Tesla's 1.5B reduction of cash on hand was largely due to the 920M convertible bond payment — but that only happened because TSLA didn't perform to the level necessary for conversion (~$360 IIRC). I wonder what changes in terms this'll warrant for future capital raises.
Then they mention that they missed a lot of revenue due to missing half their shipments overseas, and onto Q2 (But also expecting a loss in Q2).
Sales for their higher-margin vehicles seemed to have cratered, explained by seasonality, lower US tax credits going forward, and inventory/demand mismatch.
Panasonic has halted their planned battery plant expansion, which implies a lot about future demand.
I don't want to be a downer, but I'm having a hard time seeing the way forward for Tesla in a manner that isn't very unfavorable for them.
This wasn't reported much, but Tesla also expanded their ABL (Asset Based Lending) credit agreement by $500M in March 2019: https://ir.tesla.com/node/19561/html
Without that, they would have $500M less cash on hand. They shipped half of their cars in the final 10 days of Q1. Finances must have been pretty tight at the start of March. That was around the time they announced they are closing all stores, firing sales personnel, and in general tightening the belt significantly. They also had the Model Y reveal in the middle of March, presumably to raise capital via deposits. Cutting prices multiple times towards the end of March must have helped to move a lot of metal, at the expense of gross margin.
Speaking of the Model Y, I also found it suspicious that on the conference call Elon Musk wouldn't divulge the number of deposits. When the Model 3 deposits were skyrocketing he talked about the reservation count frequently. I can only suspect that the number of Model Y deposits isn't so impressive.
The pool of people that put down $1000 thinking they were going to buy a $35k car, has to be much larger than the people willing to plunk down $2500 for a $48k car (the cheapest pre-order currently available).
The multi year wait for the $35k version to be available (and quickly abandoned) can't help.
With the model 3 the deposit made a huge difference in delivery time. The production ramp was painfully slow (production hell) becuase it was a completely different car than the model S and X that Tesla was producing. Because of the slow ramp the incentive for a deposit was quite large. There was also pretty minimal competition for the model 3, mostly the chevy bolt which most don't really consider in the same class.
The production ramp for the Y is expected to be much better than the model 3. There's two announced locations (Reno and China). Tesla also has substantial experience building the model 3, and the Y shared about 75% of the parts. Additionally the model Y is a very conservative design. Same motors, same batteries, same nav, same display, same steering wheel, same seats, same autonomous hardware, same sensors, etc. The announced differences I've heard of are low tech tings like the chassis and suspension. Nothing crazy like the model X gull wing doors to throw a schedule off.
Combine that with significant increase in competition from Audi, Volvo, Porsche, Rivian, and others expected in 2020 there's a much less exclusive market for people interested in a small crossover/SUV in 2020.
I'd be quite surprised if Tesla doesn't sell every model Y they can make for a good long time, but the world is a really different place than it was when they opened up the model 3 preorders. With that said I did put a deposit down on the Y, it's still my guess at the best small SUV for 2020. If things change I can get a refund.
>The production ramp for the Y is expected to be much better than the model 3. There's two announced locations (Reno and China). Tesla also has substantial experience building the model 3, and the Y shared about 75% of the parts. Additionally the model Y is a very conservative design. Same motors, same batteries, same nav, same display, same steering wheel, same seats, same autonomous hardware, same sensors, etc. The announced differences I've heard of are low tech tings like the chassis and suspension. Nothing crazy like the model X gull wing doors to throw a schedule off.
So let's see if I have this right: they reveal the Model Y 1.5 months ago, and say it's available in ~1 month of purchasing. From what everyone says, they hacked up a Model 3 and people drove in a prototype. Now we hear Tesla don't even know if they're going to build it in China or California. But don't worry, they've ordered all the tooling and machinery, even though they don't know which factory it'll be built in.
I'm am constantly astonished that people still believe what is happening over there. What will it take for people to realize this is a desperate company?
Elon's vision is to take over the world automobile market quickly. It's impressively how close he's come. From zero to #1 since 2012 in premium cars is an almost unbelievable achievement. Originally the plan was announced that the model Y would be produced in new assembly lines in Reno, then later the lower end model Ys would be produced in China.
However since then the model 3, S, and X demand had dropped significantly, at least in the USA. They are developing markets in the EU, but delivery logistics, safety certifications, dealer networks, and related have delayed things. Reduced tax incentives in the USA have also hurt demand locally.
My speculation is that Elon wanted all 4 model 3 assembly model 3 lines in Fremont to stay producing the model 3. But now after Q1 they are considering converting a model 3 line in Fremont to the model Y. This will save significant money since with 75% of the same parts, but of course will reduce model 3 production capacity.
How much this makes sense depends on if Panasonic keep up with the battery demand and how much can the new EU model 3 demand make up for the decreasing USA model 3 demand. I suspect there will be related announcements in the next quarter or so.
As for desperation. They made $3.7B with a 20% margin and just paid off $920M in convertible bonds. They have $2.2B on hand and sold 63,000 model 3s this quarter. Where's the desperation? They promised a model Y (mostly a model 3 with a bit more ground clearance and a slightly taller chassis) in late 2020. I don't really see a problem. Given that they have set up 4 model 3 lines so far, at least one model Y line in 1.5 years seems pretty reasonable.
>Elon's vision is to take over the world automobile market quickly. It's impressively how close he's come.
What? They are a microscopic fraction of global market share. They are number 1 in a particular, shrinking market segment that all other manufacturers are moving away from, because they produced 2 years worth of demand at once. Their month-over-month share of cars in that price range is decreasing.
>They made $3.7B with a 20% margin and just paid off $920M in convertible bonds. They have $2.2B on hand and sold 63,000 model 3s this quarter. Where's the desperation?
They made $3.7BB in revenue, at 20% GROSS margins, but still LOST $600MM+, after promising profitability every quarter in the future. Revenues declined 30% quarter over quarter. Paying down the debt doesn't show up on the income statement. They have $2.2BB on hand, $700MM+ is restricted deposit money, after burning through $1.6BB last quarter. They also drew down their ABL. Their capital expenditure is barely covering depreciation, yet they have to build out multiple lines and factories. Their AP barely decreased ($100MM), while revenues sunk drastically. They have $9BB+ in debt, and less cash on-hand than their AP. They are slashing prices on cars they claim have "insane demand". There are people all over Twitter and Reddit waiting months for service or parts. Insurance costs are sky-rocketing. There's inventory stuffed in abandoned car lots all over the country. Elon is fighting with the SEC and rumour has it the DOJ and FTC as well.
You don't see a problem because you don't appear to know where to look. No individual metric is an issue, but in aggregate it doesn't look good.
> Now we hear Tesla don't even know if they're going to build it in China or California.
I believe you are confused here. The car will be built in China for some markets. The part that hasn't been decided is where US production will occur. The most logical place has been guessed to be GF1 in Sparks, NV, but they have considered California as well (possibly Fremont expansion).
>The part that hasn't been decided is where US production will occur.
Point still stands: they ordered machinery when they don't even know what factory it will go in. Anyone with a modicum of sense or experience in manufacturing understands this is nonsensical.
I happen to have a modicum of sense, and realize Tesla has some serious management problems, but why is ordering machinery before having a location finalized nonsensical? It's not like this stuff is in transit or they need to buy any land.
How many people will be out $1000 or $2500 if Tesla goes under? I'm assuming deposits are about as low a priority as you can get for recovering money in a bankruptcy?
I suspect it would be a total loss. But rationally it seems like a really unlikely thing to happen. Tesla just made a $920 million payment in March, they have a 20% gross margin, and have $2.2B cash on hand. Sure they may have to slow their growth, or take out another loan, but Tesla is hardly at the brink of bankruptcy.
There are some serious competitors targeting the model S and X coming, although none I've heard come anywhere close to 370 mile range. Most impressively even those with similar size battery (like the 95kwh audi etron) only manage 56% of the range of the model S (100 kwh). It's also substantially slower in acceleration (Telsa is 4.0 second vs Audi e-tron 5.5 seconds).
But the model 3/Y competition in the $40k to $60k range is looking significantly more sparse, especially with similar range. This is where Tesla becomes significantly harder to match because if even if you can match the size of the battery, matching the efficiency is tougher. Running a substantially larger battery to make up for lower efficiency is particularly problematic at this price point.
even those with similar size battery (like the 95kwh
audi etron) only manage 56% of the range of the model
S (100 kwh).
I suspect that's because Tesla have had batteries on the road for much longer than Audi, meaning they've got better data to base the battery-life-vs-discharge-depth trade-off on.
After all, everyone's worried about how degraded their batteries will be after 10 years, and there's no better way to get hard data on that than having EVs on the market for 10 years.
But the model 3/Y competition in the $40k to $60k
range is looking significantly more sparse
There's the Hyundai Kona Electric, with 258 miles for $37k-$45k. But I agree one car isn't a lot of competition :)
> everyone's worried about how degraded their batteries will be after 10 years, and there's no better way to get hard data on that than having EVs on the market for 10 years.
Jeff Dahn, now working with Tesla (exclusively I think) does not agree, and has a fantastic lecture explaining some stuff about lithium ion degradation (specifically, how normal accelerated age testing doesn't work, but they have a different method which lines up very well with long term cell aging)
Closer. No supercharging network, tiny screen (7" vs 15"), no AWD, slower (0-60 in 7.6 vs 5.5 seconds). At least the range is close (258 vs 300).
Tesla does pretty well on safety (passive and active) as well.
My main concern was did Hyundai skimp on the cooling and battery management system like Nissan did with the leaf. The result with leaf was rapidly degrading batteries that lost more than 25% in the first 3 years. Tesla's in comparison often manage 92% of new range after 150k miles.
With all that said, it does look like the Kona Electric is the closest model Y competitor I've found.
No evidence that consumers want a large screen instead of physical knobs.
And seriously who on earth cares about acceleration beyond a certain point. I mean come on. Nobody is drag racing their car on the way to the supermarket to buy groceries.
If Elon called me up and asked how to improve the model 3 (or future model Y), I'd definitely mention a few more buttons, or maybe a dial. Sure I want buttons, knobs, AND a big screen... but not enough to pay $80k and up for a model S. So given the choice between a model 3 and the competitors (ICE or electric) I have a hard time finding something better.
I'm hoping there's a model Y killer out before the model Y ships, but if not I think I'll be really happy in a Y.
As for the acceleration. I'm married and have a kid. I drive pretty conservatively. I haven't had an accident of any kind or even a speeding ticket in 20 years. I did however find numerous occasions to floor the model S I was renting and every time it resulted in a huge grin. I'd wouldn't trade that acceleration for say a Hyundai electric that has a 0-60 in 7.6 seconds just for some extra knobs/buttons. Nor is the Hyundai cheap, starts around $38k. In a traditional ICE car the acceleration has significant down sides, cost, MPG, noise, weight, size, packaging efficiency, etc. On a Tesla the acceleration there's not nearly as much of a downside.
>And seriously who on earth cares about acceleration beyond a certain point.
