Since this came out as part of the Tesla earnings, here's my recap from their earnings release and call....
- Tesla will be late getting up to 5,000 units a week of Model 3. It will happen at the end of Q1 instead of the end of this year. The bottleneck is batteries.
- Some lines are at only 500 cars a week. Namely the battery pack assembly, body shop welding and final vehicle assembly.
- The $2.92 a share loss was much bigger than the $2.27 analysts expected.
- The company burned $1.4 billion and has $3.5 billion in cash. Raising money shouldn't be necessary.
- Automotive gross margins fell from 28% to about 18% and will slip to 15% next quarter.
- Auto revenue grew 10% to $2.4 billion as sales of Model S and X grew.
Revenue is at risk, though. Tesla will divert resources from Model S and X to the Model 3.
- Tesla didn't say much about China. The company added a supercharger station with 50 chargers in Shanghai, but no word on a new plant.
- Musk expects to spend $1 billion on capital expenditures next quarter. That's consistent with expectations for ramp up for Model 3.
- Tesla installed 109 megawatts of ``energy generation systems'' in the third quarter. It acknowledges this is an underwhelming figure: ``the lower deployments are in large part a result of deliberately de-emphasizing commercial and industrial solar energy projects with low profit and limited cash generation.''
As to the battery delay.... Tesla says it's the suppliers fault. "key elements" of the battery module assembly had to be taken over and redesigned, Musk says.
EDIT
- most importantly, Elon has moved his desk to the giga factory as that is where the largest bottleneck is.
”Other lines, such as battery pack assembly, body shop welding and final vehicle assembly, have demonstrated burst builds of about 500 units per week and are ramping up quickly.”
If you can do burst runs of 15 km/hour, that doesn’t mean you can run a three hour marathon.
”The company burned $1.4 billion and has $3.5 billion in cash. Raising money shouldn't be necessary.”
To get that $1.4 billion in revenue, they will need to sell 40k Tesla 3s at $35k each, or 3,000 a week. To get it in margin, even assuming the average model 3 will sell for $50k, they will have to sell 12,000 a week or so (at 20% margin)
=> If things go as planned, I guess they will need about half their money in half a year or so before turning a profit. That doesn’t leave very much in case things go worse than planned (for example, they plan for 25% margin on model 3, but currently don’t have that on their more expensive models, and they plan to sell more of their expensive models, but can decrease production, so, presumably, they have quite a few of them in inventory)
Tesla may have a fantastic future ahead of it, but it also may fail spectacularly fairly soon, or just have a decent future ahead of it that doesn’t warrant its current share price.
Most auto production lines produce nearly 500 cars per shift. Normal cycle times in an auto plant are about one minute. Here's a Mercedes production line.[1] That's a vehicle on a par with Tesla's products.
That E-class production line video is interesting, it's basically the same assembly strategy Tesla uses: all bits of the engine, drivetrain, suspension etc. is assembled into a "skateboard" in one line, while the body gets fitted with all the trim, interior, doors etc. on another line and then dropped onto the skateboard (which you see from 6:30 and out in the video).
If Tesla is stuck on a battery bottleneck it's just as silly as if Mercedes were stuck on a sheet metal bottleneck. Yes, you need reliable component suppliers that can scale with you as you grow and provide the quality you need. If you don't have that, you have a big problem that vertical integration isn't going to solve.
That E-class production line video is interesting, it's basically the same assembly strategy Tesla uses: all bits of the engine, drivetrain, suspension etc. is assembled into a "skateboard" in one line, while the body gets fitted with all the trim, interior, doors etc. on another line and then dropped onto the skateboard
The Mercedes E-class is monocoque, like almost all cars. They build the body/frame and then add the powertrain and wheels. Here's the body/frame and the powertrain/suspension coming together.[1] The powertrain and suspension aren't self-supporting; they're a collection of parts held in a fixture. That's very clear in the video of the parts coming together.
The Tesla Model S, though, is body on frame. If it can sit on its wheels without a body, as the Tesla Model S can, it's body-on-frame. Here's the Tesla Model S platform sitting on its wheels, with the powertrain installed.[2]
Well that's what the redesign is meant to fix, no? Supplier can't keep pace so they're either building it in-house or they've designed something that can be supplied easier/by another vendor.
Most auto production lines don't need EV-size batteries. The post above specifically says batteries are the bottleneck, so it isn't really evidence that something is "terribly wrong"
Based on second hand information from people working with tier-1 Tesla suppliers, it seems that Tesla demanded they set up the Model 3 production in about half the time as other manufacturers. The suppliers knew that the promised dates and production volumes were a total joke but went along anyway just to get the business. The Tesla reality distortion field only goes so far; it doesn't help accelerate the creation of big, complex physical objects like dies and molds.
Apparently the suppliers told Tesla that the dates were impossible, but Tesla management didn't want to hear that and continued to pass on nothing but good news up the chain. It wouldn't surprise me if Elon only recently learned just how bad it is all going.
Seems like there's a lot of slack given for being new. They have had relative ease raising capital, their market cap is still enormous relative to the number of cars produced, and lots of people are still on the waiting list for a car that they won't get for years.
That's just money burned from people investing -- there's no slack from the market, and none of this does much good if you can't compete on the market.
In the end, unless they get profitable, if they burn their stash, they're toast.
Tesla's profit margins are fine, this is all a question of ramping up to cover demand. Which tends to be much simpler when you are already a huge company.
Their real risk is if the Model 3's reliability is bad or they need a recall thus reducing their profits significantly.
What they've been ramping up is the Model 3's price point.
"The truth is the Model 3 costs $40,000 if you want a standard version with autopilot (an extra $5,000) in black with no other options. If you want a different color, add $1,000. And if you want a longer range ($9,000) to get over 300 miles per charge instead of 220, well now we’re at $50,000. $50,000 for a midrange car."[1]
Autopilot is not a standard mid range car feature.
"Enhanced Autopilot adds these new capabilities to the Tesla Autopilot driving experience. Your Tesla will match speed to traffic conditions, keep within a lane, automatically change lanes without requiring driver input, transition from one freeway to another, exit the freeway when your destination is near, self-park when near a parking spot and be summoned to and from your garage."
You can get adaptive cruse control for more reasonable costs, but lane changing takes a lot more awareness around the car.
"To get that $1.4 billion in revenue, they will need to sell 40k Tesla 3s at $35k each, or 3,000 a week. To get it in margin, even assuming the average model 3 will sell for $50k, they will have to sell 12,000 a week or so (at 20% margin)"
It seems like you're assuming that the cash burn will stay at 1.4billion. Expenditure should go down once the production line tooling is complete.
Tesla originally planned to run two production lines but had to drop to a single one, and they're doing it in an expensive and unusual manner, and a second won't fit in their fremont plant, and they still plan to build out the second line in the same unusual 'cold' manner.
This leads me to expect it's reasonable their burn will continue at the same rate.
Furthermore, it's estimated they won't reach 3k a week till the end of 2018.
So, can we assume that if the production has to be multiplied by 10, the cash flow used for operating activities should also be multiplied by almost 10, giving expenses of way more than $1.4bn?
No, because a huge cost for them right now is underutilization of assets (factory, tooling, some workers, etc.). Their utilization rate will improve, and so operating costs should not scale linearly with revenue growth. "Should" being the key word.
"Capital expenditures were $1.1 billion in Q3. The majority of capital expenditures were attributable to Model 3 and Gigafactory 1
production capacity increases. "
"Tesla may have a fantastic future ahead of it, but it also may fail spectacularly fairly soon, or just have a decent future ahead of it that doesn’t warrant its current share price."
lol. "it might go up, might go down, or might stay the same!"
