"Tesla Inc. was “bleeding money like crazy” during its Model 3 production ramp-up and almost went under earlier this year, Elon Musk said Sunday."
(Includes a 1:14 excerpt from the Axios interview)
Yikes, looks like few knew how hard it really was.
This just validates my reasoning on why the Service and Call Centers are so over loaded. They've been throwing every last dollar on the 3 ramp and had to defer building up the service infrastructure. Now that the cash flow has been loosened up I expect they will be investing heavily in service upgrades.
And they want to refund $5k to Model 3 owners. Smh!
@hammer, they certainly need to build up service bandwidth, especially in areas with high Tesla ownership rates.
How far away is GM if they are closing factories, stopping 6 lines of cars (Volt, 2 Caddies, Cruze, Impala, and ???), buyouts to 18,000 people and laying off another 15,000? They call it reorganizing for the future. Uh huh!
I am glad I was able to help him out a bit by purchasing two cars
"they certainly need to build up service bandwidth, especially in areas with high Tesla ownership rates."
Yes they do and they know it. They have been playing a game of whack-a-mole with respect to bottlenecks and Model 3 was one big-ass mole, so big they didn't have any mallets left. They are going to have to take a whack at service now, and fast, before it starts to effect sales.
Part of why the call center is bogged down is people calling to ask questions that they could have answered themselves if they had read these forums or did some basic research before buying their car. I know that my local service center seasonally gets “panic” calls from new owners about high energy usages, “stuck brakes”, noises when charging in the summer, etc., etc. etc. All the while people with real issues are trying to get through.
So this is not wholly Tesla’s fault.
I’ve seen several posts from new owners on here lately who made service appointments the first time it got cold because their ‘regen was broken’ or ‘the car was using more energy per mile than it was in September.’ On this forum and were educated; most were convinced to cancel their service appointments; but for every one I’ve seen, there are likely hundreds of owners calling service for things they should have learned from in their owner’s manual! I know, I know, no one reads any more…geez
This is a factor in why it takes months to get an appointment for an actual repair (%&^$#%$@!@$#
I’m glad they focused on Model 3 production. Otherwise there possibly would be no Tesla today. Now they can move on to the next issue.
So the real threat of going under is why /what accounts for the 'funding secured' tweet, and why $40 mill fine was such good value. It does affect the taste in our mouths though of loyal followers. I think he may have been a bit naughty (and Grimes would not have been helpful like).
And so, what did the auditor, now the Chair elect, do about it, and now he has tweeted that , I think her very position must feel terribly vulnerable. Oh well, she gets $1.4 m as a seat on the board but I expect she has already half moved to USA from AUS already...?
***How far away is GM if they are closing factories, stopping 6 lines of cars (Volt, 2 Caddies, Cruze, Impala, and ???), buyouts to 18,000 people and laying off another 15,000? They call it reorganizing for the future. Uh huh!***
Read between lines GM is just saying the traditional car business is going to be tough. It needs to change focus to EV but that is an even tougher business. It did not specifically mention Tesla but the reason everyone can see is Tesla has set the bar too high.
Once Tesla has the Model Y and pickup, lookout!!!!!!
As a recent report on CNN pointed out, GM has a lot of sedans in its line up and no one or at least not enough people are buying sedans. This is no different than Ford announcing a long while ago that they were going to stop marketing sedans in the U.S. The only difference is Ford didn't immediately announce factory closings associated with this new strategy of theirs.
Mark my words though, this is a repeat of the late 90's of when the "Big 3" put all of their eggs in one basket and focused on gas guzzling SUVs/trucks and then gas prices went up, the economy tanked and we had to bail out GM and Chrysler. The only thing that saves Ford is the F150, which we subsidize because businesses can deduct the cost of their Ford trucks from their taxes.
And here i was under the impression Tesla was paying their Model 3 suppliers and employees with unicorn farts until the ramp was completed.
Musk was being melodramatic. Tesla has access to as much money as needed, but of course there are good reasons to not tap that if at all possible.
It is telling that Tesla is selling more sedans than they can make. It seems as though people simply do not want to buy the GM sedans being offered.
Imagine if a compelling Y had been produced instead of the M3!
"Imagine if a compelling Y had been produced instead of the M3!"
you mean in the context of managing demand going even more "through the roof"?
Well, likely Tesla would actually have gone broke trying to ramp up the production of the Model Y if they hadn't had the 3 first.
Tesla knew they needed to make the Model 3 before they made anything else. Thats why they made it.
If they had tried to make a Model Y without having gone through the 3 first they would have failed.
