As an investor of Tesla who bought into Elon's vision I've been getting more and more nervous about how the company is actually run at this point.
A modern car company is as much of a production and supply chain company as it's a product and tech company. I get the feeling that due to Tesla being cutting edge in the tech department it led to all the supply chain/production problems being treated as if they are speed bumps on the way, when in reality they are fundamental core competitive areas for an automotive company. Toyota is not the world's premier automaker because they have cutting edge tech, they are what they are because they build unbelievably number of reliable cars at an unbelievable scale.
The bleeding of cash after so many promises of "not going to raise money again" just shows that their vision is way ahead of their execution ability. Decisions like the terribly executed Falcon Wing Doors on a SUV that delayed production and increased cost and hurt reliability just further gave fuel to all the doubters.
I also have a strong suspicion that Tesla has not been honest with their Auto Pilot 2 and full self driving tech's progress. The current AP2 is an unsafe joke and I have no idea how people are ok with paying $5-10k for a significant downgrade when compared to AP1 because of a non-binding promise that it "might" get upgraded before their lease term is out. Any other automakers would be laughed out of the room for suggesting this kind of sales tactics.
I still believe in Tesla/Elon's end game vision, and I think what they accomplished is nothing short of brilliant, but I think it's a very risky investment at this point and the road ahead is bumpier than many like to admit.
The upcoming Model 3 will be the acid test for Tesla. It will no doubt be a good car, but at this point people should focus less on what the car can do and on how the car will be rolled out, sold and supported afterwards. A wealthy Model S customer may be ok with having the car in the shop after a minor accident for 5 months due to lack of replacement parts, but for an average Joe paying $500/month leasing a Model 3 that would just be the birth of a new BMW customer.
Although I applaud your skepticism, I think it's misplaced. My first job out of University was working for Daimler-Benz when they owned Chrysler. I was a front line eng supervisor at the plant level focusing on In System Damage, Federal Torque and a host of other quality issues that were plaguing the company at the time. I dealt directly with it so I can tell you, Supply Chain is not that big a deal to fix. They will sort out their problems there, they just imo need a few vets from a traditional car company.
As an aside, my time there was a hugely formative experience for me. Given a $500K budget and armed with nothing more than a little sql, I was able to immediately start saving the company multi-millions of dollars annually. I was considered a big star among the fresh batch of talent they inhaled that year, but I left because I could see the writing on the wall about the industry. Given the bailout and all that, I am pretty happy with that decision.
This is kind of irrelevant, but somewhat amusing, so I figure I'll tell it. My neighbour (in the middle of nowhere in rural Japan) was some kind of automotive manufacturing expert before he retired. I don't even know his name (he tells me to call him "Tom"), but we go out drinking occasionally. He must have been a big wig because he spent a considerable amount of time in the US and even has a personally signed thank you card from George Bush Sr.
Anyway, we were at the bar and I was telling him about the use of kanban in software development. My wife interrupted and asked what kanban was (because in Japanese "kanban" just means "signboard"). I tried to explain the concept, but she remained confused. He said, "I can explain it very easily". He picked up an empty plate and handed it to my wife. "We're out of fish", he said, motioning to the bar. :-)
We had an empty plate. We send that plate back to the bar. The sushi chef slices fish and puts it on the plate. If he goes below a certain amount of tuna, then he sends an empty tuna container to the sous chef. The sous chef takes tuna from the refrigerator and puts it in the container. If the refrigerator goes below a certain amount of tuna, the manager writes a note and puts it in an envelope for the fish monger. The fish monger gets the note and sends more tuna. If the fish monger goes below a certain amount of tuna, he sends a note to his agent at the fish auction. The agent at the fish auction buys a tuna and sends it to the fish monger. When the tuna at the auction is all sold, the fishermen bring more from their boats. When the boats are empty, the fishermen go out to sea to catch more tuna.
Only, we've caught almost all the tuna in the ocean, so please make sure to ask for something else at the bar.
Edit: Just to be clear, that was not Tom's point. His point was that the plate was empty, so by simply noticing it is empty, we can ask for more fish which "pulls" all the activity that ends up producing fish on our plate. In a kanban system, you only really need to worry about how much inventory you want to carry at each station and the connection to the previous station.
I assume it means that the act of _sourcing_ something at the time it's needed is a much harder problem than it appears; simply because a source exists does not mean that it's the right source, or that it's even stocked.
>Supply Chain is not that big a deal to fix. They will sort out there problems there, they just imo need a few vets from a traditional car company.
Tesla have been trying to and they are still running into many problems, many industry veteran hires and tens of thousands of cars sold later.
I have talked to many people who have worked/work in production as well, and unfortunately they don't share with you the same optimism on how easy it is to scale up supply chain for a large scale luxury auto company. Daimler-Benz has had major reliability problems with both Chrysler and Mercedes and it took Mercedes over a decade to get back to industry average, while Chrysler is still in the gutters.
It's because of the fast pace of the company. I doubt they are any worse than any other company introducing a new model. As a new model recedes into the past quality issues should decrease linearly, and maybe faster. Alot of the BSR issues (often caused by worker inaccuracy) that Tesla faces today are probably catchable nowadays with a convnet before they even go down the line.
If I had to guess right now, many years after leaving I would guess that Chrysler will eternally be a fail, it's culture is just wrong at every level. Tesla isn't hamstrung by that, or the UAW either (yet).
"I doubt they are any worse than any other company introducing a new model."
Except they are. The Model S is 5 years old (even the refresh model is a year old) and they are still running into parts and build issues. It has improved a long way but during the whole process they had to cut the number of interior and exterior colors/trims just to streamline the production. Other manufacturers introduces new fit/finish and trim options along a model's life span and Tesla does the opposite.
Case in point, the original P85+ came with sports trims inside (such as the red piping on the leather seats) and some unique fit and finishes, with unique sports suspensions and chassis tuning. But later on they eliminated all of those and now a top of the line P100D have the exact interior trim and chassis tuning as the cheapest S60 that cost less than half as much, all for the sake of streamlined production.
And even then they can't find parts for when cars need service or are in an accident.
It sounds like I won't convince you, and it probably shouldn't be convincing because it's Chrysler, but we were having problems like that and worse on a 20 year old platform. The way I got involved in Federal Torque was because we delivered a brand new vehicle that basically fell apart (lost an axle iirc) as the customer was cruising down a freeway. Even among all the problems we had, that was a pretty big deal. As a result we had many meetings about what a serious issue this was.
Chrysler was a special case. First it was saved in the 80s when it ran itself in a ditch and when rolling up a good head of steam, bought was left of AMC, and had a good partnership with Mitsubishi.
The in 98 along comes that infamous Daimler Mercedes merger where Mercedes basically looted Chrysler to prop themselves up. At that time Chrysler was making money hand over fist with their minivan.
Once bled dry, a lot because most new car projects dried up or worse, the platform sharing using older Mercedes setups, they got sold to an investment firm. There were even claims of value gone missing during that sale.
A more apt comparison is watching GM. After bankruptcy they still pushed out the first generation Volt, the second generation took longer but arrive in 2016. However the real kicked was how fast the Bolt went from conception to production. In 2015 it was shown in concept, Jan 2016 in production form, and in customer hands by end of the same year.
The Volt was rushed. As a hybrid, it's pretty good. As a car (ergonomics, user-friendliness, etc) it's not so hot. The B-pillar is in your way when you turn your head to look left. The use of capacitance switches in a car ought to be a firing offense (no tactile feedback and muscle memory is useless because there's nothing for the fingertip to guide the last millimeter of motion). Honda is learning this with the low ratings on their new volume knob-less radio.
The Bolt on the other hand, seems to addressed all those. The local car show is in a couple of weeks and I hope to see one there.
Totally agree about "The merger of equals". No such thing. The Germans took Chrysler for everything they could, like you said - to prop up product quality disasters like the ML and E class (a coworker went through 5 window regulators on his E-430 over 2 years. I had something break on my ML-320 on average every 8.5 weeks)
My mom bought a Chrysler LeBaron that, in one year of ownership, the brakes, exhaust, cylinder head, a/c and shock absorbers required service. We were later informed by a federal court that her car was one of the "rollback" vehicles. Chrysler denied it and basically told us "see you in court."
I don't dispute your facts at all, but I think you've strongly missed the key point of how disruption works. Not having as many trim and color options because they can't shove them out the door fast enough is a textbook example of "good enough". It is this very industry's not too distant history from which the quip "they can have it in any color they like, so long as its black" comes from.
What I mean is, you appear to be trying to apply the standard of a very broadly experienced car magazine critic, which yes, will absolutely 100% find a laundry list of grave shortcomings. And they won't matter.
You've strongly missed the point he was making. Tesla has such problems with their supply chain management that they have had to reduce parts and SKUs to the point of using mass grade finishings on lower-luxury class vehicle.
Except in most cases disruption doesn't work. The canonical examples from "The Innovator's Dilemma" all fall apart under scrutiny (as in the "disrupted" companies end up eating their disrupters for breakfast). GM is now doing a better job of executing in Tesla's space than Tesla, and that situation is not going to get better for Tesla.
Isn't Elon a sort of supply chain pariah at this point though? His learnings from SpaceX and Tesla so far probably make him one of the most experienced people in modern supply chains.
Pariah is not the word you're looking for, but either way I'd say the answer is certainly not. Making a few very expensive rockets and luxury cars is not anything like mass producing vehicles on a scale like VW/Toyota/GM/Ford/etc.
I'd say a company like Foxconn is probably a much better example. They are able to mass produce millions of widgets with astonishingly few defects and even begin doing it in secret. Very impressive logistics. If just one component of the iPhone isn't ready the whole line grinds to a halt.
It unintentionally might be accurate, though. ~90% of the parts in cars nowadays are manufactured by huge companies that sell to all the major automakers, worldwide. Tesla just doesn't have the volume to get the consistency of supply and quality that the other majors do.
Yes, this is a chicken-and-egg problem. But a real one nonetheless.
I'd like to know what vehicle programs you were on at DMX during that time, because other than WK1, L cars were a mess, and now that I think about it, nearly every other DMX B/C segment program I was involved with was a mess with respect to quality too.
fyi, I cut my teeth on WK1 and WK2. I love JNAP, and Jeep - I found a home there.
Nice to hear. I worked on B/AB, D. My impression was that everything seemed to be a mess, but especially management. My direct supervisor (an area manager) wanted me to fudge the numbers and lie to his boss (a center manager). By then, I'd had enough and left.
