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Tesla meets self-imposed deadline for Model 3, rolls out 5000 cars in a week (cnbc.com)
361 points by melling 7 months ago | hide | past | web | favorite | 361 comments

"It was not clear if Tesla could maintain that level of production for a longer period of time."

I think this is the million dollar question—was this just a sprint effort to hit a milestone for PR sake or will they produce 5000 next week too?

Bloomberg's chart of Tesla Model 3 production[1] shows very low production rates in early June, around 1000. Maybe they saved some parts up for end of quarter. Let's see what happens over the next month.

A well-run production line produces about the same number of units per week. Tesla's weekly numbers are all over the place. Their cost per unit has to be very high, because the cost of running the plant is roughly constant as the output varies.

Eventually Tesla ought to get their plant debugged, but if they're doing assembly in a tent, that's in the future.

They also seem to be having trouble at the battery plant in Nevada, which is strange. That's a relatively simple product, and it's one they've built before.

[1] https://www.bloomberg.com/graphics/2018-tesla-tracker/

They timed production to maximize federal tax credits for US consumers.

No. They timed DELIVERY. There are many reports of them holding assembled complete cars and sending stock to Canada.

Among other reports: https://electrek.co/2018/05/25/tesl-model-3-massive-shipment...

Couldn't they just ship cars overseas? Or wait until the end of June to ship them?

That's what has been reported, that they slowed or re-routed deliveries not production. https://electrek.co/2018/05/25/tesl-model-3-massive-shipment...

They have done exactly what you say, sending production to Canada.

Can you clarify, did Tesla announce this, or are you announcing this?

A huge percentage of this quarter’s cars went to Canada to avoid triggering the tax credit sunset

Its discussed towards the bottom of that Bloomberg link.

Can you quote the text here? For the life of me I can’t find the section you’re referencing. I’ve heard the “timing production to match tax credit” thing before and it doesn’t make sense to me, hence why I’m trying to track down the primary source.

There's a tax credit of $7500 that will begin to be phased out as soon as they sold 200 000 cars to US customers.

Phase out starts with the same tax credit still applying for the remainder of the current quarter and the next one (before being reduced in later ones) and that's exactly the reason why they would want to match reaching the threshold to the beginning of a new quarter. This way they have as much time as possible to ship as many cars as possible to their customers (that's OK then since numbers sold do not affect the phase out beside the threshold of 200 000 cars).

The way the tax credit works is that a car company's customers get $7500 US tax credit for the first 200k Tesla type electric cars. Then begins the phase out. First the $7500 tax credit remains for the rest of the quarter when the 200k US sales was hit and the following quarter (so between 3 and 6 months). Then the tax credit goes in half for 2 quarters and then 1/4 the original for another 2 quarters. Seems strange to have a variable length phase out on the full amount but maybe the people who wrote the bill couldn't envision a company selling so many cars in a quarter that when in the quarter the company passed the 200k marker would be something the company would focus on.

Tesla is near the 200k mark and has been holding back domestic sales so to hit it at the beginning of a quarter (i.e now).

Edit: Here is a link to the official explanation of the credit in glorious IRS legalese (https://www.irs.gov/irb/2009-48_IRB#NOT-2009-89).

Relevant quote from the IRS to this discussion:

"The new qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period."

> > > They timed production to maximize federal tax credits for US consumers.

This is what is confusing me: if the credits are timed to domestic sales (so international sales don’t affect the timing of the tax credit phase out) what does this have to do with production?

If timed right, they have 6 months to sell cars after the 200k cutoff. Some people say they have been storing some cars and not selling them along with selling more overseas so that all the cars produced (and sold, but with the reservation backlog, this is the same thing for now) for the next six months can get the tax credit. It has to do with production because you can't have sales of cars that don't exist.

> It has to do with production because you can’t have sales of cars that don’t exist

Rather, you don’t want to rush to produce vehicles you don’t want to deliver quite yet. You want to get to maximum output at the same time the timer starts on federal tax credits phasing out (which, keep in mind, would’ve happened without Model 3 production due to 2k/week Model S and X production).

It doesn't.

It's under Hyperdrive Tesla Production Blog, Friday June 22, 2018: "The $366 Million Subsidy Play, Part 2" as well as "Tesla's 200K Strategy".

tl;dr they'd basically benefit from an additional 336M in government subsidies if they delay recording their 200k'th sale to July 1 instead of June 30.

Actually the customers benefit from the subsidy. No other car company has sold enough evs in the us to get to this point. After they finish q4 2018 and the subsidy if greatly reduced, there will be one less reason to hate tesla. How many volts and bolts has gm sold? I haven't ever even seen a bolt on the road. Apparently gm doesn't make many of them on purpose, too expensive for the batteries - tesla's super advantage!

You can say that all you want but there's virtually no difference between the two. Even tesla includes the subsidies in its cost calculations.

The word “tax” doesn’t even appear on the page when I search for it.

Are you on a different page?

Those who know anything about manufacturing are seeing very clearly that this is unlikely, or if achieved will be done at great cost and waste.


Those in the know said electric cars in general were an unpractical waste of money. I also remember three years ago hearing those in the know saying a self landing rocket would not be possible, and if it ever were made it would also be done at great cost and waste.

Heck, those in the know said even a couple of months ago that Tesla would not be able to achieve 5000 Model 3s by today.

The truth is, there aren't really any people we can claim are "in the know" when it comes to new, innovative approaches to manufacturing.

Maybe Tesla will fail, maybe it will succeed. I don't think anyone actually knows one way or another. Elon Musk and his crew are trying something no one else has bothered to try before and we just have to see how it goes and what lessons can be learned from it.

Well as a first point, I think that there's a huge difference between 'This very difficult thing is probably so difficult that X' and 'I have physically seen this production line, and there's no way it's doing X'.

The first is an estimation of difficulty - probably an educated guess that could be wrong. The second is a statement based on the evidence in front of you.

Secondly, whilst it's true that people have been saying Tesla won't get to 5k/w, it's also true that Tesla were claiming they'd have a fully automated production line. If Tesla gets to 5k/w by hand-building them all then in most people's eyes they've failed. The value of Tesla is not the actual production of cars. It's the IP of their self-driving technology, and the IP for their fully automated production line. There's a reason Tesla's valuation is completely unlinked from their production capacity.

>>The first is an estimation of difficulty - probably an educated guess that could be wrong.

Difficult things have been done all time and being done even as we speak now. Its not very hard to be positive about difficult things happening even in the present.

The real problem is the discomfort with anything new, and the fear of new order of things.

There is also a certain amount of risk taking ability that goes away when you become intelligent(expertise). That's because expertise is an investment in time, and there fore a good part of one's life. Watching that get washed away, or giving it up to start a new life is very hard. Its a huge mountain of emotion which you have to scale up and then down. People would rather let existing order of things prevail as they are.

The second part is people find it hard to put what is already done aside and start afresh. I have even forgotten the count of number of people who I have heard telling they can't learn something new, or begin on a new heading because they have travelled too long down the current path. Sometimes this is for things as simple as starting a new hobby.

So Tesla will likely win, and people won't be happy seeing it win. People are not comfortable watching live anti-thesis to their excuses.

"The value of Tesla is not the actual production of cars. It's the IP of their self-driving technology, and the IP for their fully automated production line. " I highly doubt that but if you have any link/proof pls share. Their value is in providing a product people are head over heels about. And their valuation is much like any other company, based on guestimates of success.

Musk's "new, innovative approaches to manufacturing" are the status-quo from around 40 years ago. Maybe he doesn't know that...

And are they really "trying something no one else has bothered to try before"? Altogether, an electric car is simply not that much more new or different from a conventional one, these days. In fact it's much simpler. A lot of the learnings of the last 40 years would absolutely apply.

We'll see!

> Those in the know said electric cars in general were an unpractical waste of money.

Really? Who said that?

I would like to point out that you go to any article written about tesla from "the industry" viewpoint from at least 2008 to 2010. It's actually quite vitriolitic, actually.

