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Right as they raise the base price of their other Models by $10,000 to $15,000 by eliminating the lowest battery capacity option from the cars.

Edited by GCrites80s

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The way that they factor in "fuel savings" as part of the price of the car is really dumb. Even on their website, they display the price of the Model 3 as $34,850* and then when you get to the end it reveals that the actual price is $42,900.

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20 hours ago, GCrites80s said:

Right as they raise the base price of their other Models by $10,000 to $15,000 by eliminating the lowest battery capacity option from the cars.

 

I wouldn't be surprised if the lower battery capacity options weren't selling that well. One of the biggest obstacles to people buying electric cars is range anxiety.

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1 minute ago, taestell said:

I wouldn't be surprised if the lower battery capacity options weren't selling that well. One of the biggest obstacles to people buying electric cars is range anxiety.

 

And if the bulk of your driving is under 50 miles, let's say, then you're likely buying a much cheaper Nissan Leaf or even a PHV.  You give up a 250+ mile electric range, but also save potentially $15k+.


Very Stable Genius

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On 1/18/2019 at 2:45 PM, jmecklenborg said:

Trouble in paradise:

https://www.cnn.com/2019/01/18/business/tesla-layoffs-elon-musk/index.html

 

I return to the "moat" business concept popularized by Warren Buffet and Charlie Munger.  Tesla is only enjoying a brief "moat" advantage.   Other manufacturers will soon enter the luxury car, sports car, and SUV markets.  Porche, Mercedes, etc.  Tesla is borrowing money like crazy to try and "get big", so will be vulnerable to collapse. 

 

Seems you have a particular tunnel vision for Tesla layoffs (which came after a period of intense growth and still leave the company quite a bit larger than it was two years ago in terms of workforce).  Thoughts on the layoffs at GM?

 

https://arstechnica.com/cars/2019/02/gm-is-profitable-but-its-still-laying-off-4000-workers/

 

Ford?

 

https://www.chicagotribune.com/business/ct-biz-ford-europe-layoffs-20190110-story.html

 

The real question is whether Tesla is able to produce and sell enough cars at high enough margins to service its debt.  You're quite right that their debt burden is significant (though I'd note that no car company operates without debt financing, to the best of my knowledge).  And the company hit another production and delivery record in Q4.

 

https://electrek.co/2019/01/02/tesla-record-deliveries-production-q4/

 

Granted, that was with the federal tax credit about to halve.  We will see whether and to what extent the loss of half the tax credit, in some sense offset by the sticker price reduction, impacts sales (and more importantly, margins) in 1Q19.  However, as of last week's conference call, Musk said that the company has enough cash on the balance sheet to make a scheduled $920 million bond payment in March, which will eat a decent chunk out of the company's $10B-ish debt load.

 

https://www.nytimes.com/2019/01/30/business/tesla-earnings-elon-musk.html

 

(I get it, less than 10% of the overall debt load, but that's still a respectable slug, and the goal isn't to pay off the entire debt ever, or at least not while there's still expansion in the works as well.  Managing debt is part of the life of any car company.)

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52 minutes ago, taestell said:

The way that they factor in "fuel savings" as part of the price of the car is really dumb. Even on their website, they display the price of the Model 3 as $34,850* and then when you get to the end it reveals that the actual price is $42,900.

 

Completely agreed on this.  Especially because the fuel saving math can become over-aggressive when the price of gas remains moderate, which it has.

 

46 minutes ago, taestell said:

 

I wouldn't be surprised if the lower battery capacity options weren't selling that well. One of the biggest obstacles to people buying electric cars is range anxiety.

 

It's hard to know that yet because the short-range battery was never even produced yet.  All production has gone into higher-margin versions, i.e., ones with many options selected.  It's generally accepted that a lot of the reservation backlog is people waiting for the $35k model, which would be short-range RWD.  With the release of the "mid-range" model, a concept that didn't even exist and launch, and the price cut, it's likely that Tesla wants to tempt at least some of that backlog off the sidelines to commit to mid-range RWD models (still considerably more affordable than long-range AWD models. but well above $35k), before they try to tackle the production challenges of the $35k price point.  The company admits it can't hit that target profitably yet.

 

Because the options change the price of the car so much, you can spec out a Model 3 for $43k now all the way up to $80k+.  That's serious variability, though I haven't even checked to see if other luxury car marques have similar variation in their models.  I'm guessing not, though; they'd have entirely separate model lines to target those various market segments (e.g., BMW 3-, 5-, and 7-series).

