Bloomberg's chart of Tesla Model 3 production[1] shows very low production rates in early June, around 1000. Maybe they saved some parts up for end of quarter. Let's see what happens over the next month.
A well-run production line produces about the same number of units per week. Tesla's weekly numbers are all over the place. Their cost per unit has to be very high, because the cost of running the plant is roughly constant as the output varies.
Eventually Tesla ought to get their plant debugged, but if they're doing assembly in a tent, that's in the future.
They also seem to be having trouble at the battery plant in Nevada, which is strange. That's a relatively simple product, and it's one they've built before.
Can you quote the text here? For the life of me I can’t find the section you’re referencing. I’ve heard the “timing production to match tax credit” thing before and it doesn’t make sense to me, hence why I’m trying to track down the primary source.
There's a tax credit of $7500 that will begin to be phased out as soon as they sold 200 000 cars to US customers.
Phase out starts with the same tax credit still applying for the remainder of the current quarter and the next one (before being reduced in later ones) and that's exactly the reason why they would want to match reaching the threshold to the beginning of a new quarter. This way they have as much time as possible to ship as many cars as possible to their customers (that's OK then since numbers sold do not affect the phase out beside the threshold of 200 000 cars).
The way the tax credit works is that a car company's customers get $7500 US tax credit for the first 200k Tesla type electric cars. Then begins the phase out. First the $7500 tax credit remains for the rest of the quarter when the 200k US sales was hit and the following quarter (so between 3 and 6 months). Then the tax credit goes in half for 2 quarters and then 1/4 the original for another 2 quarters. Seems strange to have a variable length phase out on the full amount but maybe the people who wrote the bill couldn't envision a company selling so many cars in a quarter that when in the quarter the company passed the 200k marker would be something the company would focus on.
Tesla is near the 200k mark and has been holding back domestic sales so to hit it at the beginning of a quarter (i.e now).
"The new qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period."
> > > They timed production to maximize federal tax credits for US consumers.
This is what is confusing me: if the credits are timed to domestic sales (so international sales don’t affect the timing of the tax credit phase out) what does this have to do with production?
If timed right, they have 6 months to sell cars after the 200k cutoff. Some people say they have been storing some cars and not selling them along with selling more overseas so that all the cars produced (and sold, but with the reservation backlog, this is the same thing for now) for the next six months can get the tax credit. It has to do with production because you can't have sales of cars that don't exist.
> It has to do with production because you can’t have sales of cars that don’t exist
Rather, you don’t want to rush to produce vehicles you don’t want to deliver quite yet. You want to get to maximum output at the same time the timer starts on federal tax credits phasing out (which, keep in mind, would’ve happened without Model 3 production due to 2k/week Model S and X production).
It's under Hyperdrive Tesla Production Blog, Friday June 22, 2018: "The $366 Million Subsidy Play, Part 2" as well as "Tesla's 200K Strategy".
tl;dr they'd basically benefit from an additional 336M in government subsidies if they delay recording their 200k'th sale to July 1 instead of June 30.
Actually the customers benefit from the subsidy. No other car company has sold enough evs in the us to get to this point. After they finish q4 2018 and the subsidy if greatly reduced, there will be one less reason to hate tesla. How many volts and bolts has gm sold? I haven't ever even seen a bolt on the road. Apparently gm doesn't make many of them on purpose, too expensive for the batteries - tesla's super advantage!
Those in the know said electric cars in general were an unpractical waste of money. I also remember three years ago hearing those in the know saying a self landing rocket would not be possible, and if it ever were made it would also be done at great cost and waste.
Heck, those in the know said even a couple of months ago that Tesla would not be able to achieve 5000 Model 3s by today.
The truth is, there aren't really any people we can claim are "in the know" when it comes to new, innovative approaches to manufacturing.
Maybe Tesla will fail, maybe it will succeed. I don't think anyone actually knows one way or another. Elon Musk and his crew are trying something no one else has bothered to try before and we just have to see how it goes and what lessons can be learned from it.
Well as a first point, I think that there's a huge difference between 'This very difficult thing is probably so difficult that X' and 'I have physically seen this production line, and there's no way it's doing X'.
The first is an estimation of difficulty - probably an educated guess that could be wrong. The second is a statement based on the evidence in front of you.
Secondly, whilst it's true that people have been saying Tesla won't get to 5k/w, it's also true that Tesla were claiming they'd have a fully automated production line. If Tesla gets to 5k/w by hand-building them all then in most people's eyes they've failed. The value of Tesla is not the actual production of cars. It's the IP of their self-driving technology, and the IP for their fully automated production line. There's a reason Tesla's valuation is completely unlinked from their production capacity.
>>The first is an estimation of difficulty - probably an educated guess that could be wrong.
Difficult things have been done all time and being done even as we speak now. Its not very hard to be positive about difficult things happening even in the present.
The real problem is the discomfort with anything new, and the fear of new order of things.
There is also a certain amount of risk taking ability that goes away when you become intelligent(expertise). That's because expertise is an investment in time, and there fore a good part of one's life. Watching that get washed away, or giving it up to start a new life is very hard. Its a huge mountain of emotion which you have to scale up and then down. People would rather let existing order of things prevail as they are.
The second part is people find it hard to put what is already done aside and start afresh. I have even forgotten the count of number of people who I have heard telling they can't learn something new, or begin on a new heading because they have travelled too long down the current path. Sometimes this is for things as simple as starting a new hobby.
So Tesla will likely win, and people won't be happy seeing it win. People are not comfortable watching live anti-thesis to their excuses.
"The value of Tesla is not the actual production of cars. It's the IP of their self-driving technology, and the IP for their fully automated production line. "
I highly doubt that but if you have any link/proof pls share.
Their value is in providing a product people are head over heels about.
And their valuation is much like any other company, based on guestimates of success.
Musk's "new, innovative approaches to manufacturing" are the status-quo from around 40 years ago. Maybe he doesn't know that...
And are they really "trying something no one else has bothered to try before"? Altogether, an electric car is simply not that much more new or different from a conventional one, these days. In fact it's much simpler. A lot of the learnings of the last 40 years would absolutely apply.
I would like to point out that you go to any article written about tesla from "the industry" viewpoint from at least 2008 to 2010. It's actually quite vitriolitic, actually.
that particular poster seems to be an anti-tesla troll. Certainly there is reason to wonder if Tesla can do what they are trying to do, they've had trouble so far. But it's not an impossible task, there are lots of companies in the world doing mass production of cars, tractors, etc, it's not some impossible task.
I think it’s a good question to ask, but it doesn’t mean the milestone was meaningless. Several months ago this would have been unthinkable, and the 5000 deadline was arbitrary anyway.
> Wasn't it in multiple letters to shareholders? It is literally an update to debtors on the company's position, far from arbitrary.
Debtors are people who owe you money. The word you are probably looking for is “creditors”, who are people you owe money (e.g., corporate bondholders.)
But, while it's closer, stockholders aren't those, either.
What are you claiming the SEC would disagree with? The claim is that Tesla set a goal of 5000 vehicles per week.
There are two things you could disagree with but you don't specify which. You can disagree that Tesla set this goal for itself, or you can disagree that the number 5000 is arbitrary.
To disagree with the first part, you'd need to show that the 5000 figure came from an external party, do you have such a source for this?
To disagree with the second part, you'd need to show that there is something significant about the number 5000. Is your claim that there is some significance to the number 5000?
If you can't substantiate the claim that some external party gave Tesla the goal to make 5000 vehicles per week, and you can't substantiate the claim that the number 5000 has some fundamental significance when it comes to car manufacturing, then you have no grounds to refute the statement that Tesla set this arbitrary goal of 5000 for itself.
> Several months ago this would have been unthinkable
Unthinkable? Their Q4-16 Shareholder letter [1] (Feb 22nd, 2017) stated: "Our Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018."
On July 2nd, 2017 Musk forecasted [2] 20,000 per month by December '17.
The first shift was 3-months, as of Nov 2017 [1]: "We currently expect to achieve a production rate of 5,000 Model 3 vehicles per week by late Q1 2018".
When that was missed, it was pushed back again to Q2-18. It looks like those shifting goalposts have finally been met but for the above poster to call it "unthinkable" is absurd. It's the exact messaging we've been hearing for at least a year and a half.
The company is losing $300 MILLION per quarter. Being late by a year on this figure means $1.2 Billion down the drain.
That's the important thing. A lot of people are concerned about Tesla's ability to raise money and stay solvent. Tesla will not be profitable, or even cash-flow positive, until enough Model 3 cars are made.
Every month Tesla fails to reach a high-degree of production, Telsa loses another $75 million.
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The worst part about this rampup effort is how bursty and unreliable it is. Its going to be a one-week hit of 5000. Next week, or even next month, Tesla's sustainted output will be well below 5000, and therefore Tesla will remain unprofitable for another few months at minimum.
That's not even factoring in all the costs Musk threw down for these tents (Obviously a temporary arrangement, as a single storm will put those tents out of commission).
