Tesla, EVs, and the auto industry's response

[ChadS]

I still feel the lack of explanation for the Cybertruck design is leading many to focus solely on the unusual design, and ignore what's really great about the Cybertruck. But in another thread it came up that Tesla could have provided all the same functionality with a different design at a higher price...the exoskeleton was chosen primarily to get the price down, and other decisions came from that. So if Tesla had explained their design process...would people now be focusing on how Tesla chose the cheapest design? Interesting question. Focus on a low price is not the best way to build excitement about a new product in an expensive category where most buying is emotional. Maybe that is why Tesla was obtuse about their design choices. Hmm, I'm still not sure that was the best way to go.

But, enough speculation about Cybertruck design. What about the early automaker response to it? While they haven't known details about the Cybertruck, the other automakers have known that something would be coming for a few years.

I just saw a claim (not directly from the automakers) that both GM and Ford's electric trucks will start off in very small quantities...building up to the enormous number of 40k per year by 2024. Note that the 3M truck sales per year I noted above was US only; so these guys only plan to build somewhere on the order of 1% of their trucks as electric. Of course plans can always change, but they are clearly not following the Volume strategy with those numbers. Given the numbers and market loyalty, I doubt it's primarily Conquest strategy either (by offering an electric truck where they didn't before they would indeed get some new customers; but likely not enough to make the strategy worthwhile with those numbers). Compliance numbers can be obtained in lower-margin segments, so I don't think they will do that with their high-margin trucks either. That number could point to a Halo strategy, and I can't rule that out yet until I know more about the trucks (they'd have to beat Tesla's specs to make that work, but not Tesla's price). But given the high-margin importance of the truck market, I'll bet they will really mostly follow the Defensive strategy - they are just doing a quick reflexive response to Tesla to keep their customers from jumping ship.

A Defensive Ford or GM truck will not have to meet or beat Tesla specs or price. It will basically just have to be a GM or Ford truck and be electric, and then many loyalists will stick with their brand rather than moving to Tesla. Design-wise, it may look a lot like a compliance vehicle, but again because of margins that won't be the primary reason why they build the trucks - keeping truck customers is more valuable than earning credits with trucks, given the credits can be earned in a cheaper segment. The Defense trucks won't be a permanent fix, but will give Ford and GM more time to develop a Volume truck strategy.

 

[renim]

I..... Meanwhile, their engineering departments are sweating, wondering when the boss is going to come in and demand that they come up with something to match the Cybertruck’s specs and price but with conventional styling, and then someone is going to have to deliver the bad news that they can’t ....”

I suspect their bosses will understand all too well, its a problem for the marketing department.

 

[wdolson]

I think the Cybertruck’s presentation was very poor and failed to convey all the ways that the design is brilliant. It’s taken me a few days of research and contemplation to understand it.

In time (and remember, it’s two years out from even shipping) this is going to become a hugely influential design. Iconic, even. Other truck makers will have to emulate it. They won’t have any choice; it will be the only way for them to compete. This is what pickup trucks will look like.

I expect that the management at Ford and GM and FCA are laughing and breathing a sigh of relief right now, confident that this “electric weirdmobile” poses no threat to them. Meanwhile, their engineering departments are sweating, wondering when the boss is going to come in and demand that they come up with something to match the Cybertruck’s specs and price but with conventional styling, and then someone is going to have to deliver the bad news that they can’t do it.

“I canna change the laws of physics, Captain!”

The Tesla truck is fine for the SUV/stylish truck market, but this doesn't work for the commercial truck market. The bulk of the pickups out there have a separate bed that can be removed and replaced with a commercial bed.

 

[Sean Wagner]

The Tesla truck is fine for the SUV/stylish truck market, but this doesn't work for the commercial truck market. The bulk of the pickups out there have a separate bed that can be removed and replaced with a commercial bed.

I just know too little about the commercial truck market, but judging by cost & capability, I think the dichotomy you mention is important.

Before the unveil, I was wondering how big a leap in battery cell cost Tesla would present and doubted it would enable longer range hauling at a competitive price.

It seems the projected leap in cost is very significant, but - as expected - still not enough to become a viable alternative in many segments of the commercial market. Which leads me to wonder where numbers will settle when the novelty of Cybertruck fades, as it will.

Addendum: in this context, and considering the SUV/stylish truck market, let's also consider that most Tesla trade-ins are non-domestics, so in the following table, it's the Toyotas of this world that matter more:
Light trucks in the U.S. - best-selling models 2018 | Statista
The Toyota Tundra sold 118K times in 2018.

