…the “Duma challenge” that no one yet has defeated…but maybe you will be the first:
Yawn. My opinion is you don’t want to hear the truth, but for those who might actually listening to you I provide these common sense answers:
Tesla did not and is not making a profit on Model S and Model X.
Fact: With gross margins above 18% since early 2013, Tesla has simply chosen to invest the money it’s made into the business.
Opinion: What bothers me about this point is that it either shows laziness, a lack of understanding how a business invests in itself, or is an intentional mis-statement of the facts.
TSLA has a market cap of $61 BILLION vs Ford at $46 BILLION…please explain that math in detail…
It’s called Growth. Ford is going to make about the same revenue next year as it did last year. Tesla next year is going to make 4X the revenue it made last year. And it’s going to continue to grow in future years. And we haven’t even gotten into Tesla’s future energy business!
And before you throw out the Clayton references, about Ford being old school, keep in mind that all of these established companies will go wherever the market is and right now…that ISNT’T with battery power.
You do yourself a disservice by intentionally ignoring Christensen and the effects of Disruption on established businesses. Christensen gives us example after example of successful businesses that failed precisely because they listened to their customers and gave them what they said they wanted - until the disruptive technology came along and then they switched to that. Remember Balmer laughing at the iPhone?
Want another contemporary example? Look at what upstart Arista is doing to Cisco. (ANET is my second favorite stock).
The competition doesn’t just lay down…they go wherever the market goes…and they are very well capitalized.
Even when you’re smart and savvy, surviving disruption is really hard (Christensen spends much of his time advising companies how to survive it). Look how Cisco is struggling to fight off Arista. And as I pointed out previously, the entrenched automakers are neither smart nor savvy (Cisco is, though). Again, back to my previous example of Mercedes. It’s going to cost money to switch to electric, due to a combination of engineering, retooling, and slow initial sales, and so Mercedes has warned that this transition will be a period of years with much lower profits. Do you think Mercedes shareholders will tolerate that? I don’t. But, that may be what Mercedes has to suffer in order to survive.
see yesterday’s announcement of BMW’s 400 mile per charge car…beautiful!
So, you fell for that?
As anyone who follows Automotive, even as a hobby, can tell you, the industry loves to present concept cars that are never built and make announcements of cars that will never be produced.
What BMW really announced was the “Urban Mini” for “local emission-free city traffic.” That’s clearly a low range vehicle. And it’s 2 years from now. The “electric X3” is three years from now, with no details provided.
Don’t believe me? Here’s an example: Back in 2012, Audi made announcements about BEVs, which they branded “e-tron.” There was an A3 e-Tron concept model that never was produced (https://www.engadget.com/2012/06/15/a3-e-tron-hands-on-video…), and there was a so-called “production” R8 e-tron that was built and raced (https://www.engadget.com/2012/07/01/audi-r8-e-tron-ev-lap-re…), but it was canceled before actually being produced in any volume (http://insideevs.com/audi-r8-e-tron-shelved-again-this-time-…) with Audi saying it “had no plans to sell its electric sports cars.” The “e-tron” label is now being applied to future hybrid models.
And finally, as for the “400 mile range” vehicle, what is that, exactly? It’s a garbage throw away line, and even if you believe it, it’s certainly 400 miles on the NEDC cycle, which is equivalent to about 310 miles on the EPA cycle, which is what Teslas are measured against. In essence, BMW is saying that someday they’ll have a car that does what Tesla’s Model 3 does today. Beautiful!
And even then, it won’t have a world-wide SuperCharger network, so it isn’t really suitable for road trips. Shall we talk about Tesla’s moat now?
- The margins on the 3 will be smaller…
If you listened to Tesla’s most recent conference all, they confirmed that they expect to reach 25% margins next year on Model 3. Model 3 was designed to be cost-effective to build. The entrenched automakers are happy to have 10%-15% margins, but then they’re letting their dealers take some of the profit.
- Need more giga-factories
As I posted earlier, this is actually an argument for Tesla’s success in needing to build more factories to satisfy demand for its vehicles. I guess you missed the recent Tesla shareholder letters in which Tesla talks about building more gigafactories.
- We are greater than 5 years away from price/cost of ownership parity of battery power automobiles to ICE.
Where’s your data on this? I believe that Model 3 already compares favorably in terms of TCO for what you get compared to BMW’s 3-series, Audi’s A4, Mercedes C300, Jag’s XE, Infiniti Q50, Caddy’s ATS, or Alfa’s Guila Quadrifoglio. Shall we start with the 5.6 second 0-60 or the 5.1 0-60 version?