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posted by n1 on Saturday April 09 2016, @11:57PM   Printer-friendly
from the what-say-you,-betteridge? dept.

Tesla has received 325,000 preorders in the first week for its Model 3 electric car. The starting price of the car is $35,000, and preorders cost $1,000. However, those preorders are refundable, and the company has faced delays for previous vehicles, leading to skepticism about the company's ambitions:

Especially at a time when the automobile seems to be slouching toward commodification, the sight of Tesla fans lining up at stores across the world hoping to put down deposits on a car they had never seen before was nothing short of mind-blowing. But as stunning as this feat of stunt salesmanship was, it was just that: Tesla has not actually sold any Model 3s and there are a wide range of reasons for believing that these pre-order eggs will not hatch into the chickens that Tesla is already counting. In fact, there are reasons to suggest that the entire pre-order play is all a gambit designed to boost the company's stock ahead of a much-needed return to capital markets.

The article goes on to point out Tesla's troubles in China, where speculators placed huge amounts of orders and inflated the actual demand.

[...] With the launch of Tesla's most ambitious vehicle, the Model 3, the risk of overestimating demand is once again real. Indeed, everything about the Model 3 pre-order program seems calculated to delude the company about the market's actual demand for the car. At $1,000, the deposit is less than 3 percent of the base model's $35,000 projected price, and far less of a financial commitment than the $5,000 Tesla demanded for reservations of its Model S and Model X. More critically, the deposits are entirely refundable, meaning Tesla has to keep reservation holders on board for at least a year and a half during which time the competition will be launching a wide variety of premium and mass-market electric vehicles.

The risk of this kind of defection is supercharged by the fact that Tesla still hasn't shown the actual, production version of the Model 3, and that deposits have been made without any definitive information about the production car. The vehicles that Tesla showed off at last week's launch were hand-built prototypes, with a totally unverifiable relationship to the vehicles that are supposed to start rolling off production lines at the end of 2017. Because Tesla's major challenge with Model S involves massively reducing costs in order to hit its $35,000 price point, we won't know how good the car really is until production tooling and supplier sourcing is finalized and cars actually start being made at the firm's Fremont, California, plant. Musk has already said that the Model 3's design and production plans are being adjusted, raising the very real possibility that the final production version will be different enough from the recently shown version to risk disappointment and order cancellations. But even if the final production car comes close enough to the revealed version to satisfy the faithful, Tesla must still prove that it can build cars at dramatically increased scale without the rampant quality problems that have plagued Model S and Model X. Production problems delayed bringing both of Tesla's existing cars to market, and owner forums overflow with a huge variety of quality problems.


Original Submission

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Tesla Model 3 Pitched As an 'Affordable' Electric Car 50 comments

Tesla has unveiled its much-anticipated Model 3 electric car - its lowest-cost vehicle to date.

The price and range of the five-seater should make the vehicle appeal to new types of customers and could boost interest in other electric vehicles.

Chief executive Elon Musk said his goal was to produce about 500,000 vehicles a year once production is at full speed.

The California-based company needs the vehicle to prove popular if it is to stay in business.

The first deliveries of the vehicle are scheduled to start in late 2017, and it can be ordered in advance in dozens of countries, including the UK, Ireland, Brazil, India, China and New Zealand.

The basic model will start at $35,000 (£24,423) and have a range of at least 215 miles (346km) per charge.

Tesla delivered 50,580 vehicles last year. Most of those were its Model S saloon, which overtook Nissan's Leaf to become the world's best selling pure-electric vehicle.

Will Tesla's gigafactory give it a leg up against the competing Chevy Bolt, Nissan Leaf, Hyundai Ionic, and other electric cars?


Original Submission

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  • (Score: 2) by bitstream on Sunday April 10 2016, @12:14AM

    by bitstream (6144) on Sunday April 10 2016, @12:14AM (#329512) Journal

    So the problem is to transform Model 3 prototype into a Model 3 factory? Going by Musks track record it seems doable. The key problem is if there's money to build the factory and hire people. And of course getting the long term production cost below sales price.

