When you click on links to various merchants on this site and make a purchase, this can result in this site earning a commission. Affiliate programs and affiliations include, but are not limited to, the eBay Partner Network.
Tesla Inc. said it would raise prices on a few of its electric vehicle models as the company changes some of its plans to close its stores in a shift to selling online only.
The company said it had already closed 10% of its shops following last month’s announcement that it would shutter many of its stores.
However, the company said Monday it would reopen a few high-visibility locations though with a smaller number of employees. An additional 20% of store locations are under review. Tesla had 378 stores and services centers globally at the end of last year.
Tesla’s decision to keep some of its stores open has prompted the company to raise its vehicle prices by about 3% on average world-wide, the company said in a blog post filed with the Securities and Exchange Commission Monday. There won’t be a price increase to its Model 3, though more expensive variants of the model, as well as its Model S and X vehicles will see a price bump.
Though it will keep some of its stores open, Tesla said all sales will still be done online, with the physical locations serving as a showcase of its vehicles.
In a February securities filing, Tesla said it has “various non-cancellable operating lease agreements,” and any effort by the company to terminate those leases could result in legal battles. The company has total lease obligations of $1.6 billion, with $1.1 billion due between this year and 2023, according to its securities filings.
Tesla’s Elon Musk Rebuts SEC’s Motion to Hold Him in Contempt
March 11, 2019
Tesla Inc. Chief Executive Elon Musk on Monday pushed back against regulators, telling a federal judge he didn’t violate a fraud settlement that restricted his social-media communications and suggested the government is trying to muzzle him.
In a filing made late Monday, Mr. Musk’s lawyers said the Securities and Exchange Commission hasn’t shown that his tweet on Feb. 19 was material, while the federal agency is overreaching by suggesting he needs prior approval for any statement that relates to Tesla.
The SEC in February said a tweet by Mr. Musk violated a condition of his 2018 enforcement settlement. In that case, Mr. Musk and Tesla agreed to pay $20 million each over claims that he tweeted misleading information about taking Tesla private.
Under the settlement, Mr. Musk was supposed to have a social-media monitor preapprove any tweets that could affect the company’s stock. But a message he sent on Feb. 19 about 2019 production volumes wasn’t reviewed, according to the SEC and a company lawyer.
The SEC as a result sought to hold Mr. Musk in contempt of court, a move aimed at compelling him to fully comply with the settlement terms.
The offending tweet was sent on Feb. 19, when Mr. Musk talked about Tesla’s anticipated production levels for 2019. The SEC said the tweet contained new information that could be material to shareholders and hadn’t been reviewed by Tesla’s lawyers, in violation of the court’s order.
Mr. Musk’s message said that Tesla made zero cars in 2011 “but will make around 500K in 2019.” Hours later, working with an in-house lawyer, he posted another message that said he “meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.”
A lawyer for Tesla previously acknowledged the first tweet wasn’t given prior approval. The attorney, Bradley Bondi, argued that Mr. Musk believed such a review wasn’t necessary because similar figures were part of the company’s Jan. 30 earnings update, according to court records.
In their filing Monday, Mr. Musk’s legal team, led by California attorney John Hueston, told the court that Tesla and its CEO had complied with the oversight policy by reviewing his tweet and providing some context and clarity for it.
The lawyers also told the court that his tweet simply repeated information that Mr. Musk made in an earnings call and that Tesla itself included in its 2018 annual report, which was issued the same day he tweeted.
“The tweet was simply Musk’s shorthand gloss on and entirely consistent with prior public disclosures detailing Tesla’s anticipated production volume,” Mr. Musk’s lawyers wrote. “Moreover, it is clear from the context of the tweet that it was celebratory and forward-looking—a type of statement that courts have concluded is immaterial as a matter of law.”
Mr. Musk’s lawyers argued that the CEO has “diligently attempted to comply” with the SEC’s order, while noting he cut his average monthly Tesla-related tweets by nearly half in the three months following the settlement.
U.S. District Judge Alison Nathan must first decide whether to hold him in contempt for violating the settlement. The SEC hasn’t proposed what kind of punishment he should face if Judge Nathan determines he should be held in contempt.
The lawyers also told the court that his tweet simply repeated information that Mr. Musk made in an earnings call and that Tesla itself included in its 2018 annual report, which was issued the same day he tweeted.
“The tweet was simply Musk’s shorthand gloss on and entirely consistent with prior public disclosures detailing Tesla’s anticipated production volume,” Mr. Musk’s lawyers wrote. “Moreover, it is clear from the context of the tweet that it was celebratory and forward-looking—a type of statement that courts have concluded is immaterial as a matter of law.”
The lawyers also told the court that his tweet simply repeated information that Mr. Musk made in an earnings call and that Tesla itself included in its 2018 annual report, which was issued the same day he tweeted.
“The tweet was simply Musk’s shorthand gloss on and entirely consistent with prior public disclosures detailing Tesla’s anticipated production volume,” Mr. Musk’s lawyers wrote. “Moreover, it is clear from the context of the tweet that it was celebratory and forward-looking—a type of statement that courts have concluded is immaterial as a matter of law.”
1st tweet contained inaccurate and misleading information.
"will make around 500K in 2019" =/= "annualized production rate at end of 2019 probably around 500k, ie 10k cars/week."
In a series of Twitter messages on Feb. 19 that began as a celebration over Tesla vehicles prepared for shipment to Europe, Mr. Musk noted how the auto maker had seen large growth in recent years. “Tesla made 0 cars in 2011, but will make around 500k in 2019,” he said in one posting at 4:15 p.m. California time.
