Guest essay by Eric Worrall
Having failed to hit their own production targets, Green car maker Tesla has bought a company which designs robotic production lines, apparently with the intent of making the Tesla factories themselves into products.
Tesla buys robot maker. Hang on, isn’t that your sci-fi bogeyman, Elon?
Slight glitch in Industrial Revolution 4.0
By Andrew Orlowski 8 Nov 2017 at 15:04
Troubled Tesla Inc. has quietly acquired Perbix, which designs robot production lines. Perbix was already a Tesla contractor.
“With the acquisition of Perbix, Tesla further advances its efforts to turn the factory itself into a product – to build the machine that makes the machine,” the electric carmaker burbled on its website.
That’s the glass-half-full interpretation. A more sceptical view is that Tesla is finding it so difficult to manufacture its long-awaited Model 3 sedan that it’s hand-finishing them as they drop off the production line.
…
Read more: https://www.theregister.co.uk/2017/11/08/tesla_buys_perbix/
Tesla’s statement on the acquisition is available here
Is Tesla hoping Perbix’s expertise will help fix Tesla’s production line problems?
Does Elon Musk believe other businesses will queue up to buy Tesla’s expertise at producing things, despite Tesla’s utter failure to date to deliver on their own production targets?
Perhaps we shall all be dazzled by next quarter’s Tesla production figures?
As if Tesla has the production process for its products so well established it can automate it?
Truly explains Tesla’s problem…If production gets perplexing, buy Perplexed
Perbix as a separate entity and with insight to Tesla’s production line hell was a liability.
Solution: Buy it.
Eliminate the liability to the truth.
Tesla is in production hell with Model 3 and the light at the end of the tunnel is a high-speed train.
That inbound light is a train called Reality.
It moves forward at the rate of 1 second/second.
It is unstoppable.
It is the clock on your wall.
It is the calendar on your desk.
It is the mirror in the morning telling you are 1 day older than yesterday.
Elon Musk thought he could defy Reality by overselling Model 3’s for an immediate cash infusion on deposits.
Reality is now calling.
In Tesla’s case, their reality seems to be a Pyramid Scheme, taking down payments for cars that will never be delivered on time. And then losing vast sums of money in the last quarter alone. Time is not Elon Musk’s friend on this enterprise.
He would be better off selling Tesla (along with embedded Solar City) and putting it all into his privately owned rocket business, SpaceX. I do respect his ability to land an upright rocket and reuse it.
At current production rates, Tesla will require 3 centuries to fulfill all model 3 deposits for the 2018 model year
Yes, joelobryan!
From Bloomberg:
“Perbix has been a supplier to the automaker led by Elon Musk for almost three years, according to a Tesla spokesman, who declined to disclose the terms of the deal. James Dudley, Perbix’s president, will receive about $10.5 million in Tesla stock, according to a regulatory filing.”
I was wondering how much cash could still be on hand after purchasing a successful automation company. It looks like Musk gave them a lot of TSLA stock and options for the company.
One does wonder just what the automation company Musk bought in 2016:
“The Perbix purchase comes about a year after Tesla announced the acquisition of German manufacturing-technology specialist Grohmann Engineering to boost production and reduce manufacturing costs.”
Few things ruin a good company quicker than some behemoth purchasing them. One wonders how many new Tesla employees are selling their TSLA stock while considering new careers elsewhere.
Vesting
There is just an awful lot of BS with this new “machine that builds the machine” nonsense. I am the sales manager of a company that makes a specialized industrial control product that is used in auto assembly plants all over the globe. In that capacity I visit body welding robots in auto assembly plants around the world several times a year. Auto assembly is perhaps the highest expression of industrial automation. Modern plants produce 1000 to 2000 cars per day. Hundreds of very large welding robots do their work to an accuracy better than 1 mm. There are no secrets about how to do it. Robot makers in Europe and the U.S. will sell the same machines anywhere in the world. No one who understands auto assembly would take seriously the claim that manufacturing engineers at GM, Ford, Honda, Nissan, or Toyota don’t know what they’re doing. Yet that’s what Elon would have you believe, along with the fiction that he has a better idea of how to do it. I’ve been inside the Tesla plant several times, and I’ve heard the stories from experienced engineers who report finding arrogance combined with inexperience. And incredible pressure to perform. At the same time, they have a lot of smart people, and I’ve met some of them. I personally think that Elon’s forecast of his production ramp on the Model 3 is nonsense, and I’d love to short TSLA. But I stop myself because the guy somehow seems to pull stuff from a hat. Is this where magic meets hard core reality?
