The quinessential 21st century con man

[Hawkmoon]

Elon Musk

https://www.vanityfair.com/news/2019/08/how-elon-musk-gambled-tesla-to-save-solarcity

But the level of secrecy surrounding the SolarCity plant may offer an additional indication of how bad things are. Tesla refused to allow me to take a tour, and former employees say a rare media event at the factory last fall was highly scripted. “They spent more time and resources trying to fabricate what people saw than they do making anything,” says Witherell, who worked there at the time. “They told employees to pretend we were busy.” A story aired last February by News 4 Buffalo described the shop floor as “torpid,” with idle employees milling about. “They say they are in ‘ramp up’ mode,” says Scott, the former employee. “But this isn’t even start-up mode. What company spends two and a half years starting up something they were already supposed to be the best at?”

[MechAg94]

So is this whole thing just a failure of govt subsidized industry or a repeat of the solyndra scandal only 100 times bigger?  He at least sort of had a product for a little while.

[sumpnz]

The caterwauling when Tesla finally goes bankrupt will be epic.  As will the schadenfreude.  I only wish I had the balls, and cash, to buy put options.  But, the market can remain irrational longer than I can remain solvent.

[Jocassee]

So is this whole thing just a failure of govt subsidized industry or a repeat of the solyndra scandal only 100 times bigger?  He at least sort of had a product for a little while.

To be fair, Tesla does make a pretty awesome product (in my opinion and Tesla owners I've met), just heavily subsidized and probably not sustainable. It also seems that Musks biggest enemy is himself.

[HankB]

Tesla is losing money on every vehicle they sell, but their strategy seems to be that they'll make it up in volume.

I actually see quite a few Teslas on the road in my area, just west of Austin, TX. The way some pull away from a light, they have pretty good performance, too. But I can't help but wonder how the advertised battery range compares to the actual range when it's 100+ outside and the Tesla driver is using his air conditioning and radio.

I will be surprised if Tesla is still selling cars in 5 years.

(Speaking of car fads that seem to have passed - what happened to those itty bitty "Smart" cars? Just a few years ago they were fairly common on the road - privately owned as well as rentals - but these days I don't see more than 2 or 3 per month. I heard they discontinued sales, but what about the ones that were already on the road? Did they all just fall apart in a couple of years?)

[cordex]

(Speaking of car fads that seem to have passed - what happened to those itty bitty "Smart" cars? Just a few years ago they were fairly common on the road - privately owned as well as rentals - but these days I don't see more than 2 or 3 per month. I heard they discontinued sales, but what about the ones that were already on the road? Did they all just fall apart in a couple of years?)

My guess is that they made a little bit of sense to some people when gas was over $4 a gallon, but with gas a little over $2 a gallon people realized how much they suck for lots of stuff.

[sumpnz]

Co-worker had a "Smart" car.  Had a hell of a time finding a dealer that would even take it as a trade in, and nobody would buy it private party.  They just are dumb cars here.  Fuel economy was no better than a Civic, and unless you lived where parking was super tight, they were far less practical than a Civic too.  Not to mention way more expensive when brand new.

[WLJ]

Tesla is losing money on every vehicle they sell, but their strategy seems to be that they'll make it up in volume.

You make up a lower profit on volume. Loss + more volume = more loss

[MillCreek]

In the affluent tech-heavy Eastside suburbs of Seattle, you see many many Teslas.  They have also built a number of the Tesla Supercharger locations in the area.

[lee n. field]

Tesla is losing money on every vehicle they sell, but their strategy seems to be that they'll make it up in volume.

I actually see quite a few Teslas on the road in my area, just west of Austin, TX. The way some pull away from a light, they have pretty good performance, too. But I can't help but wonder how the advertised battery range compares to the actual range when it's 100+ outside and the Tesla driver is using his air conditioning and radio.

At least 3, in our little run down no-jobs city.

(Speaking of car fads that seem to have passed - what happened to those itty bitty "Smart" cars? Just a few years ago they were fairly common on the road - privately owned as well as rentals - but these days I don't see more than 2 or 3 per month. I heard they discontinued sales, but what about the ones that were already on the road? Did they all just fall apart in a couple of years?)

Again, a couple around town.  Including one that looks like a bumblebee. 

