Tag Archives: Tesla

Be Careful Around Ram, Tesla and Subaru Drivers

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By Gary S. Vasilash

Sometime there are survey results that seem reasonable and some that make you wonder, like a sampling of findings of “driving incidents” (including accidents, DUIs, speeding, and citations) that were codified using QuoteWizard by LendingTree insurance quote data.

For example, it determined that Ram drivers had 32.90 driving incidents per 1,000 drivers, which makes them “the worst drivers.” And Ram drivers in Massachusetts are particularly bad: 64.44 incidents per 1,000 drivers. Ram drivers have the dubious distinction of being the worst drivers in 23 states, followed by Tesla drivers, who took the lead in 11 states.

Tesla drivers overall, incidentally, were second to Ram. They had 31.13 incidents per 1,000, although they took the lead in the specific accidents category, with 23.54 accidents per 1,000 drivers, besting (?) Ram, which was at 22.76 accidents per 1,000 drivers.

But here’s something curious: The third overall worst drivers were piloting Subarus. They had 30.09 driving incidents per 1,000.

Only Ram, Tesla and Subaru were above 30.00 in the overall incidents category.

In addition, Subaru was also third in accidents per 1,000 drivers, with 20.90.

Again, those three brands are the only ones of the 30 surveyed that were above 20.00.

Subaru? Ram and Tesla are not necessarily unexpected, but Subaru drivers might seem benign—unless they live in California where Suburb drivers racked up 57.66 incidents per 1,000

What do drivers drive that had the least number of driving incidents? Mercury. It was at 15.82 incidents per 1,000 drivers. Given that Mercurys stopped being built in 2011, thereby making those that exist somewhat vintage, might mean that the drivers are exceedingly. . .careful.

Tesla and the Rental Fleets

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By Gary S. Vasilash

One of the things that rental companies do—besides trying to get you to buy all manner of insurance and making you feel marginally criminal and totally liable if you don’t—is sell vehicles from their fleets in order to get an even better ROI.

Hertz, back in 2021, announced that it was going to make a massive investment in electrifying its fleet, with the purchase of some 100,000 Teslas. A few months later it upped the amperage and further announced 65,000 Polestars would be included in lots at airports around the country.

But it seems that the company is rethinking its approach for a couple of reasons.

One of which has to do with the price reductions that Tesla made in order to boost its sales volumes, which had the consequence of putting downward pressure on the residual values of its vehicles. That is, if you buy something for one price and then the same thing is available for a lower price, even before you try to sell your object as used it is worth less than it otherwise would have been.

Hertz CEO Stephen Scherr told The Verge, “The MSRP declines in EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower compared to last year, such that a salvage creates a larger loss and, therefore, greater burden.”

In addition to which, Hertz discovered that it was costing about twice as much to repair damaged EVs compared to vehicles with internal combustion engines.

“We nonetheless remain committed to our long-term strategy to electrify the fleet,” Scherr also said, which undoubtedly has something to do with the company (1) justifying its initial tranche of EVs and (2) simply positioning itself as a good corporate citizen.

But Hertz isn’t the only rental company rethinking its EV strategy.

Sixt, the German rental company (#2 in Europe; #4 in the U.S.) has decided that as it is electrifying its fleet it is moving away from Tesla and moving toward Chinese OEM BYD.

Again: the residual values and the costly repairs are factors that have played into this move.

While this doesn’t mean that either of these companies are any less interested in electrification, it seems to indicate that their interest in Tesla is waning or disappearing.

EV (Dis)interest

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By Gary S. Vasilash

One of the things that isn’t talked about much is the fact that electric vehicles really aren’t that popular unless they come from Tesla.

Flying in the face of that is a finding of Kelley Blue Book that in Q3 2023 EV sales in the U.S. hit 313,086 units, a 49.8% increase over Q3 2022. Such a jump means interest, right?

Well, the total number of EVs sold in Q3 represents 7.9% of total industry sales.

In other words, 92.1% of the vehicles people bought in Q3 weren’t electric.

And to the point of Tesla’s sway over the market—even though KBB saysTesla’s share of market tumbled to 50%–is that KBB acknowledges“Tesla’s price cuts have moved the market, pushing electric vehicle prices down more than 22% year over year, from $65,295.”

That’s right: a single company moves the entire segment.

(And in case you’re wondering, in October, according to KBB, the average transaction price for an EV was $51,762 while the ATP for a non-lux vehicle was $44,331.)

Drilling down a bit more, it is bracing to discover that in terms of share of the EV segment, the mainstream brands really don’t have much in Q3.

  • Chevrolet, 5.1%
  • Ford, 6.7%
  • GMC, 0.4%
  • Hyundai, 6.3%
  • Kia, 3%
  • Nissan, 1.9%
  • Subaru, 0.9%
  • Toyota, 0.9%
  • VW, 3.4%

And know that the 6.7% for Q3 Ford racked up represents 20,926 vehicles: 14,842 Mach-Es, 3,503 F-150 Lightnings and 2,617 E-Transits.

