This is very good news. If they can do this for ten more quarters there will be less carbon in the atmosphere and an oil glut for 2-million-barrels of oil a day will be removed from daily demand according to Bloomberg — Great graphs in the article too: https://www.bloomberg.com/features/2016-ev-oil-crisis/
They still have a ~400k net reservation backlog (based on investor call math). So close enough?
Tesla has demand levers available to stoke additional demand when supply is not constrained. They'll have sold almost half a million Model 3s with no active marketing effort (besides a Youtube promo video here and there) by the time the backlog has been worked through.
Crude (Brent and WTI) is trending higher [1], which is only going to help EV sales. EVs are already a slam dunk TCO-wise in most of the country except where fuel is still cheap in the Midwest/Appalachia [2].
That wasn't in the comment I replied to. OP asked about # or cars, not options/trim and tax incentives available. I assume Tesla will maximize for tax credits (soak up those federal dollars), and then reduce the price if necessary for their vehicles if demand is decreased by the credit phaseout.
International orders (which are still in queue) aren't impacted by the Tesla vehicle credit phaseout. There's a reason they're going to push every car they can in the US first before that credit is gone.
Animats mentions labor costs top of thread, which have been falling in Fremont now that they've hitting their stride (rumor I've heard, not material info, can't provide a citation).
If you're interested, highly recommend being on the investor call next month for Q3 rundown.
That video, and articles on the teardown, confirm that the luxury-level-priced Model 3s are solidly profitable...which they should be, since no major automaker sells luxury vehicles at a loss per unit.
The question is whether Tesla can sell Model 3s at the originally claimed $35k, which is highly questionable. Indeed, Munro himself sells, "I think $36,000 Model 3s will be rare as hen's teeth. I don't see how they could make money at $36,000."
The answer to what Munro doesn't see is that the Tesla battery makes up $6,500 of the cost. With continually falling battery costs, the answer is that the "how" will be obvious in a year or so.
I would bet that there is much more. I would by a $35K model 3 if I could get one, but I'm not going to go on a wait list for years. I think there are a lot more people who feel the same way and that is not accounted for in the already impressive backlog numbers.
I don't know. But I do know that with our current charging infrastructure electric cars are out of reach for most of the population. The barrier of entry for an all electric is 1) $40-60k dollars for the car, 2) somewhere convenient to charge which today means owning a house , 3) the ability to sacrifice the flexibility of a gas engine.
Any one of these issues would eliminate huge market segments. Once the used market for the ~35k model 3 starts to pick up, the first problem will be reduced of course, but maintenance costs remain to be seen.
The article doesn't actually say 50k over 10 quarters. It projects a 60% annual increase each year until 2023 (or 17 quarters). So this is a much higher number that 500k.
There are 1 billion cars on the road. 80m are sold annually. So 500k is literally a drop in the bucket.. you can't get a 2% decrease in oil by selling 500k in 17 quarters, 10 quarters.. or even 4 quarters.
To get to 2% of cars, you would need to sell about 500k every quarter.
"Cumulative passenger EV sales are set to hit 4 million this week. This includes battery electric passenger vehicles and plug-in hybrid passenger vehicles. If we include e-buses, the 4 million milestone was reached at the beginning of July. The time needed to reach each consecutive million EVs sold has shrunk from 17 months for the second million to 6 months for the fourth million. The next million EVs will take just over 6 months. We expect the five-millionth EV to be sold in March 2019."
I won't quote the entire article here, but it's worth a few minutes of time. The EV sales rate is climbing rapidly; not exponentially, but much faster than linearly.
That's great... but the thread I'm replying to starts by claiming Tesla can make a 2% impact by selling 50k cars for 10 quarters (absolutely false). And the target is not 500k cars over 10 quarters.. it must be an order of magnitude higher than that to make the claimed impact.
Even the article doesn't project the industry (not just Tesla) will reach these numbers in 10 quarters. Close to double that.
>In case anyone's looking for context on this, daily demand for oil is currently around 99-million-barrels a day, so this would be a 2% drop
Keep in mind too though that direct percentages can have non-linear effects. Oil is very fungible, but the inputs have a wide range of extraction costs and levels of pollution/technical risk/geopolitics involved. A 2 million barrel a day reduction isn't going to shave off every input source equally, and oil from sands or ultra deep sea or whatever all have different kinds of effects. If it kills the worst first that could have a bigger benefit then a straight 2% would suggest.
Furthermore, there is a lot of oil infrastructure that is fantastically capitally expensive, most particularly refineries, that will not be equally effected. I think maximum plant capacity tends to be around 800k-900k barrels a day and many are smaller, and running subcapicity isn't ideal. Not all types of oil or products refineries produce are equal either, increasing electric cars would presumably primarily affect refined products, consider for example this piece[0] on refining capacity, and then consider what a significant bigger reduction could mean.
Finally at some point we should start to see more tipping points for economies of scale, the spread of enhanced charging networks, continuing spread of solar, and just changing public consciousness and people become more familiar with it. Public interest is racing way, way ahead of what the energy industry wants. So even 2% worldwide in that short a time would be a real deal and could also just be the shallow end of an S-curve. Next 5 years will be very interesting!