The suggestion that Tesla would make 500,000 vehicles this year stood in contrast to previous guidance by the company on Jan. 30. In his quarterly shareholder letter, Mr. Musk told investors that Tesla would reach an annualized build rate of 500,000 Model 3s sometime between the fourth quarter and second quarter of next year. Tesla planned to deliver as many as 400,000 in all of 2019.
More than four hours after his tweet on Feb. 19, Mr. Musk clarified in another message, saying, “Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.”
The SEC said in its filing that Mr. Musk “did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people.”
Tender Offer Extension for Acquisition of Maxwell Technologies, Inc.
PALO ALTO, Calif., March 15, 2019 – Tesla, Inc. (NASDAQ: TSLA) today announced that it has extended the expiration of its previously announced offer, through its direct wholly-owned subsidiary Cambria Acquisition Corp., a Delaware corporation, to acquire each outstanding share of common stock of Maxwell Technologies, Inc.
The offer is now scheduled to expire at 11:59 p.m., Eastern time, on April 2, 2019, unless it is further extended or earlier terminated in accordance with the merger agreement. The offer was previously scheduled to expire at 11:59 p.m., Eastern time, on March 19, 2019. All other terms and conditions of the tender offer remain unchanged.
The depositary of the offer has advised that, as of 5:00 p.m., Eastern time, on March 14, 2019, a total of approximately 3,094,515 shares of Maxwell common stock had been validly tendered and not validly withdrawn in the offer.
3,094,515 shares, or about 6.7%, out of the 46.01 million shares outstanding have been tendered so far.
Elon Musk's Later-Landing Model Y Reignites Concerns About Tesla Cash
March 14, 2019
Elon Musk’s unveiling of a new electric vehicle that Tesla Inc. won’t deliver to customers for another year and a half rekindled concerns about the company’s cash position.
The Model Y crossover the chief executive officer debuted late Thursday in Hawthorne, California, will start being delivered to customers in the fall of next year, later than some analysts anticipated. The company immediately began taking $2,500 pre-orders, a bigger ask than the $1,000 it has charged to reserve a Model 3 sedan.
“More expensive customer deposits for Model Y are likely to reinforce bear concerns about Tesla’s cash,” Toni Sacconaghi, an analyst with Sanford C. Bernstein Co., said in a report Friday. “We expect initial orders to be notably lower than Model 3.”
By showing the Model Y now and yet keeping customers waiting until the second half of next year, Tesla risks undermining momentum for the Model 3, which catapulted the automaker up the sales charts and helped Musk post back-to-back quarterly profits for the first time. Investors are counting on the Model Y to help the company better meet the demands of consumers who are increasingly ditching sedans for roomier crossovers and SUVs.
“The biggest surprise was Model Y initial shipments will begin in the fall of 2020, a year later than we had anticipated,” Gene Munster, a managing partner of venture capital firm Loup Ventures, wrote after the event. “This timing likely implies the company is postponing the costly Model Y ramp in 2019 to conserve cash.”
The costlier call for Model Y orders relative to Model 3 reservations “suggests Tesla remains in a precarious cash position,” Jeffrey Osborne, an analyst at Cowen & Co. with the equivalent of a sell rating on the shares, wrote in a report. “We remain concerned about the company’s liquidity.”
The Model Y is making its official debut after a rough patch for both Tesla and Musk. In late February, the company announced it would finally offer a $35,000 version of the Model 3, though it linked the ability to do so with a plan to close almost all of its stores and pivot to online-only ordering.
This blindsided employees and investors alike, and Tesla backtracked 10 days later, saying in a blog post that more stores would remain open but vehicle prices would have to rise by about 3 percent on average worldwide.
Tesla ended last year with about $3.7 billion of cash and equivalents, but the company has since had to pay off a $920 million convertible bond. Musk has warned a loss is likely this quarter, and the carmaker has a $566 million note coming due in November.
“The company appears to have to raise cash to meet the November debt payment and working capital needs,” Loup Ventures’ Munster said. “While this raise would fuel concerns around the company’s prospects and would be negative for shares of TSLA in the near-term, it would put the company on track to bridge the gap between meeting its debt requirements and volume production of Model Y early in 2021.”
Tesla's Elon Musk, SEC to face off in U.S. court on April 4
March 26, 2019
NEW YORK (Reuters) - Lawyers for Elon Musk and the U.S. Securities and Exchange Commission will square off in a Manhattan courtroom next week over whether the Tesla Inc chief executive should be held in contempt over one of his tweets.
U.S. District Judge Alison Nathan scheduled oral argument on an SEC contempt motion for April 4 at 2 p.m. EDT (1800 GMT), after both sides said they saw no need for an evidentiary hearing.
. . . .
Legal experts have said a contempt finding could subject Musk to a higher fine, further restrictions, or even removal from Tesla’s board or as chief executive.
The case is SEC v Musk, U.S. District Court, Southern District of New York, No. 18-08865.
PALO ALTO, Calif., April 03, 2019 (GLOBE NEWSWIRE) -- In the first quarter, we produced approximately 77,100 total vehicles, consisting of 62,950 Model 3 and 14,150 Model S and X.
Deliveries were approximately 63,000 vehicles, which was 110% more than the same quarter last year, but 31% less than last quarter. This included approximately 50,900 Model 3 and 12,100 Model S and X.
