Should Tesla Make Batteries Instead of Electric Cars? 362
cartechboy writes: "Tesla seems to be doing quite well these days, but one bond trader thinks the company should quit making electric cars and focus efforts on making batteries instead. Bond manager Jeffrey Gundlach says he's already tried to meet with Elon Musk to persuade him to take the battery-only route. Speaking to Bloomberg, he said Tesla could be 'wildly transformational' in the same way electricity and electromagnets were at the advent of their discovery. Enough people are interested in Tesla's vehicles that Musk probably won't take Gundlach's advice. Should he?"
He probably only needs 640K in his computer, too (Score:5, Funny)
I mean, these electric car thingys are just a fad, right?
Re:He probably only needs 640K in his computer, to (Score:4, Insightful)
With comparative advantage, even if you do better at both things than everybody else, the world derives more benefit if you do most of what you're absolutely best at, even if you're better at everything compared to everybody else
Also, what would be the demand for such batteries if Tesla stopped manufacturing cars?
Re:He probably only needs 640K in his computer, to (Score:5, Informative)
The funny thing is that Telsa was originally founded on the idea they would purchase drop-in replacement power trains from AC Propulsion and put them into Lotus bodies as an integrator. That was their original goal, but it didn't quite work out the way they intended and it turned out they needed to get their hands dirty on a whole bunch of other manufacturing just to get even that to work out.
One thing I admire about Elon Musk is that he is able to see some inefficiencies in his companies and root out a way to make them much more efficient. That is definitely how Tesla has been able to turn a profit from a company that simply should have gone bankrupt a couple of times in the past. His way of rooting out inefficiencies is usually by not cutting corners with employees or feeding them shit in a mushroom management system, but rather by looking for components that are costing far too much compared to the raw materials price and taking over the manufacturing of those components in a vertical integration of manufacturing. Every one of his companies that he is currently running is now making much more stuff in-house than was the case even a year ago.
Mr. Musk once started to complain about the cost of raw Aluminum and IMHO Alcoa ought to be concerned he might just start a Bauxite mining & processing operation.
They've been pushing this angle for a while (Score:5, Insightful)
The analysts are pessimistic that a newbie can outperform the established automakers. I disagree. What better way to make a market for your battery factory than proving the technology that they will be used for? This is the type of thinking that kills companies traded on Wall Street.
Re:They've been pushing this angle for a while (Score:5, Insightful)
They've also been doing a great job of building the cars themselves, making it even more baffling. It's not like they were putting good batteries in crappy cars.
Re:They've been pushing this angle for a while (Score:4, Informative)
It helped that initially Lotus made most of the car. Lotus has been making cars for some time.
Re:They've been pushing this angle for a while (Score:5, Informative)
Interestingly Musk recently said that in retrospect that's one of the things that he'd do differently; they ended up changing so much of the chassis that they didn't really get a lot of benefit from it, but used enough of it that they were still bound to it.
Re:They've been pushing this angle for a while (Score:5, Insightful)
Yeah, but manufacturing is only one piece (admittedly a big piece once you start moving tens of thousands of cars per year). What doesn't make any sense is how Tesla has innovated in car design outside of the electric aspects. Anyone could have put a huge glass cockpit in their luxury car. They could have negotiated lifetime data plans with cellular carriers. They could have auto-retracting door handles. They could have done OTA updates to fix SW updatable components of the car. They could have designed gullwing doors for SUVs that take just a few inches to open.
No one ever did. The major automakers got lazy, they stopped even trying to innovate decades ago.
Re: They've been pushing this angle for a while (Score:5, Interesting)
Bingo. (Score:3)
Re:They've been pushing this angle for a while (Score:4, Informative)
I know that Wikipedia is of course the one and only best primary source, but here goes anyway:
"Tesla produced the Roadster until January 2012, when its supply of Lotus Elise gliders ran out, as its contract with Lotus Cars for 2,500 gliders expired at the end of 2011."
