Tesla Misses Model 3 Production Goals
wsj.com
wsj.com
OT: Sad how difficult it was to find this. The media avoids linking to primary sources. For example, Engadget's 3 paragraph article contains no less than 5 links back to engadget.com and not a single mention of this source.
Anyone can setup a real time account for free.
Also the WSJ article pretty clearly used the press release as a source, so mentioning that is a separate issue from whether it is a good or bad source.
(unless you think the WSJ called Tesla and verified specific facts like "4,820 Model S and X vehicles were in transit" vs "The company said 4,820 vehicles were in transit at the end of the quarter")
Of course, in this case it's a bit hard, since the only insight into Tesla's production goals is what they report externally, barring leaks and whatnot. A press release from the company is pretty much the best we can get. But just because it's the best doesn't mean it's necessarily good.
They did not reach their goals. No need for paranoia.
In any case it's not paranoia. No matter what the law is, a press release is a first-party source. It is inherently biased toward the company. By no means should it be compared to an independent source, such as a report from an auditor or independent regulators.
If they did so, that would be securities fraud, by definition. What about their projections, which were publicly stated and published in the past, or their actual production, which was publicly stated in the article (both of which are subject to SEC regulation review and legal recourse) are inherently biased toward the company?
You can still pay for premium services (via Bloomberg, Thomson Reuters, etc) but subscribing to company news releases can be easily done by just visiting a company's investor relations website.
That's Engadget's house style. They forbid external links the the body of an article, only allowing links within their own site. The best you can hope for is a single hard-to-find link at the end.
They've done it this way for years. It sucks. It's one of the reasons I never read anything on Engadget except by mistake.
The comment was not regarding the quality of Google's search engine results for given keywords.
When something like this this happens, the manufacturer has most of the costs of full production with the revenue of tiny production. Profitability just got further away.
As of August 2017, there have been about 63,000 cancellations of Model 3 preorders.[1]
[1] https://www.recode.net/2017/8/2/16087432/tesla-model-3-elect...
More likely is that Musk set an overly ambitious target, for the hundredth time, and what they're doing for the quarter they probably should not have been doing at all. They produced something like 60-80 Model S vehicles in the first month. Check back in two quarters, if the Model 3 production is down 80%-90% from projections, that will be something meaningful.
The press release makes it clear that there was a major production bottleneck. Will it get fixed? Very likely. But as of today, they've got a serious problem.
Absent more data, I think the OP's guesses are plausible and not malicious.
Comments on Glassdoor indicate that lower and middle management are disorganized.
[1] http://www.businessinsider.com/tesla-factory-workers-detail-...
These issues could be due to the different composition of the 3 compared to the S and X - more steel, less aluminum - or with them trying to build a denser automated production line, or just general gremlins setting up new production.
[1] https://electrek.co/2017/09/29/tesla-model-3-production-ramp...
(Back when newspapers had real reporters, some reporter would go to a bar near the plant, buy some of the guys a few beers, and listen. The recent stories about Tesla are all from press releases or CEO interviews.)
It's stories like this and the attitude that they're important which gets us very destructive behaviors like putting production quota ahead of quality. Production misses are news when they're for substantial cause. Like a 10% miss for an S or X might be news.
Edit: I am not trying to say that Tesla should be punished, but am specifically addressing that it is, in fact, news.
I wouldn't read too much into this myself. Scaling production is hard. Regardless, it's an important metric that speaks to Tesla's ability to deliver, at least short term.
Some investors will value on random noise, and some other investors will figure this out and capture the mispricing, if there's any.
There's a strong incentive for either side to overblow a piece of news that fits their agenda.
It's something like criticizing someone for running 75 feet instead of 400 in the first 45 seconds of their third marathon because they had to re-tie their shoes.
Why is Tesla missing it's Model 3 targets at the very beginning of the production run (hundreds of cars) more relevant than the Model S and X productions exceeding targets by "several thousand"?
Looking at the first two columns of WSJ tech page that lists that article ... articles are on (Apple, Tesla, Google, Facebook, Goldman Sachs/Bitcoin, Uber). Looking at that list of companies, would you guess that WSJ's editors are pushing the most relevant and important information, or the information their readers want the most? One is gossip, the other is news. People gravitating towards the news they want to see and news producing information tailored for their audience is the greatest force of evil in the 21st century. Popularity drives every news outlet to the bottom until you can't tell the difference between TMZ and WSJ.
Where do I go if I want to read actual news instead of the business gossip column?
Tesla is probably the only car company where the number of pre orders is deemed to be important. Car companies make money with sales and if they don't get production ramped up in time (before more alternatives become available), a lot of potential buyers will order somewhere else. Production capacity and consistent quality are the only important factors for Tesla, not how many people think about buying one at some point (in my opinion).
Tesla isn't a startup working out of someone's garage -- it is a large player in a heavily regulated capital market. Estimates and guidance are for investors, not for people on the street: they are supposed to mean something.
Are you sure about that? The only thing I start thinking is that the person making the estimates is being consistent.
Other manufacturers don't really do that, which is why you rarely see the headlines of Dodge Durango being three weeks behind schedule.
If it turns out that they knew or should have known they wouldn't make the schedule then they are liable for misleading investors.
But many public companies have discovered that conservative forecasts with positive surprises are better for the share price than optimistic forecasts with profit/production warnings.
They lied to investors to keep the stock price pumped. Not cool.
You don't read safe harbor statements?
> In total, we expect to deliver about 100,000 Model S and X vehicles in 2017, which would be a 31% increase over 2016.
31% increase from 2016, that's a huge bump in delivery and I wonder how/if this affected the model 3 production.
Looks like they have a long way to go before they will be a threat to the big car companies..