Today's Minis are very poorly made and unreliable. They are also extremely difficult to work on. I don't know if electrification will make things better or worse.

Mean old bankers keeping the future from happening

 

Looks like the value of the gigafactory building and related land will pay off the bondholders (most of them, hopefully) when Tesla goes bankrupt.  So stockholders will be lucky to get a nickel per share. 

 

 

Tesla stock down 30% since the launch of the Model 3, from $350 to $250. 

Tesla Looked Like the Future. Now Some Ask if It Has One

 

https://www.nytimes.com/2018/03/29/business/tesla-elon-musk.html?hpw&rref=automobiles&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well

 

Mr. Musk originally predicted that the Model 3 would arrive in 2017 and that the car would push the company’s sales to 500,000 cars a year by 2018. He later lowered his prediction to 100,000 Model 3s in 2017. Backtracking again, he said last August that the company hoped to make 20,000 a month by December, and added that “people should have zero concerns” about Tesla’s ability to increase its output of the Model 3.

 

But in the fourth quarter of last year, Tesla made only 2,425 Model 3s. In its most recent plan, it hopes to lift production to 2,500 Model 3s a week. The company is expected to release first-quarter production totals in early April.

 

For those of you who can do basic math, 2,500/week is approximately 125,000 Model 3's in 2018.  They made 100,000 total vehicles in 2017, so maybe they get to 225,000 vehicles in 2018.  That's only roughly half what Musk predicted.  There is a HUGE difference between selling 225,000 and 500,000 cars.  It's the difference between simply losing a lot of money and going bankrupt. 

 

By comparison Ford makes about 225,000 vehicles per month.   

 

 

 

 

 

Also, Ford and the other major automakers have tons of other revenue streams.

https://www.theverge.com/2018/4/2/17188894/tesla-model-3-production-target-elon-musk

 

They're up to ~2,000 Model 3's per week (saw my first one this past weekend in Columbus - I see Model S's and X's almost daily).

 

So 8,000 per month?  Maybe?  I mean, they're going to struggle to get to 100,000 Model 3's in 2018 at this rate.

 

I just don't get it...they set these targets, knew they had to ramp up production, and...have just failed.  You'd think if they come out with these huge production estimates they'd already have MOST OF THE NECESSARY PARTS IN PLACE to meet those estimates.

My friend was in fairly early for the Model 3 deposits, but upon realizing that the model he wants (AWD) would be last and thus put the EV credit in jeopardy he changed course (I believe) and is considering a Model S instead.

 

UPDATE - friend opted for the Model 3 to save a lot of money and now is in "wait and see mode" - anticipated delivery of 3-4 weeks now.

Also, there's this: https://www.theinformation.com/articles/teslas-musk-takes-charge-of-model-3-production-as-problems-persist?shared=79037ad558ae276f

 

esla’s struggles to manufacture its flagship Model 3 electric sedan reached a boiling point last week, prompting CEO Elon Musk to take direct control of the division producing the vehicles, according to two people briefed on the matter.

 

The move came after Tesla failed to hit its goal of making about 500 Model 3 sedans per day, or 2,500 per week, by the end of March. Mr. Musk appears to have pushed aside the company’s senior vice president of engineering, Doug Field, who had been overseeing manufacturing in recent months.

I just don't get it...they set these targets, knew they had to ramp up production, and...have just failed.  You'd think if they come out with these huge production estimates they'd already have MOST OF THE NECESSARY PARTS IN PLACE to meet those estimates.

 

 

Refer back to the choice Tesla made to buy the final production equipment first instead of building a demo set.  Apparently all established automakers buy a set of equipment to outfit the line, build a few hundred cars, then have the final machinery rebuilt on new specs to fix problems that appeared.  Tesla is no doubt having to manufacture complex parts in-house and stop the line for each car where the assembly machinery is not working properly and install things by hand. 

Tesla CEO Elon Musk, stressed but "optimistic," predicts big increase in Model 3 production

 

Tesla, the pioneering electric car company, has suffered a series of very public challenges since the beginning of this year. Its high-profile CEO Elon Musk called this a period of "production hell." Most of the troubles revolve around the company's Model 3 sedan, its first mid-priced, mass-produced electric car.

 

 

In response to this article, Elon tweeted:

 

Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.

Tesla Is Temporarily Shutting Down Model 3 Production. Again.

 

During the pause, workers can choose to use vacation days or stay home without pay. This is the second such temporary shutdown in three months for a vehicle that’s already significantly behind schedule.

Tesla Is Temporarily Shutting Down Model 3 Production. Again.

 

During the pause, workers can choose to use vacation days or stay home without pay. This is the second such temporary shutdown in three months for a vehicle thats already significantly behind schedule.

