A serious review of the case for and against Tesla viability

I didn't care for it due to the simplistic analysis on both sides.

Bob Wilson

 

The article seems to miss the point IMHO. Tesla should be able to become profitable by competing with BMW, Mercedes, etc., as the market for entry level luxury cars is big enough to support Model 3 sales of hundreds of thousands of units annually. This also would involve making a larger proportion of the higher end, more profitable Model 3. They can do this now without investing more capital into larger factories. That's my "Tesla succeeds" case.

Trying to go downmarket too soon is my "Tesla fails" case. To compete in the $30K and under price range, they'll need more models and more factories which will require cash that they don't have. They could try to sell a lot of $35K Model 3s, but based on past remarks from Elon that will be difficult to do profitably in the near term. It also changes the nature of the Tesla brand from an aspirational car (like Porsche) to a transportation appliance (Toyota, Hyundai, etc). Porshes sell on emotion, appliances sell on quality and value.

 

If Tesla can build 500,000/year annually in the factory they currently own, I don’t see why using that capacity would be anything but good.
Frankly, it is less efficient to build less than 500,000/year with that capacity.

I also don’t believe BMW’s rep has been hurt in the least by offering less expensive cars.
In addition, it might accelerate Toyota’s plans to sell a BEV in the US, which would be a good thing.

 

With the Model Y, Semi, and a pick up in the works, Tesla won't be getting to an under $30k car anytime soon.

 

I'm assuming Tesla won't be able to build 500k units a year until about 2020. That's 10k / week, while we haven't seen 5k / week sustained. I'd expect by the end of 2018 they'll be at 5k or more every week, without having to put in extraordinary effort. If they can double that by the end of 2019, that would be 2020 before they produce 500k in a calendar year. Looking at BMW / Mercedes / etc., they should be able to sell all those units for a $50K average selling price or more.

What is a "less expensive" BMW? Would that be the 1 series which starts at $35K (if my quick Google search is accurate)? Or are you referring to the Mini, which is a separate brand name so that their $20K-something offerings don't actually have to have a BMW badge on them?

 

seemed very simplistic, and just rehashing what both sides have said. (kinda like here, and we aren't senior policy and legal analysts for the ucs) nothing new or enlightening.

 

They will implode when the tax credits expire . RIP Model 3

Kenny

 

When the tax refund goes to half, or when they completely disappear (end of 2019 I believe)?

 

another shorter, hoping against hope.

 

Stopped reading after:

"...EVs will succeed and so too will Tesla. The Tesla brand has developed an allure strong enough to get them over any financial hurdle."

Really?

Credibility:
Fail.

 

Where is Tesla going to get all the money to build a factory in China and the EU pretty much simultaneously? What will happen when something major happens (sabotage, storm, strike, etc) stops/destroys the only current battery or auto production plants? What happens to their financials even with higher rates of sales/deliveries with the currently planed tariffs in the short term when they have multiple loans that are due and must be refinanced at higher rates? The competition offers pretty much the same functionality with a dealer network (but without superchargers, I know)? Cheaper? Elon's could have a health issue?

There are lots of uncertainties. I'm rooting for them

 

there are uncertainties for all companies.

 

They got to 5000 per week of Model 3, while doing about 2000 of Model S and X. If sustained that is an annual run rate of about 350K.

Mike

 

The base price of the BMW 3 series is $34,900. BMW 3 Series – Gran Turismo, Sedan & Sports Wagon – BMW USA

I see now you were talking about sub-$30k vehicles.
I don’t see any reason to think of that as an option. Tesla’s plans for their next three vehicles are the Model Y, Tesla Truck, and Roadster. None of which are sub $30k.