1/1/2015
guest Replace? 100% replace or replace lots of ICEs?
100% replace, yes, but it's not a range issue per se. If you want to replace all ICEs, you have to:
- bring down cost of batteries (and other components)
- be able to meet all needs:
- small people-movers
- larger, long-distance people movers
- larger vehicles dealing with heavier loads and towing.
- people who really insist on driving for many hours non stop.
How do you get there? You have to increase the volumetric and gravimetric energy densities of the batteries. Also at very high volumes you will need faster charging methods to deal with congestion; plus if you want to take the taxi market you'll want faster charging to improve the economics.
If you improve densities of the batteries, you can have higher capacities in a car.
If you can have higher capacities, it also makes it easier to charge faster (in terms of mph, which is what matters).
If you make batteries cheap, people will be more able to pay for additional capacity _if they need it_.
(If they need it. Give me a Model S 60 and Superchargers just in the current plan, including Portsmouth/Kittery, Portland and Bangor and I'm covered thanks. That's over 13,000 miles per year.
Our "2nd" car certainly would need that much range. A solid 50 miles would be enough.)
But 100% replacement is _lots_ of vehicles. Tesla's isn't looking at anywhere near 100% replacement. Gen 3's target is around 500,000 sales, no more than global BMW 3 Series sales. Just in the USA _new_ _car_ sales (just cars, not "light trucks, which includes pick-ups, CUVs and SUVs) are at 7 million per year. Total US new _hybrid_ car (not plug-in) sales in 2013 were 495,685.
The global automotive market is absolutely huge. If you're trying to evaluate Tesla current range should not be a concern. They have a base spec that works: 200 miles _EPA_ (not NEDC) with fast DC charging capability. They're building the Supercharger network based on that model and Elon Musk has said clearly that that's the base target spec for Model 3. At Model S prices it's natural that people are paying for more range and more performance, but at Model 3 prices it'd be like the 3 Series where most sales are the base models, including a lot of 3NNd. People will still be able to pay for more range and the full-size Model S should be able to offer even more range than now.�
1/1/2015
guest Porc, you need to come up with better FUD than that. The constraint on replacing ICE is battery manufacuting capacity, not range. What is needed is bout 5000 GWh/yr capacity. The massive rollout of hundreds of Gigafactories will take decades. In the meantime, energy density will ever decade. So in twenty years, a pack the size and mass of MS 60 will suffice for 240 kWh and a range in excess of 800 miles. Moreover, without any breakthrough in charging, Tesla should still be able to provide a half charge in about twenty minutes, 400 miles range in 20 minutes! So in the time it takes to scale up production, the technology will be more than adequate to finish the job.�
1/1/2015
guest As others have stated, the current range is almost certainly enough, for now. The primary limiting factors are cost and battery production capacity.
That said, I agree that adding range will make the case for EVs even more compelling and will thus increase the pool of resources available to furthering EV development and infrastructure. Consider the performance of the P85D. How many would argue that achieving a 0-60 time of 3.2s is essential to EV adoption? Surely we could consider 4.4s (the prior P85 time) to be "good enough". However, achieving supercar acceleration helps to drive home the point that EVs are better, creates a halo effect, and maintains strong interest in the Tesla brand even as the long-awaited Model X is further delayed. This translates to a higher stock price (compared to what it could be) and more interest from would-be EV competitors.
Further, having more range would be convenient in plenty of use cases. Being able to do a full days' worth of driving, whether to grandmother's house and back or to a client site across the region, on one charge would be of value to many.
Personally, I live on a high mountain 1.5 hours' drive from downtown Los Angeles and drive into the city on occasion. Most likely, it would be pushing it to make the round trip without stopping at a Supercharger on my return. (I don't yet own a Tesla, but from LEAF experience I know that it's best not to descend a mountain with a fully charged EV and of course extra energy is needed on the climb.) A 15 minute stop in Rancho Cucamonga would likely be enough, but what if I'm in a hurry, there's a lot of traffic around this suburban Supercharger site, and there's a wait to charge? Or, what about folks in areas that aren't so well served by Superchargers?
Certainly there are costs (money, weight, and efficiency) associated with having more battery capacity, but it is inarguable that more range has value. As batteries become cheaper and more energy dense, more and more people will want to maximize range.�
1/1/2015
guest I certainly would like to see Tesla offer higher capacity battery options. In fact, I expect that a 110 or 120 will be offered when the Model X comes out. Anyone serious about towing will want it. But the basic constraint in the short run is the supply of cells. Tesla can make twice as many 60kWh cars as 120 kWh cars with the same supply of cells. So in the short run you've got to consider the tradeoff of more unit sales for higher ASP.�
1/1/2015
guest Well I bet the total gross margin is better for a car with high ASP than two with low at the equivalent value.�
1/1/2015
guest That would depend on how Tesla chooses to price them. I would argue they should be priced so that GM/kWh is the same for each version and across models. In a battery constrained environment, this would leave Tesla indifferent to the mix of versions and models demanded.�
1/1/2015
guest Perhaps they should, but they have said in quarterly calls several times that highly optioned cars have higher gross margin. The big battery option is the most expensive option. One way to see it is that they are giving the customer the choice to get a large battery but since they are battery constrained it's right of them to "tax" the customer for this (high margin on the battery upgrade).�
1/1/2015
guest I'm not so sure about that. 110 would need a 30% improvement in cell energy density over the 85, ready to go in 2015. (Assuming the X will use the same pack architecture as the S.) Maybe at some point but I'd be quite surprised to see it available at launch.�
1/1/2015
guest I am also not sure that we will see 110 or 120 kWh battery at the Model X launch. I do believe, though, that Model X will be offered with about 10% larger battery - 93 or 94 kWh.
The prediction about 10% larger battery comes from the Credit Suisse August report. Given that they predicted next generation drivetrain (which is now/going to be used in D variants of Model S), their prediction now carries little more weight than a casual speculation. From the "Not a Fair Fight" initiation report dated Aug 13, 2014 (PT $320):
�
1/1/2015
guest What about next gen Battery which holds more kW/weight and Tesla still goes with 85kw for Model X? The reduced weight will provide additional efficiency.
Tesla does not have to charge bigger battery premium.�
1/1/2015
guest Its worth mentioning here that Tesla has super devoted customers, an asset others will envy for years to have. A recent example is some hints from P85D thread. A guy who is awaiting delivery of his car sent a missile (a toy from amazon) to factory. A whole new thread is discussing how to appreciate the efforts of the factory workers and may be send them pizza or thank you notes. Unreal.�
1/1/2015
guest I believe that the larger battery will be offered as an option. The reason that Credit Suisse listed this under the "Margin Improvement" category is because the assumption is that due to technology advancement the same cell (18650) could hold approximately 10% more energy, while weighting approximately the same and costing approximately the same.
So with the new cell Tesla could offer 85kWh option, with the battery priced at the same level as previous generation of 85kWh battery. This will yield higher gross margin because new generation 85kWh battery will have 10% less cells at the same cost per cell to Tesla. Since each cell will weigh less the total weight of the vehicle will go down, but efficiency would be mostly improved for a city cycle. Weight has much less impact on a steady highway driving (almost negligible).
They could also offer the option of the larger battery, say 94kWh, at an added price. Once again, since cost per cell presumably stays approximately the same, Tesla would be able to increase their margin�
1/1/2015
guest
- As of 2010 there were more than one billion motor vehicles in use in the world excluding off-road vehicles and heavy construction equipment. Global vehicle ownership per capita in 2010 was 148 vehicles in operation per 1000 people.
Motor vehicle - Wikipedia, the free encyclopedia
en.wikipedia.org/wiki/Motor_vehicle
Tesla produces 50,000 cars at present (approximately), so even if people were lining up out the door to buy them (which, uh, they are), Tesla couldn't replace all the oil-burning vehicles in the world's fleet at that rate, for twenty thousand years. It would be Q4 of the year 22014.
Doesn't matter one bit what the range is. Manufacturing capacity is the key thing to modify.�
1/1/2015
guest Tesla Model S drivers put way more miles on their cars than Nissan Leaf owners do (we think)
Both Tesla and Nissan have racked up more than a billion electric kilometers. What interesting is that Model S owners are putting alot more mileage on their cars than Leaf owners. So while the Model S is more expensive, their owners are getting more out of them.�
1/1/2015
guest No surprise here. With its declining battery capacity (lousy, heat sensitive first generation chemistry) and limited charging infrastructure in our area, our 2011 LEAF is really only good for local driving, within a 20-25 mile radius. When it was new, we regularly took it on longer drives, hypermiled to stretch the charge, and waited hours for charging, but now we only do that on rare occasions. Still, as an EV, it remains (for me) more enjoyable to drive than any ICE.
Given that I have no interest in ever buying another vehicle with an ICE, Tesla is the only manufacturer building cars with sufficient utility for all of the driving currently handled by our Prius. At the same time, my family could use a roomier vehicle with more seating and AWD. That leaves the Model X as the only real choice. (Yes, one could compromise with the third row jump seats in the Model S, but why compromise in such a large purchase?)�
1/1/2015
guest Absolutely not surprising. Volt drivers drive more electric miles than Nissan Leaf owners. If you buy a short range vehicle, it stands to reason that you'd not be driving long distances.�
1/1/2015
guest Not only that... it's a short range vehicle with slow charging.
If the Leaf were a short-range vehicle with fast charging, at least they could get back on the road again very quickly, and rack up more miles... but they can't.�
1/1/2015
guest This isn't entirely true. With CHAdeMO quick chargers, a LEAF can be charged relatively quickly. The issue here is the quality of the charging network. With CHAdeMO (as well as COMBO-DC), there is typically no site redundancy, availability is often not 24/7, prices are typically greater than gasoline, and station locations are often not helpful for inter-city travel.
By building out an international, reliable, highly available, and well placed network of "free" fast charging stations, Tesla is constructing a wide moat that is under-appreciated by many. Others could potentially duplicate the Supercharger network, but it would take a lot of time and effort.�
1/1/2015
guest I don't know that they would be aband le to do that. I think a lot would depend on Panasonic. Tesla has a contract with Panasonic that's going to run for several years. Unless capacity improvements can be incorporated into existing manufacturing lines, I think Tesla would stick with the existing cells for the 85kWh model to work towards fufilling the contract using "older" capacity, and then offer the expanded capacity with new cells at a premium that'd help them and Panasonic lower future battery costs.�
1/1/2015
guest If you live in the Pacific Northwest, then the Leaf IS a short-range vehicle with fast charging. There is an extensive network of DC chargers that the Leaf and a few others are able to use in this corner of the country. I've personally experienced how well it works when driving from the Canadian border down to the OR/CA border 2 years ago in the BC2BC rally. The 2 Leafs and the iMiev were arguably covering ground faster than me in the Roadster.
