Musk endeavours

[dspp]

@bD,
Thanks. I agree that VW said they'd pivot very quickly, just I'd not posted the volume links before.
Those Samsung cells are prismatics. See VW slide 8 and compare with the corresponding Samsung descriptors.
https://www.volkswagenag.com/presence/i ... e_Bock.pdf
http://www.samsungsdi.com/automotive-ba ... -cell.html

@02000,
Munro et al do make cars. Or more to the point, they are extremely skilled at the cost-estimating and value-engineering part of the overall automotive sector. A good engineer needs to be perfectly capable of stripping a competing design to understand its strengths and weaknesses, and respond accordingly in the market place. I am willing to bet that there is nothing that Munro said that Tesla don't already know, and there will have been conscious design decisions taken in the interests of speed of launch that led to what Munro are reporting on.

regards, dspp

[redsturgeon]

Here is another bit of robot factory porn...note how tidy this looks compared with the Tesla factory.

The Audi electric motor factory in Hungary.

https://www.youtube.com/watch?v=rq6z1hShFcE


John

[odysseus2000]

Munro have a nice web site & tell you all sorts of things about how useful they are:

https://leandesign.com/automotive/

They have a testimonial by a Rover engineer about how important they were to the launch of the new mini, all impressive stuff.

But a friend mine's daughter bought one of the new mini & had problems from day one. My friend who used to run a large engineering department at the university of Oxford worked on it & told his daughter to sell it was terribly designed, manufactured & with everything made as cheap as possible.

No doubt someone will tell me how their BMW mini has been better than sliced bread, so my friends experience & comments may be meaningless, but from my practical experience of the Mercedes I own I can say it was built as cheaply as possible & sold for a very high price. What do I mean? All the brake & rear suspension parts were in steel tubing that rusted, the injectors are held by m6 stretch bolts in aluminium that strip out & my garage says they are forever dealing with the Black Death from leaking Mercedes injectors, plus lots of other stuff even no brake pad low thickness warning on the rear pads.

Regards,

[Howard]

Munro have a nice web site & tell you all sorts of things about how useful they are:

https://leandesign.com/automotive/

They have a testimonial by a Rover engineer about how important they were to the launch of the new mini, all impressive stuff.

But a friend mine's daughter bought one of the new mini & had problems from day one. My friend who used to run a large engineering department at the university of Oxford worked on it & told his daughter to sell it was terribly designed, manufactured & with everything made as cheap as possible.

No doubt someone will tell me how their BMW mini has been better than sliced bread, so my friends experience & comments may be meaningless, but from my practical experience of the Mercedes I own I can say it was built as cheaply as possible & sold for a very high price. What do I mean? All the brake & rear suspension parts were in steel tubing that rusted, the injectors are held by m6 stretch bolts in aluminium that strip out & my garage says they are forever dealing with the Black Death from leaking Mercedes injectors, plus lots of other stuff even no brake pad low thickness warning on the rear pads.

Regards,

Ody

Your comments seem a bit illogical. My wife and I have owned four Mercedes from new and over many years and many miles they were impeccable from a reliability standpoint. Unlike Teslas, they didn't have faults, scored highly in user surveys and only needed to go to a garage once a year for service. (Except for an embarrassing incident where a mouse chewed the fuel injector leads having made a nest on top of an engine). As an owner and driver, they were quality cars and nice to drive. We can't predict their future, but in the past they have been one of the most successful car brands ever. They are no slouches when driven by Lewis Hamilton either! Their hybrid drives in F1 make Tesla look like amateurs.

By coincidence I was in the Mini plant in Oxford today and, remembering the video linked by RedSturgeon, had a good look at their body manufacturing process. Ok they are using steel, but the finish on their raw bodywork was a lot tidier than Tesla's patchy handiwork shown in the Munro video. They also make the bodies with hardly a human being present. Their use of ABB robots is impressive. And in the last few years they have sold more than 2 million minis and are currently producing one every 65 seconds with a fully electric model on the way. It will take Tesla a few more months to rival their brand image, productivity and profitability!!

You haven't explained why you are driving a Mercedes and not a Tesla if they are so great and wonderfully constructed?

regards

Howard

[odysseus2000]

This had me rolling on the floor laughing. Perma Tesla bear Citron, who are suing Tesla, have turned bullish:

https://citronresearch.com/wp-content/u ... ignore.pdf

Where have you been boys!

