It's Still Funny That 1k People Gave Tesla $250k for a Roadster Six Years Ago
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The problem for Tesla, though, is that we aren’t in a zirp environment anymore so money will become harder and harder to come by and they have exhausted the early adopters. They are already suffering deflation in their prices, having to cut prices to stimulate demand which still seems to result in lackluster numbers relative to valuation.
I don’t see how this company is going to sustain its valuation given the basic fundamentals at play.
BTW, it’s important to understand that Elon is incredibly focused on the share price and his genius perception. This was made evident in 2022 when he split the stock in an attempt to create incremental buyers during a very tumultuous time, but he was careful to do a 3 for 1 split so that the stock price would still be three digits (it was around $900 at the time) so that the perceived value wouldn’t be diminished.
He’s also made reference to the share price and worked frantically on Twitter to try and pump the share price and hurt short sellers on many occasions. CEOs who are overly concerned with share price fluctuations are always a red flag for me and in Elon’s case it is abundantly clear he needs to keep the savior image going. I would not be at all surprised if the timing of the CT delivery event came about due to nervousness over the slumping share price.
Car rides are a big market.
There are 2 billion cars on the road.
If 10% of car rides are done in a robotaxi, that is over 200 million rides a day, over 70 billion rides a year.
Sell a ride for $10 and that's a 700 billion dollar market.
Capture 10% of that and you make $70B a year.
One taxi can do over 100 rides a month. That is $1000 in revenue. Operating cost should be less than half of that.
So you have 50% margin: $35B profit per year.
At a p/e of 30, that is over $1T market cap.
Teslas current market cap is $700B.
The current generation of neural networks already seem to do pattern recognition better than humans. And that is all that is needed to press the brake in a dangerous situation. All that is needed is to train them on enough examples of different situations that occur on the road.
As I said, neural nets are already good at pattern recognition. That is all that is needed to recognise you ran over someone.
Humans are still better at long reasoning sessions. Aka "thinking something through". But that is not involved in recognizing you ran over someone.
So this is not an example of pattern matching being insufficient to avoid danger.
The only real way this would work is if you build a pipeline where you have a simulated world with realistic physics, rendered through some pipeline to represent camera images (in relatively high fidelity) and/or lidar outputs, and teach the network to predict the evolution of these scenes, and do this with a shitload of random data
This is probably orders of magnitude more expensive to do than training GPT models, since for vision, you would have to render it with ratyracing.
Human drivers drive with EXCEPTIONALLY more "software" under the hood. We simulate the world around us using learned rules across multiple domains. For example, if someone has never driven at night, but understand that the cars have tail lights that are red, we can deduce that pairs of red lights are cars on the road without ever being subjected to the visual of driving at night. Its this kind of processing that lets us be safe.
In the current form, ML models are way subpar to this. A superhuman driving agent should be able to drive through a construction site with cones and debris, or a busy parking lot, or a grass field full of logs. No model out there can do this. This is why you absolutely need simulations if you want to do it traditional way. Comma AI has gained quite a bit of success in training in a simulated environment that simulates deviations from straight line driving on real world video.
we can deduce that pairs of red lights are cars on the road
Even if you had a simulation set up for training, and enough compute on the vehicle to run something like MuZero real time inference for self driving, you would still run into the problem of humans setting up all the possible driving scenarios, which will likely leave some out and the model will never learn the right actions for those - meanwhile, to any human, the action would be very obvious. Over time you could probably get close enough to a very very small error rate, but you would still be hesitant to trust the system.
A true superhuman driving agent would most likely be able to take a picture of a scene, and then give a prediction of evolution of object position in 3 dimensions for a given time window, and give a confidence score on that. For example, if the single image is from few on a highway, it should be able to predict that cars are in fact moving, because the chance of cars standing still on a highway is very low.
And to train a model like that, you most likely need a base model that can "understand" physics.
Additional images from the past or the future would generate prediction that is more accurate, and also improve the model self assessed confidence. And then you would have some heuristic algorithm like MCTS based on confidence levels on the best course of action.
