By on January 27, 2018

Tesla’s Model 3, described by many as a make-or-break product for the EV startup, has had a very slow launch, with production falling far short of the numbers Tesla had predicted.

CNBC is now reporting that, according to current and former Tesla employees, one of the factors in the launch delay is the failure of Tesla’s battery “Gigafactory” in aptly named Sparks, Nevada to come up to speed. Ironically, the highly automated factory apparently needs so much human hand work that Tesla has had to “borrow” dozens of employees from its partner in the facility, Panasonic.

Last November, in a conference call with Tesla investors, company CEO Elon Musk promised the company was making strides in correcting previously reported problems at the Sparks works. CNBC‘s sources,  however, say the factory isn’t anywhere near mass producing the Model 3’s lithium-ion battery packs and that manual labor was still being done more than a month after Musk’s earnings call.

A company spokesperson acknowledged to CNBC that the Gigafactory was not yet up to full production, but said some manual assembly would be involved until they reached that point, and that it was consistent with what Musk and other Tesla executives previously indicated.

Tesla originally said that it would be making 5,000 Model 3s a week by the end of 2017. Later, that goal was pushed back to the middle of 2018. As of December 31, 2017, the company had produced fewer than 2,000 Model 3s and none of the $35,000 base models, just high-trim, high-range examples. Presumably, at least some of the hundreds of thousands of prospective buyers willing to plunk down the $1,000 interest free loan deposit Tesla requires to get in line for a Model 3 are waiting for a base model. Tesla, though, may be in no hurry to bring out the entry level Model 3, as it appears to be a loss-leader. Some analysts claim the base Model 3 will cost Tesla about $45,000 each to build. Stanphyl Capital’s Mark B. Spiegel, who is shorting Tesla stock, says Tesla won’t sell enough high-trim versions of the Model 3 to make its projected profits on the vehicle.

The longer it takes to get the Model 3 into Tesla’s company-owned stores, the easier it is for competitors to gain EV market share. The Chevrolet Bolt and Nissan Leaf may not have the social status or cachet of a Tesla, but they are in dealers now.

It should be noted that any new factory, particularly one making an all-new product, is not going to hit the ground running, and the assembly of lithium-ion cells into battery packs is a precise operation, with the cells needing to be properly aligned. Eventually, that operation will be automated, with the accuracy and repeatability that only machines can perform, but a Tesla engineer told CNBC that as of December a lot of that work was still being done by hand, resulting in a high scrap rate. That hand work is being replaced as the machines come on line, and some of the Panasonic employees have been transferred back to their regular jobs, but another Tesla engineer said the automated lines are still not up to capacity, and worse, they have no backups. Allegedly, even the automated equipment isn’t meeting quality standards.

“There’s no redundancy, so when one thing goes wrong, everything shuts down. And what’s really concerning are the quality issues.”

Tesla is a fairly young company, with a brand new factory, and many of its workers are new hires. Those current and former employees claim QC inspectors are inexperienced temps hired through staffing firms, with no prior automotive experience.

The report states two engineers who are still working at Tesla worry that misaligned battery cells could be a safety issue. The cells must be separated by a small gap, and if the cells do make contact, they could possibly short circuit. Since lithium-ion batteries have an inherent fire risk, an electrical short could start a vehicle fire. The engineers told CNBC their concerns were raised, but were ignored by managers.

Additionally, the sources also claim Tesla doesn’t perform “stress tests” of the Model 3’s batteries to accepted industry standards, which the engineers say could detect contact between cells or any other fault or potential service life issue the batteries might have.

In response, Tesla said that all of its employees, including new hires working in battery production, receive “extensive training, including safety training.”

“The implication that Tesla would ever deliver a car with a hazardous battery is absolutely inaccurate, contrary to all evidence, and detached from reality,” a Tesla spokesperson wrote in an email to CNBC.

The EV automaker asserted that extensive testing, “including shock and vibration, and high temperature and humidity testing, as well as thermal cycling endurance testing throughout design and via sampling in production,” ensures quality control. The company says this testing “is designed to prevent touching cells from being installed in any of our vehicles.”

As CNBC obviously had inside information on how Tesla puts its battery packs together, the company spokesperson went into some detail.

“Every battery in a Tesla vehicle has thousands of cells, the vast majority of which are at the same voltage potential as neighboring cells. Hypothetically, even if two cells of the same voltage potential were touching, there would be absolutely zero impact, safety or otherwise – it would be as if two neutral pieces of metal touched.

“Despite this fact, all Model 3 battery modules’ cell positions are measured twice in manufacturing to verify process control and quality of outgoing parts. Conversely, if at any point in the production process cells are touching at different voltage potentials, they cannot be electrically interconnected. Over the course of the production process, we conduct three different tests to ensure the right number of cells are electrically connected in Model 3 modules.”

