Tag Archives: Tesla

Tesla, Tesla, Tesla

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By Gary S. Vasilash

Sandy Munro and Cory Steuben of Munro & Associates have, through a comprehensive tear-down analysis of Tesla models as well as EVs from other OEMs (as well as a vast array of ICE vehicles over the years), achieved a special POV regarding the means and methods that are used by Tesla to produce its vehicles. Using the context they have acquired from the analyses of both Teslas and other vehicles (as well as from working in other industries, which provides different perspectives on product and process), they are able to make assessments about how Tesla is developing and producing its vehicles.

And they are, putting it mildly, damned impressed, such that Sandy Munro expresses a concern that traditional domestic OEMs are likely to find themselves trumped by Tesla in terms of sales—before the decade is out. (Globally, Tesla says that it plans to build 20 million vehicles by 2030. By any measure a lot of cars.)

Tesla recently held an investor day at its plant in Austin, Texas. The attendees were from various big and bigger money firms that can direct investors’ funds into firms like Tesla. So the objective on Tesla’s part is to make sure that the best foot is put forward so that it can get some of that cash.

But Munro and Steuben scored valuable laminated credentials to be part of the audience during with the “Master Plan 3” was revealed—everything from new manufacturing methods to a home-grown operating system that combines ERP, MES, and even more.

And on this edition of “Autoline After Hours” Munro and Steuben talk to “Autoline’s” John McElroy and me about what they learned at the event, particularly focusing on the operational developments that Tesla is making.

For example, there is a new method Tesla will be using for vehicle assembly.

During his presentation at the Tesla program Drew Baglino, senior vp, Powertrain & Energy engineering, explained:

“We build the sides of the car independently, we only paint what we need to, and then we assemble the parts once, only once.”

That, Munro points out, is a non-trivial change, as paint shops in factories are typically large, complex and very expensive. This changes that.

That rethinking of the industry status quo and others are examined in a deep-dive into what Tesla is doing—and what other OEMs ought to be thinking about regarding their futures.

And you can see it here.

Tesla Dominates S&P Global Mobility Loyalty Awards: How Come?

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By Gary S. Vasilash

Tesla is a phenomenal company in many respects, not the least of which are captured in the most recent S&P Global Mobility Loyalty Award assessment. The firm has been doing this for 27 years, so it has a good handle on what’s going on.

Based on 11.7-million new vehicle registrations in 2022, the loyalty determination is made on whether a household with a particular make, model or manufacturer in the garage goes out and buys a new vehicle that repeats the same. So a Tesla loyalist might have a Model 3 in the garage and gets (additive or replacement) another Model 3 or a Model Y or S or X.

Of the eight overall categories, Tesla took five:

  • Overall Loyalty to Make
  • Ethnic Market Loyalty to Make
  • Most Improved Make Loyalty
  • Highest Conquest Percentage
  • Alternative Powertrain Loyalty to Make

The other three are:

  • Overall Loyalty to Manufacturer: General Motors
  • Overall Loyalty to Dealer: Subaru
  • Most Improved Alternative Powertrain Loyalty to Make: Mercedes-Benz

As for those three: Tesla couldn’t have won the Manufacturer award because that goes to a firm with multiple brands, and Tesla just has one. It doesn’t have dealers, so that’s out. And the “Most Improved” goes to a brand that has historically had one type of powertrain (e.g., ICE) and is now adding EVs to the mix.

All of which is to say that Tesla is dominant.

On this edition of “Autoline After Hours,” Vince Palomarez, who manages and develops the Loyalty tools at S&P Global Mobility, talks with “Autoline’s” John McElroy, Jeff Gilbert of WWJ-950, and me about Tesla’s performance as well as how other companies did in this latest assessment.

Realize that, for example, GM has taken the Manufacturing award for eight years running and has taken it 19 times out of the possible 27, so it isn’t like it is withering from the Tesla onslaught.

That said, when you think of the OEMs spending literally billions of dollars on advertising (according to Statista, Ford spent $1.98-billion in 2021 on advertising in the U.S. to persuade people to buy its vehicles—those who already own a Ford or Lincoln and those it hoped to conquest) and Tesla spent $0, how it is accomplishing its domination of the Loyalty awards is something that is essential for some to know and just fascinating for the rest of us.

And you can see it here.

