By on October 31, 2017

Tesla Model S Grey - Image: Tesla

Lately, we’ve been guilty of the same behavior as a lot of other well-rounded and objective automotive publications — bashing Tesla Motors. It hasn’t been done maliciously, but we’d be lying if we said the divisive hype and hate surrounding the company didn’t bother us. However, since the summer launch of the Model 3, a slew of happenings at Tesla have have raised unanswered questions.

The biggest question surrounds the cause of the company’s rather severe production delays. Tesla also fired hundreds of employees this month, without any clear answer as to why, and seems to have shelved a cross-country trip aimed at highlighting the progress made with its Autopilot driver assistance platform.

None of this would be quite so noteworthy if its stock valuation wasn’t still stratospherically high and CEO Elon Musk hadn’t publicly promised so much — but that isn’t the reality we’re living in. Now, with the company reporting its third quarter earnings on Wednesday evening, we’re hoping to get some clarity on what exactly is happening in Fremont, California. 

Earlier this month Tesla reported that it had only built 260 Model 3 sedans in the third quarter, despite forecasting 1,500 units in the same timeframe. Citing “production bottlenecks” as the reason, the automaker hasn’t given any additional explanations for the assembly delay. Bloomberg, also keen for answers in this weeks earnings report, said Musk was “camping” on top of the company’s Gigafactory outside of Reno, Nevada, and speculated that the problem could be a battery supply issue.

Taking a step back and looking at Tesla’s production goals in comparison to well-established manufacturers doesn’t inspire a lot of confidence, even under idyllic circumstances. The company is trying to explode into high-volume production at a pace that is difficult to comprehend, and without a clearly outlined path to get there. With delays ongoing, shareholders need more answers and less self-promotion.

One such solution could stem from adding a production facility in China. In June, Tesla said it’s “working with the Shanghai Municipal Government to explore the possibility of establishing a manufacturing facility in the region to serve the Chinese market.” That deal was expected to have solidified into something tangible by the end of the year, but we’ve yet to hear anything.

We also haven’t heard much regarding the company’s staffing issues. The firm has lost essential members of its Autopilot team, potentially stalling autonomous development plans and explaining why we haven’t heard anything about enhanced features in a while. But it also reportedly fired a large hunk of its production team in California this month. While Tesla remains somewhat tight-lipped on the reasoning behind it, the United Auto Workers has filed a federal complaint claiming the layoffs were a result of Fremont-based employees supporting efforts to organize.

When questioned as to the validity of the UAW’s claims, Tesla eventually stated that the terminations were part of a performance review process. “At Tesla, we strive to be a fair and just company, the only kind worth being,” a spokesperson said in an email. “Performance reviews result in promotions and occasionally in employee departures. No one at Tesla has ever or will ever have any action taken against them based on their feelings on unionization.”

Still, the layoffs came as a bit of a surprise from a company striving to bolster volume and maximize production hours. However, if these employees were dead weight, losing them wouldn’t necessarily be a crushing blow.

Perhaps the biggest conundrum is that of the company’s financing. While we know Tesla had around $3 billion in cash at the end of the second quarter, we also knew that the Model 3 was going to be a six-month money pit. There was no way it couldn’t be. But, with individual delivery wait times stretching to the end of next year and no word yet on how the company plans to solve its production problem, we don’t know how long this cash burn is going to last.

Hopefully, Tesla can provide the public with some clear answers in tomorrow’s report, because we really could use them at this point.

[Image: Tesla]

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47 Comments on “It’s Time to Figure Out What’s Going on at Tesla Motors...”


  • avatar
    Cactuar

    Speaking of Tesla, where is TTAC’s review of the Model 3?

  • avatar
    Heino

    Hubris. Mr. Musk is obviously talented and I am impressed with Space-X, but eventually he is going to lose the trust of people. On the other hand I am baffled with Wall St. for valuing the company so astronomically. Just like Uber, innovative but massively over hyped.