There’s a lot of cars to replace. Capturing 10% of yearly car sales, worldwide, is already a very tall order.
Capturing 10% of all cars on the road would require this level of gargantuan sales for many years, and that’s just so 10% of cars in the world are your brand, not so 10% of rides are on cars owned by the fraction of people who bought your brand and decided to let it drive strangers while they’re not using it.
Moreover, beyond the safety concerns there’s policy concerns— knowing how to safely drive in Indonesia doesn’t mean being allowed to drive in Indonesia. Resource constraints— where is all the lithium going to come from, and how will the people around the world feel about this?
And there already are alternatives beyond the car industry. Public transit, for example. Demand for not driving or not owning a car can’t only be safely fulfilled with robotaxis.
That is 1% of all rides taking place in Tesla robotaxis, not 10%.
Also it is about rides, not about cars. Less than 1% of cars being Tesla robotaxis is enough for 1% of rides to be Tesla robotaxi rides. A robotaxi will do multiple times more rides per day that the average car.
They don’t
The cost of operating the current car fleet is way higher than $700B. Buying the cars alone is higher. There are 70M new cars on the road each year. At $10,000 per car, that would already be $700B.
What is the difference in utility of a robotaxi and a meat taxi besides maybe a reduction in cost per ride (how much is labor vs. non-labor cost), and why isn't everyone using Uber to get everywhere now?
The robotaxi vehicle still needs to be manufactured, purchased, financed, maintained, fueled, insured, with room for profit for the robotaxi company. None of these things are free.
Automation and economies of scale (maintenance, repair, cleaning, charging) will also contribute to the lower cost of a robotaxi fleet compared to privately owned cars.
It is way cheaper because majority of Uber cost is the driver.
Safety: https://news.ycombinator.com/item?id=38456847
It is more convenient because it has more space. No drivers seat, steering wheel etc.
Robot driver or not, basic financials and operational constraints still apply. They can only be ignored for quite a while if a company has endless VC money, unit economics ultimately catch up so, always.
I think you’re overestimating how many people will buy Teslas.
Also, how many people who own Teslas would robotaxi it. A company might do it as a business, but it’d just take waking up one morning to discover a drunk passenger puked all over your back seat, or fluid remains of someone having sex in there [1] for individual owners to pull out of the program.
[1] https://sfstandard.com/2023/08/11/san-francisco-robotaxi-cru...
That is only true because Uber doesn't have to pay for buying and maintaining the cars in their 'fleet', having offloaded that cost to their drivers. If Uber were to move to owning robotaxis then they have to have to move the car ownership costs back onto their books.
When you take the driver out of the equation, the cost of providing rides plummets massively.
But sure, as long as other take all the costs and most of risks away from the new liberatrian tech nobility we are suppossed to not care about those little things, right?
Spoiler: he did not sell a thing to 10% of people in Africa.
Will robots that lead to less commuting be simply balanced with more fun trips for similar revenue potential, or will they lead to a complete shift of world economics that means the money stops being meaningfully comparable to today's?
Less people will commute to work. But more people will meet for a coffee and order stuff online which then gets delivered in 30 minutes by a robotaxi.
We havn’t ever seen a situation where a reduction in the cost of work lead to less work being done.
What happens is that employers (and the market) demand more work, and only labour law holds back the demand that employees work all their waking hours.
You’ll probably respond that UBI will give everyone all the free time they want… but capital owners will have to fund UBI through tax. And capital HATES paying tax.
This feels like stuck gears to me. What am I missing?
> This feels like stuck gears to me. What am I missing?
Communism.
Or at least, some variant of it. If your government owns the full automation and operates it for the citizens, that's much the same as the upper limiting case of a corporation owning the same full automation for the benefit of the shareholders.
(I'd say "and this time nobody needs to go to the gulags", but having the government aligned with the citizens is a separate problem: any given state might get it right, or history might rhyme).
