5 ms·

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

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?
    - bb611 10y ago
      My understanding is that the economics of power generation are deprecating coal: http://www.triplepundit.com/2016/12/despite-trumps-promise-economics-will-hasten-coals-decline/ http://www.triplepundit.com/2016/12/despite-trumps-promise-e... So it would be better to have electric vehicles than ICE in its current form, but more power grid usage will likely accelerate other technologies rather than make coal profitable again.
- prostoalex 10y ago
  > It assumes Government subsidies for solar, which may be going away for political reasons. Residential solar costs average out at 15c per kWh, post 30% tax credit. If the credit goes away, the 20c per kWh generation cost is still competitive compared to utility's retail rate. The bet is on solar technologies to continue incremental gains in efficiency, pushing the final price per kWh down. In the commercial and industrial world the cost can be driven down significantly since the installations are larger (4c per kWh is the lowest I've seen), and the one-time installation costs are recouped faster, so that sector is likely to grow with or without tax credits. It's subject to the same efficiency metrics as consumer-grade tech.
  - makomk 10y ago
    The obvious problem with this argument is that if grid-scale solar installations push down utility pricing, this will kill residential solar and SolarCity's business model revolves around residential.
    - unprepare 10y ago
      Didnt they just agree to a large scale project in Australia? I would think they see this coming and are engaging more on the utilities side
    - prostoalex 10y ago
      There's the transportation and distribution cost on grid-scale that's currently low, but as the generation costs go down, the fixed cost of owning the land, building and maintaining power lines will occupy larger piece of the pie chart. Residential has zero transportation cost, post-installation, and I think those solar roof tiles SolarCity pre-announced is an attempt to blend the solar installation costs into the roofing costs. "You are paying the roofing guy for labor and materials to build/replace the roof anyway, so why not pay our roofing guy to build/replace the roof, and get solar as an incredible bonus" is I think their marketing strategy with that.
  - Animats 10y ago
    Most residential solar is third-party financed, either leased from the manufacturer or operated under a power purchase agreement, where the solar supplier owns the gear, acts like a utility, and sells power to the consumer. There are various incentive programs which make this viable.[1] Solar City pulled out of Nevada when one of those incentive programs went away.[2] [1] https://financere.nrel.gov/finance/content/don%E2%80%99t-be-party-pooper-how-states-can-attract-3rd-party-owned-ppa-financing https://financere.nrel.gov/finance/content/don%E2%80%99t-be-... [2] http://www.slate.com/articles/business/the_juice/2016/01/solarcity_and_vivint_pulled_out_of_nevada_is_solar_power_losing_at_the_state.html http://www.slate.com/articles/business/the_juice/2016/01/sol...
nyxtom 10y ago
Isn't the entire premise of building affordability/profit into the model 3, among other vehicles, is driving down the cost of li-ion batteries? All of these ventures rely on an economy of scale of difference. Correct me if I'm wrong in this.
prostoalex 10y ago
Chevy Bolt is $37,500 MSRP, and GM likely turns a profit on it (once the R&D investment is recouped), are Tesla's unit economics way worse?
- querulous 10y ago
  chevy has 105 years of experience at manufacturing automobiles and huge volume with suppliers. there's no way tesla has anything close to their unit economics
  - stickfigure 10y ago
    On the other hand, Tesla is a retailer whereas GM is effectively a wholesaler. Perhaps the dealer margins are significant?
    - coredog64 10y ago
      GM doesn't sell the car to the dealer for $37k. I'm too lazy to look up invoice price, but even that is unlikely to be the true price the dealer pays. There could be dealer incentives for moving the car. There are usually "holdbacks" in the invoice price as well. If GM is making a profit per car, they are doing so at significantly less than MSRP.
  - deleted 10y ago
    [deleted]
agumonkey 10y ago
I know "shit" but it seems to me that Musk is where he is by being somehow very careful in his company evolution. Every step was bold, but just enough so the market would gain trust for the next bold move that would look less risky than the previous ones. Seems like he's bending the curve a bit higher this time. Spreading thin ?
- aidenn0 10y ago
  He's also pretty much every product released had its ship-date slip from his initial announcement.
Shivetya 10y ago
Well the dirty little secret is the majority of III buyers aren't going to get any assistance because the tax rebate will be used up. Unless Elon can convince Trump its in the best interest of the country to change the limit a lot of people who put money down are in for a surprise.

