Tesla Burns Through Record Cash To Bring the Model 3 To Market (bloomberg.com)

Dana Hull, reporting for Bloomberg: Tesla's Elon Musk keeps getting the green light to do what it takes to bring electric cars to the masses, regardless of how much it's going to cost. The company burned through $1.16 billion in cash in the second quarter by spending on capacity for its cheapest model yet and boosting battery output. Investors fixated instead on what Musk said is coming next: Hundreds of thousands of Model 3 sedan deliveries, installations of solar roofs and an all-new semi truck to add to the lineup. "This is the best I've ever felt about Tesla's future," Musk said on a conference call. The stock surged as much as 7.4 percent to $349.94 as of 9:45 a.m. Thursday in New York, the biggest intraday gain in four months. The chief executive officer has built a fanatical following of Tesla shareholders who continue to throw their support behind his clean-energy vision. It helps that consumers keep opening their wallets: The Model 3, which starts at $35,000, has racked up almost half a million reservations and is drawing more deposits by the day. The record negative free cash flow Tesla reported for the three months ended in June was almost double the $622 million it went through in the first quarter. With a little more than $3 billion in cash on hand, Musk told analysts the company is thinking about raising money through a debt offering.

Comments

it's not "burning cash"

[sxpert]

it's buying hardware and services to set up the production facility... big difference burning cash would be spending it on things that don't do anything for the company, such as distributing dividends and cash executive bonuses...

Re:it's not "burning cash"

[ranton]

it's buying hardware and services to set up the production facility... big difference
burning cash would be spending it on things that don't do anything for the company, such as distributing dividends and cash executive bonuses...

Considering the terminology for how much they spend each month is their "burn rate" I don't see how burning cash is that inaccurate of a description. Probably evokes some misleading connotations but these are the terms the industry is using.

Re:it's not "burning cash"

[sxpert]

it shows "the financial sector" has it's priorities reversed if they seem to think "investing in production machines" is "burning cash"

Re:it's not "burning cash"

[sxpert]

well, they can if they allow you to build more of the stuff you're selling faster... allows more money to flow in
it's a balancing act between buying production stuff or materials, and selling the product

Re:it's not "burning cash"

[fruey]

Well the cashflow is negative, for sure, but it's a long term investment strategy. Headlines are getting more clickbait-reinforced by the day.

Re:it's not "burning cash"

[OldMugwump]

"Burning cash" simply means using up cash reserves, without replenishing them from sales. Cash can be 'burnt' wastefully (throwing parties) or usefully (investing in production machinery), but it's still called 'burning' if you're using it up faster than it's coming in. That's just how the term is used.

Re:it's not "burning cash"

[AlanObject]

it's buying hardware and services to set up the production facility... big difference

Absolutely. This post should be modded up 1000.

What this also represents is a near perfect case study as to why most Republicans are sheer nonsense when it comes to the economic of taxation. They will try to convince you that if rich people and rich corporations accumulate enough cash they will start to "create jobs." So we need tax cuts or else nobody will create jobs.

Pure BS. There is one reason and one reason only that a (well run) corporation will spend money to create jobs. It is because they are following a business plan to get customers to buy their service or product. Because they see a market they can win at. Anything else and they will turtle up and hoard cash and lay people off if necessary to stop bleeding.

In this case Tesla has a $1B backlog. They know the customers are there and they are using a lot of its available cash to employ people. Either directly or by buying stuff from their vendors. Tesla has nowhere near the amount of cash on hand than many companies that are looking for a tax cut.

So this is why they are not "burning cash." They are generating revenue. Profitable revenue which they will likely spend, not burn, creating the next generation product to expand their market space.

Re:it's not "burning cash"

[jimtheowl]

"This post should be modded up 1000."

That would be burning mod points.

Re:it's not "burning cash"

[Rei]

$1B backlog? There's nearly half a million reservations on a $35k-base vehicle (average expected sale value after options (luxury, performance, extended range, etc) = $43k). The Model S has a profit margin of about 25% per sale and they expect similar on the 3. You're looking at nearly $20B in sales and $5B in profit just from the already accumulated waiting list, which is increasing by about 1800 new reservations net every day.

If Tesla manages the "production hell" ramp-up without any serious glitches that cause excessive delay / QA problems / expense, they've got it made.

Re:it's not "burning cash"

[swillden]

There is one reason and one reason only that a (well run) corporation will spend money to create jobs. It is because they are following a business plan to get customers to buy their service or product. Because they see a market they can win at. Anything else and they will turtle up and hoard cash and lay people off if necessary to stop bleeding.

You should read a book on basic economics.

Capital seeks returns. Always. It never "turtles up". Oh, a company will absolutely lay people off if they are not generating income. This frees up the capital to flow to other ventures where it can generate income... which it will do by buying capital equipment, hiring people, etc. to produce products that people want to buy.

This is a Good Thing. Employing people and dedicating resources to produce stuff that no one wants to buy is bad for everyone. Oh, it appears in a very narrow view to be good for the people who are employed, but it's ultimately not really good for them because it makes the economy as a whole less productive, which means making less of the stuff that they need and want, which means prices go up. Meanwhile, at some point the corporation will run out of cash to pay them and their jobs will go away anyway.

The way companies (or any business, of any size) produce income is by making and selling stuff that people want, i.e. by benefiting people. Not because their motives are altruistic, but because that's how you make money, by pleasing your customers (sufficiently; if you're delighting them you're probably investing too much). And to make the economy able to generate the stuff people want it's crucial that capital and labor flows to the companies that can make best use of it to generate income (by making stuff people want). But that's only possible if capital and labor can also flow away from companies that can't make effective use of it.

Yes, obviously Tesla is only investing like crazy because the owners see a clear path to generating even larger returns. That's how business works. And it's not just a Good Thing, it is the single most important cause of the fact that your life is more comfortable, better-fed and generally better than your ancestors' lives were. If you don't believe me, you should take a hard look at the parts of the world that have experimented with alternative approaches to managing economic production.

Re:it's not "burning cash"

[swillden]

If Tesla manages the "production hell" ramp-up without any serious glitches that cause excessive delay / QA problems / expense, they've got it made.

I'm betting they will. Literally. I've been buying a little more TSLA every month for some time now. Lots of analysts have been rating it as overvalued on the fundamentals, but I think most of those analysts have one serious deficiency in their understanding: They don't know what driving an electric vehicle is like. Unless the traditional automakers can make the transition much, much faster than I think they can possibly do, Tesla is going to vault from being a niche player to a major automaker, and its value will rise accordingly.

I have great hopes for the solar roof and home battery businesses as well. It's clear to me that this is the future of residential power, and no one is as well-positioned as Tesla to reap the rewards.

Re:it's not "burning cash"

[Solandri]

The problem is their cashflow is mixed together with government incentives influencing buyers, and selling ZEV credits to other car manufacturers. It's not at all clear that Tesla's long-term investments actually yield a self-sustainable business model without these external factors. Both have to end at some point.

Re:it's not "burning cash"

[Chris Mattern]

Exactly. "Burning cash" is not necessarily a bad thing. If done right, it'll be getting you to a place where you're making cash. But if you can't stop burning cash, that's bad.

Re: it's not "burning cash"

[WindBourne]

Well consider that majority of American M3 buyers KNOW they will not get 7500 from feds, and are STILL buying M3s. In fact, it appears that M3 may be the highest demand car in America.

Re:it's not "burning cash"

[Anonymous Coward]

The Ford Taurus, in 1980s dollars, cost ONE BILLION DOLLARS. Which is roughly TWO POINT FIVE BILLION DOLLARS today.

"Development for the first-generation Taurus started in the early 1980s to replace the Ford LTD,[2] at the cost of billions of dollars, with a team led by vice president in charge of car development Lewis Veraldi dubbed "Team Taurus."

https://en.wikipedia.org/wiki/Ford_Taurus_(first_generation)

Ford spent more money bringing the Taurus to market than it cost to research, develop, and deliver the first F117 to market.

Manufacturing cars is expensive. But by historic norms, Tesla is far ahead of the established big boys in bringing an entirely new design to market.

Re:it's not "burning cash"

[crafoo]

Design in India, production in China, Software in the eastern block, MBAs in the USA. Spending capital on physical equipment and sub-assemblies is a "waste of money". That cost should be externalized to a supplier you can squeeze out of business with progressively unfavorable contracts.

Re:it's not "burning cash"

[SlaveToTheGrind]

You're right -- it's not "burning cash." Both the headline and summary clearly say "burning through cash," which is a well-known idiom for spending lots of money quickly.

Your straw man has certainly generated a vigorous discussion, though. Well done.

Re:it's not "burning cash"

[KingMotley]

I have to agree with you. I think the car business is great, but I think the real money is in the power business -- solar panels, home batteries, and I'd venture at some point power production from other means.

Re:it's not "burning cash"

[Solandri]

What this also represents is a near perfect case study as to why most Republicans are sheer nonsense when it comes to the economic of taxation. They will try to convince you that if rich people and rich corporations accumulate enough cash they will start to "create jobs." So we need tax cuts or else nobody will create jobs.

