Who Should Be Worried? Tesla's Master Plan For Global Domination Includes Budget Class Model 4

I would be worried if I put down a deposit on a car - and they never actually produced the car at the price expected. But I did not.

THe people who should worry are the suppliers of Tesla. Until Tesla actually posts a profit - the idea that they will make an even cheaper car than the $35,000 Model 3 just does not hold water. It may be more affordable if you have to bid on it at the bankruptcy auction!

TomM: +1

As far as I can see, Tesla is not set up for success, though I admit they might change something in a huge way in the future and turn things around.

Just as a data point, Blackberry now owns less than 1% of smartphone sales (they used to be an industry leader), they've been steadily bleeding red ink and losing customers for close to a decade. We've been talking about the "Blackberry turn-around" for over half a decade, and even more so since John Chen came onboard in 2013, and yet they continue to slide. In spite of all this, there are still some investors buying Blackberry stock, still some people buying their handsets, and still some people who believe they're a viable company.

Are you comparing Tesla to Blackberry? LOL. Blackberry is where it is today because it became complacent and failed to innovate versus its competitors (not even innovate, they couldn't catch up to other's innovations). A better analogy would be Tesla to Apple after they released an expensive, button-less phone/ipod that analysts said nobody would buy. Apple was the reason why Blackberry is where they are today... Telsa is much close to Apple than Blackberry.

The trick will be to continue to innovate while competitors try to catch up. As long as the company continues to employ a constant-improvement Silicon Valley mindset versus a staid Detroit mindset, they will be okay for a long time.

Also to the original comment, each car is produced at a 25% margin. That margin is being reinvested in infrastructure to build more batteries and expand capacity. The company is not profitable, but that does not mean that each car is produced at a loss. They can stop investing right now and build a moderate number of cars and have a killer margin similar to Porsche--but that is not the end goal.

SanJoseDriver: The point I make with Blackberry is that in spite of its dire situation, there are still many people who believe that a turnaround is imminent, and there are people who are willing to buy Blackberry stock, and even to bid shares up before quarterly results are revealed. After almost a decade's worth of tail spin and augering in, there are still believers in Blackberry. That's the point I make: the "believing."

I DO NOT claim that Tesla Motors is a Blackberry, with a decade's worth of declining market share, with someone else knocking them out of a position of prominence, with a catastrophic and decade-long decline of market valuation. That's your misunderstanding of my post, and this straw man is the basis of your argument against me.

SanJoseDriver
We have heard that argument before about each car making a 25% profit - the problem is THEY DON"T. If you take their their ANNUAL costs and revenues- NET THOSE TWO - and divide that by the number of cars they make - they lose on EVERY car they make. - ALL manufacturers have R&D and infrastructure - and UNTIL they actually make an OVERALL profit - their products are simply NOT making money - PERIOD. GM could not get away with saying that what it learned on making the EV amounted to a profit - it did not - and TESLA still cannot point to ANY profit.

BUT I can compare Tesla to Blackberry based on market share of the overall CAR market - where Tesla has currently 0.1% of the total market for cars - I really don't care about their share of EVs because if they cannot expand their market share of ALL cars exponentially - they are doomed. AND that still requires them to produce a less expensive version of their type of vehicle - and actually MAKE a profit on it. THey have not shown that they can make a profit where their average price exceeds $80,000. Making a profit at $35,000 (Which I don't think they will actually come in at anyway - more likely closer to $50,000)would take VOODOO economics. The costs of the Lithium in the lithium batteries has not come down - in fact it has gone up - something they failed to consider.

@SanJoseDriver...here we go again. If Tesla is in the red, then their vehicle sales are not covering costs. That means they are selling at a loss. The car sales are not covering company costs and that means they are losing money on each and every car they sell.

I know you guys will never understand (or continue to pretend not to) but maybe this will help - Toyota lost money on the Prius for YEARS because of the heavy r&d that car required. Today it is one of their biggest cash cows.

Runninglogan - SORRY but the comparison is not the same. Toyota - while losing money on each Prius - MADE a profit every year it has been available because it had other cars that they were able to sell to make up the difference and then some. Tesla - on the other hand - only has two models (yes - they have sub-models of them) - THe X and S. THey do not have any other cars for which they can derive PROFIT from. So - they can only go on for so long before they run out of money and people will not be willing to lend them more. THAT is because they are losing money ON EVERY car they sell. And the cars they currently sell - sell in a high price range - with most in the area of $80,000. IF they cannot make money selling cars for an average of $80,000 - what are the odds that they WILL make money selling cars for less than HALF that price. THe economies of scale only work so much in this matter - you still need a breakthrough in the PRICE of Lithium - as well as greater supply - one mag indicated that they would need to buy MORE than the worlds production of Lithium to make the cars they promise. How are they going to get the price of Lithium DOWN - if it is so scarce a commodity - just one example. THere has not been that new battery breakthrough required to bring the price of the battery pack down low enough to allow $35,000 EV with the capabilities that Tesla Claims.

