Tesla's Model X Was a Mistake
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The Model X enabled Tesla to use the same core as the Model S while building and testing some new features during the construction of their giga-factory that will enable the Model 3. It also allows Tesla to stay in the press during that time (demonstrating new features, talking about the new car etc.).
While delivery is a little delayed they've already sold over sixteen thousand Model Xs - I don't agree that it was a mistake.
East Coast guys are thinking "wtf? How can Fiat / Crysler / Dodge / Jeep / Ram / Ferrari COMBINED" be worth less than a company who currently only makes two cars?
Tesla stock is over priced, once the German Luxuries esp. BMW arm themselves with batteries there is going to be stupendous completion that would not justify their market value. On top of this, you have Apple getting into the think of things, at least rumors of it.
Tesla will be consuming 2013's entire world production of lithium batteries in ~2 years. Please, enlighten me, where is BMW going to source cells from? Where will you find these youth drivers who don't want autopilot, and prefer "the ultimate driving experience"?
BMW's goal in EVs is to hold on to the segment of the market that they have. Tesla's goal is to capture a market that they don't currently have - and that's harder. It's much harder when they have many legitimate competitors, and it is starting to look like they will have much more competition very soon.
http://cleantechnica.com/2016/01/15/1-large-luxury-car-in-us...
Tesla doesn't publish very detailed sales figures and there isn't that market research into it (at least public one) yet, currently it seems that many people are buying a Tesla as a second (or even 3rd, 4th etc ;)) car as people who can afford to buy a 100,000$ car usually will have more than 1.
From anecdotal experience I've also noticed that quite a few of the people who buy through finance / lease a Tesla really can't afford one but like many people who end up buying a 800$ phone do - simply because it makes them feel better.
Tesla owners currently enjoy quite a bit of perks that traditional car owners do not, the insurance rates tend to be quite preferable (most likely partially subsidized by Tesla it self), the finance options are also one of the best in the market (In the UK I can pretty much get a 100% finance on a Tesla which costs about my yearly pre-tax income, considering the cost of living and the taxes I pay I would technically will not be able to afford it, I can't get any thing close to this for other cars which cost 100K GBP for example), this is not that dissimilar than how Apple pushed a very expensive handset at the time through their partnered carriers but phones aren't cars so it yet to be seen how it will work out.
Most Tesla owners haven't owned the car for longer than a year atm, the average life span of a car in the US is still about 10 years, there isn't enough data currently to know how the Tesla secondary market will work out (the current "secondary" market sells cars that are usually couple of months in use for almost the same price as a new one), what will the end TCO of a Tesla be after say 5 years to both the end consumer and the company.
Luxury cars in the US have a very well established secondary market with buy backs and dealerships that specialize in reselling cars that tend to hold the value quite well (this is especially true to the more boutique cars like Jags). Some cars are have also very specific markets in the US (and any where else) e.g. while pretty much anyone will want to drive a BMW 5/7 series or a high end Audi not that many people will go for a Jag or a range rover these days.
Tesla has had a very good market penetration but it's really too early to tell what it means, and with a large part of it's costumers buying it because it's cool and because of it's environment impact (or lack there off) could also quite likely look at other EV options when some actually arrive on the market.
Fully loaded versions are very expensive because luxury manufacturers feel they can charge whatever they want and get away with it. Those things cost a pretty penny - a navigation system add-on in BMW, for example, is just under $2k (as if you'd buy a luxury vehicle without navigation system in 2016). A backup camera from Mercedes is optional even in "luxury" edition of their vehicle, and is $770. Blind Spot Monitor is another $750.
And we excluded ultra-luxury sporty manufacturers like Maserati, Ferrari and Lamborghini, as they represent comparatively tiny segment of the luxury market. However, "performance" versions of Acura, Lexus, BMW, Mercedes and even Nissan (GT-R) and Chevrolet (Corvette), if that's what you're after, are priced above "performance" versions of Model S.
Then there're the maintenance costs, more or less mandatory at dealer prices if you ever want to sell your car for decent resale value. Then subscriptions for things like maps, navigation and XM real-time traffic. Then, of course, the cost of gas - even if you assume oil falls down to $0 (perhaps a free tank of gas with a purchase of a hot dog at the gas station, if current price trends persist), you're still getting pretty close on the TCO front for 4-5 years.
