M3 is expected to reach positive gross margins in Q1 or Q2. It was negative in Q4 because they were building so vastly fewer than the design levels, using very expensive equipment and labour intended for a far higher rate.
Tesla is not really "significantly encumbered with debt". There's 200-something million due in November, and next spring there will be another round due that brings the total up to $1,1B. 500k vehicles with an average sale price of $45k is $22,5B. At 25% margins, it's $5,6B. Knock that down by SG&A, R&D, etc - the debt is not at all disproportional compared to the business activities it was acquired to fund.
Tesla has no plans to stop at the vehicle numbers you state (although your timing figures are outdated - the slow Model 3 launch delayed some of the timing). Model 3 is to peak at 500k without advertising, 700k when Tesla starts advertising in the future. Model Y is expected to be 700k without advertising. No figures that I'm aware of have been announced for their Semi expectations, but let it suffice to say that freight vehicles are a very large market in their own right. After the Y Tesla will be launching a pickup, which is a huge market. Etc. Tesla is not stopping at the Model 3.
Additionally: Honda's 5M vehicles per year are nowhere near $45k average sale price.
As for "how long": Model 3 should be hitting "around 5k/wk" at the end of June (they're trying for 6k then, but a miss is expected, even by them). The line should be tuned to 6k or higher in Q3 and potentially Q4. Tesla plans to duplicate the 3 line, but the delays and the good news on the China front make it increasingly likely that they'll duplicate it directly into China to have local production for the asian market, rather than duplicating at Fremont. Gigafactory, after having paused in size for nearly a year, is as we speak undergoing a significant expansion; they're expanding the base to the full target width and they're building a new peripheral parking lot so that they free up the current parking area for building expansion.
Y is to be announced this summer. I anticipate that they want to have Model 3 production up to ~5k/wk before announcing it so that they don't get accused of trying to draw attention away from Model 3 production rate issues. Expect at least half a million reservations for it within the first couple months. Model Y is built on the Model 3 architecture, so it's not going to take near as long to go into production (Model 3 is a brand new architecture). I expect about a year, maybe 1 1/2, before first deliveries, with a much faster scaleup. So we're talking mid-late 2019. I expect a pickup in late 2020 or early 2021. By that point, Semi will have gone from pilot orders to full fleet orders. So we're talking maybe 3-4 years before Tesla becomes massive.
Also, the problem with comparing to other automakers production today, is that the more the market Tesla expands into, the more they take away from other automakers. So not only does Tesla become larger, but its competitors become smaller. In short, a bet on Tesla's success is simultaneously a "short" against other automakers. Right now, according to surveys, Model 3 is mainly hacking away at a market that's about an even mix of customers from entry-level luxury brands (BMW, Audi, Cadillac, etc) and customers from eco-friendly vehicles (hybrids, other EVs, etc). But as prices continue to drop, the market segments that it draws customers from will also move downmarket.
Because airline autopilots (where the term came from) mean the pilot can just nap off and do everything for the pilot?
Tesla makes abundantly clear , over and over, every time you start the bloody thing, that you're responsible for driving it, and makes you not only touch the wheel, but torque it at regular intervals, to prove you're paying attention - and now appears to be going toward adding eye tracking into the mix as well. They make it literally impossible at checkout for you to think you're getting a self-driving car, because they break AP into two parts, "Enhanced Autopilot" for basic features, and "Full Self Driving", which literally states over and over again that you can order it now but the functionality is not available yet. If you choose EAP-only then you specifically have to choose not to get Full Self Driving. And if you choose the latter, you're repeatedly informed that it's not available yet.
Meanwhile, you have Mercedes advertizing their god-awful Drive Pilot system literally as a self-driving car. But oh no, it's Tesla who should be scolded here...
Even if there were no subsidies, the average US user saves about $1000 per year in energy costs, and the average European user double that. Ignoring maintenance savings, etc.
Then spread your shorts out over a length of time to soak the risk of uncertain timing. Come on, "reality is setting in", right? So why stay off the money train?
PE ratios are great for a company with relatively static business operations in a relatively static field, but they're terribly misleading for growing companies. Ex: in late June of 2014, Amazon had a PE of over 500. Was it a bad buy? Hardly; people who bought it then would be 4 1/2 times richer today.
