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Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

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Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#51

Post by hwillis »

jeffdavis wrote: post #35

What is the main practical selling point of a model 3 over, say, a leaf? Longer range and that's it? Good thing tesla has a lot of vertical investment in batteries. The market is very competitive.

> What is the main practical selling point of a model 3 over, say, a leaf?

Much better value, larger size, better fuel economy, more conventional, more power, more range, and superchargers.

Cost per mile of range: $200 for the 2018 leaf, 132 for the Model 3. 147 hp vs 258 hp, 10" of extra length and 6" of extra width, over twice the range at less than half the capacity.

The Tesla is way superior to any other electric car on the road. The supercharger alone makes it the obvious buy for almost all consumers.

Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#52

Post by hwillis »

neilalexander wrote: post #30

I can't help but feel that price is an inevitable factor here. Tesla Model S and Model X are expensive! Now that the novelty is wearing off and more EVs are hitting the road from other manufacturers, it strikes me that they just won't remain competitive models. I expect the Model 3 to go some way towards helping this by being much more affordable, but with delayed production on those and an interior design that won't…

"reallocating resources" is not the same as "unable to sell cars". Tesla is still selling every car they make with zero problems.

Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#53

Post by 11thEarlOfMar »

opportune wrote: post #26
11thEarlOfMar wrote: post #14

Earlier quoted context omitted.

The most worrying is the slowing production of models S and X, coupled with what I'd call a collapse in the gross margins of those products. Why is the margin declining so drastically?

The gross margin changing is fine and natural, I think. The Model 3 is a lower-priced good, so by being able to sell more of it, they can deal with somewhat lower margins. By that I mean, 100 cars * $12,000 gross margin each is definitely worse than 5000 cars * $4,000 gross margin (for Tesla at least, I suppose branding could come into play with other brands), even though the gross margins drastically collapse. It's…

But the ratio of Model 3 to S+X units sold in Q3 does not support a 10% drop in Gross Margin for Q3, unless the cost of manufacturing the 3s they did ship was way higher than the associated revenue (significantly negative gross margins on the 3s). Maybe there are costs associated with the gigafactory that are getting assigned as cost of goods for the model 3s and throwing the margins out of kilter until the volume gets up? Or perhaps depreciation on the stamping equipment and fixtures that are largely idle?

I'm fine with the gross margin trending towards, say, 20% over the next few quarters since GM for example is at 12% (I'd expect Tesla's gross margin to be higher than GMs because Tesla keeps the revenue that GM has to give to its dealers).

Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#54

Post by sixQuarks »

pwinnski wrote: post #2

The first two zones of a four-zone process to produce battery packs are being completely reworked, and this is something they only found out about after they were already failing to deliver on promised production goals? I've mis-estimated a lot of things in my career, so I'm trying to be sympathetic, but it seems like someone with production line experience should have been able to test individual parts of the produc…

As much as I'm a fan of Elon, the Model 3 production always had me worried when they kept having to replace senior production and battery executives in the run up. I'm still very bullish on Tesla long-term, but I think the Model 3 will be a fiasco unless some sort of miracle happens, and we haven't even gotten into initial quality problems that may arise once enough units are in customer hands.

Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#55

Post by drewg123 »

maxerickson wrote: post #42
pmurT wrote: post #15

I've been considering cancelling my preorder. As late as they'll be (assuming they do deliver) and my estimated place in line, the other manufacturers will have competitive offerings

How does the Bolt compare to what you expect to get from Tesla?

I test drove one. It was fairly ok, but the seats were uncomfortable.

The big objective thing that the Bolt is missing is a fast charging network. For now, nothing can touch Tesla's supercharger network in terms of charging speed and locations.

Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#56

Post by fmihaila »

glbrew wrote: post #48

"cuts production" I don't follow official statements closely but it sounds like they are using this retooling as an excuse for low demand for the S and X. This way they get to have their cake and eat it too: low S/X numbers justified and re-energized promises for increased 3 production.