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?
  - bb611 10y ago
    My understanding is that the economics of power generation are deprecating coal: http://www.triplepundit.com/2016/12/despite-trumps-promise-economics-will-hasten-coals-decline/ http://www.triplepundit.com/2016/12/despite-trumps-promise-e... So it would be better to have electric vehicles than ICE in its current form, but more power grid usage will likely accelerate other technologies rather than make coal profitable again.
prostoalex 10y ago
> It assumes Government subsidies for solar, which may be going away for political reasons. Residential solar costs average out at 15c per kWh, post 30% tax credit. If the credit goes away, the 20c per kWh generation cost is still competitive compared to utility's retail rate. The bet is on solar technologies to continue incremental gains in efficiency, pushing the final price per kWh down. In the commercial and industrial world the cost can be driven down significantly since the installations are larger (4c per kWh is the lowest I've seen), and the one-time installation costs are recouped faster, so that sector is likely to grow with or without tax credits. It's subject to the same efficiency metrics as consumer-grade tech.
- makomk 10y ago
  The obvious problem with this argument is that if grid-scale solar installations push down utility pricing, this will kill residential solar and SolarCity's business model revolves around residential.
  - unprepare 10y ago
    Didnt they just agree to a large scale project in Australia? I would think they see this coming and are engaging more on the utilities side
  - prostoalex 10y ago
    There's the transportation and distribution cost on grid-scale that's currently low, but as the generation costs go down, the fixed cost of owning the land, building and maintaining power lines will occupy larger piece of the pie chart. Residential has zero transportation cost, post-installation, and I think those solar roof tiles SolarCity pre-announced is an attempt to blend the solar installation costs into the roofing costs. "You are paying the roofing guy for labor and materials to build/replace the roof anyway, so why not pay our roofing guy to build/replace the roof, and get solar as an incredible bonus" is I think their marketing strategy with that.
- Animats 10y ago
  Most residential solar is third-party financed, either leased from the manufacturer or operated under a power purchase agreement, where the solar supplier owns the gear, acts like a utility, and sells power to the consumer. There are various incentive programs which make this viable.[1] Solar City pulled out of Nevada when one of those incentive programs went away.[2] [1] https://financere.nrel.gov/finance/content/don%E2%80%99t-be-party-pooper-how-states-can-attract-3rd-party-owned-ppa-financing https://financere.nrel.gov/finance/content/don%E2%80%99t-be-... [2] http://www.slate.com/articles/business/the_juice/2016/01/solarcity_and_vivint_pulled_out_of_nevada_is_solar_power_losing_at_the_state.html http://www.slate.com/articles/business/the_juice/2016/01/sol...

nyxtom 10y ago

Isn't the entire premise of building affordability/profit into the model 3, among other vehicles, is driving down the cost of li-ion batteries? All of these ventures rely on an economy of scale of difference. Correct me if I'm wrong in this.

prostoalex 10y ago

Chevy Bolt is $37,500 MSRP, and GM likely turns a profit on it (once the R&D investment is recouped), are Tesla's unit economics way worse?

querulous 10y ago
chevy has 105 years of experience at manufacturing automobiles and huge volume with suppliers. there's no way tesla has anything close to their unit economics
- stickfigure 10y ago
  On the other hand, Tesla is a retailer whereas GM is effectively a wholesaler. Perhaps the dealer margins are significant?
  - coredog64 10y ago
    GM doesn't sell the car to the dealer for $37k. I'm too lazy to look up invoice price, but even that is unlikely to be the true price the dealer pays. There could be dealer incentives for moving the car. There are usually "holdbacks" in the invoice price as well. If GM is making a profit per car, they are doing so at significantly less than MSRP.
- deleted 10y ago
  [deleted]

agumonkey 10y ago

I know "shit" but it seems to me that Musk is where he is by being somehow very careful in his company evolution. Every step was bold, but just enough so the market would gain trust for the next bold move that would look less risky than the previous ones. Seems like he's bending the curve a bit higher this time. Spreading thin ?

aidenn0 10y ago
He's also pretty much every product released had its ship-date slip from his initial announcement.

Shivetya 10y ago

Well the dirty little secret is the majority of III buyers aren't going to get any assistance because the tax rebate will be used up. Unless Elon can convince Trump its in the best interest of the country to change the limit a lot of people who put money down are in for a surprise.