EU Market Situation and Outlook

[dirkhh]

Everything is done for the Model 3. Everything. No advancements needed. No engineering problems to solve or perfect. All done. It'll be a cakewalk compared to the S & X. It seemed the hardest decision for the Model 3 was just made recently, when it was officially announced by Elon that they'd go with a less wild design, saving that for the next iteration of Model 3.

I would describe this as a very very optimistic view. Actually, that's an understatement. I'd say that's a view that ignores reality.
Model 3 needs a different battery. Different physical dimensions, and most everyone seems to assume different chemistry. Which will need different TMS.
Model 3 is said to have just one screen, so the information display needs to be redesigned.
For both of these (and many other) reasons, it needs new firmware.
Model 3 is very likely not an aluminum car. New manufacturing challenges. Either way, new crash test considerations.
It needs a smaller, cheaper to produce interior.
etc. etc.
Claiming "all done" on the engineering challenges is not supported by the facts.

But even more important and why there will be no delay, Model 3 is tied to the Gigafactory, and the Gigafactory is tied to partnerships with other companies. Model 3 will not be late like the Model X, because it can't be.

That's like saying Fisker will fix the issues with their car because it has taken government money so they cannot fail.
The business world doesn't work that way. Model 3 is an extremely risky endeavor. Billions of dollars ride on it. There are a ton of open questions and many challenging engineering and design problems that need to be solved.
I would be shocked if we even got to see Model 3 in 2017. I see no possible scenario where Model 3 will start shipping in 2017.

 

[Krugerrand]

Claiming "all done" on the engineering challenges is not supported by the facts.

Nothing new or hard has to happen for Model 3 and that's been stated by Tesla. Once you know how to make a cake, making muffins (even if in a different flavor) isn't hard. That's what I mean by all done. There will be no dolphin flipper hatch, no 1500 horses, no 50" video display, no hover mode. Model 3 will be built from known data, scaled down, and made simpler for affordability. Just addressing a couple of your points for time's sake, making a car out of aluminum is way more challenging than making a car out of steel, as an example. The people in stamping are likely to breathe a huge sigh of relief not having to make A class panels out of aluminum any longer. And considering Model S has the highest safety ever recorded, the Model X I'd bet money will score equally as well if we know Elon Musk at all, I'd then say Tesla knows how to make a car safe, such that there will be no outstanding challenges to make Model 3 safe.

That's like saying Fisker will fix the issues with their car because it has taken government money so they cannot fail.
The business world doesn't work that way. Model 3 is an extremely risky endeavor. Billions of dollars ride on it. There are a ton of open questions and many challenging engineering and design problems that need to be solved.
I would be shocked if we even got to see Model 3 in 2017. I see no possible scenario where Model 3 will start shipping in 2017.

I don't think that analogy fits at all. If Model 3 is late (beyond a time period that can be readily absorbed by all partners - a few weeks, a couple months, whatever that contingency plan in place is - and maybe I'm wrong and there is no contingency plan at all, no built in buffer) then it's over. As in bye-bye Tesla. That's how 'this' business world works where Tesla is concerned. Tesla is all in as evidenced by the big money spending comment at the last ER. Model 3 has to be on time, because the health and future of Tesla and others depends on it. After all this time and effort, I'm confident Elon Musk will use his considerable force of will to get Model 3 out on time.

So again I say, thinking Model 3 development and deployment will in any way be parallel to the development and deployment of Model X is false, and would pretty much conclude the business of Tesla.

 

[smac]

Lets not pin Tesla vs the German establishment. All vehicles have their pros and cons..While I love German luxury automobiles, my personal experience with German cars are not satisfactory. The electrics fail too often and the maintenance cost for German vehicles are horrendous, especially Mercs which do not have third party suppliers for parts. My uncle has made a very nice living off unsuspecting German car owners by cleverly operating his own German repair shop in the Bay Area.

I've visited friends in Germany before and can say that yes, many crazies drive at high speeds and crash their vehicles all the time. However, this is not the case for every car owner and certainly not the case for my friends. The Germans are very nationalistic and proud of their engineering, Tesla will need time to alter the perception of German superiority with small incremental moves like yesterday. My take on this is that perhaps your friends, who are conscious about "limitations" that they've either read or heard about, may not have test drove the MS. Give them time... if we speak of limitations, I have a long list of complaints about German vehicles, this was why I now own a Lexus.

Here in the UK there are plenty of non-franchised Mercedes specialists where you can buy parts and get warranty approved services, for a lot less than the main dealers.