Just as surely as if they had tried to go directly from the Roadster to the X.
While the Y will be an improved Model 3 (most of the Model Y waiters here are secretly or not so secretly hoping its basically the Model 3 "done right").
And it will have even more simpler build process, less wiring even more electronics but still uses the existing 3 chassis.
Even so the Y will be a big stretch for Tesla even with the 3 mostly under its belt.
But with it comes a while new raft of challenges both making and supporting it.
@carlgo2 +1. Sounds like Musk was saying he would rather let Tesla fail than do another capital raise. More likely he’s trying to take credit for pulling it out of the ditch with his crazy 22 hour days.
Yeah if they were really that close to failing then they probably wouldn’t be out of the woods yet. Hopefully they won’t have to cut it so close for every new car release
carlgo2, apart from Tesla, every car company is seeing a decline is car/sedan sales. I believe in 2107 only 32% of new vehicle sales were cars.
"It is telling that Tesla is selling more sedans than they can make. It seems as though people simply do not want to buy the GM sedans being offered."
I've been thinking similar thoughts - why is it that Tesla is having no problem selling sedans when the US auto makers is having trouble selling them?
For one thing, prior to the 3 and even now with the 3, Tesla seems to be competing in the luxury car market against European brands that predominantly sell what? Sedans, although in recent years they have started offering SUVs and crossovers.
"Tesla knew they needed to make the Model 3 before they made anything else."
Why is that? If in the US market SUVs and crossovers are more popular than sedans, why would Tesla need to bring out a second version of a less popular type rather than add a more popular type to it's offerings? Please explain the reasoning behind your statement.
One might suspect that anyone who will buy a sedan will only buy a Tesla.
By extension, one might suspect that once a Tesla SUV or truck is available, will those who only want such a vehicle also only want a Tesla one?
As far as Tesla's choice to lead with cars: the value of an EV shows up better on a car's lower drag due to the fact that a battery is so heavy and expensive. The additional drag caused by the less aerodynamic body style of a truck or SUV would make a comparable electric truck or SUV more expensive than its ICE equivalent. With cars the superiority of EVs shows up with comparable costs with today's battery costs.
Huge sales of cars has allowed Tesla to build up to the economies of scale to make batteries much cheaper, thus paving the way to the feasibility of Tesla SUVs and trucks to dominate their markets in the near future.
That makes sense. Air drag is always the thing that Tesla has put a lot of efforts to tackle. That's why all its cars have best aerodynamics in their class. I thought that was also how Elon came up with the hyperloop idea when he's trying to figure out every way of how to reduce the drag.
@greg: "Tesla knew they needed to make the Model 3 before they made anything else."
@Earl And Nagin
"Why is that? If in the US market SUVs and crossovers are more popular than sedans, why would Tesla need to bring out a second version of a less popular type rather than add a more popular type to it's offerings? Please explain the reasoning behind your statement."
Simple production 101.
Model 3 was required as the next step in the EV manufacturing ramp up chain. Basically the 3 was a smaller "S" in design and concept with a dash of X [glass roof] on the side. The key difference was that they wanted more glass in the roof as that has major vehicle manufacturing benefits (if you add the roof, last, as a single piece of glass you can keep the interior open for the car assembly allowing robot automation to insert componentry, seats or whatever from the side and from above. Vehicles with solid roofs (the original S for one) can't benefit from that.
So the 3 is the next evolution in automation of the assembly process. Way more so than the X or S. Neither these vehicles were designed for assembly. They were designed as vehicles then Tesla spent a lot of time figuring out how to make the damn things the engineers and designers had created, then after that how to automate [with robots] the making of the damn things. Then lastly how to make enough money from the making of the things. After 5 years they did all that and didn't go out of business first. They made it and each next model was literally and figuratively built by the money and designs and tooling experience got from models before it.
They knew when they started on the 3 they didn't have the luxury of having 5 more years to "figure it out", not if you're planning on making half a million of them a year - let alone a million plus as was the original plan and make enough money so you don't go broke. Same with the batteries - they needed a new battery tech. Hence the 2170 cell design - best mix of easier to make, cost effective and weight saving, so that they could use a smaller pack in the 3, saving tons of money over the packs used in the S and X.
So thats why the 3 is needed its the next rock in the rocks in the river that lets Tesla (and us) cross from "No EVs" side to the "everything is EV".
Musk said the Roadster was like their version/generation 1.0, the initial S 2.0, then X 2.5, then the revised S was version 3.0, and the 3 was more like a 4.0.
The Y will be built on a version 5.0 for sure, even if based on the current 3 chassis/body rather than a completely new one as Musk wanted to do early on but was talked out of doing so by the board.
