Tesla Second Quarter 2018 Update
ir.tesla.com
ir.tesla.com
The argument that a company can't build it's product fast enough to satisfy demand strikes me as extremely weak: as long as margins as positive the production problems are solvable.
Generally the theme is, if she says it the likely hood of something happening goes up 300%.
That said, I don't necessary think that you can assume a direct causation of the difference between SpaceX and Tesla based on her alone.
[1] Even more impressive is that these are sales of a single model...
Edit: Just reading the post twice. Tesla took 7 years to go from ~0 to 250K annually. Toyota took 18 years. Not really an apple to apple comparison
But if you want to compare yearly figures...the non-liftback models went from 0 sales to 530,000 in sales in just 2 years. Now that is impressive. And it's also the counterpoint to Musk's Tesla: both Tesla and Toyota knew that demand existed for their cars. But Toyota knew how to execute properly, and did so, and was able to satisfy that demand. Tesla so far has royally fucked up, continues to fuck up, and it's up in the air whether they'll be able to right the ship before they run out of money.
They didn't invent the market, the Prius was just a better Honda Insight (primarily by virtue of having 3 more seats). Again, they deserve massive credit for their accomplishments.
But, again, they lose the "sales increase" by a wide margin unless you tweak that by insisting on limiting it to "a single model".
Certainly we don't know if Tesla will survive but the challenges facing a new carmarker of any sort are simply massive, rather than just producing a slightly-differently-propelled model in addition to the millions of conventional cars you already produce.
And where you really fall over is by trying to argue about "the non-liftback models" which I can only presume means the discontinued[1] Prius V which is a slightly-differently-bodied version of an existing car.
But I'm not quite clear on your comment-- At first I thought it was to be read that the Toyota accomplishment was more impressive than Tesla's. But then I realized maybe you meant it to be less impressive, because the scale is far less. So I assumed you meant maybe Tesla's accomplishment was the more impressive one. But then you said Toyota's is EVEN MORE impressive when you consider that it's just a single model (which is a good point).
I've driven a stick-shift for a while in the past and always wondered if there was a way to capture the engine power when you downshift for engine braking coming up to a red light. Not sure how it would work though.
Flywheels could work, but they are heavy, and have a potentially unsafe failure mode (dense material disintegrating at high RPM).
If we relax that "restriction"... Toyota says they sold 1.52 million electrified vehicles in 2017. That includes the Prius (both hybrid and PHEV variants), all their other hybrids (they have at least one hybrid option in most market segments they cover now), and the Mirai (fuel cell vehicle), across both the Toyota and Lexus brands.
It sounds a little less impressive when you realize that's only about 15% of the vehicles they sold globally, though (10.386 million cars globally, although I'm not 100% sure if that number includes Lexus).
Now if only people would stop driving their Prius' 10-under in the fast lane.
(I own a 2018 and am very happy with it, but I've never driven an older one, so I can't personally address any complaints about driving dynamics.)
My least favorite thing is the near-deafening road noise, particularly in the back seat. It's got a tin can door closure sound that reminds me of a Renault 5 or something. It's a HUGE step down from most economy cars in those regards.
This was through the 2nd and 3rd gen, at least. I've not been in a 4th gen.
The first incarnation of the Honda Insight was before the Prius, and somewhat successful before the Prius came on the scene and took over.
Thats for '00-'06 sales. idk what the first year sales were but the Pirus was on the scene very soon after the Insight.
The other obvious thing, the Insight looked like a car for weirdos. Something that tesla and later model prius / leaf's have tried to avoid.
Edit: Okay, maybe 1996 in Japan? According to this Wikipedia link, the Insight DOES predate the Prius but only in the US: https://en.wikipedia.org/wiki/Hybrid_electric_vehicles_in_th...
No, 17,000 or so were sold, and it was the first mass produced hybrid sold in the US.
The insight WAS offered for sale, and Tesla DOES lease their cars[1]
A Tesla (any model) is the most fun street-legal car ever built
Full stop, no caveats. American muscle cars from the 60s weren't this responsive. No German car is this responsive. You just have to drive one to understand.