Mercedes, BMWs, Audi's are everywhere here. (And was a factor in getting a Tesla in the first place. )

I agree compared to Lexus the German brands are still built for maximum profit at expense of maximum quality (Mercedes in particular with the "round eye" E class were famous for rusting away and electrical faults, when they started cost cutting on steel quality and galvanizing + cheaper electrics.) It was a bit of a PR disaster for them, so they learnt lessons and did address a lot of the quality for the recent cars.

My honest opinion, is Tesla will keep making gradual improvements, but until a facelifted Model S comes out with higher quality interior in terms of fixings, plastics and dash rigidity, they are probably only 80-90% of the way there.

I have no axe to grind, I love my Model S. The cliche that it feels like I'm driving the future is true, but it still feels a bit "beta" in certain ways, and there is an air of penny-pinching in others. I'm inclined towards geeky/early adopter side of things, my more staid business partners would still opt for a Merc/BMW/Audi.

Tesla need to exceed the Germans in the perceived quality to take market share in the traditionalist demographic (which at the UK price point, is a big number of owners outside the London bubble).

The true bellwether will be the Model X. With a blank sheet design on the dash area in particular, it will be interesting to see how much more solid it feels.

 

[daniel Ox9EFD]

Nothing new or hard has to happen for Model 3 and that's been stated by Tesla. Once you know how to make a cake, making muffins (even if in a different flavor) isn't hard. That's what I mean by all done. There will be no dolphin flipper hatch, no 1500 horses, no 50" video display, no hover mode. Model 3 will be built from known data, scaled down, and made simpler for affordability. Just addressing a couple of your points for time's sake, making a car out of aluminum is way more challenging than making a car out of steel, as an example. The people in stamping are likely to breathe a huge sigh of relief not having to make A class panels out of aluminum any longer. And considering Model S has the highest safety ever recorded, the Model X I'd bet money will score equally as well if we know Elon Musk at all, I'd then say Tesla knows how to make a car safe, such that there will be no outstanding challenges to make Model 3 safe.



I don't think that analogy fits at all. If Model 3 is late (beyond a time period that can be readily absorbed by all partners - a few weeks, a couple months, whatever that contingency plan in place is - and maybe I'm wrong and there is no contingency plan at all, no built in buffer) then it's over. As in bye-bye Tesla. That's how 'this' business world works where Tesla is concerned. Tesla is all in as evidenced by the big money spending comment at the last ER. Model 3 has to be on time, because the health and future of Tesla and others depends on it. After all this time and effort, I'm confident Elon Musk will use his considerable force of will to get Model 3 out on time.

So again I say, thinking Model 3 development and deployment will in any way be parallel to the development and deployment of Model X is false, and would pretty much conclude the business of Tesla.

If it's true that there is no leeway in the delivery time, and even a year delay could be a disaster, it makes all the more sense to be a bit of a bean counter on quarter results.
This is a bit like trying to guess the standards of hygiene in a restaurant by looking at how clear is the bathroom. So on this note, hopefully the article on Norway deliveries is non indicative (or plain false), and that they are on the way to meet guidance for Q1.

 

[smac]

Given production delays at tail end of last year, it hurt D deliveries, and while Norway were always going to be a big market for AWD, the more important US market probably had enough orders and took priority.

My guess is they diverted a lot of effort into satisfying US demand, Norway suffered as a result, with a knock on for the UK market that won't now be seeing AWD cars until Q3/Q4. So overall worldwide the numbers will settle, but we will see the repercussions in dips in Norway Q1 figures, and UK Q2 figures.

 

[Krugerrand]

If it's true that there is no leeway in the delivery time, and even a year delay could be a disaster, it makes all the more sense to be a bit of a bean counter on quarter results.
This is a bit like trying to guess the standards of hygiene in a restaurant by looking at how clear is the bathroom. So on this note, hopefully the article on Norway deliveries is non indicative (or plain false), and that they are on the way to meet guidance for Q1.

You're making the same mistake as so many others. One market does not a quarter make. Nor do the individual quarters matter in and of themselves. Everything up to this point and going forward has always been about Model 3. The path to it has never been more clear. The Norway delivery number for Q1 does not matter in the scheme of things. When Model 3 hits the market, nobody will remember how many Model S's were sold in Q1 of 2015, nor will it hold any individual significance. Norway will definitely be remembered for being an important market, in at least as far as the early Model S years goes, and many of us thank Norway for having embraced Tesla and helped make Model S the success story it is and thereby helping the path to Model 3.

