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Tesla Delays Launch of Model X Until Q3 2015 111

An anonymous reader writes "Tesla on Wednesday announced that it was pushing back the release of its highly anticipated Model X until the third quarter of 2015. Explaining the delay, Tesla relayed the following in its quarterly shareholder letter: "Work continues on the finalization of Model X with the testing of Alpha prototypes and initial builds of the first Beta prototypes. Model X powertrain development is almost complete with the early introduction of Dual Motor drive on Model S. We recently decided to build in significantly more validation testing time to achieve the best Model X possible. This will also allow for a more rapid production ramp compared to Model S in 2012." During Tesla's subsequent earnings conference call, Tesla CEO Elon Musk shed a bit more light on all things Model X, including the fact that if you order one today, it won't arrive until early 2016. Forbes goes into more on the business end of what's caused delays for the company, as well as how investors should see it (critically, they say).
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Tesla Delays Launch of Model X Until Q3 2015

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  • by NotDrWho ( 3543773 ) on Thursday November 06, 2014 @11:56AM (#48325741)

    Before all the "Tesla is taking over the car industry!!" hype machine kicks in on this story (as with all stories Tesla), I just want to remind everyone in Silicon Valley that Tesla is still a niche car company that's barely on the big car companies' radars.

    I live in a metropolitan area of a red state and I've never even seen a Tesla in person. Not one. I'm sure they're a common sight in San Francisco but in most of the country they're still just something you just read about in Wired.

    • by Mr D from 63 ( 3395377 ) on Thursday November 06, 2014 @12:29PM (#48326001)
      Tesla struggles with scaling. They talk about how the demand is greater than their production capacity. which is OK in a niche market but a bad thing in a major competitive market. They are losing money with their existing scale, and it is not clear how much it will cost to scale up significantly. They may take quite a long time to become profitable, or they may never make it to that point, it is still unclear. What makes it a risky investment, in my opinion, is the fact that once the production/price/market variables become favorable for the technology, the big companies will be able to scale it at a much lower cost, as that is what they are good at. That is where the battery manufacturing thing become critical for Tesla's sustainability.
      • by Herkum01 ( 592704 ) on Thursday November 06, 2014 @12:48PM (#48326161)

        What makes it a risky investment, in my opinion, is the fact that once the production/price/market variables become favorable for the technology, the big companies will be able to scale it at a much lower cost, as that is what they are good at.

        I very much doubt that Tesla is going to outsource its manufacturing for key components. It is going to keep those in house, and it will be expensive in the near future, but they will not have worry about competitors getting cheap access to those components. Too many of the current car companies are focused upon assembling a car; they are not engineering huge advantages in technology or going in new directions.

        Tesla is going to have these guys beat for no other reason than they are going to sit on their hands until it is too late. If you want a better explanation, they are going to have engineer their own product and manufacturing of specialty parts. They don't seem interesting in committing to electric cars now and when Tesla is big enough to be mainstream it will still take them 3 to 5 years to get their own product out the door.

        • Tesla is going to have these guys beat for no other reason than they are going to sit on their hands until it is too late.

          That is a quite an assumption, that no other car company other than Tesla understands the market. I wouldn't bet too much on it.

          • by Teancum ( 67324 )

            What has GM done about electric automobiles? Ford? At best all I can see is that they are hiring lobbyists to craft state laws to exclude Tesla automobiles from being sold when they would have been legal under earlier laws.

            That doesn't sound like people trying to innovate and compete in the market place. Instead, it sounds like people who are scared of the future and don't want to make any sort of long-term investments into a new kind of technology.

            Yeah, GM has the Volt. It is basically a conventional a

            • EV's are not in high enough demand to warrant the changes you want to see from the big boys. They could probably create a high end niche car like Telsa, but that won't bring them any significant returns on investment. They will do their best to predict the demand curve for EV's of various types, match the right cost and technology, and try to deliver in time. Some will do better than others, some may move too soon, some late, but there always be a market. If they let Tesla pave the road and take the pain, s
        • Tesla is going to have these guys beat for no other reason than they are going to sit on their hands until it is too late.

          Yep, in the automotive space Tesla is the Apple/Google and everybody else is Blackberry. It will come to burn some of them.

      • by icejai ( 214906 ) on Thursday November 06, 2014 @03:53PM (#48327791)

        A friend of mine who happens to be a senior engineer at a large Japanese automaker took me to a Tesla dealership some years ago to take a look at the Tesla. I asked him how much it would to produce a car like the Model S at this very large Japanese automaker. He said each car would end up costing in the hundreds of thousands of dollars. At first I didn't believe him, but as he proceeded to explain every single detail of R&D, prototyping, testing, dealing with suppliers, manufacturing, dealing with the factory (or many factories, being the more likely case), retooling, etc, and all the manpower, meetings, executive approvals, and other costs involved at a company as large as his... it was very obvious that he knew exactly what he was talking about.