GM and BWM would be the android device manufacturers - assembling 3rd party components, poorly differentiated, initially not competitive on quality but eventually catching up, while competition w/ each other prevents any of them from achieving profits comparable to Tesla.
Their competencies are in Software and the Supercharger/Battery Infra. No one is going to come close to that in 5-10 years at a minimum.
Tesla CEO Elon Musk seemingly confirmed on Tuesday that the company is working on a strategy for getting into transportation services.
During Tesla’s third-quarter earnings conference call, Musk was asked if the company was planning to get into an Uber-like business. Musk tried to keep mum, but when pressed he hinted that the company was at least entertaining the idea.
“There is a right time to make announcements and this is not that time,” Musk said during the call.
He added that the strategy for such a service was not yet “fully-baked,” which implies the company does in fact have some semblance of a strategy.
> 595 Supercharger stations with 3,465 Superchargers
https://www.teslamotors.com/supercharger
This doesn't include destination chargers at hotels, restaurants, and other establishments.
That's why Tesla is 5 years ahead.
One is 1/3rd the speed of the other in real-world usage.
I can tell you charging chademo on a Model S is much slower.
As I said elsewhere, the Chademo connector can support higher currents when there is a need. When there are Leafs (and Souls? I think think those are the only two in the US on Chademo) with 200mi range batteries, I'm sure we'll see the existing chargers upgraded to the higher current capability.
I'm not aware of and chademos above 60kw today while Tesla has a while infrastructure deployed right now.
Also there is no currently deployed charging standard that comes closer to SuperCharger. Chademo is 60kW spec but usually 40 or 50 depending on how downrated the charger has been. I've never seen less than 118kW on a Supercharger and had multiple Chademo's that have throttled down to 35kW in some cases.
It's going to take years to build out that infrastructure while Telsa continues to deploy SuperChargers and Destination Charging.
Chademo deliberately selected 50kW as being optimal given the cars using the charger and the infrastructure available; the connector is designed for up to 200A (up from 125A at present) which would yield 100kW.[0] My understanding is that the CCS connector is being deployed at 200A now. I don't know what you're definition of "close to" is, but I would consider 100kW and 118kW to be close.
Tesla superchargers require less real estate footprint and are next to freeways and frequently next to Starbucks and some casual restaurants.
Tesla has a simple streamlined operation: They do almost everything in house and they only have to focus on electric cars. No other distractions.
They also have a sort of hidden weapon in the form of SpaceX. They have higher expertise than any other car maker on working aluminum from reusing the knowledge gained from SpaceX. Elon Musk can trickle down a lot of know how from his SpaceX operation. Most car companies are not using synergies from spaceship companies :-D
Tesla buys its cells from Panasonic. Panasonic owns half the gigafactory (the Lithium Ion half). Tesla only buys Li-Ion cells from Panasonic and then assembles them into batteries. I can agree that there is some efficiency in this arrangement (cells and batteries made inside the same facility), but don't get ahead of yourself. Tesla is only assembling batteries.
Panasonic makes the 18650 cells.
GM and Ford build their own batteries too for their own fleet of vehicles, supplied from LG Chem. The benefits of scale seem to benefit the joint effort between GM + Ford + LG Chem, and the topology of Detroit (which has tons of railroads and shipyards that GM / Ford / LG Chem can leverage).
I'll be worried as soon as I see legacy automakers building their own battery factories. Until then, good luck!
I bet you Bolt EV hits consumer market before TSLA Model 3.
But yeah, GM owns its own battery factory. Is it the same size as Tesla's?? No. But I think its a smarter move to build the factories after demand has proven itself.
Tesla expects the Model 3 to sell out. Anything less than "amazing" will make the Gigafactory not worth its billions-upon-billions of dollars of investment.
> Tesla expects the Model 3 to sell out. Anything less than "amazing" will make the Gigafactory not worth its billions-upon-billions of dollars of investment.
Even if the Model 3 doesn't sell out, there are utility customers clamoring for stationary storage, first to replace peaking plant capacity, and then down the value chain as more utility scale wind and solar come online.
