EV Discussion thread

Grumpy_chap

Martyn1981 said:

@GC - Good news / bad news!

I know you weren't that impressed with the TM3, but you might find that a longer test drive (Tesla usually let you take the car away for ~1hr), settles you in.

Only mention this because there are rumours that Tesla will be launching the RWD LR TM3 in the UK. This will be priced about midway between the TM3 and the TM3 AWD LR.

Bad news, is that the rumour is that they will only be for business customers, but who knows?


Edit - Should have searched for news first. Looks like it's a stron(ish) rumour:

Tesla launches Model 3 Long Range RWD variant for commercial customers

A Tesla Account Manager in the United Kingdom (UK) recently announced the launch of a Model 3 Long Range RWD variant, specifically catering to the needs of commercial customers. 

The Tesla Model 3 Long Range RWD variant will be available for B2B fleets with a starting price of £46,990 ($58,358.15). Tesla’s Senior Key Account Manager in the UK, Karen Bowen, announced the Model 3 LR RWD through LinkedIn a few days ago. 

Thanks - we did have a 1 hour test drive, in fact I think we were about 5 minutes over by the time we took the car back.

The idea of a lower cost model just for business customers is only going to drive further division between those with a company car / SS scheme and those without.

If EVs are to really drive forward and grow the market penetration percentage, this needs to drive beyond only the company car sector.  That may require that the current incentives (SS) are ceased.  With no incentives for anyone, the market pricing needs to compete head-on and be affordable.

I doubt we'll have time to do any more car hunting this coming weekend, so we'll see what transpires in the next few weeks.
TESLA website only lists 5 used TM3LR today so, either they sold out over the weekend, or there is a price adjustment coming.

1961Nick

Martyn1981 said:

Heard about this, and found an article, where Renault seem to be saying 'they get it". More a discussion point than news, but I think Renault's thoughts on the Tesla price cuts, and the impact on the industry are positive, in the sense that they can see a big transition is ahead.

Not sure I agree with Elon, when he says:

We’re not “starting a price war”, we’re just lowering prices to enable affordability at scale.

I think he may have missed the point. Yes, they are lowering prices as costs fall, to expand the demand market, but intentionally or not, they absolutely have started a price war. Personally I think that's great for the BEV market from the buyers point of view, but of course, it's really hard on the legacy ICEV manufacturers, who need as much time as possible to transition. Ideally they want a slow transition, with ICEV profits to pay for a BEV expansion. With hindsight, starting 5-10yrs sooner would have helped them, but tbf even optimists like me, didn't spot how quick things would change till about 5-6yrs ago.

Tesla’s price cuts are a challenge to automakers, says Renault CEO

Tesla’s recent further price cuts should be taken as a “warning” for other automakers amid what some see as an “EV price war,” says Renault CEO Fabrice Cambolive.

Since the start of the year, Tesla has adjusted its pricing many times, including two significant price drops across its entire lineup.

The aggressive price drops have led other automakers to reduce the prices of their electric vehicles – leading some to believe that Tesla might have started a price war.

Following the most recent price drop in Europe last week, Fabrice Cambolive, the head of the Renault brand, said that he believes automakers should take Tesla price cuts as a “warning” (via Reuters):

It’s clear that (Tesla cutting prices) is a challenge, starting with the cost side of things. It’s a warning that we are looking at.

Tbh, £32,000 for a Zoe is at least £7000 too much. It's only £6000 less than Tesla were selling the Model 3 SR for at the end of March!

The legacy auto price model for EVs has probably been established against Tesla's premium pricing during the global chip & raw material shortage. The danger there is that a significant chuck of that premium was to balance demand with supply rather than to compensate for higher input costs... many of which didn't materialise in the long term anyway. That resulted in Tesla having a 25% margin to dip into for selling price reductions whereas much of legacy auto has little or even zero margin. Some still make a loss on every EV they sell & are still having to reduce prices... the manufacturer that's been brutally honest about EV margins is Ford & it's not a pretty picture! The ability of Legacy auto to hide EV losses with ICEV profits maybe short lived as ICE overcapacity is looking likely & discounting/incentives will return with a vengeance... possibly final quarter 2023.

While all the above is happening, Tesla continue to find new ways to reduce their production costs & increase output. The elephant in the room is of course the Model 2 & that's an existential thread to several automakers. £22,000 Model 2 or £32,000 Zoe? I doubt Renault can absorb a 33% price cut & re-engineering it to be competitive would take years - by which time Tesla have moved the goalposts again.

JKenH

We don’t really know the thinking behind Tesla’s price cuts but there has been plenty of speculation. Some are saying it is the start of a price war to put the competition out of business, some believe it is to sustain demand in the face of growing competition while at the same time expanding manufacturing capability, while others say it is because the cars have become cheaper to build and Tesla’s mission is to expand EV ownership - not make enormous profits. 

