"The market space for a nearly-six-figures car is vastly smaller than for a $30k car."
There are two orders of magnitude more people who can afford a Leaf than an S. Yet the S sells nearly as many as the Leaf. That's not to the Leaf's credit.
Dual motor and air suspension won't add much to the price (they didn't for S/X, and won't for 3 either). Performance package on the other hand, surely will. Obviously they won't let it outperform a P100D, but I wouldn't be surprised if it outperforms a base S.
Performance package adds a lot of profit regardless of what model line you put it on, so I don't think Tesla will hesitate to put it on the 3. I'd actually expect a surprising number of high end buyers to buy both a 3-performance and a P100D, because the latter is faster and a larger cruiser, while the former is more nimble and can do sustained track duty.
Musk was a complete dick. Those analysts were holding his feet to the fire over the horrible numbers Tesla is reporting and basically just ignores them? He's hiding something.
The question he didn't answer was about the ratio of people who chose an early config vs. a later config with more options available. In what way is that "holding his feet to the fire over the horrible numbers"? And to reiterate, the numbers beat market expectations. In general, the mood of the call (which I can only presume you weren't listening to, based on your description of it) was very upbeat, both on the Tesla side and the questions side.
It's been 15 years and Tesla has never showed a profit from operations.
Tesla has had several profitable quarters. Each time, however, it's rolled everything and more into scaleup - and managed quite successfully to scale up at a dramatic rate. Which has proven very profitable to stakeholders, which is why people are in general very happy with the company's performance under Musk's tenure. I guarantee you, there's nobody on that call who wishes Tesla had stuck with making Roadsters and never gone into debt to scale up for the S. I guarantee you, there's nobody on that call who wishes Tesla had stuck with making Ss and had never gone into debt to scale up for the 3. Of course with the benefit of hindsight various details would have been done differently. But the overalls strategy of capex-heavy growth rather than switching to dividends and slashing capex / growth after stabilizing any particular model line is very much wanted by investors. The largest investors being major funds, not retail investors.
So you're telling us that there were delays in the Model 3 production schedule? No way! Tell us more!
Tesla's accelerated "15 months from the start of tooling" production schedule was insanely fast by automaker standards. The current timeline is actually closer to the original timeline (before they realized how many orders they were going to need to fill and tried to accelerate the schedule), and still a very good rate at bringing a new model line up.
BTW, have you ever looked at who the "stupid people" dumping cash into Tesla are? Might want to do that.
Unfortunately, GM lacks two things on the Bolt: a profit margin, and a market. Apart from that, a great car, really.
The lack of a profit margin is why GM hasn't made the Bolt available in more markets - for example, the Opel Ampera-E (Bolt) is ostensibly available in Europe, but very difficult to get ahold of. But even with the limited production, there's few people waiting for a Bolt, while Tesla has half a million people waiting for the Model 3.
The big auto makers are making big investments in EV tech but largely in R&D rather than production.
They're just not investing that much period.
Because for them the production is actually the easy part.
It's not an issue of "easy or hard", it's an issue of are you paying for it.
They have plenty of cash and experience building cars
Yes, because EV tech is totally the same thing as building ICEs.
Right now the EV market is too small to justify production for them so they are letting Tesla do the heavy lifting of building and proving the market. But Ford, GM, etc could bring an EV to market within 18-24 months
GM has brought EVs to market - most notably the Bolt (and Ford has done compliance cars). They have not proven competitive in the marketplace. People were more willing to wait on Tesla's waiting list than buy a Bolt.
And 18-24 months? You realize that even with the delays, Tesla went from start of tooling to sales of the Model 3 in 15 months (April 2016 to July 2017), and hit 10k produced in the time it took GM to hit 1k? But please, go on and lecture about how major automakers can mass produce quickly and Tesla can't.
Their strategy is to be a fast follower
Yes, because building a gigantic battery factory is totally something you can do overnight. On pocket change, too.
And beyond this, even if their strategy was to be a "fast follower", this would be an inherently losing strategy. Targeting where Tesla is today, rather than where they'll be several years later when your vehicles come on the market, is a good way to guarantee that your vehicles will be a flop. The market is not going to become relatively static for quiet a long time.
