Tesla Continues To Take More Risks, As Most OEMs Are Playing It Safe

Tesla Model 3 (Source: China AutoReview)

JAN 20 2019 BY EVANNEX 109

AS THE REST OF THE AUTO INDUSTRY PLAYS IT SAFE, TESLA PILES ON MORE RISK

After years of record sales and huge profits, legacy automakers are preparing for leaner times ahead. The US Big Three have killed off most of their sedans to concentrate on trucks and SUVs. GM is shuttering plants and laying off workers, and has pulled out of Europe and Russia. Ford has announced a substantial restructuring of its European operations as well.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Tesla Model 3 fleet in parking lot (Image: InsideEVs)

Meanwhile, Tesla CEO Elon Musk attended a groundbreaking ceremony for a new Gigafactory in Shanghai, where he hopes to be producing cars within the year. The Californians are also bringing Model 3 to Europe, and pushing full speed ahead on new projects, from Model Y to the Tesla Semi to a jet-propelled flying Roadster.

As Detroit’s automakers contract into their comfort zone, what is Tesla doing? Taking on even more risk (tempered slightly, however, by recent job cuts). Matthew DeBord, writing in Business Insider, noted the jarring contrast between Musk’s China plans and Big Auto’s ongoing announcements of austerity. However, he believes both sets of players are simply doing what comes naturally to them.

“Before 2009, big car companies would count on brief recessions and robust recoveries, reliably stalling on difficult strategic decisions,” but they no longer have that luxury, DeBord writes. “The arguments in favor of these [downsizing] moves aren’t complicated: when times are good and profits are rolling in, as they have been for years, make the tough calls. Then batten down the hatches when the bad weather sets in, as it always does in the highly cyclical car business.”

Above: Some automakers are moving away from sedans in favor of trucks and SUVs (Flickr: Tino Rossini)

There are alarming developments afoot in the industry. The biggest, says DeBord, is an economic slowdown in China, which is now the world’s largest market. Automakers are also keeping a wary eye on demographic trends that may presage lower demand for cars, and on the massive investments that they will soon be making in electrification.

Not only the Big Three, but also the Japanese, Germans and South Korean automakers are all “wisely de-risking,” while Tesla is doing just what it’s supposed to do: “gobbling up risk, front-running it while the rest of the industry is happy to sit on the sidelines.”

Tesla is taking on significant risk by building a new factory when the rest of the industry is closing them, but the Shanghai Gigafactory could signal a major turning point for the company. “Although Tesla makes some fantastic vehicles, its real product is risk,” writes DeBord. The legacy auto industry avoids risk whenever possible, and that’s why Tesla, incredibly, has a bigger market cap than GM. “For investors, risk equals payout, and that applies to longs and short sellers.”

Above: Tesla’ breaks ground on its first overseas Gigafactory (Youtube: South China Morning Post)

While the voice of reason might argue that Tesla should be consolidating its gains instead of committing to a new factory, “unfortunately, Tesla can’t afford to wait out a downturn and defer its expansion. If and when the China market starts to grow robustly again, Tesla wants to be well-established in the country.”

Besides, DeBord concludes, “where would Tesla be without risk? You have to be true to your principles – and risk is what’s made Tesla the first successful new car company to arrive in decades.”

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Written by: Charles Morris; Source: Business Insider

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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109 Comments on "Tesla Continues To Take More Risks, As Most OEMs Are Playing It Safe"

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The license plate on the front of the Model-3 in the photo is in a weird place. That’s not where mine goes. Mine is much lower down. Maybe other countries have different height requirements for the plate?

You know where my front license plate goes? In the glovebox.

Tesla taking more risk is fuel for Tesla’s shorters and give them a fighting chance to bankrupt Tesla in a FUD campaign.

IMO Tesla should focus all resources on scaling production of Model 3 and make changes to how they produce Model 3 so that they can lower its price and reach more customers. Also Tesla needs to speed up development of the autopilot so it becomes fully self driving so Tesla can finally launch Tesla Network with on-demand taxi services. Postpone projects that are not mission critical like Tesla Roadster, Semi, Truck and even Model Y. Tesla risk ending up with bad expensive products if they spread their development resources over too many different products too fast.

Model 3 was A Training And Educational Step, to prepare for High Volume Production: it was crucial to learn that, to prepare for the Model Y!