It was an exercise in creative problem solving. I'd query the data to find out where on the line the most (costly x incidence) problems were occurring and then devise a solution. If a worker was scratching the paint every time he put his tool down the secure a fastener, we'd get a heavy rubber guard fabricated, change his man assignment and have him put down the guard before he did his little peice, or even better change the tool if that was possible. If you are curious, yes there were workers who would damage the vehicle every time and let it go to rework. Don't even get me started on labor. :)
The line is Body Shop->Paint->Trim->Chassis->Final Vehicle.
Final Vehicle is concerned with testing and certification and whatever other finishing touches need to be performed. It also operates the repair department, and the 'yard' with all the defect jobs. Our yard was so packed the company was renting new yards away from the factory.
The repairmen who worked in the bays and yard were stone cold experts on the vehicles and they kept written logs. Those logs were typed up and put in the database by the office clerks. These were mostly signal. There were also networked terminals at some stations but not all down the line.
Finding the root cause of an issue was basically like git-bisect. You knew where a part was added and where it ended up. So you just needed to narrow it down. For a high priority issue, I'd go do a visual inspection myself at the mid station before a part got covered by another part. Broken? Go to the mid station between here and start. Not broken, go the other way. We got stumped sometimes, but mostly we could narrow it down pretty fast. For the workers, it's impossible to lose your job so there isn't a care factor about covering up shoddy workmanship.
My wife works in supply chain (top 5 cosmetics company in Brazil) as a senior analyst and she alone managed to save several million dollars in the last couple of years just by doing the right stuff with Microsoft Excel, the right stuff nobody was doing before she joined them. You would be surprised how amateurish big rich companies can seem sometimes.
The upcoming Model 3 will be the acid test for Tesla. It will no doubt be a good car, but at this point people should focus less on what the car can do and on how the car will be rolled out, sold and supported afterwards. A wealthy Model S customer may be ok with having the car in the shop after a minor accident for 5 months due to lack of replacement parts, but for an average Joe paying $500/month leasing a Model 3 that would just be the birth of a new BMW customer.
Yeah, that's pretty much it. The question then is do you think they can fix the issues that lead to those negative experiences with a little bit of time, and a billion more dollars?
I don't know the answer either. Obviously whoever can figure it out though, stands to make a killing either way. If you invested this money with the knowledge that it was a risk, that you could lose it all, then you should probably stick with that; nothing has really changed. If this was something you felt was a sure bet, or if circumstances have changed then maybe it's worth re-thinking your position.
I think it would be genuinely difficult for Tesla to succeed as a company and not go belly up if the Model 3 ultimately is a failure. Even with the overwhelming success and potential for a trillion dollar market of Tesla Energy, I think a failure to execute well on the 3 will overleverage Tesla to the point of no return. I'm a true believer and think they need to stick this launch (and that means service centers, supply chain, super charger networks, etc) or they're simply done. My hope is that they succeed due to me buying the tale they're telling. More renewables + electric vehicles is better for everything and everyone. Also, all torque all the time is mind bendingly fun to drive.
Disclaimer: I'm long on both TSLA and Solar Bonds. Even if I lose it all, I'm willing to take that risk if it gives them a better chance of successfully executing their mission statement.
Hell, at this point, I would be happy if they succeeded purely based on the future influence they may have on how cars are sold. Buying a new car at a dealership is a horrible experience, only made worse the more I know about it and the practices they use to hide the details of the transaction, and how little that helped me deal with them the last time I was in there.
That whole part of the system is a rent seeking protection racket.
There you go then, it sounds to me like sticking with your original choice is the wise move. I for one wish you the best of luck, and wouldn't be surprised if you ended up fairly happy with your decision in the end.
I guess it's a good reality check for autonomous cars when you take away the LIDAR toys. One rather important point is that the car often doesn't realize it is screwing up, because quelle surprise, realizing you don't have a correctly detected lane can be just as difficult as detecting one in the first place.
Wow. That guy is going nineteen miles per hour on a simple road in daylight and the car literally crossed to the wrong side of the road in nine seconds!
How much value are they expecting to get from riding the "Beta" train? There's a huge difference between their self-congratulatory demos of features and the reality here.
I can't afford a Tesla anyway, but even if I could I'd be wary about buying one on the promise that the Hardware 2 cars "will" get full self driving.
I can easily see a new version with Lidar coming along and all those old cars not getting that full self-driving update after all, even in places where the law allows it.
Wow that was shockingly bad. These seem like very standard conditions. Was there some confounding factor? He mentioned the sun being right in front of him...
That video supports what I've suspected: the SV self-driving car projects are training on wide American roads in perfect Californian weather, so that's where they might work. Put one of these things on a poorly-paved rural road or a snowy mountain pass, or in a driving rainstorm, and it will disengage and/or kill you.
Just today I drove by a temporary orange sign saying "X St. closed; use Y St. detour," which I'm sure would have confused a fully autonomous vehicle. I bet we'll get fully autonomous cars to drive on existing roads about the same time we create strong AI.
I was under the impression that AP* was for keeping the car in a lane on the interstate. Is it suppose to be capable of navigating rural roads like the video shows?
I'm not fully up to date with that, but I think it was meant to be enabled for more residential streets recently? And the AP2 is also still speed limited making it somewhat useless on interstates?
In any case, I'm pretty sure there shouldn't be a button that instantly makes your car swerve into the ongoing lane..
I've railed on this for a while. I'm glad people are starting to find these edge cases, thank god in situations that don't end up with fatalities. Only when users see these issues will Telsa stop getting away with "beta testing" software that can literally kill you if it screws up.
Before Tesla Legal bared their teeth George Hotz was going to buy a Tesla, hack it and run his own proprietary software on AP2's hardware. It would've been hilarious because Comma.ai is a tiny little fly by night operation outperforming AP2 using cheap, over the counter hardware.
That local roads update was an embarrassment, what was Tesla thinking? I mean, they're talking L5 by the end of the year, and this is what their autopilot division has to show for themselves.
It's important to note that the rollout of the Model 3, along with other Tesla vehicles, is done in spite of many laws that are explicitly aimed at preventing the sale of Tesla vehicles. Many states completely hamstring the ability to sell EV cars directly and some states are downright hostile towards Tesla. Additionally, one has to consider the current administration's position on fuel economy standards and any company such as Tesla getting the leg up with subsidies. Which, according to Elon, would be completely fine to get rid of so long as we are getting rid of all subsidies (including the massive ones for Oil companies). In general, this is and always has been an uphill battle and rolling these products out to market is met with great enthusiasm but at the same time hostility from many states who see them as a threat.
Is there any Tesla vehicle that doesn't have a waiting list?
I'm not disputing that some of the rules around auto sales are problematic, but it seems to me like the limiter on Tesla's ability to sell cars is its ability to produce them.
Hmm that is true. It's probably been said before, but the Model X definitely made things a lot more difficult to get to a rollout of the model 3.
"I'm not sure anyone should have made this car," he said at a press conference just hours before the first Model Xs were delivered to VIP customers."
""We probably should have just [modified the Model S]," he added. "There are so many more features and difficult to build parts on [the Model X] than it is necessary for us to sell the cars.""
> "We probably should have just [modified the Model S]"
This is one thing I really don't get about Tesla. Why haven't they made an estate-ish version of the Model S? I'm thinking along the lines of the Mercedes CLS Shooting Brake:
It's a very nice looking car, and adds that little bit of luggage practicality that the Model S is missing. The aerodynamics aren't much worse than the coupe, so range shouldn't suffer very much.
That is the ugliest thing I've seen in a long time, more power to you if you like the appearance, but I can't seem them bringing in sales for that thing for the design.
I don't think it's uglier than the sedan but I wouldn't call it beautiful. VW makes really nice wagon versions of its golf (or Jetta depending on the year) and I don't see why Tesla couldn't have done something similar.
> Many states completely hamstring the ability to sell EV cars directly and some states are downright hostile towards Tesla.
This has nothing to do with EVs, it has to do with Tesla wanting to sell cars differently than anyone else sells cars. If Tesla wanted to do a dealer model they could certainly give it a go and be treated no differently than any other auto maker.
Their argument is that dealerships have no actual incentive to sell EV vehicles over other ICE vehicles given that franchises make most of their profit from servicing; as such this exposes quite a bit of unnecessary risk for Tesla or any EV maker for that matter. This is the primary argument in lobbying efforts that there should be an exception for EV vehicles in this case of similar laws.
"Tesla General Counsel Todd Maron argued that the automaker wouldn’t thrive under a franchise dealership model because independent dealers make most of their profit from servicing cars while electric cars have little long-term maintenance and fewer moving parts."
AIUI, unused Tesla parts are hard to come by and the expertise to actually service the vehicles is thin on the ground.
It is true that a Tesla dealership won't be able to charge for oil changes, but tires, suspension, interior fixes (e.g. power windows or that strange squeak) are still required.
It is an easy fix:. Don't charge much for the franchise given the alleged lower service volumes. How many would show up at a Tesla dealership and then be convinced to buy an ICE car? If possible, write the franchise agreement to prohibit colocation with other ICE brands.
I absolutely love Musk and the idea of Telsa. Hell, I would love to get me a Model S, if I could.
But I completely agree with you. I think the Model 3 will end up costing way more that $35k, to turn a profit. The timeline will slip and it won't come out until 2018. The whole solar city deal was premature.
I think Musk knows this isn't going to work, at least for a while. I think he knows Telsa is going to have a more expensive Model 3 and they're going to bleed cash. Telsa will lose money on every sale of the Model 3. I bet money, he plans to ride the stock for the next 5 years until they can get things turned around.
I think the Model 3 will end up costing way more that $35k, to turn a profit.
That's Tesla's biggest risk - they can't deliver profitably at the price point they pre-sold at. The Model 3 is an ambitious car to sell for $35K. Tesla is not a "lean manufacturing" operation; their head counts at the auto plant per car sold are currently quite high. They'll probably get that figured out eventually, but meanwhile, they need the high margins of luxury cars.
The timeline will slip and it won't come out until 2018.
Probably. They're claiming "late 2017" now, and new orders won't be processed until 2018.
The whole Solar City deal was premature.
The Solar City operation has political problems. It assumes Government subsidies for solar, which may be going away for political reasons.
> It assumes Government subsidies for solar, which may be going away for political reasons.
Residential solar costs average out at 15c per kWh, post 30% tax credit. If the credit goes away, the 20c per kWh generation cost is still competitive compared to utility's retail rate. The bet is on solar technologies to continue incremental gains in efficiency, pushing the final price per kWh down.
In the commercial and industrial world the cost can be driven down significantly since the installations are larger (4c per kWh is the lowest I've seen), and the one-time installation costs are recouped faster, so that sector is likely to grow with or without tax credits. It's subject to the same efficiency metrics as consumer-grade tech.
