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Analyst Aaron Bragman, of IHS Automotive, on Tesla's outlook

Analyst Aaron Bragman, of IHS Automotive, on Tesla's outlook

Published by GreenCarReports:
http://www.greencarreports.com/news/1067021_2012-tesla-model-s-electric-...

Actually, I wanted to post this in the thread on the Morgan Stanley guy who managed to create a very welcome buying opportunity for some of us recently -- but I cannot find that any more. I start wondering if that's may fault, or if these forums suffer from selective memory syndrome...

EdG | 2 mars 2012

Assuming gasoline prices continually rise between now and 2014, when Model S wait times grow smaller, sales will blossom. By that time there will be thousands of cars on the road, and news organizations will be interviewing owners about how they've managed to ignore range anxiety. Drivers will see our cars and be jealous. Gen III will be where we were 6 months ago: with bunches of people wanting what doesn't exist yet.

Barring any major faux pas by TM, I think that analyst will be quoted next year again saying he was wrong about TM.

Crow | 2 mars 2012

@EdG
I agree. The car isn't even out yet and the reservations are approaching 10,000. I haven't done the math but I think reservations are at about 20 per day. The thing he doesn't understand is that the S isn't just eating into luxury ICE sedan sales. It is a cmpletely unique car and there is no competition. It has the market to itself.

Mycroft | 2 mars 2012

He also assumes that only people who would buy expensive luxury cars like Merc, BMW and Porsche are buying the Model S. I bet he'd be shocked at how many people who have never bought a new car before are stretching for the S.

He'd probably then say that they're just greenie, wacko, early adopters, completely missing the point.

The Model S is a completely new kind of sedan. One never produced before.

BYT | 2 mars 2012

@Mycroft, you called it! I never purchased a BMW, Benz or any other car over the price tag of $28k in my life. I have always been a loyal Honda owner and my wife has always purchased Toyota's or Honda's as well. I plan on joining a Tesla Motors loyalty program after I drive off with my S!

skystream3.7 | 2 mars 2012

the only new car i have purchased was vw jetta tdi. I agree this car is like nothing else. #P6997 We the people have had a reason to be vain and own a car like this. Now we do EV

Brian H | 2 mars 2012

Well, I think the 2,000 prediction is his estimate of how many TM will actually be able to get out the door in 2012. I doubt he's thinking there will be 8,000 cancellations!

Jason S | 2 mars 2012

Yes, the analyst is looking at it as if it was just another ICE. This is old-style thinking ... maybe the kind of thing that the iPad faced when compared to a laptop or netbook.

Same analysis would indicate the Leaf would have zero buyers. It just doesn't provide similar capabilities to cars in same price range. Yet somehow that is ignored because luxury cars are somehow different.

I'm also in the category of people spending a great deal more $$ on this car than I ever would've dreamed spending on a car. And I'm very much looking forward to being an early adopter.

Soflauthor | 2 mars 2012

One of the more interesting comments in the article is the suggestion that Toyota, via the Lexus brand, might acquire Tesla at some point in the future. From the article:

We think, however, that Tesla would make a very interesting possibility as an electric luxury brand that shares space in Lexus showrooms. Thus far, Lexus hybrid vehicles have largely fallen short of customers' (and even dealers') expectations--with the possible exception of the latest compact hatchback, the CT 200h.

Lexus understands how to build very high quality cars in substantial volume and has the capital to grow the Tesla brand. Tesla has created an entirely new category—luxury EVs—and would dovetail nicely with Lexus' market. Lexus would also give EVs a level of credibility (within the segment of the market that is completely ignorant of them) that might be difficult for Tesla to achieve.

I think Lexus and Tesla might be a good fit a few years out. Then again, my understanding is that Diamler has the right of first refusable for any acquisition, so a marriage might be difficult to consummate.

BYT | 2 mars 2012

I hate to have Tesla acquired as I can see the fate for a great idea such as this fading fast. That would make our Model S all the more valuable however. I dunno, catch 22!

