Most everyone in the US who ever wanted & could afford a high-priced Model 3 now has one? Pent-up demand for luxury cars in the era of Carmageddon is a tricky thing, especially when tax credits phase out.
Details trickling out over the 3,200-plus layoffs Tesla announced on January 18 are starting to paint a picture of what is happening on the demand side for the Model 3 in the US. According to two laid-off employees cited by Reuters, the company has gutted its delivery team of 230 people at its Las Vegas facility that delivered tens of thousands of Model 3s to buyers mostly in the US but also in Canada.
About 150 of the 230 employees on the team have been let go, the two sources said who were among those let go, as the company struggles with deliveries that have plunged from the pace in the fourth quarter last year.
The federal tax credit of $7,500 was cut in half to $3,750 at the beginning of the year after Tesla’s EV sales rose past the 200,000-threshold in 2018. Yet the $35,000 Model 3 that CEO Elon Musk promised in 2016 remains a distant promise.
The company already slashed its Model 3 price twice this year to stimulate demand, yet the least expensive Model 3 still has a price tag of $42,900.
“There are not enough deliveries,” one of the laid-off employees told Reuters. “You don’t need a team because there are not that many cars coming through.”
The two laid-off employees said that in the first quarter, delivery targets for North America – mostly buyers in the US but also in Canada – are down 55% to 60% from what they were in Q4 2018.
After a herculean effort late last year, Tesla delivered 145,610 Model 3s in 2018, all of them high-priced luxury versions. During this effort to deliver as many Model 3s as possible while the full federal tax credit of $7,500 was still in effect, the reservation list was “plucked clean” of American buyers “willing to pay current prices,” as Reuters put it, citing those two laid-off employees on the delivery team.
“We sold through just about every car we had on the ground and we called almost every being on the planet who had ever expressed desire to own a Tesla to let them know the tax credit was expiring,” said the other laid-off employee. Late last year, employees around the company were reassigned to pitch in, the source told Reuters.
Reuters said that “Tesla declined to comment on the job reductions in the delivery team.”
Of the 3,200-plus full-time employees to be laid off, at least 1,017 are at facilities in California, according to required disclosures that Tesla filed with the California Employment Development Department, reported by the San Francisco Chronicle on February 6. The layoffs in California will start on March 20:
- 802 employees at its plant in Fremont, Alameda County (East Bay), across the board, human resources, quality assurance, delivery experience, sales advisers, service technicians, production associates, 37 manufacturing supervisors, and some manufacturing engineers and technicians.
- 137 employees at its warehouse in Lathrop, San Joaquin County (Central Valley); most of them production associates.
- 78 employees at its Palo Alto headquarters, Santa Clara County (Silicon Valley), most of them in engineering, including hardware, software, and data engineers.
So what happened to all the reservations Tesla received for Model 3s? Back in July 2017, Musk was out there, being his usual self, promoting the dickens out of Tesla’s stock, saying that over half a million buyers had put down deposits to get their reservation in place for the Model 3, which caused shares to surge. Alas, in 2018, when Tesla actually started selling the Model 3, it delivered 145,610 during the entire year. And now demand is drying up. What happened to the other 300,000-plus reservations? What happened to that pent-up demand?
Analysts wanted to know this too during the earnings call on January 30. And CFO Deepak Ahuja, whose resignation Musk announced minutes later, said: “Reservations are not relevant for us. We are really focused on orders.” And those orders don’t appear to be forthcoming.
Musk shed some light on part of the reasons: “The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just like people literally don’t have the money to buy the car.”
Duh. Yes, that’s a simple fact of life: high-priced luxury goods occupy a small niche in the overall US market.
And then there is this: Americans have veered away from buying “cars.” They’re buying pickup trucks, SUVs, compact SUVs, and vans. Since 2014, annual sales in these “truck” categories have surged 21%, reaching 11.8 million units in 2018, while car sales have plunged 31% to just 5.5 million units – a situation I have come to call “Carmageddon.”
So, Tesla is heroically trying to mass-market expensive luxury “cars” into a small niche of the rapidly shrinking car market.
Now Tesla is focusing on selling the Model 3 in China and Europe, it said. And that’s where most of the Model 3s now being built in Fremont are headed.
Alas, every global manufacturer already has EVs on the market, and their lineups are growing, even in the US. The EVs built by new entrants in the US EV-market will qualify for the full federal tax credit of $7,500 for the first 200,000 vehicles per automaker, while Tesla buyers get $3,750 through the first half of 2019, and only $1,8725 in the second half. And the plunge in demand for the Model 3 shows just how much bunk has been mongered about Model 3 sales not being sensitive to the tax credit, or that the Model 3 could somehow transcend Carmageddon in the US.
Americans love paying big profit margins for big equipment, and automakers love them for it, but total sales are declining, and something doesn’t add up. Read… New Trucks are Hot, Prices Surge. But Cars Face Carmageddon. And Total Sales Fall
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Thank you, Wolf! This year might be very interesting for Tesla.
40% reduction in driving range on cold winter days.
If left outside, totally dead within a few days without being plugged in.
Tripled the car charging fee at quick charging stations.
What is not to like?
Yet there are countries that want to start banning emmision vehicles in 20 yrs. 2040 I don’t see this battery draining issue being resolved any time soon. https://money.cnn.com/2017/09/11/autos/countries-banning-diesel-gas-cars/index.html
It is hard “resolving” basic physics.
