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As an investor of Tesla who bought into Elon's vision I've been getting more and more nervous about how the company is actually run at this point. A modern car

As an investor of Tesla who bought into Elon's vision I've been getting more and more nervous about how the company is actually run at this point. A modern car company is as much of a production and supply chain company as it's a product and tech company. I get the feeling that due to Tesla being cutting edge in the tech department it led to all the supply chain/production problems being treated as if they are speed bumps on the way, when in reality they are fundamental core competitive areas for an automotive company. Toyota is not the world's premier automaker because they have cutting edge tech, they are what they are because they build unbelievably number of reliable cars at an unbelievable scale. The bleeding of cash after so many promises of "not going to raise money again" just shows that their vision is way ahead of their execution ability. Decisions like the terribly executed Falcon Wing Doors on a SUV that delayed production and increased cost and hurt reliability just further gave fuel to all the doubters. I also have a strong suspicion that Tesla has not been honest with their Auto Pilot 2 and full self driving tech's progress. The current AP2 is an unsafe joke and I have no idea how people are ok with paying $5-10k for a significant downgrade when compared to AP1 because of a non-binding promise that it "might" get upgraded before their lease term is out. Any other automakers would be laughed out of the room for suggesting this kind of sales tactics. I still believe in Tesla/Elon's end game vision, and I think what they accomplished is nothing short of brilliant, but I think it's a very risky investment at this point and the road ahead is bumpier than many like to admit. The upcoming Model 3 will be the acid test for Tesla. It will no doubt be a good car, but at this point people should focus less on what the car can do and on how the car will be rolled out, sold and supported afterwards. A wealthy Model S customer may be ok with having the car in the shop after a minor accident for 5 months due to lack of replacement parts, but for an average Joe paying $500/month leasing a Model 3 that would just be the birth of a new BMW customer.