Most residential solar is third-party financed, either leased from the manufacturer or operated under a power purchase agreement, where the solar supplier owns the gear, acts like a utility, and sells power to the consumer. There are various incentive programs which make this viable.[1] Solar City pulled out of Nevada when one of those incentive programs went away.[2]
The obvious problem with this argument is that if grid-scale solar installations push down utility pricing, this will kill residential solar and SolarCity's business model revolves around residential.
There's the transportation and distribution cost on grid-scale that's currently low, but as the generation costs go down, the fixed cost of owning the land, building and maintaining power lines will occupy larger piece of the pie chart.
Residential has zero transportation cost, post-installation, and I think those solar roof tiles SolarCity pre-announced is an attempt to blend the solar installation costs into the roofing costs. "You are paying the roofing guy for labor and materials to build/replace the roof anyway, so why not pay our roofing guy to build/replace the roof, and get solar as an incredible bonus" is I think their marketing strategy with that.
> It assumes Government subsidies for solar, which may be going away for political reasons.
Isn't their car operation also vulnerable? Tax credits may be less easy to get rid of, from a political perspective, but I think Trump would be far more interested in promoting cars that run on coal than cars that run on electricity.
If the solar plan falls apart, electric cars would prop up the coal industry better than gasoline cars. The electric cars you charge from your wall outlet will be powered by coal, no?
So it would be better to have electric vehicles than ICE in its current form, but more power grid usage will likely accelerate other technologies rather than make coal profitable again.
chevy has 105 years of experience at manufacturing automobiles and huge volume with suppliers. there's no way tesla has anything close to their unit economics
GM doesn't sell the car to the dealer for $37k. I'm too lazy to look up invoice price, but even that is unlikely to be the true price the dealer pays. There could be dealer incentives for moving the car. There are usually "holdbacks" in the invoice price as well. If GM is making a profit per car, they are doing so at significantly less than MSRP.
I know "shit" but it seems to me that Musk is where he is by being somehow very careful in his company evolution. Every step was bold, but just enough so the market would gain trust for the next bold move that would look less risky than the previous ones. Seems like he's bending the curve a bit higher this time. Spreading thin ?
Well the dirty little secret is the majority of III buyers aren't going to get any assistance because the tax rebate will be used up. Unless Elon can convince Trump its in the best interest of the country to change the limit a lot of people who put money down are in for a surprise.
Isn't the entire premise of building affordability/profit into the model 3, among other vehicles, is driving down the cost of li-ion batteries? All of these ventures rely on an economy of scale of difference. Correct me if I'm wrong in this.
I test-drove an AP2 car. After a disastrous ride in which it tried to hit two parked cars and a trashcan and wanted to drive off the road entirely, the sales person said, with a straight face, that it was great for stop and go traffic on 101. I'm a bit amazed they can currently sell cars.
On-ramp to Off-ramp
Once on the freeway, your Tesla will determine which lane you need to be in and when.
In addition to ensuring you reach your intended exit, Autopilot will watch for opportunities
to move to a faster lane when you're caught behind slower traffic. When you reach your exit,
your Tesla will depart the freeway, slow down and transition control back to you.
That sounds nuts; it seems like a huge liability that they are putting AP2 in the hands of consumers when it can be more dangerous than just the average driver...
It would be funny if in the future they say something like "So your new Tesla has Level 5 autonomy, but because the car still has a driving wheel, even if you turn on the Level 5 Autopilot, you're liable if an accident happens."
sure, I didn't intend to say that recaptcha doesn't provide a useful service, I was just saying that they pioneers, in our field, in "exploiting" (for lack of a better term in my vocabulary) a human work to solve a problem while training for free a neural network that is going to be used in a separate line of business. I think it's just pure genius
Toyota at its core is obsessive about manufacturing and relentless about distribution. The tech is mostly outsourced save some holdovers like engine technology. But even the engine is increasingly being innovated on by others. (Though it's dealership tiers are pretty confusing in Japan - I think there are 2 or 3 Toyota dealer tiers separate from Lexus)
Similarly, the heart of Tesla's tech is its batteries (I imagine they but the motors from someone). After that, outsource everything else and focus on manufacturing and distribution.
I read this book [1] back in the '90's. An amazing read about the world of auto manufacturing.
Regarding Tesla, surely I am not the only one waiting for competition. I think the problem Tesla has is that when the giants awake they will outclass them at nearly every level.
It's like thinking you are doing great in your open water swim until the triathletes leave you in their wake. Surely companies who have been honing their skills and optimizing their design, engineering, manufacturing, distribution and support over decades will have non-trivial advantages over Tesla.
The way I see it, building an electric car is significantly simpler than one with an internal combustion engine. All you have to do to see this is take an accounting of the thousands of parts and many fluids you leave out. The design, manufacturing, supply chain, distribution and service costs of having another 1,000 to 2,000 parts in a car are monumental. Any company that knows how to deliver quality, reliable and reasonably priced internal combustion cars will have a laugh delivering electrics at scale.
They know how to do this today. They are all waiting for the same thing: Cheaper, lighter, better energy storage. Recent developments might indicate this could be just a few years out.
Tesla has a problem: It has to achieve scale before that moment in time. Today choices are few and Tesla might have an advantage with Model 3 (if it ships on time and has no problems). In some respects they are the only game in town (range). The minute that changes people are going to flock to other manufacturers.
This is total conjecture, of course, so take it for what it is.
I need to go back a ways on this one. I have been flying model aircraft for decades.
If you go back far enough it was impossible to even consider flying an electric powered airplane because alkaline batteries simply didn't have the energy density.
Sometime later came NiCd batteries and they eventually hit that sweet spot where you could stick a few of them in a plane, put a motor in the nose and fly for a few minutes. I had gliders with 27 NiCd cell packs what weighed in at somewhere around six or eight pounds all by themselves.
A few years went by (6 to 10, don't remember) and LiPo batteries surfaced. Now I could actually fly jets. And the glider with the super heavy 27 cell NiCd pack got a very light and small six cell LiPo pack, a far more efficient brushless motor and performance was out of this world.
Today electric powered model aircraft are probably the majority of the product sold and they include high powered helicopters and even the "impossible" quadcopters.
These transitions were mainly the result of energy storage technology, nothing else mattered until you could carry enough energy at a favorable weight ratio and in a favorable volume.
The companies that brought us these transitions, very much in the spirit of "The Innovator's Dilemma" [1], were not the same companies that provided the older energy storage technologies.
This is where I come full circle to Tesla and the Gigafactory.
Tesla has done a great job with this and it has positioned itself to benefit from scale in manufacturing battery packs with the existing best-in-class energy storage technology. They will, in this regard, do well.
Yet, this will become a significant liability if and when the next step change in energy storage technology comes about. Scale has it's benefits, but it can also kill you.
Again, this is conjecture. Imagine a day within the next 3 to 5 years when someone demonstrates a technology with three times the capacity, in half the volume, with half the weight and none of the longevity problems. We recently saw just such an announcement, although it seems the technology suffers from a power-to-weight issue at the moment.
Imagine someone else finally develops a supercapacitor system that makes current Lithium-based cells look as bad as they made NiCd cells look years ago.
Whoever does that will trigger the inflection point and a massive migration away from internal combustion engines to electric powerplants. Just like it did with model airplanes.
In the model airplane world, the pioneers of electric flight were absolutely skewered by the established (and some new) players in model airplane manufacturing. Most people today don't even know the names of the pioneers.
Tesla could suffer this fate. The Gigafactory could actually become a huge liability. Imagine having such an operation at a time when nobody has any interest in the technology you can produce.
I truly believe other manufacturers are waiting in the wings for this inflection point while they experiment and get ready. I have a gut feeling we are not too far from that moment in time when a significant enough technology shift occurs to make electric transportation viable for the masses.
I think you capture my nervousness as well -- but I'm still bullish on the company. I think what we're seeing is a by-product of other car companies finally starting to take electric cars seriously, and Musk's attempts to grab as much of that nascent market as possible before it gets too crowded.
I think the choice Tesla has right now is to fix up their supply chain and reliability issues or expand. Musk has chosen "expand". Incidentally that choice also brings focus to the supply chain -- just in a different way.
My concern is that long-term, delivering several years of great performing, flashy but not-luxurious, and very unreliable cars, is going to hurt the company in the long run. Honda and Toyota both either have or have announced vehicles competitive to the Model 3 on price, range and features. Ford already sells a couple electric vehicles at competitive prices. BMW has entered, and so on.
Amazon made the same bet years ago, focus or expand, and after years of no profitability the gamble has played off. However, Amazon also provided good service and product during those years. So far Tesla owners love their cars, even if they spend as much time in the shop as an exotic Italian car.
The other electrics don't have the brand cachet like Tesla, but they can fast follow until they simply overwhelm the much smaller company.
But, while even the iPhone is a minority smart phone these days, Apple makes most of the profits. Tesla might be able to do the same.
I don't see Tesla being the #1 electric vehicle maker in 10 years, but I do see them being a major player in the industry. Musk is also trying to diversify the company in various ways. It will be interesting to see how this pays off.
You're concerned with a 23% YTD return on the stock and a 600% return over 5 years? The market has a way of signaling if a company is totally screwed up. Looks like it isn't.
Well the market can be terribly wrong on many companies in the long run, both undervaluing great companies and overvaluing terrible companies. Tesla's vision is for the next 20 years, not the last 5.
Historical performance is also not an indicator of future performance. Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day. If anything the fantastic return would encourage long term investors so far to partially cash out and diversify their risk a bit.
> Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day
This is a great way to think about holding investments. I remember using this argument to try and convince a family member that they should sell what I considered to be a bad investment. I phrased it as 'If you were forced to sell your shares right now would you use the money from the sale to immediately buy back your shares?'. He responded that no, he wouldn't. Obviously this ignores brokerage fees, but it is a useful thought experiment nonetheless.
Sure, the real world inhabited by the pro's is complicated, but the point is when we're first learning the fundamentals, we assume an idealized frictionless plane.
> Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day
While I'm not a banker, I find with this method looking at investments highly disagreeable. The price of the stock at the time of purchase is the projected future profits discounted to present day. In other words, it is the fundamental value of the firm, which is invariant of its day-to-day fluctuations.
If you have to be watching for the daily upticks, it's a sign the company is either incompetent or is operating in a highly unfavorable environment.
I don't see how any good can be gained from envisaging a purchase price other than your lock-in price.
Perhaps you're putting too much emphasis on the "every day" part. The key idea of evaluating whether the shares are worth it now and not just when you bought them is important, to me.
> I don't see how any good can be gained from envisaging a purchase price other than your lock-in price.
