Chevy Bolt - 200 mile range for $30k base price (after incentive)

[wdolson]

As if they can afford to lose sales to Tesla -- NOT

The ICE manufacturers are caught in a chicken and egg dilemma: should they gamble and invest in the charging and battery supply infrastructure required for general purpose EVs and volume production leading to economies of scale, or take an "organic, slow growth" approach, meaning 3rd party infrastructure. Clearly GM et al prefer the latter but Tesla has forced things with the Gigafactory. The Bolt should be understood as a compliance car, in the sense that it is not profitable at current scale and pricing.

GM may well be right in tie-ing themselvese to the CCS standard (although their current approach of not investing a dime strikes me as idiotic,) but I don't see a way for battery production to grow slowly and successfully.

At the moment they can afford to lose sales to Tesla. GM sold 9.8 million vehicles last year. Tesla delivered 50,000 last year, that's 1/2% of GM's sales. When Tesla is selling 1 million cars a year, GM might be sweating a bit.

Another reason that car manufacturers are dragging their feet about jumping into the current battery tech with both feet is they are scared they are going to make a major commitment to one chemistry only to have a much better one come along shortly after they commit. Management is risk adverse to new technology. Building a 30K a year car that is obsolete in a couple of years is no big deal. To commit to building a million cars a year only to have their tech go obsolete in a couple of years is scary.

They are largely ignoring Tesla right now because they see Teslas as rich kid toys and focus on what their direct competition is doing. They dismiss Elon's claims that he will be building 1 million Model 3s a year by 2020. They judge everything on past performance and Tesla has never been good about bringing new products to market anywhere near on time. I think they are underestimating Tesla. They are amazingly flexible.

So they look at the competition and figure the last one to commit to building a Gigafactory will be the winner because they will have the latest tech. Will Ford build a GF this year? Will Honda? etc.

The entire calculus of the industry will be completely and totally disrupted if Tesla manages to launch volume production of the Model 3 anywhere near when they say it will be launched. That will be panic time.

 

[jbcarioca]

...
The entire calculus of the industry will be completely and totally disrupted if Tesla manages to launch volume production of the Model 3 anywhere near when they say it will be launched. That will be panic time.

As usual, wdolson is right on substance, well reasoned on expectations.

 

[SageBrush]

At the moment they can afford to lose sales to Tesla. GM sold 9.8 million vehicles last year. Tesla delivered 50,000 last year, that's 1/2% of GM's sales. When Tesla is selling 1 million cars a year, GM might be sweating a bit.

This reflects a common misconception. Companies can go bankrupt from losing just a few percent of sales because all the rest cover fixed costs; the last couple percent are the profit.

The best example of this are the utilities, but auto companies share much of the same finances.

 

[Menifeer]

The entire calculus of the industry will be completely and totally disrupted if Tesla manages to launch volume production of the Model 3 anywhere near when they say it will be launched. That will be panic time.

Tesla will have to dramatically expand its service center facilities if volume production of the Model 3 is anywhere near what's expected. The Tesla Service Centers topic (in the Tesla Motors main topic) contains real-word examples of the problems of too-few facilities.

When people learn that Tesla buyers may have very long waits for service and costly trips when their cars require towing, enthusiasm for the brand will wane. Offerings by companies that already have dealerships in the neighborhood will begin to look like a better option.

As an investor and enthusiast, I want the brand to succeed, but this situation is very troubling.

 

[3Victoria]

Tesla is aware of the importance of Service Centres and undoubtedly have plans to expand and extend their SCs.

 

[ChadS]

Expanding on that...

If Tesla is to grow roughly tenfold, they certainly do need more service centers. And stores, delivery centers, batteries, components, factory space, vehicle transport, etc. They will need a lot more of EVERYTHING.

Growing rapidly is difficult when all goes well. Plus something bad (like an earthquake) out of their control could mess up the works. Tesla's success is not guaranteed.

But all of these concerns were raised when Tesla went from displaying a concept to selling the Roadster worldwide. And when they went from selling small numbers of the hand-made Roadster to much higher volumes of the new-factory-built Model S. They have pulled it off before. Is there a chance they could screw up? Yes. Are there likely to be growing pains even if they pull it off? Certainly. But is there any chance they aren't already aware of all that needs to be done, and have a plan to put it in to place once they have the funds? No way.

Not only do they know how much they need to grow, with their pre-order list they even know where they need to grow. They are not doing it all yet because they still need to keep costs down while the S is all they are selling. But after they make another capital raise and as the Model 3 release gets closer, we should see a lot more spending and growth.

(I haven't looked at any numbers, but realistically it is likely that just before the 3 release Tesla will be very tight on cash and so some growth won't happen until after the 3 is released. Of course the 3 may trickle out at first so it might not be a big deal, but there are still likely to be some really tight spots until a year or so after the 3 ships. But that is just conjecture).

 

[SageBrush]

Expanding on that...