amluto 10y ago
I test-drove an AP2 car. After a disastrous ride in which it tried to hit two parked cars and a trashcan and wanted to drive off the road entirely, the sales person said, with a straight face, that it was great for stop and go traffic on 101. I'm a bit amazed they can currently sell cars.
- xxbondsxx 10y ago
  That sounds nuts; it seems like a huge liability that they are putting AP2 in the hands of consumers when it can be more dangerous than just the average driver...
  - vkou 10y ago
    What liability? You're supposed to constantly be aware and in control of your vehicle when using AP2. (At which point, you may ask: What is the point of AP2..?)
    - scotu 10y ago
      collecting data at the customer's expense :) A classic playbook in our industry since RECaptcha came out
      - coldpie 10y ago
        What? RECaptcha provides a very valuable service to website maintainers and users alike.
        scotu 10y ago
        sure, I didn't intend to say that recaptcha doesn't provide a useful service, I was just saying that they pioneers, in our field, in "exploiting" (for lack of a better term in my vocabulary) a human work to solve a problem while training for free a neural network that is going to be used in a separate line of business. I think it's just pure genius
    - mtgx 10y ago
      It would be funny if in the future they say something like "So your new Tesla has Level 5 autonomy, but because the car still has a driving wheel, even if you turn on the Level 5 Autopilot, you're liable if an accident happens."
      - 10y ago
grizzles 10y ago
Although I applaud your skepticism, I think it's misplaced. My first job out of University was working for Daimler-Benz when they owned Chrysler. I was a front line eng supervisor at the plant level focusing on In System Damage, Federal Torque and a host of other quality issues that were plaguing the company at the time. I dealt directly with it so I can tell you, Supply Chain is not that big a deal to fix. They will sort out their problems there, they just imo need a few vets from a traditional car company. As an aside, my time there was a hugely formative experience for me. Given a $500K budget and armed with nothing more than a little sql, I was able to immediately start saving the company multi-millions of dollars annually. I was considered a big star among the fresh batch of talent they inhaled that year, but I left because I could see the writing on the wall about the industry. Given the bailout and all that, I am pretty happy with that decision.
- kilroy123 10y ago
  I'm very curious how you were able to save the company millions of dollars.
  - grizzles 10y ago
    It was an exercise in creative problem solving. I'd query the data to find out where on the line the most (costly x incidence) problems were occurring and then devise a solution. If a worker was scratching the paint every time he put his tool down the secure a fastener, we'd get a heavy rubber guard fabricated, change his man assignment and have him put down the guard before he did his little peice, or even better change the tool if that was possible. If you are curious, yes there were workers who would damage the vehicle every time and let it go to rework. Don't even get me started on labor. :)
    - dilemma 10y ago
      >Don't even get me started on labor. :) Wow.
      - softawre 10y ago
corbett3000 10y ago
You're concerned with a 23% YTD return on the stock and a 600% return over 5 years? The market has a way of signaling if a company is totally screwed up. Looks like it isn't.
- elastic_church 10y ago
  Millennials will buy anything. Can't short the retail bull. (Yet.)
- robszumski 10y ago
  > 23% YTD return While the 600% is impressive, the year to date performance matches the overall market. Gotta hit those Model 3 dates to maintain the confidence.
  - ojbrien 10y ago
    What overall market? MSCI ACWI Autos and Components was at 3.44% YTD at the end of Feburary while MSCI ACWI was at 5.37%. The S&P 500 is at about 7% YTD return. Tesla's YTD return more than matches the overall market https://www.msci.com/documents/10199/f87aad4f-6f38-4878-a149-878bde47068c https://www.msci.com/documents/10199/f87aad4f-6f38-4878-a149...
    - idiot_stick 10y ago
      >Tesla's YTD return more than matches the overall market What is so significant about YTD? You can arrange the data in any number of ways to tell a story: A Tesla investment since 2014 has lost money (and been diluted). Go back to 2013 and suddenly it's a goldmine. Tesla having been a "good purchase" depends on what you paid. But I have a feeling that more people are sitting on a cost basis >$250 than <$100, in which case a TSLA investment has been mediocre.
- Cookingboy 10y ago
  Well the market can be terribly wrong on many companies in the long run, both undervaluing great companies and overvaluing terrible companies. Tesla's vision is for the next 20 years, not the last 5. Historical performance is also not an indicator of future performance. Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day. If anything the fantastic return would encourage long term investors so far to partially cash out and diversify their risk a bit.
comboy 10y ago
Can you explain why do you consider AP2 to be a downgrade from AP1? I thought it's everything AP1 has + more.
- Cookingboy 10y ago
  Supposedly that's the case, but since they switched away from Mobile Eye they are still trying to reach feature parity with AP1 at this point. It was supposed to take 2 months, but viola, 6 months later they are still struggling and there are many YouTube videos out there showing how terrible and unsafe it is. It still lack many features of AP1 such as automatic lane changing and blind spot detection at this point. Lane keeping is also not as stable and safe as AP1 and many videos show that the car like to drift into oncoming traffic.
  - ehsankia 10y ago
    Self driving tech is (still) a really hard problem, unlike what people are lead to believe looking at the dozens of company jumping on the bandwagon and releasing cool looking videos. People look at that recent video of the Tesla car doing a full A to B drive and they're like, wow, that's awesome! Then, they ask themselves, hmm, I wonder why Google hasn't released anything after a decade of research. And realize too that google had a simple A to B video 8 years ago too... yet 8 years later it's still not ready.
    - TomMarius 10y ago
      Yeah, but no. This isn't about the autopilot not being like on the video, it's about the autopilot being worse than it used to be. The really hard problem already had a better solution.
  - ehsankia 10y ago
    Self driving tech is (still) a really hard problem, unlike what people are lead to believe looking at the dozens of company jumping on the bandwagon and releasing cool looking videos. People look at that recent video of the Tesla car doing a full A to B drive and they're like, wow, that's awesome! Then, they ask themselves, hmm, I wonder why Google hasn't released anything after a decade of research. And realize too that google had a simple A to B video 8 years ago too... yet 8 years later it's still not ready.
baq 10y ago
the one problem with your post is that you think it's still a car company.
- Cookingboy 10y ago
  Well judging by the percentage of their revenue from cars at this point they are undeniably a car company. Vision statements are predictive instead of descriptive. Apple can have a vision of building cars in the future but it doesn't change the fact that they are a consumer electronics company today. Vision is cheap, execution is where the money is at.
  - orb_yt 10y ago
    Please correct me if i'm wrong, but I think the comment was suggesting more than the fact that Tesla, in the literal sense, sells more than cars. I think it's also important to note the company itself supposedly operates much differently than a traditional car company, and in fact much like a software company.
    - Cookingboy 10y ago
      A company is defined by the type of goods/services it provides instead of how it operates. I can operate my bagel shop like the CIA but it won't be spying on the Trump Tower through microwaves anytime soon :)
  - wlesieutre 10y ago
    People aren't buying Apple stock because of what the company is today, they're buying it because of where they think Apple will be in the future relative to what they are now. In Apple's case, that future version might still be a consumer electronics company. Just one with (hopefully) innovative new products and a higher share price than you're buying in for. Given the Tesla's SolarCity merge, the associated solar shingles project, the battery gigafactory, the PowerWall, and their grid energy storage projects, I wouldn't invest in Tesla today thinking "Tesla is a car company, and 5 years from now they'll be a bigger car company with new car models!" in the same way that I'd approach Apple.
revelation 10y ago
AP2 is truly dangerous. It's incomprehensible they would release something like this: https://www.youtube.com/watch?v=UZ1XLqc5IUg https://www.youtube.com/watch?v=UZ1XLqc5IUg I guess it's a good reality check for autonomous cars when you take away the LIDAR toys. One rather important point is that the car often doesn't realize it is screwing up, because quelle surprise, realizing you don't have a correctly detected lane can be just as difficult as detecting one in the first place.
- owenversteeg 10y ago
  Wow. That guy is going nineteen miles per hour on a simple road in daylight and the car literally crossed to the wrong side of the road in nine seconds! That's an absolute disaster.
- FireBeyond 10y ago
  Wow. That is a trainwreck. Or car wreck. How much value are they expecting to get from riding the "Beta" train? There's a huge difference between their self-congratulatory demos of features and the reality here. Oh, and you have to pay for this.
- ClassyJacket 10y ago
