Video: Is Tesla’s Future Outlook Declining Due to Upcoming Competition From the Likes of BMW and Audi?

4 years ago by Eric Loveday 45

We could try our darndest to explain what’s being discussed in this here video, but we’d still miss all of the finer points hit on in this somewhat heated discussion of what lies ahead for Tesla Motors.

We're Doubtful Musk is Concerned With the EV Efforts Put Forth by BMW or Audi

We’re Doubtful Musk is Concerned With the EV Efforts Put Forth by BMW or Audi

Here are just a few highlights of the topics discussed:

  • Should you sell Tesla stock now?
  • Is the BMW i8 real competition for the Tesla Model S?
  • What will the production volume be on the Tesla Gen III?
  • Does Tesla has the cheapest per kWh costs in the industry?
  • Will Gen III have true competition when it launches?

All that and more is covered here as Dougherty & Co.’s Andrea James, Trading Advantage’s Scott Bauer and Bloomberg’s Matt Miller discuss Tesla’s future with Trish Regan on Bloomberg Television’s “Street Smart.”

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45 responses to "Video: Is Tesla’s Future Outlook Declining Due to Upcoming Competition From the Likes of BMW and Audi?"

  1. Tesla’s valuation is insane. No way is the company worth almost 2x Porsche. People forget that Tesla is making cars, not smartphones or apps. A very hard business to make money in.

    1. EVerywhere says:

      20B seems like a lot but then consider even Priceline.com is currently capitalized at 50B. Toyota is at 202B. Really, 20 billion is not a terribly huge number IMO

      1. Mint says:

        Tesla is going to have to sell 300,000 cars a year with a net margin of $5k per car (after R&D, supercharger costs, etc) to be worth near $20B. I don’t think they’ll be able to sell quite enough of the Gen 3 to make that target look feasible in the near future.

        I think there will be a compelling $30k PHEV by 2017 that’ll follow in the footsteps of the i3 REx, and I believe it’ll have much broader appeal than Tesla’s pure EV. Meanwhile, Tesla will price the Gen3 near BMW 328i levels and target a smaller but more profitable segment to get gross margins near $10k/car.

        Even if Tesla’s competitors have to pay an additional $100 per kWh for battery packs, having 20 kWh instead of 50+ kWh is going to be more than enough to pay for a cheap range extender, so they’ll be cheaper and have zero range anxiety (superchargers are great, but will take ages to match gas’s coverage and speed).

        Of course, Tesla could surprise us with a range extender option, but I’m not getting that vibe at all. I don’t think a Phinergy-type range extender will be ready in time or match the cost/convenience of a gas REx.

  2. MDEV says:

    They will make apps and I don’t see i8 competition here, is double of the price coupe, electric less than 100 miles. I don’t see the competition and this guy saying other companies can produce 300 miles EVs make non sense, please a Volt with 100 miles will be a Market killer but no even GM can produce this to a customer price.

    1. Bonaire says:

      They will. Battery tech will make for much higher kWh per kg. In all EVs. Today’s vehicle AER will be dwarfed by what is to come. Why everyone looks at “today” as the defining moment – you have no idea what is yet to come. Sure, you will see Teslas with 500 mile batteries but also will have a similar $90K pricetag. Volts will end up with 80-100 mile AER along with range extender. 150 mile BEVs will be commonplace among the car vendors. All by 2020.

      Value Tesla today based on some “guesstimate off the future”. The competition will all be allowed to use new cell technologies with higher capacity. My biggest hope is pickup trucks will get electrified to help cut down on oil usage. Not which luxury car is “better” than someone else’s non-luxury car. A lot of people can’t look past this model year, this one model, this one moment. Tesla’s own proposition is to drive other manufacturers to create more EVs. More sustainable EVs all around. This is a multi-vendor game being played. Not who will “win” the EV marketspace. If Tesla is successful, it may put itself out of business by driving everyone else to produce more EVs.

      1. kdawg says:

        “Not which luxury car is “better” than someone else’s non-luxury car.”

        LOL

  3. David says:

    Tesla has no competition. Existing established auto makers are so used to how they’ve done things they are unable to move out of their own way. BMW i3 and especially i8 is a joke. Embarrassing. Of course they’ll sell some, just like GM will some some ELRs.

