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Should Tesla Make Batteries Instead of Electric Cars?
cartechboy writes: "Tesla seems to be doing quite well these days, but one bond trader thinks the company should quit making electric cars and focus efforts on making batteries instead. Bond manager Jeffrey Gundlach says he's already tried to meet with Elon Musk to persuade him to take the battery-only route. Speaking to Bloomberg, he said Tesla could be 'wildly transformational' in the same way electricity and electromagnets were at the advent of their discovery. Enough people are interested in Tesla's vehicles that Musk probably won't take Gundlach's advice. Should he?"
I mean, these electric car thingys are just a fad, right?
The analysts are pessimistic that a newbie can outperform the established automakers. I disagree. What better way to make a market for your battery factory than proving the technology that they will be used for? This is the type of thinking that kills companies traded on Wall Street.
Many companies make batteries, they're all more or less the same other than the obvious size/capacity differences.
Not so many make cars like that, I'd respectfully suggest the bond manager has flipped his lid!
Even if Tesla becomes the best and largest car battery manufacturer in the world doesn't mean they can't make cars as well.
IMHO somebody's being paid by the other car manufacturers to steer Tesla away from making cars.
Then again, the "low-cost" electric cars sure aren't coming from Tesla any time soon, so I don't really care.
Get free satoshi (Bitcoin) and Dogecoins
I was under the impression that Tesla vehicles used banks of off-the-shelf 18650 Li-ion batteries. Panasonic is their current supplier if I recall. Even their proposed battery plant in the southwest is really a place for Panasonic to manufacture batteries for Tesla. Yes, they package them well and I'm sure they have some great controls and associated hardware and software, but is there really something groundbreaking about their batteries specifically? They already make a powertrain for Toyota - a move that hasn't produced a fraction of the buzz and money as their own vehicles. Not sure I understand this suggestion.
Nope. He should do it with a separate company.
Manufacturing auto batteries should be a low-margin business. They're a commodity. Others can enter the business. Over time, margins will decrease. There's not much brand value. (Who made the battery in your phone?)
Why not both?
Why would Tesla stop making cars? They're doing a great job of it, not to mention challenging the status quo when it comes to how Americans buy their cars; heck, if anything we need more companies doing what Tesla is doing, so they stand a better chance in the fight against the heavily entrenched *ADA organizations.
That said, someone should be working on building better batteries, just not them. Maybe a subsidiary.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
This is an example of why listening to "investors" is a terrible idea. It's like listening to a gambler advise you on how to coach a sports team.
This guy is looking at the market and going "Electric cars are scary, batteries are a sure thing. Ditch the cars and take the safer investment." It's investor thinking, but Musk isn't an investor, he's an inventor. The battery route would probably be good for long slow growth, but it wouldn't revolutionize the world the way he intends to with the cars. It's a riskier position, but one with much bigger potential payoffs. One where he crashes through the stodgy old boys club that is the existing automakers with his disruptive technology and becomes a dominant automaker in the world.
I read the internet for the articles.
I don't see why the car business gets in the way of the battery business. There's no shortage of investment capital.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
Enough people are interested in Tesla's vehicles that Musk probably won't take Gundlach's advice. Should he?
A car can be a great premium product. People pay not just for objective functionality but for style and image, and they form loyalties that can be milked for cash. Batteries are a commodity. Someone comes out with a better battery tomorrow and all your customers switch (your customers being cold calculating businessmen wanting an edge for their product that the battery slots into). If someone come out with a better car tomorrow then a whole bunch of people stick with what they know / love and you have time to adapt. Tesla have done the hard work of creating an image. It would be insane to ditch it to move into a commodity market.
75% of innovators use frustration of not having the right "thing" for their needs for innovating something new and spectacular. Without Tesla Motor Co, would Elon have that source of innovation anymore?
When you are a leader in a broad field like Automotive, you have a competitive edge because of your technology. If Ford was to make a 100MPG engine that still had 150HP, everyone would want it. But, Ford would likely just want to sell their own cars because the car is a technology platform. The engine is important, but, it only works when combined with the final product.
Tesla is building a battery factory. Can/Will they sell them to others? Who knows. $5k after market upgrade to your Leaf to get you 200 miles on a charge? Sounds like a cool post-market, but, who needs to sell the batteries to Nissan when you are making less than your own demand.
I hate it when Bond and Hedge fund guys try to say what a company should do. All they are doing is trying to hedge their own funds by ensuring their other holding benefit.
Probably hasn't flipped his lid, but almost certainly has an ulterior motive.
Stop making those stupid low margin shaving handles and FOCUS SOLELY on cartridges!!!!
You should always ask what else do they do a complete shite job on.
Jeffrey Gundlach has a god give right to be a complete uninformed tool and has every right to loudly make proclamations that reveal this fact to all that hear him.
Just as I have every right to take his outburst of stupid as a warning.
I need to contact my portfolio manager ASAP and make sure Bond manager Jeffrey Gundlach isnt closely associated with anything in my portfolio.
And I mean good in the sense of making great batteries, not just many batteries. Economies of scale are nice, but they're really no match for better technology. You have to be great not despite having economies of scale but because to have economies of scale, you have to make a huge investment. Invest in less than optimal technology and you're toast.