They are bursty, and they probably won't keep up their last week of the quarter production, when I'm sure they killed themselves to get to 5k/wk. It doesn't really matter if they were 6k or 4k that last week. If we use the total over the quarter we can see if they were making progress overall, rather than one stupid week when they could do something trick to push up their numbers.
But the thing is, they did triple their q1 production, going from 9.7 to 28.5k so they almost trippled, or went from an avg of 9/12 weeks to 28/12 weeks, a clear increase. The newly announced goal is 6k by the end of August. It doesn't matter if through super-human work they get one week that is good, we can just measure their performance by total production, so I'd guess at least 50k would be another significant increase. It won't be 6k*12 weeks in q3.
Lost in this is the significant additional revenue they get. They aren't making their cheapest cars yet, so at 50k each, that last week alone was 250 million additional revenue. That 28.5 cars is about 1 billion more in revenue than q1. If they double that again, you are talking real money :-)
So, the Q1 average was about equal to that last week of 2017, but only because of a massive sprint (20% of production was in the last week of the quarter)
If that pattern has repeated itself, we should see about 26,000 model 3’s produced in Q2, 5,200 of which in the last week.
Also, based on these data points, they won’t produce 5,000 next week, but next quarter’s sprint will bring the average there.
I wonder what the cost of reaching that milestone is. That extra factory wasn’t free, and they either are driving their personnel into the ground or they had to hire and pay a lot more people (possibly even both, as new people being hired will need training)
One cannot will anything one wants into existence.
At some point, he'll need to understand how to design an effective large-scale manufacturing system, and not simply yell for one.
Specifically, he should actually learn some things about managing people, and the place that has in producing quality at volume at speed. It's sad, because that's exactly the lesson Toyota was trying to teach at NUMMI, and their legacy has been totally forgotten by its new owner—at great cost. It's simply a shame.
> One cannot will anything one wants into existence
Let's just see now.
Musk wanted to grow a plant on Mars, and when the Russians pulled out of a deal to sell him a couple of ICBMs he decided he would will his own rocket into existence.
Then he decided he wanted it to be reusable, so he willed that into existence when everyone said it was impossible.
Then he wanted to strap three of them together, so he willed that into existence.
Then we wanted electric cars, so he willed into existence not only the best electric car ever, but one of the best cars ever, period (Model S)
First, large-scale manufacturing is a different thing from rocket engineering. It ceases to be about building something, and begins to be about understanding and managing people. That's what I challenge Musk is still learning, and far too slowly. He may never be able to learn at all—beliefs about people and management are far more hard-set than those about physics and engineering.
That said, I think he'll get it done, but it's still arrogant (and inefficient) to take all of the learnings of manufacturing and management of the past 30 years and try to "start fresh."
It's a waste. It's a waste of money, a waste of time, a waste of human capital and life and happiness. He's expending energy to learn things we've already learned.
That's the sad part. I'm sure he'll get it done, but at what cost? At what despair and unnecessary strife? And at what level of waste and inefficiency.
Sure, you'll say, necessity is the mother of invention, and new knowledge and innovation will come out of this struggle—but how can we know even more could not be done in a better process? We can't, and this naysaying will go by the wayside. As perhaps it should.
I think the reason he does it this way is to avoid reaching the same local maximum competitors are already stuck in - you can’t out-compete incumbents with more of the same but a little better. It is arrogant in many ways but there is a reason behind it, it’s not just hubris, and crucially it requires finding the right frustrated talented people and listening to them, it would be a mistake to think he comes up with all the ideas.
I disagree that he’s not good at managing people, he just has very different success criteria, which do not highly rate the welfare of his workers. I think like Jobs, Bezos and many other successful business leaders he’s good at finding talented people, selling them a dream, and wringing every last ounce of life out of them in service of his dreams, then finding someone else to keep it going. A lot of people will be broken along the way, a lot of people will produce their best work.
It's possibly(?) tangential to the discussion, but I would say that if he does not "highly rate the welfare of his workers" then, he is by definition not good at managing people.
I mostly agree; I wouldn't want to work for someone like that, there is some ambiguity though as usually they are themselves driven to excel at all costs, and sometimes they encourage people to excel in ways they would not without the pressure (even if at great personal cost). I think he is highly skilled at manipulating and motivating people to do what he wants, whether you want to call that 'good at managing' is another discussion, mostly centred around the moral connotations of 'good'.
> It ceases to be about building something, and begins to be about understanding and managing people. That's what I challenge Musk is still learning, and far too slowly.
Hmm. This strikes me as somewhat implausible or at least uncharitable.
Are there other example of doing something as complex, in a 'new' field, at a scale to compete with incumbent operators AND vertically integrating both design and manufacture?
If one zooms out a little to place what Tesla is doing in context, or Musks 'performance', it doesn't seem they've been particularly bad per se, more that they've faced difficulties that are inevitable. It's somewhat of a testament to them 'doing well' and learning to do it pretty damn quickly that we here can continue to talk about how bad they continue to be - namely because they're still around and not dead and disbanded.
I may, of course, be talking rubbish seeing as I don't know much about this subject nor do I have a horse in the race. But it just strikes me that Tesla is doing something extraordinarily hard (I know about the logistics of supply chain management and that's hard enough in the auto industry) and being played out in public view with intense competition.
Yes, you're correct. And in fact I had a bet with a friend ten years ago that Tesla would in fact still be around today. He didn't think they would. I just won that bet in January. :)
The shame is that the parts that are innovative, like the engineering of an electric car, the design, the interface, and the battery technology, are all going so well, all things considered.
Whereas the parts that don't necessarily require innovation on a major scale, such as management of people, the operation of a manufacturing line at scale, systemic quality control, and safety and health—are being done (by all accounts) not so well. These are the things that are far more difficult than the technology and innovation precisely because they are so much more complex, and require a different mindset. For the same reason Musk is so good at engineering, it is not totally surprising he is not so spectacular at leading the human systems required for this new pursuit. Again, by all accounts.
And the sad part: these are the parts that have been done before, in similar situations, at similar scales, with similarly new technologies, without drastically different requirements or problems. Having that experience available to you and not using it is not exactly wise.
All that said, I think he'll learn what he needs to learn, get it done anyway, and will not fail. Making this point of efficiency at this stage pretty moot. I realize that.
Ah yes, I forgot that running a company doing rocket science with ~5000 employees (as of late 2015) clearly proves no abilities in management or people skills whatsoever.
I would argue that the number of companies who have gone bankrupt sitting on this dollar volume of preorders is and will continue to be, 0. Worst case scenario, they can issue stock or sell a chunk of the company. Even easier is to dial back R&D.
Pre-orders are overstated. Check Twitter - people who were quoted November delivery for AWD Performance are now being told they can take delivery in July.
They'll burn through supposed 450K before the end of Q3, and then the order book is dry/cash crunch time for Tesla.
That means they are managing cash flows and taking high margin orders first, not running out of demand.
Further, I expect the number of people who can put down 1k and wait with no new car for a long time is but a small fraction of those who can buy without those substantial barriers.
It's always the next thing that Musk won't achieve. It's funny how people are constantly moving the goalpost after every success he has. He is building a car manufacturer from scratch and people are making 6 months worth of delays such a big deal...( I mean as a personal failure not as far as the importance of the milestone for the company).
I don't think anyone said you couldn't land a rocket. Folks have been looking in to doing that for a long time, we just didn't have the technology or enough investment in space to make it happen. He was just one of the first ones to come along and bring enough capital and technology to bear on the problem.
Don't get me wrong, I absolutely admire what Elon Musk is capable of. But it's worth being realistic when we draw opinions of leaders lest we fall victim to hero worship.
For shareholders and customers that makes sense. For everyone else not so much. There are a lot of people in the everyone else column who are happy to see an entrepreneur take risks.
> who are happy to see an entrepreneur take risks.
Are there really? I feel like a massive percentage of people are against Musk and Tesla precisely because he's trying to do something new, and take some risks.
It's like a majority of Americans don't want anyone to do anything radical anymore, like they're happy to stagnate.
You're overthinking this. What's going on is simply that when you say you're going to do something, people (especially the ones who've lent/invested money) expect you to do it. If you don't then you rapidly lose credibility.
That's just the thing, Tesla isn't creating the chaos, everybody else is. Tesla setting huge goals and trying their best to reach them, no doubt exceeding Musk's true expectations. Companies fail to meet goals all the time, most of the time because the goals have been set intentionally unreachable.
...and generally speaking, human. Musk might be able to work longer hours without having a stroke, but ultimately he's not magic, and lots of other people can do this, too. Let's see more people try. (But I’d suggest just one major company at a time, spend more time with your spouse and kids.)
I didn't mean it this way. I believe Musk has enough self confidence and college education to think he can crack through things like he did with SpaceX (remember they almost died and now vertical reusable landing is almost the new normal). So if he manages to keep Tesla growing, he'll fix things on the way. Maybe he'll have time to read about Toyota :)
One can judge from the distance and think he has better understanding of the problem, than a person who is immersed in it most of his waking hours and surrounded by people specialized at solving it.
