The Model S outsold most other 'large luxury' vehicles in the US in 2015, including the Audi A7 and A8 combined, and the BMW 6 and 7 series combined, and the Mercedez S-class.
"I wish we had put that car on the road and not Tesla,"
We have seen the exact same (lame) process from BMW/audi/porsche for 12 years now.
First they announce an "e/i/tron/whatever" initiative, then they roll out some concept cars, then they test market a half-assed hybrid with a lanwmower engine hidden somewhere inside ... and then wait four years.
Then repeat.
We've seen at least three cycles like this from all of those high end manufacturers. All they have to show for it is million dollar cars from mercedes and porsche and a half-assed hybrid i8 from BMW. Oh, and I guess audi now has a small sized hybrid.
I drive a 7 year old Prius, and would never dream of buying a 7 series/S class/A8. TBH if I didn't live in London I'd buy a Model S. I am on the waiting list for a Model 3.
What the incumbent car companies don't get, and this article gets right, is that Tesla are operating on a different plane. Yes, I've drunk the Musk Kool-Aid, but it's the only thing that appeals to me that is on offer. The big OEMs just don't get it, and I'm not sure they ever will.
Like, how long will it be before one of the big 3 German OEMs has a > 200 mile range, fully electric car for sale? 2018? That's nuts
Just for context, 2015 numbers for the US:
Tesla - 25,202 units sold;
Mercedes - 380,461 units sold
Of course not all Mercedes cars are in the same class, but it just goes to show that Tesla is still relatively small for now and its captured market share does not necessarily need to have a significant effect on other brands (for now).
I'm the former owner of two Mercedes cars. I won't buy another because their engineering quality is poor, as well as being anti home mechanic. I'm much happier with my Ford I've owned for 25 years and is very well engineered, easy and friendly for a home mechanic to repair, and inexpensive to repair. It also has had an order of magnitude fewer random problems than Mercedes.
This is because there is no Tesla directly competing with the entry to mid level German luxury cars. That is until the Model 3. The German auto makers are definitely going to take a hit once the 3 comes out. That is why they are scrambling.
Right now, the only issues holding people back from buying a Tesla is:
1) Range
2) Price
3) Habits
With the new upgrade, the largest model S can drive 613 km on a charge. And this year or next year Tesla covers basically all of North America and Europe with their chargers.
Already now, the range covers what people need 99 percent of the time. I drive more than 600 km once every 2-3 years. So for me a Tesla would already cover 99.9 percent of my use cases. Some people take long hauls more often, but most of them pass superchargers on the way. Once the batteries exceed 7-800 km and the supercharger network is slightly more expanded in the American Midwest, Southern and Eastern Europe, Tesla will cover 99.9 percent for everybody. I simply cannot think of a scenario, in which an American or European in 2021 would drive 800 km and not pass several superchargers on the way, unless they drive outside of Europe and North America or go to arctic regions.
Price is another thing. Model 3 is priced like a midsize car. A lot of buyers cannot afford that even when incentives and money saved on gas is included. But from mid size class and and up, you basically get a car
- that is much safer
- that unlike gasoline cars is upgraded for free on a regular basis after you purchased it
- that unlike gasoline cars can be upgraded modularly for small investments (buying better batteries etc.)
- has much more luggage space
- that drives more smoothly (due to electrical engine)
- with better acceleration
- that to some - ever increasing - extent can drive itself
- that you can buy in the city center or a mall
- with longer range between charges/fill ups
- with cheaper fuel
for the same price as a gasoline car.
But mostly, Tesla buyers will get a car where the digital stuff is integrated in everything. Tesla learns from usage just like Amazon or Google learn from usage. And just like Amazon and Google use that to get an edge from their competitors, I have a hard time seeing how Mercedes or Audi are going to be able to compete in the mid to large size class unless they too integrate digital into everything.
Habits die hard, and for some people, gasoline cars are the only cars. But if the market for Tesla has been high income 30-60 year old first movers on the American coasts and Northern and Central Europe, it will soon be medium income people all over Europe. The demographics of potential Tesla buyers will be 100 times larger in a couple of years.
I truly hope the large car manufacturers introduce their own fully electrical vehicles in production soon, and not just a concept car here and there. Competition is best. But if they don't do it in the next 2-3 years, they are going to be gone from everything except very high end and cheap cars, and for cheap cars as well after a decade or so, when Tesla can produce $20,000 cars.
