I can't think of any product I'd rather have than a Tesla.
I think Tesla will sell millions of Model 3. Which other car is 400,000 people waiting patiently to buy for two years, even putting down a $1,000 deposit?
Tesla is doing to traditional car manufacturers what Apple did to Nokia.
> Tesla is doing to traditional car manufacturers what Apple did to Nokia.
Sincerely, and with all due respect, this is a false analogy.
What happened to Nokia was pretty much self inflicted. Mismanagement, competing empires, complacency.
Apple did not start shipping low end brick phones and eat Nokia's market.
Post '08 bailout automotive manufacturers are lean and hungry (for the most part)
Furthermore, the 'traditional' car market, while slow to move, is not far behind. And in some cases is taking a longer view. E.g. Ford is going straight to Level 4 in 2022. Forget the ICE v. electric debate, that ship has sailed and everyone is heading to EV. The real battle will be to produce the safest self driving product.
I am long on TSLA, I expect them to do well however they are in a far riskier spot than Apple was when the iPhone dropped.
They were healthy, profitable and experienced (+Jobs). TSLA is none of those.
I'm not disagreeing with your sentiment. I just thought we were past the Apple analogies.
Tesla is currently training their driving AI using the existing fleet in shadow mode. How do you skip this step and go straight to level 4? They need months of tuning outside a lab, worldwide.
A lot of car manufacturers still refuse to build an EV from the ground up. They are reusing an ICE platform and converting them to EVs.
heh, I'm sorry. Musk is still alive and surpassed Jobs long ago now, he's up to his 5th disruptive successful company. Online Payment, Cars, Space, Solar roofs and AI beat shiny laptop and smartphone.
I see car companies getting off the shelf solutions from companies like Nvidia, which is what is being trained in Tesla's today. And Nvidia have their own demo. I genuinely wonder who owns the algorithm...
It actually makes sense to jump to level 4 from both a liability & design/platform perspective.
The fact that Tesla is bleeding through the first few stages with driver-in-the-loop doesn't necessarily mean they get to maintain a competitive advantage long term.
(Also, Mazda is a 2nd tier manufacturer, little resources, mostly Ford parts Inc drivetrain, engine and firmware)
Finally, I appreciate the Musk fandom. As someone with a little skin in TSLA, I aim to take an objective view fwiw.
Good to know, just sold my '04 Mazda 6 which was pretty much all Ford. After looking it up I see that Ford reduced ownership from 1/3rd to 10% in '08. Thanks for the correction.
The german manufactures are not asleep at the wheel, get into the newest E-Class and despite it being a lot cheaper than a Model S, the self driving capabilities are impressive. Don't even let me start on the interieur quality, which is my biggest gripe with Tesla considering their price segment.
Car companies are selling bricks. In large part because of the used car market no company makes reliable and cheap because the cost conscious don't buy new cars.
Further, the dealer model forces high markups, heavy advertising, etc to attract the kind of people that buy new cars.
Fair opinion, but I think you are arguing the wrong point.
Apple ate market share from Nokia because of brand advantage.
Many commentators mention that manufacturers are improving their EV product, but I think that boat has long sailed: Tesla vs. Ford won't be about features, but the brand.
Agreed, but it's not about the brand - it's just that in the market segment for a $35-40k mid-size sedan, there's not a whole lot of need to wait two years for a car, which is why it's so uncommon. The reason it doesn't happen to other manufacturers, is because although they have 3-4 year lead times on new models they produce, they're still continuously producing the current models
Here's another illustration of how our intuition about compound interest can be really wrong:
Futurama scene where Fry has been transported to the year 3000 and he still has his ATM card: The bank teller checks Fry's bank balance. She says, "You had 93 cents in your account in 2000. With an average interest rate of 2.25% compounded for 1000 years . . . that brings your balance to $4.3 billion dollars."
The math is correct. Plug those numbers into the compound interest formula, Pn = P0 (1 + r/100)^n, and you really do get $4.3 billion.
Your gut feeling is that even with 93 cents, you could retire rich. Not a billionaire, but comfy. It ain't so. In 50 years, you'd have $2.83. And even that $2 gain would be wiped out by a single monthly banking fee :-).
In 400 years, $6820. My intuition told me that I should be in the millions by then. Wasn't even close. Didn't even account for taxes and inflation.
Another thing that many people forget is that while compound interest gives you more money, at the same time inflation makes your money worth less.
So what you should really be looking at is the difference between the inflation and the interest rate: the so called 'real interest rate'. Currently in the US, that rate is negative ..