This was the first time they hit a peak of 5000 model 3s. Undoubtedly, this was at their limits right now, but they're STILL ramping up, so it won't be their last, either, and soon (months) will be at 7000-8000 M3s per week at a peak rate.
I just want to point out one thing: hustle is valuable. Not all companies can sprint like this when they need to.
I've been at companies that could hustle, and hustled. I'm not sure it's valuable. In one case, our hustle was a waste, as a dependency was late. In another, our hustle was a success, and we launched to the world.
In both cases, me and colleagues made the same amount of money, experienced a degree of burnout, and if anything taught the company they can do it again if they want. Hustling at a sustainable pace? Sure. Sprinting, like death marches, just burns employees.
I would resist commenting, but I know those Tesla employees won't be getting a huge bonus or extra time off. I wonder how well it will go for them the next time.
The cars aren't fraud, it's a weird belief system that leads to people honestly repeating that over and over. They make cars, real cars. You can order one but it takes a long time to get one. They work.
It's some kind of hyper bizarre, borderline crazy, Musk hatred syndrome that floats around parts of the tech industry.
The anti-Tesla posts are always overflowing with empty, overly emotional statements. No matter how many times Musk overcomes and ultimately delivers in the end, it doesn't matter, the anti crowd returns for the next fight with the exact same emotional arguments.
Maybe it's just all BMW, Toyota and Mercedes employees doing the trolling around the Internet (joking). Every ~$40k+ vehicle that Tesla sells comes directly out of their pockets (it's certainly not coming out of the pocket of GM and Ford). Over the next year, Tesla will take $20+ billion in sales away from the luxury auto makers. The bigger that number gets, the more desperate BMW, Mercedes and Toyota (Lexus) are going to get. Hundreds of billions of dollars are on the line.
If you go back and read forum threads around the time the Model S was launched, people were claiming back then that Tesla could never build it in any volume period, that it would be a failure across the board. Similar claims were made about the Model 3 right out of the gate; they weren't supposed to ever make it in any volume, the venom in every thread was extreme to say the least.
There's a type of person that aggressively hates successful people, and often success in general. They resent everything about it, they lust after tearing people down. Musk succeeding with Tesla is a perpetual open wound for those types.
Still isn’t proof; fraud is a strong term. Throwing around such allegations with any proof is irresponsible. Has Tesla been convicted of fraud in the past?
> with the final car rolling off the assembly line on Sunday morning, several hours after the midnight goal set by Chief Executive Elon Musk
No, they missed the deadline, twice now. Lot of Muskites in these comments, remember, Tesla failed to meet the same deadline in January and pushed it to June. (EDIT: I've been told they missed this 3 times now, the 5K/wk figure was originally Dec '17, then Jan '18 then Jun '18).
When it was clear they would miss again, they put up a third production line in a canvas tent, which the NYT quoted as "never heard anything like this ever" using what Musk tweeted as "scrap we had in warehouses" to build the cars. And even then, and running all three lines 24/7 striving to hit that goal for just 7 consecutive days with the whole world watching... they still came up 150 cars short.
(5k/wk / 168 hrs/week = 30/hr * missing the deadline by 5 hours = 150 cars short)
Imagine that today is July 1, 2020. Looking back I see three scenarios.
1) It's clear now that the company is a sham and Musk is a snake-oil salesman. It's all smoke, mirrors, bubblegum and baling wire. After hitting 5000 cars per week one time, they never reached that level again. The company had to do a punishingly dilutive capital raise just to get 6 months more runway, and the company's market cap is now $6 billion (down 90% from 2018).
2) The company has continued to stumble from failure to failure with just enough successes to delay the day of reckoning. Musk is still sleeping in the factory trying to iron out kinks in the manufacturing process and automation. They're producing 3000 cars per week, but the quality is so poor that 30% of cars must be returned to the factory for rework. Competitors are likely to match Tesla's battery technology in the next 3 years, and the company's market cap is down by 50% from 2018.
3) After many delays and billions of dollars of cost overruns, Tesla has perfected the "machine that builds the machine". It's producing 40,000 cars per week in three factories in the US, Europe and China, and a fourth factory in South Korea opens next year. Tesla is cash-flow positive and the company's market cap is $600B (up 10x from 2018). In hindsight, all the delays people anguished about in 2018 proved to be nothing but amusing anecdotes in the company's history.
I assign probabilities of 10%, 50% and 40% to these scenarios, which equates to an expected market cap of $250B in two years. At $60B today, it looks like a bargain.
Why should Tesla be worth 600B if they produce 2 million cars a year? Toyota makes 10M cars per year and has a market cap of less than 300B.
Future growth is already baked into Tesla's current valuation of 60B. They're not making any money today (in fact they're losing billions) but they have a high market cap because they might become profitable years from now. Once (if) they become a mature car manufacturer their valuation multiple will go way down. They'll be judged on their profit margin and FCF like any other car manufacturer.
Your best case scenario of Tesla growing their market cap by 550B in the next 2 years is completely unrealistic. Even Facebook didn't grow that quickly, and their profit margin is second to none.
Tesla's best case scenario is much more than an automaker. They also have hopes of being an energy company, a battery company, a transportation company, and a logistics company. There is still a lot of debate whether any of those will actually become profitable (and I think 2020 is a very aggressive timeline for any of this to happen), but there are huge potential revenue streams for Tesla that simply don't exist for other automakers like Toyota.
Toyota or Ford or any other car company can enter any of those fields, either directly or through investment. That they choose not to probably indicates that the risk/reward doesn't make sense for them, and they probably aren't worth that much if Tesla manages to pivot. They chose not to play in EVs until recently, for example, because the market appetite wasn't there
I am surprised to see this type of argument on HN of all places. One of the primary goals of any start up is to either create a new market or to serve a market that an incumbent is failing to properly serve. You can't just assume that because a company like Toyota hasn't done any of these things yet that there is no potential to gain from them. There are countless reasons why traditional powers fail to innovate and are eventually challenged by more forward thinking companies. I have no idea if Tesla will be that company long term. But the potential is there and that potential is what is fueling the hype.
GM/Toyota have the resources to start operating in the same markets that Tesla has ambitions for. And they are certainly keeping an eye on Tesla's actions.
After watching what Tesla is doing, they have chosen not to invest those resources even though if they did, they would beat Tesla at its own game quite easily because they eclipse it both in capital and experience.
Either their analysts are wrong and failing to see a winning strategy here, or there is no winning strategy. One of these two statements must be true. I've put my money on option #2, but I'm aware that large competitors aren't idiots and there is a risk here.
Elon Musk has also publicly stated that he wants the other big players to compete with Tesla. He doesn't actually care if Tesla is ever profitable or not, he just wants to force the world to transition off fossil fuels by dispelling the myths sown by the oil industry with concrete examples of success. It is stupid to ignore Musk's stance on this matter as an investor.
You have very skewed perception of how a company like GM operates. The incentives for managers are pretty short term they have 0 incentive to do a project that might pay off 5 years from now. In deciding on how to allocate capital there is 0 chance they will allocate it to doing high risk long term project vs doing a bigger truck now that they will sell next month at some ungodly margin.
Using this logic every start up would fail as soon as they showed their business model could lead to success and a bigger company swooped in a with their overwhelming capital and experience.
Right the argument isn't sound. It basically boils down to if big company x hasn't done it already, it's because it's not worth doing it. We know this isn't true because small players make improvements in their fields all the time. Big players aren't perfect, don't have unlimited resources, are prescient, and most of all, are ruled by people.
>If you ever pitch your startup idea to a VC, you're expected to explain how you're going to deal with this risk.
And that is exactly my point. Tesla certainly has strategies to respond if GM/Toyota enter their markets. You and TAForObvReasons are responding as if those companies will easily beat Tesla as soon as they make that decision.
> Tesla certainly has strategies to respond if GM/Toyota enter their markets.
Elon Musk's stated purpose for Tesla is to kill the fossil fuel industry, not to create a profitable enterprise. And he is tracking well towards that stated purpose. He actually wants those much bigger companies to start doing what Tesla is doing at scales that they can achieve and Tesla can't. He said this very clearly in an interview with DiCaprio. I don't know why people keep thinking there's some master plan to be profitable when the guy steering the ship has repeatedly said the plan is orthogonal to profitability.
As an investor, I am well aware of this. I'm also well aware that the profits of SpaceX eclipse what Tesla could achieve even in its best case scenario, so he probably really doesn't give a shit about making profit via Tesla.
I am not convinced he really changed the market's desire for EVs. He made a halo car, and now he is selling the baby version for Average Joe. I think the success of the Model 3 has a lot more to do with the brand than it does with it being an EV.
>Once (if) they become a mature car manufacturer their valuation multiple will go way down.
