Agnzona said:

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Its all shuffling chairs on the deck. The 35k car cost 65k. It's profitable at 65k not at 35k. They made production quotas by limiting choice, reducing battery size and adding tents on the line. They have no service technicians. No distribution, no spare parts. The demand for a 65k car is a completely different market than a massed produced car. Not to mention the company's run by a pot smoking 15 year old.

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They have the number 1 car in America based on revenue and the number 5 car in America by volume. (3rd quarter)

They have 20% gross margins on that car.

They are utterly dominating the luxury car market in America.... and that is shuffling chairs on the deck?




You are saying that the #5 car in America isn't "mass produced?"

Does Tesla provide the price break down of their pre-orders? How many thousands of pre-orders say under 40k, how many are 50-60k, how many are 60k+?

Except everyone knew they had reservations for the Model 3, so burning through the backlog doesn't necessarily say anything about the long term demand.

Obviously Tesla supporters have renewed reason to be optimistic, but IMO this is where the story really starts for the Model 3 (and Model S, if the Model 3 cannibalizes sales).

Fizban said:

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They have the number 1 car in America based on revenue and the number 5 car in America by volume. (3rd quarter)

They have 20% gross margins on that car.

They are utterly dominating the luxury car market in America.... and that is shuffling chairs on the deck?

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You can't compare a car that's been in mass production for a few months(and hyped for years) against models that have been out forever. And Tesla's gross margins have to be considered carefully based on what they include and don't in those figures.

Ryan34 said:

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Except everyone knew they had reservations for the Model 3, so burning through the backlog doesn't necessarily say anything about the long term demand.

Obviously Tesla supporters have renewed reason to be optimistic, but IMO this is where the story really starts for the Model 3 (and Model S, if the Model 3 cannibalizes sales).

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It shows that Tesla can mass produce the Model 3 profitably... something many here doubted not that long ago.

Tesla hasn't even started Model 3 deliveries outside the US and Canada and only just started to produce cheaper versions of the Model 3. I think it is safe to say that they aren't going to have to worry about demand any time soon.

TennAg said:

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Fizban said:

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They have the number 1 car in America based on revenue and the number 5 car in America by volume. (3rd quarter)

They have 20% gross margins on that car.

They are utterly dominating the luxury car market in America.... and that is shuffling chairs on the deck?

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You can't compare a car that's been in mass production for a few months(and hyped for years) against models that have been out forever. And Tesla's gross margins have to be considered carefully based on what they include and don't in those figures.

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Tesla's sales in the US will drop after the 4th quarter, if only because that is when Tesla will begin delivering the Model 3 outside the US and Canada and their factory is still capacity constrained.

With that said you can be sure every other automaker worldwide is sitting up and taking note of what Tesla is doing. The Model 3 is the top selling car in America by 50% over number 2. (by revenue) Those are huge numbers.

Tesla's margins are calculated using GAAP as explained in their Q3 letter to shareholders...

https://www.scribd.com/document/391531183/TSLA-3Q18-Update-Letter#from_embed

Fizban said:

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Ryan34 said:

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Except everyone knew they had reservations for the Model 3, so burning through the backlog doesn't necessarily say anything about the long term demand.

Obviously Tesla supporters have renewed reason to be optimistic, but IMO this is where the story really starts for the Model 3 (and Model S, if the Model 3 cannibalizes sales).

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It shows that Tesla can mass produce the Model 3 profitably... something many here doubted not that long ago.

Tesla hasn't even started Model 3 deliveries outside the US and Canada and only just started to produce cheaper versions of the Model 3. I think it is safe to say that they aren't going to have to worry about demand any time soon.

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It showed they could make the Model 3 profitably as a luxury car. Except they already had the luxury EV market with the Model S. The Model 3 was supposed to be an affordable, mass market car in the ~$35K range. Now Tesla is basically competing with itself for luxury EVs, and a whole bunch of competition is about to hit the market too.

Don't get me wrong, it's still a very positive sign for Tesla, but there are still unknowns and risk going forward too. But Tesla's leadership also earned back some trust after a strong Q3, so there's more reason to believe they can navigate through the future scenarios as well.

A lot of people are running with this reported gross margin as if it's real or repeatable and that's dangerous. Consider all the thousands of vehicles produced in q2, "factory gated" and stored yet "finished" and sold in q3. What does that do to margins? What kind of deal did they work with Enterprise at the last minute for the loaner fleet? Full price with guaranteed rentals and buy back? What all about the vehicles that were pre-paid in full yet the VIN went to someone else? There's a lot of things to iron out for this quarter.