    • 0 avatar
      raph

      I guess that Tesla is social consciousness affirmation for the wealthy and since those guys tend to form the bulk of the individual investor class I suspect they buoy Tesla well beyond reasonable expectation along with the sycophants on down the ladder who want to drive a stake into the heart of anything their parents held dear.

      There is a lot of want for Tesla to be the sort of old industry busting harbinger for the future its basically become the automotive version of scientology and that translates into a high degree of valuation on the stock market which it seems is less about logic and more about emotion.

    • 0 avatar
      Lorenzo

      The billion$ made by Silicon Valley dudes pitching vaporware has turned Wall Street into giddy rubes chasing the next Big Thing.

      Never forget that Wall Street is designed for insiders to make money, some of it for “investors”, but most of it for the insiders themselves. Running up stock based on nothing but thin air promises is the new way to concentrate investor cash so it can be siphoned off more efficiently.

      There are still operators who make money investing in growing companies, or stable companies that produce steady returns, but they work for institutional investors and trust funds. Chances are, few, if any, of them have a cent invested in Tesla.

    • 0 avatar
      kurkosdr

      Wall St values Tesla so high because innovation delivered out of deadline or even delivered with production issues is better than innovation not delivered at all.

      Just remember where we used to be 10 years ago before Tesla. Automakers (with the exception of Toyota) were giving us the same engine technology every year, very slightly improved, but with Bluetooth and MP3 added to the dashboard (that used to count as innovation apparently). Only Toyota dared to innovate, but they came up with the Prius (do you really want one?)

      Oh, and Tesla’s cars look good on a sea of ugly cars with grilles a ricer would find too much. Never underestimate that.

      In plain English, Wall St doesn’t listen to the commentators whining about production delays and see the product.

  • avatar
    Rick Astley

    I have 1,000,000% absolute faith that if somebody elses money (preferably the taxpayers) is at risk or can be leveraged for personal profit and stock value manipulation, that Elon Musk will do everything in his considerable power to do so.

    No stone shall be left un-turned, no financial will be in accordance with GAAP, not a single dime of somebody elses money shall be left un-burnt in his quest for personal limelight and benefit.

    • 0 avatar
      stars9texashockey

      +1

    • 0 avatar
      Heino

      Rickroll!

    • 0 avatar
      SCE to AUX

      Likewise, I have absolute faith that given an opportunity to repeat falsehoods about Tesla, you’ll take it.

      So I’ll clarify for those you’ve duped:
      The only taxpayer money involved with Tesla is the Federal and state subsidies which go to Tesla’s customers, not Tesla. These are tax breaks, not checks.
      The corporate welfare Tesla receives is similar to every other large mfr. These are tax breaks, not checks.

      Tesla reports its financials per GAAP, and has been for a while now. Maybe you missed that news, but now you know.

      Mr Musk may be guilty of self-aggrandizement, but he’s also sending spaceships to dock with the International Space Station. The nations of the world don’t let just anyone do that.

      That said, my confidence in Tesla has been eroding for some time. My reservation money may end up in somebody else’s hands.

      • 0 avatar
        Ray Davies

        Nevada has agreed to provide Tesla with $1.3 billion in incentives to help build a massive battery factory near Reno.
        The Palo Alto company has also collected more than $517 million from competing automakers by selling environmental credits. In a regulatory system pioneered by California and adopted by nine other states, automakers must buy the credits if they fail to sell enough zero-emissions cars to meet mandates.

        there is a lot more, i got bored

  • avatar
    silentsod

    “even under idyllic circumstances” should probably be “even under ideal circumstances” unless you did mean peaceful, serene, picturesque in natural simplicity.

  • avatar
    hamish42

    In very recent times I have heard from Mr. Musk on Tesla Motors, his space initiative, interstate trucking, hyperlinks, tunneling under cities, and the rescue of Puerto Rico. So, while he’s dreaming out loud about too many things at once, who is running the Tesla ship? Crisis requires concentrated effort, and he seems spread awfully thin.

