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Tesla Q4 2018 Earnings Letter (tesla.com)
106 points by 11thEarlOfMar on Jan 30, 2019 | hide | past | web | favorite | 96 comments


- Will they give guidance on Model 3, Geographic breakdown(most other peers do)?

- how many sales are high end cars vs low end?

- TSLA down 11% on year vs market up 5ish

- convertable debt issue, we're now in the 20 day average window, option implied vols show market doesn't think they'll make it

- Elon commented that they could pay bond w cash and didn't seem concerned, cash balance is up, though so are short term liabilities

Car Notes:

- current lowest price car sold is Model 3 $44,000

- reported to sustain 7,000 per week, a pretty big miss from the 10,000 that elon claimed they'd be at by mid 2018 but expected

- Est. 2019 delivered 360,000 to 400,000

- Est. Q1 delivers expected to be down vs 2018

- Est. Q1 deliveries expected to be down in North America

- still no funding secured for China plant


- why even track anymore, installations fell, yawn


- cash balance is 3.7B

- cash flow positive again!!, beat last quarter, though capital spending fell alot( down to $300ish million)

- 4Q Adj EPS $1.93, Est. $2.14 (Big misses, what happend here?)

- layoffs could cut $400M annually from budget

- Customer Deposits $792.6M vs $908.5M in 3Q

- Bonds unmoved, yield still 8%

- Elon expects to be profitable each quarter in 2019


Lots of analysts congratualting Tesla saying they've got the supply side sovled.

Shrinking sales on the high end indicate taht their next challenge will be on the demand side, especially on the high end that allowed them to survive for so long

Can they be profitable with $1000 in margin per car instead of 5,000-10,000?

Interesting note by Bloomberg

> Services reported a loss of almost $500M

"So basically, Tesla is taking a $500 million hit just to save customers from the dealership experience."

Nice summary! I was under the impression that the services loss was from the free electricity they gave out at superchargers to some owners. Their boosting of the prices there was a response to converting that line into a something at least revenue neutral. Also no details on how they proceed with their power swap arrangements.

Personally I expect them to use the Google hack where they create a wholly owned subsidiary that is a registered power company so that they can negotiate at grid rates for power rather than with various power providing entities where the super chargers are located.

The amount of money lost in services is way too big to be free electricity.

You could estimate this in a couple different approaches, here's one.

Tesla Model 3: 26 kwhr / 100 mi Model S: 33 kwhr / 100 mi Model X: 39 kwhr / 100 mi

Hard to say where the balance of supercharging comes from (more expensive models more likely to have it free, but maybe less likely to use?) so let's be generous and call it 30 kwhr/100mi

I pay 24 cents per kwhr but I hope their average price is more like 10 cents (not even counting the solar...)

So each 100 miles charged would cost $3.

So 100 million dollars spent giving out electricity would generate 3.3 billion miles charged.

Back in september there were 20 million telsa miles driven per day, but a year long projection would be hard given the fast growth of model 3. let's just say 20M per day. That's about half of the year's miles driven covered with 100M.

I can't imagine that even 1/2 of the total miles driven are charged by superchargers. So I am inclined to agree with you; the free-supercharging-electricity costs are probably a small piece of the total 500M.

I am getting familiar with your summaries like this which I really appreciate. I am interested if you are writing these up or obtaining them through a script or other service?

Thanks again!

He works for a hedge fund in Toronto (or used to?). Pretty sure these are all his own words. And you’re right they’re great. Whenever there’s earnings reports from the big tech companies - his are the first comments I look for.

For me the next couple of years are going to make or break Tesla.

You have pretty much every car manufacturer releasing flagship electric cars in 2019/2020. And most of them are either cheaper than Tesla or offer far more value i.e. premium branding and better interiors. And whilst they have their Supercharger network I suspect that pretty soon we will governments intervening to regulate standards and build out infrastructure.

So they better get ready quickly before the onslaught comes and like you said be profitable if margins drop.

Electrify America has an order of magnitude more money to spend on charging than Tesla used to build their supercharger network. That said, they seem to be using it to buy charging networks but so far the experience isn't improving. Conventional EV roadtrip charging is years behind Tesla.