If Tesla is to grow roughly tenfold, they certainly do need more service centers. And stores, delivery centers, batteries, components, factory space, vehicle transport, etc. They will need a lot more of EVERYTHING.

Growing rapidly is difficult when all goes well. Plus something bad (like an earthquake) out of their control could mess up the works. Tesla's success is not guaranteed.

But all of these concerns were raised when Tesla went from displaying a concept to selling the Roadster worldwide. And when they went from selling small numbers of the hand-made Roadster to much higher volumes of the new-factory-built Model S. They have pulled it off before. Is there a chance they could screw up? Yes. Are there likely to be growing pains even if they pull it off? Certainly. But is there any chance they aren't already aware of all that needs to be done, and have a plan to put it in to place once they have the funds? No way.

Not only do they know how much they need to grow, with their pre-order list they even know where they need to grow. They are not doing it all yet because they still need to keep costs down while the S is all they are selling. But after they make another capital raise and as the Model 3 release gets closer, we should see a lot more spending and growth.

(I haven't looked at any numbers, but realistically it is likely that just before the 3 release Tesla will be very tight on cash and so some growth won't happen until after the 3 is released. Of course the 3 may trickle out at first so it might not be a big deal, but there are still likely to be some really tight spots until a year or so after the 3 ships. But that is just conjecture).

Spot on.

This all speaks to a somewhat hidden advantage that might propel Tesla to the top: they make a less complex car in the M3 than ICE competitors, and all else being equal, may well end up with a reliability advantage that will help them in so many ways. Musk very clearly understands this, and he has a fantastic company behind him to pull it off.

 

[wdolson]

Tesla will have to dramatically expand its service center facilities if volume production of the Model 3 is anywhere near what's expected. The Tesla Service Centers topic (in the Tesla Motors main topic) contains real-word examples of the problems of too-few facilities.

When people learn that Tesla buyers may have very long waits for service and costly trips when their cars require towing, enthusiasm for the brand will wane. Offerings by companies that already have dealerships in the neighborhood will begin to look like a better option.

As an investor and enthusiast, I want the brand to succeed, but this situation is very troubling.

I suspect this is the reason Tesla is planning on rolling out the Model 3 regionally. I suspect they will concentrate on building new service centers in the western US first, then use revenue from western US sales to expand service centers in the eastern US, etc.

The logistical challenges of expanding the company as much as they plan are daunting. Knowing Elon Musk and the way he's been talking the last few months, he dove into the subject of Industrial Engineering with as much vigor as he did rocketry with SpaceX when the Model X turned into a logistical nightmare. He's nothing if not flexible.

Expanding on that...

If Tesla is to grow roughly tenfold, they certainly do need more service centers. And stores, delivery centers, batteries, components, factory space, vehicle transport, etc. They will need a lot more of EVERYTHING.

Growing rapidly is difficult when all goes well. Plus something bad (like an earthquake) out of their control could mess up the works. Tesla's success is not guaranteed.

But all of these concerns were raised when Tesla went from displaying a concept to selling the Roadster worldwide. And when they went from selling small numbers of the hand-made Roadster to much higher volumes of the new-factory-built Model S. They have pulled it off before. Is there a chance they could screw up? Yes. Are there likely to be growing pains even if they pull it off? Certainly. But is there any chance they aren't already aware of all that needs to be done, and have a plan to put it in to place once they have the funds? No way.

Not only do they know how much they need to grow, with their pre-order list they even know where they need to grow. They are not doing it all yet because they still need to keep costs down while the S is all they are selling. But after they make another capital raise and as the Model 3 release gets closer, we should see a lot more spending and growth.

(I haven't looked at any numbers, but realistically it is likely that just before the 3 release Tesla will be very tight on cash and so some growth won't happen until after the 3 is released. Of course the 3 may trickle out at first so it might not be a big deal, but there are still likely to be some really tight spots until a year or so after the 3 ships. But that is just conjecture).

Probably the biggest risk to Tesla's future is something looming over the heads of everyone: the economy. The real underlying problems of the 2008 crash were not addressed very well and many of the people who caused the crash in the first place are still around and still up to their old tricks. Tesla just barely survived 2008, but the rest of the car industry took even more damage. An economic crash at a time Tesla is heavily leveraged could spell doom.

I'm not too worried about an earthquake. The most likely scenario from a severe earthquake would be a disruption of production for a few weeks while damage is assessed and repairs are made, but buildings like the Tesla factory don't tend to collapse in earthquakes. The building might suffer some damage, but I would expect it to be easily repaired.

