I was responding to show how it is possible for one company’s margin to rise and another to drop so they meet somewhere in the middle. That was in reply to a comment about how company X margins will only reach half of company Y current margins in 2-3 years. The point is that it doesn’t make much sense to compare marginsi different years, it makes much more sense to compare in the year in which company X says they might “reach” company Y.
I don’t really think it can happen in 2-3 years, if there is indeed a comparative disadvantage of having older factories/processes, and if there is indeed a comparative disadvantage building ICE over EV, then it can’t happen until automaker X stops doing ICE and switches over to EV, and stops using older factories/processes. That will take more than 2-3 years. That will take more than 10 years.
And of course, like every other business, if Tesla can continue to out innovate the competition, they may remain on top for much longer.
The VW business plan is also changing in an interesting way.
Focus on cash flow over revenue.
Focus on margin instead of market share
Software sales expected to contribute 30% of revenues.
Bloomberg has a more complete interview of the VW CFO but behind a pay wall.
It sounds to me like the VW group may be abandoning the entry-level market to focus on higher margin models. Goodby Skoda, hello Audi. The lower priced BEVs market may be left to the Chinese and the $25k Tesla platform.
Fastest way to improve cash flow is to reduce inventory. Seems like bad news for dealers.
I am skeptical about the software goal. VW is known for being good at several things, but software ain’t one of them. Can they really compete with more tech-centric companies like Google, Apple, and yes Tesla for developing/marketing an automobile operating system?
It’s a trend, at least according to the Grey Lady:
Do they need to? Google and Apple don’t make cars, and probably aren’t about to start. If Waymo has an awesome car operating system, they’re likely to sell/license it to companies that do make cars. In fact, that’s probably part of their business plan - that’s one of the obvious channels for monetizing a car software product.
If companies are bailing on the lower-end BEV sector and Tesla does come out soon with its $25K platform (two admittedly big ifs) then the notion of Tesla selling 20M cars becomes a bit more plausible.
“Companies” aren’t bailing on the lower-end BEV sector. Maybe not VW, but there are plenty of offerings coming at the ~$25K price point in China and in Europe. The Fiat 500e and the Dacia Spring are already in Europe, of course. These are not minor entries - combined, they outsold the Model 3 there last year (115K units between them, compared to 91K Model 3 sales). Coming soon are the Renault 5 and the Citroen e-C3, and Fiat’s next entry in that segment, Panda. Kia and Hyundai also have EV’s in the queue (the Picanto and the Casper are also expected to price at that point). VW’s supposed to launch the ID.2 (though maybe that’s not on track any more?).
Tesla’s going to be late to that segment in China and Europe (the two biggest EV markets) even if they did manage to get their “Model 2” launched by 2025. And given the difficulties they’ve had moving from design to production with every other platform since the Model 3 in 2017 (the Semi, the Cybertruck, and the Roadster have all been seriously delayed), that’s hardly assured. I don’t think it was an accident that they didn’t talk specifics on scheduling for the new platform or the Cybertruck or Roadster as part of their Investor Day presentation.
You are making your usual error by mixing facts with your personal theories as to why Tesla has done things the way they have. Your theories are always completely wrong, even when your facts are right.
The only true “engineering failures” at Tesla have been a rough time ramping the Model 3, and the continuing delays in achieving anything like autonomy.
The delays in Semi, Cybertruck, and Roadster have been all about the mission. Accelerating the transition to sustainable energy has meant that so long as there hasn’t been a real surplus of batteries that it made no sense to start producing those vehicles. So they haven’t.
It is just now getting to the point where producing them moves the mission forward, so you’re finally seeing them get closer to production.
What you might expect is colored entirely by your misperception of Tesla as a company. It has no bearing on Tesla’s reality.
The Cybertruck is currently on schedule to ship the first vehicles in June or July of this year. No reason to discuss it at the Investor Day presentation.
The new vehicle schedule depends (of course) on how long it takes to build the factory, but what has been stated is that it should start shipping the first units by the end of 2024. They intend to break ground near Monterrey by next month (April, 2023).
That doesn’t make any sense. Why, then, announce the incorrect dates for starting production? Tesla produces its own batteries. It knows (or should know) its likely battery yield in future years. And it knows (or should know) the output capability of its factories for the other models. If there weren’t going to be enough batteries available for five years to make a few thousand Semi or Roadster**, or even the Cybertruck, Tesla would have known that. Why tell everyone the wrong date? Not just once, mind you. Over and over again, Tesla kept promising that the vehicles would enter production shortly - never ever citing lack of battery supply as the reason for delay.
