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Comment by toomuchtodo | Hacker News Reader

There are always risks. Every US automaker has gone bankrupt at some point except Ford and Tesla. Success is not assured, and there is substantial peril ahead. Regardless, Tesla is not fighting for it's life like it was 5-10 years ago. They are on firm footing, through a combination of insatiable demand for energy storage products, robust EV subsides to get off of fossil fuels (which I refuse to debate the merits of, that is wasted time), and a brand that is popular. Tesla may still die, but we must get to the point where it is immaterial if they do, where there is no going back to combustion for mobility.

The financials I reference are public in EDGAR, I currently do not have access to material non public information and would not share if I did.

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The "no going back to combustion for mobility" is already passed, and Tesla only sped the transition up slightly. The real cause is a 7%/year improvement in battery tech.

Don't believe me? Pick up https://www.amazon.com/Innovators-Dilemma-Revolutionary-Chan..., and read the chapter on electric cars. Starting with the first edition back in the 1990s, it correctly stated that 2020 would be about when mass market electric vehicles would start to make economic sense, and the transition would be inevitable a few years after that. Tesla was only slightly early to that party, and now basically every car company has acknowledged that electric is the future.

And yet, no automaker building them in volume except BYD and Tesla. Again, to be clear, not a fanboy. Show me the volume, that's it. I disagree we are at the inflection point where an EV future is assured (although I would agree we are close). Further dismantling of existing combustion assembly supply chain must occur before this can be stated as fact (imho). Until this is done, lazy humans will walk back their commitments. You must lock the future in.

https://europe.autonews.com/automakers/uk-pushes-2030-combus...

The exact same book predicted that we'd see hybrids, and traditional automakers would try to sell them, would fail to find the market, and would wind up being wiped out.

As https://www.canalys.com/newsroom/global-ev-sales-2022 says, if you want to find the mass market for electric cars, go to China.

Don't forget. The main driver of this transition in the long run is that batteries still improve at about 7% per year for the same price point, while ICE engines barely budge. The lifetime cost of ownership for electric cars is below ICE right now. And the cost of initial purchase is falling.

As long as the battery tech is there, someone will figure out how to sell it. But it won't be anyone who has dealers whose business model centers on no longer needed maintenance.

>But it won't be anyone who has dealers whose business model centers on no longer needed maintenance

Where does this come from?

According to Kelly Blue Book, a Tesla costs about $600 a year in maintenance, which is higher than many ICE cars.

So either the cars are relatively expensive to maintain, or Tesla is milking its captured customer base, which people accuse dealers of. Which is it?

Tesla success with mass manufacture the Model 3 highly profitably in 2017/2018 was a huge shock to the infustry. Nobody thought it was possible and it lead to a huge increase in investments.

And even then the base from where these investments sarted was massivly higher because all companies had increasingly experimented with EVs. The Roadster making EV cool and desirable and the Model S really showing what a modern car was.

Battery investment doesnt come from knowwhere either. You need products that actually allow for continues battery scaling. Tesla investing huge amounts into Giga Nevada was necessary to build batteries in these quantities. And the other battery companies took note and also started to think way bigger.

Those battery factories is what allowed for things like the Model 3. Consumer electronic alone wouldnt have driven battery demand so agressivly since the Model S. Battery improving comes from increase investment and research drivien by expectation of growth in the demand. And Tesla unquestionably was the most important driver behind the believe in future demand.

The price per kWh was dropping faster BEFORE mass market cars than after. It is not that we lacked the technology to build cheap batteries. It is that we lack the technology to scale them.

Tesla is ahead of the curve. Their aggressive efforts on supply chains and factories have reduced the cost of batteries for them relative to everyone else. But the end result is not a change in which technology will win. Instead it is a question of getting there a single digit number of years earlier.

Initially there was a bunch of low hanging fruits, as we were going into the 2010 it was increasingly hard to improve batteries and required lots of investment.

You also needed investment for supply chain built up, increasing lithium mining and refining, cobalt mining and refining.

>The financials I reference are public in EDGAR.

Yes, I know, I follow their finances closely. "They have $25B in cash according to their balance sheet" is practically meaningless. I understand this might be a difficult concept to grasp for some mental models, but there are many historical analogs to look at why that's the case. They'll produce whatever numbers simple minded analysts will post on Twitter. Look at the discourse around their decrease in COGS. Many metrics are trending down.

Of course, I'm not a "they're going bankrupt" person; I just believe they'll be a much smaller company than most imagine.

I have nothing more to offer you. If you're a sophisticated capital market participant, place your bet. I have no current exposure to TSLA or any of their debt offerings. I do not care about the stock price. I care about a material movement in climate change outcome.

You jumped into this thread with a comment similar to "all that matters is that they have $25B in cash." I'm asking questions about why you think that's all that matters.

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