While the cost of capital to transition Cybertruck to mass production will be much lower than anticipated, there's also an opportunity cost when it comes to driving the mission forward - for instance, a cheapish panel van for metropolitan regions could become ubiquitous while needing maybe 55-85 kWh of capacity.

For markets outside the Americas where the need for long range is less acute, Cybertruck's dimensions narrow its use cases.

I'm beginning to think this is a Tesla that takes a back seat to the S, 3, and Y when it comes to real world impact, and that we'll need another three to five years of solid battery development after 2021 to change this.

The very good news is that the 3 and Y [and now less important S and X] continue to benefit from Tesla's ongoing efforts.

 

[tonybelding]

The Tesla truck is fine for the SUV/stylish truck market, but this doesn't work for the commercial truck market. The bulk of the pickups out there have a separate bed that can be removed and replaced with a commercial bed.

Uhh, it's targeting the F-150, not the F-250 and F-350. The vast majority of light duty trucks will never have their beds replaced.

And I'm not talking about SUV/stylish suburban lifestyle vehicles. I grew up on a ranch, we used pickups for work. We beat them up pretty hard and went through a lot of them, and the only bed we ever replaced was one big IH truck (at least ¾ ton, i.e. F-250 class) that we had converted to a dump truck.

Here in my little town I occasionally see a pickup with a flat bed put on it, but it's not that many, and most of them appear to be ¾ ton models which the Cybertruck was never meant to replace.

 

[Sean Wagner]

Uhh, it's targeting the F-150, not the F-250 and F-350.

Cyber six by six incoming.

 

[wdolson]

I just know too little about the commercial truck market, but judging by cost & capability, I think the dichotomy you mention is important.

Before the unveil, I was wondering how big a leap in battery cell cost Tesla would present and doubted it would enable longer range hauling at a competitive price.

It seems the projected leap in cost is very significant, but - as expected - still not enough to become a viable alternative in many segments of the commercial market. Which leads me to wonder where numbers will settle when the novelty of Cybertruck fades, as it will.

Addendum: in this context, and considering the SUV/stylish truck market, let's also consider that most Tesla trade-ins are non-domestics, so in the following table, it's the Toyotas of this world that matter more:
Light trucks in the U.S. - best-selling models 2018 | Statista
The Toyota Tundra sold 118K times in 2018.

While the cost of capital to transition Cybertruck to mass production will be much lower than anticipated, there's also an opportunity cost when it comes to driving the mission forward - for instance, a cheapish panel van for metropolitan regions could become ubiquitous while needing maybe 55-85 kWh of capacity.

For markets outside the Americas where the need for long range is less acute, Cybertruck's dimensions narrow its use cases.

I'm beginning to think this is a Tesla that takes a back seat to the S, 3, and Y when it comes to real world impact, and that we'll need another three to five years of solid battery development after 2021 to change this.

The very good news is that the 3 and Y [and now less important S and X] continue to benefit from Tesla's ongoing efforts.

There are many commercial uses for trucks that require less than 200 miles of driving a day. Every municipal fleet has many trucks to maintain city services. Our town has about 10K people and it owns 20 or more trucks. Some have commercial beds on them for specialty purposes, but others are standard pickups. Utilities also have commercial trucks that are the same guts as the King Ranch pickups you see tooling around. They might put a cherry picker on there, or some other specialty bed, but if you look at the badge it probably says F150, F250 or F350 (or the equivalent from GM or Dodge).

Some commercial uses require more range than an electric is going to provide right now. For example a ranch truck usually needs to go long distances without refueling. They usually buy them with extra fuel tanks for that purpose. My sister has a truck for hauling her horse trailer and her first truck was a retired ranch truck that had a couple of tanks with something like 40 or 50 gallons capacity and a switch in the cab to switch between tanks. She likes to go horse camping in the mountains, so having the extra range is good insurance.

In layout the Cybertruck is sort of a stylized El Camino, though it has the towing and hauling capacity of a real truck. Th El Camino was built on a car chassis which is why it was a more sleek looking pickup. It had its followers, but died out a little before car companies quit making the long chassis sedans/station wagons.

For a short while there was a Cadillac Escalade pickup that was laid out kind of like the Cybertruck with a relatively short bed and large cabin. There was also a Lincoln pickup for a while, but it looked more like a standard Ford series pickup.

My thought when I first saw the Cybertruck was I thought it looked like Tesla was trying to take the gang banger SUV market away from Cadillac. For a gang ambush it would be stealthier than an ICE. There are mandated noise makers on quiet cars now, but that can be disabled easily.

