From Elon Musk, after Tesla announced weak results yesterday:
Tesla is currently between two major growth waves.
You betcha. But not everyone bought it:
Dan Ives, a tech analyst with Wedbush Securities, said executives failed to address short-term concerns, even though he remains sold on the company’s long-term value.
“We were dead wrong expecting Musk and team to step up like adults in the room on the call and give a strategic and financial overview of the ongoing price cuts, margin structure and fluctuating demand. … instead we got a high-level Tesla long-term view with another train wreck conference call,” Ives wrote Thursday.
The company’s falling margins and “constant never-ending price cuts” are concerns, Ives wrote.
I'm a little surprised that analysts are surprised by this. Tesla was always bound to run into weakening growth when the rest of the world started competing in the electric car space, and they were lucky it took so long. But the future is finally here, and that means Tesla actually has to compete on both price and quality. Slowing revenue and weakening profits were inevitable.
This has nothing to do with whether or not Elon Musk is in his right mind these days. The smartest CEO in the world would have trouble navigating the changing climate of the EV market and responding to the tsunami of cheap Chinese EVs that are now flooding the world. Musk may or may not be one of history's great business geniuses, but even he can't turn back the tide on command.
"This has nothing to do with whether or not Elon Musk is in his right mind these days."
I think you are way underselling just how much Elon has destroyed the Tesla brand. He certainly won't admit it. Anecdotally, I had very much been planning for my next vehicle to be a Tesla... now you couldn't give me one. I've heard a similar sentiment probably a dozen times from folks in my orbit. If this extrapolates nationwide, then that's a demand problem.
When your primary market is people who actually believe in climate change and are probably left-leaning, working 24/7 to associate your brand with MAGA crazies was probably not the best business move.
There is nothing to be done about Musk. However, you are missing out on the greatest car you will ever get, when measured against other available cars at the moment, of course.
Sure, if your idea of a stylish dash board is a large laptop sitting on top of an Ikia table.
"you are missing out on the greatest car you will ever get, when measured against other available cars at the moment"
I've seen no objective measure by which this is true.
The objective measures are:
-- Tesla has built out its own charging network, which always works, and, for that matter, has more elegant interface (you pull up, it recognizes your car, and plug in) than any other charging network and any gas station I have ever been to. As for other charging networks I have had an eGolf for about nine years, so I am familiar with their (non) existence.
-- Tesla is the only car you can buy which updates itself, for free, in over the air software updates with no visits to any dealer. Every aspect of the car is controlled by the computer, so the updates can effect every part of the car. No other car is even built this way.
-- as far as dealers go, I would say its an objective fact that you don't need to go to one to buy a Tesla.
-- the Full Self Driving suite, which i have also had since 2019, may not be driving the car by itself door to door yet, but is in second place (after the first iPhone, for me) as the most amazing bit of tech I have seen since the introduction of the personal computer.
All other cars, of any type, cost or design, are going to have those four features sooner or later. None of them have them now. Its kind of amazing that no other legacy car company has them, but they don't.
Now, the fact that the interior or exterior of a Tesla may not be to everyone's taste is the usual objection I see, but that's the subjective part. For me, its like saying that the interior of a Ford Model T could not compare with a finely tooled custom saddle for your horse. That would have been a true statement, of course, but the main thing isn't comparing the Ford Model T to a horse, the main thing is that the Ford Model T was not a horse.
This is a straight up downgrade. Cars requiring software updates is a downgrade. You're presenting this as some kind of selling point as opposed to an example of hellish tech dystopia.
In fact, Tesla's over-the-air "update" features have already been used for evil, with them deliberately fucking with their customers cars without their consent in objectively harmful ways.
Imagine presenting this as a selling point.
What gets tiresome is someone who obviously does now own one making comments like this.
How about this. About two years into owning it, after a software upgrade you can now view all the cameras from your phone app.
So my wife, if she is out at a meeting, and its dark, can check to see if anyone is hanging around the car before approaching it.