Natural gas, wind, and solar are rapidly pushing out coal and nuclear (except where nuclear is receiving a zero carbon subsidy). Oil is not used for electrical generation in mainland USA. 30% of electricity in California already comes from renewables.
Oil is not typically a major resource, but in cold winters in gas pipeline-constrained areas, i.e., New York and New England, there is quite a bit of oil generation. Even in high load summer days when gas is available but the load is much higher than the winter you'll see a bunch of oil units turn on.
Oil-fired and dual-fuel units in those RTOs (NYISO and ISO-NE) also make up a pretty large amount of the total installed capacity.
As you can see, natural gas has half the CO2 impact per million btus as coal. It's a great bridge until wind, solar, and utility scale batteries take over (natural gas ramps quickly, coal does not, and is much cleaner).
I think it's probably closer to 1 million barrels/day if you factor in all the emissions and pollutants associated with mining the nickel/lithium for the batteries.
Even if your EV is charged using a dirty power source, it’s still a net benefit to the environment. ICE vehicles are hideously inefficient compared to power plants, which have much better ratios of produced energy to consumed fuel.
Those dirty power plants can also be replaced by clean power plants, instantly making all the EVs they’re charging dramatically cleaner. A dirty ICE vehicle is always going to be a dirty ICE vehicle, no matter what.
Good points!
>ICE vehicles are hideously inefficient compared to power plants.
Any source for that? I was wondering about power transmission losses as well.
> I think it's probably closer to 1 million barrels/day if you factor in all the emissions and pollutants associated with mining the nickel/lithium for the batteries.
This is the same type of argument erroneously used against nuclear -- factoring in costs in one place but not the other. As though internal combustion engines, transmissions, radiators, exhaust systems with rare metal catalysts, etc. are not made of raw materials that have to be mined and processed.
The curb weight of a Model 3 is on the same order as a Ford Taurus or BMW 3 series.
As opposed to, say, aluminum, which consumes so much electricity to produce that it amounts to ~3% of the world electrical generating capacity and producers have resorted to building their own power plants at the site of the smelting operation.
There is also the question of how much longer lithium mining will have to continue at this pace, since in a few years there will obviously be a dense source of lithium for new batteries in the form of all the old batteries that can be recycled.
That article extrapolates growth.. purely a projection based on Tesla not just producing 50k cars a quarter, but ramping up production even higher along with additional manufacturers.
2nd, where did you get 10 quarters from? The earliest, most optimistic projection in that article is 2023 -- That's 17 quarters. Or 2025 - 25 quarters. Or perhaps it won't reach it until much later.
> Tesla had quite the ambitious Model 3 production goal for this quarter
They claimed to be able to consistently make 5000/week at the beginning of the quarter and that they'd be at 6000/week in August.
50000/quarter is <4200/week. That doesn't seem like "quite the ambitious" goal. If they were actually consistently making 5000/week at the beginning of the quarter, they could've taken 2 weeks off, just easily continue at the same pace that they were already doing and still hit that goal.
It's not like every week is the same. On a typical week they could make 5000, but on some weeks (say Labor Day), the production line has planned shutdowns.
Can they sell them at a profit, or have they saturated the market now?
I heard they actually have enough inventory that they were doing same day deliveries and offering end-of-quarter incentives. That's great for customers, but not so much for a company that is not profitable.
Gross margins for model S and X are 25%+. The model 3 is supposedly profitable, at the scale that they have now achieved.
Tesla's big spend is on R&D on new product lines, and ramping up production. In other words: their core business has long been cash flow positive. It's the growth that is requiring all the cash and creating short term losses.
Anecdotal, but a friend's model 3 was originally scheduled for delivery today and got a text last night letting them know it would be delayed about a week, so it's not clear if they're starting to fluff Q4 numbers or if there was an operational or logistics issue of some sort.
> We continued to achieve 5,000 Model 3s per week, or 7,000 combined S, X and 3, multiple weeks in July, showing that, so we're able to do this on a sustained basis. And we expect to, in the absence of a force majeure or some very unexpected event, be able to achieve an average of 5,000 Model 3s or above for Q3 and 2,000 Model S, Xs or above per week for Q3 as well. So essentially, 7,000 cars a week plus on average for Q3.
An average of 5000/week would be 13-weeks * 5000 == 65000. If Tesla makes only 55,000 M3 cars, then that's a miss by 10,000.
Bloomberg's model is not whatsoever accurate on a week-to-week basis. They overestimated production by quite a bit earlier this month [1], revised the model downward by about 6000 total units, and now have to drastically lower their estimated production rates in order to not still overestimate totals.
Well, if the closures were planned they wouldn't be part of the "force majeure or some very unexpected event",so the 65,000 intended (now missed) target still holds.
Thanks! Seems legitimate. So that's good that they're hitting the goal!