His question was about electric cars in general, not Tesla in specific.

that particular poster seems to be an anti-tesla troll. Certainly there is reason to wonder if Tesla can do what they are trying to do, they've had trouble so far. But it's not an impossible task, there are lots of companies in the world doing mass production of cars, tractors, etc, it's not some impossible task.

> there are lots of companies in the world doing mass production of cars, tractors, etc, it's not some impossible task

Exactly the point. Yet the struggle is real with Tesla, for some reason.

I think it’s a good question to ask, but it doesn’t mean the milestone was meaningless. Several months ago this would have been unthinkable, and the 5000 deadline was arbitrary anyway.

> the 5000 deadline was arbitrary anyway.

Wasn't it in multiple letters to shareholders? It is literally an update to debtors on the company's position, far from arbitrary.

Were Tesla required to give an estimate? Nope. But doing so may be used to attract further investment into the company, so it is far from innocent.

> Wasn't it in multiple letters to shareholders? It is literally an update to debtors on the company's position, far from arbitrary.

Debtors are people who owe you money. The word you are probably looking for is “creditors”, who are people you owe money (e.g., corporate bondholders.)

But, while it's closer, stockholders aren't those, either.

Shareholders aren't debtors. It's still arbitrary, a goal they set for themselves.

SEC likely wouldn't agree, and haven't agreed historically.

What are you claiming the SEC would disagree with? The claim is that Tesla set a goal of 5000 vehicles per week.

There are two things you could disagree with but you don't specify which. You can disagree that Tesla set this goal for itself, or you can disagree that the number 5000 is arbitrary.

To disagree with the first part, you'd need to show that the 5000 figure came from an external party, do you have such a source for this?

To disagree with the second part, you'd need to show that there is something significant about the number 5000. Is your claim that there is some significance to the number 5000?

If you can't substantiate the claim that some external party gave Tesla the goal to make 5000 vehicles per week, and you can't substantiate the claim that the number 5000 has some fundamental significance when it comes to car manufacturing, then you have no grounds to refute the statement that Tesla set this arbitrary goal of 5000 for itself.

> Several months ago this would have been unthinkable

Unthinkable? Their Q4-16 Shareholder letter [1] (Feb 22nd, 2017) stated: "Our Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018."

On July 2nd, 2017 Musk forecasted [2] 20,000 per month by December '17.

[1] http://ir.tesla.com/static-files/1ff901ba-bb25-4264-9153-7aa...

[2] https://twitter.com/elonmusk/status/881757617416056832

Right. And his whole timeline shifted right by 6 month when they didn't start production as they expected a few weeks afterwards.

Giving this the new estimate is placed to summer 2018.

The first shift was 3-months, as of Nov 2017 [1]: "We currently expect to achieve a production rate of 5,000 Model 3 vehicles per week by late Q1 2018".

When that was missed, it was pushed back again to Q2-18. It looks like those shifting goalposts have finally been met but for the above poster to call it "unthinkable" is absurd. It's the exact messaging we've been hearing for at least a year and a half.

[1] http://ir.tesla.com/static-files/d68bddfe-6f2b-4f8f-bed0-94d...

Their timeline shifted to almost a year later, but it looks like they did get there.

The company is losing $300 MILLION per quarter. Being late by a year on this figure means $1.2 Billion down the drain.

That's the important thing. A lot of people are concerned about Tesla's ability to raise money and stay solvent. Tesla will not be profitable, or even cash-flow positive, until enough Model 3 cars are made.

Every month Tesla fails to reach a high-degree of production, Telsa loses another $75 million.


The worst part about this rampup effort is how bursty and unreliable it is. Its going to be a one-week hit of 5000. Next week, or even next month, Tesla's sustainted output will be well below 5000, and therefore Tesla will remain unprofitable for another few months at minimum.

That's not even factoring in all the costs Musk threw down for these tents (Obviously a temporary arrangement, as a single storm will put those tents out of commission).

They are bursty, and they probably won't keep up their last week of the quarter production, when I'm sure they killed themselves to get to 5k/wk. It doesn't really matter if they were 6k or 4k that last week. If we use the total over the quarter we can see if they were making progress overall, rather than one stupid week when they could do something trick to push up their numbers.

But the thing is, they did triple their q1 production, going from 9.7 to 28.5k so they almost trippled, or went from an avg of 9/12 weeks to 28/12 weeks, a clear increase. The newly announced goal is 6k by the end of August. It doesn't matter if through super-human work they get one week that is good, we can just measure their performance by total production, so I'd guess at least 50k would be another significant increase. It won't be 6k*12 weeks in q3.

Lost in this is the significant additional revenue they get. They aren't making their cheapest cars yet, so at 50k each, that last week alone was 250 million additional revenue. That 28.5 cars is about 1 billion more in revenue than q1. If they double that again, you are talking real money :-)

I think that most people would agree that it was implied in the idea of the milestone that it would be sustainable for more than 7 days.

Looking at historical data:

- 2,425 model 3’s in Q4 2917, about a third (793) of them in the last week of 2017 (http://ir.tesla.com/news-releases/news-release-details/tesla...)

- 9,766 model 3’s in Q1 2018, about a fifth (2,020) of them in the last week (http://ir.tesla.com/news-releases/news-release-details/tesla...)

So, the Q1 average was about equal to that last week of 2017, but only because of a massive sprint (20% of production was in the last week of the quarter)

If that pattern has repeated itself, we should see about 26,000 model 3’s produced in Q2, 5,200 of which in the last week.

Also, based on these data points, they won’t produce 5,000 next week, but next quarter’s sprint will bring the average there.

I wonder what the cost of reaching that milestone is. That extra factory wasn’t free, and they either are driving their personnel into the ground or they had to hire and pay a lot more people (possibly even both, as new people being hired will need training)

> Tesla expects to increase production to 6,000 Model 3s per week by late next month.


Musk has been quite endurant so far. It's possible tesla will keep up, or not.

As long as tesla doesn't die i'd bet Musk will find a way to crank up the next stage.

One cannot will anything one wants into existence.

At some point, he'll need to understand how to design an effective large-scale manufacturing system, and not simply yell for one.

Specifically, he should actually learn some things about managing people, and the place that has in producing quality at volume at speed. It's sad, because that's exactly the lesson Toyota was trying to teach at NUMMI, and their legacy has been totally forgotten by its new owner—at great cost. It's simply a shame.

> "According to this, they're using 7 times as many employees and still making less than a 1/5 of the cars NUMMI did when they had the factory." https://insideevs.com/teslas-fremont-factory/ -- via https://twitter.com/Benshooter/status/1012113642689519617

(albeit they're earlier in their maturity, for sure, but still)

> One cannot will anything one wants into existence

Let's just see now.

Musk wanted to grow a plant on Mars, and when the Russians pulled out of a deal to sell him a couple of ICBMs he decided he would will his own rocket into existence.

Then he decided he wanted it to be reusable, so he willed that into existence when everyone said it was impossible.

Then he wanted to strap three of them together, so he willed that into existence.

Then we wanted electric cars, so he willed into existence not only the best electric car ever, but one of the best cars ever, period (Model S)

etc. etc.

I think it unwise to underestimate Musk.

First, large-scale manufacturing is a different thing from rocket engineering. It ceases to be about building something, and begins to be about understanding and managing people. That's what I challenge Musk is still learning, and far too slowly. He may never be able to learn at all—beliefs about people and management are far more hard-set than those about physics and engineering.

That said, I think he'll get it done, but it's still arrogant (and inefficient) to take all of the learnings of manufacturing and management of the past 30 years and try to "start fresh."

It's a waste. It's a waste of money, a waste of time, a waste of human capital and life and happiness. He's expending energy to learn things we've already learned.

That's the sad part. I'm sure he'll get it done, but at what cost? At what despair and unnecessary strife? And at what level of waste and inefficiency.