This is a fight that Tesla doesn't seem to be engaged with - it's staying on the manufacturing side of the issue. Its opponents are going to see this as a gun they can fire to shut out Tesla's supply-centric economics: install regulations on robotaxi - vehicle form factor, signals, testing - that make it impossible for anyone but a well-capitalized player to enter. Then it doesn't matter how cheap the vehicle gets if the other costs required to operate legally keep small players out.
Tesla's recourse in this market is to either sell a commodity product that passes regulation, which is terrible for their bottom line, or to become a robotaxi company themselves, which is not unfeasible(they have the Supercharger network, they can grow more vertically) but which they aren't currently aimed for. If they did that the fast path would be to find a ridehail partner and acquire them.
I believe in the robotaxi concept, but I don't think it's settled as to what form it ultimately takes.
They want people to believe that the demand is a foregone conclusion and they need to build more factories to satisfy it. But clearly they are trying to maximize the profit. Of course they would like to lower their costs in pursuit of that but it’s not to charge the least they can, otherwise they’d have led with a compact EV instead of an $80k luxury sedan.
Tesla had a very explicit plan for a long time to make high margin luxury cars and keep scaling up production to make cheaper and cheaper cars to make electric cars dominate.
Lowering prices isn’t some sign of “struggling to hold on”.
This is why Luxury brands are normally split off into different sales channels.
[1] https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-t...
You can make inflation arguments, but it's pretty hard to claim that Tesla is driving prices down. (Prices have come down in 2023, but it's too early to know if this change is sticky. The reality is, most observers think Tesla uses price to regulate demand - so dropping price could just well mean less people want Teslas than before.)
I agree that they use price to regulate demand. But they want to sell as much as they can. So if the price is too high they will not sell out all cars. And they can afford to lower prices more then many of their competitors because they earn more per unit sold then the rest of the field [source: https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-t... ]
Not sure why you bring up interest rates as a weakness when Tesla is the least dependent on debt of all the major car companies. High interest rates will be much more of a burden on their leveraged competitors. Same thing with the price deflation. Yes, that will hurt Tesla's profits, but it will hurt competitors that are selling BEVs at a loss even more.
Tesla is still trying to convince people it is in hyper growth mode constrained only by its ability to supply cars with robots, self driving cars, semis and compact cars all in the pipeline.
Let’s see how that plays out with fed funds at 5.5% for a few more months.
Goodwill has always been the main driver of Tesla's valuation.
This may become a problem, with Musk turning into a cartoon villain recently.
But, frighteningly enough, it is rather ordinary these days.
Would the person supposedly "endorsing" the thing agree that that is what they are doing? Would Musk agree that PizzaGate is true if asked?
https://twitter.com/NikkiMcR/status/1729532438508941359?ref_...
Finally, our cheerleading or hate of public figures and of companies should not distract us from what's in our best interests. We should be happier as EVs are cheaper.
Think about it. From the point of view of someone responsible for a huge company that may well go under due to bad cash flow. Is it better to bamboozle a thousand rich people into lending you a chunk of spare change for a couple of years, or risk going under with a company that employs thousands of people and affects hundreds of thousands indirectly in its supply chain. Considering it like that one can feel almost sorry for Elon forced into the role of a bullshitter by his enormous responsibility...
There is an amazingly deep irony that someone who was supposed to be building fully automated gigafactories, is being apologized for lying for funds and failing to deliver tech.
Picking from the dataset of companies you can think of is something that Musk's marketing strategy relies on as it's what we do when comparing companies for buying cars, buying stock or talking about.
Source:
https://www.google.com/amp/s/www.livemint.com/companies/news...
https://jalopnik.com/the-1-234-hp-lucid-air-sapphire-almost-...
if the majority of your time is spent spinning rubber fruitlessly at launch then you can begin to lessen the problem by adding weight to increase mechanical friction.
electric vehicles are torquey, so their weight profiles vs. their 0-60s is a lot different than you'd expect from an ICE.
