Is Tesla a good investment?

[ChpBstrd]

2023 will be the year investors start thinking about TSLA as just another car company. New competition in the BEV space, and perhaps softening demand, will bring Tesla's margins closer to industry norms. If Tesla's margins collapse faster than growth makes up for it, we might see some losing quarters from TSLA. Even if that doesn't happen, the wide range of new market entrants will put the kibosh on all this talk about Tesla's world domination and raise questions about valuation.

https://www.greencars.com/expert-insights/new-electric-vehicles-coming-in-2023
https://topelectricsuv.com/featured/upcoming-electric-cars-2022-2023/#Tesla_Roadster

I think you should consider the nuances in the business models of Tesla vs other OEMs. Why do you think industry margins would homogenous? Especially between EV and ICE. Tesla's manufacturing processes are wildly different than other manufacturers so why should Gross Margin be the same? Here's a video of Munroe and Associates going over the iterations of Tesla's body manufacturing: https://youtu.be/WNWYk4DdT_E

There are also software products, insurance, energy products (storage deployed grew 62% yoy), charging infrastructure, and revenue from services and parts which is just getting off the ground because there's actually many cars on the road now as opposed to some companies like Ford and GM which are a century old.

New EV entrants isn't an argument for margin collapse.

You know a ton about investing. It's obvious and I see it in other threads. I'm just not sure you're educating yourself on this company or the industry before passing judgments.

Tesla has been earning a 28% net margin from their customers, eight times what market leader Toyota pulls in. Their ability to grow organically (e.g. set up new factories) has been fueled by quickly-growing operating earnings, but it all comes back to their customers being willing to pay several thousand dollars extra per car. Why are customers willing to pay Tesla roughly $9,500 in margin per car? An economist might say because Tesla has monopoly power in the BEV market (71% market share for BEVs in 2021, down to 65% in 2022). If you wanted a BEV in the past few years, it was Tesla or the downmarket Leaf / Bolt, which were themselves fairly expensive and had shorter range. Yes, there were some startups like Fisker also selling upmarket BEVs, but they weren't widely available.

There's also the tailwind from Tesla selling billions of dollars worth of pollution credits over the past few years. That market is destined to dry up as more and more manufacturers make their own BEVs.

The question is whether Tesla will continue to grow the top line quickly while simultaneously maintaining 8X industry margins in a near future when customers have many possible choices, such as a $34k Chevy Equinox BEV or Hyundai Kona BEV. An economist might say these new market entrants will break the monopolist's pricing power and force margins toward equilibrium.

Of course, the Tesla brand may retain some additional value to certain customers as a status symbol, so their margins may never get as low as a Chevy or Kia, but there are other luxury nameplates like Cadillac, Lexus, or Infinity that should be able to do the same thing. It will soon be fair to ask why Tesla is so special that their cars are worth thousands of dollars more than equivalent offerings from their competitors.

[mistymoney]

If Elon had not bought Twitter I'm pretty sure Tesla would be much more highly valued; although I don't like his tweets etc I don't think that impacts Tesla long term prospects.

But it is translating to people not buying the cars, so that is a concern. How many people are going to change their purchase inclinations due to CEO antics? That is the question. It could just be a blip, I remember some anti-apple, any phone but apple, etc. and I can't recall what that was about but it did not seriously impact the iphone trajectory.

[NorCal]

If Elon had not bought Twitter I'm pretty sure Tesla would be much more highly valued; although I don't like his tweets etc I don't think that impacts Tesla long term prospects.

But it is translating to people not buying the cars, so that is a concern. How many people are going to change their purchase inclinations due to CEO antics? That is the question. It could just be a blip, I remember some anti-apple, any phone but apple, etc. and I can't recall what that was about but it did not seriously impact the iphone trajectory.

I suspect part of his equation is knowing that the Tesla brand was built on becoming an idol to the left. He realized that half the country wasn’t interested in Tesla products.

If he can become an idol to the right, the other half of the country would now consider a Tesla.

Maybe it will work and maybe it won’t. But I think there’s more customers to be gained than lost.

[waltworks]

I find it interesting that the Tesla 'stans (correctly) point out that Tesla overcame a lot of doubters/haters/disbelief and will now almost certainly be a top-3 or at least top-5 automaker eventually, but in the same breath seem to refuse to believe that *any* of the legacy automakers and/or other BEV startups will offer meaningful competition for Tesla.

I mean, there are an awful lot of big companies with lots of money and smart engineers aiming most of their efforts at the BEV market now. Even if only a few succeed, that's infinitely more competition than Tesla faces now. And to be frank, BEVs are a lot easier to make than ICE cars. I'd expect many, many companies to succeed in producing good ones.

Yeah, you can't get most of them yet. Yeah, they're going to have a struggle to scale up. But 3 or 4 years from now there will be a freaking ton of choices (if you're willing to be on a waitlist for 6 months, there already are, really).

-W

[NorCal]

I find it interesting that the Tesla 'stans (correctly) point out that Tesla overcame a lot of doubters/haters/disbelief and will now almost certainly be a top-3 or at least top-5 automaker eventually, but in the same breath seem to refuse to believe that *any* of the legacy automakers and/or other BEV startups will offer meaningful competition for Tesla.

I mean, there are an awful lot of big companies with lots of money and smart engineers aiming most of their efforts at the BEV market now. Even if only a few succeed, that's infinitely more competition than Tesla faces now. And to be frank, BEVs are a lot easier to make than ICE cars. I'd expect many, many companies to succeed in producing good ones.

Yeah, you can't get most of them yet. Yeah, they're going to have a struggle to scale up. But 3 or 4 years from now there will be a freaking ton of choices (if you're willing to be on a waitlist for 6 months, there already are, really).

-W

Right now, the non-Tesla companies are all racing to see who can build a quality EV that will be popular.  And they're doing a good job.  Ford, Kia and Hyandai have some very compelling models.  It looks like the GM Ultium platform will be good as well, but it's too early to say for sure.  Stellantis is a big question mark.  The Japanese automakers are a big failure so far.  Maybe they'll catch up, but I doubt it.

Focusing on Ford, Kia and Hyandai, they have good EV's, but are delivering tens of thousands a year.  They will be scaling to low hundreds of thousands each by 2025, at best.  Tesla should be in the ballpark of 1.5M in 2022 and probably 2M (ish) in 2023.  The gap between these companies will narrow, but you need to look at the numbers to appreciate how much of a gap there is to start.  It's also too early to figure out where gross margins will land until they start selling them at a much larger scale.  Ford even mentioned that they're currently selling the Mach-E at a loss.  This will change at scale, but it's a question mark on how much it will change and how fast.

Right now, the market is focused on compelling products and ability to scale.  And this is the right metric to think about it today.  But sometime in the back-half of this decade, the EV market is going to be fully saturated.  More manufacturing capacity will come on line than the market will support.  At this point, the market will become about who can make EV's most profitably.  While this will impact all EV makers, I think this is where Tesla will come out ahead.  Tesla has put a massive focus (to a fault I believe) in eliminating cost from the manufacturing process and from the upstream supply chain.  I don't want to own Tesla stock when this time comes, but I'd rather own Tesla stock than any other automaker.  This will be the inflection point that some car makers don't come back from.

[lemonlyman]

Tesla has been earning a 28% net margin from their customers, eight times what market leader Toyota pulls in. Their ability to grow organically (e.g. set up new factories) has been fueled by quickly-growing operating earnings, but it all comes back to their customers being willing to pay several thousand dollars extra per car. Why are customers willing to pay Tesla roughly $9,500 in margin per car? An economist might say because Tesla has monopoly power in the BEV market (71% market share for BEVs in 2021, down to 65% in 2022). If you wanted a BEV in the past few years, it was Tesla or the downmarket Leaf / Bolt, which were themselves fairly expensive and had shorter range. Yes, there were some startups like Fisker also selling upmarket BEVs, but they weren't widely available.

There's also the tailwind from Tesla selling billions of dollars worth of pollution credits over the past few years. That market is destined to dry up as more and more manufacturers make their own BEVs.

The question is whether Tesla will continue to grow the top line quickly while simultaneously maintaining 8X industry margins in a near future when customers have many possible choices, such as a $34k Chevy Equinox BEV or Hyundai Kona BEV. An economist might say these new market entrants will break the monopolist's pricing power and force margins toward equilibrium.

Of course, the Tesla brand may retain some additional value to certain customers as a status symbol, so their margins may never get as low as a Chevy or Kia, but there are other luxury nameplates like Cadillac, Lexus, or Infinity that should be able to do the same thing. It will soon be fair to ask why Tesla is so special that their cars are worth thousands of dollars more than equivalent offerings from their competitors.

Thanks. An economist might also say that Tesla has a better product than just monopoly power. So you believe Tesla will reduce prices only and not costs? Margins are affected by sale price and cost. As you know, most of Toyota's margins (nearly all) are a result of ICE sales. That's a different cost structure for manufacturing than what Tesla has in manufacturing only EVs. Different raw materials, labor requirements, cooling systems, electronics, suppliers, and manufacturing techniques. Tesla is pioneering single body castings and in house pack manufacturing. They make their own seats and heat pumps. They design their own onboard navigation computers. They have a direct to consumer selling model.

The models are too different to expect homogenous margins.


My Opinion:
1. Tesla hasn't yet pulled the demand level for offering bare bones Model 3s or Ys yet because they've been able to sell higher priced/range models. And they are still reducing manufacturing costs and ramping production in 2 factories which will bring more operating leverage.

2. Tesla's net margin is only 17%.  Gross margin is around that 28-29%. It is still 8x Toyota's earnings but only <2x Gross Margin. ICE and EV costs are not the same.

3. I do not believe OEMs won't sell EVs, but their margins will continue to struggle. ColoradoTribe has been trying to point out that most EV sales are switches from ICE, not EV to EV. As GM aims to produce a million EVs by 2025, they are cannibalizing their own ICE sales to do it. Ford is the same. Toyota is the same. These companies aren't growing their margins, they are shrinking.

4. Tesla will reduce price and cost while increasing other services. Margins will not compress. Top line will grow with Cybertruck, Semi, FSD sales, Supercharger growth, and Energy Storage growth.

5. Energy credits will vanish and it won't matter. 10% of net income last quarter.

6. Customers don't look at what the margin for a vehicle is. $9,500/per vehicle is Unknown to most people. I've personally never met an individual in real life who also reads 10Qs. Buyers compare features, range, ease of use, convenience, build quality. All kinds of things. Consumers are all different but on the average, Tesla has excelled.

7. The next tailwind is the IRA. Consumers will receive tax credits for purchasing Tesla's in full while most manufacturers will only get a partial credit due to the sources of batteries and assembly requirements. Tesla will also be the only manufacturer in 2023 to receive the corporate credits for manufacturing batteries. GM and others will get there in a few years but most of their battery plants have not even begun being built.

8. Most manufactures won't have the capacity in 2023 to offer a meaningful number of EV sales in the market. Tesla is at a 2 million run rate world wide. No one else is even close to that yet.

