Tesla's solar factory is exporting most of its cells | Hacker News Reader

Tesla's solar factory is exporting most of its cells

reuters.com

157 pointsSolaceQuantum132 comments

>...accompanied a request to produce the cells in a foreign trade zone within the Buffalo plant that would allow Panasonic to import certain parts tariff-free because the finished cells would be sold overseas, not domestically. That request was granted in April.

>The zones help companies avoid, delay or pay reduced tariffs on imported parts in cases where it helps U.S. manufacturers compete with overseas rivals.

>“It is fully anticipated that the majority of the cells to be produced” in the FTZ “will be exported,” the company said in its application.

>Panasonic’s Canal said foreign solar panel manufacturers want the Buffalo plant’s cells because solar panels assembled abroad with American-made cells can be shipped to the United States tariff-free, according to U.S. trade rules implemented last fall.

>Panasonic’s Buffalo operation is one of few U.S.-based solar cell producers because it is traditionally far cheaper to make the components in other countries, putting it in a unique position to serve the foreign demand.

This is kinda hilarious. Gotta love incentives.

Wait, so if i'm reading this right the process is:

* parts can be imported tariff free into the US to be used to manufacturer cells

* cells get exported back out to other countries (to enable the tariff free importing of the parts).

* cells are then assembled into a final product over seas

* the final product is imported tariff-free due to being manufactured in the US.

Is that correct? Because if so that's hilarious and horrifying at the same time!

Seems like this is the tariffs doing exactly what they're supposed to do -- incentivize US domestic production.

> Panasonic’s Canal said foreign solar panel manufacturers want the Buffalo plant’s cells because solar panels assembled abroad with American-made cells can be shipped to the United States tariff-free, according to U.S. trade rules implemented last fall.

> Panasonic’s Buffalo operation is one of few U.S.-based solar cell producers because it is traditionally far cheaper to make the components in other countries, putting it in a unique position to serve the foreign demand.

They would have to do the assembly into panels domestically as well if they didn't have the exemption due to the cells being US built.

They're incentivizing domestic production, but at two costs: 1) environmental, from shipping stuff around the world several times (parts into the US to SolarCity, cells out of the US to final assemblers, assembled panels back into the US for final sale and use), and 2) cost to domestic purchasers. Finally there's 3) reduced demand for solar panels due to higher costs, which means we don't produce as much power this way, and instead use other means (generally fossil fuel).

All in all, it's a terrible deal for us.

If we're going to shoot ourselves in the foot on something made abroad, I propose we do it for smartphones. Slap a giant tariff on any cellphone made outside the US, like 1000%. Let's see how Americans like being stuck with their aging smartphones or having to spend $10k for a new one. Oh yeah, make sure the tariff applies to the LCD/OLED screens too, since we can't make those here.

Just to put it in perspective, the 30% tariff on imported cells resulted in a net impact of about a 5% cost increase to the end consumer. [1]

The basic macroeconomic equations always tilt to the side of free trade. I majored in economics. The basic theories work in an ideal and simplified world, and don't account for all the variables. The "hollowing out" of American manufacturing was a result of globalization spurred by free trade. Any government intervention which isn't a subsidy is going to be less than ideal theoretically, but in a geopolitical reality can still be the right choice.

And to be sure, both the tax credit and net metering still provide a huge government subsidy for adding solar generation.

[1] - https://news-media.energysage.com/wp-content/uploads/2018/05...

> basic macroeconomic equations

Only in oversimplified models. Food production for example is generally a low margin business. However, that’s only the case with a surplus. Price shocks can wipe away even decades of minor savings very quickly.

Free trade creates more centralized production which is more likely to result in such price spikes. Thailand flooding resulting in a HDD prices doubling is a very recent example.

That is interesting. Where can I read more about price shocks and their influence on economy?

Free trade is optimal... assuming you're optimizing for the greatest number of goods manufactured at the lowest price. Given that all the developed economies have been demand-constrained since World War 2, that might not actually be the best variable to optimize for.

That's an interesting take that I (total non-economist) had never considered, where does the demand-constrained philosophy lead to in terms of variables to optimize for, and eventually, policies?

There's no such thing as demand constraints if you are talking about the whole economy: the supply of money is the constraint.

> The "hollowing out" of American manufacturing was a result of globalization spurred by free trade.

Putting aside the question of whether domestic manufacturing is more desirable than domestic production in other industries, this claim is not borne out by the data. Real manufacturing output is at an all-time high, passing the 2007 peak last year: https://fred.stlouisfed.org/series/OUTMS

Perhaps you mean manufacturing employment?

There's an article that claims that domestic manufacturing numbers are very misleading, because of stuff like this:

"To make the output volume comparable from one year to the next, the statisticians aggregating the data adjust for price changes, as well as improvements in product quality. For example, let’s say statisticians want to figure out how much the sales of Intel processors grew in 2017 versus 2016.

The problem is, the processor released in 2017 is superior to that sold in 2016 in many tangible ways. But how do you account for the fact that a 2017 processor provides users with more value? In general, statisticians assume the difference in value between the two models is just the difference in their prices. If, say, the 2017 processor costs twice as much as the 2016 one does, then selling one 2017 processor counts as selling two of the 2016 versions in the statisticians’ books."

https://qz.com/1269172/the-epic-mistake-about-manufacturing-...

This critique doesn't make a lot of sense to me. Why wouldn't you count a processor that costs twice as much as twice the economic output?

It's vaguely reminiscent of the claim that inflation data is understated because computers at the same price have gotten better... except opposite. There's no adjustment for quality in the sense that a quality improvement without a change in price is estimated & counted. It's only if the processor's actual price doubles — i.e. it brings in twice as much revenue!

