Tesla cuts prices as Model 3 deliveries narrowly miss estimates | Hacker News Reader

Tesla cuts prices as Model 3 deliveries narrowly miss estimates

bloomberg.com

132 pointsnopriorarrests259 comments

"Automaker sold 63,150 Model 3 in the fourth quarter" - [and this is only in North America] What Tesla has achieved is truly unbelievable and it is kind of hilarious to see HN meltdown and Tesla bashing. To give you a perspective on how much of a gigantic scale this is, BMW only sold 99,000 3/4 series in the US in all on 2017 [1]. Tesla is a carmaker who only sold ~100 vehicles in 2011. It is amazing how much of Tesla's success is under-appreciated in this forum.

[1] http://carsalesbase.com/us-car-sales-data/bmw/bmw-3-series-4...

Nope, that's just the U.S. sales figures for BMW (says so in the link). You need to add the European sales of the 3-series (129,000) and 4-series (64,000) with the China figures (123,000) to get a bit closer to the global figure of 415,000 cars for both 3/4 series.

Yes, you are right. Edited post

Thanks! Tesla's progress sure has been impressive even with the correct figures.

Yes, but the Model 3 won't start selling in Europe and China until this quarter. Once that happens we can compare sales, but for now US is the only area where you can make a comparison.

Meanwhile, Toyota, which is only at 3x the market cap of Tesla, sold >2,200,000 vehicles in Q4. It ships more combined battery capacity in its hybrids, then Tesla does in its EVs.

Toyota was founded in 1937, so it has a 80 year head start. I didn't say anything about market cap, but Toyota's is not valued as a growth stock.

Sure, and Samsung and Huawei sell more phones than Apple. Probably Tesla is overvalued but that doesn't mean it isn't very valuable. Pricing power is much more important than volume.

I think you are misestimating. Toyota sells ~1.5 million hybrids (plugin and otherwise) per year. If I'm not mistaken, the average capacity is ~6kwh. That works out to 9,000,000 KWh (9 GWh).

Tesla sold about 250,000 cars last year, with an average pack size of at least 70 KWh. That works out to 17,500,000 KWh (17.5 GWh).

Obviously, these are estimates, but Tesla is also running at a pace closer to ~320k units for next year with only marginally smaller pack sizes.

Revenue is another interesting metric. Toyota is at ~280 billion/year (USD). Tesla is currently at ~27 billion/year.

I think even these estimates of Toyotas battery capacity are too high. Here's my attempt:

Prius Prime PHEV: 8.8 kWh Regular Prius: I couldn't find recent numbers, but 1st gen was 1.2 kWh

All other hybrids seem to have between 1-2 kWh https://en.wikipedia.org/wiki/Hybrid_Synergy_Drive#High_volt...

European PHEV sales were 0.3% of all sales and 0.65% of all hybrids [1]

US Prius Prime 2017 sales (I think their only PHEV model) were 21k units. [2] Note that 21k units just in the US out of 1.5m hybrids total gives us 1.4%, so maybe the PHEV prius is not selling as well in Europe.

Let's say we have the following scenarios of 2.5 or 5% of the total 1.5m number being PHEV to be conservative. Further assume that regular hybrids have 1.5 kWh. For the 2.5% scenario, if my math is correct, that yields 550,000 kWh. For the 5% PHEV scenario, that yields 874,000 kWh.

[1] https://insideevs.com/only-0-3-of-toyota-sales-in-europe-wer... [2] 2017 table from https://insideevs.com/monthly-plug-in-sales-scorecard/

Oh, nice job finding ratios of the PHEV to the rest. I felt like I was probably overestimating, but it was hard to get a feel for how much. I agree that the real number is likely closer to your estimates.

Tesla will produce close to 400k cars from one factory in 2019. It is now (relatively) easy for them to reproduce that with all their learnings in additional factories around the world.

They also own an energy and solar branch of the company which have huge growth potential and run their own electric (gas) stations.

The production and delivery numbers they came out with were very good and higher than most had expected. These numbers will allow them another profitable Q4 likely higher than their Q3 numbers.

The price cuts are likely to impact margins, but is in line with what Tesla had done with the Model S and X as production efficiencies allow them to reduce manufacturing costs.

The reaction looks like a big overreaction as the market is apt to do. Seems like there is a lot of Tesla hate on the internet for some odd reason these days.

At $50B Market Cap, Tesla should be delivering at least $2B Annual profits.

It's clear Tesla has run through higher margin demand. There aren't many people in the world who can afford a $50,000 car. Tesla is a niche market car, but priced as a mass market (like iPhones) product.

Expect Tesla's sustainable profit to be around $500 Mil per year and it's share price must be cut in half to justify that

> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits.

LOL what?

Show me another company with $50B market cap growing at 50% a year on the top line to deliver $2B in profits.

I'll wait.

Huh? Did you compare Q3 and Q4 numbers, the growth has pretty much reached steady state. 90,000 per quarter is what Tesla will be and probably 500 Million annual profit.

50% profit growth is delusional at this stage

I think OP's point is that Tesla isn't just a car company but they're also an energy storage & solar producer. While the car biz may have be leveling off (and that's not accounting for the semi & modely Y launching this year and next respectively), their energy storage is starting to take off along with the solar roofs so this provides huge growth opportunities in the future.

Q32018: 55,800 Model 3s delivered.

Q42018: 63,100 Model 3s delivered.

That's a 13% growth rate in a single quarter which is more than 50% growth rate annualized.

If Tesla was expecting 50% annualized growth, or even growth comparable to their recent historical trends, they would not have cut the price tag on every model of car they sell.

That... isn’t how economies of scale or elasticity of demand work.

I think you might need to brush up on your understanding of demand elasticity curves.

Tesla is dropping the sticker price of their vehicles because they think that demand for their cars is at least somewhat elastic with respect to sticker price, and they're in a better position than you or me to have the data and analysis on this. (Tesla has also announced that this is why they're dropping the price so I'm not sure why you're arguing this point?)

Economies of scale are not related to this drop in price. Economies of scale refers to it being cheaper to product an product at scale due to efficiencies in the use of the largely fixed-cost capital expenditures. Companies don't usually drop prices due to EOS until at least a quarter or two after they've reached that point in the production cost cycle, largely to confirm that they've actually reached EOS operationally, and some company's retain the efficiencies from EOS as profit until/unless they need to for competitive market reasons.

Or: they’re dropping the sticker price to keep the overall cost of the vehicle stable or lower to meet demand.

Economies of scale allow them to do this.

Or: since the car is actually more expensive out-of-pocket even after the price "drop", they're simply doing this to reduce the sticker price they quote on all of their marketing materials.

I don't follow your logic here. With the reduced tax incentive, Teslas have seen an effective increase of ~$1,750 USD.

Would you normally argue that a yearly price increase of ~3% on a car portends anything in particular about demand? I guess it implies that they expected demand to fall if the increase had been ~6% instead, but that doesn't seem like anything that would preclude 50% worldwide growth.

Yes, but during Q3, weekly production ramped up from ~2000 to ~4200. During Q4, weekly production stayed pretty much flat.

https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iqPFhpeWEIS...

Article: https://www.bloomberg.com/graphics/2018-tesla-tracker/

It’s almost like the company should consider manufacturing and selling Teslas in a country other than the USA...

Please don't post in the flamewar style to Hacker News. It degrades discussion, regardless of how right you are. Your comment would be fine with just the middle sentence.

https://news.ycombinator.com/newsguidelines.html

> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits.

