GM - General Motors

[nikhil25]

http://www.forbes.com/sites/joannmuller/2016/01/15/with-a-boost-from-lyft-chevrolet-bolt-ev-is-guaranteed-to-be-a-winner/#2715e4857a0b12f43cf246fa

 

Some color on the investment in Lyft

[LowIQinvestor]

I don't think GM is necessarily the next Kodak.  I just think free cash flow is going to dry up at some point in the somewhat near future.  Just look at what Tesla will be spending on capex today, much less in the future as they generate more cash flow. 

 

Look at what Tesla is doing with every single car that leaves their factory:

 

 

 

And this is from update 7.1.  Not update 8.0 or 9.0.  7.1.  They don't need to spend money running ads they just develop better and better software on a platform that lets them create these various selling points for a car which will cost $35k in the near future.  GM (and others) are going to need to lower their profits in order to compete with what is coming out into the market over the next few years.  No Tesla owner thought they would have the "summon" feature available so soon.  Do you really think GM is going to be able to suddenly compete in all the ways Apple or Tesla will make consumers become more picky about choosing a vehicle?

 

If Tesla (and others that will likely be funded by Apple, Google, etc) will not be rationale about pursuing profits, then don't we just have another Amazon versus "pick your retailer" on our hands?  GM will be forced to use their free cash flow to completely change the way they approach consumers based on changing consumer tastes.

 

Anyway it's hard to know what the right multiple or future cash flow looks like.  I just don't think it's as easy as saying 6x, 7x, etc etc.  You have to think they can effectively compete in what will be a completely different market in the not so distant future.

 

Would you mind elaborating on the following:?

"They don't need to spend money running ads they just develop better and better software on a platform that lets them create these various selling points for a car which will cost $35k in the near future"

 

How soon will Telsa be selling a $35k vehicle?

Thanks,

 

Sorry just realized that you are probably referring to the Tesla Model S and predictions from Elon...

 

http://seekingalpha.com/article/3802346-teslas-model-3-mess-the-aftermath

[RadMan24]

I don't think GM is necessarily the next Kodak.  I just think free cash flow is going to dry up at some point in the somewhat near future.  Just look at what Tesla will be spending on capex today, much less in the future as they generate more cash flow. 

 

Look at what Tesla is doing with every single car that leaves their factory:

 

 

 

And this is from update 7.1.  Not update 8.0 or 9.0.  7.1.  They don't need to spend money running ads they just develop better and better software on a platform that lets them create these various selling points for a car which will cost $35k in the near future.  GM (and others) are going to need to lower their profits in order to compete with what is coming out into the market over the next few years.  No Tesla owner thought they would have the "summon" feature available so soon.  Do you really think GM is going to be able to suddenly compete in all the ways Apple or Tesla will make consumers become more picky about choosing a vehicle?

 

If Tesla (and others that will likely be funded by Apple, Google, etc) will not be rationale about pursuing profits, then don't we just have another Amazon versus "pick your retailer" on our hands?  GM will be forced to use their free cash flow to completely change the way they approach consumers based on changing consumer tastes.

 

Anyway it's hard to know what the right multiple or future cash flow looks like.  I just don't think it's as easy as saying 6x, 7x, etc etc.  You have to think they can effectively compete in what will be a completely different market in the not so distant future.

 

Are consumers changing tastes? Because GM's retail market share has increased since 2009. Tesla is only selling to high net worth individuals. Let's be real. GM is selling the bolt and volt in Cali to target the mass consumer market, they are going bottom up, not top down like Tesla. If GM's strategy works, they'll be fine, regardless of what Tesla does. So, it's not likely GM will have to lower profits, it's likely Tesla will if they want to hit the mass market. GM is killing the light pickup market, and reinvesting that cash into electric vehicles, lift, its cars, and of course, modernizing its current technology. Not sure what else you want them to do.

[Picasso]

I wouldn't call the Model 3 a prediction.  It's going to happen and the price should be somewhere around $35-45k for an incredible car that can drive anywhere in the country with autopilot capabilities.  Reminds me a bit of the Ballmer video where he laughs off the iPhone because it costs $500 subsidized and didn't fit the mold of what a Windows phone could do (lacking a keyboard, etc.).

 

If you're going to invest in GM, you should probably understand your competition really well.  Tesla isn't stopping their "non-rational" approach of investing all their cash flow until the majority of all new car sales are electric.  I think what GM investors might be missing here is the common argument I get: well when it's obvious that electric is where the future is, they can just go electric and stomp out the competition.

 

That's not how this will work out.  As it is there will be no excess capacity for batteries once you factor in Tesla demand.  It takes a lot of time to build out that capacity and a lot of capital.  Then you need the infrastructure in place to allow long-distance fast charging which takes a lot of time and a lot of capital. 

 

I was at this little EV show where GM was showcasing the Chevy Bolt a few months ago.  I found it to be a complete joke.  GM is supposed to have this car come out in the near future and they bring a car that could only go 8 miles an hour with 3 miles of range because they hooked up a golf cart battery to a shell of a car that is supposed to be the Bolt.  Nevermind there is no charging infrastructure for long distance driving, fast charging capability, etc etc.  They just aren't serious yet because it's going to take a ton of capital to be serious and right now they're trying to answer to activist investors about better ROIC.

 

Anyway people were asking why GM is cheap and I'm just giving reasons why.  There was a good interview with Koenigsegg fairly recent and I think he nailed what's going to happen.  http://koenigsegg.com/ama-with-cvk-part-4/

 

A quick excerpt if you don't feel like reading:

 

The end-game is pretty clear if you look forward far enough, however: we won’t really need cars in the volumes produced today.

 

In a 15-20 year timeframe….. somewhere in that time, the number of combustion cars sold in developed markets will dwindle due to other options emerging.