So, if you're trying to say that Lotus never made parts for the Model S, fine. You're the first person to use the designation "Model S" anywhere in this thread. Tesla made other cars, before the Model S.
http://en.wikipedia.org/wiki/T... [wikipedia.org]
Re:They've been pushing this angle for a while (Score:5, Insightful)
The Roadster is essentially irrelevant as anything other than a prototype for Tesla's propulsion system. Generally stating that Lotus is significantly responsible for Tesla's success (as was claimed, despite the fact that the hard part was not done by Lotus) is absurd.
Additionally, the Model S has literally sold more than 10 times as much as the Roadster, and it is the car that is viewed as truly significant.
Discussing the Roadster as if it were truly significant as anything more than a prototype is about the same as discussing the Ford Galaxy as proof that Ford typically rebadges other manufacturers' vehicles as their own.
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Besides being open for debate (the real engineering work had to be done by Tesla), it's a profoundly bad argument. Tesla's real success is the Model S, not the Roadster.
Re:They've been pushing this angle for a while (Score:5, Insightful)
And it's not like there's many other electric cars to put them in. The only one I can think of is the Leaf. All the other EVs out there are just conversions from gas-driven vehicles, rather than purpose-built EVs, so they end up with very compromised designs. Many of them aren't even serious vehicles at all: the automakers are just slapping them together to satisfy government regulators, to say "look! we have EVs too! But no one wants to buy them!" Yeah, no one's buying them because they suck ass. The Tesla by contrast is actually really good, so they're selling like hotcakes, since it isn't a half-assed attempt like what the other automakers are spewing out.
There was another company that tried what this dumb bond manager suggests; it was called "Ovonics". It supplied batteries to GM's EV1 electric car, which was famously ill-fated. Ovonics has disappeared now after being bought up and then shut down. I guess that's what this bond manager wants to happen to Tesla.
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Re:They've been pushing this angle for a while (Score:5, Insightful)
They certainly could and should have let GM die, though. The biggest flaw in Americas take on capitalism is bailouts. Companies like GM need to die and be replaced by companies like Tesla. I've had quite enough "government propping up failed business models" for one lifetime, thanks.
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Manufacturers need to be big... (Score:3)
Re:They've been pushing this angle for a while (Score:5, Insightful)
Whats baffling is that Bond manager Jeffrey Gundlach thinks hes a better judge of investment than a many-times-over millionaire who has launched 3 wildly successful businesses-- paypal, Tesla, SpaceX.
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Last I checked Musk paid his debt off, and was doing fine.
but see no a priori reason to assume he *isn't* as smart, or smarter, than Elon Musk.
Sure, but generally skill in a capitalist market is measured by "successful businesses built" and "amount of money you have", neither of which categories put Gundlach ahead of Musk.
If I had to choose someone to put my money with, it'd be with Musk, any day of the week.
Re:They've been pushing this angle for a while (Score:5, Interesting)
Yeah, this is pretty laughable. I don't remember the exact figure but his battery factory (not built yet but planned) is estimated to be something like 25 to 50 percent of the current world output for these batteries; and it is expected that the battery factory will sell almost entirely, if not exclusively to his electric car operation. So this "genius" of a bond investor thinks to himself "gee, if there is such a big market for batteries he should just sell the batteries". Only problem with this line of thinking, if he quits making cars then the battery market dries up. With people like this running our economy it is little surpirse that we fell into an economic collapse, and are probably setting up the next one as we speak. Explain to me again why people like this deserve to be paid millions a year.
-AndrewBuck
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Well, the trader has one point - the Tesla batteries are serious tech. With the advent of many things that could use them (airliners, other electric cars, trains, etc), and the fact that current batteries are frankly shit, if Tesla batteries are that much better then they would need to build a vault to hold the piles of money that they would get. However, he has a market for the cars and they are driving the battery tech, so it would be nuts at this point. If the car making business starts to dry up, then t
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Tesla use Panasonic cells, and the batteries (packs of multiple cells) were developed with their help. Even the battery management tech was developed with Panasonic's help. Tesla don't own all the technology and don't have all the skills, that's why they are building the new factory with Panasonic.
Since Panasonic already dominates the market for automotive grade lithium cells and Tesla needs their help I don't think striking out on their own would be a very good plan. Panasonic already sells to other manufa
Re:They've been pushing this angle for a while (Score:5, Interesting)
Only problem with this line of thinking, if he quits making cars then the battery market dries up.