When Amazon reached that mark in 2009, their annual profit was slightly over 1B... And the car industry isn't famous for particularly high margins.

> Expect Tesla's sustainable profit to be around $500 Mil per year and it's share price must be cut in half to justify that

There are no such rules for share prices, especially with this kind of revenue growth. Nobody knows where Tesla will be in 5 years but most shareholders expect easily an order of magnitude higher revenues and possibly profits.

Yeah, there are plenty of avenues for Tesla to increase profit, such as:

- new vehicle markets (def. semi trucks, perhaps boats and trains as well) - solar - military

They don't have a ton of baggage like their competitors, so they can pivot their battery business in a variety of ways without too much additional investment.

The real question is if they can stay ahead of competition as they expand.

> The real question is if they can stay ahead of competition as they expand.

So far they have not only expanded their lead (e.g. Nissan Leaf used to be a bestseller), they've also proven that they got their priorities right from the start. Look at the new Audi e-tron, the Mercedes GLC and the i-Pace: they're all suffering from horrible aerodynamics that cost them 20% or more range at freeway speeds compared to Teslas. They have no fast charging networks able to support similar sales numbers even to Model S/X. Tesla apparently did proper planning while the big car makers are just trying to produce their usual cars with electric engines. They are now making expensive mistakes that Tesla avoided altogether, so I'm confident about Tesla's leadership.

Nissan has sold nearly every Leaf it has ever made. It simply doesn't make many of them, since it was first intended to be a compliance car and a loss leader for the brand.

You can't even buy a Leaf in most of the country, so if you were to scale up sales of the Leaf to the same geographic territory as Tesla sells to, the sales would be about comparable.

Tesla apparently did proper planning while the big car makers are just trying to produce their usual cars with electric engines.

Ah, proper planning. That certainly explains the billion-dollar line collecting dust, the year-long delay on every model, and their inability to properly deliver finished cars to their customers when promised (i.e., basic logistics). The cars you've mentioned aren't meant to have maximum range at high speeds; they're meant to have X range at commuter speeds while providing a luxurious ride. You'll also have to demonstrate (with cites) that the aerodynamics will cost them 20% of posted range, since those aerodynamics have already been factored into their range as part of the federally-mandated testing.

> and their inability to properly deliver finished cars to their customers when promised (i.e., basic logistics).

What are you even talking about? I bought my Model S 2 years ago and waited the same amount of time as for the previous BMW (3 months), which didn't even come from overseas (I'm in Europe).

> The cars you've mentioned aren't meant to have maximum range at high speeds; they're meant to have X range at commuter speeds while providing a luxurious rid

And this is why they are no Tesla competitors for most people - who don't want or can't afford a second car for long distances.

> You'll also have to demonstrate (with cites) that the aerodynamics will cost them 20% of posted range

Lots of people have, it's simple physics. At higher speeds, air resistance causes most of the energy consumption. The results can be calculated easily:

https://www.ecalc.ch/evcalc.php?lang=en

130 Km/h (= 80 mph)

Model S = 22 KWh/100 Km

Mercedes EQC = 30 KWh/100 Km

i-Pace = 28,5 KWh/100 Km

The fast charging network only exists in a few areas. If you happen to live there, great. But for the rest of the country, "range anxiety" is still pretty real.

Once Jaguar, Porsche and Audi are able to produce electric cars in quantity, things are going to get interesting. For instance, I was recently looking at the Jaguar I-Pace, and was stunned by how long the wait and how high the markups are. Clearly there's a demand for a $100,000 electric car, but things are going to get difficult for Tesla once the competition arrives.

The i-Pace makes me drool far more than Tesla... but it's going to be a while before I can afford either so it's rather a moot point!

Competition has been arriving for quite a while though. Having just bought a Tesla, I can tell you I'm starting to appreciate more than just intellectually the huge network of chargers and other infrastructure that company has laid out. It's not perfect but anyone else wanting to play in this market will need the same, and Jaguar is in no position to do it. I don't think anyone at Tesla is losing any sleep over Jaguar TBH but they might be looking intensely towards Toyota.

I live in a nice part of LA and I see as many iPace's as Teslas, and the iPace has only been available for about 3 months locally.

And the iPace owners are absolutely glowing in their reviews of the car in a way I've never heard Tesla owners get. Indeed--while most Tesla owners I know talk their heads off about the charging network[1], they tend to be defensive about the actual quality of the car itself in ways that luxury car buyers shouldn't be.

[1] While Tesla has a geographically large charging network, it's density is pretty horrible. In DTLA for example, you're 9 miles away from the closest Supercharger, and condo/apartment dwellers are SOL for installing their own unless they want to pay excessive fees to have one installed in their parking spot. There are a number of standard EV chargers through the downtown area, and the number of non-Tesla chargers exceeds the number of Tesla-only chargers by a factor of at least 10:1.

We must be living on a different planet then if you never heard a Tesla owner go on and on about how much they love their cars. Before buying one 4 days ago I had plenty of that kind of experience.

I know quite a few Tesla owners, and they all love the idea of the car far more than the actual cars themselves. After about a week, reality sets in and the misaligned panels, haphazardly responsive touchscreen, and relatively pedestrian interior furnishings start becoming noticeable. After about 2 weeks, the Tesla owners who don't live in homes (i.e., condo/apartment dwellers) even start to get annoyed at the charging cycle, since the Superchargers in the LA area are not very convenient to get to and it's roughly $10k-$20k (per charger) to get a charger installed in their parking structure. One Tesla owner, who evangelized the car before buying it, eventually sold his Model 3 (one of the first sold to the general public) and, in his words, "upgraded" to the iPace.

Also, I've ridden in all of the Teslas (including the Roadsters, thanks to a former boss who collected cars) and the Model 3, while comfortable enough, is only roughly as comfortable as my Camry and certainly isn't as comfortable as the $65k+ cars other friends drive. IMO, this is Tesla's big problem. Their cars are expensive, but you're paying a lot of money for the brand and while that can get you started, in the auto market you eventually have to start competing based on features like comfort, etc.

As a Model 3 owner, I have never been happier or more impressed with any car I have ever driven.

It’s more fun to drive than my old Camero SS. It’s more comfortable than my old Infiniti. I absolutely love the interior aesthetic. And I just paid $3,500 to PPF wrap it because I think it’s absolutely gorgeous and I want to keep it looking that way.

Oh, and I paid $45k not $65k, and it saves me at least $100 a month on top of that.

You are blowing smoke with “roughly as comfortable as a Camry”. The ride quality is better than BMW in my opinion, and that’s before throwing in the mental benefits of Autopilot combined with no engine noise making my commute the most peaceful part of my day.

Where did you do the wrap? I can't find a shop that carries the cutout for the Model 3. Bay area?

AutoNuvo in Holliston, MA

I rode in a Model 3 several times this past weekend and my Camry 3 all this week. They are absolutely on par comfort-wise. Can't compare to an Infiniti since I've never ridden in one, but the Model 3 can't hold a candle to the Lexus's, BMW's, or Audi's I've ridden in.

The driving experience and handling is waaaaay better than my wife's Mercedes. I can’t really say from a passenger perspective.

I have a Model 3 and I don't know WTH are you talking about. It's a great car. Panel gaps are just a little too wide for my taste in the rear doors but you rapidly forget about it when you're behind the wheel. Best car I've ever driven hands down.

I'm confused about this entire line of argument. You're saying that people can't get chargers installed in their condos, so their solution is to switch to another electric car that also requires a charger?

