I really wish Tesla would succeed. But between their build quality issues and their production issues, it's not looking good.
And this isn't even their biggest problem, which is that the cars are too expensive for the mass market.
And this isn't even their biggest problem, which is that the cars are too expensive for the mass market.
I wasn't able to find anything by Munro on the Model S--I wonder what they have to say about that car.
Spoiler, there is none.
I wouldn't turn one down though.
> And this isn't even their biggest problem, which is that the cars are too expensive for the mass market.
How is Tesla's biggest problem that their cars have a very high ASP? Demand is not a problem for Tesla at all, much less their biggest one.
Now, if you think that Tesla should make a cheaper car, don't hold your breath. Elon has said many times that rather than make a cheap electric car, he thinks it will make more sense to make a mid-price car that can do self-driving to earn the owner money during off-driving hours that the owner can then use to offset the cost of ownership of a Tesla.
Yes it is a bold play, and it might not work. But Tesla's biggest problem is not that they make expensive cars. I'm not sure what their "biggest problem" would be, except for solving their current issues so that they could scale up more smoothly.
Just look at bikes: either you hire/"share" a 40-pound tank that sucks to ride, rent something decent with a substantial deposit, or buy a nice bike that you would never loan out to random strangers.
Public transportation is a great thing, but it is fundamentally different from private vehicles.
Throw a streaming camera in the car, and require a credit card on file, and they can trash the inside of my car all they want, they are just paying for the cleaning or new interior.
Still, even without the "general population ridesharing" aspect, I'd love to "rent out" my car to friends and family. Between myself and my wife, we really don't need 2 cars, but we have 2 because there are some semi-rare instances where we both need to be somewhere different. The amount of time that we both need to be somewhere different at exactly the same time is even more rare.
If we had a self-driving car capable of taxiing us around, it would allow us to drop down to 1 car instead of 2, meaning it can be quite a bit more expensive and still save us money.
> Throw a streaming camera in the car, and require a credit card on file, and they can trash the inside of my car all they want, they are just paying for the cleaning or new interior.
You might want to think this one through a bit more carefully. One dude hides a joint in his back pocket, and now your car smells like weed. Another accidentally sat on a piece of gum earlier, and now part of it is stuck to your seat. When do you notice? How do you decide who is at fault, or when to start a credit card dispute? You will have a dozen random people using your car every day, very few malicious, but none with any interest in taking care of it beyond not trashing it. Taking care of "your" car will become a full-time job.
EDIT (slow-ban reply): Fair enough. Plenty of people have rental properties. I think it seems like an enormous hassle, but it can apparently be a decent living or side-hustle, so I could be wrong about cars.
I don't really want to get into an internet argument on the details of how uber and lyft work, but most of those things are easily solvable right now in-app with the click of a button, and I've personally seen the "difficulty" of having to take a few photos of what the last rider did to your car, upload it in-app, and have the company pay for repairs/cleaning in the span of a day or 2.
None of this is "impossible" to solve, and I could absolutely see the future of cars being less of "this is my car" and more of "i'm buying this as an investment" similar to how some people buy and rent housing, especially 50 or 100 years from now.
Although I believe the moderation is more strict for comments that do that, as the whole point of the reply throttling is to prevent low-effort angry replies.
If you give me $500 you can puke in my car all you want. And I'm relatively well-off and don't need the money, imagine someone struggling to make the payments like most Americans.
There are multiple, billion dollar companies where users rent out large, personal assets to others. I don't see that as "nothing to support the idea". It's direct evidence that people are willing to do it at a reasonable level of scale.
I'm not sure what level of scale you're thinking or what you're responding to at this point. If you can scale back a bit on the hyperbole and adversarial mindset, I'm interested to discuss.
However I do think that % of people will be higher than it is today because full autonomy creates more situations where you've bought an expensive asset which sits idle throughout most of the day when you're working or sleeping.
Elon's assuming that Tesla will be the first to market with Level 5 autonomy. If that's the case, people will be willing to pay a huge premium to get one, especially if they think they can offset the costs by having it "pay for itself while you sleep".
Don't underestimate production and quality. It takes a lot of time and experience to get the supply chain reliable and cost efficient. This is not software where you can make changes quickly. You need tooling and production facilities which are expensive and take years to build.