Being able to launch the car and be going highway speed nearly instantly is really useful whenever you have to merge in a short distance or take a right turn into high speed traffic. You can get by with an under-powered vehicle just fine in most of the country but if you're commuting in/out of a east coast city between DC and Boston it's going to come in really handy (possibly daily if your commute includes a really bad merge). Just last night some dude in a Maserati cut me off taking a right onto a two lane road where I was going ~70mph in the right lane. Had he been driving anything else I would have had to brake but he mashed the skinny pedal and I didn't have to do anything. If I had to take that turn every day I'd want something fast too. Sure it's a luxury feature but damn does it make things less stressful when you're in that situation.
Ordinary people aren't buying cars today based purely on MPG so why do people think range, battery efficiency etc is going to be a primary reason in future ?
It's far more likely to be just one of many factors. And Tesla really isn't great in many of them e.g. interior design, build quality, easy of service, product availability, brand cachet, etc. And now they have to worry if Tesla will even be around in 5-10 years.
Agreed. But Tesla IS doing really well on what consumers care about. Search for "Tesla owners are more satisfied than any other auto brand's, according to Consumer Reports" or similar articles.
Especially for first time electric car buyers, they really do seem rather worried about moving from a 488 mile range (like a honda accord) to a 240-370 mile range (Tesla). I suspect mostly because they haven't internalized the impact of being able to start each day with a full "tank".
That report does not measure what consumers care about. It simply measures what Tesla owners think. And those owners tend to come from a very narrow demographic which is unrepresentative of the general public.
And yes people are worried about the difference in range given it's a new technology. But no evidence it significantly influences purchasing decisions especially given that most people aren't driving hundreds of miles in a day.
I agree, but it's not such a narrow demographic. 63,000 bought them in Q1. The mode similar luxury/premium car I can find is the BMW 3 series. BMW sold 8,225 of them in Q1.
So almost 8x as many people bought a model 3 for similar or higher prices than the BMW 3 series. In fact at various time periods Tesla was outselling the sum of all similar premium cars in the USA from BMW, MB, Audi, and Lexus.
So sure Tesla owners are a self selecting set, but there's apparently quite a few people that want the model 3.
> But Tesla IS doing really well on what consumers care about. Search for "Tesla owners are more satisfied than any other auto brand's, according to Consumer Reports" or similar articles.
How much of this is due to many of the buyers were fans where Tesla could do not wrong? I know one of those people.
I also know someone who bought a TSLA recently. He likes the car, but hates dealing with TSLA the company. Incompetent was the word used.
Model Y starts at $48k and has a range of 300 miles.
Doesn't seem like a fair comparison, does it?
A fairer comparison would be the model S. The Model S base is $78,000 ($3,200 more), but has a range of 285 miles (1.4x the Audi) and 0-60 in 4.0 seconds instead of 5.5 seconds for the Audi.
The biggest issue is the Audi seems to have very poor efficiency. So you need a model S size battery (95kw) to compete with the model Y (75 kwh or so). Or you compete with the Tesla model S with a 100 kwh battery and end up with only 71% of the range.
Ah, interesting, it does look much more competitive. More range, less cost, and better acceleration, looks like a direct Model Y competitor. However it's still called a concept vehicle by Audi, couldn't find any mention on a planned availability date.
> This is where Tesla becomes significantly harder to match because if even if you can match the size of the battery, matching the efficiency is tougher.
The established car makers also have to bear the cost of having dealerships. I don't find it too unlikely that some of them are selling their EV at a loss and have the production throttled accordingly.
I was surprised by your claim so I checked... the Tesla website currently allows me to configure a Model 3 that is $39,500 before discounts for estimated delivery in two weeks. Not $35k but far less than $48k too.
Like animal fries at In-n-Out, the $35k is not shown on the website. You have to call and ask for it specifically.
Or if you prefer you can order the $39.5k one and call up service and get them to change the settings, and then they'll send you a refund of $4,500.
Does this all sound strange? Sure, but I guess they have their reasons for doing it, which seem to be mainly to keep the menu simple and steer people toward the best value, because the $39.5k car is a better value than the $35k car.
The heated seats can be controlled by an iPhone app and various other means. Pretty sure this involves software. I mean sure software is not needed but then you would be in a different car.
The mid-march reveal of Model Y was announced in May 2018.
(There was a later comment from Musk saying that he just picked a date when posting this but eventuelly Model Y was revealed on March 15th 2019, so it looks like the timeframe for the reveal actually was somewhat clear back then.)
The Model 3 was a completely different market segment from the Model S, so they could hype the Model 3 to the moon without impacting Model S orders (atleast for a time).
With the Model Y, they can't brag how much better it is than the Model 3 because it will cause prospective Model 3 buyers to wait for the Model Y, rather than buying a Model 3 and Tesla needs Model 3 cash flow to fund the Y program.
Hmm, it’s quite a big difference. Model Y actually looks almost identical to model 3. Headlights, body shape etc, just slightly taller. Model X has a different body type and head/tail lights.
It still comes down to a race between Tesla figuring out the complete automotive supply chain and competitors figuring out EVs.
Tesla had, and I would assume still has, production hell. Now it's delivery hell. Both are solved, controlled and executed constantly by other car companies (VW has an exception with the new Golf 8 that proves the rule).
The competition is still struggling to solve EVs, some like Jaguar and Audi and BMW and others seem to be ahead of others.
Advantage Tesla: EV brand, EV dedicated basis for their cars, software and experience with batteries
Advantage competition: scaling production and delivery, economies of scale
I would argue that the window of opportunity for Tesla is closing now. Which might not be good news for them. And given the ever shorter life cycles in the automotive sector the window ever was max. one facelift / model replacement. Which again is something the competition is doing constantly for decades now. Tesla never did it once.
So I see the advantage on the competition but not by a big margin. Had Tesla solved their production and supply chain earlier the margin wouldn't be there at all or Tesla even be a head of others. The biggest risks for Tesla are a) to miss the window of opportunity they have and be b) to run out of cash before their issues are solved. Both are related and I suspect Elon is much a help regarding the cash side as he is a hindrance regarding the rest.
Tesla has one more advantage over all the fossils: they're all in. The old guys are still challenged on mission, twisted up and fighting internally, bringing out weak token products designed to not hurt their ICE lines.
I think this is probably more important than people give it credit for. I have an acquaintance who works R&D at a traditional car company (but on self driving features) he says the internal 'fights' between ICE and electric are very real and damaging.
You can experience it first hand if you go try to test drive a Chevy Bolt - Motor Trend car of the year in 2017. I spoke to dealers who (pretended?) unawareness of the model and didn't want to help me find one. Another tried to talk me out of it. Finally one dealer was well informed about its pros and cons, and had several for sale.
Another example: bmw i3. 114 mile range on the 2017 model, really? And that's up from less than 100 miles before that. Painfully token.
The big problem the big auto manufacturers are having is the battery and cost. A mass-market electric car cannot cost as much as Tesla's offerings, and a huge part of that cost is the battery. Even with the most optimistic cost projections of battery costs in the near future, it's hard to see how to offer an electric car which is competitive on both cost and range with an ICE car.
It's just a car, to the salesman. If I went in and looked for a Chevrolet Equinox and the dealer didn't have anyt, they'd try to sell me another model.
Just like if you went to Best Buy looking for a certain TV, they'll just try to sell you the one on the shelf
I've had on multiple occasions gone into a dealership and had them tell me that they have the car i'm asking about, but that I don't want that car, and that I want this other car instead.
I went into nissan to look at the Juke a while back, the asshole wouldn't even let me look at it until I literally started leaving. He just kept pressing the Rogue saying that I'd like it a lot more... Then when he finally took me to it, it was still wrapped in plastic and they said they couldn't do a test drive.
Another time I went to go look at the Chevy Bolt when it first came out, they said they had a few in stock, but they would not stop trying to get me to test drive a Malibu instead. They kept pushing how it was a better car, how it was cheaper, how it would go further, how it looks better.
Eventually they let me test drive the Bolt, but the whole time the guy just kept pointing out how all the features in the car were also in the Malibu.
It just left such a shitty taste in my mouth. I literally went in there asking about a single model of car each time, and it seemed like they did everything they could to actively sabotage my ability to buy it.
I went in to dealer, money in hand, to buy a specific car I knew they had in stock and that I'd already picked out. The salesman then proceeded to convince me that I actually wanted this other model which would be much better for me. Fine you've convinced me, how much for that other car. Salesman comes back a couple of minutes later and sheepishly admits they don't actually have that car in stock and won't be getting any for 4-6 weeks. I walk out without buying a car.
This is why online car shopping needs to be a thing. I experienced the exact same thing. I'm a highly informed customer who knew every car I wanted to see but almost every sales guy ignored that fact, besides at a Honda location. Which isn't surprising that I ended up with a Honda.
I would have bought it online if I could and it's very possible I wouldn't have ended up with a Honda, that has to play a role in each company's auto sales.
Same here, I ended up going into an Audi dealer after the Bolt fiasco, and it was a night and day difference. When I asked a question about a car, they answered it happily! When I wanted to look at a car, they took me to a few. When I wanted to test drive one, they pulled up their inventory of cars and asked what one I want to test drive.
No "you don't want that", no "we are trying to keep the miles down on that one", no condescending talk about how some other car is probably more in my range.
And unsurprisingly I ended up getting an Audi!
It's one of the big reasons why I think the whole "online sales" thing is perfect with Tesla. They have showrooms in many places where those who want to look at and ask questions about the cars can go, and when you actually want to buy, you buy it like something off amazon, and it gets delivered when ready.
You can pick the car and get pre-negotiated pricing online. You still have to go to the dealer to actually pick it up, but you don't need to be "sold to", negotiate the price, etc. The people I know who have used it have gotten excellent prices, but it's always worth comparing to the estimates from Consumer Reports or other sources.
I used https://www.unhaggle.com to find out the MRSP of the car and saved about $2k from the list price, basically the lowest price the dealer could offer. It's basically a lead-gen system for dealerships which I discovered after my experience mentioned above. The dealer was very welcoming with us using it and said it was getting more common.
I worked in a small sales and marketing office for IBM in the early 90's. I remember the sales people, who made very good money from mainframe sales, openly discussing how they didn't even want customers to know about RS6000's. I think the margins were pretty low on RS6000's at the time.
Anyway, internal struggles holding back product lines is a very real thing.
From what I know of at least european car makers, they see the writing on the wall, especially with various governments making noises about banning petrol and diesel cars in the next decase or so, and they are heavily investing in the switch, even if it's not so obvious to consumers at the moment because the industry moves slowly.
The shift want just digital cameras it was also the iPhone that made the digital camera obsolete.
With digital cameras they were losing film revenue which was larger than camera sales.
Car companies don't own gas stations so they will switch faster and easier than Kodak.
There will be some struggles internally but not as much I suspect.
Plus modern EVs have demonstrated more performance then ice so it's really just a matter of catering to demand as it changes.
The challenge here is more on Tesla to make a sustainable car company than it is on old companies to convert.
If a startup car company in Czech can make a hyper car EV that beasts a Veyron in acceleration then there is nothing proprietary about the tech and incumbents will have an easier time switching as demand evolves.
Kodak wasn't even really a camera company latterly and hadn't been a serious camera maker since the Japanese (mostly)--who still collectively mostly own the high-end camera space--cornered the market. They were primarily a photographic consumables business.
