By on February 28, 2014

450x298x1488276_10151952273333579_659848810_n-450x298.jpg.pagespeed.ic.WC5A2hrjb7

Writing in Bloomberg View, former EIC Ed Niedermeyer has published a crtical essay of Tesla, albeit one with a fresh angle: Toyota, one of Tesla’s main automotive partners, is in fact the true force of disruption in the automotive world.

Although Niedermeyer touches mainly on Toyota’s efforts in manufacturing and quality (namely, kaizen),  which disrupted Detroit’s stranglehold on the automotive market, other improvements come to mind. Lexus disrupted German dominance of the luxury segment, while the Prius is the world’s most successful hybrid car. Even if the company is anathema to enthusiasts, Toyota’s contributions to the broader automotive world are immense.

On the other hand, Niedermeyer takes a much more grounded (or dim) view of Tesla – you won’t find any appeals to a utopian society of autonomous EVs, as one analyst touted this past week. According to Ed

“Auto industry success is a marathon, not a sprint … and at current volumes, Tesla is barely walking.”

Get the latest TTAC e-Newsletter!

204 Comments on “QOTD: Toyota, Not Tesla, As A Force Of Disruption...”


  • avatar
    Lie2me

    Wasn’t Toyota at one point just a barely walking Tesla?

    • 0 avatar
      rox1

      Yes; I’m sure it was … but that was about 75 years ago and the barriers to entry in the auto industry were much lower then. Your point?

      • 0 avatar
        el scotto

        75 years ago would have been 1939. Toyota came to the US in 1957. They didn’t hit mainstream until the 80′s. Yeah, they had a “teething’ period just like Tesla is having.

        • 0 avatar
          rox1

          So, I guess in typically myopic US fashion, the period between 1939 (actually it was earlier, but I was rounding) and 1957 doesn’t exist? Amazing navel gazing. What Toyota did in its home market was the “formative” period leading to 1957, which was incidental.

          And, BTW, I don’t completely agree with Mr. Niedermeyer’s position. What Tesla has done is pretty revolutionary, by focusing activities on engineering rather than that which is immediately marketable to the mass-market. I would never underestimate the chutzpah of a company willing to completely bypass conventional engines in favor of an all-electric solution … with absolutely no market share to begin with. That’s not inconsequential.

        • 0 avatar

          So wait until Tesla succeeds before taking a victory lap. What’s your rush?

      • 0 avatar
        Stumpaster

        Tesla has already entered.

      • 0 avatar
        Dr. Kenneth Noisewater

        Well, 75 years ago, they _weren’t_, given unions, tariffs, taxes, wars, oligopolies, etc.

        Today? Not so much.

        Given the explosion in custom/small volume builders around the world these days, and the proliferation of suppliers, it’s probably easier now to build a new car company than it has ever been.

    • 0 avatar

      In a sense. And they surmounted a lot of hurdles.

      “Auto industry success is a marathon, not a sprint … and at current volumes, Tesla is barely walking.”

      Let’s call Tesla “winners” AFTER they have succeeded. What’s the rush?

      • 0 avatar
        Dr. Kenneth Noisewater

        So far they have delivered far in excess of what most people thought they would, and their success rate so far has entitled them to the benefit of the doubt.

        Besides, ‘current volumes’ are dictated by cell availability, not production capacity or sales.

  • avatar

    The Prius certainly put hybrid technology on the map.

    Niedermeyer’s piece is well worth reading. He points out a lot of behavior by Tesla partners that they don’t think that Tesla is disruptive.

    There was also Musk’s making a big deal of future autonomous Teslas. When you build a car that’s designed to be a driver’s car, if that’s working on a scale that promises to be disruptive, you don’t suddenly claim you’re soon going to have autonomous cars in the next few years when these are probably much further away than that.

  • avatar
    Pch101

    The battery factory is a smart move, because it helps to channel the value of the grossly inflated stock into a useful asset that diversifies the company. In that sense, the battery plant is a smart move.

    Otherwise, the young Niedermeyer got this one right. If one understands how Tesla gets more range out of its cars than conventional automakers, then it becomes clear why Tesla’s business model is fragile. (Hint: Tesla did not reinvent battery chemistry, and that’s where the inherent problem lies for every auto manufacturer.)

    There is an element of the population that desperately wants to believe that EVs are ready for the mass market. But it should be obvious that Toyota would already be building them if that was true. There is a reason why TMC and others like it have opted for hybrids, and it isn’t because they’re all morons.

    • 0 avatar

      Yessir. And therein, in your post, you show, in a few succint words, why Tesla is so much vaporware. Not only the battery part, but the rest of the car. It has been pointed out how GM, Ford, Toyota can make mistakes and they’ve been in the business forever. Hyundai has been at it for 40 plus yrs and yet they can’t compete on refinement with others. Sigh, Mr Ed Niedermeyer’s quote is right on. Like our former editor was wont to say, wanna play? Be ready for 50 yrs just as a break in period.

      • 0 avatar
        Pch101

        I think that “vaporware” is a bit harsh.

        The car works well — quite well in some respects — even if some of the engineering choices are questionable. There is some innovation here, and it isn’t a scam. But disruptive? No.

        • 0 avatar

          Ok, take that back. What happens though if the next car is a flop? If some of the cars continue going up in flames, scaring off the consumer? If one of the majors resolve the problem and undercuts their price by 50%? If, as the cars age, due to the underlying problems the rate of battery pack defects grow exponentially? Of course, none of these scenarios may play out, but if any or some of them do, the comapny could disappear fast. What I meant by vaporware was that the jury is still out, and will remain out for a decade or two. Until this period is over, their position is necessarily fragile.

          • 0 avatar
            Pch101

            It’s not so black-and-white. Tesla has already built a brand that can sell electric cars (at least to that small segment of the population that wants electric cars). Assuming that the brand value can be preserved, that is worth something.

            That doesn’t mean that everyone is going to switch to EVs or that Tesla will become a particularly important car company. But there’s still value in that.

            And this battery business is quite a positive step, in my view. It’s not entirely without risks, but the risks are worth taking — it broadens Tesla into becoming something more than just an automaker, which would be a positive development. (Automaking is not exactly a high-margin business, and is greatly vulnerable to economic cycles.)

          • 0 avatar
            Lie2me

            Actually, I think once the practicality issues are addressed most everyone will want one, because what’s the down side?

          • 0 avatar
            Pch101

            EVs continue to have range and recharge time disadvantages, and they can’t be sold at a profit — consumers don’t want to pay prices that are high enough to pay for the battery.

            Using Tesla’s methods to maximize range is not a practical approach for automakers who care about reliability.

            Batteries are a weak point for EVs, and no one has figured out how to fix them.

          • 0 avatar
            NMGOM

            Guys – -

            Yes, Tesla has the potential to be the rogue, game-changer, IF, IMHO:

            1) It can make batteries that:
            …a) Can charge in 10 minutes or less from anyone’s wall outlet;
            …b) Give a REAL 500-mile range at 20-degrees F with all heat on;
            …c) Be largely immune to low-tempertaure voltage drop-off;
            …d) Last for 20 years and 200,000 miles.

            2) Can be priced comparably to a typical 5-passenger ICE car.

            3) Can handle and corner almost like a BMW 5-series; and….

            4) Will be absolutely fire-proof!

            So, you can see that the entrepreneurial phase is one thing; the growth phase will require these vehicles to MATCH or EXCEED their ICE counterparts in order to really gain traction (no pun) and market share. Otherwise, they will always be niche vehicles for “early adopters”; sun-belt residents; urbanites; global warming fanatics; and greenie-weenies.

            ———————-

          • 0 avatar
            krhodes1

            @NMGOM

            Let’s be as little realistic – ICE cars rarely have a 500 miles range, no mstter what the temp, and they catch on fire occasionally. And most cars handle more like Camrys than 5-series. Including the latest Fiver, unfortunately.

            Tesla probably has the longevity beat though, as long as you are willing to buy battery packs that long. Which rather makes up for the lack of oil changes and timing belts, I suspect.

          • 0 avatar
            NMGOM

            krhodes1 – - – -

            Can you deny that if the four battery criteria I listed were in place (and it can be done with the aid of super-capacitors**), there would no longer be the EV elephant in the room? The “Yes buts” would have disappeared.

            We can be “realistic” from another point of view: marketing success. Without beating ICE’s on all fronts, and doing so substantially, EV’s will still only be niche vehicles.
            Latest “.gov” projections are that, even by 2040, ICE’s are expected to hold greater than 75% of automotive market.

            With regard to cornering and handling, a friend test-drove the new Tesla S in the sports-sedan fashion to which he was accustomed: body roll was absolutely unacceptable. The 5-series was far superior, even in its new less vigorous state.

            ———————
            ** Some are saying that fuel cells may be one way out of the EV conundrum, but Mr Zetsche (CEO, MB) has concluded that, for the next decade, that technology will not be economically viable.
            ———————

            =======================

          • 0 avatar
            Xeranar

            NMGOM-

            –1) It can make batteries that:
            …a) Can charge in 10 minutes or less from anyone’s wall outlet;

            Why 10 minutes from a standard wall outlet? Who’s going to build a standard wall outlet in their garage or a commercial parking center? Stage II and Stage III chargers are becoming more prevalent and just like houses built before 2000 rarely have Ethernet conduit most houses built now (or atleast until recently) have done so.

            10 Minutes to get a big bump charge is possible and with improving charging tech regard of cars, we’ll see vastly improving speeds sooner rather than later.

            —b) Give a REAL 500-mile range at 20-degrees F with all heat on;

            Most of the United States doesn’t live in a 20 degree zone most of the year. In fact if the car just doesn’t sell well in Minnesota and that upper belt, well that’s life. Charging with an ignition heater isn’t unusual in cars up there, so having a disconnected from the battery system heater (so you don’t cycle more power in than you need to) would solve the initial cool down and heat up issues and again, who needs 500 miles? If the car can do a reasonable 300-350 in the cold without needing any further charging that will be good enough. This is where a charging infrastructure comes in. If I have to go sit at a truck stop on a drive from Tulsa to Amarillo for 25 minutes while my car picks up 150 miles of charge, well I think I can live.

            —c) Be largely immune to low-temperature voltage drop-off;

            Spoken to previously: An independent heater pack can solve that issue along with using cabin heating to enhance it further by setting up a smaller series of batteries closer to the heater.

            —d) Last for 20 years and 200,000 miles.

            What you mean is getting battery packs cheap enough to justify replacement at 100-200K. The complete lack of oil changes should actually account for a fair bit. Lets assume $40 per at 5000 mile intervals: 1600. If you prefer synthetic oil: 2800. Since repairs like rings or pistons are a thing of the past the cost of maintenance dips significantly, not 10-15K worth of batteries but as production standards and increased overall availability in-house the cost will drop further and further.

            —2) Can be priced comparably to a typical 5-passenger ICE car.

            Right now a Tesla runs around the price of a luxury car. That will change as time goes on. But to gripe that the ICE car is dirt cheap in comparison is irrelevant. The Tesla is outfitted like a premium luxury car. It’s sized like one too. You sell to the luxury buyers first than work your way down.

            —3) Can handle and corner almost like a BMW 5-series; and….

            That’s relevant how? Oh it’s not. Never mind then…

            —4) Will be absolutely fire-proof!

            Batteries aren’t be contained in the same kind of housing a car engine is. Redesigning the housing and adding a small coolant system should solve that.

            Is that sufficient?

          • 0 avatar

            > Can charge in 10 minutes or less from anyone’s wall outlet; Why 10 minutes from a standard wall outlet?

            It physically can’t do that since a standard outlet can’t provide the current. Even with a special plug such a thing is tremendously difficult because the rate of energy flow is so extremely high that any electrical loss (ie heat) which is impossible to completely eliminate can set everything on fire. This is a basic physics constraint.

            Ultimately what Tesla et al need to is make a battery swap network. In a way this is more like gassing up than charging: you’re physically transporting the source of energy rather than via electrical/chemical transfer. Then the source of energy can be renewed at an efficient and safe rate.

          • 0 avatar

            > —d) Last for 20 years and 200,000 miles. What you mean is getting battery packs cheap enough to justify replacement at 100-200K.

            Also, it really helps longevity to charge “slowly”. Li-on’s I believe are best charged at 1hr for a mostly-full charge. A full charge takes longer because the recommended charging cycle is only constant current for the first portion which get it most of the way there, and then it tapers off to the constant voltage stage (ie reduced current).

          • 0 avatar
            NMGOM

            Xeranar and agenthex – - –

            Thank you for your additional views.
            But, as you can gather, I am throwing down the gauntlet on EV viability. All the ameliorating factors in the world won’t change that. EV’s and their battery technology would have a long way to go, and without the assistance of:
            1) super-capacitors (which charge virtually instantly);
            2) ten-fold increase in battery-storage density;
            3) high amperage dump-circuits; and….
            4) hydrogen fuel-cell implementation,—
            —- EV’s won’t have a chance as general-purpose, all-weather, long-range, practical vehicles. And yes, that ALSO means Minneapolis in January: they’re still part of our country the last time I checked.