I'm not sure "premium branding" for the competition matters vs Tesla, as I don't think the latter has a downmarket reputation. Interior/existing brand relationships I can see helping the conventional players. Range doesn't seem to be there even on the models supposedly coming out this year. It seems like we keep hearing the Tesla killer is coming Real Soon Like Now.

Still, I ultimately agree they need to sustain through the onslaught, it just seems like it's taking longer than expected.

> For me the next couple of years are going to make or break Tesla.

Maybe, but haven't people been saying that about Tesla for 15 years now?

That's what happens when you aggressively scale a business. They could have throttled back and been a profitable niche manufacturer with the Roadster, and again (albeit a bigger niche) with the Model S, and again now with the Model 3. But that's not their goal, so they're continuing to expand as fast as possible, and that carries risks.

Sure. But they never really had serious competition until now.

Companies like Mercedes, Audi, Jaguar own the mainstream, premium car market and they've only just joined the game.

As I most recently pointed out in https://news.ycombinator.com/item?id=18712442, there is good reason to believe that all the other car manufacturers are going to learn the hard way that their interests do not align with their dealers. Which means that consumers will learn that they shouldn't go to existing car companies to buy electric cars. Which does not bode well for the future of existing car companies.

(This is a prediction that I've been aware of for around 20 years now. And the form of the problem - that existing tech manufacturer's wind up hamstrung by their existing supply and sales networks, is a common one for companies that get destroyed by disruptive innovation.)

This is a bizarre argument to me, and I remember thinking that the last time you "pointed it out".

You're essentially saying that tens of thousands of dealers and hundreds of billions of dollars worth of car companies are going to go out of business because they can't find a mutually beneficial incentive structure.

It's not going to be all roses, but Tesla shunning dealers hasn't exactly been either, from a service quality and cost structure perspective.

Porsche doesn't seem to have any trouble shifting Taycans, doubling their production from an initial 20k to 40k units a year (simultaneous to Tesla cutting their X/S production from 100k to maybe 80k).

Here's my prediction: legacy auto manufacturers will continue to be years behind Tesla, but if and when the space matures that'll stop mattering. At that point, Tesla better stop acting like a startup and have their shit figured out, lest they become the Myspace of EVs.

You're essentially saying that tens of thousands of dealers and hundreds of billions of dollars worth of car companies are going to go out of business because they can't find a mutually beneficial incentive structure.

It would be far from the first time. One of the biggest problems is for a company whose internal incentives and business model are based around one set of market assumptions to rethink it all and do something else instead.

Both The Innovator's Dilemma and The Innovator's Solution touch on this. The latter one in particular walks through how internal structures and incentives have caused company after company to fail to figure out how to sell products that they know consumers are buying.

The two most common problems being that it is very hard to cut your own margins to match a low margin competitor, and it is even harder to convince a third party sales distributor to cut their margins.

Anyways this is something that I've been aware of for close to 20 years. In another 10 years you'll be able to decide whether I was wrong.

Yeah, I've read them too. But you're not saying that it's a challenge the industry will face, you're saying the death is a fait accompli, and the entire traditional auto industry is not real competition to Tesla (your words from your linked post).

I don't need to wait ten years to decide that you're wrong; even if your prediction turns out to be correct (which it might), assigning a 100% probability to this outcome is absurd, and if you could reliably do this you'd be a trillionaire.

Since we're reading the tea leaves via business school curriculum, what about a little Prisoner's Dilemma?

Let's assume that consumer demand exists for EVs (which Tesla has basically created single handedly), and EVs aren't profitable when slotted in to the cost structure of a traditional dealership due to the lack of maintenance. Dealers try every trick in the book to steer customers away from EVs.

Why wouldn't a percentage of dealerships defect, rebrand and focus exclusively on EVs? They'll enjoy abnormally high sales, and be profitable on the margins from new car sales alone. Dealerships that insist on only selling ICE vehicles will stick around for a while, but nobody will start one, and the number will be reduced by attrition. The total number of dealerships fall and the EV transition is completed over a few decades.

