BusinessWeek: Can Tesla Become a Real Automaker?

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.

 

I'd wait 'till their up & running ... IF they get up & running, before I'd claim their plan is better. On a side note, I read Tesla sport car buyers have a special 1st in line status, for the sedan (along with another 1,000 or so investers who also have priority). So the sedan wait may take longer for the average shmoe.

 

GM & Chrysler are excellent role models--of how not to do things. I wonder what Hall has to say about the business models of GM & Chrysler.

 

1st gen Prius owners were given the chance to be first to get the 2004, and at least some 2nd gen owners were given the opportunity to be first to buy the 2010.

While Roadster owners have first crack at the Model S, it is unlikely that a very large number of them will accept that offer, because the cars appeal to very different buyers: The Roadster is aimed at the extreme speed addict, while the S is aimed at the upscale family interested in electric. Some will take the offer, but I doubt it will delay delivery very much for folks like Evan. OTOH, if you didn't get your name on the list early, you could have a long wait as that list grows.

The Model S will probably be a much nicer car than my Porsche, and cheaper, but I'm driving now, while Evan and others on the Model S list have several years to wait.

 

People?
Peoria?

 

P is for Production. The number I have.

 

Articles like this really rub me the wrong way. I always take what businessweek says with a large grain of salt. First the chasing after large profit margins is what got GM and Chrysler into the problems they are in now. Building SUVs (which are high margin) and forgetting about smaller cars (lower margins). It is clear that gasoline/diesel usage is not the way the market is trending in the long term. Tesla is focused on the long term to establish themselves as a front runner in the EV market. Tesla is a real car company producing cars albiet at low volume, but so does Ashton Martin.

I have way more faith in Tesla's business model and up coming model s (7 seater with 0-60 time of ~5 sec) vers the GM volt (4 seater thats trying to be sporty) for very similiar pricing. Tesla already has experience with ev. GM doesn't has experience with the series hybrid that is in the volt. there are bound to be bugs/kinks. At this point Tesla should have worked most of them out.

 

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.

 

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.

 

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

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.

 

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.