        There is a certain myth about scaling. Big companies know how to scale? Of course they know how to scale. But I'm sure many people here can imagine how starting fresh with a small team, and scaling *that*... is faster and cheaper than modifying a gigantic already-scaled process to output something completely different.

        Larger scale *leads to* lower costs.
        But big companies don't *scale up* at "lower cost".

        Tesla has an absolutely *enormous* advantage by manufacturing many parts of the car themselves. The infotainment system, the battery packs, they stamp their own metal, etc. You might not believe me if I told you that automobile companies need to fight with their factories to implement changes to the production line, because the factories are separate companies that operate independently from the actual car company (Ford, GM, Honda, Toyota, etc). Any changes means less cars produced and less profit. Just because of this fact alone, Tesla can scale production MUCH cheaper and quicker than *any* large car company, American or not, just from the fact that they run their own factory.

        Smaller companies are better at scaling. They can do it quicker and cheaper.
        Large companies, especially car companies, not so much.

        • Tesla has a long long way to go to get close to the scale of the major manufactures. The problems you state will become Tesla's problems once they try to scale that large. Controlling & producing everything presents its own set of issues and headaches.
          • by icejai ( 214906 )

            You're right. The volume of cars they produce is nowhere near as much as all of Toyota, or all of GM. However, the comparison mustn't be between "Tesla and BMW", the comparison must be made between "Model S and BMW 7-series", or "Model S and Audi A7", simply because the line that makes an A7 isn't the same line that makes the Q7.

            This is why large automakers try to reduce costs by attempting to build other cars on top of already-existing production lines. For eg, Hummer once tried to save money by forcing th

      • by mspohr ( 589790 ) on Thursday November 06, 2014 @04:31PM (#48328097)

        Right now they are constrained by the supply of batteries. They are building a factory to make enough batteries for 500,000 cars a year so in a few years they will not have this constraint.
        Currently their gross margin on cars is 30%... much higher than any other car company. They also have a 2-4 month backlog of orders without doing any advertising and having a very limited distribution network. They are projecting 50%+ growth for the next few years.
        The competition has so far only produced pathetic electric cars (limited range using old designs and chassis from their ICE cars). These are equivalent to what a weekend mechanic could build in his garage. None of the established car companies has attempted to make the investment required to build a real electric car from the ground up like Tesla has... they could do it but they are at least 5 years behind the curve so it will take them a long time to come out with something equivalent to today's Tesla... and by then, Tesla will have moved on to something better.

      • Actually, at $0.02 earnings per share, they're profitable already.

        Musk released all of the patents Tesla owns related to electric cars. I'm almost certain that if the other car manufacturers don't have a competing product in the works, they're smoking some really good stuff. Oil subsidies will only get them so far.

        I can't wait for the Model 3. Once that hits the streets, you'll be seeing a lot more Teslas.

    • Look how many supposed supporters of unbridled capitalism, opt to impose state rules making entry nearly impossible via compliant state legislative acts. Could, just by chance, your state allow sales only through dealerships? If so that might partially explain your not seeing them, I know it took a very long time before hybrids were common in this area.

      Also could the implicit antipathy be due to its association with belief that climate change is both real and mostly due to human sources?

      • There are no such state rules here, but also no Tesla showrooms. In fact, in the entire southeastern U.S. there are only two Tesla showrooms, one in Atlanta and one in Nashville. Hell, I live in a city that's hours away from even the nearest charging station. And that's not a town, mind you, it's a major CITY.

        So I would have to drive over 3 hours in my regular car to even see a Tesla in person. Then I would have to spend at least $70,000 for the cheapest model. And I would only be able to charge it at home

        • At an average price of >$80K, that's >$4B dollars

          At one point everything you are saying was true of gasoline automobiles. There are lots of places in the country which have a good supercharger & showroom infrastructure now, and more chargers & showrooms are showing up every month. You can drive cross-country in a Tesla right now. Obviously they are focusing on the parts of the country where people have a lot of money and don't have an irrational hatred of anything new or different--so it will

          • Change is just fine with me. My point is that a $70,000 car that can only go about 250 miles on a charge is still a niche product. There is nothing irrational about the vast majority of the country looking at that and deciding to stick with their un-hip combustion engine cars.

            • It competes against $70K+ cars from Mercedes and BMW, and it's doing very well in that segment. Sure, that's a niche market.

              Tesla has plans to work their way down into more volume markets. Lots of automotive technology started out initially in luxury segments (because those segments can tolerate high capital costs associated with new technology) and then trickled down to the volume markets as the technology matured (air conditioning, automatic transmissions, fuel-injection, etc.). Tesla is following that cu

    • I live in a metropolitan area of a red state and I've never even seen a Tesla in person. Not one.

      I live in San Jose, California. I see a few Teslas almost every day. Nissan Leaves are more common. Priuses are even more common. Probably 25% of the cars on the road are either hybrid or full electric. Living here is sort of like living five years into the future. My robotic butler has just paged me to say that my breakfast is ready to be served, so I gotta go ....