So to be clear: you assign a zero percent probability to this happening?

The probability is not 100%, but I believe it to be very high.

As for your hypothetical, the reason is that the dealers that try to do that won't make a sufficient profit to their business model unless they sell EVs at a very significant premium to published list price. And it will be very hard to sell consumers on letting them do that.

Even if you could get consumers to accept those prices, the industry would then face the problem that the margins on EVs from traditional car manufacturers have much higher margins than the EVs from startups like Tesla. Which will make them uncompetitive in the marketplace. This gets us back to the classic problem that it is hard to get organizations to significantly cut their margins. And even harder to convince your business partners to do so for your benefit.

You are assuming that Tesla and future competition can operate their own dealerships more efficiently.

They don't get their physical presence for free, and the cost is baked in to the sales price just the same way.

Maybe Tesla can pull that off but there's no reason to expect other EV manufacturers will until they hit massive scale.

Let's say there are 2 grocery shops. All their costs and expenses are the same but one grocery shop sells twice as many products per square foot / unit of time.

As someone interested in more profit, which store would you rather own?

The argument you're responding to wasn't "Tesla's stores are dramatically more efficient".

The argument is that Tesla stores sell Tesla's EV cars effectively (because that's the only thing they sell) and traditional dealership anti-sell EV cars because they make more money on selling ICE cars.

This is not a conjecture. In addition to plenty of anecdotal evidence, there were qualitative studies both in US and Europe where researches sent "mystery shoppers" pretending to be interested in buying EV cars.

The results were dismal. Many dealerships didn't know much about EVs themselves and in the worst case, they would literally lie about how bad EVs are.

That will be a problem for GM, Ford, and others when they finally have good EV cars to sell.

And there's no obvious solution to that. Car makers and dealerships are frenemies so it's not like GM can dictate terms to their dealers or that they can force dealers to do a good job selling EVs.

The obvious solution (heavily subsidize dealers with bigger discounts) is bad for profit margins. Investors like profit margins and it'll look doubly bad because when they finally have EV cars to sell, they'll go through the same "loss due to low volume / production ramp" that Tesla went through in first half of 2018 and will be competing with Tesla's 2021 heavily cost optimized production.

In fact parent was making claims about the extra markup required for a traditional dealership to make a profit on EVs. This expense doesn't magically disappear on a Tesla, unless their dealerships are more efficient.

Feel free to argue with my prisoner's dilemma point earlier in the thread if you want, which is in my view how this will play out. I've already agreed that what you're describing is an issue (and am at a loss why you took the time to write it out), I'm merely asserting that it's not going to spell the end of a quarter trillion dollars worth of wealth.

This expense doesn't magically disappear on a Tesla, unless their dealerships are more efficient.

Walk into a regular dealership and then Tesla's version and you tell me which is more efficient.

For just one example of the differences, consider the typical haggling over price where multiple sales people and managers interact with you for an extended period of time to try to get you to spend top dollar. Compare with the Tesla version where you're pointed at a computer open to their website where you can order and configure the car that you want.

I've already agreed that what you're describing is an issue (and am at a loss why you took the time to write it out), I'm merely asserting that it's not going to spell the end of a quarter trillion dollars worth of wealth.

On what principles will it not do so? Merely because it seems absurd? Or is there some logic that applies?

I've greatly enjoyed this thread, thanks to you and parents for taking the time to write it out. Just wanted to add, putting the "250 billion dollars of wealth destroyed" into perspective, that is more or less what Apple's loss of market cap during the last 6 months represents.

Granted, that's to a large degree a speculative reduction in wealth. A similar re-valuation of the global car industry's future prospects would cause more mayhem due to well-established investments in supporting industries. It's fascinating how 250 billion dollars in reduced marked cap means "meh, it was overvalued" in Apple's case, whereas it would be a nasty surprise of historic proportions if it happened to the car industry.

The tentative release for many of these new electric cars are in 2019/2010. There's probably going to be a good chance that they are delayed with the technical difficulty of manufacturing electric cars at scale.

