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Tesla Is Facing a Crucible
- xattt 9y agoWorse comes to worst, Tesla is bought out by whatever car company that has the biggest gap in autonomous and electric tech.
- timewarrior 9y agoI think is it more likely that Elon will use his equity from SpaceX to take it private.
- TaylorAlexander 9y agoIf Elon had to chose between SpaceX and Tesla he’d choose SpaceX. He’s said as much many times.
- timewarrior 9y agoYea. But if giving up 20% of SpaceX gives him 100% of Tesla, he might go for it. Hope it doesn't get to this!
- jacques_chester 9y agoMaybe. A lot of the value in buying a company like Tesla is the patent portfolio. In 2014 Musk announced that these would be "open source", but I can't actually seem to find any legalese with the details. As for the rest, I imagine the residual value is brand, a lot of which is deeply entangled with Musk himself. As a buyer I'd be asking for a hefty discount because I would expect Musk wouldn't stick around to spruik the goods.
- resource0x 9y agoAt what price? According to google, market cap of Ford: 44.30B, GM: 53.14B, Tesla: 54.28B.
- goshx 9y agoThe "worst comes to worst" scenario will not likely be priced at 54.28B
- freehunter 9y agoI imagine if they went bankrupt, those numbers would change.
- deleted 9y ago[deleted]
- antonkm 9y agoI find the concept of short selling a bit confusing, even though I've Googled. Can someone explain this in an easy to understand way?
- neals 9y agoYou borrow stock from somebody. You say "I'll give these back to you next month". You quickly sell these borrowed stock on the market for $100. 1 month passes. The stock goes down. You buy the same amount of stock, but now for $50. You return the stock to the person you borrowed it from. You have profited $50 per stock. You can now get a nice cold pint and wait for all this to blow over.
- otherme32 9y ago3. 1 month passes. The stock goes up. You HAVE to buy the same amount of stock, but for $150. You HAVE to return the stock to the person you borrowed it from. You lost $50 per stock.
- rebootthesystem 9y agoThat's not quite right. You can hold a short position for as long as you want. There is no contract saying you have to close the transaction in 30 days. In that sense the otherwise excellent analogy provided isn't accurate (which isn't a problem, it's meant to be a simplification). What does happen if the stock goes up is that your brokerage company will ask you to put up the delta. In other words, if it goes from $100 to $110 you'll be required to deposit the equivalent of $10, the delta, times the number of shares you shorted. If you shorted 1,000 shares you'll have to deposit $10,000 for every $10 of upwards movement in the stock price. If you have long (traditional stock buying) positions in your account your broker might actually sell those automatically to cover this delta. The other important point is that this is a loan. Which means you will pay interest on the funds, in this hypothetical $100,000. The interest charged can vary. If, for the sake of an example, we assume 5% simple annual this means $5,000 per year or just over $400 per month. I used to day trade (about 20 years ago) and would use shorting multiple times per day. I am not sure I would consider shorting for long term (> 1 day) positions. As many have said, the potential for loss is great.
- TaylorAlexander 9y agoMy bullish position on Tesla goes like this: They had the same production problems on the roadster, the Model S, and the Model X. Each time, the new vehicle was a “make or break” for the company. Each time, there were reports of how these production problems would sink the company. The company never sank. Tesla is now apparently “good” at making the Model S and Model X. I always assumed they would have similar nightmarish production problems with the Model 3, so all of these reports are sort of expected for me. But I also know that Teslas are extremely popular in Silicon Valley, where I live. That to me indicates that those with the means really like the cars. So it stands to reason that once they are good at making an affordable car, they’ll sell like hot cakes. Musk mentioned recently that two things really stress him out: Artifical Intelligence and what to do about the risks is poses for humanity, and the Model 3 launch. I still have a lot of faith that Elon can make it happen. And personally I really want Tesla to succeed. I think a lot of other people do too.
- jacques_chester 9y ago> The company never sank. The company refreshed its financing. This is always possible, until it isn't. > That to me indicates that those with the means really like the cars. Cashflow is no respecter of brand power.
- skybrian 9y agoBrand power can result in more sales, though, which usually does increase cash flow? We don't know yet at what point they'll transition from being supply-limited to demand-limited. Tesla owners seem to be pretty forgiving of quality issues so far. We'll see how well that holds up.
- jacques_chester 9y ago> Brand power can result in more sales, though, which usually does increase cash flow? Yes, when you can get to the point where cash changes hand (this may be a very different moment from the "sale"). If cash shows up too late, then it doesn't matter how much demand there is, the game is over. Endings from cashflow crunch can be very abrupt. A very dangerous time for many companies is under conditions of growth, because very often your outgoing cash happens now and your incoming cash comes later. Tesla has to pay its employees each month, has to pay its suppliers on time (or lose them), pay its utility bills etc etc. The outgoing cash does not stop going out. But the bulk of the cash comes in only when they can hand a car over. And that's not happening very fast right now. The monthly outgoings per-car appear to be negative.
