> No other company has the infrastructure to be able to do that.
Because they don't want it. They don't want AP regressions we've already seen happen. They don't want engineers testing code out on real people's lives.
You really think other companies just don't know how to send OTA updates to an ECU or other car components?
I could literally put that together with scraps in my garage, my car's ECU can be flashed over OBD, it'd be trivial to write firmware for a microcontroller to repeat a set of OBD commands downloaded from a webserver.
Obviously an auto manufacturer would do more than that, but there is literally nothing but choice stopping other manufacturers from doing this.
Why is everything Tesla does always suddenly some sort of competitive advantage. Next people will be saying the fact they have cars that spell out "S3XY" is a competitive advantage.
I think you're being a little uncharitable or simply don't understand what Tesla are doing.
When Tesla pushes and runs code in the shadow mode, it is run in parallel to the "production" version of the software. The actual behavior of a car, even with the test code in, still relies on decisions made by the "production" version of the software[1]. The purpose of such testing is to compare decisions made by the updated code vs those made by the old version, and use this info for fine-tuning the next gen algorithms.
Because the difference between could do and did is massive.
What you suggested would take at least a year for them to setup at all, let alone work the bugs and making it useful.
Ask any kid, they probably couldn't say what happened at school all week. But if they do remember something, it would have been something outside of their routine.
Ask any kid, they probably couldn't say what happened at school all week. But if they do remember something, it would have been something outside of their routine.
This is why I find their delivery numbers completely and utterly irrelevant to company value. This is a just a technology company that has produced a great user experience and is now scaling it.
Their main bottleneck is battery production and they're very competitive at it.
If the bottleneck was auto-manufacturing they would have no trouble raising enough investment to just buy out a car company.
If they can't make the car thing work, and their autopilot tech sells for as much as mobileye, shareholders are going to be wiped out in the event of liquidation.
How the cars are selling and what margins they're getting matters a great deal, even if you believe that the long term value comes from autopilot.
Tesla AP is a highly integrated, custom product, that works only with Tesla cars.
Mobileye was (and still is) general automotive supplier, with most of car companies as their clients. Intel didn't buy just tech - it bought all also the integrations and market share.
Keep in mind that Tesla couldn't even raise enough money to buy out themselves, not even at the incredibly discounted price of $420/share.
that seems very juicy?
edit: it seems people put a disclaimer on their ownership of tesla stock on hn about tesla threads. i dont own any.
It's cool that they can collect that data and no doubt will help refine the feature, but otherwise marketing speak. Says nothing about how accurate their algorithm is or how long it may take. There's nothing stopping them from rolling out an algo for anything and running it in "shadow mode".
If it is not turned on, they still send the inputs to autopilot, without controlling the car. I think they can also compare what the driver does against what the autopilot would have done.
They can also ask their "fleet" to match specific conditions, and collect data if they are met.
The autonomy day video showed some interesting images, for example "animals" the fleet had seen.
I think this is the video https://youtu.be/tbgtGQIygZQ
I'm just curious if it does make them way ahead, and if so how much more ahead? Is this driving a car vs horse wagon levels?
There are people much more informed than myself that believe Shadow Mode isn't real, and that Tesla is outright lying about its existence.
In casual talks with friends, this is something I've expected would be the competitive edge Tesla has over Waymo and the others; driving millions of "virtual miles" strikes me as far less useful than having a human baseline to compare to along with data capture from a fleet in all manner of real situations/locations.
In huge black font, then they just show the statistics of how often that happens.
It's an excellent way to prove (or disprove) the effectiveness of new safety-related features.
As for non-safety-related features, my 3-yr-old granddaughter calls my Model S the "fartmobile" because of a recent electronic whoopee-cushion easter egg.
They generated over $600 million in FCF in Q2. Compare this to only $200 million by Ford over the same period, also announced today: https://s22.q4cdn.com/857684434/files/doc_financials/2019/q2...
Tesla's non-GAAP "Operating cash flow less capital expenditures" is $ 613,929 [edit: in thousands, so $614 million]. Ford's same GAAP amount is $6.5 billion, or 10x Tesla's non-GAAP FCF for the same period (Q2).
Ford's "company adj. free cash flow" is a non-GAAP item that includes other items beyond capital expenditures.
Loss is more than $400M on record sales.
Tesla has a demand problem and is discounting cars in order to maintain the growth story.