Is that even something we observe in computers to a significant extent? Even if it is, is it a bad thing? If homes increase in size by 50%, simultaneously increase in price by 50%, and an equal quantity of them are sold, is home production not up 50%?

This feels like an argument that automation in manufacturing has only increased because the distribution of production has shifted towards the highly automated semiconductor industry, but it's couched in a bizarre claim that increases in monetary value of output for the computer industry just don't count.

Doesn’t the fact that we’re just now catching up to 2007 levels support my point rather than refute it?

When are you arguing globalization happened?

The watershed moment would be China admission to the WTO in 2001. We’ve been going basically sideways since 2000.

In the same period (2000-2018) that real manufacturing output increased 10%, US real GDP doubled.

What makes China's convergence different from those of postwar Europe, Japan, Korea, etc?

Scale, simply put.

China went from an economy of $1 trillion (1999) to ~$14 trillion (2019) at warp speed. It's the largest economic expansion, in the shortest amount of time, that has ever occurred.

South Korea has a good economy with a seemingly bright future, however it's still only a $1.5t economy today. That's sub 2% of global GDP.

The US post civil war industral boom (~1890-1930) and Japan from 1970 to 1995 ($200b to $5.5t), would be the two closest, most recent comparable extreme booms. Japan of course topped out in 1995 and in real terms has never surpassed that economic output since.

When you add $13 trillion in manufacturing-tilted economic output in 20 years, it's going to be very likely to dent the largest manufacturing economy at that point in time (the US). Considering the huge scale of that Chinese expansion, the US weathered it remarkably well and continued to expand its economy while retaining one of the highest GDP per capita output figures. I'd argue it harmed Europe far more than the US, suppressing their growth to a far greater degree than the US (the US economy has continued to grow over the last 15-20 years consistently, Europe has struggled to produce any net growth in the last ~12 years). Over those 20 years China rapidly built out a massive technology sector, with global giants, Europe has badly failed at keeping pace with the US and China on that front (one of the reasons Europe's growth has been so poor over recent decades).

It began in 2001 and the effects become very obvious when you watch country GDP's. Watch the of countries, but especially China, in this animation of country GDP: https://gfycat.com/energeticrigidalbertosaurus

I think there's a fun angle we could take on this. One could reasonably argue that large solar deployment in major industrialize countries is unlikely to occur "in time" without some sort of government prodding (of some sort). And when that time comes, it's gonna be big. We're going to need crank out solar panels and wind turbines like mad.

In that context, basically everything we've done so far is basically warm up. Like 2% of US electrical production is from solar. We're gonna need to install like 25-100x the current installation base to do what we want.

A reasonable assumption to make is that by the time the USA gets around to doing that, most other rich countries will be doing that too. This means that global supply is going to be challenged. This means that having the domestic capacity to grow this production is key. This means that being somewhat inefficient at this stage to build knowledge-base and competency in key parts of the supply and operations chain may actually be the long-term optimal solution.

Of course, this is all just conjecture.

Look at “Swanson’s Law” for insight into solar economics.

We’re at the order of magnitude where widespread deployment is inevitable. It took a lot of learning curve to get there, there’s barely another order of magnitude left to be had.

There are also the supporting infrastructure that needed to get there, such as battery/storage tech and smarter grids to handle the variable load.

Governments around the world have put hundreds of billions of dollars into solar R&D. Last year we had 500GW of solar and 600GW of wind, and added 100GW of solar. We should add more than 100GW of new generation to that this year. It’s pretty good progress!

I think global generation is about 15TW, and of course solar doesn’t generate 24/7, so there’s plenty of room to grow.

Really the Trump tarrifs havr been more moronic than usual in being more on raw materials and parts instead of finished products. That is literally exactly backwards for how tarriffs are supposed to be done.

It also panders to rural extractives and low complexity manufacturing so there may be demagoguery to this massive stupidity.

Yes. Manufacture is a multi stage operation. Transportation costs (waste) is balanced against production cost at each stage. Tariffs are one (synthetic) aspect of production costs. This may be a hint that the tariff structure is inconsistent, or perhaps it working fine and transportation waste is an acceptable cost.

One way to look at is that it's often cheaper to export inputs (cells) for foreign assemble and then reimport the outputs, even if tariffs are not a factor in the location of the inputs. I believe steel or aluminum or oil is similar in that taw materials are mined/extracted somewhere, sent elsewhere for processing, and then finished products sent back. You yourself might have once sent a piece of equipment or repair via mail order, or sent your children away temporarily for education?

I knew about customs free zones for storage and logistics. That you can do that with manufacturing is news!

Pretty creative way to subsidize "domestic" manufacturing for sure.

So... If they imported the same parts and sold locally without first exporting for assembly.. they'd pay tarrifs on the parts?

This is funny. Also a reminder that while any given engineering-with-tax policy might make sense, the totality adds up to a mess.

The issue here is that goods produced or imported into a FTZ should not qualify as American made or origin.

The foreign company should not be able to claim a tax exemption on re-importing to the u.s.

The simple solution is to have the manufactured/imported goods in a FTZ not qualify as American made. Because they're not, if they haven't been subject to all America's rules and regulations

The "simple* solution would be to not have FTZ, or to not have that tarrif exemption. But... Each of these had their reasons. What you're suggesting is having a made-in-america-but-not-exactly category. It might be the right solution, but it's not a simple one.

No, I'm suggesting simply "not made in America".

The more I think about this, the more I'm convinced it's bad reporting, or misquoting. As a Canadian that exports, I've been to presentations out on by CBP and cross-border warehousing services that covered FTZ. There's no way something this basic gets past them.

It's not bad reporting, it's true. This is how "rules of origin" work in general.

For an example relevant to Canada pead e.g. what the CETA (EU-Canada) deal has to say about "rules of origin"[1]. For the gory details start reading at page 549 of the full text[2].

