Tesla Is Doing Much Better Than Headlines Suggest | Hacker News Reader

Tesla Is Doing Much Better Than Headlines Suggest

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97 pointskartikkumar129 comments

This article seems to be saying that Tesla is in a good place because they build good, popular cars and electric vehicles are the future.

Maybe, I'm reading different news stories than the author, but I don't feel like those are criticisms of Tesla that I'm seeing anymore. Pretty much every current news story I'm seeing is either focusing on Tesla running out of money because their cars aren't profitable enough, or the fact that Elon's behavior on Twitter is hurting the company. The author addresses neither of these points.

Sure, maybe a few years ago I could get behind the idea that the Koch bothers are spending billions of dollars to try and suppress the electric car industry. But currently, pretty much every major car company has some sort of electric offering and many are making commitments to be fully electric in the near future. Even if the Koch's are spending money to hurt the electric car industry, it seems like they are fighting a losing battle.

Honestly, this whole article reads like a straw man argument.

I am a fan of Tesla who feels like a lot of the coverage has been really unfair. I still largely agree with the point that you are making, and I don't really consider this article to be better than some of the "bear" case articles that I have seen from time to time for the past few months.

Having said that, I think it is also a little unfair to imply that the work that the (???) are doing to try to push a false narrative and to get that narrative into the press has been unsuccessful. I'm honestly not even sure what to call these people. Are they really shorts in all cases? Maybe call them the twitter-geniuses-who-use #tslaq a lot?

An example is this article: https://www.nytimes.com/2018/10/01/business/tesla-cars-quest...

Despite the title, did that article actually unravel the mystery? Or did it just devolve into unsupported claims of soft demand and quality issues, along with a poor job of setting an appropriate baseline for how much inventory a typical auto-maker would have in-transit?

I wouldn't attribute it to malice, but would these poorly researched articles exist were it not for the "tslaq" crowd stuffing "tips" to friendly reporters? And do they have something to gain from such mediocre work?

The Tesla profitable article wave seems done. They seem to have managed to scale just enough and just stable enough to unfold orders which was already a risk a year ago.

Of course the narrative has changed because Tesla's success has forced it to change but the underlying conclusion (i.e. "Tesla is doomed") has remained the same through out.

It would be ridiculous if they were still running articles about how Tesla will never build the Model S or the Model 3 or reach 5,000 cars a week or are always bursting into flames or whatever because reality has proved them wrong time and again.

Saying this new narrative is plausible unlike all those previous narratives ignores that all those previous narratives where plausible and wrong when they were pushed.

Tesla still hasn't consistently hit 5000 cars a week. They've so far only managed this for about 3-4 weeks, split up between two roughly fortnight-lengths periods at the end of quarters. It's possible they managed to hit this milestone in Q3, but based on past PR behavior if they had they would have let the world know by now.

The naysayers were never saying that Tesla would never build a Model S or Model 3, you're just creating false strawmen to tear down. The naysayers were always saying that Tesla wouldn't be able to make cars profitably, which to date it has not by industry-standard metrics or the generally accepted accounting principles (i.e., GAAP) most companies use (and definitely not under IFRS standards, which most non-US companies use).

The 5,000 mark seems to be a red herring, though. Tesla has lined up European and Chinese factories (latter one seems to be accelerated due to tariffs) and copying existing processes to new factories is something that seems doable.

So even if Fremont stays at 4,500 forever, they could double or triple worldwide weekly production by just completing the factory build outs.

The validity of previous criticisms of Tesla don't negate current criticisms of Tesla. You don't get to say, well the media was wrong about Tesla last time, so they will be wrong about it next time. Sure, if there is a history of them being wrong (which the author claims there is), it can be part of your argument, but it can't be the entire argument.

It seems we both agree that not many people are currently criticizing Tesla for making bad cars, or not being able to hit production goals, or that electric cars aren't useful, yet this whole article focuses on refuting those points.

IMO, it seems most of the current criticisms of Tesla are that Elon Musk's antics on Twitter are hurting the company and that they aren't yet profitable and have some big debt payments due in the near future. The author of the post has done nothing to respond to those points, which is why I feel this is a straw man.

Look at it this way, even if you think there is a media campaign to make Tesla and Elon look bad, and all these criticisms are just pulled out of thin air, a broken clock is still right twice a day. You can't just say, well they are out to get Tesla because, even if they are, that doesn't mean what they say isn't true.

I decided to just look into an assertion from the first paragraph of this post: "NHTSA testing shows that the #1, #2 and #3 cars with the lowest likelihood of injury in a collision are the Tesla Models 3, X and S in that order."

This is linked to a news article on "CleanTechnica," sourced to the Tesla corporate blog. Notably, the blog does not claim that these vehicles are #1,2,3 in the rankings, but rather that in prior tests the X and S models were found to have "the lowest and second lowest probabilities of injury of all cars ever tested."

But it turns out NHTSA disputes even Tesla's more mild assertions:

"A five-star rating is the highest safety rating a vehicle can achieve," the agency said in the statement, which did not name Tesla. "NHTSA does not distinguish safety performance beyond that rating, thus there is no 'safest' vehicle among those vehicles achieving five-star ratings." https://autoweek.com/article/car-news/nhtsa-downplays-teslas...

In 2017, just over 30 cars attained 5-star ratings: https://www.safercar.gov/Vehicle-Shoppers/my2017_5_star_test...

> But it turns out NHTSA disputes even Tesla's more mild assertions:

I think it's worth noting that neither are contradicting each other, as they are saying different things. Tesla says NHTSA testing shows something, which may have nothing to do with specifically what the NHTSA says or how it rates. If they have access to the actual test data (or the tests are publicly available), they can make assertions off that data.

If that was the case, the NHTSA is clarifying its position, in that it is not making those claims so them saying "NHTSA does not distinguish safety performance beyond that rating, thus there is no 'safest' vehicle among those vehicles achieving five-star ratings." is a way of clarifying their position and staying neutral, since they haven't made that assertion for any other vehicles in the past.

