
Musk urges Tesla workers to cut costs ahead of fundraising round - itg
http://www.bloomberg.com/news/articles/2016-09-02/musk-e-mail-urges-workers-to-cut-costs-in-bid-to-woo-investors
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farcical_tinpot
It's a bit late now. When your company is basically one research and
development project you need to cut all costs down to specifically those
that's going to provide you with a product you can sell, and then keep
iterating over until you can sell for a profit. You do the boring grunt work
until that is achieved.

The fact that Musk told us stage one was done when he came up with that
ridiculous grand plan, designed to drum up yet more investor cash, was
laughable. Once the Model 3 sells for a profit, and for $35,000, which it
never will do, then you can start looking at further grand plans. The Model X
was a ridiculous distraction with gull-wing doors any sensible automotive
engineer would have pointed out was a production and maintenance nightmare
that would never end well.

They're also swallowing Solar City, basically to save it, not because of any
grand plan for 'synergy' as Musk says that makes sense.

The Emperor's clothes are starting to dissolve and the wheels are coming off
I'm afraid.

~~~
qaq
It might be cultural differences but it always amazes me how people can have
such strong opinions without even a tiny doubt that there might be a chance
that the person they are criticising is a bit more informed/experienced and is
maybe taking actions based on their knowledge and experience.

~~~
hourislate
I was thinking the same thing after reading OP's comment.

I wouldn't even try to wrap my arms around what Elon is doing. Cars, Energy,
Rockets, etc. It's not everyday that someone who wants to change the status
quo comes along. All I know is he must be very lonely with so many people
hoping he fails.

~~~
qaq
That's another thing I can't understand if he succeeds we all win in a very
fundamental way, why so many people hope he fails is beyond me.

~~~
nihonde
If he fails for making promises he could never keep, many will stand to lose.
I live in the home of Toyota in Japan, and would welcome any competition that
pushes Japanese automakers to achieve more, but in my opinion Tesla is not
showing the signs of a business that can scale. Incidentally, I blame the
American consumers, investors, media, and labor pool for that shortcoming as
much or more than I would blame Musk. A great leader is still only as good as
his weakest link. In my view, America is incapable of sustaining a great
manufacturing culture at scale due to the influence of various perverse
incentives that have woven themselves into the cultural fabric.

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partiallypro
I love Tesla cars, I think they look amazing, the technology behind the is
incredible...but it is just not well run in terms of money. Musk is a
visionary, but seems to overlook his cash burn. I am waiting for the headlines
when people are talking about Tesla'a stock plummeting down to earth. Maybe he
has enough billionaires in his network of friends to keep him going long
enough to maintain his image. I don't know. People aren't as friendly with
their money during economic downturns and we're due for one. That's when we'll
find out what lies beneath the veneer.

I love his work, but I question his financial decisions.

~~~
greglindahl
You are commenting on an article which is all about Musk paying attention to
cash burn.

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sna1l
I wonder what kind of cost cutting they will do. Whenever I hear cost cuts, I
always think layoffs, but at a time where they need to ramp up production, I
feel like that would be counterproductive.

~~~
farcical_tinpot
There will be a call to cut whatever costs they can, which won't get far, and
then there will be layoffs.

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stevep98
My model S has been in the shop after a collision since a June 10. The repair
shop has been waiting for parts. The last thing we're waiting for is some kind
of spring related to the airbag assemblY. Originally tesla said they would
pull one off the production line since I waited so long, but now they are
backing off that. It's going to be at least another 3 weeks.

Be aware if you are buying a car from tesla, that you are at their mercy in
terms of parts. There are no third party parts available, and tesla is using
all the parts for new cars.

~~~
brianbreslin
That's not tesla exclusive. My dad's been waiting 3 months for a replacement
airbag for his 2008 lexus. They were one of the ones takata (sp?) recalled but
can't make enough replacements.

~~~
davidf18
Sorry to hear about the 3 month delay and provides some insight in the
construction of luxury cars at least Lexus. Auto manufacturers were warned
that the propellant for the airbags was dangerous and were warned by other
airbag vendors who refused to use it to _save a few dollars per airbag_ and
lost the contract to the Japanese airbag vendor.