Due to a massive increase in deliveries in Europe and China, which at times exceeded 5x that of prior peak delivery levels, and many challenges encountered for the first time, we had only delivered half of the entire quarter’s numbers by March 21, ten days before end of quarter. This caused a large number of vehicle deliveries to shift to the second quarter. At the end of the first quarter, approximately 10,600 vehicles were in transit to customers globally.
Because of the lower than expected delivery volumes and several pricing adjustments, we expect Q1 net income to be negatively impacted. Even so, we ended the quarter with sufficient cash on hand.
In North America, Model 3 was yet again the best-selling mid-sized premium sedan, selling 60% more units than the runner up. Inventory of Model 3 vehicles in North America remains exceptionally low, reaching about two weeks of supply at the end of Q1, compared to the industry average of 2-3 months.
Despite pull forward of demand from Q1 2019 into Q4 2018 due to the step down in the federal tax credit, US orders for Model 3 vehicles significantly outpaced what we were able to deliver in Q1. We reaffirm our prior guidance of 360,000 to 400,000 vehicle deliveries in 2019.
Given that Tesla vehicle production currently occurs entirely from one factory in the San Francisco Bay Area, but must be delivered to customers all around the world, production could be significantly higher than deliveries, as it was this quarter, when production exceeded deliveries by 22%.
We’ve just begun the global expansion of Model 3, and we want to thank our employees for their hard work and our customers for supporting our mission. We are doing everything we can to deliver cars globally as quickly as possible and look forward to continuing to scale deliveries throughout the year.
Our net income and cash flow results will be announced along with the rest of our financial performance when we announce Q1 earnings. Our delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct. We count a produced but undelivered vehicle to be in transit if the related customer has placed an order or paid the full purchase price for such vehicle. Final numbers could vary by up to 0.5%. Tesla vehicle deliveries represent only one measure of the company’s financial performance and should not be relied on as an indicator of quarterly financial results, which depend on a variety of factors, including the cost of sales, foreign exchange movements and mix of directly leased vehicles.
Tesla Inc. said new-vehicle deliveries in the first quarter fell 31% from the previous three months as the electric car maker strained to ship its Model 3 compact car to Europe and China for the first time.
The Silicon Valley auto maker delivered about 63,000 vehicles in the latest period, worse than analysts’ already-lowered expectations. Analysts on average had predicted deliveries would drop to 73,500, according to FactSet, a figure reflecting total deliveries of Model 3, Model S and Model X vehicles.
Tesla books its sales when a car is delivered. Concerns of a slow start to 2019 have raised questions about the company’s ability to deliver on ambitious sales targets after it struggled for nearly two years to increase production of the Model 3, its lowest-priced vehicle. Tesla had slashed the Model 3’s starting price three times during the quarter, finally reaching its long-promised base of $35,000, suggesting to some analysts that demand for more-expensive versions had plateaued.
Last quarter was the first sales period for Tesla after the phaseout of U.S. tax credits went into effect, dropping to $3,750 from $7,500 for buyers. It eventually goes away next year.
On Wednesday, Tesla attributed the slowdown to challenges associated with taking the Model 3 overseas for the first time, noting it had only delivered half of the entire quarter’s vehicles 10 days before the period ended. The company cautioned that lower-than-expected sales volumes along with several price cuts would negatively affect first-quarter income. It said it planned to end the quarter with “sufficient cash on hand.”
Tesla said it delivered 50,900 Model 3 cars in the first quarter, down 20% from 63,359 the preceding three months. Analysts had expected 54,600 vehicles in the latest quarter. Sales of the more-expensive Model S car and Model X sport-utility vehicle collectively fell to 12,100 from 27,602 during the fourth quarter.
Tesla went into the final days of March with a broad push to deliver the Model 3. In a companywide email, first reported by Business Insider, Mr. Musk urged employees to focus on deliveries, noting that sharply rising orders in Europe and China, similar to the increase in North America last year, were posing new fulfillment challenges. Shortages of Europe-specific parts and a printing error that had recently been resolved in China, he said, were making it harder to get vehicles to customers.
Tesla warned in January it expected deliveries of the Model 3 to be 10,000 fewer than it would make during the quarter because of cars in transit overseas. In fact, Tesla on Wednesday said it made 62,950 Model 3 sedans in the quarter, compared with the 61,394 made in the three months ended Dec. 31. Overall, Tesla built 77,100 vehicles in the period.
The company said it had 10,600 vehicles in transit at the end of the quarter that will count as sales during this delivery period. Tesla had almost 3,000 vehicles in transit at the end of the fourth quarter.
Without giving any specific country figures, Tesla said orders for the Model 3 in the U.S. outpaced deliveries in the period. The company said inventory of the vehicle in North America remains exceptionally low, with two weeks’ worth of supply.
Brian Johnson, an analyst for Barclays, has noted that the difference between the low and high ranges for the year given at various points by Mr. Musk during the quarter could amount to a revenue swing of $10 billion and a difference of $8 billion in inventory built.
On Wednesday, Tesla also reiterated that it plans to deliver between 360,000 and 400,000 vehicles this year.
Shares of the company plunged 8 percent in pre-market trading after Tesla said late Wednesday evening that it delivered 50,900 Model 3 cars in the first quarter, below the 52,450 analysts expected, according to the consensus estimate from FactSet. Overall deliveries also fell short of consensus estimates.
“Tesla’s 1Q19 vehicle production & deliveries report was substantially worse than expected,” J.P. Morgan analyst Ryan Brinkman said in a note to clients.
