Tesla Q2 2019 Letter • Hacker News Board

Re: Tesla Q2 2019 Letter

#141

Post by LeoPanthera » Thu, Jul 25, 2019, 12:21 AM UTC

justapassenger wrote: post #111

Most recent story of Tesla's profitability was built around Musk's manufacturing innovations, that will make Model 3 much cheaper to produce. Experts disagreed, got fired, and alien dreadnought continued. It was such a huge failure, that to this day, portion of Model 3 production is happening a tent. With forklifts, leaking roof and space-heaters. Tesla now has new profitability story - Musk's innovations in FSD, wil…

> It was such a huge failure, that to this day, portion of Model 3 production is happening a tent. With forklifts, leaking roof and space-heaters.

Citation needed?

Re: Tesla Q2 2019 Letter

#142

Post by mehrdada » Thu, Jul 25, 2019, 12:24 AM UTC

gamblor956 wrote: post #133

mehrdada wrote: post #86

Earlier quoted context omitted.

> I know at least one person that's decided not to buy a Tesla simply because their future is so murky and is not sure if they will be around for repairs. That's a problem they need to tackle now before it spirals out of control. I’m sure there is one person that made a decision on that basis but I’ve heard many more not-real customers speculating about this as if they were in the market, but they very clearly wouldn…

A company that is production constrained does not need to lower the price of its products. It can keep the price the same or even increase prices. This is basic economics. Tesla has already lowered the price of its vehicles 3x this year...

Two points: the basic model assumes there’s a single market to sell to, but different geos ramping up may spike your supply in one market while your other segment is not deliverable yet, causing short term supply spike in one segment while simultaneously being production-constrained in total.

For the Model 3 specifically, the price cuts are mostly in-line with tax credit phaseout and they have reshuffled features (AP features moved to more expensive FSD option for instance). of course the higher end vehicles faced more price cuts, but that speaks little of the demand of the base vehicle.

Re: Tesla Q2 2019 Letter

#143

Post by mandeepj » Thu, Jul 25, 2019, 12:25 AM UTC

BoorishBears wrote: post #105

jtchang wrote: post #68

Being able to test your code out in the real world and dark launch a feature gives Tesla a ridiculous advantage. No other company has the infrastructure to be able to do that. Plus they can even tell if the decision the neural net made was wrong because I assume even Tesla knows you got into an accident. And this over thousands of cars. The speed at which they are collecting data is unprecedented.

I'm so tired of this unapologetic Tesla hand holding. > No other company has the infrastructure to be able to do that. Because they don't want it. They don't want AP regressions we've already seen happen. They don't want engineers testing code out on real people's lives. You really think other companies just don't know how to send OTA updates to an ECU or other car components? I could literally put that together with…

Rest of the car companies are like Boeing. I hope you are keeping up with that. If not here's the latest - https://www.cnn.com/2019/07/24/business/boeing-loss/index.ht...

Re: Tesla Q2 2019 Letter

#144

Post by new_realist » Thu, Jul 25, 2019, 12:27 AM UTC

slg wrote: post #77

new_realist wrote: post #53

Earlier quoted context omitted.

ASP on the Model 3 has been falling quarter over quarter, as have margins. S and X demand and prices have dropped significantly. Model 3 prices dropped yet again less than a week ago.

Your comment directly conflicts with what was stated in this letter: >During the quarter, a majority of orders continued to be for a long-range battery option and the Model 3 average selling price (ASP) was stable at approximately $50,000. At the same time, manufacturing costs continued to decline.

Yes, the ASP was stable... during the quarter.

In 2018 the Model 3 ASP was above $57K.

Re: Tesla Q2 2019 Letter

#145

Post by notatoad » Thu, Jul 25, 2019, 12:35 AM UTC

Animats wrote: post #108

"GAAP net loss of $408M" - the number that matters. Tesla isn't doing that badly. But now that they have some production volume, they have to be evaluated as a car company, not a startup. Can they make lots of cars at a profit? They got the production quantity up by throwing people, money, and a big tent at the Fremont plant. That ran up the cost per car. Although it's better than their previous state of low producti…

>They're also at the point where all their models need a refresh or a replacement. Tesla is slow at new models compared to the competition.

They're definitely at the point where their competitors would have released a replacement (Model S) or refresh (Model X). I'm not sure it's clear that Tesla actually needs to do that. Ford and GM don't release new models just because the clock demands it, they release new models when the market demands it. Is the market demanding a replacement to the model S, or did the Model 3 hype cycle alleviate that demand?

Re: Tesla Q2 2019 Letter

#146

Post by rgbrenner » Thu, Jul 25, 2019, 12:36 AM UTC

gordon_freeman wrote: post #9

kenhwang wrote: post #4

Earlier quoted context omitted.

They missed market expectations. They lost 6x more money (-$2.31/share vs expected -$0.35/share) and sold less cars ($6.3b sales vs $6.5b expected) than the market wanted with more capex to come (China Gigafactory, Model Y).

