The Model Y is now unveiled. A realistic production timeline has been announced. Pricing is about what one would expect. There's some complaining about where it will be built — pssst, Gigafactory 1 and Gigafactory 3 — which is BS. The unveiling was rather bland, Musk went through the presentation fine, but appeared uninspired by it all. "Here's our story. Here's the car. Go out in the parking lot and take a test ride. Thank you."I suspect the lawyers told him to cool it on the projecting the future front. Blame the stick in the mud SEC for that.
The vehicle itself? The usual suspects — the same cheerleaders of Wall Street's alleged geniuses that denied the Great Recession right up until our quarterly investment reports tanked — were underwhelmed. Tesla stock tanked Friday. Indications are for more tanking Monday. What I'd like to know is what it takes to impress this bunch. When someone goes futuristic — see the early prototypes of Mercedes' E SUV — they complain. When a carmaker goes more conventional — see Audi's E-tron— they call it boring. Just no satisfying that bunch. If you're going to demand that an automaker deliver a "for the masses -- read chap" vehicle, don't expect to get a Rolls Royce with batteries and 19 cupholders. Those desires are mutually exclusive by definition.
The MY has been described as the M3's larger sibling and that's about right. People who took test rides Thursday night were impressed with the MY's performance as per usual for Tesla vehicles. There is no denying that anything Tesla makes flat gets after it in the performance department. Test riders immediately dismissed the seven seat option saying, like Trix, the last row is for kids. Makes sense. The M3 the MY is based on is a small sedan, there is only so much room despite the MY being 10% larger. There is no getting around trying to put more cargo in a box than it can hold. If one wants roomy for all, buy a MX. The MY does offer best in class in storage with the rear seats down.
M3 owners rave about their cars. I expect MY owners will do the same. My personal reaction to the Model Y is about the same as it was for the Model 3 initially — nice, but not for me. I much prefer the MX I currently own. When I replace it—right after the coming refresh—it will be another MX. I love my MX. We went to see Captain Marvel Friday night; when I punched the on button walking through the parking lot afterward and saw my MX light up like a spaceship going active, apropo given the movie I had just seen, I thought after owning it for 18 months I still get a big kick out of the thing. Darned thing is a spaceship with wheels. Falcon Wing Doors? They've never given me a moment's trouble and I have zero complaints about 'em. The thing I dislike most about the MY is the same thing I dislike about the M3 — the missing screen in front of the driver. The main screen on the dash is fine for changing settings, but for info while driving I much prefer the 2nd screen for the driver. Personal preference. Minimalism as a style is fine, just don't touch my driver's screen.
TESLA'S IMMEDIATE FUTURE
I think it's contingent on the following with the first being by far the most critical:
1. The state of the global economy
2. The mundane task of reducing production costs
3. Changing the political climate in the U.S.
STATE OF THE GLOBAL ECONOMY
Storms clouds are gathering. Car sales, all kinds of cars, are down. The industry has been propping up sales with subprime car loans — remember subprime mortgages? The same thing — defaults rates are high and growing. (Who could have thought THAT would happen? Wall Street geniuses indeed). Used car prices for ICE vehicles have collapsed. On the larger scale, there are definite warning signs. The gold is good crowd panicking, though more than usual. What's truly worrisome is some allegedly savvy investors see troubling signs. Major retailers are closing stores. Large companies are starting to lay off workers at every level. The Fed continues to readjust its forecasts for future economic growth downward. The Atlanta Fed's running GDP estimate, for example, currently shows virtually no economic growth in 2019Q1. This is not good. Most everyone sees zero to negative growth worldwide and in the U.S. in 2020; some think the bottom could fall out later in 2019.
When it comes to Tesla, this might be the reason for Musk's sudden conservatism. In the midst of the layoffs last year, Musk said one reason was to make Tesla recession proof meaning the company could weather the storm. I don't think he was kidding. Being a high end automaker, Tesla is more vulnerable than economy carmakers. "Honey, put down the Consumer Reports. You're just going to have to wait a year or so before you decide whether a Model S or the Mercedes is what you want. We just can't chance it right now." I think Tesla now has the strength to weather a recession, but it's still troubling. If some of the more dire prognostications come to pass — see former Reagan Economic Chief David Stockman — everybody is going to be in trouble. CNBC hosts don't even want to put Stockman on any more because his dire warnings upsets their preferred picture of rainbow, sunshine and a pot of gold in every investor's house.
Any way you slice it, the intermediate term economic picture doesn't look anywhere near as rosy as you know who trumpets (pun intended).
REDUCING PRODUCTION COSTS
Tesla aims to hit $100 per KwH on its battery packs by 2020. That's fine, but there's still the little problem of getting through 2019 in what could be a difficult year economy wise. One-hundred bucks per KwH is the Holy Grail of EV production because it puts the sales cost on par with comparable ICE vehicles. Once EVs hit that milestone it will be game over for ICE vehicles; they will no longer be able to compete with electric cars. They already lose on performance, fueling and maintenance costs, but that sticker price is still a remaining hurdle.
But that all starts in 2020. There is still 2019 stock get through. Right now, Tesla is dependent on the M3, the MS and the MX. Tesla is getting better and better at turning out M3s, see Bloomberg's M3 production page, Tesla is ahead of schedule in hitting the 7,000 per week M3 production goal by the end of this year. The $35,000 M3 is finally available, but not without pain. IMO Musk's real goal in "going internet on sales" was to squeeze costs by eliminating the commission structure for people manning Tesla's stores. Tesla has backed off its close-the-stores mantra somewhat, but the commissions are still gone.
CHANGING THE POLITICAL CLIMATE
Our government in its infinite wisdom, crafted a terrible EV bill in 2010. The goal was nice but the lawmakers' vision of the future was flawed. At that time, EVs didn't really exist. Tesla was a small boutique shop turning out a few roadsters a month. Toyota was fooling around with the Prius. The Chevy Volt wouldn't show up for another year. So, Congress figure that offering a federal tax credit of $7,500 for the first 200k customers of an auto company would help spur the market. It did help in lessening the cost to make EVs more attractive to buyers, but nobody anticipated Tesla. Last year, Tesla blew through the 200,000 ceiling, so did GM a few months later. Both companies are now in the phase out of the tax credit where customers will no longer get the full $7,500 tax credits. Customers of drag-their-feet automakers like BMW still get 'em because they didn't try to make and sell EVs. Tesla and GM are being penalized for leading the way.
How to fix that? Two ways: 1) eliminate the 200k cap for the tax breaks and set a deadline for the . The tax breaks, btw, are minimal in terms of impact on the federal budget @ around $7.5 billion; or 2) eliminate the tax break for every automaker. The downside to that is it would slow adoption of EVs until around 2022 when the entire industry manages to hit the $100 KwH per battery pack goal.
On a wider scale, we need a government dedicated to addressing climate change top to bottom. For example, the tax credit for installing solar panels on one's home, which makes EVs from those homes even cleaner in GHG emissions, is necessary to defray some of the upfront costs. The Trump administration is hostile to it. They are also hostile to adoption of renewable power sources at the grid level as well. This needs to change.
Tesla is the first U.S. automaker in 100 years to get as far as it has gotten. The company now employs 40,000, mostly in America. Why is it suddenly verboten for government to support a native business success story? The government still gives established, gigantic oil companies subsidies/tax credits of all kinds. Why not incentivize our two auto companies in a like manner? Or utilities that are moving in the same direction at the grid level? Or companies that are moving to self power their operations?
Why? Trump is why. He and his cronies need to go. Yep, that's a political argument, but so what? It's true.