    • I live in a metropolitan area of a red state on the east coast, and not only have I seen Teslas in person, but I know people (friend of a friend) that have them. It helps that there's a supercharger at a nearby mall that I almost always see a Tesla parked at, but I've seen them parked around town, too.

      Your anecdotal evidence is just as good as my anecdotal evidence, and neither one is indicative of the actual popularity, supply or demand of the car.

    • Objects can exist even if they aren't in your direct view, it's called object permanence.

      Every company that has ever dramatically changed an industry was at one point a niche company--and I'm sure in each of those cases some jackass from a red state went out of his way to point that out.

      • Yeah, I'm aware they exist, jackass. My point is that they're still a niche product. Now, maybe that will change someday. But until I can see more electric cars in the wild than Windows Phones, it's still a niche market.

    • by CaptainLard ( 1902452 ) on Thursday November 06, 2014 @01:58PM (#48326913)

      that's barely on the big car companies' radars.

      Aside from Toyota, Mercedes, & BMW who all previously/current owned shares or have direct partnerships with Tesla or GM where they were at least part of the impetus behind developing the Volt. Not to mention nearly ever car dealer in the USA who are all campaigning to have Tesla stores banned because they might destroy the car dealer business model entirely.

      I live in a metropolitan area of a red state and I've never even seen a Tesla in person.

      But you might hear your politicians talk about them. Now that Tesla is having success, a lot of repubilcans are falling over themselves to say they've supported them all along.

  • by denzacar ( 181829 ) on Thursday November 06, 2014 @12:18PM (#48325925) Journal

    "Tesla Q3 Earnings Live: Shares Rise, Strong Outlook for '15 Even While Model X Faces More Delays" []

    Tesla reported a tiny third-quarter profit of $3 million using its preferred numbers while delivering a record 7,785 Model S sedans. That resulted in a $932 million quarter, up 55% from a year ago. But results were challenged by a month-long shutdown of the company's lone production facility as it tools up for the Model X crossover SUV it is introducing next year, albeit later than planned. Gross margin also took a small hit due to changes in warranty accounting, coming in at 23%. The sum total is that Tesla lowered its outlook for 2014 production to 33,000 total deliveries, from 35,000 citing the production deficit. Investors so far have shrugged off the news, sending the stock higher after hours.

    Wall Street was looking for lower revenues and a small loss. But the numbers were buoyed by very strong sales of Zero Emission Vehicle credits, which totaled a "much higher than expected" $76 million, Tesla said.

    "Tesla Shows Signs It's Struggling With Manufacturing" []

    Tesla Motors TSLA +5.8% reported its third quarter results Wednesday. While analysts' attention was riveted to its financials, manufacturing experts saw two signs that the company is struggling.

    First, Tesla lowered its 2014 production target to 33,000 vehicles, down from its goal of 35,000. Second, Tesla pushed back the delivery date for its upcoming Model X once more, to the third quarter of 2015. ...
    The announcement validates the prediction made last month by Morgan Stanley MS +0.09% analyst Adam Jonas.

    One has a "hey, no biggie" tone while the other uses weasel words and literal red herrings to push "gloom and doom" scenario.
    Despite obvious disregard by investors, clearly seen in the opening paragraph with Tesla's stock market tag.

    I.e. "Manufacturing experts" who say that the company is "struggling" are ONE "Morgan Stanley analyst Adam Jonas".
    Who, in the cited article [] said the following:

    "Given the ever-higher level of technical and safety scrutiny facing all auto manufacturers, we find it very common for major launches to hit dealer lots later than the market anticipates," Jonas said.

    Which was interpreted in TFA as:

    One was that major launches are often delayed, although generally not for numerous times like Model X.

    Note the slight bias?

    The rest of it is in the same mode. Positive points and sentiment turned into negative.

    Jonas refers to Tesla as "world's most important car company", calling the delay "an opportunity to buy" and a "silver lining".
    Instead of talking about "generally numerous delays", furor, technological features not available - while dumping lines which present those things as positive.

    Like " intense public interest in the product", "one of the most desirable âwhy buyâ(TM) characteristics" and the entire 4th point being a praise to Tesla.

    Jonas, in his investor note, said there were four reasons he expected another delay for Model X. One was that major launches are often delayed, although generally not for numerous times like Model X. The second was that few prototypes have been spotted on the road.

    Third, Tesla caused a little furor a few weeks ago, when it introduced an unexpected all-wheel drive version of the Model S, and Jonas thought the company might want to put more space between it and the Model X.Fourth, Model X is likely to be Teslaâ(TM)s most ad

  • Because that's the car I'm buying.

  • What was the 40k low end model?model E? That is the highly anticipated model. This one is a plaything for people with too much money.

All laws are simulations of reality. -- John C. Lilly