But had they tried to bring out the Y straight away, just like if they had tried to bring out the SR Model 3 first - they would have failed. Too hard to ramp up. They need profitable model 3 production lines to springboard the Y off of.
Yes, it would be nice to have done a Y first up but First principles dictated that "you couldn't get there from here" - yet.
Tesla took a risk that tanking Car sales wouldn't be a problem, in part it was a safe bet, because if you build a superior vehicle, people will buy it if its compelling enough.
So there is my reasoning.
Sweet validation. Critics such as me who kept presenting red-flegs like executive defections and cash-burn now deserve a massive apology. We won't get one, but we deserve it.
Lol moe are you really that dumb to understand a figurative expression? Jeff Bezos just told his staff one day Amazon will fail. When you think it will go bankrupt?
lol Mos who do you want an apology from? You have been equally hyperbolic about Tesla’s doom as optimists have been about its health. You were dead wrong, period. Assumed that’s why you stopped slinking around here. Please don’t use this story as some vindication for you.
Also...Elon wants you to believe they were inches from death because that makes him a savior. Are you going to grant him that title Mos?
Elon is proud of the fact that he lives on edges and always need to put in 200% in order to survive. Many see him as having superhuman intelligence but he always thought he owes his success to that philosophy, so too are Jeff Bezos and many successful people. Elon actually raised that production hell red flag before any of those idiots started to bash Tesla for the wrong reasons.
@mos you were still 100% wrong.
This isn't horseshoes where if Tesla almost fails you were almost right.
In case you are wondering, the interview was clarified as Tesla not wanting to get more money. They could have easily gotten more money but Elon was dead set against it.
3:02 in the video.
Yes they were burning through cash. Doesn’t take a rocket scientist to figure out that having parts and a factory for producing thousands of cars per week is costing money if you are not actually building those cars.
But to think Tesla would go under completely, is laughable.
Mos, you don’t deserve an apology. Not even remotely close. In fact, you should apologize to all of us for all this time of Tesla not going to make it. But you will twist it somehow in your mind. Oh well, that’s your problem.
“Elon wants you to believe they were inches from death because that makes him a savior.”
I believe you are 100% mistaken. Elon has much more moral character than what you insinuated.
Tesla was indeed near failing mainly because of the cost and time that was wasted on totally dismantling an entire assembly area because Elon pushed for total automation. Well, he was wrong and he admitted he was wrong. Production was super slow, what he thought would be a time saver totally backfired on him . Taking that line down and reconfiguring it took a huge toll on time and cash.
Elon said many years ago that Model 3 will be the make or break of Tesla. Start ups making cars takes a huge, incomprehensible amount of cash. Many have tried, only Tesla looks like they might succeed .
And no, Elon doesn’t think of himself as a savior , simply a man on a mission for the betterment of all of us.
On the Cars vs. SUVs - it far less about which one is better and a lot more on providing a useful vehicle. The old-line companies have almost zero innovation in the sedan space - reusing tired old designs over and over. No wonder they sell poorly. It seems they put their C design team on sedans, while SUVs got the A team. SUVs have gotten dramatically better over the years, but still are not nearly as safe as sedans (except for the Model X).
Plenty of people find sedans the optimal vehicle for their needs, while other fine SUVs optimal. Once you find the category, the choices in the sedan space are not all that compelling especially against Tesla's offerings.
"On the Cars vs. SUVs - it far less about which one is better and a lot more on providing a useful vehicle"
Probably right, after all, Blackberry phones [remember them anyone?] continued to sell ok for a while after the iPhone came along.
Seems that the email functionality and physical keyboard, [albeit all done within a walled garden] - like sedans, simply suited some folks better than the more flashy "SUV" type iPhones did - and did so quite well, for a while anyway.
Of course, total lack of ANY innovation at all by Blackberry by RIM killed the Blackberry.
Of course, SUVs have their place. But a compelling sedan EV will sell well. and the boxy shape of most SUVs kills fuel economy in both ICE and EV models. So I can see why Telsa sticks with Sedans for now.
The Model Y will be a CUV rather than a SUV., probably for efficient as much as any other reasons.
@David N you somewhat missed my point it was more directed at MOS, a long time troll who spent months talking about how 1) inevitable that Tesla is going under and 2) how incompetent and dishonest Musk is. So my point is he can’t have it both ways. So MOS should apologize about being dead wrong about Tesla going under (unless he wants to admit that Musk truly did save in superhuman fashion). Either way he’s a troll and has some nerve demanding apologies.
Opps, I apologize.