Elon Musk: Always A Douche

[Grey Fox]

The passenger car industry is, I would say, both forward looking and not at the same time.

In this thread, most of our doom saying about Tesla is how they've seemed to have stop innovating and that a good chunk of their revenue was from other car manufacturers buying carbon/emissions credits from them. Credits that other car manufacturers need less and less every year. All bad things on the long term.

On the short term side, they are still the only electric car manufacturer actually filling orders in a timely manner. (Unless you want a Ford F-150 lightning. Ford has stock of that 100k$ truck)

[The Minsky Moment]

If the most important things for an EV are price, performance, and range, Tesla is still really well positioned. The cars drive well, their ranges are upper tier, and their pricing has become more reasonable.

But 2 years ago they were really the only serious game in town.  Now there is real competition, and that competition is increasing the tempo of iterative releases and upgrades, while Tesla seems to be slowing theirs. 

Tesla can still thrive with lower market share of a much bigger EV market, but their price premiums and thus margins will take a hit.  And that is going to be problem because the stock price is not consistent with any margin erosion.

[crazy canuck]

Report today that Ford and Tesla are getting into a price war.

That is something Ford has the resources to outlast.

[Josquius]

Report today that Ford and Tesla are getting into a price war.

That is something Ford has the resources to outlast.

Truly the battle of build quality specialists

[Grey Fox]

What's Ford's competing with against the model 3?

[crazy canuck]

What's Ford's competing with against the model 3?

The E version of the Mustang, which was just reduced in price.

[Zanza]

If the most important things for an EV are price, performance, and range, Tesla is still really well positioned. The cars drive well, their ranges are upper tier, and their pricing has become more reasonable.

But 2 years ago they were really the only serious game in town.  Now there is real competition, and that competition is increasing the tempo of iterative releases and upgrades, while Tesla seems to be slowing theirs. 

Tesla can still thrive with lower market share of a much bigger EV market, but their price premiums and thus margins will take a hit.  And that is going to be problem because the stock price is not consistent with any margin erosion.

They have the stated ambition to sell 15 million cars by 2030 (about 20% global car market), which is not realistically achievable. And their next project "Redwood" is assumed to be a $25k entry level car.

Competition with the Chinese in that mass market segment will be brutal. Will be tough to earn significant margins there. Tesla have said that manufacturing will be revolutionary ("giga casting", "workers sleeping on the line") though, so let's see if they can pull it off.

One interesting thing about the Chinese challengers is that they seem to have an innovation cycle of about 36 months for a new model. Traditional car companies are closer to 60 months. So far, Tesla seems to be closer to their traditional competition rather than their challengers here. Haven't heard any signs yet that they are reducing that.

[Zanza]

Report today that Ford and Tesla are getting into a price war.

That is something Ford has the resources to outlast.

Ford's Q4/23 figures do not sound like they have more stamina for a price war than Tesla. Or maybe I am missing why you think they could outlast Tesla?

[Grey Fox]

What's Ford's competing with against the model 3?

The E version of the Mustang, which was just reduced in price.

Interesting choice. 

[crazy canuck]

Report today that Ford and Tesla are getting into a price war.

That is something Ford has the resources to outlast.

Ford's Q4/23 figures do not sound like they have more stamina for a price war than Tesla. Or maybe I am missing why you think they could outlast Tesla?

It's simple really, Ford has higher margin vehicles that drive its profits. Tesla has only this line of vehicles.

[Tamas]

BTW Chinese EVs don't seem cheap at all.

[OttoVonBismarck]

Tesla can still thrive with lower market share of a much bigger EV market, but their price premiums and thus margins will take a hit.  And that is going to be problem because the stock price is not consistent with any margin erosion.

Tesla is a success story as a small car company that has been able to attain scale and market share and become a larger car company. Tesla is not a success story as a disruptive tech company that is going to dominate a whole new industry akin to Microsoft and personal computing, Google and search, Meta and social media, Apple and mobile phones, Amazon and online retail etc. And the problem is the people who have been speculating on Tesla stock for 10 years have largely done so with the belief Tesla was going to be akin to the latter story, not the story of "successful startup car company that becomes a successful player in the car manufacturing market."

Tesla has the first mover advantage all of those big tech incumbents I mentioned do, but the industry Tesla is in doesn't reward the first movers with the monopolistic power that tech did with those respective technologies.

There is nothing intrinsically bad about being a car manufacturer, and it is a market with a lot of baked in incumbency advantage and very difficult for new players to break into (basically none have since the first half of the 20th century when the car companies started consolidating, with the exception of state backed enterprises.)  So however they achieved it, being able to break into the market is a big accomplishment.

But if your share price is priced like something very different from that, there can be some pain when those realities are reconciled.

[Tamas]

I think Tesla has been the "invest in Elon Musk" stock at least since the pandemic market craziness and will perform accordingly (i.e. not well).

[Zanza]

BTW Chinese EVs don't seem cheap at all.

US and EU homologation and cost of sales  makes them much more expensive than in their home market.

[Gups]

BTW Chinese EVs don't seem cheap at all.

They are much cheaper than other EVs of similar size. MG4 and MG5 are a good 20% cheaper than their European, American or Japanese equivalents. Only possible exception is the Dacia Spring but that's quite a bit smaller than he MG4 and has only half its range.