The pool of people that put down $1000 thinking they were going to buy a $35k car, has to be much larger than the people willing to plunk down $2500 for a $48k car (the cheapest pre-order currently available).
The multi year wait for the $35k version to be available (and quickly abandoned) can't help.
With the model 3 the deposit made a huge difference in delivery time. The production ramp was painfully slow (production hell) becuase it was a completely different car than the model S and X that Tesla was producing. Because of the slow ramp the incentive for a deposit was quite large. There was also pretty minimal competition for the model 3, mostly the chevy bolt which most don't really consider in the same class.
The production ramp for the Y is expected to be much better than the model 3. There's two announced locations (Reno and China). Tesla also has substantial experience building the model 3, and the Y shared about 75% of the parts. Additionally the model Y is a very conservative design. Same motors, same batteries, same nav, same display, same steering wheel, same seats, same autonomous hardware, same sensors, etc. The announced differences I've heard of are low tech tings like the chassis and suspension. Nothing crazy like the model X gull wing doors to throw a schedule off.
Combine that with significant increase in competition from Audi, Volvo, Porsche, Rivian, and others expected in 2020 there's a much less exclusive market for people interested in a small crossover/SUV in 2020.
I'd be quite surprised if Tesla doesn't sell every model Y they can make for a good long time, but the world is a really different place than it was when they opened up the model 3 preorders. With that said I did put a deposit down on the Y, it's still my guess at the best small SUV for 2020. If things change I can get a refund.
>The production ramp for the Y is expected to be much better than the model 3. There's two announced locations (Reno and China). Tesla also has substantial experience building the model 3, and the Y shared about 75% of the parts. Additionally the model Y is a very conservative design. Same motors, same batteries, same nav, same display, same steering wheel, same seats, same autonomous hardware, same sensors, etc. The announced differences I've heard of are low tech tings like the chassis and suspension. Nothing crazy like the model X gull wing doors to throw a schedule off.
So let's see if I have this right: they reveal the Model Y 1.5 months ago, and say it's available in ~1 month of purchasing. From what everyone says, they hacked up a Model 3 and people drove in a prototype. Now we hear Tesla don't even know if they're going to build it in China or California. But don't worry, they've ordered all the tooling and machinery, even though they don't know which factory it'll be built in.
I'm am constantly astonished that people still believe what is happening over there. What will it take for people to realize this is a desperate company?
Elon's vision is to take over the world automobile market quickly. It's impressively how close he's come. From zero to #1 since 2012 in premium cars is an almost unbelievable achievement. Originally the plan was announced that the model Y would be produced in new assembly lines in Reno, then later the lower end model Ys would be produced in China.
However since then the model 3, S, and X demand had dropped significantly, at least in the USA. They are developing markets in the EU, but delivery logistics, safety certifications, dealer networks, and related have delayed things. Reduced tax incentives in the USA have also hurt demand locally.
My speculation is that Elon wanted all 4 model 3 assembly model 3 lines in Fremont to stay producing the model 3. But now after Q1 they are considering converting a model 3 line in Fremont to the model Y. This will save significant money since with 75% of the same parts, but of course will reduce model 3 production capacity.
How much this makes sense depends on if Panasonic keep up with the battery demand and how much can the new EU model 3 demand make up for the decreasing USA model 3 demand. I suspect there will be related announcements in the next quarter or so.
As for desperation. They made $3.7B with a 20% margin and just paid off $920M in convertible bonds. They have $2.2B on hand and sold 63,000 model 3s this quarter. Where's the desperation? They promised a model Y (mostly a model 3 with a bit more ground clearance and a slightly taller chassis) in late 2020. I don't really see a problem. Given that they have set up 4 model 3 lines so far, at least one model Y line in 1.5 years seems pretty reasonable.
>Elon's vision is to take over the world automobile market quickly. It's impressively how close he's come.
What? They are a microscopic fraction of global market share. They are number 1 in a particular, shrinking market segment that all other manufacturers are moving away from, because they produced 2 years worth of demand at once. Their month-over-month share of cars in that price range is decreasing.
>They made $3.7B with a 20% margin and just paid off $920M in convertible bonds. They have $2.2B on hand and sold 63,000 model 3s this quarter. Where's the desperation?
They made $3.7BB in revenue, at 20% GROSS margins, but still LOST $600MM+, after promising profitability every quarter in the future. Revenues declined 30% quarter over quarter. Paying down the debt doesn't show up on the income statement. They have $2.2BB on hand, $700MM+ is restricted deposit money, after burning through $1.6BB last quarter. They also drew down their ABL. Their capital expenditure is barely covering depreciation, yet they have to build out multiple lines and factories. Their AP barely decreased ($100MM), while revenues sunk drastically. They have $9BB+ in debt, and less cash on-hand than their AP. They are slashing prices on cars they claim have "insane demand". There are people all over Twitter and Reddit waiting months for service or parts. Insurance costs are sky-rocketing. There's inventory stuffed in abandoned car lots all over the country. Elon is fighting with the SEC and rumour has it the DOJ and FTC as well.
