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Tesla CEO Elon Musk has referred to as the company “a drama magnet” compared to SpaceX, The Boring company, or any of Musk’s other endeavors. since the launch of the mannequin 3, the $ 35,000 automobile in Tesla’s battery-electric lineup, it really is held real. Now in Q3, the enterprise’s financial statement displays greater of that drama, good and dangerous. Wednesday nighttime, Tesla posted one more loss, enhanced than the one earlier than it, however with revenues and earnings hitting listing highs on the same time.
in keeping with numbers released these days (PDF), Tesla posted a $ 671 million loss on total revenues of well-nigh $ 3 billion within the third quarter of 2017.
evaluate that to 2017’s 2d quarter, the place Tesla posted a loss of $ 401 million after total revenues of $ 2.7 billion.
In a letter to shareholders, Tesla referred to that it got “record net orders” for the mannequin S and X in Q3—both car items that the company appears to be capable of push out with consistency. This salary name turned into notably predicted in strengthen of the Q3 creation numbers that Tesla posted in early October. while effects for the mannequin S and model X were good—25,930 older model luxury automobiles have been delivered within the quarter, beating the business’s estimates for the quarter—new model 3 deliveries were startlingly bad. although the business had promised to deliver 1,500 model 3s in Q3 2017, it best delivered 266 complete. Tesla CEO Elon Musk blamed construction bottlenecks, and the Wall road Journal mentioned that “foremost portions” of the model 3s that had for this reason-far been delivered were built by using hand.
The view from “production hell”
In opening remarks on an income name today, Musk talked about he was “doing this name from the Gigafactory because that’s where the construction constraint is.”
“I at all times flow…myself to the place where the biggest difficulty is… I accept as true with one should always lead form the entrance traces.”
Musk’s feedback demonstrated experiences from Reuters past this week that the mannequin three production challenge turned into as a result of battery meeting complications. The Reuters report turned into according to feedback from Panasonic’s CEO Kazuhiro Tsuga, who noted that bottleneck issues can be nearing an end. (Panasonic, you’ll don’t forget, has partnered with Tesla to run the Sparks, Nevada Gigafactory the place many of the model 3 battery packs are presupposed to be built, as neatly because the Buffalo photo voltaic metropolis panel factory.)
Tesla’s shareholder letter published on Wednesday afternoon gave details on the issue:
so far, our simple construction constraint has been within the battery module assembly line at Gigafactory 1, where cells are packaged into modules. four modules are packaged into an aluminum case to kind a mannequin 3 battery pack. The mixed complexity of module design and its automated manufacturing manner has taken this line longer to ramp than anticipated… we have redirected our top-quality engineering skill to satisfactory-tune the automatic procedures and related robotic programming, and we’re assured that throughput will raise radically in upcoming weeks and finally be capable of production prices significantly better than the normal specification.
Musk additionally hinted at considerations with a sub-contractor on the battery assembly line causing complications. He claimed a “sub-contractor definitely dropped the ball and we didn’t understand the ball became dropped except reasonably recently… We needed to rewrite the application [for a battery assembly area] from scratch.”
Tesla declined to predict when all the bottlenecks could be smoothed out, however the shareholder letter cited that by way of “late Q1 2018” it hoped to be producing 5,000 mannequin 3 motors per week. Musk did seem to dismiss the model three’s stumble-birth within the call, as well. “The mannequin 3 is a ten-yr software. a couple of months out of ten years is…immaterial,” the CEO talked about.
As for Musk’s model three “creation hell,” a caller asked him to rate where Tesla is on a scale of 1 to 10.
“We have been in degree 9, now we’re at stage 8, and that i believe we’re near exiting stage 8,” Musk talked about. “I had hoped we would be at stage 7 by means of now.”
past model 3
In mid-October, the Wall street Journal reported that Tesla had reached a deal to open a factory in Shanghai’s Free trade Zone. The company would nevertheless be required to pay 25 p.c import tariffs on vehicles sold in China, but a Shanghai manufacturing facility could curry want with the chinese executive and would open up China’s give chain to the company.
Musk perceived to verify this news on the call, however cited that any capital spending on a manufacturing facility wouldn’t come until 2019. “Don’t set your watch by means of this, however’s kind of a rough goal of production in the next three years,” Musk mentioned of a factory in China. “And it might be serving the China market,” he clarified, noting that the manufacturing facility would likely only make mannequin S and as-yet-unannounced model Y vehicles. “It’s really the most effective became to make the automobiles not pricey in China…nonetheless it’s three years out,” Musk referred to.
Musk also criticized recent information articles reporting that Tesla had fired a whole bunch of employees, which anonymous sources recommended had been union-leaning. reviews said that between 400 and 700 personnel in the 33,000-person company have been laid off after efficiency reviews. “A journalist who wrote reports like this may still be ashamed of themselves for missing journalistic integrity,” Musk spoke of, noting that “handiest 2 percent of people didn’t make the grade.” (Editor’s notice: a enormously-seen startup firing lots of of worker’s in the middle of greatly-said creation considerations definitely has news value.)
Musk also in brief touched on the place Tesla is with admire to autopilot. In September, reviews surfaced that Tesla would build its own customized AI chips, snubbing Nvidia for a partnership with AMD. these days, Musk talked about on the enterprise’s earnings name that Tesla can be able to obtain full autonomy, however regulatory demands could make a hardware improve quintessential. “It’s not just full autonomy, but full autonomy with what degree of walk in the park,” Musk noted. “Regulators may additionally require some huge margin above [a level of safety]… but I’m confident that we are able to get to human-stage with our current hardware.”
The CEO referred to that there would be an announcement on AI hardware “quickly,” including that if a chip upgrade is critical for a consumer who had already purchased Autopilot, Tesla would change that chip.
despite drama from Tesla’s automotive sector, Tesla energy seems to be paying off for the business. Battery pack revenue (together with stationary storage Powerwalls and grid-tied Powerpacks) introduced in $ 317 million in income, but the sector best charge the business $ 237 million. “In Q3, we deployed a hundred and ten MWh of power storage methods, turning out to be 12 % from the prior quarter and increasing 138 p.c year-over-12 months, driven mainly by means of increased Powerwall deliveries,” the business wrote in its shareholder letter. “to date, we’ve additionally put in more than eighty% of the Powerpacks for the South Australia challenge; besides the fact that children, income should not identified until full deployment of the challenge.”
certainly absent from the call became any mention of the Tesla semi, which was imagined to be printed in September, then in October, and now’s tentatively scheduled for November.