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Old 25th February 2020, 16:54   #16
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Originally Posted by alpha1 View Post
Wouldn't Tesla's factory and worker (at the proposed gigafactory) income contribute to the German GDP?
So how does EV push Germany into recession?
If Tesla grows, it will be at the cost of Audi, BMW, Mercedes, Porsche, and VW.

Last edited by Latheesh : 25th February 2020 at 16:56.
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Old 25th February 2020, 16:57   #17
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Default Re: Are electric cars slowly pushing Germany into a recession?

What is with Tesla and clickbait headlines? Earlier, it was about Tesla cars having technology 6 years ahead of rivals (I would like to see the formula that the reporter used to arrive at the figure), and now this. Many economies are currently suffering a recession or a dip in growth, including our Indian economy. The reasons are varied, but I doubt Tesla is the biggest contributor to that.
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Old 25th February 2020, 20:58   #18
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Default Re: Are electric cars slowly pushing Germany into a recession?

Tesla is becoming an aspirational brand in whichever markets they operate while others like India are desperately waiting for their arrival. Once it arrives, people will rush to grab it at the cost of German biggies. Secondly, Tesla is aspirational brand, still affordable to an extent. Combination of these factors can prove to be deadly for German trio in medium run, may not take long.
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Old 25th February 2020, 21:08   #19
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Originally Posted by Newpunter View Post
Earlier, it was about Tesla cars having technology 6 years ahead of rivals (I would like to see the formula that the reporter used to arrive at the figure), .
They must have googled it.

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Old 25th February 2020, 23:07   #20
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Default Re: Are electric cars slowly pushing Germany into a recession?

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What is with Tesla and clickbait headlines? Earlier, it was about Tesla cars having technology 6 years ahead of rivals (I would like to see the formula that the reporter used to arrive at the figure), and now this.
Sure "recession" is clickbait worthy term thrown around by arm chair economists.

The article from Nikkei business review was based on a teardown and their estimates of the time it takes others to build a water cooled AI chip and other electronics that Tesla builds on its own.
https://asia.nikkei.com/Business/Aut...Toyota-and-VW2

The 6 years estimate is probably based on how long it takes for any one to build a new SOC from scratch. Especially, when there are no vendors offering/working on such chips. We can disagree about the need for AI or such chips in cars, but we cannot dismiss a report based on a teardown as clickbait. Perhaps alarmist - but certainly not clickbait. To me - clickbait (as a term) is an empty headline, with no related info to substantiate that headline.

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Old 26th February 2020, 11:02   #21
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Technically no. Tesla is registered in US and revenues would be reported in their US balance sheets. Germany only stands to gain on employment. This, unless Tesla has made a local legal entity and reports that earnings in Germany.
Gross domestic product means anything that is produced on the soil of Germany. How does it matter whether Tesla is registered in Germany or not? It will have to pay local taxes. Will have to employ people based on local govt regulations, will have to deduct tax at source and declare to the govt.

Just like any regular local enterprise.
What you are talking about is the company profits but GDP calculation doesn't distinguish between enterprise owned / located at a particular location.

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If Tesla grows, it will be at the cost of Audi, BMW, Mercedes, Porsche, and VW.
I am skeptical that others will simply sit twiddling their thumbs while Tesla tends to achieve a monopoly.
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Old 26th February 2020, 11:12   #22
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Originally Posted by srini1785 View Post
Technically no. Tesla is registered in US and revenues would be reported in their US balance sheets. Germany only stands to gain on employment. This, unless Tesla has made a local legal entity and reports that earnings in Germany.
Would Tesla not be paying Tax in Germany? How can anyone have a large scale business setup without officially registering the activity?
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Old 26th February 2020, 11:23   #23
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Would Tesla not be paying Tax in Germany? How can anyone have a large scale business setup without officially registering the activity?
See my earlier post. Of course, Tesla is an officially registered Germany legal entity, Giga Berlin.

It is whole owned by Tesla Inc, USA. How the Germans figures get consolidated into the US is something different all together. The Giga factory produce actual cars, but also components and assemblies that are shipped to other factories around the car.

Giga Berlin is tax liable in the Germany, but with these big multinational companies there is always room for some financial engineering in order to minimise tax and maximise group profit. E.g. if Giga Berlin sells the components and assemblies at no profit to other Tesla factories outside of Germany, there is essentially no profit in Germany to be taxed. In fact, they could be having a loss in Germany due to how they dimension the internal transfer cost.

Most western countries Tax Authorities will demand a certain intracompany transfer profit on which local (german) tax is paid. But these multinationals are masters in financial engineering

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Old 26th February 2020, 11:37   #24
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Sure "recession" is clickbait worthy term thrown around by arm chair economists.

