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Musk: Great salesman. Tesla: Least capable automaker?

6654 Views 36 Replies 15 Participants Last post by  Upper5Percent
The auto industry admires Tesla, envies Tesla, and ultimately wants Tesla to succeed. But the Model 3 proves that something the wider industry always suspected is true: Elon Musk is the greatest car salesman who has ever lived — but Tesla is currently one of the least capable automakers on Earth.



Tesla is spending as much as General Motors every quarter — about $1 billion — to produce and sell a fraction of the vehicles that GM does. GM is also turning that invested capital into steady profits, while Tesla in the third-quarter of 2017 posted the biggest loss in its history. GM has a $25-billion war chest. Tesla only has enough cash to operate through 2018.



http://www.businessinsider.com/tesla-model-3-problems-threaten-company-future-musks-job-2018-1
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Yes, that seems like a perfectly reasonable and sound comparison. Both businesses are at the exact same lifecycle in their growth. As well it's the same type of vehicle and infrastructure needed to support it. /s





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And, of course, Tesla only makes cars /s

**** Utility and large business level powerpacks ****




**** Home level powerwalls ****



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Others may argue that Tesla will surprise everyone and it will produce 400,000 Model 3's in 2018. That would require producing 7700 per week starting this week. But Tesla also pushed back its production plans for the Model 3 and is now saying a 5,000-unit weekly run-rate won't be achieved until July of 2018. Of course, Tesla has never been reliable in it's production forecasts, so who knows?
How do you think Tesla sales of the Model 3 will be compared to the Bolt? The difference is people are clamoring for the Model 3.

What if Tesla only does 200K or 300K while the Bolt sells 20K or 30K (with LEAF2 and TM3 out). Is that still a fail?

What if Tesla is 6 or 9 or 12 months off their projects but are proven to be ramping up and get there in that time? I am driving at **6** year old Volt and GM has failed to ramp up to a major electric car sales in 72 *months*. Is that a fail?

The X and S were known to be high end limited sales. The 'master plan' subsequent Model 3 is supposed to be for the masses. https://www.tesla.com/blog/master-plan-part-deux

This is all very amusing how it gets framed and what goal post are used to describe failures.

Yes, Tesla's Powerwall and Powerpacks are a large part of the company ... so they are bigger than the electric car but that seems too obvious on how it all fits together and people love to ignore that ;)
... But alas, for some reason, GM still wants to stockpile them in lots in California instead of shipping them to places with high demand.
hmm ... yes for some reason ... certainly they knew what they were doing. In the USA there are advantages for selling in certain states ;)

Now, it seems they've pretty much achieved their 30,000/year target and are looking to ramp up production.
It will be interesting to see all the numbers when competition is out (LEAF2 and TM3) as well as now that we know the USA EV tax credit will continue into 2018 (vs bigger 4Q sales in the USA when there was a question of it going away).

2018 is going to be a great year for EVs in general for all manufacturers and that is what we all want.
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I can see your point here but the issue is whether Tesla can sell the Model 3 and stay in business. Last quarter Tesla lost something like $28K on every vehicle is delivered. If GM took even $20K off the price of the Bolt how many do you think it could sell? That's not to say the Model 3 costs a lot more than the Bolt EV to build. It won't. But the models Tesla will be selling won't be $35K with a $7500 tax credit. And how many of those "clamoring" for what has been marketed as a smaller version of a Model S for $35K will still be clamoring when they see what they get for $50K. This isn't a problem for Tesla alone. For GM and Tesla and every other auto manufacturer the problem is that BEVs are too expensive given the alternatives.

So to answer your question: I don't think Tesla will sell 200K or 300K Model 3s a year, both because it won't be able to make that many and because the demand won't be there. Demand for the Model S and Model X is not exactly going through the roof. These models, especially the Model S, had a nice run, but Tesla is looking at steady or even declining demand. How many small sedans for $50K do all manufacturers combined sell in the US? (The US is the relevant market because Tesla's business in Europe is "Meh" and in China it's downright lousy).

A journalist for the WSJ and NYTimes once remarked that, for technology companies, "it seems that it's the true believers who sometimes don't get something very basic -- addition and subtraction".
Thank you for your considerate reply. The 'master plan' had a goal of the Model 3 and certainly they have worked those configuration pricepoint numbers (LR/SR, options, RWD/AWD, etc) with many forecast models that get revised regularly. Certainly their avg (config opts) sold Model 3 will make money. The battery material and tech is one of the major components and that is a major the point of the gigafactory (along with powerwall/powerpacks).

Re: How many small sedans for $50K do all manufacturers combined sell in the US?
IMO, at a highlevel the Model 3 and the Bolt are competitors only because they are > 200 mile BEVs. They are very different and the Bolt is not the competitor. There are *many* articles on this using lower BMWs, Audis, etc as the real comparisons. As to your question, you would have to define what small sedans are the competitors and then look at goodcardbadcar to see what they sell. I suspect there are articles about this. I'll search.


I really like the blue line with the circles here:

Via: https://www.reddit.com/r/teslamotors/comments/7ohclp/i_did_some_graphs_on_model_3_production_rates/
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Re: I'll search -- I had a tough time getting tables to come up in goodcarbadcar to add some annual numbers to the below list of competitors.