In other words, it's possible for them both to be be correct and accurate, but talking about slightly different things. This doesn't even require intent to deceive from either party.

I, of course, have no idea if that's true and this is the case. It is one possible way to interpret the statements though, so a little additional investigation might be warranted before we determine that either statement is false or intentionally misleading.

This was my impression as well, in that what I've read suggests Tesla is making claims on the basis of percentage chance of injury from NHTSA data, but NHTSA does not take a position on whether differences in those percentages is significant.

I can't say I've verified the percentages myself though, nor do I have the requisite understanding to say whether there are margins of error present (which would make Tesla's claims correct but potentially statistically meaningless.)

> Tesla has achieved enormous results in ramping up its Model 3 production faster than almost any new model car in history.

That defies my gut feel, so I checked on carsalesbase to confirm/refute.

Nearly any new car model that I look at far outsells the Model 3 during new model ramp up...

http://carsalesbase.com/us-car-sales-data/tesla/tesla-model-...

How dare you fact-check an article? ;)

The author describes himself as a cleantech and blockchain reporter [1].

[1] https://medium.com/@michaelbarnard_46445

I've firmly started believing in the phrase Bitcoin not Blockchain and dismissing anyone who thinks we should be storing database data in a blockchain.

Its 2018, we found its expensive and slow to use blockchain, don't store stuff that doesnt need to be trustless.

He's also delighted to have been "mentioned in four books"

> blockchain reporter

I wonder if the general public has as negative a connotation of blockchain reporter as I assume most HN readers do.[1]

1: Even if you're bullish on blockchains, I don't think it's a stretch to say that blockchains reporters are not unfamiliar with overhyping news.

Which models did you look at? I don't remember a lot of models that are new to the market recently. I checked the Mazda CX-3 and the Nissan Leaf, and the Model 3 does appear to have crushed both of those based on first year numbers.

It's a lot harder to quantify "ramp-up" for these models too, because they almost never have a bare starting point. E.g. CX-3 is (IIRC) based on the Mazda2 platform, so do you include the preceding Mazda2 ramp-up in the number?

Still it's the pro-Tesla person that's making the claim; the onus is on them to provide the numbers or if it's not a fair comparison, to avoid it (or clarify it).

I guess that is fair, but according to this carsalesbase.com site, it isn't even remotely close. Tesla has built/sold more Model 3s in its first year of production than anything else I can find...by a lot. They built/sold more in the past few months than entire years for all of the other models I have checked.

That's why I asked what models the other person looked at because so far all of the information I can see from the site that they linked confirms the "pro-Tesla" person's statements.

Ford sold ~559,500 1965 Mustangs in a much smaller overall market.

Chevy sold over 200K Corvairs each of the three first years of launch.

First 12 months deliveries of Tesla Model 3 were a little over 26K. First 15 months deliveries (which is more apples-to-apples with other company "first year" launches) were a little over 80K.

It's not even close, IMO... Do you see the figures differently?

Those are high numbers, wow, and Tesla hardly started producing them in mass until mid year 2018. They could get to 50k a calendar year if Q3 holds. Just for estimation purposes let's use that. It's hard to believe they'd do as well as one of the best selling cars of all time, but they are in a different segment too. Tesla is selling cars that are more expensive than average, maybe a more fair comparison is the bmw 3 series, audi 3 or 4 series type cars. At least Tesla is doing pretty well at the current moment, but they are not doing as well as Mustang or Corvair - some of the best selling cars of all time.

Tesla has been limited by production of batteries and cars, now they have scaled those a lot. But they aren't the fastest of history, that seems clear. Unless they suddenly sell 125k cars a quarter they won't catch Mustang.

I tried to find "truly new" models (rather than generation refreshes or name changes). The first five I thought of were the Lexus RX SUV, the Fiat 500, the Mini Cooper, the 1965 Mustang, the 2015 Mustang (a ground-up re-platform, not a restyling effort).

It would be possible to argue that Tesla outproduced the Mini Cooper (depending on how exactly you shade the first year of production).

The others handily beat them, with the 1965 Mustang crushing Tesla...

Which year Lexus RX are you referring to? The Lexus RX SUV has been around a long time, and was originally based on a car platform which I believe was the Toyota Camry / Lexus ES platform.

The RX was released in 98 but was really a rebadged Toyota Harrier and came out a year prior in JDM.

You could argue the '65 Stang was a cheap Falcon. So they had everything in place, just changed up the bodywork.

Is the Model 3 just a cheaper Model S by the same argument?

(It's a genuine question. Yes, the Mustang was based in part on the prior Falcon platform. Wouldn't Tesla sensibly base the 3 in part on the S in the same way Ford continued to sell the Falcon alongside the Mustang? If Tesla is sharing literally nothing across models, that seems like a non-sensical way to run a car company to me.)

They're sharing what they can obviously, but the platform will be different. There are a lot of cars that are like 90% similar, especially sedans and crossovers sharing the same platform. To that extent, the Model X apparently used the Model S platform as its starting point (but no idea if it's still shared). The Model 3 however is a mid-sized sedan compared to S's full-size, so the sharing would mostly be limited to tech and components, but not platform.

Yeah, I'd imagine a new Rav4 or CR-V model goes from 0 to 10,000 a week pretty damn fast and with little to no fanfare.

That isn't a "new" model with all of the uncertainty that goes along with it though. Rav4 and CR-V have established reputations, entrenched supply chains, etc... A better comparison would be brand new models, not refreshed old models.

https://news.ycombinator.com/item?id=18223847

Toyota sells 1/2 million Camrys a year. For Model 3 to reach that level, Tesla will have to produce 10,000 a week.

The stated goal of tesla is to make 10k of them a week, instead of the current 4-5k. I worry that will be too many, there can't be that much demand can there? At least there's a lot of demand at the moment.