If I have a thing valued much higher than I believe it is worth, surely the logical thing for me to do is sell and buy something else that is valued lower than I believe it is worth. The price I paid for it is completely irrelevant (except, importantly, when it comes to taxes but this may not be an issue, much less relevant for many in the UK).
TSLA is ~$256. If I only think it would be worth buying at $100, then why would I keep the ones I own? The purchase price is a sunk cost.
If company X's price is currently $100, but it's projected future profits discounted to the present day is $90, then why wouldn't you sell, regardless of the purchase price?
I suppose "the market" was collectively looking the other way for Bear Stearns in January 2007, when it closed on a record high? What was the market signaling about Enron in September 2000, little over a year before it collapsed?
Share prices can be fantastic while a company is horribly, even comically mismanaged. They soar right up until they don't.
That return can only be realized if OP sells. It sounds like OP's intent was to buy shares in a long-term business/vision, not in a stock.
In the long term, markets are a weighing machine, but in the short term, they are a popularity contest.
In August 1998, YHOO traded under $10/share. In December 1999, YHOO traded at > $100/share, a > 1000% return over 16 months. From February 2001 to February 2003, YHOO traded under $10/share. Markets are fickle.
That is because Yahoo got overtaken by Google's superior ad platform and search. Tesla has no obvious viable competitors. It is a premium product that caters to a specific demographic, much like the iPhone in 2007.
Arguably the Model 3 is not a high end luxury car either, not priced at $35k. The Bolt is a direct competitor to the Model 3 with first-mover advantage.
The only argument against that is one has a badge that says "Chevrolet" and the other says "Tesla". If the Model 3 didn't have the Tesla name, no one would think anything of it. It'd just be yet another compact electric car, yawn, who cares, and then they'd buy the Chevrolet.
I'd say that the model 3 is comparable (in price also) to the BMW 320i.
The Chevrolet Bolt is similar in price, but I think somebody making a comparison between a BMW and a Chevy would be similarly mistaken. BMW and Tesla are luxury car manufacturer. Chevrolet isn't.
IMHO, the bolt is overpriced. It's a crossover SUV from a manufacturer that is known for making low cost, high-volume cars. It looks like it is most similar to the Chevy Trax, which starts at $21,000.
The Bolt is GM's first practical EV. If it succeeds, GM could easily choose to compete in the luxury EV market against Tesla.
If GM decided to do this, it would have many advantages over Tesla: a huge dealership and service network, lots of suppliers, easy financing, and all of the other perks you get when you buy a "normal" car from an established company.
Tesla aims to have razor thin margins for the thing that they actually produce. So their lack of dealers who supply an automatic mark-up is something that they cite as a strength, not a weakness.
The thing that Tesla is producing, however, is really expensive to build right now. The cost curves are great for it to come down, but until they do they are in the ironic business of selling expensive things with thin margins.
GM would find it harder than it thinks to compete against Tesla with an equivalent product. Just as Tesla is running into challenges scaling up production.
> So their lack of dealers who supply an automatic mark-up is something that they cite as a strength, not a weakness.
They don't have an automatic mark-up, but car dealers also operate on razor thin margins (the real money is in service and trade ins). However dealers pay their own rent and even spend money advertising. Tesla is on the hook for all of its dealerships, a significant cost that its competitors don't have. In the end I don't think it's such a game changer. It makes sense for Tesla, but doesn't magically make things cheaper.
It also makes it easier to service your car. If you own a Tesla and need warranty service, and you live in middle America, you may have a long drive ahead of you. If you own a Chevy, it's rarely a problem.
The primary threat to Tesla is Tesla's own ability to execute and succeed long term.
Developing a long-term-viable car company is hard even when it makes regular old gasoline cars. Tesla also needs to fulfill the Model 3 preorders, and that process could be derailed by a number of issues: manufacturing speed, quality control, factory problems, etc. That's a big challenge for a company that has made small numbers of high-end luxury cars until now.
I'm impressed by Tesla's success so far, but if I were to invest in a car company today, I would rather invest in GM. They are getting into the electric car market big time with the Bolt, and unlike Tesla, they already have realized economies of scale in car production. If the Bolt succeeds, GM could choose to produce a car that would be a good competitor to the Tesla Model 3.
>Tesla's YTD return more than matches the overall market
What is so significant about YTD?
You can arrange the data in any number of ways to tell a story: A Tesla investment since 2014 has lost money (and been diluted). Go back to 2013 and suddenly it's a goldmine.
Tesla having been a "good purchase" depends on what you paid. But I have a feeling that more people are sitting on a cost basis >$250 than <$100, in which case a TSLA investment has been mediocre.
The market isn't an oracle, and a stock doing well is no guarantee that a company is moving in the right direction. The sentiment is that they're doing well, but only time can prove that.
Musk did not say "not going to raise money again". That said, if you don't like how he has communicated about past raises, you should definitely sell -- there's no sign that this style of management is going to change.
The point at which Tesla will become not a pie-in-the-sky wet dream is when the price point matches a run-of-the-mill Honda.
Right now, having a Tesla is like having a Maserati.
I know zero people who have one, my wife (a structural integrationist) _works_ on people who have them, so I am like two social tiers away from thinking of affording one, which, for me, is like dreaming of that Kawasaki Ninja I had postered on my wall as a ten year old boy.
He, and his team, need to dramatically scale down costs somehow. I read something cool today about Chinese charging stations that swap batteies instead of sitting and waiting to recharge. I wonder if something like that with an attendant would work to extend the battery "life" ad infinitum for grids in other nations.
Seems like his head is on straight though. He took profits and looked up. He said, yeah, I could drive down prices on my car by saturating more, but I'll build rockets that don't waste as much on reentry costs instead. That's smart innovation, that's passing the baton in the 400m instead of sprinting 10m and saying "I win!".
I do think there is stigma (even in my own mind, and I really am a fan of Elon) surrounding borrowing money over and over, but the reality is: almost EVERYONE does this. If you aren't Dow, or Ford, or some huge ass fucking company that has a war chest the size of Dubai, you aren't going to weather the stormy market conditions we are facing as a result of globalization (see Brexit et al for moreon that topic of discussion).
Businesses need floating because they don't exist in a vacuum, they exist because they aren't welcomed by their competitors, in fact, they are actively "sabotaged" by those that stand to lose market share, and that, my friends, is a HUGE problems with mercantilism. Unless we decide to get along, it's not going to get better, and corporate espionage has not lessened in my lifetime, not by a moonshot.
So, yeah, play nice and he and those like him will stop having to borrow money, and maybe he will throw us a bone and make a car that doesn't cost as much as my entire post-secondary education (including grad school).
It would probably be easier to have charging stations with people hot-swapping batteries, than charging station with extremely fast charge times. It would be a task that could be automated right out of the gate too.
I like this idea too. Because battery positioning within a car is quite important (at least what have read about the teslas it is) there could be a smaller 100km (60 mi) range swappable battery that is easy to remove and replace.
It might even be feasible to have a system like a drive-through carwash, that instead lifts specially compatible EV's, remove the old battery "strip" from the lower portion of the car, and then install a new one. If it could get down to 3-5 minutes, especially if your car could interface with the "hut" so you don't need to be in it...
Elon Musk demoed Tesla's battery swapping capability a few years back: https://youtu.be/FE81S26XG8c. I'm not sure if it's gone live at any supercharging stations yet. Maybe someone else can confirm rollout or not.
See that is just incredibly cool. I honestly see no reason why they, or someone, shouldn't be able to make it work. The barriers would probably be having enough of an installed userbase, but that's always the problem.
No-one wants to own a depreciating asset like a battery. The model would be something like "pay $x/year and any member of our nationwide network will swap out your battery for a battery with at least 100 miles' worth of charge, whenever you want". They can take care of replacing worn-out batteries on their side.
People aren't buying Apple stock because of what the company is today, they're buying it because of where they think Apple will be in the future relative to what they are now. In Apple's case, that future version might still be a consumer electronics company. Just one with (hopefully) innovative new products and a higher share price than you're buying in for.
Given the Tesla's SolarCity merge, the associated solar shingles project, the battery gigafactory, the PowerWall, and their grid energy storage projects, I wouldn't invest in Tesla today thinking "Tesla is a car company, and 5 years from now they'll be a bigger car company with new car models!" in the same way that I'd approach Apple.
Please correct me if i'm wrong, but I think the comment was suggesting more than the fact that Tesla, in the literal sense, sells more than cars. I think it's also important to note the company itself supposedly operates much differently than a traditional car company, and in fact much like a software company.
Supposedly that's the case, but since they switched away from Mobile Eye they are still trying to reach feature parity with AP1 at this point.
It was supposed to take 2 months, but viola, 6 months later they are still struggling and there are many YouTube videos out there showing how terrible and unsafe it is.
It still lack many features of AP1 such as automatic lane changing and blind spot detection at this point. Lane keeping is also not as stable and safe as AP1 and many videos show that the car like to drift into oncoming traffic.
Self driving tech is (still) a really hard problem, unlike what people are lead to believe looking at the dozens of company jumping on the bandwagon and releasing cool looking videos.
People look at that recent video of the Tesla car doing a full A to B drive and they're like, wow, that's awesome!
Then, they ask themselves, hmm, I wonder why Google hasn't released anything after a decade of research. And realize too that google had a simple A to B video 8 years ago too... yet 8 years later it's still not ready.
Yeah, but no. This isn't about the autopilot not being like on the video, it's about the autopilot being worse than it used to be. The really hard problem already had a better solution.
Cars with the second generation autopilot hardware were sold without any autopilot at all. It also had no auto park, no automatic headlights, no automatic wipers, no automatic emergency braking, no side collision warning, no lane departure warning, no automatic lane change, or summon.
A 45Mph speed limited version of autosteer was enabled in an update, and maybe some of those other features. I sadly do not actually own one myself to know.
This is simply not true. AP2 has auto park, side collision warning, auto headlights, emergency braking, forward collision warning, 55 mph speed limit, with TACC at 80 mph.
Not sure why you're being downvoted, as this is correct. (Actually, it looks like TACC is now up to 85MPH.) The other comment was correct for a time, but that info is obsolete.
Correct. They are "re-training" their AP2 system to achieve pairity with AP1. The falling out with MobileEye resulted in them having to remove AP1 prematurely before having a proper replacement.
I have a model 3 reservation, but I don't think it can be successful on this timeline. I mean it seems like the design is still not 100% set and we are just now seeing test cars. For other car makers this would mean mass production is at least a year away.
Because Elon tends to mix the interests of his companies. I believe one of them purchased bonds of the other a while ago or something like that. They have financial ties of some sort but I don't recall what kind or which is more vulnerable.