What the IRA Means to the Auto Industry

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By Gary S. Vasilash

According to the U.S. Energy Dept., the Inflation Reduction Act of 2022 is “the single largest investment in climate and energy in American history.”

And in the automotive space, the IRA means a continuation of tax credits for consumers who buy electric vehicles (up to $7,500, though the math gets tricky) and even for OEMs and other companies that get into the business of making batteries.

Blue Oval City, the $5.6-billion, 3,600-acre campus for EV and battery production Ford is building in Stanton, Tennessee. (Image: Ford)

As for that battery money:

It provides tax credits of $35 per kWh for the cells. And if another company organizes those cells into battery modules, it gets $10 per kWh. So if there are two companies involved and they each produce portions for a 100-kWh battery for an EV, then the cell manufacturer would get $3,500 and the module maker $1,000. And if a single company did both, then that’s $4,500.

So if you wonder why vehicle manufacturers are investing billions in battery plants (like Ford’s recent $3.5-billion announcement) perhaps that makes it even more understandable.

Not only do they make money by selling vehicles, but they also make money by producing the batteries that go into those vehicles.

On this edition of “Autoline After Hours” we’re joined by Devin Lindsay, who is responsible for Alternative Propulsion forecasting at S&P Global Mobility, Mark Barrott, principal with Plante Moran’s strategy and automotive practice, and Mike Martinez, who covers Ford for Automotive News.

The topic is the multi-billion dollar effect of the IRA on the automotive industry.

The IRA is essentially industrial policy. The aforementioned tax credits that consumers can receive are only possible if the vehicle in question not only falls below a price cap, but if the vehicle’s manufacturing—including the batteries—has sufficient domestic content. This puts companies that do make electric vehicles but don’t make them in the U.S. (think Audi, for example) at a competitive disadvantage.

While an objective is to make EVs more accessible to more people—right now EVs account for 5.6% of the market—it isn’t entirely clear that the 50% mark that the Biden Administration hopes to achieve by 2030 (and that several OEMs seem to be capacitizing themselves to provide) will happen: Do consumers really want EVs?

These and other questions are explored on the show.

And you can see it here.

Tesla’s Price Hokey-Pokey

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By Gary S. Vasilash

In January Tesla cut the price of various Model 3 and Model Y configurations by as much as 20% in the U.S. (there were also price reductions in other markets).

But after the U.S. Treasury Department adjusted its vehicle classification rules pertaining to federal tax rebates through the Inflation Reduction Act, Tesla made price adjustments—again.

This time up.

So there have been additions of as much as $1,500 to the base prices for Model Ys.

Part of this is predicated on those reversed rules.

Whereas the Model Y had been classified by the government as passenger vehicles, it (except for the three-row version) is redefined to be an SUV.

This is advantageous because the retail price cap for those looking for a rebate on an electric car was $55,000, which is pretty much an entry point for Model Ys.

SUVs, however, have a price cap of $80,000. So the Model Y pricing can go well beyond the mid $50Ks.

Presumably, Tesla figures it can do this because of the nature of its fan customer base.

Ford reduced prices on its Mach-Es in response to Tesla’s original move.

While it is unlikely that the company would make the same type of sudden increase in price of the Mach-E for the simple reason that the Ford customer wouldn’t be as financially pliable, it wouldn’t be at all surprising were there folks in Dearborn planning the means by which they can made price rises more palatable to potential customers (e.g., different trim packages).

Start of an EV Price War?

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By Gary S. Vasilash

Last month Tesla did something that OEMs almost never do. (And in its history, Tesla has done lots of things that traditional OEMs almost never do, so at least in this regard it is being consistent.)

It cut the price of its vehicles in China, Germany, and the U.S.

These weren’t slight, either. In the U.S., for example, the Model Y Performance was cut by 19% and the Long Range version by 20%.

There were all manner of assessments as to why this happened. Some suggested that Elon Musk’s Twitter distraction was causing the company to lose sales. Others were pointing out that there is increased competition from some of the traditional OEMs. (Who, to be frank, are bigger on rhetoric about their electric scale today and tomorrow than they are in putting EVs in customer’s driveways.)

Tesla has some 2/3 of the U.S. EV market.