One particularly poignant window of time had me plugged in at one of the slow West Coast Electric Highway chargers in Centralia, WA, while both Leafs and the iMiev in the rally charged and left AND another Leaf that wasn't in the rally charged and left using the fast charger, before I finally got to move my car across the street to the Roadster charger (yes Six - I still remember that!) and then finish up. (The WCEH standard setup is a 32A J1772 charger and a DC fast charger in 2 parking spots next to each other).
The point being that we have evidence that it's NOT just the supercharger network that expands the usable range of electric cars. Any and every adequately dense DC / fast charging network will make any compatible vehicle more capable.�
1/1/2015
guest I made a comment about range before and it was sorta covered here in response to the question by saying that if you had an 800 mile pack then you would be able to get to 400 miles in 20 minutes using current technology. This should be highlighted as my only major NEED for a larger pack as it gives an angle toward getting more miles on the bottom half quicker. Do you NEED more than 200 miles for normal driving? No, not really, but there is plenty of circumstance that you would NEED to get a recharge of that 200 miles back relatively quick (say around 5 minutes). Our current cells can safely handle around a 2C rate max. So if you had a larger pack your C rate is therefore higher, so your 2C max becomes higher thus filling the pack back at a faster rate.
So what they need to do and focus on, is getting charging times lower. One shortcut to that would be the ability to sustain a high kW rate in the pack for a longer period. Even if they *cant* go higher than 135kW, being able to stay at that rate for a much longer period would mean more miles faster. If your taper curve didn't hit on that 135 until after you were at a half charge it would cause a pretty big difference in recharge times.
The final point I would make is that I strongly feel that the better sweet spot is actually 300 REAL miles. Not 200. There is a reason I went with the 85kW pack for my driving needs and there have been plenty of times where I wished I had just a *little* bit more range. I wasn't doing any crazy road trip, it was all just normal local driving, and as it turned out, just toward the end of the day I had to go out of my way to get some extra miles on my car to finish out my day's driving. Maybe this is more of a problem with the spread-out DC metro area.... but it is not uncommon for many people in my part of the country to go north 30 miles, then south 60 miles, and then west 40 miles, (and so forth) all in the span of one day.
Most cars on the market easily have 300+ miles of range on them under most all driving conditions. It is what people are used to having access to. Yes, 2 seater sports cars and other crazy high performance cars are the exception to that, but even most of the large luxury easily have more than 300 mile gas tanks on them.
I am happy with my range, and I make it work for me as my only car, but there have certainly been moments of inconvenience that a non-enthusiast would not be willing to put up with... recharge times and a *slightly* larger battery would fix all of that. I really am nit-picking here though, since it has no real impact on the success of the company, since there is plenty of market for their current cars given their "limitations" just make it cheaper and we will be good. But in the future, I expect we will see 400 mile packs become the standard, and combined with a 5 minute half charge time, and there will be no excuse not to switch by really anyone out there...�
1/1/2015
guest This pretty much says it all. Eventually it won't be an issue (assuming the current rate of SC buildout continues so that it covers state highways and other non-interstate roads). Until then there are many routes (and a few urban/suburban situations) where the non-entusiast just won't put up with the current limitations (even if they are only imagined limitations--and there are plenty of limitations that are real). I envision the EV range path to be
- 250 (now)
- 300 (+2-3 years)
- 400 (+3-5 years)
- 500 (+5-8 years. At this point there the major shift to EVs will start and continue for several years because virtually all the excuses will be gone.)
- 300 to 400 (+15-20 years. SCs are now common enough that almost no routes requiring slower charging will exist and most of the competition will be based on price. Batteries will be small enough and cheap enough that they should be DIY plug ins.)
Currently, the major obstacles to EV adoptions are "I don't want to have to stop for hours to charge", "I live where there is no possibility of charging", and price. Price will take care of itself in a few years as costs are reduced. The lack of home charging is more serious and harder to overcome, but more range is helpful because of the frequency of charging and the faster charging speed.
Currently there is enough range for most urban/suburban driving and many trips, provided the trip is limited to only the busiest interstate highways. Within two years that will change to most interstate highways. There will still be the many non-interestate routes that people would like to/need to use. Eventually that will be solved by having enough SCs, but it will take many years, so the work-around until then is to have longer range vehicles. If you have a 500 mile range--which goes down to 400 during adverse conditions--the "needs more range" excuse becomes hard to sustain. The faster charging a 500 mile range battery provides will also help. 80% of 500 miles in 20 minutes means that the only charging stop is for lunch during a day's long distance driving.�
1/1/2015
guest 500? That's crazy and unnecessary and won't be standard in 5 years. It also won't be the tipping point for adoption. That will happen earlier, and will happen with cats with lower range than 500 miles because they cost less. Fast charging is much more important to focus on. Your last step, the decrease to 300-400, will happen earlier and the range number will be lower than that. I expect consumer EVs to settle around 150, maaaayyybe 200.
The people who make the excuses you speak of more likely either lack knowledge or are just resisting change. There are vanishingly few people whose needs would not be served by a 60+SC right now. The people who make excuses will likely make excuses regardless, until EVs become "normal". Their buying decision won't be a response to improvements in EVs but more a result of increasing their own awareness and seeing EVs as something less foreign�
1/1/2015
guest Remember 150 can become 100 or less in bad conditions, exactly when people fear running out of charge the most. Plus the public is used to 300+ miles of range and a quick fill up anywhere. I'd expect at least 200 miles to be the norm eventually.�
1/1/2015
guest Right, the public being used to it is what has to (and will) change though, not the cars. It's silly to think that we need to offer the exact same thing - you can only fill up at electricity stations, it costs a lot, there are only a ew companies running the stations and they're all evil, etc etc. it's simply not going to be the same, we can't expect it to be the same, and it's a good thing that it's not going to be the same. Which is why I think making it exactly the same is far less important than educating the public about how EVs work and then watching people get used to it. This is how change happens, not by making things exactly the same as they used to be.
The reason the public needs to go 300 miles between fill ups is because going to a gas station every day would be a horrible experience. Not so with charging at home. And because the marginal cost of increasing gas tank size is much lower than that of increasing battery size.�
1/1/2015
guest People will want 300 mile real world range on a standard charge regardless of how they drive and in what conditions they drive in regardless of how much public education EV advocates engage in. To be free of range anxiety real or imagined. People buy on wants not fact based needs.
That will be at least 500 rated miles.
Mass adoption at 150 rated miles will only happen with punitive taxes or other government coercion.
As a rule voters/consumers don't like being coerced.�
1/1/2015
guest Sorry but I have to disagree with you just a bit here. These "daily driver EVs" already exists and they're OK for what they are but what Tesla are trying to do here is bridge the gap completely and create a fully competitive EV, for virtually all use cases. And unfortunately 265 EPA miles and Supercharging with the current tapering curve just isn't cutting it. I speak from my own experience here from multiple 350 km drives to my family in Sweden, with three small children in the car, in snow or rain at speeds of around 120 km/h (70 mph) and even with 2 SC along the route I feel I'm finding the need to compromise even if slightly. Now, for me that's completely fine but in order to win over the hearts and minds of the whole car owning population Tesla needs to improve on the remaining two variables where ICE cars still have the upper hand: range and fill-up time. These two are intimately connected as one can, but only partly, compensate for the other: fast and ubiquitous fills mitigate the need for very long range - very long range mitigates the need for tight spacing of fill-ups and high speed of fill up. In my opinion Tesla should (and will) continue to improve on both these variables by:
Further expanding the SC network geographically.
Improving SC rates and delaying taper (if possible).
Providing even larger batteries.
Providing battery swapping.
The consumers will be the weighing machine here - the consumers will decide how large the batteries will need to be, how ubiquitous and quick the Superchargers need to be and if there is actual demand for swapping (and at what price). This is uncharted territory and Tesla are wise to keep improving on all of these and let it play out.
I think we as early adopters will definitely have a tendency to underestimate what the average car buyer will expect with regard to battery size, fill-up time (SC or swapping) and price. To replace ICEs EVs need to be better on all levels.
RobStark: us northeners think alike
�
1/1/2015
guest EV heads who dismiss the real importance of having 200mi real world range (aka 300 mile batt pack, or near that amount) are, thankfully, not the CEO of Tesla. otherwise, EV adoption for the masses would be screwed.
Let's not act as dismissively as Petrolheads. We are better than that, hopefully.
personally, i wouldn't buy anything less than 200mi real world range, and i'd only buy it when "range anxiety" is as common as it is with my ICE car - in other words, very rare.
and like many people in Europe/Asia, im not as priviledged to have my own garage where i can install my own charger. not happening.�
1/1/2015
guest I think range needs to be in the middle of what we think and what the other consumers think they need, so i agree around 200.....unless battery makers can find a way to make them not loose range in bad weather conditions. If they can then 150.
My mom is a director of technology at the private school I work for and keeps up with whats going on in the tech world, but ive had to completely educate her on the EV transition. She loves to travel the country through all the back roads and finally said to me that even as great as the Supercharger network is, she still can not see herself getting an EV because all the chargers are located on major roads. She said she would get a hybrid, but that still depends on gas and I'm trying to get her off of it when she buys her next car.
So either we get relatively cheap (20s) long range EVs or we need lots of chargers on back roads as well as major ones to get people like my mom to switch.�
1/1/2015
guest So I neither lack the knowledge nor am I resisting the change and I am telling you, had I not have had the option of *at least* 200 miles, I would NOT have bought an EV regardless of who made it. I am neither the farthest driver coming in to work nor the closest (there are people in my building who live less than a mile away and who live more than 50 miles away). So I feel like I can speak for myself and speak for at least others who are working in our combined buildings in the NOVA area of some 50,000 employees, that a 150 mile car would not work for likely half of our population. Especially when we live far enough north that the cold certainly has an affect on the range, combined with the hilly roads... my summer wh/mi is around 308, and my winter wh/mi spikes all the way up to 400 at some points... largely because running the heater in stop and go traffic is BRUTAL to your range.
