Which other car company do you think have the darkest future?

[electracity]

........

As for your contention "Disruption" in the tech sector definition of the word simply isn't possible in the car industry. " I find that to be simply a bizarre thing to say considering firstly that is exactly how it was built and secondly it is inevitably set to erupt right in front of your eyes.

What year do you expect Tesla to make 500,000 cars?

 

[FlatSix911]

What year do you expect Tesla to make 500,000 cars?

The stated objective by Tesla is 2018 when they ramp the Model 3 production ...

 

[eloder]

I have to assume you don't know what the abbreviations I posted (TPS, JIT...) are about after reading your answer.

These methods and (production) processes will remain as relevant as ever in future car manufacturing, regardless of the propulsion system used.

Things like having all key suppliers on board and managing critical paths with little to no inventory.

The people who made the horse and buggy had 100% of their manufacturing principles and expertise apply to automobiles, with the exception of the ICE and battery/motor of EVs back then.

It sure did them quite a lot of good.

The fact is that nobody is going to care about someone who can manufacturer everything in the car except for the drivetrain. Manufacturing a car body is super easy, and those who design their own in-house power trains will have a big advantage over those who outsource the entire thing. End result, the legacy manufacturers are still as poorly off as the horse and buggy manufacturers.

Also, how do you account for countries like Norway where EV sales are something like 20% of all new vehicles? That happened in just a few years, and I see almost no legacy OEMs taking a piece of that pie. Norway is a good example of what will happen in 5-10 years as non-subsidized BEV costs reach Norway-like levels even for the most backwards of governments.

 

[EVNow]

Also, how do you account for countries like Norway where EV sales are something like 20% of all new vehicles? That happened in just a few years, and I see almost no legacy OEMs taking a piece of that pie. Norway is a good example of what will happen in 5-10 years as non-subsidized BEV costs reach Norway-like levels even for the most backwards of governments.

Hmmm .. have you seen the numbers ? Last year Tesla had 25% BEV marketshare - rest were legacy OEM. This year, Tesla has 16% marketshare - 84% are legacy OEM. In Sep Tesla had 6% share, 94% are legacy OEM. VW, Nissan & BMW are all doing well.

Norway Plug-In Electric Car Sales Up 77% In September

 

[Yggdrasill]

A part of the reason is of course that the Model S has gotten more and more expensive, and is less and less a car the middle class can afford. While the European and Asian cars haven't increased in price.

 

[ecarfan]

Interesting. In the USA the Model S has gotten less expensive over time because more and more features that were formerly options have been included in the base price and some options have decreased in price, plus now the base model has a bigger battery.

 

[Yggdrasill]

Interesting. In the USA the Model S has gotten less expensive over time because more and more features that were formerly options have been included in the base price and some options have decreased in price, plus now the base model has a bigger battery.

It's the exchange rate that's to blame, as I explained here: EU Market Situation and Outlook - Page 165

 

[tftf]

The stated objective by Tesla is 2018 when they ramp the Model 3 production ...

This is not possible (500k total output by 2018).

Tesla is only constructing one out of seven buildings in Nevada at the moment, they can maybe equip 70k-100k cars with cheaper batteries in 2018 (just 14% of entire GF building structure).

As long as they don't start building the six additional 'blocks' in Nevada (progress will be easy to see thanks to drones...) there's no chance to get to an output of 500k EV batteries/year.

I posted this before: Car demand is still rising (especially in Asia) to around 100 million cars / year globally while Tesla can maybe equip 500k cars in 2020 (that is if they invest an additional $3-4 billion with partners into the Nevada project until then) - and that's a best-case scenario for Tesla.

The other 99.5% of cars sold worldwide must still come from somewhere; why would big ICE car manufacturers have a dark future in 2020 - especially since most of them will also launch new EVs and PHEVs until 2020?

The numbers for a "collapse" of large ICE car manufacturers simply don't add up in the coming 5-10 years, even if new (EV) entrants manage to sell a few million cars combined by 2025.

A faster ramp-up simply isn't possible in the car industry (especially since Tesla wants to vertically integrate most of its battery production...it takes years and billions to build each new factory).