Ford sold 23,931 Mavericks in Q3, of which 56.5% were hybrids. Somehow that 20,926 EVs sold—encompassing three models, one of which is based on the best-selling pickup Since Time Began—seems more than anemic.

So even before Ford started talking about having to make adjustments as a result of the salary and benefit increases in the proposed agreement with the UAW, the auto company suddenly found things like the F-150 Hybrid more interesting.

When I ask knowledgeable people about the subject, they point out that much of the EV development and promotion is predicated on government regulations, more than organic customer demand. Look at those puny percentages up there, slices of the 313,086 vehicles sold by companies ranging from Audi to Volkswagen.

There’s not much there there.

Yes, there will be more EVs offered. More EVs sold.

But—again, absent Tesla—the market demand isn’t at all what it sounds like it should be.

Another example of this not-big demand is something that some point to as a real success story: the Chevrolet Bolt EV.

Here are the sales figures for the past five years:

  • 2018: 18,019
  • 2019: 16,418
  • 2020: 20,754
  • 2021: 24,828
  • 2022: 38,120

Whoa! you might think. From 2018 to 2022 the sales of the Bolt EV doubled! Remarkable.

But there are a couple of elements that need to be considered.

For one thing, Chevy added a (slightly) different body style, the more ute-like Bolt EUV in 2021, which certainly added some interest to the model(s).

And in June 2022 General Motors cut the price of the Bolt to persuade customers to buy one—sort of like what Elon has been doing.

Had Dodge made a substantial price reduction to the SRT Hellcat Redeye Widebody, the Brotherhood of Muscle would exponentially increase its membership of all genders and municipalities throughout the country would have a sharp uptick in revenues from speeding tickets.

If there is a change in the political situation, those regulations that are driving EV development and sales and those incentives that do the same (what if the government offered $7,500 tax credits for the purchase of a Hellcat?), the question of actual market demand is really going to matter.

Best Elon Musk Quote from the 2023 Q3 Earnings Call

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While discussing how to reduce the cost of building vehicles. . .

Musk:

“We’re trying to be very rigorous about improving the quality and capability of the car because it’s like any fool can reduce the cost of a car by making it worse and just deleting functionality and capability and that’s how I call this sort of any fool like—if you want to like lose weight and you said, ‘Well, I need to lose over 15 pounds right away,’ well, you could chop your arm off, but then you’re sitting with one arm.

“You know, you’re still fat.

“So, sort of like, yes, you actually have to eat less food and work out. That’s the actual way. And doctor’s advice. Yeah.

“It’s not super fun because food is delicious. And personaly, I’m not–I don’t love working out. I know I say I do. I wish I did, but I don’t.

“Unless moving the mouse consists of working out. In which case, I love moving the mouse.”

Underwhelming Domestic OEM EV Sales

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If you listen to the pronouncements of traditional OEMs about their EV efforts, you’d think that there is probably some sort of parity vis-à-vis their internal combustion engine business.

As in GM (remember: “All in” on EVs) selling plenty of EVs, and the Ford F-150 Lightning being in demand the same way the ICE versions of the truck are.*

So it comes as a surprise how few EVs the traditional OEMs are selling in the U.S.

According to the just-released Kelley Blue Book “Electric Vehicle Sales Report” for Q3, when it comes to General Motors, year-to-date it has sold:

  • 49,531 Chevrolet EVs
  • 5,334 Cadillacs
  • 1,216 GMCs

That’s a total of 56,081 EVs over nine months. If we include Brightdrop commercial vehicle sales, it boosts the number to 56,414.

The GMC HUMMER EV was introduced in October 2020. During the past three years, there have been 2,071 of them sold. (Image: GMC)

GM sold 65,255 Chevy Trax models, or 15,761 more units than sales of the Bolt EV/Bolt EUV sold through Q3.

Meanwhile, over at Ford:

  • 46,671

To put that in perspective: during the first three quarters of 2023 it sold 56,427 of its giant Expedition SUVs. So the Mustang Mach-E, Lightning and E-Transit commercial van summed are nearly 10,000 fewer.

And while adding things together: GM and Ford combined sold 103,085 electric vehicles.

Meanwhile, according to KBB Tesla sold 493,513 EVs.

Think about that: two of the biggest, most legendary OEMs in the U.S. together sold about a fifth of a company that was established 20 years ago.

*To be fair, Stellantis brands (Chrysler, Dodge, Jeep) sold 0 EVs.

Tesla & Scale

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By Gary S. Vasilash

During yesterday’s Telsa Q2 earnings call, there was, not surprisingly, a whole lot of discussion of COGS, or cost-of-goods-sold. (There was seemingly an equal amount of time talking about the Dojo supercomputer that the company has built and is using in its pursuit of full self-driving vehicles, including its, in Elon Musk’s words, “our sort of future robotaxi products,” which essentially got no attention.)

Anyway, the issue for the investors is to make sure that costs are at the least kept under control, if not cut, so that there will be more goods sold.

(And on the subject of “more,” Musk, understandably proudly, noted at the top of his comments “Model Y because the bestselling vehicle of any kind globally in Q1, surpassing the likes of Corolla and Golf. So, it was the number one vehicle of any kind, including vehicles that are sold at a far lower price.”)