But all of this is tangential. The real issue is that success in the EV market follows the money. Years after the money gets spent. And until the pocketbooks open up, there will be no success. And when they do, the success will come several years after the fact.
Exactly and it astounds me that Tesla has so many problems when even the low-end car makers have it down to a science.
Meanwhile in the real world, even with the delays, from the start of tooling, Tesla made its first 10k vehicles faster than GM made the first 1k Bolts.
Tesla sets absurdly fast timelines for itself relative to normal product development timelines. That they frequently miss those timelines doesn't mean that they've done a bad job, it means that the company's employees aren't magicians.
Did you miss the articles about the delivery delays when they happened? Particularly in Europe there were a lot of issues with a shortage of available transportation in important markets (part of it was due to a port strike in Norway, making cargo have to be shipped in over greater distances and overloading the other ports). Tesla ended up having to hire some "second tier" services that use a lot of eastern European drivers in outdated trucks, but after a number of broken down vehicles and one accident, Tesla discontinued using them, choosing to take a lower delivery count instead.
The reason that EVs have been more common at taking over the higher end has nothing to do with "who's producing them". It's because - opposite of gasoline cars - adding range is expensive but adding power is cheap. You need a roughly constant amount of batteries whether you're going for the high end or the low end, and those batteries cost money that makes it hard to compete at the low end. So you might as well start at the high end and work your way down.
And capital costs do not stem from "who's making it". They stem from "how much you invest in making it". Historically, Tesla has invested far more in capex than the major automakers, and that puts the latter in a competitive disadvantage from an economics situation - either having to make less competitive vehicles, or having to subsidize them (and thus limit total production to keep costs down).
This situation looks to be changing (e.g. VW's capital plans are no slack, for example), and I look forward to a more competitive market a few years from now. But you can't make up this sort of deficit overnight.
BMW is the current EV king with their I3. For ever Tesla I see on the road, I see 5 or 6 i3's.
Maybe where you live. But even in Europe, in 2017 while 10,5% of European BEV sales were i3s, 11,5% were Model S. Nissan was barely ahead of Model S, at 12,9% (Zoe had the lead at 22,7%), which I'll never understand.
As for the UK specifically, in 2017, 41,1% of BEV sales were Leafs, but Model S was #2 at 17,9%. i3 was 5th place at 8,3%.
It's not really a mass-market sedan at $35k starting price, with lots of ways to option it out. It's a small entry-level sports sedan, akin to a BMW 3-series or Audi A4. Now, its TCO may be mass market, but its purchase price isn't. BMW's margins are usually around 20%.
Also, Tesla is a lot more vertically integrated than most manufacturers. Auto parts suppliers have higher margins than automakers. Lastly, Tesla has a number of very popular software options. They're almost entirely profit. If there was no margin at all on the base model, autopilot alone (no FSD) would push it up to a 14% margin.
Exactly. The market space for a nearly-six-figures car is vastly smaller than for a $30k car. The fact that Tesla has sold nearly as many Ss as Nissan has sold Leafs (in 2 more years) is not a comparison to the Leaf's favour.
It's not an "American problem", it's a capex problem. Until other manufacturers start throwing the sort of capex at EVs that Tesla has, they'll struggle to compete. They can make price/feature uncompetitive models and mass produce them, or they can make price/feature competitive models via subsidy and then limit the supply. But they can't mass produce and subsidize, and rob from their gasoline sales at the same time. It's capex that reduces your per-unit cost.
A couple manufacturers have announced plans to start putting serious capex toward EVs. Volkswagen, for example. That will start to pay off a few years down the line. But not today.
The latest results though show that Tesla is selling each Model 3 at a loss.
What exactly do you expect when you have to pay for labour and depreciation on a line designed for 5k/wk but only getting the revenue from 1k vehicles/wk off of it, like they were through all but the end of Q1?
Right. Tesla is the most shorted company in the US, with a third of its stock held by short positions, making for a massive risk of a short squeeze if the stock goes up by even relatively small amounts - people losing potentially tens of billions of dollars if the stock goes up. But clearly they're not going to wage anti-tesla PR - I mean, why would they?