“Altogether, we think the delivery results will put pressure on TSLA’s shares, and corroborates our belief that volume expectations for the company’s products in 2019 are too high with consumer demand likely lower as subsidies phase out in the US,” said Goldman Sachs analyst David Tamberrino who reiterated his sell rating. “Further, this likely puts downward pressure on our EBITDA and FCF estimates (as well as consensus) given the lower volume levels and worse utilization than anticipated.”
Here’s what the analysts are saying about the Tesla delivery numbers:
I was shocked to see the Kia Niro EV. As more stuff like this comes from the mainstream what is Tesla going to do? My guess is they turn into a battery company.
Judge Gives Elon Musk, SEC Two Weeks to Strike Deal on Contempt Claims
April 4, 2019
A federal judge told Elon Musk and the U.S. government to craft a compromise that would avoid the need for her to rule on claims that the Tesla Inc. TSLA -8.23% chief executive violated a court order governing his communications on social media.
U.S. District Judge Alison Nathan, showing some disappointment with the Securities and Exchange Commission’s rush to court to have Mr. Musk held in contempt, told the two sides at a Thursday New York court hearing to “put their reasonableness pants on” and report back to her after two weeks.
The step could save Mr. Musk from harsher restrictions on his use of Twitter and from the possibility of stiffer financial penalties. The SEC in its request to the court asked the judge to spell out a “series of escalating fines” that would result if Mr. Musk is found in contempt and continues to violate a 2018 settlement deal, which required him to seek approval for his tweets.
Mr. Musk, who attended the hearing but didn’t address the court, was surrounded by reporters and autograph seekers outside the courthouse following the nearly 90-minute hearing. He told reporters he was “very happy with the results.” Asked live on CNBC later if he could reach an agreement with the SEC within two weeks, he said: “Most likely.”
Fiat Chrysler Automobiles has agreed to pay Tesla hundreds of millions of euros so the electric carmaker’s vehicles are counted in its fleet in order to avoid large fines for breaking tough new EU emissions rules.
The move will allow FCA to offset CO2 emissions from its cars against Tesla’s, lowering its average figure to a permissible level.
From next year, the EU’s target for average CO2 emissions from cars is 95g per kilometre. In 2018, average emissions were 120.5g per kilometre, according to data supplier Jato Dynamics.
FCA averaged 123g last year, according to UBS, which said the carmaker had the “highest risk of not meeting the target”. Analysts at Jefferies forecast FCA could face fines in excess of €2bn in 2021 when the new targets become law.
A study by PA Consulting last year said FCA was likely to exceed the target by 6.7 grammes of CO2 per kilometre — the biggest gap among the 13 carmakers it profiled.
Under EU rules, carmakers are allowed to pool emissions internally, allowing Volkswagen, for example, to offset VW, Seat and Skoda emissions against those from Porsche and Audi cars.
The rules allow rival companies to form so-called open pools but until now none have agreed to do so. “For Europe, this is the first time that completely separate manufacturers have pooled their emissions together as a commercially viable compliance strategy,” said Julia Poliscanova, a senior director at Transport & Environment, a green-energy lobby and research group. “Once you’ve set up a pool, it is valid for several years.”
FCA is planning to sell hybrid and electric vehicles in the future, but is regarded as being behind most other carmakers in this part of the market. Its low sales of electric cars make meeting the EU targets near impossible without the Tesla agreement. Chief executive Mike Manley has previously said the company would use all options available to meet the targets, including dropping the most polluting cars from its range and continuing to sell diesel vehicles that produce less CO2 than petrol models.
According to a declaration on the European Commission website, Fiat Chrysler formed an open pool with Tesla on February 25, saying Tesla would be counted in its fleet of brands that include Alfa Romeo, Jeep and Maserati.
The document also revealed that Japanese rivals Mazda and Toyota would form an open pool. Toyota owns a 5 per cent stake in Mazda.
The declaration does not disclose financial details. FCA declined to comment on financial specifics. Tesla confirmed it submitted its intention to form the pool on February 22 “to give other [carmakers] the chance to join the pool.” Applications closed on March 25.
Tesla generates significant revenues by selling zero emission vehicle credits in the US. Last year, it earned $103.4m in this way, versus $279.7m the year before. The revenues can fluctuate widely depending on when contracts are executed, the company explained in a regulatory filing in February.
Tesla and Panasonic freeze spending on $4.5bn Gigafactory
Japanese company also suspends planned investment in Shanghai plant
April 11, 2019
OSAKA --Tesla and Panasonic are freezing plans to expand the capacity of their Gigafactory 1, the world's largest EV battery plant, as concerns mount on Wall Street about weakening demand at Elon Musk's car company.
The partners had planned to raise capacity by 50% by next year, but financial problems have forced a rethink, Nikkei has learned.
Tesla is a top maker of electric vehicles, and Panasonic one of the biggest producers of the batteries that power them. These companies are shifting their strategy reflects the EV industry's thin profits.
It also highlights a problem that can only be solved by attracting more buyers, which in turn requires further innovation to drive down production costs.
The Gigafactory has been making batteries for the Model 3, Tesla's new small sedan, since January 2017. Panasonic manufactures the cells, and Tesla assembles them into battery packs.
The companies had intended to expand the plant's capacity to the equivalent of 54 gigawatt hours a year by 2020, up from 35 GWh at present.
