> Remember, Tesla has to become bigger than Toyota to justify the stock price. It is not possible to do that at Tesla's current price points. It is not possible to do that at Tesla's current price points.
Long term Tesla has to create a balance sheet and a narrative that convince people that it's current valuation is justified. Based on my time in R&D I think Tesla might achieve that through lower cost vehicles - they were taking some very bold steps in manufacturing that might be hard for others to catch up to - but could also achieve it through other means.
One thing I was very aware of at my time at Toyota was how many of the nascent supplies of Lithium and Cobalt Tesla was snatching up directly or indirectly. Even if other companies can deliver a lower cost of production it may not matter if they can't supply the batteries. 3-5 years from now those investments might pay off substantially in lower costs for Tesla's rather than other vehicles even if the bets in manufacturing don't work out.
And assuming Tesla has a squezze on Li supplies, laws prevent the use of that control to hurt competitors. Braking these laws carries enough fines in all major markets that they will be adhered to.
My understanding is that Tesla is leveraging long-term contractual lock-ins in various shapes. One particular one I heard was that in exchange for fronting some of the up-front cost for the mine Tesla would retain the right to buy X% of the mine's output at a maximum markup of Y% over cost to produce.
This kind of contractual lock-in can achieve the desired goal without using either of the mechanisms you listed.
They're usually used by mining companies to hedge future market variance, and are not exclusive to Tesla either. On top of other companies having these contracts in place as well, mining companies will pay to break these contracts if a high enough bidder comes along or flat out pays them to break it.
With demand pricing spiking for batteries, these lock ins are not very strong.
Agreed.
> On top of other companies having these contracts in place as well
Yes, but scale is important. My analysis at the time was that Tesla was locking in significantly more material behind contracts than Toyota or other companies.
> mining companies will pay to break these contracts if a high enough bidder comes along or flat out pays them to break it.
This assumes the contract is written in such a way that Tesla does not have to consent to the contract being broken. My understanding was that Tesla was trying to get into as many contracts as they could without such clauses.
Source: More compliance trainings I can count and enough real life experience with monopolistic raw material suppliers to know that abusing market position to hirt competitors is a really bad idea.
Both those cars look hideous to me.
Regardless, it doesn't change the fact that the Tesla aesthetic is due for a refresh. Whether they have to go as unconventional as some other manufacturers have is up for debate but that they need to come up with something new surely isn't.
Note the last qualifier in your statement. "in China". I think the concern is that a potential adversary could influence Musk outside of their jurisdiction too. So "in China" becomes "everywhere". Which means that one day your might find that you're not able to criticize Putin or Xi Jingping or whoever else on Twitter because Musk has a large Tesla presence in that country
China will do what it always did before with other companies: try to hack Twitter to get sensitive data, and try to place spies in high places to obtain trade secrets, IP, and technology.
Honestly though I'm just entertaining the idea. I'm not too worried about Musk's acquisition of Twitter
[0]: https://hir.harvard.edu/rated-c-for-censored-walt-disney-in-...
Find Gwynne Chatwell for Twitter, and Bob's our uncle!
I think Sheryl Sandberg running Twitter would be a great idea. She definitely has a ton of experience, is used to dealing with complicated founders and executing on their vision, the only place that she could move up in her career is to be the CEO of not just a large corporation but something meaningful.
In a way Twitter and Facebook are no longer as directly competitive as they were in the old days when it was just FB and Twitter.
Bringing in a "Traditional" Social media Exec will just result in repeating the same policies all social media companies have, including the clear political bias all of these companies have
https://www.reddit.com/r/BoringCompany/comments/xugxdl/comme...
Remember, the first SpaceX launch attempts didn’t make orbit. Did that make them quit because they ‘failed’?
Improvement is the name of musks game
Jeff Bezos for example owns the Washington Post, but doesn't run it (which will likely be the case with Musk and Twitter in a few months), and it doesn't seem to have detracted from anything while he was still CEO of Amazon.
Finding the right CEO will be the challenge, and I surprisingly haven't heard any speculation on who could get the job.