            All this is discounting other limiting factors such as the weakness of the US power grid; the current use of exotic, supply-restricted, and uncommon metals; and the advancing progress of modified and/or hybridized ICE vehicles. Although it’s a super-car, the Porsche 918 is an excellent example of what could be done in the latter category. I won’t even mention the possible decline of global warming, as that might make me susceptible to accusations of trolling…

            ———————

          • 0 avatar

            > EV’s and their battery technology would have a long way to go, and without the assistance of:

            There’s quite feasible solutions for all EV problems. Charging (and thus range) can be trivially fixed with physical transfer of fuel just as it’s done with gasoline. As the level of tech available increased, it becomes a math problem given a destination to provide the driver an optimal path (include a quick fuel swap if need be).

            The main issue isn’t the technology, but rather the incremental cost of implementation. Transportation systems rely on network effects, just a highway *system* has a much higher aggregate value than the individual roads. An EV solution is much cheaper/easier if implemented systematically/en mass like the national highway network than one supercharger at time.

            Therefore the main barriers are political, and stupid people are a tougher nut to crack than science.

          • 0 avatar
            NMGOM

            agenthex – - –

            You said: “Therefore the main barriers are political, and stupid people are a tougher nut to crack than science.”

            Disagree. There are BOTH huge technological barriers to general purpose EV’s, AND huge cultural and societal problems. I have addressed the technological aspects.

            Here are some cultural ones: America has a population that is, on the average, fiercely independent. Just look at the lack of support for mass transportation outside of big cities in this country.

            What you are proposing is a type of dependency network, and that rankles the American spirit. EV charging networks with battery-swapping might work in more socialist states like CA, IL, NY, and MA, but for the farmer, rancher, or “ordinary Joe” in MT, ID, IA, IN, WI, TX, OK, AZ, NB, GA, NC, SC, etc… forget it. Smacks of “big brother” and servitude. The British tried that here in the late 1700′s: how did that turn out?

            BTW1: Being a military man, patriot, and professional scientist with a long industrial career in five different industries, I may suggest that you count me in as one of your “stupid people”.

            BTW2: Global Warming. Anyone with half a scientific brain (or less), would be asking the simple question: “What is the evidence for a functional (not statistical or phenomenological) relationship between man-made CO2 production and global temperature rise ABOVE and beyond the cyclical patterns that have existed on 50,000 to a 100,000-year wavelength?” And “How do we explain the equatorial temperature rise on Mars(!) between the 1970 and 2010? Man-made C02, I suppose?” (^_^)

            —————————

          • 0 avatar

            > Disagree. There are BOTH huge technological barriers to general purpose EV’s, AND huge cultural and societal problems. I have addressed the technological aspects.

            Frankly you don’t seem to understand the technological enough to address anything, eg. “Can charge in 10 minutes or less from anyone’s wall outlet”.

            > What you are proposing is a type of dependency network, and that rankles the American spirit. EV charging networks with battery-swapping might work in more socialist states

            It might shock you to observe that most cars similarly depend on a network of gas stations where fuel is physically transferred through I can can only presume are socialist pumps.

            > Anyone with half a scientific brain (or less), would be asking the simple question: “What is the evidence for a functional (not statistical or phenomenological) relationship between man-made CO2 production and global temperature rise ABOVE and beyond the cyclical patterns that have existed on 50,000 to a 100,000-year wavelength?”

            That’s a rather trivial question given what greenhouse gasses do and the rate we’re dumping into the atmosphere. Hopefully a scientist can understand the difference in scale between 50 years and 50k years even without calculus.

          • 0 avatar
            NMGOM

            agenthex – - –

            You said, “Frankly you don’t seem to understand the technological enough to address anything, eg. “Can charge in 10 minutes or less from anyone’s wall outlet”.”

            An ordinary 120-volt wall outlet can charge a battery pack slowly WITHIN the house, to allow the high-speed amperage dump to occur OUTSDE the house into the super-capacitors in the car.

            You also said, “It might shock you to observe that most cars similarly depend on a network of gas stations where fuel is physically transferred through I can can only presume are socialist pumps.”

            Independent and competitive petroleum fuel stations DO NOT constitute a network, any more than Walmart Stores or food stores constitute a “network” in the oppressive sense I am using. We have the freedom to buy gasoline anywhere. Will that happen with EV charging stations, or will Big Electricity make sure there is no competition? Many people are already trying to “get off the grid” by solar and/or wind power for the same reason: revulsion at BIg Electricity and its monopolistic position.

            You further said, “That’s a rather trivial question given what greenhouse gasses do and the rate we’re dumping into the atmosphere. Hopefully a scientist can understand the difference in scale between 50 years and 50k years even without calculus.”

            Good. I’m so happy that you determined this to be trivial. Now, give me your data and your credible, unbiased references; and we can continue this discussion after that.

            ———–

          • 0 avatar

            > An ordinary 120-volt wall outlet can charge a battery pack slowly WITHIN the house, to allow the high-speed amperage dump to occur OUTSDE the house into the super-capacitors in the car.

            This makes even less sense than the first attempt. The fundamental problem is the current as explicitly noted above.

            > Independent and competitive petroleum fuel stations DO NOT constitute a network, any more than Walmart Stores or food stores constitute a “network” in the oppressive sense I am using. We have the freedom to buy gasoline anywhere. Will that happen with EV charging stations, or will Big Electricity make sure there is no competition?

            First, note that our socialist road system is very much a network. Second I’m not sure where you get the idea that only the state can own the stations. If an energy oligopoly makes you feel any better, we can be sure to set one up. The point here is for a relative sparse yet sufficient network to boostrap the process.

            > Good. I’m so happy that you determined this to be trivial. Now, give me your data and your credible, unbiased references; and we can continue this discussion after that.

            You can consult any college level physics text to understand how thermodynamics works. Frankly the various well-published models’ underlying assumptions are so clear that those who still don’t get it by now can’t be the learnin’ type.

          • 0 avatar
            NMGOM

            agenthex – - –

            You said, “This makes even less sense than the first attempt.”

            Really? How? Battery storage in the home APART from the vehicle would allow a fully charged battery pack always to be available while the EV is out being used. Then, an “amp-dump” through high capacity wires into the the vehicle’s super-capacitors, eventually bleeding into its own battery pack, could allow the short-time recharging cycle that is the current (no pun) wet dream of greenie-weenies. But, obviously it would take some added and advanced technologies.

            You also said, “You can consult any college level physics text to understand how thermodynamics works. Frankly the various well-published models’ underlying assumptions are so clear that those who still don’t get it by now can’t be the learnin’ type.”

            I am quite facile with thermodynamics, thank you, — since I taught it. And thermodynamics is not the only issue. The Global Warming hysteria is based currently on a wealth-equalization political movement as much as the actual cyclical temperature rise that HAD been occurring. No one, in my research on the matter, has ever shown an unassailable functional relationship between man-made CO2-emissions and global temperature rise, especially since man-made CO2 from cars accounts for less than 4% of all CO2 produced in this planet; and since other factors, such as the Martian temperature rise, suggests that there are many factors involved, including variability in the mean distance of earth from the Sun, and cycles in solar radiation output.

            I am sorry, but I have become weary of dealing with your ad hominem attacks, direct or implied, and will discontinue this discussion at this point.

            —————–

          • 0 avatar

            > Then, an “amp-dump” through high capacity wires into the the vehicle’s super-capacitors,

            I highly doubt someone apparently incapable of comprehending the amount of heat/temp this generates in a small space with any sort of electrical loss is capable of understanding much less teach thermodynamics.

            > No one, in my research on the matter, has ever shown an unassailable functional relationship between man-made CO2-emissions and global temperature rise,

            You should consider researching how electricity and heat (you know, the linear stuff) works before heading into higher order thermo equations.

            > I am sorry, but I have become weary of dealing with your ad hominem attacks, direct or implied, and will discontinue this discussion at this point.

            I guess the gig’s up at the point you pretend to understand some topic when that’s not reflected at all in what’s written thus far.

          • 0 avatar

            To be clear what’s being perpetuated in the media (ie. what NMGOM “researches”) is the measurement problem, not the underlying physics problem. The measurement problems are very hard and certainly important given science is based on data, but it’s a difference in kind to the basic concepts that the public should be more concerned with learning. Put another way, we know from largely inviolable thermodynamics that with more greenhouse gases warming occurs slowly but steadily, but sometimes it’s going to measure on the high or low side (like any given room after turning up the thermostat depending on the ductwork/etc).

            The political angles play up one or the other a la confirmation bias, but that’s largely irrelevant to what’s going on underneath. It’s almost entirely certain that those focusing their entire efforts over the latest niche of measurements have no clue how any of this works.

          • 0 avatar
            KixStart

            NMGOM: “What you are proposing is a type of dependency network,”

            Unless you’re growing your own food, drilling for your own oil and water, making your own electricity and fabricating any little household items you may need (make a needle for me… I’d like to see you do that), you are already part of a “dependency network,” you just don’t think about your how you live your life enough to recognize it. Maybe you’ve got a generator and if the power goes out, you’re OK. Super. How much gasoline do you have on hand? When your bread runs out, where’s your next loaf coming from? Maybe you raise cows and wheat… where’s next year’s fertilizer and diesel coming from?

            Unless you are one in a hundred million – and live very close to the Earth (How do you connect to the internet? Where do you get your laptops?), you have some Galtian fantasy of how you live your life that absolutely does not square with reality.

            NMGOM: “The Global Warming hysteria is based currently on a wealth-equalization political movement as much as the actual cyclical temperature rise that HAD been occurring.”

            So, how’s that work? Did all the World Government Socialists get together for a planning meeting about 70 years ago and decide to recruit future World Government Socialists into an obscure and difficult branch of science as part of a long-term strategy to take over the world? Without somehow noticing that none of the then-successful paths to significant political power involved concern for the environment? Without noticing that no real environmental protections had been passed until *after* a very significant amount of damage had been done? Did they not notice that “toxic waste” was not a concern until *after* Love Canal? Even today, basic environmental legislation to curb pollution has a rough go of it, even when the damage is already obvious. And did these World Government Socialists not realize climate change as an issue would be unlikely to gain any traction until after considerable, noticeable, severe and irrefutable damage was done?Did they not notice that the best way to gain real power was to game the markets, make money, demonize a minority or start a war? How did that first wave of Climate Scientists who committed academic fraud for decades get paid off? How does the current wave get paid off? Will they suddenly be appointed governors of the provinces of the newly poor?

            And how, exactly, do we get to “wealth equalization” from, for example, putting a tax on our carbon use – or just setting limits and cranking down usage?

            And, if this scheme does somehow work to create “wealth equality,” these people who all conspired to hijack the science, what’s the motive for those who live in the US to reduce their country to the same wealth status as, say, Niger or Nicaragua? They’d like their children and grandchildren to grow up living a real Third World experience?

            You’ve alleged that what looks like good science and, in fact, passes the sniff test for pretty much anybody who looks at it honestly, is all part of some Grand Conspiracy but you haven’t provided any explanation of the mechanism for the web of payoffs that must result… especially when many of the check would *necessarily* have to be paid to people who contributed but can’t be rewarded.

            So, if there’s something going on here, explain how it actually works.

            Also, explain why the basic forcing feedback of CO2, which is demonstrable in a lab, will *not* tend to heat the atmosphere. What’s the mechanism that prevents it? Or, show how everybody since Arrhenius has miscalculated the properties of CO2.

          • 0 avatar

            > Also, explain why the basic forcing feedback of CO2, which is demonstrable in a lab, will *not* tend to heat the atmosphere. What’s the mechanism that prevents it? Or, show how everybody since Arrhenius has miscalculated the properties of CO2.

            This is the key point here. I often make the analogy between climate denialists and evolution denialists but reality is that climate denialists stand on an even wobblier peg because at least it’s hard to demonstration the biological evolutionary process in action. Maybe we’ll get a new rhetorical distinction between micro/macro-climate when those two sets start trading notes.

        • 0 avatar

          > I won’t even mention the possible decline of global warming

          Also, this isn’t something which is going to happen for reasons of basic physics:

          http://www.thetruthaboutcars.com/2014/02/eu-ratifies-new-co2-targets/#comment-2876481

          All of the momentary relieves (or scares) are not unlike concerns over fluctuating temps in various rooms after you turn up the thermostat. Some vague level of hysteresis is always involved, but more greenhouse gases equates to heat generated in the furnace.

      • 0 avatar
        Dr. Kenneth Noisewater

        Let’s see competitive offerings that can beat Tesla on price per kWh, they’ve had a lot longer to do it. Where’s the launches?

        *crickets*

        The rest of the automotive industry is still treating EV as a CARB credit factory, and they’re fixing to get into fuel cells (which garner the most CARB credits) as soon as they can offer them “profitably”. Tesla has no real competition, and won’t until there’s midsized sedans/CUVs with at least 40kWh usable and 200+ kW motors. The econoboxes are a different class, and pretty much all of them are just compliance cars.

    • 0 avatar

      > There is an element of the population that desperately wants to believe that EVs are ready for the mass market. But it should be obvious that Toyota would already be building them if that was true. There is a reason why TMC and others like it have opted for hybrids, and it isn’t because they’re all morons.

      The story of startups overtaking the slow established player isn’t uncommon. The big guys all have the internal talent; it’s just often misdirected.

      There’s no guarantee of success, but won’t come as a shock, either. Tesla’s problem as you alluded to is they’re priced as if it’s already a success, but that’s not necessarily a bad problem to have.

      • 0 avatar
        Pch101

        The problem with EVs is that they depend upon batteries. And batteries are poorly suited to cars, on a number of levels.