Except that VW, BMW, GM, and others are beginning to produce cars with these batteries. If Tesla expands battery production enough they could make money not only from their own vehicle sales, but also get a cut of the profit from each of their competitors cars sold because they made the batteries.
Think like how Microsoft gets a cut of each Android device sold. "If our products sell, we win! If our competitors products sell, we win!"
Re:They've been pushing this angle for a while (Score:5, Insightful)
Personally, I think the best approach here is to keep the battery manufacture in house for now (since it provides a powerful advantage over competitors) and build up electric car market share to the point where you're triggering anti-trust. Then use the spin off of the battery business as a playing chip to keep the rest of the business together.
Finally, if Musk wishes to exit this job at some point, that would be a good time to do so. He could appoint a competent successor and gradually divest himself from the business.
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Re:They've been pushing this angle for a while (Score:5, Funny)
Absolutely. It's a mistake to assume that just because 99% of lawyers are corrupt scumbags, that all lawyers are corrupt scumbags. For example, some stopped taking bribes after their funerals.
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I get the point you were making, and to some degree you are correct. What you say is not entirely true though. Bond __investors__ make money as you suggest, but I think the article described this person as a bond __trader__, which is a very different thing. Traders often get a commision for the trade, whether the trade itself makes any money or not, even if they were the one who decided when to buy and sell, and what bonds to trade in. There are a lot of hedge funds that either lose money for their clie
Re:They've been pushing this angle for a while (Score:5, Informative)
He is doing all right pushing his cars so far and advancing his tech, why stop doing something that is working?
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If he goes to a batteries-only platform then he's sunk, as they'll simply not bother to
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Not to mention he created the market for these batteries. Yes, electric car manufacturing probably has the momentum behind it that it would continue without Tesla's goading, but that's not a sure thing. If Tesla rolls out the Model X and Model E in the coming years, there will be no going back; but right now the industry is just starting to get rolling. Destroying the largest most disruptive player in that industry is a bad idea if you want to sell to that market.
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Tesla is traded on Wall Street and they raised the money for the gigafactory from Wall Street through a convertible bond sale. Wall Street has been key to providing capital to Tesla.
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The analysts are pessimistic that a newbie can outperform the established automakers.
It isn't a question of performance, it's a question of production.
Tesla doesn't have a "mass market car " in production --- and Tesla's definition of mass market is the $35 to $40,000 car.
Historically, automakers like Ford began with a truly affordable mass market car and absorbed bits and piece of the high end market, as their betters ran into financial trouble, as they always did, sooner or later.
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I think not... (Score:4, Insightful)
Many companies make batteries, they're all more or less the same other than the obvious size/capacity differences.
Not so many make cars like that, I'd respectfully suggest the bond manager has flipped his lid!
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Sounds like he's in league with the automakers.
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Sounds like he's in league with the autodealers.
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Automakers like Tesla? Tesla is a US auto company. Such cognitive dissonance in that thought, isn't there?
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Kind of depends on whether you think this year or this decade for your horizon. I see more brands/models of electric and hybrid cars, not fewer, in the coming years.
That's not to say that you should abandon a promising car business, though. Making a product which challenges others to compete with you, and then mastering the underlying components which give you the edge makes your cars more competitive AND a second revenue stream which is funded by your competitors.
Why can't it be both? (Score:5, Insightful)
Even if Tesla becomes the best and largest car battery manufacturer in the world doesn't mean they can't make cars as well.
IMHO somebody's being paid by the other car manufacturers to steer Tesla away from making cars.
Then again, the "low-cost" electric cars sure aren't coming from Tesla any time soon, so I don't really care.
Re:Why can't it be both? (Score:5, Insightful)
It's still a terrible idea. For the most part, the other car companies won't innovate unless they have competition. Tesla is far more likely to create real change by existing as a car company than they are by existing as a parts company.
Re:Why can't it be both? (Score:4, Informative)
If they make good batteries and sell them at a reasonable price, other will buy them. Take a look at say, projector LCD panels -- Epson makes essentially all of them, but you can buy projectors with a wide variety of designs from a number of manufacturers. And that's hardly the only example.