[StashingAway]

Do you think that Tesla will be the only one to have/hold high margins on EVs?

What is stopping the electric division of the big players, or the new startups to follow suit (GM, Ford, VW, Rivian, etc.)?

As a thought experiment, 10 years down the road after this all shakes out, what will the paths to success look like? It seems kind of obvious how the big players might fall; they maintain old manufacturing and selling strategies that become less and less competitive as EV sales squeeze them. But how would the potentially successful ones look? I think that's a scenario that isn't accounted for by ColoradoTribe, etc. (I might be wrong here though)

 It is assumed that every single one will fall by the wayside, won't innovate, don't see the $ on the table from the Tesla way (similar to how companies started following the Toyota way in the 90's). Which is definitely a possibility, but it just seems that long term there is too much $ for *no one* to compete.

I am not making comment on the valuation specifically, just the general tone of the posts. It could be a decent buy right now but I don't have the capability to know that.

[ColoradoTribe]

2023 will be the year investors start thinking about TSLA as just another car company. New competition in the BEV space, and perhaps softening demand, will bring Tesla's margins closer to industry norms. If Tesla's margins collapse faster than growth makes up for it, we might see some losing quarters from TSLA. Even if that doesn't happen, the wide range of new market entrants will put the kibosh on all this talk about Tesla's world domination and raise questions about valuation.

https://www.greencars.com/expert-insights/new-electric-vehicles-coming-in-2023
https://topelectricsuv.com/featured/upcoming-electric-cars-2022-2023/#Tesla_Roadster

I think you should consider the nuances in the business models of Tesla vs other OEMs. Why do you think industry margins would homogenous? Especially between EV and ICE. Tesla's manufacturing processes are wildly different than other manufacturers so why should Gross Margin be the same? Here's a video of Munroe and Associates going over the iterations of Tesla's body manufacturing: https://youtu.be/WNWYk4DdT_E

There are also software products, insurance, energy products (storage deployed grew 62% yoy), charging infrastructure, and revenue from services and parts which is just getting off the ground because there's actually many cars on the road now as opposed to some companies like Ford and GM which are a century old.

New EV entrants isn't an argument for margin collapse.

You know a ton about investing. It's obvious and I see it in other threads. I'm just not sure you're educating yourself on this company or the industry before passing judgments.

Tesla has been earning a 28% net margin from their customers, eight times what market leader Toyota pulls in. Their ability to grow organically (e.g. set up new factories) has been fueled by quickly-growing operating earnings, but it all comes back to their customers being willing to pay several thousand dollars extra per car. Why are customers willing to pay Tesla roughly $9,500 in margin per car? An economist might say because Tesla has monopoly power in the BEV market (71% market share for BEVs in 2021, down to 65% in 2022). If you wanted a BEV in the past few years, it was Tesla or the downmarket Leaf / Bolt, which were themselves fairly expensive and had shorter range. Yes, there were some startups like Fisker also selling upmarket BEVs, but they weren't widely available.

There's also the tailwind from Tesla selling billions of dollars worth of pollution credits over the past few years. That market is destined to dry up as more and more manufacturers make their own BEVs.

The question is whether Tesla will continue to grow the top line quickly while simultaneously maintaining 8X industry margins in a near future when customers have many possible choices, such as a $34k Chevy Equinox BEV or Hyundai Kona BEV. An economist might say these new market entrants will break the monopolist's pricing power and force margins toward equilibrium.

Of course, the Tesla brand may retain some additional value to certain customers as a status symbol, so their margins may never get as low as a Chevy or Kia, but there are other luxury nameplates like Cadillac, Lexus, or Infinity that should be able to do the same thing. It will soon be fair to ask why Tesla is so special that their cars are worth thousands of dollars more than equivalent offerings from their competitors.

You attribute Tesla’s margins to branding and lack of competition, completely ignoring other possibilities. One, that Tesla simply offers a superior product. Two, Tesla has revolutionized the manufacturing process, which reduces the complexity and cost of the vehicles, and in doing so reduces the number of possible issues that can arise down the road. Just a few differentiators that provide Tesla owners with an added value proposition:

1) Part of that extra margin for Tesla is because they don’t have middle men in the form of dealers. Not having to deal with dealers is also a value add for Tesla customers.

2) Tesla vehicles come with access to the supercharger network. This is entirely unique to Tesla and provides added functionality and value to Tesla vehicles. Owners of other EVs will either need a second ICE vehicle or to rent a car for cross country trips that can easily be accomplished in a Tesla using the supercharging network.

3) OTAs fixes and software upgrades. Tesla vehicles can be improved and in many cases fixed without having to bring the car into a shop. Tesla is the industry leader here. Tesla has actually improved the range of cars that were already sold using OTAs. I’m not aware of any other car company doing that for its customers.

4) Giga-casting. Tesla structural battery pack paired with front and rear castings greatly reduces the number of components and welds that go into a vehicle, improve vehicle handling, reducing cost, and reducing the number of potential issues down the road. It improves margins and offers the customer a superior product.

5) Best in the business batteries. Higher energy density, better thermal management, lower rates of battery degradation. It’ll be a long time before legacy catches up to Tesla on this front.

6) Best driver assist software (AutoPilot) in the business. While everyone is focusing on autonomy, Tesla’s “auto pilot” is rapidly improving and preventing accidents and saving lives NOW. I don’t know when/if they’ll achieve autonomous, but in the meantime this is still a big value add to Tesla’s customers.

7) Highest safety and customer satisfaction ratings in the business. Consumers care about safety and Tesla’s are some of the safest vehicles on the road.

There are dozens more things, big and small, like those listed above. You seem to think folks are buying Tesla’s mainly because of some blind brand loyalty or because Tesla is a monopoly. In reality, once people start researching the alternatives they are seeing the value proposition Teslas offer to justify the pricing.

[ColoradoTribe]

Do you think that Tesla will be the only one to have/hold high margins on EVs?

What is stopping the electric division of the big players, or the new startups to follow suit (GM, Ford, VW, Rivian, etc.)?

As a thought experiment, 10 years down the road after this all shakes out, what will the paths to success look like? It seems kind of obvious how the big players might fall; they maintain old manufacturing and selling strategies that become less and less competitive as EV sales squeeze them. But how would the potentially successful ones look? I think that's a scenario that isn't accounted for by ColoradoTribe, etc. (I might be wrong here though)

 It is assumed that every single one will fall by the wayside, won't innovate, don't see the $ on the table from the Tesla way (similar to how companies started following the Toyota way in the 90's). Which is definitely a possibility, but it just seems that long term there is too much $ for *no one* to compete.

I am not making comment on the valuation specifically, just the general tone of the posts. It could be a decent buy right now but I don't have the capability to know that.

I never said they would all fail. I’ve said that roughly half are likely to fail based on current trajectory.  Volkswagen was on the right path, but then fired CEO Geiss (sp?) and slowed or reversed course on EVs. Toyota and Honda are in big trouble after a hydrogen false start. Ford and GM are moving in the right direction, but are heavily debt laden and will need to cannibalize their ICE profit center at the same time they need to be investing billions into an EV/battery transition. Throw a recession on top and I’d say their chances are 50/50 at best barring another round of federal bailouts. Tesla struggled mightily to make the jump from prototypes to mass production and didn’t have to fight an entrenched ICE culture, unions, stranded ICE assets, ICE part suppliers, a reluctant dealership network, or billions in ICE business debt. The legacy autos would be better off starting from scratch in reality. Ford recognizes this problem, which is why they split their EV division off from their ICE division. They’re trying to create a firewall to shield the growing EV business from what will quickly become an anchor. How do you think Ford and GM shareholders are gonna feel when they’re told they’ll need to forgo dividends and stock price growth for 3-5 years while they plow every available dollar into an EV transition? Why would a shareholder stick around for that?

[lemonlyman]

Do you think that Tesla will be the only one to have/hold high margins on EVs?

What is stopping the electric division of the big players, or the new startups to follow suit (GM, Ford, VW, Rivian, etc.)?

As a thought experiment, 10 years down the road after this all shakes out, what will the paths to success look like? It seems kind of obvious how the big players might fall; they maintain old manufacturing and selling strategies that become less and less competitive as EV sales squeeze them. But how would the potentially successful ones look? I think that's a scenario that isn't accounted for by ColoradoTribe, etc. (I might be wrong here though)

 It is assumed that every single one will fall by the wayside, won't innovate, don't see the $ on the table from the Tesla way (similar to how companies started following the Toyota way in the 90's). Which is definitely a possibility, but it just seems that long term there is too much $ for *no one* to compete.

I am not making comment on the valuation specifically, just the general tone of the posts. It could be a decent buy right now but I don't have the capability to know that.

They could all become profitable. Rivian will be first IMO. OEMs will have billions of assets stranded during the transition. It’s going to be really tough for them. Balance sheets have decades of long term liabilities associated with those assets  that will still need to be paid.

10 years from now is unknowable but today Tesla has been through the growing pains already and has multi year head starts in many facets. That’s the main thing. Nothing is stopping the others. It’s just Tesla has passed the execution risk.

[lemonlyman]

As an example of Tesla's current EV manufacturing prowess:

Tesla Model Y and Ford Mach-e were both released in 2020.

Tesla Model Y Production: >1,000,000
Ford Mach-e Production: just celebrated 150,000 total produced

[StashingAway]

1) Part of that extra margin for Tesla is because they don’t have middle men in the form of dealers. Not having to deal with dealers is also a value add for Tesla customers.

2) Tesla vehicles come with access to the supercharger network. This is entirely unique to Tesla and provides added functionality and value to Tesla vehicles. Owners of other EVs will either need a second ICE vehicle or to rent a car for cross country trips that can easily be accomplished in a Tesla using the supercharging network.

3) OTAs fixes and software upgrades. Tesla vehicles can be improved and in many cases fixed without having to bring the car into a shop. Tesla is the industry leader here. Tesla has actually improved the range of cars that were already sold using OTAs. I’m not aware of any other car company doing that for its customers.

4) Giga-casting. Tesla structural battery pack paired with front and rear castings greatly reduces the number of components and welds that go into a vehicle, improve vehicle handling, reducing cost, and reducing the number of potential issues down the road. It improves margins and offers the customer a superior product.

5) Best in the business batteries. Higher energy density, better thermal management, lower rates of battery degradation. It’ll be a long time before legacy catches up to Tesla on this front.

6) Best driver assist software (AutoPilot) in the business. While everyone is focusing on autonomy, Tesla’s “auto pilot” is rapidly improving and preventing accidents and saving lives NOW. I don’t know when/if they’ll achieve autonomous, but in the meantime this is still a big value add to Tesla’s customers.

7) Highest safety and customer satisfaction ratings in the business. Consumers care about safety and Tesla’s are some of the safest vehicles on the road.

There are dozens more things, big and small, like those listed above. You seem to think folks are buying Tesla’s mainly because of some blind brand loyalty or because Tesla is a monopoly. In reality, once people start researching the alternatives they are seeing the value proposition Teslas offer to justify the pricing.

