Tesla has shown several areas where they have a distinct and growing lead over legacy Internal Combustion Engine (ICE) competitors.
EXECUTIVE SUMMARY by @GeorgeHawley
"A company succeeds by profitably pursuing their mission.... Tesla has jumped the automobile market and has locked in their lead with:"
•Great cars (S and X) including performance, features, looks, range, and safety
•Worldwide Supercharger network
•Big battery factory
•Big, automated car factory
•Tesla fans, early adopters, and technology enthusiasts
TABLE OF CONTENTS
•Charging: Got Juice?
•Battery Pack Helps
•Style and Substance: Franz von Holzhausen and JB Straubel
•The Gigafactory: Tesla's Not-so Secret Weapon
•Controlling Costs and Customer Experience
•A Much Better Driving Experience
•The Tesla Effect: Fans, Early Adopters, and Technology Enthusiasts
•First-mover and Competitive Advantages
•The Model 3 has Innovative Design Features
•Demand, Supply and Profits
•Strategic Engineering Choices
•Why Not Join Supercharger Network?
•Pride, Prejudice, and Perspective
•Mollom work-around Footnotes
•Some Other Posts
•References to Other Contributors
•About This Post
•Tesla's mission statement takes the clear unambiguous higher ground and does not pander to purely financial opportunities or technical sensibilities.
•Elon wrote the Secret Master Plan (Part 1) to let everyone paying attention know that while Tesla was starting out in rarefied air of high-end sports cars, they were not going to stay there.
•Elon wrote the Master Plan, Part Deux to show where autonomy, ride sharing, sustainable energy, and covering all major ground transport are the next phase.
•Because Tesla is motivated by more than dollars and cents and technical intellectual property, Elon was able to release all of their patents to those that would use them in good faith.
•"Tesla has Elon Musk and an energized and talented workforce. People love working there." -- @Chunky Jr.
•Tesla is the only automaker with the express goal of being part of the solution to pollution.
•They refuse to make a profit on service... since that would be a conflict of interest. [@OP Note: saw a post recently quoting financials reported by Tesla stating 1% profit on service]
•They also are driven to make cars last a million miles... so that fewer cars need to be made per capita.
SAFETY FIRST [4.1]
•The Model S actually rated higher than 5 stars, but that is not possible so it has a 5-star safety rating
•The Model X actually rated higher than 5 stars, but that is not possible so it has a 5-star safety rating
•"The Model 3 will be rated 5 stars in every category." — E. Musk during M3 Unveiling
•The Model S broke the machine that was meant to test its frame. It can handle many times its own body weight on its roof. In case it rolls over and...
•Both the Model S and Model X are very unlikely to roll over. The testing machine again had difficulty w/ this test.
•In addition to the passive safety measures that Tesla employs, they now include active safety features as part of Autopilot.
CHARGING: GOT JUICE?
•The Supercharger network will double (3608 => 7200) by the end of the next year, 2017.
•The destination charger network will quadruple (3689 => 15K) by the end of next year, 2017.
•No other competitor has a comparable charging network, let alone two comparable charging networks.
•The Supercharger especially has enabled long distance travel and quick fill ups in dense urban areas (like London and Hong Kong).
•The Supercharger technology has improved and evolved over time which shows how valuable having experience building the network is. Tesla has some serious plans for improving them:
•Stationary storage to handle demand spikes (see JB's comments about Tejon Ranch).
•Solar panels to allow charging even during a zombie apocalypse and to help generate clean electricity too.
•Liquid-cooled cables (SC in Mt. View, CA) help to improve ergonomics and in the long run how fast a Supercharger can charge.
•Stationary storage likely will improve how fast a Supercharger can charge.
•Robotic snake charging cables.
BATTERY PACK HELPS
•The temperature managed battery pack architecture where you make it out of several sub-packs which in turn are made from many individual cells is a big innovation.
•Temperature management is key to improving charge/discharge, battery longevity, and general usability—for example, no re-gen when pack is too cold/hot.
•By being able to distribute the charge load across a massive, interconnected, temperature-managed battery pack, Tesla is able to charge more quickly w/o degrading the cells too much.
•Other auto-makers build battery packs using large monolithic cells that may not even be temperature managed; This makes it difficult if not impossible to manage the charge-discharge process dynamically.