In Who Killed The Electric Car? (why, btw, is not a Michale Moore documentary, nor is it particularly political), the only group that blame was not assigned to was the battery industry. The producers found plenty of blame to go around with pretty well everyone else you can imagine. If Musk were to switch Tesla to making only batteries, the industry could fall out from underneath him - and then he would have nobody to sell his batteries to.
Sounds like a suicidally bad idea.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
Was it not the Energizer Bunny?
Just change the words around a little and repost.
I think most Fords do 100MPH at this point. It's the future!
Being crazy isn't a handicap. If you make insane predictions that don't come true, people forget. If an insane, unsupported claim turns out to be true, they look like geniuses.
Seriously, who else are they supposed to sell those batteries to? Nissan Leafs?
Just earlier this weak, they invented a new battery technology in japan that is believed to allow at least 3000 charge/recharge cycles with under 1% degradation-- i.e. a battery that will last longer than the car it's in.
As a battery company, tesla could be wiped out over night.
As a car maker- they have a "moat". It's a weak moat-- other car makers could come out with electric cars in the same slot. But Tesla's styling is pretty cool. It's likely to retain it's customers going forward unless newer electric cars were significantly better looking or had markedly superior battery life (aka lower cost of ownership).
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Elon , let me tell you how to be successful, you see these batteries, they are like in everything, forget your hopeless idea with electric cars and spaceships and solar panels, join the crowd and make batteries! sigh what a fool
This Jeffrey guy is being told by the car deals who hate Tesla to try and convince him to get out of their market because he's fighting their laws.
Here's the thing... Tesla doesn't sell cars, they sell California ZEV credits to other car companies. (Kind of like how GM wasn't a car company, they were a health care company for retired auto workers that made money by flipping auto loans and sometimes made cars). If the ZEV credits dry up (changes in the law or other companies producing a popular ZEV vehicle), they're fucked and will need to find another line of business, ie manufacture batteries and operate charging stations.
Do you even lift?
These aren't the 'roids you're looking for.
Let me guess - he invests heavily in more traditional auto manufacturers.
Qualcomm's initial strategy was to make complete systems, analogous to Tesla's decision to design, manufacture and sell cars. Qualcomm started out making complete mobile network systems (based on cdma technology), and then slowly, step-by-step exited those other businesses to become the semiconductor supplier that it is today. Qualcomm once sold handsets and cellular network gear. Now it just designs and sells chips. I suspect that Tesla's path may be similar: it makes both cars and components today, because the toughest function is to engineer the entire system. Once the system design settles down in a few years Tesla may decide to sell batteries, or more likely batteries + power system controllers + engines, to lots of other carmakers. And in turn decide that the component business is better than the 'car' business. Gundlach may ultimately be right, but he is most certainly way, way too early for that strategy change.
I think Elon Musk is awesome, but I haven't seen him do anything, battery-wise, that makes me think he's got anything revolutionary up his sleeve. If he does, I completely agree with her -- or at least make it a separate company to do "battery stuff." But otherwise, getting rid of the "Motors" in Tesla to go and try to be Yet Another Company Trying To Make Batteries Better is probably a fruitless endeavor.
Betteridge's Law at it's finest.
.. finally, some fucking "bond manager" had to come out and tell Elon Musk what HAS to happen.
Hmmm. Which is more fun? Making spaceships and awesome cars or making batteries for somebody else's ho-hum cars.
Nothing drives engineering like a tangible end goal that is big and easy to understand. Want to make batteries better? Have an engineering target that says what size car they have to fit in...
Tesla makes a better car than a "normal" car. It is faster than almost every sport sedan. It has excellent styling, excellent practicality (seating for 7!), very good handling.
Even if it weren't a pure EV, it would be an interesting contender.
But hey! It's also an EV. It is completely quiet. It doesn't need oil changes, or coolant flushes, or gasoline. You don't have to use the brake pedal anywhere near as much.
Tesla was the first company to make an electric car in my lifetime that wasn't a total piece of shit garbage joke. Not only did they instead make a _credible_ car, they made a car that kicks the ass of nearly other car. Their car is quieter than a Mercedes, out accelerates most BMWs, and handles better any other American sedan.
Why in the world should they stop making cars? The car they've made is better than most of the competition, AND is a game changer.
And, they're selling more of them than they can build. The model S is around 2 month lead time. The Model X already has 6 months of deposits.
I don't want Tesla to make batteries. I want everyone else to figure out how to make Telsas.
My opinions are my own, and do not necessarily represent those of my employer.
They want to build the gigafactory to supply batteries for their own cars as well as have extra production to sell to other car manufacturers. If they stop making electric cars, then it would seem the need of a gigafactory would be reduced and a regular old factory would be enough. Besides, the other car manufacturers already have their battery suppliers, so who is to say that the new Tesla battery factory would succeed in the market if they had to rely on taking business away from the other battery suppliers to stay in business. Sometimes I don't understand how some people think or fail to think.
-- ssoorrrryy,, dduupplleexx sswwiittcchh oonn.. -Quote found on actual fortune cookie.
> ... to persuade him to take the battery-only route.
Uh, why? The guy wants to make cars; why shouldn't he? If Mr. Wall St. Business Analyst doesn't like the business model, nobody's twisting his arm to invest.