- Proven 9y agoBandit company living off taxpayer and state largesse ... Good riddance, leeches.
- crowbahr 9y agoAnd how many times has this happened before? Musk plays the edge of these things. If it wasn't way too ambitious it doesn't seem like he'd do it.
- Someone1234 9y agoThat's a pretty terrible article title, the mods should consider changing it from "Tesla Is Facing a Crucible" to e.g. “Tesla’s Make-Or-Break Moment.” which was the much better title of the article this article is based around. I cannot tell if it was titled this to add an air of mystery or trying to be too clever for its own good, but it is pretty shoddy either way.
- freehunter 9y agoCrucible isn't a super common word, but it's not a super uncommon word either. It means "a severe test where many things combine to influence the end result". It is an entirely correct word to choose for this situation.
- userbinator 9y agoI read the entire article and didn't see anything about crucibles.
- traek 9y agocrucible noun cru·ci·ble \ ˈkrü-sə-bəl \ 2: A severe test
- mcbits 9y agoWarning: This page will automatically blast audio without asking, potentially ruining whatever you were recording, damaging your ears, waking the baby, annoying the boss, etc.
- intopieces 9y agoublock origin w/Safari on OS X blocked the video automatically
- corruptbytes 9y agoI think that's just a Safari feature. Safari > Preferences > Websites > Auto-Play "Stop Media with Sound" I personally have all videos blacklisted, and I white list a few sites.
- intopieces 9y agoCould be. For me, the video didn't even appear. Just a blank space on the page -- is that a components of this feature?
- jonathankoren 9y agoOr you could browse muted.
- tom_mellior 9y agoI'm with you on this, autoplay is evil. But I'm curious about the "ruining whatever you were recording" part. Why are you clicking random Internet links if you're in the middle of "recording" something (presumably, audio or video)?
- Groxx 9y agoLooking up stuff as needed is relatively common for the more free-form podcasts I've listened to in the past. There are also quite a few vlogs out there, a Tesla segment showing site content wouldn't be too surprising. I assume there are other formats where this comes up too. Podcast-like stuff seems pretty natural tho.
- fictionfuture 9y agoTesla is another "solution looking for a problem" type of company. They make nice cars but the electric engine concept has yet to provide a real benefit over combustion. (They say less solution but that's not really true is it?) Another concept looking for a problem is crypto; as the only problems crypto really solves are the ones faced when doing illegal transactions or hiding money.
- matthewmacleod 9y agoThey make nice cars but the electric engine concept has yet to provide a real benefit over combustion. That comment has absolutely no merit whatsoever.
- pscsbs 9y agoBenefits of an electric engine vs. ICE: 1. No oil changes. 2. Fewer moving parts, fewer repairs, longer life. 3. Instant acceleration. 4. Zero emissions. 5. Ability to be fully powered by renewable energy.
- adrianN 9y agoAny real benefit besides being really fun to drive, mechanically simple, and not putting noxious gases in the air?
- URSpider94 9y agoLess pollution from EV’s is real. https://www.ucsusa.org/clean-vehicles/electric-vehicles/life-cycle-ev-emissions#.Wq6p0CJlDDs https://www.ucsusa.org/clean-vehicles/electric-vehicles/life...
- Erlich_Bachman 9y agoThe medium-term future of the automobile industry is definitely in the electric engines and drivetrains. If you don't see that, you either live in some parallel universe or just don't understand the market at all. You're welcome to prove all of us wrong by shorting Tesla and all other elecric car companies.
- username223 9y agoThe Model 3 seems like it was premature. It gets mediocre reviews ( https://www.caranddriver.com/tesla/model-3 https://www.caranddriver.com/tesla/model-3 ), they have 180,000 orders, and they're fulfilling them at about 3200 a month, i.e. 4.6 years to satisfy the current backlog. For scale, Toyota sold about 32,000 Camrys a month last year just in the US. Heck, BMW sold about 34,000 3-series a month. Tesla should have stuck to high-end markets. It looks like their foray into mass production will end badly.
- ams6110 9y agoAnd that's where some people were predicting Tesla would stumble. There are dozens of boutique high-end car manufacturers. Ferrari, etc. Price is not really too important for buyers of those cars -- in fact it can be part of the attraction (a Veblen good). Making "mainstream" cars targeted at middle-class buyers is an entirely different thing. Sales price is a huge factor, and at that volume saving a dollar or two on any given component is something you spend time trying to do. Optimizing the manufacturing process is also critical. Chevy and Ford and Toyota know how to do all that. Tesla doesn't, yet.
