Luke42
Well-known member
- First Name
- Luke
- Joined
- Aug 10, 2020
- Threads
- 0
- Messages
- 1,143
- Reaction score
- 922
- Location
- Illinois, USA
- Vehicles
- Tesla Model Y, GMC Sierra Hybrid 3HB (2-Mode)
Scaling up a capital intensive low-margin business like car manufacturing is a Hard Problem.I just don't see how this company survives on its own without some other major player coming in that helps with volume and service. Like a government contract, amazon, apple, or a legacy auto. Thoughts?
The conventional mass-market car business is one where you spend a billion dollars upfront to develop a platform and build the factories, and then you make it back a few thousand dollars at a time amortized over hundreds of thousands of units. That's a big bet with a low payoff, and not many people will take that bet without a *lot* of assurance that they'll get their money back.
Tesla has managed to pull it off, but they're the only one whose managed to thread that needle in a century -- and Musk has had to bet the company on each successive product in a way that legacy car makers would likely consider to be "batshit crazy".
One way to make it less hard is to use contract manufacturing from existing Tier 1 automotive suppliers, or an existing car company -- but someone still has to make a billion dollar bet. The only billionaire I know who's batshit crazy enough to do that is already the CEO of Tesla.
Even existing car companies have trouble selling cars in the US. For instance, Mahindra & Mahindra (who got their start making licensed Jeeps) has been trying to introduce their pickup trucks and SUVs into the US market for at least 15 years, and they're already a car company. See:
https://en.wikipedia.org/wiki/Mahindra_&_Mahindra#Mahindra_in_North_America
Introducing a new car brand is a tough nut to crack.
Mad props to everyone who wants to give it a go. I'm cheering all the way!