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39 minutes ago, Gramarye said:

 

 

 

 

Because the options change the price of the car so much, you can spec out a Model 3 for $43k now all the way up to $80k+.  That's serious variability, though I haven't even checked to see if other luxury car marques have similar variation in their models.  I'm guessing not, though; they'd have entirely separate model lines to target those various market segments (e.g., BMW 3-, 5-, and 7-series).

 

 

You can turn an $80K Porsche 911 into $130k+ quite easily with options. M-B can be very bad with that as well. The different model lines in German luxury are defined by size ordinarily.

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https://actionnetwork.org/letters/proposed-ohio-ev-ownership-fee

 

Quote

Clean Fuels Ohio is currently hearing that the House intends to propose a $200 annual fee on EVs and a $100 annual fee on plug-in hybrids as part of the state transportation budget.

 

Oh good, Ohio is apparently trying to lead the way in stupidity.


Very Stable Genius

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^ It needs to happen at some point. EVs put the same amount of wear and tear on infrastructure as any other passenger vehicle (if not more given that they're often heavier), but their users don't contribute to paying for said infrastructure via gas taxes. As more and more electric cars end up on the roads, some sort of funding mechanism will have to replace gas taxes.

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They ought to move to a VWMT (vehicle weight miles traveled) system for everyone, then.  Or just pay for roads out of the general budget and abandon the accounting fiction (just a cultural and rhetorical separation, not a legal one) of a "segregated" or "trust" fund for transportation infrastructure.

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56 minutes ago, Gramarye said:

They ought to move to a VWMT (vehicle weight miles traveled) system for everyone, then.  Or just pay for roads out of the general budget and abandon the accounting fiction (just a cultural and rhetorical separation, not a legal one) of a "segregated" or "trust" fund for transportation infrastructure.

 

I agree.  😮

 

The "transportation fund" is already the "accounting fiction" given how frequently it is bailed out with general funds. 

 

 

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On 1/2/2019 at 9:42 PM, jmecklenborg said:

Tesla is still in a deep debt swamp.  Its luxury cars are profitable but the imaginary $35,000 Model 3 will never exist and it couldn't be profitable if it did exist. 

On 1/16/2019 at 10:09 AM, Gramarye said:

 

I am confident that the $35k Model 3 will exist within 2 years.

 

 

I'll take my I-told-you-sos in small unmarked bills, thanks. 🙂 

 

https://electrek.co/2019/02/28/tesla-model-3-standard-battery-interior/

 

Tesla finally launches base Model 3 for $35,000 with shorter range and new interior

 

Tesla is finally launching the long-promised standard Model 3 with a base price of $35,000 – fulfilling Elon Musk’s “secret masterplan” released back in 2006.

The automaker is now making several new versions of the Model 3 available with a shorter range and new interior options.

Elon Musk has been teasing an important Tesla announcement this week and now we finally have the details.

Tesla has been gradually releasing cheaper versions of the Model 3 over the last year, but it has never been able to bring the price down to $35,000 – the mass market price that they have been promising.

The standard battery pack and interior has been delayed on several occasions… until now.

 

Also of relevance to me, later in the article:

 

Tesla is also updating Autopilot options and pricing. The base Autopilot package is now cheaper ($3,000 before delivery – $4,000 after) but it only includes Autosteer and Traffic Aware Cruise Control.

All the features previously found in ‘Enhanced Autopilot, like Summon and Autopark, are now part of the Full Self-Driving package which is $2,000 more than the standard Autopilot package.

 

This is big news for me because by far the most-used feature of Enhanced Autopilot (which was formerly $5000 pre-delivery, $6000 after, and actually then raised to $6000/$7000) was TACC, and was the only thing I'd have considered getting it for.  I don't need Summon and Autopark.  The $3000 reduction of that $7000 post-delivery price tag to $4000 in exchange for losing Summon and Autopark might just get me to consider it.

 

The big potentially negative news for me in there is the store closings announcements.  The question for at this point, since I already own the car, is whether it means service centers (which are generally located at "stores") will be closing.  I don't need the store to show me new products, though an online-only sales strategy makes me wonder how much more difficult getting a test drive will be for prospective customers.  For my own selfish purposes, though, I'm most concerned about whether the Lyndhurst service center will close.