PE ratios don't cut it for growth companies that are dumping tons of money into capex, expanded options for future sales and building a new market. Quite the opposite , PE ratios paint precisely the *wrong* picture. In such a case, they're more a measure of how aggressive the company is being toward growth.
For such growth companies, the real question is how large of a market they're aiming for and how likely they are to get there. E.g. the reason Tesla shot up so much after Model 3 preorders opened is that nearly half a million people put down real money to wait over a year for a BMW-priced electric car that they'd never even seen in person, much less driven, without any advertising . That's pent-up, untapped demand. That's a market. Tesla is priced based on the potential shown, relative to the risk in getting there. Its current profits are almost irrelevant except for helping fund its route to "there".
One can disagree about the exact market size and the risks. It's expected! But what should not be in dispute is that PE is totally the wrong tool to employ here.
Right. You're convinced Elon is a fraud and it's all a big house of cards ready to crash. Yet rather than making money on what you know to be a sure thing, you've decided, "Nah, money's overrated"?
But now the NTSB is very likely going to step into national standards for autonomy, and it doesn't appear Tesla is ready to meet the likely minimum standard, such as redundant navigation (operate without GPS, or without optical recognition.) and redundant systems.
Contrary to some bad reporting of late, the Model 3's AP systems are redundant - both onboard redundancy, and redundancy in the mechanical assist systems. And if AP loses a sensor or a sensor is obstructed, AP is disabled until it can be fixed.
In case anyone is wondering: all of this "Autopilot is doomed" stuff comes out at a time when it just had one of its most massive updates in its history (unfortunately, it hadn't significantly rolled out before the fatal crash in California). It no longer filters out stationary objects, it handles roads with unusual lane widths, two-direction roads with no central lane markings, and will deliberately "break the rules" when needed for safety (for example, driving into the shoulder when a truck is about to hit you, or when the normal "rules of the road" have suddenlychanged.
But of course, you're not going to see a million articles about that because that's not the obligate doom-and-gloom.
I consider myself a self-driving pessimist. I think there's far too many rules that we process, with too complex reasoning, for self-driving to be immediately around the corner. I have slowly been becoming more optimistic with the realization of how much more one can enable a car to "see" than humans (for example, using radar brightness at different wavelengths to determine road smoothness / traction conditions ahead, or past altimetry data to determine the depth of water on a road), but still think it's going to be a long time before full self driving becomes mainstream. But I also believe that, if properly implemented, combined human-computer systems can be much better than either alone - with the computer bringing new senses and "constant attention" to the picture, and the human bringing their brain. The key is ensuring that the human pays full attention. Making them regularly torque the wheel is one thing, but even better looks to be where the tech is headed - eye tracking. With eye tracking, they can't stop paying attention to the road. And I can't see how in such a situation that "human + computer" is not better than "human alone".
In case anyone is wondering why you're seeing so many stories like this about Tesla all of the sudden, here is your answer. In particular, this chart.
Tesla is the most shorted stock in the US right now. There is literally no company in the US that more people have a financial interest in seeing fail than Tesla. A third of the stock is in short positions. The problem is that this is incredibly dangerous from the perspective of a short squeeze. Shorts hold the stock price down - the massive surge in short selling countered the benefits (from a stock price perspective) of the major increase in Model 3 production rates. But this can only be taken so far; it's not like they're going to be able to short 100% of the stock. If Model 3 production continues to rise like it's been doing - and along with it, the stock price - not only will some short sellers want to liquidate, but others will be contractually forced to liquidate. This is done by purchasing an equivalent number of shares of TSLA to cover their short. This purchase in turn raises the stock price. With such a massive percentage of Tesla shorted, this can easily snowball, where the obligations of some shorts to purchase cause the next to be forced to purchase, and the next, and so forth - all purchased at whatever price Tesla happens to be at the moment. The shorts would need to acquire literally 1/3rd of Tesla's stock in a short period of time.
Needless to say, this would be a financial disaster for them. If Tesla underperforms what the market expects of them, longs lose some money. But if Tesla overperforms what the market expects, shorts lose a huge amount of money. It's highly asymmetric.