        Nobody has fixed what ails the battery in this application. Installing a larger battery that can’t be sold at a profit, and then putting levels of stress on it that make it more likely to fail, is not a particularly good answer.

        TMC certainly can’t do that because it has a reputation to maintain, which leaves us with a Tesla-powered RAV4 with fairly mediocre specs. TMC cares about defect rates; Tesla cares about selling convertible bonds and flipping stock.

        If the battery is to be improved or replaced with something better, than those innovations aren’t likely to come from the auto industry. Those types of improvements will come from chemists and researchers in academia, not from engineers.

        • 0 avatar

          > The problem with EVs is that they depend upon batteries. And batteries are poorly suited to cars, on a number of levels.

          I didn’t see this earlier. I already wrote one example of a proper solution:
          http://www.thetruthaboutcars.com/2014/02/qotd-toyota-not-tesla-as-a-force-of-disruption/#comment-2887441

          It’s difficult for EVs to compete as equals in a system designed for the alternative, so what’s really being argued here is that they need to be better in aspects other than dropping the less efficient ICE.

          If someone bothers to do an analysis, the cost of implementing a proper global EV solution (rather than chipping away locally as they’ve been) probably won’t take forever to pay off.

      • 0 avatar
        Dr. Kenneth Noisewater

        “There is an element of the population that desperately wants to believe that EVs are ready for the mass market. But it should be obvious that Toyota would already be building them if that was true. There is a reason why TMC and others like it have opted for hybrids, and it isn’t because they’re all morons.”

        Try this:

        There is an element of the population that desperately wants to believe that smartphones are ready for the mass market. But it should be obvious that Microsoft/Blackberry/Nokia/Palm would be building them if that was true. There is a reason why RIMM and others like it have opted for keyboards, and it isn’t because they’re all morons.

        Fast forward 5 years after iPhone: they were all morons.

        • 0 avatar
          Pch101

          It has been covered elsewhere why that is a bogus comparison.

          The focus of Tesla’s approach is to make large (unaffordable) batteries and push them harder in order to claim more range. Other automakers don’t do that because they need to make a profit and they can’t afford to compromise reliability in that fashion.

          The problem with EVs is with the batteries, and those issues inherent to batteries are not going to be fixed by building more cars. Rather, they need chemists in laboratories to either improve or replace the battery.

          Automakers simply don’t have the expertise for that kind of science. You’re expecting car companies to do something that they can’t do.

          • 0 avatar

            > The focus of Tesla’s approach is to make large (unaffordable) batteries and push them harder in order to claim more range. Other automakers don’t do that because they need to make a profit and they can’t afford to compromise reliability in that fashion.

            The main difference is cycle depth as you seem to imply (which are minimal in li-on’s compared to operating temp anyway) but basic chemistry. Tesla uses cobalt whereas Leaf/Volt use manganese chems which are more hardy at the expense of some density. Tesla makes up for this somewhat in climate-consistency with liquid cooling.

            > The problem with EVs is with the batteries, and those issues inherent to batteries are not going to be fixed by building more cars. Rather, they need chemists in laboratories to either improve or replace the battery.

            Those issues can very much be mitigated with technology such as GPS, computers, and some network buildout. The large issue isn’t making a transportation system which provides the benefits with minimal compromise but doing so within our socioeconomic framework.

  • avatar
    KixStart

    I think Ed got it somewhat wrong. Tesla is “disruptive.” Between the long range of the Model S and the introduction of the Supercharger network, they have shown that an EV has the potential to be a practical personal general-purpose mobility solution.

    However, this doesn’t mean that Tesla is going to be “the winner.” The Model S is still very expensive, which limits its appeal. The Supercharger network is limited and inadequate, much more fast-charge infrastructure is needed, that will take time and money and it’s not something that Tesla can do on its own.

    Toyota is very, very good at building cars at low cost and they have access to the same cell chemistry that Tesla does. An EV is just a special case of a car and Toyota could build one, if they wanted to. The Volt was a good idea, badly delivered. The Prius PHV (and C-Max Energi) are a similar approach, but very low end and represent a natural and economically developed progression from their HEVs. This is not a bad thing. This interim “xEV” solution has more potential in the near term for delivering EV-ness without extreme cost.

    The Model E (or whatever they’re going to call it), even with a 30% cell cost reduction, will remain expensive and will not have the same complete freedom of mobility that an HEV or PHEV does. And it’s not clear that Tesla’s vehicle engineering is good enough to wring maximum EV miles out of the Tesla, which is what the Model E will really need to succeed. Toyota is likely to get more miles/KWH out of their car, which will confer a competitive advantage on Toyota.

    • 0 avatar

      Tesla is disruptive until one of the majors really cracks it. Then it’s bye bye Tesla.

      • 0 avatar
        redav

        That’s not the definition of “disruptive.”

        If one of the majors suddenly is able to do what Tesla does, it’s changed the market, and that’s the meaning.

      • 0 avatar
        tekdemon

        In order to crack it one of the majors would also have to build the equivalent supercharger network for a car with no existing customer base at all. The Model S has a few rough edges and frankly I thought the sales guys at the Tesla store were idiots but it really is an amazing car. For Tesla to tweak the few things that make the Model S less than absolutely perfect is pretty easy whereas it will be very hard for the majors to catch up with Tesla. Battery management technology for lithium is *very* difficult to get right so assuming that the majors will be able to catch up easily is a flawed idea.

        The real concern is whether or not the batteries Tesla manufacturers would be as reliable as Panasonic’s cells-Panasonic makes by far the most durable and reliable cells and if they don’t want to help Tesla it’ll be very difficult to achieve the same level of reliability.

    • 0 avatar
      Pch101

      Tesla hasn’t done anything that is particularly disruptive. Installing a few battery chargers is not particularly innovative.

      The company has done a fantastic job of building a brand, as well as establishing a cult of personality around Elon Musk. That alone increases the odds that it will survive in some form, rather than fail outright.

      They are also savvy in their handling of the media and the markets. It would have been hard for anyone else to have done that better.

      But at the end of the day, it’s a manufacturing company that has to struggle with low margins and the constant need for R&D. At this point, it has been deferring R&D, and that will eventually catch up to them if they keep that up.

      • 0 avatar
        KixStart

        “Tesla hasn’t done anything that is particularly disruptive.”

        I disagree. Most of my driving is around town and a Leaf would be OK for all of that. But pretty close to monthly, I have to go on a 520 mile round trip excursion over a weekend. I was stunned to find that there are two Superchargers between here and there. The Model S is a car that could comfortably do this trip.

        Finally. The EV is a practical solution. To my mind, this is disruptive.

        Of course, it’s still very expensive. I don’t consider that a failing of the Model S as much as I consider it to be a failing of my bank account. But maybe that’s just me. It helps that I actually *want* the car, too.

        • 0 avatar
          Pch101

          As I have noted here, when you understand why other automakers don’t make EVs like this, then you’ll understand the problem with Tesla.

          The other automakers aren’t all idiots, and it isn’t hard to see what Tesla is doing. They could have been doing it already, but for the fact that it wouldn’t make any sense.

          • 0 avatar
            Uncle Wainey

            LOL. Because those automakers always make smart decisions and always have the perfect product line-up that never gets them into trouble. Certainly not in 2008.

            Also: Cadillac ELR.

          • 0 avatar
            Pch101

            I see that you missed the point.

            I’ll try again: The things that Tesla does to get more range out of its batteries are (a) things that other automakers already know how to do and (b) reduce the reliability of the battery.

            Battery reliability and range are inversely related. I would hope that the implications of that are obvious.

          • 0 avatar
            KixStart

            pch101,

            No, I understand why the other automakers don’t make EVs, it’s because there’s little to no money to be made (EV zealots will only get you so far). It’s (almost certainly) impossible to make an EV with Model S range at a Malibu price point. When battery tech and cost makes it feasible, any manufacturer with good auto building skills will be able to field an entrant.

            I get all that.

            But I think “disruptive” includes mind-set. I can afford a Leaf (and I’ve thought about getting one or the Mitsubishi and my wife would be OK with it) but it can’t do everything I need a car to do. However, the Tesla can.

            That’s a whole different ball game, at least in my head. I think others are looking at EVs differently now, too.

          • 0 avatar
            Uncle Wainey

            Pch101 I’m almost out of troll food, but I have one more piece:

            That is false. The Model S has more range because it has a larger battery pack. It’s a pack that is substantially over-provisioned unless you change its charge settings.

            If you want to look at unreliable battery packs, exhibit A is the Nissan Leaf and its air-cooled pack. Which happens to use more of its available capacity than the Model S when using its standard charge setting, as owners do in most cases.

          • 0 avatar

            I would just add to what Pch says here that you (KixStart) happen to live where they have the requisite superchargers.

            I drive between Boston and DC several times a year. On my normal route, there’s only one supercharger (masspike to 84 to 91 to the Merritt, to the Hutch to the xcounty to … the GW bridge, then 95 to the DC Beltway), but half the time I go via Quakertown PA (friends) where there is none. I do a lot of other driving to places where the Tesla can’t go. I don’t want to have to plan my routes around the existence of superchargers.

            As for the price, you can view your income as the problem, but from Tesla’s point of view, not very many Americans can afford this thign. It’s a niche.

          • 0 avatar

            I give Tesla credit for using available laptop batteries, installing them in the floor board, etc. They have certainly done some nice things and the car has the presence on the street that other $90K cars have. In fact, it probably has an enhanced level of cachet. My wife has NEVER asked me to go around the block to have another look at a car, but when a neighbor bought one, she had to have another look at it sitting in his driveway. She had no idea it was an electric car. That’s my informal gauge.

            But I certainly agree that what Tesla is doing isn’t anything so special that other OEMs couldn’t also do it. But Musk is a master at extracting money from investors. At the end of the day Musk will make his money. Tesla might even be a “stalking horse” for Toyota or MB. They could buy out Tesla and instantly end up with a division of their own company that includes only OEM owned stores. Certainly, there are some OEMs itching to get into “direct from the factory” sales, just as Ford attempted the failed Ford Collection. They aren’t likely to try another grand experiment from scratch again. They also aren’t likely to attempt it based on the hefty stock price Tesla currently commands. Just let Tesla encounter some head winds that lowers its stock price to a reasonable level and see what happens.

            From Ed’s excellent piece:

            “Tesla’s market capitalization is hovering around $30 billion, about half that of General Motors and Ford. Tesla has sold a grand total of 25,000 Model S sedans around the world over three years. GM and Ford deliver upwards of 200,000 vehicles in the U.S. alone each month. When you extend the comparison to financial performance, with $2 billion in sales last year, Tesla’s relative market valuation appears even more overblown.”

          • 0 avatar

            > My wife has NEVER asked me to go around the block to have another look at a car, but when a neighbor bought one, she had to have another look at it sitting in his driveway. She had no idea it was an electric car. That’s my informal gauge.

            I guess that explains this:

            http://www.thetruthaboutcars.com/2014/02/teslas-latest-filing-the-good-the-bad-and-the-eps/#comment-2874225

            Now I see where that 30 years of experience comes down to: whether my wife thinks it’s pretty. So funny.

        • 0 avatar
          krhodes1

          And what if when you get to those Superchargers, there is already a line of cars waiting to use them? Or they were broken? I don’t find that particularly practical. It would certainly be disruptive to my trip planning.

      • 0 avatar
        redav

        It doesn’t seem like you understand what “disruption” is. It is not “innovation” (regardless what the wiki article says) or even “intelligence.” It is doing something that changes the market, that forces others to adjust their strategies and plans.

        Maybe what Tesla is trying is reckless and dumb, and that’s why the majors aren’t trying it. I don’t know. But none of that, nor successfully making a profit is necessary to be disruptive.

        If nothing else, the vehement reaction they are getting on the dealership front is clear evidence of disrupting (or fear of disrupting) the market.

        • 0 avatar
          Hillman

          AOL paved the way for the online boom but where are they now? The same can be said about Kodak with their first digital camera. Being first to market is great but it can only be a competitive advantage for so long before the big boys throw a ton of money to create a competitor. If I was Toyota I would let someone else take the risk before I spent the money on this.

      • 0 avatar

        > Tesla hasn’t done anything that is particularly disruptive. Installing a few battery chargers is not particularly innovative. The company has done a fantastic job of building a brand, as well as establishing a cult of personality around Elon Musk. That alone increases the odds that it will survive in some form, rather than fail outright.

        The same could’ve been said about Apple & Jobs. Music players, smartphone, tablets have all been done before; there’s no “disruptive” technology there. Musk isn’t Jobs but the situations are quite analogous.

        The main barrier is imo cars aren’t cheap like electronics, so Musk has higher hurdles to jump even if the hurdles themselves are similar.

        • 0 avatar
          Pch101

          The personal computer was disruptive — it has radically changed how we access, process and ultimately use information. Apple can’t claim any monopoly there, but certainly played a role in it.

          iTunes has also been disruptive to a certain extent. Along with broadband video and internet retail, it has essentially destroyed the retail music industry as we used to know it, and possibly sunk the long play format along with it.

          The iPhone is innovative, but not disruptive. The mobile phone itself may have been disruptive, although that is debatable.

          • 0 avatar

            > The iPhone is innovative, but not disruptive. The mobile phone itself may have been disruptive, although that is debatable.