Not sure how does the CapEx gets allocated for the projects that are already progressing. For example: Tesla started building GF2 in China a few months ago so any idea in which Quarter(s) Tesla account for the CapEx? Is it before the project starts or at the end or every month gets even distribution of CapEx allocation from Start until End of the project.

Simply buying a capital asset is not an expense. It just moves assets from one asset account (cash, for example) to another (fixed asset account).

You then depreciate the asset over the expected life of the asset. So if you depreciate it over 30 years, then in year 1 you would record a depreciation expense of 3.33%. (That's for straight line depreciation.. there are accelerated schedules.)

In other words.. It's spread out over the expected life of the asset.

Also the depreciation usually wouldn't start until the asset has been put into production.

Re: Tesla Q2 2019 Letter

#147

Post by jayd16 » Thu, Jul 25, 2019, 12:42 AM UTC

BoorishBears wrote: post #105

jtchang wrote: post #68

Being able to test your code out in the real world and dark launch a feature gives Tesla a ridiculous advantage. No other company has the infrastructure to be able to do that. Plus they can even tell if the decision the neural net made was wrong because I assume even Tesla knows you got into an accident. And this over thousands of cars. The speed at which they are collecting data is unprecedented.

I'm so tired of this unapologetic Tesla hand holding. > No other company has the infrastructure to be able to do that. Because they don't want it. They don't want AP regressions we've already seen happen. They don't want engineers testing code out on real people's lives. You really think other companies just don't know how to send OTA updates to an ECU or other car components? I could literally put that together with…

>Why is everything Tesla does always suddenly some sort of competitive advantage

Because the difference between could do and did is massive.

Re: Tesla Q2 2019 Letter

#148

Post by WheelsAtLarge » Thu, Jul 25, 2019, 12:47 AM UTC

gamblor956 wrote: post #133

mehrdada wrote: post #86

Earlier quoted context omitted.

> I know at least one person that's decided not to buy a Tesla simply because their future is so murky and is not sure if they will be around for repairs. That's a problem they need to tackle now before it spirals out of control. I’m sure there is one person that made a decision on that basis but I’ve heard many more not-real customers speculating about this as if they were in the market, but they very clearly wouldn…

A company that is production constrained does not need to lower the price of its products. It can keep the price the same or even increase prices. This is basic economics. Tesla has already lowered the price of its vehicles 3x this year...

Basic economics also tells us that at some point substitutes will be found for your product. So, if product x1 is too expensive then x2 will do. It's not a 1 to 1 substitute but if it meets your needs then x1 will need to find a way to lower the cost or make it more attractive in other ways.

Tesla is not the only car manufacturer. There are plenty of transportation options to choose from. It has a niche now but it needs to sell large quantities to survive long term.

Re: Tesla Q2 2019 Letter

#149

Post by rgbrenner » Thu, Jul 25, 2019, 12:51 AM UTC

Animats wrote: post #108

"GAAP net loss of $408M" - the number that matters. Tesla isn't doing that badly. But now that they have some production volume, they have to be evaluated as a car company, not a startup. Can they make lots of cars at a profit? They got the production quantity up by throwing people, money, and a big tent at the Fremont plant. That ran up the cost per car. Although it's better than their previous state of low producti…

But now that they have some production volume, they have to be evaluated as a car company

I'm generally critical of Tesla.. but this isnt right in my experience. If the company's volume is growing rapidly, they are going to have higher expenses than a stable low growth competitor. Because as volume approaches the capacity of the equipment and staff, you must throw more people at it, reduce maintenance, buy more equipment, etc. And all of that costs money. Capital assets are being built for their future volume, which is going to be more expensive, since they would be overbuilding for their current volume (which can be a big problem if growth slows). And the growth also creates urgency, which reduces the company's leverage when negotiating prices.

Only once growth is under control can a company then turn its full attention to controlling costs.

Re: Tesla Q2 2019 Letter

#150

Post by reitzensteinm » Thu, Jul 25, 2019, 12:55 AM UTC

leesec wrote: post #136

reitzensteinm wrote: post #115

Earlier quoted context omitted.

Waymo quotes $7500 per car for the LIDAR unit, which is financially feasible today for consumer vehicles, even if it only supplied level 3. It's trivial for a level 4 robotaxi. But only once the software works. Even discounting aesthetics, Tesla couldn't have bolted it on to every car sold in the hope that it'll work in a few years time. They'd be bankrupt by now. They were forced to use cameras if they wanted any in…

That's just one LIDAR, count how many are on their vans. (I think 5)

It's for the main one. The others are much cheaper. The total price is not 5x$7500.

These are not levels where it makes sense to question if it will "ever" be financially viable. It's less than the premium people paid gladly for a Model S.

A true level 3 on consumer cars would sell like hotcakes.