Tesla VP: “Every Time, We Overcome The Disbelief”

AUG 12 2015 BY ERIC LOVEDAY 93

In Traverse City, Michigan at the annual CAR Management Briefing Seminars last week, Tesla’s Diarmuid O’Connell, vice president of business development, addressed the crowd.

He started off by explaining that Tesla should not be considered an elite, luxury brand.  Yes, the Model S is price at luxury car levels, but the brand itself is not focused solely on luxury cars.  Even the Model S is not a luxury car, according to Tesla.

Quoting O’Connell:

Tesla Model S Not A Luxury Car, Says Tesla

Tesla Model S Not A Luxury Car, Says Tesla

“We have a business plan that we’ve been working on from the beginning, and it’s more than what we are today.”

“There are competitors out there who are trying to characterize us as what we are right now, at this snapshot in time, with the products we have. They also did that in 2008 when all we had was the even more expensive roadster.”

“It is not the vision of this company to produce a mass-market $35,000 car by 2017 – it is the plan.” 

O’Connell went on to discuss what he calls a “massive disbelief hurdle” that surrounds Tesla:

“There is a massive disbelief hurdle at every stage of our development. We will never launch a roadster. We will never launch the Model S. And every time, we overcome the disbelief.”

Back to Tesla’s “plan.”  O’Connell says that Tesla was forced to enter the market on the high end for the following reasons:

“The fact is, this is the business plan we were forced into because we were coming from zero with no capital, no reputation and no product. Other manufacturers can put a compelling $35,000 vehicle on the road today. In the meantime, we put an aspirational product out in the market that hopefully will attract others.”

“We have a plan and we’re going to get there. The demographics of our buyer is going to change.”

And Tesla’s goal today is the same as it was when the company was found a decade ago:

“Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.”

Source: Automotive News

Categories: Tesla

Tags:

Leave a Reply

93 Comments on "Tesla VP: “Every Time, We Overcome The Disbelief”"

newest oldest most voted

GO TESLA!

But I don’t believe they’ll market the Model ≡ in 2017. Sure, they continue to confound analysts and achieve what they set out to do… but never when they first (or second) say they’ll do it!

Concerning this, the Model X is likely delayed again.

GCR had a report today that there will be only a few (1000?) Model X built in 2015 with REAL volume production starting around mid-December 2015, maybe even later (suppliers not ready).

Ramping up production of the Model X may happen a bit slower than Tesla’s guidance at the beginning of the year, but it’s not news that Tesla won’t achieve full production of the Model X by the end of 2015. If I recall correctly, Tesla has been saying for at least a year that they won’t achieve full production on the X until 2016.

In fact, if you look, you can find statements from Elon going back several years saying that it is more important to make each new model (Model S, and now X) right than to produce it quickly or in large numbers.

That’s not news to me. Tesla never started production at full tilt (this applied to the Roadster, Model S, and likely will apply to X and 3 also).

tftf — That has been the expectation from the beginning. And it will be exactly how Tesla will roll out the Model 3 when it comes time.

tftf — It sounds like you have gotten very used to how traditional car companies work, and don’t fully understand the vast difference between them and how Tesla does things.

Traditional car companies sell exclusively through independent dealerships. This means that when they roll out a new model, they have to stock all of their dealerships with vehicles, and then embargo sales until they do a big sales release. They build up stock for weeks, storing them and shipping them. Then they release the cars for sale, with vehicles already on the lots ready to buy.

So when traditional dealerships do a production ramp-up, you have no idea it is happening. All you see is the stock they built up over weeks of production suddenly appearing out of nowhere on dealer lots.

Tesla doesn’t work like that. They don’t stock dealerships, they don’t build up stock before putting vehicle up for sale, they don’t run advertising blitzes that require stock at dealerships nationwide for the ads to be cost effective.

truth. This is also why when you buy a traditional make, you are getting a car that had most of its design locked in 1-2 years before it was launched.

When you buy a Tesla, you are buying a car that hasn’t had its design locked in at all.

Those damn stupid doors. Build a version with normal doors!

Nope…as has been discussed many times before, some of us are anticipating first deliveries in Q2 or Q3 of 2018.

BFD! It gets easier when you have scale and experience. Regardless it is soooo much better to have a company constantly pushing the envelope, constantly improving albeit with missed date projection than another company that accomplishes very litttle in a timely msnner.