            I post my key point on the topic below: http://www.thetruthaboutcars.com/2014/02/qotd-toyota-not-tesla-as-a-force-of-disruption/#comment-2879681

            To apply that to this case specifically, it’s unfair to categorize “the iphone” as disruptive or not based its inner qualities as opposed to any other phone.

            It was “disruptive” because it was pretty enough for Jobs to sell, and easy to enough to use the app store coincidentally included (almost as afterthought) that the platform took off, creating many opportunities such as for whatsapp to make an end run around text msg pricing and get a jillion dollars.

            Nothing in that chain technically speaks “disrupt” more than “fluky luck”, and it’s only in hindsight that a certain confluence of events allowed the greater disruption to happen. Far better tech has fallen by the wayside through unfortunate mistiming.

            So the question of whether a tech-loaded car that’s more or less practical without gas is “disruptive” is too early to use that word.

  • avatar
    LeMansteve

    I think Niedermeyer makes a great point about the existing love triangle between Tesla, Panasonic and Toyota. I think he should have added some cultural perspective, specifically that many long-standing relationships between Japanese OEMs and their suppliers are iron-clad.

    I think when people call Tesla “disruptive” they are confusing it with “brand building”. Niedermeyer is correct to point out that Tesla is currently a niche vehicle and without a successful Model E (which appears to depend heavily on an unlikely Panasonic investment), they really don’t have anywhere to go.

    Now, this is all kind of short-term thinking. In 25-30 years? Sure, maybe we’re all in Teslas. I think Elon Musk has a unique way of generating publicity and selling some pretty wild ideas, so who knows?

  • avatar

    Why must volume be the criteria for success? So any arguments dismiss Tesla for not making mass market cars.

    Are Koenigsegg, Ferrari and Aston failures because they only build playthings for the rich?

    • 0 avatar

      Volume is important. Aston is a relative failure while Ferrari is a success. Difference? Patronage and engineering talent from a muych larger company. Tesla is like Lamborghini was (until VW/Audi came along), always on the brink until the deep pocket sugar daddy comes along and adds liberal doses of money and a degree of engineering and product sanity.

      Tesla is always one car away from bankruptcy.

    • 0 avatar

      It’s the criteria that Elon himself established. He mentioned on numerous occasions that he is in it to enact a revolutionary change in transportation, nothing less. Degenerating into an electric Ferrari would be a dramatic failure to meet goals that he established, even it it allowed the companty to continue profitably.

      • 0 avatar

        And it will be what will happen until he can really crack the problems. Now, ask yourself, who is going to do it? Nissan, Fiat, GM, Ford, Toyota, with their financial clout and technical knowhow, or Tesla?

        • 0 avatar
          mcs

          How are GM’s, Ford’s, and Fiat’s satellite launch vehicles doing? Has a Nissan van made any deliveries to the Space Station recently.

          Musk has demonstrated his ability to bring together scientists to do what some governments can’t do. Tesla is backing battery research and I have more confidence in them than the traditional auto companies.

    • 0 avatar

      Tesla has defined its own benchmark for success and it isn’t to build playthings for the rich. If building a gorgeous car with an unconventional drive line is success, they have achieved that. But that isn’t their stated goal. Neither is just surviving for a few years.

  • avatar
    TW5

    Kaizen is just a buzzword, not a disruptive business strategy. Every manufacturer focuses on continuous improvement, but the oil crises and CAFE regulations undermined Detroit’s engine portfolio. As a result, the Big 3 became dependent on fullsize trucks and SUVs. The Japanese had a golden opportunity to capitalize.

    The industry often thinks of Prius as disruptive kaizen, but it wasn’t. Japan has virtually no energy resources. During the late-80s and early-90s, Japanese oil imports (volume and JPY-value) spiked, and the Japanese government put pressure on the manufacturers to reduce Japan’s oil imports. Honda brought forth the Insight, and Toyota created the Prius. As a strange twist of fate, American drivers adopted the new hybrid vehicles much more rapidly than the Japanese (Asian Crisis?). As oil prices quadrupled, the Prius cemented its importance in the US. From an American viewpoint, the Prius looked like a genius disruptive technology, but its ascent in the US market is actually attributable to a strange confluence of global economic events. Toyota read the tea leaves correctly. Honda read the tea leaves incorrectly, and they dumped their hyper-efficient commuter concept, right before the worst of the oil price crisis.

    Toyota is the Forest Gump of the automobile industry. No, they are not mentally-disabled, but they are often perfectly positioned, sometimes by complete coincidence or accident, to play the lead role in history’s most influential events and trends. Toyota didn’t cause any of the disruption in the automobile market, anymore than Forest Gump caused the Vietnam War or the spread of AIDS. No one should be surprised that Toyota owns a chunk of Tesla, and no one should be surprised that they don’t really want to use Tesla’s disruptive power to the full extent.

    • 0 avatar
      Pch101

      Toyota reinvented the production process with lean and JIT, dragging the rest of the industry along with them and displacing methods that had been used for decades before that.

      Toyota also sped up model cycles. This drive for R&D helped to put companies such as Saab out of business — the independents can’t afford to keep up.

      Toyota may have crossed the chasm with hybrids, although that remains to be seen.

      TMC “invested” in Tesla because it needed to get rid of the Fremont plant — TMC essentially paid Tesla to buy the plant, so that Toyota could avoid the environmental liability. As an added bonus, it got to outsource the low-volume California-mandated EV to Tesla so that Toyota corporate could focus its efforts on more important things.

      On the whole, you’ve pretty much missed it.

      • 0 avatar

        @Pch101, again, right on. Anybody who doesn’t see this, well…

        • 0 avatar
          Pch101

          There are a lot of Americans, particularly in the Rust Belt, who refuse to give TMC any credit or acknowledge its contributions to the global auto industry.

          Every major automaker builds car differently today because of Toyota. That is simply a fact, and it would behoove those who have an interest in this industry to figure that out.

      • 0 avatar

        OTOH TMC was also a product of their time. After the war, socially speaking they were saddled with labor/union that they can’t get rid of thus had to invest in, and economically speaking they were so far behind they had to do a moon shot with new ideas/methods incl. Demming’s stats et al.

        It was the perfect storm of circumstances even if they get all the credit for implementing it right.

      • 0 avatar
        TW5

        Tempest in a tea cup. I’m talking about structural economic forces that bring the rise and fall of empires. As Ruggles indicates below, exchange rates were perhaps the key reason that Japan beat out Europe as the nascent force in the US auto market, after the Oil Crises.

        The corporate buzzwords and marketing speak are important insofar as they impress investors and they reveal how Toyota always manages to float to the top when a flood of macroeconomic change crashes into the marketplace. Toyota are great contingency planners. They are not particularly disruptive.

        • 0 avatar
          Pch101

          As I said before, you don’t know anything about production and the resulting implications. And it’s clear that you have no interesting in knowing.

    • 0 avatar
      KixStart

      “Toyota is the Forest Gump of the automobile industry. No, they are not mentally-disabled, but they are often perfectly positioned, sometimes by complete coincidence or accident, to play the lead role in history’s most influential events and trends.”

      Once or twice would be coincidental. To be there almost every time… that takes planning.

    • 0 avatar

      RE: “Japan has virtually no energy resources.”

      Yes, any understanding of modern Japan begins with this fact.

      RE: “but they are often perfectly positioned, sometimes by complete coincidence or accident, to play the lead role in history’s most influential events and trends. Toyota didn’t cause any of the disruption in the automobile market, anymore than Forest Gump caused the Vietnam War or the spread of AIDS.”

      Yes, Toyota AND the Japanese auto industry, was positioned to capitalize on the first oil crisis because they already built fuel efficient vehicles for their own market. Of course, so did Europe. But exchange rates favored Japan. In addition, Japan exists to export for a variety of reasons. But does anyone think that Japan anticipated the oil crisis of 1973 when they first entered the U.S. in the 1960s?

      RE: “No one should be surprised that Toyota owns a chunk of Tesla, and no one should be surprised that they don’t really want to use Tesla’s disruptive power to the full extent.”

      Owning a chunk of Tesla provides Toyota with some really interesting long term options. It might also set up for an interesting confrontation with the other OEM investor MB at some point. This all bears watching.

    • 0 avatar
      jpolicke

      “Every manufacturer focuses on continuous improvement”

      I’m not sure that’s correct. Starting in the 70′s, Detroit products entered into a period of continuous decline. Quality dropped by every measure. The only things they had going for them was they were big and familiar.

      • 0 avatar
        PrincipalDan

        @jpolicke, every manufacturer does practice continuous improvement as defined by W. Edwards Deming and Malcolm Baldrige. Some do it better than others. ;) http://en.wikipedia.org/wiki/W._Edwards_Deming
        http://en.wikipedia.org/wiki/Continuous_improvement

        Ford originally stumbled into it accidentally according to the stories I was always told. They set up a transmission factory in Japan to build transmissions and have them shipped over to be installed in cars. Eventually customers figured out that the Japanese made transmissions were assembled to a higher standard than the US made ones. Customers started to ask for the Japanese made transmissions but Ford couldn’t figure out how the Japanese made them come out better because in their view they were spec-ed the same.

        Ford investigated and found out that the tolerances on the foreign made transmissions were half the allowable spec. Ex: if they specified within 1/8 of an inch the Japanese would make it 1/16 consistently. The Japanese reported that this was part of their improvement philosophy adopted after WWII.

        Of course this could all be a story that was simply fed to me but it makes for an interesting tale.

        • 0 avatar
          Pch101

          Continuous improvement was a loose translation of kaizen, which is ultimately a style of management that expects workers to participate in building quality into the product, and more importantly, requires managers to listen to them.

          Detroit was doing the exact opposite of this. It was using hierarchical command-and-control methods, which involved management giving instructions to workers who were supposed to obey them. The approaches and the results were both quite different.

      • 0 avatar

        Detroit thought it was continually improving. In the 1970s it was trying to achieve CAFE requirements while providing the size cars American wanted, but suddenly didn’t want every time there was a fuel crisis. In addition to CAFE the entire industry had to convert over to unleaded fuel. Had we phased in gas taxes like the Japanese and the Europeans things might have been much different. But that’s easy to say looking back. The Detroit auto makers made a LOT of mistakes.

        The early Japanese cars weren’t so great from a quality point of view. Their drivelines were strong but they rusted more quickly than domestic vehicles. Toyota brochures of the 1970s showed Japanese assembly workers performing their labors in white gloves. Sales people were taught to show potential customers visible evidence of quality one didn’t see at first glance. They would take an air cleaner lid from a Toyota and another from a domestic. The underside of the air cleaner of the Toyota was perfectly finished. The domestic wasn’t even primeed. Even though it made no difference on long term performance, things like that made an impression on consumers.

  • avatar
    J.Emerson

    Toyota has certainly done some very interesting and important things over the years, but I wouldn’t consider any of it “disruptive.” Building a quality car and attracting customers is not the same as rejecting the entire traditional model of building, selling, and driving cars at one fell stroke. The business wisdom of that latter set of actions is certainly open for debate, but it’s undeniably revolutionary. It’s radical in a way that the introduction of a Prius is not.

    • 0 avatar

      The Prius is not, but continuous improvement and the whole Toyota system certainly is. Until then everybody more or less operated under the Ford system. Nowadays if you don’t adopt the Toyota philosophy you don’t sell and don’t have a future. That rather than anything intrinsecally related to cars id Toyota’s contribution to the industry.

      • 0 avatar
        VoGo

        We may not like the Prius, but it absolutely IS disruptive.
        - pioneered a technology into the first real market success
        - best selling vehicle in Japan, a highly competitive market
        - only car in the top 10 in the US, introduced in the last decade or two
        - THE car that caused every single major automaker to try to replicate its success
        - STILL the most fuel efficient vehicle on the market
        - Far and away the best selling hybrid, and likely the only profitable one
        - Established a brand that for most consumers is synonymous with hybrid
        - created a halo for the Toyota brand as innovative and efficient

        If this isn’t disruptive, then what car is?

        • 0 avatar
          KixStart

          Much as I admire Toyota and love my Prius, I don’t see it as exactly “disruptive.” The rest of the industry plods along much as it did before the introduction of the Prius, more affected by (as others point out), the Toyota system of production. HSD is probably an important evolutionary step in cars but it didn’t end or change the car as we know it.

          • 0 avatar

            But see? The Prius is so normal to drive it doesn’t see disruptive to you! But it is.

            Fun fact: My brother, who never showed the least bit of interest in cars, now claims his Prius is fun to drive. His best friend, who has a Boxster, and I just laugh at him.

            If inventing a car that my brother says is fun to drive, I don’t know what is!

        • 0 avatar

          What percentage of the whole market is the Prius? All hybrids taken together? The Prius has been emulated basically because it was a hit in the US. However, all the Europeans and the Americans are not really banking their future on hybrids. That should tell you something. Hybrids have possibly found a niche and aren’t going away, but it’s not the future. It’s part of the near future, sure, but it won’t come out on top.

        • 0 avatar
          Pch101

          TMC gets full respect for the Prius, but disruptive it is not. It didn’t transform the auto industry, and hybrids remain a niche product.

          An example of a once-disruptive technology is the humble refrigerator. There was a time not that long ago that salt was a highly valued good because it served as a food preservative. Access to salt could make the difference for whether you had enough to eat.

