dealtn wrote:dspp wrote:dealtn wrote:
That reflects the problem surely. How long does it take to "refill" the BEV compared to the 2 minutes or so for ICE?
It's good to know the solution is being worked on, although I would hope it would be a "capitalist" solution not a "government" one.
Reportedly approximately 5% of the mileage done by Teslas does not require public (roadside) charging. They leave home every day full to the brim. That is the typical user feedback.
In contrast 100% of dino-juice charging is done at public filling stations.
Tesla build their own charging stations, just like Shell or any other commercial company. They can be a valuable asset, or perhaps in the case of petrol/diesel stations a devaluing stranded asset.
regards, dspp
The problem being though that 95% isn't then, and that it's the new users that are needed to transform the situation, not the existing ones.
Of course existing ones and their experiences (assuming they are good) are useful in this process, but I am currently struggling to see the BEV/ICE changeover happening at the speed some others see it (and from an investment perspective that TESLA benefit from most of this, and it isn't shared across multiple offerings).
Setting aside the societal view, and focussing on the TSLA-facing investment view:
- PHEV don't count, and the longer that ICE-mfg misunderstand that the more delayed their real BEVs will be;
- TSLA are ahead in every BEV respect we can discern (cost-base, technology, products shipping; product pipeline; charger network);
- TSLA lead is not obviously disappearing (I am not personally making any claims here it is growing, but I can definitely see it is not shrinking rapidly, so let us assume it is stable as a starting point);
- it is not time that the ICE-mfg need to catch up, it is cumulative volume-sold as that is what drives the cost-base and build-capacity;
- for so long as demand is subdued then TSLA will capture an increasing share of that demand;
- and we see that "no-demand problem" in the sales data, at least so far, because TSLA are able to sell everything they build (hence such low inventory) and are running as hard as they can to build more capacity;
- and as TSLA scale and improve products (both cost levers matter), so they pass that on to consumers in the form of lower prices;
- which makes the price/cost/margin entry barrier worse for legacy ICE;
- and that will impair ICE-manufacturers trying to make the switch, much more than it impairs TSLA;
So my goldilocks scenario is the one where the TSLA capacity build-out rate can continue on its 50% yoy growth path unimpeded by competition, such that (say) TSLA would have captured 50% of the annual BEV market by then, up from its (reported) current 25% in the car/light-truck segment. If that were to come about TSLA would be doing 20m-30m vehicles per year at that point, and all the rest would be doing 20-30m, meaning that the global market (80m/yr) would be about 1/2-3/4 transitioned to BEV. If the remainder were split equally between 5 companies then, using the 20m number we would see 20m (TSLA-BEV) + 5x4m(non-TSLA-BEV) + and 40m(ICE). That would mean that the TSLA economies of scale would be 5x that of the nearest competitor. Just assume for a moment that in getting to 4m BEV someone like VAG had lost a corresponding 4m from their ICE sales, (so no aggregate loss in volume at all) that would mean that VAG (group) would be doing 4m BEV and ~6m ICE. If that pathway were to eventuate (and I think it is very much a high-case pathway, but hats off to TSLA they keep delivering) then TSLA would pass VAG (and Toyota) in both revenue terms and units terms in the late 2020s.
The problem with those scenarios is that the common view is that a trad-auto company cannot withstand more than about a 10% drop in sales before it implodes as its fixed costs cannot be balanced against its gross profits. Reading around there is negligible ICE R&D going on any more, it has all been switched over to transiting to BEV (the PHEV stuff and FCEV and H2EV is I suspect also suspended, with just the marketeers left to spin tales). So the trad-auto all know this. So at 80m/yr total market, when TSLA hit 8m/yr then all the trad-auto should go bust. However those that are segmentally more TSLA exposed would in fact go under first, with BMW being the rabbit in that headlights, followed by Audi and MB. In the Audi case VAG can ease their pain, but MB and BMW are both seriously pants down. Now 8m/yr could come as early as 2027, and of course it would be even worse for legacy if folk like BYD can build volume as well, by some counts it could come as early as 2024.
My point is that although I am used to seeing these transitions take 20-40 years, quite early on in this one - perhaps less than 5-10yrs away - we may well start seeing trad auto companies going bankrupt and there being no value in trying to resurrect them. Which for sure as heck would accelerate the transition. So although it is covid-19 that is at fault today, the headlines (https://www.bloomberg.com/news/articles ... six-months) such as VAG dividend cuts and losses, may only just be starting in earnest,
Volkswagen AG cut its dividend after losing 2.4 billion euros ($2.8 billion) in the second quarter, when the Covid-19 pandemic shuttered showrooms and factories in key markets. The German manufacturer lowered its proposed 2019 payout by a quarter to help save roughly $1 billion after global deliveries contracted in the six months through June. VW expects markets to recover in the second half after business in July improved from the previous month.
I'm not sure I'm brave enough to hold on to my shares in TSLA, but equally I really can't bring myself to see a value proposition in VAG. And yet I think VAG (and Renault-Nissan) are making the best fist of a legacy transition attempt.
Looked at like this, transforming the charging system is a trivial part of the problem. After all look what TSLA has managed with really very little outlay - it gets easier from here. That 5% is demonstrably solvable.
regards, dspp
image source courtesy TSLA, at https://www.tesla.com/ns_videos/2019-te ... report.pdf
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