The Disbelief is because of two words “on time” That has always been Tesla’s kryptonite.

But even when they’re late, they beat the market by a wide margin.

+1

+2

Explain “beat the market”. One year after they set expectation for delivery and financial performance they do not meet their own declarations.

Taser — Meh. Most car makers have delays all the time. They just hide it through endless “Concept Cars”, and by waiting to announce concrete plans until they are already very close to production.

They also don’t really build brand new models from a clean sheet very often, so if there are delays with some new feature, they simply roll back to previous products and leave out stuff. Like when GM dumped their plans for a 3-cyl turbo engine for the Volt, and instead pulled a 4-cyl they already had sitting on the shelf and used it instead. It kept them on time, but it is silly to try and pretend that Tesla could do anything similar with the Model S.

Gm never announced a 3 cylinder turbo. That was press speculation. Sure, GM may have tested one, but they tested a myriad of range extenders and battery packs to arrive at the final model for gen 2 volt.

As to tesla delays, it is far from the industry norm.

It’s also far from the industry norm to have a company’s first mass-produced car win more “Best car of the year” awards than any other in history, or to have Consumer Reports call the Model S “the best car we’ve ever reviewed”.

Taser — don’t be silly. Not only did GM publish the Volt concept engine as a 3-cyl, they even published stats:

Type: 3-cylinder, turbocharged engine
Size: 1L
Fuel: gas or E85
Nominal speed: 1500 to 1800 rpm
Max speed: 3200 rpm

This is straight from GM. The press didn’t make this up. The Volt is a good car, but sometimes the Volt fans are too close to their vehicles to have an objective view. Yes, the Tesla delays are normal for the automotive industry, much less for a complete ground-up clean-sheet new model. I don’t think you have any idea how many “new” models are actually derivative models based upon previous cars.

Please provide a link to the press release from GM stating that it will use a 3 cylinder turbo.

Again, it may have tested a 3 cylinder turbo, but it also tested other powerplants. Just as in the gen 1 it tested a 3 cylinder NA alongside the 4 cylinder.

The press cited unnamed “sources” but as we saw, they were wrong.

Taser — GM’s archives for their Press Kits only go back to the beginning of New GM (post bankruptcy). They no longer have older press kits on their official website. However, there are so many sites that republished the exact same detailed specifications from the exact same GM press kit that GM handed out prior to the 2007 Detroit Auto Show, that you would have to be in a serious and desperate state of utter denial to believe that spontaneously dozens of web pages mystically came up with the exact same detailed specs at the exact same time, without it coming from GM: If you set your way-back machine to 2007, there are literally dozens of sites like this that contain the exact same press kit stats, straight from GM at that time: http://www.autoblog.com/2007/01/07/detroit-auto-show-full-specifications-on-the-chevy-volt/ Model: Chevrolet Volt Concept Body style / driveline: 4-5-passenger sedan, unitized frame, electric propulsion, front wheel drive Construction: body-frame-integral structure with composite exterior panels and roof EPA vehicle class compact car (four doors with rear liftgate) Drive system Description: electrically driven system with onboard range extender, plug-in recharge capability Type: lithium-ion Energy: 16 kWh (minimum) Peak power: 130 to 140 kW Voltage: 320 to 350 100%… Read more »

Most car makers don’t execute convertible bond issues that are make-or-break to cash on hand with specific guidance that the money will be spent on a new model that then ends up late.

I wonder what luck he’s had getting Elon to come out of his office ans stop playing with fuses?

That is ludicrous!

mr. o’connell is stating the obvious when he says that the tesla model s is not a luxury car; because it isn’t. i am still skeptical about what tesla’s real endgame is. i still believe that tesla is really about the objective of developing assets for acquisition more than it is the objective that tesla become the next GM.

a comment addressed to the “critic” who criticize tesla’s project scheduling: so if tesla hadn’t slipped in the project scheduling for the model X, you would have placed an order to buy one, right? my comment to the elon musk fanboys is that if you *really* want to help elon musk, you need to start putting your money where your writings are, because it is hard to translate hortatory fanboy comments made on electric vehicle fora into revenue.

I take it that you don’t own a Model S… Mine sure is luxurious for a “non luxury car… In addition, the service behind my car is the best I’ve experienced in car ownership… Just saying…

Regarding the interior, I think the new seats are a lot better than the old ones. The interior is still pretty spartan though, and the touchscreen is so big it doesn’t look like it belongs, but the graphics are really nice.