Even had they executed more aggressively and better than they did, they'd have gone through hard times. (See Fujifilm which did a better job with a smaller company and still struggled.)
It's also not all about 0-60 (at least for the motorsport market).
Tesla's seem to still have issues under sustained high performance driving[1]. There's many cars with significantly slower 0-60 times that smash the Model S around Nürburgring due to batteries overheating and being put into limp mode.
As the technology improves no doubt this problem will go away, but it doesn't look like we're there just yet.
For perspective the Model S made it around the track in about 10 minutes, an old diesel Jaguar S Type with a 0-60 time of 8.5~ seconds did it in about 9 [2 & 3].
It'll be tough, most gas stations don't have a lot of space for a lot of charging stations and nothing to do while you wait for the charge. The large truck stop style ones might be able to convert more easily because they already have the larger lots and buildings with spaces to sit inside while you wait.
I have heard anecdotally that gas stations make terrible money on their actual fuel sales and the real margins are on food inside so it may work out in the end but that low but broad base flow may be an important part of the business.
In the end though they'll probably largely die out inside cities with charging mostly happening at home, at work, or in parking decks/lots. There will definitely be a need for them along highways and stuff though to service long drives. In the end that's a looooong ways off, even if you completely ban the new sale and import of ICE vehicles there's going to be a long tail for used cars until electric vehicles become 100x less expensive.
Yeah, at this point inside US cities the majority of pumps have been moving to the model of grocery stores with pumps attached, and that model still works with chargers augmenting and then replacing pumps, because grocery stores generally are useful places to charge while you shop. (Just as malls seem to be good places to add chargers, if you expect and/or want people to linger/browse while they charge.)
Convenience stores and restaurants will still be useful on the highways with or without gas pumps around. (People will always need to use a restroom or grab some grub on long road trips.)
I figure some smart "medium fast" food restaurant that benefits from a lingering dining experience, but doesn't take too much advantage of it (ie, doesn't actively slow the diner down), will integrate chargers into their franchise plans and become the new king of the highways in the way that MacDonald's (and regionally, Waffle House) became synonymous with pit stops along the open road in the 50s and 60s.
It won't work quite as well just because it takes so much longer to charge an EV than it does to gas up a regular car. So the limited lots of existing stations will have a much lower turnover rate than they do now. Also most places around me are very much just the traditional convenience store you can only get a very limited selection of stuff (like a smattering for fruit and milk at best with maybe some cereals or something) those places aren't going to be long stops to shop around in so charging at them isn't going to be a draw.
> Convenience stores and restaurants will still be useful on the highways with or without gas pumps around. (People will always need to use a restroom or grab some grub on long road trips.)
Yeah like I said in my original post I don't think they'll go 100% out of business along highways but it will largely be the larger stops that have some restaurant integrated or just restaurants along the highway that survive not the small snack food and gas places that are a majority today. Charging (today and for the foreseeable future unless there's another breakthrough in batter tech that pans out at large scales) just takes too long for anything without some kind of food or other attraction to make sense as the charging stations on longer trips.
It's eventually going to be something that happens when the car is parked, rather than a specific stop for charging/gassing up. I've already seen parking garages and street side meters equipped with EV chargers (although rarely an EV parked there). Ideally all batteries would be standardized, so you'd just pull up to a place and swap like you would a propane tank, but open standards aren't as inticing to investors as trying to dominate market share with proprietary tech and licensing it to everyone. Probably going to take a law standardizing swappable EV batteries to nip that bad behavior in the bud.
The valet game should get interesting. Pay extra to guarantee charging would be a quick and easy way to gouge a few more pennies.
As far as gas stations goes, I don't see a route where most of them aren't folding. Franchises don't have the resources to retool like a big corporation that can light money on fire every month and still increase in value.
Swappable batteries likely won't be cost effective for cars for safety reasons, if nothing else. Most EVs have the batteries "buried" in impact-protected spots, with firewalls between them, and in such ways that the battery is reliant upon and sometimes in turn contributes to the structural integrity of the car. Even if the packs were standardized by regulation, getting safe access to the packs in most EVs is expensive and unsafe access is potentially hazardous to long-term fire and/or structural safety of the vehicle.
Anyway, yes, the focus on charging inside of cities should be places that cars are already parked. For travel between cities, it will be businesses that can best take advantage of 30-45 minutes of downtime (assuming fast charging), and I do think it's going to be a restaurant chain and/or mini-mall concept that's going to be the best fit for highway travel. It's going to take a smart franchise or two to experiment there, and it may even be an existing franchise like Pilot or MacDonald's perhaps, but it will be a shift away from smaller convenience stores to probably something larger with more to do.
The one spot I see swappable batteries probably happening is on large trucks where space isn't at so much of a premium and the charge time actually costs the operators money. In cars yeah the batteries probably won't be in an accessible area for easy swapping.
I don't think it will be possible. A gas station can refuel 20 cars per hour; there's no way you can do that with a charging station.
Probably they would die out, and hotels would do long distance charging, since you need to charge it when you sleep. People would just not be able to do medium or small distance charging at all except at their home.
Jaguar seems to be doing OK with the iPace, but they only sold 1400 of them in February, and of course Jaguar as a car company is a similar size to Tesla.
Tesla is wasting time, money and focus by investing too much in self-driving tech (they're even having their own chip division now! - is Tesla really in financial a position to compete with Intel/Nvidia now?).
Not to mention they made all of their Model 3's thousands of dollars more expensive by including the "full self-driving hardware-that-wasn't" in every unit to the point where it didn't even make sense for Tesla to sell the base model anymore.
Keep it simple stupid - focus on making great high-value EVs, and keep dropping their prices in a profitable manner. Stop throwing billions of dollars on "full self-driving tech" that will never work well enough.
I think you underestimate how many companies do chip design. That part of it is actually quite unremarkable.
And while that transitional Nvidia hardware obviously isn't ideal, it's still necessary to run Autopilot today. And it is what is allowing Tesla to gather mountains of real world training data for its machine learning algorithms.
I'm not confident Tesla will pull off their vision of a driverless taxi business, but if they do pull it off, the business fundamentals promise astronomical revenues. Nobody questions that Uber and Lyft are viable businesses. Tesla's plan is to be in their space but with cheaper fuel, cheaper labor and a greater revenue share.
there is a line of reasoning, rarely articulated, that EVs will never reach the price points it would take to fully 100% replace ICE cars in the private/personal market.
li-ion batteries have done an excellent job walking down the learning/cost curve, but we can all see the way it bends and how much headroom is left in the chemistry. we'll likely hit $100/kwh in the next few years, but even just $80/kwh is likely 5+ years away after that. the model 3 will never start with a $2.
so if you're going to bottom out at around 3x the price it would take to fully replace the existing market... then you have to figure out a way to get 3x+ the value out of the asset you're delivering.
that means some combination of lasting 3x longer (~500k miles) and/or being in use 3x more (~600hrs/year). the former is viably unlocked by the EV engineering advantages, but w/r/t the latter, individual drivers have no intention of tripling their car usage. so it simply has to be turned into some kind of shared asset.
imho self driving makes this a nirvanna, so I'm glad they're pursuing it, but its not actually required. tesla could add a basic uber/lyft feature set to their existing app and then when the last 0.01% of self driving winds up taking years longer than elon said it would he can blame the regulators and just make it a regular human-driver ride sharing app.
remember the mission is the end of carbon emissions, so any plan for "lets just get good market share and margins in the luxury segment" is a plan to fail.
I think that view neglects the costs of the fossil fuel infrastructure. At some point gas stations are going to start closing for lack of customers. That time is a while off yet, but all of the existing stations are not going to be able to be supported by say, half as many ICE cars. Convenience will go down and at some point prices may go up as the existing infrastructure is paid for by fewer stations and less fuel. At the same time electrics will continue getting better, cheaper and more convenient. This could provide an extra push.
I agree with your points on a longer time horizon, but elon needs to solve for model3 demand now (this year).
EVs will not drive the kind of oil distribution market retraction you're describing until they're at least 10% of cars on the road, which would be years and years after they're 10% of new cars sold.
So while I agree the affect you describe will help, we don't have time to wait for it.
I think the time horizon for a step change in oil distribution is a lot shorter than people expect, precisely because it will be more likely a severe step change (ie, a snowball/crash) than an easy transition. Oil distribution is extremely complex, amazingly baroque, and has only a small number of players (they use a shell game [Shell Oil pun intended] of a large number of different "station" brands, but are really only a few companies left). When instability hits, it is likely to hit hard and look almost immediate (look at 70s Oil crises, for example).
I don't yet have a guess what percentage of the car fleet needs to be EV for that to happen, but that number is also not the only potential disruption that may happen to cause it (again, we have the 70s Oil crises as examples).
(Not that causing an Oil crisis is necessarily the right way to combat climate change, but in the question of chicken-and-egg between ICE and EV, people sure have a short memory for how volatile Oil is.)
It is currently manufacturered in Fremont California. Nothing in Fremont is cheap, it is no different than manufacturing in Manhattan, since employees need to pay for super high housing costs and deal with high costs of doing business.
Manufacturing in China could bring the cost down significantly, with lower wages, taxes, material costs, etc.
i don't know why this comment is being downvoted. He's absolutely right about every word. Fremont is not a place to be building cars. If you're gonna build in the US, Tesla could have chosen almost any other city in the US and gotten labor cost that was 33% cheaper.
Software companies can afford the higher labor cost in the bay area because they tend to have really large margin when they win. Car companies have very very low margins, even when they win, so they really need to pay attention to things like labor cost. This is a huge mistep for Tesla and shows poor judgement on Elon Musk or whoever decided to do it in Fremont.
They bought the old NUMMI factory that used to make GM and Toyota cars. It was active right up until they bought it in 2010 (they announced the sale a month after NUMMI closed) so my guess is they were able to accelerate early progress because of that purchase.
In the long run, I'd agree, the expense vs. reward calculation doesn't make sense now. But GM and Toyota successfully used that plant for something like 30-50 years before that and there was a whole community of auto workers living around it, so I'm not sure I'd say that was poor judgment for them at all.
Nobody expected housing prices to go up 100%+ over the last few years. 2010-2015ish was a real estate boom period for Valley workers if anything. You had post-recession housing fire sales; AirBnB wasn't big enough yet to incentivize empty houses; Google, Apple and FB didn't quite own the entire Menlo Park->Sunnyvale corridor yet; etc. Good times.
> EVs will never reach the price points it would take to fully 100% replace ICE cars in the private/personal market
The Chevy Bolt and to a lesser extent the Model 3 have already hit the "Corolla/Civic/Sonata/et al" sedan sweet spot for new sales. The mean in new car sales has always been around and just above $30k. Certainly the mean in total car sales is closer to $20k, but that hugely because of the secondary market and fast depreciation (used car sales). It's still too early to tell what sort of impact models like the Bolt and Model 3 may have on used sales (and obviously production numbers are still a factor, especially with Tesla's production and delivery woes).