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6 hours ago, Gramarye said:

 

I'll take my I-told-you-sos in small unmarked bills, thanks. 🙂 

 

https://electrek.co/2019/02/28/tesla-model-3-standard-battery-interior/

 

 

I just went on the website.  I suspected smaller wheels but instead we get the standard 18" wheels but with wheel covers that look like the sets you buy at Wal-Mart for $14.99.  The option for real wheels is $1,500.  Also, you can only get the color black.  Every other color is either $1,500 or $2,000.  I don't know if they're skimping on the black paint to save money or if it's of the same quality as the other colors.  So for most people, the minimum price will be $38,000. 

 

Also, absolutely no information is given regarding a delivery fee.  Where do you get the car (today we heard that Tesla will close most of its dealerships)?  Do you have to fly to Oakland and drive the thing back to wherever you live?  Do you have to pay for California temporary tags just to drive the thing back to Ohio? 

 

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5 hours ago, jmecklenborg said:

 

 

I just went on the website.  I suspected smaller wheels but instead we get the standard 18" wheels but with wheel covers that look like the sets you buy at Wal-Mart for $14.99.  The option for real wheels is $1,500.  Also, you can only get the color black.  Every other color is either $1,500 or $2,000.  I don't know if they're skimping on the black paint to save money or if it's of the same quality as the other colors.  So for most people, the minimum price will be $38,000. 

 

Also, absolutely no information is given regarding a delivery fee.  Where do you get the car (today we heard that Tesla will close most of its dealerships)?  Do you have to fly to Oakland and drive the thing back to wherever you live?  Do you have to pay for California temporary tags just to drive the thing back to Ohio? 

 

 

The way Musk seems to do things, they won't charge for delivery but won't announce this until they have already delivered a few.

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9 hours ago, jmecklenborg said:

 

 

I just went on the website.  I suspected smaller wheels but instead we get the standard 18" wheels but with wheel covers that look like the sets you buy at Wal-Mart for $14.99.  The option for real wheels is $1,500.  Also, you can only get the color black.  Every other color is either $1,500 or $2,000.  I don't know if they're skimping on the black paint to save money or if it's of the same quality as the other colors.  So for most people, the minimum price will be $38,000. 

 

Also, absolutely no information is given regarding a delivery fee.  Where do you get the car (today we heard that Tesla will close most of its dealerships)?  Do you have to fly to Oakland and drive the thing back to wherever you live?  Do you have to pay for California temporary tags just to drive the thing back to Ohio? 

 

 

With today's environmental regulations the dull solid colors such as black and white are cheapest for the factories to shoot without the paint peeling off after a couple years like a '90s car.

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11 hours ago, jmecklenborg said:

I just went on the website.  I suspected smaller wheels but instead we get the standard 18" wheels but with wheel covers that look like the sets you buy at Wal-Mart for $14.99.  The option for real wheels is $1,500.  Also, you can only get the color black.  Every other color is either $1,500 or $2,000.  I don't know if they're skimping on the black paint to save money or if it's of the same quality as the other colors.  So for most people, the minimum price will be $38,000. 

 

Sure, if you want the absolute cheapest car possible, you make sacrifices on the option front.  But you're being too harsh on the wheels.  The aero wheels are the same ones I have and they don't look like they were $15 at Wal-Mart, and the "real" wheels you're saying are a $1500 option are not just flashier, they're larger 19" wheels.  If anything, the 18" standard wheels have some advantages in colder, snowier climates, or I'd have gotten the 19" ones myself.

 

And if you've got $2000 to commit above the absolute minimum price, you'd be much better advised to put it towards the Standard Range Plus model (which in addition to slightly longer range comes with slightly better acceleration and top speed and a slightly better interior) and stick with black paint than splurge $1500 on a flashier color or getting 1" larger wheels.

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Closing their dealerships in order to cut costs so they can reduce the price of their vehicles does not sound like a winning strategy to me. If they want to continue to sell cars to mostly tech nerds, ordering via their website is fine. But if they want to become more mass market, that's not going to happen unless they have dealerships where people can stroll in and take a test drive.

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Remember, to the Tech Bro the only important customers are other Tech Bros. Never mind older people that have tons of money and always qualify for financing and like buying things the old way.

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Anecdotally, I have noticed way more Teslas on the streets of Over-the-Rhine in the past few weeks.  Like, I go to my window and look down at the traffic on Main Street for a minute or two, and I will see 1 or 2 Teslas driving down the street during that time.

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On 3/1/2019 at 12:40 PM, taestell said:

Closing their dealerships in order to cut costs so they can reduce the price of their vehicles does not sound like a winning strategy to me. If they want to continue to sell cars to mostly tech nerds, ordering via their website is fine. But if they want to become more mass market, that's not going to happen unless they have dealerships where people can stroll in and take a test drive.