TennAg said:

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A lot of people are running with this reported gross margin as if it's real or repeatable and that's dangerous. Consider all the thousands of vehicles produced in q2, "factory gated" and stored yet "finished" and sold in q3. What does that do to margins? What kind of deal did they work with Enterprise at the last minute for the loaner fleet? Full price with guaranteed rentals and buy back? What all about the vehicles that were pre-paid in full yet the VIN went to someone else? There's a lot of things to iron out for this quarter.

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Tesla's inventory at the end of Q2 was only a couple thousand cars higher than its inventory at the end of Q3... so no, there wasn't any huge stock of cars held back from sale at the end of Q2 for sale in Q3.

I love a good conspiracy theory as much as the next guy, but they have already guided for profitability again in Q4 and there is no reason to think they won't get there.

Why are they comparing themselves to run of the mill midsize and compacts for revenue and volume and then flipping to luxury manufacturers for the bottom chart?

Tesla can be competitive in the luxury market, so if they stick with the 65k model 3 and market against Lexus and Acura and Mercedes then they will be fine. They need to stick to one identity. I think they will have a marketing error if they try to market the model 3 as a 35k Nissan Maxima or Honda accord class vehicle. There is a reason Acura and Honda, Nissan and Infinty, Toyota and Lexus are distinct seperate brands.

When Tesla rolls out the 35k Model 3 that will be the very base model in their lineup. Toss in autopilot (5k) paint options, etc, and the price will be in the 40s. That is still luxury brand pricing.

bmks270 said:

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Does Tesla provide the price break down of their pre-orders? How many thousands of pre-orders say under 40k, how many are 50-60k, how many are 60k+?

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They do not. There is some data that people figured out about by tracking $1,000 transactions through the merchant services. About half of the ~420,000 deposits were from overseas, and half US. It appears that probably 2/3 of the US deposits were for the $35k model, and a third are completed transactions. You don't need to be a reservation holder to buy a Tesla in the US or Canada today unless you are looking for the base model. Nobody knows how those reservations will get prioritized.

03_Aggie said:

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Why are they comparing themselves to run of the mill midsize and compacts for revenue and volume and then flipping to luxury manufacturers for the bottom chart?

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The first two graphs are the top selling by quantity and by revenue cars in the US, which are what they are...mostly midsize sedans from non-premium manufacturers.

The lower chart is either a comparison to the luxury brands Tesla is sees as it's primary competition, or more likely, is an attempt to cut off the "stockpiling cars" narrative to show that they have less cars on hand than comparable size car companies.

bmks270 said:

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Tesla can be competitive in the luxury market, so if they stick with the 65k model 3 and market against Lexus and Acura and Mercedes then they will be fine. They need to stick to one identity. I think they will have a marketing error if they try to market the model 3 as a 35k Nissan Maxima or Honda accord class vehicle. There is a reason Acura and Honda, Nissan and Infinty, Toyota and Lexus are distinct seperate brands.

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I'm no marketing guy, but they don't seem to have a need to play by the same rules. Legacy manufacturers have luxury brands since they were competing with similar cars so the identity was luxury vs not luxury.

Tesla has a huge name recognition as the go to name in electric vehicles. I think that is their identity, and forking it would be a huge mistake.

They need to stick to the premium models simply because a midrange bev is not yet profitable.

Affordable in a relative sense... A 35k car is right about where the median new car sells for in America and that will be the starting price on Tesla's base model. Obviously that leaves Tesla in the higher end of the market.

It's also a throw away car (think cell phones). Useless and worthless in 4 or 5 years. What's the long term market for that? After the pent up demand is gone then what? And that demand is all based on cool factor. What if it ends up with Fiat like dependability issues and no mechanics that can fix it?

There is one thing I dont understand. 4 to 5 years batteries have to be replaced, but so far their resale value has held up very well.

Has it just that we haven't enough time? But you would still think that would be taken into account on resale.

Other Tesla cats have covered 2-400k mines with battery degradation of around 10%. Why would you replace it in 4 years? Battery has 120,000 mile warranty which includes excessive degradation.

https://www.tesla.com/support/vehicle-warranty-m3

So far as resale value, they've traditionally been better than other cars, but there has also been less available product than other cars. Time will tell, but so far the resale had been fine.

The amount of easily debunked "knowledge" about these cars is incredible.

