Pizza Bets On Price & Production Schedule

[DonC]

Here is my take on the production schedule. First of all I don't think you can separate out the schedule, the new CEO, and the last round of funding. So far this has proceeded along the normal course. A start up gets its C round, the investors will only put money in if a more experienced person is CEO, so the founder must step aside. This is where we are with Aptera. (The good thing is that Steve did get the C round and the company is viable. That's an accomplishment).

The second act usually unfolds like this: The new CEO starts digging in and finds that the company is not nearly as far along as they thought they were. A lot of details have been missed, time estimates are too optimistic (founders are by nature optimists not realists), and so on and so forth. Usually pricing has also been understated, with parts being marked up 10% when they need to be marked up 100%.

The new CEO is now on the job. After a few weeks and he has a better grasp of the situation I'm expecting both a change in the production schedule and a price increase. To meet the year end deadline Aptera may make a car or two, but the cars will be more production prototype than production vehicles. I'm happy to take a pizza bet on either the production schedule or the pricing from the first comer. Any takers? :fighting0030:

[randyd]

I'm expecting both a change in the production schedule and a price increase. To meet the year end deadline Aptera may make a car or two, but the cars will be more production prototype than production vehicles. I'm happy to take a pizza bet on either the production schedule or the pricing from the first comer. Any takers?
See if Steve F. will take you up on that bet. :)

What's "production prototype" in your mind? Hand-welded roll cage as opposed to robot-welded? To me, any vehicle with the "fit and finish" of a production car counts, even if it takes extra time to build because not all the jigs are ready.

I'll take both bets on the following terms:

They must produce at least 5 cars for sale by 12/31/08. If they do, see the next test. Dealership demos don't count, but cars *sold* to employees do count.

If the cars produced for sale by year end have all major features of the production cars (opening windows, advertised battery range, two seats, etc.) I win. If the windows don't open, you win. Having unadvertised features (like multiple colors or support for 220V charging) works to my favor.

That's one pizza.

If the price for the first 10 cars sold to non-employees is below $30,000, I win. If the price rises shortly after production starts, I will have already enjoyed my pizza. :)

[DonC]

See if Steve F. will take you up on that bet. :)

What's "production prototype" in your mind? Hand-welded roll cage as opposed to robot-welded? To me, any vehicle with the "fit and finish" of a production car counts, even if it takes extra time to build because not all the jigs are ready.

I'll take both bets on the following terms:

They must produce at least 5 cars for sale by 12/31/08. If they do, see the next test. Dealership demos don't count, but cars *sold* to employees do count.

If the cars produced for sale by year end have all major features of the production cars (opening windows, advertised battery range, two seats, etc.) I win. If the windows don't open, you win. Having unadvertised features (like multiple colors or support for 220V charging) works to my favor.

That's one pizza.

If the price for the first 10 cars sold to non-employees is below $30,000, I win. If the price rises shortly after production starts, I will have already enjoyed my pizza. :)
In my mind a production prototype is like a release candidate. It might be the production car and it might be a one off. Whether the car is truly production, done in a production way with the intent of doing more exactly like it, is more important than the numbers.

The price is the price to the public when they start producing them. I think this is what you're talking about. I'm expecting an email before the end of the year so I think we're OK there.

I've got a great pizza place down here -- Pizza Port -- if you pick up your car. If you win maybe I'll throw in one of their micro brews. :fighting0003:

[Carbon Saver II]

Prototypes, I believe the Ford GT that I posted elsewhere with Neil driving was a "Prototype". So they can look pretty real.... :)

When I worked for Madza Raceway Laguna Seca I got a sponsor car (had 6 different vehicles in 4 years. Nothing like visiting other tracks and running the course flying your home colors...) that did not have a remote control. No problem, asked the North American marketing support guy to send me a kit and I'll program the remote. No matter what I did it did not work.

Got pulled over because the dealer plate was out of date. The Officer was not getting a return from the computer on the VIN. After some phone calls, the Mazda people were giving me the third degree about how I got the car.

They put on the graphics and shipped it to us for ad use. It turned out to be a pre-production vehicle, which are required not to be street driven and must be crushed per Fed regulations. The remote did not work because the computer was not the final version.

So a pretty nice car got through the cracks, from a world wide car company, and it was not a street sellable or usable enough though it functioned perfectly well.

So definitions in the contest could be interesting....

[DonC]

So definitions in the contest could be interesting....
That's a great story. I can imagine how frustrating the remote much have been.

Yes, this is what I'd call a release candidate car. It's close but no cigar. I'm surprised so few people here expect a delay or price increase. Seems very likely to me.

Not to worry about defining the parameters of the bet. It's a friendly pizza deal. Maybe the damage will be slightly worse with a couple of micro brews but nothing worth arguing about.