Also, it's not like UAW would spend half a million dollars on an anti-Tesla PR campaign oh wait they already did.
Which is totally a reasonable point, because stock is totally priced based on companies current revenue and profit, right?
Better tell that to all of the naive dupes that own Tesla's stock. Here, I'll give you a list of the biggest ones: Fidelity owns nearly 10% of Tesla, in its OTC portfolio, which is in turn mainly owned by Apple, Amazon and Alphabet. The next biggest dupe is Harbor Capital. Followed by those morons over at JP Morgan. Vanguard is next on the suckers list.
Clearly the smart money is on the short-selling echo chamber over at Seeking Alpha, rather than the rubes at major investment firms.
A bit unusual? I guess it was odd for a CEO to give a "No Stock For You!" answer to a questioner, it's not often you hear a CEO in an earnings call telling someone to sell their stock and not buy anymore. But I actually agree with his point - catering to the whims of day traders is dumb. And I also agree that the question that he got bored with earlier was a stupid question (there's no effect at all of the ratio of people who want a first-production vehicle vs want later config options), and by switching questioners he got a lot more strategically-useful questions.
Other things we learned yesterday, while we're at it:
1) 5k is targeted at the end of Q2 (actually 6k, but that's to make sure they can at least get to 5k). From the newsletter: "After achieving a production rate of 5,000 per week, we will begin offering new options such as all-wheel-drive and the base model with a standard-sized battery pack."
2) Concerning the FUD that Tesla is "giving up" on factory automation, Tesla is actually doubling down on it. What they were getting rid of was a small number of specific systems that were cases of serious automation overreach. One that Musk couldn't restrain himself from self-deprecating laughter on was "FluffBot". Part of the battery pack assembly process involves careful placement of a "fluff", and they designed a robot to do it. "Fluff" being one of the hardest things you could think of for a robot to have to handle. And they had to make this elaborate computer vision system for it, and it still kept coming up with new, interesting ways to either fail to pick up the foam or to place it in unexpected places. They were paying a lot more on engineers to try to keep FluffBot working and correct its constant problems than it would have cost just to pay people to place the fluff, so of course they scrapped it.
3) GAAP automotive gross margins en route back up 25% after being dragged down by the 3 - now up to 19,7%. S and X gross margins *over* 25%. But Model 3 margins still negative in Q1. Non-GAAP automotive margins (without ZEV credits) saw a nearly 5% boost.
4) Bosch is on the hook for the S recall - as expected, but which lots of people here were making a storm in a teacup about.
5) Both solar and energy storage are expecting a major ramp in Q3-Q4. Musk hinted at a 1GWh battery project in the works, dwarfing the Australia one.
6) Before the downtime near the end of Q1 that boosted production, it took 7 hours to assemble a battery pack. It's now 17 minutes.
7) Model 3 is now nearly the best selling sedan in its class. Not "electric sedan" - all sedans in its class. This month it should take the lead, and by the end of the year take almost half the market.
8) The per-unit depreciation on the production system is around $2k per vehicle, well below its competitors.
9) Based on their results so far, Tesla expects to be able to continue to reduce the cobalt, to "almost nothing".
10) While Musk didn't care much for the question, when asked about integration of SpaceX broadband into Tesla vehicles, his answer was about three years for that.
11) Model Y capex is not to become significant until 2019, with production starting in 2020 ("about 24 months from now"). But the unveiling will be this summer. Production will not be at Fremont.
12) Model 3 gross margin is expected at 20% by the end of Q4, hitting 25% early next year.
