
Will the Model 3 make Tesla a real car company? - lackingcaffeine
https://www.bloomberg.com/news/features/2018-07-12/how-tesla-s-model-3-became-elon-musk-s-version-of-hell
======
michaelt

      Tesla is running out of cash at a time when competition
      is heating up—Volkswagen, BMW, Daimler, and others plan
      to release dozens of electric car models.
    

I wish competition _would_ heat up.

All I want is an all-electric EV with a 200+ mile range. You know what my
options are? [1] A Tesla Model S or X, a Bolt EV/Ampera-e which isn't sold in
my country [2], or a Tesla Model 3 which is barely shipping at all.

I look forward to the day when more than one company sells an EV with a
respectable range.

[1]
[https://commons.wikimedia.org/wiki/File:BEV_EPA_range_compar...](https://commons.wikimedia.org/wiki/File:BEV_EPA_range_comparison_2016-2017_MY_US.png)
[2] [https://fleetworld.co.uk/new-ampera-e-wont-make-uk-
confirms-...](https://fleetworld.co.uk/new-ampera-e-wont-make-uk-confirms-
vauxhall/)

~~~
baggachipz
> a Tesla Model 3 which is barely shipping at all.

Sorry, but no. One can be had in just a couple months at this point, and that
lead time will dwindle quickly now that they've really ramped production.

~~~
IkmoIkmo
Isn't production 20k a month and pre-orders >400k right now?

Doesn't seem like a couple a month right now and at all. Of course it could
dwindle fast from here on out, but even if production doubles you'd still be
looking at more than just a couple months. And you'd likely see pre-orders go
up accordingly as well, I'm sure there's people who haven't pre-ordered
because it makes no sense paying $1k to be on a 3 year waiting list, I
wouldn't be surprised if waiting lists didn't budge nearly as much as
production rates increase. And besides, doubling production isn't exactly
trivial despite Tesla's erroneous claims in the past.

~~~
stetrain
Depends on your country and configuration.

A large chunk of the 400k are probably outside of the US, and another chunk
are waiting for cheaper configurations.

If you are in the US and order a 'First Production' model (Long Range battery
+ premium interior) you will definitely not be at the back of a 400k long
line.

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startupfounder
Tesla isn't a car company, it's an energy company that is building the Model E
on their energy platform. Reading their SEC 10-K[0] will show this.

Solar is 55% of all new installations in the USA and Tesla is the leader in
solar installations with SolarCity. $/watt installed is only going down with
scale.

Batteries are becoming the platform for transportation and Tesla owns 50% of
the global manufacturing capacity. $/watt is also trending down with scale.

Charging stations will replace gas stations and Tesla owns a major percentage
of the stock.

The question is over what timescale is Tesla over/undervalued? The genius is
that there is always going to be friction between long and short term values.
This shortsightedness is the weak link of Wall Street. But if it's overvalued
then short the stock!

The Model E has already made Tesla an energy comany with a very successful
product, "the Model 3 is selling more units in the U.S. than any comparably
priced midsize sedan, including those offered by Mercedes-Benz, BMW, and
Audi."[1]

I don't own a Tesla or Tesla stock.

[0] [http://ir.tesla.com/static-
files/0fbefe56-326c-412e-a33c-aa1...](http://ir.tesla.com/static-
files/0fbefe56-326c-412e-a33c-aa1b342e9469) [1]
[https://www.bloomberg.com/news/features/2018-07-12/how-
tesla...](https://www.bloomberg.com/news/features/2018-07-12/how-tesla-s-
model-3-became-elon-musk-s-version-of-hell)

~~~
sokoloff
> But if it's overvalued then short the stock!

To put the disclaimer up front: I have.

I think Tesla's going to run out of cash and be forced to raise on
disadvantageous terms.

As a car company, they would be unbelievably overvalued. As an energy company,
they would be wildly overvalued. As a solar company, they would be wildly
overvalued. As a battery tech company, it's unclear, but probably still
overvalued or wildly overvalued. I don't see how even that combination, along
with the current and projected cash burn rate, lets them catch up to their
current valuation let alone exceed it before needing to raise capital.