Also I wouldn't count out Tesla's major advantage in sourcing the best batteries at wholesale prices.

I have a feeling Tesla didn’t capitalize enough on their first mover advantage and now it’s going to be tough as proper competitors move into the market.

Audi is matching the Model X with the E-Tron, but without Tesla build quality: https://www.audiusa.com/models/audi-e-tron

Volvo Drive-E, Jaguar I-Pace, new Nissan Leaf; similar stories.

> offer far more value i.e. premium branding and better interiors

This can't happen soon enough. Ever since driving a Tesla, I'm completely disappointed by the interior/control panels of most (all?) other cars. Buttons, seriously? A 9-inch screen?!

> Buttons, seriously?

Buttons allow a driver to not take his/her eyes off the road while changing the radio station or adjusting the AC. Totally eliminating dashboard buttons is dumb, but fortunately some car-makers have started realizing this and have started to re-introduce some of those buttons.

Additionally, buttons and knobs allow critical systems like HVAC to be operational and affordably serviced when the infotainment system inevitably dies. This was the primary reason I got rid of my 2015 Ford Fusion. The SYNC system in it became a generation behind and even when it was the latest generation it was nearly impossible to get it serviced at the dealer for software updated.

Yeah, I'm not opposed to a few buttons - like +- temperature, all blinkers, etc. But in most cars, the number of buttons is just overwhelming, so you probably need to take your eyes off the road just to find the button you're looking for!

I could type on my old Nokias etc without ever looking at the message. It was flawless. If one wanted to do it whilst driving (not that anyone ever would, of course) it could be done without ever looking away from the road. That's the power of actual physical feedback.

I'm sure there's someone somewhere who can prove me wrong and touch-type flawlessly on their touch screen phone. But in most cases you're relying heavily on auto-correct to make a parseable sentence. Which means you'll need to look at the screen a lot.

The radio/Cassette player in my car is all buttons. I can change stations, volume, switch to tape etc without looking much at all. Some buttons I might no remember their place - but here's the crucial thing. I don't have to keep looking until I make contact. I glance, see where the button is, and then feel for it.

A touch screen simply doesn't give you that, you either need to see yourself making contact or wait for the software to do something you may (or may not) have wanted. If it's wrong, you're now trying to fix that and try again.

I do not believe that touch screens reduce risk in interacting with car functionality, indeed I'm pretty sure they increase it.

Siri works well enough for me that I can perfectly dictate a text message without taking my eyes off the road. That's just one data point and I know others have diverging experiences, but it seems likely that voice control with improve enough that this could soon be a feasible way of controlling a car's secondary systems too.

Seriously? Tesla interiors have a high tech feel, but they are pretty spartan and lack luxury I expect in a $100k car. You can get into a 3 series BMW and it's got a higher quality interior than any Tesla.

Tesla also just lost another CFO. Deepak Ahuja announced he’s leaving. Again.


And this much turmoil in an accounting department is never good. In the last year, they've lost 5 finance VPs, their CFO, and a CAO that they hired and left a month into his tenure. That would be shocking for any other $50 billion market cap company.

Oh absolutely. That much unplanned churn in the financial sector of a Girl Guides troop would be shocking! In a $50 billion market cap company it’s downright alarming. I really don’t know exactly what to make of it, but it factored into my decision to leave the stock the hell alone.

That is if they have something to hide, but since they are public and have to go through Audit. I wonder why are al these Financial people leaving.

Yes, they are public and have to go through audit and that's why all these people want to spend more time with their families... Probably the departing interim CFO won't be signing the 10-K filing, and apparently they weren't able to find anyone better than Zach willing to do so.

Elon: "And we thought long and hard about who the right person is to take over from Deepak, and that's Zach. And Zach has been with Tesla now for nine years... [...] So Zach, you had management and technology at Wharton undergrad and then worked at Tesla and then spent a couple of years at Harvard Business School, which I actually don't think was necessary, by the way."

Jesus. It’s hard not to worry about this particular combination of events. Is there a benign explanation?

