An Evaluation of TSLA; What Value can it Realistically Reach this Decade?

[wakester]

@samdasari Reading other tesla boards, you’d be surprised how many young people making 65k (median income, not wealthy) are taking out financing to buy a tesla. They aren’t just doing that for a 50k regular car. Other mainstream car manufacturers are still hugely lacking in charging infrastructure as well. Tesla may not win in all areas but it has an appeal and charging standard others don’t, and won’t for at least 4+ years.

 

[samdasari]

@wakester All car enthusiast forums are like this, it's not unique to Tesla at all. They don't do it for a "regular car", but they will spend their entire income on a 3-series, C-class, Challenger, Nissan Z, etc.

 

[caliban]

@samdasari Exactly lol

If you go on the Honda forum it's not a surprise they're going to be talking about buying Hondas

 

[mark6126]

@wakester Yeah, at current interest rates. Which will rise and price them out.

 

[dsoundman]

@samdasari A 45k car that is far cheaper to fuel and maintain is probably equivalent to a $35k car over it's lifespan.

Tesla can easily bring down the price (to $45k).

It's not really that much of a stretch

 

[samdasari]

@dsoundman Why do you think Teslas are cheaper to maintain? I've never seen this substantiated.

As for fueling. Comparing a Tesla to a 10k cheaper car, average person is spending $500 vs $2000 per year. That doesn't break even until year 9. So pretty much 0 Tesla drivers are actually ahead on fuel costs alone when you consider the higher sticker price.

 

[theologyandfishing]

@samdasari It might be best to think about it terms of miles. Assuming $30 an oil change every 2000 miles, a $10 brake check every 5000 miles and 25mpg and $3/gal for gas

100000/2000 * 30 + 1000000/5000 * 10 + 100000/25 * 3 = $15500

over 100k miles it saves about $15k, very roughly

 

[samdasari]

@theologyandfishing Honestly, I don't even know why I just rolled with the "35k car" comparison in the first place. Most cars sold are not 35k, they are under 30k. But let's just pretend a Corolla is a 35K car.

and sure, we can use 100k miles even though that's extremely low.

The combined fuel efficiency is 32 mpg, not 25. So 100k miles is actually more like $9500 in gas, not $12000.

Source: https://www.fueleconomy.gov/feg/Pow...020&make=Toyota&baseModel=Corolla&srchtyp=ymm

No Honda or Toyota owner is paying $3500 in maintenance on the first 100k miles. A $30 tune up is required every 5000 miles, not 2000 (wtf?). Then you need to replace breakpads once every 20k miles or so, and rotors every 50k miles.

I'll say $550 for brake pad replacement and $800 for rotors. $3000 over 100k miles. $600 for oil changes.

https://www.toyotaofroswell.com/toyota-corolla-brake-rotors.htm

https://www.toyotaofroswell.com/toyota-corolla-brake-pads.htm#:~:text=Toyota%20Corolla%20brake%20pads%20replacement,vehicle%20such%20as%20the%20rotors.

https://www.whiterivertoyota.com/blog/how-often-should-you-change-the-oil-of-a-toyota-corolla/

And lastly, even according to your calculation, it costs 15.5k to maintain an ICE. So how does it save you 15k to have a Tesla for the same mileage? Fuel may be cheap, but it's not free. 3 cents per mile on 100k miles is $3000.

Tesla maintenance also may be cheap, but again, not free.

https://electrek.co/2020/09/26/tesl...extreme-low-cost-minimal-battery-degradation/

This guy spent $1700.

So tallying that up we have $9500 for fuel, $3000 for brakes, and $600 for oil changes. That's $13,100 over 100k miles for an imaginary $35,000 Corolla vs $4700 for a Tesla.

So that's a savings of $8400, less than the difference between a Model 3 and this imaginary expensive average car.

 

[theologyandfishing]

@samdasari Yea, so.. I don't disagree with your numbers. I was just throwing out a very rough estimate. And if the competing car is a $25k Corolla, then it's a fair point.

I do think there is value though, in that comparably priced EVs to ICE cars will see a difference in cost over lifetime. It's not enough to justify buying an EV that costs $20k more.. however, EV prices will certainly come down to meet demand. Tesla had previously stated their goal is to get a $25k EV (it sounds like they believe robotaxis will happen before that.. but that's beside the point), but my model has ASP dropping to $33k. Tesla has a 30% gross margin and 18% operating margin buffer to drop prices to meet demand.

