Ford has all the infrastructure that Tesla is attempting to build now (aside from the batteries, but that is something that Ford could easily partner with another manufacture to get). They know how to mass produce cars (granted right now, ICE cars). That's not an easy feat. They have a large manufacturing and maintenance base that, frankly, Tesla can't replicate. The bet is that Tesla will be the first successful company to market, or that they will hold some patents which will prove valuable in the future. The market is not betting that they'll beat Ford or GM.
e.g.:
> Nearly everything changes when you opt for a fundamentally different power train, so GM’s greatest advantage—more than a century of experience building cars—was all but moot. Car structure was different, since they were building around a battery, not an engine. The brakes, steering, and air conditioner were powered differently. New systems, from electromagnetics for the motors to onboard and off-board charging, each came with its own learning curve. The engineers didn’t have established tests to follow. Just turning on the car required finding the perfect sequence of electrical signals from more than a dozen modules. “Oh my God, it took us forever to get the first Volt to start,” Fletcher says.
https://www.wired.com/2016/01/gm-electric-car-chevy-bolt-mar...
This is why Ford is unlikely to succeed at pivoting into the electric car market. The power and pull inside their company doesn't want them to. It will take superhuman leadership to overcome that force.
Start with a hybrid Ranger billed as "torque+" marketing slogan "it'll tow a mountain"
By your logic Tesla would have been locked out of the VC/investment market due to Big Oil. Money flows like water.
I guess you could say the same for Kodak, Blockbuster, and Borders?
“The reason is that good management itself was the root cause. Managers played the game the way it was supposed to be played. The very decision-making and resource-allocation processes that are key to the success of established companies are the very processes that reject disruptive technologies: listening carefully to customers; tracking competitors’ actions carefully; and investing resources to design and build higher-performance, higher-quality products that will yield greater profit. These are the reasons why great firms stumbled or failed when confronted with disruptive technological change.”[0]
[0] - https://www.goodreads.com/work/quotes/1468535-the-innovator-...
Ford has primarily focused on hybrids and there EV offerings are either fleet-only or compliance cars.
http://insideevs.com/march-2017-plug-electric-vehicle-sales-...
Source?
Oh wait sorry this is HN. Ya, those idiots at ford will die to the great Elon. hahahahaha any company older than 25 years is worthless old school idiocy and will die within 5 years of a startup coming in.
History is littered with companies that refused to pivot into new technology until far later than they should have, because they were too heavily invested in the old way. American car companies suffered from this in the 70s, where they got thrashed by competition from small imports for quite a while before they could be convinced to stop concentrating on land yachts.
Companies seek to outperform themselves relative to the last quarter and year. Long term strategy like this takes a backseat, if it gets attention at all. It certainly doesn't get the luxury of a whole company pivot that could tank short term value.
Need proof? Look at all of the American companies that got caught with their pants down shipping nothing but bigger SUVs when the price of oil shot up back in 2008.
They've also ditched the high-end SUV market right as that market exploded all over the world, thus missed out on massive profits because they no longer sold an Expedition. They openly admit to ceding the market to GM in their annual letters to shareholders specifically because they don't see gas-guzzling SUVs as long-term investments.
They also lead the market in fleet and industry-oriented products. They offer both technology and core-products designed to keep the incredibly lucrative fleet buyers happy.
In this regard, Ford is akin to Microsoft: their consumer products aren't mind blowing, but their corporate products are so well entrenched that they will be a practical ATM for the next decades. Ford sells six times as many F150s as Toyota sells Tundras and they own the entire small cargo van market.
I would highly recommend the book "The Innovator's Dilemma." It provides case studies of disruptive innovations across many different industries -- from farm tech to disk drives.
I think the economics aren't really there yet for them to bother with an electric platform (vs retrofitting electric drive into an existing platform). If they thought it made sense, they would be able to be producing at large volumes in a few years.
That's an incentive not only to produce an electric car, but to produce one that people buy instead of buying petrol/diesel cars.
https://ec.europa.eu/clima/policies/transport/vehicles/cars_...
Also, don't discount the importance of the cashflow from pickups. The only reason Chrysler and Dodge still exist is because of their anchorage to Jeep and RAM. Ford could eliminate their entire car division and still retain like 80% of their profits.
Well that's what you get for buying a car that has Microsoft software running in the infotainment system. The MS-designed Sync system had all kinds of terrible reviews at the time, and it was so bad that it brought Ford way, way down in the "initial quality" surveys, from #1 down to near the bottom IIRC. Do you not do any research before spending a giant amount of money on a car? I spent several months researching my last purchase, a Mazda (I didn't actually spend several months continuously researching it, but I was doing research and test-drives for several months before committing).
To be fair to Ford, though, my understanding is that the latest generation dumped Microsoft and switched to QNX, and should be much improved. While they were using MS, there was no way in hell I'd buy one of their cars. After they switched, I did look into a Focus, but was deterred by all the reports of problems with their DSG transmission.
What about a Bolt?
My sleeper is MB though, overall.
You mean largely trouble-free engines that run on ultra-cheap gas?