- Zigurd 9y agoTesla is facing a test. There are some bad signs that point to deferring profitability longer than expected, such as high defect and rework rates. On the one hand, despite the challenges, Tesla has built more Series 3s than Chevrolet has built Bolts. On the other hand that's about 15% as many per week as Tesla thought they could do. The reason this isn't a fatal disaster is that nobody else is yet willing to try to beat that. There is no real replacement for a Model 3 available. Building hundreds of thousands of cars per year is not something that industry newcomers have managed to do for a very long time, nevermind electric aluminum cars. This is a different challenge than competing against high-end BMWs and Mercedes that also have relatively small production runs. The advantage Tesla has is that they started the learning process early. The competition is still a couple years from profitably selling a direct alternative. But every month Tesla is late is a month of sales runway and revenue gone.
- gfodor 9y agoI have a model 3 and it basically feels like the iPhone of cars. Financial issues could take them down, but you'd have to be a fool to bet against them. Comparing the model 3 to other electric vehicles reminds me of when people were comparing the iPod to other MP3 players based upon tech specs. At this stage, the electric nature of the car just bolsters the design and UX of it. Comparing it to other EVs because they happen to share the same type of motors is stupid. They should be comparing the Model 3 to high end luxury combustion vehicles because from my vantage point you're getting that kind of driving experience, better even, for half the price. The only place where the electric nature of the car creeps into your life in a negative way is when you consider long trips. And even then, the impact is minimal because of the supercharger network. (You are going to stop regularly on long trips for breaks anyhow, so just charge the car.) Beyond that, the only way the electric nature of the car impacts your life is beneficial -- no more trips to gas stations and less cost of ownership. At some point you stop even making the comparison because it's just a plain better ownership experience so you don't think about it anymore.
- BoorishBears 9y agoOut of curiosity, what’s a car you had before the Model 3 that you’d compare as the “MP3 player”, and is it a recent car? I ask because the Model S can’t compare with the S Class or 7 series on comfort and luxury, yet you’re saying the model 3 should be compared
- gfodor 9y agoI've never owned but have been in a relatively recent S class. It's personal but the 3 is basically a pretty pure distilled car. If you hate buttons and like symmetry and simplicity they basically took the car to what feels like the logical extreme. Reminiscent of Apple it's a design that shows they agonized over every button and additional degree of freedom for the user. There is no dashboard, no key, the whole car is controlled through the center console. The only buttons are entirely flush with the surfaces they are on. They don't even have door release handles on the inside the door pops open when you grab and depress the button flush on the handlebar to exit. Rip the steering wheel out and there is no longer a clear driver's seat just two symmetric front passengers. I find the design refreshing enough and the torque of the engine responsive enough (with no transmission pullback) to say it outweighs other potential creature comforts on a feature level. My last car was a BRZ and I don't miss it too much :)
- vondur 9y agoI’m guessing if it came down to it, Tesla would be sold of for their battery tech and battery manufacturing capabilities.
- brian-armstrong 9y agoLet's say Tesla does go bankrupt. What would happen next? Would GM acquire it? Could they fix the production issues? Also, would that endanger Musk's other projects? I seem to remember he's pretty leveraged in Tesla, but I assume financially each company is separate?
- sunstone 9y agoIn the run up to model 3 production Musk mentioned that "the production line is the product" because it was needed to be highly automated to make a great car at a low price. Clearly getting the production line wrinkles ironed out has been a much bigger challenge than Musk expected but that is typical of almost every thing that Musk as done: Envision a way to make things an order of magnitude better. Work like a bugger (while blowing through a dozen deadlines) to make that happen. Eventually, come out the other side smelling like a genius -- because the original vision had merit and was not just a pipe dream. The model 3 fits this mold. In terms of finance and cash flow, unlike previous near death experiences with Tesla and SpaceX, now Musk could quite easily sell of a chunk of equity in SpaceX to finance what's yet to be done in debugging the production line if the markets won't oblige. But likely the bigger problem right now is time rather than money before things come right. Most of the upfront production line expenses will have already been spent, now it's a learning curve to make it tick along as expected.
- neonate 9y agoHere's this article in a format that makes no noise: http://archive.is/wCQls http://archive.is/wCQls The WSJ article it refers to is called "Tesla’s Make-Or-Break Moment Is Fast Approaching": http://archive.is/ucf9q http://archive.is/ucf9q The CNBC article it refers to is called "Tesla employees say automaker is churning out a high volume of flawed parts requiring costly rework": https://www.cnbc.com/2018/03/14/tesla-manufacturing-high-volume-of-flawed-parts-employees.html https://www.cnbc.com/2018/03/14/tesla-manufacturing-high-vol...
- dang 9y agoSince the CNBC article is by far the most factual, and doesn't seem to have been discussed yet on HN, I'm going to try burying this submission and rolling back the clock on the first post of that one: https://news.ycombinator.com/item?id=16587249 https://news.ycombinator.com/item?id=16587249. The Bloomberg article isn't bad, but it's so generic that the discussion is generic as well (Tesla in general, short selling in general). That's the main trouble with articles that don't contain enough factual fiber.