If you want a technology that will eventually replace all your driving needs (even if we assume that you will have 2 cars per household) at least one of those cars is going to have to be a 300 mile car combined with some form of a fast recharge such that it only takes about 10-15 minutes per stop and putting back in around 200 miles in that timeframe. That was why I said for now, Tesla is perfectly fine trucking along at their current range and charge speeds. Heck, they could have gotten away with still selling their 40kWh battery car if they had wanted to. But even Tesla doesn't agree with the notion of a 150 mile car being "ideal"... why else would they drop it? It is also telling that Elon talked about a 400 mile pack for roadsters. Clearly there is some perceived notion that you need more range whether it is logical or not and Elon supports that.�
1/1/2015
guest I think you over estimate the speed at which the public is willing to change and accept a replacement technology for their tried and true ICEs. Logic does not win here.
I don't think range will play a part in mass adoption, because that technology is advancing faster than public perception. The battery cost/mass/volume balance will settle somewhere around 300-400 miles and EVs will cost the same as ICEs...at that point the cost of electricity will sway a larger percentage of the motoring population than today. But...I believe the key technology will be the ability to quick charge an order of magnitude faster than even current Tesla superchargers. Until people can charge up about as fast as they can gas up, reluctancy will prevail.�
1/1/2015
guest If the only charge they need to do on a trip is one at the lunch stop, 20-30 minutes would be fine. This should be doable easily with a larger battery since a larger battery can charge more miles at a high rate of speed.�
1/1/2015
guest Don't get me wrong--I totally get that. I just dont believe the inflection point in public perception will be based on logic and reason. It will be a one for one comparison against their ICEs, and the EV will basically need to take every category.�
1/1/2015
guest Does anyone think that Model X will have a much larger effect on electric car adoption than anyone realizes?
Model S is the "Generation 2" automobile in the secret plan, and the X is sort of a "Generation 2.5" vehicle. I saw in another thread that someone heard rumors about prototype X vehicles coming off the line as looking way more awesome than the concept that was introduced 3 years ago. Model S is a great car with pretty decent cargo space, but it's not quite an SUV replacement, whereas that Model X has the "minivan" passenger and load capacity. I've got a hunch that the more expensive Model X has the potential to vastly outsell Model S, and bring in a lot more profit margin and overall profit.
Sourcing enough batteries will be the big problem, which makes the Gigafactory all the more critical.�
1/1/2015
guest In the USA, I think 200 rated is enough, because most household have multiple vehicles. The 2nd vehicle provides the safety net.�
1/1/2015
guest This is hilarious. This is the third time I remember now this range argument coming up here. It's always FANGO vs everyone else. I'm not taking sides but it's like Groundhog Day!�
1/1/2015
guest In fact, the ceo of tesla thankfully agrees that ever increasing range numbers are not necessary for adoption, and also understands that fast charging is a more important focus.
Though it would be nice if people who ought to know better would stop arguing against him. No, EVs will not settle around 400 miles.�
1/1/2015
guest In all fairness they also thought the 40 kWh option would sell well. They were quick to cancel it when very few bought it. It's 95% about perceived need. Elon gets this too. The customer is always right, right?�
1/1/2015
guest What was the 0-60 times? That might have played just as much of a role in canceling the 40kWh option as well. He did say it felt like a hobbled product (not his exact words, but something to that nature). He talked about it being a two fold reasoning. People didn't want to buy it and it didn't feel like a good product. So for whatever the reason they didn't think it was a good product we can argue forever, but part of that has to likely do with the pack size since that was pretty much the only difference...
So:
Is not entirely a truthful statement. Yes, at some point too many miles are too many miles... but considering he is always talking about *at least* 200 miles of range for any of their products, I am going to go with anything less than 200 they don't think it is a good product. Which goes against your point FANGO, that the sweet spot in range will settle around 150.
Even if I had charging at work (which I don't and likely never will... grrrr I hate our building management)... I *still* would not have wanted a 40kWh MS. And I know people who have the 60kWh pack that have stated that there have been times they wished they had bought the 85. Especially if you decide to road trip it, because it is quite a noticeable difference in the supercharge speeds.
One such friend set off from DC to NY a solid 2 hours ahead of me, and not only did he stop at each charger along the way, he was there much longer than I, to the point where by the time I caught up with him at Syosset, NY he was just finishing charging at around the same time that I was. Me on the other hand was able to go 250 miles on the first leg not stopping until Edison, NY, and then a very short charge to get the last 70 miles to Syosset. That right there is reason enough to me that going with a larger pack is more beneficial because it is easier to get a higher charge speed out of it. Which has been one of my critical points on the whole thing. Barring some great chemistry change, increasing the pack size is going to be the fastest path toward faster supercharging. Combine that with vampire losses, the cold effect, and elevation changes during travel, and having an extra hundred miles on the pack would be very welcome.
If I could be guaranteed 250 miles regardless of driving conditions up through around 80MPH then I would be fine with that... because I am not, and there is a decent amount of guesswork involved in determining your range then I am not quite happy with where things currently shake out on the range side. Yes, this is still the best car I have ever owned, and I would never willingly go back to something else, but denying that there is room for improvement is folly.�
1/1/2015
guest Yes, FANGO is pretty much alone on "limited range island" every time. I drive a 50 mile max range EV but I know that just because I can make it work in my situation it's never going to be acceptable to the general public. People don't "need" smart phones but they've come to think that they do. People "need" more range because they are used to having more range, and many have a lifestyle that does in fact require more range. Taking a step backwards is not going to sell to the general public. Especially when range can be drastically cut in extreme conditions.
Right, the same CEO who when asked about a 400 mile pack said why not a 500 mile pack? Seems the only person arguing against the CEO is you. Even most of the dedicated early adopter Tesla owners want more range than they currently have, and you expect the less motivated general public to settle for less? At some point you have to realize that your viewpoints are completely out of touch with the mass market.�
1/1/2015
guest The weight of a 150 kWh Tesla battery pack is likely 1,800 pounds even at 300 wh/kg for the cells. That's 600 pounds more than the existing battery pack. You would then have to factor in the increased rolling resistance and the energy cost for acceleration due to the increased weight. If you put that into a Model S with only rear wheel drive and compare against a P85D which has a 500 pound addition to the non-D 85 weight, but not the efficiency gain of the 2nd motor, then we're talking less than 2.85 miles/kW EPA range. That's about 400 mile EPA range with cell technology probably beyond the 2016/17 Model 3 cells and the price is likely higher than the existing pack even with price dropping dramatically at a $/cell level and assuming the volumetric density isn't an issue. At the same weight as the existing battery pack with a 300 wh/kg is about a 100 kWh battery pack. That's about 310 miles of EPA range.
Therefore, I'm thinking any discussion of 400 mile and 500 mile range is really just pie in the sky stuff waiting for technology breakthroughs that are not likely until 8-12 years from now. Further, you have then carrying around a lot of extra weight, reducing your overall efficiency for the very odd occasion you need the range (for most people, obviously, some people would want that) In order to accelerate the widespread adoption of BEVs, Tesla has to push downwards in price. So finding the minimum acceptable all around useful vehicle is interesting.
The 60 kWh battery pack vehicle is already very close to the limit to achieve 2 hours of driving, 30 minutes of charging with a C-rate max of 1.7 with a 250 Wh/kg specific energy density. The Model 3 is likely to do better because it is smaller, lighter, and will have a battery pack with higher specific energy. Even then, I did some napkin mathematics and I can't see them dropping much below 55 kWh in battery pack size...maybe 52 or 53 kWh in order to hit 200 mile range. In order to drop further, they'd have to employ BMW i3 style construction (CFRP) to drop weight and then cost become a big problem.
The 40 kWh Model could not be Supercharged at a reasonable cadence.. 160 mile ideal range with 68 kW max charging. It would be very hard to make the jumps. It would be a full range charge to even try to make the longer Supercharger jumps, which means 1.25 hours to charge. Basically, the 60kWh Model S is 208 mile EPA range, take 70% as reasonable minimum range = 145 miles. That has to be within your 80% of battery in order to avoid the slowest part of the tapering of the charging. You therefore end up with a very expensive car that most people won't view as a car that can travel long distances. Even if the DCFC stations were put 50 miles apart, the cadence would be terrible. This is the heart of why the existing CHAdeMO and CCS installs make zero sense - 40-60 kW shouldn't even be called L3 charging. It's L2.5 at a hideous price.
I think 55 kWh represents the minimum for an all around road trip capable battery pack in a Model 3 sized car... it can be charged at 90-95 kW at Superchargers, have 200 mile EPA range and use the existing Supercharger network. Big questions remain on the construction materials and of course, the resulting price.�
1/1/2015
guest But ...
Capacity ~ cost ~ size ~ weight ~ range ~ charging speed ~ performance ~ 1/C rate.
I don't think _typical_ range will be 400 miles, but without massive breakthroughs in charging speed, the dependencies on capacity means that naturally there'll be a significant market for batteries that provide more range.�
1/1/2015
guest Utilities Are Building the Infrastructure for Californias Shift to EVs : Greentech Media
From GreenTech media but also reported in many papers in California: "The big news recently, however, comes from Southern California Edison. SCE recently submitted an application to the CPUC to develop the infrastructure for up to 30,000 EV charging stations in the next few years. SCE will develop the required distribution lines, transformers, and other infrastructure and also provide rebates of up to $3,900 for third parties to own the EV chargers. This is known as a �make-ready� approach because it relies on the utility making the infrastructure ready for third parties to build out the charging stations themselves.
The price tag for SCE�s proposed program is about $350 million, to be paid for with ratepayer funds. This is not chump change, but SCE has asserted that its program will be cost-effective for ratepayers. While we need a lot more evidence to firm up this conclusion, my feeling is that we know enough from many similar analyses to feel pretty confident that SCE is right on this. The key savings from EVs come from the fuel savings, simply because running cars on electricity rather than petroleum is so much more efficient (EVs are 2.5 to 3 times more efficient than gasoline vehicles in terms of energy used).