Chinese manufacturers have been exploring the "bottom" of the EV market much more effectively than the US and EU markets simply because they don't need the carrot of luxury to attract early adopters in quite the same way. If Chinese EV companies are to be believed, hitting below that magic USD$20k mean is possible with new car sales alone due to EV supply chain efficiencies that ICE supply chains can't match.
> self driving makes this a nirvana
I feel self-driving is a red herring/impossible goal like the 60s AI boom all over again, and we're all going to look back on this in a decade or so and wonder what everyone was thinking.
Also, ride sharing isn't likely the answer in current America. It's enough of a culture shift to get gas-lovers/petrolheads to enjoy/love/trust EVs. It's even more of an ask to remove ownership from the question and to force them to only ever rent a car. We might not have time to take only one hurdle at a time, but we may have to.
I've read that the wiring harness of a modern ICE car costs more than the transmission.
Do you think it's possible that all we need is ~$100/KWh, after which due to diminishing returns, find better ROI improving other areas like a dramatically cheaper wiring harness?
Yes but its not enough and its not soon enough. Tesla needs to stoke demand this quarter. Humanity needs to be driving toward zero emissions yesterday.
IMHO privately owned electric vehicles will only ever have been a historical oddity of the transition between personally owned cars and shared/pooled cars.
> Keep it simple stupid - focus on making great high-value EVs, and keep dropping their prices in a profitable manner.
Problem is, self-driving is an essential part of their image of high-tech luxury. Their marketing strategy depends on being the opposote of KISS. Making the best cars they can while also being electric is the only way to get the volume necessary to make electric affordable.
I don't care about self-driving tech in the least, for me it is about as likely for us to get level 5 autonomy as us getting nuclear fusion soon. Just make a good cheap electric car that works. The new Tesla chip info I've heard promising it next year sounds like a complete lie/classic Elon Musk fabrication.
Yes, the existing supply chain is not geared towards EVs (which is serious problem in terms of chanel masters and such). Still the knowledge and tools and processes and people are there. Combine that with the fact that an EV is actually less complex an ICE powered car incumbents, I assume, should be able to switch easily (biggest issues being internal struggles keeping them from executing as a lot of powerful people in these companies have to loose a lot). Still, the basis is there as is the purchasing power and the aftermarket activities and such.
As far as Tesla is concerned, they have production hell and delivery hell. On top of that I suspect they have a kind of procurement hell as well with Panasonic as one the most important suppliers. Together that results in Supply Chain hell. So while Tesla's SC is geared towards EVs im not sure on the execution side.
If only it was so clean cut. Tesla isn't even operating in all 50 states due to specific laws in 1/2 which prohibit direct sales. This is part of the reason for switching to service centers and transitioning sales completely to app based purchasing.
Tesla is driving the biggest wedge of change through the world economy in the 21st century. The impact these changes have will affect everyone who uses, sells, services and advertises automobiles. It's no wonder the amount of outright vitriol the press propagates given the lack of advertising Tesla does.
That said, their "Tesla Ranger" program where the mechanic comes to you is the future. It is easily one of the coolest things Tesla does and is a sensible way to scale out their service centers which are (admittedly) overbooked.
Sure Tesla can make good cars, but not if it has to sell them at a profit. Over the lifetime of Tesla, each car has been subsidized by like 10k from shareholders and 7.5k from government. Both subsidies are going away as we speak.
That is really not true. Each individual car is sold for more than the cost of manufacturer. Statistics like this tend to take fixed costs and historical costs into account in a way that shouldn't be divided by unit volume.
I caution you to read more about this, as you see statistics like this quoted often in the press. It is almost always an indicator of issues with article quality.
When considering whether a fleet of cars has been profitable, you can’t consider only the gross margin (which excludes certain company fixed costs to arrive at an answer to “was that last car we made profitable?”) but must also consider overall profitability (“did we make money doing all of the things we did?”)
Tesla’s answer to the second is “no” for substantially all of the company history.
Tesla doesn't make good cars. They make unremarkable cars with good drive-trains. It's like the EV version of FCA's ~700hp offerings. Sure the interior and build quality are kind of crap for what you pay but with 700 ponies on tap you don't care.
This is a joke right? They make some of the most highly regarded cars of all time. Recently buying one and showing it off almost every single person (30~) was blown away at how much better it was then their car and wanted one in the future.
Tesla has many problems but making bad cars isn't one of them, these things are awesome.
No it's not a joke. The Model 3 and Model S have relatively high NVH and a relatively cheap feeling interior compared to vehicles of the same class and price point. You're paying German car money but it goes to the drive-train instead of the "luxury German driving machine" experience. There's nothing wrong with that but to talk up Tesla's vehicles as though they're luxury cars is foolish.
I just can't agree with that on the model 3. The model 3 is basically BM 3 series money, and there is nothing particularly phenomenal about the BMW 3 series from a luxury standpoint.
I just priced out a BMW 330i (all wheel drive), which starts at $42,250. The Tesla M3 Long Range (dual motor) starts at $49,500. However, the BMW base price does not include "luxury trim" (i.e., chrome highlights), "convenience package" (basically lumbar support and keyless entry plus app access), "driver assistance", or "parking assistance". All of these seem to be standard in the M3 LR. Once you add those packages, the 330i pops over $51k. If anything, it looks like Tesla has set their prices to compete directly against the 3 series line. (These prices don't include tax subsidies or destination charges, etc.)
The ASP of Model 3 in the US is ~50k, if I'm not mistaken. The base price is just under $40k USD. In the US, the base price for the BMW 3 series ranges from ~40K to ~$56k for the M badge.
Also, the options packages for the BMW will tend to add up. TACC cruise is standard on the Model 3 SR+ for $40k. AFAIK, that will add at least 1k or so to the BMW.
Yeah thanks for explaining it to me, I own one. I personally couldn't care less about the interior but I understand some people do. The driving/overall experience to me is night and day when compared to ICE vehicles or even other EV competitors.
The interiors aren't all that nice though, certainly not for how much change they are asking for. Having everything behind a hulking iPad sucks when you are driving a car. Give me dials, give me buttons that click in, give me levers, give me something where I can tell where the setting is with my fingers without having to take my eyes off the road. I'm really surprised car manufacturers have gotten away with cramming so many features into touch screen interfaces that give you zero feedback if you aren't staring at the screen, it really should be illegal as its absurdly dangerous.
"And given the ever shorter life cycles in the automotive sector the window ever was max. one facelift / model replacement"
That assumes that Tesla's competitors actually have the expertise to compete.
Its been mentioned elsewhere I believe, that Audi's Etron has less range per kwh of battery, compared to a Tesla.
Tesla also has a charging network.
I'm tempted to turn your statement around and say there's a rapidly closing window for the other car makers to start taking EVs seriously. I suspect theres going to be a tipping point situation where the market for EVs is going to rapidly increase, and the established car makers better hope they have something they can sell, and at scale, because theres the Chinese as well as Tesla all ready to go. My crystal ball doesn't tell me what car companies are going to go bust, but I predict there'll be some big names, and Tesla could be one of them, I doubt it would disappear as a car making entity though.
Toyota and Tesla merging would be great. Toyota masters scaling and world-wide logistics but doesn't have EV technology. Their software is also very basic. Tesla doesn't control logistics but master EV and autopilot. Them merging is not impossible, Toyota once had a stake in Tesla.
Elon would be a roadblock to such a merge. Toyota won't be able to function with him in any managerial position. I doubt he'll accept anything less than full control. He won't be content as an "evangelist".
If his dream is really to have the world switch from ICE to EV cars, then he should consider this. That would be an engineering and laudable feat, and he would be in the annals of history. He can then focus on SpaceX and go to Mars. But if his dream is to become ultra-wealthy and be like Stark in Ironman, then I guess he can keep to himself Tesla.
This is a guy with 5 Beverly Hills mansions and a private jet. All financed via his Tesla stock.
It seems as though any sacrifices related to "the mission" are expected to come from Tesla and SpaceX employees who have to suffer through periodic rounds of layoffs.
I'm still trying to figure out the root cause. Is it because, production is not keeping up to demand? Or is it because demand is dying? So far it seems former, not later. Some analysts are saying random things like impact of tax credit and competition coming in to EV market. I still don't see anything close to Tesla offering in EV space, at least in US.
They really need to focus on offering EV at $18K price point with 300 mile range. Keep self-driving stuff for later. I love Tesla and hope they would come through this.
EV are still too expensive and Tesla ridiculously so. That’s not a problem if you can’t keep up with demand, but competition creeps up.
Why would you buy a Tesla when you can buy a Hyundai Kona for a lot less?
We need better leadership though. I live in Denmark where EVs aren’t very widespread because of taxes. In Norway more than half of new vehicles sold are EV. Norway has more money than us, but they didn’t really need it for this transition and nothing they did are things we couldn’t have.
They simply had better political leadership than we do. I know some Americans might call free market, but we have 150 years of history to show that big advances in society are driven mainly by the public sector if they are to benefit all and happen quickly.
First of all, you basically cannot buy a Hyundai. The production is far below Model 3 levels. Here in Germany, you are looking at 12 months wait time due to demand far exceeding supply.
Also, the Model 3 is a very attractive offering. It is the faster car, aims at the typical BMW audience, and most of all, has the supercharger network available.
As another German I can definitely tell you that no one here sees a Model 3 at anywhere near a BMW in production quality.
If Tesla intends to market the Model 3 at the "BMW audience" - whatever differentiates them from, say, the "Audi audience" - they are horribly miscalculating at what German people expect from a car. It is not limited to EV range.
Also, Volkswagen is ramping up production on their Modular Electric Drive Matrix (MEB) [1] and within 2-3 years cars with this technology will hit the market.
I wonder if Tesla can keep up when Volkswagen, Toyota or other car heavy weights begin serious EV production once they belief the market is ready. Diesel sales are better then ever in the last years, so they simply could afford to wait and continue to make money until infrastructure ramps up and technology improves. Tesla cannot do that.
Do you have any info about VW's batteries? If they are building up MEB for the next 2-3 years, they should have some idea of what they are going to do about batteries by now right?
So far, it appears that batteries and drive train efficiency are the secret to Tesla's dominance in efficiency. VW would be a dumb competitor if it comes out in 2-3 years with a car that costs as much or more than a Tesla with only 60% of its range.... there is risk for VW as well here..
Several tests comparing Tesla with NIO show that the efficiency is the same, so not sure about "batteries and drive train efficiency are the secret to Tesla's dominance in efficiency."
No. Model Y looks more like a crossover or a fastback. These types of cars are getting slightly more common here (for example BMW X4, Mercedes GLE, ...) but they are not mass market cars. These are fancy cars for people with too much money.
The sloping roof means there's not a lot of space in the back. The Model Y might be an improvement compared to Model 3, but it looks like it is still way too long for the amount of space it offers.
Lots of people drive station wagons around here. Cars like the VW Golf Variant, Passat Variant, Audi A4 Avant, BMW 5 series Touring...
People with kids buy family cars like the Citroen C4 Picasso, Opel Zafira, Touran. The Model Y doesn't look like it can compete with those on space.
Smaller SUVs (Tiguan, Peugeot 3008, Nissan Qashqai) are also very popular here, but Model Y doesn't really look like an SUV either.