I've still got concerns about their March 2019 bond however. I'm not sure if the M3 is reaching profitability in time to save up the $1 Billion needed to pay off the loan. But if it is profitable, then they might be able to secure good terms on a new bond offering.
The same pdf says the model 3 gross margin turned positive in Q2 (which I take to mean the model 3 is profitable on a per-unit basis, but not if you're factoring in R&D costs)
Because Tesla doesn't have any dealerships, they need to spend a lot of money on sales staff.
SG&A (Sales, General, and Administrative) costs are not part of Gross Margin, but are necessary for Tesla to sell any car due to their unique structure. Redo the calculations, and take into account SG&A this time... you'll see that they're quite negative.
So for Tesla, you've got Gross Margins (car sales price - car construction price), AND SG&A (cost of sales staff), Capital Expenditures (aka: buying equipment / factory space), AND R&D costs to all take into account.
Capital Expenditures have to be large because its expensive for rampup. R&D can theoretically be cut (It'd suck to lose the Truck, Semi, or Roadster projects. But they're not strictly necessary for survival). So I think its reasonable to discount both CapEx and R&D costs.
But as long as Tesla plans on this "no dealerships" strategy, they'll necessarily need a large SG&A expenditure.
So that's the number I'm looking at to judge "profitability". Car sales (aka revenues) - Car construction prices - SG&A.
Strictly speaking, operating profits are "Revenue - Cost of Goods Sold - SG&A - CapEx". So I'm personally slightly more lenient than the technical definition of "operating profits", but stricter than the term "gross profit margin" (which is just Revenue - COGS).
It seems they are missing other goals, because on August 1 they also said that
> Having achieved our 5,000 per week milestone, we will now continue to increase that further, with our aim being to produce 6,000 Model 3 vehicles per week by late August.
but according to Electrek
> For the first time in months, Tesla was able to produce about 5,000 Model 3 vehicles over seven days.
Nothing Tesla makes is a luxury car. And to be honest, it's a stretch, even with the Model S, to call them premium cars (like Audi, BMW, Mercedes, etc). And the Model 3 is an economy car. They just happen to be pretty expensive due to the technology.
If anything, Tesla shouldn't have too much trouble beating the Fords, GMs, and Toyotas of the world in production -- they're just putting together batteries and electric motors, which is a good bit simpler than engineering an entire ICE drivetrain and getting it out the door successfully.
The S and X are clearly in the luxury segment. Some people pay a very high premium for the pleasure to drive a quick electric luxury sedan. Which is completely unnecessary for their needs.
All the owners I know are clearly in the luxury segment (coming from luxury ICEs). What you find desirable isn't everyone's pleasure.
Maybe Tesla is just reinventing/killing the luxury segment, but that's another debate.
Ha, just because Wikipedia says so doesn't make it true. People have been trying to call BMWs and such 'luxury cars' for a long time. BMW themselves wouldn't say that. They're premium cars. Luxury cars are things like Bentleys.
What you're noticing is that everyone who can't afford a Bentley or Rolls-Royce would prefer to call their Audi a luxury car ;-).
The (Honda / Acura) or (Volkswagen / Audi) splits covers normal vs luxury brands by the same company. So a new luxury car segment starts around 35k even if you can pay more than that for a Honda Accord you still go to the Honda dealerships etc.
As a point of comparison, the last US car company to be founded was Ford, in 1903. They all literally have a > 100 year head start in factories and whatnot.
For ICE vehicles perhaps, not for EVs, or we'd see more than a token manufacturing capacity from them.
How many times did they manufacture 200k Volts or i3 EVs? Where is their serious battery production? Anything even 1/2 as big as the current gigafactory (which is about 30% finished and is still the aggregate battery capacity of almost every battery factory in the world in 2016).
Tesla's manufacturing woes are not with assembly of the EV components... it's with the build quality, speed and precision of assembling everything else, plus worker safety and required on-clock hours. This has been discussed here many times.
It reminds me of Chipotle famously scoffing at McDonald's attempt to teach supply chain management and more... and then Chipotle routinely having shortages of food items, quality and consistency issues, or suffering from nation-wide food-safety outbreaks. Turns out they could have leaned a thing or two...
That's fair, but I'm still a bit skeptical as most other manufacturers outsource the overwhelming majority of things where Tesla does things in-house. I mean they had to create their own Seat for the Model X as they wanted them to take an amount of force no "off the shelf" seat could. As a result, the traditional "scale up by buying more" model simply doesn't work quite as well. That said, Tesla could learn TONS from the rest of the industry, but that is why guys like Deepak Ahuja are executives there, their experience.
Yes, but you must acknowledge having a seat manufacturing company design and manufacture the seats probably would have resulted in a better, cheaper seat that was available sooner and with less trouble... after all, it's the only thing the seat manufacturer does as a business.
(I also don't believe the forces were so great that no seat could be bought or made by another company... some of the Tesla models have good performance... but they aren't alone in that arena)
The seat is a flagship example of NIH Syndrome - the same syndrome that has led to bloated costs, reduced profitability and poor quality and craftsmanship of Tesla vehicles. Tesla is figuring out how to do things for the first time - solving problems that have already been solved, and solved well by others. Looking towards the heavy-weights in the field and learning a few things could go a long way...
