HOME  |  NEWS  |  BLOGS  |  MESSAGES  |  FEATURES  |  VIDEOS  |  WEBINARS  |  INDUSTRIES  |  FOCUS ON FUNDAMENTALS
  |  REGISTER  |  LOGIN  |  HELP
Blogs
Automotive News

Can Tesla's $5 Billion Bet Pay Off?

NO RATINGS
Page 1 / 2 Next >
View Comments: Newest First|Oldest First|Threaded View
<<  <  Page 2/4  >  >>
CharlesM
User Rank
Silver
Re: Not viable
CharlesM   5/9/2014 10:08:06 AM
NO RATINGS
Either you get it about the need for more investment in clean energy or you don't. Some obviously don't. Government is in the business of picking winners and losers, GTOlover. They do that all the time as a matter of course. It's just that some people are afraid they will be among the losers. Their precious gasoline, which is subsidized by wars, billions in taxes, and offloading its environmental problems onto future generations, may need to be priced more realistically, sooner rather than later, and these people somewhat understandably feel threatened.  If you look long term, though, the best way to ward off major economic and other calamities later is to start making the necessary investments to move beyond fossil fuels now. It will be much cheaper in the long run and borrowing is especially cheap now. The federal debt is not a problem.  Moreover the reason for all the stimulus programs was because the economy collapsed and the free market was broken. If you studied economics, you'd know it really didn't matter if the stimulus took the form of hiring people to dig ditches for no reason. It had its intended effect and also saved the domestic auto industry which is now thriving.

I agree with your last sentence, however. The rich and the big corporations are the problem. They are behind political sound bites like "government picking winners and losers" and they encourage distractions like fake outrage over federal debt. (edit for clarification: Musk bucks that trend, though, just like his businesses are disruptive.) I hope you at least were as consistently vocal during previous administrations about your wishes for fiscal restraint.

careyfelix
User Rank
Silver
Re: Not viable
careyfelix   5/9/2014 9:40:22 AM
NO RATINGS
For the Detroit Three selling off the parts suppliers as independent companies generated cash flow through the IPO's and sell of stock, which those companies needed.  GM had a huge pile of cash in the late 90's and early 2000's and owned many majority shares of companies like Hughes Satellite but now they don't. They had to sell it off for cash flow to prop up the automotive side.  

Henry Ford was all about vertical integration it gives you control, it's not always about cheaper.  It's also more complex to manage and many mangers and executives don't have the capability for such complex interactions of internal systems. It's easy to make a contract and force the supplier to uphold it but it's more difficult many times to deal with internal interactions because there isn't such contracts to enforce only executive will and pressure from the top.  The steel companies come to mind when talking about automotive.  They produce a inferior product to Japan mills (by inferior I mean they use to complete tolerance band for properties (chemical and physical) which is an issue for reducing a stamping processes variation) and won't change to provide their customers with better product.  So, if you need your material to have improved formability your out of luck you have to scrap a lot of parts or import material because the US mills are completely indifferent.  So, Tesla's issues with suppliers aren't secret and that along with cost is more than likely what he is trying to correct and he could also very well become a supplier of batteries to Toyota, Mercedes and other larger automotive companies that invested in his company.  It's hard to control quality and cost if you don't own the process.  Because if you want quality the supplier will says that's going to cost you and if you what lower cost you typically end up with a lower quality or delivery or both.  But if you view the battery plant like and engine or transmission plant they aren't much different.   and with an electric motor and simple gearbox in an all-electric vehicle the most complex part of the drivetrain or costly is the batteries, vs. the engine and transmission in a gas/hybrid car.  Toyota has control of key items in their hybrid systems it just makes since for Tesla to do the same, you have to look past the surface.

Charles Murray
User Rank
Blogger
Re: Cross Country Market
Charles Murray   5/8/2014 5:23:50 PM
NO RATINGS
I agree wholeheartedly, naperlou. If (pure) electric vehicles take off, it will be cause of the batteries. The batteries still need to get better -- a lot better -- or we will never really see widespread adoption.  

naperlou
User Rank
Blogger
Re: Not viable
naperlou   5/8/2014 2:27:26 PM
NO RATINGS
It's not really a matter of being bold.  It is about being practical. 

I once worked at an aerospace plant where we made our own composites from scratch.  The volumes were low and the applications really specialized.  It made sense.  One of our competitors, who was later merged with us, made more high volume satellites.  They got their composite bodies from a manufacturer whose main business was railcars.  Who was right? Both, each in their own application area.  What is the answer for Tesla?  My answer is that they are moving in the wrong direction.  If they sell batteries for other markets, then the economics will be very different.  If you look at the recent downward move in their stock price, the marker believes that they may not be on the right track.