          The refrigerator turned salt into a flavor enhancement. Now it is a nice-to-have and is no longer a must-have, which makes it incredibly cheap. Owning a salt mine is no longer what it used to be, thanks to a completely different item that bears no resemblance to salt at all, yet still replaced it.

          • 0 avatar

            > An example of a once-disruptive technology is the humble refrigerator. There was a time not that long ago that salt was a highly valued good because it served as a food preservative. Access to salt could make the difference for whether you had enough to eat.

            To reinforce the point of disruptive as language instead of innate physical character, the invention of refrigeration wasn’t so much about the phase-change refrigeration device. Before that people with the money bought ice to keep food chilled in a box. So “cold storage” vs “salting” is the essential narrative, and the refrigerator the literal and literary device to support it.

            There’s a great lesson to be learned against overfocusing on single-thread linear narratives for understanding history. History is more like a massive 4+ dimension dataset from which we pick out patterns according to yet limited by how our brains functions (eg. cause-effect, categorization). It’s a need for this explanatory story-telling that we create a term like “disruptive” to explain the before vs after even though the dividing line is somewhat arbitrary.

            That isn’t to say we can’t try to predict disruption, but know it for what it is: predicting the hindsight story, which in effect includes assumptions about the storyteller. You’re essentially claiming that a certain plane can be drawn across that dataset with our “device” and a story told about before/after.

            Perhaps the greater irony here is that for all our use of language we don’t understand it very well.

      • 0 avatar

        There are some things in the Toyota model that haven’t worked as well as the domestic brands. The Toyota High Throughput model was touted by Steve Girsky to the government which then pressured Chrysler and GM to shed sales outlets. NO ONE had EVER heard a factory guy say dealerships cost an OEM a dime until the D3 execs said so before the Congressional panel in the fall of 2008. Dealers are, in fact, they are a profit center. Neil Barofsky, Special Inspector General for the TARP program said as much in his excoriation of Team Auto and the two automakers in his extensive report.

        But I digress. The D3 have had hundreds of small country dealers servicing mostly rural areas. Toyota makes a FINE truck in the Tundra. Trying to sell that vehicle in volume when attempting to conquest the domestic brands hasn’t worked out well. A farmer or rancher has to drive by a LOT of domestic truck stores to reach the High Throughput Toyota store. Cadillac sells some compelling vehicles these days, but it is the division which terminated the most sales outlets as a percentage at GM. It has killed their potential sales ESPECIALLY with the ATS, which just took a residual value hit from ALG because they’ve had to overly incentivize it to move enough volume to keep the plant running. And its a GREAT car. So much from the High Throughput model. Toyota must think it works for them. One wonders what they could sell if they had better coverage.

  • avatar
    Uncle Wainey

    Ed needs to go back and read his Clay Christensen again. That word he is using, it does not mean what he thinks it means.

    Tesla is the only company currently building a mass-produced electric car with range and sticker price competitive with equivalent gasoline vehicles. Everyone else is selling small cars that cost twice as much as the equivalent gas vehicle and only run for 80 miles.

    Tesla is the only EV maker following a new technology diffusion curve by courting early adopters at the top of the market, then gradually moving downmarket as technology and manufacturing advances and costs come down. This has made them do the impossible: be a viable, cash-positive company while only selling EVs. How much money are other automakers losing on their EV programs?

    Tesla is the only company fully solving the EV charging infrastructure problem, and they’re doing so with chargers that only work with their vehicles, forcing people to buy their cars if they want to use their infrastructure. Other automakers can’t simply build Model S clones when Tesla’s charging infrastructure is a key part of the ownership experience.

    Where would the EV market be today if not for Tesla? Well, where would the Blu-Ray market be if not for video streaming a la Netflix?

    Nothing against Toyota, they’ve done a ton of disrupting too. The LS400? Holy crap! But dismissing Tesla will only get you beaten by them.

    • 0 avatar
      Pch101

      “Everyone else is selling small cars that cost twice as much as the equivalent gas vehicle and only run for 80 miles.”

      When you figure out why that is, then you’ll understand what’s wrong with Tesla.

      • 0 avatar
        Uncle Wainey

        Ah yeah, I should have said “offering”. Because those companies sure as hell aren’t selling a lot of ‘em. Not to mention that the percentage of the sticker price subsidized by the federal government is twice as high for those vehicles as it is for the Model S.

        • 0 avatar
          Pch101

          Again, when you figure out why other automakers don’t use the same approach, then you’ll understand the problems with Tesla’s approach.

          Here’s something to begin your research: in an extensive survey conducted by Plugin America, it was found that 19% of the Tesla Roadsters required battery pack replacements. Almost one out of five.

          There is no way that Toyota could afford to build an electric car with that lack of reliability. And that lack of reliability is directly linked to the range that has you so impressed.

          • 0 avatar

            Those who don’t want to see, just won’t see. I’ll stick to the cars offered from the major makes, that’s for sure.

          • 0 avatar
            Uncle Wainey

            “There is no way that Toyota could afford to build an electric car with that lack of reliability.”

            And yet Tesla is cash flow positive and operationally profitable. What does that tell you about Toyota? Well it doesn’t tell you anything since Toyota buys RAV4 EV powertrains from Tesla anyway.

            Every new technology has its teething problems. You learn your lessons and you improve. Toyota does and Tesla does too.

          • 0 avatar
            Uncle Wainey

            Marcelo: as will I (since I sure as hell can’t afford a Model S) and as will most people. That’s how technology diffusion works.

            DVD players were crazy expensive in the late ’90s. Then they got cheap and everyone bought them.

            We’re still in the late ’90s for this stuff. Let’s see where we are in 3-4 years.

          • 0 avatar
            Pch101

            It’s not a “teething” issue.

            There are two ways to get more range out of a lithium ion battery: top it up to a higher level, and discharge it more deeply.

            There are two ways to reduce the reliability of a lithium ion battery: top it up to a higher level, and discharge it more deeply.

            Hopefully, you’re noticing a pattern here.

            This reminds of that poster Norm with his mythical high MPG UberSaab — he wants to convince himself and everyone else that he has reinvented chemistry and the laws of physics. But science provide us with no free lunch, and anyone who makes cars knows where the food is coming from.

          • 0 avatar

            Uncle Wainey, to use your DVD analogy, if you buy a Tesla player you have a much greater risk of it eating up your CDs. It might be prettier and rewind faster, but the other players, who up to now have been making VCRs haven’t launched or have launched slower DVD because they realize there is a problem with the new tech and aren’t comfortable betting the farm on it until they solve the problem.

            That is Tesla’s problem.

          • 0 avatar
            Uncle Wainey

            Pch: You’re absolutely right about battery chemistry, but you were talking about reliability before. Anyway, cars are built to a cost. As battery costs come down (as they have historically) you can afford to put more of them in a car. When you do that, you can reduce the amount of top-up and discharge-down and improve battery pack longevity.

            Marcelo: That’s Tesla’s problem but also their opportunity. There’s a huge first-mover advantage in the auto industry. The longer automakers continue to play it safe, the bigger that advantage gets.

          • 0 avatar
            arun

            I get what you are saying – that range and battery life are inversely proportional. But what if that is a cost customers don’t mind paying?

            On a tangential note, you see Apple sells generations of iPhones making the smallest of improvements, and yet people buy them like they were tickets to the Pearly gates.

            Apple certainly disrupted the mobile phone world and I see Tesla doing something similar – and if expensive battery replacements are the cost that customer have to pay (and are willing to pay), then so be it.

          • 0 avatar
            jsixpack

            I’d simply point out @pch101 that disruptive technologies often suck the first time around. The first iPod was expensive, only worked on macs, and had crummy battery life. The Kodak DCS was huge, weird and gave all of 1.3 mpix. Both of those heralded the end of a market, and notice that only one of them profited from the rise of the new. Just because you’ve got the tech, doesn’t mean you’re gonna rule the new world

          • 0 avatar
            Pch101

            “But what if that is a cost customers don’t mind paying?”

            The market for that sort of thing is very limited. And it would damage the reputation of a company such as Toyota to manage its batteries in that fashion.

            Which helps to explain why that the RAV4 EV, with its Tesla drivetrain and battery pack, is claiming only about a 100 mile range. When Elon Musk was offering a similar amount of kW in the much heavier Model S, it somehow magically managed to have more range.

          • 0 avatar
            Pch101

            “I’d simply point out @pch101 that disruptive technologies often suck the first time around.”

            Again, that isn’t the issue. The issue here is that Tesla overtaxes the battery so that it can brag about the range.

            Everyone else could be doing the same thing. There are good reasons why they don’t.

          • 0 avatar
            E46M3_333

            “A considerable number of owners reported that some or all of their battery pack had been replaced: 23 out of 122, or 18.9%. The Roadster battery pack consists of 11 equal sheets of 621 cells. A battery replacement can be anything from replacing a single sheet to replacing the entire battery pack. There are also a number of reasons for doing a partial or full replacement, not all related to battery health or capacity. Further, the replacement for a sheet or pack may be either completely new or refurbished.”

            “It should be noted that Tesla Motors typically replaces entire items for even small issues. A battery pack may be replaced because of a blown fuse.”

            You DID know that, right Pch101? Perhaps you can’t be bothered to read the actual report; far easier to just pull a misleading statistic from it. Kind of like the IPCC pulls misleading stats from their reports on climate change. You’re nothing more than an ill informed, sanctimonious know-it-all.
            .
            .

          • 0 avatar
            Pch101

            The failure to replace every single cell the battery pack is not an indication that the battery pack is reliable or that replacements weren’t made.

            The fact that almost one out of five owners have battery pack issues should be sufficient. If that many Prius owners had problems like that, nobody would touch it.

          • 0 avatar
            WheelMcCoy

            “But what if that is a cost customers don’t mind paying?”

            “The market for that sort of thing is very limited. And it would damage the reputation of a company such as Toyota to manage its batteries in that fashion.”

            Toyota is a mass market auto manufacturer and won’t be forgiven easily. But Tesla is a niche player right now, and customers are wealthy enough to forgive Tesla for its shortcomings in return for something unique and special.

            Yes, the market is limited, but it is growing. An electric SUV is due out this year, and a $40k electric sedan is in the pipeline.

          • 0 avatar

            > I’d simply point out @pch101 that disruptive technologies often suck the first time around. The first iPod was expensive, only worked on macs, and had crummy battery life. The Kodak DCS was huge, weird and gave all of 1.3 mpix.

            The way those things improved is technologically different than a Tesla. For example, a digital camera’s main sensor chip cost is predicated on chip size. That’s why today’s cameras with a big chip like the DCS are still expensive while the cheapies (esp ones inside phones) have tiny chips. Similarly for the iPod, storage density for music either electronic or magnetic scales at a rapid exponential pace, either allowing more music for the same price or lower price for same amount with a smaller storage unit inside.

            The fundamental analogous part in an electric car is the battery, and battery density chemistry generally advances at much lower pace in comparison. This isn’t just a matter of chem engineers being lazy, but rather because fundamentally new “rechargeable” chemical bonds need to be discovered for the tech to advance whereas the processes for semiconductors/mag-disk is just making the same thing smaller. You just can’t make the chemical atoms & sh1t any smaller without re-inventing physics (ie being God).

    • 0 avatar
      CapVandal

      Tesla is also the first startup car maker to be named Consumer Reports best car — after only a few years of operation. It took Hyundai 15 or 20 years to go from a joke (Glen Garry/Glen Ross) to a seriously competitive vehicle.

      People don’t buy Teslas to save money — they buy them for the unique driving experience.

      As far as range — I can’t imagine owning one as my only vehicle. People that can afford a Tesla can also afford a secondary vehicle. I wouldn’t mind having a personal fleet of a model S and a LandCruiser.

      As far as the financial markets go, Tesla has a market cap of 30 billion vs 60 billion for Ford.

      For the real Tesla haters, a perfect opportunity to put your money behind your convictions. Long F, short TSLA.

      Tesla could easily raise a billion a year for R&D by simply issuing some stock. How many vehicles does Ford produce and what is their R&D per vehicle?

      As far as disruptive … at least moderately so. I see the various vehicle sharing schemes as more disruptive. One of their biggest advantage is that they include urban parking as part of the package.

      • 0 avatar

        Acknowledging Tesla’s challenges and publicity stunts isn’t “Tesla hating.”

        I wouldn’t buy Tesla under any circumstances. There are just too many unknowns at this time. At these current prices its for real gamblers.

        How would it impact Tesla’s stock price if it issued a billion dollars of new shares?

  • avatar
    WhiskerDaVinci

    Toyota has not really innovated anything in terms of safety or performance. And with their quality slipping, both in terms of interiors and just manufacturing, buying one today doesn’t seem to make much sense when others are doing better. Some of their competition is built better, with better interiors and better safety. That are also equally, if not more reliable. Their hybrid tech is dated and dirty compared to what others are doing with their hybrids as well. Toyota hasn’t really seemed to show much interest in improving their safety, like other makes have, and they’ve stopped advertising how safe their cars are as well recently.

    They’ve appeared to make the mistake of resting on their laurels, as well as going backwards in some areas, while others were working to improve themselves. Remaining stagnant in their market never ends well. It’s actually quite sad to me, because once upon a time I respected Toyota for their quality, which is just not something I see anymore.