Somewhat answered your own question . It's if the market values Tesla as a mature company or a continues to value it as a growth company. When have we seen Elon rest with a successful product? Tesla is more than just cars. And Elon's answer to Gali (hyperchange YouTube channel) question during earnings about moats states his mindset clearly. He's about innovation. Innovate faster than competitor always. If Tesla can be cash positive, Elon will do what Bezos does. Demand that as much money as possible is reinvested. They're not going to be like Apple with tons of money sitting on the side.
I suspect that investors are looking at Tesla to be highly automated and have a high return on capital. There's also the hype so it keeps on going up looking for the last fool that buys before the stock's true value is found. It's easier to buy the stock than to figure out its future value.
I think Tesla won't be just a car company. Eventually, they will be a company with multiple branches in the same idea as Alphabet. But that's way in the future. First, they have to survive to profitability.
Musk himself said they made mistakes in trying to automate everything when manual approaches work better. And all cars made today are highly automated anyway so not sure why this is a unique advantage.
More and more Tesla is looking like a traditional car company. Especially as the traditional car makers are moving aggressively into EV.
Not to be rude, but these scenarios and percentages are all really random as is your valuation. Its far more likely they continue to do the same thing they have for the last year or two: limp through their slowly escalating production targets until the Model 3 is just one of several electric sedans available and there is no way to justify their multiples.
If these $45k cars are fully automatic (a big if for sure), then $45k will be a bargain price and would probably capture at least half the new car market.
(a) Tesla aren't the leaders in the self driving car space. Waymo arguably is, (b) almost all of the car makers have self driving car programs and most importantly (c) why would the traditional car makers just sit back, do nothing and allow Tesla to eat up the entire market ?
If Tesla can make it work without lidar, and that’s a huge “if”, they have a massive head start in training data. From a conference panel a few years ago that had Tesla, Waymo and some others on stage at the same time, Tesla was getting as much data in a week as Google was in months. That type of training data asymmetry is ripe for blowing past others. Again though that’s all conditioned on not needing lidar and I remain far from convinced their approach works for a true self-driving system.
Waymo's cars are connected to Waymo's servers with, I guess, gigabit ethernet (after they go back to base for the night), Tesla's cars are connected by mobile data, they'd have to pay billions to cell phone networks to get as much data.
I think Tesla is not the leader, they probably made a crucial mistake in not using the expensive lidar. But they have be far the most cars on the road with early versions of this tech that has worked pretty well in my car for 4 years.
Your world view is too narrow. That 5000 figure is important, but it's not really meaningful in the grand scheme of things.
There is a 4th or 5th scenario, where
4. other car makers trail behind Tesla more and more in terms of technology. Remember, all these car makers had DECADES of head start developing EVs before Tesla was even born. Tesla was supposed to trail them in tech, not the other way around.
It's easy to assume that because a company is bigger, and have more resources and manufacturing experience, that they can move fast in developing tech. It's easy to judge a book by it's cover. Incumbents move slow ALWAYS. If moving fast was so easy, they would of done it before Tesla was born.
5. solar panels from SolarCity come into play.
Tesla has already deployed Solar grids in Australia. It's not just "smoke and mirrors", it's actually in production.
While the competitors are still trying to "match Tesla", Tesla has already moved on to find other areas to grow in tech advancement.
Right now, solar panels are considered a "toy". It's not even on any of the car makers' radar. It's like how Tesla's first Roadster cars were not on any of the car maker's radars 5 years ago. It's a "toy" until one day, it becomes a reality, and you tout your ability to "catch up" with your "vast experience"
5 years from now, folks like you will write another article, about how GM will be able to produce solar panels to "catch up to Tesla in just one or 2 years"
> 4. other car makers trail behind Tesla more and more in terms of technology. Remember, all these car makers had DECADES of head start developing EVs before Tesla was even born. Tesla was supposed to trail them in tech, not the other way around.
> It's easy to assume that because a company is bigger, and have more resources and manufacturing experience, that they can move fast in developing tech. It's easy to judge a book by it's cover. Incumbents move slow ALWAYS. If moving fast was so easy, they would of done it before Tesla was born.
This isn't silicon valley. There is years of design and manufacturing experience that Tesla simply does not have. This isn't a software project where someone in a garage can make it and scale it. Tesla can build luxury cars because budget constraints are significantly less. Now they're struggling with the constraints like everyone else.
Other car makers are just as competitive now. The reality is the Chevy Bolt is a great start and will only be improved upon. Elon Musk has no monopoly on technology. There are competitors in almost every sector. Many great engineers are elsewhere.
And the reality is - most people don't care about EV right now. Sedans are struggling mightily. Americans are buying SUVs and crossovers right now. General car manufacturers are able to easily switch production when the market shifts. Tesla can't even make a budget friendly car. Their model 3 will be out of most of the market's price range. Meanwhile GM can still make a Sonic and Cruze or a pickup truck.
> Right now, solar panels are considered a "toy". It's not even on any of the car makers' radar. It's like how Tesla's first Roadster cars were not on any of the car maker's radars 5 years ago. It's a "toy" until one day, it becomes a reality, and you tout your ability to "catch up" with your "vast experience" 5 years from now, folks like you will write another article, about how GM will be able to produce solar panels to "catch up to Tesla in just one or 2 years"
Gee why didn't GM buy FirstEnergy or Duke Energy! They're so behind in the energy industry...This argument isn't even worth debating. GM is not a power company. They do not want to be.
It has nothing to do with Silicon Valley. The geography is meaningless. The only thing that matters is staying ahead of the curve. It's always going to be hard for GM to do that, because it's focus is always going to be on incremental improvements of the same way of doing things. The "years of design and manufacturing experience" you mention.
Look at their $1B acquisition in Cruise Automation. Like you said, GM is not a power company, its' a car company. Its' business is cars. GM should have developed self-driving tech internally, and not had to buy it. Cars is GM's job. But GM missed that boat entirely, because everyone in GM is focused on incremental improvements on manufacturing.
Even your comment mentions that "most people don't care about EV right now." EV is not a big focus for GM. Sure it has the Chevy Bolt, but that only began development 10 years after Tesla started. GM does not care about EVs right now. It's focus is still on manufacturing traditional cars, and will continue to be this way until someone else forces them to change.
> The only thing that matters is staying ahead of the curve. It's always going to be hard for GM to do that, because it's focus is always going to be on incremental improvements of the same way of doing things. The "years of design and manufacturing experience" you mention.
This isn't true. They can continue to make their general automotive improvements while also upskilling in EV - the Bolt is a prime example of that. Frankly, they beat tesla to the punch there.
> Look at their $1B acquisition in Cruise Automation. Like you said, GM is not a power company, its' a car company. Its' business is cars. GM should have developed self-driving tech internally, and not had to buy it. Cars is GM's job. But GM missed that boat entirely, because everyone in GM is focused on incremental improvements on manufacturing.
Hmm, you mean like Tesla bought the solar manufacturer for Solar City? Is that not acceptable to you? You bring up an argument against your point. GM can easily purchase anyone. If they slightly miss something a purchase is all that's needed.
> Even your comment mentions that "most people don't care about EV right now." EV is not a big focus for GM. Sure it has the Chevy Bolt, but that only began development 10 years after Tesla started. GM does not care about EVs right now. It's focus is still on manufacturing traditional cars, and will continue to be this way until someone else forces them to change.
EV is a big deal to GM because they know where the future is heading. They also are not hemorrhaging money and burning runway because they also have a sustainable business now. So they can do both.
Meanwhile Tesla can't even scale a 35K car. They're a luxury brand. period.
As the price of oil continues to climb, EVs become more affordable than internal combustion vehicles. Seems like a poor time to drop your sedan production in favor of SUVs with oil prices climbing, considering Americans are already changing their behavior due to existing price momentum at the pump.
As it continues to? Please look at oil prices over the last 20 years. You will see a lot of fluctuation.
> Seems like a poor time to drop your sedan production in favor of SUVs with oil prices climbing,
GM can do this. They can change production so quickly that when oil is cheap and people want SUVs (aka now) they can do that. And when it is not, they can change production back to sedans and EV. Much more flexibility.
Please. GM has nowhere near the EV manufacturing capacity of Tesla. They also have a dealer network that is not interested in pushing EVs over internal combustion vehicles.
The batteries are what connect them. No one else will be making batteries at that rate, at least for a pretty long time. Tesla has the cheaper batteries and related tech to use them in solar power along with cars.
I'd assume that the Chinese electric car and bus manufacturers, who make far more vehicles than Tesla, are making batteries at a much greater rate (or at least their suppliers are).
Assuming the standard meaning of the phrase "snake-oil salesman", I think the odds that this is all an elaborate sham to knowingly dupe people into buying a product that doesn't exist converge on zero.
But, the case can certainly be made that he is prone to hyperbole and "exuberant optimism".
There's a 0 percent chance he's a snake oil salesman. There a reasonable chance his company won't succeed because of a problem making the cars cheap enough. But still they are awesome cars. Pretty soon they will be the only company in the US that has sold enough EVs that the tax credit runs out. That will really piss off the tesla haters who will have one less reason to claim it's all a gyp or whatever.
