Neither of those has much to do with whether Tesla is best in class at manufacturing, though. They’ve certainly made a corporate strategy decision to move away from automotive and become an AI company instead, to be sure. But that doesn’t really speak to whether they’re an outstanding manufacturer.
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They did, back when they had no real competition in the upscale EV space. But as they started getting competition, their sales and margins started to collapse, even as the EV market grew by double digits.
This year, sales have improved over last year’s, but still not on track to match their peak sales year of 2023. In the meantime, their once eye-popping margins have compressed to about the same as Toyota or Hyundai. Pretty good for a car company, but the car business isn’t that great to begin with. Last quarter revenues were up, but profits were way down. Basically, Tesla is buying sales by compressing margins. That’s not neccessarily bad, but we won’t see a return to those sweet tech-like margins any time soon.
If you’ve seen Sandy Munro’s Tesla teardowns, he gushes about the elegant design. And then rants about the poor fit and finish. Blotchy paint, panel gaps so big “you can see 'em from Mars,” comparing the build quality to a “90’s Kia” and said managers shouldn’t allow a car with so many defects to be shipped to consumers.
To be fair, the build quality has improved a lot since the early tear down videos, but as we just saw with the Cybertruck, Tesla still has problems with assembly. There were recalls for detaching roof panels and improper accelerator pedal assembly, as well as reports of leakage and poor interior trim fit.
So, I don’t see any evidence that Tesla is particularly better at manufacturing than any other company. One area where they are good is continuous improvement. They don’t have model years, so they are constantly improving their cars. There are some downsides to this approach, but they are a little more nimble when problems are encountered.
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Hilarious. Older folks do tend to live in the past, the hood old days, Make America Great again mentality. I can literally tell from your posts who you voted for, or would support if you live in the US.
I remember when Steven Spielberg could direct a great film. I remember when Neil Young could write a good song. Time passes, and it doesn’t mean the glorious past will be the same in the future.
I believe more in poetic justice. That bad men don’t go through life unscathed. Musk is a bad man. To me he’s adrift, and mentally losing it over time. I see more hardship in his business and personal life. The others he’s aligned himself with politically, their time will come as well.
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The jury is still out as to if canceling the long-planned Model 2 was a good idea or not. If I understand the timeline correctly (Musk has said different things), the Model 2 was canceled in favor of the Cybercab.
As it turns out, most of the growth in the EV market has been in the lower cost end of the market. As you point it, it would have been a low margin vehicle. But low margin and high volume isn’t neccessarily a bad thing. Lots of companies operate that way.
On the other hand, they have entire assembly line devoted to the Cybercab, which they are producing in small volumes which then are stored in parking lots. At some point they need to start realizing revenue from that investment. If a widespread robotaxi service is only a couple months out, then it probably isn’t a big deal. But time is not their friend here. They are running robotaxis in limited numbers and small geographic areas. They need to expand that by a lot and fairly quickly.
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And who knows how many enemies a musk has made that will come back and bite him. The midterms won’t be good to his friends, and he most likely won’t have a free pass moving forward towards regulation. He should have kept his big mouth shut and stayed out of politics, and I bet he hasn’t learned his lesson.
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We can quibble in hindsight whether it turns out to be the right move. I think it is. The important factor to me is how quickly the company can and does change course as needed. It doesn’t mean every decision will be the right one. Again, Musk’s view of progress is that if you aren’t failing on occasion, it means you are not pushing the boundaries far enough.
lots of companies go bankrupt this way. Vehicle sales is not a measure of guaranteed profitability nor does it necessarily create shareholder value.
They need several diverse sources of long term revenue and profitability. I don’t know the long term economics well enough to know if robotaxi will be material to the bottom line. I hope it is. Like autonomy itself, these are ambitions rather than guaranteed long term outcomes. It’s perfectly reasonable for those that think this is speculation, to sit on the sidelines, until these concepts are proven. As with many businesses that prove to be great long term, they often appear wildly overvalued in the beginning.
That’s an interesting perspective. I see Tesla as kind of the opposite - they stubbornly stick to their approach regardless of whether it’s working, especially if it’s something that Musk feels strongly about.
They’ve insisted on no advertising, even though they’ve long since passed the point where “free” coverage was positive or large enough to drive sales. They stick to having a minimalist model line up (refusing to pivot to the Model 2 or anything else), despite it being clear that EV customers like model diversity the same as ICE owners. Musk’s aversion to dealerships means that Tesla’s got bottlenecks at service and body shop facilities that won’t go away. They won’t bring back physical buttons or stalks, even though it would make their cabins more appealing to drivers. Same with the ultra-sonic sensors that they removed because they’re completely married to Musk’s idea of “vision-only,” even though it resulted in a degradation of user experience. They stuck to their claims of all cars being able to run on FSD for far too long. And we don’t talk about LIDAR, dar, dar, dar…
I don’t know. To me, it looks like Musk has an idee fixe of what the Car of the Future is going to look like, and Tesla is not going to waver from that vision no matter how much it hinders their ability to grow their automotive business.
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I’m no communist, does it show? 