That's just one of many. Every other car I have ever had would have required buying a new one to get a feature upgrade like that.
Just to note, if you piss Tesla off, they will cut off your ability to supercharge at their charging staions. But it will be done by a free download.
Here’s my objective measure: I drove one. It made my existing ONE YEAR OLD car feel like a dump truck. So I bought the cheapest Tesla. It has more than enough range, I can charge it every night in my garage and there are several Tesla chargers in my area (where I can plug in, run inside to buy a coffee or use the restroom, and return to a car with 150 more miles of range than it had when I got there.). I have taken road trips that required charging on the way and have never had an issue with a Tesla charger. I’ve had no issues with winter charging or operation (I live in the northeast). It cost less than my one year old car that now feels like a dump truck, and it costs way less to operate. I will probably replace my dump truck car with another Tesla next year.
My brother and niece have Chevy Bolts, they are nice. And with the rebate you can buy one for $19,995.
I guess it's about what you think is great.
I have several friends who work for Tesla.
Which is why I own a Nissan Leaf. I'd buy a Kia, Hyundai, Nissan, Volvo, Ford, or Toyota EV before I'd buy a Tesla. They're crap.
"The smartest CEO in the world would have trouble navigating the changing climate of the EV market..."
But a smarter CEO would do better than Musk. There was no need to turn the hottest brand in autos toxic, or make FSD his own Metaverse.
Tesla still is years ahead of the major carmakers, who have done little to close the gap on Telsa's strongest asset, its charging network. You can go anywhere in a Tesla and not have worry about where to get a charge. Everyone else is relying on these guys:
https://www.latimes.com/environment/story/2024-01-24/california-ev-charging-stations-broken
Just like with Twitter, Kevin (and most of his readers) insist on measuring Musk by their criteria, not his criteria.
I'm no Musk fan – I think his substance abuse is dumb and, like most people who play that game, will destroy him faster than he realizes there's a problem.
BUT
Musk was never in this to make billions. He's in it to "save the world" according to his lights. Tesla is to save the world insofar as transportation (and running out of oil) is concerned. SpaceX is to get people onto Mars as a backup plan against Earth going insane. Twitter is to protect free speech in a US where most of the media have succumbed to groupthink.
You may not like any of these goals. You may think other issues are more important in terms of "saving the world". Whatever; that's not the point. The point is that each of these enterprises has a specific goal in mind, and "making money" is not that goal, it's merely a means to the end.
So, for example if Tesla goes bankrupt under a wave of cheap electric car competition, Musk would not consider that a tragedy! For him THAT'S THE ENTIRE DAMN POINT -- THAT IS THE GOAL!!!
So, you're no Musk fan, you just believe the lies he's told.
The Twitter thing is especially precious, because that's both a category error (Twitter cannot protect OR destroy free speech; it does not have that ability) and a transparent, obvious lie on Musk's part. He owns Twitter because he attempted stock manipulation via Tweet when floating the idea he might buy it, the SEC said "that better have been a serious offer or we'll nail your ass to the wall," he went "it sure was! Here, let me put it in writing" and he's such an idiot that he waived all due diligence and handicapped his ability to back out of the deal, which he tried to do multiple times.
SpaceX's idea of Mars as a "backstop" to Earth is of course even more nutty, as the knowledge and technology for a sustainable settlement on Mars that can survive without massive subsidies from Earth will not exist for many, many decades. Which leaves Tesla "saving the world," which is not something we should believe given the astounding breadth of Musk's other lies; Tesla only still survives as a going concern because of massive fraud.
...handicapped his ability to back out of the deal, which he tried to do multiple times.
And when he sued to back out of the deal, what caused him to drop the suit? Discovery was making public some revealing conversations, ranging from the embarrassing to likely illegal, with people who don't want to be public (Saudis, e.g.). Before the details got too juicy, the suit was dropped and the deal went through.
Jeez. Where to begin?