    Tesla probably does have the industries lowest cost/kwh at the moment. The question is who will ramp the price down fastest. Nissan is being very serious and making improvements to their batteries next year but likely at a higher cost.

    Tesla has the motivation and drive that no other company does. They will make it happen. The Gen III will be the breakout car. It will be many years before they can make enough to meet demand if they do anywhere near a decent job at a 200 mile range EV in the $30-40k range.

    1. Dr. Kenneth Noisewater says:

      BMW’s use of CFRP is novel, and leapfrogs Tesla’s materials at this time. However, they still use prismatics that have higher costs (due to non-standardized formfactor not getting economies of scale and multi-source competition) and lower power densities, so until they get a modern battery comparable to Tesla’s density and price/kWh, they’re at a significant disadvantage.

      1. io says:

        Unless you have actual information about what manufacturers pay for their battery packs, claims that one technology is cheaper than the other are baseless.

        I could counter-argue that assembling, and having electronics to monitor, a moderate number of large cells, is cheaper than thousands of smaller ones, but I don’t have numbers.
        It seems logical however that, as cells slowly come down in price, the cost of assembly etc will become more important.

        Second, production of large cells scales more easily. Nissan’s Smyrna facility is sized to build up to 200’000 packs per year.
        http://www.hybridcars.com/nissans-new-us-battery-plant-shows-major-dedication-to-evs/
        Tesla already absorbs a good fraction of the world’s 18650 production, for far less vehicles. Its growth becomes limited by the production capacity of its cells suppliers (Panasonic and soon Samsung). Not only those companies won’t increase it for free or without some major commitment from Tesla, they can’t do it overnight either.
        http://wheels.blogs.nytimes.com/2013/09/06/as-it-increases-production-tesla-worries-about-battery-supply/

        1. George B says:

          Good, point, but some semi-official numbers are available. According to those, Tesla’s 85 kWh battery pack costs about a quarter of the price of the vehicle, which is approximately $25K. The battery pack in the BMW i3 is rumored to be around $13K. These numbers are based on statements made by company representatives.

  4. OceanRailroader says:

    I think the $200 stock price was over bloated to begin with and at most it shouldn’t have been $50 to $70. I’m really quite surprised that it was able to almost get up to $200 dollars a share. But it could go back up to $200 the day Tesla announces the official release and ordering date of the Generation 3.

  5. David Murray says:

    Tesla has no competition from BMW. The i3, while a nice car, is no competition for a Model S. The i8, on the other hand, I expect to be a flop. Its just way too expensive. I could buy two low-end Model-S for the same price. I’m not aware of any product that will compete with the Model-S anytime soon.

    I expect the real competition in the future to come from General Motors, specifically competition for the Gen-III Tesla. I think GM is aware of the stakes in the $30,000 electric car market in just a few years time. I suspect they are going to make their stand with the second generation Volt and most likely some other pure electric with similar range to a Gen III Tesla. And as much as I’d like to own a Tesla, depending on what GM does with their 2nd generation Volt, I could see myself preferring one of those over a Gen-III Tesla. They’d have to make the Volt faster, give it some more EV range – at least 60 miles.

    1. Dr. Kenneth Noisewater says:

      Indeed. An electric i7 full-size sedan with quad motors totaling ~500kW, 50kWh battery and 150kW turbo 3cyl in the $100k range would be competition for Tesla.

  6. philba says:

    I love Andrea’s question to Matt after he was talking about how all the majors will be competing with battery technology “Why haven’t they done that?”. He blusters and switches the subject. Still laffin…

    There is some truth to competition is coming but so far no one else has even gotten close to Tesla’s range. To me, it’s all about range. The Model S with it’s out of sight cost has the range and is selling very well. First sub $40K EV with a 200+ mile range will be a home run product.

    1. Bonaire says:

      It’s not about the range. It is about *selling* the *perception* of range.

      The Volt fixes the range issue today. Not everyone drives 100 miles a day. People have multiple cars in their household. Tesla attempts to say “they are the best because they have the range”. That is a great sales “topic” and a poor buying “reason” for a sane individual.

    2. OceanRailroader says:

      The Nissan Leaf could threaten Tesla if it is able to raise it’s range to 120 miles or mach Tesla’s 200 mile range which is not really out of the question. It could attack Tesla by being a $20,000 dollar car with 150 to 200 miles vs Tesla $30,000 car.