I wouldn’t call it “luxury” either, but maybe “premium” would be a good adjective. When it comes to subjective opinions, there is no right or wrong.

electric-car-insider.com

Well said, kdawg.

Minimalism is a style often associated with premium products, especially those oriented toward cerebral purchasers like technical professionals.

it is hard to dispute that the model s is a “premium” car, it is just not a “luxury” car in the conventional sense of the word.

Tesla’s tagline has always been (Google tesla motors and look at the full name in the top result) Premium Electric Vehicles.

They have added in some features that luxury buyers look for, since they are at that price point.

The interesting thing I see is Tesla wants each of their vehicles to cut across many vehicle segments. S hits large sedan, sports sedan, plug-in buyers, techies, and arguably SUV owners with the large storage. My last friend who purchased one sold his Toyota Tacoma for it, go figure. X is targeted to be Minivan functionality, with sleek SUV styling, and 911 performance.

I wouldn’t be surprised if their model lineup never grows past 6: S, X, 3, Y(3cuv), Truck, and Roadster (3.0?).

They would cover 90%+ of the passenger vehicle market with that lineup with is half the size of most automakers.

kdawg said:

“I wouldn’t call it ‘luxury’ either, but maybe ‘premium’ would be a good adjective. When it comes to subjective opinions, there is no right or wrong.”

Serious question: Just how is the Tesla Model distinct from the kind of car that is typically called a “luxury car”?

I’ve read reviews that say the quality of the interior materials isn’t up to actual luxury car standards. I wouldn’t know; I’ve never owned or spent much time in a Rolls-Royce or high-end BMW any other really tip-top luxury car.

All I can say is that when I finally got the chance to do a ride-along in a Model S P85D the other day, the spaciousness and comfort of the interior certainly seemed luxurious to me.

Seriously, I’d like to know why people say the Model S isn’t really a luxury car.

* * * * *

kdawg also said:

“When it comes to subjective opinions, there is no right or wrong.”

Truth.

Well, allow me to state the obvious, pal…most of us can’t afford the current offerings – but it is very well within our interests to dispel FUD and cheer the company on so that they get to the offerings that we can afford.

+ 1

Couldn’t have said it better myself.

Well said, TomArt.

Asserting that we can’t be true fans of Tesla Motors unless we buy a Tesla car is as Ludicrous™ as arguing that you can’t be a true sports fan unless you buy a major league team.

Tesla is applying the trickle down theory of transportation. All cars are a luxury we can’t afford. There is no such thing as a sustainable car, at any price.

Is the computer you used to send that message any more “sustainable” than personal automobiles?

Perhaps you need to look in the mirror before posting your next judgmental criticism.

Of course computers are not sustainable. But they are much more useful, and I would argue they go a long way to making cars unnecessary. But just like the hoped for paperless economy, inertia has kept us from reaping the benefits.

So this is a direct response to GM’s trash talk. And all of it is exactly that, trash talk. What matters is making EVs and getting people to drive them.

What was the trash talk?

Just read The Detroit Free Press… “Tesla only sells to the wealthy. Tesla only cares about subsidies, and isn’t a real car company. Tesla does not know how to make cars out of steel, etc.,etc…”

I was asking Vdiv if he was referring to a specific statement made by GM when he used the term “trash talk”.

I’ve heard GM usually compliment Tesla.

Didn’t Barra make an indirect slight towards Tesla in one of the Bolt announcements?

Something like we are going to make EVs for the average person or something like that. I think most people took that to be referring to Tesla over BMW, Merc, Audi or others.

It is summarized in here, http://evobsession.com/chevy-bolt-updates-awkward-swipes-at-tesla/

But this is the one I was referring to: “The Bolt is for regular people, not for the elites.”

Exactly! Thank you Josh!

The link won’t open for me, but wasn’t that like 2 months ago?

Yeah. It was when they confirmed Bolt for production.

“It is not the vision of this company to produce a mass-market $35,000 car by 2017 – it is the plan.”

Do or do not, there is no try.

(But seriously . . . just hit 200+ miles EPA rated, look good, and under $40K.)

electric-car-insider.com

That would be the Chevy Bolt.