Most fun? You must not have driven many cars. If you only enjoy quick acceleration - sure, but I prefer a gocart feel and a car nimble around the corners, and the only tesla that's remotely competitive in this area is the roadster, of which it sold very few. The Model S, while it has a very low center of gravity which makes it feel like a smaller/lighter car than it is in corners, is still a large boat if you compare it to cars that are considered to be "fun" and well-handling.
A lot more people would agree with the statement that an MX5/Miata is the most fun street-legal car ever built - because - well, it most likely is. :P
I MUCH rather drive my cheaper toyota 86 than a model S.
I want it to be an awesome car, but to me it just isn't.
Anecdotally, I lost count of the number of Model 3's I see on a daily basis in Bay Area.
But the more time I spend in the 3, the more I realize it's a MUCH nicer car inside than the S -- which I didn't expect.
I'd love to see a Tesla version of the Road Star!
http://www.motorcyclespecs.co.za/Gallery%20%20A/Yamaha%20XV%...
Throw in the other Models and Tesla will be shipping 300,000-400,000 electric cars a year. That’s quite an accomplishment.
At least in the US, the only two cars I can think of (besides the Model 3, which is hard to come by) that move the needle at all are the Nissan Leaf and Chevy Bolt, both of which look... not great.
Why don't any other car companies offer a 'standard' mid size or compact sedan that's fully electric? Just take an existing decent car like a Toyota Corolla, Honda Civic, etc. and redesign it electric? I know it's a different drivetrain/architecture, but why not a standard looking body instead of some weird buggy space-age thing?
I think they're still counting on the signaling. It's said that the Prius was bought by so many in large part because it looked so goofy, in that it didn't look like anything else, so everybody knew it was a Prius, which by proxy meant that you were driving green.
Tesla shook that up, but styling still remains something withheld for the maximum dollars. There are very few stylish cars at cheaper price points because they know that despite whatever features are there, people shop with their eyes predominately.
If they happen to land on a design that's too fetching for the price point they're targeting, it seems likely that they'd uglify it somewhat and withhold the better design for a more expensive vehicle that they may or may not plan to make.
https://en.wikipedia.org/wiki/Honda_Insight#Design
They were shown in 1997 and on the road in the US by 2001 or so.
The Prius seems to have been a much better car.
The Insight is pretty much strictly a commuter car: it's laughably tiny, like a roadster without any power. But it's really fun, and gets outrageously good fuel economy despite how crude the hybrid system is relative to Toyota's.
The Prius on the other hand is an everyday vehicle that's spacious inside and small on the outside. Far better suited to be the only car someone owns.
https://www.extremetech.com/wp-content/uploads/2017/12/17120...
Source? Many flashy design elements are expensive to fabricate.
Yeah, Nissan LEAF and Chevy Bolt might not look great but they are far more affordable. With heavy federal and state incentives (and sometime as much as $10k incentives from local utility companies), you are talking about half or even as little as a third of the Model 3 MSRP. [1][2]
[1]: https://www.greencarreports.com/news/1110809_lots-of-ways-to...
[2]: https://www.greencarreports.com/news/1113092_costco-members-...
It's "affordable" at $30k, but it has 1/2 the range of the Model 3 at around 130 miles, which I think tells you a lot. This technology is still at a price point where you need to make significant trade-offs between range and price. A new Honda Civic is something like $20k by comparison, and without the range anxiety.
Still, I see a lot more of the these Hyundai Ioniqs here in Amsterdam after they were released, particularly as workhorse vehicles like local taxis. Part of that's government incentives to use electric vehicles, European customers having lower range requirements, and that gas is still practically given away for free in the US compared to what it costs in the EU.
https://sfbay.craigslist.org/sfc/cto/d/2012-nissan-leaf/6658...
Go a little further and remove the axle and giant transmission and suddenly you have a lot of space under a car.
As for batteries, why can't they just make it wider and flatter and put it at the bottom, like tesla?
https://www.extremetech.com/wp-content/uploads/2017/12/17120...
It looks better than the Bolt or Leaf
https://www.chevrolet.com/electric/volt-plug-in-hybrid
EV range is about 55 miles Gas range is about 250 miles
Have to be willing to cannibalize part of your own market to succeed. Tall order for most.
https://cleantechnica.com/2018/04/30/volkswagens-decision-to...
