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I disagree with the assumption that anyone spending $100K on a vehicle cares nothing about fit and finish. They may be willing to buy into the vision, but the s

by xkjkls 9y ago

I disagree with the assumption that anyone spending $100K on a vehicle cares nothing about fit and finish. They may be willing to buy into the vision, but the segment of the population who can afford these fancy toys definitely care about their appearance.

ChuckMcM 9y ago
That conflates two things in the discussion. People can care about something and have it affect their buying behavior, and people can car about something without it affecting their buying behavior. There are certainly people who are not buying Tesla cars because they don't feel they have the value or quality for the money they cost. And I am sure there are people who own Tesla's who wished that the fit and finish was better than it is. But from Tesla's perspective, improvements to fit and finish are addressed on the assembly line and they slow down the number of cars per day they can build. They also reduce yield by increasing quality check fallout from the manufacturing line. Taking that hit to production rate or yield does not make sense when the current customers are not either cancelling orders or returning cars purchased due to "minor" fit and finish issues.
- xkjkls 9y ago
  That comes with an assumption that right now is the only time Tesla want customers to buy a car from them. Tesla wants these customers to buy another car from them again 3 years from now, and wants them to show off their Tesla to all their friends and have them remark about how cool it is, so that they want to buy a Tesla three years from now. Not having the fit and finish perfect is going to be something that works against them on both those fronts. If Tesla is truly deciding to optimize for production targets over quality, that seems incredibly shortsighted.
  - ChuckMcM 9y ago
    That is a fair point, the 'second' car sale is going to be tougher. And yet that has always been the case since if Tesla is/was successful the second car purchase would come at a time where there were many more choices. Very few people are alive today who have witnessed the founding, growth, and eventual success of an automobile company. It is an insanely cash intensive kind of thing. The whole notion of discriminating on fit and finish is its own interesting story when Japan, which was synonymous with "junk" cars decided to compete with American car makers on fit and finish. Until that point, only very high end German cars were achieving the level of precision that defined good engineering at that level. There is an interesting lesson here for people who are able to see it, around prioritizing cash expenditures to achieve the highest revenue (and thus survival), rather than engineering excellence. There are examples of dead companies that went the other way. Understanding this trade off is the difference between a senior engineer and an engineer who can operate at the executive level.
    - xkjkls 9y ago
      > The whole notion of discriminating on fit and finish is its own interesting story when Japan, which was synonymous with "junk" cars decided to compete with American car makers on fit and finish. In that case, I think there's a big distinction because of the different market segments Toyota/Honda operated in at the time vs. Tesla now. People buying a $20,000 car are more willing to accept a couple of quality kinks. That's not nearly the same case in the premium segment that Tesla still competes in. > There is an interesting lesson here for people who are able to see it, around prioritizing cash expenditures to achieve the highest revenue (and thus survival), rather than engineering excellence. That's a possibility -- that Tesla needs to get to profitability fast enough in order to stave off death. But I'm not entirely sure that if their brand doesn't survive that it's a fate worth living. Also, that doesn't really entirely jive with their behavior. Tesla has been burning hordes of cash investing in new initiatives like the Tesla semi-truck, operating SolarCity, the PowerWall, etc. If they were so concerned about getting to profitability why would they be making those massive investments now? Also, why would they not issue more debt or equity in order to give themselves a longer runaway? Given their earlier bond sales, they easily could acquire more capital at a low coupon.
  - greglindahl 9y ago
    Owner surveys show that Tesla is #1 in "would you buy another one". Can you suggest any data that shows Tesla is having a significant problem?

by xkjkls 9y ago

ChuckMcM 9y ago

That conflates two things in the discussion. People can care about something and have it affect their buying behavior, and people can car about something without it affecting their buying behavior. There are certainly people who are not buying Tesla cars because they don't feel they have the value or quality for the money they cost. And I am sure there are people who own Tesla's who wished that the fit and finish was better than it is. But from Tesla's perspective, improvements to fit and finish are addressed on the assembly line and they slow down the number of cars per day they can build. They also reduce yield by increasing quality check fallout from the manufacturing line. Taking that hit to production rate or yield does not make sense when the current customers are not either cancelling orders or returning cars purchased due to "minor" fit and finish issues.

xkjkls 9y ago
That comes with an assumption that right now is the only time Tesla want customers to buy a car from them. Tesla wants these customers to buy another car from them again 3 years from now, and wants them to show off their Tesla to all their friends and have them remark about how cool it is, so that they want to buy a Tesla three years from now. Not having the fit and finish perfect is going to be something that works against them on both those fronts. If Tesla is truly deciding to optimize for production targets over quality, that seems incredibly shortsighted.
- ChuckMcM 9y ago
  That is a fair point, the 'second' car sale is going to be tougher. And yet that has always been the case since if Tesla is/was successful the second car purchase would come at a time where there were many more choices. Very few people are alive today who have witnessed the founding, growth, and eventual success of an automobile company. It is an insanely cash intensive kind of thing. The whole notion of discriminating on fit and finish is its own interesting story when Japan, which was synonymous with "junk" cars decided to compete with American car makers on fit and finish. Until that point, only very high end German cars were achieving the level of precision that defined good engineering at that level. There is an interesting lesson here for people who are able to see it, around prioritizing cash expenditures to achieve the highest revenue (and thus survival), rather than engineering excellence. There are examples of dead companies that went the other way. Understanding this trade off is the difference between a senior engineer and an engineer who can operate at the executive level.
  - xkjkls 9y ago
    > The whole notion of discriminating on fit and finish is its own interesting story when Japan, which was synonymous with "junk" cars decided to compete with American car makers on fit and finish. In that case, I think there's a big distinction because of the different market segments Toyota/Honda operated in at the time vs. Tesla now. People buying a $20,000 car are more willing to accept a couple of quality kinks. That's not nearly the same case in the premium segment that Tesla still competes in. > There is an interesting lesson here for people who are able to see it, around prioritizing cash expenditures to achieve the highest revenue (and thus survival), rather than engineering excellence. That's a possibility -- that Tesla needs to get to profitability fast enough in order to stave off death. But I'm not entirely sure that if their brand doesn't survive that it's a fate worth living. Also, that doesn't really entirely jive with their behavior. Tesla has been burning hordes of cash investing in new initiatives like the Tesla semi-truck, operating SolarCity, the PowerWall, etc. If they were so concerned about getting to profitability why would they be making those massive investments now? Also, why would they not issue more debt or equity in order to give themselves a longer runaway? Given their earlier bond sales, they easily could acquire more capital at a low coupon.
- greglindahl 9y ago
  Owner surveys show that Tesla is #1 in "would you buy another one". Can you suggest any data that shows Tesla is having a significant problem?