Tesla and Panasonic have invested $4.5 billion in the plant. Six months ago, in October, Panasonic President Kazuhiro Tsuga said the company would consider "further investment in North America, keeping in step with Tesla." It was reportedly considering putting an additional 100 billion yen to 150 billion yen ($900 million to $1.35 billion) into the Gigafactory.
Panasonic's Tesla EV battery business had operating losses exceeding 20 billion yen in the financial year that ended in March, up from a year earlier. The losses were exacerbated by delays in the start of production of the Model 3.
Tesla's unit sales fell about 30% in January to March versus the previous quarter, hurt by slower growth in China, smaller tax breaks for electric vehicles and problems with logistics. This has made the companies more cautious about the future, although they plan to continue joint operation of the plant.
Wall Street analysts have recently raised concerns about weakening demand for the Model 3. In an April 4 report, Goldman Sachs analysts said, "Volume expectations for the company's products in 2019 are too high, with consumer demand likely lower as subsidies phase out in the U.S."
Tesla is scheduled to launch a small SUV, the Model Y, that is likely to use the same batteries as the Model 3. The two companies will reevaluate their expansion plans for the Gigafactory in 2020 or later, depending on how well the models sell.
Panasonic will also suspend its planned investment in Tesla's integrated automotive battery and EV plant in Shanghai. Instead, it will provide technical support and a small number of batteries from the Gigafactory. Tesla is committed to buying batteries for the cars built at the Shanghai factory from a number of makers.
Prices for Tesla cars start at $35,000 for the Model 3, its lowest-priced model. Batteries make up about half the cost of an EV.
Given the relatively small profit margin on these cars, significantly cutting battery prices will be difficult without further technological advances. And lowering sticker prices is crucial to getting more EVs on the road.
A Tesla spokesperson has reportedly commented on Nikkei’s report:
“We will of course continue to make new investments in Gigafactory 1, as needed,”
Update: In a comment to Electrek, Tesla exapnded:
“We will of course continue to make new investments in Gigafactory 1, as needed. However, we think there is far more output to be gained from improving existing production equipment than was previously estimated.”
So they feel they can get more improvement by making what they have now work more efficiently instead of just spending money on new production equipment, and this is seen as a negative?
There was a rush in the US to buy before the tax credit was cut in half, that plus the holiday season made Q4 a great quarter. Q1 is usually slower than Q4, Q1 they focused on Asia and Europe and had to deal with the initial logistic difficulties of expanding Model 3 deliveries in to two new continents.
I think they screwed up with the launch of the 35k model, they tied it to closing a bunch of stores which was a dumb idea. They then mostly backtracked on that idea and had to raise prices, they probably aren't getting as good of a profit margin on the base model as they were anticipating. If there is reduced demand it may be because of the Model Y.
There may be reduced demand for the S and X because they're due for a refresh. They need to be better than the 3 but they're not significantly better right now. They need the 2170 batteries, they need to support Supercharger v3 250kw charge rates, they need more exclusive features that the 3 and Y don't have. Unfortunately Tesla has limited resources and all their focus is on the 3 and Y right now.
Tesla President of Automotive Jerome Guillen and Shanghai Deputy Mayor Wu Qing held a meeting on Tuesday, where they discussed the progress of Gigafactory 3’s buildout in the Shanghai Lingang Industrial Zone. The Tesla executive and Chinese official shared in-depth updates on the project, including an estimated timeframe for the installation of the facility’s vehicle production lines.
Local news agency Laoyaoba, which covered the meeting, pointed out that the installation of vehicle production equipment could start as early as May, when the initial stages of the facility are expected to be completed. This represents a notable accomplishment for both the electric car maker and its construction partner, considering that Gigafactory 3 is one of the most ambitious foreign-owned projects that have been attempted in China.
Based on this recent update, it appears that Tesla intends to start the installation of production equipment in Gigafactory 3 while other areas of the 864,885-square meter site are still under construction. This is a bold and risky move on Tesla’s part, but if the electric car maker pulls it off, such a strategy will likely help the company meet its goal of starting Model 3 production in Gigafactory 3 by the end of 2019.
Guillen and Wu also discussed the recent milestones of the project. Construction work in Gigafactory 3 started back in January, and since then, the first phase of the buildout has been moving along very well. Pile foundation structures have been completed, and the steel structure construction of the factory has begun. Multiple sets of steel roof grids have also been completed.
Gigafactory 3 is under an incredibly ambitious timeline. During the groundbreaking ceremony of the facility, Elon Musk noted that he expects the factory to be completed around summer. This timeframe was mocked by Tesla’s skeptics, many of whom claimed that such a target was impossible. This was until Shanghai official Chen Mingbo stated that Gigafactory 3 was on track to be completed by May, a date even more ambitious than Musk’s estimate.
The work in Tesla’s Gigafactory 3 site in Shanghai does not stop for the night. (Photo: 烏瓦/YouTube)
Part of the reason behind Gigafactory 3’s rapid progress is the support that Tesla enjoys from the Chinese government. Tesla’s presence in China is beneficial to the country, which is aggressively pushing for the adoption of electric vehicles. In a statement to Xinhua News, Cui Dongshu, secretary general of the China Passenger Car Association, noted that Tesla’s China production will have a “catfish effect” in the country’s auto industry, pushing domestic carmakers to expedite and improve their own electric vehicles to compete with the Silicon Valley-based electric car maker.