An electric vehicle does have some advantages off roading over ICE. There is always the danger of damaging differentials offroading which aren't there for an EV. Additionally driving in dry grass catalytic converters can start fires. My sister is a Geologist and when she was in grad school she was working on the Geology field work for the MX missile system in Utah. In a couple of cases they lost trucks and started brush fires when trucks were parked in tall grass with hot catalytic converters.

When she bought her own truck to do field work for her thesis she removed the catalytic converter and put it back on when she wasn't off roading as much.

The truck market is huge and Tesla can afford to enter the market with a niche vehicle. I doubt it will come close to rivaling the volumes from the 3 and Y, but may sell more than the S and X. Especially if the truck has better range than either. A 500 mile range truck with good cabin space that costs less than an S or X will convert some owners of S and X. Though by the time the truck comes out the S and X may have a similar battery pack and motor arrangement to the top end truck and get better range.

 

[wdolson]

Cyber six by six incoming.

Or a 6 X 1 (only one gear)

 

[Sean Wagner]

Thank you for sharing your thoughts, that's truly useful. Appreciate the anecdote too!

Agree that Cybertruck [Prime] will outsell S&X combined in the US but not the Y, and that the former two will gain some upgrades to further differentiate them from competitors' EVs. Municipalities might still prefer cheap barest-bones pickups, but around 40K for the base CT is not to be skoffed at once TCO is factored in.

Don't think I've ever seen an Escalade EXT, or its Lincoln analog. But a full-size US SUV carefully lumbering down my euro-sized city street... definitely not for me.

 

[Takumi]

Wirtschaft, Handel & Finanzen: Mobilitätsanbieter Free Now will Angebot auf mehr Städte ausdehnen

https://ww.electrek.co/2020/01/08/tesla-large-order-competition-daimler-bmw-free-now-app/

 

[Brando]

Demand lever ??
If Tesla needed to increase demand, they could offer a one motor option aimed at taxi companies. (min. qty # ??)
Could be any of their models.
Front wheel drive to allow max trunk space ?? Perhaps not worth engineering costs?

just a thought

 

[wdolson]

Demand lever ??
If Tesla needed to increase demand, they could offer a one motor option aimed at taxi companies. (min. qty # ??)
Could be any of their models.
Front wheel drive to allow max trunk space ?? Perhaps not worth engineering costs?

just a thought

I would think rear wheel drive would offer more frunk space. There isn't much trunk space they could gain by eliminating the rear motor. The rear motor is under the floor of the cargo space and if they did eliminate to rear motor to create more space, they would have to reengineer the body of the car with the risk of weakening its body integrity. Removing the front motor could create more space by just making the frunk tub bigger.

I would think a Model Y taxi could bury the Prius taxi business. It's a bit taller with a decent sized wayback and it's designed to mass produce cheap. Though I doubt Tesla is going to be very interested in any large fleet sales for a while. They are going to be running full tilt to keep up with demand for the Model Y for a while.

Model S and X sales have fallen off, but those cars are not designed for economical mass production. Especially the X.

 

[Brando]

I would think rear wheel drive would offer more frunk space. There isn't much trunk space they could gain by eliminating the rear motor. The rear motor is under the floor of the cargo space and if they did eliminate to rear motor to create more space, they would have to reengineer the body of the car with the risk of weakening its body integrity. Removing the front motor could create more space by just making the frunk tub bigger.

I would think a Model Y taxi could bury the Prius taxi business. It's a bit taller with a decent sized wayback and it's designed to mass produce cheap. Though I doubt Tesla is going to be very interested in any large fleet sales for a while. They are going to be running full tilt to keep up with demand for the Model Y for a while.

Model S and X sales have fallen off, but those cars are not designed for economical mass production. Especially the X.

Fine points.

Netherland airport taxi service did replace/update their fleet of older Model S with Model X. They do tend taller than most.

London Black Cab long rich history back to 1662 and first electrified 1901 also sold around the world. Interesting & surprising intro at Hackney carriage - Wikipedia you'll enjoy, I promise . note: Geely

As we all know, the limiting function to electrification is battery production and not demand as often claimed by legacy OEM industry. Poorly designed/built products won't match Tesla annual growth rates.

Also worth a revisit Tony Seba Jan 2020

 

[wdolson]

Fine points.

Netherland airport taxi service did replace/update their fleet of older Model S with Model X. They do tend taller than most.