Re:Why can't it be both? (Score:4, Insightful)
Who's going to buy batteries to make electric cars? There aren't any serious competitors to the Tesla right now, except maybe (and that's a big maybe) the Nissan Leaf. The other automakers are strongly resisting making any serious electric cars; they're only making "compliance cars", crappy half-hearted attempts to appease government regulators and show they're making an effort to make zero-emissions vehicles. The automakers do NOT want to sell EVs to the general public; they make a lot more money with the status quo, since gas cars require lots of expensive ongoing maintenance at overpriced dealerships, and wear out after a while. The auto dealerships are even worse, as their entire business model rests on expensive maintenance and parts.
Also, we already had a company that specialized in making batteries for EVs. It was called Ovonics, and supplied the batteries for the GM EV1. It was bought out and shut down. Making batteries for EVs, without a popular automaker that's going to buy from you, is a stupid business move.
Besides that, there's a lot more profit in making cars than in making batteries. Who do you think is more profitable, mobile phone makers like Apple and Samsung, or the companies that supply batteries to them. Can you even name those suppliers? You can get Li-ion phone batteries all over Ebay for next to nothing.
Re:Why can't it be both? (Score:5, Funny)
I actually understand his point. If Tesla just makes batteries for other companies, then they don't see Tesla as competition. If Tesla's also producing cars, then they are far less likely to do business with them regardless of how good their batteries are.
Yeah, that would be like Apple buying chips from, say, Samsung. Ain't gonna happen.
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If Tesla's also producing cars, then they are far less likely to do business with them regardless of how good their batteries are.
Arguably just the opposite. Car companies share parts and technologies all the time, if anything also being a car maker gives them higher status/more legitimacy than simply attempting to sell parts.
Re: Why can't it be both? (Score:2)
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If Tesla's also producing cars, then they are far less likely to do business with them regardless of how good their batteries are.
Automakers do business with one another all the time. Several licensed hybrid tech from Toyota, for example.
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The natural reason it can't be both is that there is only so much invest-able time and capital on the CEO's part.
Re:Why can't it be both? (Score:4, Informative)
Tesla doesn't produce the consumable fuel (electricity), just the durable storage device. And while car manufacturers certainly might outsource a fuel tank, no one would consider it unusual for them to make their own either.
Re:Why can't it be both? (Score:5, Funny)
Bingo. Last time I heard, he also owns a company that makes rockets too.
Clearly, SpaceX should stop building rockets and just sell rocket fuel.
Make batteries? (Score:5, Informative)
I was under the impression that Tesla vehicles used banks of off-the-shelf 18650 Li-ion batteries. Panasonic is their current supplier if I recall. Even their proposed battery plant in the southwest is really a place for Panasonic to manufacture batteries for Tesla. Yes, they package them well and I'm sure they have some great controls and associated hardware and software, but is there really something groundbreaking about their batteries specifically? They already make a powertrain for Toyota - a move that hasn't produced a fraction of the buzz and money as their own vehicles. Not sure I understand this suggestion.
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The Toyota contract is dying a quiet death; Toyota never wanted an electric car but their fuel cell vehicles weren't ready in time to satisfy California's ZEV requirements.
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They use 18560s.
LMGTFY [lmgtfy.com]
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If there's a bad enough crash, don't the batteries catch fire?
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Um... they have, and they are the 18650's.
Tesla went this route so as to not be locked into a specific or custom battery form factor.
Tesla Battery Packs. (Score:3)
Is CNET [cnet.com] good enough for you?
Similar to the Roadster, the Model S battery pack is filled with cylindrical lithium ion cells dubbed 18650s. Tesla does extensive testing of these cells at its headquarters, cycling them at different temperatures, trying different discharge rates, and even crushing them. The data Tesla collects gets used to refine the specifications sent to its suppliers, among them Panasonic and Samsung.
How about SAE International? [sae.org]
Despite Tesla Motors’ proven success with 18650-type Li-ion cells in its Model S, the industry’s best-known EV battery analyst isn’t betting that other automakers will adopt that form factor, which describes the cylindrical battery case’s 18 x 65 mm dimensions.
It's not a 'zillion cylinders', it's just over 7k, and 'wasted space' is instead used for the liquid coolant used to keep the batteries under temperature.