You're trying to understand this from the perspective of an employee, not a business owner. Rich people and rich corporations don't "create jobs" in some cause and effect manner. It's a self-sustaining cycle (as long as the business model works and growth continues). They become rich(er) as a result of the jobs they've created, and becoming richer allows them to create more jobs, which in turn allows them to become richer yet.

To an employed individual, reduced taxes equals more take-home pay (more "profit"). So it's easy to understand your misconception. But to a business owner, the best way to increase your take-home pay (profit) is not by taking home the money saved due to a tax cut. It's from reinvesting that saved money into the business so your business can grow. That reinvestment is what creates more jobs (which in turn creates more profit, meaning more take-home pay). The only rich people who want a tax cut for the sake of a tax cut are people who've inherited their wealth and don't know how to run a business. Any successful business owner would rather take the money from a tax cut and reinvest it in the business (turning it into more money and also incidentally creating more jobs), rather than keeping it for themselves and using it on hookers and blow.

That's why all the arguments that rich people want to cut taxes so they can keep more for themselves are wrong. That's the last thing any rich person who runs a successful business would want to do with extra money from a tax cut. They would rather reinvest it in their business (creating more jobs) and grow it into even more money.

Since you want to make it political, the key point Democrats seem to miss is that it doesn't matter where from the economy you extract taxes. Whether you tax income, sales, business transactions (VAT), or business profits, the end result is the same - money transferred away from people's control to the government's control. Corporations are paper entities - basically a line drawn around a group of people (employees, owners) acting as one entity. The corporation by itself doesn't produce anything - the people it represents do. As such, a tax on a corporation is a tax on those people (and their customers). The government is not gaining any extra revenue by taxing corporations. The corporation, being a paper entity, just passes those taxes on to employees (lower wages), owners (lower dividends), and customers (higher prices).

This is why most taxes and tax cuts don't work like their proponents think it will. Aside from localized effects (a tax on almonds but not pistachios will result in almond sales falling relative to pistachios), taxes don't really affect the economy as a whole (increase in sales of other foods will balance out the decrease in almond sales). Only the overall tax rate affects the economy. Each person generates a certain amount of productivity, and the economy as a whole is the sum total of those persons' productivity. The overall tax rate is the percentage of that productivity which is shifted to the government's control.

Once you realize this, you realize it's insanely stupid to tax every little thing like our government currently does. Taxes should be consolidated into just one or two major things to make them easy to collect (if you believe in progressive taxation, the obvious choice is income tax), plus a few behavior modification taxes (e.g. property taxes to encourage people to find a profitable use for land or sell to someone who will, rather than use it unproductively). Elim

Re: it's not "burning cash"

[uncqual]

Very few people have actually bought a M3 yet. The deposits are fully refundable and a few negative reports on the M3's reliability, function, or value could cause a rash of cancellations. I wish Tesla the best of luck, but at this point their venture is quite speculative - esp. given that Musk seems to be intent on dividing his attention as many ways as possible across unrelated fields.

Re:it's not "burning cash"

[Khyber]

Plenty of businesses operate in the red for years starting at inception, and then get into the black. Tesla is doing literally no differently than most other successful companies.

Re:it's not "burning cash"

[hord]

It shows you don't work in the financial sector if you don't use their jargon.

Re: it's not "burning cash"

[WindBourne]

Or follow Amazon , who was not making profits for ages.

Re:it's not "burning cash"

[Gorobei]

The problem is that Tesla needs to transition from a niche player to a production automaker, meanwhile they are trying to finance themselves like a software company. Cars don't scale like software:

One serious design flaw that starts surfacing three years from now could kill them (and they're already betting the farm here - they think their tooling is production ready and are budgeting accordingly, normal automakers would still be using lower cost, beta quality machinery while they work the kinks out.)

They haven't turned a profit to date, and best technology in the world won't make a $35K car 5x cheaper to produce.

Scaling up requires a capital investment that is basically linear with the scaling factor. 500K Model 3s is going to need a ton of capital, and that capital is betting on one model.

Tesla seems like all of Musk's current plans: a cool technology solution to one part of the 10 parts that have to come together to build a viable company; negative cashflow; rosy predictions. Maybe he wins, but his plan doesn't seem to align with reality.

Re:it's not "burning cash"

[Kjella]

it shows "the financial sector" has it's priorities reversed if they seem to think "investing in production machines" is "burning cash"

It's an idiomatic use, like "He got his paycheck yesterday and already the cash is burning a hole in his pocket." indicating how willing the company is to use their cash reserve as opposed to sitting on it. They don't think anyone is going to set it on fire, literally or proverbially.

Re:it's not "burning cash"

[swillden]

Yep, it's risky. I think they'll make it, and I expect a handsome reward when they do. Or I may lose a few thousand dollars if they don't. That's the game. The bulk of my retirement portfolio is in safer, more consistent bets, of course.

Re:it's not "burning cash"

[WrongMonkey]

Tesla's current stock price is valued as if they already are a major automaker. Their market cap is higher than GM.

Re:it's not "burning cash"

[soft_guy]

> Both have to end at some point. Why?

Re:it's not "burning cash"

[rainer_d]

$1B backlog? There's nearly half a million reservations on a $35k-base vehicle (average expected sale value after options (luxury, performance, extended range, etc) = $43k). The Model S has a profit margin of about 25% per sale and they expect similar on the 3. You're looking at nearly $20B in sales and $5B in profit just from the already accumulated waiting list, which is increasing by about 1800 new reservations net every day.

If Tesla manages the "production hell" ramp-up without any serious glitches that cause excessive delay / QA problems / expense, they've got it made.

That's really a big "if".

It's a ramp-up like Apple does for the iPhone - but really Foxconn is doing it.

I doubt, though, that they can pull it off. They've got enough problems in their factories pushing out the current number of cars.

Still waiting for the Tesla-Minivan or Station-Wagon anyway ;-)
Though, they'll come last. SUV-buyers have more money...

Re:it's not "burning cash"

[Rakarra]

Well the cashflow is negative, for sure, but it's a long term investment strategy. Headlines are getting more clickbait-reinforced by the day.

The difference is that cash flow is real, and long-term investment is hope. There are lots of companies that spend cash to "invest in the future" and that cash is gone when the hoped-for sales don't occur. Tesla has a leg-up on them, given it has deposits for future sales, but not all of those future sales will happen.

Re:it's not "burning cash"

[Rakarra]

well, they can if they allow you to build more of the stuff you're selling faster... allows more money to flow in
it's a balancing act between buying production stuff or materials, and selling the product

Yeah, and anyone who has even just watched Shark Tank knows that it's not an uncommon problem to require outside investment (or in this case to burn through already-accumulated cash) just to be able to ramp up inventory creation to meet the demand for the product that already exists.

Re:it's not "burning cash"

[Tenebrousedge]

Your argument is interesting. I think that your description of the profit cycle is being undermined by automation, however. It seems predicated on the idea that labor is the source of capital/wealth.

But to a business owner, the best way to increase your take-home pay (profit) is not by taking home the money saved due to a tax cut. It's from reinvesting that saved money into the business so your business can grow.

Or you're Jeff Bezos. At some point the concept of take-home pay gets hazy. Perhaps you can extrapolate a bit.

If you don't mind, I would also appreciate your position on capital gains/investment taxes and/or estate/death taxes.

Re:it's not "burning cash"

[Shotgun]

you should take a hard look at the parts of the world that have experimented with alternative approaches to managing economic production.

I like to think of those economic systems as trying to deny that greed exists. "We'll all just share, because unicorns and rainbows"

But, the truth is...people are greedy. All people. Note the "non-greedy" people screaming for a $15 minimum wage, when there are people in the world living off $1/day. The thing about capitalism is that it tries to "harness" greed. You too can be fabulously rich. You just have to do something your fellow man wants to pay for it.

But, then it all breaks down with monopolies, regulatory capture, and people in general being greedy.

Re:it's not "burning cash"

[Mr D from 63]

Plenty of businesses operate in the red for years starting at inception, and then get into the black. Tesla is doing literally no differently than most other successful companies.

But MOST businesses that operate in the red for years starting at inception never succeed.

Re:it's not "burning cash"

[TemporalBeing]

The problem is their cashflow is mixed together with government incentives influencing buyers, and selling ZEV credits to other car manufacturers. It's not at all clear that Tesla's long-term investments actually yield a self-sustainable business model without these external factors. Both have to end at some point.

For the Model3 the credits may make a difference for buyers given it's price; however, for the Model S and Model X - it's not likely an influencer at all on price and they're doing just fine with sales.

For that matter, the backlog on the Model 3 alone blows through the amount of cars allowed to be sold while still receiving the credits, which has been published, and which they would have to list per purchase prices, and yet it seems 1800 people on average every day are still putting down $1k for reservations...

Re:it's not "burning cash"

[LynnwoodRooster]

Except, per GAAP, Telsa loses moneny on each unit they sell. Selling them faster does not help in that situation.

Re:it's not "burning cash"

[LynnwoodRooster]

Tesla makes 25% gross profit margin; it's actual net profit margin - profit after all expenses, not just COGM - is negative. They lose money on each unit, when you do your accounting per GAAP standards.