"If you can do burst runs of 15 km/hour, that doesn’t mean you can run a three hour marathon."
Once you're in 3 hour marathon territory, what you can do for 1 mile is a lot more relevant to what you can do for 26.2 miles than you might think. One of the tent poles of effective marathon/half marathon training is to make your race pace into a drumbeat. You want to feel your race pace in your bones. Very effective workouts look like: take your marathon race pace, and run 5 minutes easy/5 minutes hard (~race pace) for 60, or 10 easy/10 hard for 80.
Tesla is talking about burst builds that last for a week. That sounds like very effective training that will prepare them for race day.
"Tesla is talking about burst builds that last for a week".
Was that in the call? Their statement says "Several manufacturing lines [...] have demonstrated a manufacturing ability in excess of 1,000 units
per week during burst builds of short duration. Other lines, [...] have demonstrated
burst builds of about 500 units per week...". AFAIK, "short duration" != "a week".
Assuming they didn’t produce a lot more than they delivered, if they had even one week in which they produced 500 Model 3s, they also must have had weeks in which they destroyed them.
Probably has something to do with pair particle production [1]: 500 virtual Model 3 is produced along with 500 anti-Model 3 then they are immediately annihilated.
"key elements" of the battery module assembly had to be taken over and redesigned, Musk says.
Tesla seems to be taking the opposite approach to Apple here. In my observation, Apple drives its suppliers extremely hard to achieve the quality it requires. Tesla, on the other hand, is too eager to bring any sundry part in house (e.g. car seats). Apple's approach appears to work in that it pushes suppliers to do what's necessary. I worry that Tesla, having already bitten off a large bite to chew, is inviting too much distraction that will, in the long run, not put Tesla in a stronger position (there is a reason most automobile manufacturers outsource their seats after all).
You could substitute Apple with Wal-Mart in your comment and every bit would be just as true.
Sometimes forcing your supply chain to pinch every penny works out the best for your shareholders.. sometimes focusing on quality products pays off more in the long run.
Hmm, I think I do agree with you that it would be true, but in my estimation it does shift the meaning. I was thinking of how Apple is known to specify extremely rigorous quality standards on cutting edge technology and really push its suppliers to advance their craft. Whereas Walmart I would associate more with outright penny-pinching.
I'm thinking about the different ways to structure a business to achieve a quality product. Is there a good example of a company that produces, in-house, an entire non-trivial (i.e. there are some systems to be integrated) product?
Other comment mentioned Intel. Intel does their own fab.
Other point Boeing had years long delays with the 787 partly due to developing a new technology while also trying to outsource much of their production.
You could substitute Apple with Wal-Mart in your comment and every bit would be just as true.
No, it wouldn't. The OP asserted that Apple holds their supply chain to rigorous quality standards. You're asserting that Walmart holds their supply chain to the lowest possible pricing.
Insourcing some things also helps pose a credible threat to suppliers in the future when you tell them to straighten something up or you will insource it.
Apple does have a great deal more leverage over their suppliers though, just by virtue of their size. It may not be the most efficient thing for Tesla to bring so much stuff in house, but it may be their only option if they don't want to left at the whims of their suppliers.
>Tesla seems to be taking the opposite approach to Apple here. In my observation, Apple drives its suppliers extremely hard to achieve the quality it requires.
Apple earned this right by helping those suppliers get off the ground. With introduction of iMacs/iBooks (~1999) Apple helped build wireless card manufacturing plant in Taiwan from nothing ('few dusty rooms' at their modem supplier manufacturing facility). They did similar thing while shopping for Camera supplier, instead of going with someone established like Sony Apple chose Taiwanese bottom of the barrel volume suppliers (Primax/Micron) and grew their camera module divisions with each iteration of iPhone.
Apple and... every successful mass-market car maker. So it's interesting that Tesla are inhousing like Morgan rather than setting high standards like Toyota.
Because they bought an entire company to do it with, because the value proposition of doing that was better than continuing to pay the Qualcomm tax, or conversely siding with Samsung to bring Exynos LTE to the US (and they already have too much of a complex relationship with Samsung; to the point that even on the iPhone 8 and X, if you bought an iPhone instead of a Galaxy S, Samsung still makes a profit).
It is a part of their core product differentiation. They can get better performance and longer battery life by owning the hardware design and OS design and being good at it.
Apple in particular understood lomg before competitors that battery life is an extremely important real world metric. Doing their own SOC helps them optimise that.
Seems like revisionism to me? Before the iPhone/smartphones in general, battery life on a mobile phone of a week was not uncommon. One of the first criticisms of the iPhone was that you had to charge it every night. I'm not sure I'd say that they had some unique insight into the importance of battery life.
Not revisionism. Prior to the launch of the iPhone, "smartphones weren't very smart" to quote Steve Jobs.
Anyway, you are comparing the battery life of touch-based smartphones with its non-touch predecessor which isn't a fair comparison. Besides, mobile phones that could last for a week from a single charge are definitely not considered smartphones, those are feature phones.
Batteries are part of Tesla's core differentiation as well. Even if one might argue they make too much in house, taking batteries on seems like a reasonable move to me.
Well, I guess it's apparent now that it fell outside of my immediate observation. I would be curious what the risk calculus on that decision was. I think it still fits in to the same narrative that I was building though: Tesla seems like they want to bring everything in house while Apple has only brought one piece, the jewel of the system, in house.
They don't make their own chips, though, do they? Or screens, or whatnot. Making their own SoC is like Tesla making their own drivetrain, not like making their own seats.
The difference is that Apple has its supply chain and manufacturing processes down to an exact science and has for years. Tesla is clearly still learning how to put everything together in a profitable way.
I'm not sure about the "too" part. This approach has worked quite well for SpaceX - it might not work out for Tesla, but it's too early on this period of massive transition to know for sure.
Wendover Productions recently did a Youtube episode on Elon Musk that was citing doing things in-house as a way to keep costs low. Seemed a bit counter-intuitive, but they had some interesting numbers.
The most worrying is the slowing production of models S and X, coupled with what I'd call a collapse in the gross margins of those products. Why is the margin declining so drastically?
Found the official answer from the shareholder letter, page 3:
- Non-GAAP automotive gross margin temporarily declined to 18.7%, which was in line with our expectations. The gross margin declined primarily because of a significant increase in Model 3 manufacturing costs to support the limited initial level of production.
- Model S and Model X gross margin declined from Q2 primarily due to one-time price adjustments for discontinued trims and unfavorable trim mix. Numerous actions to improve Model S and Model X gross margin are underway. Consequently, we expect Model S and Model X gross margin to improve in upcoming quarters.
I think what really damaged the Tesla brand was going with my cousins to pick up his >100k Model X.
1) They had done the paperwork wrong and hadn’t informed his bank about some additional charges so it required an additional hour for them to get that sorted before my cousin basically just paid that additional amount upfront.
2) There were scratches in quite a few places that were noticed by us and cleaned up once we mentioned them. My cousin has purchased a couple of BMWs in the past for a lot less and never seen that before.
3) Some parts were not fitting well and had to be adjusted.
4) The autopilot to remove the car from the garage doesnt work because the garage is at the top of a slight incline. This is pretty common in many US garages. Hopefully this is just a software fix.
5) The overall car quality simply doesn’t match up to what you’d expect from a 100k car.
That being said, it’s still a pleasure to drive and a really nice car. He can’t go back to driving an ICE anymore.
Tesla does seem to have a lot of quality control issues which may have been to,reared by the initial set of buyers that will become more of a problem with a less forgiving next wave of potential customers. And a lot of their solutions currently appear very manual and ad hoc. Hopefully they can improve on them soon.