[Image: Wikimedia Commons (CC BY-SA 4.0)]

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97 Comments on “Whistleblowing Tesla Engineers Say Model 3 Batteries Being Made by Hand, Slowing Production, Creating Potential Fire Hazard...”


  • avatar
    FreedMike

    So…it’s the batteries, not the car. Makes sense.

    • 0 avatar
      Art Vandelay

      Isn’t akin to saying “It’s the Gas Tank, not the car” in regards to the Pinto?

      • 0 avatar
        FreedMike

        Well, in the sense that you can’t build a Pinto without a gas tank, and the production of gas tanks is too slow, yes.

        But there’s no evidence that there’s actually a safety issue here. If anything, the slow rate of production tells me that they’re trying to avoid that. Self-immolating Model 3s are not going to do much to maximize shareholder value.

      • 0 avatar

        Whether or not Ford was negligent in not upgrading protection to the fuel tank once they knew there was a problem, the statistics show that the Pinto was no more of a fire hazard than the Chevy Vega or other small cars of the era.

        • 0 avatar
          FreedMike

          Agreed, but the “it’s cheaper to pay the lawsuits than fix the gas tanks” attitude was especially galling, and the fact that it came basically on the heels of the whole Corvair fiasco made it that much worse.

          • 0 avatar
            SCE to AUX

            “Agreed, but the “it’s cheaper to pay the lawsuits than fix the gas tanks” attitude was especially galling”

            This myth was debunked years ago.

          • 0 avatar
            Guitar man

            <>

            They don’t, which is precisely why Ford lost the lawsuit and had to replace all the fuel tanks. There is still some confusion with an ABC story made later where they put an explosive in the tank of a Gremlin to “prove” it was dangerous.


            If you look at the specs for the model 3, its crystal clear they could not possibly sell it at a profit for $35k. The inverter alone costs about $20k. Its the Sinclair QL all over again.

        • 0 avatar
          probert

          I thought the report said:” No more of a hazard than any other portable gas grill for four…”

          • 0 avatar
            FreedMike

            @sce:

            The memo in question was real – what was debunked was the claim that they were talking about the Pinto in particular. In fact, they were talking the cost/benefit analysis of fire risk across the entire Ford line.

            That makes it no less appalling.

          • 0 avatar
            WheelMcCoy

            @FreedMike – “The memo in question was real – ”

            That’s my understanding as well. The same logic was applied to the relatively recent Jeep gas tank problem, and the older GM ignition key problem. It’s a very cold calculation, even for a corporation (aren’t they people too?).

  • avatar
    CKNSLS Sierra SLT

    Maybe Musk should ask the Koreans on how to build an electric car. Both Hyundai and Kia have offerings.

    Tesla is a disaster.

  • avatar
    tnk479

    It must be tense the next day at the office after leaks hit the media.

  • avatar
    EBFlex

    Is it too early to call this farce of a company a failure yet?

    • 0 avatar
      Sub-600

      I’d say it’s too early, if they work out the kinks by the end of the year they’ll probably still survive. The real test will come when a large number of Teslas are on the road and how the quality is perceived and how the dealer network(?) reacts to customer needs. Getting people to buy one is the easy part, getting them to keep it and eventually buy another one isn’t so easy.

    • 0 avatar
      CKNSLS Sierra SLT

      EBFlex-it’s getting pretty close to that time……

    • 0 avatar
      FreedMike

      Too early? Yes.

      If they can’t get this fixed, and thus can’t produce enough Model 3s, then they’re probably boned.

    • 0 avatar
      raph

      Doubt you’d ever hear that even if Tesla and the Gigafactory disintegrated into a mushroom cloud by early next morning.

      However if Tesla folds and the Gigafactory doesnt work out for years to come you’ll hear plenty of talk about how domestic vehicle manufacturers and big oil sabotaged Elon’s efforts of that I’m fairly certain.

    • 0 avatar
      probert

      I dunno – Tesla is admired world wide and is the largest selling luxury car in Europe. Of course being smart, bold, and individualistic isn’t such an American trait except in fairy tales. Lift your head up and it’s mowed down by endless dumb.

      • 0 avatar
        Massiv

        Lol – You see yourself as the bright noncomformist, just like all your friends! Internet folks read a lot online, and feel “confident” substituting curated information and marketing for experience. Define “smart” and “bold”. Is it smarter and bolder to drive a Tesla than a Corolla?

        Giving the benefit of the doubt here, perhaps you’re spinning up hyperbole on purpose, but it doesn’t look good to those that understand nuance in issues.