    • 0 avatar
      Lorenzo

      See, that’s the problem. Like deal-maker Sergio, Musk doesn’t know how to run a car company either. Sergio has an existing industrial company with the people to run it on a day-to-day basis, but Musk doesn’t. Apple was going to get into the car biz, but accumulated enough auto manufacturing expertise to tell management what it was getting into. They got out quickly.

  • avatar
    thelaine

    When this bubble bursts, it is gonna be a bloodbath.

  • avatar
    el scotto

    If they can only get the Model 3 out. Almost every Tesla owner that I know is gaga over their car. A friend of mine gave me a ride in Ludicrous Mode, he used to own a 911 9 (water cooled Jack), another friend loved driving his Tesla because we got always got VIP parking, another guy talked to me for 15 minutes in the grocery store parking lot for 15 minutes about his car; including insisting that ai sit it and start it up. These folds are college educated, can afford a Tesla and their enthusiasm for their car is far from normal from other car owners.

  • avatar
    indi500fan

    I’m still pretty surprised in this era of internet and lack of employer/employee loyalty (both directions) that there’s no “deep throat” in the Tesla factory giving us daily or weekly updates on the goings on.

    • 0 avatar
      ImpalaBro

      I work for a company that supplies industrial machinery to Tier 1 and 2 manufacturing companies. One of our customers is producing an aluminum frame component for the Model 3. The line has been shut down for almost 2 weeks, because Tesla is STILL making design changes to this component, even though millions of dollars have already been spent on machinery, tooling, etc. And this is just one little Mid-western Tier 2 supplier. I’ve worked in automotive mfg for close to 20 years, I’ve never seen anything like it, from any other auto manufacturer.

    • 0 avatar
      SCE to AUX

      Ah, but there is:

      https://disqus.com/by/endeep/

      It’s a very troubling story he tells.

  • avatar
    whitworth

    The virtue signaling benefit of manufacturing electric cars is that people will ignore the serious white collar crime and fraud Elon Musk is engaging in. Because the ends always justifies the means and this is too big to fail.

    Think about it, if Tesla made anything besides electric cars, do you really think this house of cards would still be standing?

  • avatar
    APaGttH

    Prediction:

    3Q numbers are a blood bath with a lot of spin and excuses. Cash burn will be in excess of 1/2 billion for the quarter.

    Stock will go down about 10% and then return to close to previous days close end of day Thursday, and then up 10% to 15% within a week because, well there is no valid reason beyond TESLA! Elon! Electric cars! I want my iPhone X and my Model 3!!!

  • avatar
    DAC17

    I agree with the stock move, in the short term. But, about a month ago, I purchased some January 2019 puts (basically options to make $$ if the stock price goes down). This drip, drip of bad news can’t last forever without some negative effect on the share price. Remember 2000! But, maybe I’m wrong. We’ll see.

  • avatar
    AoLetsGo

    I heard about one piece of this story. The original paint shop for the 3 was some cheap, Chinese puzzle cluster. They now have a German team in there on overtime trying to fix it.

  • avatar
    DAC17

    With stories like that, I can’t wait to see the cash burn in 3Q…

  • avatar
    CaddyDaddy

    … had to take a business trip to Nor Cal last week. Was loading luggage into G50 rental car at SJC and a brand new Tesla P85 D, just bought privately owned, pulled up behind us to pick up wife and kiddos. I turned around and was horrified at the hood and door panel alignment gaps, I mean they were bad. ……anyway, just my observation.

    • 0 avatar
      Thinkin...

      “Brand new, just bought, P85D” eh?

      Tesla hasn’t made that model since February 2016. But please don’t let facts get in the way of a good story.

      • 0 avatar
        CaddyDaddy

        Ok, you got me on that one, owner claimed it new and it had CA temp tags. Regardless, to clarify further, horrid panel gaps on the hood, doors and trunk speak volumes to the quality of stamping and ability of employees to match standards found on Nissans rolling out of the factory in Tennessee.

        I guess I’m not a fan boy of what iteration comes out and when, to me they are the same car, same stampings etc.