Comparing it to the history of other companies, it might seem like a less likely explanation, but I'll give it a shot: Deepak Ahuja came out of retirement after the departure or Jason Wheeler, during a critical part of the company's history.

Cash flow was critical during this period, so it made sense to choose a CFO who both has a long history with the company and was able to take over on short notice. Now that Ahuja returns to retirement, Tesla figures it's better to hire an insider than get someone with external experience, given how many external executives they're losing after a short time.

In this scenario, the executive departures are taken at face value, namely that Tesla is such a chaotic and stressful environment that it's a bad match for many executives who thrive in other companies.

All good points. I would reply with, “Why Zach?” Are the current and future financials so exceptional that they can afford someone with no record of performance at this level as the CFO? On the other hand, if Mr. Ahuja signs the 10-K on the way out that would allay my fears that Zach is just the guy lining up on a future chopping block.

"Services and Other" from the consolidated statement of ops shows:

Q4 Services and Other Revenue: $531 MM

Q4 Services and Other Cost Of Revenue: $668 MM

Which would suggest a loss on services of $137 MM.

Is this the same 'Services' that Bloomberg is referring to? I cannot find any other mention of Services in the letter.

Services number is YoY in the columns beside where you are probably looking

$1,880,354,000 costs - $1,391,041,000 revenues is $(489,313,000) in losses

Of course, thanks.

You mention solar is a big nothing burger. I remember when the acquisition happened there was quite an outcry about Tesla basically bailing out Musk's other company. Do they have a liability here or is it just going to disappear into the ether?

Why would it be a liability? Shareholders voted and accepted the purchase of SolarCity.

I agree its sketchy, but Musk doesn't technically control the company. He has a large share of the voting pool, but the shareholders in general were willing to bail out SolarCity. Its kinda "Democracy in action".

I think it was a stupid move for the shareholders to do, but its fully within their rights to do so.

To nitpick, it's literally plutocracy, not democracy.

Fair enough. The Stock Market is a pay-to-play game for sure.

Didn't also Musk abstain from voting before the SolarCity acquisition? That's what I remember, anyway.

Yes. Musk abstained from voting. Musk made his opinion known, but otherwise "fairly" let the shareholders vote on the issue. At least technically fair. It was 85% in favor of merging.

I say "technically", because Musk also went around trying to convince people that they should allow SCTY to be acquired by TSLA. But hey, shareholders trust Musk and were willing to follow his opinion on the matter. So I guess its fair overall.

A stupid move, but fair.

> A stupid move, but fair.

Are you're saying this from a short-term financial perspective?

I personally think it's too early to tell if it was a stupid move. Elon Musk had a plan, and his plans do seem to work out for the most part given some time.

It's my understanding that they recently cut a major sales channel, so it's perhaps not surprising that the number of installations have fallen.

> Are you're saying this from a short-term financial perspective?

Absolutely. Tesla's risk isn't long-term at all. Its all about the short-term risk.

Just think about Tesla's debt schedue.

* CUSIP 83416TAA8 -- $188,058,000 of Solar City Debt on November 2018.

* CUSIP 88160RAB7 -- $920,000,000 of Tesla Debt on March 2019. (Not part of SolarCity, but it has to be part of the calculus).

* CUSIP 83416TAC4 -- $566,000,000 of Solar City Debt, on November 2019.

Imagine how much easier 2019 would have been if Tesla didn't have to worry about $740 Million of Solar City debt coming due.

As a result, Tesla's CapEx spending (ie: building factories, buying factory equipment money) has dropped dramatically.

That doesn't even get into the stock-dillution issue either. Millions of shares were issued, reducing Tesla shareholder voting power, and your representation of the company. Solar City investors joined with Tesla investors as a freebie, part of the deal.


So now that we've talked about the costs of merging the companies. What exactly has SolarCity done for Tesla? Absolutely nothing. Tesla has been given hundreds-of-millions of dollars in debt, and millions of shares worth of dillution... with nearly nothing in return.