It didn't match my "gut feel" either, but I'm having a hard time finding a good case of a faster rampup in that data. I don't think a minor refresh would count.

Can you cite an example?

https://news.ycombinator.com/item?id=18223847 and

https://news.ycombinator.com/item?id=18223341

Interestingly, none of those pointed to the datasource that I was responding to.

I specifically searched the comments for "history" because another line in the article triggered my spidey sense:

> It still has hundreds of thousands of $1,000 pre-orders for the Tesla Model 3 (more than any car in history).

Um, yeah, Tesla IS having a hard time getting balanced coverage, and people writing articles where they specifically look for things Tesla does that nobody else TRIES to do is part of the problem.

I'm one of the very few people in the world who has put money down on a Model 3 and another car, and I still wouldn't count for the competition of "more than any other car in history" because:

* My "deposit" on my previous car was $500, not $1000, so I'm sure this author would find a way to discount that and say it's "not the same".

* My "deposit" on my previous car wasn't even solicited by the dealership; in fact, they didn't WANT to take my money, they just kept promising my spot in line was solid, which I wasn't all that happy about. Ultimately my $500 deposit was them photocopying my credit card so no money actually changed hands.

Can you provide a specific example? I looked through several different cars and can't tell what you are referring to. It depends on what year you look at and when the refresh happened. There are cars that outsell tesla, (like the very popular and reliable econobox basics from Toyota and Honda). But Tesla is outselling on actual model year sales most other cars with the model 3. If you exclude the top 3 or 4 cars in the us (honda/toyota civic, corolla, accord camry), tesla appears to be outselling all the rest, and I don't see bumps like Tesla's if you go outside the top 4. Maybe you were looking at trucks? Trucks sell an amazing number, but Tesla isn't in that segment, & I think it's reasonable to compare just to sedans.

> Nearly any new car model that I look at far outsells the Model 3 during new model ramp up...

The article is apparently referring to rate of change rather than absolute numbers.

Their numbers also compare favorably to other EVs, e.g. the numbers for the Model 3 from last month are about the same as the annual numbers for the Nissan Leaf or Chevy Bolt.

They're really struggling with delivery logistics though. I was scheduled to pick up my Model 3, which will be my 3rd Tesla, this Wednesday.

I've been hounding them for my bill of sale because the bank needs it before they'll send a check. I called the local delivery center again this morning and they informed me they gave my car to another customer. They didn't bother to let me know about this or the home office so they could begin looking for another VIN to assign to me. Apparently I was just supposed to show up on Wednesday and find out they didn't have a car for me then. I've also already taken out insurance for the VIN they gave me and provided it to my bank so now I have to redo all that whenever they get around to giving me another VIN and hope they don't give that car away too.

My first two delivery experiences were great but now I'm starting to think I'd get a better experience working with a traditional dealership.

I suspect as they fix one issue (production, etc), the next in line becomes the bottleneck. Now it’s delivery logistics, but once that’s fixed, it will become service, which already seems to be straining.

Companies around the world are building, shipping and supporting products simultaneously.

Really confused why Tesla can't do the same.

The way I understand it what the previous poster was saying was that they're building a high-volume pipeline which is likely to have issues as it's new to them, and the delivery issues can't show until there's sufficient volume coming in from manufacturing, and the service problems can't show until there's sufficient volume of vehicles delivered.

Tesla doubled their production last quarter, and everything else needs to double, and they are having trouble. The reason 'other car companies' can do better is because Ford or Porsche are stabile companies, with a slow change in the number of vehicles over time. They are more organized than tesla for sure, and they know how to change manufacturing lines when a new model comes out, way better than the young pup tesla.

But ford doesn't double production every quarter like tesla is doing now; one model might change but overall production, sales, support staff doesn't change. Ford has some amount of slack available, but I doubt they could double production from one quarter to the next and just be okay. At least tesla has shown their delivery was not up to the job. The factory is handling it, but struggling.

Anyway, if I got a new car, tesla or now, I'd want it to be well made and for there to be enough salespeople and support and finance and repair staff to handle me - tesla is sucking wind trying to handle all the new customers. At the same time, they are also on full production of new supercharging stations all across the us and the world.

Well hopefully that's the exception and not the rule. I mean you end up needing the VIN for everything (which was news to me but mine didn't change). My delivery pickup was great with the exception of sitting in the waiting room for a half hour to get my car. During my delivery date they had 100 deliveries scheduled.

As much as I'd like the company to succeed, it seems frivolous to dismiss the concerns as short sellers' PR projects and media's desire to drive traffic through clickbait.

Bond markets are largely dominated by institutional players who've seen every PR trick in the book, pay astute attention to fundamentals in hopes of finding a minuscule mispricing opportunity, and even they are not treating TSLA positively

https://money.cnn.com/2018/09/10/technology/business/tesla-s...

OTOH, some of those same investors know that not all tricks are aimed at them, and some tricks are effective.

In this very thread, we have people who are hesitant to buy the car due to solvency concerns: https://news.ycombinator.com/item?id=18222268

Car companies and rumors of solvency issues can often turn into real solvency issues due to the nature of the automotive business and the impact of rumors on sales.

Does that show the debt servicing costs vs the expected profitability of the current production pace? The August/September production numbers were pretty robust, and given the profit margin on the current models I could see the debt being serviced.

The tweets and executives leaving are just drama. Tesla will make or break on the production rate and the profitability per car, both of which seemed on target, but I haven't seen definitive numbers.

> Tesla will make or break on the production rate and the profitability per car

Sure. For now.

But every car company is releasing electric cars over the next few years. Many of which look like serious threats against Tesla's more profitable models. Electric as a differentiator will disappear and all that will be left is (a) brand, (b) design, (c) quality, (d) service. None of which Tesla is better than its competitors at. And you need executives around to be able to resolve this.