He's clearly a very smart man, which means that he understands the challenges which are known (cognitive decline from radiation, no material suitable for shielding, incomplete understanding of human microbiome, etc...) and the impossibility of his stated goal to establish a human colony on Mars anytime soon.
He's positioned for LEO cargo, and in the longer-term (I suspect) for potentially surveying and mining asteroids. There is almost literally money out there, for the first people to stake a claim. It's daring, it's risky, but it's possible to do with a combination of human explorers and robotics.
It's not sexy however, and it calls to mind all of the dystopian sci-fi of the last few decades. "We're going to Mars folks!" is just... easier to swallow than... mining space rocks.
People like you and me want to believe in a secure future for the species, which requires getting a self-sustaining group of humans off this planet. It's a powerful dream that could really move some very bright and dedicated people, who might not be similarly moved by the dream of simply gathering more resources for Earth.
Elon Musk, I think, has perfectly blended PR and a real business plan, but the PR and plan are not one and the same. More credit to him, but it's a bit discouraging to see so many people flip the switch on their skepticism out of pure "wanting it to be true".
I think you need to listen to more of his interviews, look over his plans, examine his side businesses... They are all remarkably consistent with a long term vision he lays out years in advance of any business dealings. For example, The Boring Company is his exploration of what they can do on mars to avoid radiation and create habitats. His mars beliefs go back years.
I hope this doesn't apply to you, but I feel really sorry for people who can't believe in altruistic motivations. It seems people who don't believe anyone works for the greater good often disbelieve because they have only selfish motivations, so imagining someone motivated by altruism or higher order goals sounds fantastical, and they can only understand it as a "trick."
Further, I don't think it is at all clear that those obstacles are insurmountable. They are technical problems. Nasa thinks solutions are possible and worth discussing:
I believe in altruism, but I don't believe that Elon Musk is altruistic. In fact, the way he seems happy to treat his people suggests a far less humane side, but that's neither here nor there. In any case, I don't really care about his motives, just his plans.
He's made some interesting points about using Mars to shield from radiation, but it doesn't matter because they'd be cooked before they ever arrived. Worse, it seems that radiation is going to have an impact on cognition, which is just about the worst thing you can imagine. Dying in your 50's from cancer is tragic, but dying because you stopped thinking clearly before your mission ever truly begins? Wasteful.
The notion of using water as a shielding works at first glance, but then you realize that you'd need a looooot of it, and that you've kicked the problematic can. Now your biggest concern shifts to micro-impacts, which no longer just erode your armor (you'll need armor... expensive as it will be to lift, you'll need it), but open your radiation shielding to vacuum. Presumably you'd have some means to circulate the water through the outer crew quarters, so large parts suddenly freezing and slowly sublimating away strike me as catastrophic.
What we need is a material that is incredibly strong, durable, manages thermal stress, and which can shield against all kinds of radiation (without just cooking the poor bastards with gamma rays secondary to the incident radiation). That material need to be light enough that lifting it into orbit doesn't bankrupt any potential operation, and frankly... no such material exists.
That is just one problem.
Edit: To be clear, I don't think that Elon Musk being something other than altruistic, is for example, malevolent. I think of all the arena in which he could have acted, he chose ones that were potentially beneficial to the species. Not being altruistic doesn't mean that you have to be terrible... most of us aren't altruistic.
Even if what you say is true and SpaceX never delivers on a Mars colony, the incremental steps they are taking towards it are going to be beneficial for future private companies and governments to build on.
Being the main company that in 10 years replaces all cars that currently exist that drive around autonomously that no one owns and that can only be ordered via an app that are powered by Solar panels that are on Hyperloops all around the world.
1/ Basic premise was they keep highlighting their entry into larger and larger markets and so investors keep ponying up $ for the ambition.
2/ First, it was taxis
3/ Then, it was taxis + logistics
4/ Then taxis, logistics, vehicle ownership
5/ Then taxis, logistics, vehicle ownership, autonomous
6/ Then taxis, logistics, vehicle ownership, autonomous,
trucking
7 / Then taxis, logistics, vehicle ownership, autonomous,
trucking, drones
8/ I might have the order wrong but each spins Uber into addressing an even larger Total Addressable Market
9/ While they never actually own even the first one (taxis) yet. But investors love the ambition and keep ponying up.
It's hard to say whether Musk is doing something similar or not. Satellites, boring company, mars mission, electrified grid, etc....Obviously, Kalanick is much different than Musk, but I can't help but feel pattern recognition creeping up on me.
In a ponzi scheme, nothing is created. Uber has created a service used by millions and which tens of thousands of people make an income from.
Tesla has created products that hundreds of thousands of people use, millions want, and hundreds of millions admire. Tens of thousands of people work in their factories. To many of us, their products hold a promise of a better future. SpaceX is reopening a chapter of human exploration that nation states had closed. Literally the most powerful organisation in human history, the United States, had all but given up on it. In my mind, landing a rocket is one of the most astonishing technological feats by humanity in decades. And it was done by a startup.
Now, I don't know what you spend your days doing, but I cannot compete with Musk. And I am just talking about his achievements until now, not the potential future ones.
I get that from an investor point of view, Tesla might have created little of value if it bankrupts soon. Eventually, though, all companies bankrupt or close in other ways, and so will Tesla. But the EV revolution that Tesla started will not stop. The cars are still there, the ideas have been proven. Is the comparison with ponzi schemes really a good one?
Please, spare me. Uber had a pattern of malicious and immoral behavior from the start. As soon as I read about them tracking people's ride patterns at company parties for laughs, I knew exactly what kind of company Uber was. Since then, their moral shortcomings have only diversified, unsurprisingly.
Musk, by contrast, has show over and over that he cares a lot about doing what's right, starting with the very fundamental purposes of his companies: not profit, but making things better for everyone, with profit as a necessary part of the real goal. To point to a recent quote from his twitter, he had said he didn't care if his participation in Trump's panels hurt his reputation or that of his companies, because it was right and he didn't care what people said. And it seems (and many people close to him have said as much in interviews) that this is very much in line with who he is as a whole. Every time someone has made an accusation against his companies of a customer or employee being shortchanged, he's publicly investigated it and resolved it within a couple days. I recall him saying in one such case that if indeed a contractor had been injured on Tesla property, he would have seen to it that they were completely compensated in every way, even if a court did not compel them to do so, simply because it was the right thing to do.
I hate seeing a company mired in wrongdoing compared to a company like Tesla, which is the polar opposite.
Then we come to this accusation of a "ponzi scheme of ambition." Did your creeping pattern recognition notice that Tesla is being led by the same person who leads SpaceX? I don't understand how people can write this off. No matter what your criticism or doubts of Tesla are, it's simply impossible to deny SpaceX's astounding accomplishments. This is obviously not a CEO who fails to deliver despite unparalleled challenges. Do you truly believe manufacturing another car, after having already succeeded with the Model S, is harder than starting a successful space program from scratch?
Musk doesn't do Ponzi schemes. He builds Paypals and Model S's and rockets that have successfully landed when industry leaders mocked it as impossible.
What achievement of Musk was "mocked as Impossible"? Now, was those really impossible or even hard enough; or some kind of cheap PR stunt to blow their achievements out of proportions?
A great many people said reusable rockets were not going to happen and that the pursuit of the technology would end in failure.
The same has been said (and continues to be said in this thread) of the ambition to revolutionize the automotive market with a compelling affordable electric car.
Cheap pr stunt? What? How the hell is it even possible to blow SpaceX's accomplishments out of proportion? What they've done is indisputably astonishing. Are you trying to minimize it?
>A great many people said reusable rockets were not going to happen and that the pursuit of the technology would end in failure.
A great many people said? Where? And more importantly, why? For what reasons did they say it was not possible? Was it impossible by laws of physics?
What "breakthrough" in physics did spacex make that made this suddenly possible? How come we never hear of any such breakthroughs, but only about these PR stunts?
I had a colleague of mine (who works on rockets/spaceflight, has done so for decades) say the barge landing was impossible.
As far as your other demanding questions, no breakthroughs in physics have been necessary to make reusable launch possible. People have constantly made predictions that somehow physics precludes reuse, let alone fast turnaround reuse, from being possible. But that has never, ever been the case. Still people (who ought to know better) will continue making such ridiculous statements. And yes, SpaceX has disproven a lot of these myths.
Privately developed orbital rocket (i.e. not based on government missile parts, etc): Falcon 1, done.
Privately developed capsule return from orbit: Dragon, done.
Vertical landing recovery of a first stage for an orbital rocket: Falcon 9, done.
First landing on an autonomous ship: Falcon 9, again, done.
In less than a month, they'll also do their first orbital flight on a reused first stage.
Lesser-known accomplishments by SpaceX:
Merlin 1D has a thrust to weight ratio of about 180-200 in its latest incarnation. That's dramatically better than the next-best, the NK-33 (at 137). And it's a big reason they've been successful at recovering so many stages without a prohibitive performance penalty. And it accomplished this by using deep propellant subcooling, which had never been done before except in some subscale tests.
Supersonic retropropulsion of the first stage is also something that had never been done before. It's a key enabling technology for Mars landings, and NASA was scared to baseline it for any of their Mars architectures and couldn't afford the tens of millions for a dedicated test. SpaceX gave them the data for free (in exchange for some in-kind services like data collection, but no money). Now every NASA human-scale Mars lander concept assumes the use of supersonic retropropulsion. This is a big change.
Crew around the Moon is not a PR stunt but a revenue source for SpaceX. Red Dragon is not a PR stunt but a key in SpaceX's (and the world's) ability to land large payloads on Mars and test the ISRU technology needed for sustainable crewed Mars missions.
Raptor, which has already had some test fires, is a truly scifi engine. It'll be the highest performance engine (in terms of chamber pressure, which is a key metric for thrust to weight ratio, and especially Isp for a given propellant combination, and also for thrust from a given engine size and thus for manufacturing efficiency) ever. A full-flow staged combustion engine, two-stage turbopump. It's insanely high performance and will get similarly high thrust-to-weight ratio as Merlin in spite of using a less dense propellant.
The ITS will dwarf all other launch vehicles in terms of raw size, raw thrust, raw payload, and especially its fully reusable upper stage/spacecraft combo.
And it's not even that SpaceX are the first ones to imagine these technologies (although some details are novel), it's that they're actually doing them. And that's a big difference. There are virtually no good ideas in aerospace that were not at least imagined by the end of the 1960s, but the vast, vast majority have languished. There have been several other abortive attempts to develop a low-cost private launch company, and (beside Orbital, which has a very different company mindset now) SpaceX is essentially the first successful one.