 

I said something three years ago and people thought I was crazy back then. Right now in Norway, in 2015, 5% of all new car sales are electric vehicles. In Sweden it’s 1% and it’s gone from virtually zero to 1% in just a few years. These sales curves typically have a slow beginning and then they pick up quickly. Apple had slow sales of its portable technology at first but a few years later it went off and in short order, Nokia was basically dead.

 

So a few years ago I said that in 2020, in developed countries, there will be more electric cars sold than combustion engined cars. People thought I was crazy for saying that and there IS a big chance that I’ll be wrong, but let’s put it another way….. I think that around that time, the cars offered on the market will be 70-90% combustion engined cars and 10-30% electric cars but people will be walking away from combustion cars in big numbers. There’ll be huge delivery times for electric because people will not want the old technology once they get used to the new. Sales of old technology will go down dramatically. Cars will also be autonomous by then and a family will only need one car because it’ll be picking up and delivering the family members and their stuff all day long.

 

There will be a bloodbath, I think. And most of the cars sold by then will be electric. It might be 2020. It might be 2023 or 2027. It might be 30% or 40% instead of 50% but I do think it’s coming and it will only gather momentum when it does.

[Picasso]

Are consumers changing tastes? Because GM's retail market share has increased since 2009. Tesla is only selling to high net worth individuals. Let's be real. GM is selling the bolt and volt in Cali to target the mass consumer market, they are going bottom up, not top down like Tesla. If GM's strategy works, they'll be fine, regardless of what Tesla does. So, it's not likely GM will have to lower profits, it's likely Tesla will if they want to hit the mass market. GM is killing the light pickup market, and reinvesting that cash into electric vehicles, lift, its cars, and of course, modernizing its current technology. Not sure what else you want them to do.

 

I think consumer tastes will change dramatically over the next few years.  I see it happening first hand and so it's hard to look at what's happened the past several years and project it forward. 

 

My take from everything that is going on in this industry is that you're seeing disruption similar to when Amazon entered the retail market.  Investors and CEO's just scoffed at the idea of a company that couldn't turn a profit killing their core business.  Same thing is happening here and it's likely that Tesla will never pursue profits. 

 

But there are guys like Einhorn who own a Tesla and also own a big chunk of GM.  It's a question of timing. 

[hyten1]

am i missing something

 

GM just reviewed the chevy bolt both at the ces and detriot auto show, bolt is a real car with good review (people/journalist) who drove it.

 

i have not heard anyone who actually drove bolt and said its a joke or a golf car with a shell.

 

people talk about tesla's infrastructure like its some insurmountable hill that the auto industry can't climb. how much money did they spend? 5bil? 10bil? (lost less than that) so the entire auto industry will just wither and die due to that?

 

both people who underestimate tesla as well as people who think tesla will just take over the world need to take a deep breath. comparing to iphone etc is bit misleading and not quite the same.

 

people who think tesla is taking over the world need to read up on what the "traditional" auto makers are doing

 

a company that never pursue profit?!? how many of those will the market stand and how long do you think that will last.

 

 

I wouldn't call the Model 3 a prediction.  It's going to happen and the price should be somewhere around $35-45k for an incredible car that can drive anywhere in the country with autopilot capabilities.  Reminds me a bit of the Ballmer video where he laughs off the iPhone because it costs $500 subsidized and didn't fit the mold of what a Windows phone could do (lacking a keyboard, etc.).

 

If you're going to invest in GM, you should probably understand your competition really well.  Tesla isn't stopping their "non-rational" approach of investing all their cash flow until the majority of all new car sales are electric.  I think what GM investors might be missing here is the common argument I get: well when it's obvious that electric is where the future is, they can just go electric and stomp out the competition.

 

That's not how this will work out.  As it is there will be no excess capacity for batteries once you factor in Tesla demand.  It takes a lot of time to build out that capacity and a lot of capital.  Then you need the infrastructure in place to allow long-distance fast charging which takes a lot of time and a lot of capital. 

 

I was at this little EV show where GM was showcasing the Chevy Bolt a few months ago.  I found it to be a complete joke.  GM is supposed to have this car come out in the near future and they bring a car that could only go 8 miles an hour with 3 miles of range because they hooked up a golf cart battery to a shell of a car that is supposed to be the Bolt.  Nevermind there is no charging infrastructure for long distance driving, fast charging capability, etc etc.  They just aren't serious yet because it's going to take a ton of capital to be serious and right now they're trying to answer to activist investors about better ROIC.

 

Anyway people were asking why GM is cheap and I'm just giving reasons why.  There was a good interview with Koenigsegg fairly recent and I think he nailed what's going to happen.  http://koenigsegg.com/ama-with-cvk-part-4/

 

A quick excerpt if you don't feel like reading:

 

The end-game is pretty clear if you look forward far enough, however: we won’t really need cars in the volumes produced today.

 

In a 15-20 year timeframe….. somewhere in that time, the number of combustion cars sold in developed markets will dwindle due to other options emerging.

 

I said something three years ago and people thought I was crazy back then. Right now in Norway, in 2015, 5% of all new car sales are electric vehicles. In Sweden it’s 1% and it’s gone from virtually zero to 1% in just a few years. These sales curves typically have a slow beginning and then they pick up quickly. Apple had slow sales of its portable technology at first but a few years later it went off and in short order, Nokia was basically dead.

 

So a few years ago I said that in 2020, in developed countries, there will be more electric cars sold than combustion engined cars. People thought I was crazy for saying that and there IS a big chance that I’ll be wrong, but let’s put it another way….. I think that around that time, the cars offered on the market will be 70-90% combustion engined cars and 10-30% electric cars but people will be walking away from combustion cars in big numbers. There’ll be huge delivery times for electric because people will not want the old technology once they get used to the new. Sales of old technology will go down dramatically. Cars will also be autonomous by then and a family will only need one car because it’ll be picking up and delivering the family members and their stuff all day long.