Is it working? I don’t know the scale of price cuts in percentage terms (and it varies across markets) but believe in 2023 it has been at least 10%. Critics will say deliveries are only up 4% on Q4 while fans will point out deliveries are up 36% in 2023 Q1 compared to 2022 Q1 figures. Take your pick. Pundits are expecting Tesla’s margins to take a hit but still remain above 20%.

I think it is fair to say that Tesla was supply constrained in the first half of 2022 building up a backlog of orders  but supply exceeded new orders in 2022 H2 when the backlog was reduced. In 2023 Q1 Tesla seem to have got the balance between supply and demand about right - in part due to the IRA in the U.S. and the rest due to price cuts but can that equilibrium be maintained as production is ramped up further.

My own view is that Tesla will struggle to match demand to expanding supply without further price cuts. We are seeing these selectively at the moment in Europe. Is there any other convincing explanation as to why Tesla would make these cuts in specific European markets. Tesla is not, at the moment, under threat from Chinese manufacturers in Europe.

For Tesla to maintain the momentum of 50% y-o-y growth they need demand to grow at that rate and if overall demand for cars is static then that requires EV demand to grow at 50% and at the same time for Tesla to maintain their existing share of the EV market. That’s assuming of course that production can keep pace - but that’s the easy bit. 

There are headwinds. A lot of the external stimuli that have driven demand growth around the world have been scaled back and economic pressures have further dampened demand growth. At the same time EV competitors, like BYD, have taken increased market share and OEMs are finally getting a regular supply of chips and other components which had caused large backlogs of orders. 

Tesla may have the margins to cut prices further but how price elastic is demand? The substantial price cuts we have seen to the M3 in the UK in Q1 have not translated into demand growth (please note I am going from memory and can’t put my hands on the stats just now so may edit later). Price cuts and external financial incentives may stimulate demand but sometimes they just shift it from one time slot to another. 

Until the new $25k Tesla arrives Tesla just don’t have the range of cars that other EV manufacturers have to enable them to maintain market share. There are limited opportunities to sell people cars that don’t suit their needs. Tesla had such a compelling product in the Model 3 that EV enthusiasts were prepared to ditch their ICE hatchbacks and SUVs just to drive an EV. The arrival of the MY on the scene cannibalised M3 sales in many markets and the M2 (or whatever it will be called) is likely to impact sales of M3s and MYs as well as competitors’ offerings and ICE cars. Normally if you are in the market for a certain type of car at a certain price you buy in that market but people bought Teslas at prices way above what they have paid for any other car in the past because they wanted a Tesla - it was such a technological tour-de-force that nothing else would do for the techies. In that respect some natural TM2 customers may already be driving other Tesla models so expect some migration within the brand. 

Now I am going to go off at a slight tangent here and suggest that we have also seen many people buy new EVs at a price point way above what they normally would spend on an ICE car. I usually buy secondhand but bought a new EV. Why might that be? Perhaps because EV technology is constantly evolving and to get the car we want (with enough range perhaps) we had to buy new. For others there were also significant tax advantages (SalSac etc) which were more accessible buying new. Will this set a trend for people buying more new expensive cars (EVs) in the future or will we eventually migrate to cheaper models? Will people who went up market and bought an Audi e-Tron or a Tesla maybe consider an MG4 next time if it does everything they need it to? 

Tesla, with the M3 and MY had such a compelling technical lead (range) and image over every other EV when they were launched that traditional BMW, Audi, Mercedes buyers moved over to them but as these OEMs develop their own very convincing EVs will those buyers migrate back, particularly as Teslas are so ubiquitous and no longer perceived as prestige? 

Will we find that the combination of the desire for the new technology of EVs coupled with external incentives has simply accelerated the move to EVs among those that were driven by such stimuli and as this wave has passed through will EVs settle down to a more modest rate of adoption, i.e. will there be a dip in the S-curve before it picks up its momentum again?

Edit: the comparative UK  sales statistics for the Model 3 in Q1 2022 and 2023 were 7773 and 3402 respectively. The Model 3’s share of the BEV market in the UK fell from 12.1% to 4.4%.

ABrass

Last year was the first time in living memory that the average cost of an EV battery pack (in $/kWH) rose. That was almost entirely down to material cost. Now the price for materials has dropped back a bit, because of the Chinese incentives changes, the price per kWh will probably be dropping as well.

China's changes to it's EV incentives disrupted the market at the end of last year, pushing forward purchases and determining the global supply of EVs. Given that it's so much more important than the US it's surprising how little attention we pay to them compared to the US.

Tesla have marked out their roadmap, they're building few models but in huge volumes and using that to drive down costs rather than a more traditional approach of building tiny numbers of five dozen different models. As they build out capacity they will increase the number of models until they can sell into every major segment. We'll find out if they are managing to hit their 20% gross margin tomorrow I believe.