Also, they've had a lot of executive turnover... we've all heard the stories about what it's like to work for Mr. Musk...
Gotta say, as a Model 3 owner, I don't see any build quality or poor craftsmanship in the vehicle and I took a very long time doing final inspection at the service center before taking delivery. I'm not saying it has the same build quality as say a high end Mercedes or BMW (the model 3 isn't in that category of vehicle), but it is the nicest car I've ever driven as a daily driver. He is trying to do something differently, and he very well might do it slower as a result, but vertical integration will definitely lead to lower costs in the long run as there is simply less of the middle tier. When it comes to the guts, there is nothing but quality, and tesla easily stands alone in that regard: https://cleantechnica.com/2018/02/19/tesla-model-3-stuns-ger...
TL;DNR: People have been hating on Elon since he said that banking could be online (when he founded x.com that became most of what is now paypal), and when he said he would found a rocket company, and when he said his rockets would be reusable by landing on boats, etc. He'll get it eventually, or die trying.
Thank you for correcting me. My original comment was incorrect, but the point still stands.
Dodge: 1900
Ford: 1903
GM - 1908
Chevrolet - Formally "Chevrolet Division of General Motors Company" is a division of GM founded in 1911
Jeep - not a car company but a division of FCA founded in 1943
Chrysler - "Fiat Chrysler America" aka FCA, was a division of Fiat founded in 1925
The last US car company to be founded was GM, in 1908, all of the others are simply divisions of existing entrenched players internationally. Tesla is the first to do this from scratch in the US in > 100 years. They are definitely the first to try it with EVs.
Ford were making a Liberator bomber every sixty three minutes during WW2, they built the factory and had the product rolling off the production line a year after the government requested it.
A huge amount of WW2 inventory rolled off the Ford production line with Ford and not the government finding the capital and the land for the factory. The war in Europe would have been very different without Ford supplied planes and other materiel.
Compared to other war time suppliers Ford 'aced it'. Yet despite the amazing things the original Henry Ford and Edsel did you don't get the impression that today's Ford has that same dynamism. The more out there ideas Ford had went with him. The company had shareholders in the stock market after Ford died and from then on the brakes were on as far as speculative, massively vertically integrated investments.
Ford may have a 100 year head start but it is 75 or so years since their 'Elon grade' founder left them.
Oh I was referring to manufacturing capacity, tooling, logistics. You don't need a Henry Ford or an Elon Musk to ace manufacturing, you need experience. Something Tesla has precious little of overall. That was the crux of my point.
They have none of that when it comes EVs. The bigger problem is they don't have a Henry Ford anymore to build a new set of them.
An even bigger problem is to toss out all that existing edge with ICEs to start afresh with EVs.
The problem at the most basic level is MBAs have to compete with current era Henry Ford(Elon Musk). Most of them will quit when faced with even 1/100th the pressure Musk is in now.
Well, Tesla isn't a big car company. Its a growing car company.
But that's what makes these misses so important. Elon Musk originally promised exponential growth with 20,000 cars a month by Dec 2017. But that's a miss. He pushed it to 5000/week by Q3 2018, and now it seems like that's a miss as well.
So Tesla, as a growing company, is nearly a year late on its rampup plans. As such, it may not have enough profits to pay down its first major $1-billionish loan due March 2019.
---------
That's what people need to be watching: how does Tesla plan to pay off $1 Billion loan (its also a convertible bond, so if the Stock Market raises the price of Tesla to $360, they can give stock instead of paying off the loan.)
Let's admit it. You would never be happy regardless of what Tesla does. Goalposts will always move. Tesla sold only 100 cars in 2011. It is nothing short of a miracle that they are on track to produce and sell >200k cars in 7 years time. A miss here and there are irrelevant. As for capital raise. Who cares, there is unlimited capital in this world courtesy of Middle East sovereign funds. There is a story in HN front page about a Chinese startup without any revenue raising $1.5bn. It is time for Tesla skeptics to admit that they were wrong and recognize the sheer audacity of Tesla's achievements. It is time to admit defeat.
In short, I'm not impressed by gross profits (Revenue - COGS), but I agree with the Tesla Bulls that operating-profits (Revenue - COGS - SG&A - CapEx - R&D) is too strict.
My definition of Tesla sustainability is (Revenue - COGS - SG&A). EDIT: Seems like this value is called "Operating Income".
That is explicitly what would please me. SG&A (Sales, General, and Administrative) costs MUST be accounted for because Tesla decided to avoid dealerships. So all sales staff employed by Tesla need to be accounted, if you are planning to build a sustainable company at a sustainable price.
> It is time for Tesla skeptics to admit that they were wrong and recognize the sheer audacity of Tesla's achievements. It is time to admit defeat.
As soon as Tesla reaches positive "Operating Income" (Revenue - COGS - SG&A) for more than one quarter, I'll gladly admit that I was wrong. Sound fair?