Freezing cold and hungry in the dark…with a dead $60,000 car in the driveway.
Doesn’t anyone make a home trickle charger? Quick, get Battery Tender on the job!
My understanding is that if the car cannot heat its battery in cold weather then the battery incurs permanent damage.
I think the Tesla S is a good car but it will follow the same path as did Delorean. No parts available except from cars sold. And their values may fall.
GM has also reached the 200,000 limit for the full federal tax credit.
Yes, but the “new entrants in the US EV-market,” as I called them in the article, have not. And unlike GM, they include direct competitors to Tesla’s luxury rides: BMW, Mercedes, Jaguar, Porsche, Audi, etc. That’s where you go if you want to spend $45,000 to $120,000+ on an EV.
Tesla? Teslas with no range?
I’ll just keep my 38 year old VW Westfalia, thank you very much. It looks brand new and is fully restored, with a spare engine and transmission when the brand new rebuilt engine eventually wears out, plus I have a nephew who is working on his auto-body and painting apprenticeship so it will stay new and rust free with modest cash infusions going forward. I am 63, and am shooting for the van’s 60th birthday before we start slowing down on our rambles. (No charging stations where we roam, for sure.) Next paint job will probably be VW Racing Green, or maybe even a Candy Apple Red if we’re feeling spry. I predict this van will still be rolling, long after Tesla disappears.
And you don’t have to worry about upgrades to proprietary Tesla software. If Tesla goes under, how on earth will all their cars be serviced? They can’t even manage to replace a dented bumper in less than 4 weeks it seems. What will happen when they fire more of the IT staff and QA people?
I don’t drive any more but if I did, I’d love an old Volvo or Saab or one of those vintage BMWs with a proper stick shift.
my westy is a young 26 but it does have 275k miles (engine rebuild at 180k) and very much needs a paint job :)
seriously though, i don’t think we should rejoice in tesla’s setbacks no matter how well deserved they may be. they are the first new american car brand with international appeal since forever. i for one, hope they survive.
Paulo,
Just make sure to never have a collision with your VW van. Some things have improved over the years! Crash safety being one of the most significant. And if you had a modern EFI water cooled engine in your Westfailia you wouldn’t have to replace spark plugs every 10,000 miles and would have 30% better fuel economy.
re Tesla 3 series build quality: somewhere below Hyundai— perhaps best compared to the old Russian Trabant. What do you expect when you build it in a tent using temp employees.
Tesla or any EV..no thank you. I will continue to drive with great pleasure my 66 Big Block Corvette daily and gladly spend the money for the 60 gallons a month I use. I figure if 1500 private jets can invade Davos so that our enlightened billionaires and elites can preach about climate change and the need to be green and clean…that my tiny bit of emissions and the joy it brings me is irrelevant compared to what was emitted by their travel to Davos. And if something needs an upgrade or to be fixed..well a pair of plyers and screwdriver will be all I need.
If you find something called Formula E on TV, you can watch Mercedes and Audi race teams competing with Electric race cars. Both are investing in learning how to make high performance evs.
Reading these musings over the last couple of years, I was always surprised that Tesla hadn’t gone racing. Its the traditional way of promoting luxury car brands to a mass market. Ask Ferrari and Porsche and Jaguar about it. And Tesla never seemed shy to borrow more money, so it never seemed like being broke was the reason Tesla was missing. I always had the sneaking suspicion that Musk didn’t want to be embarrassed. Racing has a way of separating the real from the BS.
“GM has also reached the 200,000 limit for the full federal tax credit.”
True, but Tesla has bigger worries than GM. The BEVs coming from Audi, Jaguar, and Porsche compete directly with Tesla at the high end. The offerings from Hyundai and Kia compete with Tesla’s Model Y that is at least a year away. Buyers in the US from all these manufacturers will qualify for the full FIT credit.
Not to mention you can get parts and servicemih
Musk is looking forward to sales in China? Apparently he has never walked around on the street when he visits there to hype his factory. There are more Chinese EV’s every week, and they all cost less than a Tesla.. They are easy to spot now with their green and white license plates
Musk is such a flim flam man…he can sell raincoats in the desert as the old saying goes! Then, next to each other, on-line, I see an article where an “analyst” says shares could go to $4,000…did she mean total value of ALL the outstanding shares?! What an irresponsible comment ! Then, right next to this article, another one says Tesla in real trouble! They cannot even generate positive cash flow from operating activities…so I think the hole that has been dug here is simply too deep. They are bankrupt per the financial definition. Wondering when the marketplace will finally accept this reality. Will be quite the show when it all hits the fan. And, as Wolf says: “these are the good times”. You gotta love it!!!
After once entertaining the idea of shorting, (long the bond short the stock?) seems to be a good idea again. Two things against, taking it private and possible white knights (Apple?). The USG PUT is probably off the table, if he can’t manage 5B for a wall how would he bail out these guys? On the plus lower interest rates will not impair their debt, worse case layoff workers and invest capital in treasuries to pay the interest. Extend and pretend.
Note that a 55%-60% plunge in deliveries is the goal. If you include that a bit over 1k Jan. deliveries were in transit at the end of Q4, it’s looking more like 70%-80% now.
