Tesla Real Problem: Mass-Producing Its Cars ?

[HTSS_TR]

Quote:
Designing a great car is hard. Creating an assembly line to build it is also hard. But optimizing that assembly line to build those great cars profitably in the face of fierce, well-funded competition is really hard.

In fact, I argue that manufacturing -- profitable manufacturing -- is the auto industry's real "moat", the thing that fends off new entrants.

Toyota was able to bridge the established automakers' moat and become a global giant because it was (and is) exceptionally good at efficient manufacturing. More than anything else, that's the secret of Toyota's success.

If Tesla wants to compete in the mass market, if it wants to build and sell a million or more cars a year, it's going to have to compete -- not on quality, or range, or zero-to-sixty times -- but on manufacturing efficiency with the likes of Toyota

CEO Elon Musk said this past week that the factory(Fremont, CA) would have the ability to build about 1,000 units of the Model S and 1,000 of the Model X per week once Model X production is fully ramped up. In other words, Tesla probably has the necessary tooling to build about 100,000 vehicles a year now.

But it has never come close to that number. It's not close to producing 100,000 cars a year right now. It built just over 30,000 last year, and Musk said this week that it would produce between 50,000 and 55,000 cars in 2015.

Given that Musk consistently says that Tesla has lots and lots of orders for its cars, manufacturing would appear to be what's holding the company back.


http://www.fool.com/investing/general/20...ogyholnk0000001

 

[Merkava_4]

"Slow is smooth and smooth is fast."

 

[raytseng]

Well isn't it a better problem to have, then the reverse of we've made a ton of extra cars that nobody wants to buy...

 

[Andy636]

Tesla is nothing more than a fashion statement at the moment...a cool toy to have and brag about for the wealthy snobs.

Make a model with 200 BHP, double the range and lower the cost by at least 30% and then you could consider it as a viable alternative to the infernal combustion wagon.

 

[Nebroch]

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/TSLA FCF.jpg

https://upload.wikimedia.org/wikipedia/c..._by_quarter.png

It seems that more production means more cash burn for them..

 

[CT8]

Compare the Tesla to a Porsche or any other exotic not G.M.

 

[Danno]

Originally Posted By: CT8
Compare the Tesla to a Porsche or any other exotic not G.M.


So then they need to decide if they want to continue to be a specialty boutique car manufacturer, or a car for the "unwashed masses".

Seems to me, number 1 is the path they will follow - if they are in business in 5 years.
Same thing happened to Smith Electric trucks. I lived that dream nightmare.

 

[A_Harman]

Tesla made all their patents available in the public domain last year. To me that means they don't think their technology is worth protecting in the courts. (Never mind the "benefactor of mankind" posture they want to put on it. If the IP was worth billions of dollars, they would be protecting it.)

If Elon Musk wants to be a modern version of Henry Ford, he will develop an electric commuter car that is cost-competitive with current IC-powered compacts. A reliable, robust 150 mile range would probably be good enough, if the customers don't mind plugging it in every evening. They would probably be OK with it as long as they could save money by doing $2 charges, instead of $40 refuelings.

The charging robots, the high-performance electric cars, the nationwide network of Supercharger stations; they're all just for publicity and are nothing but playthings for people with money to burn on fashion statements.

 

[B20z]

My concerns remain winter weather performance. Specifically, decreased battery life due to cold temps and snow/ice driving issues (if any). I'm interested in a Tesla model but like many it would be as a daily-driver.

I do hope that someone (anyone) is able to keep up the momentum towards EV and so should everyone else. Innovation can push all of the "traditional" car companies to improve as well.

 

[4wheeldog]

Originally Posted By: Danno
Originally Posted By: CT8
Compare the Tesla to a Porsche or any other exotic not G.M.


So then they need to decide if they want to continue to be a specialty boutique car manufacturer, or a car for the "unwashed masses".

Seems to me, number 1 is the path they will follow - if they are in business in 5 years.
Same thing happened to Smith Electric trucks. I lived that dream nightmare.


I see them remaining a boutique builder, and maybe selling some of their expertise to another manufacturer, for mass produced "Everyman" cars. Think Porsche and VW.

 

[A_Harman]

And here's another take on Tesla's current state of health:

http://finance.yahoo.com/news/tesla-burns-cash-loses-more-110938852.html

 

[Nate1979]

I think they are in serious trouble. The cost of bringing a new model to the market is significant and they do not have the volume to sustain their business. My prediction is they will be bought by a larger company or bankrupt within next 3 years.