"The automaker had been guiding a production of 50,000 to 55,000 Model 3 vehicles for the third quarter.
According to a reliable source familiar with Tesla’s production, the automaker had a strong week of production and managed to bring the total number Model 3 produced to over 51,000 vehicles."
And now they need to deliver the cars. I have two colleagues who are waiting for their cars. Apparently the deliver process (which Elon noted on Twitter) is pretty hectic right now.
I've heard the horror stories, but delivery for me was amazingly smooth. I signed a few pages of papers which were already prepared, and got a 10 minute tutorial on features, and drove out of there less than a half hour after I arrived. Best car buying experience ever.
They have a 2 days no questions asked return policy, including paint. We had plenty of time to inspect ours and then do an even deeper inspection at home.
My Model X buying experience was great too. I just have a lot of friends who are less than happy. One of my referrals got a Model X that was supposed to be brand new and had over 100 miles on it. Talking to my colleague today who worked at Tesla and has been in the auto industry for a few decades, he said that a new car should have less than 8 miles on it.
I had a great experience, but I also bought my car a year ago.
No wonder the Tesla hating incumbents (ICE manufacturers, car dealerships in US/Canada, Big Oil Industry worldwide) are all out against Musk in every possible way.
The pace of their growth is pretty amazing. The year I bought mine, 2015, they made just over 50,000 cars. Now they’ve made that many on one fourth the time, of just one model! Add in their other models and this quarter’s numbers are close to the number they made in 2016.
They have not met their goals, but that’s only because their goals are crazy ambitious.
I have mine, having taken delivery at the end of August and it was ordered at the beginning of the same. Not a previous owner and did not reserve. Recently completed a 1600+ mile round trip with it.
As a car it is very competent, fun to drive, and well designed inside and out. As an EV, Tesla cars are in a league of their own. Build quality was very good, I do have three areas that are not as tight as I want but I will take it to the local service shop and let them tell me my options.
Are EVs ready for prime time? If your primary usage is local then yes. Even on our trip we needed three stops and the time charging plus to and from added over two hours each way. That can take a "tolerable" nine hour drive and push it into "well....". Plus the planning required to insure adequate range at your destination where you might be anchored to the nearest SC. (120v is desperation, 240/20a is minimum realistic and that is still but 12/15 miles ranged added per hour!)
While they will continue to add features over the life time of the car it does lack some simple quality of life attributes that I have had in cars more than a decade ago. From the mundane as to real bluetooth audio controls with playlist support and maximum audio startup to the required blind spot monitoring which apparently they will never put in the mirrors where it needs to be. Traffic aware cruise control works very well, auto steer at my current software level is good for 95% of the highway travel we had. Though cruise control's default speed is the posted limit and that can be damn annoying when that is lowered by weather or even construction - you cannot stop it - it will only assume your current speed if lower than what the maps say if there is a car in front of you or your going faster.
Still great news to hear, I like mine. Was a great step up from the Chevy Volt which sold me on EV driving. It isn't for everyone but give it ten years and it might be the default choice.
I’ve found that I naturally reached for the volume knob on older cars which didn’t have this very software-enabled feature.
It’s something that I didn’t notice nearly how much I used it until I enabled it and found myself grabbing the volume at startup and turning it down to 0.
I wonder how this will affect the upcoming earnings report. I think we’ll have to see how it ultimately is going to mesh with the ongoing SEC investigation into Musk.
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[ 4.1 ms ] story [ 194 ms ] threadIn case anyone's looking for context on this, daily demand for oil is currently around 99-million-barrels a day, so this would be a 2% drop: https://www.statista.com/statistics/271823/daily-global-crud...
Obviously just a start, but still this sounds great to me.
Tesla has demand levers available to stoke additional demand when supply is not constrained. They'll have sold almost half a million Model 3s with no active marketing effort (besides a Youtube promo video here and there) by the time the backlog has been worked through.
Crude (Brent and WTI) is trending higher [1], which is only going to help EV sales. EVs are already a slam dunk TCO-wise in most of the country except where fuel is still cheap in the Midwest/Appalachia [2].
[1] https://www.bloomberg.com/energy [2] https://www.gasbuddy.com/GasPriceMap?z=4
International orders (which are still in queue) aren't impacted by the Tesla vehicle credit phaseout. There's a reason they're going to push every car they can in the US first before that credit is gone.
https://news.ycombinator.com/item?id=17542864 (HN Thread)
Animats mentions labor costs top of thread, which have been falling in Fremont now that they've hitting their stride (rumor I've heard, not material info, can't provide a citation).
If you're interested, highly recommend being on the investor call next month for Q3 rundown.
The question is whether Tesla can sell Model 3s at the originally claimed $35k, which is highly questionable. Indeed, Munro himself sells, "I think $36,000 Model 3s will be rare as hen's teeth. I don't see how they could make money at $36,000."
https://cleantechnica.com/2017/12/11/batteries-keep-getting-...
