Why Tesla is going to dominate for the next 5yrs

[Jonathan]

Hello all.

I have a 2015 i3 REX, and waited in line for the tesla Pre-order.

I fully believe that at least 50% of the pre-orders will not follow through.

4 reasons.

1. Pre-ordered with the hype and just plain changed their mind or had buyers remorse.

2. Took too long and they went with another car, whether it be gas or electric. Current projections put deliveries from 3rd quarter 2017, all the way out to 2019/2020 for the final preorders to get their cars.

3. They no longer have the money for it when order time happens, or didn't realize how much it would be with additional options and taxes, etc...

4. This one is I believe the most important. They never thought about how they were going to charge it at home. As we probably all know, it can sometimes be a chore to get a fast charger installed. I fortunately already had a 100amp circuit run to its own breaker box in my garage, so it was easy. However, I would guess that a considerable amount of these people either have no garage, simply have a car port, or even worse, do not have the electrical capability at there house. Whether it be not enough power being delivered to the house, or it is already all used up with electric stove, water heater, etc...
Most probably believe they can just plug it into the wall. Per the Tesla website they can get at best 4 miles per hour of charge from a 15amp 110v outlet. This means over 53 hours of charge time from 0 to full with 215 mile range.
It can cost 1000s for an electrician to install a fast charger.

I have read a considerable amount of articles on the new tesla and I have not read any of them that mentioned charging at home. If 50% of the people do not purchase that would be, as of right now, about $140,000,000 in refunds...

Thoughts? Is my 50% estimate too high?

 

[freeewilly]

Model 3 is just half of the story, Tesla's mission is accelerate the advent of sustainable energy. The only way Tesla can dominate for the next 5 years is the completion and full production of Gigafactory. Gigafactory can produce more battery than the world combined today.

Without the Gigafactory to bring down the cost of the battery, Model 3 won't generate enough profit for Tesla.

 

[OWG]

While I agree with you that probably 50% of the current reservations have the potential to drop out, I expect that as the official date approaches, that the open reservation slots will fill in and then some.

Other comments have been quick to point out that while Tesla are busy readying this car for production, other manufacturer's will have models out and available and just as compelling. I would counter that by stating that the model 3 will likely also undergo specification changes leading up to the launch date. Assuming Tesla can keep the financial house in order, I have every reason to believe that the hype in this car will only increase as the production availability date draws nearer and additional production features/specs get finalized. Don't be surprised to see the battery capacity/range increase before launch.

 

[jadnashuanh]

FWIW, producing the batteries in large quantities doesn't save huge amounts. It does help in that they won't have a middle-man to pay, but the overall savings from buying elsewhere is not as great as some people believe it will be. Second, and maybe as big or bigger issue is that lithium and some of the other materials needed to produce those batteries isn't available everywhere, and if the supply starts to get squeezed, much of that savings may evaporate. Third, production of batteries creates a fair quantity of toxic waste, and that could become more of an issue, especially if created on a large scale like at that huge factory.

It will be interesting to see how this all plays out. Unless the CAFE rules in the US and Europe change (not likely), you will have to see more and more hybrid and EV vehicles produced. The infrastructure really doesn't exist to make a mass changeover to EV's, and it will take a concerted effort of all involved both government and private industry to make that a reality. There are rumblings, but the lead time is still pretty significant.

 

[kzod]

I can't imagine a 50% drop in reservations. I suspect that no matter how long any of us wait for a Model 3, it will far exceed anything else on the market. However, I still say that it's silly and unfair to compare it to current cars or soon to be released models like this summer's refreshed i3. The Tesla is a LONG way from becoming reality and could be longer still. I don't hold much hope of actually owning one before 2019, but I also can't imagine anything I'd rather own by then too. Fast, roomy, and AWD make it a perfect combo for Canada. Just hope that trunk opening is big enough for my kids goalie hockey bag.

 

[jadnashuanh]

If you want AWD, you're not going to be looking at the base price on a Tesla model 3! Just like any EV, cold temperatures create a fairly significant hit on actual range, so depending on where in Canada, you may also want an upgraded battery pack, again, which makes things pricier. While they say 'reasonably well equipped' at the base price...that's one person's opinion, which may or may not conform to what you're interested in. The actual out the door price could be very significantly higher, which puts it into competition with potentially other things. Those actual numbers are unlikely to be available for probably close to a year yet. I really appreciate the CFRP, aluminum, and plastic on the i3...never have to worry about rust. I'd expect their next entry into EV's to be similar construction, and with the weight savings, a better range or smaller battery for the same range. By 2019, we should either be able to buy it, or at least know a fair amount about what it will do. And, there should be other entries in this category. Actually being able to buy a Bolt near the end of this year could be significant, too, in whatever happens with the Tesla.