Since a Teslas battery capacity is zapped by cold weather I have no idea how they sell outside of California. They appear to be cruel vehicles, and it’s likely they can only be repaired at the dealership.
And it’s a well established fact in the North-east that if you bring your car to the dealership it will cost you two to three times as much as the local guy, not to mention the fact they almost always break something else once the car is off warranty.
I have a friend who is an army officer in Norway. In the winter he parks his 20 year old Volvo in the garage and plugs a cable in to the electric engine heater so when he goes to work in the morning, the engine is hot, and hot air comes out of the heating vents before he opens the garage door.
How does one keep a Tesla warm? I saw a US weather forecast a couple of days ago and had to clean my laptop screen when it said -70 for Chicago. I thought it must be a mistake!
From what I read the Tesla has a battery warmer built in, at a certain temp the heater will automatically kick in and run off the battery life. If you forget to plug in your Tesla in the cold I would assume it would freeze and ruin the battery pack once the battery runs out of juice.
In other words, the ‘GREEN’ tesla uses battery (indirectly evil fossil-fuel fired power plants) to keep itself warm enough to run in the AM. BRILLIANT!
ICE vehicles that are designed for brutal colds have engine warmers that are plugged into household electricity to keep the engine warm so that it will start in the morning. Same thing. No one writes about all the ICE cars parked on the street in the brutal cold whose locks froze up and whose engines wouldn’t start in the morning. That’s been an issue ever since I started driving. ICE cars have gotten a lot better about that, but it’s still an issue. But it’s not worth discussing. It’s just when an EV has some trouble in brutal cold that it’s worth discussing.
ICE’s, BEV’s and and Cold
Block heaters or sometimes called soft plug heaters have been used for a long time in cold climates to keep the engines warm so that these cars can start.
Plug in the car at night and even when its -30 F the car will start.
No damage or degradation to the engine or car components. No degradation or reduction in running distance either.
The ‘problems’ with Tesla of any other BEV are two-fold:
1. The internal battery is used to keep the car ‘warm’ and the battery ‘warm’ which reduces the driving distance of the car. Not a problem for ICE’s. Basic physics.
2. Should the battery pack in a BEV go below a certain temp, I believe that the literature and much research shows that the battery pack will be permanently damaged and reduce the life of the battery pack. Again not a problem for ICE’s.
As these BEV’s are new to the market and they haven’t been though the severe cold for numerous cycles, I doubt that these problems will show up for a number of years.
If and when this happens you’ll see a huge number of battery packs fail and need to be replaced.
Everyone is missing the point about this massive short coming of EV’s, including Tesla’s when it gets below only 32F. These batteries cannot be charged at all, when the batteries get below 32F. Very nasty things happen, so Tesla’s and others software immediately shutdown the charging system if it happens to be such that the battery temp gets below 32F. That in of itself is one problem. The next is every single minute you are in temps below 32F, and worse get below 0F, that battery is sucking itself down just to keep it warm enough to be able to handle a charge. If you dont have the car connected to a substantial charger, you are going to have to have the car towed to a warming facility. The amount of energy it takes to keep something like that warm, particularly in minus 20F, like it got here in Chicago during the Vortex, is not insignificant. So its not about losing range, or even about a simple little heater that could keep an ICE warm, as that takes very few watts to keep the engine warm enough for the oil not to make it hard to start. Thats ALL an engine warmer needs to do, and thats pretty much ONLY when temps STAY below -20 for some time, and you dont have a good battery.
There is a LARGE chunk of the population living where temps can get below 32F pretty regularly, which means for example, if you have thousands of EV’s in downtown areas like Chicago, with parking garages, you’d need thousands of individual chargers for every single one of them. Most garages IF they have any chargers, only have 2 or 3.
The further away you get from cities, the worse those odds are of getting screwed in cold weather, and also the longer it would take for some towtruck to come rescue you. EV’s are just nowhere close to being ready for prime time. And btw, every copy of a Model 3 sold for a price below $55k is a money loser. In fact, most of the other models at much higher prices were also sold at prices that were lower than the actual cost to make the cars.
GM readily admits its EV’s are money losers too, but at least they have very profitable truck sales to support that. Tesla has nothing, other than the ‘goodness’ of very naive stockholders, and even more naive creditors to keep them afloat. Other automakers can spend just a few billion to stay along with Tesla, until that company goes under, and EV’s once again get doomed back to the realm of more novelty than reality. Tesla does not exist if we were not in a bubble much larger than the Dotcom bubble. Musk was clever enough to realize this when he got involved, as he is rather good at sucking away OPM. Also, you don’t lose more than 30 very high level executives and stay afloat for long. (especially when most left in less than a 2 year period). Those people were not dumb before getting involved, in fact likely very very smart at their selected role, and simply wanted to get their fair share of the money, but knew way more than any shareholder or anyone not in the bowels of that company what the prospects were. Those are the people you pay attention to, and its not about what any of them say publicly, but what is not being said after leaving. Their silence is deafening, and this company is on its last legs. the problems they are having are so numerous, and on so many different fronts, its actually a miracle that Musk is still at the helm, and they are not in front of a bankruptcy judge.
Wolf,
Thanks for the piece.
The party is ending. Tesla has to cough up $920 million on Mar 1 for the holders of the convertible bonds.
Company will have to try and tap debt markets again to keep this sideshow going a while longer. Good luck with that.