I was in a Jaguar dealership this weekend, and the iPace, though I have no intention of getting one, is a VERY nice car. Build quality. Features. Specs.

Tesla has the highest consumer satisfaction rating and brand loyalty of any car maker [1]

[1] https://electrek.co/2017/12/21/tesla-tsla-tops-customer-sati...

I suspect Model 3 will change all that, unfortunately :(

Evidence? Most Model S and 3 owners I've heard prefer the ride of the 3.

There are obviously no official survey numbers, but there are a lot of indicators that point to the fact that rushed production for Model 3 resulted in quality control issues:

https://www.cheatsheet.com/money-career/the-biggest-problems...

> While Tesla has a geographically large charging network, it's density is pretty horrible. In DTLA for example, you're 9 miles away from the closest Supercharger

That's sort of the point, the Supercharger network is designed to facilitate long distance travel. So the stations are spread out along highways. The other networks are bunched up in cities. Try using plugshare.com to plan a trip using CCS chargers vs Superchargers. Say San Francisco to Portland, or Denver to Dallas, or LA to New York.

Only path forward is to share the market. Japan and Europe will enter the market in a big way without the logistics friction Tesla is so often in the news for.

But yes... I expect Toyota to have more affordable TCO, particularly on the maintenance side where Tesla gets ripped often. The will need to adjust to be competitive outside the luxury market.

Other brands have dealerships all over the country where they could install chargers. I'd say the barrier to doing that is pretty low.

For example, if every BMW or Audi dealership had some charging spots for owners of their cars, it would probably have more nationwide coverage than Tesla's Supercharger network. The dealerships are also frequently located in convenient places near major highway exits, etc.

I live in Seattle, east of here there is one BMW dealer on my way home and next closest BMW dealer is in Boise, Idaho. I can’t drive to my home town and visit a dealership. That means an electric BMW would need a range of 1,000-1,200 miles to be remotely comparable to an ICE car or Tesla.

Putting universal chargers at existing gas stations or buying an entire brand and converting to charging makes way more sense.

Except for the BMW dealership in Yakima you mean?

Or if you go via PDX.

PDX is the opposite direction of my part of Idaho from Seattle. Taking that route would add hundreds of miles.

The dealer in the tri cities or Yakima is out of the way and the one in Spokane would add a couple hours of driving time.

There are no dealers on the direct route home for me. Realistically I could only stop at one.

Gas stations are obviously a great place for chargers because they're already properly distributed along well travelled routes. I think there's probably going to be a market for either an existing restaurant coffee chain with a lot of existing real estate (or perhaps a new chain that's a bit more upscale) to partner with Tesla and any of the other electric car manufacturers and build a concept around high quality food with quick turn around (like order ahead and eat in under the time it takes your car to charge). Gas stations as they currently exist can be pretty bleak places to spend 30 minutes

Chevron stations in Las Vegas have EV chargers. Of course, they also have tiny casinos, so there's something to do while your car charges.

There are five BMW dealerships in Washington, including three within 30 miles of Seattle:

* Seattle

* Bellevue

* Fife

You don't go charge a car to a dealership though. I charged mine yesterday in the parking structure next to the mall in Colma while getting ice cream with my son. Sorry but no, that's not a valid suggestion.

I'm assuming most electric car owners would charge their cars at home and make use of Superchargers/dealership chargers on road trips.

Being able to charge at your local shopping center is nice but it's not a necessity for electric car ownership.

I think you're underestimating the proportion of potential EV owners in situations which preclude charging at home.

*Could

Even if people wanted to charge at dealerships, dealerships aren't incentivized to sell electric cars, much less charge them.

The proof is that any Chevy dealer that sells the Bolt should have a public charger already, but I'm guessing few do.

There were big markups on the reintroduced Ford Thunderbird, too.[0] Sales tanked after the first year and it was out of production 4 years later.

[0]https://en.wikipedia.org/wiki/Ford_Thunderbird_(eleventh_gen...

Chevy Bolt was supposed to end Tesla as well. Didn't really happen, did it ?

The Volt didn't do it. The Bolt couldn't either. Perhaps they're working on the Chevy Molt? (the first car wrapped in OLED!)

The model 3 was supposed to compete with the Bolt on price- that didn't really happy either (yet), did it?

Today there was a discussion on HN about "Sears vs Amazon."

And comparing the Tesla Model 3 to a Chevy Bolt is very similar!

For instance, Tesla is prepared to sell their cars at a loss, to gain market share. Amazon had the same strategy twenty years ago. Sears was never willing to do that, and Chevy wasn't going to do that with the Bolt either.

I like the Bolt - it's a very nice car. But the Model 3 seems to offer so much more for the money.

Chevy Bolt and Leaf have been available for a long time and had zero impact on Tesla

Wouldn't they be used as self driving pods in future? 50k is low end for that.

In the far future. Tesla is unlikely to be able to wait 20+ years for driverless cars to become a reality.

The future as in 2030 or the future as in 2090?

> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits

P/E ratios aren’t effective for high-growth or quickly-declining companies. The PEG ratio attempts to compensate for this.

Exactly my point. US demand growth is done. There will be International pent up demand will be done in Q1.

Q2 and Q3 will show that Tesla has pretty much plateaued. Profit growth is even lower

Companies can grow in a shrinking market by stealing share. I’m no Tesla bull, but you’re casting a loose prediction with far more certainty than it merits.

It is a concern though, and as a Tesla supporter I’m a little worried. Tesla is also going to be looking at serious and sustained competition from giants like VW, so if they want to steal market share they’d better do it fast. I accept the argument that such competition is a good outcome for the planet, but I’m not so sure it’s a good outcome for Tesla the company.

As deliveries are to the US and Canada only at the moment, at worst they have cut through the higher margin demand of those two countries. Deliveries to other contries are going to start in Q1 of course with the highgest margin cars. And of course, while demand for the high margin versions might drop somewhat in the US there is no reason to assume it was completely addressed in just two quarters. This was just the demand by people who could afford to buy their car in that time frame. But that is only a fraction of the possible customer base - most people buy a new car when their old one breaks down, they have the money ready or the lease of their current car runs out. So it is not clear to me that the demand for the high end configurations is going to drop significantly at all.

>>At $50B Market Cap, Tesla should be delivering at least $2B Annual profits

There is no rule like that on a growth stock. You don't value growth stock on a P/E ratio, but some measure of future discounted cashflows.

tesla already has a market cap bigger than both ford and gm. you have to believe tesla is going to be the sole major north american car manufacturer in the near future to think tesla is a growth stock

While we can argue whether the $50B market cap is too much, i was only commenting on a hard rule around valuation and earnings for a company in growth mode. I mean, I haven't looked at the P/E ratios but I bet Amazon's will look out of whack compared to Walmart's

Not sure if you're being sarcastic or not but Musk had become a liability for Tesla for certain. The once "Tony Stark" has had a serious of Twitter meltdowns and absurd business proposals.

lol...he had a spell with some poor choices no doubt, but calling him a liability is a little much. One hopes he learned from his episodes.

https://www.cnbc.com/2018/11/19/neil-degrasse-tyson-elon-mus...

He caused the SEC investigation that probably impacted them enough to miss the targets mentioned in the article. He also has a DOJ investigation in progress against him and Tesla. He is a liability.

Tesla's product is their stock. Musk is a liability iff removing him would cause the stock price to go up. I highly doubt that.

You can’t be serious, that is not how the stock market works. Tesla sells cars, cars are their product. You could make an argument they are some kind of energy company with the powerwalls and solar gear.

