The AMZN model won't work b/c no matter how good Tesla's products are, he won't be allowed to create a monopoly. The zeitgeist has shifted, and VC's and investors who are betting on future market domination or monopolies are going to be disappointed.
The zeitgeist has shifted? The zeitgeist hasn't changed since 1847, when Marx wrote about the character of monopoly in The Poverty of Philosophy. It hasn't changed since President Harrison signed the Sherman Antitrust Act in 1890. It hasn't changed since Standard Oil was broken up in 1911, over a century ago (with Standard Oil of New Jersey and Standard Oil of New York recombining in 1999, the broken up monopoly come back to life).
It hasn't changed since the breakup of Ma Bell in 1982, the Baby Bells having re-formed into two companies: Verizon and AT&T, who control the last mile of wire and wireless, the network neutrality of which they have been fighting against. It hasn't changed since the big eight accounting firms became the big four accounting firms. It hasn't changed as Google and Facebook swallowed up all online advertising, search, social networks etc.
The idea that the zeitgeist has shifted from monopoly is absurd. Billionaires from Warren Buffett to Peter Thiel seem to think otherwise. In every industry, mergers and acquisitions leave an increasingly fewer companies with control of more and more of their markets. The data is out there and quite obvious, you really have to put on some kind of ideological fantasy land kool-aid trip to see otherwise.
Most people will be driving either a Tesla or a Chinese-made electric car in a couple of years, and like with the iPhone vs. cheap Androids there is a good chance that people will prefer Teslas for their familiar UI, American design, or some other reason we currently don't even have on our radar.
Why are people so sure of this, especially given the recent plummet in oil prices? Car sales are at all time highs. Why do people assume that there's going to be a mass exodus to Tesla and EV's in the next few years?
Oil companies recently raised their projections on EV adoption by 40% [1]. Many countries are setting aggressive EV quotas, targeting 100% EV adoption in the near future [2, 3]. Perhaps counter-intuitively, oil prices have not historically affected EV purchases [4]. Detailed sales trackers have shown consistent year-over-year growth in the EV segment for the past 22 consecutive months [5], a time when oil prices have been relatively low [6]. Even with low gasoline prices, driving an EV is reported to be less expensive per mile [7].
Because many think they will be more comfortable to use, have better entertainment systems and everyone can experience sportscar-like acceleration for spending less money than a gas-powered car.
They're not going to be a monopoly. They will be the only company on the planet that can produce the motors and batteries(!!) that are required for high quality and reliable EVs.
Tesla will make some cars for Tesla fans. Tesla will make billions selling key parts to everyone else. So they'll be the new Bosch of EVs, really.
I am not convinced they have the best battery technology or even EV technology. They are certainly best at touting their technology. They make choices and when questioned on it they talk over the subject.
I do hope they succeed this is a major market; automobiles and such; that needs new infusions to move forward both in technology and design. However they are at a very dangerous point in their history and how they execute over the next six months is most important.
Motors aren't a secret technology. And Panasonic makes the batteries and sells to Tesla. The only thing Tesla can sell as technology is Autopilot, which is just hyped up driver assistance.
Have you even heard of electric cars like Renault Zoe, Chevy Bolt, BYD ev300? All with range from 180-230 miles, selling since 2016.
I really doubt the other car companies will let that happen. Either they'll work out the battery and motor tech themselves OR they'll push for hydrogen. The automotive industry isn't going to let a company like Tesla bully them around.
Audi already had to scrap one of their EV models, because its technology was so far behind Tesla's by the time it was ready to hit the market.
Traditional car makers are just extremely slow to adjust, because they have never faced any real disruption. They've effectively been selling the same product for decades with only some marginal and incremental improvements. Tesla, on the other hand, is using the SV model of doing business: First create an MVP, then iterate rapidly until you have something that is so good, it can steamroll the market. When Tesla was founded, traditional car makers laughed at them, claiming they would never be able to even build a proper car. These comments are eerily similar to what the Palm CEO had to say about Apple and the IPhone ten years ago: That a couple of computer people from SV would never be able to build a proper phone.
Traditional car companies are entirely unprepared to deal with the kind disruption that is coming to their market. And that does not only concern EVs but also self-driving cars and the sharing economy. I don't think they can stop Tesla. The real question is how much of their business they will be able to save.
I think the term you're looking for is "history" [1] as in, "tech people tend to adopt a historical view of older companies." With extremely few exceptions, the older a company gets the more obsolete it becomes [2].
To be honest, I'll be surprised if Tesla is producing EVs at that rate too... They have 3 models of cars. I'm not even sure there is a market for 500k/year of those three models. Even expanding that to 4 models (Y) would still leave those numbers hard to hit.
Elon rarely makes categorical statements about future goals, usually throwing in a few weasel words, or "we project" or "we plan", but during Tesla's last earnings call he said:
“What people should absolutely have zero concern about, and I mean 0, is that Tesla will achieve a 10,000 unit production week by the end of next year. […] I think people should really not have any concerns that we won’t reach that outcome from a production rate.”
And I have no doubt that they will reach a 10000 unit week. And they will probably have that production capacity. But once their backlog of orders has been filled, how many orders will they realistically have per week? I think that is the outstanding question.
And how many of those new cars sold for > $35-40k?
Tesla certainly has a market, but it isn't competing for the same consumers that Honda is. The market Tesla is competing for is significantly smaller than 17M.
The amount of people who can afford any new car is not the same as the number of people who can afford a new Tesla.
I've had my Model 3 reservation since the day they opened... but it's highly unlikely to assume that Tesla can hit those production marks with the (admittedly) limited line up it has.
Across their entire lineup BMW sold 2.4M cars in 2016 (including MINI) [1]. I just don't see them selling 500k/year in the immediate future. Once they add models (the Y, a replacement for the Roadster, and a Truck), then they very easily could blow through that rate. But baby steps... I'd rather see Tesla exceed modest expectations than fail to meet unrealistic ones.
Eh... assuming demand is there. I guess it could be, but price of the car matters, prices of oil matter, politics and lobbyists matter, success of this rollout matter. There's some risks here before you call it "too late".
Also... nissan has an interesting play here. Waiting to see what they do.
Tesla has been around for a while and GM actually has a car that directly competes with Tesla Model 3, and many are coming. Sure Model 3 will be marquee model, but it did not have surprise element of iPhone nor people buy Cars every two years. Even to this day, building EVs with big batteries is not economical or profitable, that may change now, but building EV is not a rocket science. Every major Auto manufacturer has the know-how, they may be constrained by the supply-chain in the future. With low gas prices, people want SUVs not Sedans, if Model 3 was economic SUV, Tesla would have voraciously eaten couple of Car companies, its a Car and so the rest of the ICE world, will survive them!
It can be your fantasy, your dream, your oprinion, that's all very fine. But you cannot say that is what is going to happen, that's just one bet, one possibility (and not the most likely IMO) amongst several possibilities.
Robert Bosch GmbH, the - amongst other things - automotive supplier is not a publicly traded company, but the German equivalent of a LLC. (Some subsidiaries are traded on the stockmarket, though)
This is exactly the kind of junk that makes HN the cesspool that it has become. Do you really think that only Tesla can make electric motors, despite it being a mature, 150-year-old industry in which Tesla ships only about 15% of the electric cars? Where Nissan ships product at a dramatically lower price? Did you know that trains and elevators and blenders are also electric, and companies like Alstom and Kawasaki and Bosch make them?
By the way Tesla hasn't made a battery, ever. They are made by Panasonic. Tesla packs them into little metal boxes.