Tesla will produce a car that will inspire you.

Did you ride a Bolt ? Please save us of your Tesla snobbery. We have enough of that already.

Since when did heart-felt cheerleading become snobbery? Oh my word, what an unhappy part of reality you must reside in. 😉

electric-car-insider.com
Didn’t intend to be snobbish, Sri, I’m sorry if it came off that way. I drive a Ford Focus Electric. It’s a nice car. Great value. Does everything it’s supposed to do, looks good, saves be a bunch of money on fuel. Does not pollute. Happy with the car. But it does not inspire me. I also drive a Tesla Model S. When I let other people drive it, which is often, they almost always say “holy —” or something similar within the first 20 seconds of driving. Not because they stomped on it, I brief them beforehand to ease into it, they are not exclaiming about the power. They are exclaiming about the feeling of driving this car. It’s different. It makes you reset your expectation of what a car can be. It’s kind of a spooky feeling. People say “spaceship” all the time. Not because of the X factor. Because they realize “things have changed.” When you get that “mental reset.” When you look at a true work of art. When you read that deeply meaningful passage. Or hear that truly stirring speech. When you come to that deeply personal realization that things can be different. And that… Read more »

wellest said, sir

very nice. If Tesla ever actually does marketing, you should apply :).

Seriously, very well said. When the Model E comes out, it could (I hope will) truly revolutionize auto transportation…

Tesla, Volt or Leaf, we are on the same TEAM. But the bickering within the ranks makes me feel sad. We all should applaud the bolt and model e, and what ever others are putting forward. I am a proud Volt owner and it is a car I could afford, and does its job very well. To disparage it or its sibling (Bolt) and comparing it with a vehicle 3 times its price (post tax credit) is unfair to the core. I am happy that some of you can and do own Model S, its an engineering marvel and I am happy for you.

electric-car-insider.com

I actually agree with your view Sri. I wasn’t intending to disparage the Bolt or any other EV in any way.

I guess the humor did not come through. I was giving Speculawyer a good natured poke in the ribs when he followed the sage Yoda advice

“Do or do not, there is no try.” with

(But seriously . . . just hit 200+ miles EPA rated, look good, and under $40K.)

The “just” there at the beginning is not The Tesla Way.

If the snippets of the reveal turn out to be the Model 3, it will be a nice looking car. Nicer than the Bolt. But it won’t be $35K. More like $55K, which will meet the goal of having a vehicle that costs half what the Model S does. Keep in mind that the Musk said the Model S would cost $45K.

Delivering a product on time and at the promised price point is not Tesla’s strong suit. Given Tesla’s lack of scale and short history this shouldn’t be totally surprising.

Tesla seems to care more about making an “awesome” vehicle even if that means time and price slip a little.

It is good for one side of their reputation, bad for the other (and bad for their finances).

Musk said the Model S would start at $50k and after Federal credit the Model S 40 started at $49,999.

Musk said the Model 3 will start at $35k before any credits or rebates and have at least 200 miles of real world range.

Yeah, if you want to check off half the options list it will cost $55k.

Yes. Tesla probably makes most of their money off of options.

Since making money off of options is very much the standard for the automotive industry, I would expect Tesla to make their money on options the same as the rest of the car makers.

Tesla has pretty much outright said it themselves, saying that per-unit margins are down due to the end of their push to put out P85D’s that happened earlier this year.

DonC said:

“If the snippets of the reveal turn out to be the Model 3, it will be a nice looking car. Nicer than the Bolt. But it won’t be $35K. More like $55K, which will meet the goal of having a vehicle that costs half what the Model S does.”

Nope. Tesla is aiming to compete on price with down-market BMWs with the Model ≡. For example, they’ll be using a mostly steel body to save on costs.

Everybody says the Model ≡ is supposed to be a “$35k car”, forgetting that Tesla reps generally say “$35 to 40k”. Personally I’m expecting it to be a lot closer to $40k than $35k, and it may come in a bit over $40k. But it ain’t gonna be in the neighborhood $55k. That simply wouldn’t fit the purpose of the Model ≡. If it starts looking like it will have to be priced in that neighborhood, Tesla will go back to the drawing board and redesign it to be cheaper.

In order to hit the 200 mile range at a substantially reduced cost, they will drop size 20% and cannot drop any other efficiencies. So all these will stay: aluminum body, inset door handles, sleek design, 0.26 coefficient of drag. What will shift is standard features into options.

