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Why today's leading car manufacturers should rejoice Tesla



Cars

Published on June 30, 2019 |

by Paul Fosse

30. June 2019 av Paul Fosse


The purpose of this article is to challenge the story that is often heard on regular news sites that Tesla has sold a few cars to a few people who just care about the climate, but that Tesla does not know what it does. The other part of it is often that Tesla's leader Elon Musk is a big scam, someone who can get his faithful excited, but never lives on his promises.

Before I tell you my perspective on Tesla, I'll give you a certain perspective that I got from working for IBM for 13 years in the 80s and 90s and seeing some of their mistakes. The culture of IBM can be similar to the culture of the best car manufacturers in the world (Toyota, VW, GM, etc.). If you're not interested in my time at IBM, skip the next section.

When I started with IBM as a 20-year-old software engineer at the height of IBM's dominance in the computer industry, it was quite a cultural shot. I was very impressed with the company's ability to recruit the best and clearest minds from colleges around the country. I was less impressed with their ability to effectively use that army of talent. I found that IBM had been handicapped by its previous success. The company had been through a long and painful struggle with antitrust regulators who claimed they had a monopoly on the computer market. This fight and IBM's incredible success over the past 75 years meant that the company's attitude was very conservative. It meant that leaders thought it was important not to be too aggressive and their main concern was that if they broke the competition, they would once again be back in court. This led them to pull their punches and urged their young engineers not to aim at the stars – just following the IBM road and not killing the goose that made the golden eggs. Even when they made brilliant decisions like the decision to set up a skunkworks project in Florida to develop the IBM PC, their lack of vision caused them to make serious mistakes, such as negotiating a very poor contract with Microsoft as a lot. they sell their software to clone manufacturers and capture most of the profits from the PC industry. The IBM administration had grown up in an environment where hardware from the mainframe had been very profitable, and they could not imagine that personal computers would be very successful, and even if they were, they could not imagine that the software of the machines would be more than a small fraction of your hardware sales or profits.

Image © Kyle Field, CleanTechnica (free to use anywhere with credit)

With this back to the automotive industry, the attitude Galileo Russell recently expressed after spending time in Detroit and talked to a spacious car industry. Existing producers do not even realize the threat they face.

The economy of driving electric cars is already dramatically better than gas cars, but there are two issues that are problematic – the batteries are expensive and charging time and availability have been less than good. Tesla solves both of these issues while reading this.

To get hold of what Tesla has done in electric cars, you have to commit to dedicated electric vehicles. The design of cars that support both gasoline and electric power lines will not be as good as cars designed from the ground up to be electric.

The other problem that car manufacturers have to fight with is that they have invested a lot of money in engines and transfers and outsourced their electric motor, battery and software needs. They have to figure out how to reduce the investment in designing all these gas and diesel engines, because there will not be much demand for new gasoline or diesel cars, and they have to reduce the significant cost while investing in making good electric motors. converters, batteries, battery models and vehicle software. They are largely different skills, and companies need to decide how much retraining is needed for replacement of workers.

At IBM, I saw a large program of trying to retrain factory workers, where the jobs were replaced by factory automation to software engineers. They trained some great engineers who continued to do good things, but they also had many mistakes. Overall, I think the program was considered a mistake. The most important thing is for them to start the transition before it's too late. They will undoubtedly have to hire many new people to bring in the necessary knowledge and skills, and they must begin to transfer the people who design engines and transfers either to other tasks or out of the company.

For many years, the formula has been, developing a new engine that is a bit cleaner, a little more powerful, and a little more efficient than our latest generation powertrain, and put it in a car or SUV that has new styling and calls it "All New . " That has worked well for 40 years, but compared to a Tesla that is dramatically more powerful, 4 times as efficient and safer than their "All New" cars and SUVs, they will have great difficulty selling the vehicles without giving huge incentives to Make them lose money on each vehicle.

Why has Tesla not caused much trouble for them yet? Read on and you will see that Tesla has in every market it is entered. They have just not come to the small crossover and pickup markets that the industry has drawn to. As Tesla moves into these markets over the next two years, the pain it inflicted on companies such as Toyota and Ford, which apparently are not prepared for electric motors in their most profitable market segments, will be significant.

Tesla's bold claim

] Tesla has bold claims about every vehicle it has announced. Things like cost, efficiency, volume. These bold claims have been deduced as impossible to meet by their competitors. In all cases, Tesla has delivered its claims, but not always on time. The result is that it has consistently taken a top spot in the sales in the markets where it is listed, leaving competitors to fight for the clippings.