 

There will be a bloodbath, I think. And most of the cars sold by then will be electric. It might be 2020. It might be 2023 or 2027. It might be 30% or 40% instead of 50% but I do think it’s coming and it will only gather momentum when it does.

[tylerdurden]

Are consumers changing tastes? Because GM's retail market share has increased since 2009. Tesla is only selling to high net worth individuals. Let's be real. GM is selling the bolt and volt in Cali to target the mass consumer market, they are going bottom up, not top down like Tesla. If GM's strategy works, they'll be fine, regardless of what Tesla does. So, it's not likely GM will have to lower profits, it's likely Tesla will if they want to hit the mass market. GM is killing the light pickup market, and reinvesting that cash into electric vehicles, lift, its cars, and of course, modernizing its current technology. Not sure what else you want them to do.

 

I think consumer tastes will change dramatically over the next few years.  I see it happening first hand and so it's hard to look at what's happened the past several years and project it forward. 

 

My take from everything that is going on in this industry is that you're seeing disruption similar to when Amazon entered the retail market.  Investors and CEO's just scoffed at the idea of a company that couldn't turn a profit killing their core business.  Same thing is happening here and it's likely that Tesla will never pursue profits. 

 

But there are guys like Einhorn who own a Tesla and also own a big chunk of GM.  It's a question of timing.

 

I don't agree with the argument that Tesla will conquer the whole world and all other car manufacturers with their sizable capex budgets will be just watching. There will probably be winners and losers and GM could be one of the winners.There was a whole section in terms of how GM is different from other manufacturers in  technology (Onstar, Mobileyes largest customer etc.) in the investor day presentation so I'd highly recommend you to review those pages. By the way I don't think Bolt is a "complete" joke; 200m plus miles range with $30k price tag, that's respectable to me and I wouldn't expect them to first come up with the charging stations and then the car. I think it is more conceivable the other way around... Overall I think GM is well aware of the changes in industry and they are trying to shape it, not follow others' lead. For the discount on GM shares, first the gap between GM and others like Ford etc should be closed. That's GM specific issue. That is not a discount because of "Tesla" the disruption machine for sure. 

[Picasso]

Without long distance charging ability and the spend that goes with it, the Chevy Bolt is dead in the water.  Let's say it costs $30k.  You won't have any real capability to drive the car further than 80 miles one way without range anxiety or causing damage to the battery over time.  That means for any occasional long distance trip you'll still need another car capable of doing long distance travel, like an ICE car.  So you're really going to end up paying say $50k between your $30k Bolt and some $20k ICE (or whatever you like in that category price wise) plus all the costs of maintaining/registering/insuring that extra vehicle. 

 

Public level 2 charging or using the 240V at someones house on Plugshare would take you 9-10 hours to recharge.  That's just ridiculous.  You can't travel more than 100 miles without the ability to waste half your day waiting to recharge (assuming no one is using some random charging spot you found).

 

And guess what?  If they don't have the ability for the Bolt to do DC charging (which they have not said they would allow) then it will never be able to do DC charging.  If they ever came up with a Bolt in the future that allowed it, your Bolt would plummet in value.  There's a reason why they need to create the right infrastructure/platform from the start.  Take a look at the residual values for the Volt/Leaf, etc.  It's absolutely terrible. 

 

They either fully commit and spend the money to make these products better or they'll keep wasting capital anyway on products that will have a difficult time selling.

 

And no one said Tesla is taking over the world.  They can have a relatively small market share and still wreck havoc on the profits of the other automakers. 

 

Edit: So looks like Chevy is making DC charging "optional."  For those that aren't familiar with the chademo DC charging, it will take you about 30 minutes to add roughly 90 miles of range.  So GM is making you pay more for something which lets you even attempt to drive long distance, an option which even the Nissan Leaf makes standard.  I guess that's how they're getting that pre-incentive price tag in the $37k area.

[merkhet]

Without long distance charging ability and the spend that goes with it, the Chevy Bolt is dead in the water.  Let's say it costs $30k.  You won't have any real capability to drive the car further than 80 miles one way without range anxiety or causing damage to the battery over time.  That means for any occasional long distance trip you'll still need another car capable of doing long distance travel, like an ICE car.  So you're really going to end up paying say $50k between your $30k Bolt and some $20k ICE (or whatever you like in that category price wise) plus all the costs of maintaining/registering/insuring that extra vehicle. 

 

http://cleantechnica.com/2015/09/27/some-non-tesla-evs-may-finally-get-tesla-supercharger-access/

 

I thought Tesla was opening up its charging infrastructure to others.

[LowIQinvestor]

I wouldn't call the Model 3 a prediction.  It's going to happen and the price should be somewhere around $35-45k for an incredible car that can drive anywhere in the country with autopilot capabilities.  Reminds me a bit of the Ballmer video where he laughs off the iPhone because it costs $500 subsidized and didn't fit the mold of what a Windows phone could do (lacking a keyboard, etc.).

 

If you're going to invest in GM, you should probably understand your competition really well.  Tesla isn't stopping their "non-rational" approach of investing all their cash flow until the majority of all new car sales are electric.  I think what GM investors might be missing here is the common argument I get: well when it's obvious that electric is where the future is, they can just go electric and stomp out the competition.

 

That's not how this will work out.  As it is there will be no excess capacity for batteries once you factor in Tesla demand.  It takes a lot of time to build out that capacity and a lot of capital.  Then you need the infrastructure in place to allow long-distance fast charging which takes a lot of time and a lot of capital. 