There is now $11bn of debt and $4bn of accounts payable on the balance sheet. It's costing not far off $1bn a year to service that debt, plus they are also very reliant on capital markets to roll over this debt every year or so. If there was a significant decline in corporate debt markets and Tesla couldn't roll the debt over, they would be out of cash very quickly (regardless of the losses).
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...
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.
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...
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.
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 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?
While they're growing at this rate, they're still a startup and expected to use their available cash to improve their market share.
I like that they don't stop moving even if it scares a few investors with heavy capex spending on their next products.
Did you even look at the financials? It doesn't even cover depreciation!
Edit: Downvoters want to explain how $250mm is "heavy capex spending" in the automotive world, particularly in a "high growth" company?
Personally I don’t think it matters or changes the likelihood that they’ll eventually succeed or not succeed.
Edit: >The opportunity cost of owning it has been huge while the rest of the market ripped up
The S&P is up over 50% in five years. TSLA could go up 20% tomorrow (and ignore today's after hours change) and the S&P would still be outperforming TSLA.
Tesla now has new profitability story - Musk's innovations in FSD, will make them a lot of money, and make cars appreciating assets. Experts disagreed, got fired, and FSD continues. Wonder how will that end?
Citation needed?
Tent was temporary, and year later - it's still there
Tesla would be wise to focus on being a car company first and foremost.
I don't understand how such huge volatility could happen assuming that the efficient market hypothesis is real.
A more reasonable brand comparison might be Mercedes-Benz Cars, which made 575,639 vehicles in Q2. It's quite impressive that Tesla have got to about 15% the volume that Merc do, but they're hardly going to take over the world with that kind of growth rate.
IMO they should stop chasing volume sales of lower cost vehicles and concentrate on premium vehicles with higher margins. What's the point of killing themselves trying to lift production numbers to try to make all the analysts who seem to be obsessed with that happy, which doesn't yet seem to be working, if the margins aren't worth bothering? It won't end well.
Mission statement: Tesla's mission is to accelerate the world's transition to sustainable energy. [1]
Strategy (paraphrasing): Start with low-volume, high margins. Over time introduce high-volume, low-margin. [2]
[1] https://www.tesla.com/about [2] https://www.tesla.com/blog/master-plan-part-deux
Also, it seems to me that Tesla should work with one of the big three automakers on manufacturing. Tesla has spent a lot of resources reinventing car manufacturing and yet they can't produce a vehicle that meets their needs. They need to focus on the high tech aspects and leave the mundane manufacturing to experts.
At the very least, Musk should trust his manufacturing experts on how to produce a car rather than try to make every decision by himself. He's a great marketer and should focus on that role and leave the rest to the experts.
Too bad they can't lower the cost of batteries enough. If they did that, they could lower the price of the car to a point where it would be a no brainer to buy one.
I’m sure there is one person that made a decision on that basis but I’ve heard many more not-real customers speculating about this as if they were in the market, but they very clearly wouldn’t buy a Tesla anyway and would’ve found another excuse (hint hint: with so much negative noise and FUD and hatred by big media it’s not hard to find one). The reality is even if Tesla hypothetically goes bankrupt, it’ll most likely cause a change in who owns the equity at large and will likely not materially impact the customer base.
In general, it’s much easier to expand the customer base by solving real problems for people who are eager to buy stuff but can’t (for example, due to real charging problems in urban areas or the car being expensive) than to try to soothe a skeptic. This applies to VCs you pitch too. Spending time changing people’s mind is often futile, and in this case it’s not at all clear that it materially impacts Tesla. They are for the most part production constrained still.
Tesla has already lowered the price of its vehicles 3x this year...
To start with, this article of many articles on the subject. Plus Musk has spoken on the subject too.
Manufacturers have known for decades that over automation is a problem. The dream is to put raw resources at one end and get a finished product at the other without humans touching any of it. The closer you get to total automation the harder it gets to do it. There's a fine line that must be found.
Tesla has not shown that they have found the best manufacturing process so they should get help.
Also, it is almost never the best practice to produce a product 100% in-house. It requires too many resources and it's very hard to do it at the lowest cost especially in low quantities. They aren't producing their product 100% in-house but from what I've seen in the past they've tried to produce as much as possible in house. Like I said there's a fine line that needs to be found.
Designers didn't have anything to do with this mess.