Re: it's not "burning cash"

[Rei]

Completely in contradiction with the facts, but nice try.

There have been over half a million reservations, and only a bit over 10% cancelled - despite Tesla's heavy attempt at anti-sell to try to push people to the Model S. They're currently netting (new minus cancellations) about 1800 a day.

Re: it's not "burning cash"

[WindBourne]

Amazon is deeply in debt.

Re: it's not "burning cash"

[WindBourne]

huh.
Where did you hear that 10% cancelled?
I missed that.

Re:it's not "burning cash"

[BasilBrush]

Clearly, Tesla is not typical.

Re:it's not "burning cash"

[im_thatoneguy]

how much they spend each month is their "burn rate" I don't see how burning cash is that inaccurate of a description.

In my opinion it depends.

Twitter keeping the servers running for another month is in my opinion burning cash. Uber subsidizing their prices to win market share is burning cash. Capital Expenses for robots is in my opinion not burning cash since the durable goods have persistent value after they money is spent. Really you aren't burning cash you're converting the cash from one form into another form.

Re:it's not "burning cash"

[samwichse]

I feel like it's a difference in the phrasing.

"Burning cash" suggests it's just going poof out the chimney.
"Burning through cash" (headline) suggests it's being used at a high rate.

At least that's how I read it.

Re:it's not "burning cash"

[MooseMiester]

Exactly. But lets look at the absolute basics. If you save money, you put it in a bank. That is what the bank uses to make loans. No loans, no startups, no growth, nothing. duh!

If you tax capital at 50%, and the country next door taxes it at 25%, all the money that can leave your country, does. That's why lowering the tax on money creates growth. duh!

It's common sense. But for some reason people have lost this basic ability to fathom how basic economics work, because they have been brainwashed by political ideological theories designed to fleece them of their money. They think "all sales people lie, because corporations are evil" without thinking "Wait, isn't a politician, or a political party, made up entirely of SALES PEOPLE?"

Re:it's not "burning cash"

[MooseMiester]

Labor is the source of capital and wealth be it a person or a robot. Both require an investment, and both require training. The only people who don't "do" something in order to get paid are politicians...

Re:it's not "burning cash"

[ebvwfbw]

I can see you're right. It's far better to send tax money to Washington because they know oh so much better than anyone else how to spend it.

What pure BS. You've been brain washed.

The solution isn't government, the government is the problem.

Cutting taxes works every time it's tried. Worked for Kennedy, Reagan, others.

Re:it's not "burning cash"

[PlaynBass]

Crafoo, it's attitudes like yours that are driving great businesses and the strengths of their exceptional excellence that they once contributed to the USA's preeminence in new technology and innovation into its current state, that of a sad third-tier country that now can only sell inane slogans like MAGA, to a dumbed-down population of wage slave consumers.

Shut. Your. Ignorant. Pie. Hole. You have nothing worthwhile to contribute to this discussion.

Re:it's not "burning cash"

[Bender0x7D1]

You have an unstated assumption... that Tesla will remain the only player in the market. When Volvo, Chevy, BMW, VW, Toyota, etc. decide to jump in, the market will get crowded - quickly.

Plus, all of those companies have established service centers and training programs for after-purchase issues. I don't think Tesla will go away, but they aren't going to be an unstoppable juggernaut with a license to print money.

Re:Chevy Bolt

[sxpert]

it actually looks like a car

Just get me my car

[ranton]

Borrow whatever you have to do but I want my Tesla 3. I'll do my part by spending an unnecessary amount of money on a supposedly entry level car, just make it happen.

Re:Just get me my car

[sxpert]

eagerly waiting for the "inside the model 3 production line" video ;-)

Re:Chevy Bolt

[ranton]

Has been out for awhile and nobody is buying it. What's better about the Model 3?

I can't speak for everyone, but the two reasons I am buying a Tesla Model 3 is the better performance and the over the air updates. Most car models have all their features on day one and any new updates are only for future year models. This is not the case with Tesla. I'll give my money to Tesla for almost no other reason than to support a company which does this.

Re:Chevy Bolt

[sxpert]

said government money was paid off with interest aeons ago

Chevy vs Tesla

[mykepredko]

I don't love the look of either vehicle but I think the differences are pretty significant.

Which company has more cache? If I wanted something cool, where would I go? Mom, America & Apple Pie or the company run by the guy going to Mars?

Re:Chevy vs Tesla

[avandesande]

Bolt has that awful instantly out date look that they put on American cars so they age poorly. Tesla has more classic lines that should look good down the road.

Re:Chevy vs Tesla

[sxpert]

no, the tesla takes into account the fact that you won't even need a steering wheel and pedals in 5 years, which is withing it's lifetime

Re:Chevy vs Tesla

[R3d M3rcury]

Which company has more cache?

caché.

So this height-challenged Czechoslovakian resistance fighter is trying to escape the Gestapo, who are chasing him. He sees a small farm house, runs to the door, and knocks rapidly. The farmer opens the door and the resistance fighter immediately asks him:

"Excuse me, but could you cache a small czech?"

I'll be here all week.

Re:Chevy vs Tesla

[avandesande]

The Bolt isn't unconventional, they (US automakers) do this to all their economy cars to shame the driver.

Re:Chevy vs Tesla

[Rei]

Honestly, I consider things like this to be a train wreck. Which one is the machine that goes "Ping!"?

If Audi, BMW and Mercedes designed smartphones they wouldn't even fit in your pocket due to all of the knobs, levers and buttons on the outside.

We don't use different peripherals for each program, we use multifunction screens and multifunction controls. It's about time the auto industry caught up (the controls in the latter case being steering wheel controls and voice commands for things you need to control while driving, and touchscreens for things that you don't, and/or things with large on-screen buttons that don't need precision presses so you don't have to take your eyes off the road).

Having a million and one controls means a million and one wiring connections (labour, weight, power draw), a million and one things that can break, and little upgradeability / patchability. Ignoring the aesthetics of clutter.

Re:Chevy vs Tesla

[Rei]

You mean that miniature screen far away from the driver? Yeah, totally the same thing.

And I'm sure you're typing this message from your special web browser keyboard and using your special web browser mouse, which is different from the one you use for word processing, which is different from the ones you use for each different video game... because of course it makes total sense to have different controls for each task rather than multifunction.

If you can't hit a button this big on a 15" touchscreen that's right in front of you, there's something wrong with you. No "three levels of menus", it's one level, and accessible by steering wheel controls.

apparently the designers expect everyone to have a long pre-planned playlist ready for every trip or something.

What exactly is your use case? Want to listen to a specific artist or song? Press the voice command button and say to play their name. Try doing that in your specialized-control-for-each-device interface.

Re:Chevy vs Tesla

[Rei]

BTW, for Model 3, it looks like they're an always present icon at the bottom. (That's just a mockup based on videos people took during the unveiling, but it gives a general sense). So zero levels deep.

It's also worth noting that Tesla has various climate autoconfiguration options for drivers and passengers.

Re:Chevy vs Tesla

[werepants]

Hang on there. Do you seriously believe that automakers are intentionally selling cars that look like garbage just to make vehicle owners feel bad about themselves for not buying something more expensive? Why would they ever do such a thing? How does that generate a profit? The customer would just buy a decent looking economy vehicle from another manufacturer.

Try this on for plausibility: Automotive design essentially works the same way as fashion trends at this point. Manufacturers try to create something that taps into whatever is trendy at the time. At first, the new design seems edgy and hip, looks great on the showroom floor and during a test drive, and so early adopters get to feel like they are fashionable and living in the future for a little while. However, pretty soon, those high-volume economy models start popping up all over the place, and since they are cheap, that means teenagers and other "low-status" people are driving them all over the place. No matter how nice the car looked in the showroom, now it's been tainted by association with the lower class.

So, here's the situation as I see it: Americans are obsessed with status, and will spend completely irrational amounts of money to portray themselves as members of a higher class. Economy cars end up being associated with low status, so any economy car design becomes unfashionable to the American public eventually.

Another, lesser effect: The more "on-trend" a vehicle is initially, the worse it will age. If you have something that's conservatively designed and doesn't follow the latest fad, it will have less initial appeal upon release. On the other hand, when the fad changes, the conservative car is still just as appealing, while the previously fashionable car is now undesirable. American companies tend to be more aggressive in their styling, and they kill off car models and start new ones much more frequently than imports - the Civic has been around through the Cavalier, Cobalt, Aveo, Sonic, and probably some I'm leaving out. So some car manufacturers deliberately design for an initial burst of sales but a short shelf life.

One thing's for certain though - nobody is intentionally putting ugly cars out there.

Re:Chevy vs Tesla

[avandesande]

Aggressive styling? Every US car the last 10 years looks like shit. They even managed to tack a bunch of pep boys ninja-crap on the corvette, which always has had clears. Malice is the only explanation.

Re:Chevy vs Tesla

[avandesande]

(which always had clean lines)

Re:Chevy vs Tesla

[toddestan]

The main problem isn't all the buttons and dials and knobs, it's that cars are increasingly designed with form over function nowadays. The primary focus seems to be to make the dashboard look cool with lots of "gee-whiz" features (light up cupholders anyone?). It doesn't seem like much thought is given to usability, especially when actually driving the car. My guess is part of it is also a desire from the manufacturers to make the car feel dated after few years to keep you buying the latest models. The sad thing is that Audi is actually one of the more restrained manufacturers.