People are buying into Elon’s vision, Tesla is just a vehiclefor realizing this vision. Without Elon, Tesla is astagnating company, and people will buy whatever Elon comes up with next instead.

Twitter meltdowns are a very Tony Stark thing.

People are skeptical of Tesla because people are skeptical of Elon. His dozens of misleading statements and half-truths over the years have caught up with him.

The pot smoking and twitter insults also dont help.

Neither does the SEC investigation that got him for fraud

EDIT: SEO > SEC - Context switching is hard

I don’t really see the problem with the pot smoking honestly, why is anyone wound up about that? Do you care if he drinks or smokes cigarettes? What about his workout routine?

Twitter insults aren’t impressive.

Regardless of how you feel about smoking pot the CEO of a publicly traded company is expected to be prudent enough to avoid doing things that are federally illegal on camera with the beforehand knowledge that the footage will be made public.

I personally don't care what Elon, or anyone does in his spare time but smoking pot on TV (or podcast, basically the same thing since both are going to be broadcast to viewers) shows a willingness to take risks with the wrong amount of upsides relative to their downsides and wall street doesn't like that.

The Joe Rogan podcast is on national TV now? I thought the whole point of it was that it wasn’t a network show.

I thought he did it on some evening comedy show. I'm probably wrong about that.

He did it on the Joe Rogan podcast.

> The Joe Rogan podcast is on national TV now?

The part of it in discussion was, because of its content.

Everything that is recorded and available outside of a narrowly controlled group is effectively national TV, in that if you do something that would be newsworthy, that's where it's going to end up.

Anyone in a PR-sensitive role, including any CEO, ought to be aware of that.

The comment I replied to was edited after I replied. Musk didn’t smoke weed on a national broadcast but I agree he should be aware his actions anywhere could be reported at a national level.

I wonder what wall Street would think of a company CEO going and buying a lottery ticket...

More relevant to SpaceX: It was notable that the CEO of a defense contractor publicly uses drugs, since that sector is fairly strict about these things. Smoking weed is a problem for security clearances etc?

Even though the acts themselves aren't that different, smoking a cigarette on camera doesn't potentially cause him to lose his security clearance (which could make him less effective at his job).

I don't have a problem with drinking and am sure most CEOs drink at networking events considered part of their job, but I'd think a CEO showing off by downing a couple of shots on a comedian's podcast was a bit of a liability, even if it wasn't his idea. More so if their leadership was already under scrutiny and one of their businesses was entirely reliant on the patronage of an abstinence-obsessed government that wouldn't let their contractors' staff anywhere near their projects if they'd been known to have touched alcohol recently. And there's no defending the lame 420 joke which fits in the same bracket (the sort of joke that was a pretty pathetic way of getting lunchtime detention as a teenager, never mind a hefty fine and stripped of a measure of control of one of your companies). You can be 100% pro legalisation and in favour of CEOs smoking pot every day if it works for them and still think Musk's acted like an absolute idiot over it.

>I'd think a CEO showing off by downing a couple of shots on a comedian's podcast was a bit of a liability.

You need to lighten up. Musk doesn't owe anything to anyone, if anything he garnered interest for selling more cars to the 18 million people that watched that podcast. If the CEO of <any fortune 500 company> was on the same podcast, do you think it would have been anywhere close to as entertaining?

> Musk doesn't owe anything to anyone

Investors and board members definitely think otherwise.

> Musk doesn't owe anything to anyone, if anything he garnered interest for selling more cars to the 18 million people that watched that podcast

He owes a lot to his shareholders, and wiped 9% off the value of Tesla with that podcast. If he has to be entertaining as well as reassuring them he's also laser focused on solving production challenges - and CEO of an engineering company is definitely a job description where being dull is no disadvantage - there were certainly better ways of doing it.

No he doesn't owe anything much to the stock holders either. They put in money knowing he was at the helm now if they have problem with how he behaves they can take out their money or buy enough voting shares that they can remove him.

Perhaps the coke/stripper parties and Insider Trading on Wall ST would have been a better approach. I'm sure the SEC would have found that more appropriate and acceptable.

This narrative doesn't resonate with me. Forward looking statements are speculative, especially when you're innovating new technologies.

I personally trust Elon Musk and I am a large investor. I don't expect him to hit all his targets, but I trust him to only raise money on the heels of good news.

Characterizing lying to the SEC and calling a Thai cave rescuer a "pedo" as such is stretching the definition of "forward-looking statement."

Musk has always been largely bluster, but now the bluster is hurting people, and his companies as well. He's the biggest liability Tesla has.

I don't know what he's done to earn my trust, or any investor's.

If bluster results in the first truly desirable EV cars and the first autonomous reusable rocket then more bluster please. The rage machine against Elon here is preposterous. At the end of the day , is he making the world a better place ?. No amount of contrived answers involving Twitter can change the vehement "Yes" to that question.

> At the end of the day, is he making the world a better place?

With rare exception, I don't subscribe to the idea of "key men" in general, and especially not in this case. Even if I did, I don't think that Musk is acting in a way that makes him an asset.

I agree that Tesla, for instance, is doing good and important work. However, I think attributing Tesla's success, and net impact on the world to Musk alone is unsupported by evidence. That's because aside from initial investment/PR, and sufficient cult of personality to inspire people to work for him at the start, I don't see what Elon Musk is contributing to the company's work at this point. In fact, I see him as a liability and I think Tesla would be better off without him.

Candidly, I also believe that if Musk was less driven by his own ego, as he appears to be, he'd see that and step aside.

Of course, the success of Tesla isn't based on Musk alone. There are thousands of Tesla employees contributing to it. Be it in engineering or production. However, Musk is the glue which ties all of this together. He set the direction, contributed quite a lot of his personal money in the beginning and is at the steering wheel.

I would say that his contribution to Tesla is mostly a sense of urgency and direction. Certainly some more “normal” CEO could come in and make the company more profitable, but it’d come with steep cost: the company would also become very stagnant and very boring. That’d be great for Wall Street but it’d bum me out pretty badly.

I think there is another way to make this comparison:

If Musk did not exist, and Tesla as a company did not exist, then all the engineers, expertise, effort, and capital that is currently with Tesla would be placed elsewhere.

Would all those people and resources do more good with all the other companies?

Tesla is one of many companies making mass market electric cars. Piling on luxury touches isn't making the world a better place. Tesla's $35K car (when if ever shows shows up) isn't better than anyone else's. He's just coming down from higher price points on fancier cars while others are improving at the same price point.

Have you driven or been in a Tesla? These are manifestly not the same cars as anyone else's.

Model 3's are everywhere, especially in the Bay Area. But sure say false things to suit your narrative.

> I don't know what he's done to earn my trust, or any investor's.

The ~20x ROI since IPO has made many people trust him. Tesla itself is a marvelous success, with no established car maker able to match them yet. It is far more likely that your personal dislike of him is making you see a distorted reality.

> It is far more likely that your personal dislike of him is making you see a distorted reality.

Certainly possible. I personally think he's acting like a buffoon and I haven't been shy about stating it.

However, as I told another commenter in this thread, I think the relatively objective argument is that while Musk was necessary initially to get Tesla into existence and functioning, he's now more of a liability than an asset. It's not that he was never valuable or never deserved any trust - rather that he doesn't deserve it now.

Put another way: At what point does the goodwill he's earned expire?

> I think the relatively objective argument is that while Musk was necessary initially to get Tesla into existence and functioning

Martin Eberhard and Marc Tarpennin initially got Tesla into existence.