NOTE -- Reminding myself that a *lot* of people stretch themselves (mental (and budget) threshold) for cars they really want. I did with our 2011 Volt. Never spent that much money on cars. (gateway drug to electric as we got a 2016 Volt and 2016 X).
To me that means that the below is just not the competition because others that would only spend 25-30 before may now spend 40-45 if they rationalize less brake jobs, gas, oil changes, etc!!!

Re: How many small sedans for $50K do all manufacturers combined sell in the US?
... As to your question, you would have to define what small sedans are the competitors and then look at goodcardbadcar to see what they sell. I suspect there are articles about this. I'll search.
Via: http://redgreenandblue.org/2017/08/09/tesla-model-3-comparison-vs-22-ev-competitors-straight-specs/


UPDATE
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...
Tesla is spending as much as General Motors every quarter — about $1 billion — to produce and sell a fraction of the vehicles that GM does. GM is also turning that invested capital into steady profits, while Tesla in the third-quarter of 2017 posted the biggest loss in its history. GM has a $25-billion war chest. Tesla only has enough cash to operate through 2018.
This was in my youtube suggestion list tonight. It turned out to be a GREAT (IMO) video on many of the financials and philosophies. Tip: I watched at x1.25 speed (gear icon).

Title: I Love That Tesla Is Losing Money CHEDDAR
HyperChange founder Galileo Russell goes on Cheddar to talk about Tesla's new Semi, Roadster, cash burn and grand vision to transition the world off fossil fuels. Interview took place on 11/22/2017 live from the NYSE.
http://www.youtube.com/watch?v=BTHVoq5Z6kI
Looking at the "US Sales of Midsize Luxury Vehicles" chart seems to show that the entire market is about 500k vehicles.

That Tesla has reservations totaling the equivalent of almost the entire yearly sales in this market segment should be of concern to the other automakers in this segment. Of course we don't yet know how many will translate into sales, but let's assume 80-90%.

So, after the backlog of reservations is addressed in 2018 and 2019 (assuming production issues are resolved), how much of this market can Tesla expect to take? 10% would be 50,000 cars per year. Based on how many cars the other brands are getting, 50k sales per year seems like a little bit of a stretch, but achievable. That's would be what I expect Model 3 sales to be in 2020.
I noticed that as well (Note/aside: it was a 2015 chart). I'm not sure about your 'expect to take' 10% number. What did they take from the higher luxury vehicle market? Not sure if that translates directly but interesting. (and did that wake-up/push those manufacturers into EV market for mid/low end cars - thx Tesla :) ) -- UPDATE -- added 2015 chart below

Also what about the people that were in the market just below the mid-luxury? Did you, I, many others buy a car 'above' their typical/historical high-water-mark purchase price to get a Volt or a Bolt? No doubt that happens. So this opens up more than the 500,000 mid-lux market right?

Aside: What about the Model Y (mid/smaller SUV/CUV) coming out? Elon indicated in a tweet in the past month that the pickup truck would be right after that too.

I alluded to this in an update to my above post but not sure if you saw it.
NOTE -- Reminding myself that a *lot* of people stretch themselves (mental (and budget) threshold) for cars they really want. I did with our 2011 Volt. Never spent that much money on cars. (gateway drug to electric as we got a 2016 Volt and 2016 X). To me that means that the below is just not the competition because others that would only spend 25-30 before may now spend 40-45 if they rationalize less brake jobs, gas, oil changes, etc!!!
Via: https://cleantechnica.com/2016/02/10/tesla-dominates-large-luxury-car-market-in-us-updated-figures/


P.S. Hope you/people had a chance to see the youtube video in my previous post. very interesting perspective.
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Just to add a bit of personal experience to Scott's brave and persistent data presentations, I thought I'd share info about the 3 model 3 reservation holders that I know. One, my wife, would be looking for another mid-luxury to replace her Infiniti so she is in that target group. One woman we know is is going for the LR is coming from a Camry. That's a big expansion of possible buyers. And a guy that we know who is waiting for an SR is coming from a Honda Element. As Scott has emphasized, this vehicle has a huge "aspirational" pull. Virtually everyone we know wants to see the car when we get it. The Volts have elicited mild interest at best in the past.

So the Model 3 market segment is potentially very wide. I think worrying about demand is silly. Whether they can keep running fast enough to stay ahead of the creditors while building manufacturing capacity is the real question now that the 3 appears to be a home run in terms of the reception of the car by early buyers and testers.
Thank you for your real-world input. I'm not in the Model 3 market so do not have personal exposure there.

I generally have been trying to stay away from most Tesla "discussions" on this forum but I didn't think Steve's post was really telling an accurate story. I'm fine with trying to back up Tesla with some data/videos/graphs/tables and there are many that are analyzing this to great detail so a lot to view.
Tesla is spending as much as General Motors every quarter — about $1 billion — to produce and sell a fraction of the vehicles that GM does. GM is also turning that invested capital into steady profits, while Tesla in the third-quarter of 2017 posted the biggest loss in its history. GM has a $25-billion war chest. Tesla only has enough cash to operate through 2018.
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