Tesla Delays Launch of Model X Until Q3 2015

An anonymous reader writes "Tesla on Wednesday announced that it was pushing back the release of its highly anticipated Model X until the third quarter of 2015. Explaining the delay, Tesla relayed the following in its quarterly shareholder letter: "Work continues on the finalization of Model X with the testing of Alpha prototypes and initial builds of the first Beta prototypes. Model X powertrain development is almost complete with the early introduction of Dual Motor drive on Model S. We recently decided to build in significantly more validation testing time to achieve the best Model X possible. This will also allow for a more rapid production ramp compared to Model S in 2012." During Tesla's subsequent earnings conference call, Tesla CEO Elon Musk shed a bit more light on all things Model X, including the fact that if you order one today, it won't arrive until early 2016. Forbes goes into more on the business end of what's caused delays for the company, as well as how investors should see it (critically, they say).

Comments

Re:Why?

[Higaran]

It kind of is, they are almost as much of a tech company as a car company, what they do has a big impact.

Re:Why?

[Teancum]

If there is anything that is "news for geeks", Tesla automobiles would be it. Exotic energy storage systems based upon laptop computers, mobile network platforms that have built-in web browsers and awesome sound systems, and pretty damn nice looking equipment as well that can get you from point A to point B in some awesome style that can also get you laid (not that most geek know a thing about such stuff).

What makes that irrelevant to Slashdot? That you might have to wait a few more months before you can get a girlfriend?

Re:Why?

[Anonymous Coward]

I'd rather see a car model pushed back a year than wind up back in the shop often due to recalls and bugs that should have been fixed.

The notable thing about Tesla is that they provide updates for "last year's" models. Other car makes might do some update for safety, but not for adding features.

Still a niche company

[NotDrWho]

Before all the "Tesla is taking over the car industry!!" hype machine kicks in on this story (as with all stories Tesla), I just want to remind everyone in Silicon Valley that Tesla is still a niche car company that's barely on the big car companies' radars.

I live in a metropolitan area of a red state and I've never even seen a Tesla in person. Not one. I'm sure they're a common sight in San Francisco but in most of the country they're still just something you just read about in Wired.

Re:Still a niche company

[TomGreenhaw]

We've had ours coming up on two years. By far the best car I've ever owned and driven. It does actually work very well and when maintenance costs and savings on gas are included, its not really more costly than any other comparable luxury sedan.

Tesla may today be a niche company, but its certainly no liberal pipe dream.

Re:Still a niche company

[Mr D from 63]

Tesla struggles with scaling. They talk about how the demand is greater than their production capacity. which is OK in a niche market but a bad thing in a major competitive market. They are losing money with their existing scale, and it is not clear how much it will cost to scale up significantly. They may take quite a long time to become profitable, or they may never make it to that point, it is still unclear. What makes it a risky investment, in my opinion, is the fact that once the production/price/market variables become favorable for the technology, the big companies will be able to scale it at a much lower cost, as that is what they are good at. That is where the battery manufacturing thing become critical for Tesla's sustainability.

Re:Still a niche company

[Herkum01]

What makes it a risky investment, in my opinion, is the fact that once the production/price/market variables become favorable for the technology, the big companies will be able to scale it at a much lower cost, as that is what they are good at.

I very much doubt that Tesla is going to outsource its manufacturing for key components. It is going to keep those in house, and it will be expensive in the near future, but they will not have worry about competitors getting cheap access to those components. Too many of the current car companies are focused upon assembling a car; they are not engineering huge advantages in technology or going in new directions.

Tesla is going to have these guys beat for no other reason than they are going to sit on their hands until it is too late. If you want a better explanation, they are going to have engineer their own product and manufacturing of specialty parts. They don't seem interesting in committing to electric cars now and when Tesla is big enough to be mainstream it will still take them 3 to 5 years to get their own product out the door.

Re:Still a niche company

[ShanghaiBill]

I live in a metropolitan area of a red state and I've never even seen a Tesla in person. Not one.

I live in San Jose, California. I see a few Teslas almost every day. Nissan Leaves are more common. Priuses are even more common. Probably 25% of the cars on the road are either hybrid or full electric. Living here is sort of like living five years into the future. My robotic butler has just paged me to say that my breakfast is ready to be served, so I gotta go ....

Re:Still a niche company

[Quince alPillan]

I live in a metropolitan area of a red state on the east coast, and not only have I seen Teslas in person, but I know people (friend of a friend) that have them. It helps that there's a supercharger at a nearby mall that I almost always see a Tesla parked at, but I've seen them parked around town, too.

Your anecdotal evidence is just as good as my anecdotal evidence, and neither one is indicative of the actual popularity, supply or demand of the car.

Re:Still a niche company

[mojo-raisin]

I drive a 2014 pure EV, and I make a modest/decent wage. I live in the Chicago, and I charge from my apartment. It really is pretty easy, and I don't have to deal with gas and combustion engines.

So you're wrong.