•By also building stationary storage (PowerWall, PowerPack, etc.) Tesla not only has another way to bring economies of scale, but also a large use case for re-using older cells.
•This also gives Tesla a huge resource to refine and improve their battery pack management processes.
STYLE AND SUBSTANCE: FRANZ VON HOLZHAUSEN AND JB STRAUBEL
•"Tesla does not make slow cars." — E. Musk during M3 Unveiling
•Tesla has refined their skateboard design and power train to improve quickness and driving dynamics. WIRED's pro-GM article on BOLT spends a lot of time going over how GM had to start from scratch to develop their Battery Pack (BP) and drive train. None of their experience w/ ICE vehicles was any help.
•The look of a Tesla is timeless. They do not try to be overly eye-catching or ahead of their time, but instead try to be like a Mercedes-Benz 300SL Gull Wing.
•Elon has also said that Tesla not only needs to make compelling cars, but also cars that are clearly better than the competition.
THE GIGAFACTORY: TESLA'S NOT-SO SECRET WEAPON
•When the Gigafactory is fully operational it will double the world's Li-ion battery supply (per JB and Elon). The plan is to produce 150 Gigawatt-hours (GWh) of battery packs including all but 15 GWh of cells produced on site.
•Without the Gigafactory legacy ICE competitors trying to enter the Battery Electric Vehicle (BEV) or Plug-in Hybrid Electric Vehicle (PHEV) market will need to purchase their batteries from third-party vendors.
•Tesla planned the Gigafactory to be environmentally friendly from the very beginning. It does not have any toxic emissions; It does not even have a natural gas feed. Wind, solar and geo-thermal will provide sustainable energy on site. The Gigafactory will have recycling and re-using of old BP and cells.
•The Gigafactory will cut BP costs by at least 30% by reducing shipping costs, eliminating many import tariffs, reducing taxes, supply chain management, and economies of scale.
•In addition to hard cost savings, by having the production of battery cells and packs under one roof, the Gigafactory should help drive innovation and improvements.
CONTROLLING COSTS AND CUSTOMER EXPERIENCE
•Tesla's production lines are heavily automated and rely on robots to do most of the work.
•Tesla is not burdened by legacy pensions and union contracts. I would guess they would be like a lot of other high tech firms in Silicon Valley and focus on Employee Stock Purchase Program and 401(k) retirement savings accounts instead.
•Tesla purchased the former NUMMI plant for a song. Tesla plans to expand production back to at least NUMMI's output of 500K vehicles per year.
•Tesla sells made-to-order vehicles directly to buyers instead of relying on third-party franchise dealers. This allows Tesla to focus on customer education instead of moving inventory. Even in states where Tesla is not allowed to have stores, they are often able to have "Galleries" where customers can still find out about the cars.
•Stores and Galleries are often in high foot traffic areas like malls instead of by the highway. Think an Apple Store instead of Walmart.
•"The company-owned stores have twice the dollar sales per square foot of Apple." Apple has long been the leader among retailers by that metric. — Elon during TSLA Q2-2014 Call
•A good portion of a third-party franchised dealer's profit comes from the Service Center. Tesla has pledged not to make problems w/ their products a profit center.
•Tesla recently scored "last" in being Salesy during a secret shopper survey.
•Tesla will more than double (213 => 441) the number of Galleries, Stores, and Service Centers by end of next year, 2017.
A MUCH BETTER DRIVING EXPERIENCE
•The Tesla Grin is legendary.
•A Tesla should come w/ a warning sticker: "Be careful, don't drive a Tesla unless you are prepared to buy one."
•Teslas have a very low center of gravity especially the skateboard-based Model S, Model X and Model 3 because the BP is at the bottom of the body.
•The BP not only lowers the CG, but also adds stiffness which helps w/ safety and driving dynamics.
•Instant torque is available from a single-gear drive train. That means that there is no shifting, no waiting for the engine to rev up, and tire slip is managed by software. So even RWD versions have excellent traction in snow.
•Elon compares it to the difference between analog and digital.
•No legacy ICE drive train can add AWD and improve both driving dynamics and economy. With a dual-motor Tesla you get both better handling and acceleration as well as better range/mileage.
•One way to improve driving is to not have the driver drive. The Autopilot convenience upgrade enables drivers to relax and let their Tesla do the driving.