        Very Soon, it will not matter. When the investor ponzi scheme of pump and dump fizzles out and the political class in Sacramento realizes that voters are tired of corporate welfare so Tesla’s can be built for rich people to feel less guilty, the whole enterprise will collapse.

        They ain’t making, F series King Ranches.

      • 0 avatar
        Big Al From 'Murica

        Yeah…maybe said Tesla owner wrecked it, but had crap insurance and got it fixed in one of those respray shops like in Grand Theft Auto and that explains the panel gaps.

        Or maybe this is one of the myriad of little things that normal cars get beat up for that is overlooked on these because Tesla. I know Saturn was beat up over this on cars that started around 8 Grand (because GM I guess). Rattles, poor assembly quality, bad paint, panel gaps, and let’s be honest, a design that if it was any other automaker, especially one at Tesla’s price point would be described as “long in the tooth.”. Fine, electric cars are real cars and have moved into that realm from toy and novelty status. So how come Tesla’s don’t get judged as such. But these issues would be overlooked on a Bolt or Toyota.

    • 0 avatar
      FreedMike

      I’ve never seen a Model S with poorly sorted out panel fits.

      But when you are inclined to dislike something for political reasons – and, hey, if that’s the case, then you’re entitled to do so – you’ll find fault where there really isn’t any.

      (And anyone who thinks folks buy Teslas because of the tax credit is way, way, way off base. These are affluent people who can afford any car they want, and they’re VERY picky. Seven grand back on their taxes won’t make much difference to these folks. If the Model S was a piece of crap, Tesla would have failed LONG ago.)

      • 0 avatar
        CaddyDaddy

        …… huh, no one buys a Tesla because of the Tax Credit? I call horse manure on 2 parts.. 1st off Freed Mike, from following you on your past posts as a promoter of the left, you rail on taxes not being enough for the rich Trump voters etc…. However, if you are rich and buy a virtue signaling Tesla, that’s OK. And you can’t ever imaging the rich considering tax consequences of the purchase, thats laughable.

        My disdain for Tesla is not political, it’s purely Economical!

      • 0 avatar
        Ray Davies

        My brothers S leaked in 5 places. It was 500% worse than my 70’s Dodge that was old! It needed an engine swap, the paint was flawed and soft, it has rattles. The interior is cheaper than a VW. It ate tires at the rate of about 50 cents a mile for a while, It had other problems.

  • avatar
    SCE to AUX

    “Now, with the company reporting its third quarter earnings on Wednesday evening, we’re hoping to get some clarity on what exactly is happening in Fremont, California.”

    This article is mostly repeat clickbait; it would hold more meaning if it was posted *after* the Q3 earnings report.

    Personally, my annoyances and concerns with Tesla and the Model 3 are growing daily, to the point I’m almost ready to transfer my reservation money to another mfr. I think the greatest irritation is the NDAs which early Model 3 owners are signing. *All* videos about this car are from non-owners with access to someone else’s car. Not cool.

    Today it’s production issues; tomorrow it will be service nightmares. Hangin’ by a thread here, Tesla.

    • 0 avatar
      Master Baiter

      “I think the greatest irritation is the NDAs which early Model 3 owners are signing.”

      Agreed. Pretty heavy handed on Tesla’s part. I’m not sure I’d want to patronize such a company. If I were in the market for an EV, I’d wait for something decent from BMW or Mercedes, once the reviews are in.
      .
      .

  • avatar
    stroker49

    How do I short Tesla?

  • avatar
    tomLU86

    Tesla makes money–for Mr. Musk and savvy Wall St. players (not investors) by using imagery to foster perception, in other words using the virtual and intangible to make money in the stock market (that can be converted to tangible things, like Park Avenue apartments, fine dining, Ferraris, the Caymans and so forth).

    Making money by making autos requires real and tangible success, or at the very least, a lack of REAL failure.

    The brilliant Mr. Musk overestimated how difficult this can be. After all, if the rubes of Detroit can make cars, how hard can it be, right?