A kitchen sink app in which..
- Use Twitter to pay for parking (tired of downloading tons of apps in different cities to do this)
- Musk should find other verticals where ppl have to download multiple apps to do the same thing.. just do it in Twitter
- Make Twitter a public Internet identity system. You want to troll online use your fake account... you want to be serious, comment online using your verified Internet ID that Twitter has verified you in many ways
- Free speech .. cesspool continues and worse via anonymous/fake Twitter accounts. Slightly less when one uses their verified account
I think he could triple his investment with a kitchen sink app!
From what I've seen, non-anonymity doesn't do much to reduce the vitriol of online discussion. What it probably has a larger impact on is on potentially persecuted minorities (say, trans people), where non-anonymity makes it easier to threaten them in real life.
Real identity has those most vulnerable get more threats, the majority get less.
Hmmm...on a different note...Getting downvoted and would enjoy hearing why if anyone cares to explain. Are you not tired too of downloading tons of apps just to pay for parking?
I am tired of my every sneeze being tracked by the rest of the world. It is dystopia.
P.S. I do not downvote any posts no matter what.
You don't have to use it, but many others who desire a simplest user experience for X will and that's a money maker I believe. A way to reap his investment and then some.
Running Twitter OTOH? There's an endless supply of "captains of industry" in the Silicon Valley, who would be willing and able to do it.
We went with a local company and it it took a couple weeks longer to install than estimated and they were turned on immediately after install. The power company has even changed out the meter now, so we're fully installed and done.
They probably mean there is an issue with getting approval from city/utility company to connect them to the grid.
Given ~20% efficiency I’d guess they heat up by ~20%
Check out W&S in Flagstaff (https://www.solar-electric.com/) (no affiliation) for components.
I think Tesla's battery moves are spot on. Investing in extraction, processing, refining, and manufacturing is going to pay off big time in the future.
Tesla is the king of battery manufacturing. Their EV drivetrains are the most efficient on the market today. But their cars kinda suck overall and they are not going to be competitive with the traditional auto makers in the long run. Better to sell batteries & motors to Toyota, and sell power walls & solar to consumers / resellers. That is their core competency.
Did you mean Panasonic?
Do explain how a kinda sucky car, Model Y, became best selling car in Europe in September and is tracking to be best selling car world wide in 2023.
And yes, I do mean "car", not "electric car". Model Y is outselling Peugeot 208, a car half its price.
https://electrek.co/2022/10/28/tesla-model-y-best-selling-ca...
https://www.reuters.com/business/autos-transportation/teslas...
Because gas is obscenely expensive in Europe, so EVs are in high demand and there are very few "real" EVs available. Especially in the form factor of the Y, which is especially popular these days.
The model 3/Y are over priced, have poor build quality, and are a nightmare to have serviced. But there are no real competitors (yet).
I have some doubts - 4G/5G access is more and more prevalent throughout the US, and it provides better speeds and lower latency for less cost. T-Mobile's latest "home broadband" router that has an integrated 5G modem is surprisingly fast and affordable now, as one example. Starlink simply can't compete there, ever, seemingly. Cellular coverage grows and grows. Maybe there truly are enough customers cellular will never reach to justify low cost satellite internet? I have no doubts a market exists for expensive satellite internet for those that really need it. I pulled 600mbps over the air the other day on a Verizon 5G connection, just sitting in a store in a small town.
There is absolutely a risk Starlink will be an amazing technical invention, but not one enough people actually need to buy to justify continuing an affordable service. I think even owning a 2nd internet connection outside of your devices could become weird in the future - who wants wifi if the device can just have connectivity embedded from the factory, skipping wifi, routers and broadband connections altogether unless you want them? Smartphones and watches have already ditched the physical sim cards...