 

I was at this little EV show where GM was showcasing the Chevy Bolt a few months ago.  I found it to be a complete joke.  GM is supposed to have this car come out in the near future and they bring a car that could only go 8 miles an hour with 3 miles of range because they hooked up a golf cart battery to a shell of a car that is supposed to be the Bolt.  Nevermind there is no charging infrastructure for long distance driving, fast charging capability, etc etc.  They just aren't serious yet because it's going to take a ton of capital to be serious and right now they're trying to answer to activist investors about better ROIC.

 

Anyway people were asking why GM is cheap and I'm just giving reasons why.  There was a good interview with Koenigsegg fairly recent and I think he nailed what's going to happen.  http://koenigsegg.com/ama-with-cvk-part-4/

 

A quick excerpt if you don't feel like reading:

 

The end-game is pretty clear if you look forward far enough, however: we won’t really need cars in the volumes produced today.

 

In a 15-20 year timeframe….. somewhere in that time, the number of combustion cars sold in developed markets will dwindle due to other options emerging.

 

I said something three years ago and people thought I was crazy back then. Right now in Norway, in 2015, 5% of all new car sales are electric vehicles. In Sweden it’s 1% and it’s gone from virtually zero to 1% in just a few years. These sales curves typically have a slow beginning and then they pick up quickly. Apple had slow sales of its portable technology at first but a few years later it went off and in short order, Nokia was basically dead.

 

So a few years ago I said that in 2020, in developed countries, there will be more electric cars sold than combustion engined cars. People thought I was crazy for saying that and there IS a big chance that I’ll be wrong, but let’s put it another way….. I think that around that time, the cars offered on the market will be 70-90% combustion engined cars and 10-30% electric cars but people will be walking away from combustion cars in big numbers. There’ll be huge delivery times for electric because people will not want the old technology once they get used to the new. Sales of old technology will go down dramatically. Cars will also be autonomous by then and a family will only need one car because it’ll be picking up and delivering the family members and their stuff all day long.

 

There will be a bloodbath, I think. And most of the cars sold by then will be electric. It might be 2020. It might be 2023 or 2027. It might be 30% or 40% instead of 50% but I do think it’s coming and it will only gather momentum when it does.

 

Picasso, have you read the following?

http://seekingalpha.com/article/3788616-beware-teslas-model-3-mess

 

Beware Tesla's Model 3 Mess

 

Summary

 

While Tesla has been astonishingly vague about how big its Gigafactory must be to support Model 3 production, it's clear that the pilot facility now under construction is inadequate.

 

Tesla is at least two years behind its own schedule for committing crucial suppliers and subcontractors to "partner" with it in the Gigafactory.

 

It is highly doubtful that the Model 3 will cost only $35,000. A base model price of $45,000 is more likely, and 500,000 Tesla vehicle sales in 2020 is unachievable.

 

Tesla's Model S and Model X have had the luxury EV market all to themselves. The Model 3, by contrast, will face formidable competition.

 

Tesla's reliance on Model 3 deposits as interest-free financing presents the company with serious disclosure obligations to a less financially-sophisticated class of buyers.

[blainehodder]

am i missing something

 

GM just reviewed the chevy bolt both at the ces and detriot auto show, bolt is a real car with good review (people/journalist) who drove it.

 

i have not heard anyone who actually drove bolt and said its a joke or a golf car with a shell.

 

people talk about tesla's infrastructure like its some insurmountable hill that the auto industry can't climb. how much money did they spend? 5bil? 10bil? (lost less than that) so the entire auto industry will just wither and die due to that?

 

both people who underestimate tesla as well as people who think tesla will just take over the world need to take a deep breath. comparing to iphone etc is bit misleading and not quite the same.

 

people who think tesla is taking over the world need to read up on what the "traditional" auto makers are doing

 

a company that never pursue profit?!? how many of those will the market stand and how long do you think that will last.

 

 

I wouldn't call the Model 3 a prediction.  It's going to happen and the price should be somewhere around $35-45k for an incredible car that can drive anywhere in the country with autopilot capabilities.  Reminds me a bit of the Ballmer video where he laughs off the iPhone because it costs $500 subsidized and didn't fit the mold of what a Windows phone could do (lacking a keyboard, etc.).

 

If you're going to invest in GM, you should probably understand your competition really well.  Tesla isn't stopping their "non-rational" approach of investing all their cash flow until the majority of all new car sales are electric.  I think what GM investors might be missing here is the common argument I get: well when it's obvious that electric is where the future is, they can just go electric and stomp out the competition.

 

That's not how this will work out.  As it is there will be no excess capacity for batteries once you factor in Tesla demand.  It takes a lot of time to build out that capacity and a lot of capital.  Then you need the infrastructure in place to allow long-distance fast charging which takes a lot of time and a lot of capital. 

 

I was at this little EV show where GM was showcasing the Chevy Bolt a few months ago.  I found it to be a complete joke.  GM is supposed to have this car come out in the near future and they bring a car that could only go 8 miles an hour with 3 miles of range because they hooked up a golf cart battery to a shell of a car that is supposed to be the Bolt.  Nevermind there is no charging infrastructure for long distance driving, fast charging capability, etc etc.  They just aren't serious yet because it's going to take a ton of capital to be serious and right now they're trying to answer to activist investors about better ROIC.

 

Anyway people were asking why GM is cheap and I'm just giving reasons why.  There was a good interview with Koenigsegg fairly recent and I think he nailed what's going to happen.  http://koenigsegg.com/ama-with-cvk-part-4/

 

A quick excerpt if you don't feel like reading:

 

The end-game is pretty clear if you look forward far enough, however: we won’t really need cars in the volumes produced today.

