This timing seems about right to me. Most of the wrinkles appear to be out of the Model 3 production now. Designing the Model Y is about to start. Right now would be the right time to take some well deserved R&R.
Yeah, with what information the general public has, this could just as easily be spun as 'Engineering chief takes well deserved break after months of crunch successfully implementing Model 3 mass production.' Even if output production isn't as high as was initially planned, doesn't mean it's a failure.
> successfully implementing Model 3 mass production
For comparison on mass production: "more than 15 million Model Ts were manufactured in all, reaching a rate of 9,000 to 10,000 cars a day in 1925, or 2 million annually" [1]. Toyota was producing 13,400 units per day in 2014.
Model3 is currently somewhere around 300 to 500 per day.
What’s the point of the comparison? Model T manufacture started in 1908 and by the end of 1910 they had produced 12,000. By that comparison, model 3 is crushing it
Ford literally invented the assembly line. Tesla has a century of expertise to learn from. Tesla has also been producing ~2000/wk S&X's for almost two years now; however they just recently (last week of March) exceeded 2,000 3's in a week, 9 months into production.
Why is it a poor example? I'm comparing a car company that, over 100 years ago in 1914, was producing 714 vehicles a day by hand with 13,000 workers [1] to a company in 2018 with 37,000 employees utilizing robots yet manages to only produce half that amount?
How many total employees did Ford have, total? How many of Tesla's total employees are in line work/production? How difficult is the relative assembly of a Model T vs a Model 3 (ie, how many parts, welds, fasteners, etc)? I honestly have no idea how to compare them fairly, but I am not impressed by your analysis so far.
I can't speak to the relative complexity of the two machines either (obviously a Tesla is vastly more technologically complex but that doesn't mean it's necessarily more difficult to assemble: assembling computers today is extremely easy compared to 30 years ago) but I can however point to:
* Tesla produced ~250k vehicles (cumulative as of Q2 2017) prior to the first production Model 3, so it's not appropriate to compare them to a brand new company: They know how to build cars by the time Model 3 rolled around. This is their 4th vehicle model.
* Tesla has stated many times how the Model 3 is a far simpler and trimmed down vehicle compared to the S or X: production should be easier.
* Tesla had a goal of 2,500/wk by December 31st (they managed 793 the last week by shutting down S&X production) and a total of 2,425 for that entire quarter.
* Tesla had a goal of 5,000/wk and a revised goal of 2,500/wk by March 31st but only managed to hit 2,020 by that point, again which required shutting down the S&X lines.
* The new goalpost is 5,000/wk by June 30th.
* Elon said that "excessive automation at Tesla was a mistake" and that "Humans are underrated". [1]
If Musk himself is suggesting that the Model 3 delays would have not occurred due to human assembly instead, I think it's quite fair to compare against Ford's Model T assembly line a century ago. Not to mention a few advancements in technology since then which should give Tesla the upper hand.
It's poor example because the Model 3 has 1000's of parts some of which have supply chains that spread around the world. The model T had 1481 parts almost all built in their factory. The model 3 is orders of magnitude more complex to the point that it's more similar to a business jet than it is to a model T. But then, you knew that.
I'm getting the impression that there's some kind of axe-grinding going on in the general region of WSJ when it comes to Elon. Not sure why.
But this article definitely feels like someone just trying hard to find an angle to cast a deprecating light on Tesla. Like a "vested interests" type of feeling.
If you don't follow US politics, most conservatives hate Tesla and the WSJ (part of News Corp) is probably the preeminent conservative paper in the country.
WSJ doesn't have great love for most silicon valley companies. In Tesla's case, I think it's their continued over promising and under delivery. Currently the high cash burn plus low production volume on the model 3.
I lost respect for WSJ because of their continuous anti-Tesla editorials. I’m not at all a Tesla fanboy, but the WSJ commentary on subsidies are just trashy attacks that are devoid of any logic or context, given that the help that other industries and automakers have received.