HW2 has been out for over a year and has yet to reach feature parity with HW1. I would call that a "failure to deliver". Earlier this year Musk said “November or December of this year, we should be able to go from a parking lot in California to a parking lot in New York, no controls touched at any point during the entire journey.”
It's November and they don't even have automatic windshield wipers working.
The negative press was basically just 15000 different ways of saying "A car once crashed while on Autopilot, and I have a theory about how it means the whole product is a sham." There's really not much more to it besides me-tooing.
But the failure to deliver is real. The entire Autopilot project is way behind schedule. AP2 was supposed to reach feature parity last year, but it didn't until quite recently, and it's still widely considered not to be as good as experience as the original Autopilot yet.
This is a sample of the first 100 articles from Google News on "Tesla Autopilot Crash" - in total you have about 10 unique incidents with 100s of stories in different outlets written about it.
Lots of sensational headlines and a lot of the incidents are pretty dubious about what the actual cause is but to casual readers its adds up to a cloud of doubt about Tesla repeated across many big name media sources.
Most of these same media sources also run plenty of enthusiastic coverage on Tesla so it really depends on your pre-judgements what you take away from it. Tech enthusiasts will tend to minimize the negative stories whereas people not interested in tech who are more safety concerned will give them much more weight.
Might have something to do with countries cutting the subsidies for electric cars. I know in Denmark the price of a Tesla is set to more than double in the next years as they normalice registration taxes which were previously omitted on electric cars.
> electric car dealers were for a long time spared the jaw-dropping import tax of 180 percent that Denmark applies on vehicles fueled by a traditional combustion engine
Yeah, they do. Luxury cars are taxed heavily in Denmark. Import tax on new cars can be up to 180%.
After removing the subsidy on EVs, Tesla prices became comparable to other cars and sales dropped sharply.
The gross margin changing is fine and natural, I think. The Model 3 is a lower-priced good, so by being able to sell more of it, they can deal with somewhat lower margins. By that I mean, 100 cars * $12,000 gross margin each is definitely worse than 5000 cars * $4,000 gross margin (for Tesla at least, I suppose branding could come into play with other brands), even though the gross margins drastically collapse. It's just a different business model, and it's what Tesla wants to happen so they can get into the more regular-consumer market.
But the ratio of Model 3 to S+X units sold in Q3 does not support a 10% drop in Gross Margin for Q3, unless the cost of manufacturing the 3s they did ship was way higher than the associated revenue (significantly negative gross margins on the 3s). Maybe there are costs associated with the gigafactory that are getting assigned as cost of goods for the model 3s and throwing the margins out of kilter until the volume gets up? Or perhaps depreciation on the stamping equipment and fixtures that are largely idle?
I'm fine with the gross margin trending towards, say, 20% over the next few quarters since GM for example is at 12% (I'd expect Tesla's gross margin to be higher than GMs because Tesla keeps the revenue that GM has to give to its dealers).
Man hours aren't free. Nor is a huge amount of your production facility running idle because one of your parts is constrained. The parts that aren't automated are being done by hand for now.
So sure they might well be making a loss at the current rate of sales of the model 3, but will be quite profitable once the production rate increases.
I don't want to be that guy, but there are specific Unicode characters for opening and closing quotes now, so we don't need to deal with the weird usage imposed by limited typesets anymore.[1] For some reason, the two separate backtick characters are really bugging me visually. That's all I wanted to say. Thanks in advance for bearing gracefully with my nitpicking, letting me express that makes me feel better.
"I don't want to be that guy," says that guy, and promptly proceeds within the very same breath to be that guy just as hard as he can possibly find a way to be.
Using backticks seems like an anti-pattern to me, where you want to be correct, but are only going half-way. If you want to be correct, you can use the Unicode characters that specifically denote beginning and ending quotations, in both single and double tick versions. If you don't care about being correct, just using the default ASCII single or double quote suffices. I wasn't sure why someone would purposefully use backticks in that way in what appears to be an attempt to accurately express themselves, and not appreciate the knowledge that there is a more correct way to do so.
That it's a LaTeX habit does provide an explanation, but then the information that there may be a better way when using Unicode might also be appreciated for someone that does not know. I would appreciate being informed of that if I wasn't aware.
In any case, I tried to be informative and relay that it was my own problem that compelled me to reply, but I wasn't aware I was being excitable enough to need to "chill out". I tried to word it in a way to avoid people thinking I was getting worked up, and show that I just felt compelled to contribute. Unfortunately that didn't seem to come across.
then the stock should be at $3 instead of $300 if insolvency is such an issue. obviously there is more than meets the eye here. or this is the short of the decade, more than even 2008.
Quite a few short sellers are making that very case. In fact, one of them said something to the effect that every shorter seller should short Tesla before any shorting other company.
What's interesting is that at the level of rating that Tesla has, most bond investors are active traders of one form or another rather than "buy and hold" investors. The most common strategy is to look for credit migration (ie buy the bond when it's B-, sell it when it relatively quickly moves up to BB and benefit from the capital appreciation as the yield or spread drops in consequence). A lot of them are 2+20 hedge funds. The people who play in that market are all professional investors and if they play in enough size they have good access to management.
So yes, they are probably more savvy than the average equity investor; the bonds falling doesn't mean they think a default is neccessarily on the horizon, just that a ratings upgrade is not (and potentially also that the company will come back for more money sooner rather than later, as that implies more supply vs demand which may not scale equally).
This would all seem to make a good case for the equity being overpriced, but to short the equity you need a conviction that the rest of the market will realise this sooner rather than later.
>> - Auto revenue grew 10% to $2.4 billion as sales of Model S and X grew. Revenue is at risk, though. Tesla will divert resources from Model S and X to the Model 3.
This is curious. If the S and X are profitable, why divert resources from them? Not enough? Well maybe they should not have just canned a bunch of people?
Yeah I know, the ones they let go may not be the ones they needed for the 3. But it still seems strange all these things taken together.
> "the lower deployments are in large part a result of deliberately de-emphasizing commercial and industrial solar energy projects with low profit and limited cash generation."
This is they type of figureheadism that I absolutely do not understand and which makes me very nervous about the future of a company.
Great, the boss is in house...now I spend more of my time telling the boss why it isn't fixed yet and less of my time actually fixing it. I'm not saying those things are inherently at odds but they are definitely in tension with each other.
The bottleneck is absolutely not batteries. From the document, they specifically state that they have multiple steps which are only able to operate for short periods at 500 cars per week, which basically means 500 cars could be produced if you take how things went for two hours and assume that rate can be maintained for a week.
> Some lines are at only 500 cars a week. Namely the battery pack assembly, body shop welding and final vehicle assembly.
of those, the battery pack is the big issue.
From Gabrielle Coppola, bloomberg's auto analysts:
> The biggest production constraint by far is the battery module assembly. A systems integration contractor dropped the ball, and Tesla only realized they dropped the ball until very recently. Tesla had to rewrite all the software from scratch, Musk explains. That's what he and CTO J.B. Straubel have been focused on.
So basically, the whole thing about Tesla being more a battery company than a car company that was supposed to help justify their valuation was bullshit. They don't even have the in-house capabilities to tell that the company that they contracted the work out to had screwed up until well after they were supposed to be shipping.
Not necessarily. If making battery cells is going to be the global bottleneck, having some issues making battery packs out of them is likely a lot easier to fix than not having the cells.
"Leading up to the end of September, we saw new-high Model 3 VIN numbers in the wild almost every other day, culminating in number 521.
But since the beginning of October, nothing. I can’t find a single one above 521 with VIN picture evidence on any forum.
It’s unlikely to end up this way, but the sole evidence we have to date is this: Tesla is on track to deliver zero Model 3 units in October.