  I can't afford a Tesla anyway, but even if I could I'd be wary about buying one on the promise that the Hardware 2 cars "will" get full self driving. I can easily see a new version with Lidar coming along and all those old cars not getting that full self-driving update after all, even in places where the law allows it.
- wwalser 10y ago
  I was under the impression that AP* was for keeping the car in a lane on the interstate. Is it suppose to be capable of navigating rural roads like the video shows?
  - revelation 10y ago
    I'm not fully up to date with that, but I think it was meant to be enabled for more residential streets recently? And the AP2 is also still speed limited making it somewhat useless on interstates? In any case, I'm pretty sure there shouldn't be a button that instantly makes your car swerve into the ongoing lane..
greglindahl 10y ago
Musk did not say "not going to raise money again". That said, if you don't like how he has communicated about past raises, you should definitely sell -- there's no sign that this style of management is going to change.
cel1ne 10y ago
Curious: What do you think is Tesla/Musk's "end game vision"?
- valine 10y ago
  To make humanity an interplanetary species. http://www.theverge.com/2016/9/27/13079472/elon-musk-mars-space-x-tesla-funding-dream http://www.theverge.com/2016/9/27/13079472/elon-musk-mars-sp...
  - M_Grey 10y ago
    You can't really believe that; certainly Musk doesn't. Edit: Just for one challenge with no current solution: http://www.nature.com/articles/srep34774 http://www.nature.com/articles/srep34774 There are others.
    - frisco 10y ago
      Why not? And what makes you think Elon doesn't?
      - M_Grey 10y ago
        He's clearly a very smart man, which means that he understands the challenges which are known (cognitive decline from radiation, no material suitable for shielding, incomplete understanding of human microbiome, etc...) and the impossibility of his stated goal to establish a human colony on Mars anytime soon. He's positioned for LEO cargo, and in the longer-term (I suspect) for potentially surveying and mining asteroids. There is almost literally money out there, for the first people to stake a claim. It's daring, it's risky, but it's possible to do with a combination of human explorers and robotics. It's not sexy however, and it calls to mind all of the dystopian sci-fi of the last few decades. "We're going to Mars folks!" is just... easier to swallow than... mining space rocks. People like you and me want to believe in a secure future for the species, which requires getting a self-sustaining group of humans off this planet. It's a powerful dream that could really move some very bright and dedicated people, who might not be similarly moved by the dream of simply gathering more resources for Earth. Elon Musk, I think, has perfectly blended PR and a real business plan, but the PR and plan are not one and the same. More credit to him, but it's a bit discouraging to see so many people flip the switch on their skepticism out of pure "wanting it to be true".
someone79879 10y ago
I have two tracks of thought here: 1. You are an investor who is genuinely upset 2. You are trying to short the stock by spreading FUD I can take your word for it that you're in the first bucket but I have doubt.
M_Grey 10y ago
The upcoming Model 3 will be the acid test for Tesla. It will no doubt be a good car, but at this point people should focus less on what the car can do and on how the car will be rolled out, sold and supported afterwards. A wealthy Model S customer may be ok with having the car in the shop after a minor accident for 5 months due to lack of replacement parts, but for an average Joe paying $500/month leasing a Model 3 that would just be the birth of a new BMW customer. Yeah, that's pretty much it. The question then is do you think they can fix the issues that lead to those negative experiences with a little bit of time, and a billion more dollars?
- Cookingboy 10y ago
  I'm really not sure, and I have to admit that the reason I'm concerned for my investment is that part of me don't think they can.
  - M_Grey 10y ago
    I don't know the answer either. Obviously whoever can figure it out though, stands to make a killing either way. If you invested this money with the knowledge that it was a risk, that you could lose it all, then you should probably stick with that; nothing has really changed. If this was something you felt was a sure bet, or if circumstances have changed then maybe it's worth re-thinking your position.
    - Cookingboy 10y ago
      "If you invested this money with the knowledge that it was a risk, that you could lose it all, then you should probably stick with that" Yes to all of those. Rationally I can no longer justify this investment to be honest, but I like the Koolaid they are selling too much :/
      - M_Grey 10y ago
        There you go then, it sounds to me like sticking with your original choice is the wise move. I for one wish you the best of luck, and wouldn't be surprised if you ended up fairly happy with your decision in the end.
kilroy123 10y ago
I absolutely love Musk and the idea of Telsa. Hell, I would love to get me a Model S, if I could. But I completely agree with you. I think the Model 3 will end up costing way more that $35k, to turn a profit. The timeline will slip and it won't come out until 2018. The whole solar city deal was premature. I think Musk knows this isn't going to work, at least for a while. I think he knows Telsa is going to have a more expensive Model 3 and they're going to bleed cash. Telsa will lose money on every sale of the Model 3. I bet money, he plans to ride the stock for the next 5 years until they can get things turned around.
- Animats 10y ago
  I think the Model 3 will end up costing way more that $35k, to turn a profit. That's Tesla's biggest risk - they can't deliver profitably at the price point they pre-sold at. The Model 3 is an ambitious car to sell for $35K. Tesla is not a "lean manufacturing" operation; their head counts at the auto plant per car sold are currently quite high. They'll probably get that figured out eventually, but meanwhile, they need the high margins of luxury cars. The timeline will slip and it won't come out until 2018. Probably. They're claiming "late 2017" now, and new orders won't be processed until 2018. The whole Solar City deal was premature. The Solar City operation has political problems. It assumes Government subsidies for solar, which may be going away for political reasons.
  - whyenot 10y ago
    > It assumes Government subsidies for solar, which may be going away for political reasons. Isn't their car operation also vulnerable? Tax credits may be less easy to get rid of, from a political perspective, but I think Trump would be far more interested in promoting cars that run on coal than cars that run on electricity.
    - simonrobb 10y ago
      If the solar plan falls apart, electric cars would prop up the coal industry better than gasoline cars. The electric cars you charge from your wall outlet will be powered by coal, no?
hkmurakami 10y ago
Toyota at its core is obsessive about manufacturing and relentless about distribution. The tech is mostly outsourced save some holdovers like engine technology. But even the engine is increasingly being innovated on by others. (Though it's dealership tiers are pretty confusing in Japan - I think there are 2 or 3 Toyota dealer tiers separate from Lexus) Similarly, the heart of Tesla's tech is its batteries (I imagine they but the motors from someone). After that, outsource everything else and focus on manufacturing and distribution.
- greglindahl 10y ago
  Tesla's motors are simple and made in-house, currently in Fremont but soon in Reno. It took them a while to build a motor that had a long lifetime.
bane 10y ago
I think you capture my nervousness as well -- but I'm still bullish on the company. I think what we're seeing is a by-product of other car companies finally starting to take electric cars seriously, and Musk's attempts to grab as much of that nascent market as possible before it gets too crowded. I think the choice Tesla has right now is to fix up their supply chain and reliability issues or expand. Musk has chosen "expand". Incidentally that choice also brings focus to the supply chain -- just in a different way. My concern is that long-term, delivering several years of great performing, flashy but not-luxurious, and very unreliable cars, is going to hurt the company in the long run. Honda and Toyota both either have or have announced vehicles competitive to the Model 3 on price, range and features. Ford already sells a couple electric vehicles at competitive prices. BMW has entered, and so on. Amazon made the same bet years ago, focus or expand, and after years of no profitability the gamble has played off. However, Amazon also provided good service and product during those years. So far Tesla owners love their cars, even if they spend as much time in the shop as an exotic Italian car. The other electrics don't have the brand cachet like Tesla, but they can fast follow until they simply overwhelm the much smaller company. But, while even the iPhone is a minority smart phone these days, Apple makes most of the profits. Tesla might be able to do the same. I don't see Tesla being the #1 electric vehicle maker in 10 years, but I do see them being a major player in the industry. Musk is also trying to diversify the company in various ways. It will be interesting to see how this pays off.
4SomeReason 10y ago