There could probably be an argument made for demand of a $35k EV being equivalent to a $25k car too. No one thought iPhones would sell at $700 compared to the $200 flip phone, but people just found a way to buy them anyway. This remains to be seen (or have we already seen this.. ?)

 

[samdasari]

@theologyandfishing There aren't enough comparably priced ICE cars for Tesla to sell 12M, that's the thing. The global luxury car market is only like 7M cars right now, I don't think it'll be 12M in 5 years even if Tesla took 100% market share.

Also, 25k corolla? The corolla is $21k. Most personal vehicles period are under 30k. I'm just using sedans as an example. The Model Y is still significantly more than the Nissan Rogue, Rav4, CRV, etc.

Even if they drop the (Model 3 I'm assuming?) to 33k, that's still 7k more than even Accords and Camrys, which is barely any savings using the numbers I posted.

I know they've claimed they are trying to make a 25k car, but I seriously doubt it unless they strip all the selling points of getting a Tesla. They also don't have the interest from Japan and SK where those tiny vehicles are popular. Americans aren't driving those, I'll tell you that.

There could probably be an argument made for demand of a $35k EV being equivalent to a $25k car too. No one thought iPhones would sell at $700 compared to the $200 flip phone, but people just found a way to buy them anyway. This remains to be seen (or have we already seen this.. ?)

I think you might be misremembering the past. The Motorola Razr was at least $500 in 2004

https://www.pcmag.com/news/a-visual-history-of-the-motorola-razr

I don't recall Apple ever being doubted for charging $700 for an iPhone. I remember backlash when the price went to $1000+, but not doubt.

It's not a good comparison. People literally cannot afford $45,000 cars. Even $35,000 is a stretch. People can afford to put a $1000 Phone on a payment plan.

 

[quantumleap009]

@samdasari You might be surprised to find that the average new car is $46,000 in the US. Yes, some of it is due to supply chain issues. But a $21k Corolla is nowhere near the average.

 

[samdasari]

@quantumleap009 We were specifically talking about sedans. People who are spending 40-50k on an SUV aren't even considering a Model 3. It doesn't matter how you spin it, Tesla is more expensive and outside most people's budget.

 

[quantumleap009]

@samdasari It doesn’t matter that it includes more than sedans. The point is that people have $46,000 to blow on a new car.

The people that can’t afford a new car by used cars.

 

[samdasari]

@quantumleap009 I think you're too focused on this cherry picked piece of information. This $46,000 figure is:

1. US only
2. During a time of particularly expensive cars AND low car sales

The people buying new cars the last 2 years are not average new car buyers. Millions of people, most likely towards the bottom of spenders, were not included in sales figures. I don't think you can exclude them going forward to 2027. And even if you did, a significantly smaller pool of new car buyers isn't exactly good for Tesla either.

The type of vehicle does matter when you're trying to take market share. Just because someone has $46,000 doesn't mean they want a Model 3 if they are in the market for an SUV or Truck.

 

[dsoundman]

@samdasari No oil changes, virtually no brake changes, practically no maintenance other than tires and wiper blades.

EVs have way less moving parts and far less maintenance costs than ICE cars.

 

[givelivingwater]

@dsoundman The problem here is that with a 12k$ profit margin, other companies could just sell a 45k-tesla equivalent car for 35k$.

 

[dsoundman]

@givelivingwater How do you expect other companies to do that? They don't have the scale to drive down costs.

Tesla is extremely vertically integrated.

Competing with Tesla on cost is not easy. Take a look at their EV competitors. You can't find comparable offerings for cheaper and I would be very surprised if the competitors are making any margin given the low volumes they're selling.

 

[riverwolf1975]

@dsoundman

given the low volumes they're selling.

VW has 12.5% world EV market share while Tesla is 14.5%.

 

[cymomof3]

@dsoundman I disagree with the cheapness of maintenance. A Finnish man decided to blow up his car because changing batteries for car that had 1500km on it would have cost 20k €.

Here is the video:

Sauce: https://www.tekniikkatalous.fi/uuti...amiittia/5df41c3c-150f-4bd2-835a-7c9d5f80b42a

 

[barbralovesjesus]

@samdasari Exactly right. This is why I'm still driving my 2014 Chevy Volt.

Build a $25K Tesla and I'm first in line to buy one. $45K-$50K is just too much for me (and prob millions of others).