 

In a 15-20 year timeframe….. somewhere in that time, the number of combustion cars sold in developed markets will dwindle due to other options emerging.

 

I said something three years ago and people thought I was crazy back then. Right now in Norway, in 2015, 5% of all new car sales are electric vehicles. In Sweden it’s 1% and it’s gone from virtually zero to 1% in just a few years. These sales curves typically have a slow beginning and then they pick up quickly. Apple had slow sales of its portable technology at first but a few years later it went off and in short order, Nokia was basically dead.

 

So a few years ago I said that in 2020, in developed countries, there will be more electric cars sold than combustion engined cars. People thought I was crazy for saying that and there IS a big chance that I’ll be wrong, but let’s put it another way….. I think that around that time, the cars offered on the market will be 70-90% combustion engined cars and 10-30% electric cars but people will be walking away from combustion cars in big numbers. There’ll be huge delivery times for electric because people will not want the old technology once they get used to the new. Sales of old technology will go down dramatically. Cars will also be autonomous by then and a family will only need one car because it’ll be picking up and delivering the family members and their stuff all day long.

 

There will be a bloodbath, I think. And most of the cars sold by then will be electric. It might be 2020. It might be 2023 or 2027. It might be 30% or 40% instead of 50% but I do think it’s coming and it will only gather momentum when it does.

 

I agree Hyten. Tesla is a cool company that makes cool cars and all but I disagree with pretty much everything said in Picasso's post

 

a) I think ICE cars or gasoline/electric will retain the vast majority of market share for the next 2 decades min. It is superior in almost every way. Cheaper. No 20 min charge issues. Gas stations everywhere. long range. proven tech. ICE is more maintenance short term, long term we don't know. Lifespan we don't know. Cold driving and battery longevity we don't really know.

b) What Tesla cash flow is Picasso referring to? The cash flow from the constant issuance of debt and equity? The cash flow from sale of credits? Tesla's ability to execute the business plan depends on the confidence game that is the equity.

c) The Bolt will be cheaper than the model 3 guaranteed. It will also be worse guaranteed, but price is the biggest factor for most buyers in the sub 40K car market. Comparing what will prob be a 30K car to a 40K car seems unreasonable. I think the model 3 will be a shocking failure to the always inflated predicted sales nums from Tesla.

d) The gigafactory is a competitive advantage (in the short term), but it isn't huge.  Competitors like LG will build out comparable or better battery production capability in short order. Not only will Tesla lose the battery race. The US will lose as well. It is siimply too expensive to produce huge factories in the US. I also question why anyone would think that batteries are going to be monopoly market vs a commodity market. If supply constraints become an issue, you can bet it will be an issue for Tesla as well.

e) Tesla is still tiny in the grand scheme of things.  Anything they have done successfully will be cloned, perhaps at a lag at first, but not for long. Model 3 delivery dates vs the Bolt are the first sign that GM is catching up (among others).

f) Norway is not a representative market for global sales. Gas is outrageously expensive there.

 

Even as someone who thinks the Tesla Model S might be the coolest car ever built I just don't see a rapid ramp up in electrification of global autos where Tesla takes a big share or eats a big slice of profits.

 

In my opinion GM is a dirt cheap, mediocre business, but the stock is a buy.  Tesla looks like an overpriced mediocre business fuelled by hype that will become recognized as a mediocre business over time.  probably a good long/short pair trade in my opinion. Lets come back to this in 3 yrs.

 

 

[vinod1]

I am long GM, but I think there are three longer term risks that in combination can seriously dent the company.

 

1. Ride sharing: As many others point out, an average car spends 94% of its time parked. In a lot of urban settings, there are lots of advantages to ride sharing and it is likely to put a dent on total demand. So all the SAAR that was lost during the great recession might be more than accounted for in future by losses to ride sharing.

 

2. Electric car: GM and other auto manufacturers have spent decades on IC engines and related technologies. Electric cars have a fraction of the parts of an IC engine based car and all the know how and decades of learning curve become suddenly less useful.

 

3. Autonomous driving: Technology companies are going to in an advantageous position. I have a tough time how any of the auto companies would be able to match Apple, Google, etc in this area. I think the best case would be to partner with a technology firm to collect say data on roads using their existing car base and sharing data on safety and other features that would remain the same.

 

I have no idea of how this would all shake out, but there is lot going on to be able to say confidently that GM would be able to even maintain this year's earnings in 2025.

 

But given the price, I think there is a reasonable margin of safety in GM.

 

Vinod

 

[Liberty]

a) I think ICE cars or gasoline/electric will retain the vast majority of market share for the next 2 decades min. It is superior in almost every way. Cheaper. No 20 min charge issues. Gas stations everywhere. long range. proven tech. ICE is more maintenance short term, long term we don't know. Lifespan we don't know. Cold driving and battery longevity we don't really know.

 

ICE is inferior in almost every way.

 

Less torque, more lag, more complexity, more maintenance, more fluids and parts that can break.  You have to stop at the gas station rather than charge overnight or while parked at the office (nobody drives 24/7, there's plenty of downtime to charge and you almost always drive off with a full charge). EVs are also less noisy, less polluting, lower center of gravity, can be made safer (not a huge iron mass right on front of you when you hit something), more can be done with software (including upgrades), can be made to have more interior and storage space and have better AWD capabilities. ICE is pretty mature while EVs are still improving quickly and getting cheaper by the year; extrapolate those two trends forward and it's clear that EVs will take over.

 

I don't know about market share over the next 2 decades, but I know that the change won't be linear. It won't be as fast as going from "nobody has smartphones" to "everybody has smartphones" because cars are longer-lived and more expensive, but to think that sales will stay as slow as they've been in the past few years is a mistake, IMO. Once really compelling models that are in mainstream price ranges hit, they'll probably be supply-constrained rather than demand-constrained for a while. Most existing car makers have only released compromised models so far because they are afraid of cannibalizing their ICE sales (ie. if Nissan had made an electric Altima rather than a LEAF... if BMW had made an electric 3 or 5 rather than the weird i3), but once things like the Model 3 are out, everyone will have to really try or eventually be left behind.