There will be others, but they were catalyzed by SpaceX. SpaceX's high churn rate has fertilized the whole American rocket industry. And this is very good. Even if SpaceX fails now, Blue Origin will succeed where SpaceX has prepared the ground. (Blue Origin essentially /cannot/ fail, since it's bankrolled by Jeff Bezos, who has more money than God.)
No, they didn't give any specific reasons, although I think he was thinking about the instability of the ship and lack of good enough precision landing (on the rocket-side) and station-keeping (on the ship side) as well as waves changing the angle and height of the ship. Of course, these are just engineering challenges that in hindsight look easy.
But this same thinking applies to almost everything Musk does that people think can't be done. For things in the future, consider Hyperloop and ITS.
Unfortunately I'm unable to continue responding to you, since the responses I start to give at this point usually cause the HN admin to show up and ask me to speak civilly.
I'm going to second aerovistae. I think there are plenty of glaring differences between Uber and Tesla that make your comparison just amount to throwing shade:
1. First, I haven't heard many people argue that they think Musk's end state isn't viable. That is, Musk has already proven you can build a great electric car, the question is just whether he can solve the production issues and scale up (especially battery production) fast enough before he runs out of money. But if he does get there before he runs out of money, people agree he will have huge moats around his business with his technology, brand desirability and the gigafactory. Contrast this with Uber, where a lot of people think that in the end state (when VC money stops subsidizing every ride) that it will essentially be a commodity business with very poor economic fundamentals.
2. Uber has had story after story of fundamental problems with their corporate culture, while everything I've read about Tesla appears to be almost the exact opposite.
Musk has stated that his ambition is in colonizing Mars. To achieve that he's building the companies to make it a profitable endeavor. When he succeeds he will have built a path for others to follow to also have a commercially viable option to explore space.
Travis on the other hand is apparently running a fraternity that spies on you. About the worst of the worst coming out of Uber.
i think this is unfair. I am not a big fan of uber, but uber already provides value, has a solid service and penetrates international markest (not native, is this...right? sounds kinda wrong imho). Autonomous driving complements their original target (taxis) and makes it possible conquer new markets. I get what your idea is, but i think it's wrong because what they do makes sense and they are actually building (and delivering!) stuff.
They might gamble too high and loose big time, but i wouldn't call it a ponzi scheme.
So I've personally made 6 figures on TSLA. If I'm an idiot, what does that make someone who thought they were smarter than someone who would invest in TSLA?
Here's the thing about investment: whether you're playing the long or short game, the only way you make money is through stock volatility. And as far as volatility is concerned, TSLA has been fantastic to play over and over again.
The comment I replied to talked about Uber, not TSLA. I can't understand your need to brag about how much money you made, but yeah, it would be cool if you could read first.
Tesla is basically taking on a loan in form of a convertible notes.
probably much smarter to distribute their lender among multiple entities than one giant bank that would have leverage on them.
Also, it looks like Tesla would use a portion of the money to inflate their share prices via a small buyback. The after market trading so far make this strategy look successful.
So at the end of a day: Tesla is raising capital without diluting their shareholders and reducing their share values and giving up much control.
Also the maturity date of 5 years is rather interesting. I wonder if it correlates with their internal projections and their ability to pay that money back by then.
Sort of, but not really...the FASB has said you can treat the underlying shares as non-dilutive if the stock price isn't above the conversion price (this is called "net share settlement"). So basically, while outstanding, the debt acts like debt for accounting purposes until the stock price is above the conversion price. When it goes above the conversion price, the you treat those incremental shares as dilutive. Additionally TSLA is putting what's called a bond hedge (or call spread) on top of this, which limits dilution over and above an even higher stock price.
Pretty sweet deal if your stock price doesn't go up and you only have to pay minimal interest.
Lol, effectively. A convert is basically a forward stock sale, so if you're TSLA you're basically saying "I get a pretty good cost of capital if my stock stays where it is, but if it goes up a lot, my company is probably in better shape than it was before I raised capital, so I'm more or less happy either way."
But you're not flooding the market with $750M new common stock of TSLA in the market.
If TSLA price crashes it could impact consumer confidence in buying the T3 which Tesla is banking on.
If TSLA drops and T3 are delayed, many consumers might panic and not oder their car creating a vicious circle.
> Concurrently with this offering of notes, we are offering 968,993 shares of our common stock (or up to 1,114,341 shares of our common stock if the underwriters of that offering exercise their option to purchase additional shares in full), in an underwritten offering pursuant to a separate prospectus supplement. The closing of this offering of notes is not contingent upon the closing of the concurrent offering of common stock, and the closing of the concurrent offering of common stock is not contingent upon the closing of this offering.
> probably much smarter to distribute their lender among multiple entities than one giant bank that would have leverage on them
The banks you see on the front page of the prospectus are not lenders in this transaction, they are underwriters. They are executing transaction and distributing the converts to the institutional investors (long-only and hedge funds). At any rate, underwriters and investors will have exactly zero leverage over Tesla following transaction (debt holders have no voting power).
> would use a portion of the money to inflate their share prices via a small buyback
Not at all. They are concurrently offering common shares, so buyback would make zero sense (i.e. buying and selling shares at the same time). They plan to use proceeds for general corporate purposes (Model 3!) and to buy a call spread they will overlay on top of the convert to synthetically increase the effective conversion premium above the premium that convert will price at. This is done to reduce potential dilution down the road.
> Tesla is raising capital without diluting their shareholders...
Correct - this convert will likely fly off the shelves and the conversion premium will be high (perhaps up 30-40% from tomorrow's close). On top of that, they will enter into the call spread that will bring the conversion premium to up 50% or 75% (depending on the structure they pick) from tomorrow's close.
> Also the maturity date of 5 years is rather interesting
This is standard duration for convertible debt. Generally they are structured with 5 year or 7 year duration, but 5 years sell better (pricing is also tighter).
Overall, smart deal for Tesla and net positive for shareholders.
And if you owe bond holders a billion dollars and your company has a billion dollars in assets when it goes under, the bond holders get your company and the stock holders get nothing. Or perhaps the assets are sold to another party to pay off the bond holders and it's that other party that gets the company for the price of paying off the bond holders.
> So at the end of a day: Tesla is raising capital without diluting their shareholders
They're also offering at least $250 million in common stock as part of this round. And the notes are convertible so if it becomes profitable to convert them those will result in dilution as well.
If I were to make a computer analogy, I would probably say that Tesla in having to deliver the Model 3, is right at the point IBM was when they were finishing up the IBM 360 series: it will be a make or break product release for them.
“The expense of the project was indeed staggering. We spent three quarters of a billion dollars just on engineering. Then we invested another $4.5 billion on factories, equipment and the rental machines themselves. It was the biggest privately financed commercial project ever undertaken.”"
(note $5 Billion number was in 1964, inflation-adjusted, that is many billions more)
Reading about the S/360 is insane...no one makes investments like that anymore. This would be the equivalent of Intel or someone spending $40 billion dollars on engineering the and the infrastructure needed to build a quantum computer today. (What's interesting is that they would survive even if the expense didn't pan out, but no large successful company would ever do this today.)
All of these aren't in defining a new product. There was no guarantee of a customer base for the S/360. There was already an established market for each of these listed items. Maybe if Apple had spent that kind of money on making the first iPhone you could make a similar comparison.
Disclaimer up front: I work for a Tesla competitor.
If I were a Tesla investor I'd want to hear more about how Design for Automation is going. If you plan to automate vehicle assembly in a cost effective manner (as Musk has indicated), your components and your assembly operations must be designed for that automation.
Tesla has had notable problems getting suppliers to understand and implement their plans (BorgWarner? - original transmission for the Roadster; Mobile Eye - self driving components; Falcon wing door component supplier).
Tesla regularly asks suppliers to do things that no other car company has asked them to do (see list above). Design for Automation is a new requirement for many components, so this may be a challenge for suppliers, and thus Tesla.
Tesla may win this gamble, or they may not. It will be interesting and educational either way.
Their agility in comparison to GM is communicated very well. At least they tackle innovative moonshot projects, it motivates people to give their best.
In other companies the ones innovating are the minority and people dwell on past successes.
I'd rather work at an innovative company than for GM.
To bflesch's point, GM is making a different gamble: that the vast majority of consumers will continue to prefer fossil fuel engines for the next few engineering cycles (10-15 years).
GM has a side bet on electric cars in the form of a joint venture to build electric cars with LG, and another side bet in the form of a joint venture to build hydrogen fuel cells with Honda.
Tesla is making a VERY big bet that a vertically integrated, highly automated, battery electric carmaker will be able to take an increasing amount of market share.
To be clear, I'm extremely impressed with what Tesla has accomplished so far - if Musk accomplishes what he plans, manufacturing will never be the same.
Like I said above, it will be educational to see what happens.
I just picked up my Model X after a week in the shop. They weren't able to finish all of the work, because "we are busy this time of year." They told me to bring it back in April.
In about a year of ownership, this is the 3rd time I've lost the car for about a week. I probably should have brought it to the shop 3-4 other times, but I let the issues build up.
They've had to replace all sorts of parts on my car, including the entire driver's seat. Even basic stuff like my phone playing audio doesn't work half the time. The driver's side wing mirror quit opening. I've had to reboot the car 10+ times in order for the dashboard display to work. The gull wing door opened into a ceiling and left a scratch. The hood opened into a ceiling and left a scratch. My windows have quit going up three times. Most of the trim / sealing / etc is coming off, misaligned, etc. I probably sit here and think of 10 more problems.
Anyway, I knew I was buying a v 0.1 car and I’m generally happy with it, despite the problems. Their service has actually been amazing, but that's kind of the point of my post:
If the Model 3 has anywhere near the same level of problems as my X, at 10x the scale, Tesla is doomed. How could this possibly be even remotely cost effective on a lower-margin Model 3?
They really overdid it with the X. Lots of cool stuff, but kind of impractical.
I have an S, which I think they got just about right. I actually just drove it back from the service center, but the problems I've had have been fairly minor and the sort of thing you might expect from any car.
I'm hoping that the strict cost target for the 3 will mean that it's simpler and and more reliable. Certainly there won't be crazy-ass doors to go wrong. I agree that the 3 must be a lot better for the company to survive.
By the way, when you say the hood opened into a ceiling, do you mean the tailgate? The hood is still manually operated, unless I missed some news.
If it makes you feel any better, This seems to actually be fairly common in the automobile market for new model cars to have teething issues like this.
I bought a new model mini cooper a few years back right after f56 came out and ran into issues like: USB port would not charge a Verizon smartphone, Car would occasionally stall and would need to be put in park to start again, Replaced rear seat, air bags.