 

[Vikas]

Tesla is going to crash and burn just like Apple. I am the expert, I should know.

 

[hattaresguy]

Tesla's in trouble?

Since when do 50%-100% increases in sales year after year mean trouble?

Trouble like in they need to hire some manufacturing talent to set up an efficient assembly line in that massive factory they already occupy? To me as a business owner that seems like a fairly straight foreword operations issue to be solved.

Car manufacturing is not a secret.

 

[HTSS_TR]

Designing a good EV car is not easy, engineering a good EV car with low cost manufacturing for the mass is very difficult and producing 50-100 cars a day is not so hard, but raise that volume 10-20 times to 1,000 a day is the Problem Tesla will face.

Tesla is having problems with various components/parts in making model X, they seems to have some problems with their supplier(s), especially the one supplies rear seats.

For Model 3 they need 10 times supplies from various companies, they may have to get second or third sources so that if one is having problem producing their parts at the quality Tesla demands the other will step up.

 

[A_Harman]

Originally Posted By: hattaresguy
Tesla's in trouble?

Since when do 50%-100% increases in sales year after year mean trouble?

Trouble like in they need to hire some manufacturing talent to set up an efficient assembly line in that massive factory they already occupy? To me as a business owner that seems like a fairly straight foreword operations issue to be solved.

Car manufacturing is not a secret.


There is probably a real limit to demand for a high-end electric car. Then what to do after that demand is satisfied? Tesla could probably exist for decades niche-marketing the Model S to true-believing customers; ones who don't demand perfection in $85,000 cars and having the occasional beta-test kind of a glitch. But once Tesla tries to go mass-market and sell a car to people who expect it to be as useful and reliable as a regular IC car, there is a bigger risk. People in that market don't tolerate quality and reliability problems. A failure rate of one in a hundred-thousand can lead to financial disaster if a recall is necessary. How much trouble has GM gotten into over the ignition-switch recall? So far they have paid about 140 ignition switch settlements on 28 million cars. That's a failure rate of 1 in 200,000.

 

[surfstar]

Have you read much on Tesla? Did you know that their simple business plan is:
1. Build sports car
2. Use that money to build an affordable car
3. Use that money to build an even more affordable car
4. While doing above, also provide zero-emission electric-power generation options

Roadster -> Model S -> Model X -> Model 3

They're half way there. If it can be done, Tesla is the company that can do it. The last successful auto startup in America was Chrysler. It isn't easy and hasn't been done (with EVs), but they stand a good chance...

 

[A_Harman]

It's no good having a simple business plan in a business with such high needs for capital investment and large barriers to entry. Also, no plan survives its first contact with reality.

They built their sports car, based on the Lotus Elise. Had to recall them because the two-speed transmission was unreliable.

Then they went out and got government loan guarantees to build the Model S, which at $75000 base price, stretches the definition of "affordable" to an absurd level.

They need to be in business for years selling Model S's and understanding if they can actually make it self-sustaining through at least two product cycles. They need to understand the long-term issues of warranty costs and servicing vehicles in the field before trying to go mass-market. If they're losing money on every car they sell, they don't have a business, they have a corporate welfare case.

 

[Nate1979]

Originally Posted By: hattaresguy
Tesla's in trouble?

Since when do 50%-100% increases in sales year after year mean trouble?

Trouble like in they need to hire some manufacturing talent to set up an efficient assembly line in that massive factory they already occupy? To me as a business owner that seems like a fairly straight foreword operations issue to be solved.

Car manufacturing is not a secret.


They are in trouble when year after year they lose money. The question is do they have enough money to fund the next new model.

 

[SteveSRT8]

Originally Posted By: A_Harman

Then they went out and got government loan guarantees to build the Model S, which at $75000 base price, stretches the definition of "affordable" to an absurd level.

They need to be in business for years selling Model S's and understanding if they can actually make it self-sustaining through at least two product cycles. They need to understand the long-term issues of warranty costs and servicing vehicles in the field before trying to go mass-market. If they're losing money on every car they sell, they don't have a business, they have a corporate welfare case.



They have lost money consistently. It is only with their tax credits that they keep their boat afloat. They sell hundreds of millions to other companies.

They ARE a corporate welfare case...