China’s support for Tesla was evident during Musk’s visit to the country. When Musk met with Chinese Premier Li Keqiang in Beijing, the CEO was received at the Tower of Violet Light, a place that is usually reserved for dignitaries. Li also proved receptive to Musk’s ambitious ideas, even offering the CEO a “Chinese Green Card” so that he can pursue his vision in the country freely.
Tesla did say U.S. orders for Model 3 vehicles significantly outpaced what it was able to deliver in the first quarter, and the company reaffirmed its prior guidance of 360,000 to 400,000 vehicle deliveries in 2019.
Tesla spokesperson: “Both Tesla and Panasonic continue to invest substantial funds into Gigafactory. That said, we believe there is far more output to be gained from improving existing production equipment than was previously estimated. We are seeing significant gains from upgrading existing lines to increase output, which allows Tesla and Panasonic to achieve the same output with less spent on new equipment purchases. However, we will of course continue to make new investments in Gigafactory 1, as needed. Most importantly, contrary to what is implied in this report, our demand for cells continues to outpace supply. It remains the fundamental constraint on Tesla vehicle and Powerwall/Powerpack production.”
Oh what a surprise, Nikkei were the ones reporting that the iPhone X sales were shit and the Apple was cutting production. Fuck those guys! They list no sources for this Tesla article, not even anonymous ones.
Everyone in the industry should know that "channel checks" of Apple suppliers offer largely worthless data. But every January, Japan's Nikkei newspaper unloads a report suggesting that Apple is scrambling to slash production of its newest iPhone because of disappointing sales. Every year that report has been false, and every year the tech media falls for it.
This year, Nikkei has claimed Apple is slashing production orders for iPhone X due to "slower than expected holiday sales" the U.S., China, and Europe. The report comes right after CIRP noted that iPhone X outsold iPhone 8 Plus, and that both larger models outsold the standard sized iPhone 8. iPhone X by itself outsold the now very attractively-priced iPhone 7, as well as the combined sales of all iPhone 6s, 6s Plus and SE models--despite being on sale for five fewer weeks than all of those other models.
Yet Nikkei reported that it thinks Apple's production targets for previous models is unchanged, while iPhone X production is supposedly being slashed in half. This is being reported after months of stories that suggested Apple couldn't build enough iPhone X components.
Additionally, the Nikkei report, credited only to "staff writers," claimed that Apple's production slashing was down "from the figure of over 40 million units envisaged at the time of its release in November."
Apple has previously sold 50-60 million iPhones in total in its January quarter. Imagine launching three new flagship iPhones at the highest prices ever asked, while also introducing the widest array of new, cheaper options, and then "envisaging" that the vast majority of customers would all buy just one of those models: the most expensive iPhone X.
That's simply insulting to Nikkei readers, and it explains why such an important sounding "insider report" wasn't attached to the reputation of any specific writer. The article actual claimed that iPhone X "has failed to catch on globally," and then, in a sort of desperate attempt to boldly state the most preposterous horseshit possible, stated "iPhone X features facial recognition and wireless charging, but unlike previous models, is widely regarded as lacking any groundbreaking new technology."
The report ended noting that "Apple did not comment on production plans for the iPhone X in response to The Nikkei's inquiry," knowing full well that Apple does not ever comment on specific production rumors, and that it could freely run with anything in the piece, even the notion that iPhone X has nothing really new in it.
At the same time, Apple suppliers including Austrian component maker AMS AG, which makes optical sensors to adjust brightness and color and support facial recognition--a feature component unique to iPhone X--just raised its revenue outlook on rising demand for its sensors in phones, according to a new report by Thyagaraju Adinarayan for Reuters.
"The increase," the report noted, "will likely allay concerns that weak iPhone X orders are likely to persist through the first half of 2018."
At odds with the assertions of the unsourced, unclaimed story published by Nikkei, there is no consensusamong analysts that iPhone X sales are underperforming or disappointing.
This all happened before: iPhone 7
If the story sounds familiar, it's because Nikkeireported similar woes for iPhone 7 a year ago. It claimed Apple was cutting orders by ten percent due to "sluggish sales." Yet there was nothing sluggish about iPhone 7 sales, and actual shipments didn't fall by anywhere near ten percent. During the quarter that Nikkeireported sluggish sales, iPhone shipments grew by 4.7 percent, reaching a new highest ever peak in sales.
The following quarter, facing strong competition from Samsung's Galaxy S7, iPhone sales remained steady year-over-year, with less than one percent change in sales. And across the rest of 2017, iPhone sales continued to remain above their year-ago quarters. If Apple did indeed cut any orders by 10 percent, it had no apparent effect on actual sales.
This all happened before: iPhone 6s
The previous year, Nikkeireported that Apple had cut supplier orders for iPhone 6s models by "30 percent," based on channel checks at unnamed "Japanese and South Korean parts suppliers."
The paper did note that "output will be scaled back to let dealers go through their current stock. Production is expected to return to normal in the April-June quarter, once inventory adjustment is complete. Apple's products and brand have not lost their appeal, and older models have continued to sell."
That indicates that the authors knew that rumored supply cuts have no real relevance on overall iPhone demand or unit sales for the last quarter or the coming quarter, and instead only pertain to internal inventory adjustments. At the time, Apple analyst Ben Bajarin noted on Twitter "My data and checks confirm the same."
Piper Jaffray analyst Gene Munster similarly characterized the channel check rumors as production estimates that would have little to do with final reported sales.
Channel check interpretations in a changing product mix
Interpreting the meaning of changes in Apple's vast supply chain would require an in-depth understanding of the company's inventory management, its production ramp and how early production began compared to the previous year.