And none of those attributes will be attainable by other companies? I'm genuinely not trying to be contrarian for the sake of it, just curious about where your head is at.

If you were the head of Kia, wouldn't you be making mid and long-term moves to compete? The youtube video linked above about the 3-piece casting is quite impressive. Presumably they have access to youtube as well, no? How would your internal decisions look from a public facing standpoint?

You didn't explicitly say that they would all fail (and if you read back, I said "it is assumed"), but perhaps I should have said "implied" rather than "assumed". With most innovations like this, the competition closes the gap, rather than the innovator widening it.

The Honda Superhawk (a motorcycle from the late 90's), was innovative in a similar way to the structural battery pack, where the engine casing was used as a structural element of the frame rather than just being suspended in it. Lighter, stiffer and more cost effective. At the time, it was interesting to the tech world and a first in production motorcycles. Now most sport motorcycles use this method of construction and it isn't even listed as a feature; it's just how motorcycles are built. Honda is no better at doing it than any other motorcycle company, and is in no better position for being the first to do it. This can be said for the countless improvements in vehicle design in general. Items 3-7 listed for Tesla fall into the category of approachable by other manufacturers in the future for me.

Currently, if I were to spend $40K on a vehicle and it had to be an EV, Tesla would be the top of the list. Like walt was alluding to, for some reason it is easy to see Tesla beating the odds, but somehow in the same discussion not recognize that it's possible for others to do the same.

[ColoradoTribe]

1) Part of that extra margin for Tesla is because they don’t have middle men in the form of dealers. Not having to deal with dealers is also a value add for Tesla customers.

2) Tesla vehicles come with access to the supercharger network. This is entirely unique to Tesla and provides added functionality and value to Tesla vehicles. Owners of other EVs will either need a second ICE vehicle or to rent a car for cross country trips that can easily be accomplished in a Tesla using the supercharging network.

3) OTAs fixes and software upgrades. Tesla vehicles can be improved and in many cases fixed without having to bring the car into a shop. Tesla is the industry leader here. Tesla has actually improved the range of cars that were already sold using OTAs. I’m not aware of any other car company doing that for its customers.

4) Giga-casting. Tesla structural battery pack paired with front and rear castings greatly reduces the number of components and welds that go into a vehicle, improve vehicle handling, reducing cost, and reducing the number of potential issues down the road. It improves margins and offers the customer a superior product.

5) Best in the business batteries. Higher energy density, better thermal management, lower rates of battery degradation. It’ll be a long time before legacy catches up to Tesla on this front.

6) Best driver assist software (AutoPilot) in the business. While everyone is focusing on autonomy, Tesla’s “auto pilot” is rapidly improving and preventing accidents and saving lives NOW. I don’t know when/if they’ll achieve autonomous, but in the meantime this is still a big value add to Tesla’s customers.

7) Highest safety and customer satisfaction ratings in the business. Consumers care about safety and Tesla’s are some of the safest vehicles on the road.

There are dozens more things, big and small, like those listed above. You seem to think folks are buying Tesla’s mainly because of some blind brand loyalty or because Tesla is a monopoly. In reality, once people start researching the alternatives they are seeing the value proposition Teslas offer to justify the pricing.

And none of those attributes will be attainable by other companies? I'm genuinely not trying to be contrarian for the sake of it, just curious about where your head is at.

If you were the head of Kia, wouldn't you be making mid and long-term moves to compete? The youtube video linked above about the 3-piece casting is quite impressive. Presumably they have access to youtube as well, no? How would your internal decisions look from a public facing standpoint?

You didn't explicitly say that they would all fail (and if you read back, I said "it is assumed"), but perhaps I should have said "implied" rather than "assumed". With most innovations like this, the competition closes the gap, rather than the innovator widening it.

The Honda Superhawk (a motorcycle from the late 90's), was innovative in a similar way to the structural battery pack, where the engine casing was used as a structural element of the frame rather than just being suspended in it. Lighter, stiffer and more cost effective. At the time, it was interesting to the tech world and a first in production motorcycles. Now most sport motorcycles use this method of construction and it isn't even listed as a feature; it's just how motorcycles are built. Honda is no better at doing it than any other motorcycle company, and is in no better position for being the first to do it. This can be said for the countless improvements in vehicle design in general. Items 3-7 listed for Tesla fall into the category of approachable by other manufacturers in the future for me.

Currently, if I were to spend $40K on a vehicle and it had to be an EV, Tesla would be the top of the list. Like walt was alluding to, for some reason it is easy to see Tesla beating the odds, but somehow in the same discussion not recognize that it's possible for others to do the same.

The question I was answering was in reference to justifying and maintaining Tesla’s astounding margins going forward. I think it is clear that Tesla will maintain if not grow it’s margins in the near-term. The thread asks the question, Is Tesla a good investment? It is not necessary for Tesla to hold 50% market share to be a good investment. At 20% market share, Tesla will be wildly profitable. It’s hard for me to see a scenario where Tesla does not end up with 20% market share. This does not take into account other revenue streams like software, robots taxis, insurance, energy storage, solar, supercharger network subscription, etc.

Other manufacturers can and will follow where Tesla has led, but it will require a near total restructuring of their business models. Fewer part suppliers and new suppliers, battery sourcing (cells and raw materials), buy gigapress casting machines (costly and limited supply), get rid of dealerships and maintenance profit center (no more oil changes and radiator flushes), become much more software competent (think computers on wheels), etc.

The bears consistently underestimate the level of disruption Tesla is bringing to the market and the degree of difficulty legacy auto are facing in making this transition. I’m not saying its impossible, but Tesla’s lead is wide and currently growing. A new equilibrium will be reached between Tesla and the survivors eventually, but Tesla’s lead in technology, infrastructure and scale will take the better part of a decade to erase. In the meantime, Tesla will remain a great investment, which is the whole point!

[ColoradoTribe]

As an example of Tesla's current EV manufacturing prowess:

Tesla Model Y and Ford Mach-e were both released in 2020.

Tesla Model Y Production: >1,000,000
Ford Mach-e Production: just celebrated 150,000 total produced

Yep, and the Nissan Leaf was introduced in the US in 2011 or 2012 and Nissan has yet to sell 200,000 LEAF (total lifetime sales) in the US.

[ChpBstrd]

As an example of Tesla's current EV manufacturing prowess:

Tesla Model Y and Ford Mach-e were both released in 2020.

Tesla Model Y Production: >1,000,000
Ford Mach-e Production: just celebrated 150,000 total produced

Yep, and the Nissan Leaf was introduced in the US in 2011 or 2012 and Nissan has yet to sell 200,000 LEAF in the US.

I'll acknowledge the Nissan Leaf was an inferior value proposition compared to a Tesla Model 3, or even the Nissan Versa, and that's why fewer were sold. But we're not talking about 2012 or 2016 or 2020, we're talking about the future. The future looks like lots of $30-40k EVs from most of the biggest auto manufacturers.

These new vehicles will have Tesla-like product benefits, perhaps easier serviceability, and probably much lower costs of ownership (Edmunds TCO says the cost of owning a Tesla Model 3 is in line with a BMW 5-series, out of reach for most families). They'll be advertised aggressively, widely available for test drives, and financed at sub-inflation rates. Many (most?) of them will use the CCS industry standard plug and be interoperable with Tesla's Supercharger network.

So it may be true that Tesla sold the best BEVs or the only competitive BEVs in 2018 or 2020 or even 2022, but those talking points are water under the bridge. Other car manufacturers are eating away at Tesla's technological advantages, if not directly stealing Tesla's under-protected IP, so product parity may be inevitable for at least some of Tesla's competitors. I'm sure some companies will fail at the transition - they always do - but this does not mean that nobody else in the world can make a competitive BEV. In 2023, we're going to witness this happening multiple times.

Then, people are going to ask why they own TSLA at a PE ratio of 57 when other BEV manufacturers are one-fifth the valuation. People are also going to start asking if a Model 3 compact sedan is really worth 10-20k more than an electric Equinox or Kona.

[lemonlyman]

As an example of Tesla's current EV manufacturing prowess:

Tesla Model Y and Ford Mach-e were both released in 2020.

Tesla Model Y Production: >1,000,000
Ford Mach-e Production: just celebrated 150,000 total produced

Yep, and the Nissan Leaf was introduced in the US in 2011 or 2012 and Nissan has yet to sell 200,000 LEAF in the US.

I'll acknowledge the Nissan Leaf was an inferior value proposition compared to a Tesla Model 3, or even the Nissan Versa, and that's why fewer were sold. But we're not talking about 2012 or 2016 or 2020, we're talking about the future. The future looks like lots of $30-40k EVs from most of the biggest auto manufacturers.

These new vehicles will have Tesla-like product benefits, perhaps easier serviceability, and probably much lower costs of ownership (Edmunds TCO says the cost of owning a Tesla Model 3 is in line with a BMW 5-series, out of reach for most families). They'll be advertised aggressively, widely available for test drives, and financed at sub-inflation rates. Many (most?) of them will use the CCS industry standard plug and be interoperable with Tesla's Supercharger network.

So it may be true that Tesla sold the best BEVs or the only competitive BEVs in 2018 or 2020 or even 2022, but those talking points are water under the bridge. Other car manufacturers are eating away at Tesla's technological advantages, if not directly stealing Tesla's under-protected IP, so product parity may be inevitable for at least some of Tesla's competitors. I'm sure some companies will fail at the transition - they always do - but this does not mean that nobody else in the world can make a competitive BEV. In 2023, we're going to witness this happening multiple times.

Then, people are going to ask why they own TSLA at a PE ratio of 57 when other BEV manufacturers are one-fifth the valuation. People are also going to start asking if a Model 3 compact sedan is really worth 10-20k more than an electric Equinox or Kona.

I think it's possible you could be right in some fashion in 2024 or 2025 but not 2023. Most of the cars in the links you posted aren't coming out in 2023 and those that do will have small production batches and not fully eligible for the new tax credits. Tesla is already working on their $25,000 value car platform to sit below the Model 3 and Y. So for the future, that's an incoming product scheduled for 2024 that these new cars will have to compete against as well.

What are the technological advantages other manufacturers eaten away at? As far as I know, Rivian has done the best job there and they still lack many software features Tesla do.

I think a lot of those cars will sell pretty well when they come out. But what's important here for valuation, is Margin. For margin and growth in financials, that's where they can't compete. I'm not saying they won't sell EVs. I think they will sell their EVs AND Tesla will sell all theirs as well.

[Niceday]

Edmunds TCO says the cost of owning a Tesla Model 3 is in line with a BMW 5-series

I'd call that an extremely biased opinion by Edmunds.