There's really no reason why cars couldn't be designed to be more usable with easy to use, logical control layouts. Perhaps if the Model 3 is a success, it will drive other manufacturers to clean up their designs and make them more usable, though I'm hoping those designs will be a bit more traditional and not just a giant touchscreen in the middle of the dashboard.

Re: Chevy vs Tesla

[WindBourne]

Actually, we own an MS, and have to say, that once used to screen, it blows the doors off buttons. Almost everything is within 2 levels, and easy to work.

Re:Chevy vs Tesla

[werepants]

Aggressive doesn't mean clean, at least not in modern design languages. Auto design largely apes whatever is being done in sci-fi movies and in some cases might take inspiration from racing and car-modding communities - so what you're seeing is that for the last decade or so, every new car is trying to look like a futuristic sports-car... huge, aggressive grille, extra inlets, molding meant to evoke chin spoilers and other racing elements. Of course, most of this is completely non-functional, but the point is, automakers are trying to sell cars via the exact opposite approach of your claim - don't make anybody confront the reality that they can only afford an econobox, but instead use cheap plastic parts and flashy LEDs to make today's econobox look like yesterday's sports car. Kia led the way with this, by hiring Italdesign to give an economy brand the look of Italian imports - and it paid off.

Seriously, just look at the Taurus: https://en.wikipedia.org/wiki/...

The latest iteration has the large grille that suggests it needs a ton of cooling, it has aggressively swept "angry" headlights, extra lines molded into the body panels to evoke speed and streamlining. The original was meant to convey... a beige spheroid? Style at the time essentially meant indiscriminately rounding every corner and edge. But it looks that way to us now partly because we've become accustomed to the sportscar arms race of every manufacturer out there, so anything from the 90's looks amazingly bland. And in some cases, they really were - late 80's, early 90's, there was still a focus on economy but there wasn't the technology to provide efficiency AND power, so you have small engines and rounded corners for the only kind of aerodynamics you could understand with the computing capabilities of the day. Which gives you abominations like the Mustang from that period, which looks far less aggressive than the Mustang 10 years prior.

Re:Chevy Bolt

[minogully]

Biggest difference is the supercharger network for the Model 3. The Bolt's options when it comes to road-trips are more limited and where they exist they are inferior since they don't have the same charge rate as the supercharger.

Re:Chevy Bolt

[ranton]

The Tesla isn't built by a company that swallowed a bunch of taxpayer money in a big government shell game to survive...

Oh wait...

Every company takes advantage of government programs to exist. Public roads, public education, intellectual property protection, military protection of sea lanes, etc. Tesla probably owes its existence more to our universities for producing its engineers than it does to tax incentives.

Burn Rate

[JBMcB]

The main problem with Tesla is that, as it sells more cars, the expenditure per car sold rises linearly. That means they aren't getting economies of scale. The more they build, the more they have to spend to support existing vehicles on the road. It isn't clear if it's a quality issue or management issue or support issue or whatever, as they aren't entirely transparent on these types of expenditures, but it's worrying.

https://seekingalpha.com/artic...

Re:Burn Rate

[sxpert]

that's because they have to invest to grow their network of support locations, superchargers and the like. other gas powered car companies are using a network that's been build over the last 100 years or so...

Re:Burn Rate

[bobbied]

Maybe so, but it is worrying to investors non-the-less.. Tesla remains high risk, even after all these years.

The questions here are will Tesla make money, eventually, or will they have to burn all their cash on this infrastructure building from now until bankruptcy comes? If the answer is they will survive, then investors are asking HOW LONG will it take to turn a profit?

Do you know the answers? Tesla doesn't know, Musk is making no promises so nobody knows... That makes them high risk. If you like their chances, have at it, but I'd recommend that investors take the risks they are taking into account by not playing the wall street casino roulette wheel with effectively a single number bet. Diversify...

Re:Burn Rate

[aaarrrgggh]

Tesla needs to hit a critical mass for their business model to really work and generate positive cash flow. That is clearly more than the ~2-300k cars they have on the roads today, and is likely closer to 1MM cars. They also need to have learned lessons from previous models for the mass-market strategy to actually work.

From what little I see of the Model 3, my guess is they have worked hard to address complexity issues and design a vehicle that can be manufactured with reasonable complexity, and that is higher reliability than the Model S. They seem to have stayed away from the more ambitious goals of the Model X, which seems to have been a disaster.

I would say that in 18 months there is a reasonable chance they will be turning a modest profit, although I imagine they will still need $5-10B in financing to get through the next 5-10 years.

(I own Tesla stock, although I don't consider it a logical investment.)

Re: Burn Rate

[WindBourne]

Yeah, he and some MontanaSkeptic guy are well known for arguing that Tesla is dead, but Tesla keeps going and selling more. Gut feeling says both are idiot trolls being paid by kock Bros.

Re:Burn Rate

[Khyber]

" the more they have to spend to support existing vehicles on the road"

Uhhh, nope. Plenty of places like fast food joints and gas stations are putting in electrical charging stations for EVs, on their own dime.

The McDonald's down the street from me has a PV covered parking structure, with four EV chargers. Hell, the entire building is almost entirely solar-powered, the only thing that isn't are the gas-based deep fryers.

Re:Burn Rate

[aaarrrgggh]

There are a few spots where Tesla still has strategic advantages compared to the other US manufacturers; the interesting spot will be what the German manufacturers do over the next 3-5 years.

Toyota likely could have killed them if they weren't obsessed with fuel cells.

Re:Burn Rate

[cheesybagel]

Who cares? That only matters to investors. What matters to the clients if if they can deliver the product and how good it is. AMD seldom turns a profit as well but I think you would be hard pressed to find anyone in the PC segment who thinks they don't serve a purpose.

Re:Burn Rate

[bobbied]

It *should* matter to buyers too. Where are you going to get that Tesla serviced if Tesla goes bust? How about getting parts? Do you have any idea how much it costs to maintain a DeLorean? Even WITH being able to time travel, it's expensive...

Re:Burn Rate

[LynnwoodRooster]

If Ford or GM went bankrupt, I can still get parts for my vehicle at about any auto parts shop around and fill it with gas pretty much anywhere. Like the DeLorean where you can fill it anywhere and the engine was essentially a bored out PRV 2.7 liter V6. If Tesla goes bankrupt - how well stocked is the supply chain for replacement parts, and without those supercharger stations, how convenient is it to use for longer trips?

Re:Burn Rate

[Rei]

Indeed. More to the point, with 500k produced per year going on the roads, there's easily enough demand to justify a solid aftermarket parts business.

Re:Burn Rate

[bobbied]

LOL... Yea, because the parts where made by other manufacturers and simply purchased by Ford and GM. Go buy a Deloran door panel or any of the unique parts they made (or had specifically made) for that car. Good luck. Same with the custom parts of that Ford or GM, where there *might* be a stock of third party parts out there due to the shear numbers of vehicles involved, but once those are gone you will be left scavenging in junkyards or manufacturing your own.

Tesla has parts which are not easily sourced from anybody else, parts that are known to wear out regularly. I'm willing to bet, only Tesla builds some of them. I'm guessing brake parts, tires, rims and wiper blades are going to be available nearly forever because I cannot image Tesla designing and sourcing custom parts for these things, but if you need a battery, some electronic module or a new battery and Tesla is out of business, you are going to be hitting the phones calling junkyards for parts or manufacturing your own. (Mostly the latter as there are precious few Tesla's out there yet.)

Re:Burn Rate

[cheesybagel]

The Tesla battery is made of standardized elements which, while manufactured by Tesla, have alternatives with similar specifications elsewhere.

Re:Burn Rate

[BasilBrush]

Tesla's main advantage is they have Musk. And none of the other companies do.

Re: Burn Rate

[MooseMiester]

I want him to succeed, I really do, but the actual percentage of market share is abysmal and he has zero experience mass producing anything. EV's are a tiny, tiny fraction of the market, and with the Democrats shooting themselves in the foot as of late Republicans are going to be in charge for a while, which means there will be no appetite for a mandate that we buy the things, and the subsidies may also be killed.

Re: Burn Rate

[WindBourne]

let the subsidy die.
Tesla is going to do JUST fine without it. In fact better since they actually used to CORRECTLY, while the others used it to push hybrids. Basically, GM and the rest wasted their opportunity.
Musk has a 35K car that is worth 35K. It competes head on against BMW 3/4 series,and based on offerings/prices, it appears that they will do QUITE nicely.
What is needed is to deal with QA. I THINK tha tthey have done so by inverting their manufacturing process. We will find out shortly.
But if so, then I expect Tesla to be selling 1M / year of these within 2 years. And yes, they will be PROFITABLE.