True, but Elon Musk led their series A, which is also when he joined the company along with J.B. Yes Martin and Marc created the company, but it would not be where it is today without Elon Musk.

It doesn't always matter who initially created the company. For example one of the co-founders of Apple was Ronald Wayne, whom the vast majority of people have never heard of. He left Apple very early and sold all his shares back to Jobs and Wozniak for $800.

I have always seen him as a bit like William Durant. His use expires when the company is no longer trying to grow at 2x every 3 years.

Alternatively, he could dramatically change his approach as the business matures.

Match them at what?

> with no established car maker able to match them yet.

The Hyundai Kona EV is cheaper, has good range, and outperforms new model Teslas in 24-hour efficiency (interestingly finishing second to the original Tesla Roadster):

https://insideevs.com/hyundai-kona-electric-gets-shockingly-...

https://electrek.co/2018/12/23/tesla-roadster-24-hour-electr...

Teslas are among the least reliable cars you can buy. If you want high reliability and low maintenance costs, you're best off with a sensible Toyota today:

https://www.consumerreports.org/media-room/press-releases/20...

Here are some currently available and soon to be available EVs from established car makers:

https://www.hyundai.co.uk/new-cars/kona-electric

https://www.kia.com/uk/new-cars/all-new-e-niro/

https://www.jaguarusa.com/all-models/i-pace/index.html

https://www.e-tron.audi/en

VW has to sell electrics to meet the new fleet emissions targets set by the EU and they're going to do it with their MEB platform:

http://fortune.com/2018/12/20/volkswagen-electric-cars-emiss...

https://electrek.co/2018/09/18/vw-meb-platform-electric-for-...

Right now the primary reason to buy a Tesla is the novelty of buying a battery electric. But when all manufacturers are producing battery electrics, why am I buying a Tesla?

Do you have a list of EV direct to consumer VS Dealership / franchise model distribution? Tesla the only player in this space?

Tesla just sold 63K Model 3s in a single quarter. Despite availability of Leaf and Bolt [both are cheaper]. None of the vehicles you have listed are true competitors to Tesla at this time. True competition will be something like an electric 3 series or C-class

The Jag and Audi are _absolutely_ competitors.

Jag IPace sold less than 200 vehicles in the US in November 2018[1]. Comparably Model X sold ~1875 in Nov 2017. [2]

[1] https://insideevs.com/november-jaguar-i-pace-sales-u-s/ [2] http://carsalesbase.com/us-car-sales-data/tesla/tesla-model-...

I live in the most EV friendly region in the US and I hardly see I-Paces. Meanwhile Tesla is just crushing it here.

They are priced higher than the long range dual motor model of the Tesla Model 3, yet they have significantly lower range and the Audi has inferior performance where the expensive Jaguar barely matches the 3. But unlike Tesla, both lack the supercharger network so good luck traveling with them. Competitors? Maybe, but not really all that competitive.

The last time this came up, many people said that the primary reason to buy a Tesla was for Autopilot, which I have not yet heard of another manufacturer with an equivalent product.

I think another advantage Tesla has is the Supercharger station access.

Agreed, these are both killer apps for Tesla. I've got a 3 and have driven my car with Autopilot and a few Model S with autopilot, and it's crazy tech. To me, it's not worth the money, so I didn't order it, but to others, it's the entire reason to buy the car.

Even though I've only used superchargers 4 times in 6 months, it absolutely solves the EV roadtrip FUD in a way that nobody else has figured out yet.

I'd agree with you on autopilot. Though, I think all that most people want is good crash avoidance plus lane keeping and traffic-aware cruise on the freeway. A lot of other car companies are there as well, and I'm starting to believe that true level 5 is a decade off or totally impossible.

Supercharger access is becoming less of an exclusive as well. Electrify America is putting in a lot of stations (there's a couple near me right now, with about a dozen more planned) that support 150kW now (30 more than a Supercharger), and 350kW as soon as there's a car that can take it.

> 350kW as soon as there's a car that can take it

Like the Porsche Taycan:

https://electrek.co/2018/07/30/porsche-taycan-all-electric-p...

Cadillac super cruise is supposed to be fantastic. I've never used either and will not comment on which is better, but it's certainly competitive.

Kona will only be available in a small number of U.S. states and global regions, in limited quantities.

It is a compliance car, to reduce the emissions overall of the fleet they sell allowing them to sell more high profit ICE cars. They are likely losing money on each sale as well.

I think the Kona is a great start and wish it would have a better chance, but it is crippled from the beginning.

So you're arguing that Hyundai beats Tesla on price and efficiency even when Hyundai's not really trying? What will happen to Tesla when Hyundai really tries?

No, I'm arguing that they have to sell a certain number, otherwise face stiff penalties in the U.S. and Europe. Discounting the car and taking a loss is better than paying the fine.

On a positive note, it is a step in the right direction to rev up that part of the company, as they will need the experience for future success when they can no longer rely on ICE sales

The quality also comes nowhere close to a Tesla. While it makes a good commuter car, it is strictly not on the same playing field as a model 3, other than price and propulsion method.

It's not nearly on the same playing field as the model 3 in regards to price.

The quality also comes nowhere close to a Tesla. While it makes a good commuter car, it is strictly not on the same playing field as a model 3, other than price and propulsion method.

Agreed. The Kona's fit and finish is miles ahead of the Model 3, and the interior comfort is the same for...1/4 the cost of the Model 3? Tesla's got quite a bit of work cut out for it if it hopes for the $35k Model 3 to stand a chance in the marketplace, since it'll being facing a ton of competition by the time it comes out (if ever).

> The quality also comes nowhere close to a Tesla.

Yes, I agree. Hyundai has better quality control than Tesla:

https://www.greencarreports.com/news/1115659_tesla-model-3-q...

You didn't happen to have a short position on Tesla when the infamous 420 tweet happened?

Elon has not lied to the SEC. Please provide link or other evidence. He settled a claim that he manipulated the stock without admitting guilt, in order to avoid damaging the company, but that is completely different.

he said "funding secured" and didn't have any funding secured. The SEC was lenient in allowing the settlement without an admission of guilt, but that does not mean he was not guilty. I'm a huge fan of most of the things he has done, but this was a boneheaded move only surpassed by his embarrassing pedophilia comments.

Technically he was lying to his investors, not the SEC.

Of course then in that 60 Minutes interview he all but declared he wouldn't honor his side of the settlement, but we'll see if he follows through on that.

You are ignoring a decade plus of very impressive results. Sure, the man has significant flaws. That is not justification for an inaccurate portrayal.

What results? Give me $30 billion dollars to waste and I can easily show you $28 billion dollars of progress.

Landing rockets on autonomous drone barges, coming out with a sedan that beats a Lamborghini Aventador in 0-60 acceleration at 1/6th the cost, thereby pushing the state of the art across the entire car industry. Seems like a guy I would trust.

My model rockets do 0 to 60 in well under a second, and I'm totally not a guy you should trust.

> Forward looking statements are speculative, especially when you're innovating new technologies

The innovation comes purely from the battery and associated electronics. The rest of the car is pretty standard and it's in this area where they are having problems.

There are plenty of car companies with electric cars today e.g. Jaguar, BMW, Nissan, GM and in 2019/2020 everyone else is jumping onboard e.g. Audi, Landrover etc. And they have managed to hit their targets.

His pitch on the solar tiles that would cost* at or less a typical shingled roof had me incredibly sold, but it seems that has taken a back seat as of late in his endeavors. Yeah, would love an electric car, but until they hit the $35k price point, it isn't happening anytime soon for me. But a fairly priced solar setup for home? Sign me up.

