Tesla Earnings for 3q 2023

It is alright to focus on EVs. The issue is buy and hold. Or hold cash and wait. We are seeing waiting right now in cash probably a very good idea.

It will all be back. But China not so much. Not in the lead anyway.

No one believes we can replace diesel engines in trucks with electric batteries. The technologies you describe are necessary if we are to reach Net Zero 2050. Some of these are necessary.

Hydrogen fuel cell trucks are being pursued by Nikola. It has not been easy. It does seem possible.

The other way is synthetic diesel from something like fermentation ethanol–recycling carbon dioxide. Or carbon capture from the air.

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Right, but I think the operative part of the quote was “at least a decade behind BEV.” Nobody is holding off buying an EV today because they think a hydrogen vehicle will be more practical two years from now.

True - high interest rates are bad for most big-ticket consumer durables, which tend to be financed. There are two reasons, though, to think that EV’s might end up having a slightly harder time of it:

  1. EV’s tend to be, on average, towards the more expensive side of their individual auto segments. So if higher interest rates push consumers to be a bit more frugal in their choices, you might see some demand loss as fewer of them feel like stretching up to a more expensive model.

  2. Part of the calculation with EV’s is that some of the higher upfront costs are recouped with savings down the line. That becomes a less valuable proposition with higher rates. An EV will save you money in fueling costs and lower maintenance over time…but the current value of those future savings falls as interest rates rise.

Those aren’t the sorts of things that will crater demand, of course. Just on the margins, you might see some price-conscious folks that might otherwise have thought about taking a flyer on the EV might decide to choose something with a lower upfront cost.

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Well the topic of the post I was replying to was about consumer EV sales, I believe. There are, perhaps, some economical uses for the alternative fuels that help reduce CO2.

But I do have to say that your statement isn’t true. There are people who believe that big diesel trucks can run on batteries. They work at Tesla making their semi and they work at Pepsi who have been driving a few of them for many months. I don’t know if this tech is good enough to replace 50% of semi trucks…or even 90%. I also don’t know if this is good enough to replace things like heavy road building equipment (excavaders, bulldozers) but certainly these usually don’t drive many miles per day so you need big motors (not in the drive train) to move stuff which would be the same for a BEV or Fuel cell vehicle.

See Volvo’s EV products here:

And Caterpillar here:
https://electrek.co/2019/01/29/caterpillar-electric-excavator-giant-battery-pack/

There are also some fuel cell heavy equipment products out there too. And a hybrid battery + fuel cell might make sense for a vehicle meant to sometimes drive longer distances (road crews, salt spreaders, plows)

Mike

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The EV trucks under development are for local delivery.

The big over the road 18 wheelers are limited to 50000 lb in most states. Already EV cars are the heaviest on the road due to battery weight. 18 wheelers need to run 10 hrs and 500 miles without recharging. I don’t see 20,000 lb batteries as practical in trucks. Other fuels are a better choice.

And if you have distribution for those other fuels, cars using that technology also become practical.

I wouldn’t write them off. Battery electric cars are the most practical now but that may change.

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No one is a hell of a lot of people.

September 23, using real world data

A simple way to decide if it worth seriously considering a Tesla Semi electric truck over a diesel truck. Ask a few questions:

  1. Is my truck usage more profitable when the truck gets the equivalent of 20-30 mpg? What is the per gallon price of diesel vs electricity? Is a gallon of diesel more expensive than 50 kWh of electricity? If electricity is expensive is my fleet profitable by using an amortized solar and charging facility?
  2. Does my truck operations still work when I need to stop for 60-90 minutes every 400 miles ?
  3. Will my truck fleet be able to afford or have access to fast charging?
  4. If new fast charging is needed, then is there grid power available or is a solar farm buildout economic?
  5. What are the national, state and local subsidies for the electric Semi trucks? New York offers up to $185,000 for a class 8 electric truck. California (HVIP) and other starts offer huge grants. The US Federal Inflation reduction act offers $40,000 credits for Semi trucks. There are credits and tax breaks for solar and fixed energy storage projects in the 30-70% of total cost range.

NOTE: people can complain about the unfair regulations and money in favor of electric semis but a fleet owner knows this is strictly business.

The Captain

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That could be a very long wait. The economy was giddy-up in the 60’s, then not again until the 80’s. Then it foundered for several years until the internet bubble of the mid 90’s. Then, not much until the mid-aughts, and then not again until the last 5 years or so.