Karn Budhiraj, vp of Supply Chain at Tesla, made an interesting comment that was essentially overwhelmed by the other observations made by Musk and his colleagues:

“And there’s also the unit economics improve as volumes grow. That’s the other thing we’re seeing. As we’re becoming a bigger and better part of a lot of suppliers, the economies of scale come into play.”

Yes, the size of Tesla’s marketshare will decrease as other OEMs’ EVs begin to populate showrooms, but given its massive scale predicated on sales, those others still have a steep challenge ahead of them.

Mercedes Goes NACS: Another OEM Takes the Short-Term Gain

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“To accelerate the shift to electric vehicles, we are dedicated to elevating the entire EV-experience for our customers – including fast, convenient, and reliable charging solutions wherever their Mercedes-Benz takes them. That’s why we are committed to building our global Mercedes-Benz High-Power Charging Network, with the first sites opening this year.”

So said Ola Källenius, Chairman of the Board of Management Mercedes-Benz Group AG.

Mercedes will be opening in North America a “High-Power Charging Network” that will include more than 400 charging hubs and more than 2,500 high-power chargers.

This won’t all be up and running until the end of the decade. Some will open this year.

Källenius went on to say, “In parallel, we are also implementing NACS in our vehicles, allowing drivers to access an expansive network of high-quality charging offerings in North America.”

Yes, Mercedes is signing on to the Tesla Supercharger network—more than 12,000 Superchargers (considerably more than the 2,500 Mercedes plans to have in some six years). Starting next year, they’ll be equipping their vehicles with the socket and software to take the Tesla juice.

So now there are Ford, General Motors, Volvo, Rivian, Mercedes, and probably more by the time you read this all planning on having their vehicles charging at the network created by what is arguably the world’s most desirable electric vehicle company (how else to explain the market dominance it continues to have—and when you hear about how its market share is declining, realize that the market is getting bigger, so while its slice may be smaller from a percentage standpoint, the real thing to pay attention to is the number of vehicle it is selling vis-à-vis the other companies).

This strikes me as something analogous to Apple in its early days saying that it would offer Windows as the operating system and then trying to persuade users to switch to its OS.

What would be the point?

These OEMs are taking a short-term gain and will experience a long-term disadvantage.

If someone buys a Mercedes rather than a Tesla it is probably because they think the Mercedes is a superior vehicle.

And there’s Mercedes saying, “Yes, our vehicle is great but our charging system isn’t, so go use the system from the other brand.”

Isn’t that admitting that the other brand is technologically more capable?

Sockets and Chargers & The Technical Surrender of the OEMs

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By Gary S. Vasilash

Thomas Edison patented the incandescent light bulb in 1880. By 1890 the screw-type base—like the one you can see on a light bulb right now—had about 70% of the market.

There was something to be said for standardization.

As light bulbs were the dominant type of electrical object back then, electrical sockets took that form factor.

When companies (including, no surprise, General Electric) began to make electrical household appliances, they put an Edison socket on the end of the power wire. While that seemed sensible, there was the issue of where the power outlets were located for purposes on lighting: in places like ceilings.

So not only was it a bit tricky screwing in that toaster or iron, but in the event that the appliance was accidentally knocked off the counter or ironing board, there was likely to be a ripped cord and a possible electrical short.

An inventor named Harvey Hubbell came up with another idea. He came up with the two-pronged plug that you are also familiar with today (some outlets have the third opening for the ground).

The device he patented in 1904 still used the screw-in socket for the receptacle and there was a two-pronged plug attached to the appliance cord. (The screw-in receptacle can still be found in hardware stores today.)

While it probably seemed to the people in the late 19th/early 20th century that Thomas Edison was nonpareil when it came to things electric, clearly that wasn’t the case.

Which brings me to the Tesla charging connector, the NACS.

That stands for “North American Charging Standard.”

Standards are usually created by independent organizations, not companies.

Tesla simply named its connector and port a standard. Voila!

Ford, General Motors, Rivian, Volvo, and undoubtedly others by the time you read this have signed on to the standard.

As is widely known, the Tesla Supercharger network is superior to all other charging networks—because it works. The other networks are hit-and-miss. If you have a vehicle that needs a charge, do you really want to take your chances on pulling up to a charger that may be down for an array of reasons?

Thomas Edison’s company came up with the socket. It worked. Appliance manufacturers followed Edison’s lead.

Then Harvey Hubbell came up with an alternative. A better idea.

You would think that there’s a Hubbell working at Ford, GM, Rivian, Volvo, etc.

These massive organizations can’t come up with better system than that which Tesla developed in 2012?

People want reliability and consistency.

If they associate those characteristics with the name “Tesla,” what does that say about the other companies?

Sure, as the EV market grows and there are more alternatives from the other companies, Tesla’s share of market will shrink.

But as those other companies use Tesla’s equipment and further underscore the viability of that brand, Elon Musk will be to EV charging what Thomas Edison was to what you find at the base of incandescent light bulbs today.

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.