For someone who's "no Musk fan," you sure come across as his biggest fanboy.
I said he's making the Tesla brand toxic. That point stands. That's not what a smart CEO would do. He's giving Trump a run for being the world's #1 asshole and that in no way is helping sell EVs or saving the world.
Musk was never in this to make billions. He's in it to "save the world"
That's funny. You should try comedy.
Tesla is to save the world insofar as transportation (and running out of oil)
The trouble with oil is not that the world is running out of it. It's that if we burn all the oil that we already know is there, the planet will burn and the future will belong to the tardigrade.
SpaceX is to get people onto Mars as a backup plan against Earth going insane.
"World, we need a backup plan. First, you get in my nifty new spaceship. Then around dinner time, we land in the shadow of Olympus Mons. Then we thank our lucky stars we escaped all that insanity." (You're killing me.)
Twitter is to protect free speech in a US where most of the media have succumbed to groupthink.
Comedy gold, I tell you.
FTR
I own a Tesla. A few quibbles (like the ever-diminishing range on a full charge), but I'm happy with the car. In four years plus, my only sizable expense was new tires. The thing is a bargain.
And it's zero emissions! That's why I bought an EV. Which none of the Tesla reps ever mentioned when I'd stop by to look at the models. They wanted to talk about self-driving tech, performance, why no one listens anymore to AM radio, all that. It never crossed their mind the most obvious differentiator between Tesla and the rest of the cars in the market was that Telsas are EVs and not ICEs and are saving the planet. Maybe if Musk was trying to save the planet, his sales guys would drop a hint at least.
Why is a charging network a great asset?
Cheapo Chevy Bolts have a 240mile range. The last time I drive more than 240 miles in a day? Decades ago. And like most people we have a 2nd car in the family.
Lots of people will rarely or never use a charging station.
My next car will be and EV, and charging stations are so far down the list.
Charging stations are a huge concern for people who park on the street in cities. I think this is the main thing that will put a lid on EV growth. How is this problem solvable in a way that won't be so inconvenient as to alienate potential buyers. Chargers arrayed on the street like parking meters? Not very feasible. Appointment times at central charging stations? Very inconvenient and prone to people running out of fuel. Maybe required charging stations at places of employment can get some traction.
Another issue is that people in cities often drive infrequently. They can still jump in the gasoline car once every 3 weeks and go but they will probably find that the EV has lost most of its charge, especially in the winter in the north.
By the end of 2024, the other cars will be able to use the Tesla charging station network. This was a smart move by Biden, to condition access to charging station expansion credits on being open and compatible:
https://www.consumerreports.org/cars/hybrids-evs/tesla-superchargers-open-to-other-evs-what-to-know-a9262067544/
It wasn’t Biden’s idea. He desperately wanted to help the existing US carmakers catch up to Tesla or at least become legitimate competitors - mostly to
prevent a collapse of the auto manufacturing/sales/service ecosystem that supports literally millions of non college educated Americans. But legacy auto punted on EVs and used the money Biden wanted them spend on expanding EV and battery production in this country to fund a scorched Earth FUD campaign to demonize Tesla and EVs. But all of them wisely decided that if they ever build EVs at scale, they will use the Tesla chargers because Tesla graciously encouraged them to do so. Biden just recognized a fair accompli.
Of course it wasn't literally Biden's idea, but his Administration put forth the bill that required Tesla to play ball or miss out on billions in credits. Tesla didn't "graciously encourage" anything. They responded to incentives.
Musk's biggest nightmare would be a rational valuation of Tesla. That would essentially make most of his fortune evaporate.
Tesla stock price was always an imaginary number because so little is actually traded. IOW, the paper valuation could have never matched the given value because no one will actually pay the full amount. The only question is then how much premium does one pay for the current business model. Obviously there a lot of “investors” who are willing to pay a substantial over evaluation and now we are seeing the limits. I would rank this stock as strictly speculative.
like a lot of people the next new car I get will be electric and probably in two or three years so I’ve been casually researching and keeping up on new introductions, and there are simply a ton of vastly better options than Tesla now, in the luxury space everyone is going rapidly to electric models, in the mid range notably Kia, Hyundai and Honda are going all in.
