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Tesla Model 3 Teardown Reveals a 'Symphony of Engineering,' 30 Percent Profit Margin (bloomberg.com)
An anonymous reader quotes a report from Bloomberg: Munro & Associates, a small Detroit-area firm that disassembles new cars and analyzes them down to the nuts and bolts, came out in April with damning findings that the Model 3 was poorly built and -- even worse for Tesla's long-term outlook -- costly to build. On that second point, at least, founder Sandy Munro has reversed course. Upon further analysis, his firm has found that the sedan can be profitable. It may even have the potential to make a 30 percent margin, which would be unmatched by any other other battery-powered vehicle. Munro said the systems that impressed him most were the tight integration of circuit board components, which he calls "a symphony of engineering," and the efficiency of the battery developed by Tesla and Panasonic Corp. Munro also pointed to a comprehensive side-by-side comparison of the parts and materials used by the Model 3, General Motors Co.'s Chevrolet Bolt, and BMW AG's i3, in which the Model 3 comes out favorably. The report echoes a teardown published in June by German magazine WirtschaftsWoche, which found that the Model 3 costs about $28,000 to build -- $18,000 for materials and $10,000 for production.
...but it's quite possible Munro just didn't want to be baselessly accused of pedophilia for the crime of criticizing his holy Muskness.
You are not alone. This is not normal. None of this is normal.
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Sounds like he was paid off.
Then why isn't Tesla profitable?
Well, roughly, they have spent the last two years building up manufacturing capability, and only the last month has their manufacturing been putting out a reasonable number of cars, so the upfront costs are spent, but the income stream produced by the investment has only started. The key question is to look at Tesla's balance sheet in six months.
In more nerd terms, the "income" part of "income-outgo = profit" is a time integral, while a large portion of the outgo is fixed, so the profitability rises with time.
Will Tesla be profitable? Stay tuned.
Not to mention Musk's very public nervous breakdown that he's inexplicably broadcasting live to the world.
Trolling bots all over the web and it is hard to tell anymore which is satire, parody, comedy and what is serious. People have gone off the rails more than Germany in the 1930s... if only we could put a rank on irrationality; not that it would help any as the lemmings will continue running for the cliff regardless (apt metaphor if you think about the irony.)
Democracy Now! - uncensored, anti-establishment news
The big three could learn from lessons from Musk. Having production problems with your line? Just move workers from other plants to the affected plant, set up some tents and do a big chunk of the automated work by hand.
The big three are living in the past, where you work out production problems before going into production. This tent based production methodology is the future!
tell the sales guy to take 15-20% off or I will walk away.
That's the inverse of what their quarterly reports show (rising margins, both GAAP and non-GAAP; non-rising SG R&D steadily being dwarfed by revenue; rapid growth in production rates; etc.
The big brain am winning again! I am the greetist! Now I am leaving for no particular raisin!
The only similarity between Tesla and Amazon is that both are headed by egomaniacal billionaires. The companies have nothing more in common besides that and its quite telling how the Tesla cult has to go that deep to find a positive analogue.
Tesla were designed and built more like a software development project, then a traditional automobile project, initially, later on they started to bring in _some_ of the traditional methods.
However being that we have an All Electric Car being built using a different project method, scares the Traditional Automotive industry and their biases would probably have them hunting down problems in the design vs good points.
Detroit was the Silicon Valley 2 generations ago, having its thunder taken away from them in terms of economy then in business practice will make them feel nervous.
Tesla is currently making all electric cars that people actually wan't vs. the Tiny road legal golf carts like the Leaf that people would only want it because it is electric and affordable. The Chevy Bolt is a good contender too. But it still lacks some coolness.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
It's not okay, he's done this repeatedly as CEO of Tesla too. His mouth is a liability.