And on the other hand, Levi Strauss didn't get rich digging for gold.
Lot of people are dismissing this, but I think there is sound logic to what they're saying for two reasons. One, by becoming a purely focused battery manufacturer, Musk becomes platform agnostic and will have a much better chance of licensing his tech and selling his batteries to all auto manufacturers. This could benefit the broader electric vehicle industry as the technology is now available to dozens of well established manufacturers who can produce vehicles on multiple orders of magnitude greater than Tesla could possibly reach in a decade or more. If they do it right, they could make a huge amount of money this route, dominating a key control point in the electric vehicle.
The second thing is that they will continue to be highly constrained in their manufacturing capabilities for a while. I love Tesla and would love to own one of their vehicles, but the company's production system will take at least a decade or two to even get anywhere close to the order of magnitude that more mainstream auto manufacturers are able to make. This may not matter much if you want your Tesla to be unique, but if your goal is to see the mass deployment of electric vehicles in the near future, organically scaling up Tesla may not necessarily be the way to go.
All that being said, I HIGHLY doubt Musk will go in this direction. His MO at other companies has always been platform oriented with tight vertical integration, and I don't see that changing anytime in the near future, not with him at the helm.
Seriosly this is the same kind of trollish bullshit rhetoric I expect from Wall Street - just like "Apple should license OSX so non-Macs can run OSX".
How do you think Tesla makes money? Where are the margins (not just current, but future)? Why should a company divest itself of a technical leadership role in a key and profitable market?
More to the point, why do I care what this clown Gundlach says? and why is this drivel posted on Slashdot?
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Never forget that a good portion of "Bond Managers" are idiots when ti comes to the real world...
Who said "car batteries"? If someone came up with a truly revolutionary battery -- say, one that stored 10x what batteries do now -- you could sell them, at great margin, to *everyone*. Cell phones. Tablets. Computers. Cars (a battery 1/5 the size that's more powerful than the old one, and costs the same? Damn straight I'd buy it). Etc.
THAT BEING SAID... I don't see anyone coming up with a revolutionary battery technology. Not even Elon. So I agree with you, but think your rationale was incorrect.
I've met with Jeffrey Gundlach to tell him how I think he should run his business. I suggested he quit trading bonds and become the guy who takes a highlighter to your receipt at Walmart.
Elong Musk is doing just fine without your help, thankyouverymuch.
Dear Slashdot: next time you want to mess with the site, add a rich-text editor for comments.
agreed.
Especially since then Tesla would be putting all of it's eggs in one basket and in the investing world...that's a big no-no (I'm more amazed that this "bond manager" is even a manager...let alone a bond one).
Plus recent history with A123 Systems should also say "no" to the battery-only route.
Sounds about like what kind of boxed-in thinking I'd expect from a bond manager. Maybe he could stretch himself a little and suggest golf carts.
Tesla's success in making very good cars surprised me, given how many failed to build cars in the past. But there's an important difference—most of those who failed were originally from the automaking industry. Looks like having that experience is more of a negative than a positive.
This is like going to Volvo and saying... hey, your cars use a lot of ball bearings, why don't you give up cars and make ball bearings instead?
cf. pseudoscience
Most of the value of Tesla is their battery management technology, not their battery manufacturing technology.
Tesla creates demand for batteries. Until recently, they have been only consumers of battery production. But they have been the largest. If they stop making electric cars, what happens to the demand? And who would invest in battery R&D and production if demand drops?
Its simple economics. Who is this Gundlach guy anyway? I want to short his portfolio. I'll be rich.
Have gnu, will travel.
nt
Obvious troll is obvious.
Which has more power: the hammer, or the anvil?
Progress in battery tech is so far behind the rest of technology. You really need a battery that exceeds that of gasoline in terms of energy density. Then you need one that can go from empty to fully charged in 5 minutes without needing exotic infrastructure to do so. It needs to have a really low self-discharge rate, again, exceeding the decay rate of gasoline. And it's got to survive a few thousand charge-discharge cycles.
He already made Paypal. He makes rockets. He will soon make manned rockets before Boeing does. He made electric cars successful enough to challenge the existing dealers and trigger legislation in a couple dozen states. Just by threatening to make batteries he has scared the folks that generate power. Let him be. If he really wanted more ideas, he would contact some of the smaller rocket companies for unbridled inspiration.
Some quotes from the article:
According to Bloomberg, Gundlach has suggested the Tesla Motors [NSDQ:TSLA] CEO get out of the car-making business, and concentrate fully on developing batteries for use in other vehicles.
In contrast to those traders though, Gundlach says he'd much rather buy Tesla shares than invest in a company like Twitter--and is much more concerned about the "killer" return speculative investors could get from Tesla becoming a battery-only business.
He sees Tesla as a better investment than technology companies like Twitter, whose shares recently dropped to their lowest point yet, less than a sixth the price of Tesla shares.
This article has nothing to do with technology and everything to do with maximizing third party investments. This is exactly what's wrong with the world right here, in a nutshell. Here we have an honest-to-goodness NEW thing. The Tesla car company. Finally a viable alternative to gasoline cars. The future. Less carbon emissions. Something to help the world. It's a beautiful vision.