You need a charging network to fix range anxiety, and infrastructure to make batteries at scale. Charging network the major brands don't really have an answer for yet. And as for batteries, the major brands are still stuck at the small batch, high end segment of the market, because no one makes enough batteries to tackle the lower ends of the market except Tesla — everyone else just buys their batteries from Asia. BMW is trying to reopen their old, shuttered plants, but still are only aiming to be able to support 20-25% of their cars being electric by 2025, despite claiming that a fraction of that by 2020 constitutes "mass production." [1]

That's a long "for now."

[1] https://www.forbes.com/sites/jaclyntrop/2018/07/01/bmw-is-ge...

BMW sold nearly 600k each of the last few years, so even if "only" a quarter of their sales are EV, that's still almost as many cars as Tesla sells each year. And that's just one competitor out of a dozen, all of whom have significantly more marketing muscle and better supply chain and maintenance networks than Tesla.

bmw should theoretically be able to make good electric vehicles, but jaguar and porsche aren't making evs at scale. The new ipace will be a 20k car, the porsche was about 20k/year, and audi's etron something will not be available except for special order. I think they are being dragged into making evs, but there is a shortage of batteries at least at the current time.

Of course these companies can make great cars, but it goes against their expertise in gasoline drive trains, and their dealers will be significantly impacted by less maintenance on evs.

> and better supply chain

Curious how well that will work with shift to electric.

Tesla claims that spending so much on Gigafactory will give them the lowest cost per kWh compared to everyone else.

Someone like GM might be a big kahuna in the internal combustion world, but as far as buying lithium ion batteries on the open market they will have to line up behind Tesla, Apple, Samsung, home battery companies and those no-name Amazon brands building power banks.

I agree with what other posters have said in response to this comment, but also: what you're implying is that what BMW will be able sell in 2025 is equivalent to what Tesla already sold in 2018. By 2020 Tesla will already have launched the Model Y, and by 2025 no doubt many other popular lines such as the planned pickup truck, and significantly expanded their battery manufacturing capacity: they're already building new Gigafactories, in seven years who knows how many they'll have. Seven years ago they only sold Roadsters; now their North American sales numbers are on par with the Honda Accord.

Aiming to sell in seven years what Tesla sells today isn't going to be enough to catch up. No doubt someone will turn into the Google and Samsung to Tesla's Apple; this isn't a winner-take-all market. But it seems like Tesla's pretty far ahead and still accelerating, so there'll be quite a few Kodaks along the way too.

TBH I don't think the biggest danger to Tesla comes from BMW or VW going electric — it's from Alphabet's Waymo and GM's Cruise going self-driving. That's a potentially huge industry shakeup, and is an area where Tesla doesn't necessarily have an advantage... Although considering the amount of data Tesla collects for free from every car (each one has onboard LTE and WiFi — that the customer paid for! — and uses it to collect and upload driving data for Autopilot), they might be able to compete. We'll see. Their big bet here is that they can use their data collection abilities to advance the state of the art in computer vision fast enough that they don't need lidar, which is a controversial opinion; TBH I think it's a no-brainer that eventually it's possible — humans navigate with only two eyes, whereas the cars have eight eyes and a radar, and never get tired, bored, or drunk — but I don't know if they'll get there faster than Waymo and Cruise can build out their proposed fleets. That being said, if Tesla's right, they'll be right in a way that gives them a pretty serious additional moat beyond battery manufacturing capacity: lidar is much more expensive than radar, and Tesla would be the only firm able to operate with that cost advantage since everyone else teched into lidar.

Anyway, I don't think BMW (or anyone) will beat Tesla merely by going electric. They might still die, but not from that.

Don't forget they also need to appease their dealer networks and work out over the air updates when the car is built by thousands of parts contractors.

Disclaimer up front: I work for a Tesla competitor, any opinions are solely my own.

From the linked article:

> "And now NHTSA testing shows that the #1, #2 and #3 cars with the lowest likelihood of injury in a collision are the Tesla Models 3, X and S in that order."

https://www.cnet.com/roadshow/news/tesla-model-3-nhtsa-safet...

https://www.nhtsa.gov/press-releases/national-highway-traffi...

> "NHTSA does not distinguish safety performance beyond that rating, thus there is no "safest" vehicle among those vehicles achieving 5-star ratings."

Perhaps stop making claims that are not backed by the source you claim to use.

The CNET article you linked says:

“Over email, a Tesla spokeswoman did offer more explanation on the probability-of-injury statistic. NHTSA compiles raw injury data in a load of spreadsheets every year, and it computes the overall probability of injury, listing it as a Vehicle Safety Score in its published results. That's where Tesla pulled the data from, and you can check this year's results for yourself on regulations.gov.”

It seems that NHTSA is only disputing that they hand out an official “safest vehicle” rating, not that Tesla did that well in their data. I would say that the claim is backed up if going by the actual results and not the capped, publicized rating. I’m curious what you thought when you came across that part of the article.

Man regulations.gov is a terrible site. The only document I could find that contained "vehicle safety score" was:

https://www.regulations.gov/document?D=NHTSA-2015-0119-0001

It's linked from the CNET article: https://www.regulations.gov/docket?D=NHTSA-2017-0037

Disclaimer again: These are solely my own opinions.

> "I’m curious what you thought when you came across that part of the article."

Several things:

1. I think Tesla vehicles are very safe.

2. I think there are several reasons NHTSA does not rank vehicles on safety. Also NHTSA specifically does not allow companies to claim a specific rank using NHTSA data.

3. I think not all real world factors may be accounted for in tests.

4. I think tests get harder over time, so Tesla is well prepared for future tests.

5. I think Tesla has a history of bending the rules in their press releases, including making other safety claims that are not supported by the agencies they quote.

6. I think with autonomous vehicles we will be able to log safety incidents per user-mile in various conditions and have really comparable data - and it's a shame we don't already have that.

7. The score mentioned is based on tests, not real world data. Without real world data, you can't say whether a vehicle is actually safe or not. I can't speak for NHTSA, but I feel that is their point of view.