Here's an article about how Canadian car manufacturing gets a rebate on raw materials used for exported vehicles[3].

None of this is unusual, having this happen within a FTZ is just a way to speed up the paperwork part of it. You can setup a process where you don't first have to pay tariffs and then seek a rebate, instead you don't pay the tariffs in the first place and the government makes sure the goods are for export.

Some of those good then make their way back into the country, at which point you might pay tariffs on them.

1. http://trade.ec.europa.eu/doclib/docs/2017/september/tradoc_...

2. http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_...

3. https://www.reuters.com/article/us-usa-trade-canada-autos/re...

This article is trying too hard to paint a negative picture. The Solar Roof was never suggested as a cornerstone of Tesla's near-term solar activity.

If the Buffalo factory can produce more than Tesla needs I don't see what the problem is selling to others, in the US or out.

> California state data shows 21 Solar Roof systems were connected by the state’s three investor-owned utilities as of Feb. 28. Only a few others were connected in the northeastern United States [...]

Amazing that Solar Roof got so much news coverage for what, in the end, amounted to practically nil.

I am frequently extremely critical of Elon Musk, but I cannot help but admire his marketing and promotion skills. I believe they are even above Steve Job's. And I'm not being sarcastic, I mean this sincerely.

Every other car company needs a huge marketing budget; Tesla has consistently been getting front page press coverage for free, for more than a decade.

This is what launching early looks like. This is just following the mantra of, "if you're not totally embarrassed by your product on Day 1 you waited too long."

They establish the demand and build anticipation in the product. Then they spend the millions/billions to create it to serve the demand. It seems like a smarter way to do business than the other way around.

> Amazing that Solar Roof got so much news coverage for what, in the end, amounted to practically nil.

What do you mean "in the end" -- do you think Tesla has or will abandon the solar roof project? Or is it more likely that they lost focus on Solar Roof during the Model 3 ramp, and that they are still doing the R&D to increase manufacturing yield and longevity of the tiles, and hope to ramp up production later this year?

But if only 21 units were connected, doesn't that mean they failed to establish demand? Is there actually a waiting list miles long that they're just not filling?

Yes, there are 10,000 people on a waiting list for the Solar Roof. It's not that people don't want to buy it, Tesla just isn't currently fulfilling orders.

EDIT: 11,000 reservations through May 2018 according to Bloomberg, currently it’s $1,400 to reserve.

Can you please provide a source for that. That sounds like material information, but I couldn't find any mention of this in their last quarterly report.

Aforementioned Bloomberg article - https://www.bloomberg.com/news/features/2018-11-20/inside-el...

Quoting - On the other hand, Tesla had received about 11,000 customer orders for Solar Roof by May, a backlog that was both encouraging and daunting.

Has there been a down payment associated with getting on the waiting list?

It probably means that they are failing to provide the product. I have no real information, but my best bet for how this situation came about (handful of installations, growing very slowly, yet with no news after a large splash on initial announcement) is that the tiles are not durable enough to last the lifetime of the roof.

That would be something that could come out of the left field, surprising them after announcement, and the slow trickle of installations is them attempting to iterate the product and make it better.

> They establish the demand and build anticipation in the product.

Who's left to do that? The article says that they gutted the solar sales team.

> Or is it more likely that they lost focus on Solar Roof during the Model 3 ramp, and that they are still doing the R&D to increase manufacturing yield and longevity of the tiles, and hope to ramp up production later this year?

Do you have an actual source for that, or is that just a scenario you personally are speculating on?

Tesla declined to comment on the article (but for a tiny quote). Not only is that highly unlike Tesla, but if your first assertion is true, ("first establish the demand and build anticipation"), then this silence does not bode well.

> Who's left to do that? The article says that they gutted the solar sales team.

They now sell them via the stores, the internet, and direct marketing to their car customers. There isn't as much revenue here, but presumably it isn't unprofitable now.

Regarding the plans for ramping this year, I have similar concerns to you. Having said that, there are sources for a claim of ramping this year. Quoting Elon Musk on the Q1 2019 earnings call:

"And then the Solar Roof tile, we are on Version 3 of the design. That necessarily takes a while to scale up because we have to be confident that the Solar Roof is going to last on the order of 30 years and because the warranty is sort of 20, 25 years and so the rate at which you can iterate on Solar Roof is necessarily slowed down by [indiscernible] which you can do accelerate aging on the roof and we want the installation process to be simple and easy, which is actually the Tesla Buffalo factory a few weeks ago and I was pretty impressed with the team and we are looking forward to scaling that up significantly through the balance of this year and next."

https://seekingalpha.com/article/4256560-tesla-inc-tsla-ceo-...

From the same call:

"We also have – we are also finding a significant increase in retrofit solar this year, because we have finally refined the product offering to be something that’s extremely compelling and much more cost efficient to deliver and install."

Obviously there are no numbers there, so who knows what a "significant increase" is in this statement.

>Who's left to do that? The article says that they gutted the solar sales team.

It's not clear to me that they need a sales team for a product so highly differentiated. If they can deliver a solar roof product as promised, they're no longer in the heavily commoditized traditional photovoltaics market that requires boots on the ground. A wholesale distribution model where they exit the installation business makes sense in that reality — they don't have any real competitive advantage in sales or technical ability in the existing retail market.

>It seems like a smarter way to do business than the other way around

To the superfans everything Tesla does is "smarter".

>What do you mean "in the end" -- do you think Tesla has or will abandon the solar roof project?

Well, according to the financials they are winding down Solar City. So.. Yes?

> Every other car company needs a huge marketing budget; Tesla has consistently been getting front page press coverage for free, for more than a decade.