Do you even know what the energy storage market looks like in the US? You ain't gonna build a 30 GIGAWATT-hour plant on $3 Billion (1.6 Billion initially, another 1.5 billion in upgrades a few decades later) like the Bath County pumped storage station.
https://en.wikipedia.org/wiki/Bath_County_Pumped_Storage_Sta...
Lithium Ion will cost you significantly more.
Pumped hydro is restricted by geography. That's like arguing, "Why not build dams everywhere! Hydro power is so clean!". You need someplace to actually pump water around.
Virtually everywhere else has dams they can take advantage of. The places that don't have abandoned mines for Compressed-Air energy storage. Continental US has a ton of natural resources at its disposal that can be built up to significantly cheaper solutions than Lithium Ion.
And Australia. And Europe. And anywhere that is placing a premium on renewable energy. Tesla's market for batteries increases each time they're able to lower their price as volume increases.
> Virtually everywhere else has dams they can take advantage of. The places that don't have abandoned mines for Compressed-Air energy storage. Continental US has a ton of natural resources at its disposal that can be built up to significantly cheaper solutions than Lithium Ion.
There is no point in us arguing further when you don't base your argument on reality. You can't put dams anywhere. You can't build salt caverns anywhere. You can put batteries anywhere.
http://www.sciencemag.org/news/2015/11/new-type-flow-battery...
Good luck competing against Redox Flow. Its a miracle that Elon Musk has been able to get so much done with Laptop-batteries (18650 Cells). But the new chemistries actually designed for grid-storage are coming, and they crush laptop-batteries in cost and capacity.
The Gigafactory is designed to make Electric car batteries, and the 26650 (successor to the 18650 laptop cells) aren't even being produced yet. How long before TSLA / Panasonic can tweak the gigafactory to make a cell optimized for grid energy-storage?
http://www.renewableenergyworld.com/articles/2015/08/hecate-...
Your turn. Show me a 1MegaWatt-hr or larger TSLA installation. kw-installations (Power Wall) are small money, I don't care about that. I care about hundreds-of-million $$ installations.
The only things I see for TSLA are planned projects and/or demos.
Redox Flow is a bit newer technology than Lithium Ion, but small-scale installations already exist all over the world.
http://www.energy-storage-online.com/cipp/md_energy/custom/p...
"Slated for commissioning in 2016, ViZn's ZnFe redox flow battery system will be the largest of its type in North America and Europe."
"The first of these projects is expected to be brought online by the end of Q316."
Small-scale deployments of Lithium Ion are not going to be as efficient as large-scale deployments of Redox Flow. Period. I don't think TSLA has bet on the right technology at the utility scale. Lithium Ion is great for cars, but better technologies simply exist in other niches.
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Look, Redox Flow batteries are ahead of TSLA. They exist right now at the "small scale" of 2.2MWhr.
http://www.uetechnologies.com/product.htm
These are the numbers for a utility-scale level company... currently mass producing Redox Flow batteries. TSLA power wall just doesn't compete. Not by a long shot.
There are many things which are more cost-effective long-term, which lose to something which costs less short term.
The 40-year old technology is cheaper, more well known, widely deployed, 100% green, non-toxic and extremely reliable. Its both a short-term and long-term solution.
TSLA batteries don't even beat the status-quo in the energy field, let alone the new technologies that are coming (Supercapacitors, Redox Flow, Compressed Air...)
Look, this is just like the PC revolution vs mainframes. Mainframes were cheaper and better on ANY axis relative to PC's in the 1980's.
However, a PC didn't require a multi-year allocation in the capital budget. A PC didn't require buy-in from multiple players. A PC was locally controlled.
So, PCs won. And the money expended on PCs eventually made them better than the mainframes they were displacing.
Okay. So why are PowerWalls going to beat the current state-of-the-art in battery technology?
Look, for areas with resources, Pumped Hydro / Compressed Air is straight up superior. For areas without resources, getting a shipping container for a Redox Flow battery is more efficient.
Plus, you are ignoring the biggest advantages of the PowerWall concept-- the decentralization and small-scale aspect. I don't think homeowners in my town are going to be building hydroelectric dams in their back yard, even if it weren't an earthquake zone (and it is...)
With regard to new battery chemistries... sure, there are probably things out there much better or stabler than lithium-ion. But posting some marketing copy about a not-yet-shipped new battery product proves nothing. I'm surprised you didn't latch on to the "ultracapacitor" hype since that is also a year away from taking the world by storm (and has been for the last 5 years, at least). As a layman, none of us have any idea whether these physics breakthroughs are 5 months away or 5 years, and none of the people who do know are going to talk about it.
