Ford has announced its plan to completely stop making midsize and compact cars.  Its stock price didn't budge.

 

I'd be interested in reading your book, in particular whether it actually addressed the economics of manufacturing electric midsized cars at scale.  Electric cars really are simpler than ICE cars.  The initial investment is the hardest because there was no infrastructure to support that manufacture (in particular, manufacturing batteries at that scale, which is why Tesla had to build its own massive battery factory).

I don't recall a mention of Tesla in the book.  At the time they were only producing the roadster, I think.  This was the book:

https://www.amazon.com/Overhaul-Insiders-Administrations-Emergency-Industry/dp/0547577427

 

In other news, I read today that no $35,000 Model 3's are expected to roll off the line until very late 2019 and more likely the fat middle of 2020.  By then it'll be 4 year-old technology and more EV's with better specs will have entered the market. 

 

 

In other news, I read today that no $35,000 Model 3's are expected to roll off the line until very late 2019 and more likely the fat middle of 2020.  By then it'll be 4 year-old technology and more EV's with better specs will have entered the market.

 

This falls again into "I'll believe it when I see it" territory.  The Great Awakening of the more powerful, well-capitalized OEMs that will suddenly jump in with their vastly larger resources and crush Tesla at its own game has been predicted for years now, before the Model S even hit the roads, let alone the Model 3.  It hasn't happened.  In fact, the larger, more entrenched OEMs have generally made at best tentative steps in Tesla's direction and in fact many, like Ford, have affirmatively stepped in the other direction--going the same way your book suggested and giving up on sedans altogether, opting for basically nothing but gas-guzzling crossovers and SUVs and trucks.  We'll see if that's the right move in the long run.

The bigger companies are merely dabbling in small electric cars because small electric cars can't make money in the United States.  Luxury electric cars and perhaps luxury electric SUV's can, at least in the small numbers that Tesla produces.  How large is the market for expensive but profitable EV's outside of what Tesla is already manufacturing?  Probably not much bigger.  Gasoline has been cheap for the last 10 years.  Perhaps it will be expensive again in 5-10 years, at which time EV technology will have matured and people will be willing to pay a premium for electric cars. 

 

Right now credit is also loose and cheap so somebody like me, who doesn't make a ton of money but has a high credit score, could walk into the Ford or Chevy dealership with $5,000 down and drive out 90 minutes later with a $45,000 SUV.  Ford/GM just pocketed $4,000-6,000.  That is what is going on all over America right now.  If those same people instead bought $25,000 small cars, the companies only pocket $1,000-2,000 per sale.  That is the central dilemma of the small electric car.  Shareholders for established companies will not tolerate a strategy pushing the sale of cheaper cars, be they gasoline or electric. 

 

 

https://money.cnn.com/2018/07/19/technology/business/tesla-downgrade/index.html

 

About one in every four Model 3 orders is canceled, Gill said, double the rate from a year ago.

 

24% of the Model 3 deposits end up being refunded.

Congrats to the people who gave Elon an interest free loan and didn’t even get anything out of it.

Announce another new product

Announce another new product

 

They already announced the Semi and Elon has already mentioned a Model Y (crossover SUV-ish) and a subcompact car in the works over the next 3-5 years (so, the next 7-10 years really).

MOAR

Announce another new product

 

Flame throwers. 

I was on Duke Energy's website today and saw this...kind of funny to see electric cars in the same category as hot tubs. 

 

I can’t find a news article about it, but apparently Tesla sent out an email this morning saying that the Model 3 is now available for purchase without a reservation. I wouldn’t be surprised if only the higher end configurations are available for purchase by the general public and this is nothing more than an attempt to further delay the production of the cheaper, less profitable base models.

^ Yep. On Tesla's site you can now order a Model 3, but only the "Long Range Battery + Premium Interior" models that start at $49,000. You have to pay $2,500 when placing the order and it delivers in "2-4 months." So, people who have had a reservation for years hoping to get one of the ~$30,000 models will have to keep waiting, while Tesla lets the people who want to buy a ~$50,000 model cut in line. It's obviously an attempt to boost the average selling price.

Super-low mileage 2017 Chevy Bolts are now on the market...here is one with 2,000 miles on it for $29,000 from a dealer:

https://www.cargurus.com/Cars/l-Used-Chevrolet-Bolt-EV-d2397#listing=206984755

 

By this time next year we'll be seeing 2017 Bolts with 10,000 miles on them selling for under $20k.

You know if Chevy put as much marketing muscle into the Bolt as they do the Silverado or had Muskmouth, used Bolts would sell for as much or more than new ones. Just like Harleys in the '90s.

 

Also, that car is maroon, which is a color that does extremely well on the primary market but terribly on the secondary market.