I am not underestimating production and quality. I even said that I think that Tesla's production and quality problems they have currently are their biggest problems. I do not underestimate them - but I also do not think they will sink the company.
> This is not software where you can make changes quickly.
Compared to the previous industry's way of doing things, yes it is like software where you can make changes quickly. Even on the scale of years, Tesla is showing itself to be more agile than traditional car manufacturers.
> The "previous industry" are no dummies
I don't agree with this, but I wouldn't use the word dummy exactly either. I would say stubborn, and they are very very stubborn. It will take them longer to pivot to winning and sustainable strategies like Tesla's than it will for Tesla to resolve its production and scaling issues.
What Elon is really saying is that the early adopters are subsidizing development of fleet vehicles that aren’t aimed for significant individual ownership.
Owning a personal vehicle and renting out it's idle time is a big maintenance and liability commitment which inherentlt reduces the reliable access that is the whole reason for ownership.
Specialized rental operations will be able to optimize handling the liability and maintenance overhead. Individual owners will be better of not owning and doing on-demand rental of self-driving vehicles than renting them out, because specialized rental orgs will drive the rental price down to where non-specialists won't be able to make a profit with the maintenance and liability costs imposed.
https://www.cnbc.com/2018/02/07/tesla-q4-2017-earnings.html
Which part of it isn't looking good?
$3.4 billion in cash. $277m cash burn in the quarter (a dramatic decrease there).
43% revenue growth with the Model 3 barely contributing in the quarter. 10k to 15k Model 3's likely to be produced in the second quarter.
Build quality... you mean on the first couple thousand Model 3's? How is that surprising?
I'm not a particular fan of Tesla in any regard, and this looks pretty straight-forward. The pessimism is comical.
They could do a ~$2 billion equity raise any time - against their $58 billion market cap - and fund the company as-is for another two years, on top of the runway they already have, without missing a beat. That's assuming the Model 3 doesn't ramp up meaningfully and push them toward cash flow positive in the coming six to eight quarters.
How does 20,000 Model 3's in the fourth quarter sound? That's an additional billion in sales just for that quarter. If Musk avoids building another giant plant in the next four or five quarters, their cash burn will drop toward zero rapidly.
Most other manufacturers work out the kinks before mass production begins.
How does 20,000 Model 3's in the fourth quarter sound? That's an additional billion in sales just for that quarter. If Musk avoids building another giant plant in the next four or five quarters, their cash burn will drop toward zero rapidly.
If Tesla could demonstrate that they were actually capable of producing 20,000 Model 3's in a quarter, people wouldn't be so pessimistic. As it stands, they're still struggling to produce a few hundred cars a quarter without serious quality control concerns, and they've missed every self-imposed target for several years straight. (Tesla reported roughly 2500 Model 3s in all of Q4. For comparison, most other manufacturers can produce more cars than that in a single day.)
There were tens of millions of vehicles recalled for manufacturer defects in America alone last year, and the same can be said about 2016. I don't think this statement is a fair one.
The vehicle quality reviews on the bottom half of all auto manufacturing says otherwise.
> If Tesla could demonstrate that they were actually capable of producing 20,000 Model 3's in a quarter, people wouldn't be so pessimistic.
They keep proving an ability to produce volumes of cars, and people keep acting like they've never built any cars at all -
"As for its higher-priced Model S sedans and Model X sport utility vehicles, Tesla said it delivered a record number during the quarter. Model S and X deliveries grew 10 percent globally over Tesla's prior record in the third quarter, and were up 28 percent compared to the fourth quarter of 2016."
Right now they're forecasting 2,500 per week of the Model 3 for the end of the first quarter. If they can hit that very near-term marker, they can hit 5k in the fourth quarter.
The way the skeptic game has worked - all the way back to the Roadster days - with Tesla is this: the skeptics say blah blah blah, Tesla can't blah blah blah. Then Tesla eventually does what they say they will. Then the skeptics move the goal post, and the entire cycle repeats, while the skeptics continue to pretend Tesla has never produced vehicles at volume. Meanwhile Tesla keeps powering forward, selling more and more vehicles each year, with their revenue skyrocketing.