    So how far is the factory?
    What will that factory cost?
    How much is the production cost for this Model 3?, at least the parts list should give a real hint.

    • (Score: 5, Informative) by gman003 on Sunday April 10 2016, @12:40AM

      by gman003 (4155) on Sunday April 10 2016, @12:40AM (#329514)

      Tesla currently operates a factory they bought from New United Motor Manufacturing, a GM/Toyota venture, with much of the equipment being included in the sale. Most of the factory (one of the largest in the world by floor space) is currently unused. During 2015, Tesla was averaging 800-1000 cars per week. When the factory was churning out Corollas and Tacomas, it was averaging 6000 per week. And that factory was itself a refurbished GM factory from the 60s, which produced 7000 El Caminos, Chevelles and Pontiacs per week.

      Assuming they can scale up to the same 6000 that the factory is known to be capable of, they will take about a year of production just to fulfill these preorders. Which isn't particularly unreasonable.

      The real problem is parts supply, namely batteries. Producing 6000 Model 3s per week would consume more or less the entire world's production of LiON batteries. The Tesla Gigafactory is currently at 14% planned completion, and is minimally operational - that's what they will need in order to pull this off.

      • (Score: 3, Informative) by frojack on Sunday April 10 2016, @01:10AM

        by frojack (1554) on Sunday April 10 2016, @01:10AM (#329523) Journal

        would consume more or less the entire world's production of LiON batteries

        Wait, consume, or manufacture more than the entire worlds production...?

        By 2020, the Gigafactory will reach full capacity and produce more lithium ion batteries annually than were produced worldwide in 2013.

        From here. [teslamotors.com]

        Not sure you can say they will consume the entire worlds production when they will also manufacture more than the entire worlds production.

        The question is where is Nissan, Chevy, BMW, going to get their batteries? They will be fighting over the rest of the Lithium Battery manufacturers output, while Tesla will be in the cat bird seat.

        In fact one car company, (might have been Honda, or Toyota or Hyundai, or maybe all three ) are making another run at fuel cells, and not limiting themselves only to hydrogen chemistry.

        --
        No, you are mistaken. I've always had this sig.
        • (Score: 3, Informative) by gman003 on Sunday April 10 2016, @01:33AM

          by gman003 (4155) on Sunday April 10 2016, @01:33AM (#329532)

          Tesla Motors owns two factories - the car factory (which they bought, and which consumes batteries), and the battery Gigafactory (which they're building, and which produces batteries).

          The Tesla car factory (at 6000 cars/week, 80kWh/car) will need a bit under 500MWh of batteries per week, or 25GWh of batteries per year. Current global production is hard to find a solid number for (too many articles just repeat the "Tesla's Gigafactory will produce as much as the rest of the world combined" figure, clogging search results), but it's within an order of magnitude of 2GWh by my quick Fermi estimate (one of the figures I used was from 2012, so it's probably on the higher end).

          • (Score: 2) by bitstream on Sunday April 10 2016, @01:42AM

            by bitstream (6144) on Sunday April 10 2016, @01:42AM (#329535) Journal

            So where will the battery factory be capable of in one year when Tesla will really need it? Seems they as of now have the prototype, the cash to transform the factory and a battery factory but when it only produce 1/10th of the demand. There's a problem that they will have to solve unless the customers shall wait 10 years ..

            So the key seems to be the Gigafactory. So what is the hindrance for that factory to get up to full production?

            • (Score: 3, Interesting) by gman003 on Sunday April 10 2016, @01:58AM

              by gman003 (4155) on Sunday April 10 2016, @01:58AM (#329541)

              As far as I have heard, there have been no unexpected delays in building up the Gigafactory. It's just that building the largest factory on the planet, to build more of something than the rest of the planet, is a substantial undertaking. The factory is already producing batteries at partial output, so it's just a matter of filling it out - doing the same thing they're already doing, just more so.