    • 0 avatar
      Art Vandelay

      Time for a Tesla Death Watch?

      • 0 avatar
        Asdf

        No, it’s time for an EV death watch. Even after all these years, no automaker has managed to launch an EV that has range, charging and price parity with an ICE-powered vehicle. Not a single one! Only starry-eyed fanbois (e.g. low-expectation individuals like “SCE to AUX”), who are in reality EV Luddites, put up with the poorly made EVs available in the marketplace (partly subsidized with YOUR tax dollars). God knows for what reason…

        • 0 avatar
          brandloyalty

          What’s an “EV Luddite”?

          • 0 avatar
            Asdf

            An EV Luddite is a person who meets the notion of EVs having to reach parity with ICE-powered cars (e.g. charging not taking longer than filling a tank of petrol), with derision and ridicule, as if somehow those expectations are unreasonable (!!!).

            If by any chance this becomes a widespread attitude, then EV automakers won’t have any incentive to get their act together and invest in the necessary R&D to make EVs technologically and financially viable.

            There are those who want EVs to succeed and prosper. The EV Luddites are NOT among them, they’re happy worshipping whatever crap St. Elon et al launch in the marketplace.

          • 0 avatar
            brandloyalty

            So an “EV Luddite” is something new, someone who has problems with the performance of particular technology, not someone who opposes technology itself. Ok.

  • avatar
    stingray65

    These are not some new exotic technology batteries, which means all reports about rapidly declining battery costs is just industry/Elon propaganda. If they are still using lots of hand labor to produce them, those batteries are still very costly, which no doubt explains a lot of Tesla’s losses. On the other hand, the Model 3 assembly is apparently also still done largely by hand, complaints are legion about quality glitches on the S and X, and Elon’s rockets are blowing up regularly, so is there any part of the Musk empire that actually has any manufacturing capability?

    • 0 avatar
      Gail Bloxham

      It took a couple years for the Highland Park Model T assembly line to get up and running in a smooth fashion.
      And that was after years of building pretty good volumes of other Fords.
      Why would anyone think this is going to be different?
      Oh… I know… maybe it’s the “cargo cult” mentality of modern man. Blissfully ignoring how complicated and difficult it is to actually build something.
      Even auto enthusiasts and auto writers are part of this cult.
      As evidenced by these comments.

      • 0 avatar
        TwoBelugas

        Did Henry Ford promise x amount of delivery by date y and take a deposit from prospective buyers with no guaranteed delivery date?

      • 0 avatar

        I’m not sure that’s a good analogy. The full assembly line (Ford had implemented that assembly method in subassembly at Highland Park earlier) for the Model T started up in December of 1913. Ford built about 160,000 Ts in 1913. In the first full year of assembly line operation, 1914, Ford built about 200,000 Ts, and in 1915 that went up to about 300,000.

        Obviously it takes time to troubleshoot assembly, whether in 1913 or 2018, but Henry seems to have gotten his line up to speed faster than Elon.

        • 0 avatar
          SC5door

          Henry Ford was a sponsor of the assembly line, but his team also had a lot of influence from Oldsmobile and the Swift & Company.

          A better example would be the Curved Dash Olds: 425 made in the first year with ever increasing numbers each year after.

    • 0 avatar
      mcs

      @stingray; you’re confusing the cells with the packs. The cell production is automated. Panasonic knows all about producing cells. It’s the pack manufacturing that may have issues.

    • 0 avatar
      SCE to AUX

      “Elon’s rockets are blowing up regularly”

      That is patently false.

    • 0 avatar
      brandloyalty

      The online press agrees SpaceX’s success rate is the same as the industry average of about 93%. Where do you get the information to support your claim that “they blow up regularly”?

      If you include test failures, what do you expect from new rockets, trying something new and very difficult such as landing used boosters at sea? And how about the success rate of other Musk projects such as power installations?

      People like you with your nasty little online squawks are like fleas trying to get a tiny piece out of someone who actually does exceptional things.

      • 0 avatar
        JohnTaurus

        “People like you…”

        Wow.

        You couldn’t possibly be more hypocritical if you tried. I think its funny that you take this all so personally, especially given your history of belittling and criticizing others who take aspects of the subject of automobiles personally.

        Do you only come here to show us all how intellectual and enlightened you are? Because it isn’t working.

  • avatar
    mcs

    You’re not going to get sparks from the sides of two cells touching together. That’s total BS.

    • 0 avatar
      SCE to AUX

      It’s more fun to believe the unsubstantiated claims of anonymous sources than to consider Ohm’s Law.