 

[RobStark]

The other 99.5% of cars sold worldwide must still come from somewhere; why would big ICE car manufacturers have a dark future in 2020 - especially since most of them will also launch new EVs and PHEVs until 2020?

Legacy automakers will lose their most profitable sales. And they will increasingly have a price war on their least profitable sales.

Falling profits then no profits then losses.

High fixed cost.

The writing is on the wall. When they file for bankruptcy? Which manufactures get bailed out by their national governments and on what terms. Those are the remaining questions.

Some legacy automakers offering a tiny number of BEVs and only preparing for a tiny percentage of BEVs makes no difference.

It takes a legacy automaker ten years of planning to bring out a new vehicle. From engineering,sourcing parts,to final validation.

If they are not planning for Tesla GWh of battery cell purchases/manufacturing now for the 2025 model year they are failing to plan adequately and planning to fail.

 

[electracity]

Tesla seems to need a couple billion capex for each 100,000 cars added. They don't necessarily need make all that investment on their balance sheet, but someone has to spend the money. What does the financial and production ladder look like for Tesla to achieve 10% market share? Tesla's IPO raised $220 million. So they are only another $200 billion or so in capital investment for that 10%.

 

[Bangor Bob]

The people who made the horse and buggy had 100% of their manufacturing principles and expertise apply to automobiles, with the exception of the ICE and battery/motor of EVs back then. It sure did them quite a lot of good.

It worked out ok for Fisher Body and McLaughlin Carriage Company.

As for dark futures? Mazda seems to be getting a slow start. FCA as well. We need more information on Ford, they're a black box at the moment. Magna Intl. did most of the work for the Focus EV, I seem to recall they even built the early ones, but not much information on EV plans is leaking out of Ford lately.

 

[tftf]

Legacy automakers will lose their most profitable sales. And they will increasingly have a price war on their least profitable sales.
(...)
The writing is on the wall. When they file for bankruptcy? Which manufactures get bailed out by their national governments and on what terms. Those are the remaining questions.

Some legacy automakers offering a tiny number of BEVs and only preparing for a tiny percentage of BEVs makes no difference.

It takes a legacy automaker ten years of planning to bring out a new vehicle. From engineering,sourcing parts,to final validation.

If they are not planning for Tesla GWh of battery cell purchases/manufacturing now for the 2025 model year they are failing to plan adequately and planning to fail.

Most profitable sales going away? Again, in a best-case scenario Tesla sells 500k cars by 2020, most of these will be lower-end Model3 cars. Why would sales of, say, 150k Model S/X cars combined (again using a very high estimate) be a problem for ICE car makers in 2020?

As I stated many times, the biggest problem for large ICE car companies is a severe (global or especially China/Asia) recession / slow-down in the coming years, not Tesla or any other EV entrant.

Every fourth passenger car today is sold in China, around 20-25%. Tesla on the other hand will have a market-share below 1% in a best-case scenario by 2020.

The supply for 99 million to 99.5 million cars (i.e. the missing supply even if Tesla is selling every car it can produce and with the GF in Nevada at 100% output) has to be coming from somewhere.

As long as the market expands from ca. 80-85 million cars to 100 million cars/year most car makers won't have a problem.

About the 10 years to design an entirely new car
model. Where did you get that? It's probably only half that. Let me quote a recent example of a radical EV re-design done by an ICE car company:

The BMW i3 is arguably the most radical body redesign from an ICE car company in decades (even the sales and distribution model was slightly altered, for example direct sales and online sales direct from BMW in some countries...).

See Munro's tear-down of the i3:

And in discussing the level of innovation of the i3, he made comparisons to the Ford Model T during an in-depth discussion on Autoline After Hours.

Much has been said about the i3's novel chassis design, which combines a CFRP "Life Module" passenger cell with an aluminum "Drive Module" structure that holds the powertrain and suspension.

But there's apparently more to it than that.

​

The tear-down and other analysis showed that BMW is making CFRP parts quickly enough that the i3 can roll off an assembly line much faster than any car built with the same material.

While it normally takes three to five days to make a carbon-fiber part, BMW can roll an i3 off the line in 5 minutes, Munro said.

Components are then attached to the body structure using an adhesive that's actually stronger than the CFRP itself.