Sure, you'll say, necessity is the mother of invention, and new knowledge and innovation will come out of this struggle—but how can we know even more could not be done in a better process? We can't, and this naysaying will go by the wayside. As perhaps it should.

I think the reason he does it this way is to avoid reaching the same local maximum competitors are already stuck in - you can’t out-compete incumbents with more of the same but a little better. It is arrogant in many ways but there is a reason behind it, it’s not just hubris, and crucially it requires finding the right frustrated talented people and listening to them, it would be a mistake to think he comes up with all the ideas.

I disagree that he’s not good at managing people, he just has very different success criteria, which do not highly rate the welfare of his workers. I think like Jobs, Bezos and many other successful business leaders he’s good at finding talented people, selling them a dream, and wringing every last ounce of life out of them in service of his dreams, then finding someone else to keep it going. A lot of people will be broken along the way, a lot of people will produce their best work.

It's possibly(?) tangential to the discussion, but I would say that if he does not "highly rate the welfare of his workers" then, he is by definition not good at managing people.

I mostly agree; I wouldn't want to work for someone like that, there is some ambiguity though as usually they are themselves driven to excel at all costs, and sometimes they encourage people to excel in ways they would not without the pressure (even if at great personal cost). I think he is highly skilled at manipulating and motivating people to do what he wants, whether you want to call that 'good at managing' is another discussion, mostly centred around the moral connotations of 'good'.

> It ceases to be about building something, and begins to be about understanding and managing people. That's what I challenge Musk is still learning, and far too slowly.

Hmm. This strikes me as somewhat implausible or at least uncharitable.

Are there other example of doing something as complex, in a 'new' field, at a scale to compete with incumbent operators AND vertically integrating both design and manufacture?

If one zooms out a little to place what Tesla is doing in context, or Musks 'performance', it doesn't seem they've been particularly bad per se, more that they've faced difficulties that are inevitable. It's somewhat of a testament to them 'doing well' and learning to do it pretty damn quickly that we here can continue to talk about how bad they continue to be - namely because they're still around and not dead and disbanded.

I may, of course, be talking rubbish seeing as I don't know much about this subject nor do I have a horse in the race. But it just strikes me that Tesla is doing something extraordinarily hard (I know about the logistics of supply chain management and that's hard enough in the auto industry) and being played out in public view with intense competition.

Yes, you're correct. And in fact I had a bet with a friend ten years ago that Tesla would in fact still be around today. He didn't think they would. I just won that bet in January. :)

The shame is that the parts that are innovative, like the engineering of an electric car, the design, the interface, and the battery technology, are all going so well, all things considered.

Whereas the parts that don't necessarily require innovation on a major scale, such as management of people, the operation of a manufacturing line at scale, systemic quality control, and safety and health—are being done (by all accounts) not so well. These are the things that are far more difficult than the technology and innovation precisely because they are so much more complex, and require a different mindset. For the same reason Musk is so good at engineering, it is not totally surprising he is not so spectacular at leading the human systems required for this new pursuit. Again, by all accounts.

And the sad part: these are the parts that have been done before, in similar situations, at similar scales, with similarly new technologies, without drastically different requirements or problems. Having that experience available to you and not using it is not exactly wise.

All that said, I think he'll learn what he needs to learn, get it done anyway, and will not fail. Making this point of efficiency at this stage pretty moot. I realize that.

Ah yes, I forgot that running a company doing rocket science with ~5000 employees (as of late 2015) clearly proves no abilities in management or people skills whatsoever.

Until Tesla goes bankrupt (which I believe is sooner rather than later - Tesla is sitting on a Wells Notice), the charade continues.

I would argue that the number of companies who have gone bankrupt sitting on this dollar volume of preorders is and will continue to be, 0. Worst case scenario, they can issue stock or sell a chunk of the company. Even easier is to dial back R&D.

Pre-orders are overstated. Check Twitter - people who were quoted November delivery for AWD Performance are now being told they can take delivery in July.

They'll burn through supposed 450K before the end of Q3, and then the order book is dry/cash crunch time for Tesla.

That means they are managing cash flows and taking high margin orders first, not running out of demand.

Further, I expect the number of people who can put down 1k and wait with no new car for a long time is but a small fraction of those who can buy without those substantial barriers.

It's always the next thing that Musk won't achieve. It's funny how people are constantly moving the goalpost after every success he has. He is building a car manufacturer from scratch and people are making 6 months worth of delays such a big deal...( I mean as a personal failure not as far as the importance of the milestone for the company).

Then he willed it to land standing up. On a barge. In the ocean.

And an assembly line. In a tent. From a bunch of scraps.

It's starting to sound like the first chapter in the old testament haha

I was thinking more the first Iron Man movie

I don't think anyone said you couldn't land a rocket. Folks have been looking in to doing that for a long time, we just didn't have the technology or enough investment in space to make it happen. He was just one of the first ones to come along and bring enough capital and technology to bear on the problem.

Don't get me wrong, I absolutely admire what Elon Musk is capable of. But it's worth being realistic when we draw opinions of leaders lest we fall victim to hero worship.

Yep. He delivers. People are too obsessed about when. Shits’s complicated.

For shareholders and customers that makes sense. For everyone else not so much. There are a lot of people in the everyone else column who are happy to see an entrepreneur take risks.

> who are happy to see an entrepreneur take risks.

Are there really? I feel like a massive percentage of people are against Musk and Tesla precisely because he's trying to do something new, and take some risks.

It's like a majority of Americans don't want anyone to do anything radical anymore, like they're happy to stagnate.

You're overthinking this. What's going on is simply that when you say you're going to do something, people (especially the ones who've lent/invested money) expect you to do it. If you don't then you rapidly lose credibility.

Not so worried about when, there's no rush. It's just a shame to see the chaos where there doesn't have to be, that's all.

That's just the thing, Tesla isn't creating the chaos, everybody else is. Tesla setting huge goals and trying their best to reach them, no doubt exceeding Musk's true expectations. Companies fail to meet goals all the time, most of the time because the goals have been set intentionally unreachable.

When does matter a bit, there was a probability that other manufacturers might swipe the market under Musk feet

...and generally speaking, human. Musk might be able to work longer hours without having a stroke, but ultimately he's not magic, and lots of other people can do this, too. Let's see more people try. (But I’d suggest just one major company at a time, spend more time with your spouse and kids.)

Oh good, the cult of Elon is in full force.

I didn't mean it this way. I believe Musk has enough self confidence and college education to think he can crack through things like he did with SpaceX (remember they almost died and now vertical reusable landing is almost the new normal). So if he manages to keep Tesla growing, he'll fix things on the way. Maybe he'll have time to read about Toyota :)

I do think he'll learn, and I trust that he's a pretty decent person all things considered. Hope it goes well for them!

One can judge from the distance and think he has better understanding of the problem, than a person who is immersed in it most of his waking hours and surrounded by people specialized at solving it.


sorry, frenchism, I meant endurent

Endurant was fine but its so rarely used that it sounds off. It is more conventional to say "he has been resilient" or that "he has endured".

Ah. Interesting.

This was the first time they hit a peak of 5000 model 3s. Undoubtedly, this was at their limits right now, but they're STILL ramping up, so it won't be their last, either, and soon (months) will be at 7000-8000 M3s per week at a peak rate.

I just want to point out one thing: hustle is valuable. Not all companies can sprint like this when they need to.

I've been at companies that could hustle, and hustled. I'm not sure it's valuable. In one case, our hustle was a waste, as a dependency was late. In another, our hustle was a success, and we launched to the world.

In both cases, me and colleagues made the same amount of money, experienced a degree of burnout, and if anything taught the company they can do it again if they want. Hustling at a sustainable pace? Sure. Sprinting, like death marches, just burns employees.

I would resist commenting, but I know those Tesla employees won't be getting a huge bonus or extra time off. I wonder how well it will go for them the next time.

They definitely cannot. These numbers are completely gamed within an inch of outright fraud.

So when they do maintain this rate for the next few weeks, is that still within an inch of fraud?