So in case you were wondering if it was a coincidence that all of the sudden everyone and their cousin suddenly started bashing Tesla in the news - even for something as mundane as another company poaching talent from Tesla - no, it's not a coincidence.
To this day Nissan has never sold a replacement battery pack (there is a part number and a price, about $4k).
$5,5k plus installation, according to this. For the 2011-2015 (84 mile) leafs.This more recent article suggests $6,2k for the 24kWh, $7,6k for the 30kWh pack, and $7800 kWh for the 40kWh pack. Being made available in May. So I'm not sure where you're getting this "To this day Nissan has never sold a replacement battery pack" stuff.
There were some early issues with the Leaf packs in certain climates that Nissan resolved, but beyond those they have proven to be remarkably reliable robust.
It's not just been one pack. The introduction of the 30kWh pack led to a new wave of degradation problems. Not that the improved 24kWh degradation rate was stellar, it just wasn't catastrophic for people in hot climates like it previously was.
Nissan seems to go through battery problems every time because of their cost-cutting no-active-cooling system approach. The most recent is #RapidGate; the 40kWh pack generally hits an overheat temperature around 200-250km, sometimes as much as 300km, into a trip, and from thereout charging rates are cut in half.
Nissan is finally introducing active pack cooling next year. About bloody time.
I know someone who salvages Teslas. If you want a salvaged one, I can point you in his direction. Then again, you refer to "salvage Teslas" despite saying that they don't exist, so I'm not sure how to interpret your post.
The one you got half-right is the recalls, which is related to the recent Tesla production issues
This is not correct.
1) The recall was on Model Ss. There are no production issues with the Model S. 2) The defect was in a Bosch part. Bosch supplies pretty much everyone, not just Tesla.
Nah, the shorts will first try to claim it's a burst rate. After a few weeks they'll start switching their attacks to "Tesla can't be profitable." Once Tesla turns a profit they'll switch it to "It's a one-time thing, but doom is just around the corner. DOOOOM!!!"
Gee, I can't imagine why owners would want to collect data to determine how long they can expect their batteries to last. It's just beyond comprehension.
Indeed. There's so many funding sources it's not even funny (even the short-selling echo chamber over at Seeking Alpha has covered this). And they didn't even get into the Musk aspect like you did. He's already demonstrated that he's more than willing to use some of his companies to bail out others, and that other stakeholders in his companies are - despite some grumbling dissenters - more than willing to let him. SpaceX is on a roll - they'll probably have half of the global launch market this year. Russia has basically thrown in the towel. SpaceX just got a 500M investment at a $24B valuation, and there's tons more investors wanting a piece of it who can't get one. If Tesla needed it, who wants to wager a bet that SpaceX doesn't suddenly decide that it wants to preorder a ton of semis for hauling rockets, preorder a gigacharger network along their route, order some powerpack buffers for their liquid oxygen plants, offload (at contracting rates) engineering work to Tesla, etc, if not outright buy part of the company? To say nothing of Musk's other ventures. At some point, for example, Boring Company is going to need to do a fundraising round in order to pay someone who engineer and build the Loop vehicles. Gee, what company do you think they might pay to do that?
Beyond the cash issue, the short selling thesis is fatally flawed because of numerous wrong assumptions, such as "Model 3 production will only be 2500-3500/wk at the end of the year", "SG&A will remain at a constant ratio with automotive gross profits", and "There's serious competition on the near horizon". All three of these premises are nonsense; for each of them, I understand their logic train, but it derailed a couple stops ago. They also ignore the growth potential of Tesla's other divisions (although, sure, they're not going to carry Tesla on their own).
1) Laptop batteries are designed for energy density, not longevity. There are tradeoffs in chemistry selection. 2) They're not climate controlled. Just the opposite, they're right next to a source of heat. 3) They go through deeper cycles, over a wider portion of the SoC range. 4) They have no redundancy / cell bypass 5) They're designed for a product with a pre-determined expected lifespan of only a few years, so they have no incentive to do better.
You can design to any spec, if you're willing to accept the tradeoffs.
Slashdot Mirror
Tesla has never advertised its vehicles as, and I quote from the Mercedes ad, "A self-driving car"
Then you're below average: either below-average fuel prices, below-average driving distances, or above-average fuel economy.