Of course, I don’t believe it will be exactly zero. However, it’s no longer an impossibility. It’s looking like my previous estimate of 240 units may be way too high."
Tesla says today they produced only 260 vehicles in October--and it's unlikely very many of those got all the way to end users!
From SeekingAlpha October 17: "At this stage, I'll continue to roll the dice one more time in favor of betting that for a third full month, the Chevrolet Bolt EV will out-sell the Tesla Model 3 in the U.S. - and probably by a very wide margin, along the lines or 10:1 or more. Maybe even 100:1 or an infinite margin."
Even if you consider Elon Musk a sort of demigod (as much of the tech industry seems to), the leap from 260 vehicles a month--which indicates the vehicles are still being made mostly by hand--to 5,000 a week is going to be incredibly difficult to make in just a few short months.
What does it mean to "outsell" something when that something is backordered into the foreseable future? Personally I will wait until Tesla goes bankrupt before I buy a bolt but I'm still betting that, despite Tesla's lack of ability to predict their own production capability timeline (uh hello, pretty much every tech company that ever existed), that I won't have to.
In Tesla's case, no. Tesla preorders don't come with a price guarantee, and either the buyer or seller can cancel. It's really just an option on a delivery position.
Now if Tesla had locked in the price on preorders, they'd be in big trouble.
seeking alpha is a user contributed site. they don't predict anything. their authors do. and most off them have terrible track record and are trying to push their newsletters , funds, and other crud on an dwindling supply of dumb mom & pop investors who read the site
I'm not sure at this point, but they used to allow anyone to write articles. You were paid based on pageviews. I put their analysis of companies right up there with Marketwatch headlining a big crash everytime there is a down day in the markets.
Sorry, I thought the analogy was clear, but evidently it wasn't :) "Tesla can remain irrational longer than the investors can continue to bet against it". More of a flippant remark than anything.
As an engineer who has zero investment in Tesla, I truly hope they overcome this setback. Simultaneously, I know from experience that failure is a real possibility.
At this point, it’s nice to have the additional transparancy into the current production bottleneck.
What would failure look like? Worst case outcome to me seems that they would just take longer to get to their goals rather than not achieve them at all. They have enough money in the bank and no unsolved technical issues - it's not black hole physics. I mean they've delivered cars already. They just are slower than expected at scaling up.
The production line is the ultimate in multiple single points of failure, and Tesla has exacerbated this by using advanced automation. [0]
Advanced automation promises great benefits, including reduced headcount and more repeatable (and thus higher quality) processes.
Advanced automation has some pretty serious drawbacks as well. In addition to the HUGE cost to set it up in the first place:
* Every station has to run at the same rate.
* Every station has to have material delivered at the same rate.
* Every fastener has to go on correctly the first time.
If the advanced automation cannot run at a sufficient rate, it may not pay for itself. Additionally, the Model 3 has lower margins than the Model S and Model X, so if the run rate is not high enough, the margins may not cover overhead.
I think the worst case scenario is that they can't muster the money to continue on in the face of seemingly endless losses and setbacks.
Many companies think that the economics will work out for them once they've achieved a certain scale or years of efficiencies. It doesn't work out for all of them. The worst case scenario is that Tesla keeps losing money, investors lose faith in the company, they spend what money they have left, no one will give them more funding, and they close up shop selling the assets to another.
A more likely scenario is that the tech is years away, they spend a lot of money before the tech is ready, and then someone else who is better at manufacturing and distribution swoops in once the tech is ready and cleans their clock.
Right now Tesla has no competition and doesn't have to negotiate and compete on price; when they do, their margins will suffer and holes in their efficiency hurt them.
In the future, self-driving cars will decimate the market for vehicles. If we didn't have to worry about the issues around sharing cars, we might need a tenth of the vehicles we currently have. Even if Tesla becomes the Toyota of that era, it's 1/10th of what Toyota is today and it shrinks to less than half its market cap. Plus, with fewer sales, maybe they can't make themselves profitable, they fold up shop, etc.
Maybe self-driving vehicles will create really great mass-transit systems where you can hop on and off ad-hoc routes with well-appointed 10-20 passenger vehicles and get picked up and dropped off conveniently with little added time - probably a lot less time than our current situation with traffic.
This isn't to say that Tesla won't achieve its goals, just to point out that many things could happen to impact Tesla's future. It's not just about making an electric vehicle - Tesla has done that. It's about being able to effectively compete with a market that isn't going to stand still. If Tesla can't manufacture with the efficiency that other auto-makers can, they'll fail over the long run. Heck, GM had a lot of trouble keeping up with Toyota. Will Tesla become efficient enough to compete? Will the auto market dry up as autonomous vehicles come into play? Will we just get transportation from A to B via a transit network rather than owning a vehicle?
Again, this isn't to say that Tesla can't succeed. This is merely to point out that it's far from assured. If electric vehicle economics improve, competitors will come in and fight for those dollars which will drive down prices and profits. If autonomous vehicle technology becomes a reality, Uber, Lyft, and others will be ready to make the case that you shouldn't even own a vehicle and they'll be able to transport the same number of people with a fraction the number of vehicles.
With self-driving cars the total number of cars will shrink by an order of magnitude or two, but so too will the number of manufacturers, because there will be several orders of magnitude less buyers. So the players that are left may end up with a bigger piece of a smaller pie shared by less players.
I'm hoping that Tesla's current manufacturing difficulties will eventually look like the early days of SpaceX and that over time they will improve their rate of manufacture, as well as the rate that they can make changes.
The burn rate numbers need more scrutiny as they include recurring expenses (salaries and materials) as well as one-time investments into Gigafactory and automated production lines for Model 3.
They burn it that fast because it brings more money in the future and they have funds reserve. Their net loss is getting smaller proportionally to the revenue constantly. They could stop capital investments any moment and be profitable, but that would mean much slower growth later.
Not sure that's the case as looking at this graph from The Verge, their revenues are growing but their losses are also getting larger proportionally to their revenues.
Continuing to move the deadline back by three months every quarter would constitute failure. This is a classic death march pattern. Tesla’s observables currently match this pattern. This doesn’t mean it’s in the pattern or will continue to hold, but it does increase the likelihood.
They are still smaller than the competition. They can't really afford to be slower as well. They need to show they can get the Model 3 out and that it's a real success.
The first two zones of a four-zone process to produce battery packs are being completely reworked, and this is something they only found out about after they were already failing to deliver on promised production goals?
I've mis-estimated a lot of things in my career, so I'm trying to be sympathetic, but it seems like someone with production line experience should have been able to test individual parts of the production line before committing to thousands of units per month.
As much as I'm a fan of Elon, the Model 3 production always had me worried when they kept having to replace senior production and battery executives in the run up. I'm still very bullish on Tesla long-term, but I think the Model 3 will be a fiasco unless some sort of miracle happens, and we haven't even gotten into initial quality problems that may arise once enough units are in customer hands.
Initial quality problems may not arise. They will definitely arise. It's a brand-new model, with brand-new (To TESLA) manufacturing processes - there will always be problems in this situation.
What they should hope for is for these problems to arise sooner, rather then later - lessening the cost of recalls.
So I apologize that this is basically assertion based and vague but I need to protect friends a little bit.
I went to undergrad for mechanical engineering at a university generally known for turning out good auto industry engineers. A few years out of school (maybe 2010-11?) I noticed a lot of my alumni friends were starting to move from places like Honda, Toyota, GM, etc. to Tesla. These were the friends I would generally have considered the most motivated and best engineers I graduated with or new in college. To a man (pardon the gendering) they are not at Tesla anymore. They have all left, most for other startups, and they all left disillusioned with the internal Tesla management. They all left completely burned out.