The cars aren't fraud, it's a weird belief system that leads to people honestly repeating that over and over. They make cars, real cars. You can order one but it takes a long time to get one. They work.

It's some kind of hyper bizarre, borderline crazy, Musk hatred syndrome that floats around parts of the tech industry.

The anti-Tesla posts are always overflowing with empty, overly emotional statements. No matter how many times Musk overcomes and ultimately delivers in the end, it doesn't matter, the anti crowd returns for the next fight with the exact same emotional arguments.

Maybe it's just all BMW, Toyota and Mercedes employees doing the trolling around the Internet (joking). Every ~$40k+ vehicle that Tesla sells comes directly out of their pockets (it's certainly not coming out of the pocket of GM and Ford). Over the next year, Tesla will take $20+ billion in sales away from the luxury auto makers. The bigger that number gets, the more desperate BMW, Mercedes and Toyota (Lexus) are going to get. Hundreds of billions of dollars are on the line.

If you go back and read forum threads around the time the Model S was launched, people were claiming back then that Tesla could never build it in any volume period, that it would be a failure across the board. Similar claims were made about the Model 3 right out of the gate; they weren't supposed to ever make it in any volume, the venom in every thread was extreme to say the least.

There's a type of person that aggressively hates successful people, and often success in general. They resent everything about it, they lust after tearing people down. Musk succeeding with Tesla is a perpetual open wound for those types.

pretty strong words from someone who doesn't provide any evidence

Only evidence is every other report of burst production rates ever, but yeah, I am sure this time is different.

Given the tendency to sprint at the end of a quarter, what do you think the average for this next quarter is going to be?

Where will production rates fall in the next few weeks compared to this almost-5000-a-week sprint?

At what point do you consider the report of weekly production numbers to be fraud? Whose definition are you using? Which court will back you up?

Still isn’t proof; fraud is a strong term. Throwing around such allegations with any proof is irresponsible. Has Tesla been convicted of fraud in the past?

Quote me. Within an inch. I can play with words too.

Companies make plans, if they are audacious goals and you only come close, that's okay. It's not horrible. Tesla is in that camp.

> with the final car rolling off the assembly line on Sunday morning, several hours after the midnight goal set by Chief Executive Elon Musk

No, they missed the deadline, twice now. Lot of Muskites in these comments, remember, Tesla failed to meet the same deadline in January and pushed it to June. (EDIT: I've been told they missed this 3 times now, the 5K/wk figure was originally Dec '17, then Jan '18 then Jun '18).

When it was clear they would miss again, they put up a third production line in a canvas tent, which the NYT quoted as "never heard anything like this ever" using what Musk tweeted as "scrap we had in warehouses" to build the cars. And even then, and running all three lines 24/7 striving to hit that goal for just 7 consecutive days with the whole world watching... they still came up 150 cars short.

(5k/wk / 168 hrs/week = 30/hr * missing the deadline by 5 hours = 150 cars short)

Imagine that today is July 1, 2020. Looking back I see three scenarios.

1) It's clear now that the company is a sham and Musk is a snake-oil salesman. It's all smoke, mirrors, bubblegum and baling wire. After hitting 5000 cars per week one time, they never reached that level again. The company had to do a punishingly dilutive capital raise just to get 6 months more runway, and the company's market cap is now $6 billion (down 90% from 2018).

2) The company has continued to stumble from failure to failure with just enough successes to delay the day of reckoning. Musk is still sleeping in the factory trying to iron out kinks in the manufacturing process and automation. They're producing 3000 cars per week, but the quality is so poor that 30% of cars must be returned to the factory for rework. Competitors are likely to match Tesla's battery technology in the next 3 years, and the company's market cap is down by 50% from 2018.

3) After many delays and billions of dollars of cost overruns, Tesla has perfected the "machine that builds the machine". It's producing 40,000 cars per week in three factories in the US, Europe and China, and a fourth factory in South Korea opens next year. Tesla is cash-flow positive and the company's market cap is $600B (up 10x from 2018). In hindsight, all the delays people anguished about in 2018 proved to be nothing but amusing anecdotes in the company's history.

I assign probabilities of 10%, 50% and 40% to these scenarios, which equates to an expected market cap of $250B in two years. At $60B today, it looks like a bargain.

Why should Tesla be worth 600B if they produce 2 million cars a year? Toyota makes 10M cars per year and has a market cap of less than 300B.

Future growth is already baked into Tesla's current valuation of 60B. They're not making any money today (in fact they're losing billions) but they have a high market cap because they might become profitable years from now. Once (if) they become a mature car manufacturer their valuation multiple will go way down. They'll be judged on their profit margin and FCF like any other car manufacturer.

Your best case scenario of Tesla growing their market cap by 550B in the next 2 years is completely unrealistic. Even Facebook didn't grow that quickly, and their profit margin is second to none.

Tesla's best case scenario is much more than an automaker. They also have hopes of being an energy company, a battery company, a transportation company, and a logistics company. There is still a lot of debate whether any of those will actually become profitable (and I think 2020 is a very aggressive timeline for any of this to happen), but there are huge potential revenue streams for Tesla that simply don't exist for other automakers like Toyota.

Toyota or Ford or any other car company can enter any of those fields, either directly or through investment. That they choose not to probably indicates that the risk/reward doesn't make sense for them, and they probably aren't worth that much if Tesla manages to pivot. They chose not to play in EVs until recently, for example, because the market appetite wasn't there

I am surprised to see this type of argument on HN of all places. One of the primary goals of any start up is to either create a new market or to serve a market that an incumbent is failing to properly serve. You can't just assume that because a company like Toyota hasn't done any of these things yet that there is no potential to gain from them. There are countless reasons why traditional powers fail to innovate and are eventually challenged by more forward thinking companies. I have no idea if Tesla will be that company long term. But the potential is there and that potential is what is fueling the hype.

GM/Toyota have the resources to start operating in the same markets that Tesla has ambitions for. And they are certainly keeping an eye on Tesla's actions.

After watching what Tesla is doing, they have chosen not to invest those resources even though if they did, they would beat Tesla at its own game quite easily because they eclipse it both in capital and experience.

Either their analysts are wrong and failing to see a winning strategy here, or there is no winning strategy. One of these two statements must be true. I've put my money on option #2, but I'm aware that large competitors aren't idiots and there is a risk here.

Elon Musk has also publicly stated that he wants the other big players to compete with Tesla. He doesn't actually care if Tesla is ever profitable or not, he just wants to force the world to transition off fossil fuels by dispelling the myths sown by the oil industry with concrete examples of success. It is stupid to ignore Musk's stance on this matter as an investor.

You have very skewed perception of how a company like GM operates. The incentives for managers are pretty short term they have 0 incentive to do a project that might pay off 5 years from now. In deciding on how to allocate capital there is 0 chance they will allocate it to doing high risk long term project vs doing a bigger truck now that they will sell next month at some ungodly margin.

Using this logic every start up would fail as soon as they showed their business model could lead to success and a bigger company swooped in a with their overwhelming capital and experience.

Right the argument isn't sound. It basically boils down to if big company x hasn't done it already, it's because it's not worth doing it. We know this isn't true because small players make improvements in their fields all the time. Big players aren't perfect, don't have unlimited resources, are prescient, and most of all, are ruled by people.

Many do, for that exact reason.

If you ever pitch your startup idea to a VC, you're expected to explain how you're going to deal with this risk.

>Many do, for that exact reason.

Sure, and many don't.

>If you ever pitch your startup idea to a VC, you're expected to explain how you're going to deal with this risk.

And that is exactly my point. Tesla certainly has strategies to respond if GM/Toyota enter their markets. You and TAForObvReasons are responding as if those companies will easily beat Tesla as soon as they make that decision.

> Tesla certainly has strategies to respond if GM/Toyota enter their markets.