      1. Bonaire says:

        Nissan already has announced a 120Mile range for the Leaf in a very soon model year.

      2. David Murray says:

        Yeah… but Tesla produces a “cool” product.. Much like many people would rather have an Apple product over a Samsung simply for the name. Tesla has the halo and I suspect the Gen-III will be better looking than the Leaf.

      3. Dr. Kenneth Noisewater says:

        Leaf is also really slow. It should have at least ~7s 0-60 performance and get 200mi range, and have an active battery thermal mgmt system.

        1. George B says:

          I’m curious, do you have any direct experience driving a LEAF. While the performance is no match for Tesla and could be improved, most owners would not call it slow.

    3. Rick Danger says:

      First sub $40K EV with a 200+ mile range that is RWD, looks great, and handles like a Tesla, and has Tesla build quality, and safety systems and Supercharging network will be a home run product.

      Do you think that will be GM? Or Nissan? Seriously?

      1. Bonaire says:

        FWD will do better for the consumer than RWD. RWD is for the “testosterone boys” but seriously, you have to look at the vast majority of cars on the road now are FWD for 4-season driving, general consumer handling needs and so on. Make it in three models. RWD, FWD, AWD. Since electric motors can be positioned near the axles – you can drive front, rear or both. Just because BMW is a RWD type of car – why not try to reach the whole of consumer-dom and not just the “driver’s machine” type buyer? You want to sell 400k to 500k a year, it must have a FWD option.

        1. Dr. Kenneth Noisewater says:

          RWD is superior in terms of performance and safety, and with motor weight vs engine block weight, there’s little traction advantage given modern torque controls. RWD is superior because you separate driving duty and steering duty, whereas FWD tasks the front tires with both duties. Also, in electrics, there’s no driveshaft to impinge on interior room. So pure electrics should all be RWD or AWD (with F/R motors so no interior room impingement).

          1. Rick Danger says:

            +1

        2. Rick Danger says:

          FWD is crap. It was foisted on us by the automakers simply because it’s easier to build than RWD. That is the *only* advantage, and it’s not to the driver, it’s to the manufacturer.

          FWD is not better in snow, nor is it better on wet roads. I wonder how many billions of dollars have been shelled out by insurance companies because of accidents in which FWD handles like a wheelbarrow? It isn’t about “testosterone.” It’s about a car that handles properly in avoiding accidents.

          Nice try though.

          1. Dr. Kenneth Noisewater says:

            There’s some benefit to traction by putting a heavy engine block over the drive wheels, like putting sandbags in a RWD pickup truck’s bed. But beyond that and packaging/interior room, FWD is otherwise inferior to RWD.

            The ideal configuration in my mind would be to have 4 separate motors with torque vectoring, with a rear-wheel bias (say 2x150kW motors in the rear, with 2x75kW in front). With 4kW/kg DC motors your total mass would be say 112.5kg distributed low in the car, which would compare quite favorably to a comparably-powered V8 motor.

            1. kdawg says:

              Correct, FWD wins in the winter. Come to Michigan in March and try to drive your RWD car around after a few inches have fallen. Let me know when to call the tow truck.

              With an EV you can disperse the weight more easily, so if it’s balanced, then AWD is your best bet. If it’s not balanced, put the drive where the weight is.

          2. io says:

            Obviously you’ve never actually driven in the snow or other very slippery terrain, especially uphill.
            Having zero traction on the front wheels IS a huge handicap in challenging conditions.

            1. Rick Danger says:

              Excuse me, I was born & raised in Northern NJ, I know all about driving in snow and sleet.
              With FWD, you have most of the weight of the car over the front wheels, which also must provide power, steer, and do most of the braking. There’s no balance. Everything is up front. When the front tires break away, you’re done, you have no control at all.
              One of the RWD cars I owned in NJ was so balanced I didn’t even need snow tires. The only time I got stuck was when the snow was deeper than the car was high, and it was light enough to push out.
              If you are looking for traction in snow, then get a Subaru or a Jeep.

              BTW, you couldn’t pay me enough to live in Michigan, LOL. You can keep your winters, and your FWD.