Not that your explanation jibes with Tesla as a world-class manufacturing operation, either, of course. Being so unable to make the batteries you need - and not only to fail to do that but be caught completely unawares that you’ll be unable to do that - such that all of your upcoming models have to be delayed for years - is a failure of a different kind, but still a failure.
Tesla’s been really bad at getting their new models based on platforms other than the Model 3 into production.
Albaby
**For the Roadster, this argument is utterly absurd - because that car was always intended to be a limited volume halo car. It’s completely implausible that battery scarcity would keep Tesla from building a vehicle with such a low expected production run.
But those companies so far really haven’t moved the needle much (outside of China) given the size of the $25K market. Perhaps the 2024 models will be different but it looks like a market that is ripe for disruption from the likes of Tesla or BYD.
I was referring to the “generate revenue” part. You were previously making the argument that much of Tesla’s profit margins comes from selling software. If true, they seem to be the only car company currently capable of generating such revenue.
Why is that a big deal? Musk tends to be aggressively optimistic in his pronouncements, but in the end Tesla delivers. No one is disappointed with the performance of the Model3 and ModelY for example. As for why he keeps doing this, have you noticed that Tesla spends nothing on advertising?
Your assertions are so wrong as to be laughable. Where do you get these notions?
Tesla produces a tiny percentage of the batteries it needs. It is only starting to ramp up 4680 battery cell production now.
How many batteries would be available was (and is) unknown. It depends greatly on how fast many other companies ramp up the supply of materials and manufacturing capability.
And, of course, we had COVID and supply chain and war madness occur in the intervening years, so it’s possible those may have changed some of the calculus.
You’re just making stuff up now.
Tesla hasn’t delayed building cars at all. They’ve been growing deliveries at >50% per year on average. They’ve delayed ramping up new models. They’ve been quite explicit that putting batteries in new models would mean not putting them in existing models. No extra vehicles, just a different mix. And since they could easily sell all they could produce, it wouldn’t serve the mission to just substitute one vehicle for another, especially because they could more efficiently produce the vehicles they were already producing.
Perhaps there were other reasons too, like the Model S Plaid being a sufficient halo car? But regardless, if every Roadster produced meant putting a couple fewer Model 3s on the road, that would be a net loss for the mission.
All your made up rationalization aside, Tesla has always been clear on the goals that drive them. The mission is very clear. Tesla not accomplishing what it would prefer to accomplish is mostly due to simple real world constraints, and most of those constraints are around getting enough cells to build as many cars as they want.
Your logic is based entirely on a view of the world that exists only in your head. It’s not what Tesla sees and bears little relation to anything Tesla is doing. If you stick to actual facts rather than making up your own reasons to explain what you observe, you’ll do much better.
Note that Tesla’s inability to make timely progress on achieving autonomy is entirely at odds with the mission. So that’s a perfect example of engineering inadequacy. But it has nothing to do with their manufacturing prowess.
I think this is a different situation. It’s one thing to give aggressive pronouncements on new tech like FSD - or to be off by a few months in bringing out new models. Bringing a new model from design to production isn’t a herculean task. Car companies do it all the time. It’s a basic function of car manufacturing. It’s taken them four, five, and six+ years to bring the truck, semi, and roadster to production. Which isn’t exactly a sign of best-in-world manufacturing prowess.
It is a herculean task.It takes lots and lots and lots of logistics and time to do it even after the design is completed and [mostly] tested. It’s quite possible that the main difference between Tesla and most others is that Tesla “announces” new products minutes after they pop into Elon’s head, while normal automakers don’t announce until all the feasibility studies are done, and all the initial subsystems have been defined and begun to be sourced, and a factory chosen and started the production planning for the new model. Almost every new model at normal automakers has been in development for at least 2-3 years before they are mentioned publicly. Lately they’ve been publicly floating things like “concept vehicles” … that is more like the Tesla way, Mention a “concept” vehicle, then show it after a year or two, and maybe 3 or 4 years later there is a real model based on it. Maybe. Often a concept vehicle never ends up as a real model, or only some subsystems in the concept enter some other model. With Tesla, the minute there is a concept, Elon blabs about it. Hence the longer perceived delay.
That can’t be true. Else, why bring the Semi into production? After all, that involves putting batteries into a new model that could have been put in existing models. But they went ahead and brought that new model into production. Why?
If I can borrow your patronizing and snarky tone for a moment, I think you’re just making up a “just so story” about Tesla to rationalize the massive delays in all their new models. It’s not that they couldn’t bring those models to production timely - they just didn’t want to. Because “the mission.”
I don’t think so. They’re taking many, many years to bring these models to production because it’s taking them that long to bring them into production. Not because they decided to push the pause button on all new models for five years.
