From My Wonderful Collegue, Fritz Maffry, Who Has Been Studying the Electric Transportation Market Carefully Since Its Very Inception
Even though the delivery of Tesla model 3 vehicles might be two to three years off, getting lines longer than when Apple rolls out a new phone, and 198k reservations, set up a realization for the world that a new reality is being forged, and it has legs. For example, the lines were up to 500 people in San Diego, but a similar phenomenon was going on all over the place, and online. The car is good looking and has great specs. Now the firm just needs to execute, which is no easy challenge.
But it is a huge emphasis, that the public cares, that affordablity matters, that pundits who talk about range anxiety are vapid. A monumental shift is coming to transportation and don’t forget Elon wants solar powering for his vehicles too. Paid reservations, that gets the financial communities’ interest. The sheer numbers capture the public’s imagination of yes, this is doable. Over time Tesla will drive down the “skateboard costs” of the drive platform, setting up very affordable autonomous shuttles.
The Bolt execution was tremendous and comes way earlier than the Tesla 3. Tesla has the public’s imagination, and Musk has taken the mantle from the departed Jobs and is the innovation champ for a new generation.
No car maker can watch what is developing without having a strategy to compete capably here. Already that has huge new teaming partnerships getting ready, such as LG Chem with GM, or the entire Japanese industry getting on with preparing autonomous technology. Auto dealers must be slack jawed that Tesla pulled this off in two days, and no independent auto dealers were involved.
Hearing that countries like India, Norway and Holland now have goals closing on 100% in this context start to set the tone. The auto dealers and old line makers just got served, the future is going to be very different and you better start running. A little reality may creep into events as the date gets more tangible, how far off it really is, and the possibility of delays (note, Tesla has had lots of delays before).
But as a force of nature, Elon has changed the mood of the public, changed the reality of how people are thinking about where things are going. A great environment is standard expectation for the coming generation, and their brands better deliver for them. Milquetoast efforts of political gridlock look so staggeringly incompetent comparatively.
The salvo of GM and Tesla is this is real and needs to be lifted way up in priority for policy and infrastructure preparation; next will come Nissan with some news of their own. These three have really moved up the learning curve; it will be telling in the next phases of the market competition. Going against Tesla’s third generation with your first generation, probably not a lot of fun.
Wait until autonomous magic is out and available, the public will have another seismic shift in comprehension of how amazing this is going to be, and also the massive scale of benefits realized. And the uninspired who thwart and handicap this movement, well they are going to get embarrassed and steam rolled.
So expect more progress with autonomous, electrics, wireless charging, smart transplantation management via laser mapping and artificial intelligence. These systems are now advancing dynamically in parallel at a sprint.
If 198k reservations doesn’t stir the policy and government types to action, then they will probably be departing those positions soon. This is real, preparation has to happen now, and at a bold level, beyond anything done in most localities by a magnitude. We expect Elon to start talking more about solar and battery tech, and battery pricing is entering the virtuous level where big things start to become possible with renewable energy, particularly solar. Remember still, these are just early innings, and already the game is changed, oil is in disarray, while electric is showing gigantic advancement. Electric is just getting warmed up. Electric and autonomous together, now this is the stuff of a new epoch.
So yesterday was a monumental day, and today is April Fools. The confidence of America has changed towards clean energy and electric transportation, it soon will be on autonomous and energy storage.
http://www.bloomberg.com/news/articles/2016-04-01/tesla-s-model-3-lives-up-to-the-hype
And for a little April Fools fun
https://www.youtube.com/watch?v=LSZPNwZex9s&feature=youtu.be
Craig,
The email link to your “Making fossil fuels obsolete” is not working.
In which post?
This dynamic post is so surprising that I had to double check to see what I was reading. A great post Craig! And thanks for the April 1st smile.
The credit goes to Fritz. This post quickened my pulse too.
And yes, that April Fools joke is priceless.
Color me skeptical.
2016 will mark the 3rd year in a row where EV sales growth were <20%, which is terrible for the initial years of an extreme niche market with very poor margins. I think EV's at large are showing very little promise thus far, and I'm very thankful for that because every sale is still worse for the environment than a hybrid-electric vehicle of similar size.
But the Tesla 3 does indeed have a great deal of initial interest. Of course, that won't necessarily translate into a successful rollout.
First you have to get around the fact that this car is being marketed as a "Tesla for the masses". This is the basis for a 5-year marketing campaign.
So there is a lot of interest and a lot of expectations. But as of yet we have no hard specs… just statements of goals. A significant portion of the people who have put money down will be disappointed with the final specs whenever they are released, and they will cancel their orders. The final product will not be significantly better than what is currently available in the same price range, so the initial breathless rush will fade into competition.
Second, and more importantly, Tesla has to start making money on something. Between the S and the X, Tesla is seeing a margin of ~25%. But last year they lost a net of ~$900 million, and they were sitting on ~$4.2 billion in scheduled liabilities for 2016 as of Jan 1.
They are losing money hand over fist by selling the high end cars. If the Tesla 3 meets all of the (non-binding) promises that they've made, then the margins would likely be negative for the first few years, which would only expand their ever-ballooning debt even faster. The company has never made money, and the rate at which it is losing money is increasing every year… and now they are promising the moon at $35k.