Investments in EV infrastructure are a highly cost-effective proposition for ratepayers and taxpayers because EV transportation is so much more efficient and thus cheaper than fossil-fuel-based transportation.�
1/1/2015
guest Wow, this is some really exciting stuff for electric vehicles. We are already way ahead of the alternative energy race compared to hydrogen. This is one of the primary reasons why electric will win, it's much less expensive and faster to roll out 30,000 electric charging stations as appose to 30,000 hydrogen stations. If this move gets the green light, will it be too early to declare victory? I remember the blu-ray vs HD DVDs era where consumers were confused about which player to buy. Then Blu-Ray succeeded in 2007 in acquiring a deal with a specific Hollywood brand that sealed HD's fate due to sheer volume of movies available on Blu-Ray as appose to HD.�
1/1/2015
guest The clincher will be what the EV charging rates will be. Sadly, here in California Blink has been taking over many chargers that were previously free, city or county operated chargers. Then Blink slaps rates on them making charging an EV higher than gasoline! Russell Sidney of EV Advocates of Ventura County (google groups evavc, please join) has been very active lobbying the cities and counties to keep free or cheap charging alive. At a state level he is inputting into being sure these SCE chargers must be a t a low price. 30,000 EV chargers are useless if they charge Blink or NRG rates of 49 cents per Kw!�
1/1/2015
guest Yes, exactly the same CEO who, when asked about the 400 mile pack, *dismissively* said "why not a 500 mile pack?" Then went on to explain why that would be possible but silly. The Model S could have had a 500 mile pack, but didn't, because it would make the car lousy. Nearly every time he gets asked that question, he answers in the same way, going on to explain why this is not a reasonable idea. And yet, despite that being said many times, and despite that being pointed out to you many times, you choose to keep the blinders on, and keep arguing the same thing against EV adoption.
It's very easy to pretend everyone agrees with you when you choose to ignore everyone with a varying viewpoint than yours, but it doesn't make your point any stronger.
- - - Updated - - -
I said EV range will settle around 150, *maybe* 200. Tesla range will probably be on the higher end of that, and other EV ranges will probably be on the lower end of that. Either way, quick charging is far more important than ridiculous ranges to meet 99.99999% of trips instead of 99.9%.�
1/1/2015
guest One of things I've learned here from Robert, our friendly energy economist, is that utilities love capital expenditure, because they get to make a nice comfortable profit on every dollar they spend. If the utility really wants to get involved and encourage installation they should be talking to cities about supporting installation of chargers in multi-unit dwellings.
PS
BluRay won because:
(1) Sony owns Columbia and Tristar movie studios
(2) BluRay kept regional DVD encoding.
(3) Sony got the support of other movie studios (basically all but 1) (See (2))
(BluRay was also technologically superior, with potential for multi-layered higher-capacity discs, but we know that superiority of technology's no reason for success.).�
1/1/2015
guest Regarding range, I would presume TM has analyzed the data from current and recent owners to understand the actual daily miles driven. For an EV, the auto transport paradigm is different, where one basically charges at nite. The act of opening and closing the charge port is the barrier to this paradigm- i suspect that's why TM was joking about self charging system. This would be similar to online service or app, which requires registration and login, which becomes a soft barrier to return to the service.
A larger range feels better, however my gl550 at 3/4 tank, has a range of 260 miles (13 mpg, yikes), but at the end of the day, i'm not worried when it gets down to 150 or even 50. So in practice, as long as my driving range needs are met on a daily basis, then may be 150-200 miles would suffice.
A larger battery may be useful as an option at a swap station for a planned road trip. Don't really need hyper acceleration during a road trip with family, which a heavier larger pack would ding.
just my 0.02, i'm new to the forum. I enjoy reading the posts on TMC!�
1/1/2015
guest And quite a bit more expensive as well. However, I hope you don't think for one second that if battery density allowed Musk to sell the S with a 500 mile pack at the same cost and weight as the existing one he wouldn't, or that people wouldn't buy it, because you'd be wrong on both points.
At this point in time.
You misinterpret Musk's meaning, obviously, and you ignore the entire buying public's concern over range.
Stronger than your constant denial of the real range demands of the buying public. You can't wish away people's expectations. I'm not ignoring your viewpoint, I'm just rightly pointing out that it does not reflect the majority view, which is the whole point. You either remain blissfully unaware of the constant demand for more range from the public or are just willfully choosing to ignore it.�
1/1/2015
guest If this were true, Leaf sales wouldn't be growing at 40% a year or whatever the number is. "Wishing away" the expectations of the public is exactly what you *can* do, and what every technology ever in the history of the world *does* do as it gets adopted. Unless you think EVs should be fueled solely out of the house, with fluctuating pricing based on the decisions of a cartel on the other side of the world - which is what the public currently expects of cars. Oh wait, that's going to change? But I thought the public never changes? That's why we're all still riding horses right? Because you can't refill a car in your barn, but you can refill your horse. Nobody will ever expect that.�
1/1/2015
guest Of course I never said the public never changes. Cars caught on because they provided faster travel than horses. If they had less range and longer travel times they would not have won out over horses.
I'd also point out that early versions of new technology are often inferior to existing, and few adopt initially. It's only when technology advances enough that it becomes adopted by the masses. Early cell phones were quite limited and expensive, few bought them. Same with early computers, early flat panels, etc. We are still in the early adopter phase.�
1/1/2015
guest I thought the 40 kWh option was to keep the base price under $50K when the Model S first came out. I doubt the ever expected to sell a lot of them.�
1/1/2015
guest I think that's "the other car". Tesla's model is to replace long-distance travel using electricity. I could have a Leaf as a commuter and errand runner, but it wouldn't do weekend trips. If you're going to replace the trip car there are different demands. Range and charging speed are time savers, and people drive cars as time savers. I think that even with familiarity, mainstream purchasers will not want to have to stop on regular trips. What's a regular trip? Depends on the person. People are not going to want lots of charging on longer trips. What lots of charging? Depends on the person. I think Tesla has pretty much nailed it at 200 miles base, because that leaves plenty of room for adverse conditions and gets charging speeds an hour or less, but I think that the upper target's around 4hours of driving, maybe 300-350 miles, because that's a more natural break.�
1/1/2015
guest I believe California is now requiring new multi-unit structures to install pre-wired charging. These will almost surely be "behind the meter" though, on the customer's side, so the utility can't put that expense into rate base. It can, however, increase the transformer and wiring sizes to accommodate all the EV charging.
Even aside from the potential to get returns on more distribution capex, SCE has tremendous incentives to encourage EVs.
SCE clearly has EVs on the radar, with a sizable section about them on its website. By contrast, Boston's utility, NStar, doesn't have the words "electric vehicle" on its site anywhere.
- As storage. Although the IT isn't in place yet to allow variable charging or vehicle-to-grid (V2G), the prospect of having hundreds of MWs of battery storage will be very, very important as renewable (=intermittent) generation plays a larger role.
- As load. Rooftop solar threatens to reduce net load on SCE's system and therefore put the company's financials at risk. There are 14 million people in SCE's service territory, so figure about 8 million vehicles? If 10% of those were plug-in, they'd use about 4 TWh (4 million MWh) of power annually, about the same output as a new gas-fired combined cycle plant or 1,800 MW of solar. That kind of load increase keeps the utility relevant, even if only to share power from a one person's PV panels to her neighbor's EV.
�
1/1/2015
guest I don't see a reason why tesla would not want the ability to offer more range then let the buying public decide what works best for them. I would be fine either way, shorter range with faster charging or more range. I live on the foothills in California, I couldn't make a round trip to the nearest next city in a leaf so a car like that is out of the question, might as well have 15 miles of range for my purposes.
My plan right now is to be one of the first in line for the M3 with every option including biggest pack. Almost pulled the trigger on an MS but could not justify the cost. Solar system already installed and ready to drive for free.�
1/1/2015
guest To be honest I feel that this thread is currently not really about the long term fundamentals of Tesla as a company any more. Perhaps a new thread?
On this topic though:
I think that as long as consumers and media outlets are saying that range is still a limiting factor, Tesla would do well to increase the range of their vehicles. It may be true that 350+ mile range will prove to be totally unnecessary in the medium to long term, but short term needs are driven by market demand, and not by an EV enthusiast's view of what the future of personal mobility looks like. If magazines and customers say 'It's an absolutely fantastic car, but it's just 100 miles of range short of being truly convenient', then Tesla absolutely HAS to address that concern and produce a car that has a greater range.
As EV infrastructure and public perceptions and expectations shift, maybe Tesla can afford to offer future models with smaller ranges again and either reduce price if they are demand constrained at that point or increase margins (or obviously any combination of the two). Either way the technological improvements that were made in order to increase the range in the first place (be they 'evolutionary' changes in manufacturing and scale or 'revolutionary' breakthroughs in battery technology) will still be beneficial.
edit: some words were wrong.�
1/1/2015
guest Roadster 3.0 | Blog | Tesla Motors
I wonder if Tesla is planning to make and sell new roadsters. Any thoughts?�
1/1/2015
guest If I'm not mistaken, Elon has mentioned that a new roadster will be worked on after Gen3. It appears that the upgraded battery pack will also have an upgraded body kit and tires. My take on this is that both battery and aerodynamic body kits will be additional revenues for Tesla�
1/1/2015
guest My thought is that they'll be doing a tech demo run in early 2015, that there is no announcement of anything available for Roadster owners, or of new products, and that while I'll be interested in the run, there's nothing cool for Roadster owners yet, and there are far more important execution issues for Tesla to resolve.�
1/1/2015
guest Yes, I think the press will probably get this all messed up and claim it's a new Roadster, when it's just an upgrade kit for existing Roadsters to make them a "3.0" version.�
1/1/2015
guest Does anyone know if a 31% increase in cell energy density puts this new cell ahead of the current Model S cell density? Does this leapfrog or is it just catching up?
The blog ended with a clear message that we can count on more upgrades to the Roadster, but it is not clear if this would coincide with putting new Roadsters into production. It seems that if they are going to continue to invest R&D in improving the Roadster, they must be considering a new release. Otherwise there is just not that much return to be made on 2500 cars they sold years ago. The size of this after market does not financially justify much investment, but if this is a prelude to a new Roadster, it all makes sense.
While Tesla is so supply constraine, it actually could make very good sense to issue a new Roadster. They could make something demonically faster than the P85D and sell it for twice as much. The gross margin could be say $100k per car. If they sold just 1250 per year that would add $1 to the EPS. But because this is low volume, it would not have a noticeable impact aggregate supply constraints. This would be the new halo car and would test the upper limits of what high end car buyers are willing to pay for a Tesla.
