3d quarter Tesla report

i just hope they're too big to fail.

 

If they did fail, people will want their Gigafactory and charging network.

 

The quarterly report is in, and it looks bad, although much better than analysts were thinking 9 months ago. Highlights when it comes to production and sales

model 3 - The big bottle neck appears to be in the gigafactory. Here are the details as known
Tesla Model 3 delays due to battery module assembly line

In automotive, parts suppliers often design parts to manufacturers requirements. In this case the supplier - who is not mentioned seems to have blown it, and tesla did not catch the bad design early enough. Read the above link for the full information. Tesla appears to have hand machined some parts, redesigned, and then reprogramed the line to build the parts in house. How well they did is anyones guess, but tesla is now guestimating a 3 month delay to 5000 cars/week, and talking about having it good enough for 500 cars/week right now during part of the time. Once this bottle neck is cleared there will be others. Panasonic also was having trouble making the cells, but are no longer a bottle neck. Last night tesla emailed out some of us notices of delays for ordering our cars. Previously it had said I could have a 310 mile model sometime in November to December, this morning it updated to December to February (1 to 2 month delay for first in line). The 220 mile model, which is the one I want moved from january-march estimate to early 2018 with no estimate of real date.

Once initial bottle necks are cleared, and I hope fast, they have others that will limit it to 1000/week. This really was to be expected, but tesla over promised how fast it could get things running. In and of itself that isn't such a bad thing, but it has impacted plans for supercharger build out and the model S and X and mean tesla is burning cash much faster and may need more sooner than if they had planned differently.

Everything We Learned From Tesla Q3 Call With Financial Analysts - Everything We Know Tesla Q4 Call With Financial Analysts
model S and X - These sold better than expected in the last quarter. Tesla to move manufacturing people to the model 3 line started building to stock instead of to order. This is normally a good move for a manufacturing company without enough people. They also have removed options to differentiate from the model 3 (probably too early to do this), now the base has dual motors and air suspension. The combination of factors has led to discounting which has reduced margins and will continue to reduce them until at least the end of the year. They are estimating 100,000 vehicles in 2017 (up from 76,000 in 2016) but with 15% margins versus 25%.

Introducing a high volume model is hard, and tesla has never done this before. I would say they are doing very well, but will need deeper pockets and more patient to do it right. My guess is tesla will get to 5000/week model 3s, and will will solve these bottle necks, but I don't think even they know how long it will take or how much it will cost.

Cash burn is now estimated at $1B for this quarter, dropping teslas cash from $3.5 B at the end of October, to $2.5B by the end of the year. How much higher expenses will be in Q1 are dependent on how well the line and design come together this quarter.

No way they are too big to fail. They are too good to fail. 2 exit strategies. 1) spin off solar city and sell tech - robotics for manufacturing, software for autodriving and on air updates, partner deep into china and build factories in europe localizing production at lower costs, have a valuation bigger than toyota. or 2) have trouble getting production and sales ramped up and get bought by anouther car maker, google, amazon, or apple looking to do number 1.

 

From the other model 3 page in news ;-) I thought I'd comment here.
Model 3 has 310 mile range | Page 29 | PriusChat

Head slap.

Which brings us to one of my consulting specialties, getting manufacturing running more smoothly. ;-) I'm sure EnDeep is right about a lot of this. The problems at the gigafactory should have been known earlier, and not have wagged the dog of production shifts in the Fremont and the cash outlays. I'm sure after camping on the roof, and getting some of the information, it is more evident. Some of it was evident in the firings, but it now looks like some of the firings had to do with cost cutting because people might not be needed for months. Worse the solar city acquisition not only took capital, it took management time, and its tough to fire a bunch of bad workers, layoff a bunch of unnecessary workers, while hiring massive amounts of good factory workers and manufacturing engineers.

Would it have been doing better if it was in california? No! Not only wouldn't have tesla gotten the tax breaks along with higher electricity and labor costs, the state makes it really hard to build a factory like that fast. Panasonic itself has had trouble building battery factories fast both alone and with partner toyota. LG chem was notoriously slow in getting their north american battery factory built. Sure LG chem and panasonic have done better in china than the US and Japan - but that wasn't gong to fly for tesla.

Is it a really bad problem? I wouldn't say that, but its one that needs attention, and probably some outside consultants that can tell management what they already know but probably politically aren't ready to admit. It seems like a 3-6 month problem if handled right.

 

In the meantime, latest Vin spotted out in-the-wild, is in the mid 3,000's now.
.

 

nice!