Mustang Mach-E: When does a popular vehicle–and it is popular–get a price reduction? (Image: Ford)

Consider: while the Ford F Series seems like a force of nature when it comes to sales, in 2022 there were 653,957 of those trucks sold—and GM sold 764,771 Silverados and Sierras combined, so it isn’t like either of the primary players have anything near 2/3. Yet a company that wasn’t taken all that seriously 10 years ago now dominates a category.

Shortly after Tesla made its announced cuts, the folks at Ford joined in on reducing the prices of its 2023 Mustang Mach-E models. The reductions ranged from $600 on the Select eAWD Standard Range model to $5,900 for the GT Extended Range.

Ford clearly wants to move metal. What’s curious, though, is that in 2022 it sold 39,458 Mach-Es, which is a 45.4% increase over the number it sold in 2021. It’s not like things were lagging. (Ford execs may have noticed that in July of last year GM cut the prices of the Bolt EV and Bolt EUV by $5,900 and $6,300, respectively, and those vehicles ended the year at 38,120 deliveries, not only close to that Mach-E number, but a 53.5% increase over 2021–greater than the Mach-E rise. Although it is hard to imagine the vehicles being cross-shopped..)

Everyone knows that EVs are more expensive than vehicles with internal combustion engines for a wide array of reasons. And while the overall percentage of EVs sold in the U.S. is still small—5.8%–it is growing, not declining.

So why were the cuts to prices made and will other OEMs follow suit?

Those are the primary questions raised and discussed on this edition of “Autoline After Hours.” Charlie Chesbrough, Cox Automotive Senior Economist, and Joe White, Reuters Global Automotive Correspondent, join “Autoline’s” John McElroy and me to talk about those topics and more.

And you can see the show here.

Will Twitter Doom Tesla?

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“Future Paths of Electric Vehicle Adoption in the United States: Predictable Determinants, Obstacles and Opportunities,” a National Bureau of Economic Research working paper by James E. Archsmith, Erich Muehlegger and David S. Rapson that was published in June 2021, includes a point that may have some serious implications for Elon Musk and his exceedingly expensive Twitter purchase and his remarkably successful Tesla business.

They write:

“EV demand is strongly correlated with higher levels of income and education, and EV adoption is highest among car buyers 35 to 45 years old. More liberal and coastal states tend to have higher demand for sedans and EVs. . . .”

Yes, there is a political bias vis-à-vis a large percentage of those people who buy EVs.

Should Musk tilt Twitter to the extreme Right, isn’t it likely that the liberal EV intenders are likely to no longer think of Tesla as an aspirational brand and opt for something else? Isn’t it possible that there would be a whole lot of Tesla blowback?

Somehow this doesn’t seem at all unimaginable.

Add in the issues related to the Saudi investment in Twitter and the Chinese influence on Tesla’s fortunes in China, and the self-proclaimed Chief Twit may find himself wishing that he would have not bought the bird when he could have continued to get bird shit for free.

Porsche: China and North America Are Important. But So Are Europe and Germany

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This seems unlikely.

In reporting its global sales for the first three quarters of 2022 Porsche noted that its ales in China—its largest single market—were down. Only down by one percent, but down.

Still, overall the company is up two percent compared to the same period in 2021.

Sales in North America were also down. By four percent.

So that means the #1 and #2 markets for the sports car manufacturer were down.

The case in China, Porsche said, was largely caused by the COVID-related lockdowns imposed there various times this year.

As for the North America, the company cited logistical challenges.

Turns out that Europe, including the home market in Germany, made the difference.

In Europe minus Germany sales were up 11%, to 42,204.

Germany had a rise of nine percent, to 20,850 vehicles.

China sales were 68,766 units and in North America the number was 56,357.

In total, the company sold 221,512 units.

The electric Taycan deliveries were down by 12%, to 25,452, which Porsche attributes to “supply chain-related bottlenecks and declining parts availability.”

Doesn’t seem all that long ago that the Taycan was really going to take it to Tesla. Even though the Model S, refreshing notwithstanding, is long in the proverbial tooth, doesn’t seem that much of a bite has been taken out of it.

How Innovative Is Auto?

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In the Boston Consulting Group list of the top 50 most innovative companies in the world there are few surprises.

The top three are Apple, Microsoft and Amazon. Alphabet comes in at 4.

Not much of a surprise there. You could mix up the names and it would probably be about right.

The first automotive company, at number 5, is Tesla.

Again, not much of a surprise there, either.

But there isn’t another automotive company on the list until position 21. Toyota.