They basically felt that a lot of managers with experience in software were brought in and made very bad assumptions about the translation of software development to mechanical device manufacturing...and wouldn't let go of them. Its not that those assumptions NEVER transfer but they don't ALWAYS transfer. Manufacturing ramp up is really really really really hard. Intel has a 10 billion dollar site in Oregon that does nothing but figure out how to put together a manufacturing process that minimally functions and then figure out how to scale it up. Ramping manufacturing is different than designing the parts. You have layers and layers and layers of design. The big OEM's use suppliers not just to outsource cost and employee management but because they allow those companies to build expertise in a specific area that the OEM then no longer has to maintain. I heard stories from friends there about Tesla managers trying to be "Apple like" and demand tighter tolerances on every dimension of a part, driving up not just cost but lead time as suppliers tried to figure out how to retool their whole process to meet the request. I heard stories of requests to design custom bolts to use throughout the process for no discernible reason. That custom bolt (1) means longer design time, because a part that shouldn't have to be designed has to be designed, (2) means greater cost, (3) and means a supplier has to ramp up their own manufacturing of a new part - but hey blame the supplier. I think the most interesting ones were related to internal culture. Tesla is a car company...I know there are all these cool elements of an office we expect of a startup, but having a beer cart rolling around on Friday's at a car company may not send the best image.
I now work at a couple universities (grad student/lecturer) and Tesla is the hot employee all the students want, not unsurprisingly, and they are all about campus recruiting. That can work great, but it relies on having a strong base of experienced engineers to train these people. Tesla has not managed to hold on to that experience from my limited dataset and is instead replacing them with cheap inexperienced labor attracted by the 'aspirational' nature of Tesla as an employee. From the pool of friends I have seen go to SpaceX, I have not heard the same things.
> But a problem with a subcontractor, compounded with other issues, forced Tesla to start over in certain areas, delaying production.
> “We had to rewrite all of the software from scratch,” Musk said, adding that they’d redone “about 20 to 30 man years of software in four weeks” for the battery module.
Maybe I'm just overcautious, but I would prefer not to be anywhere in the vicinity of a high-discharge actively cooled 100kWh battery whose control system was written, presumably as a rush job, in four weeks.
Yeah doing 30 man years of software in 4 weeks is nothing to brag about. It's like assuming putting 9 women together can output a baby in a single month.
This is not an unorthodox or unreasonable position. The Mythical Man-Month is a classic text in software engineering and project management and essentially argues this very point. The analogy to child birth is actually also a classic one made originally by the author.
Of course just like everyone on HN am aware of the book and heard this quote a billion+ times. And of course I know it's badly misused in this particular case (as it often is).
software development parallelization works about as well as it does for actual software, ie non-linearly at best. Add to that overhead/mistakes/difficulties caused by "synchronization" and you come to the conclusion that a significant amount of that "30 man years" of software had to be just discarded when rebuilt
The more people you put on a single project, the more communication costs - which grow with n! - start to dominate.
The solution to that is to structure the project into independent parts that can be done in parallel by smaller amount of people, thus vastly reducing communication waste. But whether or not you can divide your project in such a way is a question of its scope, and of design decisions you make.
My only point was that the quote is often misused and is highly contextual.
There are countless projects where work can be efficiently parallelized. Cramming 30 man years in a month still sounds like a death march but we do know that say Linux kernel which by now is probably a million(†) man-year effort was done faster than in geological time.
† Ok exaggerating but it is huge and with fast paced change throughout whole codebase.
assuming a man year is 40h/week and those 4 weeks were a crunch of 80 hour weeks, then 125 people worked on the same piece of software, assuming no ramp up time.
What on earth is in that control software since it take 20-30 man years to write?
I mean, charging profile based on input variables such as temperature, total capacity, current capacity, health, available power ect. And then for discharging.
The battery and it's controller ought to be a black box you can either feed power or request power from, and query for data. Either I'm missing something fundamental, or the SW stack is a mess.
This control software is for the manufacturing line. It's a mixture of a game engine and the code to control the robots by signaling each individual servo on the robot arm. Now multiple one robot * 4 lines* multiple stations(at least 6) * more than one robot per station. The game engine simulated the robot state to program then faster without requiring a pendant like it's typically done.
The code you are thinking about Is a copy paste from the model s and x batterry management system which implemented a kalman filter in a dsp to calculate State of charge among other things. That code is not the one being discussed here.
The great thing about corporate missions & goals is that they are written so broadly:
"Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible. " (https://www.tesla.com/blog/mission-tesla).
Thanks to Tesla - seriously(!! COULD not and WOULD not have happened without them), we now have a compelling mass market electric car on the market.
Well no, companies have been trying on EV every decade since the invention of the car.
The Prius normalizing an electric drive train pushed full electric further into the mainstream then Tesla has. Granted Tesla's investment into batteries bumped Panasonics time line up a bit and bumped full BEV up a bit but a compelling mass market electric car on the market has been clearly inevitable since 2000.
Edit: I changed it from "Tesla ... may have". To "Granted Tesla " to more accurately reflect my evaluation of Tesla's contribution to the time line.
Fair enough - I did fail to give Toyota credit, where credit is definitely due.
But I would say it is more a case of "necessary, but not sufficient."
Toyota unarguably pushed electric into the unsexy, mass production, mass consumption mainstream. This was a necessary step.
But Tesla showed that electric COULD be luxury, performance, etc - not necessary for mass market - but the related headlines generated arguably were.
But also that _pure electric_ could be delivered with _more than enough_ range to eliminate range anxiety, even with "notably better than a Prius" levels of performance. And it could at least appear to be "mass manufactured" (even if, on Toyota/Chevy/Nissan scale, or if you will, BMW/Mercedes/Lexus/etc they really weren't). This WAS necessary, and did cause a tipping point that, IMHO led to the Chevy Bolt.
The Prius led to the Bolt evolutionarily.
The Model 3 led to the Bolt "by Marketing force."
And now we have a Bolt.. and basically no Model 3.
We'll see what happens in the next couple of years.
You jest, but knowing Musk, he'd consider that a win.
The point of Tesla under his lead was always to make transportation electric ASAP; not necessarily for Tesla to be the biggest player forever. I.e. Tesla is means to an end, not an end itself.
In any case I'm not sure I'd give credit to Tesla on that. The Bolt seems more like a response to the Leaf and friends than it is to anything like a Model S.
Maybe. Without a broad consensus from all the involved individuals at Chevy, we'll never know. Were they looking more at the (first edition at the time?) Leaf or the hypothetical and probably unnamed at the time "Tesla mass market model with X miles range and $Y price tag?"
If they were aiming for the Leaf, it appears they got to market faster and better (specs) than the 2018 Leaf. A little surprising from Chevy (when compared to Nissan), particularly since they didn't really have a first edition to build on themselves.
If they were aiming for the Model 3 - they got to market faster and "at least in the ballpark" spec-wise, AND at much much higher volumes than Tesla. To me this is less surprising. A mass-market car producer could get to market with a high-volume car faster than Tesla? And in higher volumes? That isn't so surprising. It would have surprised me _even less_ if Toyota had done it, though they clearly weren't trying. It does surprise me a little that Nissan hasn't, though it is fairly clear that they aren't trying _hard_.
So this is the real reason that they had those 'performance-based' layoffs. If you need to fire a certain number of employees, just give bad performance evaluations to those people and fire 'for cause.'
As a company, Tesla can use whatever nonsensical management techniques they want. But firing people 'for cause' will unreasonably hurt otherwise productive people in their future careers. And it will make future candidates far more wary to ever want to work there.
Or maybe they could normally keep lower performing employees around, but cash is getting tighter so they decided to let some of them (less than 4%) go.