M3 is expected to reach positive gross margins in Q1 or Q2. It was negative in Q4 because they were building so vastly fewer than the design levels, using very expensive equipment and labour intended for a far higher rate.
Tesla is not really "significantly encumbered with debt". There's 200-something million due in November, and next spring there will be another round due that brings the total up to $1,1B. 500k vehicles with an average sale price of $45k is $22,5B. At 25% margins, it's $5,6B. Knock that down by SG&A, R&D, etc - the debt is not at all disproportional compared to the business activities it was acquired to fund.
Tesla has no plans to stop at the vehicle numbers you state (although your timing figures are outdated - the slow Model 3 launch delayed some of the timing). Model 3 is to peak at 500k without advertising, 700k when Tesla starts advertising in the future. Model Y is expected to be 700k without advertising. No figures that I'm aware of have been announced for their Semi expectations, but let it suffice to say that freight vehicles are a very large market in their own right. After the Y Tesla will be launching a pickup, which is a huge market. Etc. Tesla is not stopping at the Model 3.
Additionally: Honda's 5M vehicles per year are nowhere near $45k average sale price.
As for "how long": Model 3 should be hitting "around 5k/wk" at the end of June (they're trying for 6k then, but a miss is expected, even by them). The line should be tuned to 6k or higher in Q3 and potentially Q4. Tesla plans to duplicate the 3 line, but the delays and the good news on the China front make it increasingly likely that they'll duplicate it directly into China to have local production for the asian market, rather than duplicating at Fremont. Gigafactory, after having paused in size for nearly a year, is as we speak undergoing a significant expansion; they're expanding the base to the full target width and they're building a new peripheral parking lot so that they free up the current parking area for building expansion.
Y is to be announced this summer. I anticipate that they want to have Model 3 production up to ~5k/wk before announcing it so that they don't get accused of trying to draw attention away from Model 3 production rate issues. Expect at least half a million reservations for it within the first couple months. Model Y is built on the Model 3 architecture, so it's not going to take near as long to go into production (Model 3 is a brand new architecture). I expect about a year, maybe 1 1/2, before first deliveries, with a much faster scaleup. So we're talking mid-late 2019. I expect a pickup in late 2020 or early 2021. By that point, Semi will have gone from pilot orders to full fleet orders. So we're talking maybe 3-4 years before Tesla becomes massive.
Also, the problem with comparing to other automakers production today, is that the more the market Tesla expands into, the more they take away from other automakers. So not only does Tesla become larger, but its competitors become smaller. In short, a bet on Tesla's success is simultaneously a "short" against other automakers. Right now, according to surveys, Model 3 is mainly hacking away at a market that's about an even mix of customers from entry-level luxury brands (BMW, Audi, Cadillac, etc) and customers from eco-friendly vehicles (hybrids, other EVs, etc). But as prices continue to drop, the market segments that it draws customers from will also move downmarket.
You can pick and adjust your follow distance. Some people choose a short follow distance. I personally wouldn't.
Because airline autopilots (where the term came from) mean the pilot can just nap off and do everything for the pilot?
Tesla makes abundantly clear , over and over, every time you start the bloody thing, that you're responsible for driving it, and makes you not only touch the wheel, but torque it at regular intervals, to prove you're paying attention - and now appears to be going toward adding eye tracking into the mix as well. They make it literally impossible at checkout for you to think you're getting a self-driving car, because they break AP into two parts, "Enhanced Autopilot" for basic features, and "Full Self Driving", which literally states over and over again that you can order it now but the functionality is not available yet. If you choose EAP-only then you specifically have to choose not to get Full Self Driving. And if you choose the latter, you're repeatedly informed that it's not available yet.
Meanwhile, you have Mercedes advertizing their god-awful Drive Pilot system literally as a self-driving car. But oh no, it's Tesla who should be scolded here...
Even if there were no subsidies, the average US user saves about $1000 per year in energy costs, and the average European user double that. Ignoring maintenance savings, etc.
And can go 200-250km before its charge rate gets cut from an already slow 40-45kW to an unbearable 20-25kW.
Then spread your shorts out over a length of time to soak the risk of uncertain timing. Come on, "reality is setting in", right? So why stay off the money train?