[Hawkmoon]

To be fair, Tesla does make a pretty awesome product (in my opinion and Tesla owners I've met), just heavily subsidized and probably not sustainable. It also seems that Musks biggest enemy is himself.

If their product is so awesome, the .gov should cancel all the subsidies and let Tesla try selling their cars for what they really cost to make ... plus a profit. No product that isn't self-sustaining in the marketplace is truly awesome in any real world terms.

[WLJ]

Saw one with a "Zero Emissions" sticker on it.
90+% of our electricity around here come from coal.

[DittoHead]

Fuel economy was no better than a Civic, and unless you lived where parking was super tight, they were far less practical than a Civic too.  Not to mention way more expensive when brand new.

That was the most confusing part of their popularity to me. There was a well proven alternative that was better by pretty much every metric - it wasn't a difficult comparison to figure out where you had to compare electricity cost vs gas mileage or anything.

[Angel Eyes]

Saw one with a "Zero Emissions" sticker on it.
90+% of our electricity around here come from coal.

https://wattsupwiththat.com/2019/08/27/australian-new-report-electric-cars-have-higher-co2-emissions/

Original article is by The Australian, behind a pay wall.

[dogmush]

Tesla seems to be pivoting towards the German Luxury model of car sales, where they lease them for 3 years and then sell them "CPO".  I suspect, without running the numbers, that that will help with the profit(or loss)/unit situation.

The "make it up with volume" plan is more trying to sell enough cars that they can keep investors giving them money and stay solvent until the newer plants (Car and Battery) come online and lower manufacture costs.  I don't know if it'll work, but it's not as stupid as just sell more cars at loss -> Profit.  They are also building a plant in China, that will open a large Asian market.

It's also not as cut and dried as that.  My understanding (and I can't find numbers right now) is that the Roadster is a revenue neutral or small loss flagship car for Tesla, like the Ford GT is for Ford. I don't know about the Model S, although Panasonic has lowered battery costs recently so they should be in the black.  This Article from 2018 puts the cost to manufacture a Model 3 at $28,000, and says they might not be profitable at $35,000.  But we know now that the vast majority of Model 3's sold are the $50-$60k versions, which leaves some nice per unit profit.  Whether that remains true as the US EV tax credits taper off we should know in the next 6 months.  The Model Y is do out next year and is supposed to have economics similar to the 3.

I'm not a Tesla Fanboi by any stretch, but I am impressed by the cars they are turning out now compared to 5 or 6 years ago.  We are a 3 vehicle household at Casa de Mush, and when the wife's 2015 Mazda is due for replacement in a couple years a lightly used Tesla is very much on the RADAR.  As a second vehicle to commute into the city from the outskirts they make a lot of sense. 

I haven't kept up on the SolarCity news so I can't really comment on that side of the OP, but I will also point out that SpaceX is pulling in a pretty damn healthy chunk of revenue from Falcon 9 these days, and the Dragon is on track to be operational next year.  They can almost name their price to put people on the ISS at that point, especially as politics make the Soyuz less palatable.

[sumpnz]

The Shanghai factory will be a boat anchor.  They'll owe $323million in taxes to the Chinese govt every year, regardless of how many cars it produces.  If they don't pay it the factory gets repo'd.  Given their losses on the Model 3 in their current factory I doubt very much the Chinese factory will ever be profitable.

Whatever Munro says, Tesla isn't currently able to make a Model 3 for $28k.  Maybe for $35k for a short range 2wd, likely over $45k on the long range.  They lose too much money for it to be much better.  

Whatever cost effeciencies Panasonic might have achieved, the S and X are still losing gobs of money.  Maybe that's partly because Tesla can't sell as many as they used to (Model 3 is cannibalizing some sales, plus Jag i-Pace and Audi e-Tron are taking a lot of market share), but it's mostly because the costs just aren't dropping like Tesla promised.

The company is an absolute cash incinerator.  Anyone but Musk at the helm would've run out of the ability to con investors out of their money long ago.

[dogmush]

Do you have any basis for that estimate on cost of production?

I admit I know nothing about car production, but at first glance I would find an estimate by third party folks done at the behest of Tesla's competitors to be likely to be pretty accurate.  That's not a snow job to Tesla investors, it's a report to the people trying to undercut them.  They would seem to have incentive to be accurate on their estimates.

[sumpnz]

Just by looking at their losses and average sales prices.