Besides, Model Y, will likely be even better for use in the Tesla Network, due to more Headroom, Legroom, Luggage Room, etc!

It will come with even Better Enhanced Autopilot Hardware, as in Tesla’s Own Processing Power AI Chip, out of the Gate, a few more Billion Miles of Learning Behind the AI, and maybe even Better Cameras, More Radar Coverage, and maybe even better Close up Sensors!

Towing: most likely Y will Get That, from the Start (Model 3 is still not Towing Rated)!

Nope, they should continue to move Forward, but do so with a reasonable balance of Cash Growth, Profits, & Investment, adjusting things like Higher $ Deposits for Y, Pickup, etc., For Reservations!

2019-2020 will also need to see them Grow GF1 from 1/3rd done, to at least 2/3rds, if not to Completion!

Better to prepare for Model 3 version 2 that can be made for 35k USD and be truly profitable at that price.

what makes you think that there is a version 2 coming?
Tesla simply makes changes to the lines as they see fit. I can assure that today’s M3 is NOT Identical to the first one off the line.
In addition, labor costs money. As such, they are simply moving more and more to automation.
That is a big part of how they will lower costs.

I know all that. By version 2 I simply mean a Model 3 version that can be made at less cost than current version. How many continuous iterations it will take to get to a profitable 35k USD version is irrelevant and long as Tesla achieve that goal. Also Tesla has not reached its 10k per week target. This is also important. Spreading resources over numerous products means Tesla risk being dangerously delayed again on the product ramp for these products and that risk bankrupting Tesla. It nearly did with Model 3.

No, Tesla did not nearly bankrupt itself putting the Model 3 into production, despite Elon playing the drama queen in suggesting it did. Telsa had many ready sources for more revenue, including issuing more stock, which it has already done several times.

Indeed Musk simply said that Tesla could have gone bankrupt IF they had not managed to solve the Model 3 production problems… which was a fact. But who thought they could not solve these problems?

Dude, Tesla Model Y is mission critical. CUVs are hugely popular.

Not popular enough if it cost over 50k USD to be profitable for Tesla to sell and VW start to sell a cheaper but similar BEV. Tesla is not done developing Model 3. They need to be able to make it profitable at 35k USD. This is mission critical. Also a full self-driving autopilot.

You wrongly ASSume VW will sell a “cheaper but similar” BEV in enough volume to compete against Tesla’s Model Y.

VW has known since 2016 about the coming of the Model 3, and yet nearly 3 years later they have still failed to bring a car to market in 2019 that is “cheaper but similar” to the Model 3.

Total VW sales in the US in 2018: 1,354
Total Tesla US sales for 2018: 191,597

VW’s sales are a rounding error on Tesla’s sales. It is VW who is the one under huge mission critical pressure to actually get something done when it comes to EV’s, not Tesla. Tesla is on a roll with 3 top selling pure EV’s, holding each of the top 3 US pure EV sales slots. If I were you, I would be more worried about the also-ran company sitting in the bottom half of the sales chart as an also-ran.

Tesla should worry a lot about VW making an I.D. BEV crosover that is supposed to start at 25k EUR and hit the market in early 2020. The only way Tesla can prepare for that is to be sure they can make the Model 3 profitable at 35k USD. All Tesla engineers should focus on how to achieve that by early 2020.

It is VW who is behind the 8-ball to catch up. Every single day Tesla grows their lead over VW in the US.

The reality is that VW is in no hurry to catch up, because they understand that EV sales have nearly universally come from cannibalizing ICE sales, and they are an ICE company. All that VW and the rest can to is try and stem the losses of ICE cars by trying to keep up.

While at the same time realizing there are over 30 different small cars models, over 20 midsize cars, over 30 small CUVs, and over 20 midsize ICE CUVs on sales today, excluding luxury models, which most all will need to be replaced with a BEV over time.

So there is enough market available for what Tesla, VW and others have to offer, which makes the options better for consumers, and the competition will help create better products from each automaker.

Tesla it seems is doing a great job with forcing the traditional ICE industry to evolve, kicking and screaming all along the way. And I wonder if that’s all what Tesla is intending to do, stay in the game long enough to get the industry evolved to BEVs from cars, trucks, Semi trucks, etc, pushing the envelop to drive an entire global industry forward.