Elon Musk's stated purpose for Tesla is to kill the fossil fuel industry, not to create a profitable enterprise. And he is tracking well towards that stated purpose. He actually wants those much bigger companies to start doing what Tesla is doing at scales that they can achieve and Tesla can't. He said this very clearly in an interview with DiCaprio. I don't know why people keep thinking there's some master plan to be profitable when the guy steering the ship has repeatedly said the plan is orthogonal to profitability.

As an investor, I am well aware of this. I'm also well aware that the profits of SpaceX eclipse what Tesla could achieve even in its best case scenario, so he probably really doesn't give a shit about making profit via Tesla.

GM already entered Tesla's market with the Bolt. How's that working out for GM?

You gotta hand it to Elon for stirring the appetite for EVs though. What makes you think he can't do similar things in other markets?

Because he is overcapitalised with his existing projects.

Simple as that really.

I am not convinced he really changed the market's desire for EVs. He made a halo car, and now he is selling the baby version for Average Joe. I think the success of the Model 3 has a lot more to do with the brand than it does with it being an EV.

It's simply ignoring reality to not acknowledge Tesla's center role in popularizing EVs. It's not even a question.

Have to admit I agree with this. He didn't change the appetite he just recognized that it was better to make a $120k EV than a $20k EV.

By the way, why do you think the brand is popular if not for their EVs?

Tesla has vastly changed public perception of EVs, changing demand & enabling current production ramp up of cheaper models.

>Once (if) they become a mature car manufacturer their valuation multiple will go way down.

Somewhat answered your own question . It's if the market values Tesla as a mature company or a continues to value it as a growth company. When have we seen Elon rest with a successful product? Tesla is more than just cars. And Elon's answer to Gali (hyperchange YouTube channel) question during earnings about moats states his mindset clearly. He's about innovation. Innovate faster than competitor always. If Tesla can be cash positive, Elon will do what Bezos does. Demand that as much money as possible is reinvested. They're not going to be like Apple with tons of money sitting on the side.

I suspect that investors are looking at Tesla to be highly automated and have a high return on capital. There's also the hype so it keeps on going up looking for the last fool that buys before the stock's true value is found. It's easier to buy the stock than to figure out its future value.

I think Tesla won't be just a car company. Eventually, they will be a company with multiple branches in the same idea as Alphabet. But that's way in the future. First, they have to survive to profitability.

Musk himself said they made mistakes in trying to automate everything when manual approaches work better. And all cars made today are highly automated anyway so not sure why this is a unique advantage.

More and more Tesla is looking like a traditional car company. Especially as the traditional car makers are moving aggressively into EV.

Because the op makes stuff out of their ass

Not to be rude, but these scenarios and percentages are all really random as is your valuation. Its far more likely they continue to do the same thing they have for the last year or two: limp through their slowly escalating production targets until the Model 3 is just one of several electric sedans available and there is no way to justify their multiples.

The third scenario seems 40% until you realize that 2 million Model 3s per year @ average price of 45K are being sold.

I am not a car market place expert, $45K cars do not usually move in those numbers.

edit: For reference, check the number of cars moved. https://www.statista.com/statistics/276419/best-selling-cars...

If these $45k cars are fully automatic (a big if for sure), then $45k will be a bargain price and would probably capture at least half the new car market.

They're not. They have the same lane keeping and autimatic cruise control as the average $45k car.

Or what you can get from Honda for around $20-25k.

Possibly worse given the accidents.

This is frankly delusional thinking.

(a) Tesla aren't the leaders in the self driving car space. Waymo arguably is, (b) almost all of the car makers have self driving car programs and most importantly (c) why would the traditional car makers just sit back, do nothing and allow Tesla to eat up the entire market ?

If Tesla can make it work without lidar, and that’s a huge “if”, they have a massive head start in training data. From a conference panel a few years ago that had Tesla, Waymo and some others on stage at the same time, Tesla was getting as much data in a week as Google was in months. That type of training data asymmetry is ripe for blowing past others. Again though that’s all conditioned on not needing lidar and I remain far from convinced their approach works for a true self-driving system.

Waymo's cars are connected to Waymo's servers with, I guess, gigabit ethernet (after they go back to base for the night), Tesla's cars are connected by mobile data, they'd have to pay billions to cell phone networks to get as much data.

I think Tesla is not the leader, they probably made a crucial mistake in not using the expensive lidar. But they have be far the most cars on the road with early versions of this tech that has worked pretty well in my car for 4 years.

Your world view is too narrow. That 5000 figure is important, but it's not really meaningful in the grand scheme of things.

There is a 4th or 5th scenario, where

4. other car makers trail behind Tesla more and more in terms of technology. Remember, all these car makers had DECADES of head start developing EVs before Tesla was even born. Tesla was supposed to trail them in tech, not the other way around.

It's easy to assume that because a company is bigger, and have more resources and manufacturing experience, that they can move fast in developing tech. It's easy to judge a book by it's cover. Incumbents move slow ALWAYS. If moving fast was so easy, they would of done it before Tesla was born.

5. solar panels from SolarCity come into play.

Tesla has already deployed Solar grids in Australia. It's not just "smoke and mirrors", it's actually in production.

While the competitors are still trying to "match Tesla", Tesla has already moved on to find other areas to grow in tech advancement.

Right now, solar panels are considered a "toy". It's not even on any of the car makers' radar. It's like how Tesla's first Roadster cars were not on any of the car maker's radars 5 years ago. It's a "toy" until one day, it becomes a reality, and you tout your ability to "catch up" with your "vast experience"

5 years from now, folks like you will write another article, about how GM will be able to produce solar panels to "catch up to Tesla in just one or 2 years"

> 4. other car makers trail behind Tesla more and more in terms of technology. Remember, all these car makers had DECADES of head start developing EVs before Tesla was even born. Tesla was supposed to trail them in tech, not the other way around.

> It's easy to assume that because a company is bigger, and have more resources and manufacturing experience, that they can move fast in developing tech. It's easy to judge a book by it's cover. Incumbents move slow ALWAYS. If moving fast was so easy, they would of done it before Tesla was born.

This isn't silicon valley. There is years of design and manufacturing experience that Tesla simply does not have. This isn't a software project where someone in a garage can make it and scale it. Tesla can build luxury cars because budget constraints are significantly less. Now they're struggling with the constraints like everyone else.

Other car makers are just as competitive now. The reality is the Chevy Bolt is a great start and will only be improved upon. Elon Musk has no monopoly on technology. There are competitors in almost every sector. Many great engineers are elsewhere.

And the reality is - most people don't care about EV right now. Sedans are struggling mightily. Americans are buying SUVs and crossovers right now. General car manufacturers are able to easily switch production when the market shifts. Tesla can't even make a budget friendly car. Their model 3 will be out of most of the market's price range. Meanwhile GM can still make a Sonic and Cruze or a pickup truck.

> Right now, solar panels are considered a "toy". It's not even on any of the car makers' radar. It's like how Tesla's first Roadster cars were not on any of the car maker's radars 5 years ago. It's a "toy" until one day, it becomes a reality, and you tout your ability to "catch up" with your "vast experience" 5 years from now, folks like you will write another article, about how GM will be able to produce solar panels to "catch up to Tesla in just one or 2 years"

Gee why didn't GM buy FirstEnergy or Duke Energy! They're so behind in the energy industry...This argument isn't even worth debating. GM is not a power company. They do not want to be.

That's exactly the point I am making.

It has nothing to do with Silicon Valley. The geography is meaningless. The only thing that matters is staying ahead of the curve. It's always going to be hard for GM to do that, because it's focus is always going to be on incremental improvements of the same way of doing things. The "years of design and manufacturing experience" you mention.

Look at their $1B acquisition in Cruise Automation. Like you said, GM is not a power company, its' a car company. Its' business is cars. GM should have developed self-driving tech internally, and not had to buy it. Cars is GM's job. But GM missed that boat entirely, because everyone in GM is focused on incremental improvements on manufacturing.