London Black Cab long rich history back to 1662 and first electrified 1901 also sold around the world. Interesting & surprising intro at Hackney carriage - Wikipedia you'll enjoy, I promise . note: Geely

As we all know, the limiting function to electrification is battery production and not demand as often claimed by legacy OEM industry. Poorly designed/built products won't match Tesla annual growth rates.

Also worth a revisit Tony Seba Jan 2020

Tony Seba is interesting, but while he is accurate about technological change happening quickly, precisely predicting how it's going to change is difficult. If he had been making predictions 50 years ago he would have been talking about how much fusion energy was going to change the world.

I think he's spot on about what tech will be available when and how much it will cost, but the things that require changes in regulations and laws is a lot more difficult to predict. I don't think law makers are going to approve full self driving vehicles without a human next year. That may never become legal. If regulators approve self driving vehicles with no drivers, that's going to put millions out of work. Most of those people don't have the education or skills to get the new jobs that are going to be created.

If self driving vehicles are approved, but a human backup will be required, that will not drop costs as dramatically as Seba predicts. His cost cutting is dependent on eliminating the drivers. We already have a fairly large chunk of the population who used to work in factories who are now making far less than they used to at dead end minimum wage jobs, or they are completely unemployed with no prospect of getting work again. Self driving vehicles with no humans required will double that population if not triple it. Politicians will be reminded of this when the bills come up for consideration. Even if a good percentage of those people do end up finding decently paid work, the temporary disruption to the workforce will spell doom for whichever party is in power and approves it.

He also talks about tech penetration in cities, but ignores rural areas. Broadband internet is ubiquitous in cities and suburbs, but it can still be very spotty in rural areas. My sister lives 10 minutes outside Oildale, CA (suburb of Bakersfield) and her only option for high speed internet is satellite. She can afford the extra expense, but many people in rural areas can't. And the speeds of that kind of service are terrible compared to what you can get a little closer to town.

I live on the edge of the Portland, OR metro area. We have great broadband (150 MB/s available), but ride sharing is not really available. Occasionally someone will pay for a Lyft or Uber to go out this far, but hailing one from out here is rare. When I got a bad flat a few miles from home on a cold night Tesla service ordered a Lyft to take me home to get our other car, but it took 1/2 hour to get here. I tipped the guy heavily. More into town Lyft and Uber are commonplace.

Changes that don't require major legislative approval will happen and they will cause major disruption. If laws had to be changed to allow electric cars on the road Tesla would have gone bankrupt before the laws were passed. As it is many states don't allow Tesla to sell cars there because of their different (disruptive) selling model. Tesla, ride sharing, smart phones, and other major disruptions happened because they could happen within the existing legal structure or at maximum only required minor law changes.

The law always lags technology and science. Sometimes by decades. Some laws haven't caught up with the internet which has been available to the general public for almost 30 years.

 

[Brando]

@wdolson -
Change continues to accelerate
suggest internet search something like: where are autonomous cars allowed
Just one example, please look for others which are probably better:
| GHSA

Autonomous Vehicles
There are currently 37 states along with the District of Columbia that have enacted legislation or issues executive orders regarding Autonomous Vehicles (AVs).

• 13 states simply authorize a study, define key terms or state contacts, or authorize funding
• 8 states authorize testing, while 11 states and the District of Columbia authorize full deployment. Of these, 12 states now allow testing or deployment without a human operator in the vehicle.
• 5 states regulate truck platooning.

More information on state AV laws as well as recommendations for states considering AV legislation can be found in GHSA's report Preparing for Automated Vehicles: Traffic Safety Issues for States.
[\quote]

 

[wdolson]

@wdolson -
Change continues to accelerate
suggest internet search something like: where are autonomous cars allowed
Just one example, please look for others which are probably better:
| GHSA

I wasn't aware any state had approved anything for driverless vehicles on public streets. We'll see how things shake out.

 

[renim]

Fwiw, Nissan is looming at losing 30% - 50% production from about 5 million cars per year to about 2.6 million cars per year.
Nissan plans 30% cut in global output through December, report says

So the ariya is important for nissan but its a halo car for nissan not a volume car. The interior demonstrates its halo nature. Thats no altima / rogue, its an expensive show piece. If it was volume intent the interior would share standard nissan dash etc.

For the general automotive industry the Ariya becomes a problem, it sets a benchmark that is difficult for legacy car makers to improve upon and still make a profit. Audi etron vs Nissan Ariya anyone?

In the same way that gm Bolt really hurt the i3. The Ariya gotta hurt the BMW and Mercs EVs of the world.

 

[ChadS]

A fourth volume car on the way? Very soon, even.