13) Tesla has no near-term plan to go to 350kW for cars. Their perspective is that it's a dumb idea to go to higher C-rate cells, which come with lower energy densities; Musk compared it to having a phone that charges quickly but only lasts a few hours; it doesn't make a good product. Tesla prefers to go to more cells per vehicle to boost net charging speeds than higher density cells. Thinks 350kW starts to make sense around 200kWh (unsaid: the new Tesla Roadster is expected to have around 200kWh)
14) Repeated that they would like for other automakers to support supercharging, and they'd be glad to let them onto the network, so long as the designers accepted the Tesla plug and the owners paid the cost of charging. No other automaker has expressed an interest. "Moats are lame. They're nice and sort of quaint in a vestigial way, but if your only defense against invading armies is a moat, you won't last long. Pace of innovation is your only defense. "
15) Expects Semi to hurt rail's margins - just from the reduced trucking cost to begin with, but in particular after platooning comes in. Rail is efficient, but suffers from major "last leg" problems for most go
First off, it would have been only $400M, except they had $120Ms more inventory backlogged due to transit delays than last quarter and a $169M hit on accounts receivable due to production skyrocketing at the end of the quarter (aka, more expenses but the revenue doesn't come until delivery). That money rolled into April.
The simple fact is that at Tesla's Q1 burn rate it would have plenty of quarters left to achieve profitability (the only debt due this year is $200M in November). But it doesn't need plenty of quarters. Almost all of Q1 was spent at ~1000/wk Model 3 production, but it jumped to 2k/wk - sustained - right at the end of the quarter. Now Gigafactory is running at 3k/wk sustained, with bursts already up to the Q2 target of 5k/wk. Most of Fremont is up to 3k/wk except general assembly and the paint shop.
esla's had some people waiting more than two years for the cars they placed deposits for
And? The number of reservation holders was confirmed to be over 450k.
and one can count the number of profitable quarters in the company's 15-year history on one hand.
Yes, welcome to the world of growth stocks. If you don't like growth stocks, stay out of the water. Growing a company from "nothing" to "one of the largest in the world" takes monstrous amounts of capex, which gets spent well ahead of the revenue that it returns.
3.5 years of backlog isn't anything to be cheerful about either - eventually people are going to lose patience
Yes, you've been saying this for two years now. How's this hypothesis been working out?
Yes, some people have, but they've been more than replaced by new reservation holders - and the majority have not. Why? Because - hype notwithstanding - the competition is a joke. The "competition" literally takes twice as long to charge on a road trip, from an inferior network, and gives you a lot less vehicle for your money, with far less interesting options packages. Yes, some people disagree, but the vast majority demonstrably do not. Look at the number of people buying Bolts, for example, vs. those waiting in line for a Model 3.
Why is it that the hype from competitors never plays out as a serious threat? We're back to capex. Making good, profitable EVs takes vast amounts of capex, both in R&D, and in production. And at present, Tesla is the only company that's been doing that. Some companies are - finally, and I'm glad - talking about majorly upping their EV capex, and I cheer that. But the benefits of that will take years to materialize. Without a major capex spend, you either have to make a worse vehicle at a given price point, or subsidize it. And they certainly can subsidize it, but if they do so, they can only afford to make it available in limited markets. Either way, it becomes "not a threat".
Example: most companies today are working on "next generation" li-ions for EVs with cathodes at an 8:1:1 ratio of nickel:cobalt:manganese-or-alumium. You want to keep the cobalt down because it's the most expensive part. Tesla today already has the highest energy density cells in the industry and they're better than 8:1:1 already. Mercedes, when they heard about Tesla's Semi plans, said they "break the laws of physics". No, they just have better batteries than you. That's 500 miles with their current cells; they think they may be up to 600 by then. Batteries are just one component, mind you; capex affects everything.
"a few instances" in this many miles is not bad at all. The issue is that it was only a few instances with both a human and autopilot acting in conjunction.
Pairing human and machine - if you can keep the human alert - is good for safety. But the machines are not yet to the point where they should be allowed to drive on their own.
Why did you link me to a site that says, and I quote:
Full Self-Driving Capability
Build upon Enhanced Autopilot and order Full Self-Driving Capability on your Tesla. This doubles the number of active cameras from four to eight, enabling full self-driving in almost all circumstances, at what we believe will be a probability of safety at least twice as good as the average human driver. The system is designed to be able to conduct short and long distance trips with no action required by the person in the driver’s seat. For Superchargers that have automatic charge connection enabled, you will not even need to plug in your vehicle.