Around 7000 individual cells, coded NCR18650A by their supplier Panasonic, are used in each Model S pack. Rated at 3100 mAh, the cells are based on lithium nickel-cobalt aluminum (NCA) chemistry and feature a proprietary cathode geometry developed by Panasonic and Tesla. Last October the two companies announced a battery-cell supply agreement through December 2017 (Panasonic also owns shares of Tesla Motors) which will cover the launch of the Model X in late 2014 and subsequent Model E vehicles.
Bad idea (Score:5, Interesting)
Manufacturing auto batteries should be a low-margin business. They're a commodity. Others can enter the business. Over time, margins will decrease. There's not much brand value. (Who made the battery in your phone?)
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Exactly. The closer you are to the end user typically the higher the profit. Microsoft being the exception.
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...and pimps.
Wrong. (Score:3)
Who said "car batteries"? If someone came up with a truly revolutionary battery -- say, one that stored 10x what batteries do now -- you could sell them, at great margin, to *everyone*. Cell phones. Tablets. Computers. Cars (a battery 1/5 the size that's more powerful than the old one, and costs the same? Damn straight I'd buy it). Etc.
THAT BEING SAID... I don't see anyone coming up with a revolutionary battery technology. Not even Elon. So I agree with you, but think your rationale was incorrect.
Bad idea especially... (Score:2)
agreed.
Especially since then Tesla would be putting all of it's eggs in one basket and in the investing world...that's a big no-no (I'm more amazed that this "bond manager" is even a manager...let alone a bond one).
Plus recent history with A123 Systems [slashdot.org] should also say "no" to the battery-only route.
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Manufacturing auto batteries should be a low-margin business.
Just like ink cartridges should be a low-margin business? I think you need to reexamine that statement.
No, But Someone Should (Score:2)
Why would Tesla stop making cars? They're doing a great job of it, not to mention challenging the status quo when it comes to how Americans buy their cars; heck, if anything we need more companies doing what Tesla is doing, so they stand a better chance in the fight against the heavily entrenched *ADA organizations.
That said, someone should be working on building better batteries, just not them. Maybe a subsidiary.
Re:No, But Someone Should (Score:5, Insightful)
You nailed it. Tesla is not operating at a comparative disadvantage: they can produce cars more effectively than anyone. A $90k top-end Cadillac won't have the features of a $90k top-end Model S. They're comparable, but edged out by trim and safety features (what Cadillac warns you that it's on fire, and then doesn't burn the driver's compartment?).
The auto manufacturers are competing with each other; Tesla, a new entrant, clearly has gotten a step ahead. Detroit can catch up readily, but they're already in competition with Japan and Germany: it's unlikely they can just leave Tesla in the dust and build much better cars for the same price. That means Tesla is at worst a highly competent auto manufacturer, and possibly the top-tier American auto manufacturer.
It means GM and Chrysler should get out of the auto manufacturing business more than Tesla. If the big three keep trying to squeeze Tesla out, they might get kicked out themselves: a $20k Tesla offering could easily send the Ford Focus and Chevrolet Cobalt packing.
No (Score:5, Insightful)
Short term thinking (Score:5, Interesting)
Why can't you do both? (Score:3)
I don't see why the car business gets in the way of the battery business. There's no shortage of investment capital.
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What if they were separate corporations?
They could start a battery company that sells batteries to Tesla. So buying batteries from that company wouldn't be added to Tesla's profits.
Companies spin off portions of themselves all the time.
That said, I'm hesitant to push Tesla around or suggest what they should or shouldn't do. The pressure for batteries has been strong for over a decade and yet we have yet to see improved batteries hit the market. Even Tesla's batteries are little better then laptop batteries
No (Score:2, Insightful)
Enough people are interested in Tesla's vehicles that Musk probably won't take Gundlach's advice. Should he?
A car can be a great premium product. People pay not just for objective functionality but for style and image, and they form loyalties that can be milked for cash. Batteries are a commodity. Someone comes out with a better battery tomorrow and all your customers switch (your customers being cold calculating businessmen wanting an edge for their product that the battery slots into). If someone come out with a better car tomorrow then a whole bunch of people stick with what they know / love and you have time
Yo Gillette (Score:5, Insightful)
Stop making those stupid low margin shaving handles and FOCUS SOLELY on cartridges!!!!