Burdizzo said:

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Ok, but the whole point of the big ass factories they built to manufacture batteries and cars was to sell a lot of cars and batteries, am I right? If they start forcing a bunch of upgrades on the cars and make them more expensive and less affordable for the middle class, doesn't that start negatively affecting demand, or did I sleep through ECON 203?

We have been told for years this will be the model that gets Tesla in the mainstream, and here we sit listening to people now say Tesla is going to make money on the upgrades. Seems counter to what I was hearing.

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Does Mercedes sell expensive cars? Does Mercedes sell a lot of cars? Are they "mainstream?"

Tesla is a premium brand, they are now also increasingly a mainstream one. There is no contradiction between Tesla being a premium brand and yet also being mainstream. (as evidenced by Tesla's sales last quarter)

Wink said:

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There is one thing I dont understand. 4 to 5 years batteries have to be replaced, but so far their resale value has held up very well.

Has it just that we haven't enough time? But you would still think that would be taken into account on resale.

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The simple answer is that it just isn't true that Tesla batteries need to be replaced after 4-5 years. There are now plenty of Teslas on the road that are older than that and still have batteries with greater than 90% of their original capacity.

If a battery pack needed to be replaced after 4-5 years it would be under warranty anyway. (8 year unlimited mileage for the Model S and X)

https://www.tesla.com/support/vehicle-warranty-ms-mx

The same type of people used to say the same type of thing about hybrid batteries.

I don't think I am quite ready to compare Mercedes to Tesla.

Porsche, Mercedes and Audi all have high performance EVs coming soon if not already here. They also have parts, distribution and service channels that Tesla does not. Nothing Tesla does cannot and won't be duplicated by everyone else from a product standpoint.
They are litteral the definition of a fad right now. Sometimes fads do become solid long term companies. The jury is still way out on Tesla and I wouldn't invest in them for any kind of long term play.

1. I think battery life concerns are overblown. However there are other reasons to need to replace a battery at a huge cost but the warranty is pretty good there, assuming solvency.
2. Tesla's and all evs depreciate quickly because they are nascent technology in a quickly evolving segment. The more tech in a car the more quickly it feels old. Also, price/kwh keeps dropping.
3. The real hidden cost of a tesla is in the tires, off warranty repairs/body work, and insurance rates. National average for the 3 is @ $235/month.

Burdizzo said:

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I don't think I am quite ready to compare Mercedes to Tesla.

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Well, only you can speak for when you are ready to compare the two, but Tesla is already out-selling Mercedes in the US market... and we aren't talking just cars here. Tesla is outselling Mercedes period.

Quote:

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After Tesla's "historic" quarter - Q3 2018 - where it posted its first profits in 2 years - the American automaker had just 2 profitable quarters in its history, the last one being in 2016 - and outsold Mercedes-Benz (66,542), Audi (59,478), Acura (41,830) and Infiniti (33,079) in America with close to 70,000 vehicles sold, our current sales estimate indicates that Tesla is on track to surpass Lexus (78,622) and BMW (71,679) in the final quarter of this year.
"Although we only sell Model 3, Model S and Model X, our total U.S. deliveries in Q3 were on par with total vehicle deliveries made by our long-established premium competitors, each of which has multiple models and a vast network of dealerships," Tesla CEO Elon Musk said during the carmaker's third-quarter earnings call on Wednesday.
Tesla to become America's #1 luxury carmaker by year's end
By the end of 2018, my firm, Atherton Research, wrote in a note to clients that we expect the Palo Alto-based company to be the number 1 luxury automaker in America in sales volume, finally outselling Lexus and BMW.

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https://www.forbes.com/sites/jeanbaptiste/2018/10/27/tesla-just-outsold-mercedes-benz-audi-acura-infinity-in-america-about-to-crush-bmw-lexus-in-q4/#2b1e7d5817d1

When was the last time an American manufacturer sat on top of the US luxury car sales rankings?

Agnzona said:

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Porsche, Mercedes and Audi all have high performance EVs coming soon if not already here. They also have parts, distribution and service channels that Tesla does not. Nothing Tesla does cannot and won't be duplicated by everyone else from a product standpoint.
They are litteral the definition of a fad right now. Sometimes fads do become solid long term companies. The jury is still way out on Tesla and I wouldn't invest in them for any kind of long term play.

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Nothing Tesla has done is impossible to replicate, but the electric vehicles that older manufacturers have announced don't yet approach what Tesla has on the road today. Electric vehicles are not easy and require some significant new competencies that other companies just haven't mastered yet. For an example of this take a look at the Jaguar I-Pace EV, one of many new EVs that has been billed as a "Tesla killer."