 

They should definitely be paying these workers to help maintain morale.  They're giving these guys several days to go put applications in elsewhere. 

 

 

No money for that. This is what happens when you skip the bicycle, scooter and motorcycle steps.

Meanwhile, China is kickstarting the electric bus market.

 

https://www.vox.com/energy-and-environment/2018/4/17/17239368/china-investment-solar-electric-buses-cost

No money for that. This is what happens when you skip the bicycle, scooter and motorcycle steps.

 

There is always something an owner doesn't understand.  Musk never had to work so he doesn't understand how blue collar guys think.  Sending guys home for a week without paying them is a disaster.  He's going to find out that these guys have no loyalty to him.  I'm sure there are plenty of jobs to be had in the bay area. 

 

Tesla Is Temporarily Shutting Down Model 3 Production. Again.

 

During the pause, workers can choose to use vacation days or stay home without pay. This is the second such temporary shutdown in three months for a vehicle thats already significantly behind schedule.

 

They should definitely be paying these workers to help maintain morale.  They're giving these guys several days to go put applications in elsewhere.

 

What that article didn't say, but some other articles did, is that the production pause was planned and that such pauses are normal at other automotive OEMs, too.  This isn't to take away from the fact that the Model 3 is behind schedule and has had success defined downward (from an original target of 10,000 units produced per week by this point in 2018 to now possibly exceeding a revised target of 2500 units per week, en route to 5,000).  But this production outage isn't because there was some kind of fire on the assembly line or other emergency.  This is a normal, predictable, and planned event in the automotive industry.

An inability to manufacture even half of the needed number of cars roughly six months into production certainly seems like an emergency to me. 

I thought they were in Production Hell.

An inability to manufacture even half of the needed number of cars roughly six months into production certainly seems like an emergency to me. 

 

What really matters is the cash burn rate, which is of course in some part inversely related to the production rate because the production rate directly affects cash flow from operations.  And the cash burn rate is currently substantial, there's no doubt about that.  Musk has apparently been able to calm jittery capital markets in the past week (the stock is back up from a low around $250) and assure that they won't need to raise additional operating capital in the third and fourth quarters, but of course, his targets are known to be very aggressive.

 

That said, while 10,000 units a week might be necessary to justify the current sky-high stock price (let alone what it was a couple of months ago), there is some secret number well shy of that that will at least be sufficient to keep the enterprise solvent and operating.  For the moment, the Model 3 is getting generally positive reception, the Model S continues to get rave reviews (even notwithstanding the recall), and Tesla is basically able to sell every car it makes.  Ironically, even its troubles have changed the conversation about electric cars, because we used to talk about how no one would ever buy them, and now we talk about how the most prominent EV factory can't keep up with the demand.

If they're selling 10,000 vehicles per month instead of 40,000, they're bringing in approximately $5 billion in 2018 instead of $20 billion assuming they're selling all of their $35,000 cars for $50,000. 

 

So they're tracking to come up $15 billion short for 2018.  That certainly sounds like an absolute disaster. 

And their revenue comes ONLY from the cars since they have no other revenue streams.

So they're tracking to come up $15 billion short for 2018.  That certainly sounds like an absolute disaster. 

 

You're moving the goalposts, at least vis-a-vis the link you posted.  At first we were just talking about the planned production pause.

 

As for the financials, opportunity costs are not cash burn.  The most recent quarter for which we have results, 4Q17, showed a ($277M) cash flow.  There have been individual quarters where Tesla burned around $1B.  Bad, yes, but not $15B/yr, and the bleeding has been shrinking and should turn positive well short of the 10,000/wk production mark (unless of course they spend inefficiently to get to that mark).

I thought they were in Production Hell.

 

Purgatory it appears.

Musk has apparently been able to calm jittery capital markets in the past week (the stock is back up from a low around $250) and assure that they won't need to raise additional operating capital in the third and fourth quarters, but of course, his targets are known to be very aggressive.

 

My buddy bought up some TSLA stock on margin and was fretting about what to do last week (it was hovering above $300).  I told him to sell (he was positive at the time) and he decided to hold on, saying he was long/bull TSLA. 

Musk has apparently been able to calm jittery capital markets in the past week (the stock is back up from a low around $250) and assure that they won't need to raise additional operating capital in the third and fourth quarters, but of course, his targets are known to be very aggressive.

 

My buddy bought up some TSLA stock on margin and was fretting about what to do last week (it was hovering above $300).  I told him to sell (he was positive at the time) and he decided to hold on, saying he was long/bull TSLA. 