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When someone is exceptionally stupid..... (Score:2)
You should always ask what else do they do a complete shite job on.
Jeffrey Gundlach has a god give right to be a complete uninformed tool and has every right to loudly make proclamations that reveal this fact to all that hear him.
Just as I have every right to take his outburst of stupid as a warning.
I need to contact my portfolio manager ASAP and make sure Bond manager Jeffrey Gundlach isnt closely associated with anything in my portfolio.
Hasn't he seen the documentary? (Score:4)
Sounds like a suicidally bad idea.
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Not only that, but they talked a fair amount about the Ovonics company that was formed to make advanced-tech batteries for EVs, and supplied the battery for the GM EV1. Ovonics is history now. This should serve as a lesson for anyone wanting to make EV batteries, without a really good customer in place.
The prob with Bond Managers and analysts/pundits (Score:3)
Batteries have no "moat". (Score:2)
Just earlier this weak, they invented a new battery technology in japan that is believed to allow at least 3000 charge/recharge cycles with under 1% degradation-- i.e. a battery that will last longer than the car it's in.
As a battery company, tesla could be wiped out over night.
As a car maker- they have a "moat". It's a weak moat-- other car makers could come out with electric cars in the same slot. But Tesla's styling is pretty cool. It's likely to retain it's customers going forward unless newer elect
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It's not just the styling, it's the entire car. No one else makes a serious electric car that comes close to competing with the Tesla. All the other EVs are ultra low-volume "compliance vehicles" that are just made to appease regulators; they're not serious, purpose-built electric cars, and are generally crappy and slow but with a big price tag. Teslas have an even bigger price tag, but they're really nice and very fast, and drive extremely well. At this point, there is zero indication that any of the o
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As a car maker- they have a "moat". It's a weak moat-- other car makers could come out with electric cars in the same slot.
A guy in Mexico drove his Tesla Model S at over 110mph through a concrete wall and into a tree. He stepped out of the vehicle and walked away. A guy in Florida was driving a Tesla Model S on a highway when he got into a head-on collision with a Honda. Both people in the Honda were killed instantly, the Tesla driver pulled over, got out, and called the police.
They don't have a moat. They have a titanium fortress built on a cloud a mile above the ocean. Unless something drastic changes in the next few years,
Or.... (Score:2)
This Jeffrey guy is being told by the car deals who hate Tesla to try and convince him to get out of their market because he's fighting their laws.
Batteries are *HARD*. (Score:4, Insightful)
I think Elon Musk is awesome, but I haven't seen him do anything, battery-wise, that makes me think he's got anything revolutionary up his sleeve. If he does, I completely agree with her -- or at least make it a separate company to do "battery stuff." But otherwise, getting rid of the "Motors" in Tesla to go and try to be Yet Another Company Trying To Make Batteries Better is probably a fruitless endeavor.
WELL THANK GOODNESS... (Score:5, Funny)
.. finally, some fucking "bond manager" had to come out and tell Elon Musk what HAS to happen.
It's not always all about the money. (Score:4, Insightful)
Terrible Idea (Score:2)
Nothing drives engineering like a tangible end goal that is big and easy to understand. Want to make batteries better? Have an engineering target that says what size car they have to fit in...
Tesla makes a better car than a "normal" car. It is faster than almost every sport sedan. It has excellent styling, excellent practicality (seating for 7!), very good handling.
Even if it weren't a pure EV, it would be an interesting contender.
But hey! It's also an EV. It is completely quiet. It doesn't need oil
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To be fair, it's quite easy to build a car that handles better than an American sedan.
Who would need all those batteries? (Score:2)
Might Help Broader EV Industry, More Secure Future (Score:2)
Someone wants to short TSLA? (Score:2)
Seriosly this is the same kind of trollish bullshit rhetoric I expect from Wall Street - just like "Apple should license OSX so non-Macs can run OSX".
How do you think Tesla makes money? Where are the margins (not just current, but future)? Why should a company divest itself of a technical leadership role in a key and profitable market?
More to the point, why do I care what this clown Gundlach says? and why is this drivel posted on Slashdot?