BMW i3 Tear-Down Videos Show Electric Car's Radical Design

It took BMW just 5 years to revamp car manufacturing as we know it (especially the CFRP part !) and get the i3 into showrooms. Here's a long report in German on the i3 project genesis for anyone interested:

Wie Norbert Reithofer das Elektroauto BMW i3 vorantrieb - manager magazin (page 1/7)

Summary: I don't know where you got the 10 years. It usually doesn't take more than 4-5 years or so to design a completely new car, especially because most car companies work with "platforms" today (the i3 was an exception to the rule and took even more R&D and design time than usual). Toyota once even claimed they brought the process down to 18-24 months for some models on existing platforms.

By 2018-2020, there will be dozens of EVs and PHEVs from all major car makers in showrooms - that much is clear already because of better/cheaper batteries and stricter (emission) regulations. You don't have to wait 10 years - which means a lot of competition for Tesla by the end of this decade.

 

[Bangor Bob]

As long as the market expands from ca. 80-85 million cars to 100 million cars/year most car makers won't have a problem.

The wildcard here is the timeline for full autonomy... Full autonomy + ride hailing apps have the potential to seriously crash vehicle demand by making vehicle ownership as archaic as horse ownership.

 

[tftf]

As long as the market expands from ca. 80-85 million cars to 100 million cars/year most car makers won't have a problem.

The wildcard here is the timeline for full autonomy... Full autonomy + ride hailing apps have the potential to seriously crash vehicle demand by making vehicle ownership as archaic as horse ownership.

I agree, that could potentially impact new car sales a lot in developed countries. But this is further away on the timescale in my opinion (10-20 years or even longer, a lot depends on future legislation around the world...).

Every car maker and every car rental car/pooling company (not just Uber, also traditional ones like Hertz etc.) has this on their radar.

PS: See for example Nissan, I just wrote about this in another thread:

Why aren't the Japanese leading the way in self driving instead of Israel and U.S.?

I don't see any advantages for Tesla in this scenario either.

 

[electracity]

Tesla probably has a whole generation of cars to build (10-15 years) before worrying too much about autonomous driving disrupting the auto industry.

 

[tftf]

Also, how do you account for countries like Norway where EV sales are something like 20% of all new vehicles? That happened in just a few years, and I see almost no legacy OEMs taking a piece of that pie. Norway is a good example of what will happen in 5-10 years as non-subsidized BEV costs reach Norway-like levels even for the most backwards of governments.

That is not correct. As EVNow already posted, established car companies like VW or Nissan-Renault remain on top in Norway, see the sales chart. They will simply adapt and sell more and more EVs and PHEVs in these countries.

As I pointed out above, even if Tesla reaches all sales targets by 2020 the company will remain a niche player and 99% of the car market volume by units remains for grabs in 2020:

...the supply for 99 million to 99.5 million cars (i.e. the missing supply even if Tesla is selling every car it can produce and with the GF in Nevada at 100% output) has to be coming from somewhere [by 2020].

 

[FlatSix911]

What year do you expect Tesla to make 500,000 cars?

The stated objective by Tesla is 2018 when they ramp the Model 3 production ...

This is not possible (500k total output by 2018).

Tesla is only constructing one out of seven buildings in Nevada at the moment, they can maybe equip 70k-100k cars with cheaper batteries in 2018 (just 14% of entire GF building structure). As long as they don't start building the six additional 'blocks' in Nevada (progress will be easy to see thanks to drones...) there's no chance to get to an output of 500k EV batteries/year.

I posted this before: Car demand is still rising (especially in Asia) to around 100 million cars / year globally while Tesla can maybe equip 500k cars in 2020 (that is if they invest an additional $3-4 billion with partners into the Nevada project until then) - and that's a best-case scenario for Tesla.The other 99.5% of cars sold worldwide must still come from somewhere; why would big ICE car manufacturers have a dark future in 2020 - especially since most of them will also launch new EVs and PHEVs until 2020?

The numbers for a "collapse" of large ICE car manufacturers simply don't add up in the coming 5-10 years, even if new (EV) entrants manage to sell a few million cars combined by 2025.A faster ramp-up simply isn't possible in the car industry (especially since Tesla wants to vertically integrate most of its battery production...it takes years and billions to build each new factory).