 

Owning TSLA (the stock) is choosing to sign on for a wild ride.  But just like we should always remind ourselves that the stock market is not the economy, the stock price of any given company isn't always synonymous with that company's ability to operate.  A theoretical company that had perfect consistent revenue streams of $100/yr and perfectly consistent expense streams of $100/yr could operate indefinitely, providing its goods and services to the market, and yet have worthless shares.  Of course that wouldn't be sustainable over the long term in reality (other competitors could encroach on a company that never had any profits for reinvestment, employee morale and productivity could suffer in a theoretical eternity without raises, etc.), but as a matter of economic theory, that would be possible.

 

Given practical realities, of course, the share price is usually some barometer of the overall health of the company.  But note that even at the nadir of the recent dip, $250/share or so, Tesla was still a very highly valued company.  And in any given short term, share prices can be subject to news cycles and emotional swings that only even out over the long term.  Thus the old adage that in the short term, the market is a voting mechanism; in the long term, it's a weighing mechanism.

Musk has apparently been able to calm jittery capital markets in the past week (the stock is back up from a low around $250) and assure that they won't need to raise additional operating capital in the third and fourth quarters, but of course, his targets are known to be very aggressive.

 

My buddy bought up some TSLA stock on margin and was fretting about what to do last week (it was hovering above $300).  I told him to sell (he was positive at the time) and he decided to hold on, saying he was long/bull TSLA. 

 

Owning TSLA (the stock) is choosing to sign on for a wild ride.  But just like we should always remind ourselves that the stock market is not the economy, the stock price of any given company isn't always synonymous with that company's ability to operate.  A theoretical company that had perfect consistent revenue streams of $100/yr and perfectly consistent expense streams of $100/yr could operate indefinitely, providing its goods and services to the market, and yet have worthless shares.  Of course that wouldn't be sustainable over the long term in reality (other competitors could encroach on a company that never had any profits for reinvestment, employee morale and productivity could suffer in a theoretical eternity without raises, etc.), but as a matter of economic theory, that would be possible.

 

 

A major disconnect in the business world is the lack of communication and knowledge-sharing between finance people and marketing people.

https://www.forbes.com/sites/jimcollins/2018/04/18/musks-leaked-email-raises-more-questions-about-tesla-than-it-answers/#95a212d49690

 

Musk says Tesla is going to hire a 3rd shift of workers in the coming weeks.

Is anyone thinking about what effect a full changeover to electric cars will have on real estate? Everything adjacent to a highway will become much more valuable. People are already willing to build office buildings and apartment complexes right up to the highway when they are sources of ear splitting noise and lung searing air pollution. Can you imagine the effect, particularly on urban areas, when these negative stressors are removed and only the connectivity provided by the highway remains?

 

Also it seems the press has been unable (perhaps intentionally on the part of automakers) to de-couple the effects of a fully electric vehicle fleet from the self driving car discussion. A full changeover to electric vehicles in my opinion is something much more likely to happen sooner and will have profound effects (and almost all positive, compared to the great unknown of self-driving cars) in and of itself.

Much of the noise that comes from highways is the actual tires.  Deleting engine noise would improve but not eliminate highway noise. 

And much of the undesirability of being location feet from a highway is the fact that when you walk out of the building there are heavy metal boxes flying by right in front of you at a high rate of speed.

Also, you don't need to be all that far from a highway to eliminate or largely eliminate highway noise, especially if there are trees or other barriers between you and the highway.  Developers are well aware of this.  It's not all that hard to be fairly convenient to a highway without being right on top of it, especially in areas like Ohio where topographical space constraints are rare.  (Manhattan is obviously a different story, but people don't move to Manhattan for the peace and quiet.)

Believe it or not, trees do little to mitigate sound even when they are fully leaved. But what vegetation does do is make it harder to see the source of the noise which does have a psychological effect.

Believe it or not, trees do little to mitigate sound even when they are fully leaved. But what vegetation does do is make it harder to see the source of the noise which does have a psychological effect.

 

But don't the noises of the trees (rustling leaves and birds) help to conceal the noise in their own way.

Also, you don't need to be all that far from a highway to eliminate or largely eliminate highway noise, especially if there are trees or other barriers between you and the highway.  Developers are well aware of this.  It's not all that hard to be fairly convenient to a highway without being right on top of it, especially in areas like Ohio where topographical space constraints are rare.  (Manhattan is obviously a different story, but people don't move to Manhattan for the peace and quiet.)

 

The highway noise from I-75 and I-71 in Cincinnati kicks up the hillsides.  So there is often less freeway noise near the expressways and level with them than there is a mile away and 200-300 feet higher.  The same thing happens with the steel wheels from the railroad yard and even the chime from the streetcar. 