The point at which Tesla will become not a pie-in-the-sky wet dream is when the price point matches a run-of-the-mill Honda. Right now, having a Tesla is like having a Maserati. I know zero people who have one, my wife (a structural integrationist) _works_ on people who have them, so I am like two social tiers away from thinking of affording one, which, for me, is like dreaming of that Kawasaki Ninja I had postered on my wall as a ten year old boy. He, and his team, need to dramatically scale down costs somehow. I read something cool today about Chinese charging stations that swap batteies instead of sitting and waiting to recharge. I wonder if something like that with an attendant would work to extend the battery "life" ad infinitum for grids in other nations. Seems like his head is on straight though. He took profits and looked up. He said, yeah, I could drive down prices on my car by saturating more, but I'll build rockets that don't waste as much on reentry costs instead. That's smart innovation, that's passing the baton in the 400m instead of sprinting 10m and saying "I win!". I do think there is stigma (even in my own mind, and I really am a fan of Elon) surrounding borrowing money over and over, but the reality is: almost EVERYONE does this. If you aren't Dow, or Ford, or some huge ass fucking company that has a war chest the size of Dubai, you aren't going to weather the stormy market conditions we are facing as a result of globalization (see Brexit et al for moreon that topic of discussion). Businesses need floating because they don't exist in a vacuum, they exist because they aren't welcomed by their competitors, in fact, they are actively "sabotaged" by those that stand to lose market share, and that, my friends, is a HUGE problems with mercantilism. Unless we decide to get along, it's not going to get better, and corporate espionage has not lessened in my lifetime, not by a moonshot. So, yeah, play nice and he and those like him will stop having to borrow money, and maybe he will throw us a bone and make a car that doesn't cost as much as my entire post-secondary education (including grad school). Peace y'all.
- M_Grey 10y ago
  It would probably be easier to have charging stations with people hot-swapping batteries, than charging station with extremely fast charge times. It would be a task that could be automated right out of the gate too.
  - greenstonekid 10y ago
kmonsen 10y ago
I have a model 3 reservation, but I don't think it can be successful on this timeline. I mean it seems like the design is still not 100% set and we are just now seeing test cars. For other car makers this would mean mass production is at least a year away.
nyxtom 10y ago
It's important to note that the rollout of the Model 3, along with other Tesla vehicles, is done in spite of many laws that are explicitly aimed at preventing the sale of Tesla vehicles. Many states completely hamstring the ability to sell EV cars directly and some states are downright hostile towards Tesla. Additionally, one has to consider the current administration's position on fuel economy standards and any company such as Tesla getting the leg up with subsidies. Which, according to Elon, would be completely fine to get rid of so long as we are getting rid of all subsidies (including the massive ones for Oil companies). In general, this is and always has been an uphill battle and rolling these products out to market is met with great enthusiasm but at the same time hostility from many states who see them as a threat.
- matthewowen 10y ago
  Is there any Tesla vehicle that doesn't have a waiting list? I'm not disputing that some of the rules around auto sales are problematic, but it seems to me like the limiter on Tesla's ability to sell cars is its ability to produce them.
  - nyxtom 10y ago
    Hmm that is true. It's probably been said before, but the Model X definitely made things a lot more difficult to get to a rollout of the model 3. "I'm not sure anyone should have made this car," he said at a press conference just hours before the first Model Xs were delivered to VIP customers." ""We probably should have just [modified the Model S]," he added. "There are so many more features and difficult to build parts on [the Model X] than it is necessary for us to sell the cars.""
    - semi-extrinsic 10y ago
      > "We probably should have just [modified the Model S]" This is one thing I really don't get about Tesla. Why haven't they made an estate-ish version of the Model S? I'm thinking along the lines of the Mercedes CLS Shooting Brake: http://images.car.bauercdn.com/upload/28771/images/1752x1168/cls01.jpg?mode=max&quality=90&scale=down http://images.car.bauercdn.com/upload/28771/images/1752x1168... It's a very nice looking car, and adds that little bit of luggage practicality that the Model S is missing. The aerodynamics aren't much worse than the coupe, so range shouldn't suffer very much.
rebootthesystem 10y ago
I read this book [1] back in the '90's. An amazing read about the world of auto manufacturing. Regarding Tesla, surely I am not the only one waiting for competition. I think the problem Tesla has is that when the giants awake they will outclass them at nearly every level. It's like thinking you are doing great in your open water swim until the triathletes leave you in their wake. Surely companies who have been honing their skills and optimizing their design, engineering, manufacturing, distribution and support over decades will have non-trivial advantages over Tesla. The way I see it, building an electric car is significantly simpler than one with an internal combustion engine. All you have to do to see this is take an accounting of the thousands of parts and many fluids you leave out. The design, manufacturing, supply chain, distribution and service costs of having another 1,000 to 2,000 parts in a car are monumental. Any company that knows how to deliver quality, reliable and reasonably priced internal combustion cars will have a laugh delivering electrics at scale. They know how to do this today. They are all waiting for the same thing: Cheaper, lighter, better energy storage. Recent developments might indicate this could be just a few years out. Tesla has a problem: It has to achieve scale before that moment in time. Today choices are few and Tesla might have an advantage with Model 3 (if it ships on time and has no problems). In some respects they are the only game in town (range). The minute that changes people are going to flock to other manufacturers. [1] https://goo.gl/Drhc1Z https://goo.gl/Drhc1Z
- unprepare 10y ago
  >They are all waiting for the same thing: Cheaper, lighter, better energy storage. >Tesla has a problem: It has to achieve scale before that moment in time. Do they though? With the gigafactory, they could very well be the company providing the batteries that the big manufacturers are waiting for.
  - rebootthesystem 10y ago
    This is total conjecture, of course, so take it for what it is. I need to go back a ways on this one. I have been flying model aircraft for decades. If you go back far enough it was impossible to even consider flying an electric powered airplane because alkaline batteries simply didn't have the energy density. Sometime later came NiCd batteries and they eventually hit that sweet spot where you could stick a few of them in a plane, put a motor in the nose and fly for a few minutes. I had gliders with 27 NiCd cell packs what weighed in at somewhere around six or eight pounds all by themselves. A few years went by (6 to 10, don't remember) and LiPo batteries surfaced. Now I could actually fly jets. And the glider with the super heavy 27 cell NiCd pack got a very light and small six cell LiPo pack, a far more efficient brushless motor and performance was out of this world. Today electric powered model aircraft are probably the majority of the product sold and they include high powered helicopters and even the "impossible" quadcopters. These transitions were mainly the result of energy storage technology, nothing else mattered until you could carry enough energy at a favorable weight ratio and in a favorable volume. The companies that brought us these transitions, very much in the spirit of "The Innovator's Dilemma" [1], were not the same companies that provided the older energy storage technologies. This is where I come full circle to Tesla and the Gigafactory. Tesla has done a great job with this and it has positioned itself to benefit from scale in manufacturing battery packs with the existing best-in-class energy storage technology. They will, in this regard, do well. Yet, this will become a significant liability if and when the next step change in energy storage technology comes about. Scale has it's benefits, but it can also kill you. Again, this is conjecture. Imagine a day within the next 3 to 5 years when someone demonstrates a technology with three times the capacity, in half the volume, with half the weight and none of the longevity problems. We recently saw just such an announcement, although it seems the technology suffers from a power-to-weight issue at the moment. Imagine someone else finally develops a supercapacitor system that makes current Lithium-based cells look as bad as they made NiCd cells look years ago. Whoever does that will trigger the inflection point and a massive migration away from internal combustion engines to electric powerplants. Just like it did with model airplanes. In the model airplane world, the pioneers of electric flight were absolutely skewered by the established (and some new) players in model airplane manufacturing. Most people today don't even know the names of the pioneers. Tesla could suffer this fate. The Gigafactory could actually become a huge liability. Imagine having such an operation at a time when nobody has any interest in the technology you can produce. I truly believe other manufacturers are waiting in the wings for this inflection point while they experiment and get ready. I have a gut feeling we are not too far from that moment in time when a significant enough technology shift occurs to make electric transportation viable for the masses.
nameisu 10y ago
when cafe regulations get cut tesla cant even sell carbon credits lol
njharman 10y ago
> A modern car company Tesla is a battery / energy company.