Re:Chevy Bolt

[sxpert]

you're mistaken, you pass gas stations every 10 miles or so, in normal conditions, except in certain locations in Arizona.
you have electric plugs just about anywhere. also, the included GPS shows you where the superchargers are located and guide you there

Re:Chevy Bolt

[sxpert]

that's a budget issue. how about stopping the idiotic, unwinable war in afghanistan, and spend that money on electric car incentives (severa hundred billions a year)

Re: Chevy Bolt

[sxpert]

you only need the supercharger while transiting in a long trip. for daily use, you just have to plug in every night in your garage

Re:Chevy Bolt

[avandesande]

Bolt has that 'aspirational styling' that goes stale as soon as you drive it off the lot. They build the shame right into the design!

Re:Chevy Bolt

[doconnor]

Yes. I prefer the safe way of powering a car: carrying around a highly flammable liquid to power explosive combustion.

Re:Chevy Bolt

[Rei]

Has been out for awhile and nobody is buying it. What's better about the Model 3?

Lol, okay, let's go down the list. Bolt vs. Model 3. Just the base models (Model 3 is much more upgradeable)

MSRP: $37500 vs $35000
0-60: 6,5s vs. 5,6s
Top speed: 90mph vs. 130mph
Handling: Read for yourself (start at "What's blanching...")
EPA range: 238mi vs. 220mi
Max charge speed: 90mph vs. 260mph
Fast charge network: Poor (single stall, poorly monitored, big holes) vs. excellent (4-8+ stalls, widespread distribution on almost all major interstates)
Dealership experience: Famously hard sell and uneducated about EVs, vs. almost humorously soft-sell, behaving instead like museum curators who just want to talk about their exhibit
Automatic crash avoidance: Optional extra vs. standard
Climate control: Single vs. dual zone
Track record for safety: less-than-stellar vs. outright-insulted-if-they-score-less-than-perfect-in-any-test. And this.
Standard warranty: 3yrs / 36k mi vs. 4yrs / 50k mi (both have the same battery warranty, 8 yrs / 100k mi)
Company dedication: Makes EVs as a side project to their main business vs. fully invested in EVs.
Efficiency: heavier & higher drag vs. lighter and lower drag
Styling: Come on, is there any contest? Even remotely? Bolt vs. Model 3. The interior difference is even worse, with the Bolt being your typical econobox interior (yet at a nearly $40k price point).
Depreciation of past models: Terrible vs. Low

I could keep going. I mean, there's just no contest. Unless you're seriously in a rush, or you think Musk is the devil, I can't imagine why anyone would pick the Bolt over the Model 3.

Re:Chevy Bolt

[b0bby]

What's better about the Model 3?

As someone who is actively looking to buy a Leaf, I'd say one thing that's better is simply not having to deal with car dealerships. Trying to actually get to a price is tedious, and their processes seem backwards. For example, I went in for a test drive. They photocopied my license and entered all my information painstakingly into their computer. When I then wanted to test drive a different model, they did the whole thing over again. Even to the point of making a new photocopy **while the first photocopy was still sitting out on the desk**.

Then they tried to sell me a 2016 (rather than a 2017), which was literally sitting in the back corner of the lot covered in leaves and with a dead 12v battery, with a promise of "a few hundred dollars off" and an assurance that their service department would make it as new.

So yeah, if Chevy dealers are as useless as Nissan ones, that alone would make me want to wait 18 months for a Model 3 which reportedly handles nicely rather than pay about the same for an econobox. The Leaf is being heavily discounted right now, which is why I'm even considering one.

Re:Chevy Bolt

[avandesande]

Lol that thing looks like a Aztec mini-me.

Re:Chevy Bolt

[bluefoxlucid]

DO NOT BUY A LEAF. The Chevy Volt, Chevy Bolt, Zero S, and Tesla Model S/X/3 all have high-quality battery management systems with thermal management. The Leaf's lack of a TMS causes their battery to degrade rapidly, losing as much as 40% of its capacity in 2-3 years; whereas the Tesla, Volt, and Zero have shown little to no loss of capacity over half a decade and hundreds of thousands of miles.

Get a used Volt. They're ass-cheap. Just don't buy a Leaf, holy shit dude.

Re:Not the whole story, though

[G00F]

To bad you posted as AC, comment is worthy of +1 informative.... To see that Tesla paid off early to save 300 million or more in stock.

While that page does talk about how its a raw deal for the government which means the tax payer it misses the reason the government is doing the action. It's not investing to get more money, but investing in better technologies. If electric cars become a reality because of it, then its well invested.

Re:Chevy Bolt

[sxpert]

a 1500 mi journey, with the speed limits in place (say 60mph) takes 25 hours. accounting for filling the battery, you need 5 more hours or so.
so, that means, at least 3 days, of 10 hours driving straight, with 1 hour pause for filling up (when you can have lunch), and filling up at night
it does seem sensible...

Normal amount

[hackertourist]

It's not unusual for a car company to spend this kind of money developing a new car and getting ready for production. The first time I can remember a company publicizing a figure of over $1B was Volvo for the first generation 850, so about 20-25 years ago.

Re:Normal amount

[ledow]

That's because Volvo sold 2.8m units of its predecessor model.

It's a little different to be sinking a few billion into tooling and initial production, with little history, few sales (only tens of thousands of Tesla actually SOLD already), and lots of other things on the go (the summary even mentions batteries, trucks, etc.).

Again, let's throw money at the problem. We don't have money left? Great, let's throw debts at the problem. To end up with a car that has few paying customers (reservations don't mean much unless there's a significant amount of money put down to secure them), and can be out-spent and shoved out of the market in a matter of months by any major car manufacturer even if it takes off.

They're using Musk as a canary. When his company gets something that actually sells, they'll make better versions, sell ten times as many and just price him completely out of the market. He's already running on zero-profit, it'll kill Tesla overnight if they do it right. Especially if they leverage a patent or two.

Re:Normal amount

[avandesande]

I think US made trucks and SUV's are passable but when is the last time they made a decent car? They really are awful (hint they want you to buy a higher profit margin SUV or truck). Why would that change going to electric?

Re:Normal amount

[Rei]

They're using Musk as a canary. When his company gets something that actually sells, they'll make better versions, sell ten times as many and just price him completely out of the market.

Yes, because US automakers are famous for making good versions of things?
Yes, because they've succeeded at competing with Tesla so far?

The big automakers if anything are burdened by their existing outdated infrastructure, while Tesla's is the latest technology. Tesla can hire away people with decades of experience at will. Against most startups, the big automakers could cite their cash advantages. But Tesla is worth more than them; they can finance anything that will ultimately help their bottom line with equity.

Here, try this on for size: where are their gigafactories? No, seriously. Mass battery manufacturing is a fundamental requirement for mass-scale EV production. You think something like that just pops up overnight? A consortium of German automakers just announced plans to make one, slightly larger than Tesla's. Construction however won't start for two years (because they're just now entering the conceptual stage) and full production is long way down the road. Meanwhile Tesla is already doing the design work on something like six more Gigafactories.

This notion that the existing major automakers are going to sleep for the next few years and then suddenly whip out a couple million EVs per year that everyone wants to buy is fantasy. They're on the defensive.

The recent meeting of Daimler, BMW and Volkswagen are having a Blackberry moment. Their hopes of a diesel future look dashed, and Tesla is putting the Model 3 straight against the BMW 3 series and similar, beating it on standard features, performance, and price without even having to take into account subsidies and fuel savings (which in Europe can be thousands of dollars per year). They're meeting to try to figure out what to do. But the way forward is not going to be easy. They waited too long.

Priorities

[Okian Warrior]

it shows "the financial sector" has it's priorities reversed if they seem to think "investing in production machines" is "burning cash"

Actually, their priorities are fine, it's just not the priorities that people think they have.

About a month ago a huge percentage of Tesla's stock was held short(*), and everyone was screaming about how the stock was going to tank any day now.

Except that they knew the Model 3 would be announced around the turn of the month, so people started getting out of the short position. That caused the stock to dip, and more people exited the short strategy, and the stock went from $383 at the end of June to $319 a couple of days ago.

Now that most of the short positions are out, we might see some bull predictions for the stock. The stock jumped $10 yesterday and $22 today.

The short positions are gone, and good riddance. Now maybe we will see some legitimate news and analysis about the health of the company.

(*) I don't remember the figure, something like 15% of the total shares

Re:Priorities

[Paradise Pete]

so people started getting out of the short position. That caused the stock to dip, and more people exited the short strategy, and the stock went from $383 at the end of June to $319 a couple of days ago.

I'm not following the logic here. A short position is exited by buying the stock, and that causes the stock price to rise, not fall.

Re:Priorities

[virtig01]

Now maybe we will see some legitimate news and analysis about the health of the company.

Burning $1.16B, having $3B cash on-hand, and considering a debt offering is legitimate news about the health of the company.

Tesla does carry very real financial risk: they need to ramp up production higher than ever before, and they're running out of money to do it.

Re:Chevy Bolt

[Rei]

Here's what happens when you try to burn one of Tesla's batteries. What, you really didn't think that fire was given a second thought? Fire propagation is controlled by physical isolation, active (pumping) quench, passive quench (coolant thermal inertia), controlled venting, and many other means; they have over a hundred patents and have spent a huge amount on pack engineering to reach this point.