Twice I conducted a study: I collected everything on their op-ed page over a week or two and coded them for their political stance. I think there were a couple pro-Democratic/liberal pieces out of over a hundred, and a few criticized the Republicans;[0] all the rest were pro-GOP/conservative or anti-liberal/Dem (plus a few that were apolitical). (And if you think the NY Times is the same, you're wrong: Ross Douthat, Bret Stephens (former WSJ editorial page editor) and David Brooks are all conservatives, and maybe others are too.) I encourage anyone to do the same; I feel I can almost guarantee results ever over a small sample like a day.
My conclusion: WSJ op-eds and editorials are partisan mouthpieces for the Republican Party and conservatives. I don't know how Tesla fits into that, but that's their motive. Denying climate change and demonizing any attempt at a solution? Supporting big oil? Musk pulling away from Trump? Others might have a better guess than I do.
[0] Criticizing Republicans is not necessarily pro-Democratic. For example, an editorial could criticize the Republicans for not cutting taxes enough.
From what I recall, the editorial page was much the same before the Murdoch era. However, the rest of the paper was a fairly stark contrast, and I didn't have the general impression that they slanted the actual news. After Murdoch bought it I lost faith in their reporting, but I never held the editorials against them too much prior to that. The opinion section seemed like a quarantine for the right wing types.
Back in Apple's pre-Steve Jobs era, though, I did get the impression that the news stories were consistently bashing Apple in a way that made it seem like they had some ulterior motivation. Apple would always be described as "troubled" or "beleagured" like a mantra. And it's passed into mythology that Apple was near bankruptcy when in fact they hoarded cash and abhorred debt.
So I'm not really sure if any anti-Tesla agenda is really coming from Murdoch.
The electric car market is booming right now. All of these people would be in strong demand. And with the Model 3 now in production they might well be looking for a new challenge with, probably, much better pay.
That's like saying everybody lies, therefore nobody has ever been honest. Sure, journalists are human and have emotions and make mistakes, but it's not a binary issue; it's a continuum. Journalists generally should strive to be dispassionate.
Look at it this way, journalism’s most prized.... award... the Pulitzer, is named after a man famous for introducing the original Fake News ( https://en.wikipedia.org/wiki/Yellow_journalism )
Sure, and I think the reason he's taking a 6-week break now is that he failed to take sufficient breaks earlier.
I've burnt out myself, and it's no joke. I wish him only the best. But to me the real risk here isn't "senior leader out for long, possibly indefinite period". It's "Tesla has been running a sprint, not a marathon." If somebody this high up is burnt out, what's it like for everybody else?
Given Tesla's precarious cash position this is the time when they really need for things to go smoothly. But if people are at or near burnout, they'll be making mistakes, cutting corners, etc.
Silicon valley likes to pretend you can run a marathon in 45 minutes by breaking it into subsequent 100 meter sprints. Dashing without breaks burns people fast.
I’m on an ongoing campaign to eradicate the word “Sprint” in relation to software delivery from the company I work at, so far with some success. It seems pedantic at first, but using the word “Iteration” in its place does actually seem to be driving an understanding that we’re not going to get everything done in a week, and should instead work steadily towards completion.
Wasn't Tesla's issue over-automation? Maybe the leave is symbolic of dedication to improving other capabilities - letting the other managers take time to balance things out. I'm sure Field appreciates the break, imposed or not. Startups are hard work and stress causes problems in the rational mind. I've been experiencing that myself, lately...
Really? That's nonsense. This sentiment is a great example of what's so toxic about the public markets now. Everyone is complaining that so much value creation is happening in private companies going public later - a big reason is because of this idea that investors should care about when one person at a 36,000 person company goes on vacation and that this should move the stock price. Ridiculous. It's distracting noise.
I agree. There's gotta be a limit to how short-term-oriented/short-sighted investors can be. What's next? "Stock plunges when CEO goes to the bathroom"?