According to this article, Tesla has yet to sell a Model 3 for less than $49,000:

https://money.cnn.com/2018/07/26/technology/tesla-model-3-reservations/index.html?iid=EL

She canceled her Model 3 reservation in April after losing confidence in Tesla's ability to deliver a sedan that actually costs $35,000.

 

"If I'm going to spend $53,000 on a vehicle I'm going to look at other things," she said. "I feel like I loaned [Musk] money but didn't get any benefit from it."

 

She "feels like" that because that's literally what she did.

I'd assume that those deposits sat in an escrow account.  Maybe they're allowed to earn interest on them, I don't know, but I doubt that the law permits them to be invested in anything other than a money market or savings account. 

The deposits are not held in escow, they are held in Tesla's bank account. From the reservation agreement: "You understand that we will not hold your Reservation Payment separately or in an escrow or trust fund or pay any interest on your Reservation Payment."

They're not in escrow, as taestell said.

 

Tesla reported earnings after market close today; stock is up almost 10% in after-hours trading, even though it reported the largest loss in its history.  Revenue still increased more than expected and it's hoped/predicted that capex will be lower in the second half of the year.

The deposits are not held in escow, they are held in Tesla's bank account. From the reservation agreement: "You understand that we will not hold your Reservation Payment separately or in an escrow or trust fund or pay any interest on your Reservation Payment."

 

That is ridiculous.  So if rumors of a Tesla bankruptcy gain steam, everyone will want their deposits back, but the company can drag their feet and your $1,000 goes down with the ship?

The deposits are not held in escow, they are held in Tesla's bank account. From the reservation agreement: "You understand that we will not hold your Reservation Payment separately or in an escrow or trust fund or pay any interest on your Reservation Payment."

 

That is ridiculous.  So if rumors of a Tesla bankruptcy gain steam, everyone will want their deposits back, but the company can drag their feet and your $1,000 goes down with the ship?

 

It would have to be an extraordinarily hard landing in bankruptcy to have depositors get nothing back.  Deposits up to (IIRC) $1800 actually have a bankruptcy priority even above taxes, though below such things as wages, salaries, and benefits (again within certain limits, not CEO-level salaries).

People probably wouldn't trade in bonds at all unless there was that lack of downside risk.

People probably wouldn't trade in bonds at all unless there was that lack of downside risk.

 

A detail from the beginning of The Great Gatsby that most people miss is that the narrator is a bond man from St. Louis, and his stay on Long Island was amidst insane Wall St. people who had no patience for bonds.  So if there had been a sequel to the book set in 1932, Caraway could have cashed out his bonds and bought up the mansions around East Egg (or West Egg, or whatever) for cheap. 

Musk, they hype man, sez he's going to take Tesla private at $420...trading suspended:

http://www.msn.com/en-us/money/companies/trading-in-tesla-halted-after-musk-tweets-about-taking-company-private/ar-BBLCX4c?ocid=ientp

Musketeers will spin it positively, I'm sure.

Taking the company private is actually quite the realistic, honest thing for them to do. Let sophisticated investors worry about the massive challenges of the company rather than a market subject to twitter-fueled nonsense. There's way too much irrationality surrounding the company as a publicly-traded entity. Is it worth $420/share? Let other billionaires decide that.

Ex-SEC chair: Musk's tweet on taking Tesla private puts him at risk of civil and criminal penalties

 

    Elon Musk could face civil and criminal penalties if it's found that he didn't secure financing at the time of his tweet about taking Tesla private, former SEC chair Harvey Pitt says.

    "If you make a false statement in connection with the trading of securities, you run the risk of both having to pay for the damages you caused and also you run the risk of a criminal prosecution," he says.

 

 

 

https://www.cnbc.com/2018/08/08/ex-sec-chair-musk-tweet-puts-him-at-risk-of-civil-criminal-penalties.html?__source=twitter%7Cmain

 

 

I have to hope that he got that legal advice before tweeting, and therefore was serious about it.

 

It'll be a good day for me, though I actually thought the stock was getting a little bit overvalued and sold about a third of my position in the last 12 months at a blended average of $304.  But the blended average cost basis of my remainder is about $95, so getting bought out at $420 (I think I'll let go of it at that point, since I was already letting go in the low $300s, even though Musk is talking about a special purpose vehicle with limited trading every 6 months to allow investors to stay invested).

 

That is, of course, assuming this isn't all a big bluff to kill off some shorts.

Now Musk is claiming that the Saudis are going to buy Tesla.  If so, they're going to muzzle him, move production to Asia, etc.  But he gets to save face and not have that day when suppliers stop sending him parts. 

He is a verbal abuser.

Mercedes unveils electric crossover to begin production in early 2019:

Electric Car test-drive event on Saturday Sept 8 at Tri-County Mall:

https://driveelectricweek.org/event.php?eventid=1363

Tesla calms fears with strong sales numbers

 

A tumultuous quarter at Tesla ended with some very good sales numbers.