There have been fires in Tesla vehicles, but they've been at a significantly lower rate than in gasoline vehicles. Only two (out of all the vehicles they produced) have started in the battery pack, both from large pieces of metal road debris slicing into the pack (Tesla responded by putting a titanium debris shield on the pack; there have been no more incidents since then). There have been Model S's that burned to the ground without setting off the battery pack.

As for running out of electricity, here's how it actually plays out.

1) Your vehicle keeps an estimate of your available range. It knows where all of the chargers are, what's in use / in service, and has them on navigation. We'll assume that you plan to ignore this and run your car out.

2) Your battery gets low. Your car warns you. You could go to a charger. You decide not to. You could slow down - EVs can drastically increase their range (2-3 fold) by driving slower. You choose not to.

3) Your car hits zero - but you're still not out of battery, you've still got 10-20 miles left. It puts you into power restricted mode to maximize range.

4) If you ever give up your quest to run out of power, pull off at the nearest building of any type and ask if you can plug in. Practical experience from EV owners: you almost never will get a refusal, particularly once you tell them what the power costs (almost nothing) and/or offer to pay. Regular wall charging isn't fast, but you don't need to add a lot of range - just enough to get to the next charger (which for some reason you've been trying to avoid).

I've seen plenty of gas vehicles out of gas and stuck on the road. I've never seen an EV. 5% of our new vehicle sales where I am are EVs. Now, that may just be the luck of the draw (no question that gasoline cars are still much more common), but they're certainly not running out of power left and right like your conception of them. EVs start each day with a full charge; you never "forget to go to the gas station" like happens with gasoline vehicles.

The last time I ran out of gas I was stuck in the middle of a busy road on the way to work. Apparently someone had siphoned gas out of my tank. Eventually someone came with tow cables and dragged me to the nearest gas station. Interestingly enough, had my car been electric and out of electricity (by someone siphoning electrons?), I actually would have regeneratively charged on the way to the station.

Re:Chevy Bolt

[DrXym]

Nothing in particular. Tesla just generates the same kind of hype and aura as Apple.

Re:Chevy Bolt

[DrXym]

I really don't see why it would have any substantial impact on a long distance trip. You have to get out of the car to go to the toilet, eat, rest etc. and those stops can coincide with charging the vehicle.

Re:Chevy Bolt

[Anonymous Coward]

you have electric plugs just about anywhere.
 
Ones that you can actually use?
 
I'm wondering if you're the same fanboi I had to school not long ago about the magic Supercharger network. He tossed out the challenge to come up with trips where the SC stations wouldn't be enough to get you to your destination in a reasonable fashion. I used Tesla's own map and brought up two trips I had taken in the last year that fit the bill. In one of them I gave Tesla the benefit of the doubt, fudged the numbers a bit and while the trip could have been done it would have made a 14 hour road trip into an 18 hour road trip, taken me a couple hundred miles off the quickest route and in one case I would have been getting to the charger by the skin of my teeth. Even as I was giving Tesla's Wunderauto every benefit of the doubt and shuffling the math like an Enron CEO it was just making it by the tips of it's fingernails.
 
The second trip would have been a lot easier as far as distance between stations but it, again, involved me going (many) hundreds of miles out of my way and in one case we dependent on a single charging station at a B&B that I would have to have stayed at in order use. The additional miles and the station that I would have been forced to use would have delayed my getting to the destination by at least 18 hours. Had I gotten to the station and it was on the fritz? Oh well, that would have ended my trip or at least forced me to get real creative. Oh, and in this case it would have also depended on the hotels I stayed at in my 5 day journey to be willing to let me charge my car overnight. I can't say that would have happened.
 
Like I said, I cut every corner I reasonably could have and the Tesla could have done it but the time, mileage and potential money consumed doing it didn't make it seem reasonable. I want EVs to work and I know they will at some point in time but to act like The Mighty SuperCharger Network!!!111!!! is a catch all solution is short sighted and smacks of blind devotion.
 
On the plus side, I can say the SC network would likely work for the road trip I'm doing for the upcoming eclipse in the United States. I didn't sit down to really go over all the logistics of it yet but it looked promising. One of the reasons I couldn't give a firm answer is because aside from being at a specific location on the evening of August 20th through the morning of the 22nd, it's a pretty open ended 14 day journey. If the weather cooperates the total journey will be 4500 miles over 8 planned driving days with mileage in excess of a single charge of the Model 3. If the weather goes goofy or if I'd have to make my way back early for some unforeseen event the Tesla should be able to pull it off but certainly not with the efficiency as far as time or mileage of my ICE. Not to mention that my much cheaper ICE has more cargo room. It's not a show stopper but my current gear for this trip would have made the Tesla a bit cramped for space.

re: economics of taxation

[King_TJ]

As an Independent (yet a fiscal conservative who is repelled more by most Democratic tax plans than Republican ones), I'd question your assertion that "most Republicans" believe in the theory that rich people and corporations will start to "create jobs" only when they accumulate enough cash.

That's another way of talking about the "trickle down economics" which were out of the 1980's Reagan era, and were really just based on an untested economic theory at the time. Reagan's cabinet members succeeded in selling him on and supporting, so they could try it. It didn't work, primarily because they underestimated how many successful companies have little or no interest in more growth. (Even giants like Apple exhibit this tendency today. No matter how much money they make? They still cling to a business model that says it's perfectly acceptable to build computers that only cater to a relative niche in the marketplace. Apple doesn't even try to build Enterprise gear for server rooms anymore, leaving that whole sector to other companies. It doesn't even attempt to make its own mail server -- opting instead to build its Mail and Calendar clients around Microsoft's Exchange solution. Sometimes, adding too many new employees and expanding into too many areas just dilutes the formula that makes you successful. So profits aren't sensible to dump back into business expansion.)

I have no problem with Tesla's business model right now. I think Elon Musk is a very intelligent guy and a pretty decent leader, who really believes in the technologies he's trying to develop and market. That said though? He's definitely operating a company that greatly benefits from government loans, perks, subsidies and initiatives. In a more libertarian society, I'd like to see much less of that happening. But today, it is what it is. We voted for a bigger government than I personally like, and it's one that likes to take a lot of our tax dollars and spend them, directed at specific things it thinks are "best for all of us". So many subsidies have gone to fossil fuel based companies, it makes it really difficult to single out Tesla as the "bad guy" for receiving some now.

Re:Chevy Bolt

[Nothing2Chere]

"Paid off" is a relative term. The books are closed for sure, but the end result was $10+ billion in taxpayer money lost in the auto industry bailout.

https://www.thebalance.com/aut...

Re:Chevy Bolt

[swillden]

Dealership experience: Famously hard sell and uneducated about EVs, vs. almost humorously soft-sell

I actually tried to buy a Bolt. Couldn't do it. You can't get one. Of course, you can't get a Model 3 right now either, but I'm not convinced that I'd be able to get a Bolt much before I can get a Model 3.

Company dedication: Makes EVs as a side project to their main business vs. fully invested in EVs.

And I'm pretty sure this is the reason I can't get a Bolt.

Re:Chevy Bolt

[Rei]

From your article:

Over the course of a 20-degree weekend with minimal charging, one editor saw 134 miles of driving range disappear to warming the battery, heating the cabin

That will happen if you leave your car set to maintain cabin temperature when you're not in it. Or you could be like a normal person and just let your car get cold like everyone else. And honestly, that's a fast loss even for leaving the car preheated 24/7.

Most owners will tell you that Teslas are excellent cold-weather vehicles, particularly because you can preheat them remotely, on mains power, even if the car is in your garage, with the app. The cars also deliver instant heat, with no warmup period at all. 4WD is a relatively cheap upgrade, and actually extends your range. The cold weather range loss most affects you in start/stop city driving, which is the type of driving where range matters least and where the low speeds dramatically boost your range on their own. Etc.

Our coast-to-coast routine involved two or three hours of driving, followed by about 45 minutes of charging, rinse, repeat.

If he's spending up to 27% of his time supercharging, never better than 20%, he's doing things very wrong. Then again, he states that when he did this there were only 325 supercharger locations (there's 909 today, and they're tripling by the end of next year). The further apart, the slower you go because you need to charge to a higher level, and the last part of charging is significantly slower than the earlier part of charging. The P85D, from empty, can put on 212 miles range in half an hour from a supercharger (14% of your time charging if you're driving at around 70mph). However, that's from empty. While the first 80% is very fast (not constant speed, but close), there's a big slowdown from 80-90%, and bigger from 90-100%. So most people on roadtrips only charge to ~80% or so, unless they're out in some place with very distantly spread superchargers, say over 150mi (which there aren't many of anymore in the US).

*** Ed: Strange, his numbers don't match. His stated charge time of 15 hours 22 minutes versus a drive time of 57 hours is only 19% of his time charging. I wonder if he was exaggerating the "2-3 hours vs. 45 minutes" statement earlier.

** Ed2: Further down he indicates his charging routine. Sounds like he was mainly just suffering from how few superchargers there were back when that article was written.

We passed and drafted familiar trucks for days at a time through middle America, but the real inconvenience is that your meals are dictated by Supercharger locations. Some stops are so bereft of services that you’ll yearn for the chance to eat at a Cracker Barrel.

Well, enjoy the fact that the number of Supercharger stops has tripled since then, and will triple again over the next year and a half.