 

[Az_Rael]

Dunno if anyone has posted these yet, but more mule photos out in the wild. This time a black one:

From plugshare: PlugShare

 

[wycolo]

> So they look at the competition and figure the last one to commit to building a Gigafactory will be the winner because they will have the latest tech. [wdolson]

TM's commitment to the 18650 etc battery type at their Gigafactory does not tie their hands should some new miracle battery chemistry be discovered for EVs. Stationary power will gladly absorb all 18650 production for the foreseeable future. So TM is a winner here by definition.
--

 

[jbcarioca]

Tesl

> So they look at the competition and figure the last one to commit to building a Gigafactory will be the winner because they will have the latest tech. [wdolson]

TM's commitment to the 18650 etc battery type at their Gigafactory does not tie their hands should some new miracle battery chemistry be discovered for EVs. Stationary power will gladly absorb all 18650 production for the foreseeable future. So TM is a winner here by definition.
--

Tesla is not making 18650 at the Gigafactory. Anyway cell format is not the primary factor in new development. Most new cell chemistries and materials advances could be applied to pretty much any format, even though the larger the format the less chemical consistency, other things being equal. When Tesla adopted 18650 that was ideal. Now much improved manufacturing and materials is enabling larger formats safely and cheaply.

GM is not planning vertical integration but expect essentially Tier One performance from battery suppliers. For the foreseeable future GM will probably source from Korea. They really want nothing to do with making batteries, nor for that matter, most of the rest of an EV drivetrain. That may not be a disadvantage to them because they are very highly skilled in supplier integration. The short term problem is that they will be supply limited in production ramp up if Bolt ends out being a big success.

 

[diamond.g]

Tesl

Tesla is not making 18650 at the Gigafactory. Anyway cell format is not the primary factor in new development. Most new cell chemistries and materials advances could be applied to pretty much any format, even though the larger the format the less chemical consistency, other things being equal. When Tesla adopted 18650 that was ideal. Now much improved manufacturing and materials is enabling larger formats safely and cheaply.

GM is not planning vertical integration but expect essentially Tier One performance from battery suppliers. For the foreseeable future GM will probably source from Korea. They really want nothing to do with making batteries, nor for that matter, most of the rest of an EV drivetrain. That may not be a disadvantage to them because they are very highly skilled in supplier integration. The short term problem is that they will be supply limited in production ramp up if Bolt ends out being a big success.

I wonder if LG Chem can't keep up with the demand for batteries if Samsung SDI could pitch in. Are they making automotive use batteries for anyone?

Of course after the Note 7 fiasco I would be leery of having Samsung SDI batteries in my vehicle...

 

[Breezy]

GM is not planning vertical integration but expect essentially Tier One performance from battery suppliers. For the foreseeable future GM will probably source from Korea. They really want nothing to do with making batteries, nor for that matter, most of the rest of an EV drivetrain. That may not be a disadvantage to them because they are very highly skilled in supplier integration.

They don't want to be making battery cells, but batteries I think could go either way. They've been assembling Volt, Spark EV and hybrid batteries at Brownstown, MI for years now. I think GM will make the decision on a case-by-case basis how much it builds internally.

In this case they had LG eager to expand their presence in the EV-supplier marketplace, so they took advantage of that.

 

[RobStark]

I wonder if LG Chem can't keep up with the demand for batteries if Samsung SDI could pitch in. Are they making automotive use batteries for anyone?

Of course after the Note 7 fiasco I would be leery of having Samsung SDI batteries in my vehicle...

BMW i3 and i8

 

[jbcarioca]

They don't want to be making battery cells, but batteries I think could go either way. They've been assembling Volt, Spark EV and hybrid batteries at Brownstown, MI for years now. I think GM will make the decision on a case-by-case basis how much it builds internally.

In this case they had LG eager to expand their presence in the EV-supplier marketplace, so they took advantage of that.

I certainly agree with you, despite my earlier post. I still think GM will go outside, because their existing assembly has all the hallmarks of GM experimentation. They seem determined to internalize new technology manufacturing even when they go Tier 1 or 2 for volume production. They clearly have not decided the best way to go high volume for EV's, but never again want to lose a major evolving game.

 

[Zaphod]

Dunno if anyone has posted these yet, but more mule photos out in the wild. This time a black one:

From plugshare: PlugShare

View attachment 197369 View attachment 197370

Sweet! Looks like it comes with a CB radio option!

 

[BluestarE3]

Sweet! Looks like it comes with a CB radio option!

Breaker breaker Bolt buddy!

 

[techmaven]

I wonder if LG Chem can't keep up with the demand for batteries if Samsung SDI could pitch in. Are they making automotive use batteries for anyone?

Take all the possible production capacity build outs for end of 2017 for LG, Samsung SDI, and SKI, and we're talking about a combined capacity less than 1/2 of the first phase of the Gigafactory. It's 1/15th the size of the completed Gigafactory.

 

[ggr]

I wonder if LG Chem can't keep up with the demand for batteries if Samsung SDI could pitch in. Are they making automotive use batteries for anyone?

Of course after the Note 7 fiasco I would be leery of having Samsung SDI batteries in my vehicle...

BMW i3 and i8

Not to mention Tesla Roadster 3.0 upgrades.

 

[Breezy]

Take all the possible production capacity build outs for end of 2017 for LG, Samsung SDI, and SKI...

How is it possible to know all of the possible production capacity build outs for end of 2017?