Given that Ford is largely abandoning sedans, it would seem that they're not particularly popular anymore. The Leaf and Bolt aren't all that weird looking for hatchbacks. Original Leaf had some weird-ish features (like the headlights), but mostly had a similar profile to the Nissan Versa hatchback. The new 2018 model is very ordinary looking. The Chevy Bolt has a pretty similar shape to the Chevy Spark.
It's not a very sexy shape, but it's a practical one.
*Entirely abandoning.
Ford no longer produces any sedan models [0].
[0] http://fortune.com/2018/04/26/ford-no-longer-making-sedans/
Hatchbacks seem a lot more practical than sedans with no obvious downside. I can see people preferring the looks of one or the other, but neither is objectively prettier.
In general people looking for a practical car in the US are often buying a crossover, SUV, or pickup truck.
I think you’re right that SUVs and crossovers are taking over, from both sedans and traditional hatchbacks.
It must just be fashion, as SUVs don’t have any real advantage -- most people never do any off-roading or haul large sports equipment, and most “SUVs” wouldn’t be up to the job anyway.
SUVs are basically hatchbacks. I currently own a hatchback (GTI) and our old SUV was easier to get into and out of. The GTI is more fun to drive though.
Some people prefer a separate locked trunk.
In addition, small hatchbacks often tend to be designed as 2-seaters with a vestigal back seat as a way to maximize the use of the hatchback for cargo. As you get bigger you get something more like an Outback wagon or (increasingly) a crossover of some sort.
A hatchback is the responsible choice for for a family car, and therefore boring by association.
I realize this thread is about Teslas, but still folks are referring to non-Teslas here as well.
Maybe 3 will (hopefully) become associated with Tesla in the future and not BMW 3 series cause they are a dime a dozen in major metro areas.
I think that is a US-specific thing.
For some reason US customers prefer sedans (maybe some of the reasons given by other commenters) and that has probably skewed the market a bit (e.g. hatchbacks are only sold at higher trim levels since they’re marketed as a niche product).
Edit to add: and maybe there’s a feedback effect too? Hatchbacks are more expensive because they’re less popular, so then they’re less popular because they’re more expensive.
Depends on brand. Kia charges the same either way.
Maybe it's what's necessary to survive in the moment and maybe the moment is the nature of the car industry, but all of these car producers seem to forget what happens when gas prices rise and the economy slows. Maybe then they'll actually innovate, but in terms of technology they're already playing catchup to Tesla. If Tesla can figure out how to produce these cars steadily traditional car makers are in trouble.
If electric cars take over the mass market, most of them will be made by established carmakers who know how to crank out millions of cars per year and have thousands of dealerships across the country. I'm sure they will be grateful to Tesla for proving the concept, but the traditional automakers won't have much trouble ramping up production once they know the market is there.
By the way, I would love to have an electric car but I don't have anywhere to charge it because I live in an apartment without a garage. Charging it at work is not realistic for me -- we have some charging spots, but it's really difficult to get one because so many of my coworkers also want to use them. There are millions of customers like me who need the charging infrastructure to improve before electric car ownership becomes practical, and we are going to keep giving our money to the traditional automakers.
BTW, depending on where you live, you may be able to have a charging station installed (at your expense). In Hawaii, condo associations must allow the installation of charging stations. Less useful for apartment renters, but possibly still an option. You can read stories on Tesla forums of renters who convinced their apartment owners to spring for a bank of charging spots, though it's an effort.
And there are people who make it work without home charging. I did that for a year before I got my own charging station installed, but for anyone who puts serious miles on their car, it's a nightmare--a green version of Mad Max--hunting for an opening in one of the few public spots. Wouldn't recommend it.
I figure there might be an opening for a startup company to drive around neighbourhoods early in the morning, fast charging peoples cars for them. Subscription service. Partner with an electric car company.
Unfortunately that little piece of infrastructure could easily be a deal killer for a ton of people.
Not everyone is a homeowner with a garage. And parking in a charging space at some random retail establishment every couple days for a few hours to charge just seems insane.
