BusinessWeek: Can Tesla Become a Real Automaker?

[PriusLewis]

Originally Posted by ceric

In comparison, I think Fisker has a better chance to survive based on his business model and long term experiences in auto industry. It is like in a Marathon, the guy who is ahead early usually does not win at the end. Just my HO, of course.

There have been two attempts at from-scratch new car start-ups in modern times: John Z. and his Delorean sports car, and Malcolm and his Bricklin. Both had experience in the auto industry (especially John Z.), and Delorean was certainly not undercapitalized. Still and all, they both failed. It's not as easy as it looks (or sounds).

Originally Posted by efusco

the company has lowered the cost of its $101,500 roadster to $80,000 per car

Green Car Journal this month had an interesting article about Tesla pricing policies, which said, in part:

"At the time of this writing, the Model S is being highlighted on a page of Tesla Motors’ website that includes a prominent statement sharing a delivery date of 2011 and that reservations are now being taken. At the top is: ‘Base Price $49,900*. That seems clear enough until you read the fine print at the bottom: ‘The anticipated base price of the Model S is $57,400. All Tesla vehicles qualify for the full $7,500 U.S. federal tax credit on battery-powered cars. Teslas also qualify for state tax incentives, sales tax waivers, and rebates.’

So, color us confused. Is the base price $49,900 or $57,400? And when did incentives become factored in as part of a vehicle’s official base price?"

Tesla Shows Model S at $49,900 Base Price. We Don’t Buy It. | GreenCar.com

[ljbad4life]

Originally Posted by PriusLewis

There have been two attempts at from-scratch new car start-ups in modern times: John Z. and his Delorean sports car, and Malcolm and his Bricklin. Both had experience in the auto industry (especially John Z.), and Delorean was certainly not undercapitalized. Still and all, they both failed. It's not as easy as it looks (or sounds).



Green Car Journal this month had an interesting article about Tesla pricing policies, which said, in part:

"At the time of this writing, the Model S is being highlighted on a page of Tesla Motors’ website that includes a prominent statement sharing a delivery date of 2011 and that reservations are now being taken. At the top is: ‘Base Price $49,900*. That seems clear enough until you read the fine print at the bottom: ‘The anticipated base price of the Model S is $57,400. All Tesla vehicles qualify for the full $7,500 U.S. federal tax credit on battery-powered cars. Teslas also qualify for state tax incentives, sales tax waivers, and rebates.’

So, color us confused. Is the base price $49,900 or $57,400? And when did incentives become factored in as part of a vehicle’s official base price?"

Tesla Shows Model S at $49,900 Base Price. We Don’t Buy It. | GreenCar.com

they all work in the taw credit, gm does it too for the volt. Hell even ford, nissan and toyota do (well toyota did) factor in the price of the hybrid tax credit.

[RickFlashman]

This whole issue about profit levels and how Detroit does things reminds of an interesting tidbit I heard years ago at a Miata National Club meeting.

GM discontinued the Pontiac Fiero due to low sales. However, on the last year of Fiero sales (the lowest year in Fiero sales) they sold more Fieros than Mazda sold Miatas on their best year. What Mazda considered a success was an unacceptable failure to GM.

My humble conclusion, any analyst from Detroit using that kind of mentality is ill equipped to judge Tesla.

[PriusLewis]

Originally Posted by RickFlashman

This whole issue about profit levels and how Detroit does things reminds of an interesting tidbit I heard years ago at a Miata National Club meeting.

GM discontinued the Pontiac Fiero due to low sales. However, on the last year of Fiero sales (the lowest year in Fiero sales) they sold more Fieros than Mazda sold Miatas on their best year. What Mazda considered a success was an unacceptable failure to GM.

My humble conclusion, any analyst from Detroit using that kind of mentality is ill equipped to judge Tesla.

I was working for Hughes Aerospace once. A friend had a contract lined up that would keep him and a couple of engineers employed for a couple of years, and generate profit margins better than most of the contracts the facility had. The wouldn't let him bid it. They were only interested in multi-million or billion dollar contracts, not one for a few million. Amazing. GM thinks the same way. Due to their overhead they have to sell far more cars of a given model than Mazda because of their larger parts and dealership network.

[robbyr2]

In comparison, I think Fisker has a better chance to survive based on his business model and long term experiences in auto industry. It is like in a Marathon, the guy who is ahead early usually does not win at the end. Just my HO, of course.

Maybe so. Right now, I'm not impressed with management in the auto industry.

GM discontinued the Pontiac Fiero due to low sales. However, on the last year of Fiero sales (the lowest year in Fiero sales) they sold more Fieros than Mazda sold Miatas on their best year. What Mazda considered a success was an unacceptable failure to GM.

When I took economics I learned that the goal in a free market economy was to make as much money as possible. When I graduated and went to work in a major dept store chain, I learned that the only thing that mattered was profit margin, because that's what Wall Street looked at. It was better to make 1 million on 20 million of sales than to make 2 million on 50 million of sales, even if you only invested the same amount of money. GM's leadership would have gone to the same business schools.

[PriusLewis]

Originally Posted by robbyr2

GM's leadership would have gone to the same business schools.

You're absolutely right - the problem is business school. However, there's a growing trend toward offering degrees in management science rather than business. That's what my degree is in. It's a much different look at business. While it does encompas some of the aspects of the traditional MBA, it also looks at the process of management and leadership over the bean counter mentality of the MBA crowd. It deals with the scientific application of different management philosophies and approaches.

There's a great editorial in Car & Driver this month about Fisker's management methodology. I was so amped by it that I will be writing a preliminary white paper to send to Mr. Fisker with a request that I be alowed to do my PhD thesis on their "business model" - better stated as their management approach. Whether they know it or not, they have blended the recent trend in Aerospace of becoming a design and integation house instead of a manufacturer with some of Deming's approaches as practiced by Toyota, and thrown in applying Agile Programming methodologies in management to the design and assembly of cars instead of just for software. I'm totally psyched. They may or may not make it, but this is the first of the 21st century start-ups that appears to me to have cracked the code of getting out of the business school mentality and into a lean, agile approach to design and manufacturing.

[cwerdna]

Originally Posted by RickFlashman

This whole issue about profit levels and how Detroit does things reminds of an interesting tidbit I heard years ago at a Miata National Club meeting.

GM discontinued the Pontiac Fiero due to low sales. However, on the last year of Fiero sales (the lowest year in Fiero sales) they sold more Fieros than Mazda sold Miatas on their best year. What Mazda considered a success was an unacceptable failure to GM.

My humble conclusion, any analyst from Detroit using that kind of mentality is ill equipped to judge Tesla.

I'm not sure you can directly compare them. GM even in its sorry state sells WAY more vehicles in the US vs. Mazda.

Last month in the US, GM sold 176,571 vehicles (vs. 265,937 same time last year). Mazda did 13,729 (vs. 23,771 same period last year). See By The Numbers — Autoblog. Even Pontiac, (gone in the "new" GM) outsold Mazda by almost 2:1. Pontiac Solstice sales were almost 2x that of the Miata last month even though (or maybe because) the Pontiac brand is going away. (If I had to choose between the two, I'd buy the Miata for sure.)

If you're curious to see the model breakdown, go to Mazda Reports June 2009 Sales, GM | General Motors: Investors: Sales Deliveries and Production Schedules: Current Release and http://phx.corporate-ir.net/External...R5cGU9Mw==&t=1.