You don't see a problem because you don't appear to know where to look. No individual metric is an issue, but in aggregate it doesn't look good.
> Now we hear Tesla don't even know if they're going to build it in China or California.
I believe you are confused here. The car will be built in China for some markets. The part that hasn't been decided is where US production will occur. The most logical place has been guessed to be GF1 in Sparks, NV, but they have considered California as well (possibly Fremont expansion).
>The part that hasn't been decided is where US production will occur.
Point still stands: they ordered machinery when they don't even know what factory it will go in. Anyone with a modicum of sense or experience in manufacturing understands this is nonsensical.
I happen to have a modicum of sense, and realize Tesla has some serious management problems, but why is ordering machinery before having a location finalized nonsensical? It's not like this stuff is in transit or they need to buy any land.
How many people will be out $1000 or $2500 if Tesla goes under? I'm assuming deposits are about as low a priority as you can get for recovering money in a bankruptcy?
I suspect it would be a total loss. But rationally it seems like a really unlikely thing to happen. Tesla just made a $920 million payment in March, they have a 20% gross margin, and have $2.2B cash on hand. Sure they may have to slow their growth, or take out another loan, but Tesla is hardly at the brink of bankruptcy.
There are some serious competitors targeting the model S and X coming, although none I've heard come anywhere close to 370 mile range. Most impressively even those with similar size battery (like the 95kwh audi etron) only manage 56% of the range of the model S (100 kwh). It's also substantially slower in acceleration (Telsa is 4.0 second vs Audi e-tron 5.5 seconds).
But the model 3/Y competition in the $40k to $60k range is looking significantly more sparse, especially with similar range. This is where Tesla becomes significantly harder to match because if even if you can match the size of the battery, matching the efficiency is tougher. Running a substantially larger battery to make up for lower efficiency is particularly problematic at this price point.
even those with similar size battery (like the 95kwh
audi etron) only manage 56% of the range of the model
S (100 kwh).
I suspect that's because Tesla have had batteries on the road for much longer than Audi, meaning they've got better data to base the battery-life-vs-discharge-depth trade-off on.
After all, everyone's worried about how degraded their batteries will be after 10 years, and there's no better way to get hard data on that than having EVs on the market for 10 years.
But the model 3/Y competition in the $40k to $60k
range is looking significantly more sparse
There's the Hyundai Kona Electric, with 258 miles for $37k-$45k. But I agree one car isn't a lot of competition :)
> everyone's worried about how degraded their batteries will be after 10 years, and there's no better way to get hard data on that than having EVs on the market for 10 years.
Jeff Dahn, now working with Tesla (exclusively I think) does not agree, and has a fantastic lecture explaining some stuff about lithium ion degradation (specifically, how normal accelerated age testing doesn't work, but they have a different method which lines up very well with long term cell aging)
Closer. No supercharging network, tiny screen (7" vs 15"), no AWD, slower (0-60 in 7.6 vs 5.5 seconds). At least the range is close (258 vs 300).
Tesla does pretty well on safety (passive and active) as well.
My main concern was did Hyundai skimp on the cooling and battery management system like Nissan did with the leaf. The result with leaf was rapidly degrading batteries that lost more than 25% in the first 3 years. Tesla's in comparison often manage 92% of new range after 150k miles.
With all that said, it does look like the Kona Electric is the closest model Y competitor I've found.
No evidence that consumers want a large screen instead of physical knobs.
And seriously who on earth cares about acceleration beyond a certain point. I mean come on. Nobody is drag racing their car on the way to the supermarket to buy groceries.
If Elon called me up and asked how to improve the model 3 (or future model Y), I'd definitely mention a few more buttons, or maybe a dial. Sure I want buttons, knobs, AND a big screen... but not enough to pay $80k and up for a model S. So given the choice between a model 3 and the competitors (ICE or electric) I have a hard time finding something better.
I'm hoping there's a model Y killer out before the model Y ships, but if not I think I'll be really happy in a Y.
As for the acceleration. I'm married and have a kid. I drive pretty conservatively. I haven't had an accident of any kind or even a speeding ticket in 20 years. I did however find numerous occasions to floor the model S I was renting and every time it resulted in a huge grin. I'd wouldn't trade that acceleration for say a Hyundai electric that has a 0-60 in 7.6 seconds just for some extra knobs/buttons. Nor is the Hyundai cheap, starts around $38k. In a traditional ICE car the acceleration has significant down sides, cost, MPG, noise, weight, size, packaging efficiency, etc. On a Tesla the acceleration there's not nearly as much of a downside.