•Autopilot hardware is standard on the S, X, and will be on the 3. This enables Tesla to gather massive amounts of real-world data about how their system is working.
•Every new Tesla will get better over time because they include Over the Air (OTA) updates.
•The large center touch screen allows Tesla to add features via OTA updates as well as quick and easy access to all settings for the car.
•The temperature managed BP allows Tesla to extend the life of batteries as well improve charging efficiency.
•Single-foot driving is enabled by regenerative braking. So when a driver wants to slow down, they lift their foot and re-gen slows the car while recapturing some of the cars energy.
•Self-driving cars, plus automated snake charging cables will help use charging resources more efficiently.
THE TESLA EFFECT: FANS, EARLY ADOPTERS, AND TECHNOLOGY ENTHUSIASTS
•The fact that so many people are reading this line is significant.
•The community that has grown up around Tesla helps to get the message out and helps Tesla achieve its mission.
•Tesla is able to sell every car it makes and collect 400K+ reservations w/o doing any traditional advertising. Instead Tesla uses this money to expand its charging networks.
•Tesla's approach is similar to Apple's which uses occasional high impact events and secrecy in general to drive interest. In addition, Tesla and Elon use Twitter to maintain interest and notify followers about important items; See the buzz from "The 'D' and Something Else" tweet.
•It's not every company that can claim such a large community of well-informed, helpful, and regular followers.
•I remember quite fondly how many of you gave me support and well-wishes for my wife's recovery.
FIRST-MOVER AND COMPETITIVE ADVANTAGES
•Excluding the battery pack, the compact electric drive train should make Tesla cheaper to mass produce, and functionally better than comparable ICE vehicles.
•The Gigafactory and [consistently improving] battery costs at 7%/year can be a sustainable competitive advantage.
•The network effect of the Superchargers should drive demand exponentially.
THE MODEL 3 HAS INNOVATIVE DESIGN FEATURES
•Non-traditional Dash – Increases available space, reduces size of car, cuts costs, may have HUD (or as an option).
•All-glass Roof – Increases internal space, improves aesthetics. With volume cost of the glass should be low.
•Designed for Ease of Manufacturing – Having learnt from the difficulties of MX complexity, the M3 design avoids electro-mechanical complexities like the FWD, auto open/close doors, complicated seat mechanisms, or large windshield. Even the trunk got simplified. I expect Tesla will continue using some Aluminum, along with Steel but with simpler manufacturing processes like stamping versus forging/casting where possible.
•Low-cost Drive train – The simplicity and low costs of the electric dive train including the critical item, the battery pack. Its cost has been falling significantly, and has regular compounded improvements over time.
DEMAND, SUPPLY AND PROFITS
•We know there is huge demand for M3 in the $35K price range that probably extends all the way to $60K (before any incentives). Considering the huge demand may exceed 1,000,000, the ASP will be closer to $50K. [@OP's note: it seems the more M3 reservations there are the lower the ASP will be.] Tesla is likely to offer options like battery that can give 300+ miles range, AWD, Tech Package, Autopilot, fancy seats, and interior. Tesla will likely focus on selling the M3 with more options and thus higher prices.
•With a simple design like M3, taking advantage of metal prices that have fallen by at least 50%, commodity electronics, falling cost/kWh battery prices, etc. Tesla should be able to achieve 25-30% gross profit margins. Or 15% net profit margins once they reach high volume.
•The huge advantages are the cost/kWh falling at compound annual rates of 5-7%. We all know what compounding does over time. The other advantage is the simplicity and low cost of the drive train, compared to ICE. Tesla itself has unique sustainable competitive advantages. Hopefully, they will not squander these advantages with another expensive Model X type project. This kind of stuff happens, Apple did the Lisa Computer, Howard Hughes built the Spruce Goose, but companies learn.
STRATEGIC ENGINEERING CHOICES
•The Vertical Mfg Strategy — setting up their own metal stamping and casting operations
•Using CMT welding process
•Setting up GF as a modular plant to allow production roll ins of different battery chemistry while maintaining production
•AC Induction Motor – the technology potential of uP control algorithms and near-term higher powered GaN IGBTs put Tesla into a technology with a lot more room for innovation than tweaking the material sciences of magnets for PM based motors; what will a P85DL do when the contactors, invertors, and batteries can be improved enough to match what the motors are capable of.
