Tesla Cuts Jobs in China | Hacker News Reader

Tesla Cuts Jobs in China

bloomberg.com

45 pointsIBM38 comments

I found this reddit comment discussing Tesla's (struggling) entry into the Chinese market to be quite interesting and insightful: http://www.reddit.com/r/worldnews/comments/2vgi80/tesla_only...

In summary, the Tesla market in the US (upper-middle class, suburban) doesn't really exist in China, and the lifestyles of those who can afford the car don't match up well with owning an electric car.

Guanxi (from the writeup) for anyone who is wondering is the Chinese concept of one's social status and influence within your personal and cultural network.

My guess would be that they are replacing a significant part of their Chinese sales team. Tesla mentioned on the earnings call that there were some major challenges with parts of their team, among other things salespeople misinformed customers about charging options.

My impression is that they expanded a bit too quickly and ended up missing some important cultural details. Analysts read this as "Tesla expects China sales to be 30% lower than expected", but there is no reason to draw this conclusion yet.

I don't know. I got a sense that Tesla was trying to deflect. If not, at the very least, it seems that the blame falls on HQ by not providing proper training resources.

I suspect the underlying reality is that Tesla is trying to gloss over the consequences of the oil price collapse and possible under-reported Chinese economic slowdown.

Tesla needs time to establish its reputation. With only one car, one that is expensive regardless of taxation, that is not going to be an easy task. This may be doubly so in China.

Outside of China...

They really need lower priced cars if they are in it for the long haul. At their current price point they are merely skimming the low hanging fruit of the wealthy, people who can afford a second car that has limitations.

They are simply not moving fast enough into the price point of where the majority of cars sell and as such are ceding that market to the established players who once they focus their attention will pretty much lock it up because of better brand awareness. Both Ford and Chevy will have cars in the lower range with sufficient range by the 2017 model year.

There's no need for a Tesla to be a second car. Lots of people just own that, and nothing else.

As for an affordable, long-range Ford/Chevy EV in 2017, I'll believe it when I see it. As far as I know (and I certainly could be wrong), battery price and production capacity are the limiting factors for an affordable, mass-market EV at the moment, and Tesla is the only one taking steps to remedy that.

Tesla is also the only one solving the problem of long-distance travel. Ford and Chevy may produce EVs that can go 200 miles on a charge, but they'll also go about 200 miles in a day. Tesla's Model 3 will go 200 miles on a charge but 5-800 miles in a day (depending on how hard you want to push it).

Is the Chevy Volt too pragmatic to be considered a competitor with pure EV?

It's certainly a competitor. Any car is a competitor to a pure EV, except to the irrelevantly small segment of the population who refuses to consider anything else.

Personally, I thought the Volt is pretty cool and seriously considered it when buying a new car about two years ago, but the lack of a middle seat in the back was a deal-killer for me. Similarly, I considered Ford's Energi plugins, and rejected them because they lacked cargo space. I ended up going with a Prius v, which is a decent car and has lots of room.

For EVs to be interesting, they need to get away from the model of building a compromised car that people buy because it's an EV. The batteries intrude into the cabin, the range is poor, they often look weird, etc. I don't think most people are buying a Volt because it's the best car for the money. They're buying it because they want an EV, and it's an OK car for the money.

A Model S, on the other hand, is just plain good. It's a nice car that just happens to be an EV. There's no, "This is a problem, but at least it's an EV." It's, "This is great, and can you believe it's an EV too?" The only "but" with the Model S is, of course, the tremendous price.

It's similar to hybrids. The original Honda Insight was extremely efficient, but compromised. The original Prius was similar. You bought them to save gas, and sacrificed for it. Fast-forward to 2013, and I bought a Prius v because it was the best car for my needs for the money, ignoring fuel efficiency. The fact that it got 40-50MPG was just a bonus. And that's why they're popular.

If Tesla can repeat the Model S experience with the Model 3 at a more reasonable price, I can't see anyone else matching it. That's a big "if" of course, but they at least have a shot. Are the other car makers going to build something that's just plain good, or are they going to continue building cars where being electric is the main reason to buy them?

It's small, uncomfortable, and expensive, as well as having poor mpg on gas. In about any calculation, a Corolla is a better deal.

The Leaf, on the other hand, is selling gobs of them for a good reason.

The Volt has an answer for long distance. The Leaf does not.

and yet one is selling well and the other is not.

I'm not trying to argue in favor of the Volt. The comment I initially responded to spoke about long range. I chose the Volt for comparison because it satisfies that requirement. In the comment you replied to, I was pointing out that the Leaf does not satisfy the requirement.

I think this is a nice summary of what I'm saying. You have two compromised EVs (or PHEVs) and you're arguing over which compromise is less bad. If they can't get beyond that stage then they're going to have trouble.