    Telsa building their whole brand on electric cars, that don’t have huge range is risky. Range is a big thing for EV buyers (so I read and hear), so not offering it, or at least an engine as a generator option can be quite damming. Pricing is high too, it keeps it out of range of other EVs, which is the point, but a luxury EV is just niche as can be. They need to work on offering a broader range of things to get people interested. Not just “hey rich people, come buy this luxury EV that won’t quite get you as far as you want it to”. What buyers want is important. I wouldn’t buy an EV unless it offered the range that I was hoping for. And yes, I realize most people only need the range of an EV, but I sadly need more than they can offer at this time. I do a lot of driving for work and travel, and can’t risk running out of electricity.

    • 0 avatar
      KixStart

      They appear to me to be relentlessly improving their product. The next Prius will be built on a new Global Architecture scheme, which has the potential for both savings and improvements in time-to-market. Bertel used to talk up VW’s similar approach.

      Anyway, I’ll believe in the mythical quality slip when I see it. I bought an ’08 Corolla with over 100K miles on it late last Summer and it looks and drives like new. We’ve got 20 months and 24K miles on our ’12 Prius, I routinely beat the EPA esimtates and the car has been flawless. Other automakers are going to have a hard time winning my business.

    • 0 avatar
      Russycle

      “Toyota has not really innovated anything in terms of safety or performance”

      Even if true, irrelevant. Most people don’t care much about safety or performance, they want a car that’s cheap, comfortable, and won’t leave them stranded or drain their bank accounts. And in the 70′s and 80′s, nobody but Toyota (and Honda, but at much smaller volume) could deliver. That was disruptive.

    • 0 avatar
      84Cressida

      “Toyota has not really innovated anything in terms of safety or performance. And with their quality slipping, both in terms of interiors and just manufacturing, buying one today doesn’t seem to make much sense when others are doing better. Some of their competition is built better, with better interiors and better safety. That are also equally, if not more reliable. Their hybrid tech is dated and dirty compared to what others are doing with their hybrids as well. Toyota hasn’t really seemed to show much interest in improving their safety, like other makes have, and they’ve stopped advertising how safe their cars are as well recently”

      Go sit in the interiors of the new Avalon, Corolla, Tundra, and Highlander and tell me with a straight face that those are cheap.

      And I do love how you claim Toyota is less reliable than other makes, trying to reinforce some internet myth, when just yesterday they dominated the Consumer Reports reliability survey and last week dominated JD Powers. So tell me, what are these “more reliable” brands?

      And what are these other so called “better” hybrids out there? Where can I buy one? Do tell.

      As for safety, the IIHS overlap test you’re no doubt referring to has been flunked by many automakers who were completely caught off guard by it, including Toyota. Before that test, Toyota had more IIHS top safety picks than every single automaker. They take safety just as important as anybody.

      • 0 avatar
        billfrombuckhead

        Toyota interiors are cheap compared to today’s Chrysler interiors.

        • 0 avatar

          Audi trumps them all when it comes to interiors, but Toyota interiors are hardly “cheap.”

        • 0 avatar
          Big Al from Oz

          @billfrombuckhead
          I beg to differ. It’s according what Toyota to what Chrysler you are making your claims.

          Don’t confuse ‘bling’ with quality.

          Toyota’s overall have a better quality interior.

          Maybe the US manufactured Toyotas might be different.

          • 0 avatar
            billfrombuckhead

            Ram vs TRDyota trucks, 4runner vs Grand Cherokee, Highlander vs Durango, FJ Cruiser vs Wrangler, Cherokee vs RAV4, Dart vs Corolla, Fiat 500 vs Yaris. Yeah some of the older Mopar interiors may lag but help is on the way with newer models. The new 200 interior looks great in pictures.

            Then compare touchscreens for the coup de grace

          • 0 avatar
            84Cressida

            LOL, oh boy. I’ve been in all those vehicles. The only one I’ll concede to you is the Cherokee over the RAV4. The rest of the Toyotas blow away the piles of garbage that Chrysler churns out to dupe the American public.

          • 0 avatar
            billfrombuckhead

            The public is kicking your fading TRDyota to the curb with a surging Chrysler almost catching JapanInc’s government motors flagship last month, only 4800 sales behind. Probably if you count Canada, Mopar beat your crummy appliance maker in North America.

            Ram is Canada’s longest lasting truck after all.

            Kudos to Ford for almost beating TRDyota in retail sales.

  • avatar
    poggi

    Does anyone remember the Tesla is the car for 1%-ers? Great car and would love to have one, but can’t afford a trophy car that has very little real world utility.

    When Tesla introduces an EV for the masses or for buyers at every strata, it will be disruptive.

    • 0 avatar
      Kenmore

      Yes!

      A small pickup or TC-like minivan!

    • 0 avatar
      Lie2me

      Don’t you think that’s the Ultimate plan? Look what happened to the automobile when Ford took it from the 1% and made it available to the masses

      • 0 avatar
        Kenmore

        Hope so. Who wants the expense, stink and sludge along with the environmental and geostrategic consequences of ICE-slavery if there’s a better way?

        I’m just p*ssed that I’m already 59 and battery tech is still so lame that the best you can so far get are these really expensive and impractical warm-weather golf carts in a boy-toy format.

  • avatar
    billfrombuckhead

    In 2013-2014, Sergio Marchionne is the most disruptive force in the auto industry

    • 0 avatar

      If you’re gonna go there, then from a world perspective I nominate Carlos Ghosn with his market growing and grabbing 4-prong attack on world markets: Renault, Nissan, Dacia and Datsun (not forgetting things like Lada and Samsung).

      • 0 avatar
        billfrombuckhead

        How about Ferrari, Jeep, Ram, Fiat, Chrysler and Maserati? I believe Sergio will figure out how to make Alfa Romeo and Dodge strong brands. If right now, you had a Ford, GM or TRDyota dealer beside a Chrysler Jeep, Dodge, Ram dealer, you would feel the disruption of your customers switching to Ram and Jeep in droves. Can’t wait for the February results, read them and weep JapanInc fanbois.

        Sergio is making designer cars for everyman, something one is proud to own rather another boring beige mobile conventional wisdom coerces you to buy. From the Willy’s Wheeler to the 500 Gucci to the Panda Antarctica to the Challenger Redline to the Viaggio Shining Edition to the Mossy Oak Ram, FCA will make something glorious for you.

        • 0 avatar

          Like the failed Dodge Dart?

          I’m a Sergio fan, to a degree, but the man has some quirks I have a hard time swallowing. But he is one shrewd businessman.

        • 0 avatar

          @Bill, Sergio’s is a work in progress. I hope he delivers as I’ve always been partial to Fiat and Chrysler cars. Meanwhile, Ghosn has been able to grow Renault out of Europe and is growing in Eastern Europe, Africa, Middle East and Latin America (specially in Brazil where they didn’t exist 20 yrs ago and now command between 6-8% of the market). Renault has also been able to hold onto to its position in Western Europe (thanks to Dacia and some new succesful models). Nissan has a large presence in all of North America, Asia and a more discreet, but existing presence in Europe and South America.

          FiatChrysler is losing ground in Europe, but gaining in North and South America. Unfortuantely, they’re all but absent in Asia. If Sergio turns around Alfa, and is able to give Jeep a global presence his prospects improve. If Fiat is able to gain traction in India and China too (Chrysler, Ram and Dodge will stay in North America pretty much and Ferrari and Maserati are just halo brands), then he’ll be a genius. Until then, FCA will be hampered by not being in Asia and by their diminishing market in Europe.

          So, while so far Marchionne has been brilliant, Ghosn has been even more successful. This is all just my conjuncture and opinion of course.

  • avatar
    CapVandal

    Toyota was also beneficiary of a favorable industrial policy.

    The key elements being import barriers at home and an artificially weak currency.

    Not to mention access to cheap capital.

    This is the Asian economic playbook. I am enjoying seeing the neighbor, Korea, giving Toyota a dose of their own medicine.

    These macroeconomic factors produced a huge tailwind to fund Toyota’s content and quality.

  • avatar
    WheelMcCoy

    Niedermeyer is confusing Tesla’s valuation with Tesla’s disruptive force. Is Tesla worth its current stock price? I don’t know – your guess is as good as mine.

    Is Tesla a disruptive force? In many ways, the answer is yes. While lithium batteries will be lithium batteries, the layout is unique and patented (distributes the weight, isolates the chambers for safety). Tesla also has no engine up front, allowing for a larger crumple zone and a safer car. Established car makers cannot afford to do this because they have to maximize their investment in existing factories rather than retool big time.

    Tesla’s plan for its Gigafactory addresses the lithium battery problem. By manufacturing batteries domestically, batteries will be less expensive when comes time to replace them. The Gigafactory also gives Tesla some leverage when it comes to selling cars directly. They’ve narrowed the factory location to 4 states, one of which is Texas. Tell Texas to reconsider their law against selling cars directly and maybe Tesla will build the factory there, creating 6,500 jobs and investing $4 billion. That would be plenty disruptive.

    A supercharger network has been mention in other comments. That’s a great achievement. Meanwhile, Toyota plans to build out fueling stations for Fuel Cell Vehicles. Seriously? That’s more Quixotic than disruptive.

    • 0 avatar
      SCE to AUX

      +1

      I forgot about the hydrogen thing, which is a fool’s errand. Toyota, Honda, Hyundai, and anyone else pursuing this will fail.

      • 0 avatar
        WheelMcCoy

        >> I forgot about the hydrogen thing, which is a fool’s errand. Toyota, Honda, Hyundai, and anyone else pursuing this will fail.

        Yep, the cynic in me thinks those auto makers are really interested in carbon credits and spreading a little FUD about EVs.

        Also, while not friends with big oil, FCEVs can be viewed neutrally by big oil. FCEVs still need petroleum to create and deliver hydrogen. In contrast, EVs could be viewed as the enemy by big oil.

        So the companies pursuing hydrogen are really taking the path of lesser resistance, not the disruptive path.

    • 0 avatar
      Pch101

      “Tesla also has no engine up front”

      Volkswagen and Porsche have a long history of putting engines at the rear. Engine location is not particularly disruptive, even though the largest automaker of the time copied it during its heyday (GM).

      Battery powered cars have been around for over a century. That’s not particularly disruptive, either.

      Honda has gotten involved in hydrogen distribution to support the Clarity. But nobody much cares, nor is that particularly disruptive.

      Toyota disrupted the automotive industry with lean production — everyone changed how they made cars because of it.

      In contrast, there’s nothing particularly disruptive here. It’s a manufacturing company that is building a consumer product, which happens to be capital-intensive and is selling in low quantities and at a loss.

      • 0 avatar
        WheelMcCoy

        “Tesla also has no engine up front … Volkswagen and Porsche have a long history of putting engines at the rear.”

        Tesla has no engine in the rear either. :) The motors are at the wheels. And Tesla beats VW and Porsche in terms of safety, ranking #1 in the NHTSA tests.

        Ok, maybe disruptive is the wrong word. I’m using the word in the OP. Neidermeyer’s post used “revolution” as in Tesla is a car, not a revolution. Maybe that’s the wrong word too.

        I do know that with a Tesla:

        1. oil changes are no longer necessary
        2. gas stations can be avoided
        3. dealerships can be avoided

        My knock against Toyota FCEV is in response to Niedermeyer’s article where he holds up Toyota as a better, truer, more experienced disruptor.

        Ok, with apologies to Derek, would you settle for Tesla is a “game changer?”

        • 0 avatar
          Pch101

          It’s the matter of “disruptive” vs. “innovation.”

          Very few things are disruptive. Something that is disruptive creates broader changes and transform things beyond the product itself.

          Innovation is a lot more commonplace. It’s an improvement that is something better than just evolutionary.

          Inventions such as the elevator, internet, telephone, television, the mass-produced car and refrigerator were disruptive, in that they have changed how we live and often put other industries out of business.

          Toyota’s lean production wasn’t disruptive to the average person, but it was highly disruptive to the industry — it changed how they build cars, and sped up the pace of R&D to the point that it made it impossible for some of the smaller players to survive.

          Unless we all start driving EVs, Tesla will not have disrupted anything. Selling a few cars and installing a few chargers doesn’t mean much in the scheme of things.

    • 0 avatar

      We’ll have the plant in NV.

  • avatar
    SCE to AUX

    Ed N is creating a false choice between Tesla and Toyota:

    1. Tesla doesn’t need to sell GM-like or Toyota-like volumes to be disruptive.

    2. The fact that the story was written is proof of Tesla’s disruption of the market. You just can’t ignore Tesla.

    3. The Hyperloop concept has nothing to do with whether Tesla is disruptive, but it’s introduced as evidence that they’re not, based on the not-so-veiled implication that Elon Musk is crazy. Maybe he is, but it’s irrelevant.

    4. SpaceX wasn’t mentioned, but its success in sending spacecraft to the ISS could be falsely used as evidence in favor of Tesla’s disruptive abilities.

    5. The Gigafactory doesn’t need Panasonic’s involvement. Tesla could partner with several world-class lithium ion mfrs to produce 18650 cells. But I am mystified as to why Tesla refuses to move beyond that commodity cell, except that it’s easy to package. It was a brilliant starting point, but no other EV maker does this.

    6. An EV doesn’t need 500-mile range to be disruptive. This is like saying a Corvette is useless because it can’t carry my family.