"Cash being tight" and "firing some employees for performance reasons" are not mutually exclusive.
Low performers (and especially the bottom 2%) can often provide negative value to the company. It's quite possible there is no net additional work to distribute, or if there was, that they had additional capacity in the rest of the workforce for the same tasks.
They may not need to be replaced. If they do, we can safely presume they determined those resources (cost / time) involved in doing so were less than what it takes to replace them.
It may not negatively impact their production rate. They may be able to improve their production rate by spending that money in a more targeted way now.
I listened to the whole earnings call that just happened, Elon said they had laid of 2% of their work force which is much low than industry standard for yearly layoffs.
Elon quoted GE which lays of the bottom 10% of their staff every year. It's not that bad.
Did you not listen to the earnings call? Annual performance evaluations are standard practices in the industry(and other industries). Tesla laid off a mere 2% of their workforce while GM laid off 10%!
Me neither. Also, I am trying to get my $1000 back for 2 months now since it probably would take around 2 years until I get my Model 3. They are delaying and delaying the payout, so instead of me becoming a Tesla customer I am hating them more from day to day.
You should be able to log into the site and interact with your reservation. You can see your timeline based on the features you want, and request a refund.
Yes. I did get an email. You should be able to login to your Tesla account and 'choose' the Model 3 you want. Based on your choice, they give an estimate on when you'll be able to order the Tesla.
Not heard anything, but I live in NZ so I will be last in the queue, realistically it is more likely to be 2019 before I see mine however that suits me fine as I still need to get better infrastructure in place at home to move to an EV.
The model 3 Reviews so far are pretty positive, I know they are tesla employees cars so they are going to be quite biased, but others have got their hands on them and also posted positive reviews and it looks like a nice car once the software polished.
If something better did come along before I get a delivery date then I will obviously get that instead and ask for a refund, however I have not seen anything I like yet even on the drawing board so I will stick to my Mazda3 until then.
I literally just got an email, stating that production would take longer than initially estimated. I’m supposed to be able to log in tomorrow to see the new timeline. I bought on the first day of preorders.
not after the initial few updates. But I guess I never intended to hear back until early next year since I'm so far back in line. I don't know what updates they can give without triggering a +/- ve over reaction in the markets.
FWIW, Tesla stock price and the related predictions follow a sinusoidal pattern. When the stock goes high, doomsday predictions pull it low, and when it hits the bottom, all rosy predictions start flooding the news cycle.
When Model3 was announced, first deliveries were announced to be end of 2017, and from that POV, Tesla has already over delivered. I think most reactions that Tesla is under performing is based on the stock price, and the respective P/E value.
Seeing as how this is an issue in one of their core competencies, this is concerning. Tesla wants to be a battery company(amongst other things). I hope that with this redesign, they're actually fixing problems and working their way to viability. Its easy to doubt Teslas viability(and I think they're overvalued for sure)but Musks teams are solving hard problems at SpaceX so I think they at least have a shot...
Disclaimer: I own Tesla shares. Tesla has a long history of taking far longer and far more money to achieve a goal than they forecast. They don't show signs of adjusting their forecasts based on previous misses. For the last couple of years the market has given them a pass for that when the market has punished other companies for far less. Tesla has gone to the well again and again to raise money. One concern is that if market support drops, they may not be able to go to the well again. And history suggests that they will need to and will miss their revised goal as well.
why do people do this? it is not relevant, helpful or required in order to comment. Anyone with a NASDAQ index fund in their portfolio or 401k has at least one share of Tesla...which is basically everyone here
It's just to be honest that you're not hyping up a stock for a pump and dump scheme (see some cryptos). But you're right it doesn't really matter for such a big/liquid stock like TSLA
For what it's worth, Disclaimer: I own Tesla Shares :)
I'm just taking a wild guess that this person isn't being technical and talking about an index fund, but is disclaiming that he or she purposefully purchased shares of Tesla stock
> What is the main practical selling point of a model 3 over, say, a leaf?
Much better value, larger size, better fuel economy, more conventional, more power, more range, and superchargers.
Cost per mile of range: $200 for the 2018 leaf, 132 for the Model 3. 147 hp vs 258 hp, 10" of extra length and 6" of extra width, over twice the range at less than half the capacity.
The Tesla is way superior to any other electric car on the road. The supercharger alone makes it the obvious buy for almost all consumers.
How about compared to the Bolt, though? The Bolt seems dramatically more competitive than the Leaf. 200hp, comparable range, and cheaper than the model 3.
I think people getting fed up with the wait and switching to Bolts en-masse is a possible scenario. Imagine if Chevy made an ad targeting exactly that scenario....
The Bolt is $154/mile of range vs $132 for the model 3 and has 30% less horsepower.
The model 3 is just under twenty one inches longer and 6.6 inches wider. The Bolt is nearly the size of a mini. It's not in the same purchase category for most consumers. It's also hastily and very poorly designed- the lead aero guy called it a nightmare. To me the most indicative thing about that is the weight. Despite being almost two feet shorter than the model 3, the bolt weighs more than the (short range) model 3. It's a shitty car, and non-electric reviewers have loathed it.
> It's a shitty car, and non-electric reviewers have loathed it.
It's a perfectly good car, and most non-electric reviewers have said its only major fault is being "not sexy, not cool". Doug DeMuro, for example - https://www.youtube.com/watch?v=d2ogGZXmepY
> the bolt weighs more than the (short range) model 3.
Sure, but only barely. The short-range Model 3 weighs 3,549lbs, and the Bolt weighs 3,563lbs. Your complaining about a difference of 14 pounds (less than 1%). The Bolt also delivers 18 extra driving miles of range, which explains a small portion of the weight difference.
> the lead aero guy called it a nightmare
Of course he did, they sacrificed aerodynamics for comfort. Some of the big complaints with Chevy's last electric car (Volt) was that it was too low to the ground and too short -- all great things for aerodynamics, but all things that actual humans complained about. So they made the Bolt a proper hatchback -- taller and sit higher -- to make it nicer for the occupants. Chevy, shockingly, listened to their customers and made some changes they requested.
The Bolt is perfectly fine car. Obviously it's not as sexy or luxurious as a Model 3. But the Bolt is not in any way a "shitty car" -- by most accounts, it's fast, comfortable and reliable. In fact, the Bolt is arguably the best electric car you can actually purchase in the US today -- and likely will be for the next year or so until Tesla solves their production struggles.
Fair, RCR is the only guy that really hated it (I would edit the parent for less vehemence, but I can't). But nearly everybody remarks on how cheap the inside is:
> We’re not fans of the front seats—the lack of support reminded us of a vinyl lawn chair. The gear selector moves in an unusual 7-shaped pattern, which makes it tricky to put the Bolt in Reverse.[1]
> Although it’s spacious and practical, the Bolt EV’s interior quality and appearance don’t befit its $30,000-plus price point. It looks and feels more as if it belongs in an economy car. It’s clear where General Motors spent its money: on the Bolt’s big battery.[2]
> Sure, but only barely. The short-range Model 3 weighs 3,549lbs, and the Bolt weighs 3,563lbs. Your complaining about a difference of 14 pounds (less than 1%). The Bolt also delivers 18 extra driving miles of range, which explains a small portion of the weight difference.
I'm complaining about it because the model 3 is a full 10% larger. If you only compare the footprint (which correlates more closely with mass) the model 3 is 23% bigger! That's a HUGE difference! It's not the weight itself that bothers me, it's just what it implies about the design work.
> Of course he did, they sacrificed aerodynamics for comfort. Some of the big complaints with Chevy's last electric car (Volt) was that it was too low to the ground and too short -- all great things for aerodynamics, but all things that actual humans complained about. So they made the Bolt a proper hatchback -- taller and sit higher -- to make it nicer for the occupants. Chevy, shockingly, listened to their customers and made some changes they requested.