PE ratios are great for a company with relatively static business operations in a relatively static field, but they're terribly misleading for growing companies. Ex: in late June of 2014, Amazon had a PE of over 500. Was it a bad buy? Hardly; people who bought it then would be 4 1/2 times richer today.
PE ratios don't cut it for growth companies that are dumping tons of money into capex, expanded options for future sales and building a new market. Quite the opposite , PE ratios paint precisely the *wrong* picture. In such a case, they're more a measure of how aggressive the company is being toward growth.
For such growth companies, the real question is how large of a market they're aiming for and how likely they are to get there. E.g. the reason Tesla shot up so much after Model 3 preorders opened is that nearly half a million people put down real money to wait over a year for a BMW-priced electric car that they'd never even seen in person, much less driven, without any advertising . That's pent-up, untapped demand. That's a market. Tesla is priced based on the potential shown, relative to the risk in getting there. Its current profits are almost irrelevant except for helping fund its route to "there".
One can disagree about the exact market size and the risks. It's expected! But what should not be in dispute is that PE is totally the wrong tool to employ here.
Right. You're convinced Elon is a fraud and it's all a big house of cards ready to crash. Yet rather than making money on what you know to be a sure thing, you've decided, "Nah, money's overrated"?
If you believe this, jump aboard the short train. There's a nice echo chamber over at Seeking Alpha to assist you in parting with your money.
Also, the NTSB does not set standard for autonomy. The NTSB is an investigation board. The NHTSA sets standards in the US.
Contrary to some bad reporting of late, the Model 3's AP systems are redundant - both onboard redundancy, and redundancy in the mechanical assist systems. And if AP loses a sensor or a sensor is obstructed, AP is disabled until it can be fixed.
In case anyone is wondering: all of this "Autopilot is doomed" stuff comes out at a time when it just had one of its most massive updates in its history (unfortunately, it hadn't significantly rolled out before the fatal crash in California). It no longer filters out stationary objects, it handles roads with unusual lane widths, two-direction roads with no central lane markings, and will deliberately "break the rules" when needed for safety (for example, driving into the shoulder when a truck is about to hit you, or when the normal "rules of the road" have suddenly changed.
But of course, you're not going to see a million articles about that because that's not the obligate doom-and-gloom.
I consider myself a self-driving pessimist. I think there's far too many rules that we process, with too complex reasoning, for self-driving to be immediately around the corner. I have slowly been becoming more optimistic with the realization of how much more one can enable a car to "see" than humans (for example, using radar brightness at different wavelengths to determine road smoothness / traction conditions ahead, or past altimetry data to determine the depth of water on a road), but still think it's going to be a long time before full self driving becomes mainstream. But I also believe that, if properly implemented, combined human-computer systems can be much better than either alone - with the computer bringing new senses and "constant attention" to the picture, and the human bringing their brain. The key is ensuring that the human pays full attention. Making them regularly torque the wheel is one thing, but even better looks to be where the tech is headed - eye tracking. With eye tracking, they can't stop paying attention to the road. And I can't see how in such a situation that "human + computer" is not better than "human alone".
In case anyone is wondering why you're seeing so many stories like this about Tesla all of the sudden, here is your answer. In particular, this chart.
Tesla is the most shorted stock in the US right now. There is literally no company in the US that more people have a financial interest in seeing fail than Tesla. A third of the stock is in short positions. The problem is that this is incredibly dangerous from the perspective of a short squeeze. Shorts hold the stock price down - the massive surge in short selling countered the benefits (from a stock price perspective) of the major increase in Model 3 production rates. But this can only be taken so far; it's not like they're going to be able to short 100% of the stock. If Model 3 production continues to rise like it's been doing - and along with it, the stock price - not only will some short sellers want to liquidate, but others will be contractually forced to liquidate. This is done by purchasing an equivalent number of shares of TSLA to cover their short. This purchase in turn raises the stock price. With such a massive percentage of Tesla shorted, this can easily snowball, where the obligations of some shorts to purchase cause the next to be forced to purchase, and the next, and so forth - all purchased at whatever price Tesla happens to be at the moment. The shorts would need to acquire literally 1/3rd of Tesla's stock in a short period of time.