Regards,

[Meatyfool]

https://seekingalpha.com/article/421311 ... disruption

On page 12 of 12 you find out the author is a Tesla employee. Read what you will.

This one right up Ody’s street!

Interesting point about the laws about dealerships potentially being a big risk for big auto!

Meatyfool..

[odysseus2000]

Munro have a nice web site & tell you all sorts of things about how useful they are:

https://leandesign.com/automotive/

They have a testimonial by a Rover engineer about how important they were to the launch of the new mini, all impressive stuff.

But a friend mine's daughter bought one of the new mini & had problems from day one. My friend who used to run a large engineering department at the university of Oxford worked on it & told his daughter to sell it was terribly designed, manufactured & with everything made as cheap as possible.

No doubt someone will tell me how their BMW mini has been better than sliced bread, so my friends experience & comments may be meaningless, but from my practical experience of the Mercedes I own I can say it was built as cheaply as possible & sold for a very high price. What do I mean? All the brake & rear suspension parts were in steel tubing that rusted, the injectors are held by m6 stretch bolts in aluminium that strip out & my garage says they are forever dealing with the Black Death from leaking Mercedes injectors, plus lots of other stuff even no brake pad low thickness warning on the rear pads.

Regards,

Ody

Your comments seem a bit illogical. My wife and I have owned four Mercedes from new and over many years and many miles they were impeccable from a reliability standpoint. Unlike Teslas, they didn't have faults, scored highly in user surveys and only needed to go to a garage once a year for service. (Except for an embarrassing incident where a mouse chewed the fuel injector leads having made a nest on top of an engine). As an owner and driver, they were quality cars and nice to drive. We can't predict their future, but in the past they have been one of the most successful car brands ever. They are no slouches when driven by Lewis Hamilton either! Their hybrid drives in F1 make Tesla look like amateurs.

By coincidence I was in the Mini plant in Oxford today and, remembering the video linked by RedSturgeon, had a good look at their body manufacturing process. Ok they are using steel, but the finish on their raw bodywork was a lot tidier than Tesla's patchy handiwork shown in the Munro video. They also make the bodies with hardly a human being present. Their use of ABB robots is impressive. And in the last few years they have sold more than 2 million minis and are currently producing one every 65 seconds with a fully electric model on the way. It will take Tesla a few more months to rival their brand image, productivity and profitability!!

You haven't explained why you are driving a Mercedes and not a Tesla if they are so great and wonderfully constructed?

regards

Howard

I was just relating my experience with Mercedes and why from my practical experience I find their quality very poor.

Once Mercedes were very good cars as were Peugeot, but both marques went for profit and began to sell the cheapest stuff their engineers could come up with. I used to work on Volvo and they were far better built than my Mercedes.

If you look at margins in the legacy car industry Mercedes are tops of the list because they use marketing to sell cheaply made cars.

The reason I have a Mercedes is because of the last of the four bad D's: Death, Divorce, Debt and Depreciation. My car is now 18 years old, had depreciated to about 5% of its new price when i got it and can't depreciate much more and although I keep it in good order I don't feel the need to regularly wash or clean it which suits me. One of my neighbours gets upset with me and relentlessly tells me I should lease a new car as it would be cheaper, but I am too cheap and too busy to want to have luxury and cleaning chores. I prefer to use what free time I have to analyse equities and work out things that can make me money. Tesla stock has done a good job for me: Driving me to some nice profits with several great days like today.

Regards,

[BobbyD]

@bD,
Thanks. I agree that VW said they'd pivot very quickly, just I'd not posted the volume links before.
Those Samsung cells are prismatics. See VW slide 8 and compare with the corresponding Samsung descriptors.
https://www.volkswagenag.com/presence/i ... e_Bock.pdf
http://www.samsungsdi.com/automotive-ba ... -cell.html

Also it says so in the Samsung URL!

But does this tell us anything interesting which isn't obvious to somebody whose expert knowledge of batteries stops at which way round to insert an AA like me?

I also had a link to LG cells which got lost in the edit: http://www.lgchem.com/global/vehicle-ba ... l-PDEB0002

...and there are reports of VW getting in to battery production itself in order to have more control over supply, but I have a bit of a reading backlog atm.

Here is another bit of robot factory porn...note how tidy this looks compared with the Tesla factory.