Sort of agree with DonC. I wouldn’t take odds against a $40,000 car. I wouldn’t take odds that the Model III won’t inspire, but I’d take odds Tesla will not produce both an inspiring car -and- at the price of $40,000. This is where scale is really tough not to have.

The Model S is not inspiring because of its luxury materials, but because of its driving experience. That’s great engineering, which can be mass produced. So I think the Model ≡ will and must remain inspiring, not just affordable, in order to sell 500K/yr.

By what I’ve seen, the Bolt doesn’t look good. Nor will it be able to access superchargers.

Nor does it look bad, as does the catfishy face of the LEAF.

The Bolt is about bang for the buck. It breaks through present day boundaries and offers what nobody else has yet come up with – long range at a reasonable price. The Bolt is reality, the Model 3 remains all talk.

I think the Bolt could be the breakthough that gives EVs acceptance into the mainstream market, much as the v.2 Prius did for hybrid drivetrains.

It’s different now – the Tesla Model S caught everyone by surprise… the Model 3, if it ever sees light of day, will not.

I think Tesla should cede the $35k price point to GM and whoever else (Nissan?) enters there, and put the Model 3 into $49k-$59k territory, where they more of a chance of success.

Well, not the “look good” part.

Not a luxury brand? Funny. I wonder how many people cross shop the Model S with a Toyota Camry or Corolla? Tesla spends tremendous amounts of time and energy trying to be a luxury brand. Case in point would be the falcon wing doors. Nothing wrong with this. Being a luxury brand just means you can charge more for a car than a non-luxury brand. What’s not to like about that?

I doubt the Model 3 will be a piece of crap, but if it is, that doesn’t mean Tesla isn’t a luxury brand. Ever hear of the Mercedes Benz CLA?

Falcon Wing doors were the answer to having the X be cool, but have the functionality of the sliding minivan door that is so un-cool.

That functionality bit remains to been seen. If it sucks, you can pretty much bet on Tesla changing it.

Why are sliding doors un-cool. I’m riding around in a Mazda 5 with sliding doors they seem fine to me.

I think Tesla really blew it with the Falcon wing doors. They are cool and I’d love to have them. But they blew the production schedule, they are difficult to make work reliably for a long time, they have downsides (difficult to use roof-rack, ceiling clearance, etc.), and they are more expensive.

This seems like one area where Elon’s desire to make the car cool overrode his practical engineering sense.

Minivans have an in-cool stigma, there should be no argument there.

I don’t really think the doors were the delay with the Model X, but it was an easy excuse. I think the X was waiting on Dual Motor AWD and the denser battery packs we are seeing now 70 and 90.

Tesla also found more demand for the S than they originally thought, allowing them to take more time with X. But just like S, the life of the company is bet on X being a hit.

The Falcon Wing doors go into the same category as the S door handles. Many people find the handles “cool”, so maybe the doors will be worth it.

*phone typing sorry for any typos

“He started off by explaining that Tesla should not be considered an elite, luxury brand.”

Funny thing about this statement is that Tesla did not show up at the National Plug in Day event in Santa Cruz last year and we were informed a reliable source that it was because they did not feel they wanted to market to non-luxury buyers.

I am NOT going to say whether Tesla can do the $35K 200 miles (EPA range, NOT some real world range condition set by Tesla).

But we can look at this:

The old base S60 cost $71K with 206miles EPA range in 2012.

The new Model 3 base will cost $35K in 2017 (claims by Tesla) to have 200 miles “real world” range.

So, Tesla is going to take out $36K out of the car that has similar range, slightly smaller (thus smaller battery which is also cheaper) but in 2018 price (which adjusted for inflation is around $30K in 2012 price).

Now, if typical Tesla has about 25% margin and it is lower on the base S60. With a base Model 3, how much cost you have to take out of it to hit the $35K mark?

I never doubt that Tesla can do Model S and Model X. But the price and range claim of the Model 3 is always doubtful for me.

But Tesla can always pull a S40 stunt by offering a base model at $35K that nobody wants and then cancels it…

electric-car-insider.com

If they sell all they can make of fully optioned Model 3, (500k yr?) that would be very smart business.

I believe they will do that. Shareholders will be very happy. (I am not a shareholder. Lucky Model 3 owners who paid a few bucks more will be happy.