This is all true, but VW is not sitting on their collective hands. Actually, their timing for showing up on the US market with the I.D. family is favorable: by that time the non-T DCFC network will be a lot better than it’s now, and the ongoing incremental improvements to the Li-ion tech may well yield a battery that is a few %% cheaper and lighter, and/or with higher capacity- and charging speed than what is available now.

Tesla showed their first Model S at a car show exactly a decade ago. We’ve been hearing that other car companies will make a better one that is cheaper for a decade now.

Still waiting.

The Model 3 doesn’t show any signs of being any different.

Ill take a rear wheel drive Neo please.

Then go buy one……

Pass the pipe. VW sold 322,000 cars in the U.S. year to date as of November 2018. I would much rather have a WELL BUILT VW Neo for $30k with a practical hatch body then a $50k impractical Model 3 that isn’t as well built with a lack of parts support or service centers.

After owning 17 VW/Audi’s, my Model 3 with almost 14K miles is practical enough to be our #1 car, including 2 long distance trips. (two bicycles inside the car, luggage for an extended trip and the dog) Fit and finish is fine, and service is terrific thus far. I’m 95% satisfied, as is most every Tesla owner I encounter at Superchargers. Of course, a $30K equivalent of Model 3 would be terrific. And WHEN will that be available (from a competitor?) Agree on one thing: a hatchback or wagon would be so great..

Wow, that is a take down!

Customer satisfaction rating for Tesla owners is much higher than VW owners.

Then go buy one……

No real car company brings an entirely new from the ground up car to market in 3 years. Especially not one that is an entirely new kind of car.

So says the Daimler boss, and all other German car makers. Diapers filling at an alarming rate…

And yet Tesla did exactly that.

Twice.

Once with the S chassis (which was reused for the X) and once with the 3 chassis (which will be reused for the Y).

Meanwhile, VW is stuck with the compromises of trying to use a common MEB platform to try and split the baby between ICE and EV requirements. Stuck with the sacrifices needed to meet ICE engine needs, their MEB platform EV’s will always be at a disadvantage to companies like Tesla who do clean sheet pure EV designs.

VW sold almost 400,000 cars in the States in 2018

ICE ICE BABY!

What you fail to understand is that those 400K ICE VW’s are all just old technology boat anchors weighing VW down. They are holding VW back, and forcing VW to continue to waste money investing dead research dollars into maintaining a the manufacturing of a dying ICE industry.

Every year VW is forced to divert R&D dollars they could be using for EV’s (like Tesla) into their ICE engines to keep improving their emissions. It is all dead money investment that VW will never recoup over the long term.

What you believe is an asset for VW is actually a huge liability holding them back.

Agreed. Read The Innovator’s Dilemma, and a lot of this makes perfect sense and is in fact inescapable, regardless of whether VW execs see the writing on the wall or not.

Great book

I think we can all agree that this is what’s happening, but lets consider the alternative. Let’s imagine they drive to sell EV’s only by 2020. What if they come out an average 25% more expensive than the current ICE model? What if customers aren’t ready to go EV yet? What if a lot of customers don’t have anywhere to charge at home and no real access to a charging network? Suddenly after investing billions into EV development they might go from 400,000 to 200,000 sales per year and are potentially looking at pulling from the US market at best, bankruptcy at worst. It’s pure survival tactics, and when the tables turn and EV demand matches ICE they will change to suit the demand.

I think sometimes we forget that it’s 2019, not 2025 yet, the EV revolution is still growing and it will take time. Manufacturers are adapting to the current market, and investing 5 years ahead, that’s why it looks like they’re not trying/don’t care.

level 5 AP is NOT ‘mission critical’. Supposedly with MY, they will have level 4 AP.

BUT, the REAL reason for going with MY, is because Musk never listens to others advice and runs this like a real engineer would. As such, he has said that MY would have a whole new design, that was more automation friendly than M3. Yes, the board said that would not be the case. However, you can bet on it, that he is NOT doing that.
The MY will be cheaper right from the gitgo.
In fact, I suspect that My mules are running around on some test track right now, and they are getting 1 line going just for the MY. The idea is that once announced, production will start rather quickly.

Yeah, fully self-driving cars are most certainly not mission critical for Tesla. They’d better not be, because mass produced Level 4/5 autonomous cars are almost certainly still several years off, and quite possibly a decade or more off.