Any one of these issues would eliminate huge market segments. Once the used market for the ~35k model 3 starts to pick up, the first problem will be reduced of course, but maintenance costs remain to be seen.
There are 1 billion cars on the road. 80m are sold annually. So 500k is literally a drop in the bucket.. you can't get a 2% decrease in oil by selling 500k in 17 quarters, 10 quarters.. or even 4 quarters.
To get to 2% of cars, you would need to sell about 500k every quarter.
I won't quote the entire article here, but it's worth a few minutes of time. The EV sales rate is climbing rapidly; not exponentially, but much faster than linearly.
https://about.bnef.com/blog/cumulative-global-ev-sales-hit-4...
Even the article doesn't project the industry (not just Tesla) will reach these numbers in 10 quarters. Close to double that.
Keep in mind too though that direct percentages can have non-linear effects. Oil is very fungible, but the inputs have a wide range of extraction costs and levels of pollution/technical risk/geopolitics involved. A 2 million barrel a day reduction isn't going to shave off every input source equally, and oil from sands or ultra deep sea or whatever all have different kinds of effects. If it kills the worst first that could have a bigger benefit then a straight 2% would suggest.
Furthermore, there is a lot of oil infrastructure that is fantastically capitally expensive, most particularly refineries, that will not be equally effected. I think maximum plant capacity tends to be around 800k-900k barrels a day and many are smaller, and running subcapicity isn't ideal. Not all types of oil or products refineries produce are equal either, increasing electric cars would presumably primarily affect refined products, consider for example this piece[0] on refining capacity, and then consider what a significant bigger reduction could mean.
Finally at some point we should start to see more tipping points for economies of scale, the spread of enhanced charging networks, continuing spread of solar, and just changing public consciousness and people become more familiar with it. Public interest is racing way, way ahead of what the energy industry wants. So even 2% worldwide in that short a time would be a real deal and could also just be the shallow end of an S-curve. Next 5 years will be very interesting!
0: https://www.bloomberg.com/news/articles/2018-03-06/an-oil-re...
https://www.eia.gov/tools/faqs/faq.php?id=427&t=3
https://www.eia.gov/outlooks/steo/report/electricity.php
Oil-fired and dual-fuel units in those RTOs (NYISO and ISO-NE) also make up a pretty large amount of the total installed capacity.
CO2 per energy produced per million Btu:
Coal (anthracite) 228.6 Coal (bituminous) 205.7 Coal (lignite) 215.4 Coal (subbituminous) 214.3
As you can see, natural gas has half the CO2 impact per million btus as coal. It's a great bridge until wind, solar, and utility scale batteries take over (natural gas ramps quickly, coal does not, and is much cleaner).
So please, stop spreading bullshit
You lost the context of the discussion and became angry and insulted me.
https://www.theguardian.com/sustainable-business/2017/aug/24...
Those dirty power plants can also be replaced by clean power plants, instantly making all the EVs they’re charging dramatically cleaner. A dirty ICE vehicle is always going to be a dirty ICE vehicle, no matter what.
Manufacturing a car produces 50% of the emissions it has during its lifetime. https://www.theguardian.com/environment/green-living-blog/20...
This is the same type of argument erroneously used against nuclear -- factoring in costs in one place but not the other. As though internal combustion engines, transmissions, radiators, exhaust systems with rare metal catalysts, etc. are not made of raw materials that have to be mined and processed.
The curb weight of a Model 3 is on the same order as a Ford Taurus or BMW 3 series.
There is also the question of how much longer lithium mining will have to continue at this pace, since in a few years there will obviously be a dense source of lithium for new batteries in the form of all the old batteries that can be recycled.
Please review https://news.ycombinator.com/newsguidelines.html and follow the rules when posting here.
2nd, where did you get 10 quarters from? The earliest, most optimistic projection in that article is 2023 -- That's 17 quarters. Or 2025 - 25 quarters. Or perhaps it won't reach it until much later.
They claimed to be able to consistently make 5000/week at the beginning of the quarter and that they'd be at 6000/week in August.
50000/quarter is <4200/week. That doesn't seem like "quite the ambitious" goal. If they were actually consistently making 5000/week at the beginning of the quarter, they could've taken 2 weeks off, just easily continue at the same pace that they were already doing and still hit that goal.
Here's the Q2 2018 earning call: https://seekingalpha.com/article/4193497-tesla-tsla-q2-2018-...
> We continued to achieve 5,000 Model 3s per week, or 7,000 combined S, X and 3, multiple weeks in July, showing that, so we're able to do this on a sustained basis. And we expect to, in the absence of a force majeure or some very unexpected event, be able to achieve an average of 5,000 Model 3s or above for Q3 and 2,000 Model S, Xs or above per week for Q3 as well. So essentially, 7,000 cars a week plus on average for Q3.
An average of 5000/week would be 13-weeks * 5000 == 65000. If Tesla makes only 55,000 M3 cars, then that's a miss by 10,000.
https://www.bloomberg.com/graphics/2018-tesla-tracker/
Not sure what’s going on.
