Electric Car Prediction - Whatdayathing???

[kdh]

Ajax, I wouldn't hold your breath waiting for a pickup anytime soon. Cash flow is bit strained from the lower margins associated with the Model 3. I imagine eyes are focused mostly on the Model Y.

I've changed my tune a bit on Tesla. I think Musk is crazy, especially with his self-driving proclamations, but it's amazing to me when I stop and think of how much they've accomplished in a challenging market.

I wouldn't be long the stock, but I think they'll find ways to survive.

[Jamie]

Interesting article in the WSJ on how the automakers who don't build their own batteries are having a tough time. It's behind a paywall, so here's the stuff I thought was interesting. Pretty clear that Tesla has a serious strategic advantage in building its own batteries.

SHANGHAI—A little-known Chinese company has become the world’s biggest maker of electric vehicle batteries.

Beijing engineered a scenario that didn’t give the world much choice.

China is by far the biggest EV market, and to boost its standing in the fast-growing industry, China began pressuring foreign auto makers to use locally-made batteries in the country several years ago. One company—Contemporary Amperex Technology Ltd., known as CATL—was the only shop capable of producing them at scale.

Auto makers weren’t pleased, but they fell in line. During a visit to CATL headquarters in 2017, three Daimler AG executives displayed their irritation shortly after the meeting started, recalled Jiang Lingfeng, then a CATL project manager who prepared a technical briefing for the visitors.

One Daimler executive cut off his briefing, said Mr. Jiang. “We’re not interested,” the executive said, according to Mr. Jiang. “The only reason we’re here is that we have no choice, so let’s just talk about the price.”

Article here

A typical Chinese non-tariff related barrier.

I can think of two or three companies (suppliers for packaging, non-api ingredients) that were taught by JNJ in China that now have bigger revenues than the JNJ sub that taught them.

[TheOffice]

Today VW starts production of its electrics! We could see them hear in a year.

[BeauV]

I know that the eng. team is working on the pickup and also on a $200k ultra-fast sports car. You'll see the Model-Y first, it's supposed to ship relatively soon. It's a smaller version of the Model-X SUV. I don't have any info on a ship date for anything other than the Model-Y, which is supposed to start late spring.

[TheOffice]

The spy shots of the Y really make it look like a shrunken X. Not a bad thing. I imagine the X's days are numbered given its complexity.

I hope the renderings of the pickup are wrong. A scaled down semi with a bed doesn't work for me.

Joel

[Steele]

It looks like Rivian will beat Tesla to the truck market. They apparently have alot of support from Ford and Amazon. It has polarizing styling. I like the features, but not the price. It is a halo vehicle which makes sense for a start up, but I don't need a $70K pickup that can do 0-60 in 3 seconds. My Nissan Frontier is meeting my needs just fine, but when it is time to replace it I hope there are some downmarket midsized truck options.

[Ajax]

The Rivian caters to the "adventure" market. Not interested. This truck is not meant as a daily driver or hauler. Tesla claims that their truck will be at least as useful as an F-150.

I don't care how ugly it is, I care about its range, charge time, hauling capacity and service life. I don't even care if it's a crew cab.

[TheOffice]

The Rivian looks much better from the side! The front looks like a Yugo.

Amazon is buying thousands of Rivian vans to replace its current fleet.

if they follow the Tesla/Porsche/Polestar model, the first ones will be 'premium', with cheaper versions to follow. The first Polestar (Volvo) is going to be over 150k!

[Steele]

It is interesting that the current business model is to produce the most expensive product first, even if it must be sold at a loss and at very small volumes. This garners lots of hype and investment that then allows the product line to expand into options that the other 90% of us might be able to afford. Kind of opposite of the model T and VW bug.

Rich's point is well taken, but most trucks sold in the US are used far below their capacity, so I think Rivian's decision to target casual use and include features like 4 doors, extra covered storage, and a lux interior is spot on. I must admit I rarely use my pickup as a true hualer, but I do like it for mulch, bikes, kayaks, ski trips etc. A small cute ute would work almost as well, but you can't hose out the interior after a trip to the dump. I hope in the next few years a two door longer bed option becomes available since most mid-size 4 door trucks have a bed so short I could not even haul my muddy mountain bike with the tailgait up.