Even your comment mentions that "most people don't care about EV right now." EV is not a big focus for GM. Sure it has the Chevy Bolt, but that only began development 10 years after Tesla started. GM does not care about EVs right now. It's focus is still on manufacturing traditional cars, and will continue to be this way until someone else forces them to change.

> The only thing that matters is staying ahead of the curve. It's always going to be hard for GM to do that, because it's focus is always going to be on incremental improvements of the same way of doing things. The "years of design and manufacturing experience" you mention.

This isn't true. They can continue to make their general automotive improvements while also upskilling in EV - the Bolt is a prime example of that. Frankly, they beat tesla to the punch there.

> Look at their $1B acquisition in Cruise Automation. Like you said, GM is not a power company, its' a car company. Its' business is cars. GM should have developed self-driving tech internally, and not had to buy it. Cars is GM's job. But GM missed that boat entirely, because everyone in GM is focused on incremental improvements on manufacturing.

Hmm, you mean like Tesla bought the solar manufacturer for Solar City? Is that not acceptable to you? You bring up an argument against your point. GM can easily purchase anyone. If they slightly miss something a purchase is all that's needed.

> Even your comment mentions that "most people don't care about EV right now." EV is not a big focus for GM. Sure it has the Chevy Bolt, but that only began development 10 years after Tesla started. GM does not care about EVs right now. It's focus is still on manufacturing traditional cars, and will continue to be this way until someone else forces them to change.

EV is a big deal to GM because they know where the future is heading. They also are not hemorrhaging money and burning runway because they also have a sustainable business now. So they can do both.

Meanwhile Tesla can't even scale a 35K car. They're a luxury brand. period.

> most people don't care about EV right now > Americans are buying SUVs and crossovers right now

Tesla is building SUV EVs. Other makers are planning to.

They currently build a luxury SUV, yes.

Tell me when they make one people can actually afford.

As the price of oil continues to climb, EVs become more affordable than internal combustion vehicles. Seems like a poor time to drop your sedan production in favor of SUVs with oil prices climbing, considering Americans are already changing their behavior due to existing price momentum at the pump.

As it continues to? Please look at oil prices over the last 20 years. You will see a lot of fluctuation.

> Seems like a poor time to drop your sedan production in favor of SUVs with oil prices climbing,

GM can do this. They can change production so quickly that when oil is cheap and people want SUVs (aka now) they can do that. And when it is not, they can change production back to sedans and EV. Much more flexibility.


Please. GM has nowhere near the EV manufacturing capacity of Tesla. They also have a dealer network that is not interested in pushing EVs over internal combustion vehicles.

And yet GM has an available EV car and Tesla does not.

And yet Tesla will not be able to deliver the cheap model 3 and GM has been doing it.

That's a substantial claim - without any evidence. No surprise though - it's easy to be pulled into the Musk hype.

What? Tesla is pumping out electric cars in lots and are only expanding production with the Model 3.

The Bolt has been selling at between 1.5 and 1k per month while the production of the supply-limited model 3 is approaching 5k per week.

I guess I'm crazy and got pulled into the Musk hype.

> Tesla will not be able to deliver the cheap model 3 and GM has been doing it.

I'm guessing they will. Right now though, you have a point there, the model 3 is more expensive than the Bolt.

In a few years.

An "SUV" is a luxury good anyway and many of them are absurdly priced (imagine what that'd get you in a real car!).

> GM is not a power company

GE is.. why are they separate companies?

I don't know, why are General Mills and General Motors separate companies? Not quite sure I understand your point.

I don’t understand why solar panels would necessarily go with car manufacturers? They don’t seem intrinsically related at all.

The batteries are what connect them. No one else will be making batteries at that rate, at least for a pretty long time. Tesla has the cheaper batteries and related tech to use them in solar power along with cars.

I'd assume that the Chinese electric car and bus manufacturers, who make far more vehicles than Tesla, are making batteries at a much greater rate (or at least their suppliers are).

Amazon should buy Tesla. That would blow minds.

Musk's future compensation directly hinges on your third scenario (well market cap of $650 billion, but close enough!):


> I assign probabilities of 10%, 50% and 40% to these scenarios

Well, the devil is in the details. Where did these numbers come from?

Rear end

You think there is a 10% chance that Musk is snake-oil salesman and a sham?

Assuming the standard meaning of the phrase "snake-oil salesman", I think the odds that this is all an elaborate sham to knowingly dupe people into buying a product that doesn't exist converge on zero.

But, the case can certainly be made that he is prone to hyperbole and "exuberant optimism".

Is that too high or too low?

There's a 0 percent chance he's a snake oil salesman. There a reasonable chance his company won't succeed because of a problem making the cars cheap enough. But still they are awesome cars. Pretty soon they will be the only company in the US that has sold enough EVs that the tax credit runs out. That will really piss off the tesla haters who will have one less reason to claim it's all a gyp or whatever.

He's not a snake oil salesman, but he could be over his head in this one.


Are you referring to the tweet that was almost certainly a joke, coming from a man who "only occasionally drinks"?


I know people that never drink but are high as a kite on most days.

There’s also option 4, which I would say is most likely; Tesla is gone; the brand is owned by someone else. In practice, 1 and 2 would likely lead to this scenario.

Also it isn't even their battery tech, right? It's Panasonic's.

A mining company mines raw materials.

Panasonic takes those and makes battery cells. Think AA battery. That part is done as a joint venture between Panasonic and Tesla which means Tesla contributes to the design e.g. Tesla employs people doing research into battery chemistry i.e. cell level R&D. (and so does Panasonic, to be clear).

Tesla takes those battery cells and packages them into a battery modules, which they also design. That part is all Tesla.

That description doesn't adequately describes how much technology and work goes into making battery modules. Cells are an important component but it's also inverters, multiple electronics boards, software to control it all.

You can see e.g. https://www.youtube.com/watch?v=bNd-yJtRPhk

TL;DR: it would be grossly misleading to say that "battery tech is Panasonic". Battery cells are important but battery packs are designed and manufactured by Tesla.

600B is insanity.

OK, sure, but call it 4850 of 5000 when everyone says there wasn't a prayer of making it is pretty remarkable. Call it 97% of the way. The fact that they built out a tent and hustled 24/7 to hit the goal is impressive to me.

Overall it's pretty classic Tesla/Musk. Predict the absolutely impossible, get 97% of the way there, and regardless of how you slice it the only thing that's not impressive is the facxt that they didn't meet the arbitrary guideline. They still crushed everything that anyone else thought was possible, so IMO it's a victory just a hollow one.

Will they be able to repeat this sustainably? Probably not unless they figure some other things out, but the point is that it's within striking distance. The company has a shot at profitability in the near future, and I see Teslas everywhere now.

In the past they missed it drastically; the number is important because if they can figure out a way to get to that level of production they have the chance to become cashflow positive relatively quickly.

Yeah agree, I see no difference between 4850 and 5000 - people are so hung up in other comments on calling this a failure. It shows it’s possible, the rocket just missed the landing a bunch of times, nobody cares about that now.

Yeah, but this is sort of like if SpaceX said their goal was to ship a big chunk of rock to the moon on two rockets within a week. But no matter how hard they tried, they just couldn't get it all on two rockets, so as time was running out they built a third rocket out of spare parts from the first and launched them so they would land just in time and claim their goal. "See, we have shown that it is possible!" they would exclaim.

Except, I might say, you said you could do it with two indoor assembly lines but you needed a third outdoor line at full capacity, so you didn't show anything. We have no time to build more indoor space and we can't just keep building assembly lines in tents out of spare parts, man, they break down, it has to work with two indoor assembly lines so they will work long-term. You still need a 50% improvement in your assembly speed before you can take down that tent!

Plus, even though you had an third rocket when you assured us 2 was plenty, one of the rockets was 5 hours late. A whole extra rocket and still late?

It's not the number. It's the fact that people can't count on what the company says. So it's always a case of over promise and under deliver. So it's easy to focus on that fact and call the company and its founder flaky. Few companies can survive that.