Thanks for the disclaimer.

Obviously the NHTSA does not want the trouble, but the "lowest probability of injury" came from their tests. Apparently they were not supposed to make this public.

Truth is, comparing the videos side by side with other 5 star rating vehicles it is pretty clear which one is safer.

I think the fair comparison is something like above a certain level nhtsa wants to say they are all good with little to distinguish them, but there are numeric differences. Like rating a moving from 1 to 5 stars. There is little discernable difference between a 4.8 and 4.9, but you could say "rated better than that 4.8 movie". I think tesla was the top on some numeric scale and nhtsa doesn't want to talk about small differences.

The thing is... the difference is significant.

Check this video out: https://www.youtube.com/watch?v=Uxw_LSPBlGo

There are many others.

The current 5 star cars were the best available in the industry, but it does not mean that nothing significantly better can exist. Tesla is pushing the industry forward with this.

Disclaimer again: solely my own opinions.

This is where you have to consider the whole safety design.

In the video, the pole does intrude into the cabin more on non-Tesla vehicles; however, that means that more (de)-acceleration is passed on to the occupants of the Tesla. That is the purpose of crush zones, and also why no-context footage of crash tests can be very misleading.

Additionally, there are side curtain airbags that will deploy before the pole actually gets to where the occupants' head would be.

Just as a note, the author is from CleanTechnica. They are known to be extremely pro-tesla.

Best case scenario - most of their articles quietly ignore the downside and prop up the upside. Worst case - they lie or embellish the truth.

Disclosure: I've followed both bulls & bears for almost 6 months - and I've got quite a lot riding in short positions.

I saw a graph on one of the pro-Tesla sites that basically showed that the Tesla debt is to scale with the rampup of the Model 3 production, and that it isn't out of proportion for the scale of what the production scale of the Model3. And the scale now is above profitability. Is that not true?

That is not true. Tesla still hasn't paid off its debt from the Model X, the Model S, the Gigafactory, or the Supercharger network. They might have managed to achieve positive cash flow with respect to Model 3 specific investments, but that doesn't mean they generating anywhere near the level of cash they need to pay off past debts.

I think that is an arguable point and at least we don't know what their profits are, but we'll know better after q3 earnings are out. If they are making the claimed 25-30% margin on current model 3's, making 50k of them a quarter at avg price of 60k, 50k60k.25, that's a car profit $750 million/quarter. That will pay down their debt at a rate 3 billion a year. I think this is why they said after q3 they will start being a real company, with q3 and q4 at the current rate they could be profitable and actually pay off debt. If all else fails they could sell more stock right now, but that only goes so far. I think they will make a significant profit by q4, and probably a good profit in q3.

The Kochs didn't make Elon tweet himself into an SEC sanction

"Musk and the Tesla board have decided to keep Tesla public." Decided as in there was no plan in the first place

Yeah, that was stupid and an unforced error. Anyway, that seems to be close to being closed.

Tesla still isn't doing all that great on production.[1] They've been unable to sustain the 5,000 units a week output for the Model 3 line. They're back down around 4,000. The week to week numbers are all over the place, from 2000 to 6000.

Auto plants are usually much more consistent. A Ford exec points out that their F-150 production line at the Rouge produces a truck every 55 seconds. You can take the plant tour in Detroit and see this.

Tesla's open-ended tent setup in Fremont isn't going to work once rainy season starts. Their production problems should have been fixed by now, but clearly they're still struggling. And, as Bob Lutz says, they have way too many people in the Fremont plant. Tesla has 10,000 workers in Fremont. Ford's entire Rouge complex has about 5000 workers.

Tesla has accomplished a lot, but the core business still isn't running smoothly.

[1] https://www.bloomberg.com/graphics/2018-tesla-tracker/

First of all, we don't know whether the production is "all over the place". Your are quoting the weekly numbers from the Bloomberg tracker. But this tracker does not know about actual production numbers. It mostly looks at VIN allocation, which is not directly coupled to production numbers. Typically, Tesla allocates about 30% more VINs than the production numbers. Based on that, Bloomberg came close to the total quarter production number, but it does not give information about the weekly production numbers. We only know the average production number of over 4000 cars/week.

Tesla has more workers in their Freemont plant, but they have a very high vertical integration. They are producing their own seats for example.

Ford's Rouge plant has a steel mill. Iron ore comes in via barge. They have a glass plant. A power plant. A casting plant. An engine plant. Now that's vertical integration.

Ford also sold (far) fewer cars of any model in North America than Tesla did, and is exiting the market minus the Focus Active and the Mustang, retreating to just SUVs and trucks.

Tesla's tent is waterproof, more like a temporary structure that will be in use for years.

I actually really want to buy a Model 3 but these stories that Tesla has a bridge note due in March that they may not be able to cover have me concerned. If I buy a car I want to make sure the company is around to service it.

I don't see this article covering that particular article. In fact the word "debt" appears nowhere in it.

Edit: I'm actually asking someone to prove the debt issue wrong if they can. It is literally the only thing keeping me from buying.

Huge Tesla fan here but this is the one thing that has me up at night too. I would like someone to "show me the way" on this topic too.

I hope Tesla succeeds, but I cant deny I'd love to pick up a 3 on the super cheap because Tesla went belly up.

This sounds good until you realize you bought a first generation vehicle(unreliable parts) and a company that is no longer producing them.

It’s a serious concern. I bought an special anniversary edition of a car, had something hit me on the highway a month after, and had to wait a month for the manufacturer to make the special parts.

But surely Tesla's vast dealer network would remain available to perform any maintenance for the indefinite future </s>.

This must be reflected in insurance rates. How much more does it cost to insure a Model 3 than a Camry?

It's very unlikely that Tesla will disappear. The bear/short case here is just that the stock goes to $0 because it's overvalued. The company will not die.

Nah, Im going full Rich rebuilds style. Buy 3 of them for a couple grand each, frankenstein them together into one working vehicle.