 

[kzod]

It will definitely be more than $35! Personally, I don't know if/when they will ever build any that cheap. Musk himself has said that he expects most people to option it out at around $42k, which may very well be what it costs to add dual motors and the autopilot based on early numbers. With rebates that should make a very nice alternative to most competing sport sedans. But, that is a long way off, and hopefully the very idea of it will get BMW to bring out some remarkable upgrades. I suspect we'll get a good sense of that in a couple of months when they release prices on the new i3. If they are charging a premium for the extra mileage I'd say it's game over for them. But if they hold the price it will be an extremely compelling option.

As far as winter's effect on the battery that is always top of mind. Even in the summer the i3 is cutting it too close for me. Although my biggest demand of the car would be in the summer going to my golf course which should be @ 60 miles round trip. I'm worried that with the highway driving and possible side trips that would cut it close. How far can you guys go typically on the highway before it getting low?

 

[Boatguy]

FWIW, while BMW doesn't do s/w updates that readily on their other cars, at least so far on the i3, they have offered s/w updates and, as far as I know, there are no differences in features on a 2014 model verses 2016, assuming the hardware is compatible. There was an initial issue about unlocking the charge plug on the earlier production models, but they figured a way around that with the existing hardware on the next update. One big difference between Tesla and BMW is how the s/w updates are applied. Tesla does the vast majority (all?) of them OTA, while BMW requires a trip to the dealer, so they tend to get bundled into larger sets verses the (?) incremental ones that Tesla does. I think I'd rather know an update was applied, rather than it showing up.

It really depends on where you live and drive whether the TEsla Supercharger network is useful to you...in my case, it's not...maybe coming, but then, I don't really like the look of the vehicle, either.

Tesla OTA updates can either be applied automatically, or only upon owner request. In either case the owner is alerted to the update.

The supercharger coverage is actually already quite good in your neighborhood (Nashua, NH?). There are superchargers (120kW) in Hooksett, Seabrook, Boston, Brattleboro, Worcester, Springfield, Albany, etc. If you include destination chargers (usually 20kW) there is excellent coverage.

 

[Boatguy]

But BMW has $47B of debt [...] Tesla has only $633M of debt

Hi Boatguy, thanks for the info. I'm not a financial buff, so I've got some trouble wrapping my head around it, and it's a little off-topic perhaps, but isn't it so that Tesla has ~2.5b debt and BMW ~85b, if the numbers of the Financial Times are anything to go by ? Is this real debt or just 'book-keeping' ?
Debt/equity seems to be on par for both firms though, around 2.2-2.5

Stevei3 - you are right! I read the wrong lines.

Looking only at long term debt, Tesla has $2B and BMW has $47B. Tesla is more leveraged with D/E of 2 whereas BMW looks like about 1.1.

That said, Tesla's equity is dramatically reduced by their losses thus far. This is very normal for a young company where the only thing that matters is cashflow. Today they announced a miss on their Q1 shipments, and the stock rose by 3.4%. Clearly there is a lot of momentum behind this company and I don't think they'll have any problem raising money to.

 

[Boatguy]

I can't imagine a 50% drop in reservations. I suspect that no matter how long any of us wait for a Model 3, it will far exceed anything else on the market. However, I still say that it's silly and unfair to compare it to current cars or soon to be released models like this summer's refreshed i3. The Tesla is a LONG way from becoming reality and could be longer still. I don't hold much hope of actually owning one before 2019, but I also can't imagine anything I'd rather own by then too. Fast, roomy, and AWD make it a perfect combo for Canada. Just hope that trunk opening is big enough for my kids goalie hockey bag.

- The Tesla factory produced about 500,000 cars per year long ago when it was run by GM (I toured it as a kid when it opened). There is more than sufficient factory capacity in Fremont. Financial analysts were amazed at the transformation in the factory during the last year (http://www.bloomberg.com/news/articles/2016-03-14/wall-street-tours-the-tesla-factory-and-loves-what-it-sees), I don't think Tesla is going to be entirely flat footed on producing Model 3's, not with another 18 months of prep time.

- Installing a charger at home is a one time cost of switching to an EV, no question about it. But it's a one time cost, not annual. Consider it an add-on to the cost of anyone's first EV.

- If the real cost of a Model 3 is more like $45K, it blows away a 2017 i3 at the same price point.