I don't think they fully understand how grave their situation is. They focus on the fact that Tesla is losing money. But Tesla basically hasn't played all their cards yet. Tesla is still 1-2 years from selling a mid size car, 5-10 years away from selling cheap cars. They haven't upgraded batteries to bury the range issue yet. They haven't integrated solar in the cars yet to further kill any range anxiety.
The autopilot is learning from around a million driven km per day at the moment and soon that will be from tens of millions of km driven.
Any day Tesla can license their battery technology and superchargers to any of the large car companies. And if bankruptcy threatens, they can sell to Apple, Google or another tech company.
Heck, I bet I am just one of hundreds of thousands of people who would gladly pay $5-10,000 for their shares in a future round just to save them, even if I thought there was a good chance I would lose it all.
The traditional car companies should be much more worried. We are in a situation like when Apple introduced the iPhone and changed the cell phone industry.
It's remarkable to look at the numbers indeed. Would be interesting to factor in the turnover of each of the models as used cars as well, assuming that this would bring us closer to an analysis what could be a loyal potential customer base.
The trend of Tesla is there - question is, if typical buyers addressed by the Model 3, Tesla itself claims as essential for the success of its business model, wouldn't as well change to every other vendor bc of price, quality, etc.
"Tesla is a battery company" - well, I guess a company is that kind of company, according to what it does to an utmost.
When Tesla' sales will show visible dent in their sales it might be already too late to start acting on it, so they probably will want do it preventive.
> "I wish we had put that car on the road and not Tesla," confided a senior engineer at Porsche. "We have to earn money at the end of the day though."
Yes, after 100 years of polluting the planet with gasoline- and diesel-powered automobiles, the established companies cannot spare a few billion dollars to help us end our dependence on fossil fuels. This is why climate change will not be solved anytime soon.
Bosch, a German company that serves the auto manufacturers, seems to have bought patents on a battery technology that could be a breakthrough. Remember that 'the German way' of doing business is not to make noise at all. There have been entire German companies operating without marketing and sales departments, and there still are.
This has the potential to be a really good article, and it almost starts going down some promising lines, but then misses out on the interesting bits.
Take this quote: BMW hopes its fully autonomous iNext, due in 2021, will revolutionize the industry but in the meantime it will continue to promote its poorly performing i3 as the best option for those looking for a premium zero-emissions car.
Yes, the i3 is a wacky, kind-of ugly design, and it isn't surprising (to me) that it hasn't been a big seller. But the BMW i division is one of the most interesting things happening in the car industry today, and is making cars[1] that are just as innovative as Tesla.
It's a pity that it didn't explore this a bit more.
From a technical point of view, i think all the big German manufacturers are perfectly capable of building full EV models. It's not technology that is stoping them. It's the stale, inflexible, slow moving corporate culture that comes along with a 100 year old company like Volkswagen or BMW. Add to that the deep goverment-ties and you have even more nonsense involved.
Just look at how many models VW is building. Right now, they have more than 30 different base models, each with 4-6 additional variations. With the their full and semi EV models, they are heading for the same chaos. For the last 30 years, they have been incapable of streamlining this, so i really doubt we are going to see a EV with a competitive price–performance ratio anytime soon.
Because it's not the goal. The goal is to offer many variations to have the perfect fit for every customer. Why do you think all German manufacturers have been building more and more SUVs in the last decade. Because that's exactly what American customers want.
Why would they have to streamline this? They actually are building cars that fit their (very loyal and wide) customer base. Some people want the sporty Passat CC, others want the Allroad version. We don't need Appleization of all markets :/
I think you are exactly right, the traditional automobile manufacturers don't stand a chance in the "new world". I liken them to carriage makers in the early 1900s and the likelihood that they could make the transition to a completely new way of life. Sure, some of them did make the jump and you can even find a few modern day carriage makers, but for the most part they all died out when the Model T came to town. They just couldn't adjust & adapt as their whole world was wrapped up in the traditional way to make a vehicle.
Long time ago I invested all my savings in Tesla stock after having contact(worked) with European and American car manufacturers.
The reason? You can't imagine how big the facilities for building car components are. There are billions and billions invested on facilities with decades to be paid off.
This is a big advantage once cars are standard, and all the same,and don't change, but becomes a huge liability if you change the technology.