    • 0 avatar
      tekdemon

      I find this entire claim to be total BS. Since when does hand assembling a battery pack suddenly turn it into a massive fire hazard? This claim is preposterous, and claiming that cells sitting next to each other will magically short circuit each other just because of proximity also makes no sense at all. It’s like saying the two AA batteries in your remote control are going to short circuit because they’re sitting next to each other, this makes zero sense, only certain cells are linked together into little banks and those sets of cells may sit next to other cells but even if they touched this wouldn’t create a short since the actual battery terminals aren’t touching.

      • 0 avatar
        EBFlex

        Teslas are already a fire hazard when they hit something on the road. What makes you thin mass producing batteries in a highly suspect manner won’t increase the chances of a fire?

      • 0 avatar

        I also found the claim curious, but if you read Tesla’s response, they make an effort to keep the cells from touching, also, the following statement makes me think that if two adjacent cells indeed have different voltage levels that would create a potential difference and possible sparking:

        “Every battery in a Tesla vehicle has thousands of cells, the vast majority of which are at the same voltage potential as neighboring cells. Hypothetically, even if two cells of the same voltage potential were touching, there would be absolutely zero impact, safety or otherwise – it would be as if two neutral pieces of metal touched.”

        This is a bit of an obfuscation. While “the vast majority” of cells have the same potential, they go on to say if the two cells have the same voltage and do make contact, it isn’t a problem, not that there isn’t a problem if two adjacent cells have differing voltages and come into contact. If you remove the plastic insulation film on AA batteries, you’ll find that the metal cylinder has continuity to the positive terminal.

        If it was me, I’d insulate the individual cells with Kapton film (I wouldn’t be surprised if the stuff on AA and similar batteries is polyimide), but that’s probably more expensive than precise alignment.

        • 0 avatar
          Alex Mackinnon

          It’s probably more to do with expansion and contraction of cells during thermal cycling. That’s the same thing that caused the Galaxy Note to catch fire. Things generally expand with they heat up. You don’t want two adjacent cells exerting pressure on one another or they can squish the anode and cathode together, causing a short. The casing should be neutral unless the battery is physically damaged.

          The casings are also generally connected with the battery cooler. I’d imagine that is also isolated somehow, but we’ll wait until we see a teardown of a Model 3 battery. An ideal connection would not conduct electricity, but would conduct heat well.

          I have to say, EVs have been around for 6 years at this point and most of TTAC still has no idea how a battery works or fails. Time marches on guys…

  • avatar
    Sub-600

    If two cells inside the anti-matter reactor touch you could have a problem. The Tesla would then operate in limp-home mode on impulse power provided by dilithium crystals.

  • avatar
    dougjp

    Poor groupies with their company stock and deposits.

  • avatar
    jalop1991

    “As of December 31, 2017, the company had produced fewer than 2,000 Model 3s and none of the $35,000 base models, just high-trim, high-range examples. Presumably, at least some of the hundreds of thousands of prospective buyers willing to plunk down the $1,000 interest free loan deposit Tesla requires to get in line for a Model 3 are waiting for a base model. Tesla, though, may be in no hurry to bring out the entry level Model 3, as it appears to be a loss-leader.”

    So…Tesla is guilty of violating car-model neutrality. “You’re not paying us enough, so your product will come when it comes. Shut up and we’ll keep your money.”

  • avatar
    James2

    “It should be noted that any new factory, particularly one making an all-new product, is not going to hit the ground running”

    I think I remember reading that Boeing was still building the factory when they started building 747s inside it.

    Anyway… seems to me that Elon missed a chance to give a middle finger to God when building the factory.

  • avatar

    Whar is the difference between Model S batteries and 3 batteries ?

    • 0 avatar
      WheelMcCoy

      Good question. I learned that the key difference is the form factor:

      https://www.teslarati.com/tesla-model-3-battery-pack-uses-2170-form-factor-cells/

      The article was confusing as to why there are multiple form factors. It’s gobeldy-gook to me:

      “The decision to maintain two types of battery cells might have something to do with being able to maintain production and supply chain efficiency.”

      • 0 avatar
        SCE to AUX

        The 18650 form factor was chosen because it’s the most common battery form factor in the world – a genius move by a fledgling electric car company.

        The 2170 form factor was developed by Tesla once they had more resources to do so, and it happens to have more energy density, etc than the common 18650. When you’re consuming something like 40% of the world’s lithium batteries, you suddenly have a say in how they’re designed.

        But it would make no sense to go back to the older S and X battery packs and redesign them at this point. You’d have to expend a lot of resources re-qualifying the performance, safety, charging, and manufacturing for the whole pack.

  • avatar
    indi500fan

    Musk needs to hire some folks with production savvy and focus his creativity in other realms. Guys like him typically have little interest in the blocking and tackling needed to grind out high quality cars at real production volumes day after day after day.