* not sure if it was initial cost or cost over the life of plus the energy savings, I don't remember nor really care. Either is fine by me.

It is over the life of shingles plus energy. That won't be true of the first few years of sales.

As an upside, I think the comparison is with one roof replacement, which is supposed to be done every 8-20 years. Tesla tiles should last 100 years.

When I can buy a reliable $5k ICE car (which are the kind of cars I drive) I don't see an EV ever really making sense.

They have them in China:

https://www.youtube.com/watch?v=kILXXaqspcI

musk isn’t the only reason i dislike tesla. they are overhyped by their customer base because the cars are “cool”, but i personally find the overall design and fit and finish to be lacking. they don’t feel like the expensive cars they are. tesla also has a feature called auto-pilot, which has killed people using it in non-insane scenarios given the name and marketing. i distrust their safety ratings.

tesla also acts like they are the only game in town. they aren’t even the largest electric vehicle maker in the world.

My feeling is that there is a coordinated media attack against major US tech companies.

The thing about massive conspiracies is that it only takes a single participant to leak their existence. And for a conspiracy like what you're suggesting, there would be tens of thousands of participants.

It's time to let reality back in and accept that there is no media conspiracy. The big tech companies overreached and now the roosters are coming home to roost after 2 decades of largely unearned fawning media coverage.

It could also be that the US tech companies are just really good whipping boys or they subscribe to any publicity is good publicity.

And how do you explain the past couple of years of uncritial, overly positive media coverage these companies have received? The media coverage that has created a rabid fanbase that surrounds these tech-personalities, making it near impossible to discuss the reality of the tech and finances of these companies?

Having to face consequences for your actions isn't a conspiracy. People reporting on these realities is not a conspiracy. It's long, long over due.

> My feeling is that there is a coordinated media attack against major US tech companies.

Or the media has stopped looking at them through the rose-colored glasses of tech-optimism, and started seeing them as what they are: massive, powerful corporations that are capable of harm and dishonesty in addition to innovation.

They missed expectations on production and delivery.

Right before a debt offering btw.

> is in line with what Tesla had done with the Model S and X as production efficiencies allow them to reduce manufacturing costs.

Straight from Tesla's press release: "we are taking steps to partially absorb the reduction of the federal EV tax credit"

So no, this price reduction is not "in line" with anything in Tesla's past.

> "The production and delivery numbers they came out with were very good and higher than most had expected."

Every Model 3 they are producing is relatively expensive and already has a buyer. What happens when they get to the end of the list of relatively well off buyers? Certainly there will still be demand, but it will be less profitable.

They are maximizing for profit on each unit sold. Presumably, they’ll have had a reduction in debt to service with payments made from upfront higher margin vehicles.

It’s not a problem as long as they stay ahead of the curve margin wise. Lots of market demand outside of the US, which is why vehicle manufacturing firehose is pointed at Europe and China now with the US tax credit reduction.

What are you comparing it to when you say "relatively expensive"? I've read reviews comparing it favorably to a BMW 3 Series, which is in the same price range.

Compared to what most people can afford. My sister would love a Model 3 if she could get one for $20k

The Model S was in the same price range as the BMW 3 Series but only when you take into account the tax credit which just expired. Without that tax credit there's a difference of over $7k. That's part of the reason why Tesla is dropping their prices a bit now.

The Model S is quite a bit more expensive than a 3 Series. Perhaps you meant the Model 3, which is still competitively priced with the 3 series?

How was the Model S in the same price range as a 3 series? A Model S started around $70k after the tax credit was taken into account, a 3 series starts at about $40k. Do you mean the Model 3, rather than the S?

From the article:

"Tesla said more than three-quarters of orders for the sedan in the year’s final three months were from new customers, rather than reservation holders. That suggests many consumers are still waiting to buy versions of the vehicle at the long-promised $35,000 sticker price."

>Every Model 3 they are producing is relatively expensive and already has a buyer. What happens when they get to the end of the list of relatively well off buyers? Certainly there will still be demand, but it will be less profitable

they've already run out, did you not see all the tweets about tesla stores being open up until the end of the year and the reduction in price and the extra cars? clearly they've exhausted the areas they're allowed to sell in

There is a lot more room for margin erosion when your margins are high to begin with. So even if the S and X models had reductions in manufacturing costs there was a lot of room to play with in the first place. The model 3 has much less room.

Seems like there is a lot of Tesla hate on the internet for some odd reason these days.

In part because there is a lot of money to be made in spreading Tesla hate on the internet these days.

Think short sellers, etc...

This actually a price increase because of a loss of the federal tax credit... the title is bogus and should be changed imho.

"Moving beyond the success of Q4, we are taking steps to partially absorb the reduction of the federal EV tax credit (which, as of January 1st, dropped from $7,500 to $3,750). Starting today, we are reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000."

http://ir.tesla.com/news-releases/news-release-details/tesla...

Edit: the mods changed the title. thank you!

In what way is it a price increase, why did Tesla count tax credits when advertising price in the first place? Isn't that dishonest, since the cars price tag was higher and the government gave them money?

It was pretty obviously stated on their quoting tools, imho.

Government did not give Tesla the money.

Tesla also makes the actual amount you need to pay very clear before you buy a car. Their website is closer to the Cable companies landing pages that don’t include all the fees, before showing you the actual price at checkout.

The purchaser factors the tax credit in, so the removal of the credit will have the same effect as an increase in price.

The salesman will _definitely_ make the purchaser aware of the credit, in the same way that a mortgage broker makes you aware of the tax benefit on mortgage interest (in the US).

That doesn't make them dishonest.

They also tried to include "cost of gas savings" in some of their "line item" website pricing.

TCO seems like an entirely reasonable figure to advertise. It's a hard number to trust, but I'm not sure how that gets fixed except by trying to regulate advertisement in general.

I think putting a number of "$x" on a page, and only when you click into the details, seeing "Estimated fuel cost savings: $y" as one of the line items there is totally misleading.

TCO is a reasonable figure to discuss, especially when changing paradigms. It's not, however, reasonable, to include in a line item for vehicle cost that is not in any possible practical way to attain (at least the fed credits are more concrete) - imagine you go into a Tesla dealership and it says "$35,000" and you say "Sold!", and they reply "Great, that'll be $38,000".

"But...?" "Oh, that price was only to give you a TCO after you factor in three years of gas you're not buying now! It's not an actual discount or credit".

I, too, found this really odd. I was a reservation holder for the 3, and none of that garbage 'accounting' showed up when logged in. It was only when going to the PR-ified website for non-account-holders that I found the gas savings priced in. Strange. I don't disagree it's a relevant factor, but it's a bit disingenuous to list it like part of the MSRP.

Mortgage brokers also don't include the mortgage interest deduction when marketing mortgage rates or mortgage products, so it's not comparable.

> This actually a price increase because of a loss of the federal tax credit... the title is bogus and should be changed imho.

The ceiling in the title refers to a ceiling of what customers are willing to pay. Tesla apparently believes customers won't pay the full price without incentives, so they're cutting the price they charge you.

While it's an increase in the sense that the government stopped making it cheaper for you to buy a Tesla, it's still a decrease for Tesla as a company, and that's what has investors nervous. (Rightfully or not is another story.)

As of today Teslas cost $1,750 more than yesterday. It is effectively a price increase in the US. The tax credit went down, raising the price by $3,750. Tesla lowered the price by $2,000.