I don't know what the issue with US manufacturers is.  If you will notice, half the automotive industry employment in the US for foreign firms.  In the UK, which has a similar issue, much of the auto industry has been taken over by Asian firms.  Some of that was bought from US firms (e.g., Jaguar from Ford).  Now manufacturing in the UK is going great guns.  I have a nephew who is studying Mechanical Engineering.  He has done two paid internships with Bosh in the Carolinas. 

What matters is not who the owner is, but the level of activity.  The current expansion of manufacturing in the US is driven by low energy costs, flexible labor and a large market. 

DVanditmars
User Rank
Silver
Re: Not viable
DVanditmars   5/8/2014 1:54:35 PM
Wow, thinking like this is why real manufacturing is not around North America as much as it used to.  By real manufacturing I am talking about raw material to the final product.  Not buying something offshore and sticking a label on it.

I like Tesla's thinking from a scale perspective and the attitude.  We need more people like this leading industry to ensure that we all live in a great society, from both a security and lifestyle perspective.

ChasChas
User Rank
Platinum
Re: Cross Country Market
ChasChas   5/8/2014 1:34:26 PM
NO RATINGS
 

Battery swaps can't be free, but the cost of charging as you wait may be picked up (or alleviated) by the restaurant, casino, or amusment establishment getting the forced business. (They will probably want slow chargers.)

naperlou
User Rank
Blogger
Re: Cross Country Market
naperlou   5/8/2014 1:17:34 PM
NO RATINGS
Free charging stations will only be free for a short time.  If electric cars take off it will be becuase the batteries get a lot cheaper, the range goes up and there are sufficient charging resources.  At the price of the current vehicles Tesla can, perhaps, afford to provide free charging.  When the price comes down to the point where they are mainstream, companies like Tesla will not be able to afford to provide free charging.

GTOlover
User Rank
Platinum
Re: Not viable
GTOlover   5/8/2014 1:10:58 PM
I do not want the sliding scale to keep sliding to the left. Governement picking winners and losers is a recipe for tyranny. I applaud Elon for going for it. But 17 trillion in debt and climbing means we are not doing a very good job of picking the winners. We are just good at protecting the rich and the big corps.

sbkenn
User Rank
Gold
Politics
sbkenn   5/8/2014 12:56:49 PM
Purely capitalist or purely socialist.

Regardless of the system, the powerful look after themselves and leave the scraps to the electorate.

78RPM
User Rank
Platinum
Re: Not viable
78RPM   5/8/2014 12:46:12 PM
NO RATINGS
GTOlover, You forget that Tesla Motors was one of those companies that got a $400 million loan from the government and paid it off early while making a profit.  General Motors is still alive and, while sale of the government's stock might fall slightly short of break even, the tax revenue from the company and its employees will be a net gain.  I would not bet against Elon Musk.  His track record is pretty amazing.  How many people could start a space ship company like SpaceX?  He started PayPal. There is no such thing as a purely Capitalist country, nor a purely Socialist country. It's a sliding scale.

<<  <  Page 2/4  >  >>
Partner Zone
More Blogs from Automotive News
A half century ago, cars were still built by people, not robots. Even on some of the country’s longest assembly lines, human workers installed windows, doors, hoods, engines, windshields, and batteries, with no robotic aid.
Automobili Lamborghini is joining the ranks of supercar makers who are moving to greener powertrains.
Toyota Motor Corp. will take another small step on the long road to fuel cell viability next year, rolling out a hydrogen-powered production sedan called the Mirai.
An MIT spin-off says it’s on track to do the near-impossible task of making an electric car battery that offers three times as much energy for a fraction of the cost.
Fiat-Chrysler Automobiles CEO Sergio Marchionne has again committed the colossal sin of speaking plainly, and electric vehicle advocates aren’t happy about it.
Design News Webinar Series
12/11/2014 8:00 a.m. California / 11:00 a.m. New York
12/10/2014 8:00 a.m. California / 11:00 a.m. New York
11/19/2014 11:00 a.m. California / 2:00 p.m. New York
11/6/2014 11:00 a.m. California / 2:00 p.m. New York
Quick Poll
The Continuing Education Center offers engineers an entirely new way to get the education they need to formulate next-generation solutions.
Dec 15 - 19, An Introduction to Web Application Security
SEMESTERS: 1  |  2  |  3  |  4  |  5  |  67


Focus on Fundamentals consists of 45-minute on-line classes that cover a host of technologies. You learn without leaving the comfort of your desk. All classes are taught by subject-matter experts and all are archived. So if you can't attend live, attend at your convenience.
Learn More   |   Login   |   Archived Classes
Twitter Feed
Design News Twitter Feed
Like Us on Facebook

Sponsored Content

Technology Marketplace

Copyright © 2014 UBM Canon, A UBM company, All rights reserved. Privacy Policy | Terms of Service