    Having done about 100,000 units in 2017 they’re nicely past the science project stage, but well short of world class quality and line rates.

    • 0 avatar
      brandloyalty

      Musk’s PRIMARY goal was to get ev’s established in the market, not to make a bazillion cars. I suppose we could argue about whether he has advanced or delayed the popularity of ev’s. Why else would he make his technology public?

      • 0 avatar
        JustPassinThru

        Musk’s primary “job” is to fatten himself at the public trough and at the expense of his “investors” – who don’t understand physics or market demands or the stock markets; but who do understand virtue signalling and think Musk is the ideal crony-connected Government-Grant Solicitor.

        All of them are going to be left holding the bag, except Musk – who will move his newer, separate, ever-more demented fantasy businesses out of reach of any DoJ prosecutors.

        Ultimately, it will be the taxpayers who pay.

        And these electric virtue-signaling toys will be parked permanently. Especially when population growth and shrinking power production (all those closed generation plants) intersect to rolling brownouts. Remember when plastic bags, THAT! SAVE! TREES!! was the height of progress?

        Fads based on emotion and Virtue Signaling, do not last.

        Neither will this profit-free, disorganized, ripoff outfit last.

        • 0 avatar
          brandloyalty

          How does your critique apply to the business in which Musk got rich to begin with?

          • 0 avatar
            JustPassinThru

            I don’t know enough about Paypal to comment intelligently on it. It does, barely, slip through the regs – it performs banking functions but is not considered banking and thus is not regulated.

            It probably taught Musk that the way to get things done, honest things or other things, was through graft and crony connections.

    • 0 avatar
      JalopNick

      One angle that I haven’t seen pointed out is this one:

      America’s manufacturing has been in decline for a very long time. In so many parts of the country, the young and even older generations have never had the opportunity to work in a manufacturing job, making those things that they and other Americans want to buy. To a significant extent perhaps, the skills are gone and, in places like Nevada, they were probably never there to begin with.

      So, here’s a plucky 15-year-old company, disrupting an industry as massive as automobile manufacturing, investing in a place that nobody else would invest in, hiring a load of people and giving them skills and the dignity of a job, and yet so many of us reward this by taking the piss out of their effort.

      What they are doing is TRYING. Bending over backwards with financial gymnastics, training a workforce out of nothing in Nevada, employing those kicked to the curb by NUMMI, creating desirable products that, despite their known shortcomings, actually sell in parts of the world where nobody would even begin to consider buying an American-made vehicle otherwise … yes, they are trying and I really like them for that.

      This does remind me of driving through a couple of impoverished European countries (Switzerland and Liechtenstein). I saw only one American-made brand on the road. Tesla (not counting EU-made Fords and Opels).

      • 0 avatar
        JohnTaurus

        Oh, and we like disruptive companies. Because if its one thing companies that employ hundreds of thousands and sell millions of products need, its disrupting. And nothing disrupts more than promising the moon and delivering a basket ball.

      • 0 avatar
        28-Cars-Later

        “”This does remind me of driving through a couple of impoverished European countries (Switzerland and Liechtenstein).

        Sir, did you happen to smoke some crack this afternoon? The Swiss people can buy and sell our sorry asses and Lichtenstein’s wealth per capita is the highest in the world. I was just in both in summer 2016, neither is impoverished by any means although the cost of living is high.

        I noted Teslas were a semi-common sight in Zurich, not so much Geneva. In Geneva I noted several old American imported cars (ye old Caprice, a new Escalade, mint 70s Lincoln Conti-Town Car) and a few Chevrolet badged Daewoos but that was it. The most common vehicle I observed in Geneva was I sh*t you not was the Dodge Journey (also sometimes badged as a Fiat) but in Zurich no one model stood out to me, although Mercedes models seemed common. Vaduz traffic was a bit more plebeian but I was not there long enough to make an acute observation. I did note some vintage Land Cruisers in Sargens and the surrounding area though.

        “Though extremely small in area and locked from all sides by land, the Principality of Liechtenstein has per capita income that is highest throughout the world as it is obvious from the GDP (nominal) per capita statistics revealed by the United Nations’ report in 2012.”

        7continentslist.com/liechtenstein.php

      • 0 avatar
        dima

        That is not true. I drive Ford Cmax hybrid that is proudly made in US. Granted it is the only one in entire Switzerland but still.

      • 0 avatar
        DaveBeNimble

        Oh FFS – they’re TRYING?

        I must have missed the participation trophy you get on NYSE. There are no points for trying. Either you succeed or you don’t.

        The reason Tesla is so infuriating is quite a bit simpler: so many of the feats you list off are completely unnecessary. Making cars in volume is HARD, and the cheaper your price point, the harder it gets; because, you have less margin to play with, can’t afford cost slippage, and your customers are less able to tolerate your failure.