The Audi electric motor factory in Hungary.

https://www.youtube.com/watch?v=rq6z1hShFcE

Far more segregation of church of state, this is Botland and this is Humanistan, looks pristine.

Interesting point about the laws about dealerships potentially being a big risk for big auto!

American new car dealerships are protected by the vested political and financial interests of local dealership owners and state legislators. Being barred from direct sales channels, which is what makes firms with existing US dealership arrangements reliant on them as their sole distribution method, isn't in the manufacturers' interests.

Our answers to both questions lie in the system of state franchise laws that the profits of new car dealers. States earn about 20 percent of all state sales taxes from auto dealers, and auto dealerships easily can account for 7–8 percent of all retail employment (Canis and Platzer, 2009, pp. 5, 12, table 1). The bulk of these taxes (89 percent) are generated by new car dealerships, those with whom manufacturers deal directly. As a result, car dealerships, and especially local or state car dealership associations, have been able to exert influence over local legislatures. This has resulted in a set of state laws that almost guarantee dealership profitability and survival—albeit at the expense of manufacturer profits. Given these laws, manufacturers do have a financial interest in closing down new car dealerships, and in choosing which ones will close. Additionally, available evidence and theory suggests that as a result of these laws, distribution costs and retail prices are higher than they otherwise would be; and this is particularly true for Detroit’s Big Three car manufacturers—which is likely another factor contributing to their losses in market share vis-à-vis other manufacturers.

- http://faculty.som.yale.edu/FionaScottM ... Crisis.pdf

All of the big American car companies are prevented from direct selling in the United States because of these laws along with anybody else who has an existing dealership network, foreign competitors entering the US market and domestic startups aren't. Is it really credible that Ford, GM and Fiat Chrysler would be denied access to an economically viable distribution system in their home market while Americans can sit in their front rooms and spec out their new Great Wall pickup for delivery straight from the factory?

The reason I have a Mercedes is because of the last of the four bad D's: Death, Divorce, Debt and Depreciation.

Surely all your Tesla profits should pay for a replacement, given that you are the one person on this board who understands trading.

[odysseus2000]

BobbyD
Surely all yaour Tesla profits should pay for a replacement, given that you are the one person on this board who understands trading.

What I post on here is just a small part if what I do & other activities need cash far more than I need a new car & anyhow I much prefer cheap. My resolve only gets tested when I need to work on my car to keep it going.

Trading is extremely hard & can easily go wrong, but it is pleasing when a long term thesis like Tesla gives multiple trading opportunities.

Of course Tesla may now go wrong, but the validation by Citron of what I have been relentlessly arguing against near overwhelming bears on this board & the Fool before was one of the happiest moments in my Investing career.

Regards,

[PeterGray]

This had me rolling on the floor laughing. Perma Tesla bear Citron, who are suing Tesla, have turned bullish:

https://citronresearch.com/wp-content/u ... ignore.pdf

Where have you been boys!

Regards,

Well it certainly made me laugh, but perhaps not for the same reasons as you! It demonstrates the complete triviality of most "analysts" coverage.

Based on an "estimated" jump in production in Sept they map the the whole profit future of Tesla - which as yet we have no results showing they have yet to make any profit on selling cars (statements from the Tesla CEO do not count any longer!)

Of course they have a big jump now - the hype has been massive, people have been waiting months or more and the lucky few, prepared to pay the top-end spec, are now able to get their hands on them. But this is a temporary situation. The other car companies are a bit behind Tesla in producing all electric "luxury" cars, but they are catching up - and they will do it fast - without needing tents. And the real life performance and reliability of the Model 3 are as yet almost completely untested. Come back in a year or two and lets look again. I'm quite certain that Telsa will not have "destroyed the competition"! I suspect Tesla will still be in business, and will likely do well in the US, but outside? We'll have to see.

[redsturgeon]

I ought to be a prime customer for Tesla. I looked at the earlier models but the price was too much and I don't really need/want that much performance. The model 3 looked interesting though, however there are some barriers to me buying one:

1. The adverse publicity about the cars being built in a tent.

2. The lack of a viable servicing and repair structure in the UK.

3. The largely unknown quantity of Tesla ie. will it still be here to look after my car in two years time...five years time...ten years time?

Also it seems likely that the cheapest Tesla will still come in over the £40k mark in the UK and therefore attract high VED.

On the other hand if VW or one of the Japanese companies come out with a 250+ range Golf class electric car for around £25k then I'm in.

