"This is the big thing about Tesla that people don't understand" - Yahoo Finance

ecarfan · Jul 12, 2015

This is the big thing about Tesla that people don't understand - Yahoo Finance

As usual, Yahoo reaches new depths of shallow journalism. This quote from the article illustrates how the writer got it wrong:
"Bottom line: Tesla builds cars ... on an assembly line ... and then delivers them to customers. They're fast and networked and everyone loves them. But the business model ultimately isn't that different from what Henry Ford cooked up for the Model T."
Wrong. In fact Tesla is an energy storage and management company that has started out building cars, fantastic cars and Tesla will continue to build more and more of the , but is now branching out into building batteries for a variety of purposes. That business is likely to become much larger than the Tesla car business, which is why Tesla has already decided to expand their enormous Nevada battery factory and make it even more staggeringly enormous.

pthill65 · Jul 12, 2015

I agree, and there's a lot more that's different. I realize I'm preaching to the choir here but:
* Internet based ordering
* Cutting out dealers
* Updatable product
* No money on advertising
* Integrated factory/service

I'm sure many of you could add more, and this is only in looking at Tesla as a car company, not, as ecarfan points out, as an energy company, a builder of charging infrastructure, a company integrated with a rocket building company and a solar installer...

Johan · Jul 12, 2015

It's a great statement. The production growth curves for Ford's and Tesla's first few years mimic each other almost a bit scarily. Ford at that time with his ICE vs. horse and buggy is what Tesla is today with BEVs+all the Tesla concepts (especially direct sales and Supercharging) vs. established ICE makers and their modus operandi.

CHG-ON · Jul 12, 2015

I get and agree that Tesla is becoming an energy company. But I think at this stage they are a car company fist and energy company second. They started as a car company using a different energy source. I am all for them moving to a higher plane. But an energy delivery or storage company is a completely different animal than an auto manufacturer and I don't want them to lose site of the differences and complexities in building an item with so many interrelated parts that must work in unison. This is ignorance on my part, but I am guessing that building the products that come off the gigafactory assy line will be, from a production line POV, much simpler to do than building a car.

If they are to continue to compete with MB, BMW, Audi, etc, they need to up their game on initial build quality coming off the line. It's good and my car has been GREAT. But I have read an awful lot about quality problems here on TMC. That needs to be fixed at this price point and I am confident that they will do it.

ecarfan · Jul 12, 2015

CHG-ON said:
I get and agree that Tesla is becoming an energy company. But I think at this stage they are a car company fist and energy company second. They started as a car company using a different energy source. I am all for them moving to a higher plane. But an energy delivery or storage company is a completely different animal than an auto manufacturer and I don't want them to lose site of the differences and complexities in building an item with so many interrelated parts that must work in unison.

I do not see how Tesla could falter in their goal of building the world's greatest car since that has been their focus for the past decade. My point is that one should not value the company based on them being a "car company". That is very shortsighted and almost willfully ignoring the reality of the Tesla Energy products and the Gigafactory project which from the start has been stated to include significant capacity for battery products not destined for use in vehicles.

tander · Jul 12, 2015

Johan said:
It's a great statement. The production growth curves for Ford's and Tesla's first few years mimic each other almost a bit scarily. Ford at that time with his ICE vs. horse and buggy is what Tesla is today with BEVs+all the Tesla concepts (especially direct sales and Supercharging) vs. established ICE makers and their modus operandi.

What I wonder is if they will lower the price of the model 3 each year like Ford did, shareholders might not like it but I bet it's a consideration.

tdelta1000 · Jul 13, 2015

Interesting...the journalism community still does not realize that Tesla Motors is a car manufacture with several other products and not the other way around.

tonybelding · Jul 13, 2015

Johan said:
The production growth curves for Ford's and Tesla's first few years mimic each other almost a bit scarily. Ford at that time with his ICE vs. horse and buggy is what Tesla is today with BEVs+all the Tesla concepts (especially direct sales and Supercharging) vs. established ICE makers and their modus operandi.

Several Tesla moves could have come right out of the Henry Ford playbook. Ford wanted to do everything in-house. Tesla brought a lot of parts production, including plastic parts, into the Model S factory rather than outsourcing. Ford had the River Rouge Complex, Tesla has the Gigafactory. Ford fought the Selden patent, Tesla gave away their patents. Henry Ford was notorious for driving his employees hard -- does that sound like anyone we know?

Johan · Jul 13, 2015

tonybelding said:
Several Tesla moves could have come right out of the Henry Ford playbook. Ford wanted to do everything in-house. Tesla brought a lot of parts production, including plastic parts, into the Model S factory rather than outsourcing. Ford had the River Rouge Complex, Tesla has the Gigafactory. Ford fought the Selden patent, Tesla gave away their patents. Henry Ford was notorious for driving his employees hard -- does that sound like anyone we know?