If I had hundreds of thousands of dollars in TSLA it would mean that I had tens of millions elsewhere. But then, my parents are both actuaries and even my groceries are hedged.
This is a company when dozens of senior leadership have left the company. So yes, confirming he's just "on vacation" is relevant as the assumption could be he left too.
Btw - I don't believe he is "on vacation". It's something else, but probably doesn't matter in the end.
To add to this, I think it would be a worse sign for the company if they have a number of people in such a critical path, that they can never take significant time off. If you're doing your job well as a leader (and an organization), you have people who can fill in for you.
There's no such thing for a public company. It either talks to the board, which represents investors, or to the public, since it is impossible to know who owns shares of a public company.
And in practice, given index funds, most people do.
But then that would imply that Tesla has an obligation to make sure third party news outlets report on every holiday taken by every executive. I'm not saying it has to be private information, but why not announce it on their website? Why does the Wall Street Journal have to do it?
> But then that would imply that Tesla has an obligation to make sure third party news outlets report on every holiday taken by every executive.
Public companies have to publicly report any "relevant facts" that could seriously impact the company and the investors. A Senior Vice President of Engineering taking a leave of absence of many weeks (or more, with no end announced) during a major engineering crisis in the company is by all means a relevant fact.
The market can stay irrational longer than you can remain solvent. When the short squeeze occurs, it will incur pain.
Personally, I don’t think their valuation is irrational. They’re not a car company, they’re an energy storage company, the market for which is enormous.
A bit down the page on the right, you'll see "Shares Short", "Short Ratio", "Short % of Float", and "Shares Short (prior month)".
What that is telling you is that almost $10B of Tesla stock has been borrowed and sold (with the profit coming from buying in the future at lower prices, ie, betting against TSLA). That is increased about 7% from the prior month, and would take almost 5 entire days of average trading volume to close out all the short positions.
This is a high level of betting against a stock by any standard.
I wouldn't say so. There are other heavily shorted stocks that have a much higher short ratio because of their small float (e.g. MTCH).
>but is there a good way to determine who?
Short sellers don't have to disclose their positions, unlike investors who're long the stock. You can try to get a better sense of who's thinking what through headlines and analyst notes/reports.
Side note: Elon tweeted out that we'd see the 'burn of the century' (a short squeeze) and that it would be bigger than the VW/Porsche squeeze in 08.
Thanks, for replying when I couldn't! Generally I agree with you. I would disagree that this level of short interest is typical, I think 20%+
short interest is high 90s percentile territory. The relatively low short ratio is more indicative of how highly traded TSLA is (short ratio = short interest / avg daily volume).
If there's a way to report who is short a stock, I don't know it. There are also other trades to profit from decreases in an underlying security (buying puts, selling calls) and I don't know about reporting obligations there, either.
25% of all Tesla stock is out on loan according to the first Google result for "Tesla short" [1] Assuming most stocks on loan are due to shorting, 0.25*50 Billion (Tesla Market Cap)= approximately 10 Billion being shorted.
It may be the looming post accident battery safety realities that has caused this...it's possible a massive recall or worse is in the works for Tesla given the volatility of damaged batteries catching fire repeatedly after accidents.
https://electrek.co/2018/05/10/tesla-battery-reignited-days-...
Why on Earth would that require a recall? Hundreds of gas powered cars catch fire every day. The only difference is first responders expect and know how to handle gas fires. They will learn to handle batteries too.
If you don't like "flashy overcomplicated things", why would I try to talk you out of that? I've known a lot of people with that opinion, they're not early adopters, they get great pleasure out of buying less complicated things, and my curiosity about why they are this way was satisfied a long time ago.
Oh I'm just curious if the door thing is a fire safety concern. Nothing more. I won't buy a Tesla for a while at least but I follow the stock from an investment standpoint. You don't need to convince me of anything, just answer if the doors can be opened in a power loss situation. Satisfy my curiosity - though admittedly I'd probably use this data to further confirm my dislike of overengineering...