Volkwagen has been talking smack about how many cheap awesome EVs they will sell for many years. They are the master of the no-consequence press release. But I think this ID.4 thing is for real. (Sorry, international members, but I'm US centric because I am lazy. So I'm ignoring things like the ID.3 that aren't available in the US).

It looks like great competition for the Model Y - aside from performance. But that's fine - VW says they are not competing with Tesla, but they are rather competing with top sellers in the segment, like the Toyota RAV4 and Honda CR-V. That's perfect, in my view.

Pricing-wise, it is starting at $10k less then the Model Y. However, that's with RWD and less range; if Tesla offered a Y like that (they say they will have an RWD version, but will not release one with a smaller pack), the price would probably be about identical. However, VW still has the federal tax credit available. And they are starting off with an offer of 3 years of free DC charging. So early ID.4 owners are going to do well. And once VW gets their US factory up, they say they will offer a version for $5k cheaper (unclear to me if that one will have less content).

It looks like a nicely-designed car, in the highly-popular compact SUV segment, priced well, and targeting exactly who they should target - mainstream ICE in the segment. If VW can get their dealer on board, and don't mess up the advertising, I think they can move a lot of these. Which is great. And it just might beat the Mach-E to market.

 

[wdolson]

A fourth volume car on the way? Very soon, even.

Volkwagen has been talking smack about how many cheap awesome EVs they will sell for many years. They are the master of the no-consequence press release. But I think this ID.4 thing is for real. (Sorry, international members, but I'm US centric because I am lazy. So I'm ignoring things like the ID.3 that aren't available in the US).

It looks like great competition for the Model Y - aside from performance. But that's fine - VW says they are not competing with Tesla, but they are rather competing with top sellers in the segment, like the Toyota RAV4 and Honda CR-V. That's perfect, in my view.

View attachment 608494

Pricing-wise, it is starting at $10k less then the Model Y. However, that's with RWD and less range; if Tesla offered a Y like that (they say they will have an RWD version, but will not release one with a smaller pack), the price would probably be about identical. However, VW still has the federal tax credit available. And they are starting off with an offer of 3 years of free DC charging. So early ID.4 owners are going to do well. And once VW gets their US factory up, they say they will offer a version for $5k cheaper (unclear to me if that one will have less content).

It looks like a nicely-designed car, in the highly-popular compact SUV segment, priced well, and targeting exactly who they should target - mainstream ICE in the segment. If VW can get their dealer on board, and don't mess up the advertising, I think they can move a lot of these. Which is great. And it just might beat the Mach-E to market.

I watched an evening magazine show called Tonight out of the UK a few days ago. This episode was on electric cars and the hurdles faced with adoption. They mentioned Tesla, but said they were focusing on other EVs because Tesla's were expensive (especially in the UK compared to European options).

They went back to a couple who had been loaned an EV a year or so back to test out and after it took them twice as long to get to London as with an ICE, they decided it wasn't for them. They got them to agree to do it again with a Mini Cooper EV. The guy drive it to work for a week or so and liked it. Then they set out on another trip to London. It didn't take them as long as last time, but they found the charging situation a labyrinth of speeds and different plug types as well as non-functional chargers.

They did find more chargers than last time, but they still found it very confusing and liked the ease of refueling an ICE better.

I was thinking for people who want a road trip capable car, the car companies are going to have to make recharging away from home as simple and painless as Tesla or they face a barrier to market entry. I don't road trip a lot, but between superchargers and destination chargers, it's only a little bit more complex than road tripping with an ICE (because of where the chargers are you do need to plan your stops whereas you know you can stop almost anywhere to get gas with an ICE).

Even if there were 300+ mile EVs from other manufacturers available (coming soon, but nothing at the moment), the mess recharging on the road with non-Tesla cars is something that would be a deal killer for me. For a car that was going to be an around town car only it probably wouldn't, but unless I have more cars than drivers in the household, I want them all to be long range capable.

 

[ChadS]

I agree that most OEMs are going to have to, at some point, sort out DC charging issues. Tesla has done a great job and really made it easy. My wife and I have been all over the country in our Teslas.

However, in the US most new-car buyers are multi-cars households. So they probably have options, which means the automakers may have some time. I bought a ~90-mile EV in 2009 when there were no DC charging stations anywhere, and we were perfectly happy with the car - because we had another car we could take on long trips.

(At first our second car was a PHEV Prius. But it soon became an AC-charging-only Roadster, which I did take on many long trips - but yeah, that was inconvenient and I agree most people aren't going to want to do that).