    7. A company doesn’t need a 50-year track record to be disruptive. That just means they’re aging. By this definition, Google isn’t disruptive; gimme a break.

    Tesla has chosen to grab the market’s attention by producing high-performance, beautiful cars that cost $0.04/mile to run; in this, they have succeeded. People don’t cross the street to look at the latest C7 Corvette, but a Model S sighting is recalled later in conversation. The Model S outsold the Corvette in 2013, by the way.

    Nissan has obviously chosen a different path with the Leaf (which I drive). Realizing that most driving is the drudgery of the daily commute, they purpose-built an EV which can do that. Nissan seems committed to the cause, and has sold 100,000 Leafs so far. It has disrupted my lifestyle by saving me $100/month in gasoline vs a 30-mpg car. I don’t need long driving range every day, and I don’t need 12-second quarter mile times.

    So the term ‘disruptive’ really could be applied to both Nissan and Tesla, if the EV market is the focus. Toyota has the corner on ‘disruptive’ in terms of the general car market, however, but definitely not in the US truck market. In this niche, Toyota is a dog.

    • 0 avatar

      Hey SCE to AUX, as to point 1: they need more sales and a greater presence worldwide to be really disruptive. If the Chinese adopt it in mass, EV tech will be disruptive and soon most would have no option but buy EV. As it is Tesla is a small blip almost exclusive to the American market. Evs in general are growing but they have not disrupted the market yet.

      As to point 7, the car business is different from anything IT. I could develop some program from my basement that would disrupt the It market in a couple of months or years. I can’t build a car in my basement, much less use the internet as a way to distribute it worldwide. Industry is different from that. If you work in a steel plant as an engineer it takes years for you to become an expert and an authority. In computers such is not the case.

  • avatar
    Tifighter

    Putting the EV angle aside, Tesla would/could be plenty disruptive if they can get the selling-direct to consumers model to fly. Major implications for the entire industry. Sure won’t be easy, though.

    • 0 avatar
      Pch101

      It isn’t uncommon outside of the US for automakers to operate dealerships. Direct sales aren’t particularly disruptive or even innovative.

      • 0 avatar

        OEMs own dealership outlets in Japan. The only disruption is to the OEM balance sheet as they are money losers.

        OEMs own dealerships in the U.S. They used to own more when Ford owned so many a few years back. U.S. OEMs currently own some points on an interim basis and are majority and minority partners in hundreds through various dealer development programs.

        I once was part of a group that sold a turned around dealership back to Ford for their minority program. They paid up and tried a few partners that never made money again. The store is now in the hands of a family owned dealer group.

        I have no personal knowledge of any such programs in other countries. I hear OEMs own stores in Europe.

    • 0 avatar

      The selling direct model is Musk’s ace in the hole. He currently retains certain options. If he is successful and his dreams come true, he controls everything. This is the least likely scenario IMHO.

      Another option would be for him to sell out his dealerships for huge multiples when he needs some money for the other optimistic goals he has. I rate this his 2nd most likely scenario.

      Perhaps his most likely scenario is that he gets his two partners, Toyota and M,B to bid against each other for controlling interest in Tesla. This won’t happen at today’s overly high stock value. They wouldn’t be bidding for the technology. They would be bidding for the brand and the home owned distribution model. Tesla would become a separate division for either automaker. If either of those OEMs has aspirations to have a direct to consumer business model, this would be the easiest way to accomplish it. Perhaps this is what NADA is concerned about. Think about. A ready made division with recognizable name and an established direct sales model. What would that be worth to an OEM who thinks direct sales is where the world is headed?

      There is just no way Tesla is worth 50% of what other established OEMs are worth. But it is building real value along the way as well as many cult followers who mostly don’t have the money to ever buy one.

  • avatar
    Power6

    Starting a new automaker is pretty disruptive in itself.

    If only I could get a new car maker of the ground myself, to meet the pent up demand in the US for not-boring brown diesel wagons devoid of any styling feature that has ever been used before on an automobile. I would totally disrupt the market.

  • avatar

    The common thread of misconception here is what “disruptive” means. We use it as if to describe an innate quality of the object, but in practice it’s more akin to a label of practical impact in hindsight.

    For example, a mechanistic logical calculating gate is no more inherently “disruptive” in its literal mechanical form (ie mechanics) vs. its vacuum tube form (ie electrics), vs. its semi-conductor form (ie. qm). It’s mere matter of physical coincidence that it requires the latter to play Flappy Bird on your phone, and that still took a LOT of luck/sweat in the interim. A lot of similar research/implementation along the way often goes nowhere because of tiny nuanced details of physical coincidence, so we only see the winners and remark they were the True™ disruptive idea.

    The point is, speaking of something in foresight using a term that mostly has relevance in hindsight ignores how the concept behind the language functions.

    • 0 avatar
      Lie2me

      Disruptive = Game Changer

      • 0 avatar

        Using more words to define it to doesn’t change the nature of what it means. Language isn’t just a rhetorical toy.

        “Sharp” for example describes innate physical attributes, “disruptive” isn’t same sort of description.

        http://www.thetruthaboutcars.com/2014/02/qotd-toyota-not-tesla-as-a-force-of-disruption/#comment-2879721

        http://www.thetruthaboutcars.com/2014/02/qotd-toyota-not-tesla-as-a-force-of-disruption/#comment-2880097

  • avatar
    Lie2me

    I think all this confusion is because Ed meant to say “disruptive innovation”

    “A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market.”

    - Wikipedia

  • avatar
    ccd1

    Actually, in the EV space, BMW’s i3 and, to a lesser extent the i8 have the potential to be true disruptive forces, much more than Tesla

    • 0 avatar
      LALoser

      I’m still neutral on EVs..but the new i3 has got my interest. We may be moving closer to the big city, if we do, I will check one out. With the range extender.

  • avatar
    fredtal

    Wall Street goes thru a cycle of booms and busts. When ever someone suggests there is a bust everyone calls him out on it. Read the comments in that article and you get a hint of it. Personally I think Mr Musk hypes up himself and his company a bit much for my liking. Good luck with your autonymous-giga-electrified future. For myself it looks to be a nice day to fire up the old Lotus and go for drive.

  • avatar
    wumpus

    Ok, Toyota certainly disrupted the car market. So did Ford. So did Daimler. Disrupting a trillion dollar market is harder than a billion dollar market which is harder than disrupting a million dollar car market. The next time will be even harder.

    I am certain that buying Toyota stock in 1980 would be better than buying Tesla today (with that market cap at half of GM, this is a no brainer). This is hardly a shock. The rest of the article seems an attack on the overwhelming love these cars seem to generate and reminds me of the cult of the iHate.

    People pay Porsche prices for electric cars faster than Tesla can make electric cars. Deal.

  • avatar
    thegamper

    I like Niedermeyer’s article. It certainly raises a few caution flags in the wake of what most realist industry watchers would call unfounded exuberance in Tesla. Personally, at this point in time, I am with Neidermeyer. The sum of Tesla’s parts do not equal its current market capitalization not to mention share targets predicted by analysts. But here lies the kicker so to speak. Buying stock in Tesla is not just buying stock in a company making premium EVs. It is in effect buying a share in Musk, his vision, a futuristic high profile brand. Consider this. If Tesla were to create a high volume car, lets just say starting at 100k units per year and be able to sell that car for $30-40k, and sell everyone it could make. That is going to be an industry disruptor. That will be a stepping stone to ever increasing volume. Provided that the shine doesnt come off of Musk and his brand, everything that glitters will continue to be viewed as gold.

  • avatar
    ceipower

    Comments…..no matter what you say , someone will take issue with it.
    I’m going on the record…..I like chocolate. You got a problem with that?

  • avatar
    sparc

    I think Tesla is disruptive today…. in the luxury car market.

    People who have money are choosing Model S over other luxury cars. You only need thousands of sales to damage other luxury car sales.

    Just wait until the Model X comes out. They’ll start eating into luxury SUV sales.

    All Tesla needs to do is carve their niche and keep building on it. Just ignore their stock in the meantime.

    • 0 avatar

      How many of they sold in three years?

      The people buying Model S own other vehicles they can use if they anticipate a longer drive. My Model S owning neighbor’s other cars are MBs. I’ll have to ask him if he had to skinny down to one vehicle would it be the Model S…. now that the new has worn off.

  • avatar
    olddavid

    I don’t know the Niedermeyer’s background, but they both seem to have a grounded view of the fundamentals of economics. The numbers defy logic on Tesla. However, we’ve seen how institutional investors, backed with enough money to allow the business model to gain traction, can withstand growing pains long enough for their ideals to become fact. When Amazon began by splashing their name in huge letters on various buildings and claiming they were creating a new sales paradigm, I thought Bezos was delusional. However, many genesis capitalists took his numbers apart line by line and came up with the same results he did. I’m sure there were some sleepless nights when calling for yet another half billion dollar infusion for infrastructure and operations, but today I betting they would all happily do it all over again. Some may actually be Tesla investors. What they all are missing is that this is a niche car. Their absolute worldwide upside is what, 500,000 units? Hardly a threat or a game changer. We’ve seen all this before when the “e” stocks first hit the market. Anyone cashing eToys dividends checks? I hardly envision disaster for Elon, as his pockets are deep enough now to withstand even a T Boone onslaught, but becoming the 21st century Billy Durant? Not likely.

  • avatar

    not when it comes to product distribution.

  • avatar
    nickoo

    Tesla is overhyped and overblown by the media/stock market, but that doesn’t mean they aren’t good cars, they are intelligently engineered (very low C_d at .26, low weight distribution battery packs, good cooling of packs, fast change of packs allowable for fast swap tech, electric motors that last basically the life of the car with no maintenance, frunk + hatch), the cars aren’t really that great on the interior which is more of a minimalist fashion statement than it is of useability (no mirrors on the visors, giagantic touch screen with no sunlight protection) but the exteriors are beautiful so they got that going for them, which sells the cars as fashion statements.

    I firmly believe that the big battery breakthrough everyone is waiting for isn’t coming, the physics behind energy density, charge time, etc, have proven difficult if not impossible to overcome. I believe fuel cell electric motor set-ups such as the FCX clarity are the next step, the storage problem is already taken care of, the fuel cost/mile is slightly cheaper than gasoline at retail and can be made for free using solar and electrolysis. The research into lower cost fuel cell stack catalysts transitioning to real world application is the only missing link.

    Just think about it, any of the big auto makers could put out an electric car that’s comparible to a tesla and do it quite quickly. However, the major R&D by the big players is towards fuel cell tech, I’m sure they all did their analysis of each one and since they all decided against battery-electric, that seems like a compelling case.

  • avatar

    It is amusing how many people hate progress and aspire to live in the past. Nevertheless future eventually arrives not how you expected. I remember same talk about Apple and nevertheless it disrupted market several times. Now the same people predict Samsung burying Apple alive and Toyota taking leadership from Tesla. We will see if it happens. But Tesla already started to change the automotive landscape. You have to be blind to not see it. BTW my next car will be electric and might be Tesla. Toyota? Out of question.

    • 0 avatar
      mcs

      >> It is amusing how many people hate progress and aspire to live in the past.

      Reminds me of Clifford Stoll and “Silicon Snake Oil”:
      http://en.wikipedia.org/wiki/Silicon_Snake_Oil

    • 0 avatar
      Pch101

      “It is amusing how many people hate progress and aspire to live in the past.”

      vs.

      “(In the year 1900): 38% of US automobiles are powered by electricity”

      http://www.edisontechcenter.org/ElectricCars.html#timeline

      • 0 avatar

        > “(In the year 1900): 38% of US automobiles are powered by electricity” http://www.edisontechcenter.org/ElectricCars.html#timeline

        It’s no big surprise that new tech often makes old ideas feasible. The problem with old electric cars is that the range won’t even make it to work, and it’s a hassle to find places to charge. The latter is no different for gas cars before a network of stations sprung up. Smart electric cars certainly aren’t the first thing *connected mobile computers* enable; any one of those 3 things have changed the world.

        • 0 avatar
          Pch101

          You will note in the link that there was an EV with 100 mile range back in 1897. Of course, it didn’t travel very fast, but back then, nothing did.

          Over that time, internal combustion has evolved more than EVs, hence their proliferation. The evolution of batteries has been unimpressive by comparison.

          • 0 avatar

            > You will note in the link that there was an EV with 100 mile range back in 1897. Of course, it didn’t travel very fast, but back then, nothing did.

            A more relevant comparison would actual range given modern constraints. An EV like this can go basically forever but it doesn’t mean you want to drive one: http://upload.wikimedia.org/wikipedia/commons/2/28/Solar_Car_Tokai_Challenger.JPG

            > Over that time, internal combustion has evolved more than EVs, hence their proliferation. The evolution of batteries has been unimpressive by comparison.

            Not necessarily, and certainly not impressively given the amount of money dumped into them. The rechargeable battery is the biggest drawback, but as a system it’s solvable even with today’s technology. The necessary range simply means understanding what can be done between refueling. In ordinary circumstances for most that’s the daily commute or at least half of it. Therefore the problems are with the exception conditions, which a computer should be able to surmise and direct the driver accordingly. Note that’s a drastic difference from even 10 years ago. For example during a long trip a few brief swaps along the way is an acceptable compromise. As a network, a minimal distribution of stations spaced at reasonable fraction of the range is far less dense than existing gas infrastructure. Those with needs unmet by those compromises can just drive an ICE car.