I see Waymo did finally officially start its Waymo One taxi service in Phoenix, in early December last year, altho the so-called “driverless” cars have Waymo employees sitting in the driver’s seat, ready to take over in an emergency; and passengers are restricted to an exclusive “Early Riders” set of only 400 beta testers.

https://www.theverge.com/2018/12/5/18126103/waymo-one-self-driving-taxi-service-ride-safety-alphabet-cost-app

since when does any brand have the monopoly on a suv/cuv or sedan or even truck for that matter?

They only need to offer LEASING for the 50k car to work.
Look at BMW, MB, Audi leasing rates.

Tesla has not changed its roadmap as far as I can see. They are doing both, continuous improvement of existing products and developing new products, Model Y and Semi Truck. Personally I think the Roadster and Pick-up truck should take a back seat and use very minimal resources. Don’t know if Tesla has actually given up on the goal of 10k Model 3 per week or decided to settle for a little less, but whichever the goal is still to get speed up and efficiency increased to bring out $35k Model 3. So, IMHO Change, Robert Weekly and Cypress are correct. Tesla will prioritize Model 3 production improvements because need of immediate cash (won’t continue without low cost Model 3) and those proven successful improvements will be applied to Model Y production.

Tesla said they need significant changes to the line to go past 7K. If I were a betting man, I would put my money on Tesla hitting 10K/wk, but not just building Model 3’s.

The Shanghai plant will be used for both 3 and Y production as soon as this year.

The most flexible way to build an assembly line is to make it able to build multiple vehicles. Designed properly, there is no reason why the Shanghai plant couldn’t be designed to build both vehicles on the same line. There is also no reason why Tesla wouldn’t take that same knowledge to build the 3 and Y on the same line in Fremont. Especially considering all the construction under process in Fremont. There is also no reason why they couldn’t build the new Roadster on the same line, as they have said it is based on a Model 3 chassis the same as the Model Y.

My bet is on Tesla spending on one line upgrade in Fremont that gets production to 10K at the same time they introduce production of more models on the same line.

“The Shanghai plant will be used for both 3 and Y production as soon as this year.”

That seems next to impossible to me. Tesla did say something to the effect that some aspects of assembly would start later this year; I’m guessing something like the “final assembly” that happens at the Tilberg plant. At most, I think it would be putting Chinese-made Model 3 battery packs into the cars, likely with those battery packs made elsewhere in China.

But full assembly of the Model 3 at Shanghai is years off, and I don’t see Model Y production starting there until at least one full assembly line is installed and running.

A relevant quote:

“Tesla said earlier that production in Shanghai would begin two to three years after construction of the factory begins and eventually increase to 500,000 vehicles annually.”

https://phys.org/news/2018-10-tesla-shanghai-factory.html

Your information from Oct. is out of date. The latest news from 2019 was reported right here on insideevs:

“production of cars should start in second-half of 2019 (volume production from 2020)
.
.
.
battery packs will be assembled using lithium-ion cells from various suppliers, including Panasonic”

https://insideevs.com/tesla-gigafactory-3-facts-videos-form-groundbreaking/

Your comment runs directly counter to the latest comments regarding the factory.

Ultimately we will just have to wait and see. Generally, if you add 50% to any Tesla timeline it is about right.

So volume production won’t happen until 2021 but production will start around mid 2020. That would be my guess. As for full production maybe first half 2022 which is 3-3.5 years away. That seems a fairly realistic estimate to me.

thank god that musk is in charge of Tesla.

“Tesla taking more risk is fuel for Tesla’s shorters and give them a fighting chance to bankrupt Tesla in a FÜD campaign.”

The FÜDsters have no chance at all, but of course they won’t stop trying. 🙄

Actually, successful parasites don’t kill their host. They just keep sucking blood from it, weakening but not killing the host.

Full autonomy is a LONG way off. Building production capacity in China is a no brainer; it’s the biggest light vehicle market and even more the biggest EV market. Europe production will be next. All the big players have production in their big markets. Each new facility will incorporate what they have learned scaling up in the earlier facilities.

After 4 months of experience with Auto Pilot on my model 3 I agree full autonomy is a ways off. I love EAP but using it extended my view of the timeline of when level 4 let alone level 5 will be available. I have notice Elon hasn’t been talking about it as much lately either so I suspect Tesla realizes it isn’t “6 months” away. I do think it will happen quicker in China (not necessarily by a Chinese OEM, Tesla could do it) because a) traffic in major cities there is _horrid_ which provides an incentive and b) the government can just mandate it.