ICE has environmental issues, of course, but the idea that electric is universally superior is questionable. There's no range anxiety with gas and any backyard mechanic can fix most issues. Your locked down $100,000 IoT car is a completely different beast.
>Much of this will be of zero value in the near future.
Says who? If anything everyone is bearish on electric since gas prices have fallen and how range and recharge times will always be less convenient. Electric might replace gas but it won't be in the near future and nothing stops Ford from launching an electric line of its own. Electric cars are a solved problem if you can convince people to pay the premium and deal with the range anxiety and long recharge times. Ford has already announced an electric Mustang and F-150 on top of the $30,000, pre-rebate, 2017 Focus you can buy today. Tesla has no monopoly on electric tech. The barrier to entry is non-existant for other car companies.
edit: saying that the government will ban ICE isn't a market statement its a regulatory hope and for most nations a far off proposal. The idea that Tesla can only succeed with the government literally making their competitors illegal isn't actually a pro-Tesla argument. You guys are much less convincing than you think you are.
It is foreseeable that ICEs will become banned, at least in Europe. Right now there is still too much lobbying by the traditional car makers, but long term there is no other choice for reaching climate goals.
Edit: See e.g. http://bigthink.com/scotty-hendricks/the-end-of-the-internal...
https://www.autoevolution.com/news/germany-asks-eu-to-think-...
He uses the thing as a commuter vehicle and to tow boats every now and then. The reason he gets a new one is that the dashboard computer systems on these things get updated from year to year and he prefers to stay up with the most current technology.
For most vehicles, 100K miles is nearing end-of-life. For an F series truck, 100K miles isn't even the halfway point.
Copied from another comment I made on HN:
Nobody really understands lithium-ion batteries. One production run might have substantially higher or lower capacity. Some batteries might explode. Some batteries are high discharge and some are low discharge. The "explanation" for all of these things is 'heat'.
Imagine that happening to any other industry (for example the auto industry.)
- "Why did my car just explode!?" "Heat"
- "Why does this car last a tenth the lifetime of this car?" "Heat"
- "Why does this car go a thousand times faster than any others?" "Heat"
- "Why is this entire production run of cars not working?" "Heat"
People say "heat" for two reasons: 1) because nobody understands li-ion batteries and 2) because yes, the real answer does have something to do with heat.
Batteries are one of the most important industries and critical to every company on HN. But the state of the art of batteries is putting together random metals with a bunch of random chemicals and watching which ones don't explode.
Imagine talking to the CEO of Boeing: "We just did our millionth test, engines made of cheese and wings made of coconut shells. It crashed during takeoff, of course. We haven't had any improvements in over a decade, but we're sure we'll get there eventually - we've spent billions on research so far. Wanna come watch test 1,000,001? We're trying engines made of cheese and potato-chip wings next!"
Engineering takes time, Tesla has spent a lot of time building and testing battery tech that works. And they are using it across multiple applications.
If you get reliable electronics in, then without frequent oil changes, and tubeless tire. A electric quite literally is a zero maintenance car.
And EVs are absolutely not zero maintenance, that's just a fantasy. Even in dream-world where we have tires that never need to be replaced and no oil changes, batteries are always going to be a large part of the car's cost and only last a few hundred charge cycles.
The basic premise of an electric "engine" is simpler than that of an ICE, but when you actually make the car, it's nowhere near as simple on paper. Just look at the issue people have had with getting Tesla's repaired... the "mechanics" don't even know that you have to keep the battery charged.
Also, don't ignore the fact that we have 100+ years of experience with ICE.
Also, I would argue electric motors have been around far longer than ICE because it is simpler. https://en.m.wikipedia.org/wiki/Electric_motor
I've been through the CRT -> Flat screen television phase in India.
Arguments were typically like these. How will TV repairmen fix these new TV's which have move like plug and play internals. Therefore new flat screen TV's won't sell?
In the end it didn't work out well for TV repairmen. If its easier to identify and swap the malfunctioning part, you need lesser and lesser skilled professional to service these goods. You can dumb down the process to a point anybody can do it.
If that is done so "easily," why is Tesla building a Gigafactory?
The bet is that Tesla will be the first successful company to market, or that they will hold some patents which will prove valuable in the future.
Patents? Have you been following?
You are right about some of their resources, however I think it is a mistake to glibly discount the importance of the battery supply and manufacturing (and by extension, the charging infrastructure) -- that is arguably the hardest and most important part of an electric vehicle, and with Tesla's Gigafactories, that could represent an important advantage of Tesla.
Hypothetically, it would cost Ford/GM much less to put a "SuperCharger" at every existing dealership than it would for Tesla's entire basic roll out.
Tesla has been successful at marketing thus far, not manufacturing.
As matter of fact, that was my whole point: Rather than growing "a lot" they may end up just holding on to their marketshare. Whether that is a mark against them or not is for you to decide, when researching investments.
Ok true, but Ford is way past "post-ipo". Growth is not the metric to measure them by (they will grow, but no where near as much as Tesla). That's pretty much agreed upon by market analysts.