      2. kdawg says:

        Seriously, it could be any of them first, but I think it’s inevitable they will all get there. I don’t need Tesla’s 0-60 time, and I’m not impressed with their build quality. I do like their supercharger network, but not the fact there are not as many service stations that can work them. I have a feeling when all parties get to the 200mile AER point, GM will have a more reliable lower price option. It’s a question of when it will happen for all of them, and how much more will Tesla’s price be, and will it be worth it for access to a supercharger network (if they even offer that).

        1. Rick Danger says:

          So, you think GM build quality is better than Tesla? And that GM will have a more reliable car???

          It took me 15 minutes to type this between laughing fits.

          Lower priced maybe. Lower other things too.

    4. Anthony says:

      The answer to the question of “why” is rather easy – and its not technical competence. Traditional automakers have no go to market strategy for a pure 250 mile luxury EV. How are they going to sell it along side their existing luxury gasoline automobiles? How do they address the long-range issue? Tesla is doing supercharging but I don’t see every automaker building their own proprietary charging network, or even coming together to build a CCS one.

      Maybe in 2020 the go to market strategy picture will look better for long range EVs – quick charging networks, consumer education and acceptance, etc. But for now, Tesla is the only company that can sell a long range EV.

  7. Nelson says:

    Wow! I didn’t know the BMW i8 was a 300 mile range EV that uses “NO GAS” like the Tesla Model S.
    I also didn’t know the i3 had fast charging capabilities allowing its 300 mile range battery to get an 80% charge in 30 minutes like the Model S. I don’t know how I forgot when BMW mentioned the i8 loaner while getting your i8 repaired announcement or the at home repair/pickup service. Oh, and I must have missed BMW’s announcement to roll out a nationwide Supercharging Network at rest stops along major roadways with “FREE CHARGING FOR LIFE” for owners of the i8.

    Sure with all this going for it the $100,000 i8 Sports coup might compete favorably with the 5-7 passenger Model S Sedan. NOT…….
    When you buy a Tesla Model S you’re not just buying a car you’re buying a “Tesla Total Package”.

    NPNS!
    Volt#671

  8. Spec says:

    No. The competition is a joke.

    It is declining because the valuation hit a ridiculously high level.

  9. ptrubey says:

    Andrea really did put the knife in with her question “Why haven’t tha majors come out with a long range, cheap battery?”. Matt is utterly clueless, I don’t think he even knew he was being roasted. There is no question in my mind that currently only Tesla knows how to make large, cheap battery packs.

    And anyone who says the $135K starting price BMW i8 with limited range is a Model S competitor REALLY doesn’t know what he’s talking about.

    1. kdawg says:

      “only Tesla knows how to make large, cheap battery packs.”
      ————–
      I don’t think this is true (and they are not cheap). Between companies, I think it’s just different philosophies, not abilities. But the question still remains, why the different philosophy?

      1. Dr. Kenneth Noisewater says:

        The absence of such competition proves the truth of it.

        There is currently no prismatic cell formfactor that comes anywhere close to the massive production of 18650 cells. Therefore 18650 benefits both from massive economies of scale and multi-firm competition which guarantees a minimal profit margin and maximum dilution of R&D costs. Unless and until there’s a prismatic formfactor that benefits from those things, or a newer/better technology cannot be used in the 18650 formfactor, the 18650-based battery is the superior technical and economic choice.

        Additionally, by going with a strategy of using lots of smaller cells, you brute-force past a limitation of lithium-based battery chemistries, which is they tend to be more ‘energy’ batteries with lower power per cell than NiMH ‘power’ batteries. Like Stalin said, “Quantity has a quality all its own”. You could get the same voltages that the Model S has with fewer NiMH cells, but they wouldn’t have nearly the same energy. This has advantages both in discharging high voltages quickly (by RAIDing them across a huge array of cells) but also in safely quick charging with reduced risk of cell overload.

        Tesla really owns the state of the art in EV battery tech, and as long as the competition continues to suffer from NIH syndrome, they’ll continue to fall behind.

        1. kdawg says:

          Tesla doesn’t make the cells, Pansonic does. GM could throw them in a pack cheaper than Tesla can (mass production).

          Or look at A123’s battery in the Spark (82 mile range). Say the cells cost $8K, If we triple it, that’s $24K for the battery, or net $16K. Add that to the price of the car and we are at ~$42K, for something that would get ~250mile AER. So hitting 200miles for $40K is very doable. The Spark’s traction motor is more efficient than Tesla’s.