I love the tech, daily drive (a non-Tesla) electric, and hope EVs continue to
grow in market share; I just don't see the company as being nearly worth the
current market cap.

~~~
poulsbohemian
Here's the mental gymnastics I go through, and as it sounds like you have done
some thinking on this, perhaps you have insight... if Tesla eventually reaches
a point of desperation, isn't it reasonable to think they would sell to some
better-capitalized party, at which point the stock would have value (in
conversion to stock of the other party, if nothing else)? So, while it might
currently be overvalued at ~ $300/share, if they succeed in their goals that
will seem cheap, and if they fail you'll still more than get your money back
out of it. Is that just misguided optimism on my part?

------
d0lph
Correct me if I'm wrong, but I feel like the fact they sell cars makes Tesla a
real car company already.

~~~
SurrealSoul
But if they sell more cars can we still make these articles?

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rb808
I dont think it will be a real car company until you see.

* Crappy ads on local tv with Incentives to get excess inventory off the lot

* Old models in the scrap yard

* Disappointing resale values

* Unions on strike

* Mechanics who making blowing noises when you drive onto the lot and ask how much to fix

* Management out for themselves

* Factories in some run down city in the midwest

Until then its still a novelty company.

~~~
vntok
Hmm they do #2 already, and #4 (ish, no unions yet but threats of unionizing),
elon musk is pretty much a guaranteed check on #6 and as for #7... can you be
more run down than in the middle of the desert?

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stephengillie
Given current fuel efficiency requirements, a midsize sedan is hell for every
automaker.

Ford largely abandoned the sedan market. Every other automaker has been forced
to either hybridize or reduce car size. SUVs and trucks are effectively the
new sedan, as they have different efficiency requirements, so can support the
mobile energy requirements of an early 21st century family. Most of the plug-
in hybrids and all-electric cars - the Bolt/Volt, i3, etc - are part of
limited runs that are likely sold at a loss to offset the company's more gas-
hungry vehicles.

On the other side, cheap cars leave slim margins. In Lee Iacocca's
autobiography, he relates Henry Ford Jr telling him that they'd never make
money on small cars, in the 1970s gas crisis.

~~~
Retric
It's eye opening to consider 3-5 year ownership costs in light of what people
buying a 3-5 year old used vehicle want.

The problem with cars is they undercut the used SUV market. Which increases
depreciation on more profitable SUV's which effectively increases their price.

------
baybal2
I'm surprised. Chinese EV makers have aced the "nothing special" EV sedan
niche under $30k and are popping them out non-stop.

I guess, a part of "Apple disease" of around mid-20xx. Teslas are so distinct
from mainline cars under the bonnet, that they can't source much components on
open market, big part of manufacturing equipment have to be custom made, and
they can't outsource anything.

Chinese makers on other hands just gut existing economy sedans, and put
batteries in place of motor, and PMDCs on rear axle, without any extra magic
involved.

~~~
jeffreyrogers
They can't pass US (and I would imagine European) crash test requirements.

~~~
gcb0
like japanese cars couldn't pass US crash tests in the 80s? How well that
worked out for US automakers?

~~~
cptskippy
You're confusing tenses I think, can't not couldn't.

Chinese cars today CAN'T pass safety standards today. That doesn't preclude
them form passing in the future. It just means if you bought a Chinese car
today and tested it against US safety standards today, it would fail.

~~~
gcb0
the ONLY reason they don't pass today is because they are not exporting to the
US today. that argument is pedantic.

~~~
pwinnski
Possibly true. Then again, when the Mini was imported to the US as the Mini
Cooper, it had to be bulked up so that the American version is much less-mini
than the UK, removing some of its appeal.

I'm sure Chinese companies _can_ produce EV sedans that pass US crash tests,
obviously, but can they do so while they remain cheap? We won't know unless
and until they try.

~~~
gcb0
those are different things now. there is a joke that a car model will always
get bigger. and a different model will show up to re-fill the market that
wanted the small car.