There’s also option 4, which I would say is most likely; Tesla is gone; the brand is owned by someone else. In practice, 1 and 2 would likely lead to this scenario.
Panasonic takes those and makes battery cells. Think AA battery. That part is done as a joint venture between Panasonic and Tesla which means Tesla contributes to the design e.g. Tesla employs people doing research into battery chemistry i.e. cell level R&D. (and so does Panasonic, to be clear).
Tesla takes those battery cells and packages them into a battery modules, which they also design. That part is all Tesla.
That description doesn't adequately describes how much technology and work goes into making battery modules. Cells are an important component but it's also inverters, multiple electronics boards, software to control it all.
TL;DR: it would be grossly misleading to say that "battery tech is Panasonic". Battery cells are important but battery packs are designed and manufactured by Tesla.
OK, sure, but call it 4850 of 5000 when everyone says there wasn't a prayer of making it is pretty remarkable. Call it 97% of the way. The fact that they built out a tent and hustled 24/7 to hit the goal is impressive to me.
Overall it's pretty classic Tesla/Musk. Predict the absolutely impossible, get 97% of the way there, and regardless of how you slice it the only thing that's not impressive is the facxt that they didn't meet the arbitrary guideline. They still crushed everything that anyone else thought was possible, so IMO it's a victory just a hollow one.
Will they be able to repeat this sustainably? Probably not unless they figure some other things out, but the point is that it's within striking distance. The company has a shot at profitability in the near future, and I see Teslas everywhere now.
In the past they missed it drastically; the number is important because if they can figure out a way to get to that level of production they have the chance to become cashflow positive relatively quickly.
Yeah agree, I see no difference between 4850 and 5000 - people are so hung up in other comments on calling this a failure. It shows it’s possible, the rocket just missed the landing a bunch of times, nobody cares about that now.
Yeah, but this is sort of like if SpaceX said their goal was to ship a big chunk of rock to the moon on two rockets within a week. But no matter how hard they tried, they just couldn't get it all on two rockets, so as time was running out they built a third rocket out of spare parts from the first and launched them so they would land just in time and claim their goal. "See, we have shown that it is possible!" they would exclaim.
Except, I might say, you said you could do it with two indoor assembly lines but you needed a third outdoor line at full capacity, so you didn't show anything. We have no time to build more indoor space and we can't just keep building assembly lines in tents out of spare parts, man, they break down, it has to work with two indoor assembly lines so they will work long-term. You still need a 50% improvement in your assembly speed before you can take down that tent!
Plus, even though you had an third rocket when you assured us 2 was plenty, one of the rockets was 5 hours late. A whole extra rocket and still late?
It's not the number. It's the fact that people can't count on what the company says. So it's always a case of over promise and under deliver. So it's easy to focus on that fact and call the company and its founder flaky. Few companies can survive that.
But the reality is that they eventually deliver and Musk can keep investors engaged which keeps the company going with more cash. Even reaching 4850 is a big deal.
The real stretch goal is reaching profitability. I hope that happens soon.
I see them often in north florida. They aren't as common as other luxury sedans, but I see them about as often as Pontiacs, which is to say not everywhere but a lot.
If they almost got to that rate of 5k it's just as good. There's nothing magical about that number. Musk sets high goals and usually gets close, but it takes longer than he said it would. Reusable rockets, impossible, took years - but now we have them.
I can't understand the people that think he's a charlatan. They have sold approaching 200k electric vehicles. They are great cars, I have one. But separate from that, they always had a plan to increase production and sell more of cheaper cars, ramping up from first selling expensive ones. The latest ones are going to need a lot more volume before they can make them cheap enough to sell at 35k, such as higher battery production. They will lose money until they make them at high volume. It's not crazy to say they'll have a lot more money coming in as they raise production, that's like any business. The open question is will they actually make a profit. We can't know what the numbers are until they come out. Based on history, I think they'll get close to profitable but won't quite make it, but they'll clearly be headed in that direction as the early hurdles of increasing production are met. Again - it won't matter exactly when they are profitable if they are close. Just like the 5k/week number.
His goal was 20000/mo with less than a quarter of the current manual labor that he's using. We're now twice as far along as the original goal, and he can't even make 5000 in a week when rushing cars through as fast and shittily as possible.
Building 5000/w is nothing if you're just willing to throw more and more money at it. The point of the original goal was that it was actually going to be a sustainable, profitable approach.
Musk is certainly a self-promoter in the vein of P.T. Barnum. It's gotten to the point of irritation. But you can't deny he's changed the car industry.
A company's true function is to benefit society. Tesla has done that, so he gets a win from me. He's done it by taking chances and thinking outside the box. The tent is an example. Most companies would have given up but they did not.
20 years from now Tesla might not be alive but we will see its impact on the car industry. Very cool, Musk.
Sure, at its basics, society has needs, known or unknown, good or bad so companies are created to fill the needs. Companies survive if they reach enough people with their solution.
Sure there are ways to manipulate needs but at its basics companies are supposed to benefit society by filling those needs.
We are fed the idea that companies are created to profit the investors but profits are a side effect of meeting needs.
More specifically, profits are a side effect of meeting sufficient numbers of individuals' needs. It does not necessarily follow that meeting the needs of those individuals benefits society at large.
Profits are also a side effect of meeting needs today. It does not necessarily follow that meeting needs today benefits society in a meaningful way in the longer term.
For what it's worth, I think your implication is true. Clearly most companies create wealth and deliver benefit to society, it's that aggregate effect that makes capitalism the most successful system we know of under which to run a society.
But the reality is that it's entirely the other way around: companies do exist to profit their investors and it's the benefit to society that's the (usual, aggregate) side effect. It's not good, or bad, it's just a fact.
It's trivially true. A worker produces something and gets a fraction of their value paid back to them. They would not have been hired if it were not so.
On angle on that is we have societies have created the concept of an entity that is not a person who can assume debt, and has certain speech rights. So that entity is supposed to advance society more than alternative, which would be something like owners being personally liable for its debts and faults.
It's pretty much the justification for granting corporations limited liability, that the benefits of increased investment outweigh the harms of the limited liability.
assuming Tesla can't find a way to boost production by just 3% over those 52 weeks, it will take less than two weeks to make those additional cars.
Their revenue isn't supply driven anyway, it is demand driven. Two weeks of delay will not result in 273M in lost sales. It will just result in delayed sales.
I know two people who withdrew their Tesla Model 3 reservations due to them failing to meet a deadline. Their reasoning was that they'd like to buy a Tesla, but if they need to wait years for it, they prefer to get a nice car to drive in the meantime. The longer the delays are, the more people will give up.
I actually thought he was underpromising, and that Tesla would surprise the world by blowing past 5K weeks early. That they pulled out all the stops in the final weeks and still missed the deadline feels like a bad sign.
> When it was clear they would miss again, they put up a third production line in a canvas tent, which the NYT quoted as "never heard anything like this ever" using what Musk tweeted as "scrap we had in warehouses" to build the cars.
I'm a software guy. Can somebody explain to me how you can build a high-tech auto production line from "scrap"?
I saw a drone video inside the tent, it looks mostly like service bays inside like you'd find at a small local car place that uses hand jacks. A mix of lift + non lift bays is common in any factory at the end of the line.
You can't. GP is completely misrepresenting everything about this situation: not a tent, not canvas, not scrap. Musk's tweet about scrap in a tent was very clearly a joke.
I can't link NYT because I get the paper version and lost my login, but I'm quoting from the paper in front of me:
> A tent, about 50 feet high, its taut grey canvas membrane supported by aluminum columns.
I don't think it was a joke. The tweet was specifically in the context of trying to convince investors that the cost of that tent production wasn't substantial and by "scrap" he meant equipment they had discarded from their main production lines because they are constantly upgrading them. You can't have it both ways. It was either discarded "scrap" machines they had lying around and he was not joking or machines they bought and he was lying (a.k.a "joking") about it. I'm giving him the benefit of the doubt that they really had all that equipment in a warehouse because its been reported they have re-tooled the line several times.
The quote not withstanding, a cursory glance at the website of the manufacturer of the structure (Sprung[1]) would show that the exterior is not canvas. Further, Sprung even lists manufacturing as an application of their structures.
Repeating false statements doesn't make them true.
The journalist is conveying a thing they saw using words they are familiar with. cf: Cameleopard vs giraffe, and first sightings of kangaroo or platypus.
It probably refers to working equipment they replaced on the main production lines because they wanted something smaller/faster/shinier, but hadn't yet thrown out.
So when musk just tweeted 7000 cars in 7 days, you’re saying you have information proving he’s committing some form of fraud? Could you elaborate? This is going to be a huge story and it looks like you’ll be the one to break it, which is pretty exciting.
When you miss a deadline to produce 5000 cars of a specific model I guess the other thing you can do is brag about producing 7000 cars and include all your models in that number.