IMO, Model 3 is sizzling, however, the true economies of scale will occur when Model Y’s production ramps up.

GM has like 396 facilities on 6 continents so closing a few plants is pretty normal adjustments.

Tesla needs to keep expanding because they are still too small to survive on its own.

This article is just a fluff piece.

I think your facts are wrong. GM has bailed out of Europe and Australia so anything left is minimal at most.
Otherwise, you are correct in that, GM (along with Ford and FCA) have far too much production facilities of the wrong sort for the current model mix.

Bunny, which went bankrupt, GM or Tesla? Size does not guarantee survival.

Tesla almost went bankrupt at the same time. If they were bigger then they would have.

GM has lots of factories, including many for gas engines and other drivetrain parts.

But it doesn’t have nearly as many assembly plants, and closing even one is significant. Closing several at once is a strong sign of an economic downturn.

But yes, this article is definitely a fluff piece. The assertion “Although Tesla makes some fantastic vehicles, its real product is risk” has to be one of the silliest claims I’ve ever seen about any company, anywhere.

No company sells risk as a “product”. Tesla sells cars.

Thanks for bringing up the stupidity of the author’s “risk” comment, PP.

Exactly. VW is expanding EV factory production more than Tesla at this point.

Is it? They talk a lot

Tesla laid off 4000 people in early 2018, hires people in late 2018, and the announces it’ll lay off 7% of its workforce (approx 3000 people?) in order to be profitable? Becoming more and more like a legacy automaker if you ask me.

Tesla had a hiring spurt greater than the layoffs first.

The hiring spree you’re talking about is probably for gigafactories.

The recent 7% job cut is so that Tesla can cut costs to build the mid-range Model 3 (we’re not even talking about the base $35k model). Also, Tesla is also eliminating the referral program and increasing the price of a charge at supercharger stations. With governments phasing out EV subsidies for consumers, they’re finally realizing what it takes to have a sustainable business model.

Ok genius, i guess they should have ignored government incentives like every other industry and moved forward your ‘sustainable’ business model instead of adapting to the environment.

The legacy auto business model isn’t sustainable because their products are cooking the planet. They are the ones with the least sustainable business model as the world transitions away from fossil fuels.

I’m pretty sure Tesla understand what it takes to have a sustainable business model, Jeff. The challenge which most people (especially their opposition) totally misunderstand is, what it takes to have your business live up to its mission AND be sustainable.

Looks like Tesla Knows who does what better than you or I do, so they know who is adding value, and who is not.

Also, the New GF1 Battery Module Equipment they Flew in Last Year, was said to produce Battery Modules 4X better than what they had operational before it: they could Double That, and still lay off staff from that process, and still get more output!

There may well be Other Efficiency developments that have occurred, that we are not aware of, or privy to!

And when all the workers have been replaced by robots, who will have an income to buy or even rent all those lovely EV’s eh?

not sure tesla employees are buying teslas.

The workers who build an service the robots.

At one point Farming employed by far the vast majority of the US labor force. And now the employment numbers have entirely flipped, where the vast majority of the US labor force is in non-farming jobs.

https://www.nber.org/chapters/c1567.pdf

And yet our nation grew by leaps and bounds.

Your mentality that there is a zero-net sum game for jobs is simply historically wrong.

In at least some ways, becoming more like a legacy auto maker is a good thing. In fact, it’s necessary as Tesla continues to grow in size.

According to other comments, Tesla hired something like four times as many new employees during the year as the 7% they laid off, so this is just another attempt by Tesla bashers to pull out one cherry-picked fact and misuse it. It’s yet another pravduh attempt to suggest or insinuate that Tesla using perfectly normal business procedures is somehow “bad” or “wrong” simply because Tesla is doing it.

If China bought zero cars the Shanghai factory is still a good risk because it can supply cars for the world market. People in how many countries buy Teslas?

Exactly. The factory will most likely will be for Asia, Oceania and European markets.

Why Europe? The supply chain of finished goods from China to Europe is even longer than from the East Coast of the USA…? Unless they send all they cars to Europe by train?
btw, isn’t Tesla supposed to be building another GF in Europe anyway?

Yup, to all your points.