With the Lucid, each axle gets a motor, and the back axle gets two, so you can distribute the torque at will, limited only by how much power the battery can output, since the motors can do more than the battery will let them. You also get things like torque vectoring on the rear wheels, so you can send that thing into turns at high speeds like nobody's business without a squeal to be heard.
It's honestly pretty wild.
It doesn't really work like that. Say you double the weight, but keep the coefficient of friction - you also double the force. But the now-doubled force has to accelerate double the weight, so the acceleration remains absolutely identical. That's a small simplification, because on snow, gravel, mud and other loose surfaces you have a more complicated relationship, but on asphalt it holds more or less exactly.
The reason EVs accelerate better is usually because of instant, better-controlled and gapless application of torque and power - no shifts, no delays, no turbo lag, etc.
Wikipedia has sources and more details, in case you are interested. I haven’t found any evidence of people paying for it, though
"Test rides were given at the event for those who immediately paid the first $5,000 of a $50,000 deposit to pre-order the vehicle"
A bit less dramatic than Tesla getting a quarter million for nothing, which the article is leading with. Presumably, the kind of people that have 250K would also be able to hire some expensive lawyers to get it back in case of a failure to receive a car. I don't think that happened. The narrative that Tesla survived near bankruptcy by ripping off wannabe roadster customers seems like it is a complete and utter fabrication.
Those 5k deposits are still interesting of course but I doubt that made a lot of difference for Tesla. Assuming the number of 1000 people is actually correct of course. Which given the rest of the article is not a safe assumption. That's a lot of test rides. Just saying.
The roadster would have launched in 2020, which as some people may have forgotten was the first covid year that created a few logistical challenges for lots of companies; Tesla included. Then we got the Ukraine crisis, chip shortages, etc. So, yes they are 3 years late, not 6, delivering what was always going to be a bit of a niche car. And there seem to be some valid reasons as to why that might be. Also, people took test rides so the car was real enough for that. Tesla actually managed to keep on growing marketshare in the past three years throughout these events. So they aren't doing that poorly.
They do it because it works. Everyone in the comments here accepts it at face value and dogpiles
Fake, made up defenses of Elon and his companies? Definitely never seen on HN before.
They do it because it works I guess, you are another fan who just accepts it at face value I guess.
It's really weird when someone summarizes a reference completely incorrectly. Like is it just intentional disinformation hoping that most people don't check you on it?
From the link:
> the first 1,000 to be produced, known as the Founder's Series, will be priced at $250,000.[17][37] Full payment would be required to pre-order the latter vehicle.
You can no longer preorder the Founder's Series as they've all been accounted for already.
> Those 5k deposits are still interesting
... wow, like even worse you misrepresent even the part that you quoted out of the article. $5,000 is a prepayment of part of the deposit that allowed a test drive at the event, the pre-order deposit for non-founders cars is $50,000.
And those $50,000 deposits are in fact mentioned in the article: "That quarter billion just for the Founders Edition cars probably helped the company quite a bit, and there’s no telling how many $50,000 deposits the company got and still holds"
What Tesla did was starting a presale on a product they probably had no intention or resources to actually build, in order to get a cash-injection to continue working on Model3 ramp-up...
I'd argue even the cybertruck wasn't seeing much of development work beyond that presentation during that period, considering that the self-praised exoskeletton chassis of it actually turned out to be impractical and was dropped entirely.
You say "it is too often now" but actually it feels like the opposite. There isn't anyone left swinging for big, as far as I can tell. Everyone is receeding. No one is making new big claims. I don't like the lies, but I think we are better as a species holding ourselves in some heat of competition, to be good, to try hard, and it feels like we're in a diminishing expectations world, and that... that is shit. That is the failure mode, where the broadband efforts of trying all cojointly give up. I don't like it.
Even if this monstrosity was released on time and people actually wanted them (a big if) I still think they would struggle mightily to move them after the early adopters for the simple fact that these are very expensive vehicles. Which brings me to the most incredible point in all this- they are claiming sales when people don’t even know what it costs!