Me thinks that Tesla could meet the March 1st deadline. Just noted this recent news of a UK Institutional Investor increasing its Tesla stake. I sense there will be more cash infusion to come. https://www.cnbc.com/2019/02/08/one-of-teslas-largest-investors-just-increased-its-stake.html
Increasing a stake by buying existing shares from the market, is just re-arranging the deck chairs. Buying new shares provides money for the company, as does issuing new debt. Rolling over debt also does not increase the funds available
If Tesla needs to issue new shares it would have to be at a very deep discount given the amount of “unhelpful” news about. Discounting shares has unintended consequences in other directions concerning loan covenants.
Going into debt to pay a debt? How long can they do that? Maybe Musk will try some stunt to get the share price to the point where the bond holders will take stock as payment instead of demanding actual money. I forget what price the bond deal specified it would have to be in order for that to happen.
For 920 million you can buy around 20000 Tesla 3’s. It is for a company the size of Tesla not that much money.
What about profits?
Q3’17 -619
Q4’17 -675
Q1’18 -710
Q2’18 -718
Q3’18 +311
Q4’18 +139.5
Are these last couple of quarters real? Or are these shenanigans-based claims that a CFO can’t reconcile with reality? CFO quit looks bad.
BTW I was looking into buying a private island in the Caribbean, but the inhibitor was affordability. Turns out they’re like, literally, rather expensive.
These are not GAAP. They use some kind of Bernie Madoff accounting system.
Q3’s profit was actually *much* less than reported. It was fairly similar to Q4’s. The reason it looked good is that they had been *saving* tax credits from previous periods to use in this period.
There are other potential issues, but I’m happy to grant that they made a small profit in Q3 & Q4. However, that was with quite a bit of demand pulled forward, and quite a bit of government subsidy (note that, even for credits that go to customers, it is actually TSLA that is subsidized).
Additional things to keep in mind about the profits – (1) many analysts think that they are not including all of their costs in cost of goods sold, so they may be essentially “borrowing” from other quarters to make it look good, (2) many analysts think they are not reserving enough for future required payments (recalls, warranty, supercharger, etc.), (3) some of that money is from the “full self-drive” feature which they had to remove from their website, for which they may have to return money, and (4) some of those may actually be purchases from Elon’s other companies.
But, nonetheless, I’m happy to grant two quarters with small profits. If they were repeatedly profitable at the Q4 level, the stock would be worth between 50 and 100.
I think the problem with the Saturn-based Model 3 sedan is the styling. It might only appeal to a small group that bought Saturn sedans 30 years ago. It’s basically the same car with goofier wheels.
Dont underestimate the ability of people to learn to love the look of a car from a brand they already fawn over.
I will admit I have grown to almost like some of the model 3 styling even though I dont particularly like the company or cars.
By the time Tesla goes T.U., I’m not going to care anymore. /-:
Might be something other than price, From your earlier article, the average price of a full-size car is about $36k, and a loaded Tesla 3 is only $6k more (amortized over 8 years, that’s about $70/month).
Maybe I’m just not sensitive enough to an additional $70/mo (equals my cell phone plan or about half my cable bill, not to mention 10-12 Starbucks coffees), but the “Tesla fashion” moment may have passed (people now buy even more expensive trucks).
Just to give you an idea what $70 bucks buy in terms of telecom services here in Russia. For that amount I get 3 broad-band 100/200 mbs connections with some leased and free equipment, each including IP TV (150+ channels plus 3 paid sports channels), 7 mobile numbers with almost unlimited minutes/sms and 70 GB of IP traffic, 2 fixed telephone lines.
The Tesla model 3 price probably isnt a huge barrier competing against other entry level luxury cars. Its cost $10k more roughly to start, but you also can generally get a free charge for them via solar power or free power at work. So fuel costs may balance out the extra payment.
But the model 3 is still a ways off from general mass consumption. Given a Honda accord starts at $24k. Not $45k. Even if it comes down to $35k that is still almost a 50% price premium for a non luxury car buyer.
‘To be safe, let’s take the minimum to give us a conservative estimate. If one, low-end solar panel can produce approximately 1 kWh a day of AC electricity, that means you would need an astounding 75 solar panels to produce enough electricity to fuel your Tesla Model S to 100% capacity from 0% each day.May 11, 2018’
This is not conservative it is completely out of the real world estimate.
My 16 solar panels make ~30 kWh/day (each panel is ~300W and was around $200).
Consider this, an old 2005 Taurus I own gets around 15 mpg (not very much) giving me a range of 270 miles on a full tank which only takes five minutes to fill. A midrange model 3 gets 250 miles on a full charge which takes 18 hours at home or six at a supercharging station to recharge (assuming there is no line). Also, consider the price tag of $1,000 vs $44,000.
Don’t get me wrong these cars are diametrically opposed but the performance difference for the price difference isn’t there. Also, the A/C draws your battery considerably faster, because it doesn’t piggyback off the fan belt.
Understand that lithium-ion (and batteries in general) have reached peak efficiency for the time being and you can see why EVs haven’t taken over the market. Physics has limits for the storage of energy and so far gasoline is among the best methods to store energy (diesel is better but the way vehicles use it nullifies many of the benefits) at room temperature and pressure because things like hydrogen and propane need heavy tanks.