Tesla Model 3 Rear Wheel Drive MSRP $46,900
BMW 530i(the cheapest rwd) MSRP $54,800

Tesla Model 3 Long Range(AWD) MSRP is $57,990
BMW 530i xDrive(the cheapest 5 series AWD) MSRP is $57,100

Add the following costs for BMW's:
- oil change
- the difference between premium gas cost and electricity cost
- 10k, 25k, etc mile checkups
- break pads
- repair costs after warranty expiration

Any way you look at it, Tesla Model 3 TCO is lower.

[mistymoney]

Tesla has been earning a 28% net margin from their customers, eight times what market leader Toyota pulls in. Their ability to grow organically (e.g. set up new factories) has been fueled by quickly-growing operating earnings, but it all comes back to their customers being willing to pay several thousand dollars extra per car. Why are customers willing to pay Tesla roughly $9,500 in margin per car? An economist might say because Tesla has monopoly power in the BEV market (71% market share for BEVs in 2021, down to 65% in 2022). If you wanted a BEV in the past few years, it was Tesla or the downmarket Leaf / Bolt, which were themselves fairly expensive and had shorter range. Yes, there were some startups like Fisker also selling upmarket BEVs, but they weren't widely available.

There's also the tailwind from Tesla selling billions of dollars worth of pollution credits over the past few years. That market is destined to dry up as more and more manufacturers make their own BEVs.

The question is whether Tesla will continue to grow the top line quickly while simultaneously maintaining 8X industry margins in a near future when customers have many possible choices, such as a $34k Chevy Equinox BEV or Hyundai Kona BEV. An economist might say these new market entrants will break the monopolist's pricing power and force margins toward equilibrium.

Of course, the Tesla brand may retain some additional value to certain customers as a status symbol, so their margins may never get as low as a Chevy or Kia, but there are other luxury nameplates like Cadillac, Lexus, or Infinity that should be able to do the same thing. It will soon be fair to ask why Tesla is so special that their cars are worth thousands of dollars more than equivalent offerings from their competitors.

Thanks. An economist might also say that Tesla has a better product than just monopoly power. So you believe Tesla will reduce prices only and not costs? Margins are affected by sale price and cost. As you know, most of Toyota's margins (nearly all) are a result of ICE sales. That's a different cost structure for manufacturing than what Tesla has in manufacturing only EVs. Different raw materials, labor requirements, cooling systems, electronics, suppliers, and manufacturing techniques. Tesla is pioneering single body castings and in house pack manufacturing. They make their own seats and heat pumps. They design their own onboard navigation computers. They have a direct to consumer selling model.

The models are too different to expect homogenous margins.


My Opinion:
1. Tesla hasn't yet pulled the demand level for offering bare bones Model 3s or Ys yet because they've been able to sell higher priced/range models. And they are still reducing manufacturing costs and ramping production in 2 factories which will bring more operating leverage.

2. Tesla's net margin is only 17%.  Gross margin is around that 28-29%. It is still 8x Toyota's earnings but only <2x Gross Margin. ICE and EV costs are not the same.

3. I do not believe OEMs won't sell EVs, but their margins will continue to struggle. ColoradoTribe has been trying to point out that most EV sales are switches from ICE, not EV to EV. As GM aims to produce a million EVs by 2025, they are cannibalizing their own ICE sales to do it. Ford is the same. Toyota is the same. These companies aren't growing their margins, they are shrinking.

4. Tesla will reduce price and cost while increasing other services. Margins will not compress. Top line will grow with Cybertruck, Semi, FSD sales, Supercharger growth, and Energy Storage growth.

5. Energy credits will vanish and it won't matter. 10% of net income last quarter.

6. Customers don't look at what the margin for a vehicle is. $9,500/per vehicle is Unknown to most people. I've personally never met an individual in real life who also reads 10Qs. Buyers compare features, range, ease of use, convenience, build quality. All kinds of things. Consumers are all different but on the average, Tesla has excelled.

7. The next tailwind is the IRA. Consumers will receive tax credits for purchasing Tesla's in full while most manufacturers will only get a partial credit due to the sources of batteries and assembly requirements. Tesla will also be the only manufacturer in 2023 to receive the corporate credits for manufacturing batteries. GM and others will get there in a few years but most of their battery plants have not even begun being built.

8. Most manufactures won't have the capacity in 2023 to offer a meaningful number of EV sales in the market. Tesla is at a 2 million run rate world wide. No one else is even close to that yet.

Always enjoy your thoughtful and informed posts on tesla, btw.

One thing I'm wondering is where quality/longgevity may come into play. Tesla are very long lasting, or so I've heard. Are the other EVs like leaf also long lasting? How do you think that will that impact sales down the line? Resales?

[waltworks]

I own a 2017 Leaf, so I have a little experience with that particular car.

Leafs from 2011 (first introduced) still sell for $10k or so used, so (IMO) they hold their value fairly well. Battery degradation is the only real issue unless you wreck it, and they seem to have no problem with the battery lasting well past the 100k miles/8 years warranty and still retaining useful range. The battery temperature management on the older ones isn't the best so if you live somewhere really hot that can be an issue, I'm told.

They are only useful (at least the older ones, I think there are now some with 200+ mile ranges) for very specific types of owners, though - city driving/commuting only, no road tripping, fairly compact size/limited cargo capacity/not very fast or cool. Not comparable to a Tesla in most ways.

-W

[ColoradoTribe]

I own a 2017 Leaf, so I have a little experience with that particular car.

Leafs from 2011 (first introduced) still sell for $10k or so used, so (IMO) they hold their value fairly well. Battery degradation is the only real issue unless you wreck it, and they seem to have no problem with the battery lasting well past the 100k miles/8 years warranty and still retaining useful range. The battery temperature management on the older ones isn't the best so if you live somewhere really hot that can be an issue, I'm told.

They are only useful (at least the older ones, I think there are now some with 200+ mile ranges) for very specific types of owners, though - city driving/commuting only, no road tripping, fairly compact size/limited cargo capacity/not very fast or cool. Not comparable to a Tesla in most ways.

-W

We owned a 2013 LEAF until August when it was totaled by another driver running a red light (distracted). It was down to 60% battery capacity or 60 miles of range after 60,000 miles. New LEAF come with either 160 (S) or 240 (SV) miles of range and (hopefully) have slower degradation rates. Used LEAF prices have improved recently due to general tightness in auto supply chain and more people wanting to get into an EV. This was not the case pre-pandemic. As Walt says, the LEAF is great for a daily commuter or around town car, but most people will want or need to pair with an ICE vehicle. The battery thermal management is not as good as Tesla. Tesla uses cylindrical batteries compered to pouch battery for LEAF. LEAF base model does not come with a heat pump, which significantly impacts winter performance. There are ample stories of selling Teslas 2 and 3 years old for more than they paid for them.

[mistymoney]

1) Part of that extra margin for Tesla is because they don’t have middle men in the form of dealers. Not having to deal with dealers is also a value add for Tesla customers.

2) Tesla vehicles come with access to the supercharger network. This is entirely unique to Tesla and provides added functionality and value to Tesla vehicles. Owners of other EVs will either need a second ICE vehicle or to rent a car for cross country trips that can easily be accomplished in a Tesla using the supercharging network.

3) OTAs fixes and software upgrades. Tesla vehicles can be improved and in many cases fixed without having to bring the car into a shop. Tesla is the industry leader here. Tesla has actually improved the range of cars that were already sold using OTAs. I’m not aware of any other car company doing that for its customers.

4) Giga-casting. Tesla structural battery pack paired with front and rear castings greatly reduces the number of components and welds that go into a vehicle, improve vehicle handling, reducing cost, and reducing the number of potential issues down the road. It improves margins and offers the customer a superior product.

5) Best in the business batteries. Higher energy density, better thermal management, lower rates of battery degradation. It’ll be a long time before legacy catches up to Tesla on this front.

6) Best driver assist software (AutoPilot) in the business. While everyone is focusing on autonomy, Tesla’s “auto pilot” is rapidly improving and preventing accidents and saving lives NOW. I don’t know when/if they’ll achieve autonomous, but in the meantime this is still a big value add to Tesla’s customers.

7) Highest safety and customer satisfaction ratings in the business. Consumers care about safety and Tesla’s are some of the safest vehicles on the road.

There are dozens more things, big and small, like those listed above. You seem to think folks are buying Tesla’s mainly because of some blind brand loyalty or because Tesla is a monopoly. In reality, once people start researching the alternatives they are seeing the value proposition Teslas offer to justify the pricing.

And none of those attributes will be attainable by other companies? I'm genuinely not trying to be contrarian for the sake of it, just curious about where your head is at.

If you were the head of Kia, wouldn't you be making mid and long-term moves to compete? The youtube video linked above about the 3-piece casting is quite impressive. Presumably they have access to youtube as well, no? How would your internal decisions look from a public facing standpoint?

You didn't explicitly say that they would all fail (and if you read back, I said "it is assumed"), but perhaps I should have said "implied" rather than "assumed". With most innovations like this, the competition closes the gap, rather than the innovator widening it.

The Honda Superhawk (a motorcycle from the late 90's), was innovative in a similar way to the structural battery pack, where the engine casing was used as a structural element of the frame rather than just being suspended in it. Lighter, stiffer and more cost effective. At the time, it was interesting to the tech world and a first in production motorcycles. Now most sport motorcycles use this method of construction and it isn't even listed as a feature; it's just how motorcycles are built. Honda is no better at doing it than any other motorcycle company, and is in no better position for being the first to do it. This can be said for the countless improvements in vehicle design in general. Items 3-7 listed for Tesla fall into the category of approachable by other manufacturers in the future for me.

Currently, if I were to spend $40K on a vehicle and it had to be an EV, Tesla would be the top of the list. Like walt was alluding to, for some reason it is easy to see Tesla beating the odds, but somehow in the same discussion not recognize that it's possible for others to do the same.

I'm not really following what the essence of your argument is. There have always been multiple car companies and that will more than likely continue. What about their success in the EV transition is likely to topple tesla? That is really where I thought the discussion was - how other EV offerings were going to put pressure on tesla - like  to lower margin, for example.

So the points being put forward aren't that other companies are or aren't going to do it, or be successful at it. It is just reiterating that tesla has already secured their seat at the table, regardless of what those other companies eventual do.

[mistymoney]

in the news...

Tesla Will Dominate U.S. EV Sales Through 2030. The Future No. 2 Player Might Surprise You. -- Barrons.com
11:58 am ET November 30, 2022 (Dow Jones) Print
Al Root
Tesla has the lion's share of the market for battery electric cars in the U.S. it is going to be the electric-vehicle leader through the end of the decade. Tesla has left itself vulnerable in one way though, and General Motors plans to exploit that weakness.

Auto industry data provider S&P Global Mobility reported Tuesday that about 525,000 battery electric vehicles were sold in the U.S. over the first nine months of 2022. About 340,000 of those were Tesla (ticker: TSLA) vehicles.

[mistymoney]

another tidbit is that musk said it will take them 3 years to fulfill all the cybertuck orders.....that seems crazy....

[ChpBstrd]

1) Part of that extra margin for Tesla is because they don’t have middle men in the form of dealers. Not having to deal with dealers is also a value add for Tesla customers.