As to looks, it is pretty odd from the front. I suspect they went too far to create a unique brand identity. Appearence is very important in the light truck market and they will need to tone it down before they go mainstream.

[BeauV]

As to the business model for start-up car/truck companies: The go high end first makes perfect sense. Yes, Tesla and others lose money initially, but they lose a _LOT_LESS_ than if they tried to compete at the bottom of the market. Many very successful companies never leave the high end of the market. EG: Porsche and Ferarri. Keep in mind that Porsche came close to buying all of VW because they were so astoundingly profitable, and had an arrogant CEO.

The reason one starts at the top is that someone buying a $150,000 vehicle is NOT making a rational decision, they are making an emotional one. While this can be said for the low end too, the numbers are vastly different. When a 30something puts $1,000 into new bigger wheels for his truck, it's a big deal. When a rich person decides to choose the leather interior or some sort of stupid paint like the flat black for $12,000 it's really not a problem. The margin on the vehicle is MUCH higher at the high end.

The Exec VP of Product Development at Toyota was a good friend of mine way back 25 years ago. He said that they put their absolute best engineers on the Corolla because every penny counted and every extra mile of reliability would win that customer segment. The kids who were just out of school, they put on the Lexus line because you could screw up and still fix the car in the field, there was that much margin in the vehicle. It's exactly backward from the way most of us think.

[BeauV]

As to the _ACTUAL_ use of the F-150 pickups in the world. I've read someplace (Autoweek?) that only 12% of them EVER haul a load of dirt, rocks, etc... The other 88% are used as large commuter cars with an ability to tow stuff or just carry mountain bikes.

Rich, the number of folks who actually want a 2-door long-bed F-150 is tiny compared to what it used to be.

[Ajax]

As to the _ACTUAL_ use of the F-150 pickups in the world. I've read someplace (Autoweek?) that only 12% of them EVER haul a load of dirt, rocks, etc... The other 88% are used as large commuter cars with an ability to tow stuff or just carry mountain bikes.

Rich, the number of folks who actually want a 2-door long-bed F-150 is tiny compared to what it used to be.

Which is why the new Jeep Gladiator only comes in a crew cab. (I did see reader comments bitching about the lack of a standard cab, though.)

Hey, I won't skip the Tesla truck if it's a crew cab, I'm just saying that with the kids out of the house, it's not important to me. I won't use a "pickup truck" like someone on a Montana ranch would, but I would definitely haul junk, mulch, dirt, sails, tow my camper to Maryland's Eastern Shore and all sorts of light duty tasks.

[TheOffice]

Beau,

You are correct! The early adopters and those looking for the newest BSO (bright shiny object) will buy regardless of price. Then comes version 1.1, 2.0 etc. We all benefit from the early adopters buying what are essentially beta testers.

Got to have 4 doors if you have car seats and in-laws to take to Target!

And the wait is almost over - the Tesla pickup reveal is the 21st.

[Steele]

I am not interested in being a beta tester, and have never been a bleeding edge product consumer. That is why I will wait until more mainstream auto companies start coming out with electrics. I think the big companies have a lot more to loose if they don't do it right compared to tesla or rivian since they can generate good press based on being unique and interesting, often independent of their actual product (ie: the trials and tribulatioins of Musk). Ford is just Ford, they have sink or swim based mostly on their product line alone, not their social media standing.

I once talked to a Toyota manager about the time they were introducing the hybrid system in Lexus vehicles. I expressed concern about being one of the first purchasers of such an expensive car with still new tech. He pointed out that the cars were over engineered since the company understood that if there were early problems the whole concept could die. Indeed the hybrid Lexus vehicles had better reliability ratings than the standard versions.

[Olaf Hart]

As I understand it, the major international brands do not operate on cost plus pricing, they look at income over the total life of the vehicle.