> Maybe not the Model 3, but the model S has replaced a lot of the Mercedeses that used to dominate the taxi fleet in Amsterdam.
> It's entirely possible that Germany is more conservative than Amsterdam, though.
The taxi driver I spoke to about it told me they were using Teslas because they had gotten an agreement for free charging. I believe this has since changed though (this was almost four years ago).
>> I mean BMW's are considered pretty low end cars here in the US (compared to Audi and Benz) I feel BMW's have just gotten worse and worse in the last 8 years, however Audi and Benz is another story.
>> however the scale of engineering is something else ---> I had a lecture from the CEO of Benz, and i can tell you they are going all in on EV. Tesla needs to survive a few more years >> it is still significantly hard achieving what they have achieved for VW and Benz -> they have production lines tooled for Gasoline -> guess how hard it is to change that and retool? not easy...
> guess how hard it is to change that and retool? not easy...
This is one of the main reasons for VW to develop the MEB. This drive matrix can be used as the foundation for EV iterations on many of their current production models plus new ones of course:
> The MEB platform is part of a wide strategy to start production of new battery electric vehicles between 2019 and 2025. In 2017, the VW Group announced a gradual transition from combustion engine to battery electric vehicles with all 300 models across 12 brands having an electric version by 2030.
> As of May 2018, the VW Group has committed $48 billion in car battery supplies and plans to outfit 16 factories to build electric cars by the end of 2022. The upcoming Volkswagen-branded production cars will be assembled in VW's Zwickau plant in Germany for the European market from 2020, while two production centers in North America and China are planned to be "launched at almost the same time". The Škoda-branded SUV Vision E is to be produced in the Škoda plant Mladá Boleslav, Czech Republic, along with electric motors and electric car batteries. [1]
>Also, the Model 3 is a very attractive offering. It is the faster car, aims at the typical BMW audience
Until you find out your range goes down significantly when you drive fast... I was seriously considering tesla model 3 as most of my trips are below 40 miles, but occasionally I do need to drive to another city 200 miles away, and when I do I want to be able to drive at the same speed I normally use at the motorway (around 90-95mph, or 150km/h). Tesla model 3 will give you less than 100 miles of range at that speed and that is what will kill Tesla for many people who currently drive VWs and BMWs.
I don't know where you got your numbers from, but according to next move it has about 200 miles of range at 150km/h, going ever so slightly slower (and you probably will have sections with a speed limit anyway in between) would let you comfortably make the trip: https://nextmove.de/tesla-model-3-reichweitentest-bei-150-vs...
Most cars at that speed will get significantly reduced range, due to engine inefficiency and drag. Even then, a battery with 220 mile range should still get well over 100 in reality .
> People buy 5x the number of Teslas than Konas because they Teslas are much, much more delightful.
Sorry, but this is just a completely dumb statement. The reason Tesla sales are higher is partly because Hyundai literally cannot meet the demand for this car (https://www.thetruthaboutcars.com/2018/11/hyundai-reassures-...). Economics is a real phenomenon, and way more people
would rather have basic transportation + an extra $80k in their pocket than be “delighted” by owning a P100D.
Of course it is. Saving a lot of money on a car means you can spend a lot of money on other things you enjoy. So why would you pay a lot of money to drive a Tesla instead of a Hyundai? Because the Tesla looks better? Drives better? Has better safety features? Is more reliable? Has a higher status value?
I'm not saying that there aren't good reasons to buy a Tesla instead of Hyundai and had they cost the same then sure I'd buy a Tesla as well. But if I was in the market for a new electric car then "Why buy a Tesla when you can buy a Hyundai Kona for a lot less?" would definitely be a serious question I would be asking myself and I'm not sure I would come up with a good answer (or at least not a better answer than Tesla's are cool).
>I'm not saying that there aren't good reasons to buy a Tesla instead of Hyundai and had they cost the same then sure I'd buy a Tesla as well.
The MSRP on the base-model Kona is $36,950, which is a bit less than the $39,500 Tesla SR+, but not dramatically. The next level of trim above the base model Kona is $41,500, and doesn't seem to add any significant features (LED headlamps, etc., which Tesla already has.) The highest level of Kona trim is $44,900, which is only $5k less than the Tesla Long Range model! My suspicion is that, given the low production numbers, Hyundai is going to focus primarily on selling the more expensive models. In practice this means (with a few lucky exceptions) you're looking at Tesla prices to get a Hyundai.
>I'm still trying to figure out the root cause. Is it because, production is not keeping up to demand? Or is it because demand is dying? So far it seems former, not later.
That's what you conclude after seeing them produce more cars than they delivered last quarter, with inventory build-ups all over the country, and quarter-over-quarter decrease in revenues, even though they slashed prices? That they still can't keep up with demand?
I suspect we are still quite a few years away from an $18K EV, maybe even a decade.
I wonder if the industry might have been better off focusing on plugin hybrids to start with, you can get most of the benefits whilst battery production ramps up and costs fall.
They are slightly overproducing the SR+ (with fewer battery cells) and slight underproducing the LR (with more cells). What does that tell you about supply constraints?
The demand for the semi-premium model outweighed the standard by 6 to 1, so no, the demand is right where the new obvious entry model is.
It is still technically available, but not in any obvious way (if you weren’t to already know, it’d be fair enough to assume it wasn’t available anymore).
That was part of it, but also an extra $2,500 for 20 miles more range and a much nicer car was a very appealing offer. I certainly would have taken it.
I find the Panasonic thing very weird. Tesla claims to be battery limited, and also mentioned that their popular and in demand power walls are being throttled by lack of batteries.
Does make me wonder. Is Panasonic blackmailing Tesla with limited supply to influence Tesla's battery supply in China? Is Panasonic and/or Tesla lying about the situation?
Yoshio Ito was a well known pro-Tesla executive, and was in charge of the Panasonic automotive division until March 31st (EDIT: Typo). His replacement is neutral-Tesla at best (based on the actions of the new Panasonic director)
Mr. Ito was the original Panasonic executive who signed the Tesla deal for the Gigafactory in Nevada. Mr. Ito's departure from Panasonic is a big deal in the Tesla-Panasonic relationship. In effect: the Panasonic executive in charge of the Gigafactory has retired, so things will be dramatically different as his replacement tries to make his mark on the company.
My take: Panasonic is moving its chips from Tesla to Toyota/Mazda and betting the incumbent Japanese makers will be better positioned to capitalize on EV sales over the long term. It’s not strange for a 100+ year old company playing the long game. I also think Tesla’s function for many of its suppliers was to prove that Americans will buy EVs, and their expectations are fairly low about how much more Tesla will accomplish.
Well the weird thing is Panasonic is complaining about not selling enough batteries. Seems kinda crazy considering the rapid scale of Tesla's ramp up, not to mention secondary uses like powerwalls and grid sized battery systems.
I won't speculate why Panasonic is putting the brakes on. Could be anything from financing to some new guy at Panasonic not liking the color choices of the Model Y.
But it is telling us something that the most integrated of Tesla's partners is putting on the brakes. And I remember some reports about less then optimal conditions in the giga factory. And these conditions, even if they are only half true, would the opposite of what Japanese companies would like to see
People who did not experience the 80s, and the endless nightly news stories about Japanese school kids’ math test scores, will not understand your comment.
Japan is a small, rich and overpopulated country of 126 million; China is a still emerging, vast country of 1.4 billion. I don't think it's correct to assume history will repeat the same way as with Japan.
They may just be taking a calmer view of EV demand rather than betting the farm at every turn like Tesla. One or two quarters of running at capacity on a brand new factory isn't enough reason to massively upgrade your production capacity, if you think it's just a hump and that demand will settle down again. The Model 3 may be "affordable" compared with the Model S / X, but US$35k is still luxury car territory.
> The Model 3 may be "affordable" compared with the Model S / X, but US$35k is still luxury car territory.
Indeed, Model 3 is still very far from affordable. In Finland it sells starting at $70,600 (taxes included). I'm assuming there are also import duties from the US, though don't know the details. Needless to say, at this price point there are probably more people looking for an apartment than a car.
Agreed. Seems like Tesla may have misjudged the model 3 demand and should have increased the number of production lines more slowly. I think in Fremont factory has 6 lines. One for X, one for S, and 4 for the model 3. Seems like they should just move one or two of the lines from model 3 to the model Y, which shares 75% of the same parts instead of committing to building several new lines in Reno and China.
While the model 3 may be luxury, it looks crazy cheap compared to the electric Audi, Volvo, BMW, and Porsche competitors... doubly so if you consider range. The model 3 even looks pretty good on a cost to own basis compared to non-luxury cars like the Toyota Camry or Honda accord.
The cheapest Tesla (around $40k these days), isn't too far off the average cost of a new car ($34,000) and most will save easily $6k in maintenance and gas over the life of the car. I suspect most would consider the model 3 interior too spartan and plasticy to be consider luxury.
>> While the model 3 may be luxury, it looks crazy cheap compared to the electric Audi, Volvo, BMW, and Porsche competitors...
I tried Tesla test drive and one thing I don't like is how cheap it feels inside. Low quality materials. So you cannot compare just their prices without mentioning materials and build quality.
I rented a Tesla S (75d I believe) for 3 days. Felt pretty awesome, and stomping on the accelerator put a smile on my face every time. The nav system was a pleasure, actually better than Google Nav on a top of the line phone. The voice recognition for nav and music playing worked really well.
I've used similar nav systems from BMW, Subaru, and Toyota and they seemed like lame software running on a 5-10 year old phone. Poor touch screens, smaller screens, poor voice recognition, and poor nav. I'd rather they just have an aux port for music and let me hang my own tablet on the dash somewhere.
Overall fit/finish for the model S was not as nice as an Audi I've been in, but was plenty good for me.
The model 3 is of course substantially less luxurious. Single smaller display instead of two displays. Many less buttons/switches. I've only done a test drive in the 3. But I do have several friends that have switches from S to 3, or 3 to S, and they speak very highly of the 3. No doubt the 3 is built to a much lower price point, and you can tell. I think part of the Tesla plan is to have you touch nothing but the steering wheel or the display. I suspect the voice commands will get better over time, they already handle nav and music well.
But when it comes down to it, I'd pick performance, handling, and range over more expensive interior.
Not like Audi, Volvo, or BMW is selling anything close to the model 3 price and range. I drove a Chevy Volt (comparable on price, but not so much on range or performance) and it was nowhere close to the model 3.
Who is willing to buy a slower car and pay 50% more for 2/3rds the range just to get a nicer interior? Not me.
> I've used similar nav systems from BMW, Subaru, and Toyota and they seemed like lame software running on a 5-10 year old phone. Poor touch screens, smaller screens, poor voice recognition, and poor nav. I'd rather they just have an aux port for music and let me hang my own tablet on the dash somewhere.
Thought the same, but the newest Volkswagen generation has improved a lot. Their touch screens and software feel much much more usable than even 2 years ago.
No, definitely not but they have still made leaps from previous iterations. And I think that's a very positive development.
My subjective impression is it basically went from major annoyance to "quite usable". I recently used it on a trip from Northern Germany to Amsterdam and it worked really well.
Agreed, it is huge. Potential market at $36k vs $28k is quite a bit smaller. At least Tesla bundled in autopilot at zero extra cost.