Re:Still a niche company

[Kjella]

Electric cars, LOL
just another liberal pipe dream that will never actually work

A liberal pipe dream that will never actually work as long as oil is cheap, perhaps. But it's made me a whole lot less concerned about peak oil, here in Norway around 9% of cars sold this year are electric through subsidies. Another 9% are hybrids. If oil prices doubled or tripled I'd expect those numbers to go way up. Before it seemed like peak oil would be the end of personal transportation as we know it, but even if electrics never get quite as cheap or convenient as gas and diesel they'll do. Good enough for my commute, shopping and local activities, visiting nearby friends and family and at least in Tesla's case cabin trips - not the most remote cabin in the world, but still. Of course it now depends on cheap electricity, but at least there we've got many different sources and they don't have to be compact, light and portable like an internal combustion engine.

Particularly if it eventually gets paired with autonomous cars, cargo generally isn't in any hurry and the lorry isn't paid by the hour. Tesla did US coast-to-coast in 76 hours, the record ignoring all laws and sanity is 29 hours so it's not like they're orders of magnitude slower even if the truck has to stop for a recharge every hour or two. It's only very inconvenient as long as you need truck drivers. Basically it looks to me like we have a workable solution for when oil runs out, if we'll switch faster due to the environment that's nice but I'm guessing push will eventually come to shove anyway even though "unconventional" oil and gas extraction has pushed it back another decade or two.

Re:Still a niche company

[CaptainLard]

that's barely on the big car companies' radars.

Aside from Toyota, Mercedes, & BMW who all previously/current owned shares or have direct partnerships with Tesla or GM where they were at least part of the impetus behind developing the Volt. Not to mention nearly ever car dealer in the USA who are all campaigning to have Tesla stores banned because they might destroy the car dealer business model entirely.

I live in a metropolitan area of a red state and I've never even seen a Tesla in person.

But you might hear your politicians talk about them. Now that Tesla is having success, a lot of repubilcans are falling over themselves to say they've supported them all along.

Re:Still a niche company

[MMC Monster]

As another Tesla owner (6 months for me), my previous car was a BMW 328 xDrive.

I drive my cars reasonably hard (~20k miles/year). Fuel savings alone is ~$2-3K/year. So you're not going to make the money back. Period.

But the drive is totally different from a BMW. Not necessarily better or worse. Definitely different. The Tesla acceleration is unreal but the cornering is so-so. The overall handling in rain is about the same or slightly better in the Tesla.

All together, I will never go back to the BMW. It's nice not having to worry about filling up my gas tank, and acceleration is more 'fun', and the information/entertainment system is out of this world.

Re:Still a niche company

[BasilBrush]

You seem to be confusing chraging stations with Tesla Supercharger stations. There are chargind stations even in the Hickville states you refer to.

e.g. http://www.dasolar.com/ev-char...
http://chargemap.com/city/birm...

Re:Still a niche company

[icejai]

A friend of mine who happens to be a senior engineer at a large Japanese automaker took me to a Tesla dealership some years ago to take a look at the Tesla. I asked him how much it would to produce a car like the Model S at this very large Japanese automaker. He said each car would end up costing in the hundreds of thousands of dollars. At first I didn't believe him, but as he proceeded to explain every single detail of R&D, prototyping, testing, dealing with suppliers, manufacturing, dealing with the factory (or many factories, being the more likely case), retooling, etc, and all the manpower, meetings, executive approvals, and other costs involved at a company as large as his... it was very obvious that he knew exactly what he was talking about.

There is a certain myth about scaling. Big companies know how to scale? Of course they know how to scale. But I'm sure many people here can imagine how starting fresh with a small team, and scaling *that*... is faster and cheaper than modifying a gigantic already-scaled process to output something completely different.

Larger scale *leads to* lower costs.
But big companies don't *scale up* at "lower cost".

Tesla has an absolutely *enormous* advantage by manufacturing many parts of the car themselves. The infotainment system, the battery packs, they stamp their own metal, etc. You might not believe me if I told you that automobile companies need to fight with their factories to implement changes to the production line, because the factories are separate companies that operate independently from the actual car company (Ford, GM, Honda, Toyota, etc). Any changes means less cars produced and less profit. Just because of this fact alone, Tesla can scale production MUCH cheaper and quicker than *any* large car company, American or not, just from the fact that they run their own factory.

Smaller companies are better at scaling. They can do it quicker and cheaper.
Large companies, especially car companies, not so much.

Re:Still a niche company

[mspohr]

In the past I've had a Porsche and a Land Rover that were each more expensive (adjusted for inflation) than my Tesla as well as a bunch of less expensive German cars. The Tesla is by far the best car I've ever owned. The whole driving experience (power, handling, comfort, etc.) is incredible... an order of magnitude better than anything I've ever owned.
The fact that it is environmentally friendly is just icing on the cake (but was the primary reason I bought it).

Re:Still a niche company

[mspohr]

Right now they are constrained by the supply of batteries. They are building a factory to make enough batteries for 500,000 cars a year so in a few years they will not have this constraint.
Currently their gross margin on cars is 30%... much higher than any other car company. They also have a 2-4 month backlog of orders without doing any advertising and having a very limited distribution network. They are projecting 50%+ growth for the next few years.
The competition has so far only produced pathetic electric cars (limited range using old designs and chassis from their ICE cars). These are equivalent to what a weekend mechanic could build in his garage. None of the established car companies has attempted to make the investment required to build a real electric car from the ground up like Tesla has... they could do it but they are at least 5 years behind the curve so it will take them a long time to come out with something equivalent to today's Tesla... and by then, Tesla will have moved on to something better.