So of course some day trading jackass wants to strip the future of that vision so he can get a better return on his stocks. To hell with the future, money is involved!
Makes me sick.
Weaselmancer
rediculous.
Bond trader: "Oh, I see you're making two very good products that work together, have solid demand, and have intellectual property potential. Why not just make one of them instead?"
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
Sure. A bond trader trying to tell a real businessman how to run his company and tell him what a better product line would be.
Every company I worked for that put an MBA at the helm, failed. Those MBAs didn't understand what it took to create a product. They didn't understand production. One CEO got put in place didn't even know what products the company made (that company only lasted six months after he took over). And here we have a financial moron trying to tell an engineer how to run his company and what products to make. That's laughable. That would be like me trying to tell Einstein that the formula should be E=mc^3.
Whew! This water sure is cold!
Anyone can assemble a pack but being able to fit into an already present vehicle platform to save on costs and still sell in cheaper markets and maintain profitability is where the added challenge is
Is CNET good enough for you?
Similar to the Roadster, the Model S battery pack is filled with cylindrical lithium ion cells dubbed 18650s. Tesla does extensive testing of these cells at its headquarters, cycling them at different temperatures, trying different discharge rates, and even crushing them. The data Tesla collects gets used to refine the specifications sent to its suppliers, among them Panasonic and Samsung.
How about SAE International?
Despite Tesla Motors’ proven success with 18650-type Li-ion cells in its Model S, the industry’s best-known EV battery analyst isn’t betting that other automakers will adopt that form factor, which describes the cylindrical battery case’s 18 x 65 mm dimensions.
It's not a 'zillion cylinders', it's just over 7k, and 'wasted space' is instead used for the liquid coolant used to keep the batteries under temperature.
Around 7000 individual cells, coded NCR18650A by their supplier Panasonic, are used in each Model S pack. Rated at 3100 mAh, the cells are based on lithium nickel-cobalt aluminum (NCA) chemistry and feature a proprietary cathode geometry developed by Panasonic and Tesla. Last October the two companies announced a battery-cell supply agreement through December 2017 (Panasonic also owns shares of Tesla Motors) which will cover the launch of the Model X in late 2014 and subsequent Model E vehicles.
I don't read AC A human right
the [Tesla Model S] impacted a roundabout at 110 mph, shearing off 15 feet of concrete curbwall and tearing off the left front wheel, then smashing through an eight foot tall buttressed concrete wall on the other side of the road and tearing off the right front wheel, before crashing into a tree. The driver stepped out and walked away with no permanent injuries
Yeah, Elon, quit making cars. Leave that to the people who know what they're doing!
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
t's still a terrible idea. For the most part, the other car companies won't innovate unless they have competition. Tesla is far more likely to create real change by existing as a car company than they are by existing as a parts company.
Do you know what company is one of the most successful in the auto business?
Bosch. They don't make cars but every auto company uses their stuff.
They are also the ones who have innovated the most.
Tesla could be THE battery people.
And what everyone here fails to see, electric cars are going to be the future of the auto industry. EVERY car maker WILL be making electric or hybrid cars in the near future.
Tesla should become the "Intel" of electric cars. While the PC makers are sucking wind, Intel is still doing pretty well for themselves, aren't they.
As a long-time investor, I can attest that bond traders know even less than stock traders.
That said, what is this false Either Or choice we are presented with?
It's not Batteries or Electric Cars.
It's lots of batteries and lots of electric cars.
Economy of scale, baby!
-- Tigger warning: This post may contain tiggers! --
This guy seems to be pretty damned successful at whatever he puts his mind to, so why couldn't he spin off the battery-making business into another company that still supplies Tesla for their vehicle production, and sell batteries to everyone else as well?
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
News for no one. Stuff that doesn't matter.
And watch his entire business die.
Ohh, you stopped making electric cars, and now that nice car I paid 80K for is worth nothing?
See ya!
Exactly. Basically, what he's saying is "leave making cars to the big car companies." That would be... unfortunate.
Nice piece by The Oatmeal about why he loves his Tesla. It's a lot more than the battery. "think outside the box" is a trite meme, but Tesla has done it, with impressive results.
Never let a lack of data get in the way of a good rant.
for economy of scale, particularly manufacturers of complex machines, such as cars. Banks, on the other hand...how big do you have to be to push paper?
Never let a lack of data get in the way of a good rant.
Well, it makes sense to specialize in whatever you're best at. Tesla has innovated in some areas of automotive design, and simply followed the pack in other areas; i see no reason why Tesla Motors couldn't become an OEM parts supplier for other car makers, if they decide that batteries and all-electric power trains are interesting and reinventing the rearview mirror is boring.
DRM: Terminator crops for your mind!
So that's why Dick Morris still gets paid to be a pundit!
Comment removed based on user account deletion
That's not what he's saying. Traders like streamlined, focused companies. Big mergers usually end up with a net stock price decrease, while big spin-offs often end up with a net stock price increase for both companies (even if one is a crappy investment).
The argument is that while both his battery business and car business will be stellar performers, his comparative advantage will be batteries (that what he does _most_ best at), so why not focus on that? With comparative advantage, even if you do better at both things than everybody else, the world derives more benefit if you do most of what you're absolutely best at, even if you're better at everything compared to everybody else.