I think that’s implausible - and just picking out the pieces of the Tesla story that you want to believe. Because there’s parts of their mission that would require bringing new models to production. After all, their mission also includes selling 20 million vehicles by 2030. To do that, they’ll need a diverse array of model types and form factors (which is why they’re bothering with the Semi and Cybertruck and to-be-introduced platform in the first place, rather than just selling 3’s and Y’s).
And not for nothing, achieving that mission also requires behaving like a reputable business. If you collect millions and millions of dollars in reservations for a new product, you have some obligation towards those folks to make diligent efforts to try to bring that product to market. It’s okay if you’re trying and not succeeding (FSD). But if you’re claiming that Tesla actually secretly decided to stop moving diligently towards production as an intentional choice, and not only not tell anyone, but continue to assert publicly that they were in fact trying to bring it into production…well, that’s not only not reputable, but it’s probably outright securities and consumer fraud. Which is another reason why I don’t think it’s at all likely.
I mean - maybe? Tesla starting “blabbing” about the Cybertruck back in 2017 (it was teased in the Semi/Roadster reveal). In 2018 he was describing pretty closely the car that was revealed a year later. So Tesla also went through a few years of noodling and concept and development for their pickup before the 2019 reveal.
Meanwhile, Ford announced their intention to develop an electric pickup in 2019 (shortly before Tesla revealed their already-developed pickup). Ford unveiled in May of 2021…and had it in production by April 2022. While I’m sure they were noodling with the idea in their lead up to the Rivian deal (which got them a lot of the tech and design knowledge to let them move quickly), they certainly weren’t starting earlier than Tesla, but beat Tesla to production by at least a year:
You might want to look into exactly which batteries are going into the Semi (hint: 2170s). As usual, your facts are sometimes right, but when your logic (as in this case) is based on half-truths then you go astray.
My snarky tone is because constantly having to correct your misinformation and bogus deductions becomes tedious. You don’t know enough about the subject to comment on it in anything other than the broadest terms. And yet you present your arguments as though you’re well-informed. You’re not. But you seem to be driven by a love of winning arguments rather than getting to the truth. As I said, tedious. I’m sure I should learn to be more patient, but it doesn’t seem to be happening. My bad.
Once again you’re pretending to know why Tesla is doing something. You don’t. So far they’ve been growing sales at over 50%/year for over ten years. Another eight years will get them to 2030, and if they keep it up they’ll be well over 20 million per year. Really all they need to accomplish that is to sell their vehicles for less (obviously). So they could do it entirely on making a vehicle for half the cost they do now, which is their plan.
The Semi and Cybertruck are not really necessary. But they are spot on for the mission, because they hit the market in two places which generate outsize emissions. Replacing these with EVs have outsize benefits for sustainability, so they are being targeted as well. It’s all a battery availability balancing act.
The same goes for producing stationary storage. In the past taking second place to vehicles, but now able to grow faster due to battery availability. Again, note that the cells are not the same as those going into the cars in most cases.
Tesla has rarely been “moving diligently towards production” on the vehicles they’ve unveiled. Perhaps the only ones I’d characterize that way are the Model S and Model 3. For everything else they’ve at best been moseying, with a “we’ll get there when we get there” attitude. The only times they’ve said things about when they’ll get to production it’s been because people have asked and (usually Musk) has made a best guess estimate as to when they’ll get there.
The only thing that they (always Musk) have been diligently promoting as “coming soon” is autonomy, and that’s been wrong too many times to count now.
Once again, you’re just making stuff up. In general, Tesla’s reservation fees have been a hundred dollars or so, fully refundable (all you have to do is ask, which I did once). More recently, on some models, they have changed that to an “order fee”, which is not refundable, but that’s just for vehicles already in mass production. The exception has been the new Roadster, for which the reservation fee is big bucks, but it is also fully refundable for the asking.
It’s kind of hard to defraud anybody when you don’t have a hard delivery date and you give back their relatively tiny deposit for the asking.
You might want to consider a little less certainty about something you know so little about. No matter how good your reasoning ability, when you start with incorrect information you don’t end up with meaningful conclusions.
Well there was this distraction called Covid. During the pandemic years with all its supply and shutdown issues Tesla was still able to produce record number of vehicles while its competitors were in production decline. That’s not a bad indicator of best-in-world manufacturing and it makes sense that this should have been Tesla’s priority. Frankly, it also makes some sense to delay the introduction of new models until things settled down from the pandemic.
In any case, the real test of production competence is the profit margin. Which do you think will bring in higher margins, the electric Ford F150 or the Cybertruck?