Overall, though, the article seems to be generally positive. And Tingwall is no EV fanatic, he's a longtime petrolhead.

Re:Now that's an OTA update

[OFnow]

>> Tesla Model 3 is the better performance and the over the air updates.

Yeah, OTA Updates, so cool. or is it ? Now that's an OTA update : https://www.youtube.com/watch?...

While Chrysler/Jeep does a poor job of engineering its in-car computer systems (as shown by the film!) that has nothing to do with Tesla. Proper engineering makes ota updates safe from hackers (witness MacOS, Linux, and part of the time, Windows). Just be careful whose stuff you buy.

Re:Chevy Bolt

[swillden]

The Leaf's lack of a TMS causes their battery to degrade rapidly, losing as much as 40% of its capacity in 2-3 years

This depends on where you live. My 2012 LEAF has 50K miles on it and has lost only about 4% of its battery capacity. (I'd go check it right now with my OBDII interface and LeafSpy Pro, but my wife has it.)

Get a used Volt. They're ass-cheap. Just don't buy a Leaf

Used LEAFs are much cheaper. You can get one about like mine (note: I'm not selling mine; I like it) for around $6K. Assuming you don't need more than 60 or so miles of daily range, and don't live in an area with a very hot climate (which causes rapid battery degradation), for $6K you can get an EV that will be a great commuter and around-town vehicle for several years, and will cost less than a nickel per mile to operate, including electricity and maintenance.

Unless you live in Arizona,or the like, they're great little cars, and very, very cheap right now.

Re:Chevy Bolt

[Rei]

AC apparently thinks that the only chargers that exist in the US show up on the supercharger map.

So you might have had to stop at a CHAdeMO to top up a bit. Waaah.

Had I gotten to the station and it was on the fritz?

AC apparently thinks that Tesla superchargers are single-stall locations.

Re:Chevy Bolt

[swillden]

The Leaf is being heavily discounted right now, which is why I'm even considering one.

If you're not getting the 2018 LEAF with its bigger battery, I suggest looking for a used car. 2012-2014 LEAFs are crazy cheap right now. The main thing to watch out for is the battery capacity. Ideally, you want one that still has 12 bars on the capacity display. If you can do with less capacity, fine, but the price should drop accordingly.

I recommend getting a Bluetooth OBDII adapter and the LeafSpy Pro app on your phone. Plug in the adapter and the app will show you the total battery capacity with a high degree of accuracy. After you've found a car that seems good mechanically and in appearance, and has reasonable battery capacity for its price, take it to a Nissan dealership and have them do the free battery analysis.

Unlike with ICEVs, there's very little to go wrong with the drivetrain. Electric motors last forever, there is no transmission to speak of (just a reversing gear). Take a look at CV joints, etc., just like you would an ICEV. Brake pads wear out, but slowly, and replacing them is the same as an ICEV. So really it's just the battery you need to pay attention to when evaluating a used EV.

Re: Chevy Bolt

[Rei]

"Quick" is a relative term. Most CCS1 and CHAdeMOs are 50kW or less. Tesla's supercharger stalls are 120kW per vehicle. And the fact that there's so few chargers at most non-Tesla sites, and they're so poorly monitored, makes visiting one a risky proposition. Which is the reason why Tesla puts so many at each site - so that you can rely on them.

Re: Chevy Bolt

[minogully]

Don't forget, Teslas can use all of the third party charging stations too, with the adapters that they provide with the car or ones that you can buy from them after you purchase. So you're only making my point stronger.

Re:Chevy Bolt

[Rei]

Tesla's buyback program was a horrible deal for customers. You could always get a much better deal on the open market.

Re:Tesla already obsolete

[jfdavis668]

Solid state batteries also use lithium, they just replace the liquid electrolyte with thin layers of aluminum oxide.

Re: Chevy Bolt

[minogully]

You're totally correct. But this point is lost on those who aren't already EV owners or who aren't EV enthusiasts. I've noticed a trend in the people who are toying with the idea of replacing a gas car with an EV - they equate charging stations with gas stations. And if there aren't enough charging stations in their mind, they think they'll be stranded, like they would be if there weren't enough gas stations. It's stupid, but I hear this argument time and time again.

Well, Model 3 has the Bolt beat in this regard because it has access to Tesla's supercharger network AND all of the third party chargers that the Bolt has access to use.

Re:Chevy Bolt

[Rei]

Leaf degradation is terrible. And everyone who saw the pack design knew it would be. Passive air cooling? Geez, if you're going to cool your car battery pack like a smartphone battery, expect it to last about as long as a smartphone battery.

This is what a proper EV pack looks like inside. This is not.

Re:Won't Buy an EV Under Current Law

[Rei]

It's worse than that. It's the Nth car from a given manufacturer. So buyers of popular EVs from popular manufacturers - people making EVs that people want - will cease getting the benefit. But people will get subsidized to buy unpopular EVs from manufacturers making a half-arsed attempt at them for years to come.

Re:Chevy Bolt

[Rei]

The CHAdeMO charger takes nearly an additional half hour to get to 80%

Apparently you don't know the meaning of "top up".

Not to mention the 500 dollar adapter.

Right, because if you perceive a problem in your car, you wouldn't spend $500 to fix it? Most people perceive there to be no problem and thus don't buy a CHAdeMO adapter. You apparently perceive a problem. So enjoy the obvious solution.

But I see that you completely ignore that the challenge was about the Supercharger network

Yes, we all drive cars with the purpose of imposing artificial constraints on things!

Re:Musk might be a visionary

[Rei]

Corporate valuations are based on what investors think your companies are going to be earning, amortized and with respect to the risk. Someone's corporate assets being valuable means that investors think that their companies are really onto something and want a piece of it.

It's not hard to see why Tesla's value is high. Their profit margin on their current models is a solid 25%, similar figures are expected for the Model 3, and they have customers lining up years in advance for a car they can't even test drive yet. The fact that they're burning through cash scaling up to meet demand is completely expected; scaleup costs huge amounts of money, which is why you get investors in the first place. They invest because they can see the writing on the wall that they're going to be converting these hundreds of thousands of waiting customers into dollars in their pockets. And they see even more beyond that.

The question isn't whether Tesla should be worth a lot. The question is how much exactly it should be worth. And because there's so much disagreement on this, you get both a lot of buys and a lot of shorts. But there's one thing that does not determine a company's price, and that is "how much is the company currently in the black without any consideration of future revenues and how much they're spending on scaleup to achieve those revenues"

Those were deposits, nimrod

[WillAffleckUW]

Burning through cash is what VCs ignore silicon valley startups doing.

It costs money to actually build stuff.

And, no, your "smart water" is just tap water from Seattle. We get it out of the Tolt River. Stop paying $5 for tap water, idiot.

0-60: 6,5s vs. 5,6s should be 60 - 0 - breaking!

[FeelGood314]

These cars both use regenerative breaking. I'll never need to go 0-60 in 5.6s but I might need to go 60 to 0 that fast.

Re:Chevy Bolt

[enjar]

We have three in the garage in my workplace, and are getting a fourth one next week when someone else takes delivery. For BEV/EVs in our employee garage we also have Teslas, Bolts, Volts, Leafs, Mercedes, VW Golf and Priuses. I know we have several people who have Model 3's on order. My employer provides free charging, which is a deal that's hard to turn down. FWIW I drive a Volt.

Re:Chevy Bolt

[ranton]

I can't speak for everyone, but the one reason I am buying a Tesla Model 3 is I'm a moron.

Fixed that for you.

Proper grammar helps when you are calling someone a moron.

Re:What it's like

[swillden]

I think most of those analysts have one serious deficiency in their understanding: They don't know what driving an electric vehicle is like.

Is that really such a big factor?

Yes.

There's an extremely common point of view among car-buyers, where it simply doesn't matter how awesome it is; $35k is way too much money for a car.

$35K is the average price for a new sedan. It may be above your price point, but it's not above the price point of most buyers of sedans.

For perspective...

[fiannaFailMan]

Aerospace companies like Airbus and Boeing invest in their products and expect payback to take decades. The difference with Tesla is it doesn't have as long a history of churning out products, but that doesn't mean that there will be no payback.

I have confidence in his strategy

[dhaen]

Going for my model S test drive next week. Still not sure whether the expenditure is sensible, but if if not I'll hold off a year and go for a model 3.

No other manufacturer has a sensible alternative. Indeed everything else on the market at the moment is a conventional car with added battery.

Re:Chevy Bolt

[b0bby]

Yeah, the used ones are tempting, but I can use the extra range of the 30kwh battery in the 2016 & 2017, and with the incentives available I should be able to get a new one for $13k or so when it's all done. Used 2016s around here seem to go for $11k, so not a huge premium to go new.

Re:Chevy Bolt

[b0bby]

I don't actually drive that much daily, but I do go 125 miles (relatively level, with a quick charge station about halfway) a couple of times a month and 100 miles (over mountains, again with an easy quick charge) once a month or so. So 60 miles of range would be inconvenient, but 100 or so is fine given the chargers around me.