Well, they built and sold the first successful electric car in the age where nobody believed this would be possible. They've attempted to and succeeded in forcing the market to accept fully-electric vehicles as the future of transportation. They also appeared sincere about helping to fight climate change throughout the whole thing. This was sure to generate interesting headlines.

Honestly, I wouldn't mind to see more companies trying to force climate-change-mitigating solutions against the will of the market and actually succeeding at it.

>Well, they built and sold the first successful electric car in the age where nobody believed this would be possible.

I guess that depends on what you mean by "not possible". Did any engineer doubt an electric car could be made and sold? Maybe no one believed it could be done profitably. That's still the reality.

I meant the second and it seems to be the reality now.

First, tesla is not profitable.

Second, would you consider that the hype, the lies, the cult, and the overly optimistic statements might be a reason that Tesla can sell so many cars? Could Ford pull this off?

> the lies

Which ones? I don't remember any in pre-Autopilot Tesla.

> overly optimistic statements

A lot of companies do that. Tesla had a habit of delivering, at least (again) pre-Autopilot.

> Could Ford pull this off?

If they honestly and deeply cared about making fully electric cars exist, as opposed to making money off some cars, I don't see why not.

"Well, they built and sold the first successful electric car in the age where nobody believed this would be possible."

I beg to differ, everyone thought it's possible but there is no mass market for electric car at a reasonable price point. Volkswagen had several working prototypes in the 1970s especially after the oil shock.

I worked for eBay for some time. They could do most of the stuff that startups around them could do, they had the tech, the ideas, the money and the people. But startups can be net negative for some years, or be happy with $10M revenue, while a project at eBay being net negative would be killed and a $10M project would be thought as too small. Championing a $10M project at eBay for several years would be a career killing move.

So selling 1000 cars a year is a success for a startup (Tesla) but nothing a large company like Volkswagen (11M cars per year) can sustain as a project. Large companies are just not structured in a way (would need to be structured like a VC fund, and some try, e.g. Alphabet) to handle this small but growing opportunities. They need to find the right moment to jump in.

Sure. Not saying big automakers wouldn't do it if they could, but they couldn't, so it took a different company with different structures and motivations. Ford, Toyota, and others are now entering the game, and if big automakers will mop the market floor with Tesla I wouldn't mind.

(Hell, Musk wouldn't mind either; AFAIR he's on record saying that the whole point was to get electrification of transport going, regardless of who will be the dominant player in the end.)

Toyota is still hell bent on fuel cells, for whatever reason.

Yeah, I don't understand it either. Organizational inertia? Maybe they can afford to indulge someone in the organization who's hell-bent on this?

I mean, there are several competing companies now and none have matched the range of a 2012 Model S. I'd say it is fair to say that noone considered it possible back in 2012.

Now they build them with profit margins that are at least as good as the ICE cars on the back end. Their problems are related to scale and retail.

What does "it" mean in "no one considered it possible"?

> I believe they are even above Steve Job's

A practical, functional, and affordable electric car is definitely a more revolutionary offering than a smart phone. Smartphones are more ubiquitous and versatile, sure. But they aren't technologically as advanced as a self-driving car that directly competes with ICE vehicles and can be powered from completely renewable sources.

Jobs gets tons of respect from me for giving a fuck about UX. And because of the smartphone revolution, he'll get most of the fame. But he didn't go up against an industry as established and conservative as the auto industry (that has entire laws prohibiting factory-direct sales just to prop up prices and keep sleazy dealers in business!) and actually win. (inb4 pedantic remarks about TSLA's balance sheet: I say Tesla "won" because the auto industry has to take them seriously now; I see their cars everywhere. They weren't just a startup that had "an idea" and sold a few demo models and quit).

Smartphones are everywhere, but they were coming one way or another as manufacturing permitted lower power consumption, higher battery output, and faster CPU/more RAM. Jobs knocked it out of the park because he cared about the UX which is imperative for mobile.

> Amazing that Solar Roof got so much news coverage for what, in the end, amounted to practically nil.

I know engineers who work on Solar Roof and it's definitely not "nil". It's still scaling up. Just give it more time. It's still going through revisions. Keep in mind that when they sell this it needs to last for 50 years on someone's roof. It can't be defective.

If you're a fan of Musk as a promoter you'd probably be interested in giving this a read [0]. He's not good by evaluation as a public speaker, certainly not what I'd call charismatic, but manages to kill it anyway by just having a well structured presentation. As an autistic salesperson he's basically a role model of mine.

[0] https://medium.com/firm-narrative/want-a-better-pitch-watch-...

Both what Musk and Jobs do, are bad for consumers.

Both companies are extremely selective in what they say, and lie about their features, quality and accomplishments.

Not every company does this and gets away with it. But Tesla and Apple manage.

I wonder what demographic of people are okay with lies.

Edit, would someone explain why lying to consumers is a good thing?

Apple and Tesla are two of the most loved companies in the world by their customers. Tesla actually just won the "Most Loved Brand" rating from Auto Trader [1].

Neither company is perfect, or makes perfect products. Turns out in this world perfect isn't a requirement. Companies can "get away" with failing to deliver 100% of what they promised, when they promised it, if the end result is still delightful.

In short, both Apple and Tesla make delightful products.

[1] - https://www.teslarati.com/tesla-most-loved-brand-auto-trader...

>Tesla actually just won the "Most Loved Brand" rating from Auto Trader

I suspect this rating will probably do a 180 soon. Tesla cars (all of them) aren't that old. Just wait until a lot of owners are thoroughly in the used bracket and problems like [1] and [2] start rearing their head.

[1] - https://carbuzz.com/news/tesla-owners-are-furious-and-nothin...

[2] - https://www.thedrive.com/news/27945/a-single-component-can-b...

