Given the variety of problems that Tesla has had, I've long considered the idea that they require "perfect execution" to be a load of cobblers.
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Given the variety of problems that Tesla has had, I've long considered the idea that they require "perfect execution" to be a load of cobblers.
I believe Elon had mentioned on a previous ER call that he'd guess next years deliveries to be around a minimum of 60k. He seemed pretty confident with that number and even seemed like he was really low balling. But 50% growth over 33k is only around 50k. I wonder if if that 50% growth in deliveries is a real low ball number or if the Model X delay is the reason?
Buddyroe
Active Member
Man, I am a newbie here but I must say, this report from Tesla is disappointing to me. Not so much the deliveries, but the continued delays of the Model X. Getting something perfect is one thing, but delaying it too much might mean the market changes before you ever produce the first one. When Tesla was designing the S, that was one thing. But they are a much more mature company now. There's no way they can compete when it takes 3 to 5 years years to design and start production of a car.
The pattern I'm starting to see with Musk is to promise things aggressively that are far in the future - moving up the GF to 2016 for example, and then start pushing them back as they get closer - and do it incrementally as to lessen the shock. I think the original date on the X was late 2013 or early 2014. When was the last time Musk actually met his own timeline? The SC map for 2014 will be a miss by about 75 SCs, the swap station is a year or more behind, the X is now about a year or more behind.
Who out there can be confident in the projection for the Model 3 and the GF? At some point, you lose your credibility. Again, I understand the desire for perfection, but I'm REALLY starting to think this gull-wing door thing is killing the Model X. Surely, its advantages are FAR outweighed by how much it has delayed production. I mean, what the heck else could it be? The technology for the drive train is there. The battery technology is there. Other than those doors, it's nothing but designing the body and the interior. It's been SO long since Musk and Tesla surprised us with GOOD news - whether it be significantly beating the delivery guidance or bringing something to market earlier than expected.
My GOSH, change the dang doors and build the freaking car. Enough already. At some point, all the great work and accomplishments have to lead to a profit. If you can't get the cars to market, you sure can't make a profit. Tesla will lose close to $200 million dollars this year. How long can they do that?
Admittedly, a bad example, but Musk is starting to remind me of Axl Rose after he split with the rest of the band Guns N Roses and got all new people. He worked on a new album for years. Every time, about 3 months before it was due to be released, he would delay it by 3-6 months. Same thing - he said he wanted it to be the perfect album. 13 years later, he released an album of music that had gone "out of style" about 9 years earlier. Relatively speaking, the album sold VERY poorly.
Other than that, I love Tesla.
The pattern I'm starting to see with Musk is to promise things aggressively that are far in the future - moving up the GF to 2016 for example, and then start pushing them back as they get closer - and do it incrementally as to lessen the shock. I think the original date on the X was late 2013 or early 2014. When was the last time Musk actually met his own timeline? The SC map for 2014 will be a miss by about 75 SCs, the swap station is a year or more behind, the X is now about a year or more behind.
Who out there can be confident in the projection for the Model 3 and the GF? At some point, you lose your credibility. Again, I understand the desire for perfection, but I'm REALLY starting to think this gull-wing door thing is killing the Model X. Surely, its advantages are FAR outweighed by how much it has delayed production. I mean, what the heck else could it be? The technology for the drive train is there. The battery technology is there. Other than those doors, it's nothing but designing the body and the interior. It's been SO long since Musk and Tesla surprised us with GOOD news - whether it be significantly beating the delivery guidance or bringing something to market earlier than expected.
My GOSH, change the dang doors and build the freaking car. Enough already. At some point, all the great work and accomplishments have to lead to a profit. If you can't get the cars to market, you sure can't make a profit. Tesla will lose close to $200 million dollars this year. How long can they do that?
Admittedly, a bad example, but Musk is starting to remind me of Axl Rose after he split with the rest of the band Guns N Roses and got all new people. He worked on a new album for years. Every time, about 3 months before it was due to be released, he would delay it by 3-6 months. Same thing - he said he wanted it to be the perfect album. 13 years later, he released an album of music that had gone "out of style" about 9 years earlier. Relatively speaking, the album sold VERY poorly.
Other than that, I love Tesla.
EarlyAdopter
Active Member
So, to sum up Elon Musk on today's earnings call: Model X is delayed and investors can go suck it. We're dropping options. Your question about "inventory" is dumb. We really did sell out of absolutely everything. And, are we going to report monthly sales, reservation numbers, or regional breakdown?
"No."
Like a boss.
"No."
Like a boss.
pz1975
Active Member
Man, I am a newbie here but I must say, this report from Tesla is disappointing to me. Not so much the deliveries, but the continued delays of the Model X. Getting something perfect is one thing, but delaying it too much might mean the market changes before you ever produce the first one. When Tesla was designing the S, that was one thing. But they are a much more mature company now. There's no way they can compete when it takes 3 to 5 years years to design and start production of a car.