If new battery chemistries do take the world by storm. I don't see why Tesla wouldn't just license them, much like they are licensing lithium-ion now. Tesla has the high-current charging network that a better battery would need anyway. Traditional car manufacturers have a spotty and low-wattage charging network that might not even benefit from a better battery chemistry.
You seem to be grasping at any possible reason to be negative about Tesla. I agree they're overvalued right now, but the idea of building a big factory for batteries, and focusing on a high-end electric car is smart, and the next few years will show that. There are strong network effects in building a charging network, and major economies of scale in building the gigafactory.
And it has nothing to do with "better". Lithium Ion has more energy per watt, but Redox Flow is just so much cheaper and also has a 20+ year life expectancy. It will be very hard for Tesla to compete when they're making car batteries and trying to apply it to utility scale.
Who cares about energy density when you're just going to bury the battery into the ground? The ground can support a lot more weight than the lighter Lithium Ion batteries. The Redox Flow's heavier weight is not a disadvantage in the utility space.
Tesla Batteries can only be used inside of Tesla cars and Powerwalls right now. All the other companies build their own batteries (out of LG Chem cells or Samsung cells).
Tesla only assembles Panasonic cells into batteries. They are not poised to actually benefit from increased global demand of Lithium Ion.
Tesla has no plans to make their own cells. This is a simple fact.
I mean, serious question. In the office building I work in, my company only owns two floors. The next floor is another company, and the floor above that is yet another company. My company owns more than half the building (the bottom floors has more space for various reasons), but the stuff made upstairs isn't made by my company.
You combine cells (like the 18650) together to create batteries. The Gigafactory is trying to make 26650 cells, which should be more efficient in cars than the 18650 cells (which were originally designed for laptops)
Tesla's use of 18650 was highly innovative. They "hacked" growth into their company by taking advantage of the scale and scope of laptop manufacturers. But now that TSLA is one of the largest users of Lithium Ion in the world, they need to come up with a more efficient, car-specific cell design now.
As far as I know the cell chemistry in use was developed jointly and I believe Tesla holds patent although I'm not able to find a source at the moment.
> “Being selected by Tesla to provide cells for their current and next- generation EV battery pack is a tremendous validation of Panasonic’s nickel-based chemistry and the extensive investments Panasonic continues to make in lithium ion R&D and production,” said Naoto Noguchi, President of Panasonic Energy Company.
TSLA patents are in regards to batteries: collections of cells working together. But the Lithium needs to be turned into a cell... before collections of cells can turn into a battery.
There's been immense R&D by both parties since 2010, and the latest supply agreement was finalized July 2014.
I'm hoping for something a little more formal than a PR blurb--like an SEC filing as grandparent alluded to.
http://finance.yahoo.com/news/panasonic-backs-teslas-gigafac...
But considering the $1.6 Billion investment from Panasonic, it looks like Panasonic owns at least half of the gigafactory. This suggests that Panasonic still owns the cell technology / chemistry.
The cells in the original roadster were 3.7 V / 2100 mAh vs. 3.6 V / 3100 mAh for the latest. They're both 18650 cells--completely different chemistry.
That's that TSLA wants you to think they have the potential of being because they havr to be known as something more than a car company to keep the stock price up.
http://cleantechnica.com/2016/01/15/1-large-luxury-car-in-us...
"As we all know, Tesla doesn’t report sales/deliveries by country. However, various outlets estimate Tesla sales using a variety of methods. EV Obsession estimated 26,566 Tesla Model S sales in the US in 2015. Rob notes that the lowest estimate was 24,200. In either case, the Model S outsold the Mercedes S-Class, the BMW 7-Series, the BMW 6-Series, the Audi A7, the Audi A8, the Porsche Panamera, and every other car in this class."
And it's hard to say what class the Model S fits in. I don't think 7 or S is right, despite the price point. Those are both full-size luxury sedans, and while the Model S may be a full-size sedan, it's hardly luxury. Its interior is closer to a 3-series or E-class than the top-of-the range luxobarges. That's not a knock on build quality, just the reality of battery power currently being much more expensive than ICE. You've got to shave cost somewhere, and Tesla shaved it off luxury.