amluto 10y ago

I test-drove an AP2 car. After a disastrous ride in which it tried to hit two parked cars and a trashcan and wanted to drive off the road entirely, the sales person said, with a straight face, that it was great for stop and go traffic on 101. I'm a bit amazed they can currently sell cars.

xxbondsxx 10y ago
That sounds nuts; it seems like a huge liability that they are putting AP2 in the hands of consumers when it can be more dangerous than just the average driver...
- vkou 10y ago
  What liability? You're supposed to constantly be aware and in control of your vehicle when using AP2. (At which point, you may ask: What is the point of AP2..?)
  - scotu 10y ago
    collecting data at the customer's expense :) A classic playbook in our industry since RECaptcha came out
    - coldpie 10y ago
      What? RECaptcha provides a very valuable service to website maintainers and users alike.
      - scotu 10y ago
        sure, I didn't intend to say that recaptcha doesn't provide a useful service, I was just saying that they pioneers, in our field, in "exploiting" (for lack of a better term in my vocabulary) a human work to solve a problem while training for free a neural network that is going to be used in a separate line of business. I think it's just pure genius
  - mtgx 10y ago
    It would be funny if in the future they say something like "So your new Tesla has Level 5 autonomy, but because the car still has a driving wheel, even if you turn on the Level 5 Autopilot, you're liable if an accident happens."
    - 10y ago

grizzles 10y ago

Although I applaud your skepticism, I think it's misplaced. My first job out of University was working for Daimler-Benz when they owned Chrysler. I was a front line eng supervisor at the plant level focusing on In System Damage, Federal Torque and a host of other quality issues that were plaguing the company at the time. I dealt directly with it so I can tell you, Supply Chain is not that big a deal to fix. They will sort out their problems there, they just imo need a few vets from a traditional car company. As an aside, my time there was a hugely formative experience for me. Given a $500K budget and armed with nothing more than a little sql, I was able to immediately start saving the company multi-millions of dollars annually. I was considered a big star among the fresh batch of talent they inhaled that year, but I left because I could see the writing on the wall about the industry. Given the bailout and all that, I am pretty happy with that decision.

kilroy123 10y ago
I'm very curious how you were able to save the company millions of dollars.
- grizzles 10y ago
  It was an exercise in creative problem solving. I'd query the data to find out where on the line the most (costly x incidence) problems were occurring and then devise a solution. If a worker was scratching the paint every time he put his tool down the secure a fastener, we'd get a heavy rubber guard fabricated, change his man assignment and have him put down the guard before he did his little peice, or even better change the tool if that was possible. If you are curious, yes there were workers who would damage the vehicle every time and let it go to rework. Don't even get me started on labor. :)
  - dilemma 10y ago
    >Don't even get me started on labor. :) Wow.
    - softawre 10y ago

corbett3000 10y ago

You're concerned with a 23% YTD return on the stock and a 600% return over 5 years? The market has a way of signaling if a company is totally screwed up. Looks like it isn't.

elastic_church 10y ago
Millennials will buy anything. Can't short the retail bull. (Yet.)
robszumski 10y ago
> 23% YTD return While the 600% is impressive, the year to date performance matches the overall market. Gotta hit those Model 3 dates to maintain the confidence.
- ojbrien 10y ago
  What overall market? MSCI ACWI Autos and Components was at 3.44% YTD at the end of Feburary while MSCI ACWI was at 5.37%. The S&P 500 is at about 7% YTD return. Tesla's YTD return more than matches the overall market https://www.msci.com/documents/10199/f87aad4f-6f38-4878-a149-878bde47068c https://www.msci.com/documents/10199/f87aad4f-6f38-4878-a149...
  - idiot_stick 10y ago
    >Tesla's YTD return more than matches the overall market What is so significant about YTD? You can arrange the data in any number of ways to tell a story: A Tesla investment since 2014 has lost money (and been diluted). Go back to 2013 and suddenly it's a goldmine. Tesla having been a "good purchase" depends on what you paid. But I have a feeling that more people are sitting on a cost basis >$250 than <$100, in which case a TSLA investment has been mediocre.
Cookingboy 10y ago
Well the market can be terribly wrong on many companies in the long run, both undervaluing great companies and overvaluing terrible companies. Tesla's vision is for the next 20 years, not the last 5. Historical performance is also not an indicator of future performance. Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day. If anything the fantastic return would encourage long term investors so far to partially cash out and diversify their risk a bit.

comboy 10y ago

Can you explain why do you consider AP2 to be a downgrade from AP1? I thought it's everything AP1 has + more.

Cookingboy 10y ago
Supposedly that's the case, but since they switched away from Mobile Eye they are still trying to reach feature parity with AP1 at this point. It was supposed to take 2 months, but viola, 6 months later they are still struggling and there are many YouTube videos out there showing how terrible and unsafe it is. It still lack many features of AP1 such as automatic lane changing and blind spot detection at this point. Lane keeping is also not as stable and safe as AP1 and many videos show that the car like to drift into oncoming traffic.
- ehsankia 10y ago
  Self driving tech is (still) a really hard problem, unlike what people are lead to believe looking at the dozens of company jumping on the bandwagon and releasing cool looking videos. People look at that recent video of the Tesla car doing a full A to B drive and they're like, wow, that's awesome! Then, they ask themselves, hmm, I wonder why Google hasn't released anything after a decade of research. And realize too that google had a simple A to B video 8 years ago too... yet 8 years later it's still not ready.
  - TomMarius 10y ago
    Yeah, but no. This isn't about the autopilot not being like on the video, it's about the autopilot being worse than it used to be. The really hard problem already had a better solution.
- ehsankia 10y ago
  Self driving tech is (still) a really hard problem, unlike what people are lead to believe looking at the dozens of company jumping on the bandwagon and releasing cool looking videos. People look at that recent video of the Tesla car doing a full A to B drive and they're like, wow, that's awesome! Then, they ask themselves, hmm, I wonder why Google hasn't released anything after a decade of research. And realize too that google had a simple A to B video 8 years ago too... yet 8 years later it's still not ready.

baq 10y ago

the one problem with your post is that you think it's still a car company.