Everybody wanting a really cheap Tesla might have to wait further back in the queue. Welcome to capitalism; supply and demand. This is just the way most of the world works. Getting a good modern car for cheap in Cuba doesn’t work too good either. Pretty much worse as far as I can tell (I very much admire Cuban tech’s ability to keep ’50s era cars in daily use with no OEM parts).

Tesla has said repeatedly that they will make a mainstream car. O’Connell just confirmed that objective, that plan.

Apple charges a premium for their products. Coveted brand. But it would be really hard to say they are unaffordable in most of the markets they sell. Think about the value for money. Is that not what really matters, rather than hitting a specific price point?

“But it would be really hard to say they are unaffordable in most of the markets they sell. Think about the value for money. Is that not what really matters, rather than hitting a specific price point?”

Value is ok to use when you can afford the price.

electric-car-insider.com

My first 300 dpi black and white laser printer cost $6,500 in 1985. A fortune to me back then.

The 2400 dpi 4-color printer I bought a few months ago cost me $100, which I almost could not believe. Phenomenal value.

O’Connel said people incorrectly characterize Tesla based on this point in time. I hear that all the time, even in these forums. High end car for rich guys… yadda, yadda.

Which really does miss the point. Yes, right now Tesla cars are expensive. People who buy one are investing the future so that ten years from now, Tesla will be able to make that car that is a phenomenal value. And affordable to mainstream purchasers.

I have no doubt they’ll do it.

“Everybody wanting a really cheap Tesla might have to wait further back in the queue.”

I hesitate to show my own hand in public, but this might just be completely upside down advice. Here are the two factors that may make this advice completely backwards:

1) Tesla raised their prices right after releasing the Model S, and right after they released the Roadster. The record shows that being first in line scores you the best price on Tesla’s.

2) The $7500 Federal tax incentive may either be near ending, or in the middle of sun-setting as the first Model 3’s are delivered. If you are late to the party, it may end up costing you $7,500, $3750, or $1875 in tax incentives.

electric-car-insider.com

That’s a very good point, Nix. I didn’t mean to suggest people should wait. Only that if, as they did with the Model S, higher level trim packages ship first, people ordering bare bones low margin cars might have to wait longer than folks ordering fully loaded cars.

All the other manufacturers are doing this of course. It’s SOP. Put out fully loaded cars first, so that the people who just can not wait to get the first of the new toys, have the fully loaded new toys. At a premium price. And of course everyone they show the car to is seeing a fully loaded version. It’s just smart business.

I’m actually worried about that exact issue. I’m worried that even if I’m first on the list of pre-orders, and the first Model 3’s are sold with the full $7500 tax incentive, that my delivery might be delayed because I plan on buying one stripped down.

If delivery is delayed into a quarter where the tax incentive starts to sunset, that’s going to cut into my tax incentive plans. I’m highly reliant on both state and federal tax incentives to be able to afford a Model 3. ($13,500 in total in my state). My even bigger worry is that anti-EV politicians take control of both state and fed gov’t, and all those tax incentives are killed. I actually wouldn’t be surprised if the $7500 tax incentive goes away starting Oct. 1st of this year (beginning of FY2016 and the new budget).

electric-car-insider.com

Yep. I’ll be right next to you in line. I won’t be surprised if I’m waiting though.

FWIW, they did ship 40kWh Model S. They just didn’t give them priority like they did with P85S (and for an even bigger premium, and more priority, signature edition).

I would definitely plan on getting your order in like it was a radio call-in sweepstakes. I have never seen interest in any car like I have for Model 3.

One year sold out in advance for $100k Model X (with no one ever getting so much as a test drive) tells you something about what it will be like for a smaller $35k version.

It’s going to be wild.

Economies of scale
Battery cost reductions
Power cost reductions*
Battery size reduction
Power reduction*
Smaller car
Re-use of amortized R&D
Production efficiency

* People tend to focus on the cost of batteries, and ignore the cost of power, but power doesn’t come cheap. JB Straubel has talked about power electronics costs _falling_ to __$100/kW__ in the near future.

ModernMarvelFan asked:

“Now, if typical Tesla has about 25% margin and it is lower on the base S60. With a base Model 3, how much cost you have to take out of it to hit the $35K mark?”

