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Banks can reverse transactions if they want to. Tesla's cavalier attitude towards manufacturing has yielded a 14% first pass through rate on the Model 3 line (w

Banks can reverse transactions if they want to. Tesla's cavalier attitude towards manufacturing has yielded a 14% first pass through rate on the Model 3 line (which is abysmal and may bankrupt the company along with declining M3 demand) vs. the industry standard of ~80% FPT rate. Source - https://www.businessinsider.com/tesla-hit-model-3-target-by-reworking-thousands-of-cars-2018-8 https://www.businessinsider.com/tesla-hit-model-3-target-by-... We're at the point in the Tesla story similar to that of 2008 where Dr. Berry et el were watching the housing market collapse around them and the banks wouldn't re-price the swaps. Tesla is already bankrupt, most people don't know this yet. But they will.

jsight 8y ago
While I agree that 14% is horrible, that was a point-in-time number that is being compared to an average. One would hope that factories regularly run well above 80%. I'd also bet that some occasionally drop well below it for a day or so. The details matter here and given the quality that I see in the field, I'm not convinced that this is such a horrible situation.
jrockway 8y ago
I don't think the rework rate is a big deal for the customer. Ultimately manufacturing is about increasing the yield rate so that costs are lowered, because rework is expensive. But if you can make money with lots of manual rework on every product, it's no big deal. Something to improve next quarter. I have so many electronic devices, from cheap to expensive, that have some passive component manually bodged on somewhere. They work fine. It just means that paying someone to rework 1000 boards was cheaper than throwing the boards away and spinning up Revision B immediately. It's not a big deal. Waste is worse than a product that is imperfect immediately off the assembly line.
- karpodiem 8y ago
  People are waiting 3 or 4 months for replacement parts for their vehicles or Tesla has had possession of the vehicle (and the person is using a loner) for a similar amount of time. That won't fly in the mass market.
- mcguire 8y ago
  "But if you can make money with lots of manual rework on every product, it's no big deal. Something to improve next quarter." Is Tesla making money?
- jacques_chester 8y ago
  Rework dramatically slows production. Tesla cannot get the rest of their booked-sale cash for an undelivered car. But they must pay all the fixed production costs anyway. In cash, creditors at this point will be getting squirrelly. Therefore: slowness in production is the fast-track to a possibly fatal cash crunch.
- user5994461 8y ago
  >>> It just means that paying someone to rework 1000 boards was cheaper than throwing the boards away and spinning up Revision B immediately. It's not a big deal. It's not about money. Correcting and refacturing a board takes time, in the order of months even for a simple one. It's too long.
gammatrigono 8y ago
Why are so many things framed by HN users in terms of scenes from The Big Short?
v_petkov 8y ago
Hope your short position is huge.
paulie_a 8y ago
In some cases banks can't reverse transactions.
QuantumGood 8y ago
That link is not a source for declining Model 3 demand. Source? My info shows that • In July, over 60,000 test drive requests in the US alone • 5000 Model 3 new net orders in one week in mid-July • Total deposits greater than total refunds in the twelve months ending April 2018 • Reports of Cancellations Outpacing Orders proved to be False wording Meaningless negative indicators include Goldman Sachs analyst David Tamberrino saying Model 3 social media activity had lessened and frequent critic Latrilife said Tesla’s Burbank Airport lot is under 24/7 surveillance Sources include: • Seekingalpha.com/article/4189303-tesla-short-thesis-model-3-demand-wrong • Seekingalpha.com/article/4179986-tesla-model-3-reservations-tip-iceberg
- karpodiem 8y ago
  A key supplier may have gone cash on delivery (no more net 120 terms) because M3 production this week has been at a stand still - https://twitter.com/skabooshka/status/1032409945407250434 https://twitter.com/skabooshka/status/1032409945407250434 And - https://twitter.com/Paul91701736/status/1033136573615730688 https://twitter.com/Paul91701736/status/1033136573615730688 All the first hand Twitter intelligence is gathered by people who are short on TSLA. They see the ground level reality.

jsight 8y ago

While I agree that 14% is horrible, that was a point-in-time number that is being compared to an average. One would hope that factories regularly run well above 80%. I'd also bet that some occasionally drop well below it for a day or so. The details matter here and given the quality that I see in the field, I'm not convinced that this is such a horrible situation.

jrockway 8y ago

I don't think the rework rate is a big deal for the customer. Ultimately manufacturing is about increasing the yield rate so that costs are lowered, because rework is expensive. But if you can make money with lots of manual rework on every product, it's no big deal. Something to improve next quarter. I have so many electronic devices, from cheap to expensive, that have some passive component manually bodged on somewhere. They work fine. It just means that paying someone to rework 1000 boards was cheaper than throwing the boards away and spinning up Revision B immediately. It's not a big deal. Waste is worse than a product that is imperfect immediately off the assembly line.

karpodiem 8y ago
People are waiting 3 or 4 months for replacement parts for their vehicles or Tesla has had possession of the vehicle (and the person is using a loner) for a similar amount of time. That won't fly in the mass market.
mcguire 8y ago
"But if you can make money with lots of manual rework on every product, it's no big deal. Something to improve next quarter." Is Tesla making money?
jacques_chester 8y ago
Rework dramatically slows production. Tesla cannot get the rest of their booked-sale cash for an undelivered car. But they must pay all the fixed production costs anyway. In cash, creditors at this point will be getting squirrelly. Therefore: slowness in production is the fast-track to a possibly fatal cash crunch.
user5994461 8y ago
>>> It just means that paying someone to rework 1000 boards was cheaper than throwing the boards away and spinning up Revision B immediately. It's not a big deal. It's not about money. Correcting and refacturing a board takes time, in the order of months even for a simple one. It's too long.

gammatrigono 8y ago

Why are so many things framed by HN users in terms of scenes from The Big Short?

v_petkov 8y ago

Hope your short position is huge.

paulie_a 8y ago

In some cases banks can't reverse transactions.

QuantumGood 8y ago

That link is not a source for declining Model 3 demand. Source? My info shows that • In July, over 60,000 test drive requests in the US alone • 5000 Model 3 new net orders in one week in mid-July • Total deposits greater than total refunds in the twelve months ending April 2018 • Reports of Cancellations Outpacing Orders proved to be False wording Meaningless negative indicators include Goldman Sachs analyst David Tamberrino saying Model 3 social media activity had lessened and frequent critic Latrilife said Tesla’s Burbank Airport lot is under 24/7 surveillance Sources include: • Seekingalpha.com/article/4189303-tesla-short-thesis-model-3-demand-wrong • Seekingalpha.com/article/4179986-tesla-model-3-reservations-tip-iceberg

karpodiem 8y ago
A key supplier may have gone cash on delivery (no more net 120 terms) because M3 production this week has been at a stand still - https://twitter.com/skabooshka/status/1032409945407250434 https://twitter.com/skabooshka/status/1032409945407250434 And - https://twitter.com/Paul91701736/status/1033136573615730688 https://twitter.com/Paul91701736/status/1033136573615730688 All the first hand Twitter intelligence is gathered by people who are short on TSLA. They see the ground level reality.