- I can't imagine a 50% decline in pre-orders, I think it is more likely you'll see a "secondary market" for those pre-orders with people paying $2,000 to buy a spot in line. And keep in mind those are global orders, not just US. Look at the Tesla supercharger map and you'll see very good coverage in Europe and surprisingly good coverage in China. There will certainly be some defection, but there will also be new people who become interested, especially after the Bolt has been on the road for 6-12 months and people realize there is no charging network to facilitate longer trips (see the OP).

- Chevrolet does not have the best reputation right now, they're still trying to get the 113 customers they killed, and hundreds more they maimed with an ignition switch, off the front pages. That is not going to happen soon, there are a lot of lawsuits still to be settled.

- VW/Audi/Porsche has also badly damaged their brand and those lawsuits are going to drag on for at least 4-5 years.

- It's taking BMW a full 3yrs to just increase the battery capacity in the i3, which really didn't involve much engineering by BMW, the new batteries just have higher density than the old ones. Yes, maybe there is an i5 in the wings, but the i5 will have to sell at the same price point as the current i3 in order to compete with the Model 3. And BMW's expertise in building a charging network has been limited to press releases, don't even think about driving your 200mi range i5 from SF to NY.

Tesla has it's work cut out for it, but they have consistently delivered a product that exceeds expectations. The autopilot is the latest example; while everyone was talking about autonomous cars, they shipped a working product that drives itself down the freeway today and instantly upgraded cars that had been shipped a year earlier. Take a test drive, you'll be amazed. My wife fired it right up to 85mph on a fairly busy freeway (with a 55mph speed limit) and it never flinched while she chatted with the salesman about whether he'd ever had someone get a speeding ticket while on a test drive!

Incumbent companies start to die when new entrants steal their growth. This is what Tesla is doing to the auto industry; they skimmed the cream with the Model S and X, now they are going to the whole milk segment with the Model 3, leaving Toyota, GM, Honda, etc with the 2% low fat low margin high volume business.

 

[jadnashuanh]

The supercharger coverage is actually already quite good in your neighborhood (Nashua, NH?). There are superchargers (120kW) in Hooksett, Seabrook, Boston, Brattleboro, Worcester, Springfield, Albany, etc. If you include destination chargers (usually 20kW) there is excellent coverage.

FWIW, all of those locations are outside of my normal travels...an 80-mile roundtrip to use one is kind of counterproductive for the closest one, but none near my ultimate destinations or spaced in a good location while getting there. THis is certainly a personal situation, but I'm not alone in this. It works well for some, but if they add the quarter million or more new TEslas over the next 2-3 years, it will still be a lot more hassle finding one with an open space than an open gas pump.

 

[Schnort]

That's pretty much ALL superchargers. They're useful to get from supercharger to supercharger (generally), and not so useful for daily charging.

 

[Boatguy]

That's pretty much ALL superchargers. They're useful to get from supercharger to supercharger (generally), and not so useful for daily charging.

Yes, they are not intended for daily charging any more than the ChargeNow CCS chargers are intended for daily charging of the i3. The assumption is that an EV owner will charge at home for daily "local" use.

Tesla superchargers, and destination chargers are to facilitate longer trips away from home. For example when I visit Yosemite next month, I could stop at the supercharger in Manteca, though I won't need to, and then I can charge at the destination charger in the park at Yosemite during my stay and to top up for my drive home.

When I go to Tahoe this summer, I'll charge for 10 minutes in Roseville, probably top up in Truckee, and then overnight 110v charging at the house I rent will take care of my local trips while I'm staying Tahoe. I'll fill up in Truckee when it's time to head home and be able to drive home without charging.

Keep in mind a supercharger adds about 5-6 miles of range per minute. Fifteen minutes on a supercharger provides the equivalent range of a full battery in an i3.

 

[psquare]

now they are going to the whole milk segment with the Model 3, leaving Toyota, GM, Honda, etc with the 2% low fat low margin high volume business.

Even 250,000 orders for a vehicle that's delivered in 2-3 years time is hardly a danger for companies producing millions of vehicles per year.

BMW's vision of EV driving - and the i3's mission - is very different to Tesla's. That's why I bought an i3 and didn't spend my kid's inheritance on a Model S. And after 1 year I have to say that the i3 has proved me right. We're saving £700 - £800 in fuel costs per year. A Tesla would have cost me twice as much for more or less the same saving. What's the point?

 

[Boatguy]

now they are going to the whole milk segment with the Model 3, leaving Toyota, GM, Honda, etc with the 2% low fat low margin high volume business.