$3,750 - $2,000 = $1,750

This doesn't signal a ceiling for price as the title implies. I implore the mods to change the title. It's misleading clickbait.

You can tell from the url the original title was much more reasonable... "Tesla cuts prices as model 3 deliveries narrowly miss estimates"

I clicked on the title ready to judge it as click-bait like yourself, but I think the text makes a good point that the majority of reservation holders seem to be willing to wait for their $35,000 Model 3s. Too bad they didn't get their $7,500 tax credit though.

My main problem is with the title of the article... more than the article.

I agree. At first glance, the "price cuts" wouldn't seem to signal anything. But the price cuts combined with the outstanding reservations does seem to imply more cost sensitivity than we have seen in prior Tesla sales.

Price increase for the buyer. Price reduction for Tesla, which is mostly what matters here if we are talking about the health of the company. Totally bogus though, you should submit it to Pravduh.

The price customers pay has increased but the amount of money that Tesla gets for each car has decreased.

That reduces Tesla's revenue for each car so it is a price cut from the point of view of the company and its shareholders.

Seems like the bigger issue is that they once again missed their delivery targets, although only by a few percent this time.

Is not the historical lesson thus far maybe that the market does not care about missing them as long as the general growth story is still there?

> few percent

They missed by less than a percent. The miss isn't even statistically relevant.

The second line in the article:

> Prices cut by $2,000 to partially offset shrinking tax credit.

At that cost range I don’t know if I could ever know my customer well enough that I would be confident that a 3% price break would get more sales but what do I know. Also, this feels more like PR.

What fraction of the cost of a Tesla is the battery pack? Weren’t those supposed to be getting cheaper due to all of the automation?

When your costs decline you lower your prices, add more features or increase your margins.

At that cost range I don’t know if I could ever know my customer well enough that I would be confident that a 3% price break would get more sales but what do I know.

Would I have purchased a Nissan Leaf eight years ago had it not been for the $7500 federal tax credit? Damned right, I would have. But since we're buying one anyway, I'm not turning down free money. My point is, I wonder if there ought to be a moratorium on tax credits for the first two years. The early adopters are going to buy one regardless, save the tax credits for those that are on the fence two years down the road. Of course the gaping hole in this plan is something, something Osborne Computers (in two years, it might not be better, but it'll be cheaper).

The tax credits aren't for the consumer, they're for the manufacturer.

> The early adopters are going to buy one regardless,

Some of them will. The idea that there's isn't a demand curve for early adopters is insane.

just look at google trends, Model S/3/X still trending higher while I-pace pal plateaued

Tesla is the ONLY player with a direct to consumer model. They are a native EV start up. All others right now are legacy car makers (non native) using the old franchise distribution model. Tesla OS is its bread and butter. They built the vehicle from scratch for EV. They effectively "PULLED" ever other car maker into the MIX. The legacy car makers had no other choice but to jump into the fray and take their chances.

>Tesla is the ONLY player with a direct to consumer model

You are saying it like it's necessarily a good thing.

Not sure why the gp is being downvoted so much specifically in regards to the DTC comment. There was just a decently-sized HN thread about how the current non-direct to customer model is not the best for either the car buyer or the manufacturer.

https://news.ycombinator.com/item?id=18790480

Yeah. What gives.

A fundamental principle of competition is that consumers – not regulation – should determine what they buy and how they buy it. Consumers may benefit from the ability to buy cars directly from manufacturers – whether they are shopping for luxury cars or economy vehicles. The same competition principles should apply in either case. States should allow consumers to choose not only the cars they buy, but also how they buy them.

First watch this: https://www.youtube.com/watch?v=H8ro6kpKlw0

Choice quote from the discussion on reddit: https://www.reddit.com/r/RealTesla/comments/abkk12/what_did_...

"The takeaway from this video, if no one has gotten the message by now, is that Tesla only cares about the sale of new Teslas, which it doesn't do very well. It does not care about selling used Tesla, servicing existing customers, or supplying parts to customers.

Tesla made a shittier dealership and calls it innovation. It's hilarious that it is simultaneously waging war on the dealership laws while doing the dealership thing so poorly that it's like exhibit A in why dealership laws maybe aren't that bad. If Tesla were this bad at being a car company pre-dealership laws it would have been the reason they came into being in the first place."

Eh. I struggle to see what dealerships actually do at all. They don't make the car...why are they the only ones allowed to sell it?

Also, that quote is just wrong. They didn't make a "shittier dealership". They don't have dealerships at all.

>Also, that quote is just wrong. They didn't make a "shittier dealership". They don't have dealerships at all.

Where do you go when your Tesla breaks down? Yearly check-ups? Used Tesla sales? The fact that they are a direct representative of Tesla themselves changes very little for you as the consumer.

It’s an open question whether dealers will help sell EVs in volume. The trouble is they won’t make much off them in service contracts.

We’ll see when a major automaker tries to sell a million EVs in a year. Volkswagen says they’re going to try so they might be first to do the experiment. We don’t have anything but promises yet.

They'll sell the service contracts anyway. There's no justification for buying one for any current new car, but people still do.

Tesla is the ONLY player in US only. There are plenty EV players in China right now. NIO with ES8/ES6 https://www.nio.io Xiaopeng with G3: https://www.xiaopeng.com Weima with Ex5:https://www.wm-motor.com

Tesla is definitely hitting the demand ceiling. It's a good thing Musk isn't producing 10000 M3 per week. The current rate of ~4500 per week is enough to meet demand.

In fact, expect continuous price drops from Tesla as it struggles to drum up enthusiasm

Demand ceiling for the US or for the world? I suspect they've hit the former, but that there's a lot of demand in the latter.

The market for EVs is expanding. As Tesla starts shipping worldwide they will find the sweet spot for the US.

Big takeaway here is they are very profitable producing at current rates. As they bring out new models they will continue to grow at 30-50% per year.

> "they are very profitable producing at current rates"

You don't know that. They had one big, profitable, immaculate quarter in Q3 by pulling all demand forward and using every accounting trick in the book to show profit. There is no guarantee there will be another quarter like that. In fact, if Tesla's earnings history shows anything, it's that losses will be even bigger than before.

q3 was also helped by the fact that, despite increasing the total amount of tesla's sold by ~66%, they opened only 1.1% new service centers and only 3.2% new superchargers. The tesla experience is going to be incredibly degraded as time goes by.

Bingo! Q3 and Q4 numbers should absolutely be taken with a grain of salt. It was a confluence of all positive points. a) Accounting b) Pent up demand for larger priced vehicles c) Peak Economy

Going forward, a) Weakened Global Economy b) Everyone who is passionate about owning Tesla has bought one.

Sustainable demand and profit will be clearer in 2019 Q2 and forward.

I can make a public bet that it wouldn't be greater than $150 Million per quarter

https://predictionbook.com/predictions/194051

I’m not pro-Tesla, I think they’re horribly mismanaged, but let’s be real.

The Model 3 is selling well, and ONLY in the US. Even if they hit peak demand they can just start selling to Europe and China (planned for later this year) and they’ll have plenty of new customers.

It's called Pent up Demand.

US is the richest and most car friendly nation of the world. There aren't many countries in the world who can afford a $50,000 car especially when there are poor charging infrastructure.

There are enough countries, though.

Regarding charging infrastructure, have you seen this map lately?

https://www.tesla.com/findus?v=2&bounds=76.18385340904877%2C...

I don't think this includes the convenience fee in having to use a supercharge station to recharge your car.