When Musk thought he would teach Toyota anything about lean manufacturing I knew he was full of hot air they wrote the book on it, literally.
Is Ford paying you to drive that car?
Howard,
But you fail to mention the real benefit of the Taurus, in that is a Supreme Babe Magnet….
The Plus-Sized Female is warming up her vocal folds for Tesla
I have complete confidence in Elon Musk to keep the price of the stocks at around $300 till the day that they actually close the doors of the company. The followers of this con man are so blind that they will be buying on the dip till its stock ticker is actually removed from NASDAQ. He is a cult leader, and a damn sleazy and slippery one. Expect Musk to start talking about Mars, SpaceX, Face on the Mars, and Aliens that Musk personally shot when the tried to steal Tesla’s secret technologies. Yaay, Tesla’s stock will be $4000, and as a bonus, we’ll finally find out about the Aliens on Mars.
I see the market for electric cars as folks with a bit of “prepper” in them: if you can charge your car from your rooftop solar, you’re much more immune to things such as disruptions to the oil supply. Say, if Trump starts a war with Iran next year, and the Straits of Hormuz close to tanker traffic.
On the other hand – buying an expensive car where replacement parts may not be available is a bit of a disincentive.
The Puerto Rico aftermath was a prepper test case.
If you had an EV you were walking long after gas was available.
It would take a very serious solar installation to charge a Tesla in less than several days.
Another prepper idea is a small motor bike, one you could lift over say earthquake debris. You could store a couple of years fuel for a few miles per day in a 55 gal drum.
Unless by prepping you mean post WWIII or something in which case we are in different books.
I have a ’79 Honda Trail 90 and an ’81 Trail 110 for that very purpose. I have been known to hook up my little aluminum trailer to the back of the 110, throw in a lawn chair, and after several gin and tonics sweet talk my wife into going for a ride. Once I even tied survey ribbon to the handle grips for that ‘streamer’ effect. The last time we did this was when my son had a new girlfriend visiting his home. (Couldn’t resist). He just smiled but she fell down laughing so we knew she had a sense of humour!
I tell my wife if it all goes sideways we can do grocery runs with it just like Jed and Granny Clampett.
Mules are available here and one guy rides a steer in the Farmer’s Day Parade every year …
Storing fuel is a problem – fuel tanks tend to get water in the bottom due to condensation, so they requiring “fuel polishing” from time to time.
True, it would take several days to fully recharge a 60KW battery from a 8 KW/day home solar panel installation … but the thought would be not to drive 200 miles per day – or get a multi-fuel generator that runs on propane, natural gas, etc.
There are sealed fuel tanks available. GM for example uses them in their PHEV Volt.
Tesla, as a company, will shortly be history. The company will have historical significance for popularizing electric cars, and that’s it. The established manufacturers will take over from here, at both the high-end (Porsche, BMW, Benz) and low-end (Toyota, Honda, GM, VW, Ford).
TSLA doesn’t have a competiitive advantage – in fact they’ve got the opposite. No dealers to support the brand locally. Plus they’ve trashed their “brand value” by rushing to produce shoddy Model 3s without providing adequate service.
Very shortly potential buyers are going to start worrying buying a vehicle from a soon-to-expire company, which will complicate parts and service delivery and therefore resale value. A very expensive “fashionably green statement” will become ever more expensive.
Tesla die-hards speculate a merger could keep them afloat now that the debt markets will be closing for Tesla. Certainly a major like Ford or GM would buy them if the price were right – say 10% of current market value. There is also talk of purchase by a tech company, such as Apple, but the tech companies don’t manufacture and know it would be a foolish escapade. My prediction is Tesla will dry on the vine until there is a buyout at 10% of current price.
Why Apple, which makes 50-60% margins on its consumer electronics, would buy a metal-bending company is a mystery (medium GM gross margin = 12.95% over last 10 years; AKA “the good times”).
The last time GM demonstrated they could manage something “automotive” was around 1955.
Musk should have stayed in the luxury segment. Theoretically, margins there are more decent to attract a buyer and financing. But in the automotive world margins have never been high, in many cases negative, not the kind of margins that “monopoly” tech giants like Apple or Google or even Intel enjoy.
I would say that one potential suitor is Daimler, which has done business with Tesla from the very beginning. They would probably ditch Model 3 and expand the luxury line-up and may even take over semis.
He is looking for Chinese money. Period.
No major maker needs at all to buy Tesla. Zero benefit.
Ford, Fiat, Honda & Toyota don’t sell ev’s and only Toyota has a luxury brand. You are right i could not think of any benefit for those car makers.
Tesla is the only American, luxury car brand. If Ford or GM can buy it for cheap they will do it in a heartbeat so there is no worry about parts or service.
Not having dealers is a feature not a bug.
Do Toyota, Honda or Ford sell EV’s?
What about Lincoln and Acura?
Isn’t Acura Honda?
Lincoln is only sold in very selected markets (USA mainly) American car makers also have the reputation that they are not exactly hyper advanced which is a problem if you want to be seen as luxury.
From what I’ve read the demand for their semis is impressive…if one can believe what is written. Musk is a visionary as much as he is a con man. One way to guage his innovative-ness is to watch the number of slash articles written on his behalf.
So people are not as likely now to buy overpriced cars, overpriced phones, or overpriced houses. Could be a trend.
Our kids are all buying overpriced college degrees and the rest of us are buying over-priced trucks.