WHY NOT JOIN SUPERCHARGER NETWORK? THREE MAIN REASONS:
•Technical — need to support Supercharger protocol; need high-capacity circuitry, cells and pack to charge at 120+ kW
•Business/Financial — Tesla would need to be paid to share, so company would need a big cash payout to join; Legacy ICE makers have a vested interest in the status quo, they are making their money from franchises, who make their money from service & repairs
•Optics/Appearances — How would it look to admit Tesla has the best charging tech and infrastructure? How would it look to have high-power, high-performance EVs on the same lot as high-maintenance, gas-guzzling ICEV? The nature of instant torque and long-range batteries means an EV can be very quick.
FINALLY, THE WRONG REASON
•No Rush — Tesla is defying all odds w/ The Big Ramp Up. And, even if they are successful, they only will be making a million cars per year in 5 years. Legacy ICE makers feel they can wait for battery production to increase, common charging standards to evolve, and EV costs/performance/range/demand to improve. The baby steps regulators are forcing them to take plus the market pressure Tesla's success provides has forced them to react. Nacent programs like the Leaf, Volt, and i3 are evolving into long-range programs like the Bolt and e-tron concept. Even though the Bolt's battery + drivetrain is provided by a third-party vendor, LG, GM has developed a testing program that will help them going forward.
•I believe Tesla has game-changing advantages that give them a head start that will be difficult to overcome. But, legacy ICE makers obviously do not see an existential threat. BMW's new #WaitOrDrive ad campaign shows that they believe Tesla Model = reservation holders can be lured away by a plug-in hybrid w/ only a few miles of battery range.
It remains to be seen if they are right to wait or drive the transition to sustainable transport. (added here from original thread)
PRIDE, PREJUDICE, AND PERSPECTIVE by @Red Sage
•PRIDE IN WHAT THEY DO. Being able to design beautiful machines with bodies that stir the soul. Creating fuel efficient vehicles with improved emissions and powerful output by gently massaging gear ratios, shape of pistons, balance and weight of crankshafts. Staying one step ahead of those long haired barefoot unwashed hippie treehuggers by bribing officials to ensure the most stringent of regulations are never actually enacted or enforced. Because no one ever needed more that 12 MPG in a diesel pickup truck with a 55 gallon reserve tank anyway.
•PREJUDICE AGAINST EV. They've claimed that electric vehicles were 'inferior', not feasible, unworkable, impossible to manage for so long that they believe their own [BOLSHEVIK]. They have ordered their internal teams to deliver electric cars that follow that narrative for decades, and they did just that. So they got ugly cars that were slow to charge and you couldn't go anywhere in them and they were uncomfortable and lacked features and wouldn't have a snowball's chance to succeed in any market -- because even Californians were addicted to oil -- whether they admit it or not. They fired and blacklisted anyone who wouldn't play ball, that tried to actually improve EVs, or make them workable. They buried technologies or sold them to oil companies to make sure they didn't come to light. They ignored any and all evidence to the contrary at every turn.
•PERSPECTIVE BORN OF DECADES OF EXPERIENCE. Knowing that come what may -- no one really wants to buy anything other than a big V8 and feel that rumble through the floorboards with each tweak of their ankle against the accelerator pedal. The roar from under the hood, the throaty exclamation from the tailpipes. Seeing that the vanishing point, the end of the road for ICE vehicles will never be reached, because 'Petroleum is Eternal'. It has to be. This is a big world, it will still be around long after we are gone. But there is only one life to live, one chance to go for the gusto, so you'd might as well make the biggest mark you can. Weather the storms and come back stronger than ever, as long as everyone can be convinced that gasoline is cheap you'll be able to convince them to keep buying your products.
These are primary factors that prevent traditional automobile manufacturers from considering the notion of building fully electric cars.
Please let me know what I can clarify, correct or add....
If you liked this post, here are some other posts you might enjoy:
•All the reasons I pre-ordered a Tesla Model 3 — by Mark Morford @ SF Gate, starts w/ "Few events in human life match the soul-cringing unpleasantness of buying a new car in America."