Not rooting for Tesla to go out of business, but the result of it could be a ton of cheap EV parts hitting the market.

The CEO has shown willingness to fund Tesla Motors and SpaceX with almost all his personal funds. If I remember correctly, he is worth more than Tesla's debt, and unless he is somehow unable to liquidate enough assets to cover that debt, it won't be the end of Tesla.

> he is worth more than Tesla's debt

Most of Elon's net worth is in illiquid SpaceX stock and Tesla shares.

Why is the Tesla stock illiquid? It's publicly traded.

I'm sure he could sell SpaceX stock on the secondary market quite easily. SpaceX has never lacked in interest from investors.

> Why is the Tesla stock illiquid? It's publicly traded.

Pardon me, imprecise phrasing. SpaceX stock is illiquid. Tesla stock is liquid, but if Tesla is having financial difficulties its stock will go down. If Elon can sell Tesla shares, Tesla can sell Tesla shares.

> I'm sure he could sell SpaceX stock on the secondary market quite easily

Not "quite easily". One, he's a super material insider. That makes the process more complicated for everyone involved. (It would be difficult to avoid giving everyone else the right to participate on the same terms.)

Two, he's a super material insider. The fact that he's selling will scare away many buyers.

Three, he's a super material insider. His selling SpaceX stock to prop up Tesla screams that nobody is willing to finance Tesla in the open market. It would immediately lead to a rout.

I'm not convinced that selling some of his SpaceX stock on the secondary market is difficult, or that selling some of his Tesla stocks would cause a rout, especially when the immediate consequence would be paying back the debt, thereby saving the company.

But I hope some experts (e.g. stock analysts) would comment on this scenario, I think it's interesting.

> I'm not convinced that selling some of his SpaceX stock on the secondary market is difficult

Selling SpaceX stock is not difficult per se. The CEO selling his SpaceX stock for the purpose of purchasing shares in a public company, of which he is also the CEO, is. (Source: this is what I do for a living.)

> selling some of his Tesla stocks would cause a rout

Elon Musk selling his Tesla stock to buy new Tesla shares, thereby giving Tesla cash, wouldn't be a problem. (Though it's a roundabout way for Tesla to issue new shares.) Elon Musk selling his SpaceX stock to buy new Tesla shares would be. It shows Tesla was unable to raise capital in the stock markets.

A CEO selling off a large share of stock in the company (s)he's running is a de facto red flag. Often it's headline/breaking news.

Why is the Tesla stock illiquid? It's publicly traded.

It's not liquid as far as Musk is concerned. Ignore the aspect of "CEO dumps $COMPANY stock" for a moment. The kind of numbers Musk would need to dump would also affect the share price. 'cuz, you know, a bunch of supply just came online without corresponding demand.

My understanding is that the majority of his personal net worth is from Tesla (+Solar City) and SpaceX. Would that limit his ability to personally fund Tesla?

Just did some rough math on this. He's reported to have 55% of SpaceX, recently valued at 27.5B [1], and ~19% of Tesla [2], most recently at ~44B, for a combined net worth of ~23B (before any debt). He therefore definitely couldn't personally buy out Tesla at current prices, and any significant investment of personal funds would require the sale of SpaceX shares.

Also, much of his liquid pocket money has come from loans backed by his Tesla Stock. This could be a problem if Tesla stock price drops too much, as the stock he has pledge is required to be no less than a multiple of the money he has borrowed. [3]

Disclosure: I am short Tesla.

[1] https://www.cnbc.com/2018/04/13/equidate-spacex-27-billion-v... [2] https://money.usnews.com/investing/stock-market-news/article... [3] https://www.forbes.com/sites/jimcollins/2018/05/18/musk-has-...

Thanks for the facts.

You state that he can't buy out Tesla, which is true. But why does he need to buy out Tesla to cover their debt? On the contrary he would need to sell some of his Tesla (and perhaps SpaceX) stock and give the cash to Tesla to cover their debt.

Those are really good questions. I don't know what form a transfer of cash from Elon to Tesla like that would take. Tesla issuing new shares for him to buy?

Honestly, on paper there isn't any reason why Tesla can't just sell additional shares to the market in general, not necessarily just to Elon, in order to get enough money to cover their upcoming debt payments. Elon has publicly said he won't sell shares because Tesla won't need the money because it will be profitable[1], but some people are skeptical [2]. Maybe he just doesn't want to walk back his statement?

Also as previously mentioned, he can't sell all of his Tesla stock without paying back some of his personal loans.

[1] https://www.cnbc.com/2018/08/01/musk-says-tesla-wont-be-sell...

[2] https://www.businessinsider.com/teslas-upcoming-debt-payment...

You seem to have some reasonable answers about tesla, what do you think about tesla's increasing sales & production of model 3 producing postive cash flow, since they are now in the mass production and away from the thrashing around trying to increase production phase (and hopefully not digging a hole and burning it kind of like the poorly executed early "production hell"). If they make & sell 50k model 3s per quarter at 60k and make 25-30% margin, that's $750 million (50k60k.25). That is approaching a sustainable business if they produce $3 billion a year. Take out say a billion in infrastructure spending (new stores, super chargers, etc), that looks much better than losing 700 million a quarter. I thought they were losing money because of wasteful production ramup.

Thank you, being reasonable is really important, and being unreasonable when investing can be very expensive!

Producing 55k Model 3's per quarter [1] will definitely help with the cash flow situation. I think the biggest questions that determine if they can be self-sustaining are:

- Can they ramp up Model 3 production quickly enough to meet the debt obligations they have accumulated to date?

- What will the average Model 3 margin be, given the price distribution from 60k to 35k?

The bull case [2] aligns with your basic assumptions that the 3 will add significant cash flow that allows them to get over the "debt maturity hump". Note that their analysis does include other sources of cash flow (energy credits, remaining line of credit).