If you invest on a plant a billion dollars to build engines to be amortized in 25 years and engines become obsolete by the way... you have thrown to the trash 1.000 million dollars as your expectations for the future became wrong.
Now multiply this billion for 20 or so and there you have the car industry. They don't want change because change means them losing billions.
Then there are other minor issues: electric means no mechanical reviews which is a huge business. Electric means mechanical engineers without work.
Any change has to come from newcomers and the same way Elon did: You do your sales yourself so car manufacturers-dealers(who profit any time a mechanical piece fails) do not sabotage you.
I don't see any conventional car company doing it, maybe Toyota that advanced what the future would wring before the others that are late to the party.
I don't mean to tell you how to live your life, but investing all of your savings is very risky - putting all your savings in one company is extremely risky.
Even if everything you state about existing car companies is true, Tesla could fail for a multitude of reasons, leaving you with nothing.
An engine plant set up to build combustion engines doesn't become worthless if the demand for combustion engines goes away. Yes it will need retooling if they are going to make something else, but it's not a complete write-off.
Tesla needed to have something groundbreaking like the Model S, otherwise they would never have gotten the attention and sales that they got. The germans already had an established business and didn't need to take risks. Also their sales are strong and even increasing, so i don't buy the argument the press is spinning that Audi/BMW/Merc/Porsche are being left behind by Tesla. They have some very impressive technology in the works and Tesla still has to prove that it can be really profitable.
Still i love Tesla for what they did and the movement they started.
> But Porsche, Audi, BMW and Mercedes are ready to respond
But are they? It’s repeated every time this topic comes up: They supposedly have ready-to-manufacture blueprints stashed away in some dusty cabinet. But what about ramping up actual production? What about building production lines?
You can’t just pull a blueprint out of a drawer and cars start rolling from the production line the next day. All I see (from an outside perspective) is the big three (BMW, Mercedes, VW) failing to prepare for the future.
Of course, customers aren’t really demanding it either. Everybody just complains that electric car X cannot travel 1000 km with a single charge and then goes on to buy a Diesel.
Benz and Audi and BMW can sell their products into an existing transport system. Fuel of the correct octane is generally available. The dealer network can support itself on maintenance fees as well as sales commissions.
Telsa has to build the transport system. They need to get people interested in deploying charging stations. They need to build a distribution system that doesn't depend on US$5000 per year in maintenance fees from each customer. They need to overcome range anxiety.
In this they have common cause with Nissan (Leaf) and GM (Bolt and Volt). But they're head-to-head with the big European high-end carmakers. A car maker switching to electric power is like a computer hardware maker switching to software: it disrupts the sales process so dramatically that it's very hard to do successfully.
As a (well-to-do hipster) Tesla Model S customer, I hope I don't end up getting stuck with the Betamax of charging connectors. I hope the various EV makers can sort out the J1772 / ChaDEmo / Tesla connector issue pretty soon.
They're all full of hot air until they actually deliver a real EV that can compete with the Model S. I saw an article on a Mercedes-Maybach EV concept car the other week which made me roll my eyes. I've always felt concept cars are a silly idea; a waste of talent and resources. Why can't they spend that on creating a real car and delivering it instead?
So about the charging stations. Is the end goal going to be charging stations all over your city for each car manufacturer? Or are they willing to copy Tesla's plug and make some kind of "charging alliance"? Tesla has released their patents[1] so this would appear possible.
I think Tesla will make money regardless of whether the established car companies come up with a good or better car; they're investing heavily in battery technology, and within 5 years, Tesla will be the world leader in that respect, undercutting the competition and managing to buy up most of the world's raw materials for batteries. See it as them becoming the oil industry, instead of the car industry - designs, efficiency, laws etc are fickle and tend to vary a lot, but oil and petrol has remained relatively unchanged for a long time (as far as I can tell).
Battery tech could still face a huge revolution though; if Tesla isn't able to acquire that and go with that, they might see themselves out of the battery business very quickly.
Tesla doesn't really have a big investment in battery technology, Panasonic owns the technology and manufacturing process IP. What Tesla is investing in with the Gigafactory is taking economy of scales to the extreme (Musk has freely said as much publicly). That's not something which is difficult for others to replicate once it's proven to be a profitable venture.
Model X has arrived in the UK recently. As a UK company director (contractor), I seem to be able to tax efficiently buy one of these things and get rid of my gas guzzling family 4x4. Anyone done this, I'm still a bit hazy on how the BIK tax and finance costs work?