Re:Still a niche company

[Teancum]

Except that the Tesla isn't a luxury sedan.

How else would you describe the Model S? An SUV?

Re:Still a niche company

[steelfood]

Actually, at $0.02 earnings per share, they're profitable already.

Musk released all of the patents Tesla owns related to electric cars. I'm almost certain that if the other car manufacturers don't have a competing product in the works, they're smoking some really good stuff. Oil subsidies will only get them so far.

I can't wait for the Model 3. Once that hits the streets, you'll be seeing a lot more Teslas.

Same magazine, two articles, one rather biased.

[denzacar]

"Tesla Q3 Earnings Live: Shares Rise, Strong Outlook for '15 Even While Model X Faces More Delays"
http://www.forbes.com/sites/ma...

Tesla reported a tiny third-quarter profit of $3 million using its preferred numbers while delivering a record 7,785 Model S sedans. That resulted in a $932 million quarter, up 55% from a year ago. But results were challenged by a month-long shutdown of the company's lone production facility as it tools up for the Model X crossover SUV it is introducing next year, albeit later than planned. Gross margin also took a small hit due to changes in warranty accounting, coming in at 23%. The sum total is that Tesla lowered its outlook for 2014 production to 33,000 total deliveries, from 35,000 citing the production deficit. Investors so far have shrugged off the news, sending the stock higher after hours.

Wall Street was looking for lower revenues and a small loss. But the numbers were buoyed by very strong sales of Zero Emission Vehicle credits, which totaled a "much higher than expected" $76 million, Tesla said.

"Tesla Shows Signs It's Struggling With Manufacturing"
http://www.forbes.com/sites/mi...

Tesla Motors TSLA +5.8% reported its third quarter results Wednesday. While analysts' attention was riveted to its financials, manufacturing experts saw two signs that the company is struggling.

First, Tesla lowered its 2014 production target to 33,000 vehicles, down from its goal of 35,000. Second, Tesla pushed back the delivery date for its upcoming Model X once more, to the third quarter of 2015. ...
The announcement validates the prediction made last month by Morgan Stanley MS +0.09% analyst Adam Jonas.

One has a "hey, no biggie" tone while the other uses weasel words and literal red herrings to push "gloom and doom" scenario.
Despite obvious disregard by investors, clearly seen in the opening paragraph with Tesla's stock market tag.

I.e. "Manufacturing experts" who say that the company is "struggling" are ONE "Morgan Stanley analyst Adam Jonas".
Who, in the cited article said the following:

"Given the ever-higher level of technical and safety scrutiny facing all auto manufacturers, we find it very common for major launches to hit dealer lots later than the market anticipates," Jonas said.

Which was interpreted in TFA as:

One was that major launches are often delayed, although generally not for numerous times like Model X.

Note the slight bias?

The rest of it is in the same mode. Positive points and sentiment turned into negative.

Jonas refers to Tesla as "world's most important car company", calling the delay "an opportunity to buy" and a "silver lining".
Instead of talking about "generally numerous delays", furor, technological features not available - while dumping lines which present those things as positive.

Like " intense public interest in the product", "one of the most desirable âwhy buyâ(TM) characteristics" and the entire 4th point being a praise to Tesla.

Jonas, in his investor note, said there were four reasons he expected another delay for Model X. One was that major launches are often delayed, although generally not for numerous times like Model X. The second was that few prototypes have been spotted on the road.

Third, Tesla caused a little furor a few weeks ago, when it introduced an unexpected all-wheel drive version of the Model S, and Jonas thought the company might want to put more space between it and the Model X.Fourth, Model X is likely to be Teslaâ(TM)s most ad

Re:Why?

[Thanshin]

Because Elon Musk is a diety on /. He's slashdot's Jesus to Bill Gates' Satan.

For me, he won't be a god until he succumbs to the pressure of a million puns and releases his own eau de parfum.

Re:Why?

[king neckbeard]

So, why don't the manufacturers of said vehicles include or at least have the option for bigger batteries? The Tesla isn't impractical like a half-kilo smartphone would be.

Re:Why?

[tlhIngan]

So, why don't the manufacturers of said vehicles include or at least have the option for bigger batteries? The Tesla isn't impractical like a half-kilo smartphone would be.

The Tesla comes with the option of a bigger battery - at first you could buy a 40kWh battery, a 65kWh battery and a 85kWh battery. (Though to simplify the BOM, the 40kWh model was really a 65kWh downrated in software). So you have the option to buy a bigger battery.

Or due to the strangeness in which things work, get the "D" variant and get more distance with the same battery (yes, running two motors is more efficient than one).

Heck, Tesla even has battery change stations for quick boosts - you pay a small fee for a pre-charged battery and the battery gets swapped. (You are basically renting a battery though, so you have to return back to pick up your battery).