SolarCity employees and contractors were fired or laid off for the most part. SolarCity's deal with HomeDepot has evaporated. And finally the Gigafactory 2 is barely operational. The Solar Roof is years late and sales / revenue of SolarCity are completely ignorable.

Oh, and future Solar City debt will come due. There's also a 2020 bond due (I can't figure out how much it costs though). Its not like Tesla is close to paying off all that old debt yet.

We're looking at a ton of downsides with almost no visible upsides. Even after a year of waiting, all the touted "potential upsides" (Solar Roof, etc. etc.) are basically dead.

> We're looking at a ton of downsides with almost no visible upsides.

Now that's not quite true. We've maintained the idealized (idolized?) Musk as an infallible visionary an engineer.

(I say this as a huge Musk fan - I think his image/public perception play a big role in keeping Tesla afloat in hard times.. even when those hard times are caused by less-than-stellar tweets)

> Are you're saying this from a short-term financial perspective?

I'd argue it was a stupid move from a short-term, long-term, and even medium-term financial perspective. Not only did TSLA subsume all of SCTY's debt, they diluted their shares doing so, and most analysts of TSLA value the solar/energy business at a 0 despite the $2.6 billion acquisition. How many other businesses can make multi-billion dollar acquisitions that people think are goose eggs two years later without that being considered a bone headed move.

> It's my understanding that they recently cut a major sales channel, so it's perhaps not surprising that the number of installations have fallen.

And why did they have to do that? Because Tesla had been negative free cash flow for so long that they had to stop spending any additional money on Capex. Had they been in a better financial situation, like, for instance, like they would be if they didn't do this acquisition they might have been able to invest in future growth and wouldn't have done two series of layoffs in the last 6 months.

They also did the fake shingle demo and pushed numbers around to report a quarterly profit.

I mean a literal liability - they've currently got an asset on their balance sheet that at some point they're going to have to re-evaluate the business and at some point there'll be a write-down associated with it.

They still have “Solar energy systems, leased and to be leased” for $6.3bn, plus $350mn in goodwill, in their balance sheet. We’ll see a nice write-off someday.

Edit: for context, total assets are $29.7bn and liabilities are $23.0bn.

These numbers are unreal. From 100 cars in 2011 to 140,000 Model 3s (+100K Model X and S) in 2019. And all electric. I personally am not interested in minor changes in financials, and want to just sit back and marvel the machine that Tesla and Elon Musk has created. Kudos to everyone at Tesla.

  $TSLA annual revenue (billions)
  2018: $21.46
  2017: $11.76
  2016: $7.00
  2015: $4.05
  2014: $3.20
  2013: $2.01
  2012: $0.41
  2011: $0.20
  2010: $0.12
  2009: $0.11
  2008: $0.01

  2 yr: 75%
  5 yr: 60%
  10 yr: 107%
source: https://twitter.com/TeslaPodcast/status/1090719629922746374

It's interesting to overlay Tesla 2014 - 2019 with Apple 2002 - 2007. Now what Apple did from there will be tough to match (not to mention the margins): https://ark-invest.com/research/tesla-through-the-lens-of-ap...

Thank you for putting these numbers out. Also, kind of reminds me of Facebook revenue growth

Looks like everyone is worried about a few percentage points up and down in financial numbers. There are three keys points I took away:

1) We expect the capital spend per unit of capacity for this factory to be less than half of that of our Model 3 line in Fremont.

2) Since Model Y will be built on the Model 3 platform and is designed to share about 75% of its components with Model 3, the cost of the Model Y production line should be substantially lower than the Model 3 line in Fremont, and the production ramp should also be faster.

3) This year, we will continue to implement more automation projects, and our ongoing cost reduction efforts will also make an impact.

In the end if Tesla wants to achieve its mission of moving to world to sustainable energy, costs need to go down. Every quarter they are making improvements and the three points above show significantly potential to further improve costs. The global auto market at $2 trillion is gigantic and good fraction of it is going to be electric - it is really a race to improve costs and Tesla is significantly ahead of the pack so far.

Given how wrong forward-looking statements by Tesla are, any forward-looking statement is largely irrelevant at this point.