Clayton Christensen argues here [1] that Tesla is going to have a problem with BMW etc. - he says that it has been easier in the past to disrupt existing markets from the low end and with low margin products; the field of high margin cars has a lot of sophisticated players that might give Tesla considerable trouble in the long run - on the high end.
I think Clayton Christensen is wrong here for the same reason he was wrong about the iPhone.
First off, I think Christensen has been narrowing his disruption theory too much - pretty much to the "low-end" disruption strategy. But if I remember correctly, the original theory was a little more flexible, and it was more about the "next paradigm" technology/product, although it still put a lot of emphasis on the disruptor having lower cost structures than the incumbents.
However, at the same time, I was reading Blue Ocean Strategy, which is somewhat similar to the disruption theory, but a little more flexible, and it applies to pretty much any industry, not just the technology ones.
What I get from these two theories is that Tesla's cars are a "next-paradigm", which will at the very least make Tesla a "market builder," where it's the leader in that market, but unless Tesla also decides to make the lowest-end cars, then it will not end up dominating the new + old markets.
So in this way, it's similar to what happened to Apple. Apple was clearly the leader in "touchscreen smartphones" for a long time, but because it refused to make $200, and $100, and $50 touchscreen smartphones, it made it impossible to remain the leader in terms of sales.
So from that point of view, Christensen would be right that Tesla will not end up dominating the EV market in terms of sales, when companies like Renault/Nissan/GM will start making $12,000 EVs with 200-mile ranges in 10 years.
But that doesn't mean Tesla will not be successful. It will probably remain the market leader in terms of "who makes the best EV," for a long time, because EVs is what Tesla lives and breathes, and they already have more than a decade of expertise in making production EVs, which will be hard to catch-up to (just like it took most OEMs at least 5 years to even approach the iPhone in quality).
I'm actually quite disappointed myself that Musk said Tesla will never make a lower-end car than the Model 3. I was hoping they would at least make a $20,000 one in 5 years or so. I think he may be overestimating how fast self-driving taxis will be adopted by the majority of the population in a way that it makes sense to not have a car anymore (for people who would supposedly not have the money for a Model 3).
Will Americans really do 20-30 miles commutes in self-driving taxis, every day, twice a day? I don't know if that math will add-up anytime soon. I mean, even if it does happen, but it's 15 years from now, does it really make sense to hold-out on making a $20,000 EV and getting much more market share in the meantime? I don't think it does, but who knows. I think it's a "safer" strategy to build that $20,000 car than not to do it, though.
Unless I'm much mistaken, the Porsche Mission E hasn't actually run the Nurburgring yet. It's a non-functioning concept that was shown at the motor show, too.
Is this article implying it already has in the first two paragraphs? The only mention of a lap time from Porsche is a "proposed" sub-eight minute Nurburgring time.
[+] [-] semi-extrinsic|9 years ago|reply
> "I wish we had put that car on the road and not Tesla," confided a senior engineer at Porsche. "We have to earn money at the end of the day though."
The article also talks about "how will the German brands win back customers from Tesla?", but really, if you look at cars like the Mercedes S-class, BMW 7 series or the Audi A8, their sales are unchanged or even increasing since 2012 when the Model S was launched. Audi has been setting record sales numbers in the US, which is Tesla's biggest market, for five years straight. So it's a bit hard to argue Tesla has taken many of their customers.
Maybe most Tesla drivers were never petrolheads in the first place, and drove a boring station wagon before the Model S came along?
[+] [-] pkulak|9 years ago|reply
Saying that Tesla sells cars at a loss is just another case of sour grapes by people trying to discredit what Tesla has done. Tesla could give up on the Model 3 right now, stop building superchargers and just rest on the Modle S and X to be plenty profitable. Funny though, I'm pretty sure every stock holder would prefer they keep "losing" money.
[+] [-] codeulike|9 years ago|reply
You need to look at 2014/2015 really, which is when the Model S started being produced in decent numbers.
The Model S outsold most other 'large luxury' vehicles in the US in 2015, including the Audi A7 and A8 combined, and the BMW 6 and 7 series combined, and the Mercedez S-class.
http://gas2.org/2016/02/15/tesla-model-s-outsells-mercedes-b...
edit: re: rates of change: Model S sales increased 50% during 2015, Audi A7,A8, BMW 6,7 Mercedez S all down 5% or more.