The flaw in the logic is that he forgets that Musk is some kind of super human (perhaps chemically assisted), and I'm sure he can maximize the battery aspects of the business while making a killing selling cars. Also, Musk isn't interested in profits for the sake of profits; he has bigger plans.
This is dumb. They have made the a car that is a tech status symbol like nothing else. Ferraris are unaffordable to all but the super rich, but a Tesla ticks off so many boxes it's not even funny:
- super cool? tick
- eco-friendly? tick
- high tech? tick
- way more expensive than average? tick
- genuinely, actually not a piece of shit? tick
I can't justify buying one at the moment (Australian living in the USA temporarily) but every time I see one here I am struck with lust, and I don't even give a shit about cars. I just /want/ one.
Sounds as though Mr. Gundlach does not know much about batteries.
Tesla is not a car company that actually makes money on cars. They make money selling the carbon credits they earn for their electric cars. That's great but even investors question how long before that golden goose sails. Some think Tesla's investment in building a battery plant will help them make competitive electric vehicles.
But others question if their is enough buyers out there for electrics. Some companies like Toyota and Nissan have reduced interest in producing electrics already. Finding a tepid interest from buyers. I for one don't think electrics will ever be mass produced, at best they are a stop gap measure in technology that probably won't go very far unless battery storage technology can improve 10 fold and very quickly. I have to wonder if any one has thought about the significant impact to our electrical grid if indeed all electric cars were to become even remotely popular. Everyone charging their cars at the same time overnight? Has anyone even considered the demand increase in electricity? Probably not, given that we jump into these things considering only a small part of the equation. I am just not on the Tesla bandwagon and for more practical reasons, then just a dislike for electric vehicles.
Anyone can make a battery, and indeed a good or great battery.
But do you own or have a license to ALL the technology and then the new technology just announced in Japan last week?
Without the IP, becoming a battery maker is super risky.
Even if they make batteries better than they make cars, making their cars is a way to get their batteries noticed.
After all, Pixar was a software/hardware company, and originally made shorts to show off their hardware & software. (By the time they made movies, I think you could argue they were as much a media-creation company.)
Guys like this clown have been making speculations based on what little they know for years. In the short term they hope to make a name for themselves just from the PR, both positive and negative, and will base a career of greed upon it. Elon is not only interested in making money, because if he did he wouldn't have put most of his own behind it when everyone thought things were at their worst. He wants to see his visions through, from inception on, and what some nitwit investment salesman says he could care less. He has several other projects on the go they may or may not take off but he's willing to take a shot at a dream.
How many times have bankers and investment firms told successful companies what they need to do next? And on what basis? What does some guy on Wall Street know about electric motors, induction fields and lithium battery technology? About the same as Little Jimmy after Googling it for a few weeks to become an expert, give me a break. The same type of money monkey as this guy was telling Apple the screen was too friggin' big on the first iPhone and now states that none of them are making screen that are big enough several years later.
Give money monkey and his room of investment monkeys a pack of bananas and a can of STFU, and let the guys making cool things just do their thing. Everything is a little more interesting when it's not JUST about money.
Here's my comment on the article:
I can understand the idea, even if he's done an incredibly poor job of explaining his position as to why he recommends it.
Tesla is moving towards leased battery pack exchange as a quick long range refueling strategy, and as a mechanism for dealing with battery life expectancy based on number of charge cycles.
This model would be helpful to the adoption of electric vehicles from both Tesla, other vendors, as viable alternatives to hydrocarbon fuel vehicles, but that assumes that there is wide adoption of their "razor blade" design, and that in turn is dependent on them not having a monopoly, or design-favored market advantage by being in competition with their customers.
The problem is that Tesla has invented the sealed battery rechargeable flashlight already, and now that they've firmly pointed out that a market exists for flashlights, they are in the process of inventing flashlights with replaceable batteries, at the same time they are inventing "D" batteries.
The market for "D" batteries is going to be *much* larger than the market for Tesla brand flashlights.
The risk on the battery side is that someone else might come in and build a better "D" battery, while the risk on the car side is that someone might come in and build a commodity flashlight that takes "D" batteries, and vastly undercut the price of a Tesla manufactured one.
I think that the range/recharge issue is very real, particularly in dense urban areas where you have street parking for the most part (San Francisco, Seattle, etc.), where the range is less of an issue -- IFF you are able to charge when you need to, instead of trying to run an extension cord from your apartment, down sig stories, and two blocks away to the curb where you were able to find a parking spot.
Part of the value in a battery position, however, is based on establishing the "service station" company owned vertical market integration model up front, which is likely something that would need to be funded by something like bonds, given the extreme costs involved in making such things ubiquitous, even on a franchise basis.
But overall, it's like going back in time and asking Apple if they want to sell software or hardware, when Apple sold computers - the integrated aggregate of both - and I think this would be a hard case to make to Musk, who doesn't sell batteries or cars, he sells transportation.
I know it's easier said than done, but what I would like to see is Tesla develop some drop in replacement power trains for existing models as a dealer option or something.
I know weight is a big issue though so it likely wouldn't be anything happening unless the big manufacturers design it into the models they sell.
But I don't really see anything wrong with Tesla selling cars. They should probably move their location to a cheaper one though.
