Tesla Model ≡ Thread

[Sharp11]

Originally Posted by ZBB

Tesla has sold a bit over 130k Model S based on the latest VINs I've seen --and first deliveries were in June 2012. There are probably a couple thousand Model X delivered now, and they only built a total of 2500 Roadsters.

Current production rate is about 100k per year -- but they've been ramping up to that for years. The Fremont factory has capacity for 500k per year -- and Model 3 will help them get there.

Also, they did turn a profit. For one quarter in 2013. Their losses mostly come down to product development and capacity expansion. They are in growth mode, not profit mode...

Perhaps, but the segment, especially in the 30-40k range is about to become very competitive - the new Bolt and a redesigned Leaf will be vying for consumers, and benefitting from the resources of large companies, where losses on particular models (up to $4K on Teslas??) can be absorbed.

I'm just wondering how long a small company can stay in "growth mode".

[ZBB]

Originally Posted by JST

I'm not sure the glass roof will be standard. Did Musk address that?

Musk didn't address it, but I saw one of the articles mention that the glass roof would be optional. I think it was the autoblog one -- so I'm guessing the press received a briefing prior to the reveal that gave a tiny bit more info...

[JST]

Originally Posted by ZBB

Musk didn't address it, but I saw one of the articles mention that the glass roof would be optional. I think it was the autoblog one -- so I'm guessing the press received a briefing prior to the reveal that gave a tiny bit more info...

I wonder whether that's correct, or if it's just a garble from something saying a sunroof would be optional (meaning an opening front section).

[ZBB]

Originally Posted by Sharp11

Perhaps, but the segment, especially in the 30-40k range is about to become very competitive - the new Bolt and a redesigned Leaf will be vying for consumers, and benefitting from the resources of large companies, where losses on particular models (up to $4K on Teslas??) can be absorbed.

I'm just wondering how long a small company can stay in "growth mode".

Tesla's financial statements show that the Model S has hit their 25% gross margin target since shortly after launch (I believe in 2Q 2013).

The 4k loss per vehicle is taking their net income and dividing it by volume. But the net income is reduced by their capacity expansion -- building the Gigafactory, buying the new paint line that has 500k volume. While much of that is CapEx and will be amortized for years, some of that cost is hitting Tesla now -- and driving their net income down. That's what I meant by "growth mode". 6+ months ago, they had one model in production, now they have 2 -- and they are providing the revenue and some profit to allow them to expand -- but not quite enough. But they have literally raised billions in the equity markets and are using that to help fund the gap -- but it means an operating loss for now.

The Model 3 will be a make or break car for Tesla though -- I'm betting on "make". Although I am not a stockholder (I wish I had bought a bit when I ordered -- stock was at $36 in March 2013...)

[bren]

Originally Posted by JST

I wonder whether that's correct.

Considering how much all of the internet "press" were tripping over themselves posting hurried/incorrect information....

[ZBB]

Originally Posted by JST

I wonder whether that's correct, or if it's just a garble from something saying a sunroof would be optional (meaning an opening front section).

Really could be either way. Could also someone thinking "well, the pano roof is optional on the Model S, perhaps it will be on the Model 3". But the X doesn't have an optional roof -- all X just get the non-opening big windshield and glass panels on the top of the falcon wing doors...

[JST]

Originally Posted by Sharp11

Perhaps, but the segment, especially in the 30-40k range is about to become very competitive - the new Bolt and a redesigned Leaf will be vying for consumers, and benefitting from the resources of large companies, where losses on particular models (up to $4K on Teslas??) can be absorbed.

I'm just wondering how long a small company can stay in "growth mode".

Resources of large companies, yes. But what about the commitment?

I've said for a long time that if GM or VW or Ford put their mind to it, they could build a car that would basically put Tesla out of business. But they haven't put their mind to it, and it doesn't look like they will. Of the group, only VW has really hinted in this direction, and we'll see how much that comes to fruition--but it's far more vaporware at this point than the Model 3.

The Bolt and the (next gen) Leaf are important cars, but I think it's pretty clear that they aren't really "competition" for the Model 3. They are better than pure compliance cars, but at the end of the day they are hedges--cars made to test the waters of a new segment, cautiously, like dipping your toe in.

The Model 3, OTOH, is a car built by a company that's committed to the idea of electrification. Tesla understands the whole ecosystem here--that in addition to a long range, you need to give people:

1) A compelling reason to make the changes they need to make in their behavior to buy an electric car, and

2) A comprehensive charging infrastructure that makes switching as painless as possible.


To answer the first question, Tesla gives you two things:

a) A chance to feel like you are buying into a group effort to save the world, and

b) A car that's fast and handles well, so that even enthusiasts take note.


Now, you can quibble with how real the steak is behind the "save the world" sizzle. But from a marketing standpoint it's clearly part of Tesla's story, so much so that Musk leads with it every time he intros a new car. It's the company's defining ethos. Does GM have a defining ethos? Does VW?

And I haven't driven either a Model 3 or a Bolt yet, but I think we can make some predictions. If the Model 3 isn't *significantly* better in that respect than a Bolt, I will buy you a Model X.

So, TL;DR: Tesla is playing a different game than everyone else is.

[John V]

How are they going to sustain the free supercharger model? Where is the money coming from to cover the electricity, installation and maintenance costs of those things? I'd bet a big % of hamburger button buyers will never use one... but I guess the cost is baked into the cost of the car somehow?

They announced that Supercharger use would still be free for hamburger button buyers. I just don't get the math here.

[bren]

Would eventually having to pay for a supercharger be a deal breaker? I doubt it.

Pull a Trump. Make someone else pay. If you own a convenience store/diner it might be in your interest to offer a charger since it gives you a captive audience.

[JST]

Originally Posted by John V

How are they going to sustain the free supercharger model? Where is the money coming from to cover the electricity, installation and maintenance costs of those things? I'd bet a big % of hamburger button buyers will never use one... but I guess the cost is baked into the cost of the car somehow?

They announced that Supercharger use would still be free for hamburger button buyers. I just don't get the math here.

I'm not sure how Tesla is actually doing this on their balance sheets, but ostensibly some cash from the sale of each Model S and Model X goes to cover supercharging, even for cars (like mine) where it is "included" in the price.

The superchargers are expensive but in the grand scheme of things not THAT expensive (compared, e.g., to the cost of building the Gigafactory). And the average car probably doesn't use them more than a few dozen times in its entire lifespan.

At bottom, you could almost write the cost of the network off as a marketing expense and still justify it.

But I agree with Bren--at some point, it seems likely that Tesla will transition to a different model for the Superchargers, it just won't be at the launch of the Model 3.