Tesla could use a COO to manage operational expectations and let Elon focus more on engineering in the future. It'll keep his twitter/email free from setting market expectations.
Edit: Wow, so much hate for a one-line comment. I have five replies and three downvotes as of now.
I stand by my comment. I think Tesla is building long-term value (brand recognition, a reputation for innovation in an stodgy industry, technical know-how in multiple industries) that will allow them to be profitable. I know well how Amazon got here, but I don't care about the technicalities. It is the behemoth that it is because of the compounded value added over 14+ years. I see Tesla equally driven and able to take advantage of the things it puts in place now.
Amazon can be forgiven for losing $1.6 Billion in the 2001 recession, but their pathway to profitability was rather short all else considered.
Amazon has famously low margins, but those low margins commanded a mighty profit for decades. They are not the company you want to compare against Tesla. Tesla's strategy is supposed to be luxury vehicles at high margins and relatively (relative to Ford / Toyota / its other competitors) low production.
In contrast: Amazon is low margins while out-producing its competition. A very, very bad comparison.
2003: $35 Million profit
2004: $588 Million profit
2005: $359 Million
2006: $190 Million
2007: $476 Million
2008: $645 Million
2009: $902 Million
2010: $1,152 Million
2011: $631 Million
2012: $(39) Million <--- First loss
2013: $274 Million
2014: $(241) Million <--- 2nd loss
2015: $596 Million
2016: $2,371 Million
2017: $3,033 Million
2018: $10,073 Million
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Aside from 2012 and 2014, Amazon was both profitable AND cash flow positive. Amazon was Cash flow positive all 15 years in this time period as well. But I'm talking net profit / net loss here.
IMO: there's no valid comparison to Tesla here. Amazon is not the company you want to compare against Tesla's performance.
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Anyway, yes, Jeff Bezos sacrificing one year or two years of profits (over 15 years) for greater long-term growth could make sense. That doesn't actually mean its healthy for Tesla to consistently lose money for 10 years straight.
That's longer than average, but it's also a lot shorter than 16 years.
Tesla is likely coming to the end of the period where they have a relatively unique portfolio of products. We're starting to see the traditional car makers come up with competitive vehicles.
Whilst Tesla may ride this out fine, it's likely to have an impact on things like margins, going forward.
closest competitor for the Model X at the moment appears to be the Jaguar I-Pace.
For the model three there's things like the Hyundai Kona and Renault Zoe which are becoming competitive.
I don't think it's there yet, but if I was an investor looking at a 2-3 year timeline, you've got to expect increased competition as there's various models coming along from various companies. Not all of them will be successful, but it's a fair likeliness that some will be.
Amazon chooses to make little/no profit as a long-term business strategy to reinvest everything.
Tesla is forced to make little/no-profit as a short-term business obligation to their suppliers.
Tesla is in a completely different situation. Cars require massive upfront investment before their revenue is realized, and given the results just posted, Tesla will most likely post a quarter with declining revenue.
People should stop comparing things to Amazon. Amazon was successful because it was unique.
And you only get to play the startup card so long. Tesla is indeed a 16 year old company whose production struggles look even more troubling considering their growth isn't what anyone would really consider hockey stick, and their competitors have none of their scaling issues.
Add in a leader that has shown some stability issues, and its tough to make a case for it.
Personally, I root hard for Tesla the company, want to see them succeed, and after recently buying a house with a parking spot, may buy a Tesla as my next car, but I am not buying shares anytime soon.
The problems with customer service and production quality are to be expected if you scale at the speed that they currently do.
All the while, they are still losing money. This is not just about cash flow, this is about actual earnings. You have to look into where the disconnect there is as well to make a bull case.
Their other issues are a combination of scale and fundamental business issues with selling cars. Other manufacturers have profitable dealer networks selling their cars. Tesla has a money losing sales and service network. Some of this is due to their relatively small scale, but some of the problems are deeper than that, unfortunately.
I would argue that slow down is mainly due to the nature of the production ramp, which goes exponential in the beginning but is now starting to flatten out. As it flattens though margins should continue to get better. If they get additional factories like the one in China it should reinvigorate the growth rate.
For me the bull story goes something like: they sunk a lot of money building out their very first mass producing production line, making a lot of mistakes on the way. Although they have some quality and service and margin issues people still keep buying their cars, which is the most important. Fixing the margin and other secondary issues is just a matter of time and continuous optimization.
So the most important of Musks hypotheses that people like buying electric cars if they are better in every important category is pretty much proven by now.