Buying TSLA right now is making a big bet on the Model 3. If Tesla comes out with a popular car (likely) and can make enough of them to turn a profit (little more skeptical on that one), it may end up justifying valuations. I wouldn't put my money on it, but I'm not surprised other people do.
http://www.consumerreports.org/cars/tesla-reliability-doesnt...
TSLA has a reliability issue, and they need to get it fixed before they can deploy the Model 3 at scale.
So no. They aren't executing. They're a 13-year old company with negative profits across their entire life, and the hopes and dreams of a Gigafactory.
$230 Million lost last quarter. When will TSLA stop burning cash? It has NEVER, in its entire history, made a single profit. This is a 13-year old company, I expect better profits by now.
Instead, TSLA pivots into a space it wasn't designed for, to hope to increase demand to make its gigafactory investment worthwhile. Well, lets see. Lets see if enough people buy powerwalls and Model 3 cars to make it work.
But at a price of "Worth more than FCAU", the stock is horribly overpriced. I expect $20 billion companies to... make a profit. Just saying.
> But at a price of "Worth more than FCAU", the stock is horribly overpriced. I expect $20 billion companies to... make a profit. Just saying.
I don't. I expect them to deliver electrified mobility, which they're doing. Why would they turn a profit in a capital intensive industry so soon? I would expect them to burn cash for at least 10-20 years before they're profitable, when you're spending billions of dollars to tool up.
They don't even need to profit! They just need to break even (just like Amazon plows all of its cash into growth).
And I must ask: Why do you care if you don't own Tesla stock? As someone who holds tens of thousands of shares of Tesla stock, I'm willing to give them decades to be profitable. I don't even care if they're ever profitable! As long as they replaces as many internal combustion vehicles as possible.
I congratulate you on your success, but I'm very far away from "investing for shits and giggles". Not everyone has millions of dollars they can give to a company just because they are morally aligned to them. If a company stock isn't going to be a good place for me to store money for the next 5 to 10 years, then I cannot purchase it.
I simply don't live in that kind of world financially.
1) I invested when it was $17/share when they went IPO. It was a gamble, but a gamble I was willing to make.
2) You don't have to live in that world financially. Just understand that everyone is attempting to push in the right direction, as Tesla is doing.
I'm not a Tesla fanboy by any means. I'm a "please for the love of god fix the energy sector before we all die" fanboy.
Again, I congratulate you on your success, but you and I live in very different worlds.
It is a big deal if I can scrape together $5000 once or twice a year for a stock purchase.
East coast guys are more often known for being over optimistic (just like any human beings) rather than under optimisitic.
That it's batteries currently go into cars, and home/industrial storage systems is happenstance of the moment.
If you want to impress me, find me a car company that also males cells. All TSLA cells are from Panasonic. In fact, Panasonic owns a huge chunk of the gigafactory.
Also, depends on the like-for-like. I'd be surprised if Porsche release a car which competes with the model 3. They won't. They'll compete at the model S level and that's it (in terms of price, I mean).
Let's face it. This is a battle for Tesla to lose. If they get it right they'll sew it up. It's all in the execution from here out.
Interesting part about Tesla is how much of the product they actually own, versus buying a part here and a part there.
"On Monday, Morgan Stanley analyst Adam Jonas slashed his target price on Tesla stock to 333 from 450, reports noted, citing concerns about extra costs tied to the Model X launch delay."
http://www.investors.com/news/technology/tesla-stock-turns-l...
I would also not make any claim that Tesla's recent product rollout has failed - or use its stock price as a proxy for that decision. The near-term effect of $30 oil is quite impactful on many industries in many ways which we still have yet to fully comprehend. It could be that $30 oil is Tesla's undoing, simply because people don't need electric cars. We just don't know yet.
> "Tesla, like most Silicon Valley companies, uses most of its revenue to finance research and development for new products. Rolling out new products with minimal required development is crucial to this strategy"
Those sentences just don't follow. They spend lots on R&D and they need to roll out new products with minimal R&D?
And I'm pretty sure the majority of their revenue is spent building the cars. They did around $3.2 billion in revenue and sold 35,000 cars. Unless they somehow have unheard of margins of 50-60%, that means Tesla spends the large majority of their revenue on building vehicles.