Is that better than BYD's approach? I have no idea.

EcoKing

I had some good shares in chinese EV maker Nio during lockdown, they looked hopeful as they offer a battery swap system. Luckily I cashed out as it crashed. I didn't make enough to afford an EV though 😞

Think they are expanding into the EU currently! 

1961Nick

ABrass said:

Last year was the first time in living memory that the average cost of an EV battery pack (in $/kWH) rose. That was almost entirely down to material cost. Now the price for materials has dropped back a bit, because of the Chinese incentives changes, the price per kWh will probably be dropping as well.

China's changes to it's EV incentives disrupted the market at the end of last year, pushing forward purchases and determining the global supply of EVs. Given that it's so much more important than the US it's surprising how little attention we pay to them compared to the US.

Tesla have marked out their roadmap, they're building few models but in huge volumes and using that to drive down costs rather than a more traditional approach of building tiny numbers of five dozen different models. As they build out capacity they will increase the number of models until they can sell into every major segment. We'll find out if they are managing to hit their 20% gross margin tomorrow I believe.

Is that better than BYD's approach? I have no idea.

I'd be very surprised if they achieved a 20% margin in the first quarter. I would expect the figure to be in the 16-18% range given the double digit discounts they offered in virtually all markets toward the end of the quarter.

Grumpy_chap

JKenH said:

Tesla, with the M3 and MY had such a compelling technical lead (range) 

Tesla's lead is two-fold:
1 - range, meaning the need to use charging away from home or other regular location (workplace etc) is much reduced.
2 - supercharger network, meaning that charging infrastructure is likely to be available when required.  Included in the supercharger network is the physical infrastructure plus the software package that manages the fleet and suggests where you might like to stop to charge that balances your available range with the likely demand on the supercharger provision

Tesla's price movements are following a "technology" model so price becoming ever more favourable as market penetration increases - think DVD player.

JKenH

Grumpy_chap said:

JKenH said:

Tesla, with the M3 and MY had such a compelling technical lead (range) 

Tesla's lead is two-fold:
1 - range, meaning the need to use charging away from home or other regular location (workplace etc) is much reduced.
2 - supercharger network, meaning that charging infrastructure is likely to be available when required.  Included in the supercharger network is the physical infrastructure plus the software package that manages the fleet and suggests where you might like to stop to charge that balances your available range with the likely demand on the supercharger provision

Tesla's price movements are following a "technology" model so price becoming ever more favourable as market penetration increases - think DVD player.

Except it hasn’t been one way traffic with prices rising before falling then rising again. 

Grumpy_chap

JKenH said:

Except it hasn’t been one way traffic with prices rising before falling then rising again. 

We will never know.  I suspect the rise and fall is really more to do with the various global impacts that affected all cars in the past couple of years and the underlying trend is downward.  That is my feeling - I don't have any data to justify.

Bluebell1000

I am not sure that an EV is going to be possible, but I've gone back to one last basic definition of what a car has to do:

1. It has to be desirable and simply "work" as a car.  I will set a fairly low bar - at least as good as my 2007 Focus that I gave to my Nephew at the end of last year.
2. It has to be "affordable".  I will set a high bar to maximise inclusion - list <£51k and good used examples from <£35k. Both of those are absurdly high numbers
3. It has to be safe.  EURO NCAP 4 star minimum.
4. It has to have a good real world range in any weather, so minimising the number of times I need to use charging away from home.  Minimum 70 mile each way (140 mile total) commute.
5. There has to be enough public access charging that longer journeys can be achieved without excessive inconvenience.
6. Insurance has to be no more than 4 times the cost of my ICE, i.e. annual premium <£1k

Note - I have left out all the "nice to have" criteria that I initially started with, like any kind of comfort features you'd expect with a modern car.

Mrs G-C says I am being too fussy and that is not possible and to just get a Tipo.  Cheap one locally £7k with 50k miles.
Do you experts have any ideas I need to consider?

OR, I could buy a Tesla and give it to my Nephew in exchange for my Focus back...

We have a first edition Kia e-niro with WLTP 285 miles. In winter it drops to about 250, summer generally around 320 miles, although we don't tend to do much fast motorway driving, at higher speeds we haven't noticed too dramatic a drop in range. Definitely worth considering 🙂 

In terms of other cars, I wasn't massively impressed with build quality of the Tesla's we looked at at the weekend, so didn't bother test driving. Cupra Born (new) wasn't as comfy to drive as the e-niro. I liked the Kona but it's a bit short on rear leg room, though the new model due later this year will apparently increase it. Other possibilities that we're considering for our next car is the Skoda enyak as well as the MG and another e-niro.