I'm expecting a ton of negative Tesla articles this year, when the spending ticks up in preparation for Model 3 execution. Claims of bankruptcy around the corner, being in the twelfth hour, more about how demand has plateaued/diminished/dried up etc., etc... I'll be tuning it all out and spending my time following Model X reviews, Gigafactory progress, expansion of the SuperCharger Network, stores/galleries, SC's, dealership conquests and so on. Tesla has long since proven (to me) that they can manage the money end of things, I don't need to count the pennies or the millions from quarter to quarter.

 

[sundaymorning]

Nothing new or hard has to happen for Model 3 and that's been stated by Tesla. Once you know how to make a cake, making muffins (even if in a different flavor) isn't hard...
So again I say, thinking Model 3 development and deployment will in any way be parallel to the development and deployment of Model X is false, and would pretty much conclude the business of Tesla.

So very true.

While I understand why investors are cautious over M3 time frame, I feel that factoring the historical time frame of MS and MX delays may not be as warranted as one assumes. Model S delays were a contribution of many understandable factors:

1. An inexperienced Tesla working on a new product.
2. Instead of using Lotus chassis, Tesla had to design their own. No prior experience to learn from.
3. Almost every component to produce alphas were outsourced, meaning the MS cost $1 million a piece to make instead of $50-$80k. This greatly hindered Tesla's ability
to mobilize forward as parts weren't readily available and highly expensive in a time when liquid capital was a nuisance.
4. Tesla designed a totally new infotainment system, never been tried by anyone in the auto industry before, no predecessor to mimic or learn from.
--had cash problems.
5. New battery design & new skateboard design which again, had no predecessor to emulate.
6. Software bugs were everyday struggles: door, largest panoramic roof, lights, etc..
7. Attracting reputable engineers were challenging.
--ran into more cash problems...
8. Lacked sufficient manpower & experience to mobilize orders of new robotics and meet deadlines.
9. Many hours went into dead projects, such as the 2 gear shift trial but gained lots of insight.
--yet more cash problems.
10. All the rigorous testing in crash, safety, handling, etc. had to be done twice, three times before launch.
--did I mention cash problems?

Now the S launches! Applause applause, hugs, cheers, kisses, cries. Moving onto X

1. A more experienced and confident Tesla emerges to work on a not so entirely new product.
2. Old chassis, some new modifications...
3. Majority of parts for Alphas can now be produced in house.
4. Same infotainment as S with lots more modifications to capability (similar to D, autopilot, navigation, and more).
5. Same skateboard design with modifications, likely same batteries as well...
6. Software bugs continue to bite, but no worries, we're well staffed.
7. Engineers from the likes of AAPL, GOOGLE, FACEBOOK, Mercedes, Aston Martin come pouring in at the boatloads.
8. Still lacks manpower due to demand. Damn you demand!
9. A bazillion more cash pours into more dead projects, but invaluable insight was acquired for launching rockets.. damn it Space X, you always get the good stuff. Oh wait, Space X sometimes shares valuable insights through their own failures. NVM this is a FWB arrangement and should be of discretion so shhhhhh this never happened...
10. Elon: Rigor is key!

1st trial: we are the worlds best and littlest car company, we have standards and set examples, so why can't I get those gull wing doors to work properly? Fix it delay it!

2nd trial: What the hell is wrong with the center row of seats in here, it looks like New Orleans after Catrina, didn't I say museum? Think Mona Lisa in the Louvre and try this thing again..

3rd trial: what? You have to drive this big thing around town too? This X thing should really drive itself by now!! no no, we're doing this all wrong. Delay it.

4th trial: Ok, so it can drive itself, but can it park itself is the real question? I'm thinking out loud here, but what if it parks and the charger connects itself like a snake? "For realz" that would be cool, no?

Really though, I think the delays in X were due to Elon's high expectation for a SUV that again, had no predecessor to emulate. We know how Elon is, he wants the car to rock! The X as we know it, will be like the D on steroids with monster gull wings and improved software version 7, 8 or 9. The bugs I'm sure will be ironed out as they are being tested on current fleets of 70,000 Model S, data are being collected daily for analytics and modifications are made to fit the TESLA standard.

Technically, the M3 project started in 2013 with the hire of the Aston Martin executive. In 2014 we see Tesla file patents for Lithium Air. That's 4 years of modifications and testing, can it be on time? I think it can, will it be delayed? Maybe. Are there risks involved, yes but what investments do we know of that don't have risks? Will this thing sell, you bet! Are the stakes higher? Ask Panasonic...

Instead of listing challenges that TESLA may face, the list above was meant to show us how Tesla has tackled those challenges. Sure X was delayed, but it could very well be on time had Elon wished to weed out all the cool features. Regular seating, regular software, regular doors, etc. M3 will be pretty cool, will Elon want it cooler than the X? I think not... right now as it stands, Tesla is much more equipped and prepared than 2012 for the design and testing of M3. The latest feature and software release is a teaser for MX and M3 IMO.