That would be one thing, but the drag coefficient is .312. That's 30% worse than other EVs and stand-out bad among regular cars when it should be much better due to the reduced engine ventilation requirements and smoother underbody. The VW golf sits at .27[4], along with the mercedes b-class. There are tons of combustion hatchbacks at .27 or lower. The Bolt's aerodynamics are closer to the Kia Soul[5][6] than a Golf. The bottom line after all the excuses is still that the Bolt is way under-engineered.
> In fact, the Bolt is arguably the best electric car you can actually purchase in the US today -- and likely will be for the next year or so until Tesla solves their production struggles.
Yeah, I can agree with that. I get too incensed seeing it compared to a model 3, I guess. I also get unnecessarily annoyed when people buy a coupe civic just to save $1000. If I needed a new car in 2018, it's the car I'd buy (very unhappily).
The Bolt is a sort of unsexy compact hatchback so I can see it being unappealing to some groups of people even though from all accounts it's a fantastic product that matches the Model 3 in quality.
Tesla should be concerned if GM expands their market by taking their Bolt technology and rapidly expanding into vehicle lines that appeal to other groups, such as a Bolt crossover or sexy Bolt hot hatch.
Personally the Bolt looks a bit lame to me, but I'd consider one that was a bit sportier and that looked about as good as a Golf GTI.
> The Tesla is way superior to any other electric car on the road.
Except that it mostly isn't on the road at all!
Cost per mile of range is a nice way of getting lower numbers for the Tesla, but it's more out of pocket.
The model 3 has a longer range, is faster, and is overall much sexier, but it costs for model 3 users to use those superchargers, and you can get a Leaf or Bolt today.
They are on the road, just not very many of them. The 2018 Leaf, which I was talking about, does not come to the US until January (or may? Nissan is just saying "early 2018" now).
The 2017 Leaf has a range of 107 miles, for $287/mile. It's also 110 hp. Both the Bolt and the Leaf are crap cars. Tesla could raise the price on the model 3 by 10 grand and it would still be a better value.
> The supercharger alone makes it the obvious buy for almost all consumers.
Perhaps in parts of the USA but not necessarily in Europe. For example there is ONE supercharger station on the whole island of Ireland, at Ballacolla south-west of Dublin.
I've lived on the island for 40 years and have never even been to that part of it.
I mean... it's only 290 miles from Killarney to Londonderry. You really only need one supercharger. If you live in the middle of the island you can drive literally anywhere on a single charge.
The supercharger isn't like a gas station, it's only meant for long trips. Ireland could probably do with one on the west coast too, but it still serves its purpose in Dublin. You wouldn't be able to drive all the way south to north in a Leaf or Bolt.
But yeah, long trips are much less common in Europe and you'd think Tesla would do worse (especially since even in America the model S is a relatively large sedan), but without checking the numbers AFAIK they do better. I would guess the price point puts it in the range of people who want big cars anyway. Probably it just fills a niche that has been very empty in Europe- wealthy climate-aware buyers with preferences for stylish mid-high level cars.
Fumbled that, meant to say "Over twice the range at less than twice the capacity"- ie it's more efficient per kWh despite being larger. Unfortunately I can't edit any more.
Assuming you're talking about the new Leaf which isn't yet available in the US ...
* 50-100% greater range
* Better acceleration and handling (and RWD/AWD)
* Access to the Tesla Supercharger network enabling long-distance travel
* Much better UX and constant improvements in OTA software updates.
* Buying from a company that is all-in on electrifying and decarbonizing the world, and isn't just dipping in their toes for the granola crowd.
* A way more attractive car compared to the Leaf's awkward hatch
My "vision" for the future of EVs is that increasing range and decreasing prices will drive adoption. With sales of the Leaf totaling about 2 weeks of US auto sales, it is risky to expect it to represent Nissan's strategy.
Fun to drive, relatively attractive, better safety features (active and passive), more interior space (nice for 4 adults, tight for 5), and access to the tesla supercharging network.
So Tesla is good ("anything other than making money"), and Nissan with doing more good by selling more Leafs is not? If Nissan is good, which electic car producer is bad?
I would agree on SpaceX - though a cynic might say it's Musks way out of the earth catastrophe[1] - but with many more companies selling electric cars the argument falls flat for me.
Especially if one looks at all the allegations by employees - if they are employees at all or sub-contractors without rights. Either Tesla has bad press or there are much more than with other car companies.
[1] Because you can be sure you're not the one on the last ship out
> So Tesla is good ("anything other than making money"), and Nissan with doing more good by selling more Leafs is not?
Not saying that. But where were the other automakers when Tesla was single-handedly pushing against the market to make EVs viable?
I get people are cynical, but come on. Musk has been actually proving for years that he cares, and the goals for Tesla and SpaceX were idealistic for as long as he was involved, did not change, and the companies did nothing to suggest they're not what he says they are.
There's good information at the Daily Kanban.[1] They describe what corners Tesla cut, and why it backfired. "Tesla has not yet built a Model 3 using the automated tooling", says one of the people from the company that builds the automated tooling.
Normal testing and tweaking time for a new body assembly line is 6 months to a year, and before that, sections of the line are run in test at the supplier's factory. Tesla skipped all that. It didn't work out well.
I feel like I should cancel my reservation of Tesla Model 3. Something tells me that subscription-based autonomous cars will be here before my Model 3 and will render purchasing cars useless. Anybody in a similar boat?
While I agree that the Tesla 3 backorder delay is pretty long, I think you may be underestimating the time it will take before we see any subscription-based autonomous cars by perhaps a factor of 5.
Probably depends on where you live. It looks like a near-certainty that Waymo (aka Google) will be expanding their Early Rider programme significantly within the next 2 years, but only to particular areas.
I've been considering cancelling my preorder. As late as they'll be (assuming they do deliver) and my estimated place in line, the other manufacturers will have competitive offerings
No other manufacturer has a charging network like the Supercharger network, and that isn't likely to change anytime soon. Not being able to take a car on the occasional long-ish trip greatly diminishes its utility for a lot of people.
I'm guessing that most households who are likely to go for one are also multi-car households, and you probably aren't going to normally be taking _all_ of your cars on a long-ish trip at the same time. I'm guessing most of any potential loss in attractiveness represents anxiety more than it represents a genuine loss in utility.
I test drove one. It was fairly ok, but the seats were uncomfortable.
The big objective thing that the Bolt is missing is a fast charging network. For now, nothing can touch Tesla's supercharger network in terms of charging speed and locations.
I wonder how valuable that charging network will end up being long-term. With the Bolt delivering 238 miles of range, and that number likely to go up some more in the next few years, it seems like a fairly small niche of people that actually benefit from superchargers. Especially as the number of end-point chargers increases.
Which isn't to say that it won't be a valuable marketing tool, however -- range anxiety is definitely going to be a thing for a while.
For one, Tesla superchargers in NorCal and SoCal are insanely busy, with lines and valets during busy hours, so the usage is definitely there. Head over to TeslaMotorsClub forums or Facebook group for owners to witness the mini-dramas playing out regarding hogged supercharger spots.
For two, if someone is considering buying a new car, and their daily commute is 3 miles each way, but once a year they take a 200-mile road trip (relatives, beach, mountain vacation), the lack of fast and convenient charging options severely lowers the chance they will consider that 238-mile-range vehicle.
Both the number and reliability of public chargers needs to increase drastically - there’s a couple of free Volta chargers by the grocery store I frequent, 70% of the time they’re taken and 20% they’re inoperative. Just a slight bummer for me, as I can charge at home, but a huge bummer for someone who is on a road trip down to their last 20 miles, and was planning to do a major recharge there.