Bosch is down a few spots at 26, although one might argue that its innovation profile undoubtedly has something to do with its Industrial Technology, Consumer Goods, and Energy and Building Technology, too—not just Mobility Solutions.

Next is Hyundai, at position 33. It wasn’t that many years ago when Hyundai was considered to be not much more than a car company for people who wished they could buy a better car but couldn’t; now it is a highly innovative provider of some of the most remarkable vehicles on the road.

General Motors makes the list at 42, and crosstown rival Ford is just behind it at 43.

Mitsubishi is at 48, but odds are it is not for its motor vehicles (the company has a multiplicity of companies under its umbrella).

So if we subtract Mitsubishi but keep Bosch, there are 6 automotive companies on the list. Or 12%.

Still, it seems that there could be, should be, more.

To be sure, it is a whole lot more difficult to make significant developments in vehicles than in consumer electronics.

But one might imagine that with all of the ways that auto OEM execs are describing their companies the positioning on the list would have more than one company in the top 10 and more than two in the top 25.

Mike Ramsey on Autonomy and Electrification

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By Gary S. Vasilash

Mike Ramsey, as a vp and analyst for Gartner on the topics of Automotive and Smart Mobility, spends his time researching and thinking about those two topics and consulting with a wide array of people in the auto industry on the subjects. And on this edition of “Autoline After Hours” Ramsey talks to “Autoline’s” John McElroy and me about, primarily the subjects of autonomous vehicles (AVs) and electric vehicles (EVs).

Although AVs are getting far less attention than EVs, Ramsey suggests that work continues apace on the development of the technology. One of the factors that is going to play a big difference for the greater availability of AVs, Ramsey says, is a decrease in the cost of sensor technology (e.g., lidar). This will help make the calculations for the function more in line with what are automotive economics.

Ramsey suggests that with the amount of data that Tesla is collecting from its vehicles it may be in a prime position to make the move to actual full self-driving capability—but Ramsey underscores that it is probably not going to be with the present setup of sensors that are currently used for the various Tesla models.

EVs are going to be more widely accepted, Ramsey says—but this will require that the price points of the vehicles have to go down in order for people to be able to get into the vehicles, with most of the models out there being in the luxury pricing strata.

Another thing that needs to be addressed vis-à-vis EVs is the charging infrastructure, which many consumers have found to be quite disappointing. Ramsey thinks that automotive OEMs are going to have to think long(er) and hard(er) about what their role in charging needs to be because no matter how good the product is, if the charging experience is a negative one (a recent J.D. Power study on charging found that people are not exactly pleased with their experiences), then that will reflect poorly on the whole undertaking.

You can see the show here.

Sandy Munro on Tesla and Other Electric Vehicles

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By Gary S. Vasilash

Sandy Munro is a Tesla teardown artist.

“Teardown” as in Munro and his team at Munro & Associates taking apart Teslas—and other electric vehicles—and then carefully cataloging and assessing each element that goes into making an entire vehicle.

Munro brings to the activity a 30+ year understanding of what it takes to build a vehicle with best practices. And because he is deeply versed in things like design for manufacturing, he is able to identify where those best practices aren’t being performed.

While Munro had done extensive work on analyzing vehicles that have internal combustion engines, he says that that is behind him for the simple reason that he believes that electric vehicles are going to take a considerable portion of the new vehicle market.

He says that somewhat analogously to Moore’s Law in computing, there is Munro’s Law that has it that if 2022 has electric vehicles at 5% of the new car market, then it will be 10% in 2023, 20% in 2024, 40% in 2025, 80% in 2026.

Given the amount of money global OEMs are spending on developing battery production capacity, it seems that they don’t disagree with Munro.

One of the interesting things that has happened to Munro’s career is that whereas the suburban Detroit firm that he heads once performed its work in relative obscurity, some of the work that the company is doing—like his teardowns of the Model 3 and Model Y—have been put on a YouTube channel, which has led Munro to considerable fame or notoriety—depending on your point of view—particularly within the Tesla community.

On this edition of “Autoline After Hours” Munro talks with “Autoline’s” John McElroy and me on a variety of subjects, including his fame among nine-year-olds. Seriously. (Munro points out one reason why an increasing number of EVs will be sold is predicated on kids influencing their parents, and he thinks that OEMs who ignore the young do so at their peril.)

You can watch the entire show here.