The only down sides I see is that it perpetuates the brand perception that Tesla is a brand for the super wealthy, out of reach for everyone else, and it ties up internal design and production resources that may be better focussed on higher volume products. If the New Roadster were released after Model 3 is clearly in or coming into production, that could mitigate warping brand image. Car buyers would have a range of options from a $35k Model 3 to a $250k Roadster. The brand problem is the lack of an entry-level model, not a the presence of high-end halo car. On the second issue, if the markup is 45% to 70% on the New Roadster, this could make it well worth the added operational complexities. As a shareholder, I'd be quite pleased if this could add about $1 earnings per share. That would go a long ways toward building out an impressive organization.
So if the New Roadster could draw in about $100k GM per car, I think it could be a smart move in the near future.�
1/1/2015
guest 31% increase puts it at or slightly below the current Model S cell. At this point in time I don't think a new Roadster makes any sense, yet being able to upgrade an older existing car sends a clear message about the longevity of Tesla's vehicles and how future-proof they really are. Software updates and now hardware updates to make them better than when new. How's that for resale value support?�
1/1/2015
guest Certainly good news for all Tesla fans: Tesla intends to continue supporting its products - more than that: They continue to improve products that have been out of production for 2 years.
Have you seen any car company do that in the past?�
1/1/2015
guest "We are confident that this will not be the last update the Roadster will receive in the many years to come." Might be the most exciting part of that blog post.�
1/1/2015
guest I think a lot of it is also that the Roadster is the original image of Tesla. I think for historical sake they should work to keep the roadster alive for as long as they can. At the very least until they release a new one.�
1/1/2015
guest Tesla buys the old UAW union hall in Fremont. Any ideas what they may use this for?
Tesla buys the old United Auto Workers union hall in Fremont - Silicon Valley Business Journal�
1/1/2015
guest Move the service center over there? Maybe along with factory pickups? A Tesla store as well?�
1/1/2015
guest This may have been covered already, but here's my personal view, and why I'm willing to invest in shares of TSLA:
The Roadster was designed as a prototype; it was never intended to be a full mass production vehicle. It's the "test" model, and it proved many things to the world, including that a BEV could contain a battery with range over 200 miles.
The Model S is a direct descendant of the Roadster, but more than just eye-candy or a novelty (NOT saying the Roadster is either, only that the FUD community may consider it so). Just look at all of the awards received. Building upon the basic design of the Roadster and perfecting it. The new "D" version is another giant leap forward for the car.
Now we have the Roadster, once again, being the prototype for a significantly longer range battery: 400 miles! Granted, it's battery, wheels, and aerodynamic design mods, but 400 miles was freaking unheard of in an electric performance car until today. Many in the investment community are already predicting that the Model S will be upgraded no later than 2018 with a new Lithium Ion battery, with a 500 mile range. And, the stock has moved in a positive direction as a result.
I get tired of reading posts on the TMC forum of "Tesla over-promising and under delivering". The reality is this company constantly exceeds any reasonable consumer expectations. I haven't seen anything Elon Musk has touched which hasn't been thought out so thoroughly that it's not a matter of one or two moves ahead, but sets and matches. I can't wait until I can drive our MS 85 from Tampa to my in-laws in Biloxi on one charge, and get out of the car with that perm-tesla grin, saying "I told you!".
TSLA may be trading far higher than it should, based upon sales and profits. However, as it is with any equity play, you have to balance the upside and potential against the current metrics. This stock, in my eyes, has a very high upside.�
1/1/2015
guest Good find, and reasonable guesses for the potential uses.�
1/1/2015
guest Just stumbled on this discussion of range and recharge time.
Personally as a consumer and investor, with one caveat I'm squarely in the camp that wants to see a Tesla that will have 300 real world miles of range, or 240 miles if you do an 80% charge at a SuperCharger (real world meaning, any weather circumstances, when the car is 5-10 years old, and driving at real highway speeds). I'm personally trying to hold off on buying a new S or X until the rated range is about 330 miles or better, though the car I really want probably needs to be close to 400 miles of rated range. I can only wait so long, and Tesla's been pretty good to me anyway.
Here's the caveat... I think eventually the EV market will sort of bifurcate into two clusters of happy buyers. There will be many who want ~300 miles real world range, and many who are happy with ~100 miles real world range, likely small urban EVs. So eventually, the average may be about 200 miles of range, but there will probably be only a small percent of EVs sold with such ranges. I think it's quite possible that after the Model 3 and a pickup truck Tesla will either move on to or partner up to supply drivetrains to another brand to make an urban low range EV. This would probably be close to 10 years out before hitting the market. I realize the market is already bifurcated, but currently it's basically split between producers, Tesla and everyone else, whereas later I think it will come to be more split between large receptive groups of consumers. Right now, I think there's only a large receptive group for the part of the market Tesla has targeted as Elon foresaw in the "Secret Master Plan."
One last point... I only went a few pages back, but I see quicker charging has come up. As is well known JB has talked about the aim of 5-10 minute charging. He expressed some optimism, but suggested it was years away. I think there's a case to be made that next to the GF project (which to me likely includes a ~350 mile rated battery, but maybe that's not a well supported assumption) and the Model 3 this is the most important lever Tesla has to cracking wide open the vehicle market. They might go for battery swapping or a metal air hybrid instead, but I think pulling off 5-10 minute SuperCharging would just be the most compelling and simple way to kick down this last range/recharge time advantage of ICE vehicles (I realize the complex part is making such fast charging work... I just mean if you get to that point, for all the years of implementation that follow it seems less clunky than storing and retrieving swapped batteries, or replacing aluminum in metal air batteries, etc.).�
1/1/2015
guest I have also read and contributed to the debate about battery pack size (range) versus charge rate. While both are certainly important the next 'game changer' I believe is getting charging speeds comparable to filling your ICE with gas. Once that happens *that* will be the tipping point.�
1/1/2015
guest It makes sense that Tesla would pick this parcel up even if they didn't have an immediate use for it. Even if it is just used for delivery or perhaps rework for CPO's and maintenance.�
1/1/2015
guest Thank you Tesla Team
Nasdaq snapshot for the last few years:
2011 28.56
2012 34.4
2013 149.56
2014 222.52
How did TSLA deserve this magnificent rise:
Supercharger expansion tally
Global total: 150 + 124 + 51 = 325 (NA, EU, AP)
Model S delivery tally
2014 Model S P85D (VIN 64272) Delivered 12/26/2014
Model S reservation tally
Just got VIN assigned: 69826
Model X reservation tally
Just reserved - 15,188
Driving Range for the Model S Family
Roadster 3.0
Battery Swap Pilot Program
50 States in Model S
The House Always Wins
Factory Upgrade
Model S Achieves Euro NCAP 5-Star Safety Rating
Significantly Improved Leasing for a Tesla with US Bank
Dual Motor Model S and Autopilot
Software v6.0
Infinite Mile Warranty
First Model S Deliveries in Hong Kong
A Supercharging Milestone
All Our Patent Are Belong To You
�
1/1/2015
guest Cool!
Would like Tesla to become automaker #1 in the world.�
1/1/2015
guest Silicon Valley automaker Tesla Motors will be making "a few million cars" by 2025, enigmatic CEO Elon Musk said in Detroit today (January 13th, 2015).
That would make the company about the size of BMW today.
Musk, speaking at the Automotive News World Congress event at the Renaissance Center this evening, also left the door open to eventually establish franchised dealerships.�
1/1/2015
guest Plus they'll be much more profitable in regards to margins. This is why I play the long game.�
1/1/2015
guest Well, I think today we saw a decent amount of news regarding the Long Term affects on TSLA and very little info on the short term. But it's cool because Elon restated again today that he really dislikes the short term speculation game.
So the key points that I got today: (which was largely through live blogging and tweeting, so if something is off, don't shoot me too much because I am trying to interpret information second hand).
Regarding production, we are still on target for 500k by 2020, and the new information was stated as "millions of cars a year by 2025". He also made a joke about how it doesn't make sense to make an affordable car and then ship it to China (as in, they are going to build local factories) and has come out and said at least 4 factories being one on the West Coast (Fremont), One on the East Coast (the discussion of Michigan being in the running would only happen if they allowed them to sell their cars in the state), One in Europe and one in Asia (likely China). To me, this says that we should see something close to 2 Million a year (using Fremont as the base coming in at 500k... or at least it should) and suggesting 4 factories. So I would fully expect Tesla to be making announcments on a second factory come 2017 and the release of the model 3. Then perhaps starting 2 factories at the same time (or at least building them at the same time maybe one starts a year before the other) to bring us up to 2 million a year by 2025.
Regarding GAAP profitability. It was stated that they could be profitable right now if they wanted to be, but of course they are reinvesting everything back into the company, but that it would be reasonable to see profits in 2020. So I would set your calculators toward that timeframe if you wanted to try to guess a stock price. and you have a future modeling to 2025 of "millions" I am going to speculate that number to be 2 million a year (They might have released some other models by that point as well... although this wasn't stated at all, it has been in the past that they would look toward a truck and another Roadster... so I would expect to see that happen by 2025 as well)
About the model 3: It will be around 35,000 WITHOUT tax credits. He has said he has nothing to learn from the Volt or any other cars on the road (pretty confident then that they have a winner product for the Model 3 in the works). Some standard features on the Model S will be options for the Model 3 but he wants it to be "way different from any other car on the road, in a way that's really useful, and just doesn't feel like a weirdmobile" (yes that was his word... so that should ease tensions that he will allow a crap design to go forward). As previously known... it will be 20% smaller and because it will be 5-10 times the volume there are economies of scale to be had there.
About the autonomous driving: This was interesting because this seems like he is stepping back from his previous timeframes. He commented about how people should be concerned about the safety of autonomous cars. Safety standards should be 10 times higher to justify full autonomy and need to be able to prove that it is safe. Regulatory approval for full-autonomy will take 2-3 years and then 7-8 years before there are autonomous cars you can buy. I assume this is different from driver assist progress that is already being made across the board both in Tesla and other companies.
Competition: The impression I got is that he is begging for more competition (as always) and is not afraid of anyone's current or future offerings, in fact he wants it to happen. So if Elon isn't worried I don't think this should be a change for most of us to continue to hope for better competition as well. A rising tide lifts all boats... and in this case we need to change the paradigm for the average consumer away from ICE more than anything.
