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Small company risk is failure to grow. Big company risk is every other failure. Tesla is valued as a growth/tech company. As long as people believe in their gr

by csours 5y ago

Small company risk is failure to grow. Big company risk is every other failure. Tesla is valued as a growth/tech company. As long as people believe in their growth, they get more cash. I don't personally understand how Tesla hasn't had more problems with their apparently uncontrolled engineering changes. At least part of it is customer enthusiasm for the product papering over any drawbacks. It's not that GM can't make changes like this, it's that GM WON'T make changes like this. All of this is, again, solely my own opinion.

kjksf 5y ago
Alternatively, maybe just like SpaceX has faster development cycle AND greater safety and reliability of rockets, Tesla has faster development cycle AND greater safety and reliability of cars? Judging by the number of recalls, Tesla doesn't seem to be doing worse than GM, Porsche or Ford.
- vvanders 5y ago
  Their EMMC issue on the S was pretty egregious, that's something you get right in even basic consumer electronics. They also had numerous issues with door handles(I had two fail once the car was outside of warranty). There's things they do well but I don't know if I'd qualify them as having better reliability.
optimiz3 5y ago
Tesla is past the cash raising phase though - they are massively profitable and actively retiring debt early. https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000095017021000524/tsla-20210630.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/0000... "On July 16, 2021, we issued a notice of redemption to the holders of the 2025 Notes informing the holders that we will redeem the notes in full in August 2021 at a redemption price equal to 102.65% of outstanding principal amount, plus accrued and unpaid interest, if any."
- csours 5y ago
  They are raising money by selling stock.
- perl4ever 5y ago
  >Tesla is past the cash raising phase though It appears to me that they are steadily issuing stock at the rate of about 20% of their market cap per year, or roughly at the rate of $10 billion per month. It looks like the number of (diluted) shares outstanding increased by over 20% between 2019 and 2020. What did that consist of? Their annual report says mainly: - Issuance of common stock for equity incentive awards - Issuance of common stock in public offerings e.g. "On February 19, 2020, we completed a public offering of our common stock and issued a total of 15.2 million shares (as adjusted to give effect to the Stock Split, as described in the paragraph below), for total cash proceeds of $2.31 billion, net of underwriting discounts and offering costs of $28 million." "On September 1, 2020, we entered into an Equity Distribution Agreement with certain sales agents to sell $5.00 billion in shares of our common stock from time to time through an “at-the-market” offering program. Such sales were completed by September 4, 2020 and settled by September 9, 2020, with the sale of 11,141,562 shares of common stock resulting in gross proceeds of $5.00 billion and net proceeds of $4.97 billion, net of sales agents’ commissions of $25 million and other offering costs of $1 million." "On December 8, 2020, we entered into a separate Equity Distribution Agreement with certain sales agents to sell $5.00 billion in shares of our common stock from time to time through an “at-the-market” offering program. Such sales were completed by December 9, 2020 and settled by December 11, 2020, with the sale of 7,915,589 shares of common stock resulting in gross proceeds of $5.00 billion and net proceeds of $4.99 billion, net of sales agents’ commissions of $13 million and other offering costs of $1 million." Also, as of their 2020 annual report, roughly a billion shares were authorized to issue, which is on the order of another 100%, or double the current outstanding. https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/0001... You might dismiss this as "way back in 2020", but it does seem to be their latest annual report. Their latest quarterly report is as of June 30, 2021, and guess what? Shares outstanding are up about 4.6%. Compounded over a year, that's going to be just about 20% again. 10-Q: https://www.sec.gov/ix?doc=/Archives/edgar/data/131860 https://www.sec.gov/ix?doc=/Archives/edgar/data/131860 "Stock-based awards" seem to have been 93 million in the last three months. TSLA is around $775/share.