 

[wayner]

To me UK sales seem very weak compared to places like BE, DK and NL. Why is this? Is it due to the like of RHD? And you do see some larger cars in the UK like Land Rovers and other SUVs, like Lexus vehicles.

 

[maoing]

What? UK is supposed to be the 2nd biggest market in Europe just next to Norway.

To me UK sales seem very weak compared to places like BE, DK and NL. Why is this? Is it due to the like of RHD? And you do see some larger cars in the UK like Land Rovers and other SUVs, like Lexus vehicles.

 

[wayner]

What? UK is supposed to be the 2nd biggest market in Europe just next to Norway.

i am going from the data shown in post 738. Maybe those four months are skewed but certainly the UK is behind NL and way behind the other markets I mentioned on a per capita basis - DK has 1/10 the population and BE has 1/5. Plus the UK has many uber rich that can afford a Model S.

 

[smac]

What? UK is supposed to be the 2nd biggest market in Europe just next to Norway.

Tesla Motors UK and European Focus in 2015 - TESLARATI.com

Tesla UK has been doing pretty well. There are some real tax perks that help (0% tax if given as a company car, and lots of people own their own small businesses / consultancies to run it through, so it's a good way of extracting a bonus without paying tax on the earnings. This does get worse from April rising to c.2% per year of the cars list price, then c.3% the subsequent April).

London is obviously very affluent, and you get exemption from congestion charges worth '000s per year and free (up to 4hr IIRC) parking in some areas of the city.

The Model S is still a big car for the UK saloon market, where E Class Mercs are far more common than S Class, (I'd argue the size rather than the price is the issue). However size doesn't seem to hurt Range Rover's sales though which are very common.

 

[wayner]

If there are all of those perqs plus a large, affluent population and a relatively strong currency then why isn't the UK the number one market in Europe for Tesla?

 

[smac]

If there are all of those perqs plus a large, affluent population and a relatively strong currency then why isn't the UK the number one market in Europe for Tesla?

Image / brand recognition is a big one. Plus lot's of non driving people in London in part due to lack of offstreet parking. I guess same reason Manhattan isn't flooded with Tesla's? (Though, I'm speculating last time I visited NY was pre-Tesla)

The other big problem is heavily discounted finance deals. You can get an AMG C63, for less than an S60 on finance, and to most people the AMG has more "car park" presence.

An A6 diesel is half per month, and the tax savings are a struggle to justify unless you are doing really big mileage (for free on the Superchargers)

 

[aarontayto]

To the UK market the Tesla looks quite boring (simply on appearance). I've got a p85d on order, I don't really care what people think of how my car looks. Most people I show it to are surprised it looks so plain/boring/generic saloon.

 

[maoing]

If Telsa is not doing well in big EU countries UK, Germany, France, Spain and you name it, it's really risky to mainly rely on a 5 million population country Norway to sustainably contribute 50% of the Europe sales.

 

[matbl]

You think it's reasonable to call Tesla half-assed and ignoring a market (that they obviously - stated publically - feel is important) without knowing the specifics of what's going on behind the scenes and why specific decisions were made? Our conversation ends since we clearly don't agree about what is reasonable.
.

What is unreasable or incorrect with these assumptions? Please read carefully and if you don't agree, please describe what is actually wrong.
Facts:
A. There are sensors that can do this just fine at speeds above 140 kph and has been for years.
AND
B. It's obviously not impossible to develop software for such a system using those sensors since it have existed in other cars for years
Assumption based on the facts:
C. Tesla deliberately chose a sensor or designed sofware that limits the functionality. I call that ignoring what they have themselfves identified as a key market since it will actually limit sales in that market.
OR
D. Tesla made a mistake in either hardware design or software design that limits the functionality. I call this half-ass since the obvious thing would have been to redesign it.

There isn't really room for anything else to have happened. Or can you come up with another scenario?

 

[Johan]

What is unreasable or incorrect with these assumptions? Please read carefully and if you don't agree, please describe what is actually wrong.
Facts:
A. There are sensors that can do this just fine at speeds above 140 kph and has been for years.
AND
B. It's obviously not impossible to develop software for such a system using those sensors since it have existed in other cars for years
Assumption based on the facts:
C. Tesla deliberately chose a sensor or designed sofware that limits the functionality. I call that ignoring what they have themselfves identified as a key market since it will actually limit sales in that market.
OR
D. Tesla made a mistake in either hardware design or software design that limits the functionality. I call this half-ass since the obvious thing would have been to redesign it.