One thing to keep in mind is that every Model S and X car is built to order. Whereas the Model 3 is mass produced up front. Parts availability for a mass produced car at a run rate of nearly 500k units/year (by the end of 2019) is going to be very different than parts availability for a made-to-order car selling 50k units / year.

Tesla has to scale their service capacity tremendously. But they know this, and talk about it a lot with investors. At the end of 2016 they had made a cumulative 170k cars, by 2017 it was 272k, 2018 it was 526k, and by the end of 2019 it will be nearly 1 million.

They have a technically sophisticated product which would ordinarily result in a tremendous number of service calls for things which aren't even technically repairs. I think the huge base of YouTube videos and forum posts helps saved them a lot in this regard, as I will turn to Google searches for answers before calling Tech Support.

Tesla does have a very unique service model. They have entire states which legally bar them from operating service centers. They do mobile service in your driveway. They will text back and forth with you to help resolve an issue, and remote access your vehicle logs to diagnose a problem. The car will pre-order parts at your local service center if it detects certain anomalies.

I am sure that a minority of owners will experience Tesla "service hell". But I doubt very much that the Model 3 will turn out to be a lemon. So I think the rating will stand the test of time, particularly with OTA updates continuously making the car better in many measurable ways on a practically monthly basis.

-minority of owners will experience Tesla "service hell"-

Just make sure nobody crashes into you or damage your bumper!

So Tesla competes in the premium market segment and outsources support, partially, to Google search, YouTube and do it yourself-tutorials? Doesn't sound very premium to me. Cars the age of the average Tesla are supposed to run. And for that price tag customers can and do expect prompt service.

But I have to admit, marketing vise Tesla and Musk are even better than VW. Which is an achievement.

Tesla incentivized the massive library of tutorials on YouTube, Tesla blogs, and such with their referral code program.

It's a huge asset, and strictly better than not having that fan base out there explaining and demo'ing every little new feature that Tesla releases. I'm not sure how you consider that a negative.

Car companies have always strived for a loyal following of ardent fans to talk ceaselessly about how much they love their vehicle. Tesla does it better than most.

This is all true, except for one small complication that OTA updates may be lethal. Though, I'm hoping they are past that.

>Parts availability for a mass produced car at a run rate of nearly 500k units/year (by the end of 2019)

The astroturfing for this company on this forum is insane. They will not reach 500k run rate by the end of the year, demand is flatlining.

Why not talk about the actual numbers of today, rather than some hypothetical that you'll soon dismiss as "a goal" when it isn't reached? Can you see how ridiculous it is to argue "Tesla is having problem now because of some theoretical production rate they'll probably never reach".

> Why not talk about the actual numbers of today,...

Maybe you stopped reading my comment before the second paragraph?

Today they are at a 250k run rate. By the time Giga3 comes online that will be double. They are targeting the end of 2019, but certainly it could be mid-2020.

My point was actually that their service challenge is just going to get bigger, not debating the specifics of when they will hit production of 500k vehicles per year.

The parent has a point: the fans/consumers of those brands are very willing to overlook the drawbacks, and to accept their marketing claims that are usually overblown, to a greater degree I think that people who are not fans of those brands.

Counterpoint: Wouldn't actual owners of these products know more about their advantages and drawbacks than forum trolls?

Don't get me wrong, I can't STAND Tesla forums. But a (non-Tesla) car forum I'm on has a number of very vocal complainers who post EVERY negative blogpost they can find about Tesla in every thread about Tesla, because... reasons. I mean, everyone needs a hobby, but as someone who actually owns one Tesla and many Apple products, I see no need to spend all day digging up positive OR negative news about the companies.

I can't fathom what would drive someone to be so angry about a company as to spend more time researching it than even the most rabid fanboy, but they're out there.

Some people have nothing better to do with their time than tear something else down.

Not that this is always a bad thing: back at the height of their abusive monopoly, Microsoft definitely deserved all the bashing it got. But Tesla isn't anything like that, simply because they're a small player (by volume) and nowhere near a monopoly. If you don't like Teslas, it's simple, don't buy one. There's no shortage of other cars out there, including electric ones.

> I can't fathom what would drive someone to be so angry about a company as to spend more time researching it than even the most rabid fanboy

I can. And it's not random. It doesn't have a lot to do with Tesla, it has to do with worlds changing.

A lot of people grew up in a culture where men were respected, beef was the best food except maybe bacon, oil was a respectable professional and cars were a respectable hobby. Hitching up to someone you can have kids with would at least put you in position to have status in your community. And all the best people are mostly white, except in ethnic activities like cooking and basketball.

Then the world said:

- Men are the #1 threat to women's safety, even the men who are close to them

- Men are taking advantage of women financially, and interfering with their work

- Cars and gas are destroying the earth

- Beef and bacon are toxic and toxic for the environment

- Straight people are boring if not oppressive, fluid sexuality and queerness is the new symbol of vibrancy and virility

- White people cheated their way to the top

- Black people make the best art, Japanese people are the best engineers, women are the best CEOs, and gay people have the best parties

It's a lot to deal with if you grew up in the first world and find yourself in the second. Especially if you're a meat eating straight man with a nice car.

And yet, pretty much all of those bullet points are scientifically accurate. And the population overwhelmingly is accepting those ideas.

So you have a group of people with status and power who is feeling it slipping from their fingers. So they look for any and all opportunities to chip away at the bullet points. Electric cars are a sham. Queer people are snowflakes who don't understand that gender is a thing. Etc.

Frankly, I think the blame lies in the progressive world, which has left behind anyone considered regressive, trying to lionize marginalized identities rather than developing a true radically inclusive politics.

Not that I am criticizing... I think it is somewhat intentional, the centering of marginal identities. It has powerful benefits for the people who are centered, which maybe outweigh the cost of marginalizing men, white people, straight people, etc.