[Eyelawdoc]

I'm surprised so few people here expect a delay or price increase. Seems very likely to me.
Not to worry about defining the parameters of the bet. It's a friendly pizza deal. Maybe the damage will be slightly worse with a couple of micro brews but nothing worth arguing about.

Like yourself, I would expect both delays and price increases. It happens with practically every new vehicle. Not a big deal !

I'm a patient guy and believe that my new Aptera will be worth waiting for.

[Carbon Saver II]

I am a nasty CFO guy, and price increase I expect, but won't like. But then I do it to help the businesses I work with so.... :character0021:

Delay? It appears to me that Aptera has the right team to do it (I already posted about Neil), and is being pretty conservative on what it says. Hopefully that is quiet confidence at work. It work seem that they have had time to work on the concept and they aren't starting from scratch this week. It also appears that they are doing everything they can to delivery on their word.

That said, 1,419 is not expecting to see his until summer 2009. :character0013:

[Mzbhavn]

contest question... Will the pizza be delivered in the aptera when you recive yours?

[Ardie3301]

I won't take you up on that pizza bet (but maybe we-all will meet for pizza at some later date T-B-D).

Delays are inevitable and common, especially with companies playing so close to the edge with just-in-time inventory stocking. And it doesn't have to be you. It could be your supplier. One blip, and you're toast.

Price increases are also common, but I won't like seeing price increases after showing confidence in their product plans by pledging to buy one with a deposit.

Since I have no way of knowing how bad the price increase will be, but Aptera can show some deference to those of us in the waiting list by mitigating the price increase in some way. Suppose the price of a Typ-1e shoots up to $32,000, but those on the waiting list will be offered a sliding discounted price, say:
Nos. 0001 - 1000 will be offered a price of $28,000,
Nos. 1001 - 2000 will be offered a price of $28,500,
Nos. 2001 - 3000 will be offered a price of $29,000,
and so on.

This seems - I don't kow if "fair" is the right word - at least it would be an acceptable compromise that makes everyone equally unhappy.

As an aside, I hope Aptera knows that there is a real barrier at $30,000.
While the fanatics here on the board might accept it, a great number of people will turn away from the prospect of paying 30 grand for a battery powered motorcycle.

-- Ardie

[DonC]

Mzbhavn - Not to Northern California for sure! It's kinda out of the 100 mile range. I was actually thinking that getting the pizza after the pick-up might be a good way to get a ride. :)

Ardie3301 - I think it's the first batch. What happens after the first 1000 is too far out. Just from my experience, folks new to an area always under price because they're excited and because they don't fully understand all the costs involved. If GM thinks it will cost the $45K to build each of the first 100,000 Volts, I have my doubts that Aptera can build an electric car for $28K. Granted the Volt is a more substantial car, but still. In thinking about it, I'm having trouble figuring out how you keep prices down when you're ordering a thousand sets of disc breaks.

Because Aptera needs to at least break even on the first 1000 cars, when the new CEO starts looking at the numbers I'd think there will have to be a price increase. My guess is $32K-$34K. Hopefully this is wrong. I figure that I'm covered. Either I have to buy a couple of pizzas and pay thousands less for a car or I get a couple of pizzas. It's a hedge position!

FWIW at $32K the Aptera is still a good deal when compared to the alternatives, assuming it handles OK and is reliable. Additionally, I don't think the Aptera is all about the left brain. The tech and design are definitely cool.

[Carbon Saver II]

KarenRei, In reply to your edit on my post a couple back:

I've been in the Ford GT with Neil, he drives things very, very fast!!! (He was 3 to 5 seconds faster than any of the other test drivers when they were working on the GT per lap at Laguna.) Ford's delivery of the GT was something else he did fast.

The objective for this company can not just be to deliver the backlog, but to place the backlog and ensure that those customers are happy to set-up for regional, then national and then international growth and units.

So pushing out 1,500 Typ-1e's is the first step in what I am sure they have figured out in a long latter. The Typ-1h is next, etc., etc., etc. They will need to move quickly on this step to get to the rest of them going before someone else's product passes them by. The increase in management is not just for the current backlog, and in many ways probably won't have much to do with it. They have longer term goals to work on and execute.

Toyota's Prius topped over a million units in May, 2008. Those are the types of goals they should have hired the new management for. A few thousand units are a mere test of a drop of water from what can be a lake, and you can bet their "investors" know that and are pushing it.

http://www.wtopnews.com/?sid=1404414&nid=111

No inside info, I just believe their on it, IMHO.

Hence my optimism. :aptera:

[DonC]

So pushing out 1,500 Typ-1e's is the first step in what I am sure they have figured out in a long latter. The Typ-1h is next, etc., etc., etc. They will need to move quickly on this step to get to the rest of them going before someone else's product passes them by. The increase in management is not just for the current backlog, and in many ways probably won't have much to do with it. They have longer term goals to work on and execute.

