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Tesla Badly Misses Model 3 Production Goals (wsj.com) 244

An anonymous reader quotes a report from The Wall Street Journal (Warning: source may be paywalled; alternative source): Tesla badly missed its goal of building 1,500 Model 3 cars in the third quarter, the first sign that the production ramp-up for the new sedan isn't going as smoothly as planned. The Silicon Valley electric-car maker built 260 of the Model 3s between July and September, the company said Monday in a statement. In August, the auto maker predicted it would build more than 1,500 Model 3s before cranking up production to 5,000 a week by the end of the fourth quarter. Tesla blamed "production bottlenecks" for the weaker production. "It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain," Tesla said in a statement. "We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term."
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Tesla Badly Misses Model 3 Production Goals

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  • by Okian Warrior ( 537106 ) on Monday October 02, 2017 @11:45PM (#55298731) Homepage Journal

    Can someone explain to me why missing predicted goals - by even as much as 50% - is such a big issue with investors?

    Any time Tesla comes out slightly lower than "predicted results" the market analysts go haywire, it's all "doom and gloom! We warned you about Tesla! It's a baaaaaad investment!".

    There are people who, with a straight face, talk about Tesla being fraudulent, being 3-months away from insolvent, or being super hyper over inflated in some way. "Look at Tesla's capitalization, and compare it to Ford's!!! There's *no way* Tesla will ever be as big as Ford!"

    And Musk is a con man, Tesla only survives because of federal grants and will go under once those grants are revoked, Tesla sells cars at a loss, chewing through investor money...

    WTF?

    Is there a *rational* explanation for all this bugaboo reporting?

    • by DontBeAMoran ( 4843879 ) on Monday October 02, 2017 @11:50PM (#55298749)
      Paid shills from the big car companies. Paid shills from the big oil companies. People with investments in the big car and/oil companies. People who hate successful people. Idiots who believe there's nothing bad with burning coal and oil. The list goes on...
      • by AmiMoJo ( 196126 )

        Also people who are paid to hype this stuff up. Journalists looking for clickbait, "consultants" and "business intelligence" agencies desperate to prove their value by scraping together news stories...

        It's the same with stories about AI.

    • Re: (Score:3, Insightful)

      In what world is missing predicted goals by 50% okay? Given that Tesla has been in business for nearly 10 years, and they've been mass-producing cars for 5 years, they should have figured things out by now. For some reason Tesla is treated as a start-up, even though they've been around a very long time now. Investors should be worried.
    • by Jeremi ( 14640 )

      Is there a *rational* explanation for all this bugaboo reporting?

      Nope, it's just the natural human tendency to want to first amp up the next big thing, and then tear it down again.

      Of course, there's no rational explanation for Tesla's current stock valuation either. :)

      • by Rei ( 128717 )

        It really comes down to two questions:

        1) "Do you think the future is electric?"
        2) "Do you think that going electric requires huge capital investments in tech and production and tends to yield a strong early-comer benefit, rather than being a bandwagon than you can just hop on board with a billion or so dollars at any point in time and still expect to make competitively-priced, profitable vehicles?"

        IF 1 AND 2: Tesla bull.
        IF NOT (1 AND 2): Tesla bear.

    • The stock is at 341 from an all-time high of 383. This is not a tremendous sign of disapproval of the market. It's more like regular cyclical pricing changes.

      When Prius was the dominant hybrid car, auto companies paid for lots of anti-Prius stories. Now, it's anti-Tesla stores.

      I doubt I'd buy them at this price, but if I were holding I would not sell. It's not like the entrenched automakers will suddenly become agile, come out with better electrics than Tesla, or achieve Tesla's quality level.

    • In terms of production, its revenue that is lost - specifically, the revenue from the shortfall in production is shifted to the right in terms of actual income.

      But that doesn't mean the entire lifetime of the production run shifts to the right without penalty, as the technology and design lifetime doesn't get a free life extension, it will still need a refresh on much the same timescale as before.

      Boeing is running into the same issue with the 787 - a production delay of nearly half a decade, shifting much o

      • The difference between Tesla and Boeing is that Boeing has exactly ONE competitor - Airbus. If you want a buy a commercial, large jet airliner, you have a choice of two manufacturers. Tesla? GM just this week announced 20+ models by 2020, Ford, Toyota, Nissan, Honda, Porsche, BMW, Mercedes all have all-electric vehicles on the road today, and there are two dozen Chinese brands which sell well in Africa and SE Asia that have electric offerings. Tesla faces two dozen or more competitors, who are actually
        • GM just this week announced 20+ models by 2020

          No, they announced they planned to have 20 (not 20+) electric models by 2023 (not 2020). Announcing a plan is a lot different than delivering cars, carmakers are notorious for not following through on plans. I'll believe it once they actually start shipping cars (or at least set up production lines for them) and I think that's when Tesla will start worrying about them as well. They are currently shipping the Bolt, which is a decent competitor to the Model 3.