It's not much of a story that the company that people think will go out of business and promised to make 5k cars a week only made 4800 or something, and is raising production goals to 6k for the next month. This might matter if say a bank was going to end their credit line if they didn't make that number. That's not the situation.
If you look at SpaceX launch schedules, many are delayed for several weeks/months. Yet it has a better public image than Tesla. I think missing deadline isnt that unexpected, it happens in many projects. If the goal is still achieved at a reasonable time after the deadline, it is still a success imho. It means the project is now a reality, and that's awesome.
Missing a launch in rocketry is a normal and expected part of life in the industry, and no matter who is launching it happens. Missing targets for producing a car isn’t. This is what people mean when they say “comparing apples and oranges.”
Why should we trust you on that fact? Do you have all the documents required to prove that all the previous car models of all manufacturers in the world were built and sell on time? In my experience (not about car manufacturing), several projects didn't meet the deadlines, and still succeed at the end.
Tesla is most overpriced startup currently on the market. It will crash in a spectacular way in near future. They are constatly missing deadlines, have quality issues, troubles to manufacture spare parts in sufficient quantity and have terrible work environment yet everybody are coming up with excuses for them. This will end at some point and that even beside the fact that electric car in reality create more pollution in vast majority of the world more than modern engines.
I'm sorry but I think your facts are not true. Only people with an agenda to support the oil companies or something come out with claims that evs are terrible polluters. First, regular ice cars have pollution in their manufacture, and the production of gasoline has a lot of inefficiences, it must be transported physically. ICE engines are vastly less efficient in use of energy. Coal is a decreasing amount of power generation. It's just a silly argument that evs are terrible polluters. Of course there is some pollution in their creation, like any object on earth.
>This will end at some point and that even beside the fact that electric car in reality create more pollution in vast majority of the world more than modern engines.
Is this thread being linked to by some Tesla short seller blog of what?
Surely this kind of misinformation isn’t organic to HN.
That's impressive. I've read a great many analyses stating Musk'll never succeed in his model 3 ramp up. Let's hope he keeps this up in the coming months. It's a long way to 450.000 vehicles...
This means they're now making about 7,000 vehicles total per week (S+X+3), which means they'll make more vehicles in the next 12 months than they have made in the previous 10 years.
I'd say they're ramping pretty fast!
EDIT: 7,000 per week, not per month, thanks below.
Tesla pulled people from the S&X lines to reach their 5000 Model 3 goal. No way they also produced 2000 S&X cars in the past 7 days. In addition, their current death march schedule isn't sustainable. They won't come close to producing 7k cars in any week in July.
Tesla needs to spend billions in capex in order to get to 5000 M3 and beyond if they want to produce at a sustainable pace with acceptable quality. Billions they don't have.
Where are you pulling this information from? How do you know it costs billions to produce a 5k line? What quality failings do the currently produced m3s have? Can you substantiate any of this? I'm genuinely curious if you have information that I don't.
I think people are just making up those numbers. It costs a lot to design and implement new infrastructure, and it will cost much less to use it to make the next 5 or 50k cars than it did to get to 5k a week.
Along with blowing dust, pollen, birds, rodents, etc. Factories don't need to be clean roomed like they do for computer chips, but you'd think it would be closed to the outside elements.
> Given that half of those 5000 are being produced in a tent in the parking lot with summer heat and no AC, I can only imagine.
Well, Musk himself said that the cars being made in the tent are higher quality.
> “It does everything that the other assembly lines do but with fewer people, lower labor costs and much higher uptime,” he said. “Our unit cost for vehicles is lower on that line than on the other lines, and we’re seeing higher initial quality.”
I think the estimates I saw were a few hundred are being produced in the tents. In any case, the customers are who will deal with any quality issues. If there are issues, Tesla has a track record of making things right for the customer.
If you can afford to wait the 5-7 months during which you may not have your Tesla. You can't even get it repaired on your own dime; the computer inside won't let you.
My question is who R&D's these cars at the limits of adhesion? Every single auto maker track tests their cars using real racing drivers who understand vehicle dynamics and can comfortably drive street cars on the limit, and over it. Track testing ensures a car is safe for the average driver, who has no idea that the throttle steers the back of the car-to give just one example.
How will these cars behave when little Jimmy rides his bike in front of them and they have to execute evasive maneuvers?
I hope someone who has a clue about driving was seriously involved with the handling characteristics, otherwise who knows how these cars will behave.
come on, that's a silly fear mongering ignorant post. They've had designers and engineers from many other car companies working on their cars and you can see endless pictures and videos of people driving their cars on tracks since even before 2012, when the S first came out.
Yes I agree, I don't follow street cars near as close as I do race cars, so I was ignorant and too busy at that time to G it. TBH I am fundamentally adverse to self-driving cars (though I'd love to race against their future counterparts, but alas I'll be too old) but I am not a Musk hater-I find it astonishing that he can land a rocket on a barge. I am happy to hear he sought out expert advice, and now thanks to you, I have to look into that more myself :)
That plus the fact that Tesla doesn't have a dealership system to distribute the repair load and parts will be going to new cars if current Tesla owner complaints are any indicator and at least for me there is no way I'd buy a Hail Mary car built in 2018. Give him time to work out reliably making 5k cars per week then sure, but I think you're still somewhat in an early adopter phase buying a Model 3 right now. If I had to buy one tomorrow I'd go for a used S.
Tesla is still maturing as a company; more to the point, they’re maturing as a manufacturer.
While other companies would order whole componants from vendors - Tesla will only order parts - and assemble in house. For instance - Toyota will order brake assemblies. While Tesla orders guards. Toyota will order a door - and Tesla a door panel. Even worse - Tesla has a history or delivering third parties sub-par China made tooling; and expecting 2-3x performance out of it - when in actuality their sub-par tooling will reduce efficiency. Trying to save money on tool manufacturing isn’t where mature companies cut corners. Trusting vendors to look after their own interests is a good practice (provided those vendors have a proven record)
Eventually Tesla will work it’s way into understanding that it’s core competencies are IP, design, and marketing - and leave the micro manufacturing to third parties.
A 6mo miss in production on one vehicle isn’t a sign of the times for a company with a 10yr road map. The markets aren’t super forgiving, but I think this will all get smoothed out as Tesla grows up.
One thing I don't see people mentioning too much, but tesla numbers are great for electric cars, but they're tiny, tiny compared to something like ford. I don't get why people assume tesla can negotiate similar prices for these things as other manufacturers can. I don't think they can. Who says it's cheaper for tesla to order like the big manufacturers do?
You know, it is really interesting watching the Musk haters over the years.
The more he succeeds in doing what he promised (albeit usually behind schedule), the more they hate him, and the more convinced they become that his present projects will all turn out to be complete failures.
It almost makes you think they have some ulterior motive, like they work for the fossil fuel industry, of one of the other rocket launch companies, or a major auto manufacturer, or maybe they bet their life savings on Tesla stock crashing.
Any Musk haters out their want to respond? And if you do, be sure to tell us about your past predictions, and if they turned out right or wrong.
yeah, when he crashes and burns it will burn 100 billion dollars and the credibility of the whole tech industry (like Theranos but 100X).
There will be a nuclear winter in tech investment after that which sets back legitimate companies with real innovation by years with lasting damage to the global economy.
Same story as Uber and why people "hated" on them before the adults cleaned things up (as best as possible).
These con artists are shitting in the water for everyone else which has direct financial impact. Not hate, just money.
I think there's something to this argument. Elon actually realizes this part himself:
when he crashes and burns it will burn 100 billion dollars and the credibility of the whole tech industry
Elon has stated publically that it would be "really bad" (his words) if Tesla fails, because Tesla will then serve as an example of why electric cars will never work, and from that point it will be 10x harder to create an EV startup - to say nothing of the investment crater that's leftover from their death.
However, I don't understand the rest of the comment regarding the "con artists" and how this is at all like Uber.
>if Tesla fails, because Tesla will then serve as an example of why electric cars will never work, and from that point it will be 10x harder to create an EV startup
Except that during the last two years all the major car companies have started big EV programs, and in China, the world's largest car market, the government has gone all-in on pushing EV's. So no matter what happens with Tesla, EV's are here to stay. In fact the experts say that when batteries get cheap enough around 2025, the whole market is going to swing in their favor.
Hitting 5000 Model 3 Units in a single surge week is an anomaly, until it becomes a repeatable and sustainable pattern.
And a pattern that includes low/no rework, because building 5000 units a week is one metric, building 5000 high quality units with no expensive rework is another metric entirely.
Questions:
Why would someone work in a non air conditioned tent under high stress when they could earn the equivalent wage working across the road in an air conditioned McDonalds?
What impact will the major step down in Solar City/Tesla have in commingled Tesla finances?
Why is Bloomberg’s Tesla tracker showing a fast flattening(rather than accelerating) production trend?
Back in 2016 at GSB we were supposed to get 80 minutes with Musk in class, but it turned into possibly the first “sleep at the end of the factory line” narratives.
Am I the only one who things a fancy tent is a modern equivalent of a Potemkin Vilage?