 

 

 

 

 

A Cincinnati-area high schooler was killed in a Tesla this past weekend.  The video footage of the destroyed car is pretty dramatic:

http://www.wlwt.com/article/1-of-4-teens-involved-in-prom-night-crash-has-died-school-says/20105334

 

Unclear what caused this accident.  According to reports, the accident happened before the prom, so drugs and alcohol weren't a factor. 

Unclear what caused this accident.  According to reports, the accident happened before the prom, so drugs and alcohol weren't a factor. 

 

Kids can get high or drunk before prom.

A Cincinnati-area high schooler was killed in a Tesla this past weekend.  The video footage of the destroyed car is pretty dramatic:

http://www.wlwt.com/article/1-of-4-teens-involved-in-prom-night-crash-has-died-school-says/20105334

 

Unclear what caused this accident.  According to reports, the accident happened before the prom, so drugs and alcohol weren't a factor. 

 

An average of 3,500 people die daily in automobile accidents around the world.  Happy cherry picking..

The girl who was killed was apparently ejected from the vehicle, which means she probably wasn't wearing a seatbelt. 

 

Next, Musk will invent automatic seatbelts.  I'll tell people my 1987 Toyota had them, but then the Muskmen will hiss at me.  I'll still be wrong. 

 

 

The girl who was killed was apparently ejected from the vehicle, which means she probably wasn't wearing a seatbelt. 

 

Next, Musk will invent automatic seatbelts.  I'll tell people my 1987 Toyota had them, but then the Muskmen will hiss at me.  I'll still be wrong. 

 

 

 

Meanwhile: https://www.engadget.com/2017/06/13/tesla-model-x-earns-a-perfect-nhtsa-safety-rating/

I'm surprised that you don't hear more about electric school buses. You would think that school buses would be an almost perfect fit for this technology, since they do a bunch of runs in the morning, have time to recharge mid-day, do more runs in the afternoon, and have time to recharge overnight. As opposed to a transit bus which is making runs all day and any interruption to recharge means a loss of revenue for that time.

The schools might not want to pony up for that many stations.

If the Tesla Semi project gains momentum, I have a feeling other heavy but not-off-road commercial vehicles like that will be among the next major projects for the electrification revolution.

 

The real issue is cost, I'm guessing.  A new semi tractor (without the trailer) can easily cost north of $125,000.  School buses aren't cheap but can be had for under $100,000 (see, e.g., http://www.al.com/news/mobile/index.ssf/2014/11/how_much_for_a_brand-new_schoo.html).

 

Tesla's business model is to gain market share at the high end and work its way down, because electric vehicles do still come with heftier up-front price tags (though of course part of their value proposition is significantly reduced operating costs).

I'm surprised that you don't hear more about electric school buses. You would think that school buses would be an almost perfect fit for this technology, since they do a bunch of runs in the morning, have time to recharge mid-day, do more runs in the afternoon, and have time to recharge overnight. As opposed to a transit bus which is making runs all day and any interruption to recharge means a loss of revenue for that time.

 

If the Nashville transit tax passes today, we'll see a first-ever implementation of hybrid electric buses in a mixed-use tunnel.  When the Seattle bus tunnel was built in the late 80s, the buses had to switch to pantographs.  But in Nashville they'll simply be able to switch to battery power, and as such not have to design the entire electrical system around the needs of both buses and light rail trains, which increased the cost of the complicated Seattle project. 

 

 

The schools might not want to pony up for that many stations.

 

Schools may not be able to afford the new buses or the charging stations, but it would be a opportunity for a clever politician to step in and talk about "reducing the pollution that our children breathe" and hand them a grant to pay for it.

Consumer Reports gives the thumbs-down to the Tesla Model 3:

http://money.cnn.com/2018/05/21/technology/tesla-model-3-consumer-reports/index.html

Consumer Reports gives the thumbs-down to the Tesla Model 3:

http://money.cnn.com/2018/05/21/technology/tesla-model-3-consumer-reports/index.html

 

Hooray!

 

http://money.cnn.com/2018/05/30/technology/consumer-reports-model-3-recommended/index.html

Consumer Reports gives the thumbs-down to the Tesla Model 3:

http://money.cnn.com/2018/05/21/technology/tesla-model-3-consumer-reports/index.html

 

Hooray!

 

http://money.cnn.com/2018/05/30/technology/consumer-reports-model-3-recommended/index.html

 

Damn, he almost couldn't have planned this better.  Remote performance improvements.

I rode in a Model 3 a few weeks ago.  It has to be super annoying to have to go through a touch screen for EVERYTHING - music, heat / a/c, etc. etc.

There's a lot of luxury cars from the late 2000s-early Teens that are like that. People hated it.