          Ford

          Ford is planning electric vehicles but all they

    • by Michael Woodhams ( 112247 ) on Tuesday October 03, 2017 @12:44AM (#55298949) Journal

      I think there are both logical and illogical reasons for being a Tesla bear.

      The illogical reasons I am aware of are political. Musk founded Tesla to accelerate the shift from internal combustion engines to electric cars, to help reduce climate change. If you are a climate change denier, you can see this as making him and the company the enemy, therefore he must be a fraud etc. If you are a bit more sane, but still partly inhabit the same echo chambers as the irrational anti-Teslas, you'll have a biased view of the company.

      Logically, the price of Tesla stock is way out of whack with their turnover and profits. The price can only be based on the expectation that the company will grow very big very fast. Tesla are investing in plant etc. to try to support growing very big very fast. This is a high risk strategy: a moderate hiccup delays the pay-back on the massive investments, and you have massive debts without sufficient income to service them and lots of disappointed investors bailing and crashing your share price. Tesla might successfully grow, but on the other hand, I wouldn't be terribly surprised if they are bankrupt two years from now. Even Elon Musk has sometimes said that he thinks the Tesla share price is too high.

      In general, Musk's track record is that he builds what he says he is going to build, but it takes much longer than he says. There is a risk that, even if from an engineering view point he can eventually deliver, the company needed to deliver the results will go bankrupt first.

      • by green1 ( 322787 )

        Even the "builds what he says he is going to build" part is somewhat suspect. Sure he gets the broad strokes about right, but he lies through his teeth about the details.

        If you go back and look at the reveal for the original Autopilot suite, and then look at what that same suite of hardware actually does, you'll see that it doesn't actually do ANY of the things he stood on stage and claimed it would. He missed on 100% of his claims on that one, and his interviews in the media made even bolder claims than he

        • by Rei ( 128717 )

          To be fair concerning Autopilot, the programme was hugely setback by the breakup with MobilEye (and I say this as an Autopilot / FSD pessimist). They're only just now roughly caught up to where they used to be with AP1.

    • If you are missing the numbers by such a large number then it brings into question all your future predictions, if the future predictions are off be even 10 or 20% that is going to result in huge revenue problems, PR problems and delivery delays all of which are major concerns for a bet the company project as not only does it hurt short term it gives the competitors more time to displace you.
      • by green1 ( 322787 )

        They've missed on every timeline they've ever announced, they've missed every production target they've ever set. If it hasn't killed them yet, why would this time be any different?

        • They have never been a mass production business at these levels before nor have the prospect of competitors looking to attack their market, the 5000 a week number is 250% higher than their current total production numbers. production delays and misses now cost them ever increasing amounts of money and introduce more competitive risk on an item which isn't high margin to begin with. would a small miss kill them, probably not, but the question in investors minds will be how big a miss will it be over the comi
        • Without the recent bond sale, Tesla would be essentially bankrupt. They've yet to turn a profit...
          • by Rei ( 128717 )

            In other words, the headline reads, "World's 4th most valuable automaker has no trouble raising billions of dollars - details at 11".

            Yes, investors understand that producing infrastructure to manufacture vehicles equating to over 20 billion dollars in revenue per year requires billions in capital costs - whether you do or not.

            • Ten years in. Ten billion dollars spent. Not even ten cents of profit. Tesla is buoyed by the same irrational hype that keeps Twitter and Snap stocks afloat. When does TSLA finally turn a profit? When do they finally start hitting their financial goals? When do you - and TSLA fanatics - realize they are a distant also-ran in terms of the number of PEVs sold (BTW, in August 2017, 16K PEVs were sold in the US - combined, they wouldn't even break the top 20 of all vehicles sold in the US. The GM Volt an
              • by Rei ( 128717 )

                Ten years in. Ten billion dollars spent. Not even ten cents of profit.

                And the value of their stock vastly grown, because the future revenue picture is vastly higher than if they had stopped expansion and focused on profit earlier. Which once again: investors understand that you want the company you're investing in to be making millions of mass-market cars per year (even if it means delaying profitability) rather than several hundred Roadsters or a couple tens of thousands of Ss and Xs per year - whether you

    • Can someone explain to me why missing predicted goals - by even as much as 50% - is such a big issue with investors?

      Any time Tesla comes out slightly lower than "predicted results" the market analysts go haywire, it's all "doom and gloom! We warned you about Tesla! It's a baaaaaad investment!".

      You should be more sensitive to them because they can't help it. I mean, have you considered why there are Wacky Waving Inflatable Arm Flailing Tube Men at every car sales lot? It's because they are the investors and they are always freaking out. ;)

    • You mean why should people who talk the talk actually be able to walk the walk?
    • Because when Tesla misses a goal, people go back and look at the financials of the company to see how the miss could affect value, and realize that Tesla is losing massive amounts of cash already - and any bad publicity/supply chain failures (like here) will just increase the burn rate - and potentially reduce demand.
    • And Musk is a con man, Tesla only survives because of federal grants and will go under once those grants are revoked, Tesla sells cars at a loss, chewing through investor money...