There are many cars that don't have rear doors, but do have rear seats. The worst case scenario in a Tesla, if the rear doors don't open, doesn't seem any worse than the inevitable situation in a 2 door 2+2.
Something else people worry about (or used to) was power windows not opening in a crash in case the door is jammed. But we don't mandate crank windows for that reason.
That's a great point, though since I have kids I can only dream of a 2 door car for a while. It is technically possible but hard to schlep with them back there when they are little. So I think of it more as a safety scenario in my present life situation.
Expectations and norms are clearly different than they used to be a few decades ago. When I was a pre-teen in the late 80s, and my family got an SUV, it had seating for five passengers like modern vehicles, bucket seats in the front and ones that folded down in the rear...but four doors were not an option. In fact of the several competitors only one offered rear doors.
How many times are we going to see outrage news that would lead us to believe a company is on the brick of disaster, yet the opposite occurs. Instead of using emotions, let me present facts with stock prices:
United Airlines passenger pulled off PR disaster stock was up 13% 3 months later.
Facebook cambridge analytica at lows at $160. Today $FB closed at $186.99.
Tesla report of death while car was in autopilot and public outrage over Elon's handling of investor quarterly call. May 3rd $TSLA trades down to $285. Today $TSLA closed at $301.
Apple, all analysts go bullish saying X is not selling, suppliers reporting down, consumers complaining about minor details, the end is near for Apple. Trades down to $160 April 27th. Instead Apple crushes quarter, huge $100B stock buyback, divy increase... up 15%. Cook praises Tax reform.
In nearly every circumstance where public outrage and news blasts a solid US company for some minor incident, it has been profitable to buy the dip. I can provide many more examples if so desired.
It's almost as if journalists aren't actual stock market analysts. Media in general suffers from believing their own lies. News rooms hype up stories with outrage based on "it is said that..." kind of stories, which then generate clicks, and somehow think this has anything to do with companies bottom lines.
Yeah, I remember when Enron used to shrug off negative news by showing their stock price graphs. The market doesn’t always price in bad news, until it does.
Do you honestly believe Tesla and Elon are flat out lying and committing fraud like Enron/Skilling though? If you do, that is fine, but I'd be curious to hear your argument.
I believe you’re too focused on the example (“Enron”) and missing the point (“The market doesn’t always price in bad news, until it does.”) of the parent comment.
I read an article quite a while back (might be a couple of years ago now) that did the math and concluded that, unless some serious "magic" happened, Tesla was going to lose major coin on every Model 3 sold. Then I read an article just a couple of days ago that said that, in fact, Tesla IS losing major coin on every Model 3 sold. Who knew?
The whole notion of the article is that taking time off is wrong.
No, it is not.
For what we know, the person taking time off could be sick, mentaly or phisically.
The author of the article needs to be more humane.
107 comments
[ 2.6 ms ] story [ 171 ms ] threadFor comparison on mass production: "more than 15 million Model Ts were manufactured in all, reaching a rate of 9,000 to 10,000 cars a day in 1925, or 2 million annually" [1]. Toyota was producing 13,400 units per day in 2014.
Model3 is currently somewhere around 300 to 500 per day.
[1] https://en.wikipedia.org/wiki/Ford_Model_T
No, he didn’t. The assembly line existed before Ford applied it to cars.
[1] https://www.wiley.com/legacy/products/subject/business/forbe...
* Tesla produced ~250k vehicles (cumulative as of Q2 2017) prior to the first production Model 3, so it's not appropriate to compare them to a brand new company: They know how to build cars by the time Model 3 rolled around. This is their 4th vehicle model.
* Tesla has stated many times how the Model 3 is a far simpler and trimmed down vehicle compared to the S or X: production should be easier.
* Tesla had a goal of 2,500/wk by December 31st (they managed 793 the last week by shutting down S&X production) and a total of 2,425 for that entire quarter.
* Tesla had a goal of 5,000/wk and a revised goal of 2,500/wk by March 31st but only managed to hit 2,020 by that point, again which required shutting down the S&X lines.