              They originally planned the Gigafactory to be at full capacity by 2020 (with that capacity being enough for 10,000+ cars/week). If it's even at quarter-capacity by EOY, that will be enough for substantial production of the Model 3, when combined with the global market.

    • (Score: 3, Interesting) by frojack on Sunday April 10 2016, @12:43AM

      by frojack (1554) on Sunday April 10 2016, @12:43AM (#329516) Journal

      Well, I would expect that the factory they build first will probably not be able to meet demand at a huge profit.

      Further I find this statement in TFS to be totally ridiculous:

      everything about the Model 3 pre-order program seems calculated to delude the company about the market's actual demand for the car.

      The assertion suggests that these are stupid people who didn't learn anything from the China scalpers, and purposely set out to pull the wool over their own eyes, not to mention everybody else's.

      The thing is, there are entire assembly plants that will be fore hire as these cars come on the market, (Not just Tesla's cars, but BMW, Nissan, etc). Plants producing Engines, (Mexico has several of these), vehicle assembly plants, (Chrysler [freep.com] and also in Canada [thewhig.com] and Russia.

      Can a Mexican engine plant wine electric motors? Can Brampton Assembly [allpar.com] manufacture hundreds of thousands of Tesla Chassis per year under contract?

      --
      No, you are mistaken. I've always had this sig.
      • (Score: 3, Informative) by c0lo on Sunday April 10 2016, @01:14AM

        by c0lo (156) Subscriber Badge on Sunday April 10 2016, @01:14AM (#329525) Journal

        For some reasons, Elon Musk didn't go on the outsource path until now.

        Maybe he's right, maybe he's wrong - quality is quite a hard nut [theverge.com]

        But there’s a fundamental difference between Apple and any automaker, including Tesla: while Apple’s products are famously "designed in California," the vast majority are not built by Apple itself but are contract-manufactured by firms like Foxconn....Though the quality of smartphones and laptops can vary greatly between brands, the majority of that quality is determined by design, materials, and software rather than the manufacturing process itself.

        Design and materials go a long way toward determining the quality of an automobile as well — but because a car is orders of magnitude more physically complex than any electronic device, the quality of assembly is dramatically more important and difficult to master at scale. Not only is auto assembly the toughest quality challenge in the modern economy, the consequences of quality problems can range from ruining a customer’s day to ending their life.

        ...
        These factors explain why Toyota, a company whose quality-obsessed corporate culture and production philosophy (rather than its racy design or exhilarating performance), has come closer to "disrupting" the global car business than any other firm in the last half-century. Sexy, speedy cars may capture the public’s attention but when it comes down to spending tens of thousands of dollars, we just want them to get to work every day without drama....
        This, unfortunately, is where Tesla has consistently come up short. The Model S received nearly universal praise when it first launched, "breaking" the Consumer Reports scoring system with the strength of its design and performance, but as time has gone on it has fallen to "not recommended" status and was even named one of its "worst of the worst" used cars. Tesla forums have been flooded with a wide variety of quality and reliability issues, including defective drivetrains, cracking windshields, leaky sunroofs, malfunctioning door handles, and countless other problems.
        ...
          Consumers in the mass market are far more reliant on their cars than luxury buyers (for whom a Model S or X might be a second or third car), and thus far more sensitive to quality problems.

        --
        https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
    • (Score: 2) by Whoever on Sunday April 10 2016, @04:42AM

      by Whoever (4524) on Sunday April 10 2016, @04:42AM (#329587) Journal

      There is another factor: many of those people who put down the deposit won't be eligible for the federal $7,500 tax credit. When they realize this, I suspect that many of those deposits will be refunded.