It's not as good as originally promised, but still a pretty good deal in my opinion. Just depends how much people are willing to spend for good acceleration, avoiding trips to gas stations, and avoiding spending $1000-$1200 of gas per year. Of course electricity is not free either. My last fill up in California was $3.99 a gallon and I spent $51. I do that about 4-5 times a month.
> At least Tesla bundled in autopilot at zero extra cost.
For about 15 minutes, before they rolled that back.
Honestly that's the biggest red flag, to me - the chaotic mix of announcements, retractions, chops and changes to their pricing and marketing strategy. As an outsider it feels like the company has cool tech but lacks adult supervision.
If something is "zero extra cost" I would expect the base model to have it.
Beyond that, what you looked at used to cost $37,500 with autopilot as an optional $3k addon. Now it always includes autopilot but costs $2k more. Again, not exactly "zero extra cost".
Just to be pedantic, in the US market $35K is technically the low end of premium car territory. Actually luxury car territory starts significant higher.
Cars in the 35-45k range are routinely referred to colloquially as "luxury" cars. I agree you can quibble with this terminology, but it is absolutely common to refer to these cars as luxury, albeit the absolute low end of luxury.
Significantly higher? A brand new 3 series is 40k, an Audi A4 is 39k, and a C Class is 41k. I’m not even looking at the smaller 4 door models from Audi and Benz which are even less than the Model 3. Maybe Europe gets a smaller 4 door BMW.
I didn’t even count the offerings from Japan which are even less.
That’s a statement that’s easy to make from a privileged position. Luxury is in the eyes of the beholder, and that car costs two thirds of the median income (before tax, healthcare, housing, food) in the USA.
Privilege has nothing to do with it. It's a simple matter of market segment definition. It's rather silly to pretend that something like a base model A4 is a luxury vehicle when it contains barely any luxury features beyond the logo on the grill. By comparison a top trim Honda Accord lists for $35K but no one considers that a luxury car.
Personally I drive a cheap car. Average new car prices have gotten crazy high relative to median incomes, enabled by low interest long term financing. A lot of buyers are ending up overextended.
It's the same in Western Europe, the difference is that cheap lease deals and finance have made them affordable for a significant amount of people and so these cars are extremely common. You see more 3 series than Toyota's or Hyundai's.
Yes. I'm not saying that people in the market for a Ford Fiesta are instead going out and buying a 3 series. People who want a hatchback and going out and buying hatchbacks.
But people who want saloons and estate cars are largely buying from the three Germans, and not Japanese or Korean.
Odd. They are extremely common in California. My office mate has one, her second after giving the first to her daughter. A friend has a motorcycle accident and TWO Prius were involved.
So in the USA, or at least in California they are very common. Part of their popularity is their fleet use makes them direct cheap in the used market, and they tend to be pretty reliable despite the complexity of two separate drive trains.
I think one of the issues is that the Prius starts from $30,000 here - which is quite a lot - and a lot of cheaper, but still economical cars are available for much less.
That’s a pretty laughable statement unless you’re in Europe and get the lower trims we don’t. Pretty much all car reviews put the A4 in the luxury sedan segment[1]. Not the segment with the Accord or Camry.
Following your logic the model 3 isn’t a luxury car either.
The point I was trying to make is that different markets define "luxury" in different ways - I don't think anyone here in the UK would call an Audi A4 a luxury car - even at its highest spec level.
Edit: Sort of reminds me of the differences in defining "class" between the US and the UK :-)
A Jeep Wrangler will cost you 35k for a base model these days and 40k for a "premium" that well, most people still upgrade and tweak for 10s of thousands of more when they get home.
My volt was super expensive in 2011, but 8 years on it still drives like the day it came from the factory. Unlike my Jeep (which i love) that is only a year old and already has aches and pains and squeeks and of course, drinks gas like its going of style.
BTW, when people shop for cars, the purchase price isn't the TCO. How much fuel will you be using and how much maintenance will you dump into it?
I read that the plant is operating way below what the capacity should be, so this could be a reflection of them trying to improve on their utilization of what they have now instead of throwing money at the problem.
That was the explanation Elon gave via twitter:
"Pana cell lines at Giga are only at ~24GWh/yr & have been a constraint on Model 3 output since July [...] Tesla won’t spend money on more capacity until existing lines get closer to 35GWh theoretical."
https://twitter.com/elonmusk/status/1117144865299501056
Not sure I understand the difference in costs between 2 lines at full capacity vs 3 lines at 66% capacity. Obviously 3 lines is an extra 50% on hardware cost, but what's the cost of time to refine and make mistakes (not to mention the lost revenue on producing more cars) on the last 33% capacity? Apparently Elon would rather get closer to 100%.
From a cost perspective two lines at 90%+ are better then three at 66%. But considering that Panasonic is putting the brakes on might as well be the result rather than the cause of Tesla's struggles.
The current gigafactory build-out should be able to produce at 35 GWh/year but is currently producing at 24 GWh/year.
It wouldn't be surprising if Panasonic halted expansion of the lines to concentrate efforts on fixing problems with current lines. But rather than admitting problems they tried to spin it with a weird press release.
Both statements can be true. Tesla is battery limited at 24 GWh/year, and Panasonic says they can meet current demands at 35 GWh/year.
Well Panasonic is claiming Tesla is not buying enough batteries and they are taking profit warnings as a result.
Tesla is claiming that they are battery supply limited and would ship more powerwalls and cars if they had more.
Not clear that Tesla's car production doesn't have other bottlenecks, but it does seem weird that Tesla doesn't sell more powerwalls, if the supply was there.
Seems most likely some political maneuvering to try to get Tesla to commit to Panasonic batteries at other locations. Or just incompetence on one or both sides.
I was close to buying a used Tesla from Tesla, but this is making me pause. Am I being unreasonable? I live in the Bay Area where I feel like the only person without a Tesla or two.
The question is, can we see how Tesla can get yearly earnings of say $5 billion to justify the valuation?
Maintaining a high profit per car seems to depend on selling a premium product, or presuming that other car makers cannot compete. When shifting to the mass market (more than say 1 million vehicles per year), surely the profit per vehicle has to decrease sharply - even if Tesla can earn more than the industry $1k per vehicle (from the quote below).
From 2017: "Recently, Tesla’s valuation surpassed both Ford’s and General Motors’. BMW is among the other major carmakers in the rearview mirror. The logic of this is intriguing, given that Ford, for example, is coming off its second-best year in its 112-year history, earning $4.6 billion while selling more than 5.5 million cars worldwide. General Motors earned $9.4 billion selling 9.8 million vehicles." From article: https://www.vox.com/the-big-idea/2017/6/26/15872468/tesla-gm...
> Model S has been out since 2013 and there’s still nothing as good on the market from any other manufacturer.
Sales of the S are flat and the profits hardly make a dent towards my suggested $5 billion earnings.
> They have a huge head start
In some areas.
Hybrid cars have much of the same technology and no charging station limitations - they compete with full electrics. Hybrids sold 4 million in US 2016 compared to Japan's 5 million sold.
> To say nothing of their charging network and the issues legacy brands will have fighting with dealers.
Sure, but it looks like Tesla needs say 10x more sales to get $5 billion earnings. Another competitor only needs to deploy a little faster to catch up.
TSLA is the exact same position as AMZN a decade ago. They don’t need to make profits. They need to invest in assets and scale, which is exactly what they’re doing.
Except AMZN was cash positive and their lack of profitability was due to the fact that they were investing money they were generating from sales. TSLA on the other hand have to raise money from the market to fund their operations, let alone invest in assets and scale. The two companies are not in the exact same position
It's not different. Not even a little bit. TSLA has sold equity and debt to pay for assets to scale. It does not lose money on its sales. AMZN sold equity and debt to pay for assets to scale.
>People have been predicting failure for Tesla since the beginning.
This is such a bizarre argument. Things don't fall apart overnight, until they do.
Are you a software engineer? "People have been predicting our app will collapse under the burden of technical debt since the beginning. Hasn't happened yet!"
It is certainly not bizarre. Extrapolating from the past is almost always the best baseline for predicting future. I put emphasis on the word baseline.
To clarify they’ve said each step was impossible and that Musk was basically a fraud or a liar and each step has been executed so far.
I place the people predicting failure with those predicting a stock market crash - given a long enough time horizon you’ll eventually be right, but otherwise it seems to have mostly been nonsense so far. I suspect people outside Tesla are either just bad at predicting their ability to execute or have other reasons to want them to fail.
>To clarify they’ve said each step was impossible and that Musk was basically a fraud or a liar and each step has been executed so far.
This is a nonsense narrative that some people tell themselves to justify hanging on for dear life.
Sure, there was some skepticism about EVs, but it was mainly around whether there was demand and whether they could be built profitably at that level of demand. Who Killed The Electric Car? came out in 2006 and the entire premise was the feasibility of EVs.
So what has Tesla done? They've demonstrated that EVs can work, and that there is some demand there. They've burned through almost $20BB in subsidies and shareholder equity to get there. They are certainly not near profitability. In fact, they are changing their entire business model as of a week ago, apparently. Why, if they've proven that EVs can be so successful?
It's hilarious that the fanatics claim to think "long term", but then in the same breath claim Tesla has has nothing to fear because they haven't gone bankrupt yet, therefore they never will. Enron was the 7th biggest company in the US at one point, and won multiple awards for The Best Company to Work For. It doubled revenues between 1999 and 2000, and was set to do it again in 2001. Then it disappeared. "Nothing to fear!" right until the end...
>given a long enough time horizon you’ll eventually be right, but otherwise it seems to have mostly been nonsense so far.
By what metric? Most owners haven't owned the car for a year yet. If you bought the stock in the past 5 years, you're underwater. Do you consider that some ridiculous time frame for an investor or business? I certainly don't.
I'm not sure what to tell you, basically nothing you've said is true.
There wasn't 'some skepticism' about EVs, very few took them seriously back then.
During the roadster the main narrative was it couldn't be done and if they could do it nobody would buy them.
For the Model S there were constant reports of Tesla not having the money to build them etc. the same thing was said repeatedly about the Model 3 (they would never be able to manufacture enough, they didn't have the money, they were going to fail).
Tesla pulled EVs from the future to now in spite of it being a very hard market to enter with massive up front costs. Along the way they also built out a charging network and made huge improvements in car software and getting rid of the dealership model.
The next shift is autonomous driving and the pivot to it is because any car without the tech when it happens will have negative value.
I'm not claiming that there's nothing to fear because they haven't gone bankrupt yet, they could still fail - but you're not arguing in good faith and people have been saying the same thing for years even though Tesla has proved them wrong at each previous stage.
Yes, I've seen all these, and I'm staggered at how bad the used tesla experience seems to be. They can't even get simple basics right. Buying a used Tesla should be a simple, straightforward experience and run smoothly - after all, they are not cheap.
I buy and sell cheap (sub £2000) cars on the side. I have a better customer experience than that. That is a damning indictment.
I never set one up for doing that sort of thing - I wish I had done when I first thought of it (maybe 2009?), but I'm a bit lazy! There's now loads of people doing it, although they seem to just be rebuilding lamborghinis, etc... Mine would be a bit more mundane!