The second, that they are able to produce them at a profit is still to be proven, but economies of scale play a big role in that and they are first beginning to really leverage those.
But I do agree that they could definitely use a COO. Musk seems like a bright guy but I'm just not sure how suited he is to handle operations at scale.
Lets just look at Kimbal who has been on the board since the beginning, with a multi-million dollar compensation package even though he has zero relevant experience in the industry and is a huge outlier compared to the rest of the industry. Sure they are making strides in electric cars but as a business its very out of the norm.
https://www.cnbc.com/2019/04/23/why-tesla-is-such-a-battlegr...
Plus, keep in mind that, if TSLA isn't massively more profitable on a per-car basis than other car companies or doesn't essentially take over the automotive market, any upside is already priced in.
There isn't a car company around right now that doesn't have an electric model coming out in the next couple of years. And so Tesla has nowhere to go but down.
It's actually simpler. The attack campaigns negatively influence the stock.
VW ID.3/4 are looking like being winners and will likely outclass the Model 3/Y. eTron, I-PACE and EQC are all selling well against the Model X.
And again. Everyone is coming into EV this year and next.
“The maximum range for the Taycan is listed as just 450 km (279 miles) on the WLTP test cycle. The Audi is rated at 255 miles on WLTP and 204 on the U.S, EPA cycle. When the Taycan gets its EPA certification, it will likely have a range of around 220 miles.” - Forbes
The VW ID.3 is ugly, and it's long range version is 100 less miles than the Model 3 long range version.
Neither have Tesla's charging network either.
Range and charging is the most important thing about an ELECTRIC car. 100 miles is a big gap, and every car coming out has that gap.
And in many places e.g. EU the Tesla charging network isn't a huge advantage as you have superior alternatives e.g. Ionity.
The VW ID.3/4 are not coming to North America.
The eTron, last month sold 434 units in the US. The Model X sold 1,675 in the same month in the US. The Model 3? 20,250. The I-PACE sold 160 units and the EQC isn't being sold yet. The eTron has been a massive sales disaster, sales are not growing. https://insideevs.com/news/369439/august-audi-e-tron-sales-u... https://insideevs.com/news/373812/ev-sales-scorecard-septemb...
I'm not trying to say Tesla has no risks at all, but you have to _really squint_ to not seem them as the clear market leader currently. The Model 3 simply has no competitors today - and to invoke the Taycan is about as disingenuous as it can get.
b) VW ID.4 is coming to the US.
c) There is more to this world than the US so not sure why you seem to restrict the sales there.
Ahh, I see - the line must be at $120k, right? Since I can order a $115k Tesla which is somehow mass market?
Its a good car, but this is as exaggerated a position as I've seen from anyone on either side.
Tesla is the leader, not a follower in the segment. They have advantage of manufacturing, charging network, battery, software, and last but definitely not least their brand. If anything some laggards will lose out, for example Chrysler or Mazda.
Tesla booked about 110,000 orders this past quarter. That's a very healthy demand. [0]
[0] https://electrek.co/2019/09/26/tesladelivering-record-cars-q...
Currently Tesla's valuation is higher than both BMW and Mercedes. No doubt, they're enjoying rich multiple due to other forward-looking business units, but they're not generating any money. Their car business is what's keeping the light on.
On long term, Tesla's car business is uncertain. The first-mover advantage is eroding quickly as legacy mfrs are stepping up.
It's an extremely competitive business. And with $45k model flooding the market, the novelty factor of the brand is going to wear off very quickly.
Look at the new Porsche Taycan. To me, that's the new Model S.
Jung,
Younger demographics have less disposal income so they are hardly the type of customer you want to be betting on.
OP said Taycan is the new Model S, I think that your comment vs. mine highlights that this isn't true -- Taycan customers are not the same as Tesla customers. Tesla customers get a good bang for their buck -- speed, range, charging network at a cheap price. Porsche customers get brand, design, & build quality.
Someone who values what Porsche has to offer probably was never interested in a Tesla.
Meanwhile a Model 3 Performance -- the same speed as the Taycan -- costs $90,000 less.
And not sure why you are comparing the Model 3 to a Taycan as they are completely different segments.
The real metric is miles added per minute, though, and I haven't really seen an apples to apples comparison there.
Yes, its way better.
> design
Yes.
> interior fit
I much rather have the interior of a Tesla. I car much more about the cool features then complaining about a slight overlap of two plastic panals that are under the seat, or whatever car german fetishits obsess about.
> charging speed
They have a small advantage on a tiny number of actual charging stations but the majority of the time your gone charge much slower.