I feel like I can't get a handle on the inflation numbers I see. I pay - and the math checks out - roughly the same amount for gas, produce, and essentials. My smartphone is 1/3 the cost it was 10 years ago.
And then housing and health insurance is like 2.5 times higher. It all totals to be the official rate, but man does it feel uneven.
1.06^30 is like 5.5 ish? Unless you mean on saving 1k pa which is not what they are talking about, and means you're very much changing the game (and apparently not derisking towards retirement)
If my basic needs like housing and healthcare were already met (unfortunately they aren't), my next purchase would probably be a Tesla or a Solar/Powerwall combo for the house, or both.
Well, they lost access to $1,000 until they cancel (plus 3-6 weeks, since it can allegedly take Tesla this long to refund the money).
I don't think 400,000 have just $1,000 to spare for a really anything they will just cancel. The $1,000 mean that the person who reserved it really wanted the car and is unlikely to just refund it unless they have a very good reason to do so.
I think the commitment of $1000 is overblown. What is the actual opportunity cost here? Maybe $50-$150 depending on the interest rate and time frame you want to use for your estimates. That is nothing in the scale of a car purchase and it buys you the right to receive the car several months quicker. Relatively speaking it is like someone paying $10 to have a new laptop shipped to them overnight instead of by ground except the shipping has been prepurchased a year before the laptop.
If you aren't the type of person who can find a spare $1000, you also probably shouldn't be the type of person who spends $30,000 on a car.
You are missing the psychological element. In general, people:
(a) Feel a strong obligation to be consistent with past behaviour - not just in placing the deposit, but then thinking and reading about the new car design and wanting a Tesla for months or years.
(b) Want to avoid admitting the 'mistake' of giving Tesla a free loan. Not just admitting the mistake to themselves, but also to all their friends they told about their deposit.
(c) Hate giving up something they 'own' - ie. their place in the queue
(d) Value something that's scarce more than something that's easily available
(e) Are more likely to want something that other people love and are queueing up to buy.
Thinking about this a bit more, Musk should run a split test: Half the people queued for a Model 3 are offered $100 to move to the back of the queue. People who decline such an offer will feel compelled to buy the car when it is released in order to be consistent with their previous actions. I'm confident this would boost sales, but the split test would tell us for sure.
I think you vastly underestimate how much demand is represented by 400,000 people willing to part with $1k before a product even exists. Refundable or not.
I am not questioning the demand. I am questioning the commitment of people who put down a refundable deposit on a product they had very little information about. I am one of those people who threw down my $1000 before any of the presentations. I am still not sure whether I will purchase one. My interest has actually waned with recent leaks like the complete lack of any dashboard readouts. However I am still perfectly fine with Tesla keeping my deposit until I make a final decision. The opportunity costs of that extra $50-$150 is worth a lot less to me than the chance of securing a Tesla quickly if a do make the purchase (not to mention it increases my odds of a full federal tax rebate). I can't imagine I am the only one of the 400,000 with that mindset.
You're not the only one. I'm nearly identical. Losing access to $1k for a year or two (with the ability to get it back within a few weeks) is completely a non-factor, and since it increases my chance of a $7500 rebate, seems like a pretty good investment, actually.
Also, same feeling of 'meh' based on leaks so far. I was really hoping for a scaled down S with fewer amenities, lower performance, etc. rather than something from scratch. The no dashboard instrument cluster thing bugs me, as does the fact that AWD won't be available initially (hurting the chances of the rebate if I want AWD), but I'll wait until at least the final reveal if not later to make my decision.
The sort of people who would consider buying an expensive sedan can probably afford to loan Tesla $1000 for a year or so.
I reserved a Model 3 because I figured that if I didn't, I would be at the end of a very long waiting list and would probably lose out on the federal rebate. The most likely outcome is that I'll decide that's too much to spend on a car and cancel, but it still made sense to me to keep my options open.
I expect a lot of those reservations to be converted to actual sales, but a lot of them won't. In any case, I think Tesla will have plenty of demand if the product meets expectations.
A $1000 deposit is a significant commitment to ordering the car, even if it is fully refundable. Very few people would do this until they are basically decided on buying this. For everyone who would reconsider, there are for certain plenty of people, who are interested in the car but would not put down money without a test drive first. So, judging from the deposits, I would rather assume the actual list of interested buyers way exceeds the amount of people who put money down.
I disagree. I put down the deposit because I wanted to reserve my spot in line. Putting down $1k now isn't that much if it might save me $8K in tax credits by having an earlier spot in line.
I still haven't figured out if I can get a charger in my apartment building. I haven't decided I like the look of the car. I haven't even decided I want a sedan.