HenryN
Sorry - but the problem with your statistics is even with a car costing an average of 97,700 - they are still losing money. The reason why most manufacturers are not on the bandwagon is that the market for $100,000 cars is limited to people have lots of money - and can buy a premium level car. Most car buyers do not spend almost $100,000 for their cars - and worse - most buyers do not even buy NEW cars because they cannot afford new ones. Most car lines do not include cars in that lofty a price range. At the same time -NO manufacturer has indicated that it has a business plan for producing EVs for under $40,000 at a profit - ANd right now - I do not believe ANY manufacturer could produce large numbers of an under $40,000 EV profitably. Tesla already has the outline of the car - it can see the costs on its screen.
As far as the earth being flat - people who choose to use their own senses - and believe them - can easily come to the conclusion that the earth is relatively flat. Spend a day driving in some areas of Texas - and YOU can see for MILES and MILES of flatness. However - the majority of those people are from third world countries without education - and have no idea why people are transporting themselves on a LONG DEAD scientist from the USA - if they have ANY knowledge of Tesla at all. And yes you are probably correct - there are probably a lot more people who believe that the earth is flat that even care about Tesla doing anything. That the opinion of people who have NO knowledge of the subject however - would be of any interest - is worthless. For people who a

Tesla should be worried. The big boys are coming for you. They let you set the pace but they are not going to let you cover all price points. Be afraid, be very afraid. You will hit the capital demands wall sooner than you think and will need to look to the Chinese or Koreans to bail you out.

The big boys? You just don't get it. Remember when the big boys were IBM, Hewlett Packard, Dell and Compaq? And then little Apple came a knockin'?

Volt Bolt Leaf i8 i3 RIP

Given the breathy, sensationalistic headline, someone must have received another check from Tesla.

Even if Tesla were not a scam (it is) and even if Tesla had amazing quality (it doesn't), the rate of growth is not even remotely prudent. Tesla cannot go from dumping batteries into a Lotus and pretending to be a manufacturer to building in excess of a half million units in the span of 5 years without some serious internal problems (quality control being the most obvious issue give how so-so their quality is now).

It's amazing how some people can delude themselves into believing anything no matter how irrational it may be. At this point more folks think the Earth is flat than believe Tesla will fail.

@ MDarringer: for a self-proclaimed "car expert", you don't seem to know much about Tesla. The only "Lotus" Tesla is the Roadster, last built in 2012, and there were a little over 2400 units built.

Today, approximately 125000 Tesla cars/SUVs have been built. At an average price of $97.7K/car (Edmunds 2015 number for the S), that's over $12 BILLION dollars sales in less than 4 years since the Model S rolled out. These are facts - not opinion.

If that was easy, every car maker would jump in for a share.

Everyone should be worried. It is not only quality, ramp up etc… but Tesla has momentum and a kind of Apple glow going on around it. I think unless Porsche, BMW etc… really get into pure EVs in a serious way with pleasing designs and great prices it could be a huge warp in the car market over the next 10-15 years. One other concern is minerals… I understand Lithium is probably plentiful enough but other rate earth minerals used in the motors may be in real short supply quickly with the numbers of EVs expected to be sold over that timeframe.

The other issue is that Tesla is not cash rich at all. All the monies raised was used for factories,etc. They need to deliver and become cash positive or they will just be issuing more shares, diluting the stock causing it to be a takeover target etc. At the end of the day cash is king. Audi, Toyota, Apple, Google have war chests they can use quite easily.... and with cash positive means not selling your car at too low of a price to make a loss. If the projections hold true then good but about infrastructure? Again another big issue. The combustion engine is at an all time mature state that just keeps getting better while using less fuel. Less fuel = less demand = more surplus = lower fuel prices = higher combustion engine car sales. Tesla will only succeed in the long run and will need some help from those other than people putting $1000 down on a car.

ICE efficiency has topped out and minor mpg gains have come from transmissions, weight reduction, friction reduction, and aerodynamics. Even Toyota could not meet their thermal efficiency target for latest Prius. Only significant mpg gains have been through electrification, aka hybrids. Tesla has proven they can design and build best in class vehicles. They only need to deliver on volume manufacturing (through automation) and continual battery advancements (their biggest challenge) to be successful in the mainstream market. Japanese and Korean brands have shown that the old guard can be toppled and now own the both highest quality and value mainstream categories. So yes, Tesla can accomplish the same.