Apartment complexes where I live (Denver metro) are already competing with each other on features like "bike/snowboard fix-up stations", "Amazon lockers", "heated pool", and other absurdities - you bet they're going to install 220v chargers if it helps lure people in. Eventually, it will be expected - just like the bike fix-up station.
If I could buy something equivalent to my current car that was electric, I’d be happy to. But I would definitely have to figure out the charging situation. And that could easily turn into a mess. That mass, plus premium price, plus possibly limited availability may make it easier for me to just buy another gas car for now.
*Number made up
For example, if electric cars become popular we will need tons of public charging stations, but nobody will be willing to build charging stations unless there are already a lot of electric car owners to use them.
The early adopters of electric cars are going to have to deal with a lot of overcrowding at charging stations, unless they are homeowners and can charge in their garages.
All that aside, there is still the issue of price. I paid $21k for a new Prius C that gets 45-50 mpg. A new Chevy Bolt costs about $29k in California after tax credits as far as I can tell, and that does not include the cost of an in-home charger. That $8k difference would cover years of gas purchases for the Prius -- I've had it for 5 years and I've been spending about $35 for a tank every 3 weeks.
We just drove our Model 3 home 13 days ago. IF you want an electric car, nothing else on the market has the compelling mix of features that the 3 has, IMO.
I'm a big BMW fan, and they keep promising that they'll be selling normal electric cars Real Soon Like Now, but frankly, most automaker efforts are either 'weird' electrics like the i3 or Leaf or Bolt (which have their own range or fast charging network issues), or PROMISES to bolt electric motors to existing cars like the 3 series. It's great that they think that will magically result in an electric car, but it doesn't resolve the fast charging network issues, I've seen no real promises of charging network investments, UI that makes it easy to find said chargers, etc. Maybe it's in the works, I don't know, but the fact that they're not even publicizing whatever efforts they're making mean that they're not making a splash in the market; they're not trying hard enough.
The 3 feels like a substantially different rethink of the car; it's on when I touch the door handle (or sooner, if I start the A/C via the app). Other automakers seem lost in the "take a car, remove the gas engine, replace with electric motors, and BAM, electric car!" mindset.
I feel ya. I'm a chapter officer in the BMW Car Club, but we just placed an order for a Model 3 for my wife on Saturday. The only thing even remotely on the horizon for BMW is the iX3, which will be produced in China (even though BMW produces all X3s in the US currently). It will only have 250 miles of range. And it launches in 2020.
I currently drive a 530e plugin hybrid. I tell anyone who will listen not to waste their time with it. It has 15-20 miles of real world EV-only range. I live in a small town and it typically isn't enough for me to drive across town and back if I have the AC on. If I wasn't so upside down on the lease (12 months in), I'd be ordering myself a Model 3.
My wife made me get rid of the 2015 M3 I had prior to the 530e. I greatly miss that vehicle, but now the joke is that she's going to be the one with an M3. Just a slightly different kind of M3.
My next vehicle is not likely to be a BMW. It is mostly likely to be either a Tesla or a Porsche Taycan. Maybe BMW will have something worth my time in 2023. And it's so sad as they were ahead of the curve with the i3. And then they did... nothing.
BMW is hitting it out of the park with the M2, but their mass market vehicles of the G generation seem to be missing the point as the market moves to EVs.
Hopefully VW will knock it out of the park w/the Taycan and it's charging network.
Notice a pattern? All of the safest cars (including the handful in which nobody died) are large. Mostly SUVs and pickups, with a few luxury sedans thrown in. All of the least safe cars are small. Many of them are tiny.
Incidentally, electric cars tend to be very safe for their size because the battery makes them weigh more. I'm all for that-- I'm just saying that Americans' love of large cars isn't entirely irrational. Some very unlucky Ford Fiesta drivers would still be alive if they'd been behind the wheel of a Jeep Cherokee.
Pedestrian vs SUV bull bars turned out to be so grim for the pedestrians that they've been banned in Europe. The occupant safety statistics only tell part of the story.
Younger/inexperienced drivers buy affordable cars, which are affordable because they are [perceived as] less safe.
Older drivers, of people with the income to make a choice who care about perception, buy cars that are [perceived as] more safe.