Gas Prices: Electric is still cheaper at 40-50$ a barrel. This isn't news for most of us, but was nice hearing it come from Elon. He doesn't see gas prices having any affect on the Model S/X. Lower cost cars, though, maybe. My takeaway is that it is difficult to tell just because there is no mass market long range EV to get sales data on... so this is just the engineer in him assigning percentages to things. Nothing is guaranteed. Personally I don't see an issue at current gas prices even with the Model 3 because of the other benefits of ownership.
Some upcoming news is that they are supposed to be making an announcement in the next month or two about the Tesla Service Centers... what that could mean is anyone's guess. I think we have had this promise before... maybe we will finally see something significant here... No idea what it could be. What I will say is that they mentioned that service center growth is one of their main focuses. This is again, nothing new. But nice to hear them continue this statement up to a year later (it was exactly 1 year ago that Jerome said "reckless" growth. I think we have seen that and it is nice to hear them talk about continuing that growth. Service Centers primarily serve current demand... not generate new demand. So this is a positive to me.
Speaking of demand: Orders in the US are continuing to "rise" and they are seeing "broad growth in all our markets in Europe" both of these are good signs. Chinese demand seems to be a minor issue this time around. Which Elon chalked up to issues getting the customers to understand how they can get charging for their cars at their condos and such. it was stated that it isn't a real issue getting charging, people just have a perception issue with it. So between that and the new rear seats hopefully this issue will get sorted in short order.
Gigafactory comments: Again restated that it will produce more Li-ion cells than all the rest of the worlds production combined (including cell phone batteries and other such uses). Costs will be driven down by 30% or they should fire him (again a restate from Q3, but it was a great comment!)
Dealerships: This was sorta new this time around. They have walked that delicate line between saying no to dealerships and yes in the future... and this was a seemingly stronger side toward a yes in the future. Here is the quote from him take that how you will:
It was clarified further that if they did do dealerships it would still have to be an awesome customer experience. So I would speculate toward the Saturn-like business model, with maybe a 21st century twist.
Anyway, that was the main long term takeaways I got from tonight. I mostly did this because I needed a single place to put everything together because there was so many random comments all over the place tonight that it was hard to think straight about what had been said. Hope this is helpful to someone else!�
1/1/2015
guest And there was more:
General Motors, which unveiled the Chevrolet Bolt, a 200-mile electric vehicle concept priced at $30,000 after federal tax credit. The company is expected to introduce a production model of the Bolt in 2017.
"I think that's great. I hope to see a lot more of that," Musk said.
Tesla is developing its own version of an affordable electric car, called the Model 3, and targeted at the same time frame.
But Musk said he's concerned about the effect of fracking on carbon emissions. The fracking boom in the U.S. has helped spark a global collapse in oil prices, making gasoline cheap and creating less incentive to buy electric vehicles.�
1/1/2015
guest AutoNews:
Musk, whose company has jolted the industry with its all-electric Model S sedan, played down the effect that Tesla can have on its own in reducing emissions from fossil fuels, and urged the rest of the industry to move more urgently with EVs to prevent climate change.
Though he singled out some automakers for praise, including General Motors, the maker of the Chevrolet Volt, and Nissan, the maker of the Nissan Leaf, he warned against the temptation to see low oil prices as a reason to slow down.
�We can�t rely on scarcity to drive the price of oil and gas and rely on that to be an adequate forcing function,� Musk said during brief remarks, which were followed by a dialogue with Automotive News publisher and editor Jason Stein. �So we have to figure out how to do it without high oil and gas prices.��
1/1/2015
guest Chickensevil, thanks for the excellent write up. Lots to digest and lots for FUDsters to puke out all mixed up and backward.
Note that going from 500,000 cars in 2020 to 2,000,000 in 2025 is doubling 3 times in 5 years, 52% CAGR. This is truly amazing growth. Going from 33,000 in 2014 to 500,000 in 2020 is 57% CAGR. So basically Musk is saying they are going to keep growing at about the same rate after 2020 as they will going into to it. Analysts who plug substantially lower growth rates into their DCF models for later years have been advised.
I'm eager to learn more about plans for three more auto plants by 2025. Seems they'll need to launch a new one every 3 years. The joke about shipping cheap cars to China from the US makes me wonder if an Asian plant, perhaps in China, is being considered for the Model 3. Given that narrow time frame, some fairly specific announcements to this effect should come this year. I could also see a European plant coming quite soon too. If Tesla wants to continue the made to order approach to manufacturing, I really think they will need regional factories to shorten the wait time and improve logistics. In that regard, I would see Europe as a higher priority for the next plant.
The service center announcement is intriguing. My hope is that they will be authorizing and training independent service centers. They never wanted to make service a profit center for themselves, so if others want to jump in and give competive service to customers they should go for it. Customers will benefit, and Tesla can focus resources in more productive areas.�
1/1/2015
guest Very nice! That was quite helpful. Thanks!�
1/1/2015
guest TSLA is getting hammered in after hours trading tonight...For all who have the stomach, equities market are hard to endure.
FWIW I'm long on TSLA.�
1/1/2015
guest the several million vehicles a year in 2025 comment could have a very lasting impact on perception of Tesla.
my memory is that in the late Spring of 2013 Elon first started talking about volumes in the 500K range in 2020. I think that changed the backdrop of all conversations on Tesla. I was amazed how common it came to see the Model 3's possible volumes at the end of this decade show up in online discussions outside TMC... it made FUD over short-term noise much harder to sell. I also strongly suspect that vision from Musk emboldened analysts to write reports with similar volume assumptions, and commensurate valuations.
I think Musk has already done this again to some extent with today's "several million" vision. I wouldn't expect all the analysts to up their model based on this tomorrow... but several may in the coming month or two (perhaps a couple within days), especially if Elon "several million" gets added to Elon's stack of flashcard phrases. Not to say they'll just assume 3 million vehicles in 2025, but Elon throwing out this kind of aspiration is a significant catalyst to move their 2025 volumes towards his number (for context, I think Adam Jonas is modeling something like 800K to a million in the late 2020s) I would be surprised if Elon is not asked about this "several million" comment on the earnings call next month. I think more likely than not someone will ask him to share a broad stroke picture of how Tesla makes that happen in terms of capex and project management. Even if there's no quick pickup on this in any of the analyst's valuations I think several million vehicles a year in 2025 is now a continuing part of the backdrop of media reporting and online discussions of Tesla.�
1/1/2015
guest First off, thanks for the kind words I'm glad it was helpful. I was hessitant to state beyond 2 million since that is as few as "more than 1" as you can get without breaking the meaning of what he said. It is possible it becomes more than 2 and I would be quite happy with that, but even just focusing in on 2 million that is still a significant number and goal and should carry a decent price tag with it. I am curious to go back and read DaveT's discussion of Tesla V2 vs Tesla V3 that he talked about to see how that 2 million number stacks up.
I agree with jhm that really 2 million is just keeping in track with the claim of 50% increase for the foreseeable future. Which was what had been stated on a previous call. So the limit here is how fast they can really ramp. I am hopeful but I think movements over the next year is quite important since they are finally adding in a second vehicle and if that doesn't totally make the factory go FUBAR I will be quite happy. If they can't float unwaivering Model S production at the same time since they are going to share much of the same factory space then I will be extatic! Here is hoping for a fantastic new year!
PS: having watched the q&a video hosted by bloomberg I stick with much of my interpretations of the comments above. There was a couple other fantastic tidbits by Elon... Mostly because Elon was being himself... That make that video worth the watch, but the critical information pieces were relayed appropriately by the bloggers/tweets.�
1/1/2015
guest I always took "few" to mean 3 or more, but I may well be wrong on this. I suspect Elon will be asked.�
1/1/2015
guest "A few million by 2025" begins to reframe the company, extending the vision another five years or so. Other peices will begin to fill this frame.
Products, what will product development look like past Model 3. Note that Musk is now saying that the Model 3 will be 5-10 times the volume. I'm not sure what base he has in mind. Nominally Models S and X should reach 100,000 per year. So is Musk thinking on the scale of 500,000 to 1,000,000 Model 3 per year? To get to a few million, we'll likely need more models.
Auto plants, what will it take to build a few million? Musk is mentioning 4: Fremont, China, Europe and East Coast US. At a capacity of 500,000 per year each, I guess that could squeeze out 2 million a year, but I suspect that even 4 will not be enough, maybe 6 or more. Tesla may need to site one new plant every two years.
Gigafactories, how many? One will support 500,000 cars per year. Keeping to that scale per facility, we'll need 4 to 6 Gigafactories by 2025. Sparks looks like it has room for a few more, but other regional locations will be needed too. I think we are looking at siting one new gigafactory every two years.
Geographical markets? Expansion should pretty much go wherever there are power grids. Beyond that, stationary storage may be key to microgrid power management. Of course with all this comes stores, service centers and charging infrastructure. We need to start thinking in terms of covering the whole globe even if that takes longer than 2025. We may be looking at 5000 to 10,000 Supercharging stations wordwide.
In light of these long-term trajectories we can see why Tesla will not be profitable until about 2020. Nearer term profitably would only come at the cost of long-term growth. So if you truly buy into this vision, as Musk clearly does, you do not want Tesla to slow down, you do not want Tesla to be profitable before it is "safe" to do so. When launching a rocket into orbit, you do not pull back on thrust until you reach the point where it is safe to do so. Some investors are not cut out to be astronauts. Let them sell shares to those who are.�
1/1/2015
guest Just wanted to pull out these two points (It was a lot to quote).
Products: I fully expect that before 2020 we have at least a mid-size SUV/CUV in the bag and would speculate on a Roadster type (high margin limited production... but should be worth it. Maybe only getting something like 10-20k global out of that). Before 2025 I would also throw in there a $50-60k truck. Between the Truck, Model 3 and Mid-size SUV that *should* float them to sell pretty much as many cars as they could want. Just hitting BMW 3 series numbers would allow for 500k Model 3. I would speculate at least 500k of the SUV as well (we should have better data on this piece of speculation when the X sales start to grow). And the truck... oh man, the truck. I think this is a key player in hitting multi-million sales. Trucks, at least for everyone else, are high margin vehicles (So high margin that it is singlehandedly floating Ford's books) and they sell in very high numbers (at least in the US). I would think you could line the truckbed (and maybe under the cabin as well) with a giant battery. If they want AWD I am not sure where they would properly fit the motor in the rear (maybe by then we will have a quad-motor vehicle??? 4 tiny motors directly on top of the wheel joints.) Oh it is going to be quite a sight! That alone, if made VERY well, should easily sell by itself in the millions (just based on similar truck sales data currently). And the tow rating on that thing is going to be insane!