[CorpRaider]

Yeah, I'm thinking about getting rid of all my lawn and garden ICE powered tools/machines.  Seems like they would have to get the tech good enough to dominate that market before moving on to autos, but that is not how it has played out so far.  I agree with Picasso, its probably cheap because it filed for bankruptcy not that long ago and Apple and GooG appear to be coming.

[muscleman]

I am long GM, but I think there are three longer term risks that in combination can seriously dent the company.

 

1. Ride sharing: As many others point out, an average car spends 94% of its time parked. In a lot of urban settings, there are lots of advantages to ride sharing and it is likely to put a dent on total demand. So all the SAAR that was lost during the great recession might be more than accounted for in future by losses to ride sharing.

 

2. Electric car: GM and other auto manufacturers have spent decades on IC engines and related technologies. Electric cars have a fraction of the parts of an IC engine based car and all the know how and decades of learning curve become suddenly less useful.

 

3. Autonomous driving: Technology companies are going to in an advantageous position. I have a tough time how any of the auto companies would be able to match Apple, Google, etc in this area. I think the best case would be to partner with a technology firm to collect say data on roads using their existing car base and sharing data on safety and other features that would remain the same.

 

I have no idea of how this would all shake out, but there is lot going on to be able to say confidently that GM would be able to even maintain this year's earnings in 2025.

 

But given the price, I think there is a reasonable margin of safety in GM.

 

Vinod

 

I am reserved on cost saving of the ride sharing aspect. Cars depreciate mostly by miles driven, not by age. If I buy a car and share the rides all the time with other people, my car will likely reach 200k miles by end of year 1 and for most of the cars, that's the end of its life.

 

[jay21]

I am long GM, but I think there are three longer term risks that in combination can seriously dent the company.

 

1. Ride sharing: As many others point out, an average car spends 94% of its time parked. In a lot of urban settings, there are lots of advantages to ride sharing and it is likely to put a dent on total demand. So all the SAAR that was lost during the great recession might be more than accounted for in future by losses to ride sharing.

 

2. Electric car: GM and other auto manufacturers have spent decades on IC engines and related technologies. Electric cars have a fraction of the parts of an IC engine based car and all the know how and decades of learning curve become suddenly less useful.

 

3. Autonomous driving: Technology companies are going to in an advantageous position. I have a tough time how any of the auto companies would be able to match Apple, Google, etc in this area. I think the best case would be to partner with a technology firm to collect say data on roads using their existing car base and sharing data on safety and other features that would remain the same.

 

I have no idea of how this would all shake out, but there is lot going on to be able to say confidently that GM would be able to even maintain this year's earnings in 2025.

 

But given the price, I think there is a reasonable margin of safety in GM.

 

Vinod

 

I would add: unrepentant alcoholic risk. Auto industry might not keep current discipline.

[Liberty]

Yeah, I'm thinking about getting rid of all my lawn and garden ICE powered tools/machines.  Seems like they would have to get the tech good enough to dominate that market before moving on to autos, but that is not how it has played out so far.  I agree with Picasso, its probably cheap because it filed for bankruptcy not that long ago and Apple and GooG appear to be coming.

 

I don't think lawnmower companies quite have the R&D capabilities that Tesla, Apple, or even Nissan and GM have... Also, people care a lot more about their cars (and smartphones) than about the hedge trimmer.

 

But that'll trickle down to them, just like laptop and smartphone battery R&D is now helping EVs.

[merkhet]

I am long GM, but I think there are three longer term risks that in combination can seriously dent the company.

 

1. Ride sharing: As many others point out, an average car spends 94% of its time parked. In a lot of urban settings, there are lots of advantages to ride sharing and it is likely to put a dent on total demand. So all the SAAR that was lost during the great recession might be more than accounted for in future by losses to ride sharing.

 

2. Electric car: GM and other auto manufacturers have spent decades on IC engines and related technologies. Electric cars have a fraction of the parts of an IC engine based car and all the know how and decades of learning curve become suddenly less useful.

 

3. Autonomous driving: Technology companies are going to in an advantageous position. I have a tough time how any of the auto companies would be able to match Apple, Google, etc in this area. I think the best case would be to partner with a technology firm to collect say data on roads using their existing car base and sharing data on safety and other features that would remain the same.

 

I have no idea of how this would all shake out, but there is lot going on to be able to say confidently that GM would be able to even maintain this year's earnings in 2025.

 

But given the price, I think there is a reasonable margin of safety in GM.

 

Vinod

 

I am reserved on cost saving of the ride sharing aspect. Cars depreciate mostly by miles driven, not by age. If I buy a car and share the rides all the time with other people, my car will likely reach 200k miles by end of year 1 and for most of the cars, that's the end of its life.

 

This is what I was going to reply as well.

 

You have passive entropy (sitting in the garage) + active entropy (driving). Passive entropy over the average lifetime of the car will be saved purely by shortening the length of car life, but it's miniscule in the first place. Active entropy will increase dramatically because you've moved the car's effective "capacity utilization" from 20% to 80%. Moreover, this might mean that rather than replacing the average car once every ten years, you replace the average car once every 3.3 years. Total cars on the road might go down but total production over a period of X years stays the same.

 

(Numbers are all made up to illustrate the concept.)

[merkhet]

Yeah, I'm thinking about getting rid of all my lawn and garden ICE powered tools/machines.  Seems like they would have to get the tech good enough to dominate that market before moving on to autos, but that is not how it has played out so far.  I agree with Picasso, its probably cheap because it filed for bankruptcy not that long ago and Apple and GooG appear to be coming.