Even 250,000 orders for a vehicle that's delivered in 2-3 years time is hardly a danger for companies producing millions of vehicles per year.

BMW's vision of EV driving - and the i3's mission - is very different to Tesla's. That's why I bought an i3 and didn't spend my kid's inheritance on a Model S. And after 1 year I have to say that the i3 has proved me right. We're saving £700 - £800 in fuel costs per year. A Tesla would have cost me twice as much for more or less the same saving. What's the point?

The point is that a Model 3 costs less than an i3 for a lot more car.

 

[SSi3]

now they are going to the whole milk segment with the Model 3, leaving Toyota, GM, Honda, etc with the 2% low fat low margin high volume business.

Even 250,000 orders for a vehicle that's delivered in 2-3 years time is hardly a danger for companies producing millions of vehicles per year.

BMW's vision of EV driving - and the i3's mission - is very different to Tesla's. That's why I bought an i3 and didn't spend my kid's inheritance on a Model S. And after 1 year I have to say that the i3 has proved me right. We're saving £700 - £800 in fuel costs per year. A Tesla would have cost me twice as much for more or less the same saving. What's the point?

The point is that a Model 3 costs less than an i3 for a lot more car.

Kind of hard to compare pricing of a current i3 to a car that is still 2 years away...

 

[I33t]

The point is that a Model 3 costs less than an i3 for a lot more car.

And the real point is that the Model 3 is more car than most people need.

It consumes more resources to build and it consumes more energy to run.

Where is the sustainability?

I was hoping the Model 3 would be the ideal and efficient commuter car for the masses. Sounds like we have to wait for the Model 4,5 or 6.

 

[alohart]

And the real point is that the Model 3 is more car than most people need.

It consumes more resources to build and it consumes more energy to run.

Where is the sustainability?

I was hoping the Model 3 would be the ideal and efficient commuter car for the masses. Sounds like we have to wait for the Model 4,5 or 6.

Totally agree! The surfeit of huge, heavy, inefficient pickup trucks and SUV's in the U.S. indicates that many in the U.S. buy far more vehicle than they need most of the time. They also buy far more power than they need. Musk knows that fast 0-60 mph acceleration and large size sells and that sustainability and efficiency don't. I will be surprised if Tesla ever makes a small, light, efficient car.

I hope that BMW continues with the philosophy used to design the i3. I would be happier if one of the manufacturers of less expensive and more reliable cars like Toyota or Honda would produce such a vehicle. I had great hopes when Honda built the original Insight (still have one), but Honda and Toyota don't seem particularly interested in building a small, efficient EV.

 

[electrons]

BMW's vision of EV driving - and the i3's mission - is very different to Tesla's. A Tesla would have cost me twice as much for more or less the same saving. What's the point?

The point is that a Model 3 costs less than an i3 for a lot more car.

Reading all the discussion above, it occurs to me its all a matter of what kind of car you want, and the categories are:

1. Most Advanced Car: BMW i3: OK, the range is low right now, but by the time the Model3 comes out (if ever) the i3 may have comparable range. Remember, the i3 uses an advanced carbon composite (CFRP) body shell to cut weight. Thats exclusive in its class or anywhere near its class. Maybe its because I'm an engineer and actually think about the reality of F=M*A, but the i3 is the fastest BMW 0-30 mph for a reason: mass savings, which also increases energy economy to the highest level. The Model3 is still a metal car, far less advanced in 2019. And the Model3 is only about as roomy as a Mazda3 or Ford Focus, not a big car at all.

2. Status Symbol Car: Tesla Model 3: The M3 will be a very decent car, but its really a status symbol when you can buy a more advanced car instead (a longer range i3 3 years from now) for near the same bucks ($40k vs. $35k). Model3 styling is very attractive, and its got the "cool hipster" factor big-time. By the time the M3 is out, other cars will have that range too.

3. Value Car: Nissan Leaf or Ford Focus Electric (FFE): I paid just $15k cash for a new '16 FFE recently, and although I really wanted an i3 with no rex, I would have had to pay $10k more (after all fed+state rebates) to get a base i3.

Nothing wrong with wanting a vehicle in any of the 3 categories. Thats why we have the choices.

 

[Schnort]

3. Value Car: Nissan Leaf or Ford Focus Electric (FFE): I paid just $15k cash for a new '16 FFE recently, and although I really wanted an i3 with no rex, I would have had to pay $10k more (after all fed+state rebates) to get a base i3.

It's more than $25K for a base i3 new, unless your state is giving you some truly impressive incentives.