So the only thing that actually matters is results: how they performed last quarter.

> Tesla is significantly ahead of the pack so far

Not really.

Audi e-tron, Jaguar iPace and BMW i3 are all well reviewed.

And 2019/2020 will see a wave of car companies e.g. Hyundai, Mercedes entering the market including plenty of interesting startups coming out of China. So Tesla is going to need far more to differentiate themselves than just range.

I've ridden in an i3 a lot (good friend owns one) and I own a Model 3, and they are _completely_ different cars. They both have 4 tires and will get you from point A to point B, but that's about it.

I disagree with that. The main appeal of a Tesla over other cars is the zippy electric drive train. The rest of a Tesla car... well, leaves a lot to be desired for. The Model 3 has already developed a reputation for being unreliable, and that's even with the simpler design of an all electric vehicle compared to an ICE vehicle. They mess up on all the things that every other auto manufacturer has spent enough time in the business to get right: panel gaps, paint issues, soundproofing, etc. That's a huge competitive problem.

Audi e-tron and Jaguar iPace compete with the Model S; BMW i3's small range puts it in another category entirely. There's no competition for the Model 3 yet, and I don't think there will be for a while.

Well, given that the Model 3 is going to cost around 60k EUR in Europe according to recently announced prices, they aren't going to sell many of them.

That's a price you can have a huge (gasoline) SUV for. Or a luxury Mercedes. Or two smaller BMWs ... People aren't going to buy the Model 3 (which is supposed to be a "budget" car) only for Musk's puppy eyes at such price.

The other reason is a horrible lack of charging infrastructure. Europe isn't US where everyone has a house, garage and a driveway so plugging a car in to charge overnight isn't a problem. Here a huge amount of people live in apartments and the shared parkings simply don't have charging spaces. And a token one/two slow charging poles at some larger supermarkets are really not a solution. Even Tesla has a very poor coverage with their superchargers here.

That's why the electric cars aren't exactly selling like hot cakes here. That Model 3 doesn't have an equivalent electric competitor is very much irrelevant when everyone is going to compare it with a gasoline (or diesel) powered car - which cost half the price and have higher utility value.

The Chevy Bolt?

At the cheaper end there is the Hyundai Kona and Nissan Leaf.

Not surprised there isn't much competition for the Model 3 given that sedans are out of fashion at the moment. Car companies are far more focused on the crossover market.

The Model 3 outsold all of those by huge margins, and startups in China are not going to sell cars in the US — or any large market outside of China — any time soon due to safety standards.

IMO the biggest dealbreaker for non-Tesla EVs is the extremely anemic state of affairs for non-Supercharger charging stations: there are barely any of them, many are poorly maintained or broken (or reserved for customers/employees/building residents), and dear God they're slow. As a Tesla owner, I can't imagine having to depend on them... Half the time I come across one, which is rare enough as it is, whatever I find is literally unusable, and the rest of the time getting a decent charge takes hours. With a Supercharger I can reliably get 100+ miles in about 15 minutes, which is plenty for almost anything, and there's many, many more charging stations.

Anecdotal, but a friend of a friend bought the jag. He is having a very poor experience with the car.

Was this the story of the jag where it only had tens of miles on the vehicle, the rear motor seized, and the manufacturer and the dealer are fighting over the buyback of the vehicle?


Can you say what problems there are?

Alas. Tesla, like all companies, could use compelling competiton.

Is it the range? I think they went too low.

Or just general Jaguar unreliability?

This is the best breakdown I've seen yet. I doubt we'll see the "Production Hell" experienced with the Model 3 again.

I think Tesla may start to face issues when the other automakers start coming out with electric cars within the next few years. I sold off all my stock in Tesla, although I think they may still be a good short term bet. The supercharger network and cool factor is their big advantage at the moment, but I think in the future they won't do as well when there's more competition.

I think Tesla may start to face issues when the other automakers start coming out with electric cars within the next few years.

Perhaps, but people have been saying exactly this about Tesla for the last ten years now. Hasn’t been an issue for them yet, despite much improvement in the EV offerings from other manufacturers.