“Water level was actually very low & still (not flowing) — you could literally have swum to Cave 5 with no gear [1], which is obv how the kids got in [2]. If not true, then I challenge this dude to show final rescue video [3]. Huge credit to pump & generator team. Unsung heroes here[4],”
[1] a Seal diver died from lack of oxygen, he gave the kids too much of his tank when he was in the end cave. Clearly not swimable then. The kids were running out of oxygen so clearly air tight, and they brought them out 4 at a time during the day, with Seals restocking the oxygen tanks along the way at night. His claim is garbage, it belittles the risks involved.
[2]The kids climbed in before the floods and went deep into the cave as the water rose. They did not swim in.
[3] They made a rescue, not a video for PR purposes. His demand for a video shows his priorities not theirs.
[4] Same cave teams did the rescue as laid the pipes and power lines.
“You know what, don’t bother showing the video, We will make one of the mini-sub/pod going all the way to Cave 5 no problemo. Sorry pedo guy, you really did ask for it.”
Fuck off Musk. They didn't use your tube, you got pissy in your disappointment, one of the cavers got angry with you for the PR stunt and pissyness part and you escallated into calling him a pedo because he's in Thailand. Which is a slur on Thailand and libel against him.
If you want to help, help, don't do a PR circus when they're trying to do a rescue.
One more thing, when autopilot kills people, its not their fault they didn't turn off the autopilot to rescue the car from its bad driving. It's your bugs to blame. Don't attack customers just because they're dead and can't answer back. When the Luxembourg safety regulator complaims the brakes are awful, its because they're awful. It's not a conspiracy against your company, they just want you to fix the damn brakes. Grow up.
Your shower head is not the only thing that goes into providing you with the ability to you take a hot shower.
Seems to work ok for Trump...
Methinks Musk needs a bit of a vacation.
A lot of people put down a *refundable* $1000 deposit (kickstarter, anyone?) for a $27,5,00 Tesla (after $7,500 tax rebate, plus assorted state subsidies). Turns out maybe they didn't want to buy a $60,000 Tesla. And that tax rebate will be gone before the $35,000 model is available.
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I think people see that Tesla lost $800 million in the last quarter, and are likely to lose another $700 million this quarter, and think that is a bad thing. What they don't realize is that Tesla is in this for the long haul and there are significant investments that need to be made to make this happen. Based on my calculations they should be showing a quarterly profit starting in Q4 2018. From there on the sky is the limit.
If you plan to feed a troll, you should at least acknowledge that you realize you're feeding a troll.
The big brain am winning again! I am the greetist! Now I am leaving for no particular raisin!
Tesla loses money on every vehicle; they only "look good" on gross margin when you completely exclude SG&A - which is sales and general administration costs. This does NOT include things like R&D, capex, or even interest on the debt. Building the car, and the cost of selling and administration already results in a loss on each vehicle, and it's been consistent for several years. Check their financial statement - it's right there, in black and white.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
You are wrong. SG&A is actually increasing as a percent of gross margin. And subtracting SG&A from gross margin leaves Tesla losing money. This is before R&D or interest expenses, even. It's right in their published quarterly financials which I linked to.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Why isn't Amazon always profitable? For most of their existence, they've lost money except for the occasional quarter with a couple hundred million of profit on billions of $ of income. Same reason as Tesla - building the business using investor money.
Phillips and Sony collaborated to bring the first commercially viable CD player to market in 1982. The Sony CDP-101 cost $730 USD or $1900.00 in today's dollars. I can't prove it, but reports suggest that none of Sony's early entries into this market were profitable. And yet, there is no doubt that CD players and the CD format became widely popular and immensely profitable. This is called the Innovator's Dilemma. Shamelessly stolen from the Wikipedia page:
1. Value to innovation is an S-curve: Improving a product takes time and many iterations. The first of these iterations provide minimal value to the customer but in time the base is created and the value increases exponentially. Once the base is created then each iteration is drastically better than the last. At some point the most valuable improvements are complete and the value per iteration is minimal again. So in the middle is the most value, at the beginning and end the value is minimal.
2. Incumbent sized deals: The incumbent has the luxury of a huge customer set but high expectations of yearly sales. New entry next-generation products find niches away from the incumbent customer set to build the new product. The new entry companies do not require the yearly sales of the incumbent and thus have more time to focus and innovate on this smaller venture.
