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Author: JustMee01 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 18123  
Subject: BEVs have lost their luster... Date: 2/5/2013 12:31 AM
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even with Nissan and the Obama administration.

http://www.reuters.com/article/2013/02/04/uk-autos-electric-...

The public's lack of appetite for battery-powered cars persuaded the Obama administration last week to back away from its aggressive goal to put 1 million electric cars on U.S. roads by 2015.

Too expensive, too many fueling constraints, and not enough range.

Peter
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Author: TMFBreakerRob Big gold star, 5000 posts Old School Fool Home Fool Supernova Phoenix 1
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Subject: Re: BEVs have lost their luster... Date: 2/5/2013 8:46 AM
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What do you think of Tesla?

Expected to be cash flow positive this year, ramping up production and sales. Promising to come out eventually with a mass market priced car.

Is this merely exploitation of a niche or do they have something that will result in sustainable, growing sales? And..... could it turn out to be a good investment (which is another thing entirely)?

Rob

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Author: BFatConservative One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17395 of 18123
Subject: Re: BEVs have lost their luster... Date: 2/5/2013 9:36 AM
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"Promising to come out eventually with a mass market priced car."

This is the test I'm waiting for on Telsa. It's one thing to niche the 100k BEV market and do well (i.e. room for margins - with few competitors). However competing with the leaf, the volt - which none of these have made the bank coffers any fuller for their respective companies.

Subsidized vehicles will never be a winner. How many business models have failed as a result of trying to skip a generation? As in, skip the plug in / fuel combo and going for the all electric. It's called evolution because it is a process - we needed gasoline engines for decades before we could dream up the next thing. This world moves fast, but I think BEVs are too fast ... too soon. That is unless there is a 100k price tag. Then it works.

MjH

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Author: SkepikI One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17396 of 18123
Subject: Re: BEVs have lost their luster... Date: 2/5/2013 10:03 AM
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I had the experience of driving a friends Tesla S the other day. Very impressive, and lots of interesting new technology, which I have to believe will make it to other models soon. But I kept having visions of snazzy new technology failing as I used it. Like the cool door handles that power out when you touch them...what happens when that motor or sensor or circuit goes? Break a window? Replacement parts? ummm $550? more ??? who could I trust to work on them, certainly not me. I think most of the controls are "fly by wire" to judge by the gearshift, of course that seems true of most now. Still, there is always a certain segment that will pay the premium and if that results in a profit, unsubsidized, it can self-sustain and grow. All sorts of business models like that work especially for the "new and wonderful" - Whole Foods comes to mind, we call them "Whole Paycheck", as does Rolls Royce.

The real problem for me besides the price and reliability is infrastructure. There is gasoline in Denio NV and Fields OR, but charging station? no way. EV's are for city slickers...hybrids will work for the rest of us.

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Author: JustMee01 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17397 of 18123
Subject: Re: BEVs have lost their luster... Date: 2/5/2013 11:04 AM
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"Promising to come out eventually with a mass market priced car."

This is the test I'm waiting for on Telsa. It's one thing to niche the 100k BEV market and do well (i.e. room for margins - with few competitors). However competing with the leaf, the volt - which none of these have made the bank coffers any fuller for their respective companies.


I'll take the opposite side of this. Tesla needs to stay on the niche market side of things.

Would Coach succeed making a $5 handbag that sold for $30?
Will Apple succeed making a $300 iPad? A lot of people don't think so right now... (Sorry Rob; tell me when it turns and I'll climb on board AAPL with you...)

Tesla does not make a commoditized product. Right now they make a niche-segment novelty and sell it at a high price. It might as well be a Coach handbag or a Rolex watch. That allows them to make money. Simultaneously, it eliminates the practicality issue. People who are buying a Tesla are buying it for the same reason that early adopters grabbed a tablet. It's cool in their opinion. Practicality was not an issue. A Tesla (or any premium car for that matter) is more of an affectation than it is a vehicle.

It says that I have money.
It says that I want to save the planet.
It says that I'm on the cutting edge.
It says that I'm way, way cooler than you.

And your girlfriend wants me, by the way...

What else says that in one neat little package?

When you turn around and try to hit the mass market consumer, you get a completely different consumer that you're marketing to. And they won't get the same margins, by definition. Couple that with the fact that the segment is so small, given the infrastructure and practicality issues as Skepik points at, and you have a losing proposition.

That consumer has limited money.
That consumer can't worry about the planet. He needs to eat.
That consumer is by definition, not cutting edge.
That consumer does not really care how cool you are, because he thinks the Tesla-guy is a dork.

And Tesla-guy can have his girlfriend. As long as he doesn't take his damn dog!

Tesla making money is a surprise to me, so I could easily be wrong. But I don't think that moving mass market will help. It will hurt, because is will shrink margins as it ramps capex to access a fringe segment of a commoditized industry. That's not often a recipe for success. That's stupidity. My advice to Tesla is to stick to its knitting and keep surprising me by selling cars to 'Tesla-guy'.

JMO, and I freely admit that it's not even worth two cents.

Peter

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Author: TMFBreakerRob Big gold star, 5000 posts Old School Fool Home Fool Supernova Phoenix 1
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Subject: Re: BEVs have lost their luster... Date: 2/5/2013 11:16 AM
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But I kept having visions of snazzy new technology failing as I used it. Like the cool door handles that power out when you touch them...what happens when that motor or sensor or circuit goes? Break a window? Replacement parts? ummm $550? more ??? who could I trust to work on them, certainly not me. -- SkepikI

My comment here is getting off topic, but....

Today I got a letter from Ford saying:

* New software for MyFord Touch.
* Extended warranty on the "Accessory Protocol Interface Module" which runs MyFord Touch.

This just reinforces my determination to sell my Edge before my extended warranty runs out. If I have a module blow (had one failure in 55k miles so far), it'll probably cost out the wazoo.... and sometimes a module failure is a big deal. It was a problem last time since I lost a lot of HVAC functionality as well as all screen function until it was replaced.

Cool stuff is....um .... cool.... but you can't fix it yourself and it's expensive.

Rob

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Author: TMFBreakerRob Big gold star, 5000 posts Old School Fool Home Fool Supernova Phoenix 1
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Subject: Re: BEVs have lost their luster... Date: 2/5/2013 11:21 AM
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LOL..... your thinking is pretty close to mine Peter.... but I couldn't have expressed it even half as well. <still chuckling>.

* I'll believe a mass market car from Tesla when I see it.

* They're not profitable.... just approaching cash flow positive.

* I definitely don't fit your Tesla customer profile, but if they produce that mass market car.... I'll look into it. :)

Rob

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Author: KennyO Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17400 of 18123
Subject: Re: BEVs have lost their luster... Date: 2/5/2013 12:39 PM
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If I have a module blow (had one failure in 55k miles so far), it'll probably cost out the wazoo...

The moonroof control on my Volvo S80 failed two years ago, continually opening then closing then opening then... I was sure it was just the switch since I could wiggle the switch to make it stop cycling. But no, the module replacement was quoted at $352.00. Since I don't often use the moonroof I decided that I could wiggle the switch for a long time at that price. I can only imagine what it'd cost to replace an engine control module. I suspect that one of the many lessons Ford took away from its ownership of Volvo was the profitability of replacement modules. My car's ten years old and, given the proliferation of technical gimcracks and gewgaws throughout the industry, I'm increasingly reluctant to buy a new car. Hybrids and BEVs are surely at the bleeding edge of this technology.

KennyO
curmudgeon-in-training

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