The pattern I'm starting to see with Musk is to promise things aggressively that are far in the future - moving up the GF to 2016 for example, and then start pushing them back as they get closer - and do it incrementally as to lessen the shock. I think the original date on the X was late 2013 or early 2014. When was the last time Musk actually met his own timeline? The SC map for 2014 will be a miss by about 75 SCs, the swap station is a year or more behind, the X is now about a year or more behind.
Who out there can be confident in the projection for the Model 3 and the GF? At some point, you lose your credibility. Again, I understand the desire for perfection, but I'm REALLY starting to think this gull-wing door thing is killing the Model X. Surely, its advantages are FAR outweighed by how much it has delayed production. I mean, what the heck else could it be? The technology for the drive train is there. The battery technology is there. Other than those doors, it's nothing but designing the body and the interior. It's been SO long since Musk and Tesla surprised us with GOOD news - whether it be significantly beating the delivery guidance or bringing something to market earlier than expected.
My GOSH, change the dang doors and build the freaking car. Enough already. At some point, all the great work and accomplishments have to lead to a profit. If you can't get the cars to market, you sure can't make a profit. Tesla will lose close to $200 million dollars this year. How long can they do that?
Admittedly, a bad example, but Musk is starting to remind me of Axl Rose after he split with the rest of the band Guns N Roses and got all new people. He worked on a new album for years. Every time, about 3 months before it was due to be released, he would delay it by 3-6 months. Same thing - he said he wanted it to be the perfect album. 13 years later, he released an album of music that had gone "out of style" about 9 years earlier. Relatively speaking, the album sold VERY poorly.
Other than that, I love Tesla.
I disagree about the X delay. I think it is much more important to get it right and release it when ready then to rush it to meet a schedule. They aren't losing put on sales and profits as they still don't make enough cars to satisfy demand.
In 5 years, no one will remember that the X was released months or even a couple years late if it an amazing of a car as Elon keeps alluding it will be (just like no one cares now that the S was delayed). However, in 5 years if there are serious enough problems with it now that they needed time to fix, but instead they just "change[d] the dang doors and build the freaking car" and rushed it just to get it out, no one will remember that it was released on schedule. They will remember that that it was a flawed car with problems.
CHG-ON
Still in love after all these miles
I wholeheartedly agree. This is the problem with all US corps. They sacrifice the long term for the short. It is a mentality that will bring our nation to our knees. Quite foolish.
Regarding delaying the X to get everything right Elon put it this way: it's like the difference between a diamond with a flaw and a flawless one. I like this thinking.
Also chicken, I'm quite sure they said 7200 (not 7600) produced in Q3 which was 2000 less than planned.
Also chicken, I'm quite sure they said 7200 (not 7600) produced in Q3 which was 2000 less than planned.
pz1975
Active Member
Citizen-T
Active Member
Man, I am a newbie here but I must say, this report from Tesla is disappointing to me. Not so much the deliveries, but the continued delays of the Model X. Getting something perfect is one thing, but delaying it too much might mean the market changes before you ever produce the first one. When Tesla was designing the S, that was one thing. But they are a much more mature company now. There's no way they can compete when it takes 3 to 5 years years to design and start production of a car.
The pattern I'm starting to see with Musk is to promise things aggressively that are far in the future - moving up the GF to 2016 for example, and then start pushing them back as they get closer - and do it incrementally as to lessen the shock. I think the original date on the X was late 2013 or early 2014. When was the last time Musk actually met his own timeline? The SC map for 2014 will be a miss by about 75 SCs, the swap station is a year or more behind, the X is now about a year or more behind.
Who out there can be confident in the projection for the Model 3 and the GF? At some point, you lose your credibility. Again, I understand the desire for perfection, but I'm REALLY starting to think this gull-wing door thing is killing the Model X. Surely, its advantages are FAR outweighed by how much it has delayed production. I mean, what the heck else could it be? The technology for the drive train is there. The battery technology is there. Other than those doors, it's nothing but designing the body and the interior. It's been SO long since Musk and Tesla surprised us with GOOD news - whether it be significantly beating the delivery guidance or bringing something to market earlier than expected.
My GOSH, change the dang doors and build the freaking car. Enough already. At some point, all the great work and accomplishments have to lead to a profit. If you can't get the cars to market, you sure can't make a profit. Tesla will lose close to $200 million dollars this year. How long can they do that?
Admittedly, a bad example, but Musk is starting to remind me of Axl Rose after he split with the rest of the band Guns N Roses and got all new people. He worked on a new album for years. Every time, about 3 months before it was due to be released, he would delay it by 3-6 months. Same thing - he said he wanted it to be the perfect album. 13 years later, he released an album of music that had gone "out of style" about 9 years earlier. Relatively speaking, the album sold VERY poorly.