Sound like the auto industry right now?
I am not interested in articles about life extension advancements.
Not year-over-year - quarter-over-quarter. Year-over-year says nothing whatsoever about the impact of Model 3 scaleup on SG&A. Despite the large growth in Model 3 production across Q1, SG&A in Q1 was basically identical to in Q4. Just wait for the Q2 report; I guarantee you it won't even remotely come close to linearly tracking Model 3 volumes (there will be a small hit in Q2 from layoff severance, but that'll turn into a benefit in Q3).
For your hypothesis to work, SG&A needs to roughly scale linearly with Model 3 volume. Otherwise, Model 3 revenue swamps it.
The big brain am winning again! I am the greetist! Now I am leaving for no particular raisin!
If I posted it, you'd see my name up there.
New flash: I'm not the only person who likes Tesla here.
The big brain am winning again! I am the greetist! Now I am leaving for no particular raisin!
But ... But ... But ...
I don't wanna go to the stars. I don't even want to go to Mars. And I sure as hell don't want a $50,000 car that takes half an hour to fuel and I can't refuel from a gas can in an emergency.
I suppose I'm just gonna be left behind.
Is there anything I can do to expedite the departure of the rest of you?
You can't see ANYTHING from a car, You've got to get out of the goddamned contraption and walk...Edward Abbey
If you drill through to the breakdown video, he shows the PCB called a "symphony of engineering"
It's a very ordinary design and would have been considered dense 25 years ago. Today, those components are medium-sized or even large. The PCB layout is designed to basic industry standards and no more. However, needlessly-small components reduce manufacturing yield and reliability. Unusual PCB designs increase costs and shrink your supplier base.
The design is simply competent so I can't imagine what he's used to seeing that makes this one worth gushing over.
You are wrong. Look at the financials. As a percent of of revenue, SG&A for the last 4 quarters has been 20%, 21%, 22%, and 19%. That's pretty consistent. As a share of gross revenue, for the last 3 quarters it has been 150%, 155%, and 145%. Again, very consistent. This is for the quarterly basis.
Look at the last 4 years. SG&A as percent of revenue is 21%, 20%, 23%, and 19%. Again, incredibly constant for revenues. Where it is even WORSE is when you look at the longer term trend as a percent of gross profit: 110%, 88%, 100%, and 68%. It is actually INCREASING, meaning they are spending more on sales and administration as a percent of gross margin as their sales volume increases. It's not going down - it's going up.
SG&A as a percent of revenue has been amazingly consistent; as a percent of gross margin it has been increasing. The fact you can claim otherwise in light of published data making your claim clearly false shows you to be nothing more than a shill.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Sandy Munro is a hacker in the truest sense of the word. Unfortunately I can imagine a day in the not too distant future when his actions might be made illegal under some sort of intellectual property law run a muck.
Anything older than Q4 is pretty meaningless (maybe Q3, but that's pretty arguable), given that the point is to see how SG&A responds to Model 3 delivery rates, and they were meaningless before then.
Q4 Model 3 deliveries: 1550
Q1 Model 3 deliveries: 8180
Q4 automotive revenues: $ 2,702,195 k
Q1 automotive revenues: $ 2,735,317 k
Q4 SG&A: $682,290 k
Q1 SG&A: $686,404 k
The revenues aspect is misleading, however, as they did a serious inventory liquidation in Q4, and Q1 had much higher in-transit numbers at the end of the quarter. But the key point is: SG&A was virtually flat.
Just wait a couple weeks for the Q2 report. I guarantee you that (once you factor for in-transit inventory - Q2's is *massive*, due to the need to delay hitting 200k until the end of the quarter), revenue growth will well outpace SG&A growth, despite the severance hit.
The big brain am winning again! I am the greetist! Now I am leaving for no particular raisin!
There's a difference between things that work, and things that work while being an elegant and well-executed design. And you know it.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
He probably donates big to both parties, because he's rich AF and wants his own shills in Congress to combat his competitors' shills in Congress.