* The new goalpost is 5,000/wk by June 30th.
* Elon said that "excessive automation at Tesla was a mistake" and that "Humans are underrated". [1]
If Musk himself is suggesting that the Model 3 delays would have not occurred due to human assembly instead, I think it's quite fair to compare against Ford's Model T assembly line a century ago. Not to mention a few advancements in technology since then which should give Tesla the upper hand.
[1] https://twitter.com/elonmusk/status/984882630947753984
But this article definitely feels like someone just trying hard to find an angle to cast a deprecating light on Tesla. Like a "vested interests" type of feeling.
Wsj also has some nice pieces about Tesla, such as their recent tour of the production factory. https://www.wsj.com/articles/teslas-factory-in-a-fishbowl-15...
For example: https://www.forbes.com/sites/neilwinton/2015/02/16/tesla-sho...
Source article: http://www.wsj.com/articles/the-tesla-paradox-1423786534
Electric car site looking at subsidies across the industry: https://electrek.co/2016/11/25/tesla-subsidies-big-three-oil...
One complaint I have with both of you both is that neither provides breakdowns by dollar of subsidies per car produced or sold.
Twice I conducted a study: I collected everything on their op-ed page over a week or two and coded them for their political stance. I think there were a couple pro-Democratic/liberal pieces out of over a hundred, and a few criticized the Republicans;[0] all the rest were pro-GOP/conservative or anti-liberal/Dem (plus a few that were apolitical). (And if you think the NY Times is the same, you're wrong: Ross Douthat, Bret Stephens (former WSJ editorial page editor) and David Brooks are all conservatives, and maybe others are too.) I encourage anyone to do the same; I feel I can almost guarantee results ever over a small sample like a day.
My conclusion: WSJ op-eds and editorials are partisan mouthpieces for the Republican Party and conservatives. I don't know how Tesla fits into that, but that's their motive. Denying climate change and demonizing any attempt at a solution? Supporting big oil? Musk pulling away from Trump? Others might have a better guess than I do.
[0] Criticizing Republicans is not necessarily pro-Democratic. For example, an editorial could criticize the Republicans for not cutting taxes enough.
Back in Apple's pre-Steve Jobs era, though, I did get the impression that the news stories were consistently bashing Apple in a way that made it seem like they had some ulterior motivation. Apple would always be described as "troubled" or "beleagured" like a mantra. And it's passed into mythology that Apple was near bankruptcy when in fact they hoarded cash and abhorred debt.
So I'm not really sure if any anti-Tesla agenda is really coming from Murdoch.
There is (or was) a lot of internal conflict over what the reporters feel is favorable coverage of Trump.
https://duckduckgo.com/?q=wall+street+journal+trump+coverage...
All gone in the past year. That's a notable amount of turnover. Some of them left a lot of options on the table when they chose to depart.
It's odd, and probably what triggered an entire article about something as normally mundane as a leave of absence.
This has never been true, has it?
That's like saying everybody lies, therefore nobody has ever been honest. Sure, journalists are human and have emotions and make mistakes, but it's not a binary issue; it's a continuum. Journalists generally should strive to be dispassionate.
But why?
Not saying we don't deserve that sort of time off, but it seems somewhat excessive given the circumstances.
I've burnt out myself, and it's no joke. I wish him only the best. But to me the real risk here isn't "senior leader out for long, possibly indefinite period". It's "Tesla has been running a sprint, not a marathon." If somebody this high up is burnt out, what's it like for everybody else?
Given Tesla's precarious cash position this is the time when they really need for things to go smoothly. But if people are at or near burnout, they'll be making mistakes, cutting corners, etc.
Really? That's nonsense. This sentiment is a great example of what's so toxic about the public markets now. Everyone is complaining that so much value creation is happening in private companies going public later - a big reason is because of this idea that investors should care about when one person at a 36,000 person company goes on vacation and that this should move the stock price. Ridiculous. It's distracting noise.