I think that a major difference is that right now the 'Tesla' brand name is seen as hot/premium
Yeah, it's like just a brand, right? I mean, if GM really thought it was worthwhile, they'd make cars as sexy and high-rated as the Model S! No engineering or innovation involved, really.
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There's something wrong here. A bond analyst? Bonds??? WTF?
A bond trader/analyst is far removed from the equity side. And most equity analysts do some specializing in various industries since they can be very different.
This makes approximately as much sense as a plumber giving unsolicited advice to you on your electrical wiring. While certain matters are commonsense, the plumber isn't qualified as an electrician. Mostly a plumber should advise you, "something looks wrong with your wiring. You need to call an electrician."
Bringing it back home, a bond analyst would be qualified to say, "your manufacturing business makes your bonds a good/bad risk. We'd like you to change it to make your bonds more attractive." Never, "your company is in the wrong business." A bond analyst is unqualified to make any such statement.
It's successful, if not wildly successful. And it diversifies his track record even further; he has majorly shaken up four industries: financial services, automobiles, space launch, and energy.
That that is is that that that that is not is not.
Far less likely? No.
If Tesla offers the best value on batteries sold to other automakers, that's the first-order consideration. The fact that they are helping the bottom line of a fellow automaker is a much weaker, second-order consideration. No smart automaker would reject Tesla as a battery vendor on that basis.
other car companies won't innovate unless they have competition. Tesla is far more likely to create real change by existing as a car company
Tesla has already created spurred scads of real change despite its tiny market share. I can't wait to see the additional change it will spur over the next, say, 15 years.
That that is is that that that that is not is not.
A bond manager met with Elon Musk to convince him to abandon a successful car company and devote his talents to building better batteries? No, he didn't. This is an exceptionally clever piece of public-relations bullshit.
The bond manager's advice would ONLY make sense if Musk were sitting on some really wonderful technology-- some new science, engineering or manufacturing process that enabled him to create better/cheaper/lighter batteries than the other seven billion people on the planet. Of course everyone knows that if someone makes a breakthrough in battery technology, it'll be a game changer for EVs. A truly radical breakthrough in battery technology would be a game changer for EVERYTHING-- it would give us a path forward to dozens of alternative energy sources.
So if you read the story casually and uncritically, it generates a lot of warm fuzzy feelings about Tesla Motors. The problem is that I'm not aware that Musk has anything special or proprietary up his sleeve in the way of battery technology. He'll achieve some economies of scale with his new factories, I guess, but that's it.
Uh.... They can do both, you know.
That's sort of like saying Apple should quit developing iOS / MacOS and just focus on making devices for other people to write software for.
With comparative advantage, even if you do better at both things than everybody else, the world derives more benefit if you do most of what you're absolutely best at, even if you're better at everything compared to everybody else
Also, what would be the demand for such batteries if Tesla stopped manufacturing cars?
or some fuel cell company? Make batteries? It is true - folks go into business for other reasons than money.
Not sure you get his point. He's not saying "make batteries because the electric car thing is never going to be huge". He's saying "make batteries because the electric car thing is definitely going to be huge". Putting aside the merits of his argument re: the profitability of being a car company vs. a battery company, he's not predicating that argument on the notion that electric cars are just a fad.
Yes tesla should be focused on helping create the infrastructure so that other company's could lease the technology , patents and any related information so they can adapt the vehicles of choice. This would stream line the acceptance and pace in which ev can be available in real time and cost effectiveness.
No he should not switch gears. He has created the demand for the battieries, so he must control the hype until their is enough lithium to go around. If tesla is running into sourcing issues, wouldn't any other manufacture?
So let's remember this guy built a rocket that lands itself, in a 10th of the time NASA has been around. So I think he knows when to seperate the two. He's already assisting now if one was to visit the factory you see Mercedes and caddilacs converted to electric.
Thank you elon!!
Roadster #112 , MS #11179
Apple is certainly still around, it's just not crazy hot anymore. You could say it's reached saturation.
As for 'just a brand', not really. There's more to a brand than 'sexy'. Heck, even 'sexy' requires engineering and innovation.
And GM isn't going to be able to get a car as 'sexy and high rated' without lots and lots of engineering and innovation. The Tesla model S currently enjoys a HUGE advantage in performance and safety, as I said before. That's part of what's driving it's popularity. But it's currently a touch more popular than just those would dictate based on it's price, thus the brand premium.
I don't read AC A human right
The funny thing is that Telsa was originally founded on the idea they would purchase drop-in replacement power trains from AC Propulsion and put them into Lotus bodies as an integrator. That was their original goal, but it didn't quite work out the way they intended and it turned out they needed to get their hands dirty on a whole bunch of other manufacturing just to get even that to work out.
One thing I admire about Elon Musk is that he is able to see some inefficiencies in his companies and root out a way to make them much more efficient. That is definitely how Tesla has been able to turn a profit from a company that simply should have gone bankrupt a couple of times in the past. His way of rooting out inefficiencies is usually by not cutting corners with employees or feeding them shit in a mushroom management system, but rather by looking for components that are costing far too much compared to the raw materials price and taking over the manufacturing of those components in a vertical integration of manufacturing. Every one of his companies that he is currently running is now making much more stuff in-house than was the case even a year ago.