I bought a Model S last year and around the time of weedgate I decided the risk was too great and sold the car. It seems from the used market that the value has plummeted. The one I bought is easy $40k less just a year old.
Repairs and parts availability is one of the biggest risks. Could easily see situations where a small fender bender causes a total loss.
Especially now that the perf option used to cost twice as much (now the uprated brakes/wheels are part of the perf package). Now autopilot (not FSB) is included. Also the new motors mean 370 mile range is available with the 100 kwh battery. AP3/HW3 is also now shipping as standard.
So yes the rapid progress means that the older cars depreciate quickly. This is only get worse with the next refresh rumored to be fairly soon.
Last year this time some of the same models selling for $40k in the used market were $80k. These were for some of the oldest cars in the pre-owned segment.
The biggest hit to value came with the Tesla price lowering.
Id expect a 20% loss but not 50%. Porsche and Lexus don't lose 50% the first year.
I have a 4 year old s85d. A year ago I got an offer to trade in for 50k from tesla. I bet the value went way down because My ~260 range is so much less than 370.
AFAIK Tesla hasn't been friendly to lease arrangements so far. Parts and repair has always been my concern there--other manufacturers have a good history of parts, a robust aftermarket, etc. Porsche's EV will be the one to watch in this regard.
Unlike other car manufacturers who go bust (like Saab 7 years ago), Tesla has worked hard to limit third-parties from repairing their cars. So if they go bust, you have to hope that their service business gets spun out into a company that lives on, and that this company (which retains a monopoly) doesn't charge you ridiculous rates.
Unless I'm mistaken a major component of the Tesla value prop is the supercharger network.
I presume "shit hits the fan" includes goodbye supercharger network.
Furthermore, unless I'm again mistaken, a bunch of people are under the impression that they'll have unlimited free supercharger access for the life of the car.
I'm fairly sure cars have a required minimal / expected lifetime (especially in the EU), but I wouldn't be surprised if that's well earlier than the expected lifetime of their batteries. So far so good, I haven't heard any news about battery failure or used Tesla cars being worthless due to needing a battery replacement. Mind you that is likely to happen sooner rather than later, it's been nearly 10 years since the first Model S models appeared.
Just like with SaaS, when things go boom, you’re screwed.
With Tesla, i would assume that in car features like autopilot would go poof, along with the proprietary chargers and spare part availability. Also, who knows what over the air maintenance is happening.
With a lease, your liability is capped to the lease payments. With ownership, you can ride it down to zero.
BMW doesn't need to pay top dollar for a prestigious brand, they already have one. Tesla will be bought out by the likes of Geely or Tata who don't have strong brands of their own, but have already been going around and scooping up smaller car brands like Volvo and Jaguar.
They saw the value of the Mini brand and didn't want to put a BMW badge on a lower end car, so they held onto it when they jetisoned the rest of the Rover group. The RR brand is selling to different customers than the BMW brand is. But I don't see that BMW would need the Tesla brand, there's too much overlap there IMO.
Not really. They merged with Rover and bought Rolls-Royce in the 90s. At the time the BMW management wanted to expand. Mini is a holdover from the Rover merger. This merger is largely seen as a failure and BMW divested from all Rover brands (except Mini). For more than 20 years BMW has not expanded.
It's quite possible something similar to the Fisker bankruptcy might happen - Fisker's assets were bought out by Wanxiang Group who then launched Karma Automotive, resuming manufacture
of their 'Revero' plug-in hybrid car, which is an improved version of the old Fisker Karma.
Much worse than that: their (pre-market) valuation is 44B and takeovers require shareholder agreement, usually at least 20% premium to the market — I'd wager the ask price would be a lot more but let's be conservative... 53B buys you a 9B debt.
Seen the Cornell paper "Pseudo-LiDAR from Visual Depth Estimation: Bridging the Gap in 3D Object Detection for Autonomous Driving" or the more consumer friendly "Elon Musk Was Right: Cheap Cameras Could Replace Lidar on Self-Driving Cars, Researchers Find"?
Looks like a pair of cheap cameras with good stereo separation (distance between the cameras) provides very similar data to Lidar. All without the giant domes on the roof (like the waymo cars).
Not in scenes with poor lighting, not in rain, not in fog, not in scenes with poor surface variation, and not at the ranges needed for safe on highway driving.
Sure. Problem is cameras are more similar to humans. So a camera based system will drive more like humans, and be less dangerous. If you use a Lidar based system and conditions are great for lidar, but terrible for cameras it's going to be very dangerous to mix autonomous lidar cars with human driven cars.
That's why you should have LIDAR and cameras, if nothing else so the car can use the cameras to predict and adjust to the condition-driven changes in behavior of the human drivers.
First US car company in 60 years, electric at that. Best crash test ratings. Highest owner satisfaction. First US-owned factory in China. Built in about 6 months. Ability and willingness to use OTA updates. Willingness and ability to put auto-pilot on the road for consumers. Ridiculous performance. Better chip than Nvidia. Top 2 auto battery supplier. Best selling lux car in US (ICE or EV). Dramatically better battery efficiency. No dealerships. Online ordering. Plausible FSD story. Camera-based autonomy. $35k price point.
VW Group’s recent Audi e-tron has to 30-40% lower range than a Tesla 3 (~200 miles vs ~325 miles) and as such I would totally see them putting forward the money to buy Tesla in order to bridge this big technological gap.
I may be delusional but I actually own a VW Group car, I know of people who make their living on mostly repairing VW's past mishaps (stuff like this [1]), I have no stake whatsoever in Tesla's future financial success, and as such I can tell you that VW (and the Germans generally speaking) are way, way behind in terms of EV technology compared to Tesla because stuff like this it's not in their engineering DNA.
$10 billions is a pittance, it gives you two thirds of Whatsapp or the entire Skype before it was acquired by MS (adjusted for inflation), so I don't think I'm delusional when I'm saying that it is not a great sum to pay when the future of your entire industry depends on you being best at building EVs (and Tesla now is the best).
I've had the same discussion on places like /r/cars, i.e. that Tesla doesn't sell cars, it sells batteries and the accompanying software (with some wheels attached to the whole thing), while companies like VW, MB or BMW have almost no clue on how to build the best batteries, never mind the best software, they're only good at building cars (and lately not so good even at that), which is an industry on its way out.
Also other companies might be willing to go in on at this price to be a top compeitor for self driving or batteries. Apple must have considered it. Uber. Tencent. Facebook. Alibaba. Walmart.
Outside car manufacturers there's a lot of cashed up companies that would like to take a punt in this space.
I could not have said it better. I own a Model X, and I always tell my friends "Tesla is a tech company, but they have no idea how to build cars". I think I'm going to expand that into what you said.
> Access to the Panasonic battery supply is likely worth a pretty penny.
Licensing/partnership contracts are often written so that they don't automatically survive changes of ownership, which makes buying into such a partnership by acquisition less than reliable.
Anything that comes out of the mouth of Elon is an instant fact, and is repeated as fact until it's proven false. Then it was merely a prediction or plan.
He just went on stage and told investors that their non-existent, full self-driving robot taxi fleet will cut the cost of personal transport by 90% over Uber, and will make the car owners $10-$30k+ ("in some cases more!") in annual income. It's a pipe dream, but now it's talked about like it's already happening.
Remember Solar City and the solar shingles? Their solar deployment is 25% of what it was the quarter he made that announcement. "Synergies!". Meanwhile, they are winding down the company. In a year people will forget it was ever a thing.
Did you watch the presentation relating to the Tesla chip release - along with watching the fully self-driving vehicle video? They had the lead chip engineer explain their improvements, and they had their AI lead explain why they're at the lead for this - both very experienced and articulate people in their fields.
I don't understand how you say it's a pipe dream unless you don't comprehend what they're sharing. If they're outright lying about the operations per second speeds (TOPS) they announced then that's one thing, however I doubt they would.
Another thing to realize is Tesla will be self-interested, as they should be to some degree, so how much profit they will allow non-Tesla owned vehicles to operate in the Tesla Network could heavily be dictated by them - so I wouldn't necessarily go out and buy 20 vehicles to inject them for full-time Tesla Network usage, however some people may take that gamble and then it also fronts money to Tesla. Even if the improvements are 1/4 of what they announced, it is significant.
Re: Solar City - they've had to redirect battery and other resources to focus on the vehicles. You're making a lot of assumptions. It might help to balance that out with they're working very hard, have very intelligent people on board, their work and effort has already lead them to this level of success, they're working on creating a whole ecosystem on limited resources that they have to manage, and they have the semi and other vehicles lined up for next year - which they already have pre-orders in for as well. I'd say you're a bit too hyper-focused on certain things, and no, I'm not suggesting to not be skeptical and understand they may not meet their goals and on time the 100% that gamblers-as-investors are betting on them to have.
They lied about being the best in the world about their chips. Nvidia posted about them.
They lie about autopilot and fsd being driverless, while they are irresponsibly deployed driver assistance technologies.
Their whole argument for feasibility of driverless cars is that humans user only their eyes too, and they have a lot of data. That is like saying that if you outfit a million gopro on people, they'll have better humanoid robots than Boston Dynamics.
This whole convoluted scheme about fronting cash, wow. If they are so confident about their cars earning 30k$ a year, they should have no problem raising money via equity or debt, and pivoting from a car manufacturer to a taxi company. Later they can fire the drivers and be driverless taxi company.
Solar City, another wow. I didn't know solar panels are made of batteries, or that Tesla is the only company that makes batteries in the world. Are you just closing your eyes and denying that they laid off solar City personnel? That the 2 billion dollar was nothing but a family buyout, and infact a spacex bond bailout?
According to Elon musk and Tesla fanboys, Tesla is an amazing company. They have the most performing and cheapest batteries in the world. They have the best AI chops, not just to make the best chips, but also use it to make the most automated factory, and have the technology to have their cars be fully driverless. Their factories are so advanced that air friction is a problem, and they use strobe light to see robots. But after all these advantages, they don't sell batteries, direct AI products, manufacturing expertise, driver assistance technologies, EV drivetrains etc. They only sell cars at luxury prices, that too at a loss, while having shitty interiors, fit, finish, panel gaps, paint etc.
>Did you watch the presentation relating to the Tesla chip release - along with watching the fully self-driving vehicle video?
Yeah, I did. It was very interesting, but it was also Computer Vision 101. Karpathy essentially explained how neural nets work to a non-technical audience. It was nice.
But did you not assume this was exactly what they were doing? I certainly did. Do you think no one at Waymo/Google/Uber/Apple/Lyft/Ford/GM/VW understands this or is trying to do the same or similar? Tesla does have a fleet data advantage, but Elon's "simulated data won't work" is nonsense.
>If they're outright lying about the operations per second speeds (TOPS) they announced then that's one thing, however I doubt they would.
They weren't lying about the specs, but it isn't industry leading, like they claimed. So now they have a second best chip that they have to produce themselves in small volumes.
>Re: Solar City - they've had to redirect battery and other resources to focus on the vehicles. You're making a lot of assumptions.