            To be clear, that’s my own solution after thinking about it for a few min. There should be room for improvement in the specifics, or simply better solutions. Iow, even the trivial solution is entirely feasible given some modest level of political commitment.

          • 0 avatar
            Pch101

            Internal combustion has an inherent advantage because empty fuel tanks can be refilled quickly. It shouldn’t be surprising that a device that is made to facilitate mobility would benefit from that feature. Once automakers figured out how to take some of the danger out of using internal combustion (electric starting, for example), that technology enjoyed an advantage that no EV could possibly have.

            There needs to be either a quick-charge EV or else an EV power storage unit with so much capacity that the recharge time becomes less important. It’s quite easy to add liquid to a tank, not so easy to force-feed energy into a bulky chemical compound, particularly when it takes up as much room and weighs as much as it does.

          • 0 avatar

            > Internal combustion has an inherent advantage because empty fuel tanks can be refilled quickly.

            I addressed this above: http://www.thetruthaboutcars.com/2014/02/qotd-toyota-not-tesla-as-a-force-of-disruption/#comment-2881953

            Note this is only absolutely necessary to cover the stretch range exceptional cases. Computers smart enough to figure out if/when you need it vs. charging are now trivial.

          • 0 avatar
            Pch101

            The market has spoken in this regard. Range and recharge times do matter. There are only a few diehards who are willing to spend their money based upon differing presumptions.

          • 0 avatar

            > The market has spoken in this regard. Range and recharge times do matter. There are only a few diehards who are willing to spend their money based upon differing presumptions.

            Let’s step back for some perspective on what this discussion is about. Your claim is that EVs are a 90% solution as of now which isn’t good enough, and that’s a fair point. My claim is that there exist currently technologically trivial methods that can boost this to a 99% solution which is likely good enough.

            I would guess most of these tech supplements suffer from the chicken/egg problem where some initial infrastructural outlay is necessary for people to buy the cars and vice versa. This is not really about tech as much as a people who lack the political backbone to do anything worthwhile.

          • 0 avatar
            Pch101

            “Your claim is that EVs are a 90% solution as of now which isn’t good enough”

            I’m not assigning percentages in that manner.

            As it stands, battery-powered cars suffer from the same disadvantages today that they did a century ago. Then and now, there have been a few who embrace the disadvantages and a few more who can tolerate them, but these comprise just a minority of the market.

            If you fix the battery or replace the battery with something better, then that problem goes away. But it begins with the battery, and it’s unclear whether fixing it is even possible.

          • 0 avatar

            > As it stands, battery-powered cars suffer from the same disadvantages today that they did a century ago. Then and now, there have been a few who embrace the disadvantages and a few more who can tolerate them, but these comprise just a minority of the market.

            If computers, gps, and understanding of pollution existed then as it does now the direction of history might well have been different. As mentioned before in this thread, these “paradigm changes” often depend on external factors not under their own control–timing matters.

            > If you fix the battery or replace the battery with something better, then that problem goes away. But it begins with the battery, and it’s unclear whether fixing it is even possible.

            Consider the fundamental problem with cars themselves, namely they need very expensive roads to drive effectively. Sometimes the right solution is to build out some infrastructure so we don’t have to have to fix the issue of driving efficiently over arbitrary terrain.

          • 0 avatar

            Also, a point I laid out above which might’ve been missed is that such an fueling infrastructure already exists for gas cars, which took a LONG time and a LOT of money to develop. Your implied argument is that EV must not be just as good, but superior enough to function without such a support network. Another way of looking at my trivial solution is that technology can minimize the size of the necessary network thus delivering a suitable value proposition.

          • 0 avatar
            Pch101

            “Your implied argument is that EV must not be just as good, but superior enough to function without such a support network”

            There needs to be a compelling reason to switch. As it turns out, internal combustion cars are pretty damned good, but for the oil dependency. Switching from horses to cars was far more enticing than switching from internal combustion to full electric.

            The current EV buyers are fanboys; they are a small group that will tolerate more problems. Expand that circle, and you’ll find greater unhappiness as those who don’t want to adapt to the shortcomings find themselves at odds with the downsides of the technology.

          • 0 avatar

            > There needs to be a compelling reason to switch. As it turns out, internal combustion cars are pretty damned good, but for the oil dependency. Switching from horses to cars was far more enticing than switching from internal combustion to full electric.

            Energy efficiency itself is also a good reason. I’m not really interested in how well the pea-brained populace calculate rational self-interest as comparing various solutions (incl transition costs) as a whole.

            > The current EV buyers are fanboys; they are a small group that will tolerate more problems. Expand that circle, and you’ll find greater unhappiness as those who don’t want to adapt to the shortcomings find themselves at odds with the downsides of the technology.

            Cars without any emissions control can often be “better” than those with, yet there’s good reason we didn’t go down that route despite the protests you’ve likely seen.

          • 0 avatar
            Pch101

            “Energy efficiency itself is also a good reason.”

            Very few people care about that for its own sake.

            “Cars without any emissions control can often be “better” than those with, yet there’s good reason we didn’t go down that route”

            Not really comparable to this. It was possible to improve emissions controls, and they are largely invisible to the consumer.

            The problems of battery-powered cars are inherent to the battery, and it isn’t clear whether those problems can be fixed. Batteries, at least as we know them, may not be well suited to full electrification — there is no such thing as a stable, fast-charging high capacity battery that doesn’t degrade over time.

          • 0 avatar

            > Very few people care about that for its own sake.

            Sure, but that’s irrelevant to a regulatory body whose very job is to care about stuff many people don’t.

            > Not really comparable to this. It was possible to improve emissions controls, and they are largely invisible to the consumer.

            I wouldn’t say neutering engine output significant was “invisible”, or nor the slow but sure progress toward ever higher econ standards.

            > The problems of battery-powered cars are inherent to the battery, and it isn’t clear whether those problems can be fixed. Batteries, at least as we know them, may not be well suited to full electrification — there is no such thing as a stable, fast-charging high capacity battery that doesn’t degrade over time.

            That’s why a plan which should more or less work right now uses tech to alleviate those problem:

            A. 90% of trips you’re traveling significantly less than the range between locations where some time will be spent; add chargers there a la handicap/vip spaces.

            B. For the other 10% the car/computer knows you will be out of juice and thus directs you to stations along the way where the battery can be quickly swapped as quickly as gassing up.

            There are purposes and people for whom this won’t work and that’s ok since such a system is hardly invasive.

            The primary argument isn’t “this can’t be done economically” but rather “this isn’t political feasible” which is a different sort of limitation.

  • avatar

    “Note your use of the word “CURRENTLY.” Currently is 2014. 2008 is NOT current.”

    “2013/2014 IS current. Look at Ford, GM and yes, even Fiat as they close plants around the world. GM is leaving Australia. Ford is leaving Australia. GM is being forced to idle or seriously cut back production in Europe. Ford is cutting back production in Europe–AS WELL as divesting themselves of brands over the last several years. Only in the US are Ford and GM seeing any real growth–well, and China. If anyone, it seems Fiat/Chrysler is the only brand that’s seeing true growth in some areas but even they are admittedly weak in others, so far.”

    Go back and read what you wrote. You were referencing the closed Newark plant. What is your point? Europe’s recession has drug on. Automakers close plants in one place while building new ones in other places all the time. Again, what is your point? Closing plants in Australia doesn’t mean car sales stop there.

  • avatar

    RE: “Yes it is, because the article I linked specifically stated that Ford is going for a 12 BILLION line of credit. I can’t help it that you want to play the semantics game by pointing out that they’re losing an older one that covered most of that amount.”

    And because some headline said something you deem it to be true? You either didn’t read the column or didn’t understand it. It isn’t semantics to point out the facts that refudiate your inaccuracy.

  • avatar

    “Even if Tesla values come in at the low end of the luxury-sedan segment average, that’s a 10 percent swing. On a $90,000 car, that’s almost 10 grand a pop. Multiply that by 20,000 sales this year, and Tesla is looking at a $200 million shortfall just for 2013′s sales when the cars come back in 2016. ”

    From a recent piece on Tesla residual values.

  • avatar
    CapVandal

    $1 billion offering would dilute the stock by 3%. Which, if they are growing, could be done every year indefinitely. Back when stock options weren’t expensed, it wasn’t uncommon for tech firms to do exactly that.. It is simply another option for Tesla to access capital markets — and since I think their stock price is very speculative — if not grossly overpriced, a good idea.

    As far as the accounting, the firm would have 3% more shares (4 million) outstanding and an extra billion in cash. Their book value per share would more than double from$5 to $13.

    Hell, they should sell as many shares as the market will take.

    If I were in the market for a MB S series or BMW 7, I would definitely cross shop the Tesla S. Which would be the daily driver and I would keep something else around for longer trips. Too rich for my blood. However if Tesla could build a smaller, high performance car with limited range (which is all I need) for 1/2 the price, I would be interested. Or if anyone made one. A performance version of the Leaf.

  • avatar

    RE: “$1 billion offering would dilute the stock by 3%. Which, if they are growing, could be done every year indefinitely.”

    I’m not sure how you did the arithmetic on this but perception drives stock prices more than reality. Tesla is living proof of that. If investors continue to go for hype over substance, Tesla can do anything it wants. I agree they should float a stock offering while the fever is in their favor. Why wouldn’t they do that instead of take in partners for the Giga Factory? I wonder what major partners Toyota and MB would think about the dilution? Would the view themselves as benefiting, or otherwise? Everything is fine if what they are growing is profits rather than revenue.

    RE: “Tesla is building 1,000/week now. MB S’es and BMW 7 series 1,000/month.”

    Tesla is NOT building 1K per week. They PLAN to build 1K a week. They also plan to take over the world. The former is more likely than the latter but it hasn’t happened yet. Tesla has a rather large sword hanging over its head in the move it made to guarantee its own residuals. IF those residual values come true, they will have taken a major step in making me, and many others, believers.

    Regardless, a used Model S is likely to become Tesla’s entry level vehicle regardless of whether or not Musk has to pony up money to the participating lenders to make his guaranteed residuals come true. At that point, battery pack life and maintenance costs become clear, for better or worse. So far Musk has done a remarkable job of providing pleasant surprise after pleasant surprise and has done so in an artful way designed to kick certain cans down the road. There are MANY things that can happen that could burst the balloon. Its fascinating to watch events unfold.

    • 0 avatar
      CapVandal

      The arithmetic is simple …. $250/share, 120 million shares.

      I don’t really understand the what the investment community is thinking. Selling stock to beef up cash is a no brainer. Especially when the stock is selling for 50x book value as well as a huge multiple to the essentially nonexistent earnings. But that’s me.

      I would love to have a Tesla …. 400 shares of Tesla stock? Not so much.

      • 0 avatar
        CapVandal

        I really knew nothing about Tesla before this article.

        However, I just read that last week, the company issued a convertible bond offering at about 1% interest.

        The conversion premium is @ roughly $350/share.

  • avatar

    According to NADA guides:

    Highest/lowest retention

    • Highest retaining segment
    – Subcompact cars with an average retention rate of 54.4%
    • Lowest retaining segment
    – EV cars with an average retention rate of 39.9%

    Highest performing cars

    • Mainstream cars
    – Subaru Impreza 63.5%
    – Honda Fit 62.7%
    – Scion xB 60.6%

    • Luxury cars
    – Lexus IS 57.8%
    – BMW 5 Series 54.5%
    – Audi A4 54.3%

    • Hybrid/EV cars
    – Lexus CT 62.4%
    – Toyota Prius 54.3%
    – Kia Optima 53.6%

  • avatar
    Big Al from Oz

    I do think EVs will never be viable, unless they are subsidised. They will become viable once crude reaches obscene levels.

    ICE engine are far more flexible and no matter how much technology is provided for the next few decades you will not charge a capacitor or battery to run a car for 100 miles let alone 500 miles in several minutes.

    From a green perspective, there are diesels that are now lower polluting than some EVs. Remember the electricity has to be generated.

    Wind and solar with a mix of other energy forms are really a pipe dream.

    We are unfortunately hooked of all forms of energy. We should do our best to lower emissions and reduce consumption. But this shouldn’t be subsidised.

    If any industry requires subsidisation, then it’s not viable and shouldn’t exist.

    There are other ways in which the US could have choosen to reduce its CO2 emissions, but it choose an expensive route.

    So, keep on borrowing so the better heeled can drive EVs, whilst the biggest polluting vehicles are the vehicles of people who can’t afford to maintain them properly.

  • avatar
    05lgt

    “Even if the company is anathema to enthusiasts” Speak for your self. I’ve driven, worked on, and dreamed about some very desirable Toyota’s over the years. Lately they seem to come with an L instead of a T over the grill, but they’re still sweet.

  • avatar

    RE: “The public is kicking your fading TRDyota to the curb with a surging Chrysler almost catching JapqanInc’s government motors flagship last month, only 4800 sales behind. Probably if you count Canada, Mopar beat your crummy appliance maker in North America. Ram is Canada’s longest lasting truck after all. Kudos to Ford for almost beating TRDyota in retail sales.”

    Chrysler has its own thing going. High points include the new diesel truck and the Grand Cherokee. Flops include the Dart. Fiat/Chrysler has a LONG way to go to be in Toyota’s league.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India