The reality is that electric cars aren't in great demand today, Everyone's working on them but most aren't in a particular hurry to push out cars that don't necessarily have a good mix of price/range/features for their customers and which they won't sell all that many of as a result.
I'm in the same situation, there's the option of renting a nearby garage but when I factor that into the cost of an already expensive vehicle, the economics just aren't interesting at all.
But yeah, nowhere near the number needed for the electric car revolution (tm).
Although I've noticed most of said chargers are usually empty, so I suppose it's a chicken and egg problem.
The ICE vehicle manufacturers are waiting for battery costs to come down. They aren't short sighted. It's simple economics.
Batteries are increasingly just a commodity, and will become more so as the rest of the industry ramps up electric car production.
Parent comment used the example of the 89 mile range Honda Clarity as evidence you don't get competitive battery range on non-Tesla cars. This is demonstrably not true.
While the Bolt is a nice car with good range, it is not range competitive with the Telsa LR model 3. I have been evaluating this in the context of driving from San Francisco to Portland. This is a practical drive in the Model 3, but not even close in the Bolt.
I’d wait for a Model 3 instead of buying a Bolt off the lot. Range isn’t everything.
Oh, c'mon, you're going to use a car I can't even find a price on for comparison? Honda wants a zip code to determine if I'm even privileged enough to buy one.
Compare to a Chevy Bolt, as the sibling commenter mentions. The range might come up slightly short, but then go compare the price tags (and for bonus points, when you can get one). If Chevy wanted to bump the price, I think they could easily match Tesla's range.
If the Bolt has room for more battery. Which from pictures it does not.
In Europe with tighter roads and enough charging stations springing up the new Leaf is looking more desirable than the Model 3. The range has increased on the Leaf for 2018 and with the growing infrastructure in charging I am not sure everyone needs the increased range of the 3.
Nissan have earned their spurs in EV, as have Tesla obviously. I would be happy buying from them due to their innovation and design effort. I would not buy an electric VW Golf or even an electric Smart Car as that ground up engineering hasn't been done, it is a mere retro-fit of an existing fossil-burner.
I think the fossil-burner marques that thought they could just put some batteries in the back seat and rip out the ICE did so for regulatory lip-service reasons, a bit like how Aston Martin came out with a re-badged Toyota iQ so that the average fuel consumption figures across their fleet could be lowered. Clearly it is not in the Aston Martin DNA to make a car that is vaguely safe outside school gates. Neither has it been in the DNA of the Big Three or the German auto companies to want to do electric power properly.
I don't know what the Chevy Bolt is there for, however I think the Nissan Leaf has grown into something that suits the European market really well. Teslas are a bit too land-yacht sized for Europe plus European buyers have different standards when it comes to panel fit. Even the 'autopilot' is ridiculous in European markets where there are 'roads and motorways' not 'highways, surface roads and the interstate'. The ludicrous mode is nice to have but the novelty has worn off. The Leaf is quicker on the 0-60 times than the Nissan Qashqai and able to compete at the lights with pimped fossil burners, that is enough, there is no need for it to trounce passing Ferraris.
The BMW i3 fits a niche in London as it is compact enough to actually park. People can sneak into EV only parking spots and avoid congestion charges. There are people able to pay the premium for these benefits, they are not necessarily wanting to go green, just have private transport and be able to park it.
Tesla are working their way down from the top of the market and it could be a while before they create an 'econobox'. Realistically there is a good chance that the car you want comes from elsewhere, e.g. China, and that it has new technology such as a much smaller battery coupled to a supercapacitor for regen/city economy. Waiting for the fossil burning marques to produce something is a waste of time, EV is not in their DNA.
1. Soulless design-by-committee. 2. Complex internal politics - "Cool idea you have there with the Prius, but I don't want to see it become too successful and eat into the sales of the Corolla. We need to sell 200k Corollas or I don't get my bonus". 3. The "proven" technique of having focus groups with a diverse crowd of aged-35+ white suburban soccer moms tell you what features they value in a car the most.
Who are the sponsors slathered all over their race cars? Petrol companies.
Which falls below the 5000/week
But they expect to produce 50-55k Model 3 vehicles in Q3 (i.e. ~4000 per week at the midpoint), so it's not clear what those 5000 or 6000 per week really mean.