Fast, cheap, good.
Pick one today, maybe two later.
I find Tesla requiring $1000 deposit holders to contribute an additional $2500( for a combined $3500 converted into an advance payment no longer deposit) interesting.
At Amazon in the very early days we had 100% float from publishers for 30-60 days for a 20% gross profit operation.
Tesla’s attempt at the same is 5% float for 3-6 months for a -20% net profit operation.
It’s like using a single dish sponge to absorb a negative cashflow tsunami.
Making stuff is hard. Making stuff at industrial scale is super duper hard.
I would guess Tesla announces the 200,000th domestic sale sometime in the next week. They could be hitting their ramp-up to high production of the Model 3 right when they hit the 200k domestic electric car milestone. This also happens to be right at the beginning of a quarter so they can get as many $7500 federal tax credits for their customers as they can. One would guess this is not just some lucky coincidence, but who knows.
That is why I said "domestic sales". They want to hit 200k US sales at the beginning of a quarter and when they have a high production rate. That would be this quarter starting July 1, as they are already very near the 200k limit. It's not reasonable to think they could export the whole next quarter's production of S, X and 3 production without many serious repercussions. One being pissing off hundreds of thousands of US model 3 reservation holders.
Elon may have did this the wrong way. He should have released the 2020 Roadster first, price it at a lux $500k, beat the snot out of every hypercar out there. Get the Semi out, make actual money, then lose money on every Model 3, but have a subscription service to have monthly income. Kind of how Amazon loses money on the thing people mostly use it for, selling physical stuff, but makes money everywhere else.
Your analysis might make sense if money and profitability and staying solvent was what Elon was most interested in. However, money alone is not the goal; getting us off of oil is the goal. I think that Elon really wanted to make a mass-market car as soon as possible, which explains why he chose to take the harder path of making the mass-market car before the hypercar and the semi's.
There's a pattern from Elon of overpromising, and then pulling through, but way later. I wouldn't be surprised if they're easily staying at a 5000/week production baseline in the next three months.
Elon used the same over-promising strategy during the build-up to the start of Model 3 production. Elon promised that Tesla would start producing Model 3s in July 2017, noting that production would not actually start until sometime later; since some supplier somewhere would mess up and miss the deadline (and have themselves fired), they would inevitably be delayed. It's the same thing in this case: promise really aggressively, and be serious about the promise, but understand that Tesla will be delayed by the least lucky, least effective part of the team/production line. This way, Tesla can be aggressive, even though if you go by their promises, they should be _really_ aggressive.
Can anyone tell me why they are taking a long time to ramp up? This is not their first electric car and electric cars are supposed to have a lot fewer components than gasoline engine cars.
The supply chain is hard. Supply chain optimization is even harder. And that's not even discussing manufacturing. One of the biggest issues we had in very very very early days of DigitalOcean was, how do we juggle leases/lines of credit, with their requirements for cash in bank, with being out of capacity every other day. This is months of negotiation and conversation, not just snapping the fingers. Some tangential insight: http://money.cnn.com/2008/11/09/technology/cook_apple.fortun...
Although they did take over a car factory, they replaced all the internals. The 'reinventing the wheel' has led to initial mistakes (and lessons learned).
With the car industry about 100 years old, and fierce competition, the common wisdom can't be that foolish. So on the long term, structural improvements might well be possible, having ramp up problems when doing everything different is to be expected.
Producing low volume luxury cars and mass market $35,000 cars is very different. Mass manufactured cars must be designed for the manufacturing process in mind. Tesla is still constantly tweaking with the manufacturing process. The Model 3's they are delivering are still prototypes.
Tesla's knows how to make the electric 'skateboard' and it's technically far ahead of others. They are struggling with the traditional parts.
Munro Associates did completely Model 3 teardown and report for some customer. Munro said in a interview that had Tesla outsourced the manufacture and design of of the car minus the scateboard to a company like Magna they would have hit every target and even Toyota would be crapping their pants now. If the traditional mechanical parts of the car would have been even decent, Tesla would have mopped the floor with everybody.
Literally, the answer is "not yet". The ones shipping now are about $50K. Certainly people are willing to buy $35K version, but they might turn out unsatisfied.
The new production line is entirely devoted to the AWD and performance models. Tesla won't be producing the $35k model until next year, the market for $68k Model 3 is bigger than the market for $35k Model 3.
Producing physical things is hard. Issues crop up every step. Of the way, and any one thing can have big downstream impacts. Just think of the web of supplies chains that feeds into the components that go into a car. And in Tesla's case, throw in the fact that they are still a new company and haven't had decades to iron out all the kinks.
They've been around 15 years and they bought a modern manufacturing plant purpose built to make cars. They can buy talent. I won't cut them too much slack, supposedly they're worth more than GM. Now prove it.
Well, Bentley is making ~9000 cars per year with ~3000 employees. Tesla is making ~100k cars per year with ~37k employees (not counting all the subcontractors). That's exactly the same ratio, and it's bloody awful compared to large-scale car manufacturers. E.g. Toyota has 10x the number of employees as Tesla but makes 100x as many cars. Even if next year Tesla production is 5000 cars per week all year, they will still have >4x as many employees per car built compared to Toyota.
Also, Bentley is fully owned by Volkswagen. If they wanted to "scale up" to a downmarket Model 3 equivalent, they'd take the VW MQB platform, use most of the non-platform components from the Mk7 VW Jetta (probably offering the 250hp and 300hp engines with AWD), spend 2-3 years developing sufficiently distinct styling parts, and then be able to churn out 100k cars per year.
Exactly. The Bentley thing would be just a badge, in fact now there is very little of their SUV being 'made in England', it is done in some Skoda factory somewhere.
But how much of a Tesla is Tesla? Don't large parts come from suppliers, e.g. all the seats from Lear corp? Or did they re-engineer those too?
I think the Ford F150 truck is the benchmark, in the U.S. there are 3000-4000 made a week. The price starts around the price of the Model 3 and then goes up and up with options.
Plus you get a lot of truck for that compared to a car, and due to the Chicken Tax there are incentives to buy the things.
Recently there was a fire in a supplier plant that affected the F150, with JIT they had to close the lines. But then they shipped the dies to England and restarted making the vital parts so production is back on. Really Musk should not be making promises if even the mighty Ford F150 truck can be brought to a production halt due to one fire in one supplier factory.
That story is quite interesting and right now there is a 747 flying those parts back from England to make sure Ford can keep on getting their $40 billion in revenue from selling that truck.
I would be intrigued to know the numbers of vehicles per employee for the F150. Note how there is zero export potential for the F150 for a multitude of reasons whereas the Tesla products are definitely hot in international markets.
Yawn. You know Tesla isn’t just a car company, right? They are an energy company as well. They have people building out the supercharger network. Software engineers writing autopilot software. Employees working at Tesla sales centers. Tesla is not structured like a traditional automaker. Stop trying to compare with false metrics.
More than 90% of their revenue in 2017 came from selling or leasing cars. That makes them a car company, full stop. If they have more than 10% of their employees doing other stuff, why on earth do they have all these employees that generate basically no revenue?
I kind of deduct points for arrogantly assuming he knows anything about manufacturing cars at scale to teach a company that produces roughly 9 million vehicles a year.
The people that work for Toyota and GM aren't stupid, and those organizations have been at this game since before Elon was born.
Yet Toyota is pursuing hydrogen fool cells, GM scrapped their first EV and released the Bolt to great fanfare only to have it limited to compliance quantities.
Ford is withdrawing from the sedan market.
All US manufacturers with their decades of experience were almost destroyed by Asian manufacturers in terms of cost and build quality.
GM went bankrupt at least once in recent history.
The game has changed many times. It will keep changing, and in five years we will see that anyone not mass producing EVs as real products and not mere compliance vehicles is exiting the automotive industry.
Tesla put an awful lot of time into getting their glorious factory factory rolling. Bentley might just copy existing high volume production lines from the beginning.
Alfa had a mishap like that in the nineties and for thirty years sales dropped because “all alfa rust” even when the problem was long resolved, even when the actual model went out of production
The first reason is probably just that manufacturing stuff is hard, especially at scale like this. It takes a while to get good at it, and develop processes and talent to ensure production lines move along smoothly.
The second reason is that I think they invested heavily in an ultra-automated factory, and they weren't able to get that working quite as well as they'd hoped in the time allotted.
These are sort of the high-level reasons, maybe somebody with more specific knowledge could give a more nitty-gritty explanation.
You know, when the Model 3 came out and terrible production difficulties meant they were producing only 200 cars a month, the Tesla-is-a-scam people told us that the company would never get production much above that.
But actually it has been improving production at a steady rate, and is now at least close to the promised 5,000 a month. So the Tesla-is-a-scam believers were quite wrong.
Or don't believe you can time the market. You can be bearish on a company and still think shorting it would be a disaster. The market can remain irrational longer than you can stay solvent.
Let’s see if they’re actually building 5000 a week after another few weeks or if they just built these in a burst and it’s not sustainable. And let’s see how many returns and recalls there are.