TikiMan | 2 mars 2012

One of the biggest problems with all other EV and hybrid cars in the market place today is due to ONE KEY factor... UGLY!!!!

People today don't want anything they plan on spending a lot of money on to be tasteless looking. The technology can be off the roof, however, if it looks ugly, it's not going to sell well.

We are a species that prides itself of image, and the proof of that is right on our bodies... FASHION (clothing, jewelry, watches, hand-bags, etc)! Even the MOST unfashionable people on this planet are still concerned with image within their peer group. We spend tens of billions of dollars extra to 'look good', when we could simply survive fine on just average.

In the case more almost every EV and hybrid car on the market (besides Tesla and Fisker), the vehicles don't even remotely resemble the better looking all ICE counterparts. Even in some cases, where the vehicle comes close, they end up putting really ugly wheels on the hybrid version, or do something that runes the look of it.

It s almost as if these car companies really don’t want people buying these ‘greener’ vehicles. Take for instance the Nissan “Leaf”. Anyone that would find this car appealing is likely not very concerned with their image (well, other than maybe an Ed Begley Jr ‘type’). On the other hand, had Nissan built the ‘Leaf’ to resemble a Nissan ‘Altima’, they would have sold hundreds of THOUSANDS of it by now!

mwu | 2 mars 2012

I think by the time a company with enough capital might be willing to purchase Tesla, Gen III will likely be out or on its way and I think Mr Musk would want to see that through. After Gen III launches (assuming it is to great success), I think Tesla would be a much more expensive purchase.

Timo | 2 mars 2012

Mycroft analysis applies to me too. I wont buy Model S, but I did consider it. Gas guzzler of that price I would never even think of purchasing (new). Give me a bit smaller version of Model S and couple of brain cells to people here that decide about car taxes and I will hurry to get first in reservation line.

Main reason is obvious: with gas prices here I save money in long run, and that "run" isn't very long (not to mention all the other benefits BEV has).

Tom A | 2 mars 2012

My favorite line from the article:

"In a nutshell, I am much more confident about Tesla's ability to survive now than I was this time last year. At that point, I thought the idea that Tesla could survive without outside help from a major enterprise - likely another automaker - was remarkably uninformed."

That much, I believe.

Tom A | 2 mars 2012

+10 Mycroft!

Also, what's the deal with them talking about TM selling 30,000 Model S in the US? Did I read that right? It seems these analysts can't see the forest for the trees.

TM has always targeted 20k Model S per year, and to a global market. Even giving the article the benefit of the doubt by saying that the 30k included 10k Model X, that's still 30k units sold globally.

So, TM has implicitly demonstrated that they expect to sell at least 20,000 Model S globally per year.

Any reasonable analysis would find it more likely that TM's production targets are going to fall short of, rather than saturate, their market.

Tom A | 2 mars 2012

There are people who are stretching themselves for Leafs - they are great second vehicles, or primary commuters. Many people care about any combination of lower operating costs, lower pollution and energy independence. That means a lot to a lot of people.

Both TM models can take over primary duty, due to their industry-leading range and cargo space.

blurry_eyed | 2 mars 2012

Soflauthor, very good points about Lexus. One thing for everyone to remember is that Toyota, Daimler and Tesla have working relationships with each other. The following statement is directly from the Tesla 10-K filing from last week with the Securities and Exchange commission:

'In May 2010, we and Toyota announced our intention to cooperate on the development of electric vehicles, and for us to receive Toyota’s
support with sourcing parts and production and engineering expertise for Model S.'

So in a way, Toyota is already a partner in building the Model S. I would suspect that Toyota has been a great mentor to Tesla in the methods of engineering and production of high quality vehicles. Also at a supplier level, having Toyota and Daimler as advocates has probably helped Tesla forge relationships with quality suppliers.

Remember too that Toyota (and GM) used to produce cars at the NUMMI plant that Tesla is building the Model S in, so I'm also sure that Toyota had a lot of expertise to share in that area as well.