2) Tesla vehicles come with access to the supercharger network. This is entirely unique to Tesla and provides added functionality and value to Tesla vehicles. Owners of other EVs will either need a second ICE vehicle or to rent a car for cross country trips that can easily be accomplished in a Tesla using the supercharging network.

3) OTAs fixes and software upgrades. Tesla vehicles can be improved and in many cases fixed without having to bring the car into a shop. Tesla is the industry leader here. Tesla has actually improved the range of cars that were already sold using OTAs. I’m not aware of any other car company doing that for its customers.

4) Giga-casting. Tesla structural battery pack paired with front and rear castings greatly reduces the number of components and welds that go into a vehicle, improve vehicle handling, reducing cost, and reducing the number of potential issues down the road. It improves margins and offers the customer a superior product.

5) Best in the business batteries. Higher energy density, better thermal management, lower rates of battery degradation. It’ll be a long time before legacy catches up to Tesla on this front.

6) Best driver assist software (AutoPilot) in the business. While everyone is focusing on autonomy, Tesla’s “auto pilot” is rapidly improving and preventing accidents and saving lives NOW. I don’t know when/if they’ll achieve autonomous, but in the meantime this is still a big value add to Tesla’s customers.

7) Highest safety and customer satisfaction ratings in the business. Consumers care about safety and Tesla’s are some of the safest vehicles on the road.

There are dozens more things, big and small, like those listed above. You seem to think folks are buying Tesla’s mainly because of some blind brand loyalty or because Tesla is a monopoly. In reality, once people start researching the alternatives they are seeing the value proposition Teslas offer to justify the pricing.

And none of those attributes will be attainable by other companies? I'm genuinely not trying to be contrarian for the sake of it, just curious about where your head is at.

If you were the head of Kia, wouldn't you be making mid and long-term moves to compete? The youtube video linked above about the 3-piece casting is quite impressive. Presumably they have access to youtube as well, no? How would your internal decisions look from a public facing standpoint?

You didn't explicitly say that they would all fail (and if you read back, I said "it is assumed"), but perhaps I should have said "implied" rather than "assumed". With most innovations like this, the competition closes the gap, rather than the innovator widening it.

The Honda Superhawk (a motorcycle from the late 90's), was innovative in a similar way to the structural battery pack, where the engine casing was used as a structural element of the frame rather than just being suspended in it. Lighter, stiffer and more cost effective. At the time, it was interesting to the tech world and a first in production motorcycles. Now most sport motorcycles use this method of construction and it isn't even listed as a feature; it's just how motorcycles are built. Honda is no better at doing it than any other motorcycle company, and is in no better position for being the first to do it. This can be said for the countless improvements in vehicle design in general. Items 3-7 listed for Tesla fall into the category of approachable by other manufacturers in the future for me.

Currently, if I were to spend $40K on a vehicle and it had to be an EV, Tesla would be the top of the list. Like walt was alluding to, for some reason it is easy to see Tesla beating the odds, but somehow in the same discussion not recognize that it's possible for others to do the same.

I'm not really following what the essence of your argument is. There have always been multiple car companies and that will more than likely continue. What about their success in the EV transition is likely to topple tesla? That is really where I thought the discussion was - how other EV offerings were going to put pressure on tesla - like  to lower margin, for example.

So the points being put forward aren't that other companies are or aren't going to do it, or be successful at it. It is just reiterating that tesla has already secured their seat at the table, regardless of what those other companies eventual do.

Nobody has to topple Tesla. They'll probably do great. It's just that Tesla will inevitably become just another car company among many car companies producing a similar thing in a highly competitive and capital-intensive market. In that future world, will Tesla's valuation still look like a tech stock, or will its valuation be comparable to its industrial peers?

[ColoradoTribe]

1) Part of that extra margin for Tesla is because they don’t have middle men in the form of dealers. Not having to deal with dealers is also a value add for Tesla customers.

2) Tesla vehicles come with access to the supercharger network. This is entirely unique to Tesla and provides added functionality and value to Tesla vehicles. Owners of other EVs will either need a second ICE vehicle or to rent a car for cross country trips that can easily be accomplished in a Tesla using the supercharging network.

3) OTAs fixes and software upgrades. Tesla vehicles can be improved and in many cases fixed without having to bring the car into a shop. Tesla is the industry leader here. Tesla has actually improved the range of cars that were already sold using OTAs. I’m not aware of any other car company doing that for its customers.

4) Giga-casting. Tesla structural battery pack paired with front and rear castings greatly reduces the number of components and welds that go into a vehicle, improve vehicle handling, reducing cost, and reducing the number of potential issues down the road. It improves margins and offers the customer a superior product.

5) Best in the business batteries. Higher energy density, better thermal management, lower rates of battery degradation. It’ll be a long time before legacy catches up to Tesla on this front.

6) Best driver assist software (AutoPilot) in the business. While everyone is focusing on autonomy, Tesla’s “auto pilot” is rapidly improving and preventing accidents and saving lives NOW. I don’t know when/if they’ll achieve autonomous, but in the meantime this is still a big value add to Tesla’s customers.

7) Highest safety and customer satisfaction ratings in the business. Consumers care about safety and Tesla’s are some of the safest vehicles on the road.

There are dozens more things, big and small, like those listed above. You seem to think folks are buying Tesla’s mainly because of some blind brand loyalty or because Tesla is a monopoly. In reality, once people start researching the alternatives they are seeing the value proposition Teslas offer to justify the pricing.

And none of those attributes will be attainable by other companies? I'm genuinely not trying to be contrarian for the sake of it, just curious about where your head is at.

If you were the head of Kia, wouldn't you be making mid and long-term moves to compete? The youtube video linked above about the 3-piece casting is quite impressive. Presumably they have access to youtube as well, no? How would your internal decisions look from a public facing standpoint?

You didn't explicitly say that they would all fail (and if you read back, I said "it is assumed"), but perhaps I should have said "implied" rather than "assumed". With most innovations like this, the competition closes the gap, rather than the innovator widening it.

The Honda Superhawk (a motorcycle from the late 90's), was innovative in a similar way to the structural battery pack, where the engine casing was used as a structural element of the frame rather than just being suspended in it. Lighter, stiffer and more cost effective. At the time, it was interesting to the tech world and a first in production motorcycles. Now most sport motorcycles use this method of construction and it isn't even listed as a feature; it's just how motorcycles are built. Honda is no better at doing it than any other motorcycle company, and is in no better position for being the first to do it. This can be said for the countless improvements in vehicle design in general. Items 3-7 listed for Tesla fall into the category of approachable by other manufacturers in the future for me.

Currently, if I were to spend $40K on a vehicle and it had to be an EV, Tesla would be the top of the list. Like walt was alluding to, for some reason it is easy to see Tesla beating the odds, but somehow in the same discussion not recognize that it's possible for others to do the same.

I'm not really following what the essence of your argument is. There have always been multiple car companies and that will more than likely continue. What about their success in the EV transition is likely to topple tesla? That is really where I thought the discussion was - how other EV offerings were going to put pressure on tesla - like  to lower margin, for example.

So the points being put forward aren't that other companies are or aren't going to do it, or be successful at it. It is just reiterating that tesla has already secured their seat at the table, regardless of what those other companies eventual do.

Nobody has to topple Tesla. They'll probably do great. It's just that Tesla will inevitably become just another car company among many car companies producing a similar thing in a highly competitive and capital-intensive market. In that future world, will Tesla's valuation still look like a tech stock, or will its valuation be comparable to its industrial peers?

Good question. While you wait to see the answer, Tesla holders will reap big gains over the next decade while the competition plays catchup. Just like Tesla investors have benefitted from investing the past decade while skeptics contemplated all that might ever possibly go wrong along the way.

Tesla is not just an auto company. Tesla Energy revenue will eventually equal auto revenue once battery supply allows for wider deployments. Also, it’s not like Tesla is standing still waiting for others to catch up. Tesla is continuously innovating with the best and brightest engineers behind the scenes. They’ll continue to improve the power density and efficiency of their batteries, simplifying their manufacturing processes, reducing raw material inputs, like cobalt and nickel, improving their software, etc. Tesla cars will command a premium in the market, just like Apple products command a premium despite being in a “competitive” market.

It’s investing, nothing personal. I didn’t invest heavily in Netflix, Apple, Facebook or Google. I wasn’t in the right position financially, and even if I had been, I didn’t have the confidence that comes from being intimately familiar with a business and its market. My suggestion, don’t invest in Tesla, its clearly not something you can get onboard with, but perhaps speak with less confidence about its future prospects given how wrong you (collective you) have been to date. Instead of moving the goal posts or latching onto the latest reason du jour that Tesla is over-valued or likely to fail, maybe just quietly root for Tesla to succeed for all our sakes.

Saying Tesla will stop being a growth company some day isn’t really enlightening. That’s a given and not a reason to not invest in the short to medium term if you still believe Tesla has several years of exponential growth and innovation ahead.

[Viking Thor]

1) Part of that extra margin for Tesla is because they don’t have middle men in the form of dealers. Not having to deal with dealers is also a value add for Tesla customers.

2) Tesla vehicles come with access to the supercharger network. This is entirely unique to Tesla and provides added functionality and value to Tesla vehicles. Owners of other EVs will either need a second ICE vehicle or to rent a car for cross country trips that can easily be accomplished in a Tesla using the supercharging network.

3) OTAs fixes and software upgrades. Tesla vehicles can be improved and in many cases fixed without having to bring the car into a shop. Tesla is the industry leader here. Tesla has actually improved the range of cars that were already sold using OTAs. I’m not aware of any other car company doing that for its customers.

4) Giga-casting. Tesla structural battery pack paired with front and rear castings greatly reduces the number of components and welds that go into a vehicle, improve vehicle handling, reducing cost, and reducing the number of potential issues down the road. It improves margins and offers the customer a superior product.

5) Best in the business batteries. Higher energy density, better thermal management, lower rates of battery degradation. It’ll be a long time before legacy catches up to Tesla on this front.

6) Best driver assist software (AutoPilot) in the business. While everyone is focusing on autonomy, Tesla’s “auto pilot” is rapidly improving and preventing accidents and saving lives NOW. I don’t know when/if they’ll achieve autonomous, but in the meantime this is still a big value add to Tesla’s customers.

7) Highest safety and customer satisfaction ratings in the business. Consumers care about safety and Tesla’s are some of the safest vehicles on the road.

There are dozens more things, big and small, like those listed above. You seem to think folks are buying Tesla’s mainly because of some blind brand loyalty or because Tesla is a monopoly. In reality, once people start researching the alternatives they are seeing the value proposition Teslas offer to justify the pricing.

And none of those attributes will be attainable by other companies? I'm genuinely not trying to be contrarian for the sake of it, just curious about where your head is at.

If you were the head of Kia, wouldn't you be making mid and long-term moves to compete? The youtube video linked above about the 3-piece casting is quite impressive. Presumably they have access to youtube as well, no? How would your internal decisions look from a public facing standpoint?