I guess I'm not saying those decisions were bad, so much as I'm saying someone does need to start a platform of radical inclusivity if they want to bring the incels and Tesla haters and Trump voters and all them back into the fold of liberal society.

This maybe describes a phenomenon in general, but it does not at all describe what's happening with Tesla.

People genuinely believe they've stumbled over the next Theranos or Enron. Maybe it was seeded by the shorts, but it's taken on a life of its own. Tesla has done more than enough shady shit that it's not entirely undeserved.

I would recommend digging in to something before attempting to diagnose it, or else resisting the temptation. The world is a complicated place.

I like your explanation too. Your final comment is kind of insulting though. I spend too much time already following Tesla.

You're right, it was inappropriate. It shouldn't be my assumption that anyone with different views is just not familiar with the topic.

>Japanese people are the best engineers

While I am partial to Japanese cars, I think some people might argue that the Germans are at least as good at engineering.

Of course, it was us Americans who really excelled at rocketry and sent men to the Moon... oh wait, we had to import Nazi German scientists to do that.

I think the argument here is that they achieve their popularity via similar tactics that are somewhat misleading to consumers.

This comment is offtopic.

The parent comment is discussing the ethics of lying and that customers accept it.

You say the companies "lie". Perhaps a good example would be Elon's "funding secured" tweet? You asked why customers accept it?

Customers accept that Elon lied on Twitter because they love the products the company makes more than they don't love Elon lying on Twitter.

I would further posit that customers love Tesla because, by and large, Tesla does not lie about its products' capabilities, even if they ultimately fail to deliver the product they want to, or are overly ambitious on delivery dates, or overly optimistic of what's theoretically possible. You don't set off to build a mass market EV in 2006 without a great deal of starry-eyed optimism.

I don't want to go down the rabbit hole with "throwayEngineer" but IMO Elon tweets a huge amount about his products, and the vast majority of those tweets are factual, exciting, and/or funny.

OP says these companies "lie" as if it's the only thing they do, or that if a company "lies" how can that be a good thing? That's an obtuse question used as a rhetorical trick, and I think it's an uninteresting discussion.

The reality is that all companies do a vast array of things, and yes, sometimes, they tell lies. Whether Apple and Tesla are more egregious examples of "companies that lie" than say Exxon or Boeing, I doubt it.

I personally believe Apple and Tesla do not intentionally devise schemes on how to best lie to their customers, while I have much less of a problem imagining Exxon or Boeing doing exactly that.

The reason for that disparity, is a more interesting topic. I think it's because I love Apple and Tesla products more than I love Exxon or Boeing products, and we treat the things we love differently than things we are ambivalent about, including painting over the flaws, and believing they have good intentions.

Personally, I'd say Elon is a lot more honest than Apple ever was. Remember, Apple is the one telling everyone they really don't want a headphone jack, even if they do. (Wireless headphones have significant downsides.)

As for Exxon, that's apples and oranges. Exxon doesn't make any products. It produces oil, which is a fungible commodity, not a branded product that's different from competitors' products in real and significant ways.

Boeing, too, is a pretty bad comparison. No one actually buys Boeing planes (except airline companies). As a consumer, you can try to choose non-Boeing planes to fly on when you book tickets, but that's about it. You're not their customer.

But that's exactly my point. Since they aren't brands that consumers can really love and connect to, they are more likely to be viewed as an evil empire.

E.g. I was trying to avoid the pissing contest of whether Apple or Google or whoever is more loved.

That's the problem with your point: you were making an apples-to-oranges comparison. You're comparing brands that do connect directly to consumers and sell to them with brands that really don't. Even Google isn't a great comparison, because consumers only use Google's services like GMail and search; they don't buy products from it very much. Android phones are (mostly) made by other companies: Huawei, LG, Samsung, etc.

Maybe you should try comparing Apple and Samsung instead, or Tesla and Honda. Those are direct comparisons.

Sorry, I think we’re talking past each other.

Consumers purchase gasoline directly. Boeing cares what the public thinks because their customers (airlines) care what the public thinks.

Consumers mostly don't care about the brand of gasoline, only the convenience and price of the gas station. Gasoline is all the same; Exxon gas isn't significantly different from Sunoco or BP gas.

Boeing doesn't sell to consumers. As I said above, this just isn't a valid comparison at all.

Lying is different from overly optimistic and promising ideas that did not pan out.

It depends on where you come from, if you are skeptic, its lying. If you are a bit charitable towards Musk or Jobs, its just some idea that did not pan out.

If we live long enough, you would find, success is an exception. So, the older I get I do not buy the hype, but I do not call people with a decent results track record as liars. They might have failed at delivering and thats about it.

Such a loaded and polarizing question there.

As an Apple product user and a Tesla-owner hopeful, I see (saw in the case of Jobs) truly innovative people leading these two companies. I would rather take leaders of companies that go against the status quo than those who follow it.

I like that musk doesn’t give a shit about the SEC when he tweets something. It’s the same thing that makes him want to send people to Mars. He’s crazy in a good way.

The SEC isn't there to protect the government. It is to protect investors from false statements that can mislead them. Ex: lying about the fact that he was bringing the company private.

How can you be in favor of him doing that? Is that good governance having a CEO telling lies and mislead the public to increase in his own wealth?

People forgot about Enron it seems. Governance is good, simply because rules have to apply to everyone to be fair. If you allow the presidence there is no way prevent everybody else from braking the rules as well.

Even a weakly convincing lie can give a person an easy out of cognitive dissonance. Question is, what about the truth is causing the discomfort that they want or even need the lies?

There is a time limit for lies. I'd prefer they be discovered immediately, as deception and propaganda are a kind of fraud when money or any limited resource is on the line. But it can take a while for these lies to be discovered, quite a lot of the retrospectives use phrasing like "it was always a lie" and "the data was there, we just didn't want to see it" and so on.