I live on a wooded lot in a reasonably developed area in Ohio. DSL was brought out to my address in ~2004. Today it is limited to 15Mbps down, 768kbps up. 4G has been available since Verizon rolled it out in the area. I have no idea how long ago that was, maybe ten years ago. Today it's good for 25Mbps/2Mbps on a good day, no carrier on bad. I've had Starlink since Feb of 2021. Around November of last year it had become reliable enough that I could use it as my primary Internet access method. The numbers vary, but I would say my average is 140Mbps down and 25Mbps up.
So in my specific case, Starlink is the best Internet access, hands down. It has the lowest latency, it has the highest raw and average performance, and it is the most reliable. It has been this way for approximately a year. So in circumstances where the customer is anywhere outside of a urban/suburban area, Starlink is incredibly competitive and may in fact be the best option available.
The only question I ask is, "is there a sustainable market for affordable satellite internet access?". There is no debate it is the best connection for some people right now, but if it is unsustainable that's good for no one in long term. Before Starlink, satellite internet was far more expensive.
Yet to turn a profit, and some big headwinds in way of competitive pressures from other cheaper technologies.
I am also a Starlink customer and live in the middle of nowhere, so... For the little my example is worth as well, I haven't seen anything like as good as those speeds where I am in Washington State, for some time. Over the same period, cellular has appeared in places it wasn't before.
Cellular doesn't need to reach everyone to be big enough to end the dream of affordable satellite access, and the cellular providers fight for the same government money many countries provide to improve connections for the most poorly connected regions. Assuming you are free of trees (a big problem!), Starlink so far only works well at really low density deployments - a huge detractor in many assessments comparing it to cellular deployments, even in remote regions.
Leaked slide deck from company declared optimum deployments is 100 customers per 300km squared, their "100 per 300 rule". Maybe this is better today and gets better with time, but cellular has a lot of radio advantages and a lot of existing infra to expand from. Also doesn't need spaceships.
> https://drive.google.com/file/d/1UOI7b5flgAjJrPs2HDa64p_ZABc...
Well your first line was "By Musk's own admission, it can never be competitive against the cellular providers" and then the rebuttal was based around a strong example of it beating cellular providers inside their coverage range.
You can understand the confusion.
By only needing 5000 "towers".
So, it can be competitive.
5000 or whatever towers ain’t insurmountable - the USA already has a huge percentage of the population covered today - and has nice benefit of being an already profitable business to be in, and construction can be done by anyone with hands, tools and a vehicle. The tower probably even lasts longer than 5 years.
Emphasis on up to. They only have 3000 right now and it already works. If they go above 5000 it's because they think they will make more money that way, not because they need more than 5000.
> 5000 or whatever towers ain’t insurmountable
The US has hundreds of thousands of towers, and that number gets a lot bigger with 5G.
And while that covers "a huge percentage of the population", not all of that is fast, and reaching the rest of the population gets harder and harder.
> replacing on a 5 year cycle
> The tower probably even lasts longer than 5 years.
Let's say a cell tower lasts 20 years, which is a bit longer than two cell technology generations. So that means starlink needs to launch about a thousand satellites per year to maintain their network over the whole planet. And cell providers need to rebuild 20 thousand cell sites per year just in the US, more if they try to cover everyone.
Starlink can launch that many satellites with about $300M. Let's round way up to $500M a year to keep satellites and base stations running.
Each year cell companies are pulling in hundreds of billions and putting tens of billions into towers, just in the US.
In other words, how many people with hard wired fiber/coax will change to Starlink or will be be useful only for the rural/remote segment.
Yes, there's some international, marine, flight etc. market, but, again, how big is that.
Serious question - is there any real data?
Fiber beats starlink by orders of magnitude.
With coax it depends on how it's set up. Plenty of existing lines have worse upload speed than starlink because of frequency allocations that are expensive to change.
Phone wires are very bad at carrying data and are usually much slower than starlink.
That's just in U.S. Starlink is world-wide.
Back of envelope calcs:
$100/month == $1k a year.
1 million * $1k = $1 billion
10 million = $10 billion.
Estimated cost to replace all Starlink satellites every 5 years: $10 billion.
That's $2 billion a year.