[1] https://www.bloomberg.com/news/live-blog/2018-03-12/insights...
But I'm just telling you what Elon Musk said in the last earning call. I don't know where this 55,000 number comes from in the Electrek article.
I've still got concerns about their March 2019 bond however. I'm not sure if the M3 is reaching profitability in time to save up the $1 Billion needed to pay off the loan. But if it is profitable, then they might be able to secure good terms on a new bond offering.
SG&A (Sales, General, and Administrative) costs are not part of Gross Margin, but are necessary for Tesla to sell any car due to their unique structure. Redo the calculations, and take into account SG&A this time... you'll see that they're quite negative.
So for Tesla, you've got Gross Margins (car sales price - car construction price), AND SG&A (cost of sales staff), Capital Expenditures (aka: buying equipment / factory space), AND R&D costs to all take into account.
Capital Expenditures have to be large because its expensive for rampup. R&D can theoretically be cut (It'd suck to lose the Truck, Semi, or Roadster projects. But they're not strictly necessary for survival). So I think its reasonable to discount both CapEx and R&D costs.
But as long as Tesla plans on this "no dealerships" strategy, they'll necessarily need a large SG&A expenditure.
So that's the number I'm looking at to judge "profitability". Car sales (aka revenues) - Car construction prices - SG&A.
Strictly speaking, operating profits are "Revenue - Cost of Goods Sold - SG&A - CapEx". So I'm personally slightly more lenient than the technical definition of "operating profits", but stricter than the term "gross profit margin" (which is just Revenue - COGS).
> Having achieved our 5,000 per week milestone, we will now continue to increase that further, with our aim being to produce 6,000 Model 3 vehicles per week by late August.
but according to Electrek
> For the first time in months, Tesla was able to produce about 5,000 Model 3 vehicles over seven days.
"We expect to produce 50,000 to 55,000 Model 3 vehicles in Q3, which will..."
http://ir.tesla.com/static-files/7235e525-db16-470c-8dce-9ec...
If anything, Tesla shouldn't have too much trouble beating the Fords, GMs, and Toyotas of the world in production -- they're just putting together batteries and electric motors, which is a good bit simpler than engineering an entire ICE drivetrain and getting it out the door successfully.
https://en.wikipedia.org/wiki/Luxury_vehicle > Model S is listed there, is that a coincidence?
The S and X are clearly in the luxury segment. Some people pay a very high premium for the pleasure to drive a quick electric luxury sedan. Which is completely unnecessary for their needs.
All the owners I know are clearly in the luxury segment (coming from luxury ICEs). What you find desirable isn't everyone's pleasure.
Maybe Tesla is just reinventing/killing the luxury segment, but that's another debate.
What you're noticing is that everyone who can't afford a Bentley or Rolls-Royce would prefer to call their Audi a luxury car ;-).
Or this: https://youtu.be/yq9IvgfLFgk?t=360
The (Honda / Acura) or (Volkswagen / Audi) splits covers normal vs luxury brands by the same company. So a new luxury car segment starts around 35k even if you can pay more than that for a Honda Accord you still go to the Honda dealerships etc.
Edit: GM in 1908 is the actual correct answer.
Which really begs the question - why did Tesla scoff at outside help from the big car companies? They've figured things out already...
How many times did they manufacture 200k Volts or i3 EVs? Where is their serious battery production? Anything even 1/2 as big as the current gigafactory (which is about 30% finished and is still the aggregate battery capacity of almost every battery factory in the world in 2016).
It reminds me of Chipotle famously scoffing at McDonald's attempt to teach supply chain management and more... and then Chipotle routinely having shortages of food items, quality and consistency issues, or suffering from nation-wide food-safety outbreaks. Turns out they could have leaned a thing or two...
(I also don't believe the forces were so great that no seat could be bought or made by another company... some of the Tesla models have good performance... but they aren't alone in that arena)
The seat is a flagship example of NIH Syndrome - the same syndrome that has led to bloated costs, reduced profitability and poor quality and craftsmanship of Tesla vehicles. Tesla is figuring out how to do things for the first time - solving problems that have already been solved, and solved well by others. Looking towards the heavy-weights in the field and learning a few things could go a long way...
Also, they've had a lot of executive turnover... we've all heard the stories about what it's like to work for Mr. Musk...
Gotta say, as a Model 3 owner, I don't see any build quality or poor craftsmanship in the vehicle and I took a very long time doing final inspection at the service center before taking delivery. I'm not saying it has the same build quality as say a high end Mercedes or BMW (the model 3 isn't in that category of vehicle), but it is the nicest car I've ever driven as a daily driver. He is trying to do something differently, and he very well might do it slower as a result, but vertical integration will definitely lead to lower costs in the long run as there is simply less of the middle tier. When it comes to the guts, there is nothing but quality, and tesla easily stands alone in that regard: https://cleantechnica.com/2018/02/19/tesla-model-3-stuns-ger...