•Oh Yes! Model 3 is Unveiled — recap right after the unveiling plus a bunch of other info added as it became available including pictures of the trunk, glass top, and manual recessed door handles
•Rebuttal: The Gigafactory is Tesla's Huge Mistake — my thoughts rebutting a short's view that Gigafactory is a bad idea.
•Under Promise, Over Deliver — my thoughts on what the Model 3 Unveiling should include as well as some revisions after the event.
•How To Easily Include the Model III Symbol** — inspired by @Red Sage over a year ago.
•The Wait Begins: What it was like at Santana Row this morning — what it was like to wait inline and some polls/counts I took while in line
•Model 3 PD [Ludicrous] will be a sub-3-second car — "Tesla does not make slow cars." -- E.M.
•Daydreamer's Script for The Model 3 Event — a vision I just had to share about what an intro video to the M3 Unveiling could be like.
•Model 3 vs. Model S: How will they be different? — A very busy thread started over a year ago. I've updated w/ some actual Model 3 info as well.
•Model 3 FAQ — Another of J.T's Frequently Asked Questions posts. Need I say more
•Teslarati - Tesla Model 3: A change is coming and it will be huge — Our @PhillyGal's ode to Tesla and the Model 3
•Tips & Tricks — Inspired by J.T's great FAQ, this post shows how to post images, search this forum and other useful things.
•Model S Efficiency and Range — JB and Elon's blog post on range and efficiency
•Wait, But Why: How Tesla Will Change The World — Part 2 of four-part series on Elon and his companies; this post covers the story of energy, cars and Tesla.
•TMC: @Doug_G's "Cold Weather Driving" Blog — The one I always reference when people ask about dealing with the cold.
•Good Model 3 summary page by The Verge w/ great 5-minute super cut of Reveal Video.
•"Why You Hate the [non-Tesla] Service Department" by John Cadogan, Australia -- https://youtu.be/9bUntXTfjkc Referred by @brando
REFERENCES TO OTHER CONTRIBUTORS
@GeorgeHawley's comments became the Executive Summary @Tstolz Added (paraphrased)
@PeterPit "This community is worth the price and the ride. The intelligence, kindness, and wisdom make the heart warm."
@Bubba2000 Adds Great Points like "First-mover and Competitive Advantages" and "The Model 3 has Innovative Design Features"
@cephellow's Great Points
@TomKa Is the stated production target of 50 GWh for Gigafactory 1 still accurate? (definitely updated now)
ABOUT THIS POST:
This started as response to another FUD article. Once I got going, I realized it was probably better as a top-level post. And, since the Model = section is where most of the new folks are, I thought I would at least start it there. I don't have to remind the old-timer Teslans here about all of this, but maybe this will be helpful for others. I have moved it to the General section to see if folks there would find it useful, but it did not last long.
•Added links fixed some language
•Added Executive summary and links to other posts and articles
•Added quotes from other users
•Added more links
•Added section on Battery Pack Architecture
•Fixed link to "M3PDL will be a sub 3 second car" and Safety First section
•Simplified the content
•"Master Plan, Part Deux", temp. management, added my Rebuttal, general clean up, Table of Contents--adding anchors to headings turned them red, I've moved links to make them easier to find.
•Fixed TOC formatting (using tesla.com CSS classes) and added TomKa's updated GF point
•Added additional formatting tricks
•Not joining supercharger network
•Pride, Prejudice, and Perspective by @Red Sage NOTICE: There is probably not a 'Waffle Side' of The FORCE.
•Octagondd's request for clarification/specification.
•Added Verge link
•Added @brando's "Why you hate service dept...." link
•Gave up on waiting for rich-text formatting to return; now in flat text w/ most links at the end.
Mollom Work-around Footnotes:
 "All Our Patent Are Belong To You" https://www.tesla.com/blog/all-our-patent-are-belong-you or search for: "Tesla All Our Patent Are Belong to You" https://www.google.ca/search?as_q=Tesla+All+Our+Patent+Are+Belong+to+You (geek reference https://en.wikipedia.org/wiki/All_your_base_are_belong_to_us)
 @rishi.nair points out that Nissan has invested in charging networks too, just not to the same degree as Tesla.
 NUMMI Plant: https://en.wikipedia.org/wiki/NUMMI
 "What is the Cause of the Tesla Grin?" https://forums.tesla.com/forum/forums/what-cause-t%E2%89%A1sla-grin