The 6 years estimate is probably based on how long it takes for any one to build a new SOC from scratch. Especially, when there are no vendors offering/working on such chips. We can disagree about the need for AI or such chips in cars, but we cannot dismiss a report based on a teardown as clickbait. Perhaps alarmist - but certainly not clickbait. To me - clickbait (as a term) is an empty headline, with no related info to substantiate that headline.
I don't want to hijack this thread (since this thread refers to another clickbait article about Tesla causing a recession in Germany ), but it is ridiculous to claim that a technology that already exists in the market, would take 6 years for others to replicate. Unless, Tesla used alien technology to create those AI chips, I don't think it would take 6 years for others to replicate. The fact is that Tesla was using Nvidia's chips earlier and then they moved to their own custom chips. Those chips perform probably a little better in some aspects ( and worse in some other aspects) when compared to the newer chips from Nvidia.

There is no reason for the other car companies to build chips from scratch (other than vanity), when they can buy them off the shelf from vendors like Nvidia or even Intel.

It is similar to when Apple fans claimed that their 64 bit processor would take years for others to replicate (especially since the ARM architecture at that time was still 32 bits). It hardly took 6 months or so before ARM released the new 64 bit design and Qualcomm and Samsung started releasing processors. Another example is the facial recognition technology that Apple built into their phones and everyone claimed that it couldn't be replicated for a few years atleast.

My point is that, if the traditional companies really considered that this new AI chip was affecting their bottomline and they would lose the market if they don't add that to their cars, it would hardly take them 6 years to bring cars with those features onto the market.

Last edited by Newpunter : 26th February 2020 at 11:37. Reason: Formatting
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Old 26th February 2020, 16:04   #25
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Default Re: Are electric cars slowly pushing Germany into a recession?

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I would not call it fake news, but it is not correct either.

The competition of Tesla is compared to that effect a fairly small add on effect.

Germany relies heavily on export, not just cars, although that is a sizeable chunk. But they manufacture and export so much more. And their exports across the board are down due to several reasons, way beyond the Tesla effect. (E.g. trade war, trade restrictions, big economies such as China shrinking, Brexit etc)

Jeroen
That's a fair assessment, Jeroen.

It is true that German premium car sales in the US and other markets has been impacted by Tesla's success. But attributing recessionary trends in Germany to Tesla reeks of clickbait rather than credible research. German manufacturing (Auto, Mechanical, Electrical and Chemical industries) constituted 25% of its GDP in 2018. And these industries are collectively witnessing a slowdown in demand. And while there are significant job-cuts in the auto industry, its Germany's service service sector that provides employment to around 70% of the workforce as per recent estimates.
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Old 26th February 2020, 16:21   #26
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Originally Posted by Newpunter View Post
What is with Tesla and clickbait headlines? Earlier, it was about Tesla cars having technology 6 years ahead of rivals (I would like to see the formula that the reporter used to arrive at the figure), and now this.
After the recent share price surge, I was quite intrigued by what made Tesla shares so attractive. Did the deep dive about a week before the Nikkei article was released.

I would like to share some of the resources I came across and put together some details (and compared to other automakers).

I think there are valid reasons behind why Nikkei published that report. And 6 years figure is actually accurate (as of today). As to whether Tesla is causing a recession, no- I'll discuss that at the end of this post.

I'll leave this for you to gauge and make up your mind.

1)

2)

3) Ford's premier product- Mustang-e is a paper launch in the UK, will be on the roads only a year from now. In which time, the new Roadster will already be on the roads.


4) What's giving Tesla that extra range, its cells.


5) (The below video might sound fan-boish) but disregard that and look at the facts and numbers mentioned in the video. Current production (US +China) + upcoming production (at Germany).


6) Why do I believe the Germany will start production by early 2021?


7) Looking at various EVs available right now, what EV can actually compare to the Model S and 3 in terms of power, range and total package put together? I've been doing a deep dive and I can't find any comparable cars. Can you share your research?

8) The Tesla Model 3 has jumped to the no.1 selling EV in China, about 1-2 months after starting production. There are atleast 10 other EVs available there but why has Tesla overtaken them so quickly?

9) Not to mention the advantages of the Supercharger network. I'll let this video explain a bit more


Putting it all together, it is not just the batteries or the motors or software or supercharger network that gives Tesla such a head-start. The way it has put it all together. Others are trying, they are putting together bits and pieces but nobody is able to give in the sort of package that Tesla has. It's as simple as that.

In the same time, cost of ICE cars has been going up. They have gone up 30-40 % in the past decade.

Coming to the point of the first video shared. The Tesla model S was released in 2012. It's been 8 years since it was released. The list of improvements.. and the price in 2012 was $ 95k. Price in 2020 is $ 99k.