Good news is, there are no obvious bond market bogeymen on the horizon in the very near-term.
Sure, you have to build new tools, buy material, hire factory workers--all before you've sold your first vehicle. This is a known cash curve. The purpose of calculating a runway is to understand "we have to start selling lots of cars within 7 months, or else sell more debt or stock."
These runway calculations are only moot once Tesla is cash flow positive.
Cash on hand is important, but not the end all be all. See MoviePass and how they were extended additional funds ($5MM) even with no business plan and road to profitability.
I mean, people basically said the same about Groupon. "Once they become profitable the losses won't matter." Except Groupon hardly turned out to be the juggernaut that rewrote how commerce is done.
Cash outflow from operating activities in Q2 2018 was $130 million, which was significantly better than outflows of $398 million in Q1. This improvement occurred despite a substantial increase in finished goods vehicle inventory of $579 million as a result of the timing of deliveries.
AKA, we delayed delivering a lot of cars to not trigger the tax credit expiration in Q2.
Of course, it's been replaced with the 'problem' of selling incremental Model 3s as the effective price goes up quarter by quarter in the near term, but the issue has ALWAYS been whether they'll be able to sustain demand and sales as the vehicle goes through pent-up demand and then has to rely on incremental sales, year after year after year (or until they start dumping huge amounts of cash into ramping the NEXT car).
That said, I'm VERY impressed with our new 3; more so than I expected, and I suspect others will be similarly delighted and new sales will follow. Their next challenge will be ramping maintenance/service of the rapidly expanding installed base.
I agree that this will be the next obvious challenge. "Thankfully", they're already seeing how this plays out in Norway, where they're really struggling to service the Model S fleet as it ages and repairs are required more frequently.
I consider this a good thing, because certainly there's someone in the service department thinking about what will happen in 3 years when the amount of Model 3s requiring service starts increasing further. Norway is the canary in the coal mine, which should be completely obvious to someone who does this full-time.
I saw the numbers in the narrative and am curious what costs they're including (or revenue items they're bringing forward) for these non-GAAP measures. Generally speaking, absent explanation, I default to GAAP.
I actually see one. it depends on your definition of near term, but in march of next year Tesla has alot of debt coming due. This debt is convertible(to stock) at around $350ish.
However, reportedly, this debt allows tesla to raise the conversion rate such that it can convert the debt to equity at any rate it wants.
https://seekingalpha.com/article/4191711-tesla-stealth-capit...
I haven't verified that but I thought its an interesting thesis:)
That's the plan. But you have to spend money to make money, particularly in the car business.
There is a high chance of default. If the bond markets sour, Tesla will have to write off a lot of projects and lay off a lot of people to attempt stabilization. That basically shoots out their Model 3 and energy projects, which would bring the company's basic viability into question.
But it was only -$128M in Q2. Tell us why you chose the longer time frame for your prediction, exactly?
Your math also has some basic problems, because $2.2 billion / ($1.27 billion / 6 months) != 7 months == 11 months.
More importantly: you're mixing some completely different levels of accounting: cash flow may or may not correspond to changes in capital structure such as CAPEX. When CAPEX involves actual cash being paid, it's also reflected in cash flow. In that case, you're counting the same expenses twice. etc..
Hmm, so capital structure typically refers to the big elements liability side of a business. Equity versus debt, bank loans versus bonds--that sort of thing. When one purchases capital equipment (e.g. a factor), that counts as CAPEX. I will admit that this nomenclature could be less confusing.
Kind of interesting...the typical laptop has a 50 Wh battery, and there are about 160 million laptop sales per year. A typical smartphone has a 5 Wh battery and there are about 1.5 billion smartphones sales per year. So that one factory makes just about enough batteries for all the laptops and smartphones.
> We are drawing customers from many other segments, including non-premiums sedans and hatchbacks.
Is that the source of growth at this point?
Yes, when comparing to other compact luxury sedans such as the BMW 3-series and the M-B C-Class, yes, they are at 50% market share. The question becomes, are they just selling cars to people who would have bought a car in that class, or are they selling to people who normally would have been in a lower class. Anecdotally, they're growing the class, as there's a lot of interest in the Model 3 from people who otherwise would have bought a Camry, Accord, Malibu, or other mid-grade sedan.