That's how business is done these days.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
Want to bet that SG&A is still about 20% of gross margin in Q2 2018? SG&A - your own data above - increased by about 0.6%, and gross revenue by about 1.0%. Meaning Tesla needs to sell about 30X the number of cars they sell now to cover just their SG&A costs. And we're not talking about the costs of R&D, or even interest on their debt. That's just to cover the costs of making and selling the cars. It is not a sustainable financial model (which, I guess, explains why it's the darling of Silicon Valley).
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Good job not understanding how a business works, or a calendar.
Here's a hint - they need to build lots of them in order to sell lots of them. And they're building as many as they can, but it's not quite to the degree of "lots" that they require. As that number increases, that 30% profit margin from increased sales will overtake the expenses from cost-centers that by definition don't make any profits, but are necessary for the business to operate. Then the whole enterprise becomes profitable.
It's hilarious that you're trying to tell people that they have no business commenting on financial health when you yourself clearly don't understand the basic math here.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
I disagree. One of the interesting things about Tesla is the tendency to incrementally improve the cars as they're produced, vs. cranking out large numbers of them with flawed parts because they aren't ready to officially change the design on some scheduled calendar date.
When they can make a change via software, they do it, in a continuous rollout of firmware updates. Win-win for everybody, really.
When it involves actual part revisions? It ensures the least number of Teslas were sold to customers with the lesser-quality part in them, and the parts that fail in warranty will get swapped with the latest and greatest update. (Even out of warranty, it's at least a "case by case" thing that you stand a chance of getting the part replaced free as a "good will" gesture. Tesla tries to be a little bit like Apple used to be, in that sense. They don't want to commit to anything on paper that they don't have to .... but if you're friendly and reasonable with the service center folks, they have some leeway to give you a break when you have issues, too.)
Isn't free-market capitalism amazing?!
'Murica!
They really were fighting for THEIR right... to enslave others! All the BS about state rights, personal rights, etc-- was completely BS and exists more today than it did back then; they knew full well it was totally about their right to own slaves. They may not have had any slaves but someday when they are rich... they wanted to be able to own slaves. In addition, the culture created to justify the whole thing motivated a great many people and entrenched attitudes and beliefs which continue to this day--- because as Mark Twain said, "Laws are but sand, culture is rock."
The fight over "way of life" and "traditional values" also never ends as popular culture shifts over time even without people working to nudge it.
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A cacophony of failures in all the other things out there? You'll find a "symphony of engineering" everywhere you look around you.
Took a hot shower this morning? Guess what? It didn't happen by accident!
The level of engineering involved in my morning shower is positively anemic. The hot water heater isn't designed for maximum efficiency, it's just designed not to burn the house down and to be cheap to produce. The showerhead wasn't optimized with CFD for optimal flow; someone drew what they thought it should look like, and someone else had to make something that would more or less work and be affordable to produce. The water system was not designed for maximum flow, either; it was designed to be easy to assemble, and to basically do the job. The drain system was hardly designed at all.
My morning shower is more like mad libs than a symphony — as are most other tasks. Because most things are not engineered to be the best they can be — they are engineered for maximum profit. An up-and-coming company, however, will often put in more effort. They can't afford to simply cruise on their name. Tesla can do more of that than other companies, but if they stop delivering superior automobiles then the market will react rapidly enough.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
But did they actually benefit from being first? Or would they have been better off just waiting for someone else to develop the CD player? The market wasn't exactly refusing to buy music on cassette, so it wouldn't have harmed Sony music to simply wait. It would have been cheaper to develop the CD player some years later...
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
It would have been, yes. In fact, this pretty much describes Microsoft's entire business model (or it did until Satya took over). Let someone else innovate and then crush them like a bug when it is clear that whatever new technology is at hand is going to take off. Part of the dilemma is how to maintain your market lead when established companies decide to compete with you.
I am not interested in articles about life extension advancements.
What is the deal with the weird high asking costs and pretend crazy high asking costs? It reads like a parody or something.
http://leandesign.com/pdf/Tesl...