All you will need to do is get in and tell your car where to go. If you don’t say anything, the car will look at your calendar and take you there as the assumed destination or just home if nothing is on the calendar. Your Tesla will figure out the optimal route, navigate urban streets (even without lane markings), manage complex intersections with traffic lights, stop signs and roundabouts, and handle densely packed freeways with cars moving at high speed. When you arrive at your destination, simply step out at the entrance and your car will enter park seek mode, automatically search for a spot and park itself. A tap on your phone summons it back to you.
Please note that Self-Driving functionality is dependent upon extensive software validation and regulatory approval, which may vary widely by jurisdiction. It is not possible to know exactly when each element of the functionality described above will be available, as this is highly dependent on local regulatory approval. Please note also that using a self-driving Tesla for car sharing and ride hailing for friends and family is fine, but doing so for revenue purposes will only be permissible on the Tesla Network, details of which will be released next year.
Why did you just link to a page that entirely undercuts your argument that Tesla is claiming that its vehicles are currently self-driving? You linked to a page packed full of the future tense and a big boldfaced message stating that it's not available yet. Is this seriously your argument?
Slashdot Mirror
What about this isn't plain English?
"The market space for a nearly-six-figures car is vastly smaller than for a $30k car."
There are two orders of magnitude more people who can afford a Leaf than an S. Yet the S sells nearly as many as the Leaf. That's not to the Leaf's credit.
Dual motor and air suspension won't add much to the price (they didn't for S/X, and won't for 3 either). Performance package on the other hand, surely will. Obviously they won't let it outperform a P100D, but I wouldn't be surprised if it outperforms a base S.
Performance package adds a lot of profit regardless of what model line you put it on, so I don't think Tesla will hesitate to put it on the 3. I'd actually expect a surprising number of high end buyers to buy both a 3-performance and a P100D, because the latter is faster and a larger cruiser, while the former is more nimble and can do sustained track duty.
The question he didn't answer was about the ratio of people who chose an early config vs. a later config with more options available. In what way is that "holding his feet to the fire over the horrible numbers"? And to reiterate, the numbers beat market expectations. In general, the mood of the call (which I can only presume you weren't listening to, based on your description of it) was very upbeat, both on the Tesla side and the questions side.
Tesla has had several profitable quarters. Each time, however, it's rolled everything and more into scaleup - and managed quite successfully to scale up at a dramatic rate. Which has proven very profitable to stakeholders, which is why people are in general very happy with the company's performance under Musk's tenure. I guarantee you, there's nobody on that call who wishes Tesla had stuck with making Roadsters and never gone into debt to scale up for the S. I guarantee you, there's nobody on that call who wishes Tesla had stuck with making Ss and had never gone into debt to scale up for the 3. Of course with the benefit of hindsight various details would have been done differently. But the overalls strategy of capex-heavy growth rather than switching to dividends and slashing capex / growth after stabilizing any particular model line is very much wanted by investors. The largest investors being major funds, not retail investors.
So you're telling us that there were delays in the Model 3 production schedule? No way! Tell us more!
Tesla's accelerated "15 months from the start of tooling" production schedule was insanely fast by automaker standards. The current timeline is actually closer to the original timeline (before they realized how many orders they were going to need to fill and tried to accelerate the schedule), and still a very good rate at bringing a new model line up.
BTW, have you ever looked at who the "stupid people" dumping cash into Tesla are? Might want to do that.
Unfortunately, GM lacks two things on the Bolt: a profit margin, and a market. Apart from that, a great car, really.
The lack of a profit margin is why GM hasn't made the Bolt available in more markets - for example, the Opel Ampera-E (Bolt) is ostensibly available in Europe, but very difficult to get ahold of. But even with the limited production, there's few people waiting for a Bolt, while Tesla has half a million people waiting for the Model 3.
They're just not investing that much period.
It's not an issue of "easy or hard", it's an issue of are you paying for it.
Yes, because EV tech is totally the same thing as building ICEs.
GM has brought EVs to market - most notably the Bolt (and Ford has done compliance cars). They have not proven competitive in the marketplace. People were more willing to wait on Tesla's waiting list than buy a Bolt.
And 18-24 months? You realize that even with the delays, Tesla went from start of tooling to sales of the Model 3 in 15 months (April 2016 to July 2017), and hit 10k produced in the time it took GM to hit 1k? But please, go on and lecture about how major automakers can mass produce quickly and Tesla can't.