I’m an old-fashioned ICE guy but am seriously considering buying a Model 3 later in the year. I was cautious about Tesla cars for years but have warmed up to them. The Model 3 is Tesla’s second/third generation implementation and seems like a great city/local car if you do not live north of the Arctic Circle.
The current similarly priced BMW i3 does not compete at all range-wise. And the two cylinder BMW bike motor “range extender” for 70 more miles is a joke at best. What was BMW thinking? I’m sure BMW has something more competitive in the pipeline.
It would be a shame if Tesla self destructs due to financial shenanigans.
Tesla might end up like DeLorean, which I have been saying for years. Kind of a cool vehicle, and could last as a cult vehicle for many decades to come. By the way, other than looks and gadgetry, from what I know the driving experience of the DeLorean wasn’t much.
The Tesla SUV I saw looked odd, and kind of “frumpy”. However, the torque and other visceral experience is evidently great.
Note that a lot of these new vehicles have been tested and developed in warm climates- not just the temps are good, but no ice, white outs, etc.
The concept of the self-driving and electric car has a long way to go.
Having said that, I rented a new Ford Fusion- lots of “self-driving: lane following auto braking and acceleration”. It’s good on the freeway. Otherwise, not too different from a typical compact- it’s OK.
GSH
“What was BMW thinking of”
My guess (actually 2 guesses):
1) CAFE standards
2) Place holder (AKA mulligan)
It’s shocking to see a car industry CEO misunderstand demand. It has 2 components: desire *and* ability to pay. Demand for any new car is “insanely high” if affordability isn’t factored in.
What a mess.
A half million millennials have deposits on Model 3’s? That won’t translate into orders. I believe that it is just virtue signalling so that they can talk about “waiting for their Tesla”. No intention whatsoever of ever making a purchase.
After the direct subsidies are gone, then come the new taxes. Up in Canada some Provinces are already thinking ahead about the loss of revenue from EV’s. I think last I looked about 1/3 of Gasoline cost was made up of Sales Taxes, Excise Taxes and Carbon Taxes at the pump (that doesn’t count any other built in taxes during production and processing such as Provincial Royalties (about 10%), etc..), processing fuel taxes, etc…. So, when EV’s hit a critical level and government revenues take a noticeable hit, some of the tax ideas being thrown around include a large annual car registration tax for EV’s, a tax at the recharging station, even building in tax meters in the car (like a water or power meter). Nothing is free, or what and who is going to pay for highways and road maintenance?
The other morning it was -6 F here in Denver. I can look out my window and see a Tesla in the parking lot with snow on it that hasn’t moved for days.
A Tesla is a nice car and all, but really, I spend $38k on my 2007 (new body) Chevy crew cab diesel and have never felt the urge to trade it in on any other vehicle. With about 110k miles on it, I expect to drive it until diesel runs out, or my body runs out.
Fortunately I have never been a “status seeker”. Good for the economy there are so many others out there who are, bad for them when it all turns south again — as it will now soon enough.
At that point, I expect there will be plenty of shoddily build Tesla’s on sale, along with many other nice vehicles.
Me? I’ll still be driving that Chevy pickup.
Anybody else, 1995 Dodge Ram diesel?
1984 VW Rabbit pick-up…40mpg….
83 silverado diesel
As a retired chemist, I always chuckle when people ignore the basic laws of physics and thermodynamics so they can feel better about their consumption.
This is typical among the right and left coast elites behind their gates.
To create electricity, you must burn carbon, because nuclear power is not available. By the time the electricity is forced into the lithium cells, and then discharged, you are at about 30% or less efficiency overall. This is not too far off from the internal combustion engine efficiencies.
Don’t get me started on the amount of carbon used to build an EV or to mine lithium brine and manufacture batteries.
The whole thing is a joke. All is not lost though.
One benefit of EVs is that if used exclusively in city and urban areas, they reduce air pollution in those areas. But carbon is still being burned remotely to make it happen.
Josh,
Spent my work life in Silicon Valley from the early 70’s moving equipment…eventually many semiconductor companies and of course many solar companies…retired in early 2016…I think we had 7 or 8 start-up battery companies all searching for the holy grail…physics keeps winning…my favorite story, while being rushed to install some massive solar equipment into Solyndra in June 2011, one of the engineers was trying to get us to increase the pace…stuff was way too dangerous to rush…told him, why the hurry, this place is going to do bankrupt…in August 2011, he called me to ask, how did you know? It was pretty obvious, I had seen the same thing way too many times.
Smoke a few doobies and it will all make sense man.
Josh is right, but not just about the electrical energy for most folks. We have 100% Hydro here in BC, but still too cold for Teslas. Stored chemical energy (water vapour), stored energy as water behind dams = electrical energy for EVs once transformed by mechanical means. Not much carbon involved after the dams are built and the cable is strung. Oh yeah, forgot about tires, roads, maintenance……. :-)
That is why EVs will be taxed directly, to help pay for the free ride they get on FF, and other ratepayers.
I mention this only because even in a renewable environment for electrical energy (like BC), FF needs and uses permeates every aspect of our lives. Everything.
ICEV will pay the same direct taxes as EV’s. Current FF taxes will be considered sin taxes for CO2 and pollution emissions.
ps. The difference between an ICE and an EV isn’t that clearcut. Where would you put the cut off?