[+] [-] rsync|9 years ago|reply
We have seen the exact same (lame) process from BMW/audi/porsche for 12 years now.
First they announce an "e/i/tron/whatever" initiative, then they roll out some concept cars, then they test market a half-assed hybrid with a lanwmower engine hidden somewhere inside ... and then wait four years.
Then repeat.
We've seen at least three cycles like this from all of those high end manufacturers. All they have to show for it is million dollar cars from mercedes and porsche and a half-assed hybrid i8 from BMW. Oh, and I guess audi now has a small sized hybrid.
Who cares.
[+] [-] dabeeeenster|9 years ago|reply
What the incumbent car companies don't get, and this article gets right, is that Tesla are operating on a different plane. Yes, I've drunk the Musk Kool-Aid, but it's the only thing that appeals to me that is on offer. The big OEMs just don't get it, and I'm not sure they ever will.
Like, how long will it be before one of the big 3 German OEMs has a > 200 mile range, fully electric car for sale? 2018? That's nuts
[+] [-] martinko|9 years ago|reply
Of course not all Mercedes cars are in the same class, but it just goes to show that Tesla is still relatively small for now and its captured market share does not necessarily need to have a significant effect on other brands (for now).
[+] [-] WalterBright|9 years ago|reply
[+] [-] anotherhacker|9 years ago|reply
Yes...but you can't build the products of tomorrow when you're primarily focused on selling the products of today.
[+] [-] yalogin|9 years ago|reply
[+] [-] flexie|9 years ago|reply
1) Range
2) Price
3) Habits
With the new upgrade, the largest model S can drive 613 km on a charge. And this year or next year Tesla covers basically all of North America and Europe with their chargers.
Already now, the range covers what people need 99 percent of the time. I drive more than 600 km once every 2-3 years. So for me a Tesla would already cover 99.9 percent of my use cases. Some people take long hauls more often, but most of them pass superchargers on the way. Once the batteries exceed 7-800 km and the supercharger network is slightly more expanded in the American Midwest, Southern and Eastern Europe, Tesla will cover 99.9 percent for everybody. I simply cannot think of a scenario, in which an American or European in 2021 would drive 800 km and not pass several superchargers on the way, unless they drive outside of Europe and North America or go to arctic regions.
Price is another thing. Model 3 is priced like a midsize car. A lot of buyers cannot afford that even when incentives and money saved on gas is included. But from mid size class and and up, you basically get a car
- that is much safer
- that unlike gasoline cars is upgraded for free on a regular basis after you purchased it
- that unlike gasoline cars can be upgraded modularly for small investments (buying better batteries etc.)
- has much more luggage space
- that drives more smoothly (due to electrical engine)
- with better acceleration
- that to some - ever increasing - extent can drive itself
- that you can buy in the city center or a mall
- with longer range between charges/fill ups
- with cheaper fuel
for the same price as a gasoline car.
But mostly, Tesla buyers will get a car where the digital stuff is integrated in everything. Tesla learns from usage just like Amazon or Google learn from usage. And just like Amazon and Google use that to get an edge from their competitors, I have a hard time seeing how Mercedes or Audi are going to be able to compete in the mid to large size class unless they too integrate digital into everything.
Habits die hard, and for some people, gasoline cars are the only cars. But if the market for Tesla has been high income 30-60 year old first movers on the American coasts and Northern and Central Europe, it will soon be medium income people all over Europe. The demographics of potential Tesla buyers will be 100 times larger in a couple of years.
I truly hope the large car manufacturers introduce their own fully electrical vehicles in production soon, and not just a concept car here and there. Competition is best. But if they don't do it in the next 2-3 years, they are going to be gone from everything except very high end and cheap cars, and for cheap cars as well after a decade or so, when Tesla can produce $20,000 cars.
I don't think they fully understand how grave their situation is. They focus on the fact that Tesla is losing money. But Tesla basically hasn't played all their cards yet. Tesla is still 1-2 years from selling a mid size car, 5-10 years away from selling cheap cars. They haven't upgraded batteries to bury the range issue yet. They haven't integrated solar in the cars yet to further kill any range anxiety.
The autopilot is learning from around a million driven km per day at the moment and soon that will be from tens of millions of km driven.
Any day Tesla can license their battery technology and superchargers to any of the large car companies. And if bankruptcy threatens, they can sell to Apple, Google or another tech company.