> For one, Tesla superchargers in NorCal and SoCal are insanely busy, with lines and valets during busy hours, so the usage is definitely there. Head over to TeslaMotorsClub forums or Facebook group for owners to witness the mini-dramas playing out regarding hogged supercharger spots.
Oddly enough, two years ago, Hacker News insisted that I was an idiot for driving an ICE hybrid, because of how long it takes to stop for gas.
Note that Tesla has not offered an explicit license for those patents, so there's no guarantee that companies using the patents won't get sued. It was a pure PR stunt.
"Faster than everybody else"? I guess that depends on exactly what you're looking for. This year's Bolt has a 60kWh battery, which is supposed to give it a 238 mile range - more than the base Model 3. What exactly will the Model 3 bring to the table when I can actually walk into a showroom and buy one?
Thinking in a bigger scale then just right now Model 3 will make it clear. The way Tesla has transformed the whole car industry and the scale at which they approach the problem is way beyond anybody else.
The Bolt can not be produced in the numbers needed for a revolution. The people who produce it are not interested in a revolution in the first place.
The stock might be below peak right now, but the scaling they have achieved since they started is massive, and in the long term they are still on track.
>The Bolt can not be produced in the numbers needed for a revolution. The people who produce it are not interested in a revolution in the first place.
That's an odd argument to be making in favor of a company that's having so much trouble producing cars. Why do you think the Bolt can't be produced in larger numbers? Does Tesla make in a year as many cars as GM makes in a day?
I don't follow official statements closely but it sounds like they are using this retooling as an excuse for low demand for the S and X. This way they get to have their cake and eat it too: low S/X numbers justified and re-energized promises for increased 3 production.
Musk said on the call that they will produce fewer cars but that they expect increased deliveries, with the difference being covered from their existing inventory.
If Tesla goes under what happens to long term support for their cars? Don't Tesla owners depend on a lot of Tesla services? Subsidized charging stations, sending it in for maintenance, etc.?
I imagine the same fate would await Tesla owners. However, there enough Teslas rolling around that someone might find it profitable to pick up support. Multiple vendors still sell, and in some cases manufacture, parts for fifty year old Volkswagens, for instance.
Yeah but 50 year old Volkswagens are a lot simpler, including being almost wholly mechanical. And even today there’s a pretty robust aftermarket parts market for ICEs generally.
You have a bespoke car that nobody else makes parts for or can repair. it will be a collectors item in another 30 years but in the short term you are pretty screwed.
I'd be less worried about repairs than about electronics. No more OTA updates, can't track charging status on your phone anymore, etc etc. I wonder if any major functionality/drivability is lost if they totally go dark.
Only around a 10% drop from the start of trading today. Some nice opportunities short term but I don't see that changing anyone's longer term outlook. At $300, the stock is still either a great value given the company's potential or terribly overvalued
Especially not with other articles talking about lack of the right production mindset or process[0]. I'm a bit worried these days for Tesla cause these seem like problems stemming from ego of "doing it better through technology" and ignoring wisdom from the rest of the industry that actually works.
When major leadership keeps leaving[1] it feels like it's more of an ego, expectations, and political problem than a technical one.
I feel like they are trying to invent the wheel anew. Yes, electric cars have some differences, but everything besides the drive system has been a ton of times and there are a lot of companies and people who know how to get what you want.
Also I agree with you that it feels that they belive that they can do everything better than anybody else and thus try to do everything themselves.
They are not struggling. This Yahoo article is fear mongering. I just listened to the whole earnings call and everything sounded terrific: They pulled their best engineers to Gigafactory to mitigate a supplier misleading them about one of their battery production lines, and so they dropped production of S and X. Apparently as a result of the supplier f* up, they rewrote "20 man years of software in 4 weeks". Which is absolutely incredible.
Don't listen to this fear mongering BS. Tesla is the only one in the electric car game. Who else has the charging network, the half-million pre-orders, the 3.5 billion in cash and easy ability to raise more, the Elon shine?
> they rewrote "20 man years of software in 4 weeks". Which is absolutely incredible
... if accurate, if bug-free (for varying reasonable values of same). Otherwise the mythical man-month seems to creep in.
That's a project that's complicated enough to require 240 developers (12 months x 20 years, fitted into 1 month), yet somehow was reliably chunked up, retrofitted into their supplier screw up, tested and deployed in 4 weeks??
Sounds a bit like doing the Kessel Run in 12 parsecs?
Seriously though, you can probably redo a typical 20 Man Year project in 2, given how much of the development process is usually taken up by missed requirements and re-work, IF you have a bombproof specification and a well-drilled team of stars.
The part I’m not quite getting though is how a battery software issue impacted on wider productivity? Couldn’t they get them in-place and then patch the software after the fact?
Rewriting "20 man years of software in 4 weeks" cannot result in anything else than bug ridden convoluted spaghetti code in my opinion. That is nothing to brag about.
I can't help but feel that price is an inevitable factor here. Tesla Model S and Model X are expensive! Now that the novelty is wearing off and more EVs are hitting the road from other manufacturers, it strikes me that they just won't remain competitive models.
I expect the Model 3 to go some way towards helping this by being much more affordable, but with delayed production on those and an interior design that won't suit everyone, I'm yet to be convinced.
I disagree completely. Tesla has 400k people who put down a grand to 'reserve a spot in line' for a Model 3.
The issue is production. Tesla fired off hundreds of workers a month ago, right as they were ramping up Model 3 production. Elon seems an awesome person in terms of what he's doing at a macro level, but he sounds like a horrendous person to work for.
If they can achieve the production goal of 5000/week (an order of magnitude more than they are currently at), it will take nearly 2 years to just fulfill pre-orders. I have to believe a lot of people will be cancelling their pre-orders, and Tesla wont be getting many new pre-orders until production has caught up with demand.
How many of that 400,000 are speculators trying to make a quick buck?
Can go wrong for them, see the number of delivery mileage Focus RSs that are selling second hand for less than Ford want for a new one.
Like I said, the Model 3 will go some way to help that by being more affordable, and 400,000 people reserving a Model 3 does not make the Model S or the Model X any less expensive or any more competitive.
Of course, the profit margin on the Model 3 stands to be substantially less, too.
- Tesla will be late getting up to 5,000 units a week of Model 3. It will happen at the end of Q1 instead of the end of this year. The bottleneck is batteries.
- Some lines are at only 500 cars a week. Namely the battery pack assembly, body shop welding and final vehicle assembly.
- The $2.92 a share loss was much bigger than the $2.27 analysts expected.
- The company burned $1.4 billion and has $3.5 billion in cash. Raising money shouldn't be necessary.
- Automotive gross margins fell from 28% to about 18% and will slip to 15% next quarter.
- Auto revenue grew 10% to $2.4 billion as sales of Model S and X grew. Revenue is at risk, though. Tesla will divert resources from Model S and X to the Model 3.
- Tesla didn't say much about China. The company added a supercharger station with 50 chargers in Shanghai, but no word on a new plant.
- Musk expects to spend $1 billion on capital expenditures next quarter. That's consistent with expectations for ramp up for Model 3.
- Tesla installed 109 megawatts of ``energy generation systems'' in the third quarter. It acknowledges this is an underwhelming figure: ``the lower deployments are in large part a result of deliberately de-emphasizing commercial and industrial solar energy projects with low profit and limited cash generation.''
As to the battery delay.... Tesla says it's the suppliers fault. "key elements" of the battery module assembly had to be taken over and redesigned, Musk says.
EDIT
- most importantly, Elon has moved his desk to the giga factory as that is where the largest bottleneck is.