The bear case, basically, disagrees. They suppose that there will not be sufficient demand for the higher end Model 3, given increased competition from vehicles like 2019 Jaguar I-Pace (69.5k, 240mi); Chevy Bolt (37.5k, 235mi); and maybe Hyundai Kona EV (? $, 250 mi). This could then put Tesla into a negative spiral, where shrinking orders cause their accounts payable to not keep up with their lagged accounts receivable.

Also it's worth noting that they are probably on track to spend 2.5B in capital on PP&E this year based on 1.25B in first six months [3], and spent 3.6B, 1.3B, and 1.6B in the previous three years[4]. Adding in another 0.75 - 1.0 in selling/general/admin and R&D costs per quarter, on top of the cost of producing their cars and servicing their debt, makes even the 3B/yr in Model 3 gross profit case less of a slam dunk for Tesla success.

I think it really could go either way at this point, and the next six months will be telling. Elon does has a tendency to just make things work, but I am taking a risk here and siding more with the negative case.

[1] https://www.bloomberg.com/graphics/2018-tesla-tracker/

[2] https://www.cnbc.com/2018/10/09/tesla-on-path-to-profitabili...

[3] http://ir.tesla.com/node/18946/html

[4] http://ir.tesla.com/node/18501/html

Thinking about q3, q4, q1/19 - the i-pace won't come in their small 20k annual run rate until next year, so it doesn't matter much for now. It does look like a reasonable car. Probably better interior than the tesla, decent range, good design - without access to superchargers not very practical for long trips, but I think it's a perfect example of what legacy automakers can do if they try hard. The other big question is where will they get enough batteries to mass produce an ev - apparently that's a major reason they can't make many. It's the best competitor to the tesla so far. Does that car have chademo or ccs charging? I've never seen a ccs charger, wonder if there is one around seattle.

The chevy bolt is a great little car, it's just not as a sexy as the m3 (will tesla take this over from bmw's namespace :-)). Of course it's half the price of the current selling model 3's. I think the bolt is a fine car, not too sexy, but sales in the us are anemic, yet people complain they are hard to find. Also gm isn't making many of them, perhaps for same reason as ipace. hyundai kona ev looks like a nice car too.

All those cars are inferior evs to even the model 3, but they aren't that far away. If only they could mass produce them, and the biggie, get auto dealers to try to sell them - that's the part that's really missing so far. It's literally against their own interest at least in the short term to sell evs.

I think you should look out more than 6 months. Tesla has enough customers world wide for the 3 to sell another 100-150k of them - remember they are hardly even selling them in Canada up to now, just recently ramped up. It's only after the pent up demand is handled that we'll know. I'd say look at what q3 and q4 next year do - Tesla sales are set through mid next year just be putting their cars in other countries. The optimistic case if they'll reduce manu. costs and be able to make the base short range model and survive making a 35k car. Meanwhile, and this is the exciting bit, the higher-midrange of bmw, mercedes, audi, maybe low end porsche will face significantly reduced sales because of model 3. Those companies aren't doomed, but the 3 is so awesome, there's so much pent up demand. Even in seattle the sales office was packed last weekend, and they put 100s and 100s of them on the road last month.

W1, what do you think of Tesla new 'medium range car' tonight? I think it's a master stroke. They now have a 45k car (yes, not there yet for the 35k one), but consider this - the people buying this now will get the 7500 tax credit if they get it before the end of the year. So people who were thinking of waiting till they could buy a 35k car can now buy a 45k car! They will pay tesla more, trading off getting that car now for 7500 off. Vs the 35k car, it's 10k more money but effectively 45-7.5=37.5 for more range.

I think it's a brilliant way to harvet more money from people and maximize the benefit of the fed tax credit.

I should be honest that I want tesla to succeed because we need aggressive electric car companies to move the whole industry along. I don't want them to fail. I think their business strategy looks better than ever. IF there is a bunch of people, lets say 100k americans who want this car in this range and price, they'll be golden.

Its extremly unrealistic that this would happen.

First of all, with the Model 3 sails they now have a huge revenue stream.

Secondly, I think its pretty unquestionalble that they could easly raise more money. If they were willing to issue more stock.

The note due in March is convertible. They can cover it with cash, issuing stock or a combination of the two. It should be a concern for stock owners because it might mean dilution of their position but shouldn't be a concern as far as being a company ending event.

> They can cover it with cash, issuing stock or a combination of the two.

They're convertible notes with a fixed conversion rate, Tesla doesn't get to decide on what the noteholder wants. If the stock price isn't high enough whoever is holding the notes will demand cash (cash that Tesla doesn't have).

I think the above comment was claiming that they could issue stock to generate the cash that they'd use to pay back the convertible notes with

On the second quarter call this year, Elon Musk stated:

> “We’ll not be raising any equity at any point... I have no expectation of doing so; do not plan to do so.”

Issuing new shares would be a disaster. Far more likely is they come up with a way to roll the debt forward.

And presumably that risk is already priced in to the stock. It's not as if investors will be caught be surprise.

A very important milestone will be the numbers for Q3, which will be announced early November. If Tesla is, as expected, no longer loses significant amounts money or even is slightly profitable, the outlook should be very good. The Model 3 production volume is up, there should be some volume increase in Q4 and that means a lot of revenue. Based on that, renewing the credit shouldn't be too difficult in March. The credit due is about 900 million, while Tesla has a quarterly revenue of more than 5 billion.

That never once crossed my mind, and doesn't bother me now. I've only had my 3 for two weeks and I'm definitely happy I didn't buy a new Audi A4 instead.

If you're worried, I'd wait until the Q3 earnings call early next month. Their short term finances mostly hinge on the Model 3's margin.

Article could really use a disclaimer clarifying if the author owns stock in Tesla.

Fluff article. He could've spent a moment reviewing TSLA's financial statements for facts instead of talking about conspiracies.