John

[dspp]

But does this tell us anything interesting which isn't obvious to somebody whose expert knowledge of batteries stops at which way round to insert an AA like me?

I also had a link to LG cells which got lost in the edit: http://www.lgchem.com/global/vehicle-ba ... l-PDEB0002
.

The LG ones you have linked there are pouch batteries.
The Samsung ones you linked yesterday are prismatic ones.
The Panasonic ones that Tesla use are cylindrical ones.

One of the reasons I am asking is because there is an investment opportunity in the supply chain that deserves to be analysed. In doing so I am trying to understand whether there is a dominant design emerging, or whether it is just a free-for-all.

Another reason I am asking is because the Tesla/Panasonic decision to go cylindrical & small is something that gave them a volume advantage in cell-manufacturing, hence allowing them to drive down the technology curve faster than the competition. I am seeking to understand whether there is any more an advantage in staying on that technology pathway.

(I am asking for a personal day-job reason as well.)

VAG appear to be hedging their bets and planning for all three. They appear to be buying in at pack level. Whereas Tesla appear to have close-coupled themselves with Panasonic such that within the Gigafactory Panasonic's line manufactures the cells, then Tesla's lines manufacture the packs. So Tesla see the pack as a core competence, whereas VAG do not.

I thought that the combination of the Citron long note and the Munro strip report, plus various others (and thank you o2000) were very interesting. Meatyfool's link to seekingalpha (https://seekingalpha.com/article/421311 ... disruption) with the employee-written note also had some very good points. (I don't think it matters that the author is a Tesla employee, the points are valid).

I am now minded to pick up some TSLA at yesterday's price. However yesterday I had very little cash. Oh well.

regards, dspp

PS. People I know with Tesla cars in the UK have no trouble getting them serviced.

[redsturgeon]

PS. People I know with Tesla cars in the UK have no trouble getting them serviced.

I live in Winchester. The nearest service centres I can see, in fact the only ones in the South are:

Bristol, Woking, Dartford and Milton Keynes...I would not be buying a Tesla until they opened more service centres.

John

[dspp]

Fair point RS. The people I know are all in the Midlands.

Mind you there is http://www.alphr.com/cars/1009430/tesla ... ir-model-s and that tallies with the feedback that most things can be done at the customers' premises. But if they are still insisting on annual (or 12500 mile) services at a service centre (https://www.tesla.com/en_GB/support/maintenance-plans) they are going to have to open more.

As investors I guess we should seek asset-light business models. As customers we are not so keen. I wonder what the optimum distribution of service centres in the UK will be ?

[BobbyD]

[But this is a temporary situation. The other car companies are a bit behind Tesla in producing all electric "luxury" cars, but they are catching up - and they will do it fast - without needing tents. And the real life performance and reliability of the Model 3 are as yet almost completely untested. .

...and with pretty much their entire US subsidy run left intact as Tesla's comes to an end.

[Howard]

PS. People I know with Tesla cars in the UK have no trouble getting them serviced.

I live in Winchester. The nearest service centres I can see, in fact the only ones in the South are:

Bristol, Woking, Dartford and Milton Keynes...I would not be buying a Tesla until they opened more service centres.

John

If I remember rightly you have a VW and a BMW, like me, and they should only need to be serviced every two years. So hopefully not a frequent problem travelling to a service centre. Maybe I've been lucky, but over the last 20 years all my German cars have been 100% reliable with zero faults.

If you look at the up to date "What Car" and "Which" surveys of Tesla customers (links posted in earlier post) you'd need to schedule fairly frequent journeys to Bristol or Milton Keynes for repairs or fault rectifications if you owned a Tesla. Not something you'd want if you had bought a circa £80k car?

regards

Howard

[redsturgeon]

PS. People I know with Tesla cars in the UK have no trouble getting them serviced.

I live in Winchester. The nearest service centres I can see, in fact the only ones in the South are:

Bristol, Woking, Dartford and Milton Keynes...I would not be buying a Tesla until they opened more service centres.

John

If I remember rightly you have a VW and a BMW, like me, and they should only need to be serviced every two years. So hopefully not a frequent problem travelling to a service centre. Maybe I've been lucky, but over the last 20 years all my German cars have been 100% reliable with zero faults.

