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I see a lot of "Tesla builds it's own batteries" which is a half-truth. Tesla assembles the battery packs and modules, but they buy every cell from a primary manufacturer. Panasonic currently manufactures cells for Tesla in the Nevada production facility but otherwise they would suffer the same constraints if LG-Chem, Sony, Sanyo, and Panasonic all decided to dedicate all their other production to higher paying customers. In the end as supply is constrained, prices will rise and those willing to pay will win.

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Posted (edited)
On 7/26/2020 at 8:39 AM, FordBuyer said:

Lots of areas of the world are going to demand no fossil fuel engines and only Tesla makes it's own batteries. Everyone else is supply constrained. Probably number one reason for Tesla's sky high stock price. That and their superior software.

 

Also superior system integration, superior fast charging infrastructure, and superior marketing & sales strategy.

 

Ultimately, Tesla's leadership in BEV market and the performance of its stock comes from their corporate mission, which is very different from any incumbent automaker. It reads in part "to accelerate the world's transition to sustainable energy". That makes Tesla "a company capable of turning entire industries upside down and ultimately changing the world", as Professor Enrique Dans at IE University said.

Edited by rperez817

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3 minutes ago, rperez817 said:

 

Also superior system integration, superior fast charging infrastructure, and superior marketing & sales strategy.

 

Ultimately, Tesla's leadership in BEV market and the performance of its stock comes from their corporate mission, which is very different from any incumbent automaker. It reads in part "to accelerate the world's transition to sustainable energy". That makes Tesla "a company capable of turning entire industries upside down and ultimately changing the world", as Professor Enrique Dans at IE University said.

 

I agree. Tesla leads the world I BEV's and everyone else is playing catchup.

 

Where I live in Central Florida, I can see his Falcon rockets climb into the sky from my front lawn on a clear day. The superior technology of his companies are extraordinary.

 

I don't own the stock and hate the dash board and front end of the Models Y and 3, but you have to give them their due. I'm not even a fan of Musk as a person with his ignorant statements, but his companies are visionary and revolutionary. Big Boeing can't touch him in aerospace and big auto can't touch him in electric vehicles.

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19 minutes ago, FordBuyer said:

 

I agree. Tesla leads the world I BEV's and everyone else is playing catchup.

 

Where I live in Central Florida, I can see his Falcon rockets climb into the sky from my front lawn on a clear day. The superior technology of his companies are extraordinary.

 

I don't own the stock and hate the dash board and front end of the Models Y and 3, but you have to give them their due. I'm not even a fan of Musk as a person with his ignorant statements, but his companies are visionary and revolutionary. Big Boeing can't touch him in aerospace and big auto can't touch him in electric vehicles.


Nobody is disputing the technical achievements or the advancement of BEVs as mainstream vehicles.  The problem is it’s all smoke and mirrors from a financial standpoint.  You can’t continue to dominate an industry if you can’t turn a profit.  You can get by short term with new investment capital and temporary govt credits and big govt buyer incentives but all that eventually runs out.

 

Tesla should have been charging $5K-$10K more per vehicle to be profitable but then sales volumes go down.  Their business model with gigafactories and direct sales is very expensive to scale up.

 

I think Tesla will become a battery and component supplier to other mfrs.  I think that’s been the goal all along.  And it’s smart.  Just let’s not pretend they’re viable as a long term vehicle mfr.

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4 minutes ago, akirby said:

Their business model with gigafactories and direct sales is very expensive to scale up.

 

It's expensive initially in the short term. But the "in house" business model used by Tesla is actually better for scaling up long term compared to the "outsourced" business model for incumbent automakers. Tesla has already built economies of scale for BEV far beyond any incumbent automaker.

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29 minutes ago, rperez817 said:

 

It's expensive initially in the short term. But the "in house" business model used by Tesla is actually better for scaling up long term compared to the "outsourced" business model for incumbent automakers. Tesla has already built economies of scale for BEV far beyond any incumbent automaker.


That is hilarious.  You think building 200k widgets in house at multiple gigafactories is cheaper than a 3rd party building tens of millions of the same thing in one location?  There are advantages to building your own stuff but none of them are financial, short term or long term.

 

Sometimes the old ways are the old ways because they’re best not because they’re old.