I notice many peers and people younger than me have a strong belief in "what comes around, goes around" which I think is provable nonsense, and it makes this problem worse by proposing some force (market or spiritual) will make things right if the offense is bad enough.

SolarCity was initially a different Musk project, that ended in bankruptcy and then he made Tesla buy it to cover the losses. This sounds like they are effectively liquidating SolarCity and trying to make the factories profitable (at least for Panasonic).

Don’t remember SolarCity declaring bankruptcy.

It probably would've if it didn't become part of Tesla, but yeah it didn't.

Do we have any indications of this? Or is this just more wild speculative hate towards Musk?

Many questioned the SolarCity deal from the beginning. It was all over the financial news. There is also a shareholder lawsuit over it.

https://tslaq.org/solarcity-lawsuit/

https://www.fool.com/investing/2017/04/20/why-investors-shou...

"What's becoming increasingly clear about Tesla's buyout of SolarCity is that it was a huge benefit to Musk and his cousins Lyndon and Peter Rive. The three had $100 million of solar bonds issued by SolarCity, bonds that were recently bought back by Tesla. The three will have bonds transfered to Tesla under the same terms, unlike outside investors, but would you rather have a struggling SolarCity owe you $100 million, or market darling Tesla, who has easy access to equity markets?

The debt is on top of the 22.2 million SolarCity shares that Musk turned into Tesla shares and the 2.3 million shares the Rives converted. Had SolarCity gone bankrupt, as some major residential solar rivals have done, rather than being bought by Tesla, they would have lost hundreds of millions combined.

A bailout of their SolarCity stake to save Musk and the Rives hundreds of millions is worth considering when you see SolarCity's operations being shut down and manufacturing being turned over to Panasonic. At this point, it doesn't look like the SolarCity acquisition was a good deal at all. Musk could prove that wrong eventually, but so far, there's little indication he has much interest in growing solar under Tesla's umbrella."

Why don't you do five minutes of research? There is plenty of evidence.

At the time that Tesla and SolarCity merged, the major synergy touted was selling cars, power-walls and solar panels together at the Tesla dealership. They eliminated most of SolarCity's other sales channels like door-to-door sales, and the Home Depot partnership, to focus on sales in the dealerships. Since then their sales have plummeted.

Now Tesla is closing most of its dealerships, eliminated the main sales channel SolarCity had remaining. It looks like their plan is to operate with online-only sales, skipping even an in-person estimate visit, and offloading that do the customers.

I originally thought that the merger was a really bad deal for Tesla. I didn't realize how bad a deal it would be for SolarCity as well.

I actually thought the solar rooftop was really cool when it launched, and if I owned a home I would consider buying it. What happened? It sounds like Tesla intentionally sabotaged it.

They warranty the glass of the solar roof tiles "forever" (weatherization and energy generation for 30 years). They are only going to install a limited number of test cases until they know exactly what percentage of them will last that long.

The launch price -- $42/sq ft for the solar tiles, $11/sq ft for inert tiles that look the same -- is too high, and manufacturing yield is too low.

Finally, the first few roofs they installed took a Tesla team 3-4 weeks. I've read a couple cases in 2019 that took 2 weeks. I think they need to get installation time down to a week before they want to scale that any further.

In short, they probably lost money on every solar roof they installed in 2018, because that house is essentially acting as a real-world test bench. I think they will only install as many roofs as they need for testing purposes as they refine the design, manufacturing, and installation procedure.

If and when they cross the 20% margin point at a price that's still a premium over a new roof + panels, but not eye-wateringly so, they will scale production and start actually working through their order book.

The answer is more prosaic. Many people have worked on such technologies (the jargon is “BIPV” — building integrated photovoltaic for decades. The problems have included heat, safety, connections, individual cell failure, fire accessibility... heat in particular is bad (most panels have the back exposed for convection and radiation. Unsurprisingly, Tesla’s announcement in thisnspace claimed revolutionary achievement without mentioning how they planned to address the issues that had caused problems in the past.

Its a $50K+ product, so its only really an option for someone who would be willing to shell out for a slate or other high end roof. So, a small market. On top of that high end roofs last a long time (100 years) compared to asphalt shingles, so not many retrofit jobs are likely. New high end homes would be an option, but they would need building partners that would offer it in their menu of options. Doesn't sound like they have one.

Its really a headscratcher as to how they thought this would work out.

There's no indication that it's dead, it just launched prematurely (or early to create hype, charitably) before it was ready to scale. Powerwall 1 was similar.

Powerwall 1 was an actual product that you could buy (even internationally) and worked?!

Was it? I work in an adjacent space now (though didn't back then) and everything I've heard is that Powerwall 1 was vaporware. Even now, Powerwall 2s are hard to come by, though not to nearly the same extent — Tesla uses that product line as a way to soak up excess battery production when its car production bottlenecks, but historically batteries have usually been the long pole. That's essentially the only reason LG Chem/Sonnen/etc have any market share.

>excess battery production

Tesla buys batteries from Panasonic. Why would Tesla have excess supply?

Gigafactory is a joint venture between Panasonic and Tesla. But either way, in a world where demand for batteries far outstrips supply, the contractual ability to buy a greater quantity — knowing they can be sold profitably in any form factor — is an asset. Underpurchasing would be squandering that asset.

Tesla does not buy batteries from Panasonic. They joint manufacture a cell of Tesla design. The cell design is Tesla IP, not Panasonic's.

No idea if this is true, but Tesla might have a contract for X batteries at Y$ but only end up needing Z<X for its car sales. In every industry it's a good idea to find a use for excess materials.