Cookingboy 10y ago
Well judging by the percentage of their revenue from cars at this point they are undeniably a car company. Vision statements are predictive instead of descriptive. Apple can have a vision of building cars in the future but it doesn't change the fact that they are a consumer electronics company today. Vision is cheap, execution is where the money is at.
- orb_yt 10y ago
  Please correct me if i'm wrong, but I think the comment was suggesting more than the fact that Tesla, in the literal sense, sells more than cars. I think it's also important to note the company itself supposedly operates much differently than a traditional car company, and in fact much like a software company.
  - Cookingboy 10y ago
    A company is defined by the type of goods/services it provides instead of how it operates. I can operate my bagel shop like the CIA but it won't be spying on the Trump Tower through microwaves anytime soon :)
- wlesieutre 10y ago
  People aren't buying Apple stock because of what the company is today, they're buying it because of where they think Apple will be in the future relative to what they are now. In Apple's case, that future version might still be a consumer electronics company. Just one with (hopefully) innovative new products and a higher share price than you're buying in for. Given the Tesla's SolarCity merge, the associated solar shingles project, the battery gigafactory, the PowerWall, and their grid energy storage projects, I wouldn't invest in Tesla today thinking "Tesla is a car company, and 5 years from now they'll be a bigger car company with new car models!" in the same way that I'd approach Apple.

revelation 10y ago

AP2 is truly dangerous. It's incomprehensible they would release something like this: https://www.youtube.com/watch?v=UZ1XLqc5IUg https://www.youtube.com/watch?v=UZ1XLqc5IUg I guess it's a good reality check for autonomous cars when you take away the LIDAR toys. One rather important point is that the car often doesn't realize it is screwing up, because quelle surprise, realizing you don't have a correctly detected lane can be just as difficult as detecting one in the first place.

owenversteeg 10y ago
Wow. That guy is going nineteen miles per hour on a simple road in daylight and the car literally crossed to the wrong side of the road in nine seconds! That's an absolute disaster.
FireBeyond 10y ago
Wow. That is a trainwreck. Or car wreck. How much value are they expecting to get from riding the "Beta" train? There's a huge difference between their self-congratulatory demos of features and the reality here. Oh, and you have to pay for this.
ClassyJacket 10y ago
I can't afford a Tesla anyway, but even if I could I'd be wary about buying one on the promise that the Hardware 2 cars "will" get full self driving. I can easily see a new version with Lidar coming along and all those old cars not getting that full self-driving update after all, even in places where the law allows it.
wwalser 10y ago
I was under the impression that AP* was for keeping the car in a lane on the interstate. Is it suppose to be capable of navigating rural roads like the video shows?
- revelation 10y ago
  I'm not fully up to date with that, but I think it was meant to be enabled for more residential streets recently? And the AP2 is also still speed limited making it somewhat useless on interstates? In any case, I'm pretty sure there shouldn't be a button that instantly makes your car swerve into the ongoing lane..

greglindahl 10y ago

Musk did not say "not going to raise money again". That said, if you don't like how he has communicated about past raises, you should definitely sell -- there's no sign that this style of management is going to change.

cel1ne 10y ago

Curious: What do you think is Tesla/Musk's "end game vision"?

valine 10y ago
To make humanity an interplanetary species. http://www.theverge.com/2016/9/27/13079472/elon-musk-mars-space-x-tesla-funding-dream http://www.theverge.com/2016/9/27/13079472/elon-musk-mars-sp...
- M_Grey 10y ago
  You can't really believe that; certainly Musk doesn't. Edit: Just for one challenge with no current solution: http://www.nature.com/articles/srep34774 http://www.nature.com/articles/srep34774 There are others.
  - frisco 10y ago
    Why not? And what makes you think Elon doesn't?
    - M_Grey 10y ago
      He's clearly a very smart man, which means that he understands the challenges which are known (cognitive decline from radiation, no material suitable for shielding, incomplete understanding of human microbiome, etc...) and the impossibility of his stated goal to establish a human colony on Mars anytime soon. He's positioned for LEO cargo, and in the longer-term (I suspect) for potentially surveying and mining asteroids. There is almost literally money out there, for the first people to stake a claim. It's daring, it's risky, but it's possible to do with a combination of human explorers and robotics. It's not sexy however, and it calls to mind all of the dystopian sci-fi of the last few decades. "We're going to Mars folks!" is just... easier to swallow than... mining space rocks. People like you and me want to believe in a secure future for the species, which requires getting a self-sustaining group of humans off this planet. It's a powerful dream that could really move some very bright and dedicated people, who might not be similarly moved by the dream of simply gathering more resources for Earth. Elon Musk, I think, has perfectly blended PR and a real business plan, but the PR and plan are not one and the same. More credit to him, but it's a bit discouraging to see so many people flip the switch on their skepticism out of pure "wanting it to be true".

someone79879 10y ago

I have two tracks of thought here: 1. You are an investor who is genuinely upset 2. You are trying to short the stock by spreading FUD I can take your word for it that you're in the first bucket but I have doubt.

M_Grey 10y ago

The upcoming Model 3 will be the acid test for Tesla. It will no doubt be a good car, but at this point people should focus less on what the car can do and on how the car will be rolled out, sold and supported afterwards. A wealthy Model S customer may be ok with having the car in the shop after a minor accident for 5 months due to lack of replacement parts, but for an average Joe paying $500/month leasing a Model 3 that would just be the birth of a new BMW customer. Yeah, that's pretty much it. The question then is do you think they can fix the issues that lead to those negative experiences with a little bit of time, and a billion more dollars?