      • (Score: 2) by bitstream on Sunday April 10 2016, @12:37PM

        by bitstream (6144) on Sunday April 10 2016, @12:37PM (#329646) Journal

        At what point in time will they realize that?

        • (Score: 2) by Whoever on Sunday April 10 2016, @06:44PM

          by Whoever (4524) on Sunday April 10 2016, @06:44PM (#329771) Journal

          When the buyers realize that the $7,500 Federal tax credit is not available any more.

        • (Score: 2) by Whoever on Monday April 11 2016, @12:28AM

          by Whoever (4524) on Monday April 11 2016, @12:28AM (#329847) Journal

          Whoops, my earlier reply wasn't very useful.

          I expect that it will hit the news when the limit is reached. Some people will realize earlier.

  • (Score: 2) by c0lo on Sunday April 10 2016, @01:33AM

    by c0lo (156) Subscriber Badge on Sunday April 10 2016, @01:33AM (#329531) Journal

    Damn'd if you do... [theverge.com]:

    If Tesla does ultimately have to refund a significant number of deposits, it won’t have been the first time a mass-market electric car failed to live up to deafening hype. The 2011 Nissan Leaf attracted more than 115,000 "hand raisers", and Nissan invested $5.6 billion in plants that could build half a million of the cars around the world each year. About six years later, Nissan has sold fewer than 300,000 Leafs cumulatively

    ... damn'd if you don't (top end EV market heats up)
    BMW, VW, Audi, Daimler Take on Tesla [industryweek.com]
    Tesla finds itself surrounded by electric-car competition [marketwatch.com]

    --
    https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
    • (Score: 3, Interesting) by theluggage on Sunday April 10 2016, @12:13PM

      by theluggage (1797) on Sunday April 10 2016, @12:13PM (#329640)

      Realistically speaking, it would be no big deal if Tesla "lost" 75% of those pre-orders: it would be no big surprise, and they'd still sell every car they could make in the first year or so - not to mention any "real" orders they can take once they're closer to production.

      75%? Sure - the $1k is refundable, interest rates and inflation are low, and however hard it is to believe if you are skint, you don't have to be a one-percenter to plunk down the occasional $1k on an impulse. When the rest of the $35k comes due (and you find out how 'optional' the optional extras are, or how many governments have panicked and cancelled their EV subsidies) that could be a different matter, especially since you've got plenty of time to have some more kids, lose your job or just make too many other $1k impulse buys before then...

      The problem is, when you live by the hype, you die by the hype and by trumpeting these $1k 'placeholders' as '300k orders' Tesla have set themselves up for the "Telsa loses $8bn worth of orders as over 260,000 unhappy customers cancel" headlines in a couple of years time. That isn't going to go well with investors (you just need one investor to start worrying that other investors might panic and the whole house of cards comes down). It would also be very risky for Telsa to spend much of that deposit money...

      The other danger is that Telsa have now sent the message that the Model 3 is going to have a huge waiting list for years, so maybe less impulsive buyers will look elsewhere...

      Bottom line - Tesla have taken a very high-risk strategy with this launch. One way or another, it will probably end up in the textbooks...

  • (Score: 1) by WalksOnDirt on Sunday April 10 2016, @01:56AM

    by WalksOnDirt (5854) on Sunday April 10 2016, @01:56AM (#329539) Journal

    Tesla has said they don't need more money and will not go back to the capital markets. I've never believed that.

    Now, with all this 'unexpected' demand they have the opportunity to say they need more money to increase the supply. Much of that money can be expected to used to cover their continuing cash problems, but hopefully there will be enough left over to get the Model 3 out.

    I would like to see the Model 3 become a roaring success, no matter what it takes to get there.

  • (Score: 5, Insightful) by Gravis on Sunday April 10 2016, @02:39AM

    by Gravis (4596) on Sunday April 10 2016, @02:39AM (#329550)

    what is this horseshit?