It sucks, but it seems like the sort of last minute post release bug fixing that happens all over in software.
What happens is, you lift the tailgate a little bit and then the car takes over and opens the tailgate the rest of the way -- far higher than a person would do in a room with low ceilings. I let go of the tailgate and had no real way to stop it from opening itself the rest of the way into the ceiling.
Tesla looks like they will lose that cool new thing vibe soon, the novelty of an electric car will wear off - especially when porsche or benz come out with an electric sedan or coupe. These companies will offer a much more compelling product with the ownership value that people expect from a luxury car company.
I have shopped a model S and besides the electric drivetrain it is not really that nice of a car compared to an E class or a porsche panamera - The interior is weak as far as fit and finish. As soon as the the germans offer a similar product on the high end ( and with GM already offering a full electric on the low end ) tesla is done.
You make a great point, as I was thinking the exact same thing.
Sure, Tesla as a company may not take off as some people expect, but they have already had a huge impact on the automotive industry and the American Collective Consciousness.
Tesla doesnt make batteries they just package the cells, anyone can do this if the market demands it. Automotive companies are quite good at supply chains.
You dont know what youre talking about. They do make batteries. 2170s are rolling off the gig assembly line as we speak. They are already in their products. Please think before you speak.
you are correct, my bad. I did think before I spoke though so that was not necessary. It is interesting how angry people get when you say anything negative about tesla. And my point stands that anyone has access to battery technology - Samsung sdi and LG chem can scale up with any partner just as tesla and panasonic could
I apologize. There isnt really an excuse for the way i addressed your comment. As for the anger one sees among tesla fans, in my case its because tesla was a laughing stock for years before the model s and wide recognition. Fake reviews, hit peices, a death watch and not to mention the response from the average joe whenever tesla was brought up in conversation. Being called a loser by a presidential candidate despite achieving so much and surviving such massive challenges. People love to hate electric cars and especially tesla even now. They spread misinformarion about batteries being dirtier than gas or how emissions are moved and not eliminated. All of these things have made many tesla fans very bitter.
Packaging the cells is the hard/expensive part. Nevermind the battery management software. And the point of the Gigafactory is to compress the supply chains between raw materials and finished product. It's an all-in investment whose singular goal is to make battery packs cheaper. The only way other companies are going to match that efficiency is if 1) they make a similar investment or 2) Tesla/Panasonic screw up.
In my opinion that's like saying the "DVD buzz is wearing off" in comparison to VHS. :D But yes, if you don't believe electric cars are going to take over everything, the Gigafactory looks super risky, and regardless it's definitely an enormous investment to have on the books while it's not paying for itself.
That's my feeling too. "I drive a Tesla" won't mean anything if it costs $35k and everybody has one, even if it were a nice car. And if Honda or Mazda offered fun to drive $35k electric car with same range, I'd probably get that over Tesla.
Preferring an electric Porsche or Mercedes over an electric Tesla is one thing, but to say the "electric car novelty will wear off" is complete nonsense. EVs are the future, and they're only going to continue to replace gas-powered cars.
You're missing the point. If indeed your second point is true:
> EVs are the future, and they're only going to continue to replace gas-powered cars.
Then the fact that the "electric car novelty will wear off" is a given. By definition, electric cars can't both be the norm and a novelty at the same time.
will rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the notes, (in other words, they're not senior to anything no explicitly listed as junior, or any existing debt)
will rank equally in right of payment with any of our unsecured indebtedness that is not so subordinated (including our Existing Convertible Notes),
will be effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness and will be structurally subordinated to all indebtedness and other liabilities (including trade payables) of our subsidiaries...
That's a rather junior senior note.
None of this matters unless they go bust, in which case it really matters.
I was really hoping that Tesla and Toyota would form a partnership to build and service the Model 3. From a purely business point of view, I think this would have been a huge win for both companies.
Despite the success of the Prius, Toyota made a decision to focus exclusively on fuel cell technology and wasted 10 precious years. They lost that bet, and now they need access to Tesla's superior EV technology to catch up with the competition. Tesla has no experience with the formidable supply chain and production issues involved in building cars on a large scale. This is one of Toyota's great strengths.
Unfortunately, there seems to be some bad blood between Toyota and Tesla management. I suspect this may have prevented consideration of such a partnership.
(Disclaimer: I just decided to sell my modest investment in Tesla stock.)
"It is also correct that as a car manufacturer, owning a battery producing company and selling to the rest of the industry, is a competitive advantage."
You really don't get rich off of building commoditized foundational parts like battery. Any competitive edge you have is going to be short lived.
You say that, but in recent decades, Intel was more profitable than the typical PC manufacturer that bought chips from them. Hard technology can be a very lucrative competitive advantage.
This is the sort of thing that ought to terrify the makers of legacy automotive technology, both for how Tesla might scale production, but also how Tesla might become a lot more aggressive with its intellectual property strategy.
Their ambitions for scaling production are meager: to start making Model 3's at a rate of 5000/week by 2018, which wouldn't even match the rate at which cars rolled out of that very same factory when GM/Toyota owned it. If they kept up that rate for a whole year, that'd represent around 0.7% of US car sales. Terrifying, or just one of many small car brands on the market?
By 2019 they want to double that rate to 10K/week... but that assumes there are 10,000 people a week that want to buy an EV at (according to Mr. Musk) an average price of $42,000 or more -- significantly higher than the average new vehicle selling price.
Right now, less than 2500 people a week buy any type of electric or plug-in hybrid car of any make or model in the entire country. So Tesla needs to quadruple demand for electric vehicles and then capture all of it within ~21 months to meet their targets. By 2019 they'll also be up against a bevy of EVs from those other auto makers, likely at lower price points. The 2018 Nissan Leaf, with 200+ miles of range and ProPilot (limited) self-driving capabilities might even beat the Model 3 to market, and will almost surely be cheaper.
What valuable IP does Tesla have to license out that would terrify auto makers?
There are plenty of other suppliers of EV motors, chargers, inverters, control systems, battery cells, battery packs and battery management systems. LG Chem's nearly reached price parity with Tesla/Panasonic (and has several gigawatt-hour-per-year scale factories of its own, with more in construction). BYD, Foxconn, Boston Power, Samsung SDI, SK Innovation, etc are bringing in 150+ GWh per year of EV battery production capacity by 2020.
Their "Autopilot" software is built on Intel Mobileye (V1) and Nvidia's DRIVE PX2 (V2) platforms, which any other car company can license. The Supercharger network doesn't seem to offer anything technology wise that isn't matched by the Combined Charging System (CCS), which is rolling out 350 kW chargers throughout 2017, with the US government's backing. So what do they have that their competitors would value enough to license from them, knowing they're funding the competition?
It doesn't have self-driving technology. But that will come to Chevrolet or some other manufacturer.
Apple and Google were smart to stay out of the car making business. The established players are experienced and the margins are low and it's tough to compete. Partnering to make software and systems for the car industry is a better place to be.
Elon said in a recent earnings call that, while they would probably be fine without a raise, they expected it would make investors more comfortable if they did a raise and thus might do one.
"Elon said..." has started enough apologies for Tesla's poor judgement that I've become numb to it. They're all of the form "while it may look like we're weak, actually...(poorly reasoned explanation for the weakness)", and it has been going on for years.
Ah, convertible bonds. On the trading floor, a converts-trading colleague had a Post-It note on his monitor:
"Interest rates up: converts down
Interest rates down: converts down
Volatility up: converts down
Volatility down: converts down
Apple strudels up: converts down
et cetera"
Converts are complicated. For one, nobody is fighting for you post-issuance. You don't (yet) hold stock, so the Board doesn't think you're pretty. Yet your bonds will be subordinated, making them swim like equity. This leads to all kinds of fun [2] when markets fail to maintain monotonicity.
Monotonicity means if a line is going up it keeps going up; never down (and vice versa) [3]. A graph for the Empire State Building with the floor number on the X axis and the height of said floor on the Y axis would be monotonically increasing. If I bent the building into a U shape, that graph would not be.
If you graph pay-offs for people in your company as a function of the stock price, you want it to be monotonic. That means interest are aligned. If your CFO makes a million dollars when the stock tanks, he's going to want the stock to tank.
Let's consider HappyCo. HappyCo has issued 10,000 shares of Common Stock. They trade at $100 per share (a $1MM market capitalization [4]). HappyCo issues 1,000 convertible bonds that can be turned into one share of Common Stock in exchange for $120 per share. To keep this easy for now, let's say HappyCo issue these converts secretly, i.e. the market can't price them in before exercise.
If the stock price is way above 130 everyone wins. If the stock price is below 130, converts lose. (Stockholders also lose.)
But what if the price is exactly 130? The market, thinking there are 10,000 shares outstanding, weighs the company in at a $1.31MM market cap. But then--dun dun dun--everyone converts. Holy shit, 1,000 new shares! At what price does this new share count (11,000) yield a $1.31MM market cap? 119.09 per share. At 129 pre-conversion, the $1.29MM company trades at 129 per share after accounting for the converts (nobody converts). At 130 pre-conversion it trades at 118.18 post-conversion. It takes us until 141.90 pre-conversion to get back to 129 post-conversion. The price goes monotonically up, but the stockholders do okay, then worse, then better again. Monotonicity was broken. An evil shareholder learning of the converts might prefer a pre-conversion price of 129 over 140.
This may seem silly. Nobody secretly issues stock [5]. The market would start pricing the converts in as the stock price approached the conversion price. How does it do that?
Options! A convert is a bond married to an option. (People once made a lot of money arbitraging converts against the issuer's stock, bond and options markets [6]). You get all the legal complexity of bonds [7] entangled with the mathematical complexity of options [8]. As I said, fun [2].
But bankers would just price things properly at the outset to ensure they maintain monotonicity, right? Well, they try to. But look at the variables in a common option valuation equation [9]. Rates, volatility, dividends, et cetera. Each of these changes the balance for converts holders. (For example, if dividends go up one might want to convert sooner, i.e. at a lower price. What if taxes go up at the same time? Who knows! Fun [2]!)
In a perfect world, each variable would iterate, one by one, like an Excel spreadsheet that isn't complaining about circularity. Investors would, one by one, plug new numbers into their models to get a clean answer. Unfortunately, we inhabit a reality where more than two aspects of it can change simultaneously.
Upshot: converts commonly ram through their boundaries all the time. When this happens, everyone converts. Actually, not everyone since each investor has a different break-even conversion price. An insurance company, with lower borrowing costs, will convert differently than an individual investor on margin. Similarly, an invest trading out of a tax-deferred IRA will convert differently than one trading straight. Fun [2]!