        So why are they, in your words, “training a workforce of out nothing in Nevada?” (Of course we know why – the veritable mountain of tax breaks Nevada threw at them.) As hard as this was going to be, why did you set up your factory in an area with unreliable utilities and no manufacturing expertise? Was there shame in going to even the Las Vegas area, which has a bigger manufacturing base, or the Midwest, which is desperate for jobs, or the Southeast, where most transplants have built up workforces? Or, God help, Japan, where the actual relevant expertise is?

        NUMMI seemed like a good idea – should have been able to get a high-quality workforce there, but the stories of Tesla managing it like a typical Silicon Valley talent grinder tell volumes.

        And then you look at their design choices. Why the pop-out door handles, or falcon-wing doors? Everything they are doing is hard enough already, why take on optional problems?

        I really want them to succeed, and I want to see American innovation drive the market. But they don’t have the basics down, and are trying to do what I think is one of the hardest things on earth (volume manufacturing for consumers) the hardest possible way, and they are ignoring the century of heritage in this field at every possible turn. So, yes, for letting us down, and turning what should have been a triumph into a slow-moving train-wreck, I tend to be down on Elon.

        And lickspittles like you that try to define “success” down to a low enough level that they have already acheived it while Elon continues to pile on more and more and more empty promises, aren’t helping anything.

        • 0 avatar
          JalopNick

          I think you’re projecting a bit too much and you’re confusing me for one of the Elon groupies.

          Nevada location: You’re assuming that they’re really that thick and have not considered everything you said. Could it be that, for whatever capital they had access to, it was the tax benefits + proximity to California that trumped other considerations?

          “Tesla managing it like a typical Silicon Valley talent grinder” – well, that’s what they know around there and, looking at all the innovation that’s come out of the Big 3 in the last 20 years, that may very well be the only way to get things moving.

          “I really want them to succeed …”. That was the whole point of my comment. Yes, their cars are both awesome and crap. Yes, they do a lot of gimmicky stuff that those like you or me think is pointless and detracts from the goals. Stop for a second and consider the implications of all that gimmickry: There seems to be a large-enough segment of the target market that trip over themselves to get those dorky features. Those features are marketed at them, not you or me. Without those outrageous doors on the Model X for instance, the hype would have probably been a lot less substantial. That would have meant one more sale (to me that is) and perhaps a lot fewer to others who dig that kind of stuff.

          Sensible doesn’t necessarily sell as well. The performance sideshow and the other hoopla does apparently. Maybe it was the correct choice.
          They didn’t just build cars, they built a brand. Don’t underestimate the value of that! That alone ensures survival, whether they go out of business or not.

          “And lickspittles like you that try to define “success” down to a low enough level that they have already acheived …”

          Well, this one lickspittle, for the first time ever, found an American car that was worth a second look. If they ever build that car I reserved, then after 20 years of sending fat checks to Bavaria, I’ll send one to California. As much as it pains me to have some of it fund that communist clique running the state, I’m sure Joe Blow at NUMMI will be rather happy I did not send it to Ingolstadt again. He might even consider it some kind of success.

  • avatar
    el scotto

    I’m confused. Bolts/Volts and Ford Energi’s are sitting unloved and unsold on dealer lots. Yet people put down deposits on Tesla’s. It also seems that “appliance” car buyers don’t want extremely useful “appliances”. The Prius V and Ford C-Max are being discontinued.

    • 0 avatar
      trackratmk1

      Because even though many people say they “just need a car to get from point A to point B,” car buyers have proven themselves repeatedly to be non rational actors. When you’re plunking down 30k+, it’s all about the feels. Emotion sells cars, plain and simple. And Tesla is the single most emotional auto brand in the world right now.

    • 0 avatar
      SCE to AUX

      Because rich, arrogant morons are eager to throw away money they don’t need on virtue-signalling toys like a Tesla. They don’t even care if the company goes out of business as its volume increases every year.

      At least according to some of the B&B here.

    • 0 avatar
      brandloyalty

      I recently spent most of a day in a plug-in Prius, and a neighbor showed me his Volt. These things didn’t used to happen.

      Hybrid models proliferate, and if you look at logos on cars carefully enough, there are a lot more hybrids on the roads than you think. For instance those tiny non-virtue signalling Toyota HSD logos on Camry hybrids, or the little “h” appended to a model number.

    • 0 avatar
      JohnTaurus

      I didn’t know the Bolt was unloved and unsold. From my understanding, its doing quite well for what it is, much to the expense of the Volt if you read the tea leaves in a certain way (once production of the Bolt and deliveries ramped up, Volt sales dropped like the Titanic).