But the reality is that they eventually deliver and Musk can keep investors engaged which keeps the company going with more cash. Even reaching 4850 is a big deal.

The real stretch goal is reaching profitability. I hope that happens soon.

If company promises to make me a car on a date and misses it by 3% of a year (1 day?) I don't care. If they miss it by 6 months or a year I care.

>I see Teslas everywhere now.

Meaning you live in one of 4 coastal cities. Teslas are exceedingly rare everywhere but the wealthiest cities.

I see them all over in Utah. In the coastal cities it feels like 1/4 of the cars on the road.

I see them quite often in New Zealand, but saw my first Lamborghini in the flesh the other day!

Don't Lambos cost slightly more than even the fanciest Tesla?

I see them often in north florida. They aren't as common as other luxury sedans, but I see them about as often as Pontiacs, which is to say not everywhere but a lot.

You do realize that there aren't many Pontiacs on the road, and fewer every day? They closed over 9 years ago.

Anyway I live near Philly. I've seen a few dozen Model S in my life, one X and no 3s yet.

I live in a small state University town in South Georgia and there are at least 3 model S and a model x running around time.

I see a lot in Colorado and have been seeing them for a couple of years

I’ve seen a couple in New Orleans, and we are by no means wealthy.

I saw dozens of them on a recent trip to Paris. They were mostly taxis

Teslas are exceedingly rare everywhere but the wealthiest cities.

...recent trip to Paris.

Yeah... a notably wealthy city.

Even in Dallas i saw them over and over again.

If they almost got to that rate of 5k it's just as good. There's nothing magical about that number. Musk sets high goals and usually gets close, but it takes longer than he said it would. Reusable rockets, impossible, took years - but now we have them.

I can't understand the people that think he's a charlatan. They have sold approaching 200k electric vehicles. They are great cars, I have one. But separate from that, they always had a plan to increase production and sell more of cheaper cars, ramping up from first selling expensive ones. The latest ones are going to need a lot more volume before they can make them cheap enough to sell at 35k, such as higher battery production. They will lose money until they make them at high volume. It's not crazy to say they'll have a lot more money coming in as they raise production, that's like any business. The open question is will they actually make a profit. We can't know what the numbers are until they come out. Based on history, I think they'll get close to profitable but won't quite make it, but they'll clearly be headed in that direction as the early hurdles of increasing production are met. Again - it won't matter exactly when they are profitable if they are close. Just like the 5k/week number.

His goal was 20000/mo with less than a quarter of the current manual labor that he's using. We're now twice as far along as the original goal, and he can't even make 5000 in a week when rushing cars through as fast and shittily as possible.

Building 5000/w is nothing if you're just willing to throw more and more money at it. The point of the original goal was that it was actually going to be a sustainable, profitable approach.

Musk is certainly a self-promoter in the vein of P.T. Barnum. It's gotten to the point of irritation. But you can't deny he's changed the car industry.

A company's true function is to benefit society. Tesla has done that, so he gets a win from me. He's done it by taking chances and thinking outside the box. The tent is an example. Most companies would have given up but they did not.

20 years from now Tesla might not be alive but we will see its impact on the car industry. Very cool, Musk.

> A company's true function is to benefit society.

Could you elaborate on how did you come to said conclusion?

Sure, at its basics, society has needs, known or unknown, good or bad so companies are created to fill the needs. Companies survive if they reach enough people with their solution.

Sure there are ways to manipulate needs but at its basics companies are supposed to benefit society by filling those needs.

We are fed the idea that companies are created to profit the investors but profits are a side effect of meeting needs.

What about a company that happily sells guns and bombs to both sides in a Civil War? They are filling the needs of individuals to decimate society.

More specifically, profits are a side effect of meeting sufficient numbers of individuals' needs. It does not necessarily follow that meeting the needs of those individuals benefits society at large.

Profits are also a side effect of meeting needs today. It does not necessarily follow that meeting needs today benefits society in a meaningful way in the longer term.

For what it's worth, I think your implication is true. Clearly most companies create wealth and deliver benefit to society, it's that aggregate effect that makes capitalism the most successful system we know of under which to run a society.

But the reality is that it's entirely the other way around: companies do exist to profit their investors and it's the benefit to society that's the (usual, aggregate) side effect. It's not good, or bad, it's just a fact.

Profits are also a side effect of grabbing surplus value from their workers. Just sayin'

No, not really. If only it were that simple.

It's trivially true. A worker produces something and gets a fraction of their value paid back to them. They would not have been hired if it were not so.

That part is true, but that's not what you said. Getting profit from that surplus is something else entirely.

> profits are a side effect of meeting needs

It's the other way around.

On angle on that is we have societies have created the concept of an entity that is not a person who can assume debt, and has certain speech rights. So that entity is supposed to advance society more than alternative, which would be something like owners being personally liable for its debts and faults.

It's pretty much the justification for granting corporations limited liability, that the benefits of increased investment outweigh the harms of the limited liability.

Oh my god, come on. I'm a Tesla bear, and I don't really see a massive different between a rate of 4,850 cars and 5,000 cars....

52 * 150 * 35,000 = 273M in revenue.

assuming Tesla can't find a way to boost production by just 3% over those 52 weeks, it will take less than two weeks to make those additional cars.

Their revenue isn't supply driven anyway, it is demand driven. Two weeks of delay will not result in 273M in lost sales. It will just result in delayed sales.

It will just result in delayed sales.

I know two people who withdrew their Tesla Model 3 reservations due to them failing to meet a deadline. Their reasoning was that they'd like to buy a Tesla, but if they need to wait years for it, they prefer to get a nice car to drive in the meantime. The longer the delays are, the more people will give up.

Yeah I agree with you, but we're talking about a delay of two weeks, not years. That's how long it will take to make up the shortfall.

Anyway, Teslas are overpriced and of questionable quality.

The original deadline for 5k production was in December. It's more than 2 weeks.

The delay for the people who placed order are not same as delay to get to 5K target.

If I am 100,000 in queue, then car should have originally taken 20 weeks at 5000 cars per week. Now it will take 20.62 weeks at 4850 per week.

That is a delay of few days.

52 * 4750 * 35,000 = $8.6B in revenue.

You're quibbling over a rounding error.

3% is not a rounding error. There are industries with smaller profit margins than that.

And this is a case with production that doubled in a quarter. So, again, how big is 3%?

If it wasn't that big of a deal, they would have hit the target before 5am the day after they were supposed to.

I actually thought he was underpromising, and that Tesla would surprise the world by blowing past 5K weeks early. That they pulled out all the stops in the final weeks and still missed the deadline feels like a bad sign.

It's not the one time performance that matters, it's the rate of flow as time continues.

Also recall that band //width// can be increased for a cost while latency has hard upper bounds.

For anyone complaining about profit margins, think per unit profits rather than hitting some round base10 number.

> When it was clear they would miss again, they put up a third production line in a canvas tent, which the NYT quoted as "never heard anything like this ever" using what Musk tweeted as "scrap we had in warehouses" to build the cars.

I'm a software guy. Can somebody explain to me how you can build a high-tech auto production line from "scrap"?

I saw a drone video inside the tent, it looks mostly like service bays inside like you'd find at a small local car place that uses hand jacks. A mix of lift + non lift bays is common in any factory at the end of the line.

That fits with my analysis from a few days ago: https://news.ycombinator.com/item?id=17397505

Interesting analysis, thanks for sharing!

You can't. GP is completely misrepresenting everything about this situation: not a tent, not canvas, not scrap. Musk's tweet about scrap in a tent was very clearly a joke.

I can't link NYT because I get the paper version and lost my login, but I'm quoting from the paper in front of me:

> A tent, about 50 feet high, its taut grey canvas membrane supported by aluminum columns.