I'm willing to deal with having to understand the limitations of the battery pack for the price I can get the Leaf for, and while I had considered the Volt I really prefer to go all electric. And since I'll still have 2 other ICE vehicles at least for a while, I'm not too worried about any of the downsides.

Re:Chevy Bolt

[Rei]

The free market prices didn't even approach the buyback prices. Tesla would offer you $35k for a car that you could sell for $55k on Ebay.

Re:Chevy Bolt

[LynnwoodRooster]

No a moron would use bad grammar; a low grade dullard would at least use the appropriate verb...

Dangerous.

[DrYak]

so, that means, at least 3 days, of 10 hours driving straight, with 1 hour pause for filling up (when you can have lunch)

This means that before and after lunch you drive 5 hours non-stop.

it does seem sensible...

to me, it sounds bordering to dangerous, unless you have multiple drivers and rotate them behind the wheel, so everyone get to drive a bit and rest a bit during one of these 5 hours stretch.

bexond 2 hours, you start to be really tired and lose concentration.

Driving style

[DrYak]

Our coast-to-coast routine involved two or three hours of driving, followed by about 45 minutes of charging, rinse, repeat.

This (making significant pauses every couple of hour of driving) is highly recommended in lots of places
(random example: In france, awareness campain against tiredness while behind the driving wheel)
and is a legal requirement for professional driver license in lots of places.
(random example: In Switzerland).

Our long-distance road trip highlighted that Tesla’s range estimate is consistently optimistic.

In my experience with an electric car (the Renault Zoé available from my local Car Sharing) the mileage can widely vary depending on the driving style.
the 22kWh battery is rated for 125km,
i can get anywhere between 100km (if I drive like an asshole, floor the accelerator to reach limit speed as fast as possible, etc.)
to 150km (if I drive conservatively, try to use regen brake as much as possible, accelerate reasonnably to keep consumtion from peaking, etc.)

the estimate is that : just a vague estimate.
better rely on lap since last recharge and battery status.
(Or on Zoé you can look at the full screen on the infotainment of consumption analysis instead of the rough estimate on the dashboard)

This discrepancy demanded that the driver perform constant mental math, evaluating how quickly the predicted range was falling compared with the climbing odometer.

On the other hand, this being Tesla, that could be fixed by software : instead of basing prediction on a constant times the remaining energy content in the battery, they could upgrade the software to give an approximation based on the recent (say y100km worth) consumption history.

Maybe you can even send it as a suggestion.

Debt or equity?

[Michael Woodhams]

Tesla has a very high share price relative to assets and earnings. To me, this indicates they'd be better raising money by share offerings instead of debt, however, I am largely ignorant of financial markets. Can someone knowledgeable comment on the reasoning behind this choice?

Re:Chevy Bolt

[Do You Smell That]

That's the whole idea of "artificial floor". If you can get 56k on Ebay, great! If not, here's a guaranteed 35k JIC...

Re:Musk might be a visionary

[LynnwoodRooster]

Their profit margin on their current models is a solid 25%

Their GROSS profit margin is 25%; their net margin is negative, as they have yet to turn a profit. Gross profit margin means nothing; net profit margin means everything.

Sometimes it takes money to make money

[Shirley Marquez]

Tesla plans to be making 500,000 cars a year by 2019. That's a lot of cars. Ramping up to be a volume car manufacturer costs money. A lot of money. The investors knew that going in. If Tesla succeeds at making reliable and desirable cars and people buy them, the investors will make a lot of money. If Tesla fails to do that the investors will lose a lot of money. No real news there.

The main news is that Tesla has managed to raise that much money to finance its vision, and that so far the investors are still behind it. That is no easy feat. Elon Musk has an amazing track record at raising money for pie in the sky... but he also has a good record for actually delivering the promised pie. SpaceX is launching real satellites, SolarCity has put solar cells on a lot of houses (with plans for many more with the new solar tiles), and Tesla has already sold about 200,000 cars. Even the Hyperloop has had some successful tests.

Re:Chevy Bolt

[Rakarra]

Had I gotten to the station and it was on the fritz?

AC apparently thinks that Tesla superchargers are single-stall locations.

I can't speak for Tesla's supercharger stations, but the first long trip I took in my Nissan Leaf, all the chargers at a station I stopped at were inoperative, because the station's power feed was inoperative. There were no good chargers out in the boonies other than that one, so I was stranded until I found a 120V AC outlet and recharged at a whole 5 miles range / hour -- after three hours I had just enough range to backtrack to another station.

That was my first, painful lesson about EV charging -- you can't treat it like an ICE vehicle, stopping somewhere to charge when you start getting low. You want to still have a lot of range left when you charge, because you can't guarantee that the station you actually want to charge at is operational.. or even has open charging stations, and running out of power is a hell of a lot harder to recover from than running out of gas is.

Re:Not the whole story, though

[Rakarra]

It's not investing to get more money, but investing in better technologies. If electric cars become a reality because of it, then its well invested.

Like much of the government investment in private industry that was done during the Apollo program. Sure it was expensive, but the progress paid us all back several times over.

Re: Chevy Bolt

[Rakarra]

I actually donâ(TM)t buy the supercharger argument. I took a quick look at the number of dc fast chargers around the bay and found an order of magnitude more stations than Tesla super chargers *just* looking at EVgo. Sure, thereâ(TM)s only typically 2 chargers at each, rather than 20 at a supercharger station, but that still means that EVgo alone has as many charging plugs as Tesla deployed. Add in the charge point ones etc, and I recon the CCS1 charging infrastructure is much more advanced than teslaâ(TM)s

Those DC fast chargers are often placed where you don't need them. I don't need DC fast charging when driving in the Bay Area. I DO need DC fast charging when driving along the freeway heading through the wilderness between city areas. I'm heading to Yosemite this weekend. The closest DC fast charger to the west entrance is in Modesto, 107 miles from the valley floor. The Leaf nominally has a 110-mile range, but the route is fairly uphill the whole way, so I wouldn't trust it to go further than 60m before I'd really need to recharge. All the DC fast chargers along that area of California are on Interstate 5.

Tesla, on the other hand, put a supercharger in Groveland, CA, about 47 miles from the valley floor. Even discounting the superior range of the Telsa (the next Leaf will have equivalent range), the supercharger stations are better placed. You don't just need superchargers where you work and normally drive to. You need them to provide full driving coverage so you can go anywhere. Anywhere.

So that's why I'm driving my older gas-guzzler to Yosemite in a few days. It's a four-hour drive in that. Using DC fast chargers, augmented by the regular chargers the rest of the way, that would add an additional 2hr, 35minutes of charge time, and that's being very optimistic on the charging times.

Re:Chevy Bolt

[MooseMiester]

http://www.latimes.com/busines...

http://dailysignal.com/2016/11...

http://www.zerohedge.com/news/...

Case closed.

Re:Chevy Bolt

[toddestan]

The problem with that is it's all to easy to adopt the "ship it now, we'll fix it later" attitude which means it becomes increasingly likely you'll end up with something half-baked. And once you've got it, they've already got your money, so there's less of an incentive to actually provide that update, especially once that model is no longer being sold. I'd much rather have a feature-complete car the day I buy it rather than have to depend on updates which will almost certainly dry up after a couple of years if I get any at all. I tend to keep my cars a long time so I'm not terribly excited about these "infotainment" systems found in pretty much every new car now.

Re: Chevy Bolt

[WindBourne]

No need. Most of the buyers know they are not getting federal money and still line up for Tesla model 3.

Re: Not the whole story, though

[WindBourne]

And total BS. That was NOT an investment, but a gov. guaranteed loan, which was paid back with interest. It is funny how angry the far right is about musk. They want us to be energy independent, but fight against moving us off burning oil. They claim they hate gov subsidies, while fossil fuel is one of the largest subsidies that we give. They claim they want jobs back, and musk has made more jobs here than any other business over the last 30 years. Yet, you far righties scream, rant, and lie about him.

Re: Chevy Bolt

[WindBourne]

Ok. So you do not buy it. go to afdc.gov electrical map. Now, click on more options and change charger types to DC fast. No level 2 or others. Then go to connectors and select only dc fast, without Tesla ( chademo and sae combo). Then tell us how many routes you have for crossing the nation.
Now, go to https://supercharge.info./ tell us how many routes that cross the nation, and to make it fun, tell us where you can cross the nation ( only North Dakota ). Quite the difference.

Re: Chevy Bolt

[WindBourne]

Bingo. That is the biggest drawback of the leaf. But, it really show up at LA on South. If you own it in moderate temp location AND you do not go to fast chargers, they last 'ok'. Right now, they are ideal for buying used ( assuming daily travel is less than 60 miles ) while waiting for M3.

Re:Chevy Bolt

[Rakarra]

Company dedication: Makes EVs as a side project to their main business vs. fully invested in EVs.

Ehhhh, I don't know about that. I mean, sure, it's technically true, but it's worked out extremely well so far with Nissan.

Re:Chevy Bolt

[Rakarra]

The Leaf's lack of a TMS causes their battery to degrade rapidly, losing as much as 40% of its capacity in 2-3 years

That was only the case in earlier models in particularly hot areas (IE, the Southwestern US). There's little evidence of that sort of capacity loss with modren batteries.