Gigafactories: One thing to keep in mind is that the current 50GW of production, they have said on more than one occasion and in a few different ways that only 2/3's of that capacity is presently accounting for their own 500k cars. I am not disputing that they will be building other gigafactories around the world. It just makes sense logistics wise. But, I would expect that one gigafactory for every car factory should be more than enough, and allow for possible excess capacity for other things. Beyond that, once they get them positioned around the world, if they leave their options open like in NV, they might just expand the size of the building outward (they have plenty of room for that on their current property) and also as the density drops the number of GW produced per year will naturally rise. If they double the density then given the current size of the planned factory they would push 100GW out of the same space. So I think it might be overkill for just Tesla's needs relating to cars to think that they need more gigafactories than car factories.�
1/1/2015
guest Have you looked under a truck? Plenty of room for a large motor, and a large battery pack. Get rid of the transfer case and drive shafts, fuel tanks, exhaust pipes, in a conventional vehicle and you probably have enough room to stack two of the current 85kWh packs and still have better ground clearance.�
1/1/2015
guest I also really liked that he said sort of matter of factly 'I think we'll be first to market with the most advanced autonomous features'.
Even if they are just even, would you buy an autonomous Tesla or that ping pong ball Google has been testing? Or Bolt? Or any other electric car mfr.? I think technology will prove autonomy with electrics is better than autonomy with ICE - too many components and inputs, fighting a losing battle from the start.�
1/1/2015
guest Exactly the points I have been using in my beating up all TM people I come in contact with; all my myriad Big Truck friends as to why our large diesel pushers are obsolete; all my investor acquaintances. And myself, of course.
Now, going head to head with the only thing that is keeping the US Big 3 afloat these days is not what Mr. Musk ever has alluded to, but if Tesla wished to do so, this is the Big Hammer they have in order to accomplish just that (well, there's a battery functionality they still have to address, but that's only 15-25% of the problem, in my opinion).�
1/1/2015
guest Yes but they're also going to need powerful motors so the pick-up can tow. Oh wait ...
The battery's a really big deal because a modern pick-up needs the ability to carry loads and tow, but the elimination of the engine changes cooling requirements and allows so much more freedom in the shape of the vehicle. If an electric pick-up doesn't have a radically different front, then it hasn't been designed properly.�
1/1/2015
guest Now, wait a minute, all those people who spend hundreds and thousands of dollars on specialty tool/lock boxes after they buy a nice truck. Now imagine you just bought a sweet pick-up from Tesla, you open the "hood" aka frunk and BAM you have the perfect solution for all your tools and covered storage to spare, WHILE leaving the truck bed for actual materials for doing work!�
1/1/2015
guest Top 10 High Horsepower Trucks, High Performance Trucks | Autobytel.com
Many of the top 10 high HP trucks have only 360 hp, less than a standard Model S 85 with 380hp. The top of this list is the Ford F-450 which commands 440hp. Of course, the P85D nicely offers 691hp. No doubt, Tesla could top the HP list of trucks if it wanted too.
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Ok, you've convinced me. Let's go for the kill right after Model 3. A Tesla Truck could prove to be an existential threat to any of the big 3. They've been warned.�
1/1/2015
guest I am honestly worried about the no GAAP profitability until 2020 statement. Bears have latched on to this statement and are repeating it over and over again. I don't understand how Tesla plans to maintain a positive cash balance and repay their bonds. If there have consistent GAAP losses, there will be operating losses, and if there are operating losses, there are negative cash flows. Tesla will not be able to sustain negative cash flows for such an extended period of time without running out of cash and being forced to take on more debt or offer mores shares. I hope this will be sorted out during the Q4 quarterly call.�
1/1/2015
guest I could also imagine that the benefit to torsional stiffness given by the battery packs is particularly useful to long wheelbase pickups, although I'm no expert on them (or an American).
Another advantage: The space between the axles is no longer filled up with transmission, gearbox, exhaust, etc., allowing for a much deeper cargo space (is this an important criterion for pick-ups?)�
1/1/2015
guest In the truck space, nobody will get away with a tiny 24 kWh battery. They will have to offer high capacity batteries, over 60 kWh. They will also have to offer dense, high power charging to make towing a realistic option. Serious strategic commitment is a must to compete with Tesla in this space.�
1/1/2015
guest That space would be filled up with batteries however. Generally the truck bed does not extend below the top of the frame rails, there are also cross braces between the frame rails in that area. I'm not sure you want to use the battery pack as a stressed member in a tuck however. I'd be tempted to use some softer body mounts to cushion some of the vibration and twisting. Might even be worth using smaller separate modules instead of one giant pack enclosure. I'm taking into account the off road use that trucks are expected to survive.�
1/1/2015
guest It seems that for Tesla, it would work best to focus on a building a truck that is best in class for towing. Optimize the whole thing to deliver the best towing performance. In this vein, a sleek aerodynamic design makes good sense. Ample HP and torque are natural advantages. The stability of low center of mass plays to the strength of the skateboard design. And finally a well developed Supercharger network is a huge enabler for distance towing that no competitor can match. Moreover, commercial owners will appreciate the low total cost of ownership. If a business needs to do a lot of hauling, Supercharging will make a difference to their bottom line. So I think a high performance and economical towing rig is the right fit for Tesla.�
1/1/2015
guest To add to this another feature that should be relatively easy to incoorporate but could be of very high value to commercial customers such as contractors, would be a built in beefed up DC to AC inverter with 110V and 240V plugs for the US market or 230V and 3-phase CEE plugs for the EU market to plug tools and machinery in to. These plugs should support quite high amperages. Could be very valuable to someone working here and there and on-site.�
1/1/2015
guest Thanks for sorting me on space, for some reason I was thinking there was less wasted space under the truck bed... but I guess that isn't the case. So yeah, a Tesla Truck (maybe they could steal the "T" from Ford
I really do think they would destroy the market with a GOOD truck (and of course Tesla wouldn't make anything less than an awesome truck... he he!)
So if you are worried about them finding something they could sell to push them into "millions of cars"... Look no further than a truck option. Although they might not need a truck to hit "millions" it would certainly guarantee them that level.�
1/1/2015
guest I am going to guess they will be spending a significant amount of time sorting out Elon's comments from yesterday on the earnings call.�
1/1/2015
guest If Model 3 doesn't force their hands, then a truck certainly would. I think the Model 3 will be enough since we're at least now hearing talk from others about how they'll also create the unicorn by 2017/18. But if they don't back their talk up with real product, a compelling truck will destroy them. Either way, time is very quickly running out for them to decide to commit.�
1/1/2015
guest I'm not at all worried about the no GAAP profitability comment. The lack of worry arises from several beliefs / assumptions I have about Tesla:
- The lack of GAAP profit is due to heavy investment by Tesla in the business. Supercharger buildout, manufacturing lines, battery factory, R&D. Tesla has the option to slow any of those expenditures at the expense of future growth. More strongly - if Tesla was saying GAAP profitability next year, I would be worried as it would indicate that Tesla is no longer seeing places to deploy capital for outrageous return.
- GAAP accounting has an important role to play in measuring and reporting any businesses progress. But it is only A way, not THE way, and there are specific areas where the non-GAAP accounting Tesla also reports is a better (and worse) description of the business. Namely, treating vehicles with the buyback guarantee as lease accounting - that is extraordinarily conservative. For me, TOO conservative (and I like conservative accounting choices) as I feel it misleads regarding Tesla's actual financial position and business success. In the other direction I would like to see employee stock expense included as that is a real expense to the business owners, even if it isn't being paid out in US currency (it's being paid out in Tesla currency - stock).
For the concerns you list, I would keep a closer eye on the cash flow statement quarter to quarter, and whether Tesla's on hand cash is shrinking and on a path to running out, whether it's growing (Tesla can hold too much cash and miss out on investing opportunities), or whether it's flattish (arguably, flattish cash is functionally a decreasing cash balance as Tesla is managing a larger and larger number of in-process work/cars, and thus needs a larger and larger amount of money to finance that work.�
1/1/2015
guest Model 3 is the key to Tesla's success, particularly in international markets. There is little demand outside the U.S. for a "truck". Model 3 will satisfy a wide international sales base.�
1/1/2015
guest Yup, anyone can make an electric compliance car, but I've never heard of a compliance truck, at least not an electric one. So in a way the Model 3 moves into a product space where compliance cars too easily reside. Basically right now many consumers would not know what the difference there will be between the Chevy Bolt and Model 3. Of course, I expect alot more from the Model 3, but I'm already a Tesla fan. So for right now, GM can parade their Bolt and imagine that it could be a real Tesla killer.
By comparison, suppose Tesla comes out with something like an F-150, but with almost twice the HP, say 800. It looks go, tows like a dream, rugged, and even has electrical outlets so you don't have to lug around a gas generator to run your power tools. Moreover you've got a solid Supercharging network and batter swap-stations to support long hauls. So how does a GM or a Ford make a Tesla killer in this product space? They can't just make a little compliance truck. It just won't be taken seriously. Of course, they can try to push hybrid trucks, but in a cheap gas environment I dont think those would sell. So they've got to compete with gas and diesel truck, but they cant match the performance. So ultimately they compete based on price and appeals to traditional values. This is why Tesla should compete on the high performance end of the segment. It forces competitors to compete on price, which crushes their profit margins. Meanwhile, Tesla enjoys a pretty high margin that is uncontested by electric trucks. After Tesla soaks up the cream in the high HP truck market, it proceeds with a smaller pick up.
Actually, I would be delighted if Tesla were secretly working on this and surprised us all with a truck launch prior to Model 3, late 2016 or 2017. Are they capable of keeping such a secret?�
1/1/2015
guest That would be...I can't even come up with a word that accurately describes what that scenario would do to that segment of the auto industry. I might actually die from giddiness if that happened, but alas, less than zero chance, imo. It's just not how the Secret Master Plan is laid out. We want the whole world to electrify asap, not just hunters, construction workers, Duck Dynasty fans, and me (always have loved me a nice pick up), so gotta go with the Model 3 first.