Absolutely right! Which is why being compared to Ford isn't bad, as long as you compare the young Tesla company of today with the young Ford company of the early 20th century.

tander · Jul 13, 2015

Johan said:
Absolutely right! Which is why being compared to Ford isn't bad, as long as you compare the young Tesla company of today with the young Ford company of the early 20th century.

Makes me wonder what Henry Ford would be building his cars with if he was starting today...guessing they wouldn't be gas powered. And Rockefeller probably wouldn't be going after anything oil related either.

Bangor Bob · Jul 13, 2015

tander said:
Makes me wonder what Henry Ford would be building his cars with if he was starting today...guessing they wouldn't be gas powered. And Rockefeller probably wouldn't be going after anything oil related either.

Ford's early cars weren't all gas powered either.. Gas wasn't really a sure thing until the electric starter came into being.

jvonbokel · Jul 14, 2015

Johan said:
It's a great statement. The production growth curves for Ford's and Tesla's first few years mimic each other almost a bit scarily. Ford at that time with his ICE vs. horse and buggy is what Tesla is today with BEVs+all the Tesla concepts (especially direct sales and Supercharging) vs. established ICE makers and their modus operandi.

Do you have a good source for early Ford production growth data? I'd love to see that myself.

Johan · Jul 14, 2015

jvonbokel said:
Do you have a good source for early Ford production growth data? I'd love to see that myself.

Sorry, no. I thought I did when I started writing the post but turns out I was recalling an article about GM's early years. The one I linked.

jvonbokel · Jul 14, 2015

Johan said:
Sorry, no. I thought I did when I started writing the post but turns out I was recalling an article about GM's early years. The one I linked.

I didn't see a link... did I miss something?

caddieo · Jul 14, 2015

tonybelding said:
Several Tesla moves could have come right out of the Henry Ford playbook.

Ford was also very influential in encouraging and promoting the spread of gas stations. Superchargers, anyone?

Johan · Jul 14, 2015

jvonbokel said:
I didn't see a link... did I miss something?

Sorry. Absent minded

http://www.forbes.com/sites/greatspeculations/2013/06/03/tesla-stock-today-looking-a-lot-like-general-motors-in-1915/

jvonbokel · Jul 15, 2015

Johan said:
Sorry. Absent minded

http://www.forbes.com/sites/greatsp...ay-looking-a-lot-like-general-motors-in-1915/

Wow... that article (and the comments) were spot on. Wish I'd had that foresight at the time.

neroden · Jul 17, 2015

ecarfan said:
But the business model ultimately isn't that different from what Henry Ford cooked up for the Model T."

Ford was a pretty good investment even after the Model T had been selling for several years.

Maybe the real point here is that other car companies *aren't* using the Model T Ford business model. At some point, Alfred Sloan developed the GM business model of selling cars as "lifestyles" through heavy advertising, and using planned obsolescence in order to drive turnover, rather than Ford's model of selling useful, high-quality products at reasonable prices.

The Sloan model has taken over the car business. Tesla is using the Ford model, which is totally different.

- - - Updated - - -

CHG-ON said:
If they are to continue to compete with MB, BMW, Audi, etc, they need to up their game on initial build quality coming off the line.

Y'know, in its early days Ford was considered to have poor build quality. My grandmother who grew up in the 20s looked down on Fords... they were the car for the masses. She, of course, drove *fancy* cars...

But the build quality problems with Fords were strictly cosmetic. The cars worked.

- - - Updated - - -

tonybelding said:
Several Tesla moves could have come right out of the Henry Ford playbook. Ford wanted to do everything in-house. Tesla brought a lot of parts production, including plastic parts, into the Model S factory rather than outsourcing. Ford had the River Rouge Complex, Tesla has the Gigafactory. Ford fought the Selden patent, Tesla gave away their patents. Henry Ford was notorious for driving his employees hard -- does that sound like anyone we know?

Yeah, this is really sounding like the right parallel, isn't it?

Eds · Jul 18, 2015

Originally Posted by CHG-ONIf they are to continue to compete with MB, BMW, Audi, etc, they need to up their game on initial build quality coming off the line.

Just wondering how will Tesla respond to other car manufacturers releasing electric powered vehicles that have a. significantly better interior quality b. high ranking in vehicle quality?

1. Reduce price of their vehicles; lower profit margin?

2. Improve qulity; higher cost of design and development and materials used?

3. Get out of vehicle business and focus on energy storage / management?

pthill65 · Jul 18, 2015

I get that I'm probably feeding a troll here, but you are assuming the outcome of a hypothetical comparison of subjective features of yet to be released vehicles. Furthermore, you are imposing only three choices, when many more would exist, should this assumed/hypothetical/subjective future of yours come to pass. I sense a different agenda than open honest discussion.

"This is the big thing about Tesla that people don't understand" - Yahoo Finance

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