 

The company delivered 83,500 vehicles during the third quarter, a strong performance that should calm investor fears about logistical problems and a looming cash crunch. That included almost 56,000 of the lower-priced Model 3.

 

Production was a bit below that number: Tesla said it built about 53,000 Model 3s. But that was within the company's projections.

 

https://money.cnn.com/2018/10/02/technology/tesla-sales/index.html

Tesla's secret success story: Model 3 is best selling luxury car in America

 

https://www.cnn.com/2018/10/04/tech/tesla-model-3-luxury-car/index.html

Tesla employs Hollywood accounting and posts $312M 3Q profit:

https://www.cnn.com/2018/10/24/tech/tesla-earnings-profit-elon-musk/index.html

 

 

 

On ‎10‎/‎24‎/‎2018 at 8:57 PM, jmecklenborg said:

Tesla employs Hollywood accounting

 

 

 

I called it.  The FBI is now investigating Tesla's accounting:

https://www.cnbc.com/2018/10/26/tesla-faces-criminal-probe-over-allegedly-misstating-production-numbers-and-misleading-investors-wsj.html

^FUD

Power outage delays electric car accident trail:

https://www.wcpo.com/news/crime/trial-begins-for-driver-accused-of-killing-kaylie-jackson-on-monroe-high-school-prom-night

https://seekingalpha.com/article/4225153-evs-oil-ice-impact-2023-beyond

 

 

 

Interesting video/discussion on the article linked above projecting the decline of ICE vehicles pretty dramatically within a decade.

I haven't read all 22 pages of that, but I've read several.  The first four pages are contain the author's thesis; the ones after that are how he backs up his thesis' assumptions.  He's got some good points, certainly.  I fully agree with this one:

 

Legacy auto companies are planning on the EV disruption taking several decades. But disruptions never take that long once the new technology can match the old.

 

The interesting argument is that there will be a temporary downshift in total cars purchased in a gap period (the article's graphs suggest around 2024-2026) during which people are holding onto their ICE cars longer because they have made the decision that their next car will be an EV, but aren't ready to purchase one yet because the combination of price and quality has not reached the level that would cause them to pull the trigger yet.  Therefore, his graph accommodates a swift decline in new ICE vehicle sales that isn't fully, immediately matched by a rise in EV sales; what would increase in this scenario, at least temporarily, is average age per vehicle in the total fleet.  I'm not writing that possibility off, and the author has clearly put a lot of effort and research into this.  That said, I'm not necessarily crediting that conclusion, even while acknowledging the fairly deep work that the author did.

 

In particular, I think the growth of EV technology will be sufficiently impressive between now and 2024 that by 2024, most consumers will have good options available at affordable prices, good enough that they won't be obligated to wait if their existing ICE car is reaching the end of its life-cycle.

 

That said, we talk about this in other, EV-specific forums and we do acknowledge the possibility that raw material costs could rise to the point that it is slower or more difficult to achieve the projected cost savings from scale in EVs that are critical for increasing affordability.  For example, Tesla has gone to great lengths to secure long-term supplies of lithium, but long-term doesn't mean forever, it doesn't mean actually owning the mineral deposits themselves.  Optimists project that lithium supplies will increase with new technology almost in the same way oil and gas production increased with fracking--that the market will provide.  But economics doesn't say that the market will provide at a cheaper cost, it just says that people in a developed market will find ways to meet demand unless some external force stops them.  So if GM, Ford, BMW, Audi, Toyota, Honda, and the Chinese labels that most Americans don't know yet suddenly do start demanding massively larger quantities of lithium or other critical materials, and the mining industry can't keep up, raw material prices will increase and it will be harder to get US EV prices down into the $20k range where the mass market is.

Peak Oil?  Oh yeah that already didn't happen. 

Not even sure if you were serious ... but Peak Oil was a very different theory.  It was based on a scarcity paradigm, not a demand-drop paradigm.  Or at least, when people talked about it, they generally meant to conjure up the threat of painful forced adaptations due to scarcity, not a neutral statement that production would peak and decline over time for any number of possible reasons, some of which might inflict almost no widespread social or economic pain and be accompanied by a slew of other positive developments.

 

My wife actually recently switched jobs and is now working for an oil refiner--one that actually doesn't own any raw material assets and only owns a moderate amount of midstream assets (just the pipelines that supply its own refineries and a few that move some of its refined products).  It's actually a decent time to be in that business because raw material costs have stayed very moderate.  I still have some doubts because the market for the most common refined product--ground-based motor vehicle fuel--may not have a long-term future, but oil can be refined into a great deal else as well, and even fuel refining could still remain profitable for a long time even in an industry in overall decline if raw material costs stay low.

 

That said, I wouldn't want to own any oil & gas natural resource trusts right now.