Toyota's Prius topped over a million units in May, 2008. Those are the types of goals they should have hired the new management for. A few thousand units are a mere test of a drop of water from what can be a lake, and you can bet their "investors" know that and are pushing it.
First of all he will have to deal with the situation as it is. Aptera may not be ready to start production. He'll have to figure this out, and that will take longer than a week. He's not superman.

On the sales goals, the Aptera is an electric trike that seats two and has a large footprint and a strange design. The Porshe Boxster is probably the world's most popular roadster. Porshe sells about 20,000 of them a year. The Aptera is simply not going to sell in any significant numbers -- certainly not a million -- in its current configuration.

As for developing a more mainstream product before others release competing vehicles: The Honda Insight will be released in early 2009. The CR-Z will be released later in 2009. You have the new Prius. In 2010 you'll have the Volt. You have the Tesla Whitestar due sometime. You'll have electric mini-Coopers and electric Smarts. Basically Aptera will be a subsequent entrant by the time it develops a more mainstream product.

[KarenRei]

KarenRei, In reply to your edit on my post a couple back:

Whoops! That was supposed to be a reply, not an edit!!!

"You're expecting 1,419 in the summer of '09? Heh, I'm expecting mine (in the 300-400 range) in summer of '09 ;) You're a lot more optimistic than me."

So pushing out 1,500 Typ-1e's is the first step in what I am sure they have figured out in a long latter. The Typ-1h is next, etc., etc., etc. They will need to move quickly on this step to get to the rest of them going before someone else's product passes them by.

and...

Toyota's Prius topped over a million units in May, 2008.

Aptera is not taking the sort of approach that established companies take, wherein you don't generally release a vehicle until you can meet all demand. Aptera is taking the approach taken by typical startups, where you try and get a product, any product, out the door as soon as possible to gain confidence from investors. Watch other new car companies and you'll see the same thing. The first cars out the door are going to be pretty much handbuilt. The first lines are going to have a very huge number of operations delays, part defects, etc. They're going to have a number of supplier delays, and perhaps even wait for suppliers to scale up. Everything is going to be very sluggish until they get the kinks out and get everything as automated and streamlined as possible. And even then, they'll be having to add *many* more lines once all of the bugs are worked out to get to full production. They're going to need a *lot* of molds to be able to churn out all of the pieces for 30 complete composite shells a day, for example. I'd be surprised if they could make more than two parts per mold per day.

With a conventional car company and a mass produced vehicle, you don't release until you're ready to make a lot of them (with the exception of fleet tests). Aptera doesn't have that luxury.

Please don't get your hopes up too high about getting your car next summer. Fall, maybe.

[DonC]

With a conventional car company and a mass produced vehicle, you don't release until you're ready to make a lot of them (with the exception of fleet tests). Aptera doesn't have that luxury.
Put another way, for Aptera their customers are the fleet test.

[KarenRei]

Their first couple, yep. Aptera has stated that they will be using some of their first pre-production models for drivetesting, and of course, they've been driving the Mk1 all over the place, but there's a difference between driving, say, three cars for three months, and leasing a hundred vehicles to a utility for a year.

I hope the people early on the list are aware of this, and that if they choose to, they can delay their purchase without completely losing their place in line if they want others to be ahead of them.

[Carbon Saver II]

While I am an optimist, I have to share a story on the little blue car in the corner. It went 5,000 miles on the street before its and my first club open track experience. No problems, no bugs in any of the moving or any of the other parts that made the car work for 5,000 miles.

Then after two hard days of open track driving it developed some issues. They were not noticed in the 250 mile drive home from the track, so they could not be that bad, right? I don't believe in trailers or hauling trucks.

I had blown the front upper arm bushings out of the suspension with heavy track lateral loads in corners. I re-designed the front suspension, had those parts made, installed them and it has been able to take track related stresses every since.

After that change and further track driving I was experiencing (or was pushing it hard enough to notice) brake nose diving, researched that and applied a solution changing the differentials attachment angles to address that problem. For safety reasons that fix required sourcing and using 17" wheels rather than the original 15" wheels to avoid suspension parts contacting the ground as opposed to wheel holding it in the air.

So yes, the early units are going to find problems, and some of them many not come up until they push the limits, or take time to understand the behaviors and why they come about.

Whether Aptera wants to be a low unit producer like Ferrari, or a high unit dude like Toyota, this first round of product needs to get to market, with good product and high acceptance, to set up the next steps, IMHO. And the early "testers" will be doing all of us a favor by paying very close attention to what their vehicle does and how it performs, and reporting on those attributes..... :aptera: