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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.
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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.
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?)
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.
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.
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.
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.
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.
.. 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.
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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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.
You nailed it. Tesla is not operating at a comparative disadvantage: they can produce cars more effectively than anyone. A $90k top-end Cadillac won't have the features of a $90k top-end Model S. They're comparable, but edged out by trim and safety features (what Cadillac warns you that it's on fire, and then doesn't burn the driver's compartment?).
The auto manufacturers are competing with each other; Tesla, a new entrant, clearly has gotten a step ahead. Detroit can catch up readily, but they're already in competition with Japan and Germany: it's unlikely they can just leave Tesla in the dust and build much better cars for the same price. That means Tesla is at worst a highly competent auto manufacturer, and possibly the top-tier American auto manufacturer.
It means GM and Chrysler should get out of the auto manufacturing business more than Tesla. If the big three keep trying to squeeze Tesla out, they might get kicked out themselves: a $20k Tesla offering could easily send the Ford Focus and Chevrolet Cobalt packing.
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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.
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.
A guy in Mexico drove his Tesla Model S at over 110mph through a concrete wall and into a tree. He stepped out of the vehicle and walked away. A guy in Florida was driving a Tesla Model S on a highway when he got into a head-on collision with a Honda. Both people in the Honda were killed instantly, the Tesla driver pulled over, got out, and called the police.
They don't have a moat. They have a titanium fortress built on a cloud a mile above the ocean. Unless something drastic changes in the next few years, people will be buying Teslas as much for the safety aspect as anything else. Stick your family in a Tesla and suddenly it doesn't matter if some drunk crosses the median and slams into you full speed. Their safety is assured.
What's that piece of mind worth?
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
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."
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.
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?
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.