I love Tesla, so on the chance that I do want the car I put down the deposit. But I'm still 50/50 on actually buying it. I imagine many are in a similar positions.
Curious, did Tesla published updated stats ? or anyone else for that matter. The announcement numbers were way above expectations, but it's not much if half of that evaporated after the hype.
Sure, there will be tons of people who cancel... but then there will also be tons of people who wanted to wait until the car was fully finished before signing up to get one. They'll be fine.
This is the car version iphone, with people queuing up at the store days before the product is seen. I would believe they would stop production exactly at 400K cars, the current waiting list and start a new Model 4 waiting list. They have an air of exclusivity now with their current models. People still gawk at the sight of a Tesla. They would want to maintain that awe factor with Model 3 as well.
You're assuming a pure profit motive. Literally everything Elon Musk is doing has a strong element of trying to save the world.
The goal of Tesla is to make every new car sold electric, if they have to command 100% of the market they will do that, but they'd rather there be some competition.
> Literally everything Elon Musk is doing has a strong element of trying to save the world.
Maybe. Or maybe he's just saying that to make money. If Elon Musk ends up being completely successful in all of his endeavors, he will be the world's richest person by far.
I suspect the truth is in the middle. He does want to change the world, but he's not willing to become poor (let's say a net worth of less than a million dollars) in the process.
I have no problem with people getting rich, especially if they've earned it. But I see Elon Musk as a salesman more than anything, and he's damn good at it. He has generated a cult following of people who believe he is doing everything possible to save the planet.
I am very skeptical that Elon Musk is half as great as he's made out to be on certain internet forums. I do not mean to say he is not an incredibly accomplished person, only to say that he does not live up to his self-generated hype.
Of course time will tell. I truly hope he is as great as people make him out to be. But I just don't see it. Hopefully he makes me into a believer by delivering on all his promises.
He's 79th richest person on the planet at age 45 with only Zuckerberg being richer while also being younger.
He was foundationally involved in one of the biggest early online payment companies, one of few private rocket launch companies with NASA contracts, basically the single electric car company to change the world's views on electric vehicles, and a major solar / battery company.
These are Reddit AMA quotes from a car company CEO.
Do you really think it's likely that he can't code, can't handle electronics, doesn't understand rocketry, doesn't understand any engineering, hasn't earned any riches, and is just tricking everyone and leading a cult of personality?
If the combined 50,000 employees of Tesla, SpaceX and Solar City can't deliver on his promises, that means he's a fraud? And if they can, it's solely down to his brilliance?
If he's only half as great as he's made out to be, that's still 200th richest person in the world and head of only one or two international industry changing companies, but that's just not good enough for you?
Time has already done that. He is simply put, the real deal. Major car OEMS are always talking about what they will do in three (or more) years from NOW. Elon has done it. Is doing it. And will continue to push the envelop. Zig Ziglar reminds us that EVERYONE sells. Elon is just that much better at it. Then he executes unlike very few others. I didn't get the merger, but now with the home batteries and commercial ones, I do. Brilliant.
Unless Musk gives away much of his wealth in his lifetime, he could very well be the world's first trillionaire. Think of Toyota and Exxon Mobil rolled into one with virtually no competition in sight.
To put things in perspective, this car is just 10 grand more than a full featured Toyota Camry. In countries that import both cars and oil like India, the price of the Tesla would be less than a Camry if they reduce the import tariffs. It's a foreseeable option to reduce foreign oil dependency. Also in developing countries, for every person that can afford to buy a Tesla and also knows how to drive, there would be dozens more who can't drive but could very well afford one. Once Tesla delivers their first 400K cars and proves they can drive themselves anywhere in the world, the demand would far exceed supply in the foreseeable future.
I would assume that a company investing billions would try very hard to make accurate sales estimates.
I would be surprised if Tesla isn't surveying random people on the list, asking questions about their planned purchase and making estimates on the % that will end up cancelling.
> I would be surprised if Tesla isn't surveying random people on the list, asking questions about their planned purchase and making estimates on the % that will end up cancelling.
I hope this would give an accurate result. People might say one thing and do something else when they have to actually shell out the money...
I can't remember a product that sold 400,000 preorders (many of which were sight unseen) with a $1,000 deposit in my lifetime. I think anyone trying to downplay the demand isn't looking at it in the right context.
I think Tesla will sell millions of Model 3. Which other car is 400,000 people waiting patiently to buy for two years, even putting down a $1,000 deposit?
Tesla is doing to traditional car manufacturers what Apple did to Nokia.