To me, this community blog post reads like they started with the contrarian clickbait title, and went from there.
They're building their brand and developing their technology and supply chain with elite vehicles developing the potential for profit explosions when they're ready to release a commodity vehicle to the masses.
So the X is rather still part of the S platform and the real cheaper car will still be the Model 3. In that sense the Tesla plans did not change much. While not many X were delivered in 2015, they seemed to have started mass production literally in the last weeks of the year. They should be building several hundred of them per week now.
That the X is even more expensive than the S is not a bad thing, considering that they have about 20k orders backlog. As long as they can sell any S or X they make, there is no hurry for the "cheap" model. Revenue per car is more important that total car number sold.
I think the reason they did the X was that when Model S was brand new they expected the market to 'max out' at ~20k vehicles a year (which wasn't unreasonable looking at other, similarly priced, niche premium brands).
So, they wanted a SUV to sell more cars. Now, as everyone (especially Tesla) knows, Model S has been selling very well. So in hindsight it was a big waste of time/resources. But I can see why the mistake was made.
Without knowing many of the details of Tesla this argument makes sense on it face. That being said there's a hefty amount of hindsight going into this analysis and I'd respect it more if the author made this call about 2-3 years ago.
It's the same strategy as 5 series/x5 that bmw has, and has been exceedingly successful at.
The funny thing is that the Model S has more cargo space than many small/medium SUVs. The Model X doesn't really allow a decent rooftop cargo carrier.
Also, there was many similar slow rollout/complexity issues with the Model S first shipped, I'm sure they'll be fine.
The big problem for Tesla is scaling up. Producing the model 3 at scale at a 40k price tag is much harder than anything they have done so far. It has taken competing car companies decades to get to the point where cheap reliable cars just roll of the factory line. Just quality control alone is a huge problem at scale. Sourcing all materials at scale is enormously difficult. In manufacturing scale is everything.
In terms of interior design and finish Tesla is way behind BMW. They don't have the factories BMW does or any of the infrastructure and operational expertise. Tesla won't be able to compete in more the price sensitive "3" segment.
Perhaps Tesla would have been better if they only produced fast luxury cars. Too late for that now, though. The stock is priced based on promises of a mass adoption of the Model 3. A promise that they can't possibly deliver on. Unless Elon pulls another rabbit out of his hat. Wouldn't be the first time.
> The fit and finish of a Tesla, especially a $140,000 Tesla, is quite frankly embarrassing. Panels with gaps, cheap plastic components, a decade-old Mercedes shifter, and none of the high-end amenities of luxury cars. The doors are, quite frankly, crap. The leather is medium grade at best. The seats are terrible (disclosure: I have not sat in the brand new Model S seats, though they are still one piece with no power-adjustable lumbar, etc).
I don't know if the Model X is better.
http://bgr.com/2015/01/14/tesla-tsla-sales-market-data-model...
Personally, I think the Macan is a much sharper interpretation than the Cayenne.
Tessa's design is blander and doesn't really have a brand specific cue other than that horrendous nose. That large piece of plastic over what would be traditionally the inlet just doesn't do it for me.
I'm really looking forward to the 2017 Porsche Panamera, they are finally fixing the butt to make it look amazing, not awkward!
When I first saw the model S I thought it was nothing but but an overblown Mondeo. But it's grew on me quickly to the point that it's at the top of my list.
There's something understated and smooth about it. It makes sense.
I get the same feeling about the model X.
It's all a matter of taste, but the Cayenne and the Macan are hideous in my opinion. And I love Porsche.
For a lot of people the whole point of paying $130k for a car is that other people know you can pay $130k for a car.
Also, is the SF bay area really Tesla's biggest market? There aren't that many people in SF compared to, say, Los Angeles.
Maybe what I really want is 100k cars per capita?
Also why do you imagine bay area is X or Tesla's biggest market?
It just means that people used to think the stock of the company would go up.
Following that: low stock prices does not mean a company is not doing well.
Best idea? Probably not and maybe a little premature too, but the article makes it sound like Tesla's going out of business because of it and I don't think it's nearly that bad.
I'd give at least 6 more months before concluding anything.
Simpleminded twaddle.
So, really, what performance are you referring to?