My cousins love America, I prefer Venezuela but without the Cuban Communists running the show.
You youngsters are stuck in the past, “Tesla is a car company.” It started out as a car company with a logical plan:
- The roadster to test the waters
- Low volume luxury sedans
- Build Giga Factories
- Mass market SUVs
- At some point cars become commodities
- Tesla’s next step is to package the technology in…
- Transportation as a service
- Humanoid robots
- The stock’s breakout is just a question of time, a year or two
The Captain
I’m talking about the Cybercab specifically. I don’t know how much they have invested in it, probably well over a billion, maybe two billion. It was developed in order to create a revenue stream, of course. When that revenue stream matters a lot.
There aren’t any signs that the robotaxi will be a viable business any time soon. In the meantime, they have an assembly line with 125,000 vehicle per year capacity that they can’t use. So what’s the diverse source of long term profits?
The Cybertruck flop won’t kill the company and the likely Cybercab flop probably won’t either. But in the last earnings report profits were down, margins were down, and free cash flow went negative. Two of those three would probably be okay, but all three of them for a stock with a P/E of 290 and a PEG of ~5?
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Fortunately, my long standing stake in the company doesn’t require our agreement on Tesla and you may dedicate your own capital as you see fit. I do think Tesla is one of those companies where it is viewed good or bad through its founder. I do think we’ll look back upon his successive ventures and track record and think, this was a no brainer as a smart place to deploy capital.
Absolutely true
Solar, charging, robotaxi, autonomous subscription service, EV sales, which includes personal and commercial fleets, Optimus, Physical AI
According to Google, Elon is down another $100 billion over the past week. There is a God 
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Rest up this weekend.
Next week the celebration continues with:
- SpaceX earnings
- more SpaceX shares unlock to trade publicly, and
- more planning for a Tesla-SpaceX merger.
If you are a Tesla shareholder, how many shares of SpaceX do you have to look forward to?
I wonder if when people cheer on the decline of Elon’s net worth they realize it also celebrates the loss of wealth to everyday workers relying on the share appreciation as part of their compensation package. When you think of it from that perspective, you kinda come across as icky, Don’t you think?
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Nope. The market decides the value of Elon’s companies and I have nothing to do with it. Up to now, Elon’s companies have been way overvalued. The market is just now starting to assign more reasonable valuations to SPCX and TSLA. Another 90% decline in each should do it.
Hopefully people will learn that working for Elon is a dead-end and go get better jobs.
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You’re rooting for his financial failure and failing to appreciate the very real impact to everyday Americans that work for his companies, pension funds and small investors. Whether you dislike him personally, it seems callous to root for his failure when it has a domino effect to many others.
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Don’t bother replying to hate posts, it’s a waste of time.
The Captain
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I don’t mind. It’s ludicrous to me that people like this even bother to participate on an investing website. I can’t imagine wishing for the destruction of businesses and the people that work for them.
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The stock sinking is one issue. There’s a much larger one. Much larger.
SpaceX Stock Hits a Record Low. Starship’s Heat Shield Is Just One More Hurdle.
Musk wants SpaceX to launch its huge, fully reusable [Starship] rocket [thousands of times] a year. The ambition is incredible, so are the things that need to happen to make that a reality.One being discussed is about the thousands of small, light, hexagonal tiles that protect Starship’s upper stage from burning up on re-entry.
Starship’s heat shield is based on Thermal Protection System, [or TPS], technology developed for the Space Shuttle. The tiles are a silica ceramic material that can handle temperatures up to 3,000 degrees Fahrenheit.
After the test, however, some NASA scientists questioned whether TPS technology was good enough to facilitate rapid reusability, calling it a “dead end” in a [LinkedIn post].
“Based on the data from the recent Starship… flight, we assert that the current thermal protection system (TPS) technologies are a dead-end, and cannot get to… full-and-rapid reusability,” wrote Charles Miller, Dan Rasky, and Charles Camarda.
The system works, but the tiles need to be inspected and replaced. That means a Starship might be in a repair bay for days or weeks. It might not sound like a problem, but the goal of Starship is to cut the cost of reaching orbit by 90%-plus relative to the already-low-cost, partially-reusable Falcon 9 rocket. Part of how SpaceX keeps costs low is rapid reusability.
If SpaceX can’t use a Starship as often as it plans, it needs more Starships to reach its goal of thousands of launches per year.
https://www.barrons.com/articles/spacex-stock-starship-heat-shield-a4f4a55c
Maybe they can fix this. Maybe they can’t. I remember when “self-driving” was just around the corner, about 30 corners ago. Some things resist being overcome; reusable rocketry on this scale might be one of them.
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GoogleAI:
Charles Miller, Dan Rasky, and Charles Camarda are three prominent American aerospace experts and former NASA officials. They have recently made news as a collective group for publishing a critical co-authored analysis regarding the limitations of SpaceX’s Starship thermal protection system (TPS). [1, 2, 3, 4]
I’d take NASA experts with a pinch of salt. Elon is in the habit of doing what has not been done before. That said, this is waaay too early to buy SPCX.
The Captain