Other than that, I love Tesla.
I couldn't disagree more. I think your whole argument hinges on the assumption that bringing Model X to market would increase Tesla's profitability, and I find fault with that assumption.
The reason (of course) is that Tesla is production constrained, not demand constrained. People here seem to understand this when we only talk about Model S, but whenever we talk about Model X they assume that a second model obviously means that Tesla can sell more cars. They can't.
Model X uses the same batteries, sourced from the same partner, assembled in the same space, by the same team. Its design center needs to be build and maintained by the same software developers. It needs to be sold by the same sales people, in the same stores, where it is displayed on the same floor. It is shipped around the country and world on the same trucks and boats, inspected and delivered to customers by the same delivery experts. It is maintained in the same service centers by the same service people.
But here's the catch: it's not the same. It is a different machine. Not completely different, but different enough. Different enough that building x Model S and y Model X is much much more costly than building x+y Model S. And it has to be one or the other. The Model X program steals resources from the Model S program.
I hope that is clear. It is crystal clear to me.
The same logic can be applied to the Supercharger rollout plans and to the battery swapping stations. Both are meant to boost demand for the cars by making them more convenient to own than they would otherwise be. The battery swaping stations seem to be completely unnecessary (nearly everyone is content with Superchargers) and it turns out we don't need nearly as many Superchargers as we thought in order to sustain this level of production.
When Model X was first announced Tesla thought they needed it. They thought that demand for the Model S was around 20k units a year world-wide. But that turned out to be wrong. The truth is (as was discussed on the call today) that Tesla doesn't need the Model X at all. There seems to be enough demand for Model S for Tesla to grow at an enormous rate---about as fast as is possible---until Gen III.
Now, they didn't find that out until well into the Model X program, so there is no point in scrapping it now, but it is very prudent to take their time with it. On the other hand, think of those other Model S derivatives that Tesla talked about around the time of the IPO. There was supposed to be a cabriolet as I recall. Again, they thought they would need it. But they were wrong.
I think what you see as poor execution I see as just good business decisions in the allocation of resources. These predictions were all made with a certain level of demand in mind. A good CEO should change course once they find that reality doesn't fit their initial assumptions. That's what they have done here.
I totally understand if Model X reservation holders are upset about the date being moved back, as a customer, I certainly would be. But, I can't imagine how any investor could possibly be upset. Releasing Model X could do nothing but hurt profitability. Worse, it complicates operations and puts the Model S program (which is doing so well) at risk.
As long as Elon delivers the kind of stock appreciation I'm looking for, I don't much care which levers and knobs he manipulates to do it. It looks to me like he has decided to turn the Model X dial down so that he can crank Model S to the max. For what it's worth, I totally agree with that decision.
This thesis depends on Model S demand being larger than the number of batteries they can produce, which I believe is ~200K pre-GF (i.e. current panasonic deal is to grow to ~200K batteries per year without GF). I am not so sure that Model S demand will ever be that high; they need Model X to get to this number (pre Model 3). So while a short delay now should not impact profitability, further significant delays or scrapping it altogether certainly would.
I am a bit surprised how well the stock is doing in the AH. Yes, there is forward guidance for 50% growth over several years but at the same time there is a negative adjustment to prior forward guidance. Secondly, Tesla is clearly continuing to have operational issues. Not only is that explicitly stated in the letter ('fair criticism'), but it also shows in the facts : the retooling took longer than expected resulting in a significant production loss; more retooling is coming over the next months and finally Model X is delayed again. It's consistent with what regular users of this forum already know from smaller events like the difficulty of getting chademo working, the length it took to get a simple vibration issue in the drivetrain under control and the currently only average reliability compared to other cars as assessed by independent research despite the underlying moving technology being inherently simpler than an ICE and marketed as less maintenance intensive.
Tesla does not yet fully grasp control of the production process. Which, to be fair, is a monumental engineering task. But getting it right is a crucial part of hitting the 50% growth in supply, let alone Model 3 mass production. Personally, I am not convinced that Tesla can deliver on the production as currently guided, nor am I convinced that reliable production is Tesla's competitive advantage in the market. Maybe it would be better to aim for an business model by the time Model 3 comes along. Have Tesla focus on what it does best : creative out-of-the-box thinking in designing, marketing and selling an automotive product while outsourcing the actual mundane task of production to companies with a proven track record in actual manufacturing. It's a model that has served Apple well and I see little reason why the same could not be true for Tesla.