Heck, I bet I am just one of hundreds of thousands of people who would gladly pay $5-10,000 for their shares in a future round just to save them, even if I thought there was a good chance I would lose it all.
The traditional car companies should be much more worried. We are in a situation like when Apple introduced the iPhone and changed the cell phone industry.
[+] [-] randomnames|9 years ago|reply
The trend of Tesla is there - question is, if typical buyers addressed by the Model 3, Tesla itself claims as essential for the success of its business model, wouldn't as well change to every other vendor bc of price, quality, etc.
"Tesla is a battery company" - well, I guess a company is that kind of company, according to what it does to an utmost.
[+] [-] aquadrop|9 years ago|reply
[+] [-] ff10|9 years ago|reply
[+] [-] Decade|9 years ago|reply
Yes, after 100 years of polluting the planet with gasoline- and diesel-powered automobiles, the established companies cannot spare a few billion dollars to help us end our dependence on fossil fuels. This is why climate change will not be solved anytime soon.
[+] [-] urlwolf|9 years ago|reply
I live in Germany.
[+] [-] tome|9 years ago|reply
Very interesting! Are there any case studies on that?
[+] [-] lifty|9 years ago|reply
[+] [-] martinko|9 years ago|reply
[+] [-] robterrell|9 years ago|reply
[+] [-] raldi|9 years ago|reply
[+] [-] nl|9 years ago|reply
Take this quote: BMW hopes its fully autonomous iNext, due in 2021, will revolutionize the industry but in the meantime it will continue to promote its poorly performing i3 as the best option for those looking for a premium zero-emissions car.
Yes, the i3 is a wacky, kind-of ugly design, and it isn't surprising (to me) that it hasn't been a big seller. But the BMW i division is one of the most interesting things happening in the car industry today, and is making cars[1] that are just as innovative as Tesla.
It's a pity that it didn't explore this a bit more.
[1] https://en.wikipedia.org/wiki/BMW_i8
[+] [-] kennell|9 years ago|reply
Just look at how many models VW is building. Right now, they have more than 30 different base models, each with 4-6 additional variations. With the their full and semi EV models, they are heading for the same chaos. For the last 30 years, they have been incapable of streamlining this, so i really doubt we are going to see a EV with a competitive price–performance ratio anytime soon.
[+] [-] Vik1ng|9 years ago|reply
Because it's not the goal. The goal is to offer many variations to have the perfect fit for every customer. Why do you think all German manufacturers have been building more and more SUVs in the last decade. Because that's exactly what American customers want.
[+] [-] izacus|9 years ago|reply
[+] [-] Corrado|9 years ago|reply
[+] [-] pipio21|9 years ago|reply
The reason? You can't imagine how big the facilities for building car components are. There are billions and billions invested on facilities with decades to be paid off.
This is a big advantage once cars are standard, and all the same,and don't change, but becomes a huge liability if you change the technology.
If you invest on a plant a billion dollars to build engines to be amortized in 25 years and engines become obsolete by the way... you have thrown to the trash 1.000 million dollars as your expectations for the future became wrong.
Now multiply this billion for 20 or so and there you have the car industry. They don't want change because change means them losing billions.
Then there are other minor issues: electric means no mechanical reviews which is a huge business. Electric means mechanical engineers without work.
Any change has to come from newcomers and the same way Elon did: You do your sales yourself so car manufacturers-dealers(who profit any time a mechanical piece fails) do not sabotage you.
I don't see any conventional car company doing it, maybe Toyota that advanced what the future would wring before the others that are late to the party.
[+] [-] dmoy|9 years ago|reply
Even if everything you state about existing car companies is true, Tesla could fail for a multitude of reasons, leaving you with nothing.
[+] [-] ams6110|9 years ago|reply
[+] [-] mrep|9 years ago|reply
If their managers are even remotely competent, they'll know that the factories are sunk costs.
[+] [-] DaGardner|9 years ago|reply
> We have to earn money at the end of the day though.
[+] [-] kayoone|9 years ago|reply
Still i love Tesla for what they did and the movement they started.
[+] [-] fuzzy2|9 years ago|reply
But are they? It’s repeated every time this topic comes up: They supposedly have ready-to-manufacture blueprints stashed away in some dusty cabinet. But what about ramping up actual production? What about building production lines?
You can’t just pull a blueprint out of a drawer and cars start rolling from the production line the next day. All I see (from an outside perspective) is the big three (BMW, Mercedes, VW) failing to prepare for the future.