Honda makes a loss on the first couple of million units, and after that their only cost is raw materials and limited labour costs with robot production lines, so they are all profit.

Pricing is done on price flexibility curves, not costs of production, so it is set at whatever it takes to move a specific volume in a specific market to get into the positive side of the income equation.

Domestic producers like Ford and GM, even in the US market, cant move the sorts of volumes needed to work this way, so they tend to set the market prices with a cost plus system, which makes it so much easier for the international producers as they can price their product competitively with the domestic producers.

There are no cars or trucks manufactured in Oz now, this system wiped out the industry, of course this was also helped by our small market size and high labour costs

[JoeP]

I bought my well used 1997 F-150 long bed extended cab pickup to tow my Cal 20, JY-14 and Boston Whaler with. I have also hauled large rocks and gravel, helped my kids and others move, and other similar loads but most of the time it sits parked except on weekends when I take it on errands or short trips once in a while to keep moisture out of the crank case and keep it rolling. It also serves as a spare car if one of our other vehicles is in the shop. I have thought of selling it but it is to nice to have around for those times when it is needed. I also share it with brothers, sisters and children when they need it. It was cheap to buy and is cheap to own, except for gas (small V8). I could never bring myself to buy a new truck because of the price these days and I expect this one will last a good while longer. I think my carbon footprint with this truck is fairly small because I don't use it very often. I would love to own an EV when their range gets better.

[LarryHoward]

Interesting article in the WSJ on how the automakers who don't build their own batteries are having a tough time. It's behind a paywall, so here's the stuff I thought was interesting. Pretty clear that Tesla has a serious strategic advantage in building its own batteries.

SHANGHAI—A little-known Chinese company has become the world’s biggest maker of electric vehicle batteries.

Beijing engineered a scenario that didn’t give the world much choice.

China is by far the biggest EV market, and to boost its standing in the fast-growing industry, China began pressuring foreign auto makers to use locally-made batteries in the country several years ago. One company—Contemporary Amperex Technology Ltd., known as CATL—was the only shop capable of producing them at scale.

Auto makers weren’t pleased, but they fell in line. During a visit to CATL headquarters in 2017, three Daimler AG executives displayed their irritation shortly after the meeting started, recalled Jiang Lingfeng, then a CATL project manager who prepared a technical briefing for the visitors.

One Daimler executive cut off his briefing, said Mr. Jiang. “We’re not interested,” the executive said, according to Mr. Jiang. “The only reason we’re here is that we have no choice, so let’s just talk about the price.”

Article here

A typical Chinese non-tariff related barrier.

I can think of two or three companies (suppliers for packaging, non-api ingredients) that were taught by JNJ in China that now have bigger revenues than the JNJ sub that taught them.

Tesla signed an agreement today to use CATL batteries in gig 3 (China) built model 3’s with potentially LG Chem and others also in the supply chain. Details to be finalized by mid 2020. Seems Tesla is joining the the other automakers and falling in line. Whatever battery IP Tesla owns, its likely to be public use soon.

[Jamie]

Interesting article in the WSJ on how the automakers who don't build their own batteries are having a tough time. It's behind a paywall, so here's the stuff I thought was interesting. Pretty clear that Tesla has a serious strategic advantage in building its own batteries.

SHANGHAI—A little-known Chinese company has become the world’s biggest maker of electric vehicle batteries.

Beijing engineered a scenario that didn’t give the world much choice.

China is by far the biggest EV market, and to boost its standing in the fast-growing industry, China began pressuring foreign auto makers to use locally-made batteries in the country several years ago. One company—Contemporary Amperex Technology Ltd., known as CATL—was the only shop capable of producing them at scale.

Auto makers weren’t pleased, but they fell in line. During a visit to CATL headquarters in 2017, three Daimler AG executives displayed their irritation shortly after the meeting started, recalled Jiang Lingfeng, then a CATL project manager who prepared a technical briefing for the visitors.

One Daimler executive cut off his briefing, said Mr. Jiang. “We’re not interested,” the executive said, according to Mr. Jiang. “The only reason we’re here is that we have no choice, so let’s just talk about the price.”