Tesla has said it aims for a 15% margin on the Model S, so that will help. Also, media almost invariably cites a $35k price for the Model S, but Tesla reps actually say $35-40k.

But honestly, I don’t see why people are so skeptical about Tesla being able to make a compelling car in this price range. Aside from the expensive battery pack, a BEV should be cheaper to make than a comparable (in build quality) gasmobile. The only appropriate place for skepticism here is regarding just how much the Gigafactory can lower the cost of the battery pack.

15% margins on Model 3 across the vehicle line. That will probably mean break even or slight loss on the $35k model and 25% margin on the loaded $50k – $55k model.

If Tesla can stay in business long enough to get Model 3 out the door, it will be an awesome car.

Josh said:

“Minivans have an [un]-cool stigma, there should be no argument there.”

Yeah, but are sliding doors part of the un-coolness? In my opinion, the un-coolness is due to the fact that a minivan has to be an ungainly box. There’s not much room for sexy body lines when most of the automobile’s exterior has to be made of large flat planes, nor much room for nimbleness or responsiveness when it’s a large, tall, heavy automobile with a large turning radius.

The Model X is out of my price range, but if it wasn’t, I would actually prefer sliding minivan type doors. That’s well-established technology, with a proven track* record, and reasonably reliable. Falcon wing doors will be more complex, are something never before seen on a production car, and it’s reasonable to expect them to be more problematic.

*pun intended

The problem is, if they put sliding doors on the Model X, everyone would call it a $100k minivan.

It is a $100k SUV, so they need to have some wow factor. Falcon Wing doors are the wow.

Like I said above, if they suck, I bet Tesla will change them.

Ok, this company makes great cars but can someone tell me when it will actually start making money? I mean, realistically speaking. No wishful thinking. History knows many manufacturers making great cars and ultimately failing because they could only generate loss.

Rob — By “make money”, do you mean on a cash-flow basis, or on an equity basis? GAAP or non-GAAP? “Make money” per unit sold, or “make money” based upon net profits either including or excluding investment into expansion? When would you expect a company to make profits while they are tripling their product lines (adding Model X and Model 3), at the same time they bring in-house a major portion of their manufacturing (Giga-factory) as multi-year projects? Right now Tesla is creating value in their company, whether they are burning cash or not (they are). You can create value while burning cash as the same time. Two completely different things. Trump values his “brand” at over $3 Billion. One of the items of value that Tesla is building is the value of their brand, which many folks fail to value when they talk about Tesla and money. Tesla will continue to burn cash while they continue massive expansion that most companies can only dream about. But massive expansion absolutely doesn’t mean they are failing. If they stop massive expansion, and STILL burn cash, that would be a problem. But burning cash is how you grow and expand, and growth… Read more »
electric-car-insider.com

+1

I was thinking mainly about cash flow. In medium term Tesla must become profitable or it will not survive. It can borrow now the way it relies on credit or infusion of capital simply, and only, because the capital is dirt cheap. All this can change very soon.
I was thinking about the car manufacturers from the early times of the industry – Bugatti (the original) for example.
By the way, you did not answer my question.

Electric-Car-Insider.com

Musk is on record as saying 2020.

Given the investment in the Gigafactory and Model 3, it makes sense.

Tesla has committed to remain a growth company until at least 2020, reinvesting all profits into growth. If you want to call that “profitless”, well I guess that’s the investor’s viewpoint, but it seems to be firmly ignoring reality to me. Tesla most certainly does make a profit selling its cars, despite the nonsense we see posted on investor websites about Tesla “losing” money on every car. After 2020, I don’t know that Tesla has any firm plans. The original vision of Tesla Motors founders Martin Eberhard and Marc Tarpenning was to take advantage of the battery market producing cheaper and cheaper batteries by making less and less expensive BEVs, until they reach that “everyman” breakthrough BEV. The Model ≡ will still be more expensive than that; the best-selling gasmobiles in the USA sell for about $18k-25k. So if Tesla continues with its original vision, then they should continue to be a growth company for at least one model beyond the Model ≡ line, and realistically probably two before they get to $25k or less. But Elon Musk has stated that he may leave Tesla after the Model ≡ is well into production, and Tesla may change direction when someone… Read more »

….for bring back an image of Doris Day singing Que sera, sera.

Thank you speculators, for bringing back an old image of Doris Day singing “Que srea, sera”.