Not only has it not been an issue...Tesla's share of plug-in sales has been increasing dramatically year over year.

Cadillac ELR, BMW i3, Chevy Volt, Chevy Bolt were all billed and hyped as "Tesla Killers" upon launch.


To date, no other manufacture has announced any plans to procure enough battery supply to produce cars in comparable volume to Tesla.

To date. But more and more manufacturers are biting at their heels for the chance. With better and better cars.

that aren't selling nearly as well...


True. lol People have been saying just wait for electric Toyota or BMW and it still hasn't happened yet.

No established car company has released a car that even attempted to match Tesla in terms of performance, range, value for money or overall feature set. Maybe the new Porsche will be close, maybe not, but nothing else is even in the ball park.

This has been said about Tesla since it's inception, and has still yet to be an issue for them. Their supercharging infrastructure is so vast now that, if other automakers want to compete with charging options, they're better off licensing the infra from Tesla.

The comparison of Tesla to other EV options just isn't fair. Tesla models were designed from the ground up as being electric from the start, but other options have been ICE cars transitioned to EV, which makes them less-than-ideal and they lack the low center of gravity and storage capacity a tesla has.

I really do struggle to see how other manufacturers will compete with Tesla. Tesla just does so many things right...

I am not so sure. Its really not just about their cars being electric. Its the whole technological package that's miles and miles ahead of the competition. I just bought a new Honda with Lane Keep Assist and Adaptive Cruise Control and a whole host of other features. Compared to my boss's tesla the "self-driving" features of the Honda are nothing. My honda doesnt even really have a way to get OTA updates to any software even though this car is a 2019 model with a persistent GSM internet connection.

Was your Honda 50,000, which is I think the minimum to get the tesla self driving features? I believe with paying for the 5,000 option you get no self driving features on the tesla, just old school cruise control.

That's not true, the 5000 add on was to be able to get the full self-driving when it comes out (which it hasn't yet). I have a Model 3 and I didn't opt in for the add on. You can always add it on later since it's just software, once it comes out. I still have full adaptive cruise control, auto steer, auto lane-change.

Sorry, maybe it is just the Model 3, but I thought to get anything like lane keeping and ACC, you had to buy the self driving package, otherwise you only get standard cruise and no lane keeping, which are standard on Honda now.

Exactly. Even things like the aerodynamics - the Audi coming out still looks like a gas-powered car and doesn’t seem to have taken advantage of the reduction in drag coefficient that is possible when you remove every vestigal design decision that was made, in part, to accomodate an engine, exhaust system etc.

I don't think at this stage the number of electric cars being made by other companies is the main threat to Tesla. The main threat is still convincing people that electric cars are a viable alternative to ICE cars, in which case the more alternatives there are a different price points then more people may be convinced to buy one, which actually helps Tesla. Ultimately, if there isn't demand on the level of ICE cars for electric, the Tesla is doomed with or without competition.

What Tesla has achieved in the past decade is a miracle. Their success is a combination of luck and the resolve of everyone at Tesla.

But given the tall odds and strong pessimism from multiple groups, it's a marvel they continue to thrive. Kudos Team Tesla!

Looks like shares dropped a bit in after-hours. Likely related to the CFO planning to leave during 2019, which was not in the earnings letter.


Model Y. So Tesla will have four models: S 3 X Y

That isn't an accident. The Model 3 was meant to be called Model E but Ford owns the rights to that name even though they haven't marketed a Model E in forever.

They wanted “model e” but ford owned the trademark.

I dont think this is an accident.

Is there another vehicle company that is close to Tesla in self-driving capabilities?

If Teslas drive themselves and other EVs don't, are they a comparable car?

Tesla's don't drive themselves though. Tesla has removed the FSD option from all it's model's since October. Most self driving engineers don't actual believe the strategy of using only standard cameras installed in the vehicle is going to work out long term, and their self driving unit has less funding than BMW's, GM's Cruise division, Google or Uber.

It's hard to see how they win the self driving game, and if they do, it will be years off.

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