Sudre_ | 2 mars 2012

In general after reading the article it clearerly appears the guy has no clue how to forcast anything other than ICE cars. He so much as admits he screwed up last year then this latest article seems to tow the same line as his opinion last years.
In short this is what I heard after reading the article, "I didn't think it was possible for Tesla to make it this far last year and altho they have proven me wrong I am going to stick to my guns so I don't look like an idiot."

BYT | 2 mars 2012

From my experience, we want these analyst to talk out of their anals and underestimate what Tesla does. Then when Tesla reports and delivers good on their promises, the stock jumps up! I just hope it happens before I get the call to put my money down for my Model S, but then again, I guess I can take out a bigger loan and just hold my TSLA shares longer to capitalize on the analyst' :D

Tom A | 2 mars 2012

In one sense, I can't imagine every single multinational automaker continue to putter and struggle with EVs while Tesla Motors rises to their rank (I include everyone from GM to Mitsubishi to Porsche) over the next two decades. Right now, they are cute and tolerable with only one vehicle model (albiet, amazing) actually in customer's hands while production of that model is wrapping up. Two full lines of successful GenII and GenIII models by, say, 2020, with ranges and performance that continues to smoke them in every meaningful category, forebodes a different story.

In the grand scheme of things, I guess there is room for that much, but I don't pretend to understand corporate mentality. I don't think it would surprise anyone, though, if one of the automakers *cough*Toyota*cough* will pick them up when the time is right.

I just hope that Musk stays at the helm (which I don't think he will if the above scenario takes place). If there's one iron-clad comparison between Tesla Motors and Apple, it's this: Musk is the lifeblood of the company. TM dances to his tune, and the success of the company to date speaks for itself. If TM ends up with a stick-in-the-mud, "cautious" VP from any of the multinational automakers taking over the company/brand/etc., then what? How many dynamic visionaries are out there to take his place?

David70 | 3 mars 2012

Well, it could be that a some point he (Musk) will feel he's accomplished his goal and move on to something else.

ckessel | 3 mars 2012

Until the DOE loan is paid off, I believe Musk has to retain some significant portion of the shares. I forget what it is, but it was discussed in some interviews.

Brian H | 3 mars 2012

When big companies buy small innovative ones, they generally lose what they bought. The very things that made the small company valuable are the first things the internal admin of the big company quashes. I went thru exactly that in the dot-com era (My Desktop purchased by internet.com). Their whole strategy eventually boiled down to folding the site and its visitors into their totally aseptic corporate template. And alienated all the staff and visitors they had paid for.

The exceptions are few, far between, and short-lived IMO.

cerjor | 4 mars 2012

My feeling is that in five years TM will no longer exist. It will either fail because they don't continue to sell cars and be profitable OR they will be very successful and will be purchased by Toyota or MB.

Brian H | 5 mars 2012

Well, those are the 2 worst possibilities, all right.

Timo | 5 mars 2012

If something like Toyota or MB buys Tesla that might not be a bad thing, definitely not the worst thing. Much worse would be to get bought by clueless competitor just to get car killed (Tesla to GM for example).

EdG | 5 mars 2012

I'm not looking forward to bringing my car back to Lexus to be told about some new fictional service needs. In the past, sitting in a Lexus waiting room for service to complete, there was always one of us given the bad news of $1000 of service needed. Fortunately, it was always taken as black humor and not horrors, given the assumed spending power of Lexus customers. Please, never again.

David M. | 5 mars 2012

@EdG - I agree completely. I've owned 3 Lexus vehicles and I never look forward to maintenance at the dealership. The idea of bringing my Model S to a Lexus dealership for service sends shivers down my spine. Talk about a buzz kill . .

TikiMan | 5 mars 2012

cerjor@hotmail.com,

Personally, the way I see it... If Fisker goes under completely, then I think there is a possibility Tesla could be next. My reasoning is based upon the fact that both are selling fairly expensive EV vehicles for the upper-middle-class.

Although I don’t compare the ‘Karma’ and ‘Model S’ to each other, as both use different types of technology, (which I am sure everyone here already knows about), however, both are start-up companies with similar goals in mind, and have government loans to do so.