Zach's recent article on Elon's production estimate in 2014 on 2020 was shocking to me. By the end of 2013, 10K had produced model S for 18 months and had delivered nearly 57,000 vehicles. Elon made a very bold statement that he was comfortable that Tesla would "be able to achieve at least half a million cars a year by 2020." Tesla's current guide for 2019 is that it will deliver 360,000 to 400,000 cars. In 2020, this will have a large increase in production capacity, activated by Gigafactory 3 in China. Demand should be significantly improved by three main factors:

  1. The much lower priced locally produced Model 3 which sells into the world's largest car market, which quickly turns into electric cars.
  2. Volume production of model Y will start in 2020.
  3. All model 3s delivered in 2017, 2018 and 2019 will be shown to millions of friends around the world, generating another wave of demand from people who never considered one Tesla before.

My prediction from an article 3 months ago was that volumes by 2020 would increase 78% from the previous year to 800,000 cars. It is optimistic, but also a weakening of the growth rate Tesla achieved last year (143%) and my expectations for this year (80%). For Elon to be on the verge of exceeding a very bold assumption of increasing Tesla's sales by more than a factor of ten over 5 years, is very impressive and does a lot to discredit their critics. Tesla's critics have been horribly inaccurate. If you want a good laugh, just read some of these articles that highlight their misprints and claims.

Abbreviated story about Tesla

In 2012, Tesla surprised everyone with the award-winning and featured topping Model S, which moved to the top of its market and lived there.

In 2015, Tesla came out with far too much fancy Model X with falcon wing doors plus automatic opening and closing of exterior doors, and it has largely stayed close to the top of the market.

In 2017, Tesla came out with its first mass market car, and after some difficulties ramping production, it went to the top of the US market for entry-level luxury and lived there, and more recently saw the same success in several European countries. In addition, it encouraged hundreds of thousands of people who have never spent $ 40,000 on a car to make "Tesla stretch" and buy model 3.

Each automaker has either abandoned the sedan market (Chrysler, Ford, GM) or de-emphasized it strongly. (all other). They have flown to the crossover, SUV and pickup truck markets for most sales and entire profits.

Tesla has announced that Model Y will enter volume production next year. It has been let by some critics like just a tall model 3 and not spacious enough. The critics have not been in it. They will be shocked at how, like a Tardis, it's bigger inside. I traveled in model Y on March 14 during the disclosure event. The only pictures of the third row I've seen are published in my article the next day. Everyone thinks that seats in 3rd row will be for toddlers, but in another article I showed that there is an optical illusion that model Y is small and slim – in fact, it is quite large and tall. When the reviews go out and people realize they can own a great, good handling, fast transition that costs less to own than a dated, slow and poorly managed competitor, their sales will slow while people are waiting to get their model year. We can also assume that model Y will receive the top NHTSA security score for any crossover ever.

Image credits: Ford for top photo, Porsche for lower image.

If you can replace a Ford F-150 (which costs about $ 50,000) and a Porsche 911 (starting at $ 91,100 and going to triple that price) with a Tesla pickup truck starting under $ 49,000, many people will Find it at a great value, especially when fuel and maintenance costs are less than a quarter of these two vehicles. There will be some who are beaten by Tesla's cyberpunk styling, but with sales of sales expected to exceed 3 million units by 2020 before Tesla Pickup is released, Tesla should not have trouble hitting up to one million units in year. It has a story of joining the top-selling position when it enters markets, and expanding the size of the market segments it enters while it destroys the sales of its competitors' products.

Conclusion

If you can see in the chart above, Tesla has been able to increase sales with a 107% compound rate over the past 11 years. This is not uncommon for startup, but when you reach tens of billions of dollars, even for leading companies like Apple and Amazon, growth rates have slowed dramatically. I have tried to show how in this article some of the reasons why Tesla continues to grow with prices never before seen in a company the size of Tesla.

Fortunately for Tesla's car competitors, Tesla will not have the opportunity to replace their sales for many years, but since the last time the industry had a slowdown in sales, it triggered a series of bankruptcies, the industry should not ignore the threat of Tesla moving Immediately to the top of a market segment that it has never participated in before, takes most of the profits and causes many consumers to stop buying their competitors' products until they can get a Tesla.

The biggest problem the automotive industry has is that almost every review or trip of a Tesla end with a version of this quote: "The problem of running model 3, even for a short while, is that you will immediately own one. This is now the new car to turn on, electric, petrol or otherwise. "

Use my Tesla referral link to get 1,000 miles of free Supercharging on a Tesla Model S, Model X or Model 3, here is the link: Https://ts.la/paul92237 (but if someone else helped you more, please use their link instead of mine). Tags: Elon Musk, IBM, Tesla, Tesla Model 3, Tesla Model Y, TESLA PICKUP TRUCK, Tesla Sale


About the Author

Paul Fosse A software engineer for over 30 years, first developing EDI software, and then develop data storage systems. Along the way, I have also had the opportunity to start a software consulting firm and do portfolio management. In 2010 I took an interest in electric cars because gas became expensive. In 2015, I started reading CleanTechnica and took an interest in solar energy, mainly because it was a threat to my oil and gas investments. Follow me on Twitter @ atj721 Tesla investor. Tesla referral code: https://ts.la/paul92237




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