Maybe if you had hundreds of thousands invested in TSLA and were concerned about their downward spiral you’d think different.
Btw - I don't believe he is "on vacation". It's something else, but probably doesn't matter in the end.
There's no such thing for a public company. It either talks to the board, which represents investors, or to the public, since it is impossible to know who owns shares of a public company.
And in practice, given index funds, most people do.
But then that would imply that Tesla has an obligation to make sure third party news outlets report on every holiday taken by every executive. I'm not saying it has to be private information, but why not announce it on their website? Why does the Wall Street Journal have to do it?
Public companies have to publicly report any "relevant facts" that could seriously impact the company and the investors. A Senior Vice President of Engineering taking a leave of absence of many weeks (or more, with no end announced) during a major engineering crisis in the company is by all means a relevant fact.
Usual disclaimer: TSLA shareholder
Personally, I don’t think their valuation is irrational. They’re not a car company, they’re an energy storage company, the market for which is enormous.
A bit down the page on the right, you'll see "Shares Short", "Short Ratio", "Short % of Float", and "Shares Short (prior month)".
What that is telling you is that almost $10B of Tesla stock has been borrowed and sold (with the profit coming from buying in the future at lower prices, ie, betting against TSLA). That is increased about 7% from the prior month, and would take almost 5 entire days of average trading volume to close out all the short positions.
This is a high level of betting against a stock by any standard.
I wouldn't say so. There are other heavily shorted stocks that have a much higher short ratio because of their small float (e.g. MTCH).
>but is there a good way to determine who?
Short sellers don't have to disclose their positions, unlike investors who're long the stock. You can try to get a better sense of who's thinking what through headlines and analyst notes/reports.
Side note: Elon tweeted out that we'd see the 'burn of the century' (a short squeeze) and that it would be bigger than the VW/Porsche squeeze in 08.
If there's a way to report who is short a stock, I don't know it. There are also other trades to profit from decreases in an underlying security (buying puts, selling calls) and I don't know about reporting obligations there, either.
1. https://www.cnbc.com/2016/04/01/tesla-short-interest-hits-re...
I can't even read the news without rolling my eyes and thinking WTF?
An article about Trump or Elon Musk/Tesla even if it's completely uncalled for or factually incorrect seems to become "news".
Journalistic quality has definitely gone downhill in the last decade or two.
The news media covered the "furor" over Obama's tan suit. They're damn well going to cover any real scandal involving Trump. It's their job.
If this news doesn't interest you then don't read it.
In a complete loss of power can the doors be opened? This is unclear to me. I don't own a Tesla and am genuinely wondering.
The difference to a gas car could be that you can't get out of a Tesla if there is a fire.
I think I read in a teardown of the Model 3 that the rear door handles didn't have mechanical options as a backup for safety.
Overall I don't particularly like flashy overcomplicated things which is what these door handles seem to me. I'm curious for any rebuttal though.
Something else people worry about (or used to) was power windows not opening in a crash in case the door is jammed. But we don't mandate crank windows for that reason.
The sooner it goes bust the better for the taxpayer.
United Airlines passenger pulled off PR disaster stock was up 13% 3 months later.
Facebook cambridge analytica at lows at $160. Today $FB closed at $186.99.
Tesla report of death while car was in autopilot and public outrage over Elon's handling of investor quarterly call. May 3rd $TSLA trades down to $285. Today $TSLA closed at $301.
Apple, all analysts go bullish saying X is not selling, suppliers reporting down, consumers complaining about minor details, the end is near for Apple. Trades down to $160 April 27th. Instead Apple crushes quarter, huge $100B stock buyback, divy increase... up 15%. Cook praises Tax reform.
In nearly every circumstance where public outrage and news blasts a solid US company for some minor incident, it has been profitable to buy the dip. I can provide many more examples if so desired.
The market is still willing to shrug off news like that because we’re not in a recession or a bear market yet.
The author of the article needs to be more humane.