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Is Tesla running out of road?

The news released last week that Tesla was cutting 3,000 jobs comes after a difficult year for the car company, headed by Elon Musk.

According to Musk, “the road ahead is very difficult” because its products remain unaffordable for most people and it’s up against a large established industry.

The challenge for Tesla is to start producing its Model 3 Sedan in larger numbers and at a market price of around $35k - only then will the company be seen as having a long term future.

It’s certainly been a tough 12 months for the company with production issues and Musk’s misleading tweets about taking the company private costing it dear.

Despite that the company has made significant manufacturing design improvements and appears to have sold almost as many cars in 2018 as it had in its entire history. It has also managed its first profit and a report from Reuters suggests that the company is in discussions with Tianjun Lishan to supply batteries for the company's new electric vehicles to be built in Shanghai.

Musk said that: “While we have made great progress, our products are still too expensive for most people. Tesla has only been producing cars for about a decade and we’re up against massive, entrenched competitors.”

And those competitors are not standing still. They are looking to spend $300billion on electric vehicles and batteries over the next few years.

Could Tesla be running out of road?

Author
Neil Tyler

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Ugh, you got to understand that analysts are clueless and journalists even worse. 99% of what is printed on Tesla is fake news because nobody can be bothered to get informed as it requires 10 thousand hours of work.

Tesla was planning to produce 10k Model 3 per week at Fremont but they were forced to accelerate their China plans so Fremont will peak at 7k Model 3 units per week and China will add 3k. Those jobs are practically moving to China.
To cover another ridiculous misunderstanding from that email, Tesla's Q1 profits will be tiny because ,aside from Model S&X being seasonally down, they started Model 3 deliveries to Europe and China and that means they'll end the quarter with up to 20k more Model 3 in transit. They can't teleport cars to China, not yet.... Q1 will be weak and Q2 much much stronger as deliveries grow by 20-30k units.
The 35k $ model will be made when they run out of demand for the other models, it's cheaper to make it even at a loss than to have low utilization. Likely they will start to ship the base model in Q2 and only in N America . The noise is about hitting 25% gross margins, not about being profitable or survival.

The amounts competitors are spending are misleading. Those amounts are mostly sourcing parts, Tesla will spend north of 30B in a single year in 2020 and if they keep growing at 50% or more per year, they'll alone spend 300 billions in the next 5 years while their competitors are wasting almost all their resources on ICE and hybrids for zero long term ROI.
Toyota just today restated their goal of shipping 1 million battery or fuel cell vehicles in 2030, they are insane, they are the new Nokia. ICE will be less than 10% by 2030 not 90+% like they expect and car sales will be in ruins as we all transition to car as a service. Only Tesla and China are taking EVs seriously and really, Tesla's strength is product design not EV or AV.


Posted by: jjj, 23/01/2019

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