And sending freight long distances by train is not economical. Transport by water (oceans, rivers, canals) over any but short distances is always much, much cheaper.

Seems strange that we haven’t heard any recent news about Tesla’s coming European Gigafactory. Perhaps that plan has been put on hold?

Cars exported from China by Tesla will carry a 25% export tariff.

Only if they come to the US.

I used to get to upset over Evannex articles until I finally realized they are the Monty Python of the EV news, so ow I just sit back and enjoy the laugh.
Keep em coming guys!

The Joke’s on you. Evanex isn’t the source of this story. Business Insider is the source. This is explained in the third paragraph, and then the source is repeated throughout the story, and then reiterated at the very end:

Source: Business Insider:
https://www.businessinsider.com/tesla-risky-expansion-auto-industry-playing-defense-2019-1

Blaming Evennex for the content they quote out of a Business Insider story is like blaming Google News for Donald Trump’s tweets because they wrote a story quoting Trump’s tweets.

Sadly, this same reality has to be explained to you EVERY SINGLE TIME and you still don’t learn.

Now, do you actually have anything constructive to comment about what Business Insider said or not?

OK, but they chose to propagate a sucky article.

“sucky”

That is your constructive comment about the Business Insider story.

*Face Palm*

…its real product is risk,” writes DeBord. …

Its real product is Risk? Can’t sell risk. Sorry, not a product.

I don’t think you understand his point. Risk is very real and is quantified in the investment world all the time.

For example, the entire bond rating system is based on assigning a risk rating to corporate bonds that lead to corresponding returns.

Nobody buys bonds because of risk, or to accumulate risk. They buy bonds despite risk.

Investors who buy bonds, are repaid with interest in exchange for putting their money at risk.

It is an exchange. An investor puts their money at risk of loss, and in exchange they get paid back over time if their risk pays off, and there is money available when they go to redeem the bond.

The more risk, the more interest you earn in exchange for putting your money at more of a risk of loss. You are paid FOR putting your money at risk.

This is the real exchange of cold hard cash in exchange for you taking on risk.

Yeah, that is easily one of the most brain-dead comments I’ve ever seen about any company, anywhere.

@Nix: It might be defensible to claim, in an abstract way, that Tesla’s real business is risk, but to say that Tesla’s “real product is risk”… well, that’s just some blowhard desperately trying to sound clever, but falling on his face. Nobody can make a profit selling risk. Risk is what you must overcome to achieve a goal; it’s not the goal itself!

TM21 is right: Evannex certainly is to blame for promoting a sucky article. Even for Evannex, this one is embarrassing.

Pushy — you are reading it too literally.

Think of it like Ford saying “Quality is job one”. Technically there is no job to build “quality”. You can’t build a product called “quality”. You build cars, and then you use QA’s to check the quality, and reworks to fix problems hurting quality.

Here is the key sentence from the original Business Insiders story to show what I’m talking about:

“Tesla, meanwhile, is … gobbling up risk, front-running it while the rest of the industry is happy to sit on the sidelines. ”

The point that Business Insiders is trying to make when they talk about Risk and Tesla, is that Tesla is putting more Risk to expand their EV market and sales than other companies who are waiting on the sidelines. It may be in-artfully written, but they are correct.

It is more a major problem of US-Carmakers. European Carmakers are investing heavily (of course pushed by Tesla). I wouldn’t not buy shares from GM, Ford or Fiat-Chrysler.

You have to balance risk/reward, Musk does not do that.

Correct, he just goes for it and succeeds even when everyone else says it is impossible, even when he says it is impossible. So when a man takes on the rocket industry and succeeds, then the car industry and on top of that only produces ev’s and succeeds, anybody else’s opinion is pretty much worthless.

Yup we are all worthless ,……except the great ELON. Kneel before him…….

Oh, Elon balances risk and reward. In fact, I’ve heard him talking about exactly that; I think it was on the “Recode Decode” podcast. He just uses a different equation than everyone else.

Yes. On the “Risk” side of Elon’s equation is the long term cost to society of sticking with the status-quo and not acting with the urgency of now.

This is probably what pisses off the shorters in the investment community the most. Being pushed by companies like Tesla to have a social conscious goes against their “greed is good” religious beliefs.