Cost: $2 billion/year. Revenue: $10 billion/year. Profit: $8 billion/year.
Assuming only 25% of Americans currently without high-speed internet will opt for Starlink, not counting world-wide users, not counting commercial applications (boats, planes, gas stations), not counting using Starlink as internet backbone (i.e. alternative to under sea fiber).
Most likely Starlink will be a cash cow (and finance Mars colonization).
https://www.npr.org/2022/05/11/1098368187/42-million-america...
42M Americans = ~10M households (assuming 4 per household).
Starlink is $110/month and upfront $599, which puts it outside many/most of these remote folks.
10M household is the TAM, so SOM would be just 5-10% of that, about 500K-1M households, or even less.
Regarding the cost of replacement of satellites and their operational costs, I have no clue.
(Asking as someone that fits your description. DSL is offered where I live, at 3mbps. :( Cable/fiber are offered if I want to shell a quarter million to help them build their infrastructure... so no.)
It is atrocious, and millions of people will jump ship the second they can
I’ve used it in Canada and Australia and it’s flawless
Cars are so confusing these days - $40k USD just seems like the average price now.
My neighborhood has so many Tesla roofs I was actually surprised by your comment - but that’s fascinating! I thought they would be doing much better.
Ford’s average transaction price (ATP) edged 4% higher to $54,008, according to Cox Automotive calculations. By comparison, Ford’s ATP was about $40,000 in Q3 2017.
They had a $35k version, it was just off menu as recently as early 2020[0]. But it was discontinued around November of 2020[1].
[0]: https://www.greencarreports.com/news/1127490_the-35k-tesla-m...
[1]: https://www.theverge.com/2020/11/16/21569524/tesla-model-3-3...
Source? Their last earnings show that energy business part has improved this quarter
36 Lyriqs 782 Hummers 22,012 Bolts
For comparison Tesla sold around 32,000 Model S in 2014
Further, the future market for affordable EVs is better represented by affordable ICE sales, as that is what they will be replacing.
Tesla has actually released stats on what cars their buyers trade in [1]. Most of them are not premium brands. Toyota is the largest single brand.
The anecdote about the people you know who are buying Teslas may be more reflective of who you know than who is buying Teslas.
[1] https://insideevs.com/news/504078/what-cars-tesla-buyers-tra...
That's more than twice that of all of Porsche, VW (which owns Audi), Mercedes, BMW, Ferrari and Volvo put together.
Without selling down into the mass-market and out-competing Chevy in that segment, that price premium cannot be justified.
But they're not.
On a trailing four quarter basis; BMW has more revenue than Tesla ($135bn vs $67bn), better operating margin than Tesla (18.6% vs 16.2%) and therefore also higher earnings ($25bn vs $11bn).
The Leaf and Bolt both have starting MSRPs around $28k, and most probably sell in the mid-$30k range, so there is a significant price difference.
I would definetly put BMW and Tesla in a different class, with Tesla being the budget option.
Or it could be used as a huge influence platform. Guys like Elon might feel that they got to own it. Fishing out my old tinfoil hat ...
Musk is getting stretched rather thin. Space-X seems to be doing OK with Gwynne Shotwell running things. Tesla, which Musk apparently does really run personally, is doing OK, but their side ventures are not. Self-driving is a mess. Solar panels (yes, Tesla has a solar panel business) are not doing well. The Cybertruck is years late. (Maybe next year.[1]) So is the Tesla Model 2, the low-end vehicle.
There's still no low-cost Tesla. The market for high-end cars is somewhat saturated. Tesla's order backlog is now 78 days, much less than usual for Tesla and about typical for the auto industry. Remember, Tesla has to become bigger than Toyota to justify the stock price. It is not possible to do that at Tesla's current price points. There are not enough buyers with that much money.
So Tesla has to compete on price with the Chevy Bolt, the Nissan Leaf, etc. Electric compact sedans are a crowded sector. Solving that problem is Musk's job.
Twitter is a distraction.
[1] https://www.edmunds.com/car-news/tesla-cybertruck-might-fina...