You didn't explicitly say that they would all fail (and if you read back, I said "it is assumed"), but perhaps I should have said "implied" rather than "assumed". With most innovations like this, the competition closes the gap, rather than the innovator widening it.

The Honda Superhawk (a motorcycle from the late 90's), was innovative in a similar way to the structural battery pack, where the engine casing was used as a structural element of the frame rather than just being suspended in it. Lighter, stiffer and more cost effective. At the time, it was interesting to the tech world and a first in production motorcycles. Now most sport motorcycles use this method of construction and it isn't even listed as a feature; it's just how motorcycles are built. Honda is no better at doing it than any other motorcycle company, and is in no better position for being the first to do it. This can be said for the countless improvements in vehicle design in general. Items 3-7 listed for Tesla fall into the category of approachable by other manufacturers in the future for me.

Currently, if I were to spend $40K on a vehicle and it had to be an EV, Tesla would be the top of the list. Like walt was alluding to, for some reason it is easy to see Tesla beating the odds, but somehow in the same discussion not recognize that it's possible for others to do the same.

I'm not really following what the essence of your argument is. There have always been multiple car companies and that will more than likely continue. What about their success in the EV transition is likely to topple tesla? That is really where I thought the discussion was - how other EV offerings were going to put pressure on tesla - like  to lower margin, for example.

So the points being put forward aren't that other companies are or aren't going to do it, or be successful at it. It is just reiterating that tesla has already secured their seat at the table, regardless of what those other companies eventual do.

Nobody has to topple Tesla. They'll probably do great. It's just that Tesla will inevitably become just another car company among many car companies producing a similar thing in a highly competitive and capital-intensive market. In that future world, will Tesla's valuation still look like a tech stock, or will its valuation be comparable to its industrial peers?

Of course the PE ratio will go down eventually. But they are doubling profit every year now, that's why the PE ratio is high. Its still a lower PE now than tech stocks like Amazon with much lower growth rates.

Tesla has a backlog of orders in the existing products, plus two new products ready to launch soon (semi and cybertruck). Both of which look to have high demand / large number of preorders.

Their constraint to healthy growth for the next few years is simply growing production, and they have 2 factories that are relatively new and not scaled up yet.

They will plateau eventually at some future point but have plenty of fairly straightforward growth they can achieve with just the existing and soon to launch products. That's without factoring in anything for robotics etc which could become a factor far down the line.

They also are a tech company in addition to a manufacturing company. They improve the product technology constantly and send over the air free updates and even optional paid upgrades to cars already on the road.

[nick663]

As a thought experiment, 10 years down the road after this all shakes out, what will the paths to success look like? It seems kind of obvious how the big players might fall; they maintain old manufacturing and selling strategies that become less and less competitive as EV sales squeeze them. But how would the potentially successful ones look? I think that's a scenario that isn't accounted for by ColoradoTribe, etc. (I might be wrong here though)

 It is assumed that every single one will fall by the wayside, won't innovate, don't see the $ on the table from the Tesla way (similar to how companies started following the Toyota way in the 90's). Which is definitely a possibility, but it just seems that long term there is too much $ for *no one* to compete.

The thing I see a lot of people ignoring about Tesla is that their new product launches are run terribly.  Legacy automakers bring multiple new models to market every year while Tesla's last new product offering was Model Y in 2020.  Other automakers will change their showroom offerings completely in the next 3 years and what will Tesla have to show people?  The Cybertruck and Model S/3/X/Y?

Buyers are fickle and like shiny new objects.  A Model S that has been on sale for over a decade only receiving minor facelifts will not catch people's eye once the rest of the market has BEV offerings.  They'll have to start competing on price (like Nissan or Dodge) instead of being a front runner.

As an example of Tesla's current EV manufacturing prowess:

Tesla Model Y and Ford Mach-e were both released in 2020.

Tesla Model Y Production: >1,000,000
Ford Mach-e Production: just celebrated 150,000 total produced

That was a failure of projection on Ford's part.  The car was designed/tooled around a lower volume than actual market demand.  They are resolving that:
https://techcrunch.com/2021/12/10/ford-triple-production-capacity-electric-mustang-mach-e/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAM2RSlSsK71W9WvRrXxiHBDQnm6G9VdV2Uv2OMGkcwDhqpNPa6ly6SdZ6jOVMDXdqeZX78Zgwl8pPSb244B9-n_yfHaK9s8lzENGey-SCC_wpKHjiYWblRxDtUtJUyyfo3CD2fsNywQll0qiyqkCHTyvjwVZ2sXG6VXy3XIqNXS1

Chevy undercalled the volume on the Bolt as well so this is not just a Ford thing.  The big 3 know how to build vehicles when the volume projections are correct.

[waltworks]

To be fair, when this thread started, Tesla was $20 a share. I think we'd all agree it was a good investment back then!

I'd guess folks that were buying when it was 20 times that price won't end up doing great, but they probably won't lose their shirts either if they hold on long enough. I'd at least consider it at it's current price, if I were a stock-picking kind of guy.

-W

[mistymoney]

1) Part of that extra margin for Tesla is because they don’t have middle men in the form of dealers. Not having to deal with dealers is also a value add for Tesla customers.

2) Tesla vehicles come with access to the supercharger network. This is entirely unique to Tesla and provides added functionality and value to Tesla vehicles. Owners of other EVs will either need a second ICE vehicle or to rent a car for cross country trips that can easily be accomplished in a Tesla using the supercharging network.

3) OTAs fixes and software upgrades. Tesla vehicles can be improved and in many cases fixed without having to bring the car into a shop. Tesla is the industry leader here. Tesla has actually improved the range of cars that were already sold using OTAs. I’m not aware of any other car company doing that for its customers.

4) Giga-casting. Tesla structural battery pack paired with front and rear castings greatly reduces the number of components and welds that go into a vehicle, improve vehicle handling, reducing cost, and reducing the number of potential issues down the road. It improves margins and offers the customer a superior product.

5) Best in the business batteries. Higher energy density, better thermal management, lower rates of battery degradation. It’ll be a long time before legacy catches up to Tesla on this front.

6) Best driver assist software (AutoPilot) in the business. While everyone is focusing on autonomy, Tesla’s “auto pilot” is rapidly improving and preventing accidents and saving lives NOW. I don’t know when/if they’ll achieve autonomous, but in the meantime this is still a big value add to Tesla’s customers.

7) Highest safety and customer satisfaction ratings in the business. Consumers care about safety and Tesla’s are some of the safest vehicles on the road.

There are dozens more things, big and small, like those listed above. You seem to think folks are buying Tesla’s mainly because of some blind brand loyalty or because Tesla is a monopoly. In reality, once people start researching the alternatives they are seeing the value proposition Teslas offer to justify the pricing.

And none of those attributes will be attainable by other companies? I'm genuinely not trying to be contrarian for the sake of it, just curious about where your head is at.

If you were the head of Kia, wouldn't you be making mid and long-term moves to compete? The youtube video linked above about the 3-piece casting is quite impressive. Presumably they have access to youtube as well, no? How would your internal decisions look from a public facing standpoint?

You didn't explicitly say that they would all fail (and if you read back, I said "it is assumed"), but perhaps I should have said "implied" rather than "assumed". With most innovations like this, the competition closes the gap, rather than the innovator widening it.

The Honda Superhawk (a motorcycle from the late 90's), was innovative in a similar way to the structural battery pack, where the engine casing was used as a structural element of the frame rather than just being suspended in it. Lighter, stiffer and more cost effective. At the time, it was interesting to the tech world and a first in production motorcycles. Now most sport motorcycles use this method of construction and it isn't even listed as a feature; it's just how motorcycles are built. Honda is no better at doing it than any other motorcycle company, and is in no better position for being the first to do it. This can be said for the countless improvements in vehicle design in general. Items 3-7 listed for Tesla fall into the category of approachable by other manufacturers in the future for me.

Currently, if I were to spend $40K on a vehicle and it had to be an EV, Tesla would be the top of the list. Like walt was alluding to, for some reason it is easy to see Tesla beating the odds, but somehow in the same discussion not recognize that it's possible for others to do the same.

I'm not really following what the essence of your argument is. There have always been multiple car companies and that will more than likely continue. What about their success in the EV transition is likely to topple tesla? That is really where I thought the discussion was - how other EV offerings were going to put pressure on tesla - like  to lower margin, for example.

So the points being put forward aren't that other companies are or aren't going to do it, or be successful at it. It is just reiterating that tesla has already secured their seat at the table, regardless of what those other companies eventual do.

Nobody has to topple Tesla. They'll probably do great. It's just that Tesla will inevitably become just another car company among many car companies producing a similar thing in a highly competitive and capital-intensive market. In that future world, will Tesla's valuation still look like a tech stock, or will its valuation be comparable to its industrial peers?

Good question. While you wait to see the answer, Tesla holders will reap big gains over the next decade while the competition plays catchup. Just like Tesla investors have benefitted from investing the past decade while skeptics contemplated all that might ever possibly go wrong along the way.

Tesla is not just an auto company. Tesla Energy revenue will eventually equal auto revenue once battery supply allows for wider deployments. Also, it’s not like Tesla is standing still waiting for others to catch up. Tesla is continuously innovating with the best and brightest engineers behind the scenes. They’ll continue to improve the power density and efficiency of their batteries, simplifying their manufacturing processes, reducing raw material inputs, like cobalt and nickel, improving their software, etc. Tesla cars will command a premium in the market, just like Apple products command a premium despite being in a “competitive” market.

It’s investing, nothing personal. I didn’t invest heavily in Netflix, Apple, Facebook or Google. I wasn’t in the right position financially, and even if I had been, I didn’t have the confidence that comes from being intimately familiar with a business and its market. My suggestion, don’t invest in Tesla, its clearly not something you can get onboard with, but perhaps speak with less confidence about its future prospects given how wrong you (collective you) have been to date. Instead of moving the goal posts or latching onto the latest reason du jour that Tesla is over-valued or likely to fail, maybe just quietly root for Tesla to succeed for all our sakes.

Saying Tesla will stop being a growth company some day isn’t really enlightening.That’s a given  and not a reason to not invest in the short to medium term if you still believe Tesla has several years of exponential growth and innovation ahead.

idk - so the cybertruck is actually designed to be used on mars. So - that is like super crazy. That is a scary amount of preplanning. Spacex will trade lithium for cybertrucks ;^D

[mistymoney]

1) Part of that extra margin for Tesla is because they don’t have middle men in the form of dealers. Not having to deal with dealers is also a value add for Tesla customers.

2) Tesla vehicles come with access to the supercharger network. This is entirely unique to Tesla and provides added functionality and value to Tesla vehicles. Owners of other EVs will either need a second ICE vehicle or to rent a car for cross country trips that can easily be accomplished in a Tesla using the supercharging network.