All of the existing manufacturers have better infrastructure than Tesla and are getting into the hybrid, electric, and autonomous car marketspace. Even if Tesla survives long enough to make a profit I see no way this company ever justifies it's current valuation. Long term I expect huge price drops in Tesla stock.
Ford also maintains an extensive dealer network which can disincentivize some painful adjustments that otherwise might need to be made to be more aligned with future sales, etc. People talk about direct sales for Tesla usually in a negative connotation due to institutionalized friction (re: lawsuits / political favoritism), but I think it's a strong asset in a savvy marketplace, and can illustrate how established infrastructure isn't always for the best. One less mule for the cart to pull, IMO.
I also think there are some signs that existing manufacturing practices can be / need to be rewritten around an all elective drivetrain. For instance, Tesla plans to operate its lines at full-speed using some new "invasive" robotic procedures that the full-glass roof of the model 3 will afford. This has dramatic labor and capital consequences for an automaker with a diversified fleet. Might be costly to rebuild the machine that makes machines.
https://electrek.co/2016/09/15/elon-musk-confident-that-tesl...
We're also making the assumption that charge-battery-drive-the-car is the future
Battery power is an evolution of car tech but it isn't a revolution. Tesla is building wired telephones when the majority of the market is using wired telegraphs. A substantial improvement to be sure, but to suggest a company such as Ford is not able to grow is very short sighted-- they aren't standing still either. Tesla could increase production and sales by an order of magnitude and still have a minuscule market share.
Of course Tesla will grow, but they don't have a monopoly. The future value of Tesla is certainly greater than today's value, but to discount everyone else because we are analyzing this through a specific lens of perception is a folly.
Even if it would work out for them, Tesla is pushing really hard to be a major battery supplier, so they could end up benefitting either way.
It's true, but I don't think it matters. Traditional automakers rely on suppliers for all kinds of parts on cars: headlights, wipers, tires, glass, airbags, and many electronic modules (auto-dimming mirrors, blind-spot radars, etc.). However they do tend to always keep the body/chassis and the drivetrain in-house (sometimes they'll outsource the transmission, like to ZF).
I don't see how this would affect them moving to EVs. Going from ICE to EV means two giant changes: the chassis (to make room for an entirely different layout, esp. because of the batteries), and the drivetrain. Well, the automaker controls both of those. All those other things, like glass, headlights, electronic safety add-ons, etc., are going to be the same either way. You don't need a different blind-spot monitoring system or windshield wipers or tires just because the drivetrain is electric.
Tesla building its supercharger network was a brilliant move because it means that Teslas are comparable to most petrol-fuel vehicles (as far as where you can go), and everybody else isn't.
If I buy a Ford, can I drive it to see my family in Northern Minnesota[1]? Because I know that I can take a tesla.
That's a really big deal.
I know there are 3rd parties in the US trying to compete with tesla's superchargers (a very close friend of mine was an engineer at probably the largest one until they went bankrupt), but as far as I can tell they're nowhere close to Tesla.
[1]Originally I said North Dakota, but it looks like even Tesla doesn't have chargers there yet. BOO! Well luckily I have plenty of family in Northern Minnesota too!
That said, Tesla is pursuing the angle of enabling customers to install their own charging station requiring negligible maintenance, and no supply; charing networks are only needed for longer trips which most customers don't need. That is a game-changer for many industries.
>Ford has all the infrastructure that Tesla is attempting to build now
As for the charging stations, that's an investment that ford would have to make to stay viable, which they would do
I really don't think there is any difficulty in making EVs now, its finding enough to support the market. While 200 is great for a base range I find it the absolute minimum for any pure EV and to be honest I won't go pure EV till I see 400+ (Drive a Volt now). Not all want/need two cars and even many families are constrained based on size/packaging of the car which led to my surprise when the 3 was a sedan which is not a growing market.
> Ford has all the infrastructure that Tesla is attempting to build now
* no battery production facilities * no charging infrastructure * no vertical integration (unlike Tesla, Ford has to sell through the dealershits - I see it as a big disadvantage)
> They know how to mass produce cars
Yes - but can they produce the car the public will want in three years from now, when affordable all-electric, high-performance, autonomous Model 3s will redefine what modern car means?
> They have a large manufacturing and maintenance base that, frankly, Tesla can't replicate
I admit that they have some hurdles ahead, but what would stop Tesla from being more efficient at manufacturing than Ford? It is one of their objectives - and their track record is pretty good, to say the least.
My, what a strong argument.
>> How much is Ford expected to grow?
> If they can properly pivot into the electric car market, a lot.
I don't think anyone has any trouble telling a story in which Tesla is ultimately a more valuable company than Ford. And I agree that's a big deal. But this comment thread suggests the market cap comparison is some kind of milestone. It's hard to articulate what that milestone would be.
I'm a huge fan of Tesla and think that they will succeed, but saying that the stock is "priced for perfection" is putting it mildly.
Realistically they more often invest on their perception of others perception of the promise of future value. How those perceptions get linked together is interesting but it is not nearly as objective as you imply.