bitkahuna

iTrader: (20)

your click bait comment isn't helpful and the link taken falls short of implying tesla is going bye bye. please try to be more helpful and thorough when posting stuff like this.

to all: the thread is about the power steering mechanism coming loose (bolt breaking) on model S. sounds awful right... well in that lengthy thread it also states (from tesla themselves) that it affects Model S vehicles built before April 2016 so obviously tesla's known about the issue and fixed it a long time ago.

but hey why not throw bombs in this thread...

i get that tesla must be under insane financial pressure, but i think they're good for the auto industry and have definitely been innovative even if they're not for everyone and far from perfect.

situman

I think his point was this will put back even farther behind in meeting production targets plus the added cost and time of replacing these parts. Certainly not bye bye Tesla, yet, but it sure drives them further into the ground.

Diesel350

Tesla just issued a recall now for 123,000 Model S's so extremely doubtful they fixed anything a long time ago.

riredale

In an earlier comment above I had asked how long Tesla could go before needing additional capital. Turns out that an article in the WSJ yesterday (Thursday, 29 March) touched on that topic.

Basically, the article ("Tesla is Running Short on Time") said that Tesla currently had about $4 billion in cash equivalents. Last year they burned through about $3.4 billion. The very general implication is that they have about a year's worth of funds left, assuming nothing changes. On the positive side, they could announce next week that they have greatly ramped up production of the Model3. On the negative side, their 2025 bond has plummeted to $0.86, meaning that the nominal 5.6% (I recall) that the bond pays is now not good enough; bond buyers are saying they will only buy it if it pays about 6.5%, implying a slightly higher concern that the company won't be able to pay it out in 2025. Tesla stock has also dropped significantly.

What do I think will happen? If Musk reports blowout production levels, then folks will be far more comfortable with the current astronomical stock valuation. Otherwise, I suspect the stock will continue to fall and that some other car company (or even Apple!) with very deep pockets will eventually buy, say, 51% of the company for a $10 billion infusion.

Tesla current Market Cap is about $45B, GM is about $50B (and at nosebleed altitude are Amazon at about $700B and Apple at $850B (!)).

One final note: the article claims that "fewer than 30% of customers who have been invited to take delivery of the Model3 have done so." If true, I don't understand. Are folks with deposits saying they don't want the car after all? The article says that customer deposits represent almost $1B of the cash and most of that has to be refunded if they get cold feet.

mmarshall

Bob Lutz saw this coming some two and a half years ago.

https://www.roadandtrack.com/car-cul...ob-lutz-tesla/

Is Tesla Doomed?

Bob Lutz thinks the writing is on the wall for the EV maker.
BY BOB LUTZ
OCT 26, 2015

Tesla's showing all the signs of a company in trouble: bleeding cash, securitized assets, and mounting inventory. It's the trifecta of doom for any automaker, and anyone paying attention probably saw this coming a mile away. Like most big puzzles, the company's woes don't have just one source.

It's true that the world may be running light on buyers who will spring for a big-dollar electric vehicle that can't make the hike from Detroit to Chicago without stopping for a long charge. And cheap gasoline isn't helping Tesla's case. Right now, prices around the country are hovering close to $2 a gallon. If that's bad news for the Prius and the Volt, it's worse for the Model S.

In addition, there's never been any secret sauce to the company's battery technology. The automakers that bought into Tesla's tech early did so to avoid having to pony up development dollars on first-generation battery packs of their own. Now that Audi has announced it's getting into the EV game, Tesla should be even more concerned. If you're a luxury buyer, which car would you rather have?


IF I WERE SITTING IN ELON MUSK'S SEAT, I WOULD TAKE AN URGENT LOOK AT CUTTING COST.

And then there's the distribution problem. Nobody has ever been successful with company stores, though plenty of manufacturers have tried them. When I came to BMW in the Seventies, it had five factory stores. The idea was, like Tesla, to be in control of the retail environment and give customers an upscale experience. They were all money pits.

I think Tesla CEO Elon Musk figured that if factory stores work for Apple, they'll work for Tesla. But the fixed costs for an Apple store are next to nothing compared with a car dealership's. Smartphones and laptops don't need anything beyond a mall storefront and a staff of kids. A car dealership is very different. It sits on multiple acres. You need a big building with service bays, chargers, and a trained sales force, plus all the necessary finance and accounting people. It ties up a staggering amount of capital, especially when you factor in inventory. Under a traditional franchise arrangement, the factory never has to carry that burden. Right now, Tesla does.


Stockholders may be clinging to the hope that the company's upcoming crossover will help put Tesla back on track, but there's little evidence to bolster that optimism. A big, expensive vehicle with a compromised structure to accommodate gullwing doors can hardly be a sales knockout.