Sounds like they are trying to keep their investment alive until there is the policy of strong promotion of renewable energy which half the planet has been crying out for, for years already.

solar rooftop is much more expensive than normal solar panels, and not more efficient. just nicer looking. a hard sell!

Elon Musk mentioned at the autonomy event that the latest version of the solar roof is currently on his house and works great. Seems like they are still working on it, but I had assumed it to be dead until he said that.

Is there a plausible universe where he wouldn't say that?

No one asked him about it. He just brought it up. That's why I'm inclined to believe it's still happening.

Its a great product, I'd think every home would benefit. But I'd like to know a lot more about how safe it is, especially when they get damaged and/or in a fire.

Solar Roof and to a lesser extent solar panels is a stupidly inefficient way to generate electricity compared to a PV powerplant.

It seems to have been just one of those hype cons that Musk is so good at. Musk pitched it in order to rescue the investment made by SpaceX into Solar City.

Every time some approach fails economically/financially, Musk comes up new technology that needs some financing and sells it. He is cashing in his reputation as technical genius again and again. He hopes that that nobody notices how his ideas to turn profit constantly change and are just out of reach.

Tesla was supposed to make 20,000 Model 3 cars by December 2017. If that plan would have worked, Tesla would have needed those cells.

Large scale ramp-up of Model 3 has slowed down to crawl, and has not reached even 6000 cars per month. With those volumes debt will drown Tesla and something must be done. Musk gained new investors with full-autonomy and taxi service idea. Completely insane proposition considering the state-of-the-art and the fact that the regulation is something that the company can't really influence.

SpaceX invested in SolarCity? Didn't know that... And I found the white knight buy out of SolarCity by Tesla already sketchy compliance wise considering the shareholder structure.

The Boring Company may have also appropriated SpaceX funds. I think if this sucker goes down, it's going to surprise a lot of people here. Hacker News loved Theranos too.

Just that I get it. Instead of investing into new rockets and stuff like that SpaceX is funding a residential roof top solar company, which needed to be saved by Tesla, and a company that is drilling pneumatic tubes for cars (Teslas again) as a solution for traffic jams (like a good subway network wouldn't move more people). Nice move. Sounds almost like a snowball scheme to me.

SpaceX invested into SolarCity bonds. Musk has had the tendency to treat all his businesses as the same family operation. That's why other investors are little bit in danger.

Musk also takes loans against his stocks to invest other ventures - 40 percent of his Tesla stocks are leveraged to do other things. There is a fear that if one business crumbles, it will take healthy businesses with it.

Space X had over a $100 million invested in Solar City.

There is a bit of nuance to this. SpaceX invested cash reserves in Solar City bonds. This wasn't an equity investment. While one can argue that people paying their electric bill monthly isn't as risk free of US treasuries (and that would be accurate), the risk was appropriately rated based on the returns.

Wow, so Musk used one of his companies, SpaceX, to fund one of his other companies, SolarCity. And when the latter one was going down the drain he used his third company, Tesla, to buy the failing one and save both his own and his first companies investment. Nice.

>Large scale ramp-up of Model 3 has slowed down to crawl, and has not reached even 6000 cars per month.

Well this is a lie lol. They are doing at least 5k cars a week.

Yes, his numbers are way off, but

> Large scale ramp-up of Model 3 has slowed down to crawl,

is 100% correct. They hit 5000 cars per week in Q3'18 and then their ramp flatlined. They remain stuck there with only 5,821 made last week.[1]

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

How is going up almost 20% slowing down to a crawl?

Sounds like their just nearing capacity. Did you expect them to just grow forever from the same factory?

Sorry. I made mistake with units. The ramp-up seems to have stopped though.

This isn't surprising, and it's not exactly the worst outcome, either.

We already knew Tesla's solar business was WAY down, even though they (well, Solar City) got incentives for the Buffalo plant. But, since Panasonic can export these cells, the plant is still fairly busy as promised, giving much of the employment benefit that the incentives were promising in spite of the Tesla solar slowdown.

That's not a suboptimal result, given the circumstances, IMHO.

{And on the other side, Tesla is also not forbidden from using other lithium or solar cells besides the Panasonic ones if it's more convenient for whatever reason (for instance, Tesla often uses non-Panasonic cells in storage applications), so neither party is locked in to a situation that would be detrimental just because the other party can't immediately deliver. That's also good.}

I don't understand those who think this is some scandal or funny. The incentives seem to be working (stimulating domestic manufacturing) as designed, even showing to be robust in the face of Tesla's solar downturn (temporary, we hope). What's the issue? Are we just all super jaded now?

It's not surprising that solar panels aren't selling so well in the U.S. given how cheap your grid power is. Try paying $0.27/kWh and see how much sense it makes to install some rooftop solar.

Sure you save long term but 4 in 10 Americans can't come up with $400 let alone however much this roof will cost. It's a problem of a lack of cash on hand more than electricity costs, solar pays for itself in x amount of years no matter how much you pay per kWh, and in some cases you can sell excess back to the grid.

https://www.federalreserve.gov/publications/2018-economic-we...

Solar panels sell pretty good for how low the electricity price is. The main reason for that is that solar energy is a lot better for large portions of the US than it is in Europe. See: https://globalsolaratlas.info/?c=32.518447,-36.524111,3

Texas is one of the leading points of growth of Solar at the moment, interestingly, combined with it's low natural gas and fossil fuel cost.

The fact that Germany invested a ton in solar is kind of ridiculous compared to how poorly suited they are for it.

They pay that in California at peak times.

If you can generate power during those peak times instead, and net meter it against your off-peak use, you can do very well.

So Tesla paid $2.6B for SolarCity, but that didn't even include cell manufacturing so they aren't benefitting from this tariff-stimulated demand for foreign export, Panasonic is?

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