Cookingboy 10y ago
I'm really not sure, and I have to admit that the reason I'm concerned for my investment is that part of me don't think they can.
- M_Grey 10y ago
  I don't know the answer either. Obviously whoever can figure it out though, stands to make a killing either way. If you invested this money with the knowledge that it was a risk, that you could lose it all, then you should probably stick with that; nothing has really changed. If this was something you felt was a sure bet, or if circumstances have changed then maybe it's worth re-thinking your position.
  - Cookingboy 10y ago
    "If you invested this money with the knowledge that it was a risk, that you could lose it all, then you should probably stick with that" Yes to all of those. Rationally I can no longer justify this investment to be honest, but I like the Koolaid they are selling too much :/
    - M_Grey 10y ago
      There you go then, it sounds to me like sticking with your original choice is the wise move. I for one wish you the best of luck, and wouldn't be surprised if you ended up fairly happy with your decision in the end.

kilroy123 10y ago

I absolutely love Musk and the idea of Telsa. Hell, I would love to get me a Model S, if I could. But I completely agree with you. I think the Model 3 will end up costing way more that $35k, to turn a profit. The timeline will slip and it won't come out until 2018. The whole solar city deal was premature. I think Musk knows this isn't going to work, at least for a while. I think he knows Telsa is going to have a more expensive Model 3 and they're going to bleed cash. Telsa will lose money on every sale of the Model 3. I bet money, he plans to ride the stock for the next 5 years until they can get things turned around.

Animats 10y ago
I think the Model 3 will end up costing way more that $35k, to turn a profit. That's Tesla's biggest risk - they can't deliver profitably at the price point they pre-sold at. The Model 3 is an ambitious car to sell for $35K. Tesla is not a "lean manufacturing" operation; their head counts at the auto plant per car sold are currently quite high. They'll probably get that figured out eventually, but meanwhile, they need the high margins of luxury cars. The timeline will slip and it won't come out until 2018. Probably. They're claiming "late 2017" now, and new orders won't be processed until 2018. The whole Solar City deal was premature. The Solar City operation has political problems. It assumes Government subsidies for solar, which may be going away for political reasons.
- whyenot 10y ago
  > It assumes Government subsidies for solar, which may be going away for political reasons. Isn't their car operation also vulnerable? Tax credits may be less easy to get rid of, from a political perspective, but I think Trump would be far more interested in promoting cars that run on coal than cars that run on electricity.
  - simonrobb 10y ago
    If the solar plan falls apart, electric cars would prop up the coal industry better than gasoline cars. The electric cars you charge from your wall outlet will be powered by coal, no?

hkmurakami 10y ago

Toyota at its core is obsessive about manufacturing and relentless about distribution. The tech is mostly outsourced save some holdovers like engine technology. But even the engine is increasingly being innovated on by others. (Though it's dealership tiers are pretty confusing in Japan - I think there are 2 or 3 Toyota dealer tiers separate from Lexus) Similarly, the heart of Tesla's tech is its batteries (I imagine they but the motors from someone). After that, outsource everything else and focus on manufacturing and distribution.

greglindahl 10y ago
Tesla's motors are simple and made in-house, currently in Fremont but soon in Reno. It took them a while to build a motor that had a long lifetime.

bane 10y ago

I think you capture my nervousness as well -- but I'm still bullish on the company. I think what we're seeing is a by-product of other car companies finally starting to take electric cars seriously, and Musk's attempts to grab as much of that nascent market as possible before it gets too crowded. I think the choice Tesla has right now is to fix up their supply chain and reliability issues or expand. Musk has chosen "expand". Incidentally that choice also brings focus to the supply chain -- just in a different way. My concern is that long-term, delivering several years of great performing, flashy but not-luxurious, and very unreliable cars, is going to hurt the company in the long run. Honda and Toyota both either have or have announced vehicles competitive to the Model 3 on price, range and features. Ford already sells a couple electric vehicles at competitive prices. BMW has entered, and so on. Amazon made the same bet years ago, focus or expand, and after years of no profitability the gamble has played off. However, Amazon also provided good service and product during those years. So far Tesla owners love their cars, even if they spend as much time in the shop as an exotic Italian car. The other electrics don't have the brand cachet like Tesla, but they can fast follow until they simply overwhelm the much smaller company. But, while even the iPhone is a minority smart phone these days, Apple makes most of the profits. Tesla might be able to do the same. I don't see Tesla being the #1 electric vehicle maker in 10 years, but I do see them being a major player in the industry. Musk is also trying to diversify the company in various ways. It will be interesting to see how this pays off.

4SomeReason 10y ago

The point at which Tesla will become not a pie-in-the-sky wet dream is when the price point matches a run-of-the-mill Honda. Right now, having a Tesla is like having a Maserati. I know zero people who have one, my wife (a structural integrationist) _works_ on people who have them, so I am like two social tiers away from thinking of affording one, which, for me, is like dreaming of that Kawasaki Ninja I had postered on my wall as a ten year old boy. He, and his team, need to dramatically scale down costs somehow. I read something cool today about Chinese charging stations that swap batteies instead of sitting and waiting to recharge. I wonder if something like that with an attendant would work to extend the battery "life" ad infinitum for grids in other nations. Seems like his head is on straight though. He took profits and looked up. He said, yeah, I could drive down prices on my car by saturating more, but I'll build rockets that don't waste as much on reentry costs instead. That's smart innovation, that's passing the baton in the 400m instead of sprinting 10m and saying "I win!". I do think there is stigma (even in my own mind, and I really am a fan of Elon) surrounding borrowing money over and over, but the reality is: almost EVERYONE does this. If you aren't Dow, or Ford, or some huge ass fucking company that has a war chest the size of Dubai, you aren't going to weather the stormy market conditions we are facing as a result of globalization (see Brexit et al for moreon that topic of discussion). Businesses need floating because they don't exist in a vacuum, they exist because they aren't welcomed by their competitors, in fact, they are actively "sabotaged" by those that stand to lose market share, and that, my friends, is a HUGE problems with mercantilism. Unless we decide to get along, it's not going to get better, and corporate espionage has not lessened in my lifetime, not by a moonshot. So, yeah, play nice and he and those like him will stop having to borrow money, and maybe he will throw us a bone and make a car that doesn't cost as much as my entire post-secondary education (including grad school). Peace y'all.