There isn't really room for anything else to have happened. Or can you come up with another scenario?

They were unable to source enough parts of good enough quality and reliability as they were about to ramp up production. So they made a decision: individual sensors are not important enough to delay ramp up, this is one of those minor features where we'll have to compromise and "make it perfect" later and for now "just good enough".

 

[schonelucht]

If Telsa is not doing well in big EU countries UK, Germany, France, Spain and you name it, it's really risky to mainly rely on a 5 million population country Norway to sustainably contribute 50% of the Europe sales.

That's always been the case. Between them, California and Norway might take nearly 50% of all sales. You can look at that as a glass half empty situation (what happens when you saturate those markets) or you can look at it as the glass that is half full (what happens when other regions catch up to the same demand)

 

[Matias]

8

I would describe this as a very very optimistic view. Actually, that's an understatement. I'd say that's a view that ignores reality.
Model 3 needs a different battery. Different physical dimensions, and most everyone seems to assume different chemistry. Which will need different TMS.
Model 3 is said to have just one screen, so the information display needs to be redesigned.
For both of these (and many other) reasons, it needs new firmware.
Model 3 is very likely not an aluminum car. New manufacturing challenges. Either way, new crash test considerations.
It needs a smaller, cheaper to produce interior.
etc. etc.
Claiming "all done" on the engineering challenges is not supported by the facts.

That's like saying Fisker will fix the issues with their car because it has taken government money so they cannot fail.
The business world doesn't work that way. Model 3 is an extremely risky endeavor. Billions of dollars ride on it. There are a ton of open questions and many challenging engineering and design problems that need to be solved.
I would be shocked if we even got to see Model 3 in 2017. I see no possible scenario where Model 3 will start shipping in 2017.

And Model 3 will be in price sensitive segment. There will be competitors from manufacturers which have a couple of orders of magnitude bigger production. It is a lot harder to produce affordable good car than expensive good car.

One can not say Model 3 won't be late because it cannot be late. Happens all the time in businesses.

 

[dirkhh]

And Model 3 will be in price sensitive segment. There will be competitors from manufacturers which have a couple of orders of magnitude bigger production. It is a lot harder to produce affordable good car than expensive good car.

Certainly. The naive believe that all problems are solved is sad, but arguing against it only results in flame wars...

One can not say Model 3 won't be late because it cannot be late. Happens all the time in businesses.

No kidding. Thanks for your post

- - - Updated - - -

What is unreasable or incorrect with these assumptions? Please read carefully and if you don't agree, please describe what is actually wrong.
Facts:
A. There are sensors that can do this just fine at speeds above 140 kph and has been for years.
AND
B. It's obviously not impossible to develop software for such a system using those sensors since it have existed in other cars for years
Assumption based on the facts:
C. Tesla deliberately chose a sensor or designed sofware that limits the functionality. I call that ignoring what they have themselfves identified as a key market since it will actually limit sales in that market.
OR
D. Tesla made a mistake in either hardware design or software design that limits the functionality. I call this half-ass since the obvious thing would have been to redesign it.

There isn't really room for anything else to have happened. Or can you come up with another scenario?

Facts can often get in the way of the "true believer", which is why this species is able to simple argue facts away by sheer will power

- - - Updated - - -

Nothing new or hard has to happen for Model 3 and that's been stated by Tesla. Once you know how to make a cake, making muffins (even if in a different flavor) isn't hard. That's what I mean by all done. There will be no dolphin flipper hatch, no 1500 horses, no 50" video display, no hover mode. Model 3 will be built from known data, scaled down, and made simpler for affordability. Just addressing a couple of your points for time's sake, making a car out of aluminum is way more challenging than making a car out of steel, as an example. The people in stamping are likely to breathe a huge sigh of relief not having to make A class panels out of aluminum any longer. And considering Model S has the highest safety ever recorded, the Model X I'd bet money will score equally as well if we know Elon Musk at all, I'd then say Tesla knows how to make a car safe, such that there will be no outstanding challenges to make Model 3 safe.

So again I say, thinking Model 3 development and deployment will in any way be parallel to the development and deployment of Model X is false, and would pretty much conclude the business of Tesla.

Hey, I offer you a nice easy bet.

Any day before December 31st, 2017, the Model 3 ships to customers, I owe you 2 dollars. So let's say they ship December 1st, 2017, you get 60 dollars from me.
Any day after December 31st, 2017, the Model 3 ships to customers, you own me 1 dollar. So let's say they ship January 1st, 2020, you owe me 730 dollars.

Since you know that you are right and that this is a piece of cake, taking my money is a no-brainer for you, correct?