      This is called executing government policy. The whole purpose of subsidies is to startup companies and get them to a point in their production where they are self sufficient in order to achieve the governmental goals (in this case related to reduction of pollution and cleaner air).

      That doesn't make Musk a con man, it makes *you* ignorant.

      Speaking of the subsidies. You're talking about subsidies specifically designed by the incumbent non electric cars that give them a relative advantage (hence the exact figu

    • One thing you need to know about analyst is the new ones tend to make outlandish claims. While you might think that is due to inexperience there is a very rational reason for doing just that. If you get it right all of a sudden you are a genius for seeing what others didn't and have made a name for yourself. At that point, most analyst don't stray far from the pack because if they spectacularly wrong they'll lose their cache; whereas being wrong for the new ones are written off as rookie mistakes.
  • by 93 Escort Wagon ( 326346 ) on Monday October 02, 2017 @11:53PM (#55298765)

    If you ask them about the delay, Elon might cancel your order.

  • by Anonymous Coward on Tuesday October 03, 2017 @12:25AM (#55298889)

    Tesla is basically trying to compress +100 years of automobile development, infrastructure, manufacturing, and marketing within the span of about a few years, all while trying to rewrite the book. They have no where near the number of facilities(companies like Ford have 100s of acres of facilities dedicated solely for testing out transmissions, gearboxes, etc. To say nothing of their factories) or dealerships(there's like only 1 within 50 miles of where I live). They're also hemorrhaging money due to said breakneck expansion.
    They do have an excellent PR however that's been able to convince enough investors(or donors, depending on your perspective) to keep dropping money on the company despite plenty of reports noting that they aren't really do very well.
    That said, you could argue that Tesla has achieved it's goal of convincing people to want EVs, and other companies to start developing their own. I doubt Tesla will ever really break out of its status as a small time car company though, and it's overvalued stock may come to bite investors in the ass.

    • by green1 ( 322787 )

      Tesla is basically trying to compress +100 years of automobile development, infrastructure, manufacturing, and marketing within the span of about a few years, all while trying to rewrite the book.

      That would explain why the numbers are low, but it doesn't explain why they claimed they'd be high.

      Tesla's been doing this long enough that they should be able to predict these things, and yet they miss their targets almost every single time. How long before it goes from "they're new and trying to do a lot" to "they're lying about their capabilities", because at this point it's pretty hard for me to see the difference.

      fool me once, shame on you, fool me twice, shame on me, fool me every single quarter since

      • by nadaou ( 535365 )

        delays in the early part of the exponential growth curve simply mean that the curve moves to the right, not that the curve will not be exponential once it gets started. judging future performance on the first few months of production is silly.

      • That would explain why the numbers are low, but it doesn't explain why they claimed they'd be high.

        Tesla's been doing this long enough that they should be able to predict these things, and yet they miss their targets almost every single time. How long before it goes from "they're new and trying to do a lot" to "they're lying about their capabilities", because at this point it's pretty hard for me to see the difference.

        That's easy to explain - Musk always overpromises and delivers late. But he's practicall

    • by ledow ( 319597 )

      Or:

      Tesla make grandiose claims while trying to compete against huge, billion-dollar organisations that have been doing this for - in some cases - over 100 years, by throwing money at some things that have never been problems (e.g. actually making electric cars - the UK has had milk-floats, etc. since the 1960's and before, and essentially the underlying tech has "evolved" only by the components becoming available all the time before anyone thought of calling things electric cars, i.e. more efficient and lar

      • Motor companies have always had electric concept cars (I would argue that hybrids are rest of the motor industry's innovation, nothing to do with Tesla - a middle ground more acceptable to the consumer which sell much better. Hybrids represent 3% of the market, electrics so much less than 1% that it's too hard to account for). Just nobody was ever really willing to buy them, so why would you bring them to market - the R&D was done, yes, but to ramp up to production is expensive and they'd never have be

        • by ledow ( 319597 )

          So you're saying they're all show? I absolutely agree. That's the selling point?

          "I don't want a car that looks like it'll crumple like a tin can in a wreck."

          Right up until the day you understand physics, crumple-zones, NCAP safety tests, and the reason so many more people survive crashes nowadays.

          "If "designer" status means that I get a luxury sedan that looks like a luxury sedan, I'll buy all day long."

          Yep. Looks.

          Believe it or not, most people DON'T buy a car based on looks, or we'd all have those ridic

  • Diverted resources to Australia batteries? Though if bottlenecks unrelated to batteries then the Australia project might help use some idle capacity .
    • Doesn't sound like it; the Australian project is 50% complete and due for full completion in December, and it doesn't seem to require huge engineering or manufacturing resources. Batteries are a minimal concern relative to the total auto production numbers as well-- they delivered 26k cars total.

  • Plain and simple.

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