Quote:

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The Jaguar I-PACE is an all-electric crossover SUV that boasts plush interior accents and a 90 kWh battery. With its large battery pack, Jaguar estimates that the I-PACE should be able to travel up to 240 miles per charge. The vehicle is also compatible with DC rapid chargers, including the upcoming IONITY Network, which is capable of providing an output of up to 350 kW. As shown by a range and battery consumption test by German YouTube channel nextmove, though, it appears that the I-PACE's highway consumption and charging speed leaves much to be desired.

The publication opted to drive both vehicles on the Autobahn at highway speeds, traveling from Jena to Berlin (a distance of 268 km/166 miles). With both vehicles having a 90 kWh battery pack, and with the Model X being larger and heavier, it initially seemed like the I-PACE would have no problem keeping pace with the American-made all-electric SUV. Midway through the test, though, it became evident that the Jaguar I-PACE, despite being smaller and lighter, was less efficient than the Model X. At speeds between 93 km/h (58 mph) and 110 km/h (68 mph), for example, the I-PACE showed an average consumption of 22.5 kWh/100 km (362 Wh/mi). The Model X, on the other hand, had a consumption of 17.5 kWh/100 km (282 Wh/mi). That makes the larger, heavier Model X around 23% more efficient than the Jaguar I-PACE.

The Tesla Model X also outshone the Jaguar I-PACE in terms of charging. The German publication opted to charge the I-PACE at an IONITY station in a Porsche dealership. IONITY's stations are capable of proving up to 350 kW of output, but despite this, the I-PACE was limited to only 80-83 kW. In contrast, Tesla's Supercharger Network was able to recharge the Model X 90D with more than 100 kW of output.

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Original video:


English summary of results: https://www.teslarati.com/tesla-battery-charging-tech-model-x-jaguar-i-pace-range-consumption-test/amp/?__twitter_impression=true

With both far higher energy consumption, a slower charge rate, and fewer/smaller battery options (max 90kWh for I-Pace versus 100kWh for Model X), and essentially no charging network the I-Pace just isn't close.

The Tesla Model X was released 3 years ago and is coming up for a refresh next year. Jaguar is only now releasing a vehicle that isn't nearly competitive.

Typed a bunch here but got logged out.

The EVs announced so far have been expensive, under batteried, or undersized compared to the Model X, and I suspect they'll be downright silly compared to the Model Y. I hope they improve their game, since I think once EVs hit a critical mass of adoption, the negatives will fade and the advantages will accelerate. I think in a few short years, you'll see chargers everywhere, especially at places like Love's travel stops on the highway, but it will take more than Tesla to get there.

This article has a list of all that have been announced with a chart. The Mercedes, Jag, and to a lesser extent the Audi are 5 seat SUVs which fail in range and efficiency vs a 7 seat, but with comparable or higher costs. It seems like the traditional manufacturers hoped to win with press releases and threats thinking EV and Tesla are a fad. I think that ship has sailed, and they'll actually have to spend money.

https://insideevs.com/compared-mercedes-eqc-jaguar-i-pace-tesla-model-x-audi-e-tron-and-bmw-ix3/

One thing that is promoted as an advantage here will turn out to be a disadvantage for the legacy manufacturers is their dealers. As cars have become more technical, Tesla has shown that you can support them like a cell phone with constant improvements. The dealer contract prohibit this, and BMW has sent out an advertisement to upgrade the software for only $200. Maps are the same. More significant that that is that the dealers are dis-incentivised from promoting EV. They make most of their money through maintenance, which is far far less in an EV. No oil to change. Dramatically less moving parts (by an order of magnitude), million mile transmissions, and fixes that are far quicker (bad motor? --> new motor, bad battery? --> new battery).

https://www.greencarreports.com/news/1116873_car-dealers-push-buyers-away-from-electric-cars-worldwide-not-just-u-s-studies-find

Some stats came out in their 10-Q that hurt Tesla's 3Q numbers:

• They had $137.2M in non-ZEV credits that weren't disclosed before, in addition to the previously disclosed $52.3M ZEV credits.

• One entity represents at least 10% of their $1.15B accounts receivable.

So of their $312M in profits, $185.5M are credits and at least $115M in accounts receivable are due to one entity, likely a car rental company.

I haven't read their Q, but I am surprised at their level of AR. I'm curious as to the make up considering they sell their cars D2C.