In 2016 when you could pre-order a model 3, Musk said first deliveries of model 3 would begin in late 2017. About 2,500 to 3,000 model 3 had been delivered by the end of 2017, and over 200,000 have been delivered to date.
In Q1 2019, the company created 50,900 Model 3 over three months, or 17000 Cars/month on the average.
This 20,000 / month number is important, it is estimated that 20k/month is roughly the profitability point for Tesla. Elon Musk is over a year late, the profits haven't come in yet, and they can't sustainably create cars at the promised rate.
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I understand your optimism here. But this $1.5 Billion raise is more debt to a company that never has seen a yearly profit. It HAS to make money to survive, and Elon Musk has been wrong on every financial metric worth a damn.
If Tesla doesn't make a profit, it will run out of money, eventually. It can't just keep borrowing $1.5 Billion in loans every couple of years when they are late on these kinds of targets.
> The tax-credit is gone, never to return... and the $35,000 car is no where to be found.
Where I live (CA), both Fed & CA tax credits are still valid. Go to tesla.com and configure your M3. I just did and it comes out as $33,250 (after tax credits) + $1,200 dest/doc fee = $34,450.
The above doesn't include the debatable "gas savings".
Just a few weeks ago, Elon Musk claimed $35,000 cars will be available without any credits what so ever. This isn't some long-standing promise that slipped off the schedule, this is something Elon Musk has REPEATEDLY claimed to come, but has failed to deliver.
Its a message he's been hammering since 2016: $35,000, before tax credits. The idea was for the M3 to compete against low $20,000 ICE cars.
I recognize that the goalposts have shifted. Maybe it wasn't possible. But maybe... just maybe... Elon Musk shouldn't have set $35,000 before he knew if it were possible to do. He's done incalculable damage to the brand, and is no longer able to raise prices to make the company profitable.
If Tesla could raise prices to $40,000 base or even $45,000 base, they probably would be in a far better financial situation than where they are right now. They can't do that because of the multiple years of price anchoring at $35k.
I'm pretty sure there is a $35k model before tax credits, at least there was for a bit on the website. My understanding is this is a "special order" item now, as in, you have to call them to get it, but still available, just not on the website.
Well, the general implication was that a $35k Model3 would be profitable for the company.
My issue is mostly with the financial situation of the company. Its clear that the $35k M3 has been relegated as a "loss leader", and there's no work on actually making the car profitable at that price.
Again, perhaps its impossible to make a M3 profitable at $35k, and I would rather have the company make money than lose money. Its just that the years of $35k price anchoring really weakens Tesla's ability to set prices from here on out.
> My issue is mostly with the financial situation of the company. Its clear that the $35k M3 has been relegated as a "loss leader", and there's no work on actually making the car profitable at that price.
Doesn't it seem obvious that both processes and supply costs tend to improve over time? (this isn't Tesla specific actually)
A couple of simple examples:
- battery costs (they have been on a downwards trend for a while, and expected to keep falling)
- production/assembly line costs: initial hiccups are expected and costly, and as you fix them and learn to optimize your production, your costs also decrease. The rejection rate starts dropping, and rework costs also start dropping.
This is true of pretty much any production: you get better at it as you go, and generally your supply costs also decrease. As you get out of the ramp-up "hell" you start producing a lot more, which starts giving you economies of scale.
Lastly, innovation also offers improvements that can give you another knob. For example, the motors in the M3 are now being ported to Model S to improve the range. This gives an option to either offer a higher range, or keep the range the same but put in a smaller battery (where the savings are going to be). I expect incremental improvements in M3 to have a similar type of effect.
I consider all that "work". I imagine it will lower the production cost, given the same spec. That translates to profit, if the price point is kept the same.
The tax-credit is gone, never to return... and the $35,000 car is no where to be found.
> 200,000 have been delivered to date.
Elon Musk promised 20,000 Model 3 Cars created / month in 2017. https://twitter.com/elonmusk/status/881757617416056832
In Q1 2019, the company created 50,900 Model 3 over three months, or 17000 Cars/month on the average.
This 20,000 / month number is important, it is estimated that 20k/month is roughly the profitability point for Tesla. Elon Musk is over a year late, the profits haven't come in yet, and they can't sustainably create cars at the promised rate.
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I understand your optimism here. But this $1.5 Billion raise is more debt to a company that never has seen a yearly profit. It HAS to make money to survive, and Elon Musk has been wrong on every financial metric worth a damn.
If Tesla doesn't make a profit, it will run out of money, eventually. It can't just keep borrowing $1.5 Billion in loans every couple of years when they are late on these kinds of targets.