Now, for the financials.
With the recent share price increase, it is easier to raise debt (which will be used to build even more cars- they can't keep up with demand, something other car makers don't have the luxury of).

What one has observed from the share price over these years is that Tesla has been treated more like a tech startup than a car maker. And what this means is that shareholder /investors are willing to give the co. a long leash (i.e no profits) as long as the growth, tech, and innovation edge is intact.

And Elon has responded in kind. The sales numbers show that. The tech (as evinced above) shows that. The aggressive expansion shows that. Yes, it might be a momentum stock, it might be overpriced but there are reason why its a stock market outperformer. Investors don't see any viable competition (yet). That's the reason for the 6 year advantage.

As to why people (or journalists) feel (and this is not entirely correct) that Tesla is a probable reason for a recession is because the automobile industry is one of the larger employers in some of these countries.

https://www.nytimes.com/2019/12/31/b...y-economy.html

Carmaking directly employs 830,000 people in Germany and supports a further 2m jobs in the wider economy, accounting for about 5 per cent of the country’s economic added value. Its problems have weighed on the German economy, which only narrowly avoided a recession last year.. FT

Imagine you're in the automobile industry in the EU/US

You are surprised by the pace of adoption of EVs.
If your current investments are already providing lower ROCE, all investments (innovation) in ICE vehicles are slowing down or stagnating, and you don't have a blueprint for what the future holds in terms of EV volumes, technology (and how they can be a part of the EV ecosystem).

You are in a dilemma whether you should continue with the status quo or..? Where do you invest? What amounts do you invest? Manpower, research, production, etc?

This uncertainty is what is bringing up fears that nobody has answers to right now. Tesla sells too few vehicles to actually make a dent in the overall numbers.

The fears and uncertainty is overblown. They will be sorted out over time, employment and the economy isn't going to suffer because it will transition over time (7-10 years). Can't say the same about vendors and car makers.
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Old 27th February 2020, 02:56   #27
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Originally Posted by Newpunter View Post
I don't want to hijack this thread (since this thread refers to another clickbait article about Tesla causing a recession in Germany ), but it is ridiculous to claim that a technology that already exists in the market, would take 6 years for others to replicate.
It is one thing to opine that the claims in an article are worthy of ridicule. It is quite another to label it "clickbait". In my opinion the label "clickbait" is to draw attention to something unrelated using a catchy headline worthy of attention. The fact that they had a teardown to back up some claim steers that clear of the term "clickbait" for me.

I have also spent much of the last 3 decades working for fabless semiconductors in the wireless industry. But, I will stay away from disputing/discussing any timelines for auto grade chips, or repurposing 3rd party chips. Although an article talking about these would be considered a well researched article, rather than being dismissed or ridiculed as clickbait.
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The Tesla model S was released in 2012. It's been 8 years since it was released. The list of improvements.. and the price in 2012 was $ 95k. Price in 2020 is $ 99k.
Very good point. There have been so many cars that have been called Tesla beaters, but have hardly matched the words with actual sales. The original design of Model S was revealed in 2009, actual production was in 2012. By the way, great work putting together all those links and points to make your case!

Last edited by GutsyGibbon : 27th February 2020 at 03:04.
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Old 27th February 2020, 03:14   #28
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Default Re: Are electric cars slowly pushing Germany into a recession?

Here is another interesting video about Tesla wiring.



I was not a fan of Tesla and hated the big screen and overall interior quality first time I checked Model S in 2015.
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Old 27th February 2020, 09:34   #29
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Adding to that, the company is clearing huge swathes of forest - nearly 150 soccer fields in size - to build the factory right in neighborhood of VW and BMW.
Correction, it's not a natural forest. It was an area marked for growing trees, which were to be cut down for paper and it's byproduct. Think of it like a teak plantation, you know it's going to come down one day or the other.
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Old 27th February 2020, 10:31   #30
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Putting it all together, it is not just the batteries or the motors or software or supercharger network that gives Tesla such a head-start. The way it has put it all together.

That is the operative line, Tesla is a leader now in almost all aspects of automobile technology. They make the safest cars that receive OTA updates and carry basic self-drive technology, while BMW is charging annual fees for using Car Play and Android Auto! For decades, traditional manufacturers were only changing the configurations of their cars without any real innovation. It is not really easy to change company cultures overnight, as the experience of traditional US manufacturers shows and they faced a far smaller threat. Also, very few car companies have the financial muscle to take a head-on fight with Tesla. I know I am sounding like an Elon Musk fanboy, but traditional car manufacturers knew that their greed and laziness are bringing this planet to end but they did nothing to fix it. How can we forget VW's dieselgate? My guess is that by the time they catch up on EV tech, Tesla would have a second assault with the self-drive tech!
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