TL;DNR: People have been hating on Elon since he said that banking could be online (when he founded x.com that became most of what is now paypal), and when he said he would found a rocket company, and when he said his rockets would be reusable by landing on boats, etc. He'll get it eventually, or die trying.
GM, Chrysler, Jeep, and others were founded after Ford. Dodge didn't start making cars until 1914.
A huge amount of WW2 inventory rolled off the Ford production line with Ford and not the government finding the capital and the land for the factory. The war in Europe would have been very different without Ford supplied planes and other materiel.
Compared to other war time suppliers Ford 'aced it'. Yet despite the amazing things the original Henry Ford and Edsel did you don't get the impression that today's Ford has that same dynamism. The more out there ideas Ford had went with him. The company had shareholders in the stock market after Ford died and from then on the brakes were on as far as speculative, massively vertically integrated investments.
Ford may have a 100 year head start but it is 75 or so years since their 'Elon grade' founder left them.
An even bigger problem is to toss out all that existing edge with ICEs to start afresh with EVs.
The problem at the most basic level is MBAs have to compete with current era Henry Ford(Elon Musk). Most of them will quit when faced with even 1/100th the pressure Musk is in now.
That's more of a disadvantage when faced with paradigm changing trends.
Its always easy to do something new from scratch.
Throwing away decades worth assets, IP, patents, product lines to compete is more or less impossible. You have tear down the whole company for this.
But that's what makes these misses so important. Elon Musk originally promised exponential growth with 20,000 cars a month by Dec 2017. But that's a miss. He pushed it to 5000/week by Q3 2018, and now it seems like that's a miss as well.
So Tesla, as a growing company, is nearly a year late on its rampup plans. As such, it may not have enough profits to pay down its first major $1-billionish loan due March 2019.
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That's what people need to be watching: how does Tesla plan to pay off $1 Billion loan (its also a convertible bond, so if the Stock Market raises the price of Tesla to $360, they can give stock instead of paying off the loan.)
THAT's why it was important to get 5000/week by December 2017 as Elon Musk originally tweeted: https://twitter.com/elonmusk/status/881757617416056832
The runway has run-out. Elon Musk needs to raise capital to pay off the 2019 Billion $$ loan now.
In short, I'm not impressed by gross profits (Revenue - COGS), but I agree with the Tesla Bulls that operating-profits (Revenue - COGS - SG&A - CapEx - R&D) is too strict.
My definition of Tesla sustainability is (Revenue - COGS - SG&A). EDIT: Seems like this value is called "Operating Income".
That is explicitly what would please me. SG&A (Sales, General, and Administrative) costs MUST be accounted for because Tesla decided to avoid dealerships. So all sales staff employed by Tesla need to be accounted, if you are planning to build a sustainable company at a sustainable price.
> It is time for Tesla skeptics to admit that they were wrong and recognize the sheer audacity of Tesla's achievements. It is time to admit defeat.
As soon as Tesla reaches positive "Operating Income" (Revenue - COGS - SG&A) for more than one quarter, I'll gladly admit that I was wrong. Sound fair?
According to a reliable source familiar with Tesla’s production, the automaker had a strong week of production and managed to bring the total number Model 3 produced to over 51,000 vehicles."
With all the manufacturing defects we've been hearing about, I would think that purchasers should take their time inspecting the vehicle.
The car is nearly perfect!
I had a great experience, but I also bought my car a year ago.
They have not met their goals, but that’s only because their goals are crazy ambitious.
As a car it is very competent, fun to drive, and well designed inside and out. As an EV, Tesla cars are in a league of their own. Build quality was very good, I do have three areas that are not as tight as I want but I will take it to the local service shop and let them tell me my options.
Are EVs ready for prime time? If your primary usage is local then yes. Even on our trip we needed three stops and the time charging plus to and from added over two hours each way. That can take a "tolerable" nine hour drive and push it into "well....". Plus the planning required to insure adequate range at your destination where you might be anchored to the nearest SC. (120v is desperation, 240/20a is minimum realistic and that is still but 12/15 miles ranged added per hour!)
While they will continue to add features over the life time of the car it does lack some simple quality of life attributes that I have had in cars more than a decade ago. From the mundane as to real bluetooth audio controls with playlist support and maximum audio startup to the required blind spot monitoring which apparently they will never put in the mirrors where it needs to be. Traffic aware cruise control works very well, auto steer at my current software level is good for 95% of the highway travel we had. Though cruise control's default speed is the posted limit and that can be damn annoying when that is lowered by weather or even construction - you cannot stop it - it will only assume your current speed if lower than what the maps say if there is a car in front of you or your going faster.
Still great news to hear, I like mine. Was a great step up from the Chevy Volt which sold me on EV driving. It isn't for everyone but give it ten years and it might be the default choice.
An absolutely necessary feature. (no sarcasm)
It’s something that I didn’t notice nearly how much I used it until I enabled it and found myself grabbing the volume at startup and turning it down to 0.
Could you elaborate on this?
My BRZ's stereo doesn't have playlist support, just your typical next/prev track, pause, and volume.
And what is "maximum audio startup"?