    The reality is that even a 2nd rate automaker like Fiat/Chrysler, or even Lada, has learn much in years of experience that Tesla is still learning.

  • avatar
    arthurk45

    Little Elon Musk’s main business strategy seems to be to get into a business arena where govt subsidies abound – solar roofs, electric cars, space craft, etc. You’d think a billionaire could afford something better than a Salvation Army store t-shirt. Or wearing a sports coat and dungarees and some sort of dead exotic animal skin shoes. Yikes!!! A fashion galoot. I love the concept of electric cars, but I hate what the profit-addicted Musk has done to them. He has created ultra expensive vehices in order to hide the cost of the batteries, and thta means ultra complicated, proprietary monsters that only his monopolitics company can repair or replace and Tesla has shown NO tendency to treat their customers right. Don’t confuse complicated Rube Goldberg designs with “high tech.” High tech means good advanced design and thatg means simplicity, efficiency, cost effectiveness. In other words, everything that Tesla Motors is against. They are after profits and mislead enormously – the orginal Model S advertised price of $49,000 is a good example of this. The advertised “$35,000” Model 3 price is another. The $9,000 battery upgrade option for the Model 3, which consists of stuffing another $3500 worth of battery cells into the pack, is yet another. Tesla Motorsd ahs zero patents on anything of value. Their “high recharge rate” is now being eclipsed by a car that just became electrified – the Porsche Mission e, which can recharge twice as fast as a Tesla supercharger. The Tesla supercharger network, which caters to the only car that ujses its charging protocol and which will be overwhelmed by CCS FAst Charger stations once the 120 plus announced electric models are on the road in the near future. The point is – Tesla HAS NO technological advantages in the electric car arena – even their (non-existint) autonomous driving option is being eclipsed by GM’s more advanced system. And on top of all this, Tesla’s govt subsides are drying up over the next 4 quarters, putting their vehices often at a $7500 price disadvantage against competitors. Yikes!!!

    • 0 avatar
      el scotto

      Due to their very nature, spacecraft are basically a huge government contract. Would you say AM General gets Gov’t (government) subsides? At least his solar panels are American made. As for Elon’s sartorial sensitivities; weloome to the IT world. Yeah, they don’t wear much Brooks Brothers. You pay for the engine in an ICE vehicle, you pay for the batteries in a Tesla. I can’t quite figure out if you’re against Tesla’s design or the fact that not everyone can fix them. Anything Porsche will be stupid expensive. German engineering ain’t cheap. Yet there are chargers for electric cars at malls. The battery option is just that, an option. It’s not mandatory. Who cares if they have no technological advantage? They have a larger fanbase, and it’s a well educated one, more than any other “e” car. Tesla and and GM DO NOT get a $7,500 tax subsidy for their cars. The $7,500 is a POSSIBLE tax deduction for the buyer.

    • 0 avatar
      Ray Davies

      All of their 3s so far have had the $5,000 “premium interior package”. What in the blue hell would that spartan interior look like with out 5 grand of upgrades?

  • avatar
    EBFlex

    Unless you’ve been living under a rock or lack cognitive skills, we all know exactly what is going on with Tesla. The company is a house of cards.Their business model is terrible, the products are terrible, Musk and his cronies have no idea what it takes to run an automobile company, and they have done nothing to innovate.

    The company is a joke.

  • avatar
    redmondjp

    This company is going to run out of cash and that will be the end of the current company as it exists now. I predict that the cars will live on, but be made completely in China.

  • avatar
    Master Baiter

    I would only be concerned if I were a Tesla shareholder, or an employee of the SEC, neither of which describes me.

    And ramping down focus on autonomous driving development is probably a good idea.
    .
    .

  • avatar

    I am sure that Musk has his strategic reasons for his Alleingang in producing Teslas, and that production itself is pretty specific… But working together with other car manufacturers could have solved the issue of getting seriously behind with producing Teslas. Particularly since there are still plenty of abandoned and uderused production facilities. Nothing new to subcontract another car maker. Valmet and Magna would have been happy to cater to Tesla, is my guess.


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