oceanghost 5y ago
> I don't personally understand how Tesla hasn't had more problems It's that nobody cares and the media doesn't cover it. A friend of mine-- his Tesla has broken down a dozen times and he still happily pre-ordered the cyber truck. My 10-year-old Honda has never had any work done to it other than maintenance-- but that doesnt make the news either.
- brianwawok 5y ago
  And if we go for antidotes, my current Tesla has had 0 problems or recalls, my previous Honda had many many recalls and issues. This is not a useful way to look at a product.
  - fiddlerwoaroof 5y ago
    Yeah, I’ve driven about 16k miles in a model 3 and have never had an issue.
panick21 5y ago
Have you considered that Tesla actually has a process and good engineers and good models to understand their changes? Maybe they are simply more dynamic, have better on the fly testing, more flexible software to manage their production, are more vertically integrated and have thus more control over their production. The argument that Tesla had significant more quality problems compared to others really doesn't hold much water today. The fact is Tesla had far fewer problems with batteries and drive trains while delivering far more EV. People love to complain about minor panel gaps (that most people don't ever notice anyway) and ignore that Tesla has a very good track record in terms of drive train and battery. Compare Tesla Model 3 to Leaf or the Bold that came out at the same time and had far more problems. Leaf had to replace all early batteries and Bolt is being recalled right now. Tesla should get credit for this, rather then just them being 'lucky' or that Tesla costumers are just willing to buy broken products (another myth that doesn't hold up). In terms of drive train and battery Tesla worse failure by far was that they had to under-power a number of Model S produced in 2017. There has never been a large recall of Model 3 or Model Y.
- csours 5y ago
  >"Have you considered that Tesla actually has a process and good engineers and good models to understand their changes? Maybe they are simply more dynamic, have better on the fly testing, more flexible software to manage their production, are more vertically integrated and have thus more control over their production." Yes. That's cost of entry. It works when the customer takes delivery. They can also do smart things like have consistent APIs, electrical bus systems, etc (I don't know if they do, but they could) Even with all of that, technical debt on physical products in the real world will drag you down to the depths of the ocean. You see this with the customer experience on repairs. But like I said, Tesla is a growth company. As long as people believe Tesla is a growth company it will continue to be a growth company.
  - panick21 5y ago
    > You see this with the customer experience on repairs. Most complaints about experience with repairs are more about how long it takes because of limited service centers, not actually bad service or overly broken cars. On the other hand, many people have a really great experience as well. The mobile service is absurdly popular and make many repairs 10x better then what basically anybody else has. In terms of 'check this individual horror story', you can find those for every car maker. I have not yet seen any systematic real analysis on costumer experience for repair. The evidence seems to be based on individual stories. Partly I think because Tesla is so integrated all repair problems are more directly associate with the company, while for other companies you just had a bad dealer experience. I honestly don't know how to evaluate this in any systematic way, 'my friend had X problem with Tesla Service' is not good enough.