Seems like the most (only?) valuable thing Tesla has is their charging network, making that available to everyone would seem to be the viable business model for them.
Yeah, I'm just not seeing how Tesla has an enduring advantage. I drove a BYD EV in Germany, it was really nice.
Oh, it's worse than that. Tesla cars are getting worse over time as others are getting better. The new Model 3 is removing the turn signal lever. They already removed the radar and ultrasound sensors, so the cruise control and parking assist are worse. On my Model 3, the cruise control is confused by tree shadows on the road. They saved 50 cents on an infrared sensor, so the automatic windshield wipers are worse than econoboxes. Their self-driving features were never good, and now look terrible compared to real companies. They're losing their charging advantage as others adopt their standard.
Plus, their robot demos are embarrassing, there's a tsunami of accidental death lawsuits building up against them, Q4 was flat YoY on units and worse on margin, and the Cybertruck was a waste of design resources. I've never had Tesla stock, but I did I'd be worried. This looks like a bubble about to pop.
Once again, "the world" proves itself to be suicidal by hooking up with Chinese whores. Dumb. Just dumb.
"Space" meaning an economic or business realm or field is jargon and should be avoided whenever possible.
My long term view on Tesla is that it will be a pretty good electric vehicle charger company.
Tesla hasn't yet experienced the salutary discipline of losing major liability lawsuits the way the traditional car-makers have (though that may change soon). That means, among other things, that when pushed by their CEO and largest stockholder not to bother with redundant sensors and long painstaking development of driver-assist systems, and when pushed by their marketing-oriented CEO and largest stockholder to call their driver-assist systems by a name no lawyer would ever allow, the people inside the company who know what really needs to be done can't do it. And btw his primary title there is "Technoking," no joke.
Tesla's done quite a bit right-- charger network first of all, good basic design work done by car engineers, solving a lot of the issues around packaging batteries and electric propulsion systems in ways the driving public accepts. Starting with a performance model was shrewd, and so was ignoring "saving the planet" on the sales floor (sorry, @Joseph Harbin).
But. Its business model is Apple, and the electric car business is rapidly shifting to a PC clone orientation. The Apple model: captive company-owned sales, very high margins per unit, proprietary hookups (until virtually yesterday when they decided to monetize that very successful charger network, a shrewd move for cash flow). The high prices are crucial for new-model development and maintaining and expanding the sales network. Those high-margin sales are the goose that lays the golden egg for Tesla.
So it all has to work together-- if they don't maintain both sales volume and margin then they lose the cash flow that fuels development and expansion, and we know that's been happening. Secondarily, if they slip on build quality then they lose their asses on the distribution network, and reports are that that's been happening too. On top of which, their development work has most recently been focused on the smaller model that doesn't have the same margins and so needs to sell at bigger volumes, in a more competitive market, and through a sales network that isn't expanding as fast as planned and is becoming more expensive to maintain.
That's what the analysts and KD see, and it's what I see. I also agree Elmo has been working hard to destroy the brand for an important segment of the market Tesla has been working hard to develop.
Maybe that's okay if what he really wants is to convert the world to electric locomotion and sincerely doesn't care about having a few sous to rub together. If so, maybe a great philanthropist in this realm. Regardless, I'll give him credit as the public face of Tesla in the pre-Xitter days and maybe for ramrodding some of the internal processes, if he did that (but subject to knowing the costs of the shortcuts he's insisted on taking-- he comes after all out of the environment described by Tracy Kidder many years ago).
Basically, though, I think he's in a realm where he's nowhere near as smart as he thinks he is.
And while I was writing this, @pjcamp put up the tldr version of what I think-- it's 50-50.