I suspect it’s on a long road back to reality and being given some premium because of the first mover advantage, but still the company is basically BMW with the illusion of being run by the next Steve Jobs.
https://www.cnbc.com/2017/11/20/elon-musk-teases-flying-tesl...
The level of innovation and the speed of improvement is unseen.
I'm pretty damn confident Tesla is overvalued, but I'm not confident I can time when it will drop, nor that it won't go up significantly before then, so I don't really have an attractive way to bet against it.
Unlike BMW Tesla actually sells meaningful quantities of electric vehicles that people can actually afford.
Just look at the models BMW is advertising [1]: 2x 55k (iX1, i4 GC), 1x 67k (iX3), 1x 70k (i5 L, i4 M50 GC), 1x 77k (iX), 3x 100k+. In total, across all (!) BMW i models, they are on track to sell 340k this year worldwide [2], while Tesla aims for 1.8 million units [3].
[1] https://www.bmw.de/de/neufahrzeuge/bmw-i.html
[2] https://insideevs.de/news/691497/bmw-mini-verkaufszahlen-3qu...
[3] https://www.electrive.net/2023/10/04/tesla-auslieferungen-un...
Tesla semi seems unlikely to be real.
They can both be “real” and completely unsuitable for the task
I think what has been written there sounds plausible, but ... I wouldn't write it off as "has worked out terribly" yet. Pepsi is the first one to actually adopt electric trucks, it's inevitable that they're hitting issues now. No one before has ever even considered trying to design an electric vehicle that delivers hundreds of kilowatts of power continuously - even the multi-megawatt hypercars are only able to deliver that power for seconds to minutes.
[1] https://bradmunchen.substack.com/p/scoop-the-tesla-semi-from...
Read the article: other electric cars already hit these performance figures. With tech advancing and Tesla’s strong finances, it comes down just to their willingness to produce it.
[0] https://www.tesla.com/cybertruck-delivery-event [1] https://www.freightwaves.com/news/pepsico-praises-tesla-semi...
What is the price of the Semi? How much does it weigh? What is the range?
These are mission critical pieces of informations that have yet to be confirmed by Tesla.
I mean, far be it from me to defend Tesla, but maybe you missed the part about how you'll probably find this info out tomorrow?
>And the launch event is tomorrow.
> Tesla is a promise company. It makes promises to its customers, various governments, and other businesses. Those promises require up-front payment, and whether they come to fruition or not, the company keeps the money while continually blowing through deadlines.
This is a silly statement to make. It produced the world’s top selling car in Q1 2023.
> Tesla Model Y was the highest, with 62.4 recalls projected over its 30-year lifetime
> The brand with the fewest projected recalls is Mercedes-Benz, followed by Toyota and Lexus.
https://www.autoweek.com/news/industry-news/a43625242/tesla-...
It appears that the Tesla recalls include things like https://repairpal.com/recall/22V063000
Those get fixed over the air. Can't say I'd care that much if I owned a Tesla. The number doesn't matter that much.
And the latter already shows in data published by the German TÜV (cars here get an official road safety check every two years, the results of which are being aggregated by brand and model and published regularly): Teslas are among the cars with the highest failure rates for cars older then three years.
This honestly sounds like the conversations I'd have with people about the iPhone. Somehow it was the worst thing ever made but everyone who had a lot of money was buying one. When I eventually got around to getting it, it was awesome.
This is decidedly not a problem of the entertainment system. And all those recalls Tesla has, hint at some engineering deficiencies. Same for all other brands and cars with similar problems, which absolutely do exist. E.g. VW quality is in decline for decades by now.
Citation badly needed, because the evidence is against you.
I bought a Model X three years ago. It's been in service more than 10 times. My neighbor bought a Model X this year. I asked him what was broken on it, and he laughed and said "Everything".