 

I don't think lawnmower companies quite have the R&D capabilities that Tesla, Apple, or even Nissan and GM have... But that'll trickle down to them, just like laptop and smartphone battery R&D is now helping EVs.

 

Maybe Lamborghini would :)

 

http://jalopnik.com/5472503/the-forgotten-history-of-automaker-tractors/

 

Tractors, not lawnmowers, though...

[vinod1]

I am long GM, but I think there are three longer term risks that in combination can seriously dent the company.

 

1. Ride sharing: As many others point out, an average car spends 94% of its time parked. In a lot of urban settings, there are lots of advantages to ride sharing and it is likely to put a dent on total demand. So all the SAAR that was lost during the great recession might be more than accounted for in future by losses to ride sharing.

 

2. Electric car: GM and other auto manufacturers have spent decades on IC engines and related technologies. Electric cars have a fraction of the parts of an IC engine based car and all the know how and decades of learning curve become suddenly less useful.

 

3. Autonomous driving: Technology companies are going to in an advantageous position. I have a tough time how any of the auto companies would be able to match Apple, Google, etc in this area. I think the best case would be to partner with a technology firm to collect say data on roads using their existing car base and sharing data on safety and other features that would remain the same.

 

I have no idea of how this would all shake out, but there is lot going on to be able to say confidently that GM would be able to even maintain this year's earnings in 2025.

 

But given the price, I think there is a reasonable margin of safety in GM.

 

Vinod

 

I am reserved on cost saving of the ride sharing aspect. Cars depreciate mostly by miles driven, not by age. If I buy a car and share the rides all the time with other people, my car will likely reach 200k miles by end of year 1 and for most of the cars, that's the end of its life.

 

Definitely not in every case. But it is both cost effective and convenient in some cases - urban settings where cost of parking is high and it is difficult to find parking, it is easier to use ride sharing services than to own a car. There are a few other use cases where ride sharing is cost effective. But that is now.

 

In future, if you combine it with autonomous driving, it becomes cost effective in many more use cases.

 

Vinod

 

 

[jeffmori7]

I am long GM, but I think there are three longer term risks that in combination can seriously dent the company.

 

1. Ride sharing: As many others point out, an average car spends 94% of its time parked. In a lot of urban settings, there are lots of advantages to ride sharing and it is likely to put a dent on total demand. So all the SAAR that was lost during the great recession might be more than accounted for in future by losses to ride sharing.

 

2. Electric car: GM and other auto manufacturers have spent decades on IC engines and related technologies. Electric cars have a fraction of the parts of an IC engine based car and all the know how and decades of learning curve become suddenly less useful.

 

3. Autonomous driving: Technology companies are going to in an advantageous position. I have a tough time how any of the auto companies would be able to match Apple, Google, etc in this area. I think the best case would be to partner with a technology firm to collect say data on roads using their existing car base and sharing data on safety and other features that would remain the same.

 

I have no idea of how this would all shake out, but there is lot going on to be able to say confidently that GM would be able to even maintain this year's earnings in 2025.

 

But given the price, I think there is a reasonable margin of safety in GM.

 

Vinod

 

I am reserved on cost saving of the ride sharing aspect. Cars depreciate mostly by miles driven, not by age. If I buy a car and share the rides all the time with other people, my car will likely reach 200k miles by end of year 1 and for most of the cars, that's the end of its life.

 

It depends of what you call ridesharing. For me that would be Uber-like sharing (incidentally, GM just invested 500M$ into Lyft). But there is also carsharing, à la Car2go, where you just pay a monthly fee or on-demand to use a car in a urban environment just when you need one, like bikesharing systems, and you can park whereever you want. Convergence with self-driving car could really reduce the number of car on the roads and optimize the mileage. It would also eventually give you access to many type of cars instead of just the one you got in your driveway and that you want to use even if its format is not convenient for your needs. I think it will lead to less cars overall, even though they will age more rapidly.

[vinod1]

I am long GM, but I think there are three longer term risks that in combination can seriously dent the company.

 

1. Ride sharing: As many others point out, an average car spends 94% of its time parked. In a lot of urban settings, there are lots of advantages to ride sharing and it is likely to put a dent on total demand. So all the SAAR that was lost during the great recession might be more than accounted for in future by losses to ride sharing.

 

2. Electric car: GM and other auto manufacturers have spent decades on IC engines and related technologies. Electric cars have a fraction of the parts of an IC engine based car and all the know how and decades of learning curve become suddenly less useful.

 

3. Autonomous driving: Technology companies are going to in an advantageous position. I have a tough time how any of the auto companies would be able to match Apple, Google, etc in this area. I think the best case would be to partner with a technology firm to collect say data on roads using their existing car base and sharing data on safety and other features that would remain the same.

 

I have no idea of how this would all shake out, but there is lot going on to be able to say confidently that GM would be able to even maintain this year's earnings in 2025.

 

But given the price, I think there is a reasonable margin of safety in GM.

 

Vinod

 

I would add: unrepentant alcoholic risk. Auto industry might not keep current discipline.

 

I am not sure they are currently disciplined ooking at the expansion plans most of the companies have. :)

 

There are a whole lot of other more traditional risks with auto companies, I am just trying point out the new ones that we have not previously encountered.

 

Vinod

 

 

[Guest ajc]

I am long GM, but I think there are three longer term risks that in combination can seriously dent the company.

 

1. Ride sharing: As many others point out, an average car spends 94% of its time parked. In a lot of urban settings, there are lots of advantages to ride sharing and it is likely to put a dent on total demand. So all the SAAR that was lost during the great recession might be more than accounted for in future by losses to ride sharing.