I wasn't very clear about it, but I was thinking that they aren't necessarily so far behind strategically. Hybrids don't look so bad if there is no $25,000, 200+ mile range EV (with a good distance solution).

I agree, hybrids are probably your best bet if you're on a budget right now.

What it comes down to, for Tesla's future and the future of EVs, is whether the big car companies will be able to improve their EVs better or faster than Tesla can reduce the price of theirs. If Tesla could sell the Model S for the price of a Leaf, they'd sell like crazy. If Nissan could make the Leaf as good as a Model S, they'd sell like crazy. The question is, which end do the odds favor? I think Tesla has a better chance, partly because it's all they do, and partly because it just seems like their task is the easier one at this point.

The Leaf sold better than the Volt in 2014, but I wouldn't say they are selling gobs of them. Also, the Volt had a new model on the horizon last year, so lets see how sales go with the new model.

> battery price and production capacity are the limiting factors for an affordable, mass-market EV at the moment, and Tesla is the only one taking steps to remedy that.

Kinda, not really.

LG Chem's Michigan factory is selling to both Ford and GM now, and I hear that its still got production capacity to grow. Michigan in general is littered with the scattered remains of various battery manufacturing facilities that have gone bankrupt through 2010 and 2015.

The investments are there, the market demand for EVs isn't however. The hope is that Tesla will be different however, which it may very well be. But it is treading upon a region where many others have failed.

Why so hasty? Tesla announced the Chinese pricing barely a year ago[0] and only started delivery last April[1].

[0] http://www.teslamotors.com/blog/fair-price

[1] http://www.bloomberg.com/news/articles/2014-04-10/tesla-kick...

10 months is probably enough to find out if the current sales model wasn't working. In that situation, there's nothing to gain by waiting out and giving things a chance to work out on their own.

Any link with the falling gas price?

Probably not. Teslas are still (far) too expensive to be bought in order to save money on gas, at least for individual customers. Maybe with the Model 3.

Plus you can buy a tesla in Beijing and other cities without entering the license plate lottery and without a 2x markup standard on lux cars. They really should be doing better.

But charging is a problem. You'll see high end Audis parked illegally on the street because garage spaces are expensive. I'm not really sure how they will get around that.

The license plate lottery?

The H-1B for owning a car in Beijing, basically.

If you want to buy a car, you have to enter the plate lottery first. Unless you have some serious guanxi, it will take a few years for your number to come up.

Wow. On the one hand that's pretty tough, but on the other it's presumably a semi-useful way to curb air pollution & traffic. I can only imagine what things would be like if it was a free-for-all.

It's hard to imagine that traffic in Beijing could get much worse. I think there are already a lot of people there who wouldn't have a car for city use, even without Beijing's restrictions on cars.

Most people in Beijing don't have cars, that is a scary thought.

Self driving cars will eventually allow Beijing to optimize traffic flows given the limited infrastructure that can be built for a city of its density. Until then, I'm a slave to didi dache.

It depends on what your alternative is and how much you drive. If you're buying a Tesla instead of a Toyota and you drive like a normal person, yeah, you're not coming anywhere close to saving money on gas. But a fair number of people are going to buy something in Tesla's price range anyway, and drive a lot, and for them it can save a lot of cash. I don't think these people are numerous enough to make a big difference, but it's there.

Many people get cars through their SOE's (less now of days), and saving on gas really is an issue. But the main problem is parking: where do you charge the bugger if you don't have a space in a garage with a power outlet?

Indeed. If you have dedicated parking with a charger, it's far more convenient than a gas vehicle. If you don't, it's terrible.

That little bloomberg live view in the top right corner is a major annoyance; I can't read articles like this. Fortunately it can be removed with an ad blocker.

It's pretty useless too, I can't even make out what it says on my monitor. But since Flash is click-to-play in my browser I didn't even realize it was there when I first read the article.

In contrast: Jaguar sells nearly 40,000 vehicles in January alone.

http://www.jaguarlandrover.com/gl/en/investor-relations/news...

Jaguar has been selling 400k vehicles / year in China.

Another consequence of the oil price collapse. The dominoes are starting to fall.

So what you are saying is a person looks at $4 a gallon and thinks hey lets buy a Tesla which costs $100K. And suddenly the same person will say no reason to buy a Tesla because now a gallon costs $2. This person doesn't sound like the sharpest tool in the set.

I don't care what you think of the sharpness of tools. In aggregate, on a macro level though, it will have an impact on the appeal of electric vehicles, just like it is intended to. That will happen, regardless of who sharp or dull you think a tool is.

Yes, but it will not have a large impact on the appeal of extremely expensive electric vehicles. It would be especially odd if this particular thing was due to the drop in the price of oil, since it's just China where sales are slow, and they still have months of backlog in other countries.

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