0. https://electrek.co/2020/06/16/tesla-model-y-quality-issues/
“Here's the shocking part -- Starbucks has about $1.6 billion in outstanding gift card balances. That info comes courtesy of its annual 10-K filing with the SEC. This essentially means Starbucks is getting a $1.6 billion loan from its customers at a 0% interest rate. And it's paying that loan back in coffee, not cash. It's already a great deal for Starbucks, but it gets even better. Some customers don't end up redeeming their gift card balances, which means the coffee chain doesn't even need to pay back the full "loan" amount. For the 2022 fiscal year, Starbucks reported $196 million in breakage, meaning unused gift card balances…”
https://www.fool.com/the-ascent/banks/articles/this-is-the-w...
Even if it technically conforms to a broad sense of the word, what's the point?
I go to Starbucks to buy coffee. So it's a coffee shop.
Hopefully there is enough nuance in the world to recognise that they are both coffee shops and a bank. In the same way Google is both a search company and ads company.
Consider the following: Amazon isn't really an online retail company; it doesn't really sell goods to the consumer. What it does is use "goods" that it delivers as a loss leader to get people to click on buttons to give Amazon money.
Starbucks is a coffee company, that introduces an optional extra step of gift cards for other consumer convenience reasons. The fact that there is a comically large amount of money held in the gift cards system is just that: a slightly comical fact.
You can't withdraw your balance in cash, as you can with a bank account. You can't transfer your balance to someone else like you can with a bank account. And, unlike a bank, your Starbucks gift card balance expires after some period of time. Can you imagine your bank telling you that all the money in your account is theirs because you haven't used the account in a few months?
There are many jurisdictions in which gift card balances do not expire, such as California.
Now clearly, there are circumstances in which banks do something similar and close accounts of account holders that are unknown. However, if that occurred at even one hundredth of the Starbucks breakage rate, all regulatory hell would break loose on the bank.
[1] Starbucks reports breakage of around $212.7m in FY22 ($181.1m in FY21). Their liabilities to Stored Value Cards are $1,641m and $1,596m respectively, coming out to a breakage ratio of 13.0% and 11.4% respectively.
Besides being a sensationalist take
It also found a market to sell oversugared drinks with a dab of coffee in it
But if you're driving-through every day to get one of the above for 5$ or more I guess Starbucks thanks you for your money I guess
Starbucks wasn't cost competitive in Australia, with drinks often costing significantly more than local coffee shops.
Is the margin for Australian local coffee shops very low? I assume yes.
I have been told that what most Americans call good coffee we find undrinkable.
A company, on the whole, can operate as described therein while still simultaneously producing "the world's top selling [whatever]".
I mean, this article basically proves that point - Tesla took up-front payments from people six years ago for a car that it still hasn't delivered, and the Model Y was the best-selling car of Q1 this year.
Ah, got it. Just a heads up, maybe try and refrain from quoting long sections about a company making promises and then immediately follow that section with, "This is a silly statement to make". I don't think I would've misunderstood your approach had you only quoted that first sentence about Tesla not being a car company.
This is a good point. They probably have his phone number and call him up to chat when they can’t sleep. They probably have one long tandem bike that they ride around on together but you’ll never see the mainstream media report on that
It is possible that roadster specs were made up and now the RnD department is suffering to achieve the same, delaying the deliveries of the final product.
So he basically did sell the promise but now Tesla has to deliver it as 6 years is a very long gap.
> Tesla does note that the reservation is still refundable, so if the final price is too high or it doesn't materialize, you can cancel and get your money back.
If you don’t wish to trust the media, here’s the Reservation Policy itself:
https://www.tesla.com/sites/all/modules/custom/tesla_smartli...
Tesla trades at an insanely inflated multiple compared to other car manufacturers. It’s pretty clear they’ve had no difficulty raising money.
$250M in deposits made a difference-- both directly and in their ability to access other capital.
Was wondering whether Tesla did deliver these sales, and for that quarter they did: 466,140 units.
Like for Starbucks, goods are there.
https://uk.motor1.com/news/669260/tesla-model-y-best-selling...
I mean 250k dollars is a lot more than I have saved up. I couldn't imagine paying that much for a vehicle pre-order. Are all 1000 of them very rich bay area millionaires?
Those two things look completely de-correlated to me.