EZZ

They do need service but far less so than traditional ICE. A service department won't be able to generate significant revenue from the EV service to stay in business. We don't have to agree on the dealer service model. It's all theoretical now until things play out. I'm just putting a counterpoint to the pro franchise argument.

Toys4RJill

Apparently Telsa used to sell pre paid maintenance. Four years was around $2600 ( still trying to get that confirmed). And yes, as it plays out. We will find which method works better. I can't see many people willing to part with $35K or $50K for a car if they are not able to shop around and get quotes and prices (regardless if they actually get a better deal)

riredale

Interesting discussion. I could do with a bit less of the "you don't know finance, so don't criticize Tesla!" shutdown.

I won't get into my own bonafides but let's just say I've driven financial matters around the block a few times. I'd always thought the biggest advantage of a franchise model was that the company was able to tap Other People's Money in exchange for a piece of the action. McDonald's does, In-n-Out doesn't. Makes for explosive growth, which can bring new issues alongside the obvious advantages. One way or the other, there has to exist a local support presence, especially for something exotic like an EV.

As to the "need" for EV repairs, I'd be curious to find out the percentage of work a typical service department does towards serious ICE-specific repairs, such as intake manifold R&R, transmission overhauls, cylinder head work etc. versus accessory matters such as brakes, A/C, powered seats, wheels and tires, powered windows, dashboard issues, and so forth. I think it's uncommon to see a cylinder head sitting on a workbench. The implication to me is that, while an ICE/transmission package is quite complex and comprised of many hundreds of parts, the current state of affairs is that they are quite reliable, and with Toyota, practically bulletproof. So I tend to assume that EVs will always need tending-to from time to time, much as Lexi do. Service bays will still be needed. And if the Tesla downratings from CR are to be believed, service bays are definitely needed.

Finally, as for "profitability," Tesla has a big tub of cash out behind the corporate HQ. That tub is gradually being drained. They can refill it by selling more stock and bonds, and by increasing their product sales price and/or reducing the cost of the parts.

I personally suspect that there might very well be a new company a decade from now called "AppleTes" that is known for electronic devices and EVs. One big thing Tesla has in their favor (Apple too, to a lesser extent) is that the company has followers who regard it as a religion. Faith plays a part, just like in any religion. Man, we sure had it at Apple Lo Those Many Years Ago. The enemy was IBM and DOS. We had WYSIWYG and utter simplicity of operation. We had faith that we had the better way. Religion.

mmarshall

Agreed. Most of us on Car Chat have a pretty good knowledge of the auto industry, even if some of us disagree sometimes.


That is a very interesting prediction. Another one (that has occasionally been made here in the forum) is that Tesla will likely not survive as an automaker, but end up a company that specializes in batteries, computers, hardware, and electric-drive systems that go into other BEVs. I'd be more inclined to go along with that one.

Toys4RJill

As more and more current manufacturers jump on with EVs, the harder it will be for Tesla to survive.

mmarshall

True, but Tesla, for the time being, still has an edge in technology, if not in quality-control.

Toys4RJill

What technology do they have an advantage on? Any of the major car manufacturers Toyota, Honda, Hyundai, Mercedes, BMW and GM or Ford can make an electric car. They coils make one that could rival the performance of a Tesla. The reason why they don’t is that none of them can make a profit doing it. Until now as they start to allocate their resources into. EVs.

bitkahuna

iTrader: (20)

not sure if just being argumentative.

i believe tesla leads in re-charging speeds, acceleration/performance, range options, and driving assist features to name some big ones. their cars can stream from audio services and have full screen google maps built in to name a few more.

mmarshall

They currently (no pun intended) produce what is arguably the longest-range and most efficient electric-drive system on the market. That has been a significant Tesla selling point for years, and one thing that at least partly justifies their high prices.

Toys4RJill

Not at all being argumentative, don’t know why that is taken out of context. It is a discussion . All of the above could be done by any large automaker (in my opinion). They just don’t as of now whereas Tesla is making these products, but they are not making any money. Lack of money making capability is why most manufacturers are not in the game (until sort of recently)

But they are not making money at it? GM or MB could easily build something and not make money at it as well. Those above technologies are great, but if they don’t make the parent company money, that is a drawback for them.

EZZ

Sorry but this is completely inaccurate. They have a significant lead in both motor technology and battery technology and the other auto manufacturers haven't been able to replicate the technology successfully yet (not even close). Their best efforts haven't even closed the gap on the old Model S technology which is 7 years old. They Model S now has the newer and more efficient Model 3 motors. The model 3 still has the much higher density batteries that the model S/X lack.

Toys4RJill

So I go back to some of the comments in the thread and the arguments around that of profitability. If Tesla is not making money, then those technologies although great, are not quite as appealing to those companies that have been making money in the past. Hence the advantage is what? A money losing assembly line making high performance automobiles with very high end technology. Could Toyota pour 5 billion into an electric super car to rival Tesla? YES....Could they do it and make a profit? NO

Where the Toyota, Hyundai, Audi, MB and GM etc will put significant strain on Tesla is with manufacturing and assembly lines. Their future electric cars will be baked in with assembly and development of their current platform cars..while they may not be as fast as Tesla, they will cost significantly less, have far more outlets to sell, more than likely will have better reliability, and will have the know-how of proven, profitable manufacturing capability.

EZZ

This is completely inaccurate again. The assembly line making and selling those cars is profitable. Tesla takes those profits and invests them in other adjacent markets such as charging station build outs and battery factories. These investments lose money for now. Once investment is complete, Tesla will make money on these efforts. Tesla isn't just a car company. It's a verticalized EV technology company that is still in its investment phase so it SHOULD lose money.

Toys4RJill

So Tesla as a whole, is not making profit. Not sure what else there is to say. You are the only one I feel that is arguing that they are. Once the other manufacturers come on board, it will become more difficult for Telsa to make money. That is just an opinion, it was a pleasure discussing it with you..

EZZ

Again, the cars are making money. That part of the business is profitable. The company itself is not profitable because they are investing into other areas that are not directly related to the car manufacturing business. On a cash flow basis, it is cash flow positive this quarter. Their loss in income is due to their heavy depreciation on their capex. Very simple.