No, you are making a lot of assumptions. I am looking at the data. Since the solar shingle reveal, solar revenue has decreased every quarter. It is now 25% of what it was then. The reviews on Yelp and other sites are terrible. The Buffalo plant is in trouble, and hasn't fulfilled employment requirements. What does any of that have to do with batteries going to the Model 3 in volume in 2018?
Again, your whole argument revolves around "Tesla says..."
Of course others are working towards the same. That's the point and value of competition - and what Elon wanted to cause (whether you take it up as clever PR or genuine care) other manufacturers to start producing EVs. The point is in a highly competitive environment every incremental improvement is potentially a huge advantage in getting to market and scaling faster; Elon referenced the exponential aspect of this, especially in terms of the amount of sensor data they're already capturing and able to analyze compared all competitors combined.
Citation needed for it not being industry leading, for their specific use case - hoped for TOPS along with maximum energy usage considerations? TOPS alone isn't the only factor, doing operations efficiently is required to keep energy usage as low as possible. Unless the lead engineer and whole chip team is pulling a fast one over Elon's head - he's not an idiot and not going to move forward in a direction he's not confident in.
I wouldn't say ~1MM chips per year is small volume, and that's fine that they're producing in small volume - especially because they have the next version coming out in I think Elon said 2 years. They're likewise not building the facility to produce them themselves, they're outsourcing it - I think they said to Samsung in Austin, TX?
I'm not making assumptions, and wasn't referring to that data you were referencing. Elon has said they had to divert resources from battery-related production; yes, it could be a convenient false story, however we can agree they're under a lot of pressure and have limited resources - so it's believable enough.
My whole argument doesn't revolve around "Tesla says" of your generalized statement - however it does try to put down my argument to elevate yours. If you don't want to give any amount of trust to what Tesla says - yes, they've not been honest/straight-forward in all situations which isn't ideal - then the foundation for your arguments aren't taking into account a lot of the proof points. Just like now I believe you're being genuine in your belief, and that we just have different experiences, understandings, analysis - I suppose it's possible you have financial interest in Tesla failing and haven't disclosed that, however I won't make that assumptions - and will assume you're speaking in good faith.
I don't really get what you're defending or your point is? Do you think Tesla will completely fail? Do you believe their stock is overvalued? That all auto manufacturers are now investing shittons of capital towards EV vehicles and infrastructure is perhaps the strongest signal that the market is there, and Tesla is leading it - and Elon believes they're 3-7+ years ahead of everyone else; and during even only 3 years they get get much further ahead in the race.
>My whole argument doesn't revolve around "Tesla says"
You wrote in this single reply:
Elon wanted...Elon referenced...Elon said...Elon has said...Elon believes...
This is the foundation of your argument.
Elon also said he was taking Tesla private and had a buyer at $420, and settled after being accused of fraud. Things that Elon says, wants or believes are not facts. That is my point.
>Citation needed for it not being industry leading, for their specific use case
Go look at NVIDIA’s products, or the press release they put out after the Autonomy Event. Do you think NVIDIA knows a thing or two about autonomous vehicle tech and this use case? Because Tesla’s entire program up to this point, the one I’m sure you believe is best-in-class, is built on NVIDIA product.
Can you provide a single citation that the Tesla chip is industry leading?
>I wouldn't say ~1MM chips per year is small volume,
First, 1 million is small. Second, you assume that they'll be building 1MM cars a year anytime soon, probably because "Elon said". Tesla produced ~70,000 cars this quarter. That's the reality. There is no evidence whatsoever that Tesla can produce, nor that there is demand for 1MM of these cars annually.
>I suppose it's possible you have financial interest in Tesla failing and haven't disclosed that
Ah yes, baseless accusations. You "won't make assumptions", but you'll throw that out there anyway. Just in case. If anyone disagrees about the future of Tesla, they obviously have some agenda. Elon said as much. If this forum had any neutrality, the admin would be warning and/or banning people making these accusations, which violate a number of the HN guidelines.
I don’t short stocks. I buy the odd put. I'm long everything, including Tesla through various funds. I don’t get paid by the oil industry. If Tesla went belly up tomorrow, it would harm me financially. How about you? I’m willing to bet you own a Tesla car or stock, but didn’t disclose that, while speaking with vehement positivity about the company. Why not, if you expect it of others?
I am interested in this subject matter because I find it absolutely baffling and mind-bending that there are so many red flags with this company, and yet there are segments of the population that simply cannot or refuse to see them. Of note: there seems to be a large overlap between that segment and the one that likes accusing other people of financial malfeasance or astroturfing.
>Do you think Tesla will completely fail? Do you believe their stock is overvalued?
No idea, but I doubt it fails completely. There's value in there somewhere. Probably selling high-end, high-margin EVs to wealthy people, the market they probably should have stuck to.
I'm not going to pick apart your analysis to point out the logic errors because there's enough that I don't have time - I'll just point out an obvious one:
My saying "I suppose it's possible you have financial interest in Tesla failing and haven't disclosed that" isn't a "baseless accusation" - which you claim, which then wrongly lets you build your anger and is a bad foundation giving you the argument that I'm being hypocritical and also making assumptions. I didn't accuse you of such - realize there's a difference between an accusation and brainstorming through possibilities.
In the end we'll see how Tesla and Elon does. I believe most people are terrible at understanding exponentials, terrible at foresight at the holistic level - and only believe something once it's been 100% for X years; part of the whole Product Adoption curve: innovators, early adopters, early majority, late majority, laggards (or other labels: tech enthusiasts, visionaries, pragmatists, conservatives, skeptics).
>I'm not going to pick apart your analysis to point out the logic errors because there's enough that I don't have time
Translation: you have no idea what you're talking about.
>I didn't accuse you of such - realize there's a difference between an accusation and brainstorming through possibilities.
Bull. You were implying I was a short-seller with an agenda, just like Elon does to all critics and whistleblowers, just like happens in every Tesla discussion on these boards.
It's hilarious, because the critics are "evil shorts", but the proponents are innocent "good people" who would never talk their book.
Because I find them pretty similar in terms of size, the e-tron is 4.9 m long while the model 3 is slightly shorter, at 4.6 m, but it’s in the same ballpark. For comparison my hatch-back is 1 meter shorter, it has a length of 3.6 meters. In the end the market will be the one to decide.
That's actually complete wrong. Amazon did have 2 years of somewhat heavy losses (around 1999 to 2002), with one pretty dramatic loss the quarter the dotcom bubble exploded.
But after that, they turned a profit almost every quarters, generally very small compared to their revenue, but a profit, and when they lost money, it was also quite small compared to their revenue (apart from 2 isolated quarters in 2012 and 2014).
Basically, apart from it first 2 or 3 years, and some isolated losses, Amazon was, for most of its existence, targeting a slightly above 0% net margin, and succeeded at it, proving it was self-sustainable.
It's not the same as Tesla which is consistently losing around 10 to 20% of its revenue for nearly the past 10 years.
There are network effects, maybe not as strong, but they're there.
Theres the supercharger network, if you have one car of a certain brand in your house hold, the others are probably disproportionately likely to be of the same brand, and this can radiate out to friends, family and work colleagues. Theres probably a 'no one got fired for buying IBM' element also. Tesla is kind of the default electric car, you aren't going to be judged harshly for buying one because most ev buyers do.
I'm struggling to think of any individual car manufacturer that has driven other manufacturers out of the market. The market doesn't really work in a way, capital requirements are too high, lead times too long, to make that possible. Its still reasonable for them to forgo short term profits, just not quite to the same extent as the winner takes all nature of the internet.
It has both those things. It’s literally devouring market share from similar class vehicles of competitors. The network effect is also happening slowly.
From my point of view Tesla hasn't driven BMW, Audi or Mercedes out of business in the last 15 years, but I didn't take a look at their recent numbers, perhaps they already have.
This is probably the most likely endgame for Tesla. One of the other carmakers buys them, liquidates physical assets, and sells their own cars under the Tesla brand.
Elon Musk only controls 20% of Tesla shares, the board can force a sell upon him if the other shareholders agree on one.
And I'm not sure why Apple would buy a car company, it's too far of their core business (aka selling computers ranging from phone sized to desktop size).
The other car manufacturers are not blind idiots, they are seeing EVs are becoming a thing, but it's also in its early stages. The question for them is when should they start switching their line-up, and that's the difficult decision. Too early, and they end-up with too expensive and less convenient cars compared to IC vehicules, too late and you have basically miss the bus.
I think Elon isn’t the typical startup CEO that is only looking for the biggest cash pile, which ironically Apple has probably the biggest cash pile on earth as a corp.
There is a definitely path forward for Tesla. They needs to be 1908 Model-T but for EVs of 2019. This means only two things: (1) aggressively lower the manufacturing cost and, (2) scale the battery production. I want to see Tesla that costs $18K and has a range of 300 miles. This would turn auto-industry upside down. I think this is completely doable.
Incumbent car manufacturers are actually lightyears behind in experience that Tesla provides. Just look at their dealership model that is design to robe user at every step in the process. From tech perspective, majority of Toyota line up still doesn't even have good smartphone connection story in 2019. Honda still have bare minimum driver-assist. Toyota Sequoia hasn't been literally updated for years and a giant car like this doesn't have basic safety features that one would expect in 2019. Keep in mind these are the biggest, wealthiest and most powerful car manufacturers in the world for who money in not an issue. They have perhaps 10X more people working on improving designs than Tesla but at the end of year nothing really comes out. If you look at model differences between 2018 vs 2019 for large majority of incumbent manufacturers, you will see no difference or something tragically trivial such as offering new shade of color. You may think what the hell their design staff of thousands of people did this entire year?
Tesla's main strength is design, courage and agility. Everything from door handles to dashboard is made to delight the user. They are tech company that became car company, they move fast and they deeply care about delighting users. Ideas don't boggle down in bureaucracy. Model-3 is upgraded even before year was over. Model-3 is designed for million mile life. No incumbent manufacturer would dare go in this territory. The difference is same as incumbent software giant vs new startup.
The reason incumbent car manufacturers seem lightyears behind is probably because they run a sustainable business model. While the Tesla experience seems superior it doesn't yet appear capable of turning a profit. I really doubt that lack of ingenuity on the incumbent side is the reason for the gap you describe.
Potential for lower cost as well, the part count of an electric car is lower than a petrol car. (no combustion engine, no gears, and I'm sure they can simplify the electronics as well due to not having as much legacy baggage as other car manufacturers).
However, to achieve that they still need to reduce the cost of batteries by at least half. Reducing battery price has always been one of their goals though, hence the megafactory.
Based on Q1, the problem is not production, but demand. Tesla's inventory is growing, which probably means they are having trouble selling cars they build.
Then they mention that they missed a lot of revenue due to missing half their shipments overseas, and onto Q2 (But also expecting a loss in Q2).
Sales for their higher-margin vehicles seemed to have cratered, explained by seasonality, lower US tax credits going forward, and inventory/demand mismatch.
Panasonic has halted their planned battery plant expansion, which implies a lot about future demand.
I don't want to be a downer, but I'm having a hard time seeing the way forward for Tesla in a manner that isn't very unfavorable for them.
https://ir.tesla.com/static-files/b2218d34-fbee-4f1f-ac95-05...