by csours 5y ago

kjksf 5y ago

Alternatively, maybe just like SpaceX has faster development cycle AND greater safety and reliability of rockets, Tesla has faster development cycle AND greater safety and reliability of cars? Judging by the number of recalls, Tesla doesn't seem to be doing worse than GM, Porsche or Ford.

vvanders 5y ago
Their EMMC issue on the S was pretty egregious, that's something you get right in even basic consumer electronics. They also had numerous issues with door handles(I had two fail once the car was outside of warranty). There's things they do well but I don't know if I'd qualify them as having better reliability.

optimiz3 5y ago

Tesla is past the cash raising phase though - they are massively profitable and actively retiring debt early. https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000095017021000524/tsla-20210630.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/0000... "On July 16, 2021, we issued a notice of redemption to the holders of the 2025 Notes informing the holders that we will redeem the notes in full in August 2021 at a redemption price equal to 102.65% of outstanding principal amount, plus accrued and unpaid interest, if any."

csours 5y ago
They are raising money by selling stock.
perl4ever 5y ago
>Tesla is past the cash raising phase though It appears to me that they are steadily issuing stock at the rate of about 20% of their market cap per year, or roughly at the rate of $10 billion per month. It looks like the number of (diluted) shares outstanding increased by over 20% between 2019 and 2020. What did that consist of? Their annual report says mainly: - Issuance of common stock for equity incentive awards - Issuance of common stock in public offerings e.g. "On February 19, 2020, we completed a public offering of our common stock and issued a total of 15.2 million shares (as adjusted to give effect to the Stock Split, as described in the paragraph below), for total cash proceeds of $2.31 billion, net of underwriting discounts and offering costs of $28 million." "On September 1, 2020, we entered into an Equity Distribution Agreement with certain sales agents to sell $5.00 billion in shares of our common stock from time to time through an “at-the-market” offering program. Such sales were completed by September 4, 2020 and settled by September 9, 2020, with the sale of 11,141,562 shares of common stock resulting in gross proceeds of $5.00 billion and net proceeds of $4.97 billion, net of sales agents’ commissions of $25 million and other offering costs of $1 million." "On December 8, 2020, we entered into a separate Equity Distribution Agreement with certain sales agents to sell $5.00 billion in shares of our common stock from time to time through an “at-the-market” offering program. Such sales were completed by December 9, 2020 and settled by December 11, 2020, with the sale of 7,915,589 shares of common stock resulting in gross proceeds of $5.00 billion and net proceeds of $4.99 billion, net of sales agents’ commissions of $13 million and other offering costs of $1 million." Also, as of their 2020 annual report, roughly a billion shares were authorized to issue, which is on the order of another 100%, or double the current outstanding. https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/0001... You might dismiss this as "way back in 2020", but it does seem to be their latest annual report. Their latest quarterly report is as of June 30, 2021, and guess what? Shares outstanding are up about 4.6%. Compounded over a year, that's going to be just about 20% again. 10-Q: https://www.sec.gov/ix?doc=/Archives/edgar/data/131860 https://www.sec.gov/ix?doc=/Archives/edgar/data/131860 "Stock-based awards" seem to have been 93 million in the last three months. TSLA is around $775/share.

oceanghost 5y ago

> I don't personally understand how Tesla hasn't had more problems It's that nobody cares and the media doesn't cover it. A friend of mine-- his Tesla has broken down a dozen times and he still happily pre-ordered the cyber truck. My 10-year-old Honda has never had any work done to it other than maintenance-- but that doesnt make the news either.

brianwawok 5y ago
And if we go for antidotes, my current Tesla has had 0 problems or recalls, my previous Honda had many many recalls and issues. This is not a useful way to look at a product.
- fiddlerwoaroof 5y ago
  Yeah, I’ve driven about 16k miles in a model 3 and have never had an issue.

panick21 5y ago

Have you considered that Tesla actually has a process and good engineers and good models to understand their changes? Maybe they are simply more dynamic, have better on the fly testing, more flexible software to manage their production, are more vertically integrated and have thus more control over their production. The argument that Tesla had significant more quality problems compared to others really doesn't hold much water today. The fact is Tesla had far fewer problems with batteries and drive trains while delivering far more EV. People love to complain about minor panel gaps (that most people don't ever notice anyway) and ignore that Tesla has a very good track record in terms of drive train and battery. Compare Tesla Model 3 to Leaf or the Bold that came out at the same time and had far more problems. Leaf had to replace all early batteries and Bolt is being recalled right now. Tesla should get credit for this, rather then just them being 'lucky' or that Tesla costumers are just willing to buy broken products (another myth that doesn't hold up). In terms of drive train and battery Tesla worse failure by far was that they had to under-power a number of Model S produced in 2017. There has never been a large recall of Model 3 or Model Y.

csours 5y ago
>"Have you considered that Tesla actually has a process and good engineers and good models to understand their changes? Maybe they are simply more dynamic, have better on the fly testing, more flexible software to manage their production, are more vertically integrated and have thus more control over their production." Yes. That's cost of entry. It works when the customer takes delivery. They can also do smart things like have consistent APIs, electrical bus systems, etc (I don't know if they do, but they could) Even with all of that, technical debt on physical products in the real world will drag you down to the depths of the ocean. You see this with the customer experience on repairs. But like I said, Tesla is a growth company. As long as people believe Tesla is a growth company it will continue to be a growth company.
- panick21 5y ago
  > You see this with the customer experience on repairs. Most complaints about experience with repairs are more about how long it takes because of limited service centers, not actually bad service or overly broken cars. On the other hand, many people have a really great experience as well. The mobile service is absurdly popular and make many repairs 10x better then what basically anybody else has. In terms of 'check this individual horror story', you can find those for every car maker. I have not yet seen any systematic real analysis on costumer experience for repair. The evidence seems to be based on individual stories. Partly I think because Tesla is so integrated all repair problems are more directly associate with the company, while for other companies you just had a bad dealer experience. I honestly don't know how to evaluate this in any systematic way, 'my friend had X problem with Tesla Service' is not good enough.