Article here

A typical Chinese non-tariff related barrier.

I can think of two or three companies (suppliers for packaging, non-api ingredients) that were taught by JNJ in China that now have bigger revenues than the JNJ sub that taught them.

Tesla signed an agreement today to use CATL batteries in gig 3 (China) built model 3’s with potentially LG Chem and others also in the supply chain. Details to be finalized by mid 2020. Seems Tesla is joining the the other automakers and falling in line. Whatever battery IP Tesla owns, its likely to be public use soon.

Yes, that’s how China gets companies to give tech away. The car business is miserable. You need north of 6-7MM units a year to stay abreast of the development game. The rest live in protected markets or joint develop products. Only 1 Japanese company meets that standard, if you don’t combine Nissan with Renault.

FCA? Too small. Mazda? Honda? Subaru? All marginal. GM without China? Too small. You’d almost think that the burden of developing electric cars and the infrastructure like Tesla would push most, if not all over the brink.

[BeauV]

Don't underestimate the idiocy of government policies that have subsidized all manner of industries.

There is massive overcapacity in the auto mfg. This is because various countries, from the US to Korea and India, have considered it a great way to employ people and/or gain export revenue.

I'm about 5 years out of date, but last I knew the numbers the total mfg capacity of the globe was nearly 2X what it needed to be. All of that because the French, US, German, Japanese, Italian, Chinese, Korean, etc... either won't let weak car companies die or because they believe they can undercut the established suppliers.

This behavior is just a highly inefficient way to pretend one is in a free market system while making a massive give-away to one segment of the labor market. Meantime emerging industries have trouble getting labor because subsidized jobs suck it up.

No reason to pick on autos. Semiconductors, oil, corn, rice, and various sub-sections of contract manufacturing all have the same characteristic. Stupid giveaways pretending to be Capitalism.

Ultimately, much of it is just shrewd business folks extracting a great deal of money from their local government to fund a company that they personally own. EG: Samsung.

[Olaf Hart]

Don't underestimate the idiocy of government policies that have subsidized all manner of industries.

There is massive overcapacity in the auto mfg. This is because various countries, from the US to Korea and India, have considered it a great way to employ people and/or gain export revenue.

I'm about 5 years out of date, but last I knew the numbers the total mfg capacity of the globe was nearly 2X what it needed to be. All of that because the French, US, German, Japanese, Italian, Chinese, Korean, etc... either won't let weak car companies die or because they believe they can undercut the established suppliers.

This behavior is just a highly inefficient way to pretend one is in a free market system while making a massive give-away to one segment of the labor market. Meantime emerging industries have trouble getting labor because subsidized jobs suck it up.

No reason to pick on autos. Semiconductors, oil, corn, rice, and various sub-sections of contract manufacturing all have the same characteristic. Stupid giveaways pretending to be Capitalism.

Ultimately, much of it is just shrewd business folks extracting a great deal of money from their local government to fund a company that they personally own. EG: Samsung.

Down here this also propped up local unions and lazy work practices. In the end, the government was subsidising every full sized Australian manufactured car by $10,000.

Doesn’t help to improve productivity across the whole economy.

[Jamie]

Kinda like spending 18% of your GDP in a very inefficient sector called healthcare.

[Ajax]

I'm disappointed to hear that Tesla will (essentially) be signing away their IP.

Steele makes a good point about not wanting to be a beta driver but Tesla vehicles have proven themselves to be very high quality with high engineering standards. It's one reason why they're so expensive.

GM on the other hand, has proven to me that they are not interested in honoring their warranties or standing behind their products. Their quality is inconsistent within models and across models.
My father owned an old Tahoe that wracked up over 250,000 miles without a single major repair yet I and other acquaintances were lucky to get close to 100,000 miles before terminal failure. I wouldn't accept a Chevy Bolt EV unless they paid ME to take it.