Mr. Musk once started to complain about the cost of raw Aluminum and IMHO Alcoa ought to be concerned he might just start a Bauxite mining & processing operation.
Focus the primary mass-production business on advanced high-end batteries for electric cars as well as hybrids, and continue to produce premium electric cars to promote the company name and field test and prove out the newest battery technologies. Then mass produce and license the battery technologies for other car manufacturers to produce cheaper cars using those batteries. Other manufacturers buy and license the Tesla batteries not only because of the quality of the battery technology but because the name is associated with premium vehicles, so saying your electric/hybrid car is built on Tesla technology acts as a major selling point. But Tesla itself doesn't have to get directly into the lower-end car markets, while it makes money from them.
Also, what would be the demand for such batteries if Tesla stopped manufacturing cars?
The presumption is that with the way Tesla has already shown to be a viable business model, other companies will follow the current lead and make electric automobiles, airplanes, ships, and other vehicles with these batteries that Tesla will be manufacturing. There has been a global demand for these batteries to the point they are in and of themselves considered a commodity even before Tesla was formed. Instead you will also get really cheap laptop computers and perhaps other even more exotic markets that will really soak up the production like storage systems for solar panels that would dwarf battery demand even from automobiles as well.
There really is far more demand for these batteries than the market can supply, and a highly elastic demand so far as a minor price reduction from improved manufacturing techniques will also result in a huge increase in demand and more products that could use these energy storage cells.
The question is - what would be the benefit of *not* selling cars? So long as the car-making business is paying for itself, and the battery-making business has sufficient capital, it seems to me they are essentially independent of each other. Except that they offer a great synergy: the car-making company has a great source of batteries that will be responsive to their specific needs, and the battery-making company has a guaranteed customer that's not going to duck out of a contract at the last minute and screw them over.
Now if they want to make 10x or 100x as many batteries as the car company needs and sell them to others, then great. But they don't lose anything by making cars too, not unless they can find a buyer offering a competitive price for their specialized automotive assembly facilities. Plus I imagine the close collaboration between the engineers making the batteries and the engineers using the batteries will only be beneficial to the quality of the batteries.
Think of it like id Software - their primary product is a FPS game engine that they sell to other game companies, but they also make good money on the side selling tech demos (a.k.a. mediocre games) based on those engines to consumers.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Tesla is **innovating** as a car company, but there's nothing particularly special about their batteries -- they basically use commodity cells repackaged behind plate armor.
Strategically, Tesla *should* be making their own cells and pouring money into R&D to replace (relatively rare) lithium. And I'm sure they're working on that.
But they are in the business of making kick-ass luxury cars at a premium price point, and they have no viable competitors. Why the HELL would they want to drop that so they can go into an industry where there's a ton of competition making commodity products with very low profit margins?
There have been a number of studies about these guys, the most revealing one showing that the average bonds manager is beaten by not only the random control (the researchers threw darts at the stock page of the New York Times to determine what to buy and sell), but also by the 9 year old daughter of the head researcher.
But even those of them who have a good track record, keep one thing in mind: Being a good film critic doesn't mean you'd be a good director. Being a good music journalist doesn't mean you would be a good musician. Being a good alpha tester doesn't mean you're a good programmer.
Sometimes skills overlap, but very often, these are seperate skills.
And understanding which stock to buy or sell at what time doesn't mean you can create a good business strategy or run a company. We've seen companies being run into the ground by manager and analyst types very often.
Assorted stuff I do sometimes: Lemuria.org
The analysts are pessimistic that a newbie can outperform the established automakers. I disagree. What better way to make a market for your battery factory than proving the technology that they will be used for? This is the type of thinking that kills companies traded on Wall Street.
My comment will get lost in the posts.. Even if I was logged in...
The problem in which /. had a linked article to, the company is selling cars, but the selling price doesn't come to close to the build cost. Their losing money on the cars. The only way they profit or break even, is from their stocks. So ""This is the type of thinking that kills companies traded on Wall Street."" and if Tesla takes a big enough hit in their stock prices this company will collapse overnight.
And Tesla investing to have its own Battery Manufacture, maybe good for the time being, but the materials to build their current batteries are in short supply, and unless another company/entity, possible Universities, come up with something more eco-friendly, that can last the charge and drain cycles, and produced without any real fear of short supply for the remaining life of the human race, this to is doomed.
Those batteries will come along, but at cost, with patent licensing fees.
The thing is, usually when "shareholders" and "investors" start making suggestions, they are usually to the long-term detriment of the company.
If there was already a healthy Electric car market, then this idea would make sense. But there isn't, so Tesla needs to make the cars as well. If they are going to be the first company to mass-manufacture the cars, they may as well create a standard battery standard that competitors will have to adopt since Tesla will own the patents.
Yeah, losing millions/quarter is "doing quite well."
Especially the ignition switch department.
maybe its true or not we will see
it's the current course of "Damn the Company! I Want my Bonus Now!" type thinking that most CEO's are involved in. So the company goes teats up in the water and all the investors and employees are fucked. I don't care since I walk with 3/4 of the companies value due to my "Golden Parachute". That's a very nice incentive to fuck a company and everyone else instead of giving them a lead balloon or even better concrete overshoes
captcha=equally
its great if its true?