3) OTAs fixes and software upgrades. Tesla vehicles can be improved and in many cases fixed without having to bring the car into a shop. Tesla is the industry leader here. Tesla has actually improved the range of cars that were already sold using OTAs. I’m not aware of any other car company doing that for its customers.

4) Giga-casting. Tesla structural battery pack paired with front and rear castings greatly reduces the number of components and welds that go into a vehicle, improve vehicle handling, reducing cost, and reducing the number of potential issues down the road. It improves margins and offers the customer a superior product.

5) Best in the business batteries. Higher energy density, better thermal management, lower rates of battery degradation. It’ll be a long time before legacy catches up to Tesla on this front.

6) Best driver assist software (AutoPilot) in the business. While everyone is focusing on autonomy, Tesla’s “auto pilot” is rapidly improving and preventing accidents and saving lives NOW. I don’t know when/if they’ll achieve autonomous, but in the meantime this is still a big value add to Tesla’s customers.

7) Highest safety and customer satisfaction ratings in the business. Consumers care about safety and Tesla’s are some of the safest vehicles on the road.

There are dozens more things, big and small, like those listed above. You seem to think folks are buying Tesla’s mainly because of some blind brand loyalty or because Tesla is a monopoly. In reality, once people start researching the alternatives they are seeing the value proposition Teslas offer to justify the pricing.

And none of those attributes will be attainable by other companies? I'm genuinely not trying to be contrarian for the sake of it, just curious about where your head is at.

If you were the head of Kia, wouldn't you be making mid and long-term moves to compete? The youtube video linked above about the 3-piece casting is quite impressive. Presumably they have access to youtube as well, no? How would your internal decisions look from a public facing standpoint?

You didn't explicitly say that they would all fail (and if you read back, I said "it is assumed"), but perhaps I should have said "implied" rather than "assumed". With most innovations like this, the competition closes the gap, rather than the innovator widening it.

The Honda Superhawk (a motorcycle from the late 90's), was innovative in a similar way to the structural battery pack, where the engine casing was used as a structural element of the frame rather than just being suspended in it. Lighter, stiffer and more cost effective. At the time, it was interesting to the tech world and a first in production motorcycles. Now most sport motorcycles use this method of construction and it isn't even listed as a feature; it's just how motorcycles are built. Honda is no better at doing it than any other motorcycle company, and is in no better position for being the first to do it. This can be said for the countless improvements in vehicle design in general. Items 3-7 listed for Tesla fall into the category of approachable by other manufacturers in the future for me.

Currently, if I were to spend $40K on a vehicle and it had to be an EV, Tesla would be the top of the list. Like walt was alluding to, for some reason it is easy to see Tesla beating the odds, but somehow in the same discussion not recognize that it's possible for others to do the same.

I'm not really following what the essence of your argument is. There have always been multiple car companies and that will more than likely continue. What about their success in the EV transition is likely to topple tesla? That is really where I thought the discussion was - how other EV offerings were going to put pressure on tesla - like  to lower margin, for example.

So the points being put forward aren't that other companies are or aren't going to do it, or be successful at it. It is just reiterating that tesla has already secured their seat at the table, regardless of what those other companies eventual do.

Nobody has to topple Tesla. They'll probably do great. It's just that Tesla will inevitably become just another car company among many car companies producing a similar thing in a highly competitive and capital-intensive market. In that future world, will Tesla's valuation still look like a tech stock, or will its valuation be comparable to its industrial peers?

hmmmm

[TomTX]

In October, Tesla produced 87,706 Model 3s and Model Ys in Shanghai but delivered 71,704 vehicles, leaving a gap of 16,002 China-made cars in inventory, according to data from China Merchants Bank International (CMBI).

That was the biggest gap between production and sales since Tesla opened its Shanghai Gigfactory in late 2019, CMBI data showed.

(bolded)

Sounds like Shanghai production in October was higher than September. Lower deliveries is what one would expect when focusing on export. Which historically Tesla has done in the first month of a quarter.

"Biggest gap" - I presume that's raw numbers. As overall production is still increasing, that should surprise precisely nobody who is paying attention.

A much better indicator is where it stands percentagewise compared to prior first-month-of-quarter production and deliveries. That 16k vehicles is just 18% of the monthly production rate. So, 5 days of production didn't get delivered yet (presuming they're working 7 days a week.) Doesn't seem like much to me.

Anyone know how much longer it takes to ship and deliver cars from Shanghai to Europe instead of delivering inside China?
 

[bacchi]

In October, Tesla produced 87,706 Model 3s and Model Ys in Shanghai but delivered 71,704 vehicles, leaving a gap of 16,002 China-made cars in inventory, according to data from China Merchants Bank International (CMBI).

That was the biggest gap between production and sales since Tesla opened its Shanghai Gigfactory in late 2019, CMBI data showed.

(bolded)

Sounds like Shanghai production in October was higher than September. Lower deliveries is what one would expect when focusing on export. Which historically Tesla has done in the first month of a quarter.

"Biggest gap" - I presume that's raw numbers. As overall production is still increasing, that should surprise precisely nobody who is paying attention.

A much better indicator is where it stands percentagewise compared to prior first-month-of-quarter production and deliveries. That 16k vehicles is just 18% of the monthly production rate. So, 5 days of production didn't get delivered yet (presuming they're working 7 days a week.) Doesn't seem like much to me.

Anyone know how much longer it takes to ship and deliver cars from Shanghai to Europe instead of delivering inside China?

The 71,704 is total sales, domestic (17,200) + export (54,504). While the 16,002 leftovers may be meant for export, they weren't sold yet.

I can't find CPCA/CMBI numbers but it looks like Shanghai produced 68,117 vehicles in January (July saw a factory upgrade and April saw a shutdown) and delivered 59,845 for about 12% excess inventory. Domestic (China) sales were 19k in January, above October's sales, but January sales may be affected by the Chinese New Year.

Tesla has cut prices in China and offered an insurance deal. There are also the Beijing protests to consider, which I'm sure doesn't help sales. Finally, Musk did state that China was in a "recession of sorts," indicating that lower China sales are a possibility.

[StashingAway]

maybe just quietly root for Tesla to succeed for all our sakes.

I can't root for Ford to succeed for all of our sake? Or Rivian? Or how about Cali Transit or Schwinn?

One version of Tesla "succeeding" is the opportunity cost... I'm going to derail the conversation here a bit again. This is my personal hesitancy to invest at any price, but since you introduced the subject of societal benefit I feel it appropriate. It is also not a hard stance for me, more meant as open dialogue. It is also made with the recognition that I am in an uphill battle here and that major EV success is better than major ICE status quo.

If we manage to replace all 1.4 billion gas vehicles with 1.4 billion (heavier) electric vehicles, we have traded one extremely damaging transit with a very damaging transit. The bottom line is that, in reality, the best way to reduce emissions and mining damage and infrastructure maintenance is to reduce our dependency on cars. In this case, one might say that really we should want Tesla, and all of the other car companies to fail. Mass transit should be the place to invest, along with other boring but important efficiency companies (such as home energy audits companies or city planners who can change zoning laws).

Much of Tesla's marketing is on their environmental impact. Many people work there because of this specifically and I do think that electrifying everything is the way forward. And they have done a great job with the marketing. But in the end, they're a company who's primary goal is to grow. That primary goal is in competition with many other more environmentally friendly options. As the quote goes "It Is impossible to get a person to understand something when their salary depends upon them not understanding it".

One big reason Tesla has succeeded is that they set out to make EVs cool... the emissions are basically a bonus. On a practical level, I definitely don't want to root against them, and realize that my ideal scenario needs to be paired to a realistic future. But holding their stock as part of an index fund is fine enough. There are other companies who I would much rather own individual stocks of because I believe in their vision more, but the pessimist in me is wary of their ability to overcome the momentum of hedonism ingrained in capitalism. If we were to bet which companies were to make more growth than others over the next 5-10 years, it's not really a hobby of mine (although discussing them sure seems to be, ha!)

After all, this is the MMM forum
 

[ChpBstrd]

Major derail here, but consider the value proposition of the 2023 Toyota Prius. The traditional dorky box shape has been replaced with the lines of a sports car, and the new design looks a lot like a Model 3. The price is about half what a Model 3 costs, and there is no need to plan road trips around charging stations. At 57mpg, the cost of gasoline is a non-concern.

https://pressroom.toyota.com/hybrid-reborn-2023-toyota-prius-revealed/

Obviously, this car appeals to a cheapskate like me more than a Model 3 because it will cost tens of thousands of dollars less to own than a Model 3 (see Edmunds TCO for past models). I acknowledge my mentality differs from the average new car buyer who is mostly concerned with looks and prestige, but we might see a swing toward pragmatism with high interest rates and job insecurity. 

[Scandium]

Major derail here, but consider the value proposition of the 2023 Toyota Prius. The traditional dorky box shape has been replaced with the lines of a sports car, and the new design looks a lot like a Model 3. The price is about half what a Model 3 costs, and there is no need to plan road trips around charging stations. At 57mpg, the cost of gasoline is a non-concern.

https://pressroom.toyota.com/hybrid-reborn-2023-toyota-prius-revealed/

Obviously, this car appeals to a cheapskate like me more than a Model 3 because it will cost tens of thousands of dollars less to own than a Model 3 (see Edmunds TCO for past models). I acknowledge my mentality differs from the average new car buyer who is mostly concerned with looks and prestige, but we might see a swing toward pragmatism with high interest rates and job insecurity.

Eh, pretty dumb looking. Old one was fine IMO. Does it look like they slope the back down more in this version? Why would you do that? Just reduces the cargo space for no reason. I don't think it would help much to maintain laminar flow either?
If anything I don't see why they didn't build on the prius V instead; the "wagon" design is superior as you get more storage in same footprint, minimal extra cost, and almost the same fuel economy. In general, I honestly don't see any advantages to sedans, so don't know why they make them? Is the air resistance that much better or something? What am I missing...

[bacchi]

Major derail here, but consider the value proposition of the 2023 Toyota Prius. The traditional dorky box shape has been replaced with the lines of a sports car, and the new design looks a lot like a Model 3. The price is about half what a Model 3 costs, and there is no need to plan road trips around charging stations. At 57mpg, the cost of gasoline is a non-concern.

https://pressroom.toyota.com/hybrid-reborn-2023-toyota-prius-revealed/

Obviously, this car appeals to a cheapskate like me more than a Model 3 because it will cost tens of thousands of dollars less to own than a Model 3 (see Edmunds TCO for past models). I acknowledge my mentality differs from the average new car buyer who is mostly concerned with looks and prestige, but we might see a swing toward pragmatism with high interest rates and job insecurity.

Eh, pretty dumb looking. Old one was fine IMO. Does it look like they slope the back down more in this version? Why would you do that? Just reduces the cargo space for no reason. I don't think it would help much to maintain laminar flow either?
If anything I don't see why they didn't build on the prius V instead; the "wagon" design is superior as you get more storage in same footprint, minimal extra cost, and almost the same fuel economy. In general, I honestly don't see any advantages to sedans, so don't know why they make them? Is the air resistance that much better or something? What am I missing...