51 minutes ago, Gramarye said:

In particular, I think the growth of EV technology will be sufficiently impressive between now and 2024 that by 2024, most consumers will have good options available at affordable prices, good enough that they won't be obligated to wait if their existing ICE car is reaching the end of its life-cycle.

 

I have a 2016 vehicle and am planning on enjoying a few years of no car payments before I switch to an EV, probably in that 2024-2026 window, depending on maintenance.

 

If I remember, you have a Tesla now?  I've heard the recommended maintenance is one thing to refill every 2 years and something else every 4 years.  If that's the case that's a ridiculous low maintenance vehicle.

1 minute ago, Gramarye said:

Not even sure if you were serious ... but Peak Oil was a very different theory.  It was based on a scarcity paradigm, not a demand-drop paradigm.  Or at least, when people talked about it, they generally meant to conjure up the threat of painful forced adaptations due to scarcity, not a neutral statement that production would peak and decline over time for any number of possible reasons, some of which might inflict almost no widespread social or economic pain and be accompanied by a slew of other positive developments.

 

The U.S. government was holding huge reserves of oil due to the threat of oil scarcity.  They're releasing them because 1) we're drilling everywhere pretty much and 2) the anticipated demand for it is declining.

Are they really?  I don't know why you'd release all that into an already well-stocked market.  Gas has been under $2/gal at the Circle K near my house I think more days than not over the past 2 weeks (and it hasn't been that far above it when it has been above that line at all).

 

That said, it was formed in 1975 as a bulwark against another oil embargo, an increasingly unlikely and impotent threat.  I'd think that they'd want to keep it around as a defense supply, since it'll be a while before military vehicles can run on electricity, but that wasn't its original purpose and maybe there are reasons why it wouldn't transition well into that purpose (it is, after all, just crude oil, not refined products).

10 minutes ago, DarkandStormy said:

 

I have a 2016 vehicle and am planning on enjoying a few years of no car payments before I switch to an EV, probably in that 2024-2026 window, depending on maintenance.

 

If I remember, you have a Tesla now?  I've heard the recommended maintenance is one thing to refill every 2 years and something else every 4 years.  If that's the case that's a ridiculous low maintenance vehicle.

 

The drivetrain is ridiculously low maintenance, and of course most components are under warranty (I already had to have steering column stalks replaced).  No engine, no oil, no spark plugs.  No transmission, no transmission fluid.  Motors on each wheel axle, so none of the components needed to transfer power from driveshaft to wheel axles.  I've got windshield wiper fluid, that's pretty much it for fluids.

 

But that's not the only form of maintenance out there.  EVs are hell on tires.  100% of torque available from 0 rpm in a very heavy car that does 0-60 in 4.5.  OEM comes with pretty decent Michelin ones but still, no way they last 4 years.  Don't get me wrong, it's worth it, to be able to leave flashy European imports and American muscle cars in the rearview, and even almost keep up with minivans.  (No joke, twice last week I got dusted on the highway by a minivan, and I was already going a speed that I won't specify in public on the Internet.)  I'm guessing this thing will have suspension issues earlier than most cars its size, too, simply because of how heavy it is.

11 minutes ago, Gramarye said:

Are they really?  I don't know why you'd release all that into an already well-stocked market.  Gas has been under $2/gal at the Circle K near my house I think more days than not over the past 2 weeks (and it hasn't been that far above it when it has been above that line at all).

 

https://oilprice.com/Latest-Energy-News/World-News/US-To-Release-11-Million-Barrels-From-Strategic-Petroleum-Reserves.html

 

The release of 11 million barrels has probably been a driver in recent gas prices being down.  They were released in October and November.

Hmm.  The link says it was to cushion the blow of new Iran sanctions, but given how much prices have actually come down since August when that story was published, I'd say they overcompensated.

 

Meh.  All the same to me at this point, not just as an electric car owner but from an overall American perspective--the SPR simply isn't as big of an issue now as it would have been to my parents, growing up in the post-oil-embargo world of the late '70s through the '80s.  Not just because electric cars weren't yet a thing then, but my mom drove a 1970something Plymouth Scamp, then an early '80s Buick LeSabre, then a '77 Pontiac Catalina with a 454 in it.  Those things probably individually kept an entire gas station in business somewhere.

23 minutes ago, DarkandStormy said:

  If that's the case that's a ridiculous low maintenance vehicle.

 

 

I have a 2012 Ford Focus with 138,000 miles.  So far the only repair of any significance was a new clutch at 120,000, which was fairly expensive -- $2,000.  Otherwise, it's on its second set of tires, second battery, and I had new rotors and pads put on around 90,000. 

 

So basically zero maintenance until 120,000 miles.  It's about to be discontinued but I am thinking about buying a 2017 or 2018 to replace my current car.