Of course, customers aren’t really demanding it either. Everybody just complains that electric car X cannot travel 1000 km with a single charge and then goes on to buy a Diesel.
[+] [-] OliverJones|9 years ago|reply
Telsa has to build the transport system. They need to get people interested in deploying charging stations. They need to build a distribution system that doesn't depend on US$5000 per year in maintenance fees from each customer. They need to overcome range anxiety.
In this they have common cause with Nissan (Leaf) and GM (Bolt and Volt). But they're head-to-head with the big European high-end carmakers. A car maker switching to electric power is like a computer hardware maker switching to software: it disrupts the sales process so dramatically that it's very hard to do successfully.
As a (well-to-do hipster) Tesla Model S customer, I hope I don't end up getting stuck with the Betamax of charging connectors. I hope the various EV makers can sort out the J1772 / ChaDEmo / Tesla connector issue pretty soon.
[+] [-] alimbada|9 years ago|reply
[+] [-] electriclove|9 years ago|reply
[+] [-] spodek|9 years ago|reply
I wouldn't call emitted-somewhere-else zero-emission.
Zero emission is deciding not to take the trip.
[+] [-] legohead|9 years ago|reply
[1] https://www.tesla.com/blog/all-our-patent-are-belong-you
[+] [-] aerovistae|9 years ago|reply
[+] [-] Cthulhu_|9 years ago|reply
Battery tech could still face a huge revolution though; if Tesla isn't able to acquire that and go with that, they might see themselves out of the battery business very quickly.
[+] [-] semi-extrinsic|9 years ago|reply
[+] [-] boothead|9 years ago|reply
Should I do it?
[+] [-] tonyedgecombe|9 years ago|reply
[+] [-] MichaelMoser123|9 years ago|reply
Fascinating and very enjoyable talk:
[1] https://www.youtube.com/watch?v=rHdS_4GsKmg
[+] [-] mtgx|9 years ago|reply
First off, I think Christensen has been narrowing his disruption theory too much - pretty much to the "low-end" disruption strategy. But if I remember correctly, the original theory was a little more flexible, and it was more about the "next paradigm" technology/product, although it still put a lot of emphasis on the disruptor having lower cost structures than the incumbents.
However, at the same time, I was reading Blue Ocean Strategy, which is somewhat similar to the disruption theory, but a little more flexible, and it applies to pretty much any industry, not just the technology ones.
What I get from these two theories is that Tesla's cars are a "next-paradigm", which will at the very least make Tesla a "market builder," where it's the leader in that market, but unless Tesla also decides to make the lowest-end cars, then it will not end up dominating the new + old markets.
So in this way, it's similar to what happened to Apple. Apple was clearly the leader in "touchscreen smartphones" for a long time, but because it refused to make $200, and $100, and $50 touchscreen smartphones, it made it impossible to remain the leader in terms of sales.
So from that point of view, Christensen would be right that Tesla will not end up dominating the EV market in terms of sales, when companies like Renault/Nissan/GM will start making $12,000 EVs with 200-mile ranges in 10 years.
But that doesn't mean Tesla will not be successful. It will probably remain the market leader in terms of "who makes the best EV," for a long time, because EVs is what Tesla lives and breathes, and they already have more than a decade of expertise in making production EVs, which will be hard to catch-up to (just like it took most OEMs at least 5 years to even approach the iPhone in quality).
I'm actually quite disappointed myself that Musk said Tesla will never make a lower-end car than the Model 3. I was hoping they would at least make a $20,000 one in 5 years or so. I think he may be overestimating how fast self-driving taxis will be adopted by the majority of the population in a way that it makes sense to not have a car anymore (for people who would supposedly not have the money for a Model 3).
Will Americans really do 20-30 miles commutes in self-driving taxis, every day, twice a day? I don't know if that math will add-up anytime soon. I mean, even if it does happen, but it's 15 years from now, does it really make sense to hold-out on making a $20,000 EV and getting much more market share in the meantime? I don't think it does, but who knows. I think it's a "safer" strategy to build that $20,000 car than not to do it, though.
[+] [-] ablation|9 years ago|reply
Is this article implying it already has in the first two paragraphs? The only mention of a lap time from Porsche is a "proposed" sub-eight minute Nurburgring time.
[+] [-] waldrews|9 years ago|reply
[+] [-] mirekrusin|9 years ago|reply