 

2. Electric car: GM and other auto manufacturers have spent decades on IC engines and related technologies. Electric cars have a fraction of the parts of an IC engine based car and all the know how and decades of learning curve become suddenly less useful.

 

3. Autonomous driving: Technology companies are going to in an advantageous position. I have a tough time how any of the auto companies would be able to match Apple, Google, etc in this area. I think the best case would be to partner with a technology firm to collect say data on roads using their existing car base and sharing data on safety and other features that would remain the same.

 

I have no idea of how this would all shake out, but there is lot going on to be able to say confidently that GM would be able to even maintain this year's earnings in 2025.

 

But given the price, I think there is a reasonable margin of safety in GM.

 

Vinod

 

 

Ride-sharing, EVs and autonomous driving will boost car sales in a substantial way. Think about it.

 

In rich countries, most cars will still be personal and private and that will not change overnight. In developing countries however, ride-sharing means that car use will go up dramatically because now there is no personal capital outlay needed and users can spend 10 minutes or 10 days in a car every month depending on their financial means. The result of that, I think, is likely to be substantial growth in car sales across the billions of people in the developing world. Before, that would never have happened because you needed to raise 10's of thousands of dollars for your own vehicle and after that you only shared it with 1 or 2 family members at most.

Just go check how many cars there are in total across the developing world versus how many people there are who would use one for some portion of their day. Then look at global annual car production numbers. It seems incredibly unlikely that car sales are going to see anything but a boom over the next decade or two because of ride-sharing.

Also, keep in mind that ride-sharing will never be totally efficient. There will always need to be enough vehicles for peak times in and out of cities, even with incentives for pooling and changing work habits. I think the '7 cars taken off the road for every Uber' that Travis Kalanick talks about will only happen in the West where people still love their private property.

 

Then come EVs with far fewer working parts and therefore lower upkeep costs (like some sort of mobile phone on wheels) as well as hugely lower refuelling costs because you can 'fill your tank' for only a few bucks. Odds are that lower maintenance costs and nearly free fuel will once again drive sales because the cost of moving goods or people will have had a huge chunk of the costs taken out. Lower prices for moving around obviously tend to result in increased demand for that service.

 

Finally, autonomous vehicles take the other big cost out of the equation because now you no longer need to pay a driver thousand of dollars every year or provide them with benefits and so on. Again, add not having to pay for a driver or fuel (basically minimal) and getting in a car anywhere around the world will be like opening the faucet at home and letting it run for a few minutes. The cost will pretty much have no serious impact on the wallets of people in countries that are still even considered 'developing' 15 or 20 years from now.

 

I should add though, that this does not mean today's auto companies will win even if they clearly have the factories and ability to do so if that's what they want. Clearly there's a little thing called institutional inertia which might say otherwise, but there's no physical law stopping it from getting done.

Also, I think cars will get smaller, smarter and cheaper over time just like cellphones and so even though absolute numbers will rise the amount that they sell for may drop considerably. Then again, if you're looking at this from a margin perspective you might see one or two autonomous EV makers get really rich if they can pull off an Apple or some such thing.

Anyway, those are pretty much my thoughts on vehicle sales globally over the next 10 or 20 years. Always open to change of course, if and when new information and ideas are introduced.

 

PS. Finally, let me just add that what Muscleman said needs to be taken into consideration and rapid technological advances will also mean that replacement cycles on cars will be very quick (maybe a year or two like phones) and they'll be almost completely recyclable and if the global population is around 15 billion at some point in the future then maybe we'd need 4 or 5 billion cars purely for moving humans and perhaps another few billion for goods so if you look at where we currently are many cars still need to be sold and the cost of driving and fuelling them is only going to get cheaper.

 

 

 

[CorpRaider]

Stihl has electric trimmers and lawnmowers for the non-commercial segment now, just saying.

[RadMan24]

Without long distance charging ability and the spend that goes with it, the Chevy Bolt is dead in the water.  Let's say it costs $30k.  You won't have any real capability to drive the car further than 80 miles one way without range anxiety or causing damage to the battery over time.  That means for any occasional long distance trip you'll still need another car capable of doing long distance travel, like an ICE car.  So you're really going to end up paying say $50k between your $30k Bolt and some $20k ICE (or whatever you like in that category price wise) plus all the costs of maintaining/registering/insuring that extra vehicle. 

 

Public level 2 charging or using the 240V at someones house on Plugshare would take you 9-10 hours to recharge.  That's just ridiculous.  You can't travel more than 100 miles without the ability to waste half your day waiting to recharge (assuming no one is using some random charging spot you found).

 

And guess what?  If they don't have the ability for the Bolt to do DC charging (which they have not said they would allow) then it will never be able to do DC charging.  If they ever came up with a Bolt in the future that allowed it, your Bolt would plummet in value.  There's a reason why they need to create the right infrastructure/platform from the start.  Take a look at the residual values for the Volt/Leaf, etc.  It's absolutely terrible. 

 

They either fully commit and spend the money to make these products better or they'll keep wasting capital anyway on products that will have a difficult time selling.

 

And no one said Tesla is taking over the world.  They can have a relatively small market share and still wreck havoc on the profits of the other automakers. 

 

Edit: So looks like Chevy is making DC charging "optional."  For those that aren't familiar with the chademo DC charging, it will take you about 30 minutes to add roughly 90 miles of range.  So GM is making you pay more for something which lets you even attempt to drive long distance, an option which even the Nissan Leaf makes standard.  I guess that's how they're getting that pre-incentive price tag in the $37k area.

 

Doesn't that explain why GM is selling these cars in California? And Tesla wrecking everyone's profits? If they came up with an electric pickup truck, I'd be running for the hills.