The reason why an electric truck would push them over the cliff is because of how popular pick ups are in North America. It's a huge profit segment. But the Model 3 needs to come first because it hits all players around the world, not just the boys and girls 'here'. Tesla is trying to spur on the competition, not wipe them out.�
1/1/2015
guest I haven't been on here in awhile, but I wanted to weigh in on this comment.
Musk has stated on several occasions (but not recently), that they are basically managing Tesla to be cash flow neutral. That is the reason for emphasizing the Non-GAAP results. The Non-GAAP is closer to cash flow than GAAP results, because of lease accounting, depreciation, etc.
Since those statements, Tesla loaded up with $2 billion in cash for the GigaFactory. We should expect Tesla to burn an extra $2 billion over the next few years, putting that money to work.
Tesla's core growth is based on gross margins from S/X sales. If they fail to meet their sales goes, growth will slow. If they keep their current pace, growth will follow. But every dollar generated is going back into growth. Musk estimating GAAP profit at volume levels of Model 3 only means, he doesn't see a sustainable way to grow with that level of GM.�
1/1/2015
guest It would be interesting to look at first 15 years of net income vs. revenues for various recent major tech start-ups. Does anyone have such a graph? Quick data for Google: Founded 1998, barely positive profits 2002-2003, IPO 2004 and $400mil NI, 2013 $12.9bil NI on $55bil total revenues. Tesla was founded in 2003.�
1/1/2015
guest Elon has already said on a few occasions that a truck is the likely target after the Model 3, for the very reasons you are pointing out. It's unclear if a new Roadster might get snuck in before a truck, but as far a high volume product, truck is the only product I've heard Elon discuss.�
1/1/2015
guest Actually, a few years back there were at least two: http://en.wikipedia.org/wiki/Chevrolet_S-10_EV http://en.wikipedia.org/wiki/Ford_Ranger_EV�
1/1/2015
guest Indeed (well everything but the last sentence, I still think they will be growing product sales at these high margins in 2020).�
1/1/2015
guest I hear you. I'm not interested in anything delaying Model 3. 2018 will be late enough. I wish it could be bumped up sooner.
But playing fantasy Musk, if there was a way to slip the development in ahead of Model 3 without delaying the Model 3, I'd make it happen. But this is just a fantasy.
Alternatively, if there was some extenuating circumstance that somehow motivates a delay in Model 3 but would not be an obstacle for a Truck, then a change of order may be the sensible response. But it is hard to envision what kind of circumstance would force this. Suppose gas was so cheap that a $35k M3 just can't be compelling enough, but people are willing to buy a high end truck at a premium regardless the price of gas. I don't believe that would actually be possible. Or suppose battery supplies remain so constrained that it makes more sense to to sell 100k trucks with 100 kWh packs for a gross profit of $30k per truck than 200k M3 cars with 50 kWh packs for a gross profit of $10k per car. This hinges on being constrained to a 10 GWh supply, but if the the gigafactory proceeds as planned, Tesla will not be so constrained. Indeed the situation could be the opposite, where you have excess capacity that you want to utilize quickly. So you might find it easier to sell 400k M3s than to sell 100k trucks. So you prefer to utilize 20GWh of capacity and gross $4B than to utilize only 10 GWh and gross $3B. Of course, there may be a stationary storage maket or some other market for the extra 10 GWh. So if you could gross $1B from that, you make out the same either way. Come to think of it, if you have to sell 4x as many Model 3 to make more profit than on a truck, why would you want to make the Model 3? Hmm. I seem to have lost my way. Maybe someone can set me straight on this. This also goes to the question of why is Tesla delaying the Model 3 so it can launch the Model X. Help me.�
1/1/2015
guest In the last sentence I meant that he doesn't see a way to spend money as fast as they print it in 2020. That is the only way they would end up with profit on the bottom line.
I don't see him slowing growth ever. The next CEO might slow growth and squeeze for returns. That is when they turn into an Apple situation.�
1/1/2015
guest Well, I'll be... about 2000 of them.�
1/1/2015
guest Okay, jhm, listen up buddy! :biggrin: Model 3 depends on the Gigafactory for its battery supply. As fast as that dang factory is going up, it just can't be done any sooner than already reasonably planned. As well, we need that additional few years time for battery chemistry et al improvements. As well, the Model X profits are going to help pay for continued SuperCharger, gallery, store, service center, employee growth etc... That my friend is why the X comes next.
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Bingo! And you're the first person I've seen to realize it that way.�
1/1/2015
guest Good comparison, the real question is when should Tesla start paying a dividend or repurchasing shares. The answer is when when earnings are better reinvested by shareholde than redeployed in growing Tesla. So long as shareholders believe Tesla can get a better return on investment than other nonTesla investments, they will want tesla to reinvest earnings and cash flow. Moreover, they will welcome capital raises on high value projects like the gigafactory. So of course a company can grow long term on negative earnings and negative cash flow, they simply need to take in more capital and deploy that on investments with high enough return that shareholders are satified the growth.
So currently Tesla is throwing a lot of cash into like R&D for Model X, stores, service centers and Superchargers, the gigafactory and upgrades to the Fremont factory. If you believe those investments will payoff better than most anything else you might invest in, then you want to own Tesla stock, and you want Tesla to pour a lot of cash into this even if that leads to a GAAP loss or requires more capital (negative cash flow). If you believe you can get a better or safer return somewhere else, then take your investment dollars somewhere else. You have to ask yourself, is Tesla pouring cash into things I would want to invest in directly? For me the answer is yes. If you think, Tesla is spending money on the wrong things or things that won't pay off long run, then invest somewhere else. You might also want to clarify for yourself which items you think Tesla may be wasting money on. Too many Superchargers? Too many upgrades to Fremont plant? Gigafactory too big or costs too much? Honestly, I cannot think of a single area where I think Tesla is spending too much money.
There will come a time, however, when there won't be so much low hanging fruit to gather or bold investments to make. I think that time comes after electric vehicles dominate the new car market. Right now, Tesla has a huge opportunity to take marketshare from ICE vehicles, and current hybrids and EVs are not that great either. But the big opportunity is replacing ICE. The faster Tesla grows now, the more market share it will capture and hold for a long time. Any slow up on growth will cost Tesla longterm market share. But eventually electrics come to dominate the new car market. As that happens, there are fewer easy converts from ICE to Tesla to be had and it is harder to convert from other advanced EV makers to Tesla. So the rate at which Tesla is able to capture marketshare declines over time. It slows down noticeably as electrics come into dominance. So it should be conventionally profitable by that time. But the time electrics have about 80% of the new car market, it may be time for stock repurchases and dividends. I see this as 15 to 20 years away. We should not be too eager for that day to come. Rather we should focus on market share. By the time Tesla pays out dividends will it have 1% market share? 3%? 10%? 25%? The size of my dividends in retirement will depend a lot on how much share Tesla is able to capture over the next 15 years. Do I want them to slow down and let opportunity pass by? Not for a minute.
Growth --> Market Share --> Dividends
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That's right. The gigafactory must come first. If I only had a brain...
I don't think new battery chemistry is a requirement for Model 3, but it would be nice.
So if Tesla had the engineering and design bandwidth to launch a truck by 2017H1 and Model 3 by 2018, ...�
1/1/2015
guest Dividends don't matter.......penny for penny dividends reduce share prices and are more heavily taxed.�
1/1/2015
guest I've been saying it to my friends ever since I invested in TSLA: if Tesla wasn't investing every cent they make into themselves I would have never bought any shares. They could have decided to reap the profits of Model S and remain a producer of a single, limited production luxury vehicle mainly sold in California, richer EU countries and to wealthy Chinese. That's a valid business model - but not one I'm interested in.
Don't be fouled by what we are seeing right now. The S and the X, as amazing as they are, these are a means to an end. As said above, they bankroll the Supercharger network, service centers/showrooms and the Factories (battery + vehicle). They pave the way to the full assult on the industry.
In many ways, if Elon & co keep executing, this war is already won, except many don't know it yet. No matter what GM or Nissan or even BMW announces, once the Gigafactory is up and running and the 3 goes into production, Tesla will have:
- an unbeatable price advantage for batteries making it impossible for anyone else to catch them on price and margins. Even the players who realize this right now are already late as LG pr Samsung have not started building out capacities any any volume close to the GF. So Tesla will have an advantage for 3-5 years
- range advantage: if the 20% weight gain is true for the X pack, it means they could already bump up range with more cells if they wanted to. Come 2017, they can easily wait for others to bring 200-300 mile cars to the market and then 1 day later introduce the 400 or 500 mile Tesla options. "Dear fellow car manufacturers, 2012 called and wants its battery pack back!"
- a free, global Supercharger network of maybe 600-1000 locations with 2-4x the speed of anyone else's
- this amazing larger than life brand recognition and halo effect of the S and X that translates to millions if not billions in free advertising. None but the biggest tech companies get this free media attention.
- years of production and logistics experience to makw up for their inexpefiencw in the industry
- their own retail/service network throught the globe, cutting out the middleman, increasing profits (how does GM compete with that when their prices have to pay the dealers too?)
Game over.�
1/1/2015
guest Great posts, jhm and mrdoubleb. Thank you.
And add my name to those who feel more confident in Tesla's long-term prospects after Elon's latest remarks. The single biggest one was his commitment to stay with Tesla for life in tech-architect role. That's his clearest statement of long-term role. If you took today's Apple and added 20 more years of Steve Jobs product guidance, do you think that would possibly add further value? That's what we just got, health and Mars permitting!
P.S. 3m cars sold at $40k average price = $120 billion annual sales. If Tesla is still growing and creating innovative products, and has good gross margins, and has some kind of network effect moat (eg from superchargers, battery manufacturing infratstructure, etc) you would imagine a minimum 3 x sales valuation. That would mean a stock price at least 10x today's. Short-term, who knows. Long-term this remains an incredibly great investment.�
1/1/2015
guest Given Elon's optimism bias, here's my prediction: Costs will only go down by 20%-25%, and they won't fire Elon.
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Dividends do matter. Companies in the mature stage, companies in declining industries, have two choices: issue dividends, or set fire to their profits (either by having execs steal the money, or by wasting it on unproductive activities). I would still buy shares in an oil company which promised to spend $0 on exploration and spin out all its profits in dividends. The oil companies refuse to do this, though, so they're terrible investments -- they take their profits and set fire to them in worthless "exploration" projects.
Companies in the growth stage should never issue dividends.�
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