This year was Apple's first-ever production of three different sizes of new flagship iPhones, and the largest spread in iPhone pricing ever, from the most expensive iPhone X to the least expensive model ever offered: iPhone SE.I would suggest it's good to question the accuracy of any kind of rumor about build plans. And I'd also stress that even if a particular data point were factual, it would be impossible to accurately interpret the data point as to what it meant for our overall business - Tim Cook
This year, Apple is also selling the largest array of different generations of new pairs of flagships, meaning that the company is again learning how many of its customers will opt for the latest and greatest 8/8 Plus/X models, the newly discounted 7/7 Plus, or the least expensive 6s/6s Plus/SE models.
Apple never comments on Nikkei rumors, but Apple's chief executive Tim Cook has previously addressed supply chain rumors in general, starting in January 2013 when he noted, in an earnings call transcript by MacWorld, "I know there's been lots of rumors about order cuts and so forth, and so let me just take a moment to make a comment on these.
"I don't want to comment on any particular rumor, because I would spend my life doing that, but I would suggest it's good to question the accuracy of any kind of rumor about build plans.
"And I'd also stress that even if a particular data point were factual, it would be impossible to accurately interpret the data point as to what it meant for our overall business, because the supply chain is very complex, and we obviously have multiple sources for things. Yields might vary, supplier performance can vary, the beginning inventory positions can vary, I mean there's just an inordinately long list of things that would make any single data point not a great proxy for what's going on."
This all happened before, again and again, since 2013
Cook made those comments five years ago in January 2013 because of reports issued just prior to Apple's earnings release which claimed that the company had slashed its display orders "in half."
That report came from the same Nikkei paper that is now claiming Apple's iPhone X supplier orders may be cut by "50 percent." The Wall Street Journal also followed up with its own version of the channel check story in 2013, centering its attention on iPhone 5c. However, that paper first backpedaled its story, and ultimately was proven wrong as iPhone 5c turned out to be not only popular but strategically important in inciting Android switchers and a major smartphone success story.
As Cook noted, even if there had been any element of truth to Apple's reported internal supplier changes, it had no impact on the number of iPhones Apple actually sold back in 2013. Apple reported sales of 47.8 million iPhones in the holiday quarter, representing a 29 percent increase over the previous year.
The following quarter, Apple reported sales of 37.4 million iPhones in its historically slower post-holiday March quarter. There was no indication of any supply cut, and no possible way Apple could have been hoping to sell twice as many iPhones in the March quarter, as the Nikkei report implied.
Report everything, some of it might be true
Just as in other years, the original Nikkei rumor in 2013 also included an alternative explanation of the rumored supply chain cuts, that time from analyst JoAnne Feeney of Longbow Research.
"Our checks with supply chain contacts close to the situation identified a very different cause: a slower ramp in the manufacturing of iPhones and iPads (reflecting some quality control issues) and insufficient production lines," Feeney was cited as saying.
"Rather than ordering more components and having inventory build up further, Apple put component suppliers on notice to hold off, for the time being, on further shipments until it expanded its production lines - which it plans to complete by the end of the quarter."
Nikkei, along with the Wall Street Journal, chose to instead focus on the potential of weak demand for iPhones being behind the supply chain inventory adjustments. As Cook later noted, interpretations of the meaning of rumored supply chain changes have regularly been wildly inaccurate.
Previous supply channel check rumors were wrong in 2012, independent supply channel checks from other sources (including Piper Jaffray analyst Gene Munster and Jefferies' Peter Misek) were wrong in 2013, and over the following quarter a series of supply channel check rumors (including regular reports issued by Credit Suisse analyst Kulbinder Garcha) also failed to result in any real insight on how many iPhones Apple will actually report, at the time or in future quarters.
Channel check rumors have, however, resulted in driving Apple's stock price down dramatically, just as they did in 2013 when the Nikkei and the Wall Street Journal reported them. And the best time to seek to manipulate Apple's stock price is right before earnings, which this year will be released later this week.
Wow I notice a few similarities between Nikkei's yearly Apple FUD stories and their Tesla FUD story. Similar timing, similar lack of any sources, similar "lack of demand" bs. It's almost as if they did a find & replace of one of their Apple articles.
Tesla Halts Online Sales of $35,000 Version of Model 3
April 12, 2019
Tesla Inc. stopped online sales of the $35,000 base version of its Model 3 car weeks after introducing it, the latest shift in sales tactics as the company struggles to deliver long-promised affordability and avoid losing money.
The company’s announcement late Thursday said customers can still order the $35,000 version of the car by telephone or in its network of stores. But it effectively raises the minimum price of the Model 3 by nearly 13% for online shoppers, after announcing in late February that it was shifting its sales to the internet as it began making the $35,000 “standard” version available for order.
In a blog post Thursday, Tesla said the move was to “simplify our production operations to better optimize cost, minimize complexity and streamline operations.”
The announcement marked the fourth change to the compact car’s starting price this year, and followed worse-than-expected deliveries of Tesla vehicles in the first quarter, which raised questions among investors about demand for the company’s electric vehicles.
The lowest-cost Model 3 version offered online now starts at $39,500, and is a pricier variant of the “standard plus” version that now includes Tesla’s Autopilot driver-assistance system as a standard feature. The standard-plus version has slightly more range on a charge than the lowest-end standard version, among other differences. Tesla said it is now pushing the standard-plus version online because that has been selling far better than the standard version.