And this is a bad article as well

> The company is massively outselling its competitors in North America

How can you compare Tesla models to BMW 7? It should be compared to BMW5. What is more, SUVs rule the market and that's where they main focus is (Audi e-tron, Mercedes EQ etc.)

The 3 is more comparable to a BMW 3 series.

The Model 3 became the fifth best selling car in North America in Q3. Take a look at the sales numbers for any car BMW makes that you want — the Model 3 beats all of them. The only cars that outsell them are the Honda Accord, Honda Civic, Toyota Camry, and Toyota Corolla. And it looks to be on track to become the fourth best selling car as of current sales numbers.

This article is especially interesting in light of "Can We Go Electric Before It’s Too Late?" https://www.citylab.com/transportation/2018/10/where-america.... The answer may be "no," but Tesla is a big part, and outside of China likely the biggest part, of the answer.

China is aggressively going electric. Shenzhen went with all electric buses last year. Getting a permit for a car in Beijing is far easier for an electric car. China's electric car production is 3x US production.[1] Yes, many of them are small city cars, but then, they're used for getting around big cities.

[1] https://qz.com/1303594/when-it-comes-to-making-electric-cars...

Ya, you’ll see lots of Tesla’s in Beijing these days because of the lottery, even though they cost 2X what they do in the states (rich Chinese don’t want to be seen driving around in a BYD).

Besides the problematic assertions this article makes about Tesla's business fundamentals (already addressed in the comments), I just want to call out the absurdity of its media conspiracy theory:

> Media outlets are doing what they can to survive. They’re laying off seasoned journalists with strong fact-checking instincts. They’re laying off fact-checkers. They’re laying off editors. They’re rethinking how they write headlines to compete with clickbait...Tesla and Musk are big eyeball grabbers. They have been for five years, as this Google Trends graph shows. One publisher I work with regularly told me, anecdotally, that anything with Tesla or Musk in the headline is likely to perform better than average.

Only someone who has his head firmly in the Tesla bubble could imagine that the eyeballs that Tesla/Musk articles attract are any kind of significant blip in the revenues or traffic of a major general news outlet. It's really hard to imagine how clueless this author is, as if he had just woken up from a 2 year nap and doesn't realize what currently dominates the headlines and reader traffic.

Take this Sept. 4 article from BuzzFeed News, which arguably directly led to Musk bringing a libel suit upon himself: https://www.buzzfeednews.com/article/ryanmac/elon-musk-thai-...

I would bet a decent chunk of money that the reporters who worked on that story get paid more, and put more work into that article than did their colleague for this article from yesterday, "16 Bakers Who Should Be Very, Very Ashamed": https://www.buzzfeed.com/jamiejones/people-who-wont-be-winni...

The "16 Bakers" article has 326,000+ views, according to Buzzfeed's own metrics. The BuzzFeedNews domain does not display pageview metrics, perhaps partly to look more dignified, but also because BuzzFeed's reported articles generally are nowhere near as popular in pure pageviews as the standard Buzzfeed listicle. Moreover, the Buzzfeed listicles sell ads (the Bakers' listicle has a sponsored Uncle Ben's ad), whereas the BuzzFeedNews articles rarely have any ads.

So tell me how paying quality reporters to write damaging articles about Tesla/Musk helps BuzzFeed's bottom line?

But who would want to buy a car that was made in a tent?

A company can be doing well and have its stock massively overvalued at the same time.

Theirs is 50 percent profit business. Only matter is, it will take time to zeroing their debt.

I've never seen that number before, any source?

Tesla aims for a 25% profit margin on the Model 3 and is not there yet: https://www.cnbc.com/2018/05/21/tesla-shares-to-soar-on-stro...

From what I can see, the margins on the other models are similar. And the company still loses money overall.

May? That's pretty old.

https://www.teslarati.com/tesla-model-3-solidly-profitable-s...

That is more recent (July) and shows 30% on the long range, without dual motor or performance bumps, all of which are probably really profitable add-ons. Of course who knows who is paying this guy to do the teardown/sourcing for the article.

I'm guessing the 35k version rolls out when it becomes profitable to do so to keep on target with the debt payments.

Anyone who has eyes can see that there are lots of Tesla vehicles on the streets wherever there are lots of wealthy people. That has never been a question or something that headlines suggest. The problem is Tesla sells these cars for less than it costs to build them and have had trouble making enough of them with a build quality matching the luxury price tag. Short sellers will magically go away if Tesla can start to consistently make money by selling cars, until then nothing matters.

If you haven't read it already, don't waste time reading this article.

Supposedly, Tesla's cars themselves sell for more than their production cost. The loss comes in supporting Tesla-as-a-fuel-reseller* - aka the Supercharger network.

It would be like if Toyota started opening gas stations, and Camrys and RAV4s and Siennas and Tundras got almost-free gasoline. While these businesses are complementary, they're very different operations, and should at least be in separate business units, if not a subsidiary or partnership with an existing fuel supplier.

*Electricity of a specific voltage and amperage is now a motor vehicle fuel.

Any source for this? The Supercharger network is no longer free (at all for Model 3, 400 kWh in annual credit for Model S/X), but either way it was and still is a heavily marketed feature of Tesla vehicles so you can't ignore the cost. They need to make money or they will go out of business.

Tesla's biggest problem right now is Elon and all the negative publicity he generates. I think the stress and lack of sleep and crazy long hours are finally getting to him, resulting in outrageous behavior that has become a severe liability for Tesla.

Just a year ago I would never have thought I would say this, but perhaps he needs to step aside and hand the reins over to a talented COO-type like with Gwynne Shotwell over at SpaceX.

edit: of course I'm getting downvoted for saying bad things about Elon on HN. Oh well, I've got karma to kill, so bring it on. :)

This is probably availability bias. You read about his gaffes but you have no exposure to what he actually does inside the company.

That's the thing though: why do we have no exposure to what he actually does inside the company? You would think that Tesla would put in some effort to generate positive PR for their CEO to counter his nonsense. Why aren't they?

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