And all for a $7500+ discount over 'true' MSRP which will begin to evaporate over the coming months (which was one reason we jumped on the 3 when we did, rather than waiting).
Toyota Prius BMW 3-series Honda Accord Honda Civic Nissan Leaf
Tesla has a history of drawing misleading market share graphs by comparing its cars against cars that reasonably would be considered to be in different market segments. You would have to be pretty charitable to call the model 3 a mid-sized sedan, for example.
What is misleading is neglecting some other premium mid size sedans from the market [1] such as the Acura TLX and the Inifinit Q50. On top of that the premium mid size sedan market is only about 3% (by volume) of the total US auto industry so 50% market share in that category is still only 1.5% of the total market.
[1] http://carsalesbase.com/us-car-sales-analysis-q4-2017-premiu...
The Tesla skeptics have gone out of their way to try to ignore what a dramatic accomplishment selling so many Model 3's so quickly represents (and doing so at such an elevated price point).
To top it off, the reviews keep coming in that several of the more ridiculous early manufacturing problems with the Model 3 have been fixed, such as panel alignment and seat comfort.
Tesla is also claiming 50% of an extremely niche segment. It's like someone bragging about having the top-selling book in the Historical Sci-Fi Alien Albinos category.
So basically they have until the end of the year to produce as many cars as possible and get their finances in good shape, otherwise they're in trouble.
Loss aversion is real, and people aren't going to be happy about being asked to suddenly pay ~20% more for the exact same car. Since the base models haven't started shipping yet, it stands to reason that after the end of the year that will be mostly what's left on the waiting list. So if they lose a lot of those reservations, they're stuck with huge capital expenses and a potentially very significant decrease in orders.
It's 10% more at most, and they are making it pretty clear now that the Short Range model will not be available before January 2019. Even then, many people can't even realize the entirety of a $7,500 tax credit. A single person needs $60k in income to generate $7,500 in taxes due after the standard deduction, and a married couple needs $80k to reach that point. Most people who are holding out for the $35k Tesla because that's all they can afford are also going to have a Tax due of less than the $7,500 credit.
In a study from 2003 the new car buyer income was $69,875 [2] which is $96,905.51 in 2018 dollars [3]
[1] http://www.autonews.com/article/20150804/RETAIL03/150809938/...
[2] https://www.bls.gov/cex/anthology/csxanth8.pdf
[3] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=69%2C875&year1...
It's a 21% price increase, assuming the buyer would have been fully eligible for the credit.
Yeah, that's definitely going to change the math for a lot of prospective buyers. A basic Model 3 isn't worth $35,000 cash compared to other similarly priced EVs, especially not when those competitors will still qualify for the rebate.
True, but not until 2020. In H1 2019 there is still a credit of $3750, and in H2 2019, there's a credit of $1875, so it doesn't fall off a cliff.
So, for new car purchases at least, American buyers spend more than half the median yearly household income.
So basically, you are paying ~350$ of opportunity cost to take that decision.
[1] April 2016 (deposit date) VOO price was ~190$. Today it is 258$.
So.. can you explain everything after 'otherwise' please? In what sense are they in trouble?
Next time you are buying groceries, laptops, or go to a restaurant, I am going to point out all your laughably poor decisions of not spending your money on the absolutely cheapest options.
If one can reasonably afford a luxury item, it is perfectly fine to spend that money on that luxury item.
I agree that keeping in mind and taking care of your retirement is necessary, but I personally would not want to go through my entire life without the very occasional splurging on things that are a pleasure now, if the numbers work out well. Having only ever the end in sight is a pretty sorry way to live, in my view.
The car (not a Tesla) is paid off, I treat its value as "lost" (even though in this particular case it has not actually gone down in value), and I'm sure that I will look at it and especially the project ideas it spawned in fondness, rather in regret of the loss of some additional compound interest. Granted, I'm not in my 20s, though.
My comparisons were over the top, but vacations for example can add up to a lot over time, and they usually don't leave anything behind in terms of assets.