As to Joe's comment about only using his truck for occasional hauling as a means to minimize a carbon footprint (like I do with my 5-ton), the joy of a Tesla truck is that it would be so efficient that one could use it as a daily driver with much less guilt, especially if you live in an area where electricity is generated via cleaner technologies or if you happen to own your own solar array with enough surplus capacity to account for charging the vehicle.

If I buy a Tesla truck, I'd drive it everyday, and use it for nearly everything. Tesla has successfully demonstrated 1,000,000 miles on their drivetrain. I'd make an attempt to own the truck for 15-20 years and happily pay to replace the battery pack as long as the motor, reduction gears and body were holding up.

Back to the beta-testing thing- I think by the time I'm ready to make the purchase, the truck will be out for a couple of years and the worst bugs would be worked out.

[Jamie]

Didn’t Tesla already open sources a lot of their patents. I guess that’s how confident they are of their R&D and more concerned about getting overall adoption.

[BeauV]

I don't believe that Tesla has ever had any battery IP which was worth much, other than how they control them. As they'll continue to build their own control circuits etc... I really doubt that the Chinese will make off with anything they don't already know about. My memory (which is plenty faulty) is that prior to the Nevada battery factory coming on-line, they used LiIon batteries made by Toshiba. They may still use a large number of those cells.

I'm relatively certain that building LiIon batteries is entirely a commodity. Thus, it's just Capital Costs, which are free in China if you're building something the Gov wants you to build, and then material and labor. It doesn't surprise me a bit that Tesla would use the local supplier as a way of getting into the country to sell cars. They have such a massive lead in everything else.

[BeauV]

Interesting article on operating costs of a fleet of Teslas which are running many hundreds of thousands of miles each, HERE.

It turns out that the cars last a LOT longer than folks think.

But Tesloop, a shuttle service in Southern California composed of Teslas, was ticking the odometers of its cars well past 300,000 miles with no signs of slowing.

[Steele]

That is an interesting article, especially since it includes early cars with glitches that have been fixed ($1800 for flash data cards?). That bodes well for newer versions like the 3 and other manufacture's offerings. The article glosses over the costs related to charging time. Since they report needing to charge twice a day there have to be costs associated with the car and employee sitting idle for those periods, but I suspect they make up for it in fuel savings. I recall early cars can use the supercharger network at no cost which may be a good reason to hold on to the older cars and help their bottom line.

In way it is good news for individual owners since most of us will never accumulate that type of milage and most charging happens overnight in the garage. My friends with Teslas often brag about the proprietary charging network when I enquire about less expensive options from Chevy and the Koreans, but they rarely need to use the network anyway. I read an intersting editorial that the best electric for most of us is a used Nissan Leaf since even it's limted range is enough for most daily use.

[TheOffice]

The first Ford ev will be revealed tonight.

I think all Model S get free supercharging. Tesla will offer free charging on the 3 at the end of the quarter to move the iron.

I read somewhere that it costs about $6. To charge a Model 3 at hone and $12 at a Supercharger.

[BeauV]

We have free supercharging for the life of our cars. On the Model S it was included, on the Model X we negotiated it with the car at purchase.

I travel to San Francisco and back from my home 80 miles away at least 3 times a week. When we bought the Model S I was doing it 5 times a week. I simply do email while sitting in the Supercharger, or catch up on my reading. It's very comfortable and productive, much better than a coffee shop or restaurant. We do re-charge at home between midnight and 6 am when power prices are lower, but that's only about once a week.

[JoeP]

The new Ford "Mustang" Mach E looks reasonably nice and has good numbers but the Interior is awful, actually too plain to be awful I guess, most notably the dash.

[TheOffice]

The new Ford "Mustang" Mach E looks reasonably nice and has good numbers but the Interior is awful, actually too plain to be awful I guess, most notably the dash.

There is nothing exciting about the exterior. Putting a pony on the grill and copying taillights does not make it Mustang any more than putting me in a tu-tu makes me a ballerina. Base price is 44k so it is no bargain. I get that Ford is trying to make a splash, but I'd buy a Model Y first without giving it a second thought.

Joel