If you don't have the ability to charge at home (condo or apartment), the idea of waiting at some energy pump for 30 minutes every morning is the opposite of alluring.

Given that 30 minutes of supercharging will add over 200 miles of range to a Tesla, I doubt many people will need to do this every morning.

Still, 30 minutes is a sizable fraction of most people's free time in a given day. Especially compared to 5 minutes needed at a regular gas station.

Mmmm, it only takes 5 minutes if you happen to live at a gas station.

If you don't even understand the basics of electric car ownership you should really do some reading. People who don't have at work charging or at home charging are not the market for electric cars. A few people do, but very few Tesla owners I've heard of actually have neither. If you're buying a $35,000+ car why are you living in an apartment instead of using that towards a down payment on a condo or a house?

Because people are bad with money. Drive through an apartment complex and then drive through a neighborhood of starter homes; I'll bet the former has nicer cars than the latter.

I've seen plenty of $35k+ cars in ghetto apartment housing. People seem to look at the monthly payment instead of the total cost of the car can never seem to get enough saved to buy a house.

I don't know which is the main buyer of higher end cars, but they shouldn't completely discount people who prefer to buy cars than save for houses.

> using that towards a down payment on a condo

As I stated, you will have trouble charging at a condo. In the bay area, most new development is condos, and I don't think buying one means you're bad with money.

Tesla has made mistakes...especially Elon's timelines. Those have gotten better of late.

That aside, one has to also consider the limited number of stores that Tesla has at this point in time. As they increases the number of stores their market reach will increase. Combine this with new global markets and it is clear that they will do fine for at least the next couple years.

The story here in the market is that Tesla has already saturated the big markets in the US for EVs--namely, highly populated metropolitan centers. While this is a big country, the rest of America is very spread out, and the ROI on building more stores will be far lower.

China has a higher barrier to entry than any other market, esp. in the EV market, which is going to favor the homegrown options. The current trade war isn’t going to help Tesla. My prediction is that Tesla remains a novelty brand in Asia. Japan is similarly capable of taking care of its own market, and I wouldn’t want to take on Toyota when it comes to exports to South Asia, Africa, etc.

That's why they're building a factory in Shanghai right now: https://electrek.co/2018/12/31/elon-musk-groundbreaking-tesl...

> China has a higher barrier to entry than any other market, esp. in the EV market, which is going to favor the homegrown options.

Tesla is already positioned ahead of other auto makers with the construction of the Gigafactory 3 along with a deal with the Shanghai government to build a wholly-owned local factory (a notable exception).

Not ahead of Chinese automakers. And Tesla is paying for the privilege of that foothold. Meanwhile, Toyota is firing up battery supply in Thailand. Not to mention that Panasonic and Chinese suppliers are the real source of Tesla batteries.

>Not ahead of Chinese automakers. And Tesla is paying for the privilege of that foothold.

The context was the barrier to entry in China. That was already implied? No other foreign auto maker was able to cut the same deal as Tesla in China.

>Toyota is firing up battery supply in Thailand.

Toyota/Lexus have zero plans for electrification in the near future. In fact, they have instead doubled down on Hydrogen with the Mirai.

http://www.thedrive.com/news/22429/toyota-to-double-down-on-...

https://corporatenews.pressroom.toyota.com/releases/toyota+d...

>Not to mention that Panasonic and Chinese suppliers are the real source of Tesla batteries.

Not really sure what point you're trying to make here. Tesla is probably the only automaker (outside of china) that builds their own cells and battery packs in-house.

You’re wrong about Toyota. They’re just not in the habit of rushing to market with empty promises. https://www.toyota-global.com/innovation/environmental_techn...

The point about Panasonic is pretty self-evident: Tesla isn’t going to win Asian markets if its upstream suppliers are all in Asia. They’re effectively a middleman and they’re paying for the right to be in-country. It’s not hard to see them being squeezed out by local firms.

> Even if they hit peak demand they can just start selling to Europe and China

To what extent would they have to invest in charger networks there, though?

They already have, almost as much as the US. Take a look at the supercharger map.

Thanks for the pointer! It looks like Western Europe has reasonable coverage, but plans to at least double that. Eastern Europe (including Greece) has no existing superchargers, but extensive expansion plans.

I live in Montreal and I see a few Model 3 all the time regardless of where I drive.

The configuration opened up in Europe in December with a promised delivery in February/March timeline, so there should be a lot of the January production going to Europe.

They're not even really selling outside North America yet, so that's silly. Of course there's a ceiling of expensive cars, they're selling more of them than anyone else, right?

Yes, it's called Pent up Demand. We don't what sustainable demand for M3 is yet. For US, you'll see that in Q1. For Rest of the world, Q2 will paint that picture. So, whatever profit (or loss) Tesla makes in Q2/Q3 are truer numbers. It would have also reached a steady state.

Tesla's marketcap should be at the most 100x Q2 profit. TSLA is definitely over-priced

Another thing is the pre 2017 car-pool stickers for electric cars are expiring in the bay area. The newer stickers have income caps of $150k (single filing) or $300k (joint filing). I wonder what the impact will be on Tesla? The first change helps them but the second hurts them.

Wait, what? I was not aware of this. I guess driving in the carpool lane today was not a great idea…

OP is incorrect.

Do you have more information about this change, or lack thereof?

https://www.mercurynews.com/2018/09/11/223654-solo-drivers-t...

Green and white decals expired January 1st, 2019. Red decals, which were first issued in 2018, are still valid. Vehicles which were first issued decals in 2017 are eligible to upgrade to red decals. The current decals being issued are purple, but it is unclear if they are only for vehicles being issued decals for the first time or if they can be issued for upgrades requested now.

https://www.dmv.ca.gov/portal/dmv/detail/vr/decal

Looks like my understanding was not entirely correct but there is an income cap for the rebate. And clean air vehicles older than 2017 will lose car pool lane access. They change the sticker color to help identify.

Did they give any justification for the change? It makes absolutely no sense to me why you'd put an income cap on that - don't you wan to encourage EVERYONE to burn less fossil fuels, REGARDLESS of income?

The OP is incorrect, there is no income cap on carpool stickers.

What the GP posted is a bit misleading, you either get the rebate or the carpool lane stickers if you're over the cap but not both. It does suck but I think it's for the best. The hov lane in norcal is becoming relatively crowded lately since electric cars were a rarity before but not so much now.

They've been crowded at least since the yellow sticker 'Prius' program of, what, 2007?

I wouldn't know. I'm part of the new blood that came to the bay area after that to ruin everything. :)

You got your stories wrong, the new blood is ruining Portland and Seattle, where they hate outsiders (as long as they carefully avoid having a racial component to this complaint).

Why should everyone else pay for the rich to get a tax break and free usage of HOV lanes? They're the ones who can most afford to pay for those things, and the ones most likely to want to buy a vehicle for bragging rights.

"Rich"? I've seen Nissan Leaf leases for as low as $90 a month.

With what kind of down payment and termination fee?

I was not entirely correct but part of the problems is that the car pool lanes are overloaded here and the federal laws have some minimum average speed requirements for those lanes which are not being maintained. So they are kicking out the older clean-air cars. Also they are trying to find ways to give lower income individuals access to clean air vehicles.

According the to CARB website [1], the income cap only applies to the state EV rebate, not the carpool stickers.

[1] https://www.dmv.ca.gov/portal/dmv/detail/vr/decal

You are incorrect. The income cap is just for the CVRP rebate. https://www.dmv.ca.gov/portal/dmv/?1dmy&urile=wcm:path:/dmv_...

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