I don't understand the skepticism. He's not claiming to have built a perpetual motion machine. Even if it were the case that it's just a burst, it demonstrates feasibility. Of course the lines will get augmented and more efficient with time. It's not like there's some law of physics preventing regular deliveries of 5000 cars a week.
The skepticism is simple: Musk has a history of making schedule pronouncements that fall through. He predicted they'd hit this milestone last year, and they didn't. In fact, he predicted they'd be far beyond this milestone by now, and they aren't. And he really, really, really hates it when people point how his broken promises and failed claims, so it's reasonable to expect he might be trying to play with some smoke and mirrors and distract everybody with a one-time hit at 5k, hoping we forget he's late, and that he said that would just be a stepping-stone on the way to 25k/week.
Or, you know, it could just be late, and he's on track slowly. But the skepticism is absolutely warranted, and there are probably better odds for the skepticism.
Skepticism of hitting goals by certain dates are fair. But you are conflating skepticism of promises of meeting milestones with the ability to execute at all. They met the 5000 car a week goal. There was no promise of a date for a consistent 5000 cars a week. Is your claim that you are skeptical that they can ever hit a regular 5000 cars a week?
> There was no promise of a date for a consistent 5000 cars a week
I'm pretty sure that was December 2017 [1]
[1] "Chief Executive Elon Musk announced that production of its mass-market Model 3 would start this week and build to 20,000 per month in December. " - https://www.reuters.com/article/us-tesla-model-idUSKBN19O0GE
That's an old article, and Musk has since updated his estimates and dates, and was explicit that they would target burst builds before ramping full-time [1]. But that's beside the point - the question is, what is the source of skepticism of the ability to execute at all (not by a particular target date)? We can go back and forth on dates and numbers all day, but that's not my question.
> Skepticism of hitting goals by certain dates are fair. But you are conflating skepticism of promises of meeting milestones with the ability to execute at all.
One of the things from the Jalopnik piece that blew my mind was this:
> For other tasks, the reliance on robots has proved a headache. For months, Tesla engineers struggled to get a robot to guide a bolt through a hole accurately to secure part of the rear brake. They found a maddeningly simple solution: Instead of using a bolt with a flat tip on its threaded end, engineers switched to a bolt with a tapered point, known as a “lead-in,” that can be guided through the hole even if the robot is a millimeter off dead center, Mr. Moravy said.
Tesla is reinventing the wheel, so, yes there's going to be some doubt about their ability to execute. To my untrained eyes using the wrong bolt seems like a total rookie mistake. Even if not... Tesla spent months trying to thread a bolt. That's time and effort they could have spent on higher value propositions like fit and finish.
Unless you are the one to receive the tent assembled model 3. If past rushes are an indicator of the future to be I totally expect a large recall operation following this stunt
I can’t give up my Model 3. Driving any Tesla car is a dopamine hit. You really have to try and drive them to experience it and you’ll be hooked. Many people don’t realize what a refreshing and tremendous difference a smooth and powerful torque curve gives. Seriously forget all the noise about Elon Musk. Try and drive an electric car, which are by far still smoother than gear-shifting gas powered cars, and then try a Tesla.
Exactly this. I drive a Chevy Spark EV, which is based on the worlds least exciting car ... and it’s brilliant! I would never buy another gas car, they just don’t drive well. And yet we hear all this dribble about panel gaps and the stitching on the seat leather. I never knew there were so many so willing to look so silly in public.
Panel gaps say a lot about construction quality, and how well it will hold up going forward.
And if paying $60K+ for a car, I would expect something with amenities of a $60K+ car, not something with terrible ergonomics (touchscreen, right...) and missing features that a $30K Hyundai has.
The iPace would rival the Model X. The iPace is FAR behind the Model X in all performance measures. The iPace has a manufacturer's estimated range of ~350km, no EPA rated range given. The Model X has EPA rated maximum range of 475km - that's a third party verified range that is 125km above the estimated (and very optimistic) range of the iPace. As far as speed goes, iPace is 4.8s to 100km/h, while the P100D variant of the Model X is 0 - 100km/h in 3.6s, a solid second faster.
It’s not just being electric. I drove a Prius for several years before getting my Model 3. After now driving the Tesla for a month, I drove the Prius again last week. What an awful car.
My P3D will arrive in 2-4 months -- very excited for the future of transportation, and an end to gasoline/diesel cars. 100 years is a long time without disruption, and couldn't come soon enough.
But I love the seeing all the hate here, I wonder if people at the turn of the century reacted the same way when their horse drawn carriages were disrupted.
Sorry, but no, didn't do anything for me. Especially and particularly driving a Tesla, which felt almost like getting into a Yugo. Except Yugo was at least priced appropriately for its quality and comforts, and Tesla isn't.
Leave it to CNBC and HN to take such a success story by Tesla and turn it on its head to call it a failure.
1- Emphasizing the 5hr delay as opposed to the almost 5k figure WHEN THEY THEMSELVES SAID A FEW MONTHS AGO THAT TESLA WON'T PRODUCE MORE THAN 2k PER WEEK
2- Accusing Tesla of having low production quality in their tent line without any evidence
3- Criticizing Tesla for not being able to produce performance and dual versions, then when they do criticizing them for selling those before cheaper options when that is what any sane company would do
4- ...
Honestly it is baffling to me that you guys keep being proven wrong over and over again, yet you keep insisting that Tesla will fail. If you really believe Tesla is doomed I suggest you start shorting them (and let me know how it works out for you!).
Not surprised the only sane and accurate comment is grayed out at the bottom of the thread. HN is filled to the brink with anti-tesla shill bots. The astroturfing is so obvious it's comical. That's why I don't ever trust HN comments..
The community is obviously divided about this. That's not the same thing as "astroturfing". The guidelines ask you not to insinuate that without evidence, so please don't.
Look at the comments. It's 90% anti-tesla and all the pro-tesla comments get down voted into oblivion. So the community is not "divided" it seems...Statistics is my evidence. The extreme slant and voting behavior of all Tesla threads, mixed with debunked misinformation peddled by oil and gas industries being presented as fact pervasively in these threads is plenty of evidence
It makes things seem intensely obvious that actually aren't true. People on the other side of the fence from you are just as convinced that HN is dominated by pro-Tesla shills.
I suggest you go look at the comments again with a bit more objectivity. Some of the most-greyed out comments are critical of Tesla, and you don't get 300+ comments just from people violently agreeing with each other.
Finally got to drive Model 3 yesterday. A friend received his car a few days ago and let me try it on some suburban streets. Nothing fancy. But I did take it for a mini "drag race" against another buddy's Porsche 911. Again this was on a residential tree-lined street with kids playing outside. Not exactly fast and furious. But it definitely kept pace that first eighth of a mile ;)
In my humble opinion it outclasses all similar rides: Audi A4, Mercedes C Class, BMW 325, etc. And with charging stations popping up in every supermarket, office park, highway rest area, etc. It may rapidly become the brand of choice for young, urban commuting professionals.
Am sorry to hear that, TaylorAlexander. This was not like that. We cleared the street beforehand, and the kids enjoyed the brief show. Admittedly, even despite the precautions, it felt unsafe. And I will certainly endeavor to keep it on regulation race tracks in the future :)
Good job clearing the lanes before you drove. I'm sure that left an impression on the kids, that you might have wanted to leave on them even if you're behaviour had a risk to it - maybe they'll save up to buy a Tesla or learn about Elon. And the fact that it still felt unsafe shows that you have good judgement.
I find it hard to believe that it would outclass a C-class on interior luxury, a BMW on overall sportiness. I've driven all these cars, and when you get in a Tesla is definitely feels like a significant step down.
It's not the trim and details. It's the experience. Luxury car dashboard software lacks intelligence.
But I spent less than an hour with it. And am generally more of a Subaru Outback or Ford F150 person, though I still appreciate fine German engineering. Can't quite put my finger on it, but it just felt lighter than the MB 4-door sedans I have driven in the past. Despite the EV battery and distribution ;)
Still waiting on that train from Mountain View to Cupertino. Meanwhile, there is an Audi in the garage that can take me there anytime I want and a bus to take me there when I don’t feel like driving. I still find it really hard to take a week’s worth of groceries for a family of six on a train. Even if BART did go exactly where I needed, when I needed, I’m not inclined to risk Hepatitis or theft.
I understand that some people actually like being around strangers. I don’t. I like being in a mode of transportation where I can control the destination, temperature, aroma, and music. I don’t have to worry about people asking me for money or potentially assaulting me either. I don’t have to keep an eye on my bag, nor wait on platforms in all sorts of weather.
Public transport definitely has value, but ascribing it as the best choice is a viewpoint based on limited experience. When I was in Zurich, I felt much differently. But Zurich and the Bay Area are vastly different. They don’t have Prop 47 for instance.
I think this is the million dollar question—was this just a sprint effort to hit a milestone for PR sake or will they produce 5000 next week too?