If I were sitting in Musk's seat, I would take an urgent look at cutting cost. Not just taking cost out of the car, but reducing expense in general. When they have a situation where, on an operating basis, they're losing $4000 per car, they're in trouble. At some point, they're not going to get any more money.

I would seriously consider an entry-level model with a cheaper, range-extended hybrid driveline. Something with a much smaller battery that also looks great and drives great. Something that's electric most of the time, say 50 or 60 miles, but can carry on under gasoline power past that. Would an internal-combustion engine dilute the Tesla brand? Maybe, but everyone said Porsche could never build a front-engine car, and look how that turned out.

I like Elon Musk personally, and I think the Model S is a fabulous car, but history's filled with defunct companies with great products run by brilliant people. Unless Tesla rights its organization and products in a hurry, it'll join those ranks.

MattyG

While Lutz has some good insights, he doesn't even mention the key issue in that three year old article. Tesla and Elon Musk's complete lack of manufacturing experience as a mass market car company. They got hundreds of thousands of orders and can't fill but a fraction of those. Very short sighted thinking on Musk's part. If people want your product but you can't provide it to them, they go away after awhile and so does the money. Instead of collecting the revenue from delivered cars, you're sitting on $1000 deposits instead.

The world's big auto makers only had to build their vehicles, they didn't also have to roll out the infrastructure to support them, ie. gas stations. Other companies took care of that. Tesla not only has to build the cars, it has to build the infrastructure to support them. Chargers, places where these chargers are located and a means to power them either on the grid or off solar. This is where Musk essentially had one of his big grand visions and forgot about the details.

Och

iTrader: (3)

Tesla isn't anywhere - if anything the government will bail it out, or private investors, maybe even the Chinese.

LeX2K

Think it would be smart for a company like VW or Toyota to buy Tesla?

mmarshall

....and inherit all that debt?

LeX2K

Toyota has $50+ billion in cash laying around.

Sulu

Tesla has a bad history of over-promising and under-delivering; their initial forecast dates for each of their new models have never been close to correct. And after months of promises and re-forecasts, production of the Model 3 is still not at planned values.

Yet, investors keep coming back and buying Tesla stock. For a car company that cannot build cars, its market worth is greater than General Motors, a company that builds millions of cars.


What would VW or Toyota gain from buying Tesla? They don't want (or don't need the technology).

The mainstream automakers have their own EV technology. Toyota sold the RAV4 EV from 2012 to 2014 that used a battery and electric motor supplied by Tesla; since the end of the agreement, Toyota has given up using Tesla technology and is developing its own EV technlogy. Each major automaker that is developing EVs has its own proprietary technology.

I believe that Tesla's current market capitalization makes it too expensive for any technology company (like Apple or Google) or automaker (like VW or Toyota or Mercedes-Benz, which uses Tesla technology in its B-Class EV) to buy outright. A buyer would have to spend a lot of money yet get very little out of it because the value of its hard assets is so much less than what its stock is currently worth.

But wait until Tesla's stock price drops more, it files for bankruptcy and then the pieces are bought for pennies on the dollar.

MattyG

Musk should have focused his executive team to concentrate on quality control, upscaling manufacturing processes and delivering on promises to customers. It's not that people necessarily want to hate on Tesla. Their cars look good and the company acted as a disrupter, to wake everybody else up to the possibilities. But now that the hype is over, the opportunity to cash in on demand has also slipped away.

You now have the Chevy Bolt, Hyundai Ioniq, Kia Niro electric and the Kona electric (with a claimed 250 miles of range). While Musk and Tesla have been launching Roadsters into space orbit, the rest of the world has moved on.

Freds430

Tesla's stock is down 36% from it's high. It bonds are now graded junk. It has never come close to making money in any year. In the last four years it has lost over 2.6 billion. With their 10,000 model 3's in first quarter the 400,000th person on the waiting list will get theirs in 3.3 years. That might be okay however since Consumer Reports ranks them 25th out of 29 in reliability. Hilarious that unreliable and they do not even have an engine and a single speed transmission. Consumer Reports gave the Model X, their over $100,000 SUV, the lowest score in reliability. They listed their ten dogs to avoid based on reliability and the Model X is #1. Tesla owners are like your neighbor who just had to be the first one on the block with a HDTV. The rest waited and bought a much better and more reliable one for a whole lot less. Can't wait until these Model 3's that were rushed out are come back for recalls.

bitkahuna

iTrader: (20)

yeah not sure why anyone would buy a model 3 over a chevy bolt.

model s is cool, i seem 'em all over this area... but they still don't sell enough. x is an expensive flop.

but i want tesla to make it... perhaps they'll just get bought out or assets purchased in the bankruptcy if it happens.

situman

Its a good thing the model 3 isnt delayed, met and exceeded all production targets and the company is making money hand over fist. I guess when the company is a well oiled machine you can afford to not spend time being head of production.