      Plug-in Hybrids (C-Max Energi, etc), on the other hand, are not the same as BEVs. Lumping them all in together is disingenuous.

      But, hybrids in general aren’t selling well these days because gas is cheap and nobody wants to spend more to save less. There is little incentive to buy a C-Max over an Escape, especially if there are 11 new Escapes to choose from on the lot, but only one C-Max that’s tucked away in the back with flat spots on its tires because salesmen aren’t interested in selling it just like customers aren’t interested in buying it.

      Buying a BEV makes a statement. Especially if its from a company that is “disrupting an entire industry” according to some ill-informed Elon worshipers. Meanwhile, Hybrids are old hat, so far as making a statement goes, especially if they’re ugly (Prius) or neglected old product (C-Max).

    • 0 avatar
      28-Cars-Later

      Chevy Bolt unloved and unsold becoming lot poison? Unpossible.

      Why it’s almost as if CARB, hipsters, and the ManBearPig clergy could be wrong about what automobiles Americans want to buy?

  • avatar
    CarnotCycle

    Tesla is in constant race between cash-burn and next scheme for more cash. Deposits on cars yet to be made, new stock issuance, bonds, outright loans…they’ve explored and implemented every capital-raising shtick short of raffles and ‘Dinner with Elon’ fundraisers to keep the lights on. All of that in past eighteen months.

    Looking at their cash flows, TSLA raised ~$4bln via such “financial activities” while the car-building part of TSLA lost so much money net change in cash was only $136m; in other words they’re losing over $3 billion a year. They have $3.5 billion in cash equivalents right now.

    So seems pretty obvious if that trend continues and they don’t raise more capital, its lights out pretty much for TSLA by end of this year with no money to make payroll etc. Even if they start stamping out Model 3’s at 5k a week tomorrow, its still lights out by EOY for them unless they make money on each car. After all, they’ve got to make pretty much all the 500k Model 3’s for which they’ve monetized $1000 a pop (income booked and spent last fiscal year) already.

    Financially its getting a little existential over there (again). Expect another equity dilution or loan soon. They somehow have to increase their net cash since its getting kinda obvious they won’t be reducing the burn rate anytime soon.

    • 0 avatar
      thelaine

      Yes. In retrospect, this will appear so obvious. Why people can’t see it now is so strange. Tesla will die slowly, then all at once.

    • 0 avatar
      trackratmk1

      Excellent post, Carnot. Their short term survival hinges on how many more investors they can swindle into keeping them afloat. The boy who cries wolf is Elon preaching about future profitability. It won’t last forever.

      Car and Driver ran a piece on them in their current issue quoting analysts on both sides of TSLA. The most interesting comment to me was a guy who calculated that to justify their current share value long term they would need to own 100% of the $50k and up lux segment. One-hundred-percent! I can’t verify the math but these are investors with lots of skin in the game.

    • 0 avatar
      EquipmentJunkie

      I second the excellent post, CarnotCycle. Analysis like this is what I have been wanting to hear. I figured that the financials had to be this bad, but very difficult to get real numbers. I am getting tired of the pontifications of Musk, the High Priest of EVs. Every month of lackluster build volume of the Model 3 allows real auto manufacturers to make progress with their own EVs.

      Pros: – The Tesla product looks pretty good.
      – Tesla has lots of orders on the books.

      Cons: Production can’t be ramped up to fulfill orders in a timely manner.

      In nearly every other business segment, if this were the case, you would be yesterday’s news. Could you imagine placing a deposit to reserve a spot in a great, new restaurant only to learn that they can only seat three tables a night? Placing a deposit for a new iPhone only to learn that your order might be shipped in three years?

      I also expect a financial shell game to increase cash. Tesla needs to sell the designs to a real manufacturer since I don’t have the faith that they can turn this ship around. I’ve taken to responding to people who say “What’s new?” by saying “Short Tesla”.

    • 0 avatar
      DaveBeNimble

      This will be the thing to watch, as it will be the bankers who decide if Tesla lives or dies. Ultimately, I don’t see they have enough cash generating activity to staunch their cash burn, let alone service the debt.

      And then every electric vehicle in the future will be tarred with “the concept that even Elon Musk couldn’t make work.”

  • avatar
    anomaly149

    “Every battery in a Tesla vehicle has thousands of cells, the vast majority of which are at the same voltage potential as neighboring cells.”

    Err… that’s not how batteries work… a cell creates potential across it, that’s how a battery is, y’know, a battery. The exact contact point and misalignment is key, especially since each battery strand will be slightly different as no two cells are the same. (this is why the Battery Management System is so important in an EV)

    Or to translate into 2018speak: TESLA SPOKESPERSON FAKE NEWS, SAD!