Yes, because building a gigantic battery factory is totally something you can do overnight. On pocket change, too.
And beyond this, even if their strategy was to be a "fast follower", this would be an inherently losing strategy. Targeting where Tesla is today, rather than where they'll be several years later when your vehicles come on the market, is a good way to guarantee that your vehicles will be a flop. The market is not going to become relatively static for quiet a long time.
But all of this is tangential. The real issue is that success in the EV market follows the money. Years after the money gets spent. And until the pocketbooks open up, there will be no success. And when they do, the success will come several years after the fact.
You link to a post of yours and then credit it to me? What on Earth is wrong with you?
Meanwhile in the real world, even with the delays, from the start of tooling, Tesla made its first 10k vehicles faster than GM made the first 1k Bolts.
Tesla sets absurdly fast timelines for itself relative to normal product development timelines. That they frequently miss those timelines doesn't mean that they've done a bad job, it means that the company's employees aren't magicians.
Did you miss the articles about the delivery delays when they happened? Particularly in Europe there were a lot of issues with a shortage of available transportation in important markets (part of it was due to a port strike in Norway, making cargo have to be shipped in over greater distances and overloading the other ports). Tesla ended up having to hire some "second tier" services that use a lot of eastern European drivers in outdated trucks, but after a number of broken down vehicles and one accident, Tesla discontinued using them, choosing to take a lower delivery count instead.
The reason that EVs have been more common at taking over the higher end has nothing to do with "who's producing them". It's because - opposite of gasoline cars - adding range is expensive but adding power is cheap. You need a roughly constant amount of batteries whether you're going for the high end or the low end, and those batteries cost money that makes it hard to compete at the low end. So you might as well start at the high end and work your way down.
And capital costs do not stem from "who's making it". They stem from "how much you invest in making it". Historically, Tesla has invested far more in capex than the major automakers, and that puts the latter in a competitive disadvantage from an economics situation - either having to make less competitive vehicles, or having to subsidize them (and thus limit total production to keep costs down).
This situation looks to be changing (e.g. VW's capital plans are no slack, for example), and I look forward to a more competitive market a few years from now. But you can't make up this sort of deficit overnight.
Maybe where you live. But even in Europe, in 2017 while 10,5% of European BEV sales were i3s, 11,5% were Model S. Nissan was barely ahead of Model S, at 12,9% (Zoe had the lead at 22,7%), which I'll never understand.
As for the UK specifically, in 2017, 41,1% of BEV sales were Leafs, but Model S was #2 at 17,9%. i3 was 5th place at 8,3%.
It's not really a mass-market sedan at $35k starting price, with lots of ways to option it out. It's a small entry-level sports sedan, akin to a BMW 3-series or Audi A4. Now, its TCO may be mass market, but its purchase price isn't. BMW's margins are usually around 20%.
Also, Tesla is a lot more vertically integrated than most manufacturers. Auto parts suppliers have higher margins than automakers. Lastly, Tesla has a number of very popular software options. They're almost entirely profit. If there was no margin at all on the base model, autopilot alone (no FSD) would push it up to a 14% margin.
S3XYR?
Exactly. The market space for a nearly-six-figures car is vastly smaller than for a $30k car. The fact that Tesla has sold nearly as many Ss as Nissan has sold Leafs (in 2 more years) is not a comparison to the Leaf's favour.
Before you get your hopes up too much about Jaguar...
It's not an "American problem", it's a capex problem. Until other manufacturers start throwing the sort of capex at EVs that Tesla has, they'll struggle to compete. They can make price/feature uncompetitive models and mass produce them, or they can make price/feature competitive models via subsidy and then limit the supply. But they can't mass produce and subsidize, and rob from their gasoline sales at the same time. It's capex that reduces your per-unit cost.
A couple manufacturers have announced plans to start putting serious capex toward EVs. Volkswagen, for example. That will start to pay off a few years down the line. But not today.
What exactly do you expect when you have to pay for labour and depreciation on a line designed for 5k/wk but only getting the revenue from 1k vehicles/wk off of it, like they were through all but the end of Q1?