To lower the cost of the Model 3 to $35,000 from its $46,000 level at the beginning of this year, Tesla slashed its workforce several times and took the unexpected step at the end of February to announce that it would close many of its stores and move to an online-only sales model.
“Even though most buyers would opt for a pricier upgraded Model 3, the $35,000 price tag became the defining feature of the car,” said Jessica Caldwell, an analyst for Edmunds, an automotive website that tracks the industry. “Tesla’s rally cry of an EV for the masses for that specific price is what created the frenzy around the Model 3, but it’s now become the most iconic symbol of Tesla’s tendency to over promise and under deliver.”
The Model 3 on average sold for $57,000 last year, according to estimates of analysts surveyed by FactSet. The urgent push to lower the price left some analysts to assume that Tesla had reached a ceiling of buyers willing to pay for the higher-priced version of the compact car, which competes against a similarly priced BMW 3 Series and Mercedes-Benz C-Class.
On Thursday, Tesla also said it would begin offering leases for the Model 3, something the company had noticeably lacked in a segment where such financing is common. Tesla said it would limit annual miles driven to between 10,000 and 15,000 for leasing customers, and customers wouldn’t be given a chance to purchase the vehicles at the end of the term because the company plans to use those vehicles in a Tesla ride-hailing network.
The announcement marked the fourth change to the compact car’s starting price this year, and followed worse-than-expected deliveries of Tesla vehicles in the first quarter, which raised questions among investors about demand for the company’s electric vehicles.
It has nothing to do with demand and everything to do with the logistical struggles of loading tens of thousands of vehicles on to boats and sailing them across the world to two continents and figuring out how to get them delivered to tens of thousands of people in different countries for the first time.
Autopilot is now a mandatory option, but it's dropped in price again to compensate.
Update:Tesla contacted us this morning to say that in fact you can get a $35,000 Model 3 with no autopilot, if you call or visit one of its stores. As noted below, that information was not mentioned in its blog post on Thursday night.
On Thursday night, Tesla announced some changes to its Model 3 range. The lineup has been simplified, the prices have been altered, and in the US it will now be possible to lease the car.
First, Autopilot is now a mandatory option, although the company is only raising prices by $2,000 on each configuration instead of the $3,000 that customers have paid until this evening.
Next, the Standard Range Model 3—the one with cloth seats that Elon Musk told us about as recently as February—is now gone. Instead, the cheapest Model 3 will be a software-locked version of the Standard Range Plus, which now costs $39,500. Its range drops from 240 miles (386km) to 216 miles (348km), and features like music streaming, navigation with live traffic, and heated seats will be disabled. Additionally, if you want one you have to call the company or visit one of the stores—there is no option to order it online.
Tesla says that customers can pay to unlock the features of the Standard Range Plus at any time or choose to downgrade to the Standard Range and receive a refund for the difference in price. Since the Standard Range is not listed on the site, we can't confirm if the entry-level car now starts at $37,000 before any incentives at the time of writing. Assuming it is, the cost to unlock the extra 24 miles and those seat heaters should be $2,500.
The Long Range rear-wheel drive Model 3 has now also been dropped from online ordering. If you want one of these you'll also have to call or visit a store. However, you can still order a Long Range all-wheel drive Model 3 ($49,500 before incentives) and the Model 3 Performance ($59,500 before incentives). That means the most expensive Model 3 with Autopilot is now actually $1,500 cheaper than when we tested one a month ago; not a bad deal for a car that certainly impressed me.
Finally, it will now be possible to lease a Model 3 instead of buying one—in the US, at least. All leases are for 36 months, with the option for 10,000, 12,000, or 15,000 miles a year (16,093km, 19,312km, 24,140km). The minimum lease deposit is $3,000 for all three Model 3s, although the amount due at signing varies depending on both spec and mileage; this ranges from $4,199 to $4,584. Monthly leasing payments decrease if a customer chooses to make a larger down-payment, but, if not, these range from $535 for the cheapest Standard Range Plus car to $889 for the Model 3 Performance.
At the end of the three-year lease, there will be no option to buy the car. Tesla says that "with full autonomy coming in the future via an over-the-air software update, we plan to use those vehicles in the Tesla ride-hailing network." On April 22, the company is planning an open day for investors where it will reveal more details about its self-driving efforts, presumably intending to dispel the notion that it is lagging far behind autonomous vehicle leaders like Waymo.
And on the Tesla blog post which was the source of these articles they mention
Last quarter, we introduced two new Model 3 variants with more competitive pricing than ever before – Standard and Standard Plus. Since then, Standard Plus has sold at more than six times the rate of Standard, far exceeding our expectations.
Given the popularity of the Standard Plus relative to the Standard, we have made the decision to simplify our production operations to better optimize cost, minimize complexity and streamline operations.
So the $35k comes with the partial premium interior now, and is software limited. So initially the standard and standard plus were different battery packs and different interiors. The Standard Plus far outsold the Standard because it was a much better deal and it makes much more sense for them to not make a separate battery pack or cloth interior for a vehicle option that most people aren't choosing. Though if it's a software locked version then it still costs as much for them to make the Standard version as it does the Standard Plus since they're identical hardware. So to reduce complexity and limit their profit losses they're making the model that most people don't want available only in store or over the phone. You can still get it if you want it, and it's better than it originally was, but most people don't want it.
Autopilot is dope, and you could say it's a safety feature. Maybe they learned something from the Boeing 737 Max and they're not going make safety features optional upgrades
03-05-2019, 01:29 PM