Tesla does not yet fully grasp control of the production process. Which, to be fair, is a monumental engineering task. But getting it right is a crucial part of hitting the 50% growth in supply, let alone Model 3 mass production. Personally, I am not convinced that Tesla can deliver on the production as currently guided, nor am I convinced that reliable production is Tesla's competitive advantage in the market. Maybe it would be better to aim for an business model by the time Model 3 comes along. Have Tesla focus on what it does best : creative out-of-the-box thinking in designing, marketing and selling an automotive product while outsourcing the actual mundane task of production to companies with a proven track record in actual manufacturing. It's a model that has served Apple well and I see little reason why the same could not be true for Tesla.
RobStark
Well-Known Member
That would be unbelievably stupid. That is what Fisker tried to do and ended up in bankruptcy.
Tesla did not have expertise in anything 10 years ago. You gain expertise by doing. Expanding production 50% annually is a tough job in any industry more so in one as complex as autos. Tesla has the most experience building BEVs with 18650 cells. They are also continuously upgrading. The feedback loop between engineering and manufacturing is crucial.
Tesla expertise in marketing is Elon Musk doing a stream of consciousness on Free Media. That is a schtik Tesla will be able to ride for another 5-7 years but will eventually need an actual professional marketing department with actual paid media.
People will pay a premium for a Chinese made i-phone but are not traveling 155 mph in an i-phone. Plus, per dollar of product it is much more expensive to ship cars from Asia than phones. That is why all the Asian OEMs that sell in North America build in North America. I think the same is true for Europe. Contracting legacy OEMs to build Teslas? Even more stupid.
People will not trust the safety of a Chinese made car in this price range. Europeans and North Americans will not pay $70k-$140k for a Chinese made car. Even if it gets all the test certifications with 5 stars. Even wealthy Chinese are willing to pay a premium for German made luxury car over a seemingly identical Chinese made German brand one.
I use iphones, but only because of great Apple service. Faulty iphone gets replaced. So far I had few fairly new phones replaced (antenna failing, audio jack failing). In the absence of the replacement guarantee by Apple, I would likely look for a brand with less faults in manufacturing.
Electronic goods (TV etc) made in China are sold at steep discount prices to their Korean and Japanese peers, yet they are difficult to sell. The low maturity of Chinese manufacturing is incompatible with Tesla brand. Buying Tesla car made in China would be akin to buying fake rolex.
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Tesla claims 'innovative manufacturing' as one of its core competencies, in its 2013 Annual Report, p8. It does not make sense to outsource something that constitutes business core competency.
Elon stated that they plan to build factories outside of US. Not sure how that will work.
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It's a tough job, which is all the more reason to evaluate if there are partners who would be able to do a better job than yourself. There is no reason to assume that a 'BEV with 18650 cells' is different than other innovative high tech consumer goods when it comes to manufacturing. Yes, feedback between engineering and manufacturing is essential but they don't have to be in the same building.
The continuous upgrading actually is not a strength but a weakness. (And it is a testament to Tesla's marketing which you dismiss that Tesla customers perceive so differently) Where seamless continuous upgrades on the software side generally is welcomed by consumers, not so on the hardware side. In fact, some of the strongest words of ardent Tesla supporters on this forum towards the company are made wrt hardware updates complaining about a lack of transparency on policy and implementation of them.
That's absolutely not true. For example, the development of the supercharger network is foremost a marketing rather than a technological achievement. It's technologically well executed but not actually terribly innovative. But on a marketing level, it changed the whole message about driving long distance with an electric car. The ability to asses what the market needs for electric driving is something that Tesla understands as no other company and is in my eyes their biggest competitive advantage.
Why would that be stupid? Tesla is already outsourcing the manufacturing of many parts in their cars to traditional automotive OEMs. Regarding the shipping, it's a bit ironic that you say it is too expensive to ship cars from continent to continent while Tesla is a prime example of a car company that is shipping cars from continent to continent ... today (as do other manufacturers).
Causalien
Prime 8 ball Oracle
For a continuously upgrading production line of large scale metal products, Manufacturing's final assembly and RD can only be separated at most by one road. With less than 10 car per hour traffic. Of course, with a sound proof room for RD.
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RationalOptimist
Member
Actually this would eliminate what is actually Elon's greatest genius: the design of SYSTEMS. he's great at making machines. but even better at understanding the smart, long-term-cost-effective way to make the machines that make the machines. Engineers and manufacturing execs from BMW and Mercedes who have visited Fremont have been completely blown away by what they've achieved there. There is zero chance that a standard approach to manufacturing the model S could have resulted in cars being produced at this quality and at a 30% gross margin.
You are joking right? Did you listen to the call? Elon talked about it twice, in great depth. Manufacturing is anything but mundande - it is one of the absolute key factors in Tesla's sucess. The moment they outsource their production is the day I sell all my stock. It is a very telling metric that they are insourcing almost everything as opposed to other automakers.
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