Right. Tesla is the most shorted company in the US, with a third of its stock held by short positions, making for a massive risk of a short squeeze if the stock goes up by even relatively small amounts - people losing potentially tens of billions of dollars if the stock goes up. But clearly they're not going to wage anti-tesla PR - I mean, why would they?
Also, it's not like UAW would spend half a million dollars on an anti-Tesla PR campaign oh wait they already did.
Wow, a guy worth 20 billion dollars spending $700 million on himself, with the rest tied up in change-the-world type companies. What a selfish prick.
Meanwhile, Sergei Brin is having a one of the largest airships ever made built for him, to serve as his private flying yacht.
Which is totally a reasonable point, because stock is totally priced based on companies current revenue and profit, right?
Better tell that to all of the naive dupes that own Tesla's stock. Here, I'll give you a list of the biggest ones: Fidelity owns nearly 10% of Tesla, in its OTC portfolio, which is in turn mainly owned by Apple, Amazon and Alphabet. The next biggest dupe is Harbor Capital. Followed by those morons over at JP Morgan. Vanguard is next on the suckers list.
Clearly the smart money is on the short-selling echo chamber over at Seeking Alpha, rather than the rubes at major investment firms.
A bit unusual? I guess it was odd for a CEO to give a "No Stock For You!" answer to a questioner, it's not often you hear a CEO in an earnings call telling someone to sell their stock and not buy anymore. But I actually agree with his point - catering to the whims of day traders is dumb. And I also agree that the question that he got bored with earlier was a stupid question (there's no effect at all of the ratio of people who want a first-production vehicle vs want later config options), and by switching questioners he got a lot more strategically-useful questions.
So you think Tesla is going to grow infinitely until it consumes the whole universe? What is this, Universal Paperclips?
Other things we learned yesterday, while we're at it:
1) 5k is targeted at the end of Q2 (actually 6k, but that's to make sure they can at least get to 5k). From the newsletter: "After achieving a production rate of 5,000 per week, we will begin offering new options such as all-wheel-drive and the base model with a standard-sized battery pack."
2) Concerning the FUD that Tesla is "giving up" on factory automation, Tesla is actually doubling down on it. What they were getting rid of was a small number of specific systems that were cases of serious automation overreach. One that Musk couldn't restrain himself from self-deprecating laughter on was "FluffBot". Part of the battery pack assembly process involves careful placement of a "fluff", and they designed a robot to do it. "Fluff" being one of the hardest things you could think of for a robot to have to handle. And they had to make this elaborate computer vision system for it, and it still kept coming up with new, interesting ways to either fail to pick up the foam or to place it in unexpected places. They were paying a lot more on engineers to try to keep FluffBot working and correct its constant problems than it would have cost just to pay people to place the fluff, so of course they scrapped it.
3) GAAP automotive gross margins en route back up 25% after being dragged down by the 3 - now up to 19,7%. S and X gross margins *over* 25%. But Model 3 margins still negative in Q1. Non-GAAP automotive margins (without ZEV credits) saw a nearly 5% boost.
4) Bosch is on the hook for the S recall - as expected, but which lots of people here were making a storm in a teacup about.
5) Both solar and energy storage are expecting a major ramp in Q3-Q4. Musk hinted at a 1GWh battery project in the works, dwarfing the Australia one.
6) Before the downtime near the end of Q1 that boosted production, it took 7 hours to assemble a battery pack. It's now 17 minutes.
7) Model 3 is now nearly the best selling sedan in its class. Not "electric sedan" - all sedans in its class. This month it should take the lead, and by the end of the year take almost half the market.
8) The per-unit depreciation on the production system is around $2k per vehicle, well below its competitors.
9) Based on their results so far, Tesla expects to be able to continue to reduce the cobalt, to "almost nothing".
10) While Musk didn't care much for the question, when asked about integration of SpaceX broadband into Tesla vehicles, his answer was about three years for that.
11) Model Y capex is not to become significant until 2019, with production starting in 2020 ("about 24 months from now"). But the unveiling will be this summer. Production will not be at Fremont.
12) Model 3 gross margin is expected at 20% by the end of Q4, hitting 25% early next year.