So based on history that wait might be anywhere from five to 20 years. What business, particularly what hard charging, paradigm smashing, era defining business can afford to sit around for a decade until “the economy gets better”?

oh brother is that going to play poorly by the end of 2024. This is your 1950s.

I’m a big EV proponent, but boy howdy that was bad article.

One where an increasing number of climate-related issues are motivating governments in the major car markets to mandate the end of ICE sales in 15 years.

It is also a simple matter of economics. ICEs/hybrids only have a sales price advantage now in the cheaper models. Price parity will happen in the next 5 years with $25K BEVs and the question then will be why buy a gas car for the same price that has substantially higher fuel and maintenance costs?

In the last couple of months, plug-in vehicles made up almost 40% of sales in China and about 20% of registrations in Europe. Model Y sales are comparable to the Toyota Corolla despite a much higher price tag. The paradigm has already been smashed. The electrification of the auto market is an inevitability.

And it is not like Tesla has stopped growing…

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The focus right now is on the “big” items that are sensitive to high interest rates - homes and vehicles. In general, that’s the worry of fed overshooting … how the rates will affect those big things. There is also worry about the smaller things, but those usually can be nudged the other way very quickly via fiscal or monetary actions.

Three things:

  1. Governments’ mandates to end ICE sales are almost certainly contingent on EV prices falling a lot from current levels. If EV’s aren’t much cheaper by the time those mandates are supposed to kick in, they will be delayed.

  2. Even in more expensive cars, you don’t have price parity in the broadest sense today. The BEV version of a car is still non-trivially more expensive than the ICE version of that same car. Which is one reason why ICE luxury cars still exist, despite the obvious answer to your rhetorical question.

  3. Having lots of sub-$25K BEV’s in five years is an aspiration, not a certainty. And since the average base MSRP (not ATP) of the compact sedan segment (I’m assuming we’re talking U.S. pricing) is only about $22K, even that doesn’t guarantee price parity.

We just replaced our 7 year old Odyssey with a CR-V Hybrid. Very good gas mileage, comfy, reliable. I am ready for EV but wife is not, so we got the hybrid. Considered the CX-90 PHEV but the CR-V was a better fit for us.

A caveat to “me being ready for EV” is the whole NACS transition thing. In reality, I’d wait until the car I wanted had the NACS plug. (Mach-E, Lyric, and Prologue are on my list, maybe the ID). And I really do wonder how much of the drop in EV demand is an Osbourne Effect with the NACS plug? Certainly not zero, but uncertain if enough to make a difference. It does for me.

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Have you not seen the Tesla semi?
Pepsi thinks they are practical.
(I think Pepsi has one of the largest fleet of 18-wheelers in the US.)

Mike

Pepsico explained that it uses most of its 21 Tesla Semi electric trucks for deliveries within 100 miles with several stops. They operate for up to 12 hours a day.

Dejan Antunovic, electrification program manager at Pepsico, explained that three of the Tesla Semi trucks are dedicated to long-haul trucking, with routes that vary between 250 to 450 miles.

To support that, Tesla has been installing 750 kW Megachargers at Pepsico facilities. They enable charging to 80% capacity in less than 45 minutes.

https://electrek.co/2023/08/04/pepsico-explains-uses-tesla-semi-electric-trucks-glimpse-future-of-trucking/

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Quite different from the over the road trucks that go 500 miles per day. And sometimes more with double teaming drivers.

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This is a pilot project. Some of the trucks are going 250 - 450 miles per day.
Quite different than 100 miles. Who knows why they picked the routes they did.
Maybe to efficiently use the few chargers they have so far
But the design criteria is to be pretty close to being able to match what most semis can do. They don’t have to match all use cases to replace lots of diesels.

Mike

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There’s been some independent testing of the Tesla semi and competitors. Seems to be performing admirably.

See here.

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That’s largely because OEMs are much better at making ICEs than BEVs. It is different I think with manufacturers who know how to mass produce BEVs. I think the Model Y or even the BYD Seal have at least reached price parity with the closest equivalent ICE models. Tesla after all did surpass BMW in the U.S. luxury car market in 2022, even with the majority of BMW offerings requiring gas.

It is not a certainty, but do you really believe it is unlikely? These days, five years is a long time in the auto industry, particularly when it comes to battery development. Don’t know if it will be Tesla first or the Chinese, but I’m pretty confident that someone will make a BEV with specs as good as a Corolla for the same price.

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Disruption does not happen all at once.

The Captain

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