>And seriously who on earth cares about acceleration beyond a certain point.
Being able to launch the car and be going highway speed nearly instantly is really useful whenever you have to merge in a short distance or take a right turn into high speed traffic. You can get by with an under-powered vehicle just fine in most of the country but if you're commuting in/out of a east coast city between DC and Boston it's going to come in really handy (possibly daily if your commute includes a really bad merge). Just last night some dude in a Maserati cut me off taking a right onto a two lane road where I was going ~70mph in the right lane. Had he been driving anything else I would have had to brake but he mashed the skinny pedal and I didn't have to do anything. If I had to take that turn every day I'd want something fast too. Sure it's a luxury feature but damn does it make things less stressful when you're in that situation.
Ordinary people aren't buying cars today based purely on MPG so why do people think range, battery efficiency etc is going to be a primary reason in future ?
It's far more likely to be just one of many factors. And Tesla really isn't great in many of them e.g. interior design, build quality, easy of service, product availability, brand cachet, etc. And now they have to worry if Tesla will even be around in 5-10 years.
Agreed. But Tesla IS doing really well on what consumers care about. Search for "Tesla owners are more satisfied than any other auto brand's, according to Consumer Reports" or similar articles.
Especially for first time electric car buyers, they really do seem rather worried about moving from a 488 mile range (like a honda accord) to a 240-370 mile range (Tesla). I suspect mostly because they haven't internalized the impact of being able to start each day with a full "tank".
That report does not measure what consumers care about. It simply measures what Tesla owners think. And those owners tend to come from a very narrow demographic which is unrepresentative of the general public.
And yes people are worried about the difference in range given it's a new technology. But no evidence it significantly influences purchasing decisions especially given that most people aren't driving hundreds of miles in a day.
I agree, but it's not such a narrow demographic. 63,000 bought them in Q1. The mode similar luxury/premium car I can find is the BMW 3 series. BMW sold 8,225 of them in Q1.
So almost 8x as many people bought a model 3 for similar or higher prices than the BMW 3 series. In fact at various time periods Tesla was outselling the sum of all similar premium cars in the USA from BMW, MB, Audi, and Lexus.
So sure Tesla owners are a self selecting set, but there's apparently quite a few people that want the model 3.
> But Tesla IS doing really well on what consumers care about. Search for "Tesla owners are more satisfied than any other auto brand's, according to Consumer Reports" or similar articles.
How much of this is due to many of the buyers were fans where Tesla could do not wrong? I know one of those people.
I also know someone who bought a TSLA recently. He likes the car, but hates dealing with TSLA the company. Incompetent was the word used.
Model Y starts at $48k and has a range of 300 miles.
Doesn't seem like a fair comparison, does it?
A fairer comparison would be the model S. The Model S base is $78,000 ($3,200 more), but has a range of 285 miles (1.4x the Audi) and 0-60 in 4.0 seconds instead of 5.5 seconds for the Audi.
The biggest issue is the Audi seems to have very poor efficiency. So you need a model S size battery (95kw) to compete with the model Y (75 kwh or so). Or you compete with the Tesla model S with a 100 kwh battery and end up with only 71% of the range.
Ah, interesting, it does look much more competitive. More range, less cost, and better acceleration, looks like a direct Model Y competitor. However it's still called a concept vehicle by Audi, couldn't find any mention on a planned availability date.
> This is where Tesla becomes significantly harder to match because if even if you can match the size of the battery, matching the efficiency is tougher.
The established car makers also have to bear the cost of having dealerships. I don't find it too unlikely that some of them are selling their EV at a loss and have the production throttled accordingly.
I was surprised by your claim so I checked... the Tesla website currently allows me to configure a Model 3 that is $39,500 before discounts for estimated delivery in two weeks. Not $35k but far less than $48k too.
Like animal fries at In-n-Out, the $35k is not shown on the website. You have to call and ask for it specifically.
Or if you prefer you can order the $39.5k one and call up service and get them to change the settings, and then they'll send you a refund of $4,500.
Does this all sound strange? Sure, but I guess they have their reasons for doing it, which seem to be mainly to keep the menu simple and steer people toward the best value, because the $39.5k car is a better value than the $35k car.
The heated seats can be controlled by an iPhone app and various other means. Pretty sure this involves software. I mean sure software is not needed but then you would be in a different car.
The multi year wait for the $35k version to be available (and quickly abandoned) can't help.