13) Tesla has no near-term plan to go to 350kW for cars. Their perspective is that it's a dumb idea to go to higher C-rate cells, which come with lower energy densities; Musk compared it to having a phone that charges quickly but only lasts a few hours; it doesn't make a good product. Tesla prefers to go to more cells per vehicle to boost net charging speeds than higher density cells. Thinks 350kW starts to make sense around 200kWh (unsaid: the new Tesla Roadster is expected to have around 200kWh)
14) Repeated that they would like for other automakers to support supercharging, and they'd be glad to let them onto the network, so long as the designers accepted the Tesla plug and the owners paid the cost of charging. No other automaker has expressed an interest. "Moats are lame. They're nice and sort of quaint in a vestigial way, but if your only defense against invading armies is a moat, you won't last long. Pace of innovation is your only defense. "
15) Expects Semi to hurt rail's margins - just from the reduced trucking cost to begin with, but in particular after platooning comes in. Rail is efficient, but suffers from major "last leg" problems for most go
First off, it would have been only $400M, except they had $120Ms more inventory backlogged due to transit delays than last quarter and a $169M hit on accounts receivable due to production skyrocketing at the end of the quarter (aka, more expenses but the revenue doesn't come until delivery). That money rolled into April.
The simple fact is that at Tesla's Q1 burn rate it would have plenty of quarters left to achieve profitability (the only debt due this year is $200M in November). But it doesn't need plenty of quarters. Almost all of Q1 was spent at ~1000/wk Model 3 production, but it jumped to 2k/wk - sustained - right at the end of the quarter. Now Gigafactory is running at 3k/wk sustained, with bursts already up to the Q2 target of 5k/wk. Most of Fremont is up to 3k/wk except general assembly and the paint shop.
There's a reason that Tesla is so confident that they've resumed expanding Gigafactory.
And? The number of reservation holders was confirmed to be over 450k.
Yes, welcome to the world of growth stocks. If you don't like growth stocks, stay out of the water. Growing a company from "nothing" to "one of the largest in the world" takes monstrous amounts of capex, which gets spent well ahead of the revenue that it returns.
Yes, you've been saying this for two years now. How's this hypothesis been working out?
Yes, some people have, but they've been more than replaced by new reservation holders - and the majority have not. Why? Because - hype notwithstanding - the competition is a joke. The "competition" literally takes twice as long to charge on a road trip, from an inferior network, and gives you a lot less vehicle for your money, with far less interesting options packages. Yes, some people disagree, but the vast majority demonstrably do not. Look at the number of people buying Bolts, for example, vs. those waiting in line for a Model 3.
Why is it that the hype from competitors never plays out as a serious threat? We're back to capex. Making good, profitable EVs takes vast amounts of capex, both in R&D, and in production. And at present, Tesla is the only company that's been doing that. Some companies are - finally, and I'm glad - talking about majorly upping their EV capex, and I cheer that. But the benefits of that will take years to materialize. Without a major capex spend, you either have to make a worse vehicle at a given price point, or subsidize it. And they certainly can subsidize it, but if they do so, they can only afford to make it available in limited markets. Either way, it becomes "not a threat".
Example: most companies today are working on "next generation" li-ions for EVs with cathodes at an 8:1:1 ratio of nickel:cobalt:manganese-or-alumium. You want to keep the cobalt down because it's the most expensive part. Tesla today already has the highest energy density cells in the industry and they're better than 8:1:1 already. Mercedes, when they heard about Tesla's Semi plans, said they "break the laws of physics". No, they just have better batteries than you. That's 500 miles with their current cells; they think they may be up to 600 by then. Batteries are just one component, mind you; capex affects everything.
"a few instances" in this many miles is not bad at all. The issue is that it was only a few instances with both a human and autopilot acting in conjunction.
Pairing human and machine - if you can keep the human alert - is good for safety. But the machines are not yet to the point where they should be allowed to drive on their own.
Why did you link me to a site that says, and I quote:
Why did you just link to a page that entirely undercuts your argument that Tesla is claiming that its vehicles are currently self-driving? You linked to a page packed full of the future tense and a big boldfaced message stating that it's not available yet. Is this seriously your argument?