Your logic is flawed with regard to the Giga factory. Tesla does not need the entire factory on line to support production of 500K vehicles.

 

[tftf]

According to Tesla: They need the factory to lower costs (the promised 30+% Tesla keeps talking about) for 500k batteries, or about 35GWh on the cell level.

Otherwise, why not just increase production in Japan gradually and continue to import most cells?

Even if we assume up to 100k cars (S/X) continue to be equipped with Japanese cells with apparently worse margins (always according to Tesla), Tesla needs Nevada for the remaining 400k cells (Model 3).

I don't see how Tesla can churn out close to 500k cars/year without the entire factory, FlatSix911.

PS: But even that full output is a rounding error compared to the entire global passenger car production. I don't see how that best-case volume (in 2020) is a big issue for large ICE car makers.

 

[RobStark]

Most profitable sales going away? Again, in a best-case scenario Tesla sells 500k cars by 2020, most of these will be lower-end Model3 cars. Why would sales of, say, 150k Model S/X cars combined (again using a very high estimate) be a problem for ICE car makers in 2020?


By 2018-2020, there will be dozens of EVs and PHEVs from all major car makers in showrooms - that much is clear already because of better/cheaper batteries and stricter (emission) regulations. You don't have to wait 10 years - which means a lot of competition for Tesla by the end of this decade.

As I have stated many times a small trickle of EVs from the legacy automakers does not matter.

By 2025 Tesla could be selling 2M vehicles.


Removing 500k sales then 2M sales of those most profitable vehicles luxury cars and full size pickups is a problem for the legacy automakers.


VW Group gets ~80% of its profits from Audi/Porsche.

For Daimler Benz the figure is even higher for Mercedes Benz.

BMW sells a small trickle of Minis and BMWs below $30k.

Toyota gets a significant share of its profits from Lexus and Toyota full size trucks.

Detroit gets ~80% of its profits from full size trucks and luxury cars. Almost all full size trucks.

500k Teslas is an issue for the legacy automakers in 2020 and 2M in 2025 is more than an "issue."

The luxury car market Tesla is currently challenging is ~7.5M vehicles.

The full size truck market where Tesla will offer a product in 5-7 years is ~2.5M.

That is 10M vehicle market currently not 100M. Disrupt that 10M vehicle market and you disrupt the automakers.

A conquest sale of Toyota Yaris, VW Polo, or Ford Fiesta does almost nothing to their makers bottom line.

Take a Audi A8, Lexus GS or a Ford F150 sale from their automakers then you are taking a cash cow.


And just like Tesla's future sales are not set in stone neither are future sales projections for the legacy automakers.

 

[dalalsid]

As I have stated many times a small trickle of EVs from the legacy automakers does not matter.

By 2025 Tesla could be selling 2M vehicles.


Removing 500k sales then 2M sales of those most profitable vehicles luxury cars and full size pickups is a problem for the legacy automakers.


VW Group gets ~80% of its profits from Audi/Porsche.

For Daimler Benz the figure is even higher for Mercedes Benz.

BMW sells a small trickle of Minis and BMWs below $30k.

Toyota gets a significant share of its profits from Lexus and Toyota full size trucks.

Detroit gets ~80% of its profits from full size trucks and luxury cars. Almost all full size trucks.

500k Teslas is an issue for the legacy automakers in 2020 and 2M in 2025 is more than an "issue."

The luxury car market Tesla is currently challenging is ~7.5M vehicles.

The full size truck market where Tesla will offer a product in 5-7 years is ~2.5M.

That is 10M vehicle market currently not 100M. Disrupt that 10M vehicle market and you disrupt the automakers.

A conquest sale of Toyota Yaris, VW Polo, or Ford Fiesta does almost nothing to their makers bottom line.

Take a Audi A8, Lexus GS or a Ford F150 sale from their automakers then you are taking a cash cow.


And just like Tesla's future sales are not set in stone neither are future sales projections for the legacy automakers.

I'll add to this. It doesn't matter as much how many cars Tesla sells. It matters how many cars Tesla reservations prevent others from selling. And that will be more than the cars sold by Tesla. I have a feeling that model 3 reservations will be of the charts.