TL; DR Converts a lots of fun [2] for financial theoreticians, fun for market makers and hedge funds, a little less fun for bankers and an affordable source of entertainment for all.
Key terms are interest rate (coupon) and conversion premium. These are not printed on preliminary prospectus and will be printed on the final once the pricing is determined. They way this works is that underwriters (big banks listed on the first page) go to the market (long only and hedge fund investors) with a range for coupon and conversion premium. Investors will express interest somewhere in the range and the instrument will be priced tomorrow at close to get the right investors and best pricing for Tesla. We'll see the final terms once the convert is priced tomorrow after close, but qualified investors already have offering ranges.
Generally, converts have much lower interest than straight debt because they offer equity upside to investors once the stock goes above the conversion price. Tesla is high volatility stock, so the convert pricing will be attractive for the company (low coupon / high conversion premium) because that embedded option is valuable to convert investors.
Nothing wrong with Tesla raising money, after all they basically burn it to sustain the company..
The curios part is that it looks so few.. 1 B isn't a really much.
I think the time is ripe for TESLA to launch into India, a manufacturing plant. Modi govt is keen to ratify the Paris accord and raise the clean energy initiatives. On another side, it would help TESLA brand if they first launch a high end car in India and later market the mass market car as a better luxury car, they'll earn an awfully large income on this.
Just to quantify this a bit more: they plan to hit a rate of 500,000/year by the end of 2018, and so far the company has sold something like 200,000 cars total, ever, since it started.
(I don't know how likely they are to hit that goal by the end of 2018, but they're trying.)
The Model 3 is supposed to start at $35,000. Demand doesn't seem to be a problem, as they have hundreds of thousands of reservations and pretty much stopped trying to solicit more while they work through the backlog. The major challenge for now is actually getting production up to capacity.
If you order parts for 100k additional vehicles, and if they would cost only 10k per car, you are talking about a billion dollar bill. Tesla plans to double their car production again this year, and this requires large advance payments. Those 100k cars would give 4Billion in revenue, but thats only at the end of the year.
I think HN guidelines are fundamental to a great Internet community and want to help support it. I'm not complaining and don't care about the treatment of this one comment, but I do care if the rules of HN have changed:
Specifically, criticism of Musk attracts disproportionate down-votes (again, I don't care, but it seems obvious from my experience) and mention of Trump is obviously inflammatory. But it's important that the angry mob doesn't intimidate reasonable people into silence about important issues, nor exhaust and frustrate mods into enforcing that silence to some degree - the latter worries me a little, based on your response, though it would be very unusual for HN mods (but OTOH Trump is an unusual situation) and of course I can't read your mind.
My hope is that you have misunderstood the comment, which would be fine, and that there are not new rules and they don't apply as you seem to imply. Perhaps I didn't communicate well enough to be understood; certainly it could be shorter, but that usually doesn't attract moderator criticism (I tried to break it down with some structure, as you see).
Specifically, I don't understand:
> not political
Politics is frequently discussed on HN some having nothing to do with the tech industry. Also, the political practices of other SV figures are widely discussed, from Travis Kalanick to Brendan Eich to many others, and some of those issues has nothing to do with tech or business. We discuss discrimination against women and minorities in tech, and also in society in general, for example. You obviously don't need me to tell you all that, so I'm not sure what you mean.
And the issue I raise is politics specifically as a business practice, in a way that directly affects the tech industry and many HN readers in a serious way: Corruption distorts the market, and forces competitors into similarly corrupt practices in order to compete. The tech industry probably doesn't want success to depend on who is closer to the politician in charge. The whole startup culture depends on access to the market by weaker players, and the opportunity to succeed largely on merit. Political corruption and crony capitalism are very serious threats to SV.
(In fact, I believe this issue may become the most consequential in tech for many years to come, in large part due to Musk's current actions. Will his competitors now also have to kiss up to the President? And then their competitors? Will opportunists seize a potential advantage? If I'm right, I can hardly think of a more important issue for HN.)
> not political broadsheets
I'm not sure what is meant here: A broadsheet is a newspaper, and a political broadsheet would have many stories on many different political topics. IME the term usually is applied to second-rate partisan publications filled with loose editorial against the opposition.
In comparison, my comment is one specific allegation with a long list of supporting links: The allegation that Musk is engaging in political corruption to the significant benefit of his businesses. I step through the argument (read the statements beginning each section) and provide supporting links for each step. That is, it's not a list or variety of loosely related stories - perhaps the number of links gave the wrong impression.
It's also not loose partisan editorial, but better supported than > 99.5% of HN comments (and better supported than almost 100% of partisan editorials, but that's a low standard). As cited, multiple major investment banks have advised their clients to invest on the basis that the allegation is true or at least a serious possibility, the allegation is widespread beyond that (search for "musk trump"), and it's cited from many serious sources such as the NY Times. See my post further down the thread for more documentation and support.
I think I do a good job of avoiding inflammatory language; I am open to input and even note sources that are less-than-optimal, undermining my own point. Sometimes unpopular facts are inflammatory, however, but I don't think those should be avoided (though they should be well-supported and stated without additional provocation); they are often the most important ones.
> boilerplate
I think it's certainly it's not boilerplate, defined as standard formulations uniformly found in certain types of legal documents or news stories - that is, copy-and-paste talking points. Perhaps that's not what you meant? It is completely original, composed with greater time and effort than most HN comments.
Tesla's prospects today aren't noticeably different from how they were on November 8th, 2016, so trying to tie it in to Trump doesn't make the slightest bit of sense to me.
> Tesla's prospects today aren't noticeably different from how they were on November 8th, 2016
I think the evidence strongly says otherwise: Tesla closing stock price, a quantitative measure of the market's view of their prospects and actual financing for those prospects:
I'll pull out a few from around Election Day, as a more representative sample. But for better data than the excerpts below, go here and look at the 1 year and 5 year charts:
* Tue, Nov 1, 2016: 190.97 (1 week before Election Day)
* Tue, Nov 8, 2016: 194.94 (Election Day)
* Wed, Nov 9, 2016: 190.96
* Tue, Nov 15, 2016: 183.77
...
* Generally, on Dec 2 it was 181, then it vectored mostly steadily upward to Feb 21 (277), then there was a dip and it stabilized at the current level.
* Peak: Feb 13, 2017: $280.60 (about equal to approx. all-time high, last seen July 2015)
* Today: 255.73
----
Remember that Musk criticized Trump before the election. Then Musk made a dramatic turn and became Trump's supporter, to a significant extent at least, and I think in December or January (but it would be good to know when).
* The stock price has shot up by 31% since Election Day, and ~50% from its ~ Dec 2 low to its Feb 13 peak. Not only does that directly help prospects, but the market clearly views Tesla's prospects as significantly better.
* Multiple investment banks tie the large increase to his relationship with Trump. And at least one investment bank advised people to buy stock specifically because of the Trump relationship. See links in the GP.
* Many other reports, including some I quoted, also tie his companies' prospects to his relationship to Trump, though in ways that are harder to quantify. See links in the GP.
* Many accuse him of supporting Trump specifically for this reason. Again, see links in the GP. Of course, nobody can read Musk's mind, so that is always difficult to substantiate.
* Search for "musk trump", and you'll find much more than the few links I posted.
EDIT: made stock data a little more informative, and more clear statement in the opening
I don't recall Musk being a Trump supporter. He is working with Trump, but that is not the same thing. He has stated that he thinks it's better if the President has good people advising him, regardless of how one thinks of their policies.
TSLA is really volatile. The market cap is absurdly larger than the company's actual assets, meaning investors are banking on massive future growth. Going from $195 to $256 isn't that big of a change IMO. Your links are either irrelevant (e.g. talking infrastructure with Trump doesn't equate to support) or speculative.
Even if you don't believe him, the fact remains that joining an advisory council is not the same as lending support. So unless there's something else he's done that actually indicates support for Trump, it's a baseless claim.
> joining an advisory council is not the same as lending support
That is your opinion, but it's not fact. I'm sure you are aware that many disagree (who have no greater claim to fact than you), including the people who bought that billboard and those who pressured Travis Kalanick (of Uber) into leaving the advisory council.
It's really a matter of degree. It says that this is a person who is worth the time to advise; they are therefore intelligent, responsible, capable, they listen, and I share their values enough to associate my name with their endeavors. It doesn't say 'I support everything they do'.
If Musk joined advisory council of most businesses, it would send an incredible message of support, for example (though not exactly comparable).
I guess I'd like to see some evidence the other way. The comments above are just denials, as in negative allegations or opinions with no support. I think I made my case very strongly, with much more evidence than 99% of comments on HN.
The one thing we can agree on! Im sure that all fuels will have some limited role for as long as there are vehicles operating in adverse or unusual conditions. Hydrogen systems depend and will always depend on being adjacent to substantial batteries in the cars powertrain. This is because fuel cells can contain lots of energy but are much more limited in the rate at which they can offer that energy. In the mirai, the fuel cell keeps a battery topped off. When the car needs to accelerate quickly it draws charge from the battery.
A modern car company is as much of a production and supply chain company as it's a product and tech company. I get the feeling that due to Tesla being cutting edge in the tech department it led to all the supply chain/production problems being treated as if they are speed bumps on the way, when in reality they are fundamental core competitive areas for an automotive company. Toyota is not the world's premier automaker because they have cutting edge tech, they are what they are because they build unbelievably number of reliable cars at an unbelievable scale.
The bleeding of cash after so many promises of "not going to raise money again" just shows that their vision is way ahead of their execution ability. Decisions like the terribly executed Falcon Wing Doors on a SUV that delayed production and increased cost and hurt reliability just further gave fuel to all the doubters.
I also have a strong suspicion that Tesla has not been honest with their Auto Pilot 2 and full self driving tech's progress. The current AP2 is an unsafe joke and I have no idea how people are ok with paying $5-10k for a significant downgrade when compared to AP1 because of a non-binding promise that it "might" get upgraded before their lease term is out. Any other automakers would be laughed out of the room for suggesting this kind of sales tactics.
I still believe in Tesla/Elon's end game vision, and I think what they accomplished is nothing short of brilliant, but I think it's a very risky investment at this point and the road ahead is bumpier than many like to admit.
The upcoming Model 3 will be the acid test for Tesla. It will no doubt be a good car, but at this point people should focus less on what the car can do and on how the car will be rolled out, sold and supported afterwards. A wealthy Model S customer may be ok with having the car in the shop after a minor accident for 5 months due to lack of replacement parts, but for an average Joe paying $500/month leasing a Model 3 that would just be the birth of a new BMW customer.