I don't think it was a joke. The tweet was specifically in the context of trying to convince investors that the cost of that tent production wasn't substantial and by "scrap" he meant equipment they had discarded from their main production lines because they are constantly upgrading them. You can't have it both ways. It was either discarded "scrap" machines they had lying around and he was not joking or machines they bought and he was lying (a.k.a "joking") about it. I'm giving him the benefit of the doubt that they really had all that equipment in a warehouse because its been reported they have re-tooled the line several times.

The quote not withstanding, a cursory glance at the website of the manufacturer of the structure (Sprung[1]) would show that the exterior is not canvas. Further, Sprung even lists manufacturing as an application of their structures.

Repeating false statements doesn't make them true.

[1] http://www.sprung.com/building-components/performance-archit...

The journalist is conveying a thing they saw using words they are familiar with. cf: Cameleopard vs giraffe, and first sightings of kangaroo or platypus.

It probably refers to working equipment they replaced on the main production lines because they wanted something smaller/faster/shinier, but hadn't yet thrown out.

So when musk just tweeted 7000 cars in 7 days, you’re saying you have information proving he’s committing some form of fraud? Could you elaborate? This is going to be a huge story and it looks like you’ll be the one to break it, which is pretty exciting.

When you miss a deadline to produce 5000 cars of a specific model I guess the other thing you can do is brag about producing 7000 cars and include all your models in that number.

It's not much of a story that the company that people think will go out of business and promised to make 5k cars a week only made 4800 or something, and is raising production goals to 6k for the next month. This might matter if say a bank was going to end their credit line if they didn't make that number. That's not the situation.

They're also building Model S Cars

If you look at SpaceX launch schedules, many are delayed for several weeks/months. Yet it has a better public image than Tesla. I think missing deadline isnt that unexpected, it happens in many projects. If the goal is still achieved at a reasonable time after the deadline, it is still a success imho. It means the project is now a reality, and that's awesome.

Missing a launch in rocketry is a normal and expected part of life in the industry, and no matter who is launching it happens. Missing targets for producing a car isn’t. This is what people mean when they say “comparing apples and oranges.”

> Missing targets for producing a car isn’t.

Why should we trust you on that fact? Do you have all the documents required to prove that all the previous car models of all manufacturers in the world were built and sell on time? In my experience (not about car manufacturing), several projects didn't meet the deadlines, and still succeed at the end.

This reads like the film "Gung Ho" made reality.

What about "Tucker?"

That too would work.

Your comment reminded me about this article "The War on Tesla, Musk, and the Fight for the Future"


They built almost $250M worth of cars in a week, which is a pretty large number (assuming avg selling price is 50k).

> Elon Musk continues to kill the game

Tesla is most overpriced startup currently on the market. It will crash in a spectacular way in near future. They are constatly missing deadlines, have quality issues, troubles to manufacture spare parts in sufficient quantity and have terrible work environment yet everybody are coming up with excuses for them. This will end at some point and that even beside the fact that electric car in reality create more pollution in vast majority of the world more than modern engines.

I'm sorry but I think your facts are not true. Only people with an agenda to support the oil companies or something come out with claims that evs are terrible polluters. First, regular ice cars have pollution in their manufacture, and the production of gasoline has a lot of inefficiences, it must be transported physically. ICE engines are vastly less efficient in use of energy. Coal is a decreasing amount of power generation. It's just a silly argument that evs are terrible polluters. Of course there is some pollution in their creation, like any object on earth.

>This will end at some point and that even beside the fact that electric car in reality create more pollution in vast majority of the world more than modern engines.

Is this thread being linked to by some Tesla short seller blog of what?

Surely this kind of misinformation isn’t organic to HN.

That's impressive. I've read a great many analyses stating Musk'll never succeed in his model 3 ramp up. Let's hope he keeps this up in the coming months. It's a long way to 450.000 vehicles...

This means they're now making about 7,000 vehicles total per week (S+X+3), which means they'll make more vehicles in the next 12 months than they have made in the previous 10 years.

I'd say they're ramping pretty fast!

EDIT: 7,000 per week, not per month, thanks below.

7,000 vehicles per week

Tesla pulled people from the S&X lines to reach their 5000 Model 3 goal. No way they also produced 2000 S&X cars in the past 7 days. In addition, their current death march schedule isn't sustainable. They won't come close to producing 7k cars in any week in July.

Tesla needs to spend billions in capex in order to get to 5000 M3 and beyond if they want to produce at a sustainable pace with acceptable quality. Billions they don't have.

Musk just tweeted out: "7000 cars, 7 days"


I stand corrected. Thanks for the update.

Where are you pulling this information from? How do you know it costs billions to produce a 5k line? What quality failings do the currently produced m3s have? Can you substantiate any of this? I'm genuinely curious if you have information that I don't.

I think people are just making up those numbers. It costs a lot to design and implement new infrastructure, and it will cost much less to use it to make the next 5 or 50k cars than it did to get to 5k a week.

> I've read a great many analyses stating Musk'll never succeed in his model 3 ramp up.

*By the deadline he provided. Which he didn't.

Does quality match the quantity here? I remember Tesla having lots of quality issues (misaligned doors etc)

Given that half of those 5000 are being produced in a tent in the parking lot with summer heat and no AC, I can only imagine.

Along with blowing dust, pollen, birds, rodents, etc. Factories don't need to be clean roomed like they do for computer chips, but you'd think it would be closed to the outside elements.

> Given that half of those 5000 are being produced in a tent in the parking lot with summer heat and no AC, I can only imagine.

Well, Musk himself said that the cars being made in the tent are higher quality.

> “It does everything that the other assembly lines do but with fewer people, lower labor costs and much higher uptime,” he said. “Our unit cost for vehicles is lower on that line than on the other lines, and we’re seeing higher initial quality.”


I think the estimates I saw were a few hundred are being produced in the tents. In any case, the customers are who will deal with any quality issues. If there are issues, Tesla has a track record of making things right for the customer.

If you can afford to wait the 5-7 months during which you may not have your Tesla. You can't even get it repaired on your own dime; the computer inside won't let you.

You can have AC on big tents, and I would be surprised if they didn't as your external 40C could easily become dangerous in a literal greenhouse.

At least forced ventilation is needed.

>You can have AC on big tents, and I would be surprised if they didn't as your external 40C could easily become dangerous in a literal greenhouse.

"The tent doesn’t have air conditioning, according to the city documents." [0]

It hit 90 in Fremont yesterday...

[0] https://www.bloomberg.com/news/articles/2018-06-25/the-futur...

There was a video linked of the "tent" and the ends are open, so I don't think AC would work.

The video clearly shows the ends are being closed up.

My question is who R&D's these cars at the limits of adhesion? Every single auto maker track tests their cars using real racing drivers who understand vehicle dynamics and can comfortably drive street cars on the limit, and over it. Track testing ensures a car is safe for the average driver, who has no idea that the throttle steers the back of the car-to give just one example.

How will these cars behave when little Jimmy rides his bike in front of them and they have to execute evasive maneuvers?

I hope someone who has a clue about driving was seriously involved with the handling characteristics, otherwise who knows how these cars will behave.

come on, that's a silly fear mongering ignorant post. They've had designers and engineers from many other car companies working on their cars and you can see endless pictures and videos of people driving their cars on tracks since even before 2012, when the S first came out.

Yes I agree, I don't follow street cars near as close as I do race cars, so I was ignorant and too busy at that time to G it. TBH I am fundamentally adverse to self-driving cars (though I'd love to race against their future counterparts, but alas I'll be too old) but I am not a Musk hater-I find it astonishing that he can land a rocket on a barge. I am happy to hear he sought out expert advice, and now thanks to you, I have to look into that more myself :)

thanks for your honest answer!

That plus the fact that Tesla doesn't have a dealership system to distribute the repair load and parts will be going to new cars if current Tesla owner complaints are any indicator and at least for me there is no way I'd buy a Hail Mary car built in 2018. Give him time to work out reliably making 5k cars per week then sure, but I think you're still somewhat in an early adopter phase buying a Model 3 right now. If I had to buy one tomorrow I'd go for a used S.

Mine looked good.


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