          Like I said before, I don’t think it’s a question of ability (I believe GM said they are testing 300 different chemistries at their battery lab), but more of a philosophy of what’s the right approach; GM’s of short range = BEV , long range = PHEV. Or Tesla’s approach is long ranch = BEV + supercharging/battery swap.

          Does GM want to build a supercharger network? I don’t think so. Could they? Yes, but I think they are pushing for the infrastructure to take care of itself. Does GM think there’s profit in low run, luxury EVs? Maybe not; however they are testing the waters w/a limited production ELR, but as a PHEV, not a BEV. Does GM think there’s profit in high-volume 200 mile BEV’s? Apparently, since they have stated this is something they are working on and have called it possibly disruptive. Will they attempt a limited run, long range, luxury BEV (aka Model S fighter)? Who knows. It’s probably up to the bean counters and market study dept. Do they have the ability to do it, yes, w/out a doubt. Engineering a PHEV is much more difficult than a BEV. And GM has a much better supplier network than Tesla does.

        2. Spec says:

          Absence of competition merely shows no one else tried. No one but Tesla thought there would be a decent sized market for a really expensive EV with a massive battery.

          There is certainly some very important engineering to be done but there is no magic to stuffing a lot of battery cells into a battery pack.

      2. Rick Danger says:

        ~~~~~~~~~”But the question still remains, why the different philosophy?”~~~~~~~~

        Because GM is the Titanic, and Tesla is the BatBoat. That’s why.

  10. Dan Frederiksen says:

    Do pigs fly

  11. Dan Frederiksen says:

    Hehe the nitwit actually said the BMW i8 will make Model S look very beta 🙂
    Au contraire mon ami. I think the i8 will sell relatively poorly. Whenever you want to accelerate and have fun in the i8 the combustion engine has to kick in because it only has 98kW of electric power. So you have a combustion engine intruding on your electric car experience all the time. That’s a deal breaker. And at 135k$, slower and smaller than model S, it’s just not in a position to make Model S look bad. Indeed the opposite will be the case.

    There are no competitors for Model S and none on the horizon. i3 will hurt the Volt. Cadillac will hurt itself with its lame Volt drivetrain. Fisker is dead. Audi has nothing coming despite his lies. Merc has nothing. There is no competition.
    Tesla is only competing with itself and that’s still far from a sure thing but it helps tremendously that investor enthusiasm is so great that it’s willing to pay for anything.

  12. Bennyd says:

    Listening to these so called financial experts, not one mentioned the value of the Tesla infrastructure going up. Tesla will have a system of free energy for their customers that no auto company will be able to match.

  13. Bob Hodgen says:

    The legacy automakers are wedded to the internal combustion engine. They really know how to do them well and have invested billions in that technology, it’s all that they know.

    The Model S is outselling the Mercedes S class, the BMW 7 series, and the Audi A7. The other manufacturers had better start paying attention. Their cars are obsolete.

    When you buy a Tesla, you also get their Supercharger Network–free–for life. This is an important part of the puzzle that a lot of “experts” miss.

  14. Priusmaniac says:

    The other cars are no competition to the Model S right now and the Gen III will probably look a lot better than the odd Leaf and i3, so it won’t face competition there too at the contrary Leaf and i3 are going to be sold less because of the Gen III.
    But these are things everybody can see and tell while there is something more hidden that makes all the difference.
    Tesla is almost free of oilies influence which is one of the main reasons why it has credibility and why it has such a strong market value. Everybody knows they are not going to stop on demand of Exxon Total, Shell BP or any other oil company. That is the singling out factor that makes valuation.
    This would be even more so if they got free from the oil implicated Mercedes and oil country investors because they may be minority shareholders but they keep nuisance capability by being inside and even on the board.
    Actually a quit of them would bring back more money to Tesla in the form of an even higher valuation because they would then be 100 % oilies free. The stock would jump another 50% to about 300 $ which is a higher valuation than what the oilies connected represent in it.
    One would suspect Elon being enough self confident that he can keep control on them and use part sharing with Mercedes for example, to Tesla‘s benefit and maybe he is right, but playing with fire is always a dangerous business even for a rocket designer, so the safest way would be to extinguish the fire and let Tesla really go its fully oilies independent route. No deals, no influence, no market information, just nothing.