  • avatar
    MA128

    I put up my deposit in April 2016 amid the hype, which admittedly was quite exciting. Since then, I’ve become increasingly skeptical of Tesla’s ability to become a reliable large-scale automobile manufacturer. I think it’s much easier for an existing manufacturer to add battery power and safer to buy a car from them. The reveal of the Model 3’s interior finally killed it for me. Without any normal instruments or physical-button controls, I believe the car is just plain dangerous to drive. I requested and received my refund last month.

  • avatar
    Asdf

    Tesla should axe the Model 3 and the rest of its shoddy EVs (its entire range, in other words) until it fixes the fundamental flaw of fully charging the battery taking longer than filling a tank of petrol. Only with this massive blunder taken care of can it relaunch itself as an EV automaker that matters.

    • 0 avatar
      brandloyalty

      We should stop the production of fossil-fuel powered cars until we fix the fundamental flaw of suddenly releasing so much carbon dioxide, currently at 2.4 million pounds per second. Only with this massive blunder taken care of should ICE cars be relaunched as safe technology.

      • 0 avatar
        JustPassinThru

        Oh, of course.

        We need government to FORCE us to accept what we rationally, logically, do not want – because of practical physics or economics.

        Just like they have done with ethanol-corrupted gasoline.

        Just like they have done with the CAFE regulations, making all cars look alike, to achieve low wind resistance.

        Just like every set of regulations does. Creates an inert, inefficient, stagnant, non-responsive business and inferior product.

        • 0 avatar
          brandloyalty

          Nonsense. First of all you somehow overlook the astounding number of things government does well or better than private business would have. Not to mention the things business won’t touch to begin with.

          Second, government comprises you and your fellow citizens. Somehow many like you have been led to believe government is a vast hostile corporation. In fact government is all you have to protect yourself against vast hostile corporations.

          One government failure that seems obvious is your education.

          • 0 avatar
            EquipmentJunkie

            Experience has taught me that government is indeed a vast, hostile corporation. Minimizing and crippling government’s power over individuals provides me with great pleasure. I am more worried about government than corporations. I can easily choose to alter my behavior against corporations that displease me…which I have repeatedly.

            I have had the experience of being educated in both public and private education. You are correct, my public education was a real failure. I was happy to personally pay thousands for my private high school education as a teen. I learned a life lesson in the difference between the quality of public vs. private entities. Ditching public education was one of the best decisions of my life. Don’t bother responding since the quote below says it all.

            “A man with an experience is never at the mercy of a man with an argument.”
            – Leonard Ravenhill

          • 0 avatar
            JustPassinThru

            No, you offer the nonsense. There are only two things government does as well as (probably not better than) private groups: Staff the military and punish criminals.

            EVERYTHING else, from treating water to paving roads to collecting trash to building cars, is done FAR better, privately.

            Government is not me and my fellow citizens. Government is of the Elite Political Class, the Government Class, who get into government immediately upon finishing Elite schools and never leave.

            Joe Biden? WHERE has he EVER worked a non-government job? Chuch (Schmuck) Schumer (Choomer) another government lifer?

            These reprobates see THEMSELVES as OUR taskmasters.

            That is, assuming you are like me and not one of them.

          • 0 avatar
            brandloyalty

            EquipmentJunkie says private education is superior and JustPassinThru says the government is incompetent because it’s full of people from elite schools.

    • 0 avatar
      PandaBear

      What nonsense. There are chargers at many workplace parking lot and people can charge at home on 120V all night.

      Battery cost for production and replacement is the fundamental problem.

      • 0 avatar
        Asdf

        So you respond to entirely reasonable expectations of technological progress, with the statement “What nonsense.” You are in other words an EV Luddite. It’s such a shame that there are so many of you out there, because your collective low expectations prevent EV automakers from being forced to get their act together and produce decent EVs, which currently don’t exist.

  • avatar
    Sub-600

    Reliance on government isn’t freedom. None of the framers signed ‘The Declaration of Dependence’. Outside of national defense the government tends to be intrusive and an obstacle. “Politician” was never meant to be a career.

  • avatar
    PandaBear

    It is very common to have human involved at the beginning of automation, things takes time and robots don’t learn how to do things in 1 afternoon like experienced human does. This is why nothing will be 100% automated ever.

    Regarding to “not testing” something, a lot of time it is about calculated risk and yield lost. A lot of testing can only test 50-90% of all components and then you have to test it after integrating it into the system to test the rest. You will get some fallout and have to rework, vs taking some design trade off and test it before integration. Depends on the situation it is very common one way or another.

    Nothing to see here.

  • avatar
    HotPotato

    Hope they work it out…


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