M_Grey 10y ago
It would probably be easier to have charging stations with people hot-swapping batteries, than charging station with extremely fast charge times. It would be a task that could be automated right out of the gate too.
- greenstonekid 10y ago

kmonsen 10y ago

I have a model 3 reservation, but I don't think it can be successful on this timeline. I mean it seems like the design is still not 100% set and we are just now seeing test cars. For other car makers this would mean mass production is at least a year away.

nyxtom 10y ago

It's important to note that the rollout of the Model 3, along with other Tesla vehicles, is done in spite of many laws that are explicitly aimed at preventing the sale of Tesla vehicles. Many states completely hamstring the ability to sell EV cars directly and some states are downright hostile towards Tesla. Additionally, one has to consider the current administration's position on fuel economy standards and any company such as Tesla getting the leg up with subsidies. Which, according to Elon, would be completely fine to get rid of so long as we are getting rid of all subsidies (including the massive ones for Oil companies). In general, this is and always has been an uphill battle and rolling these products out to market is met with great enthusiasm but at the same time hostility from many states who see them as a threat.

matthewowen 10y ago
Is there any Tesla vehicle that doesn't have a waiting list? I'm not disputing that some of the rules around auto sales are problematic, but it seems to me like the limiter on Tesla's ability to sell cars is its ability to produce them.
- nyxtom 10y ago
  Hmm that is true. It's probably been said before, but the Model X definitely made things a lot more difficult to get to a rollout of the model 3. "I'm not sure anyone should have made this car," he said at a press conference just hours before the first Model Xs were delivered to VIP customers." ""We probably should have just [modified the Model S]," he added. "There are so many more features and difficult to build parts on [the Model X] than it is necessary for us to sell the cars.""
  - semi-extrinsic 10y ago
    > "We probably should have just [modified the Model S]" This is one thing I really don't get about Tesla. Why haven't they made an estate-ish version of the Model S? I'm thinking along the lines of the Mercedes CLS Shooting Brake: http://images.car.bauercdn.com/upload/28771/images/1752x1168/cls01.jpg?mode=max&quality=90&scale=down http://images.car.bauercdn.com/upload/28771/images/1752x1168... It's a very nice looking car, and adds that little bit of luggage practicality that the Model S is missing. The aerodynamics aren't much worse than the coupe, so range shouldn't suffer very much.

rebootthesystem 10y ago

I read this book [1] back in the '90's. An amazing read about the world of auto manufacturing. Regarding Tesla, surely I am not the only one waiting for competition. I think the problem Tesla has is that when the giants awake they will outclass them at nearly every level. It's like thinking you are doing great in your open water swim until the triathletes leave you in their wake. Surely companies who have been honing their skills and optimizing their design, engineering, manufacturing, distribution and support over decades will have non-trivial advantages over Tesla. The way I see it, building an electric car is significantly simpler than one with an internal combustion engine. All you have to do to see this is take an accounting of the thousands of parts and many fluids you leave out. The design, manufacturing, supply chain, distribution and service costs of having another 1,000 to 2,000 parts in a car are monumental. Any company that knows how to deliver quality, reliable and reasonably priced internal combustion cars will have a laugh delivering electrics at scale. They know how to do this today. They are all waiting for the same thing: Cheaper, lighter, better energy storage. Recent developments might indicate this could be just a few years out. Tesla has a problem: It has to achieve scale before that moment in time. Today choices are few and Tesla might have an advantage with Model 3 (if it ships on time and has no problems). In some respects they are the only game in town (range). The minute that changes people are going to flock to other manufacturers. [1] https://goo.gl/Drhc1Z https://goo.gl/Drhc1Z

unprepare 10y ago
>They are all waiting for the same thing: Cheaper, lighter, better energy storage. >Tesla has a problem: It has to achieve scale before that moment in time. Do they though? With the gigafactory, they could very well be the company providing the batteries that the big manufacturers are waiting for.
- rebootthesystem 10y ago
  This is total conjecture, of course, so take it for what it is. I need to go back a ways on this one. I have been flying model aircraft for decades. If you go back far enough it was impossible to even consider flying an electric powered airplane because alkaline batteries simply didn't have the energy density. Sometime later came NiCd batteries and they eventually hit that sweet spot where you could stick a few of them in a plane, put a motor in the nose and fly for a few minutes. I had gliders with 27 NiCd cell packs what weighed in at somewhere around six or eight pounds all by themselves. A few years went by (6 to 10, don't remember) and LiPo batteries surfaced. Now I could actually fly jets. And the glider with the super heavy 27 cell NiCd pack got a very light and small six cell LiPo pack, a far more efficient brushless motor and performance was out of this world. Today electric powered model aircraft are probably the majority of the product sold and they include high powered helicopters and even the "impossible" quadcopters. These transitions were mainly the result of energy storage technology, nothing else mattered until you could carry enough energy at a favorable weight ratio and in a favorable volume. The companies that brought us these transitions, very much in the spirit of "The Innovator's Dilemma" [1], were not the same companies that provided the older energy storage technologies. This is where I come full circle to Tesla and the Gigafactory. Tesla has done a great job with this and it has positioned itself to benefit from scale in manufacturing battery packs with the existing best-in-class energy storage technology. They will, in this regard, do well. Yet, this will become a significant liability if and when the next step change in energy storage technology comes about. Scale has it's benefits, but it can also kill you. Again, this is conjecture. Imagine a day within the next 3 to 5 years when someone demonstrates a technology with three times the capacity, in half the volume, with half the weight and none of the longevity problems. We recently saw just such an announcement, although it seems the technology suffers from a power-to-weight issue at the moment. Imagine someone else finally develops a supercapacitor system that makes current Lithium-based cells look as bad as they made NiCd cells look years ago. Whoever does that will trigger the inflection point and a massive migration away from internal combustion engines to electric powerplants. Just like it did with model airplanes. In the model airplane world, the pioneers of electric flight were absolutely skewered by the established (and some new) players in model airplane manufacturing. Most people today don't even know the names of the pioneers. Tesla could suffer this fate. The Gigafactory could actually become a huge liability. Imagine having such an operation at a time when nobody has any interest in the technology you can produce. I truly believe other manufacturers are waiting in the wings for this inflection point while they experiment and get ready. I have a gut feeling we are not too far from that moment in time when a significant enough technology shift occurs to make electric transportation viable for the masses.

nameisu 10y ago

when cafe regulations get cut tesla cant even sell carbon credits lol

njharman 10y ago

> A modern car company Tesla is a battery / energy company.