 

Tesla is partially backing off the plan to close stores, saying that only about half of the stores previously planned to close will close now.  They're going to try to raise prices of their higher-end models by about 3% instead.  Not sure how high up in the chain this goes (e.g., would this encompass the Performance Model 3?  Non-Performance but Long Range AWD Model 3?).  It will definitely affect the S and the X, though.

 

https://www.fidelity.com/news/article/company-news/201903110933RTRSNEWSCOMBINED_KBN1QS0JF-OUSBS_1

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They have to keep them open in order to fulfill their lease requirements. Musk actually thought that he could just shut them down anytime he wanted like they are servers. The attorneys and accountants at the company had to inform him that he couldn't do that.

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https://finance.yahoo.com/news/tesla-unveils-model-y-suv-041050132.html

 

Tesla unveiled it's Model Y last night and as they said - it's mostly built on the Model 3 frame.  It fits, space-wise, into the compact SUV space.  Because of the familiarity of the parts with the Model 3, mass production should be much easier but many people seemed underwhelmed by a "slightly larger Model 3."

 

Elon noted earlier press releases that Tesla will be upgrading all of its 12,000+ superchargers (and adding more) so that charging times will be reduced - 1,000 miles/hour is the goal (of course, with a 310 mile range on a Model 3 that means fully charging in ~20 minutes at a supercharger, though likely less time if you aren't starting from 0%.

 

Pre-orders are now available on the Y and the Semi.  He also noted that production slowed to almost a halt last year on the solar roof as they focused the Li-Ion production on the Model 3 batteries.  Rumors are swirling about the next unveiling to be some sort of pickup.

 

Wall Street seems mostly unimpressed by the event last night (which was about 80% just a quick history of the company).


Very Stable Genius

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It was probably wise not to try to INNOVATE too much with this one. Crossovers really should be based on the sedans and hatchbacks of a model line to keep engineering and parts costs down. That way, you can charge people $15,000 more for the same vehicle just taller and heavier. All you have to do is tell them that they want to sit up higher for some reason.

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SUVs and crossovers even worsen traffic jams since people in SUVs sit up so pointlessly high that it makes things close to them in the front seem "too close" PLUS people won't pull their vehicles close to the of back SUVs since they tower over everything and block the view. Previously sufficent car storage areas of off ramps and intersections get too full since each vehicle is now a full car length from the next.

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Bait & Switch:

http://www.msn.com/en-us/autos/news/tesla-model-3-buyers-claim-bait-and-switch-over-delayed-delivery-of-standard-range-cars/ar-BBVgujR?ocid=ientp

 

While Tesla opened orders for the Standard Range trim last month, buyers have now reported Tesla reps are delaying their scheduled delivery dates and trying to upsell them on pricier trims. Which begs the question: Has Tesla built even one base Model 3?

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https://www.cnbc.com/2019/04/10/tesla-shares-jump-as-lawmakers-begin-push-to-expand-ev-tax-credits.html

 

Quote

US lawmakers begin push to expand federal electric vehicle tax credits

 

A bipartisan group of legislators is pushing to expand the EV tax credit to 400,000 automobiles per auto manufacturer (currently 200k), and the offset is that it would phase out over 9 months instead of the current 15 months.  GM and Tesla have hit the 200k threshold (and if this new bill passes, it may complicate things for the folks who got the "half" credit within the last year from buying a GM or Tesla EV).


Very Stable Genius

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Do you BELIEVE Musk's PROMISE that existing Teslas will be worth $100-200K in THE FUTURE?

 

 

 

Back in April, Elon Musk made the specious argument that Teslas are great investments because they’ll be worth more in the future once they’re capable of full self-driving, which he believes can be achieved with nothing more than a software update.

 

Musk’s hypothetical ignores that, in this fantasy world where every Tesla becomes a capable robotaxi, other cars will probably be capable of autonomous driving, too. But, It’s highly improbable—and the height of hubris—to assume Tesla will be the only company capable of full self-driving for any appreciable amount of time.

 

https://jalopnik.com/elon-musk-really-really-believes-teslas-will-increase-1836446085

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My friend believes TSLA will go to $1,000/share because Musk is actually building a fleet of robocars and that will generate so much more revenue with very little expenses involved because they'll be a B2B company.

 

Musk makes outlandish claims all the time about his products and the fanboys eat it up.  A bunch of people just left their autonomous segment because they weren't meeting Musk's ridiculous timeline to get it done.  Even if they somehow get a million self-driving Teslas on the road in a couple years, where are they going to go when they need charged?  Plus, I'm much more inclined to trust a driver from Uber/Lyft than a car with no driver that hasn't yet demonstrated Level 5 autonomy, especially when on some of my trips it's not entirely clear where a good drop off point is.