Musk is packaging commodity laptop batteries into a pack.
Sure it's not trivial to design a charge circuit, which in an electric shaver adds about $6 to the BOM cost, but surely adding automatic climate control for the battery pack is the heart of all of the Tesla's elegance and appeal.
Musk simply was willing to build something that Toyota was too cowardly and stupid to do.
Tesla already sells battery packs to Mercedes and Toyota, which are the first car company and the world's largest car company.
...is "selling" (not just "making") and "and" instead of "instead."
Impossible. The reason the Tesla Model S and Roadster were such great cars is their extreme Cx (aerodynamic coefficient) and in the case of the Model S its design tailored to being an electric car.
This is just another smokescreen, of people trying to tell Musk to stop messing with a trillion dollar industry.
This guys idea is soo stupid it isn't even funny.
Go Musk ! Go Tesla ! Go SpaceX. Continue making ULA/Ford/GM/Toyota look stupid ! I don't care, I love it !
Elon wants to change the Car industry. Just making batteries won't guarantee that outcome. I'm sure he would much rather not be making batteries, but even Panasonic isn't good enough.
Elon Musk is an innovator. If he gets out of any market it will slow down. Without the competition he brings the fat in the system will clog it up. He is a leader they have to follow. Where is it that you want to go ?
There were more on the road in 1900 than today. So yes, this 'fad' will be over soon. :P
... "When you pry the source from my cold dead hands."
What, no ".../NASA" ?
I attended SpaceShipOne' first successful space flight. SS1 was being towed up and down past the crowd after the flight. A spectator nearby was holding up a sign that I couldn't quite see. Burt Rutan (who was riding on the tailgate of the pickup towing SS1) saw it, and ran over to grab it. He handed it up to test pilot/astronaut Mike Melvill to display for all. It simply read:
SpaceShipOne
GovernmentZero
(Photo at http://tinyurl.com/l3rrkdj)
Let's let TOM speak shall we:
"I'm having great conversations on this site with one of my alias accounts" - by Tom (822) on Monday April 07, 2014 @02:29PM (#46686259) Homepage FROM -> http://slashdot.org/comments.p...
APK
P.S.=> Tom *tried* to libel me & failed after I destroyed him in a technical debate on hosts files... result?
Tom ended up "eating his words" here http://slashdot.org/comments.p... spiced with "the bitter taste of SELF-defeat" + HIS FOOT IN HIS MOUTH
... apk
The market can't seem to address the idea of a battery swap scheme. Perhaps in Cuba...
Never mind that the government basically funded all of it.
No, Musk should not refocus on batteries. Here's the thing. The cars he is building are battery-agnostic. If someone produces a breakthrough in battery durability, power density, etc., he doesn't have to change his vehicle designs. With a little engineering, he can plop the new, better batteries right into his cars and keep on producing them. Whereas battery tech is risky. Musk is on top of lithium-ion batteries, but if (or rather, when) someone patents something better and brings it to market, he'll be out of luck if his business is built around lithium-ion batteries. If Musk hopes to keep Tesla going as a long-term proposition, he's much safer sticking with well-engineered cars, and keeping batteries as a sideline that he can jettison later on.
On the other hand, new tech in batteries is what will distinguish car manufacturers in the foreseeable future. Limiting the tech to his own niche production is a shot in the foot - sooner or later, someone will beat him. On the other hand, producing OEM components for its own line of cars as well as competitors would yield way bigger profits. See it as Samsung producing Apple's ARM cores. Samsung probably makes more money from CPUs and displays for 3rd party than from their own best-seller phones.
I suggest Mr Bond Trader stop telling other people what to do and instead cut his own head off and shove it up his ass. Musk will do what he wants because he had a vision for a different world. Mr BondGuy is just a fucking parasite.
Isn't the whole point of Tesla to use cheap off the shelf batteries and manage their performance optimally via software?
Star Trek transporters are just 3d printers.
ARM cpus are cheap, extremely cheap, since any company can license ARM designs and produce them, the critical item being the foundry.
Plus even if you could get 20% profit margin out of a product worth 5% of the tablet instead of making 10% out of 100% of the product, what is better ?
Even better, making the CPU, RAM, Flash modules and the tablet...
So I think you are mistaken my friend.
Plus even if you could get 20% profit margin out of a product worth 5% of the tablet instead of making 10% out of 100% of the product, what is better ?
I do get your point, but you're assuming they are able to captivate the relevant market share. If the difference is having 3% of the total market selling product, or supplying 60% of the total OEM parts, while simplifying both and time to market, plus deterring competition from investing on this area by providing availability of the parts, the argument falls apart. Using your math, the turnover for the whole car only makes sense if the battery approach would captivate less than 10x their total market of vehicles (eg. for 3% total market for cars vs 31% of total market for parts, parts are more profitable in absolute values). And batteries are not like semiconductors, they have way bigger profit margins than the car as a whole.
The problem is that this absolutely doesn't look like the innards of a classic internal combustion engine car.
It would require quite some work to retro-fit it into a classical car... Which could probably be a nice additional for MTV: next to "pimp my ride" and "trick my truck", let's begin the "spark my suv" TV series !!
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]