 

If Tesla needs to expand parts production they have to spend capital.  When Ford needs more seats they call Johnson Controls and order more seats and Johnson Controls invests the capital to expand production if necessary and Ford isn’t carrying that investment overhead.  And anyone who manages corporate budgets understands the difference.

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1 hour ago, akirby said:

Sometimes the old ways are the old ways because they’re best not because they’re old.

 

In the automotive industry's history, the "in-house" (vertical integrated) business model is the old way. Outsourcing didn't become big until the industry was mature. Right now, the automotive industry is experiencing a revolution whose endgame is 100% electric, 100% autonomous. Tesla's success in the BEV market demonstrates the advantages of vertical integration.

 

The outsourcing business model may work OK for the mature, slow/no growth, low tech business of building and selling ICE powered cars and trucks. But for the new generation of high tech BEV and Level 4 & 5 AV products and related services, other approaches are worth considering.

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1 hour ago, rperez817 said:

 

In the automotive industry's history, the "in-house" (vertical integrated) business model is the old way. Outsourcing didn't become big until the industry was mature. Right now, the automotive industry is experiencing a revolution whose endgame is 100% electric, 100% autonomous. Tesla's success in the BEV market demonstrates the advantages of vertical integration  having a respectable product with virtually no true competitors.

.....

 

I fixed that for you. As competition increases for Tesla,  their pricing will be under intense scrutiny. I mean unless they can be like Porsche and just charge whatever they feel like  and people will still buy (highly doubt it), pricing is going to be an issue. Building it yourself makes no sense in the grand scheme of things when mass producing vehicles. I am not saying for all things but for a lot of systems/parts. Also, I would expect the supplier build quality to be a bit better too!

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It seems to me as I remember, the Big 3 ended insourcing because they wanted to lower their costs. So they spun off thousands of union jobs into low wage companies like Delphi. Had nothing to do with quality, and all to do with shedding union jobs and costs. Not making judgement, only the way I remember it. 

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23 minutes ago, FordBuyer said:

It seems to me as I remember, the Big 3 ended insourcing because they wanted to lower their costs. So they spun off thousands of union jobs into low wage companies like Delphi. Had nothing to do with quality, and all to do with shedding union jobs and costs. Not making judgement, only the way I remember it. 

 

Don't forget Visteon....

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17 minutes ago, FordBuyer said:

It seems to me as I remember, the Big 3 ended insourcing because they wanted to lower their costs. So they spun off thousands of union jobs into low wage companies like Delphi. Had nothing to do with quality, and all to do with shedding union jobs and costs. Not making judgement, only the way I remember it. 

 

That was probably part of it, but it really comes down to economies of scale where one company can build the same components for multiple mfrs.  They all use the same basic parts and raw materials and only differ by design and one worker can work on products for any mfr.

 

The bigger savings is that the OEMs don't have to invest capital to build those factories and warehouse the materials.   That falls to the supplier and the OEM just pays for the products as they arrive.  You can also push all or some warranty liability to the supplier depending on the contract terms.

 

These concepts apply to any mass produced vehicle be it a BEV, HEV, PHEV or ICE.

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2 minutes ago, twintornados said:

 

Don't forget Visteon....

 

And by spinning off those companies they were now free to produce things for other mfrs.

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Posted (edited)
1 hour ago, FordBuyer said:

It seems to me as I remember, the Big 3 ended insourcing because they wanted to lower their costs. So they spun off thousands of union jobs into low wage companies like Delphi. Had nothing to do with quality, and all to do with shedding union jobs and costs. Not making judgement, only the way I remember it. 

 

1 hour ago, twintornados said:

 

Don't forget Visteon....

 

Visteon has shrunk dramatically since it was founded as an independent company in 2000. That year, it had revenue of $19.5 billion and 82,000 employees. In 2019, revenue was $2.95 billion and employees was 11,000.

 

To akirby's point, Visteon's customer base is much broader now even though it's much smaller overall. In 2000, 84% of Visteon's sales came from Ford. In 2019, that percentage was down to 22%. The company claims to be a supplier to most global automakers. Don't know if they supply Tesla. Visteon has also focused on high tech, fast growing business segments like cockpit electronics and autonomous vehicles recently.

 

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Edited by rperez817

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