Separate names with a comma.
Welcome to Elio Owners! Join today, registration is easy!
Discussion in 'General Elio Discussion' started by TexasTesla, Mar 7, 2019.
Sounds like what Tesla does.
What's wrong with a business being debt free? Or being a mom & pop store? When bankers run a business it always seems to run into money problems. Only a person(s) passionate about their business will succeed in the long run. They may have to take out loans to get started, but their plan also should pay off that loan quickly. After that, it is all gravy. Also, many companies get into problems when they try to grow too fast. Conagra is a good example. They started buying up a bunch of smaller companies so that they could claim to be the largest food producer in the nation. I think they got to number two. The CEO then got his huge bonus and retired. The new CEO determined that they overspent, so they started closing down many of the businesses they had bought. Many people lost their jobs because of it.
Another example: F&W Media just filed for bankruptcy. They were a debt free, family owned business until the third generation. They sold it to an investment group, who sold their building, rented another one, then bought other publishers until they needed money to pay the loan bills, so they closed those businesses to save the payroll money and sold those buildings too. They were simply working to pay the debt that they themselves had caused. For a company to perpetually stay in debt is only good for the bankers.
Mom and Pop stores that run debt free doesn't work if they decided to run a global car company up against all of the heavyweights. This is why many mom and pop stores failed when the big box stores showed up. The best example are hardware stores. The ones that went back into debt to expand and offer more and varied product, stayed in business. The other 95% that didn't want to do that because 30 years of making a profit never needs to be tinkered with. Problem was, the market changed and not reinvesting back in the business just meant, they dies a slow death.
Tesla is a completely different business and requires a different way of running them. Tesla could easily stop all R&D and future projects for the next 5 years and be turning a great profit. All while trying to offer the same exact product in hopes that nobody ever comes out with their own EV and that the current sales numbers will never go down. When the market changes again in 5 years and Tesla has zero new product in the pipeline, they will die a slow death.
Tesla is at the beginning stage of meeting Elon’s vision of manufacturing more affordable EV’s for the masses. I know nothing about business, but it seems a good business model is to create only enough debt that allows for growth and can be paid off (perhaps early to minimze interest payments) with guaranteed sales revenue and profit that’s invested back into the business. Or better yet use $Millions of interest bearing refundable reservation deposits to help fund ‘cash burning’ production and grow the business.
I agree. Lets' look at two emerging brands:
BMW established itself making expensive cars and then introduced the Mini... Mini succeeded (as it were)
VW established itself making cheap cars and then introduced the Phaeton... which bombed.
People are more willing to buy an inexpensive product from a company that is know for expensive/quality items than they are to buy an expensive item from a company known to make cheap stuff.
VW already had an expensive brand here. It was called, Audi. So, look at the pricing structure of Audi vs VW and you'll see they overlap slightly.
For example. An Audi Q3 is a VW Tiguan which is a Porsche Macan:
The Phaeton bombed worldwide due to it overlapping with Audi. As for sales numbers, VW sold 89K Tiguans in 2018, Audi sold 17K Q3's and Porsche sold 23K Macans. For VAG, the Macan is the best money maker because it costs 2X a Tiguan. The profit margin on the VW is obviously less than the Macan and Audi.
BMW and Mini:
With BMW and Mini, this is choosing a 2 door mini vs a 4 door sedan. There's no overlap when it comes to product. On the other hand, the Mini sold 26K of their flagship cheap product and 44K of their flagship 3 series. You'd think that they would sell 100K Mini's per year because it's cheap and it appeals to the masses over the rich mans 3 series.
Going cheap does not mean that it's good for investors. Having a variety and plus using most of the same platform and driveline on a product but charging 2X is much better. In the end, VAG is reaping the rewards for a common MQB chassis.
If you notice, the Model Y will be pretty much a Model 3 SUV. Tesla knows. Same chassis and driveline, different skin. Makes investors happy.
Is this the competition?
(5) Is Volkswagen AG Tesla's Biggest Threat? - YouTube
I think VAG will be competition for Tesla. That's good because we want competition, not just Tesla being the only EV maker out there, that would be ridiculous. What VAG has going got it is they own MAN and Scania. Nobody in the US knows who they are but in Europe, they are all over the place. You rarely see US Class 8 trucks in Europe. What you see are the Class 8 equivalent that has MAN, Scania or Volvo on it. my guess is that VAG is already working on the Euro market as Tesla and Thor are concentrating on the US.
Then you have VW. They will create only 1000 US jobs by 2022 by building the new ID SUV here in the US. So far, that plant has created 3500 US jobs since 2012, which will bring it to 4500. In addition to that, we are forcing VW to electrify America because of all of the bad things they did with the TDI's. So, this will create more US jobs. This doesn't count Porsche which will make their EV that will be competition for the P100.
So, VAG will be competition for Tesla and that's exactly what Tesla needs and wants. being the only game in town is not what anybody wants. They want variety and competition. It makes for a better EV selection and will end up making one that the poor can afford. Just not at the moment.
Best part is, EV's will create many US jobs for the future. That's good for America.
Solid state batteries may also be just around the corner for vehicles..