Who the fuck cares? (Score:3)
I've met with Jeffrey Gundlach to tell him how I think he should run his business. I suggested he quit trading bonds and become the guy who takes a highlighter to your receipt at Walmart.
Elong Musk is doing just fine without your help, thankyouverymuch. [google.com]
Figures (Score:2)
Sounds about like what kind of boxed-in thinking I'd expect from a bond manager. Maybe he could stretch himself a little and suggest golf carts.
Tesla's success in making very good cars surprised me, given how many failed to build cars in the past. But there's an important difference—most of those who failed were originally from the automaking industry. Looks like having that experience is more of a negative than a positive.
Great Idea (Score:2)
This is like going to Volvo and saying... hey, your cars use a lot of ball bearings, why don't you give up cars and make ball bearings instead?
Betteridge says No. (Score:2)
Tesla creates demand for batteries. Until recently, they have been only consumers of battery production. But they have been the largest. If they stop making electric cars, what happens to the demand? And who would invest in battery R&D and production if demand drops?
Its simple economics. Who is this Gundlach guy anyway? I want to short his portfolio. I'll be rich.
Somebody needs to (Score:2)
Progress in battery tech is so far behind the rest of technology. You really need a battery that exceeds that of gasoline in terms of energy density. Then you need one that can go from empty to fully charged in 5 minutes without needing exotic infrastructure to do so. It needs to have a really low self-discharge rate, again, exceeding the decay rate of gasoline. And it's got to survive a few thousand charge-discharge cycles.
Notice something about that article? (Score:5, Insightful)
Some quotes from the article:
According to Bloomberg, Gundlach has suggested the Tesla Motors [NSDQ:TSLA] CEO get out of the car-making business, and concentrate fully on developing batteries for use in other vehicles.
In contrast to those traders though, Gundlach says he'd much rather buy Tesla shares than invest in a company like Twitter--and is much more concerned about the "killer" return speculative investors could get from Tesla becoming a battery-only business.
He sees Tesla as a better investment than technology companies like Twitter, whose shares recently dropped to their lowest point yet, less than a sixth the price of Tesla shares.
This article has nothing to do with technology and everything to do with maximizing third party investments. This is exactly what's wrong with the world right here, in a nutshell. Here we have an honest-to-goodness NEW thing. The Tesla car company. Finally a viable alternative to gasoline cars. The future. Less carbon emissions. Something to help the world. It's a beautiful vision.
So of course some day trading jackass wants to strip the future of that vision so he can get a better return on his stocks. To hell with the future, money is involved!
Makes me sick.
Smart fella, this one... (Score:2)
Bond trader: "Oh, I see you're making two very good products that work together, have solid demand, and have intellectual property potential. Why not just make one of them instead?"
Yet Another MBA Sabotage Attempt (Score:2)
Sure. A bond trader trying to tell a real businessman how to run his company and tell him what a better product line would be.
Every company I worked for that put an MBA at the helm, failed. Those MBAs didn't understand what it took to create a product. They didn't understand production. One CEO got put in place didn't even know what products the company made (that company only lasted six months after he took over). And here we have a financial moron trying to tell an engineer how to run his company and what
Yeah, Elon... (Score:3)
the [Tesla Model S] impacted a roundabout at 110 mph, shearing off 15 feet of concrete curbwall and tearing off the left front wheel, then smashing through an eight foot tall buttressed concrete wall on the other side of the road and tearing off the right front wheel, before crashing into a tree. The driver stepped out and walked away with no permanent injuries
Yeah, Elon, quit making cars. Leave that to the people who know what they're doing!
Re: (Score:2)
Once the system design settles down in a few years Tesla may decide to sell batteries, or more likely batteries + power system controllers + engines, to lots of other carmakers. And in turn decide that the component business is better than the 'car' business. Gundlach may ultimately be right, but he is most certainly way, way too early for that strategy change.
I think that a major difference is that right now the 'Tesla' brand name is seen as hot/premium. It's cool to be in a Tesla, much less driving one. As long as the company can keep that up it can enjoy a price premium even over it's performance and safety advantages.
Time it right Tesla could be bought out by one of the other auto manufacturers for tens of billions. But I don't think that Musk is ready to sell yet...