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by Animats 2522 days ago
"GAAP net loss of $408M" - the number that matters.

Tesla isn't doing that badly. But now that they have some production volume, they have to be evaluated as a car company, not a startup. Can they make lots of cars at a profit? They got the production quantity up by throwing people, money, and a big tent at the Fremont plant. That ran up the cost per car. Although it's better than their previous state of low production with a full staff. Can they get to a smooth running production plant with labor hours per car comparable to Detroit? (About 30-50 labor hours per car is typical in the industry.)

"Model 3 average selling price was stable at approximately $50,000."

That's nice, but the Model 3 was supposed to be $35,000. Tesla has caught up with their backlog, and you can now buy a Tesla Model 3 off the lot, just like regular car dealers.[1] That's good; they're now like a normal car company. But it also means they've saturated the market at their high price point, which is about where BMW is.

They're also at the point where all their models need a refresh or a replacement. Tesla is slow at new models compared to the competition.

[1] https://www.extremetech.com/extreme/289911-what-shortage-tes...

6 comments

"they have to be evaluated as a car company"

Take a look at the rate of growth in capacity both of their cars and their batteries. I don't know what it is, but with Shanghai Giga coming online this year, Model Y next year, Pickup + Semi thereafter, the growth in capacity and the capital requirements to install it, is not matched by any other car company, possibly in the history of car companies (Musk's posit, to be fact checked).

All that growth is very expensive, but they may be able to fund it from operations. That is 'super impressive'.

In terms of production volumes, they are still small relative to GM, Toyota, VW, I'd still put them in the startup category. But not for much longer.

Building production plants is folded into GAAP numbers. Those are real assets with real depreciation.

Actual production at Tesla's battery "gigafactory" is only around 23GWh/yr.[1] That puts them well behind BYD and Contemporary Amperex Technology. About five other companies have battery factories in the 10-100GWh/yr range under construction or operating.

[1] https://electrek.co/2019/04/14/tesla-gigafactory-1-battery-c...

>Actual production at Tesla's battery "gigafactory" is only around 23GWh/yr.

It has already increased to 28 GWh per the latest earning call, and it is still growing. Panasonic said they already installed the equipment for 35 GWh of production and will invest further as soon as they're able to reach that rate.

> That's nice, but the Model 3 was supposed to be $35,000.

I'm sorry, this part is really misleading. The entry price for a 220 mile model was supposed to be $35k.

https://arstechnica.com/cars/2016/04/the-post-model-3-reveal...

Now a much nicer vehicle than originally announced with 240 miles of range is ~39k and the top end is right around the anticipated 60k.

The base model is $35.5k.

But now that they have some production volume, they have to be evaluated as a car company

I'm generally critical of Tesla.. but this isnt right in my experience. If the company's volume is growing rapidly, they are going to have higher expenses than a stable low growth competitor. Because as volume approaches the capacity of the equipment and staff, you must throw more people at it, reduce maintenance, buy more equipment, etc. And all of that costs money. Capital assets are being built for their future volume, which is going to be more expensive, since they would be overbuilding for their current volume (which can be a big problem if growth slows). And the growth also creates urgency, which reduces the company's leverage when negotiating prices.

Only once growth is under control can a company then turn its full attention to controlling costs.

>They're also at the point where all their models need a refresh or a replacement. Tesla is slow at new models compared to the competition.

They're definitely at the point where their competitors would have released a replacement (Model S) or refresh (Model X). I'm not sure it's clear that Tesla actually needs to do that. Ford and GM don't release new models just because the clock demands it, they release new models when the market demands it. Is the market demanding a replacement to the model S, or did the Model 3 hype cycle alleviate that demand?

I think you're right - the market is demanding a minivan and a pickup more than a new model S.
> Tesla isn't doing that badly. But now that they have some production volume, they have to be evaluated as a car company, not a startup.

While they're growing at this rate, they're still a startup and expected to use their available cash to improve their market share.

They are lowering customer's urge of refreshed models with nice and quite meaningful software updates. Clever move, if you ask me.