 

https://www.motortrend.com/news/tesla-elon-musk-interview/

 

Quote

There's not like some finance spreadsheet or something like that with some market analysis. There's none of that.

 

When you're CEO of a company bleeding money and admit you don't do any financial analysis....


Very Stable Genius

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This is the kind of thing that convinced me to significantly lighten my holdings in TSLA the stock even as I think the Model 3 was among the best purchases I ever made (and I paid the early-adopter premium, you can get the Performance model today for barely any more than I paid for the LR AWD non-Performance version).

 

https://www.cnbc.com/2019/07/16/tesla-cuts-price-on-model-3-discontinues-versions-of-model-s-model-x.html

 

That Performance version was at one time $70k+ or so, now down to $55k.

 

What grinds my gears (even though I no longer have them) is that it doesn't need this kind of puffery from Musk.  It is an extraordinary engineering achievement on its own terms.  It's vastly cheaper per mile to drive even when charged on electricity I had to pay for, and free chargers are increasingly abundant.  I've paid for charging (including using my home outlet) 3 times in the last 2 months, a grand total of about $13, while driving around 1200 miles in that time, all much more fun miles than I got in any gasoline car I've ever driven.

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1 hour ago, GCrites80s said:

Fantastic cars, crappy leadership. Usually crappy leadership leads to crappy cars as well... but that's not the case here.

 

Agree on all points, @Gramarye and @GCrites80s. In my case, my dad bought a Model S about two years ago and quickly pledged he would never drive an ICE vehicle again. As a car guy my entire life, who was disappointed when he chose the Tesla over some more traditional options, I had to see what the fuss was about. It only took about 5 minutes to figure it out. 

 

The electric propulsion has to be experienced. The styling is great and still looks fresh after 8 years. The continuous over the air software updates should revolutionize vehicles in a way that is almost as significant as the electric motors themselves. And, having taken it on a road trip with over 1200 highway miles, I can attest that the “autopilot” is a tremendously effective and valuable driver assistance program IF used properly and with full supervision. 

 

I was and am a convert, and believe in the brilliance of the engineering and products that this little carmaker in Fremont, CA can produce. Based on all of this, I bought TSLA at what ended up being its 2017 peak. And I’ll echo the previous comments that I just wish Elon would shut up and let his products do the speaking for him! They can stand on their own right and don’t need his outlandish boosterism. If he redirected that energy into making sure Tesla continues to have the type of corporate culture and workplace environment that will continue to produce such great innovations, everything else should work out for itself.

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18 hours ago, GCrites80s said:

Fantastic cars, crappy leadership. Usually crappy leadership leads to crappy cars as well... but that's not the case here.

 

I think the issue here is that "leadership" is a broad term.

 

Musk is a headache with respect to certain elements of leadership: Management of expectations, public communications.

 

But compared to the executives at other car companies, he is an absolute visionary.  And he instinctively gets some basic MBA concepts that some of those other companies appear to have forgotten--first mover advantage, inflection points on adoption curves, vulnerabilities of the franchise business model, etc.  For years now, people have been saying that Tesla is vulnerable because the other big OEMs are going to get serious about EV technology.  Back when TSLA was under $50, I was definitely afraid of that and it was why I waited longer than I should have to buy in originally.  I simply did not anticipate just how lethargic the other OEMs were going to be once they saw the technology in action.  And I still don't know when they're really going to wake up, but even now, the best any of them can hope for is probably to play Samsung to Tesla's Apple.  Will it be after Tesla gets the Semi and Model Y into production?  How about a pickup, a medium-duty truck, and a 7-passenger minivan to go along with the sedan (3), luxury SUV (X), and crossover SUV (Y)?  After it has moved into Oshawa and Hamtramck and retrofitted them the way it did NUMMI?

 

I sold notwithstanding all that because I think its momentum outran its fundamentals (most of what I sold was above $340) and Musk has lost some of the market's confidence.  But I didn't sell all my position, and I certainly don't see the company going bankrupt.  The cars sell as fast as they can roll them off the line, at decent profit margins even after the recent price cuts.  And the best talent in the industry now wants to work for Tesla, perhaps in part because they've had so little success moving the corporate culture in the existing OEMs--decadence and hidebound orthodoxy that Musk predicted and took advantage of long before I believed it.  So I give the man credit where it's due.

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