    Elon Musk’s company has failed to live up to expectations before

    i recall every clown on the block saying that electric cars were impossible... then Musk proved them wrong.
    then every clown on the block said nobody would buy them: they sell every car they made.
    the same clowns said to not buy stock in Tesla and on the first day it sold like they were never going to sell again.
    said clowns say the cars will never come down in price: Elon proves them wrong buy building a battery factory.
    now that the battery factory is soon to crank out batteries and start producing for the lower cost Model 3, these clown say he's failed to live up to expectations?
    they are right, he has failed to live up to their constant expectations of failure by proving them wrong day-after-day, year-after-year.
    these clowns can go bite the main circuit.

    • (Score: -1, Troll) by Anonymous Coward on Sunday April 10 2016, @03:29AM

      by Anonymous Coward on Sunday April 10 2016, @03:29AM (#329573)

      Tesla is a big ongoing risk. If it messes up, the company dies.

      • (Score: 0) by Anonymous Coward on Sunday April 10 2016, @07:54AM

        by Anonymous Coward on Sunday April 10 2016, @07:54AM (#329612)

        The view from Detroit on Tesla and Model 3:
          http://www.autoextremist.com/current/2016/4/4/behold-the-car-that-promises-eternal-life.html [autoextremist.com]

        The latest “show” from Elon “P.T.” Musk last week – the intro of the sacrosanct Tesla Model 3 – was an incredible hype-happening, for any number of reasons.

        First of all, the car seems like a solid concept, and let me be perfectly clear here, after the disastrous “launch” of the Model X and the subsequent fumbling of that product, the Model 3 can only be viewed as a concept at this point.

        Why? Because when some of the key auto industry veterans who helped Musk and his crew bring out the Model S - many of whom were toiling away on the project right here in the Motor City (the dirty little secret Musk and his minions would like everyone to forget) – left the company not long after the Model S emerged, suddenly Tesla was left to its own devices, which meant that Musk’s “blue-skying” was allowed to rattle around unimpeded, without the counterbalance of realistic expectations, and crucial design and engineering mistakes were made on the company’s next project, the cumbersome and ungainly Model X. ...

    • (Score: 1) by khallow on Sunday April 10 2016, @03:50AM

      by khallow (3766) Subscriber Badge on Sunday April 10 2016, @03:50AM (#329580) Journal

      i recall every clown on the block saying that electric cars were impossible...

      Given that electric cars have been around for about a century, that would seem a rather dumb thing to say.

      As to expectations, it's worth remembering that Tesla has given guidance on these expectations which hasn't been met either. A quick google found that they were two years behind on their schedule for the earlier Model X, for example. I see similar aggressive forecasts made for his other company, SpaceX.

      • (Score: 2) by Tork on Sunday April 10 2016, @04:07AM

        by Tork (3914) Subscriber Badge on Sunday April 10 2016, @04:07AM (#329583)

        Given that electric cars have been around for about a century, that would seem a rather dumb thing to say.

        If he's talking about the same things I've heard about, then it was a reference to these sorts of cars being mass-market successful.

        --
        🏳️‍🌈 Proud Ally 🏳️‍🌈
        • (Score: 1) by Francis on Sunday April 10 2016, @01:38PM

          by Francis (5544) on Sunday April 10 2016, @01:38PM (#329656)

          But, they still aren't mass market successful. They're moving that direction, but Tesla cars are still a rarity. I can't recall ever having seen any. I think I've seen more Lamborginis than Teslas.

          • (Score: 2) by bziman on Monday April 11 2016, @06:38PM

            by bziman (3577) on Monday April 11 2016, @06:38PM (#330162)

            I've seen more Lamborginis than Teslas.

            Perhaps it depends on where you live - I think there are close to a dozen electric cars in the garage at work here in Colorado, and half of those are Teslas. The rest are mostly Nissan Leafs, with the occasional Chevy Volt. And when I visit California, the ratios are about the same.