I wonder if other luxury brands such as BMW, Mercedes, Audi, used these types
of airbags. I'm guessing not.

~~~
davidf18
Well, I was wrong. Here is a list of cars effected with recalls for using the
"save a few dollars" airbag using a propellant that was known ahead of time to
be problematic.

[http://www.nydailynews.com/autos/news/takata-airbag-
recall-l...](http://www.nydailynews.com/autos/news/takata-airbag-recall-list-
cars-article-1.2602999)

Brands include: BMW, Mercedes, Land Rover, Jaguar, Audi, Lexus,....

These companies sell themselves as luxury brands and their cars are very
expensive, but it seems clear that the MBAs and bean counters are running
these companies and not engineers and car designers.

This is my HN submission of a NY Times story on the topic of the airbag
recall. One can read how the auto manufacturers deliberately put their
customers at risk to save _a few dollars per automobile_.
[https://news.ycombinator.com/item?id=12367031](https://news.ycombinator.com/item?id=12367031)

The question I have is since it seems clear that engineers don't get to decide
the safety of the car design and proper engineering in these luxury brands,
how do we trust these luxury car manufacturers to even allow the engineers to
design the car that they think is best and not the bean counters?

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jacquesm
I don't like these SpaceX-Tesla-Solarcity cross links one bit. If one of them
falls it could cause the rest to go with it.

Solar City 'power walls' are a shaky proposition at best, if that becomes a
key element in Tesla succeeding then they have a problem.

~~~
TaylorAlexander
Wait, wait... you're saying that a battery is a shaky proposition? For an
energy company that currently can only provide energy during the day?

SolarCity is an energy company. They collect and sell energy. They do not sell
any solar panels. They use the customer's homes for a distributed collection
system. But they sell energy. And currently they cannot sell energy at night.

Conveniently, lithium batteries are a proven product growing in popularity.
What's sweet is that SolarCity has close ties to a company that has shipped
more large scale lithium batteries than _any_ other company in the world.
Nissan has shipped a lot of 24 kWhr battery packs since 2011, but Tesla has
been shipping 56 kWhr packs since 2008, 85 kWhr packs since 2011, and now
ships 100 kWhr packs.

You know what would be great? If Tesla sold more product, and if they did so
through a partner company that needs lots of batteries.

Oh boy, then they'd need a bigger factory! If only...

~~~
Avshalom
Solar City also can't generate energy at night. Which means to sell energy at
night they'd have to stop selling it during the day.

Also energy has a lower price at night. Which means they'd make less money if
they stored it during the day and sold it at night.

~~~
TaylorAlexander
> ...to sell energy at night they'd have to stop selling it during the day.

Certainly that would be true if there was a finite amount of energy available
and their customers purchased all of it. But they can install as much capacity
as they need - there is more solar energy available to collect than humans can
currently imagine requiring. If it is worth it to them, there is nothing
preventing them from installing sufficient capacity to meet their customer's
needs 24 hours a day.

~~~
Avshalom
Yes well when they have installed enough solar panels to exceed the day time
demands of the entire country (which is what selling to the grid means) THEN
they can start worrying about storing excess capacity.

N.B. distributed solar currently accounts for ~.25% of electrical generation,
Solar City accounting for some fraction of that fraction of a percent.

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digitalengineer
"Tesla burned through $611 million in cash in the first half of this year and
$2.2 billion last year..." Can someone explain WHY this company wants to buy
SolarCity?

~~~
martinko
Despite Musk's positioning on the topic it really feels like a bailout of his
other investments. Does anyone have information regarding the time of the
shareholder vote on the merger? Given that Musk and co. will abstain, there
might be a reasonable chance that it will not go through.

~~~
andrewtbham
it will go through. if you didn't like the deal, you sold the stock. they have
a lot of the same large investors, that have already approved the deal, such
as fidelity.

~~~
prklmn
Tesla was down 12% upon announcement of the deal. I guess if your crystal ball
didn't tell you this value-destructive deal was coming, you got screwed.

~~~
brianwawok
One day price bump doesn't matter. If it regains the 12% in a week, to a long
term investor it destroyed 0 value.

~~~
prklmn
"If" is the key word that you used. Nothing in the future is promised. See
what long term holders of Valeant have to say..it goes both ways. The only
thing that is certain is that the stock lost 12% of its value in a single day
over acquisition/poor corporate governance concerns. That would be alarming to
me as a long term shareholder.

~~~
brianwawok
A long-term shareholder that is worried about an announcement day bump must be
new to the stock game, or not that good at it.

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blubb-fish
I think one big problem about privatization of such complex projects is that
if they go down the acquired knowledge and research results might end up
nowhere instead of being reused by a following generation of companies and
researchers.

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godzillabrennus
Steve Jobs had some cost cutting conversations during his day as well:
[https://youtu.be/BNeXlJW70KQ?t=16m14s](https://youtu.be/BNeXlJW70KQ?t=16m14s)

Great leaders know when to cut costs to save great companies.

~~~
brakmic
As far as I know Bill Gates saved Apple.

~~~
angstrom
And luck save Apple as much as Bill Gates. He may be a great philanthropist,
but corporate philanthropy isn't his shtick.

~~~
brakmic
"Luck" isn't quantifiable. Bill Gates' dollars are.

~~~
angstrom
$150m in 'luck'. See it's possible.