Model3 Owned- Niro EV TBD -Past-500e and Spark EV,

Go big or go home — Tesla isn’t burdened with the legacy infrastructure and shareholders of the established companies. That’s changing now and Elon realizes the need to maintain fiscal profitability now that he’s reached that milestone — hence the labor force reduction.

Doesn’t stop the CapEx with Giga3 and knowing the Asian market is equally important as the NA one.

Keeping Tesla in the black while transforming it from a boutique car maker to a top-level mainstream competitor will be much tougher than was overcoming “production hell”.

I won’t begin to predict if they’ll do it, but I think it’s inescapable that that’s their primary medium/long-term challenge.

Why no mention of Volkswagen ? A 48 billion dollar battery order is certainly taking risk. I think Elon knows this and sees the competition coming. I think VW will be a formidable competitor, it already has dealerships and service centers. The supercharger advantage will help only until volume is high enough to make them too busy , when you see chargers at every Walmart and pilot along the interstate then the ev revolution will be here.

VW? Competitor in what country? Have you even checked the Plug-In Sales Scorecard lately? For every ONE EV sale that VW puts on the Scorecard, Tesla puts on roughly 200.

The article was about oem playing safe. VW is gearing up to be a significant presence, and is spending big money and making big contracts with multiple battery suppliers. Dieselgate has forced there hand, and it looks as if they are investing bigger than anyone else. Right now no threat, but in 2 years it will probably be a different conversation, and I think Elon sees this hence the recent layoffs. An attractive nicely optioned crossover with 300+ miles range for under 40k, and VW will still have some remaining tax credits, it will be very interesting to see how it plays out.

It certainly will be interesting watching how it plays out.

But I’ve been watching it play out for a long time now, and VW doesn’t care about Dieselgate anymore. They are lobbying Trump’s EPA to get the Dieselgate penalties nullified. They are a member of an ICE car maker lobbyist group that is lobbying Trump’s EPA to reverse California’s CARB exemption that allows them to run the ZEV program.

If VW puts results on the plug-in sales scorecard, great. Actions speak louder than words, and right now that’s Tesla by a WIDE margin in the US.

Have you heard of the future?

Yea, I head about it a decade ago. It was when Tesla showed their Model S off in 2009 at car shows. You nutters all said Tesla would go bankrupt before selling any, or that they wouldn’t have any demand after selling to everyone with reservations, Or that Tesla would be crushed by the major car makers.

You guys have been getting the future wrong for the last decade.

I agree . I’d much rather wait for one of The many VW’s that are going to be built on the MEB platform by a real car company with parts and service available.

You mean a real cheating car company like VW. The specs on the cars they have announced are not as good as five year old Teslas. By the time they actually come out they will not be as good as seven year old Teslas

48 billion over 12 years.
This is less than what Tesla will spend over the same period.

that is just for battery contracts

Lapping the field.

Playing it safe by closing factories?

Tesla is taking risks because they have no choice. They’re building a factory in China well so is VW. They’re building one in China , expanding in Chattanooga….Are they not considered “legacy”?

Tesla Model 3 owners also take more risks, like opening their trunk when it’s raining. 🚘 🌧

/s 😉

Change and innovation is in the blood of Elon/Tesla/SpaceX.
That’s what make them great.

Tesla is not risking that much with their factory in China. The whole investment is financed with local debt to be paid back by the local Tesla branch. So even if it went bad only the local branch would suffer, headquarters would not be liable. It has been explained several times that the whole operation in China is mostly self contained.

And it won’t be going bad because the Chinese government is right behind them. If the GF3 is really successful Tesla may move most of its production to China and export from there. The Chinese government is really friendly towards EV’s.

Maybe modelY is going to be made in Fremont and they will start producing it soon after the announcement.

If the Y is made with many similar parts to the 3 it makes sense. The demand for the high end 3’s has plateaued and the low end 3’s are hardly profitable. It would be much smarter for any increased capacity at Fremont to be filled by making high-end Y’s.

Tesla could then dedicate Fremont production entirely to high-end models and build a new dedicated factory somewhere else for the supply of low end 3 and Y models. That factory could be built from the ground up for maximum efficiency.

It would be a bummer for people waiting on the cheaper model3 but the survival and maximum growth of the company is more important.

Just a thought anyway.

Everyone who hopes to continue breathing air on Planet Earth, (or indeed Mars), is a Tesla shareholder, whether they know it or not. That’s why this is not just a business story.