There's a bumper sticker I've seen on Priuses around town.

------------------
"Cool car." -- No one
------------------

[Scandium]

Major derail here, but consider the value proposition of the 2023 Toyota Prius. The traditional dorky box shape has been replaced with the lines of a sports car, and the new design looks a lot like a Model 3. The price is about half what a Model 3 costs, and there is no need to plan road trips around charging stations. At 57mpg, the cost of gasoline is a non-concern.

https://pressroom.toyota.com/hybrid-reborn-2023-toyota-prius-revealed/

Obviously, this car appeals to a cheapskate like me more than a Model 3 because it will cost tens of thousands of dollars less to own than a Model 3 (see Edmunds TCO for past models). I acknowledge my mentality differs from the average new car buyer who is mostly concerned with looks and prestige, but we might see a swing toward pragmatism with high interest rates and job insecurity.

Eh, pretty dumb looking. Old one was fine IMO. Does it look like they slope the back down more in this version? Why would you do that? Just reduces the cargo space for no reason. I don't think it would help much to maintain laminar flow either?
If anything I don't see why they didn't build on the prius V instead; the "wagon" design is superior as you get more storage in same footprint, minimal extra cost, and almost the same fuel economy. In general, I honestly don't see any advantages to sedans, so don't know why they make them? Is the air resistance that much better or something? What am I missing...

There's a bumper sticker I've seen on Priuses around town.

------------------
"Cool car." -- No one
------------------

uh, yeah, but who cares? What does my car being "cool" gain me? Why should I spend any resources in that?
Stranger's opinion? worthless
Friend's opinion? If they don't accept me for my car then not really friends then.. win-win

Once you're past age of ~22 most people realize how stupid it is to worry about this!

[lemonlyman]

Prius Sales:
2005   107,155
2006   106,971
2007   181,221
2008   158,884
2009   150,831
2010   140,928
2011   136,464
2012   236,655
2013   234,228
2014   207,372
2015   184,794
2016   136,629
2017   108,661
2018   87,590
2019   69,718
2020   43,525
2021   59,010
2022   28,445

Plenty of hybrids out there now though. Seems like those in the market for an EV are looking at EVs and not traditional hybrids. Toyota bz4x EV is getting pretty bad reviews. IMO, Toyota is in one of the worst spots for major OEMs in this transition. Honda will use GMs platform (who would have thought that 20 years ago?).

Hyundai is crushing it, but the IRA was a hit to their plans.

[Scandium]

Toyota bz4x EV is getting pretty bad reviews.

how so? First I pulled up was 7.5/10
https://www.caranddriver.com/toyota/bz4x
or 4.3/5 at KBB.
Seems pretty ok (above average) to me?

It seems crazy expensive to me at $42k+ for a small SUV, but that's about normal EV prices.. You'd have to drive a ton to ever make it back in saved gas though.

[EchoStache]

Major derail here, but consider the value proposition of the 2023 Toyota Prius. The traditional dorky box shape has been replaced with the lines of a sports car, and the new design looks a lot like a Model 3. The price is about half what a Model 3 costs, and there is no need to plan road trips around charging stations. At 57mpg, the cost of gasoline is a non-concern.

https://pressroom.toyota.com/hybrid-reborn-2023-toyota-prius-revealed/

Obviously, this car appeals to a cheapskate like me more than a Model 3 because it will cost tens of thousands of dollars less to own than a Model 3 (see Edmunds TCO for past models). I acknowledge my mentality differs from the average new car buyer who is mostly concerned with looks and prestige, but we might see a swing toward pragmatism with high interest rates and job insecurity.

I need a car in 1-3 months.  Candidates are:
1) 2017 Chevy Volt, because under $20k, 50-60 miles all electric range for daily commute, $4,000 tax credit, plus $750 in my state, so about $15k net.
2) 2023 Chevy Bolt, because 27-31k, $3750 tax credit(maybe?), plus $750 state so about 25-28k net i.e. cheaper than the Prius, no gas, much lower maintenance, but have to deal with range and charging on occasional trips.
3) 2023 Prius Prime, but seems *worse* than the Volt(if maximum value/lowest cost to own is the criteria) since Prius has less electric range and double the cost.  Better fuel economy on long trips but for most this would be seldom and not enough to make up for the better daily EV only range of the Volt.

I'm in the process of getting estimates for solar so this skews me towards electric

[StashingAway]

Eh, pretty dumb looking. Old one was fine IMO. Does it look like they slope the back down more in this version? Why would you do that? Just reduces the cargo space for no reason. I don't think it would help much to maintain laminar flow either?
If anything I don't see why they didn't build on the prius V instead; the "wagon" design is superior as you get more storage in same footprint, minimal extra cost, and almost the same fuel economy. In general, I honestly don't see any advantages to sedans, so don't know why they make them? Is the air resistance that much better or something? What am I missing...

You do you, but relative to the old one, it's quite aesthetically appealing to me.

Profiles in question. M3 has least amount of trunk space.

[lemonlyman]

Toyota bz4x EV is getting pretty bad reviews.

how so? First I pulled up was 7.5/10
https://www.caranddriver.com/toyota/bz4x
or 4.3/5 at KBB.
Seems pretty ok (above average) to me?

It seems crazy expensive to me at $42k+ for a small SUV, but that's about normal EV prices.. You'd have to drive a ton to ever make it back in saved gas though.

1. Competitors like the Hyundai Ioniq 5 or the Volkswagen ID.4 reviews are so much better. Big influence on buyers.
2. The model's wheels were falling off at first and took months to resume production.
3. Range tests are lower than expected.

I think I would prefer one of the competitors just doing spec comparisons.

[StashingAway]

Once you're past age of ~22 most people realize how stupid it is to worry about this!

General public buying habits strongly disagree. Pontiac Aztec didn't flop because of lack of features!

[Scandium]

Once you're past age of ~22 most people realize how stupid it is to worry about this!

General public buying habits strongly disagree. Pontiac Aztec didn't flop because of lack of features!

I figured might also be because it's a pontiac, and they were unreliable garbage? Seemed like a perfectly serviceable car otherwise though *shrug.
And they did actually sell 30k per year of them!
https://carsalesbase.com/us-pontiac-aztek/

Buying a car based on looks will always be absurd to me. It's a tool, as important as how "cool" my screwdrivers are.. I pick the features I need, then which car fits that best. Then take whichever color is in the nearest carmax..

[mistymoney]

Major derail here, but consider the value proposition of the 2023 Toyota Prius. The traditional dorky box shape has been replaced with the lines of a sports car, and the new design looks a lot like a Model 3. The price is about half what a Model 3 costs, and there is no need to plan road trips around charging stations. At 57mpg, the cost of gasoline is a non-concern.

https://pressroom.toyota.com/hybrid-reborn-2023-toyota-prius-revealed/

Obviously, this car appeals to a cheapskate like me more than a Model 3 because it will cost tens of thousands of dollars less to own than a Model 3 (see Edmunds TCO for past models). I acknowledge my mentality differs from the average new car buyer who is mostly concerned with looks and prestige, but we might see a swing toward pragmatism with high interest rates and job insecurity.

Was it you who yesterday criticized telsa for not changing body shape? May have been someone else....

but now toyota trying to rip off the supposedly "dated" look.....so, kind of interesting!

[mistymoney]

Buying a car based on looks will always be absurd to me. It's a tool, as important as how "cool" my screwdrivers are.. I pick the features I need, then which car fits that best. Then take whichever color is in the nearest carmax..

It's almost as if you think that stance is......cool?

[StashingAway]

Buying a car based on looks will always be absurd to me. It's a tool, as important as how "cool" my screwdrivers are.. I pick the features I need, then which car fits that best. Then take whichever color is in the nearest carmax..

It's almost as if you think that stance is......cool?

Yeah, and regardless of Scandium's personal views, it's pretty clear that having a good looking product goes a long way for the general public. I personally share Scandium's view (in that I love form over function), but I do not project that preference to other people's buying habits.

Scandium:

The Aztec flopped compared to projected sales. Projected sales had already accounted for brand perception. This is also clear when compared to the Buick Rondesvous, which is a re-skinned Aztec that sold twice as many per year for twice as long. Mainly because it didn't look weird. I can't believe that I have to point this out as it's basically a meme at this point, but:

https://carsalesbase.com/us-buick-rendezvous/

https://www.autotrader.com/car-news/buick-rendezvous-was-better-looking-successful-aztek-281474979970896

[mistymoney]

Buying a car based on looks will always be absurd to me. It's a tool, as important as how "cool" my screwdrivers are.. I pick the features I need, then which car fits that best. Then take whichever color is in the nearest carmax..

It's almost as if you think that stance is......cool?

Yeah, and regardless of Scandium's personal views, it's pretty clear that having a good looking product goes a long way for the general public. I personally share Scandium's view (in that I love form over function), but I do not project that preference to other people's buying habits.

Did you mean function over form? Otherwise I am confused!

[StashingAway]

Buying a car based on looks will always be absurd to me. It's a tool, as important as how "cool" my screwdrivers are.. I pick the features I need, then which car fits that best. Then take whichever color is in the nearest carmax..

It's almost as if you think that stance is......cool?

Yeah, and regardless of Scandium's personal views, it's pretty clear that having a good looking product goes a long way for the general public. I personally share Scandium's view (in that I love form over function), but I do not project that preference to other people's buying habits.

Did you mean function over form? Otherwise I am confused!

Yes, I said that in reverse! To my wife's embarrassment, I love functional things that often are considered ugly

[lemonlyman]

Tesla Semi looks like a GREAT product, but I was disappointed in the lack of information from the presentation. What's the actual price now? Didn't confirm production targets for 2023. When can others begin placing deposits for it again? What about autopilot or platooning?

Anyway, the other things they said were great:
500 mile range maxed out at 82,000 lbs
Cold brakes on declines because of regen
1 MW+ Charging infrastructure with new cable. Once V4 infrastructure is built out, long haul will be easy to achieve for the motor, but the cab is not designed for long haul. They will need a new cab set up for long haul when V4 is built out.
1,000 Volt architecture
<2 kwh per mile. So if a 1 Mwh pack, $120,000 for just that pack cost?
Cybertruck can use V4 and will also have the 1,000 volt architecture. Could assume 250 mile real range while hauling with a Cybertruck (500 mile standalone). 1 MW charger would get it to 80% in minutes.
Handed them over to Customers

The $40k IRA credit for EV semi trucks will be a big incentive in the new few years as the V4 infrastructure builds out.

...Also, good for rental companies like Penske if they buy them for rentals down the road. Two things happened to me renting a big diesel truck to move equipment when my old employer purchased a location.
A. The engine wasn't charged overnight and I had to sit there for an hour while it warmed up. Engine couldn't start in the cold.
B. Dummies like me won't fill the coolant tank with diesel fuel so Penske techs won't have come drain and refill the system. Just a supercharger cable.