Needless to say, this would be a financial disaster for them. If Tesla underperforms what the market expects of them, longs lose some money. But if Tesla overperforms what the market expects, shorts lose a huge amount of money. It's highly asymmetric.
So in case you were wondering if it was a coincidence that all of the sudden everyone and their cousin suddenly started bashing Tesla in the news - even for something as mundane as another company poaching talent from Tesla - no, it's not a coincidence.
$5,5k plus installation, according to this. For the 2011-2015 (84 mile) leafs.This more recent article suggests $6,2k for the 24kWh, $7,6k for the 30kWh pack, and $7800 kWh for the 40kWh pack. Being made available in May. So I'm not sure where you're getting this "To this day Nissan has never sold a replacement battery pack" stuff.
It's not just been one pack. The introduction of the 30kWh pack led to a new wave of degradation problems. Not that the improved 24kWh degradation rate was stellar, it just wasn't catastrophic for people in hot climates like it previously was.
Nissan seems to go through battery problems every time because of their cost-cutting no-active-cooling system approach. The most recent is #RapidGate; the 40kWh pack generally hits an overheat temperature around 200-250km, sometimes as much as 300km, into a trip, and from thereout charging rates are cut in half.
Nissan is finally introducing active pack cooling next year. About bloody time.
I know someone who salvages Teslas. If you want a salvaged one, I can point you in his direction. Then again, you refer to "salvage Teslas" despite saying that they don't exist, so I'm not sure how to interpret your post.
This is not correct.
1) The recall was on Model Ss. There are no production issues with the Model S.
2) The defect was in a Bosch part. Bosch supplies pretty much everyone, not just Tesla.
Wow, a car barely bumped a motorcycle at low speeds causing no damage. That never happens! Please, someone alert the world media!
Nah, the shorts will first try to claim it's a burst rate. After a few weeks they'll start switching their attacks to "Tesla can't be profitable." Once Tesla turns a profit they'll switch it to "It's a one-time thing, but doom is just around the corner. DOOOOM!!!"
Apparently you stopped reading before "the short selling thesis is fatally flawed because of numerous wrong assumptions"
Gee, I can't imagine why owners would want to collect data to determine how long they can expect their batteries to last. It's just beyond comprehension.
Indeed. There's so many funding sources it's not even funny (even the short-selling echo chamber over at Seeking Alpha has covered this). And they didn't even get into the Musk aspect like you did. He's already demonstrated that he's more than willing to use some of his companies to bail out others, and that other stakeholders in his companies are - despite some grumbling dissenters - more than willing to let him. SpaceX is on a roll - they'll probably have half of the global launch market this year. Russia has basically thrown in the towel. SpaceX just got a 500M investment at a $24B valuation, and there's tons more investors wanting a piece of it who can't get one. If Tesla needed it, who wants to wager a bet that SpaceX doesn't suddenly decide that it wants to preorder a ton of semis for hauling rockets, preorder a gigacharger network along their route, order some powerpack buffers for their liquid oxygen plants, offload (at contracting rates) engineering work to Tesla, etc, if not outright buy part of the company? To say nothing of Musk's other ventures. At some point, for example, Boring Company is going to need to do a fundraising round in order to pay someone who engineer and build the Loop vehicles. Gee, what company do you think they might pay to do that?
Beyond the cash issue, the short selling thesis is fatally flawed because of numerous wrong assumptions, such as "Model 3 production will only be 2500-3500/wk at the end of the year", "SG&A will remain at a constant ratio with automotive gross profits", and "There's serious competition on the near horizon". All three of these premises are nonsense; for each of them, I understand their logic train, but it derailed a couple stops ago. They also ignore the growth potential of Tesla's other divisions (although, sure, they're not going to carry Tesla on their own).
1) Laptop batteries are designed for energy density, not longevity. There are tradeoffs in chemistry selection.
2) They're not climate controlled. Just the opposite, they're right next to a source of heat.
3) They go through deeper cycles, over a wider portion of the SoC range.
4) They have no redundancy / cell bypass
5) They're designed for a product with a pre-determined expected lifespan of only a few years, so they have no incentive to do better.
You can design to any spec, if you're willing to accept the tradeoffs.