ICEPriusplug-in PriusVolti3 + range extenderTesla
No most coast folks are better educated Josh. Those in the midwest never took a physics course at all LOL. Sorry but you cannot paint this as a coast or fly over issue at all. Elites are a word for Musk selling car snake oil. Period.
I am considering buying an EV, but just to park in one of the always empty 4 VIP spots reserved for them in my work garage. I have no interest I’m burning coal vs. gas. I’m unconvinced by all of it.
Saves me 20 minutes a day, 5 days a week. Do the math. They are actually pretty fast, and loads of torque. Fun to drive, like a super golf cart. Used ones are MUCH cheaper. Way worth it.
This canary in the coal mine ain’t chirpin’ so much no mo’. Carmageddon is accelerating.
Apple hiked prices, and the auto industry too, and then incentives and lower prices ain’t workin’ either, watch out!
Teslas were always super fast cars for rich young doctors, lawyers, etc. that just happened to have an environmental cover (for their spouses, friends, etc.) These wealthy buyers don’t give a shit about climate change. It was always about the amazing acceleration.
The party is soon over. But shorting Tesla stock will always require immense staying power.
No, not acceleration but keeping up with the Jones.
And running away from the repo man in many cases.
Mike,
Yep. I don’t give a shit about climate change. A Tesla 3 is Mustang GT fast. I will take the social BJs that come with it, but that ain’t why I’m buying it.
An uglyish, super practical Chevy Bolt is 0-60 in 6.3. That’s still fast.
Meanwhile, over at General Motors, Mary Barra, who got sucked into the Tesla hype, has just given many thousands of engineers who do old style pre-electrification engineering their walking papers. Who needs engines and transmissions? It is all about EV. Mary, your timing is outstanding.
General Motors home market is China. China is full on with battery powered cars. Almost all countries that buy cars have as target to make only EV’s by 2040.
An ICE generator + small 2 miles battery + electric motor for driving the wheels is probably a much cheaper and lighter solution to have in a world where millions of EV’s are sold than a classic engine + transmission system. It will also be compatible with a FCEV cars
Mary, your timing is off. You should have done it three years ago.
every model 3 built since jan 1st has been shipped to europe. demand hasn’t gone anywhere.
Telsa, one quarter/hit wonder. How much patient will the investor wait for the ROI?
In The Netherlands the change in tax breaks has almost killed off sales of expensive EVs (Tesla S and X, Jaguar I-pace) in 2019:
https://www.businessinsider.nl/de-tesla-taks-doet-zn-werk-de-verkopen-van-tesla-model-s-tesla-model-x-en-jaguar-ipace-zijn-flink-gekelderd/
Pro and anti Tesla sentiment seems often to resemble a silly political divide. The facts are what they are. Whether Tesla survives or adds its name to a long list of failed car companies, in spite of all the criticism, it will go down in history as having accomplished a lot more than most.
I don’t think people dislike Tesla. It’s the stupid Wall Street build up, caused by ridiculous Fed policy, that drives people crazy. Tesla is simply the embodiment of a deranged financial climate that moves wealth arbitrarily in concert with a lunatic Federal Reserve.
EV’s are here to stay. Here is a good video on what’s to come. Like it or not they are here..
https://youtu.be/2b3ttqYDwF0
I believe Tesla sales in Hong Kong cratered by 90% or more after the electric vehicle subsidy was withdrawn.
I think Teslas are great. That said, I do not know even 1 person who owns one.
Strange.
Tesla, GM, BMW etc.’s hype and chatter with respect to EVs is irrelevant. At the end of the day it all comes down to basic economics…
EVs will not become truely mainstream until the cost of batteries falls by about 50% from current levels. This is really the only parameter that matters with respect to the future of EVs. Everything else is just noise around the minuscule percent that EVs currently make up of the entire fleet of new vehicle sales.
“mainstream” EV hurdles (priority sequence):
1) battery cost
2) recharge time
3) range
Check out the forkenswift, $1000 , 30 mile range 8 hour recharge of standard socket. New batteries and fast charger at home,gives you want you want. Or the e-up.
China,India, and Europe don’t require anywhere near the range the US might. They only have to get you to the park and ride tram/train stop and can be plugged in there while you go to work. (Unleas work is in range thrn it sits there charging and you walk to a lunch place)
I think plug in hybrids are going to be the thing before EVs though.
“The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just like people literally don’t have the money to buy the car.” – Musk
That should be no problem in California; There should be money to shelter all the homeless AND save the planet.
Just give every Tesla buyer $30K, or so.
Don’t laugh, this state is so corrupt, $30K to every EV buyer will probably happen.
The best way to increase the cost above affordability is through government intervention on behalf of special interest groups.
The ponzi scheme is unraveling
Forget the Dope Smoking Runt that tried manipulating the market by “ going private “ !
What counts with the Tesla is it is a step towards a “ possible “ read very real
Future with 100% clean transportation.
The whole drive towards a clean Energy development should’ve continued since Mr Ford designed his First Electric Car!
The Problem with innovation is that it gets hijacked by the likes of musk ( the small M intended) .