If you look at the up to date "What Car" and "Which" surveys of Tesla customers (links posted in earlier post) you'd need to schedule fairly frequent journeys to Bristol or Milton Keynes for repairs or fault rectifications if you owned a Tesla. Not something you'd want if you had bought a circa £80k car?

regards

Howard

Yes I have a petrol Golf and PHEV BMW.

I have generally run German car but my experience has not been as good as yours. My current BMW needed a new steering rack at 18 months and 20k miles, obviously done under warranty with a similar replacement car for the month it took to replace. I had a Mini (BMW) that also needed a new steering pump. I had an ML Merc that had the whole electrics go haywire and a diesel Golf that fried a turbo. Apart from that I must say I had many Golfs that I ran for 60K miles and never missed a beat. My Lexus and Honda were still the most trouble free cars I owned though.

Anyhow with the knowledge that things can go wrong then I am very wary about any reliability/build quality issues and future servicing arrangements.

John

[dspp]

Tesla Third Quarter 2018 Update
 GAAP net income of $312M, non-GAAP net income of $516M
 Operating income of $417M and operating margin of 6.1%
 Free cash flow of $881M supported by operating cash flow of $1.4B
 $3.0B of cash and cash equivalents at Q3-end, increased by $731M in Q3
 Model 3 GAAP and non-GAAP gross margin > 20% in Q3
 Reaffirm expectation of continued GAAP net income and free cash flow in Q4

[Howard]

First can I say I do enjoy reading this particular forum and, Ody, it is enhanced by your frankness, straight answers to questions and strong views.

It is interesting to debate the investment merits of Tesla with a guy who drives an 18 year old Mercedes which is still running and who invests both short and long on the Tesla share price. Even as a self-confessed Mercedes fan, I do hope your investing is successful enough for you to treat yourself to a new car which you like sometime soon!

I feel a little guilty, because years ago on the Motley Fool, you persuaded me to be a Musk supporter for many years and I really would like to drive a quality electric car with a 400 mile range. However, as a potential customer, Elon Musk’s recent behaviour has really put me off and it’s made me much more sceptical about the Tesla brand.

Tesla have had a pretty good third quarter review yesterday, particularly regarding sales and profit. This may be good for the share price in the short term. However, as I and others have been reporting, there are more signs in the link below that their cars are not as reliable as they should be. Maybe some Teslas are not even as reliable as an 18 year old Mercedes!

http://www.cnbc.com/2018/10/24/tesla-re ... -says.html

If this report of a major survey of US car owners is to be believed, current reliability issues put them way behind Mercedes, BMW and VW. Among non US brands only Volvo have a worse score.

One would expect an electric car to be more reliable but Musk’s team's constant changing of the specification of the cars and updating of software may be making things worse. Time will tell. It is pretty certain that when the major European and Japanese manufacturers launch their new all-electric models they will make sure that reliability and after-sales service are first class.

So perhaps worth going long on Tesla for the short term, but ready to go short if their reliability doesn't improve?

regards

Howard

[odysseus2000]

Super results from Tesla as posted here.

Things can go wrong, but if this momentum continues & the potential quality issues don't have an impact, the problem for competing legacy car makers is now serious.

My belief that legacy auto would put off going electric to safeguard existing investments has come back to bite them. Giving a strong and serious competitor a head start by not responding early is a more common business mistake than is often realised & all legacy auto has done this. There were clear historical warnings from the demise of the British car industry as to what happens if you let a competitor in who makes stuff folk want to buy, but that lesson was ignored.

I still believe we are entering a very different automotive environment and that the issues with self driving will be solved. If this happens the whole automotive business will change. Imagine the boost to individuals if the experience of not owning a car, as described by ap8889 becomes the norm, creating substantial house hold savings & also substantial savings for society if car accidents are significantly reduced.

Any company that can supply vehicles to serve this market if it comes into existence will make a killing. Of all the car makers imho the one that currently looks most likely to achieve this is Tesla.

How the Tesla share price goes from here is very difficult to know. The last time I looked it was up 10% ish, but US markets are in a strong down trend. Recently we saw very good results from Netflix but they were then heavily sold. The two major macro negatives are the Fed's rate rising & tariff wars. Often when things get bad so much money has been made on the short side that any good news causes a strong bounce as shorts cover to lock in profits & we had a bit of a bounce over the previous week, but it was sold. Tesla showed significant relative strength rising in this down tape, but now the results are out I find it difficult to know what the Tesla share price will do in the short term.

Regards,