Personally, I think Tesla has a better chance of success than Fisker in the long-run due to many factors; however, with all the money that is behind Fisker, I think we would see them completely dissolve at least few years before Tesla suffers any kind of similar losses.

Brian H | 5 mars 2012

Well, the market is being rational. Fisker is asking for Karma, with an all-show no-go vanity toy. Elon's intent from the beginning was "the best sedan -- period". Totally different approach, and the Invisible Hand's brass knucks are landing the first blows on Fisker.

phb | 5 mars 2012

The problem with the Fiskar Karma is that it is simply a better looking (and some might not even say that) slightly quicker Chevy Volt. Oh, and it's north of $100,000 for the base model. Fiskar isn't a tech company, they're a design firm. In the end, if the design doesn't work, the company is bust because they have nothing else to sell (no IP).

I think that Tesla will sell 5000 cars in 2012 if they can make that many... that's even if almost half of all reservation holders drop theirs.

Timo | 5 mars 2012

Don't confuse Fiskars with Fisker. Two completely different companies.

Fisker is car company, but heavily dependent of design for success, you are right about that. Unfortunately Fisker Karma is not that good as a car, it just is vanity toy like Brian says, and you can get better vanity toys if you have money from ICE -cars.

phb | 6 mars 2012

@Timo: Oops, sorry for the typo. I think that you're right on about the substance, or lack thereof, of the Karma. Top Gear reviewed it earlier in the current season and they kept going on and on and on about how innovative the tech was. It was driving me nuts. Then again, I'm getting a little tired of Top Gear (except for the specials) these days.

If they say nice things about the Model S in the next series I may like them better again. I'm not sure how, but they'll manage to get their hands on one for testing.

Volker.Berlin | 6 mars 2012

I'm not sure how, but they'll manage to get their hands on one for testing. (phb)

Agreed.

If they say nice things about the Model S in the next series [...] (phb)

Not gonna happen.

phb | 6 mars 2012

Yeah, you're probably right; I guess that I'm just an optimist at heart.

I could see Tesla letting TG come to the US and test a Model S on the roads here but I seriously doubt that they'll be sending one to England for testing. Oh, and Mr. Clarkson will NOT be invited. ;-)

More likely though is that they will find one of the Signature buyers who is willing to rent out their Model S out for the day.

David70 | 6 mars 2012

They have to pay a very very high rental rate for me to trust them. They'd probably do their best to brick it. Even through they wouldn't succeed, they'd surely do some damage to the pack if they did try.

Teoatawki | 6 mars 2012

Can't say I'd be willing to let TG touch my car for less than $2K per day plus a $1M bond. OTOH I'd probably pass the fob to Robert Llewellen (Red Dwarf, Fully Charged) no questions asked. All this is a moot point since I doubt TG or Robert Llewellen will show up on my doorstep near Seattle this fall.

stephen.kamichik | 6 mars 2012

I would only let the Top Gear clowns in my passenger seat while I do the driving.

Volker.Berlin | 6 mars 2012

I'd probably pass the fob to Robert Llewellen (Red Dwarf, Fully Charged) no questions asked. (Teoatawki)

+1 :-)

BYT | 6 mars 2012

They can all observe mine from afar, I'm overly protective! :D

mwu | 6 mars 2012

Yea, they won't drive my car, but they could let me wear a stig outfit and helmet and race around their track

Brian H | 7 mars 2012

phb;
I suspect <10% will drop, and it will be invisible because reservations will grow by 100%.

Timo | 7 mars 2012

Pessimist. Booo.

superchevas | 28 septembre 2012

I wish they would come out with a cheaper model, 25k maybe, even 30k, would honestly make an effort towards owning something within a more affordable range, I'm sold on the idea this is the future, and I like it.

mrspaghetti | 29 septembre 2012

@superchevas: stand by. Gen III duenou 2015

mrspaghetti | 29 septembre 2012

Ugh should read "due out" 2015

Brian H | 29 septembre 2012

Dec. 31, 2015. Recent predictions are for approximately zero deliveries before year end.