Remember the whole drive towards a different type of Energy away from fossil fuel based energy have gained tremendous momentum, the science will do its job,
The real moral obligation that our collective government/s have now is Not to interfere ( don’t hold your breath)! In the process , the futile skewed ways of the government/s to provide the so called ( Tax credits/ incentives to businesses which elect to establish themselves as green alternatives have to rely entirely on the merits of their ideas and prove that they’re able to grab s market share without reliance on the public purse).
Will we see this happening?
Hard to tell.
Our democratic systems so far have failed to prove they’re capable of dislodging the parasites that lives on their bodies!!
Do I have hope for the Future in great transport systems ( cars included)?
I have to say yes, as I believe in the capabilities of the human brain to produce astonishing feats .. pray we live to see that happening.
“Drop of 55-60%” is a VERY superficial analysis. To put it in the headline to me looks misleading. There is ALWAYS a strong drop in EV sales in January. For TESLA it was about the same last year. However, if you look at Year-on-Year increase from Jan2018 to Jan2019, you see an INCREASE of about 147% sold cars. 147%! I-N-C-R-E-A-S-E!! In a, as Wolf correctly noticed, shrinking market segment. No other automaker is even close.
Numbers are from https://insideevs.com/monthly-plug-in-sales-scorecard/
It is pretty weird to read this forum with one after the other telling how great their old cars are. It’s like people in the nineties saying what on earth was the use of mobile phones. Hey: EV-share DOUBLED in the USA last year. Also worldwide. We’re seeing the first electric airplanes and electric ferries. In Norway the share of sold EVs 2018 is already higher than of ICE cars. And they haven’t even started selling Model 3 there! It will never go back. Folks, get a grip: the Internal Combustion Engine show is over in a few years.
“There is ALWAYS a strong drop in EV sales in January.”
If Tesla has hundreds of thousands of reservations for the Model 3, as it claimed it had, and buyers with reservations are champing at the bit to finally get their Model 3, then there should be no sales slowdown in January or any month until the reservations are exhausted, and there would be no need to gut the delivery team.
Also if there were enough demand for the Model 3 in the US, Tesla wouldn’t have to ship them to China and Europe to try to sell them there.
well, Tesla HAS hundreds of thousand of reservations. But they’re wordlwide. And they’re based on a price of 35.000, average sale price has been 65.000. They HAVE to satisfy this demand from reservations in Europe – it has been delayed almost 3 years. And the 35.000 model will come mid-2019.
But we’ll see, still no sales statistics from Europe – we will have some from Feb begin March. I bet they jump to the top in Europe at the latest in March. And also that sales in US of model 3 in 2019 will be higher then in 2018.
China might be more difficult but that’s why they’re building a Fab there.
Aren’t car prices higher in Europe excluding tax?
I don’t know what would be better for Tesla. Supply the US fully and no sales in Europe and China or having a big backlog in all three markets.My guess for a luxury brand is having a big backlog is a good thing
Dumb Question:
Building in China? Or shipping from US to China? Someone pays every time a unit of anything gets moved from one place to another.
Battery cost are like 70% of the cost of an EV. The price of batteries are dropping hard. Tesla sells its car at the start of production for a price that is break-evenish. They hope, not unreasonable, that the price of batteries will drop 50% or so in 5 year. With that they would have a profit margin of 35% which is very nice and because there will still be a shortage of batteries and EV’s in 5 year time no pressure on dropping the price.
About the 7.5k tax subsidy. GM and Tesla were pushing for that subsidy. Now they are not. I don’t believe that subsidy will exist in a year but if they do GM and Tesla could operate as an ODM for new “ultra lean” car makers.
ps. Dealers are bad for EV’s, Getting mall retail space is easy in today’s world and Tesla needs a main street brand to not kill its luxury image. I think it would be an easy solution for Tesla
And yet another reason this company is soon to be toast….
“It has been years since Teslas debuted its Autopilot and, despite numerous software updates and fixes in response to a litany of accidents involving Autopilot, it doesn’t look as though drivers are getting the message that the software may not be as innovative, safe or autonomous as Elon Musk has led them to believe.
Yet another example came to light on Monday when a driver in North Brunswick, New Jersey wrecked his Tesla on a highway while the vehicle was in Autopilot mode. According to a report published by News 12 New Jersey, the driver said that the vehicle “got confused due to the lane markings” at a point where the driver could have stayed on the highway or taken an exit. The driver claims that Autopilot split the difference and went down “the middle”, between the exit and staying on the highway.
The car then drove off the road and collided with several objects before coming to a stop. The driver claims that he tried to regain control of the vehicle but that “it would not let him”.
(and people actually believe ‘self driving cars’ are just around the corner.) and get the best part – the so called “AI” wouldn’t “let him” regain control.
Mike R,
Look, 37,133 people died in car accidents in 2017 in the US. Millions ended up in the hospital. Nearly all of them were caused by ICE vehicles. Does it mean the end of ICE vehicles or the companies that make ICE vehicles? Nope. We don’t even care.
And about 1/3 of them were a result of drunk driving.
Totally disgusting that people still drink and drive.
The USA should implement a system similar to Japan and put people in special ‘traffic’ prisons for causing death while drinking.
Musk: – “It’s just like people really don’t have the money to buy a car”
Who is this guy man ??
They live in space that has no windows – hence they don’t have a clue that there is a real world outside.
I watched the review of the car = nice – but one size fits all is the mentality here.
Also – we need to stop driving a car that seats 4 people if there is only 1 commuter -hey !!