Musk said on the call that they will produce fewer cars but that they expect increased deliveries, with the difference being covered from their existing inventory.

Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#57

Post by gcheong »

ericabiz wrote: post #28

SeekingAlpha predicted this a few weeks ago: https://seekingalpha.com/article/4114125-will-tesla-zero-mon... "Leading up to the end of September, we saw new-high Model 3 VIN numbers in the wild almost every other day, culminating in number 521. But since the beginning of October, nothing. I can’t find a single one above 521 with VIN picture evidence on any forum. It’s unlikely to end up this way, but the sole evidenc…

What does it mean to "outsell" something when that something is backordered into the foreseable future? Personally I will wait until Tesla goes bankrupt before I buy a bolt but I'm still betting that, despite Tesla's lack of ability to predict their own production capability timeline (uh hello, pretty much every tech company that ever existed), that I won't have to.

Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#58

Post by DiabloD3 »

btian wrote: post #18
williamscales wrote: post #10

Earlier quoted context omitted.

"key elements" of the battery module assembly had to be taken over and redesigned, Musk says. Tesla seems to be taking the opposite approach to Apple here. In my observation, Apple drives its suppliers extremely hard to achieve the quality it requires. Tesla, on the other hand, is too eager to bring any sundry part in house (e.g. car seats). Apple's approach appears to work in that it pushes suppliers to do what's ne…

Then how do you explain Apple making their own SoC?

Because they bought an entire company to do it with, because the value proposition of doing that was better than continuing to pay the Qualcomm tax, or conversely siding with Samsung to bring Exynos LTE to the US (and they already have too much of a complex relationship with Samsung; to the point that even on the iPhone 8 and X, if you bought an iPhone instead of a Galaxy S, Samsung still makes a profit).

Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#59

Post by williamscales »

rando444 wrote: post #23
williamscales wrote: post #10

Earlier quoted context omitted.

"key elements" of the battery module assembly had to be taken over and redesigned, Musk says. Tesla seems to be taking the opposite approach to Apple here. In my observation, Apple drives its suppliers extremely hard to achieve the quality it requires. Tesla, on the other hand, is too eager to bring any sundry part in house (e.g. car seats). Apple's approach appears to work in that it pushes suppliers to do what's ne…

You could substitute Apple with Wal-Mart in your comment and every bit would be just as true. Sometimes forcing your supply chain to pinch every penny works out the best for your shareholders.. sometimes focusing on quality products pays off more in the long run. Time will tell.

Hmm, I think I do agree with you that it would be true, but in my estimation it does shift the meaning. I was thinking of how Apple is known to specify extremely rigorous quality standards on cutting edge technology and really push its suppliers to advance their craft. Whereas Walmart I would associate more with outright penny-pinching.

I'm thinking about the different ways to structure a business to achieve a quality product. Is there a good example of a company that produces, in-house, an entire non-trivial (i.e. there are some systems to be integrated) product?

Re: Tesla posts big loss, cuts production of Models X and S to catch up on Model 3

#60

Post by sushisource »

hwillis wrote: post #51
jeffdavis wrote: post #35

What is the main practical selling point of a model 3 over, say, a leaf? Longer range and that's it? Good thing tesla has a lot of vertical investment in batteries. The market is very competitive.

> What is the main practical selling point of a model 3 over, say, a leaf? Much better value, larger size, better fuel economy, more conventional, more power, more range, and superchargers. Cost per mile of range: $200 for the 2018 leaf, 132 for the Model 3. 147 hp vs 258 hp, 10" of extra length and 6" of extra width, over twice the range at less than half the capacity. The Tesla is way superior to any other electric…

How about compared to the Bolt, though? The Bolt seems dramatically more competitive than the Leaf. 200hp, comparable range, and cheaper than the model 3.

I think people getting fed up with the wait and switching to Bolts en-masse is a possible scenario. Imagine if Chevy made an ad targeting exactly that scenario....

(You can thank me later Chevy ad execs)

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