+googleplex
Was looking at long term puts over the weekend, but I’m timid, just like you.
The problem with shorting anything, is that the upside is limited and the downside is bottomless.
Musk is still the master at covering his cash burn with the next level of his Ponzi scheme.
Ahh, that explains it. I was wondering how an outfit that has produced little or nothing of value came up with the cash, etc., to buy a much more productive firm… Then again, that puzzle has repeatedly arisen over the last…oh, 30-35 years, with great firms making great products being destroyed or taken over by lousy firms with lousy products.
Re: comments below. The Chevy Cruze (sp?) near Lordstown is/was highly robotic. For that matter, several of Chrysler’s were increasingly heavily roboticized beginning around 1982. It’s all part of the “gig economy”, I suppose. Hit the ground running. Brag. Tear it down within 2-5 years and nearly simultaneously announce new facility opening in some other tax-victim-subsidized location with lavish promises of hiring… Repeat. Repeat. Take the money and run.
As we used to say, markets can stay irrational longer than you can stay solvent.
That hat might smell a little (h)anus
The problem is probably that the Tesla is largely built from aluminium and composites so as not to be impossibly heavy. Welding robots are not much use. It is more like assembling an aircraft. Unfortunately aircraft assembly is much less automated than the automotive industry, production rates being vastly lower and the end product much more complex, so highly automated production simply doesn’t exist.
“…arrogance combined with inexperience…” A most dangerous combination.
“arrogance combined with inexperience.” Seen that combo before; it generally gets you bucked off horses!
“…arrogance combined with inexperience…” A most dangerous combination.
Our education system’s flagship product!
Teachers can only teach what they know
Musk may have a “better idea” of how to do it, but execution of the “idea” to date can only be described as a failure.
TSLA was primed for a steep drop prior to Gov Brown coming to Tesla’s rescue earlier this year. That was the magic which drove the stock back up into the high 300s. It has never been able to hold at those levels though. The trick though, imo, is to stay flexible enough to know when to buy calls as Tesla does have strong supporters with deep pockets, or alternatively look to buy puts after the upswings. That is from a day traders perspective.
At the end of the tunnel are a dozen real car companies introducing EVs and Hybrids with many choices.
Whenever I see the name Tesla or Musk the image of “The Delorean” pops into my mind. Oh, and the man that promoted it — John DeLorean.
Really worked out for GM with the EV1….
The Bolt isn’t the EV1.
Besides showing you, 0x01010101, are 18 years behind in your reading, your comment is similar to saying Orville and Wilbur’s “Wright Flyer” didn’t work out as a commercial passenger plane.
PS: Every auto company has, or will, introduce EVs and Hybrids. Even “quirky” Subaru will soon have an EV. Their Indiana assembly plant is evolving – see the 2018 and 2019 models – to produce such all electrics by 2021. Although not one of the majors, Subaru sold 54,045 vehicles in the United States in October, 2017. This one small company should be giving Musk nightmares.
[ And yes, we own a Forrester and a Crosstrek. ]
Batteried EVs will only work in a world where the battery will last 100 years and only 600m vehicles are ALL that is EVER needed
You are spot on; I’ve spent much time reading everything I can on Tesla ownership. Beyond the delusional buyers, Tesla ownership is a painful experience. Consumers do not want to babysit their cars and pay a premium for the privilege. Tesla only exist because of Government distortion of the marketplace. Remove the subsidies and Tesla is a case study in stupidity. GM won this race, Tesla lost it without ever getting out of the starting blocks. Enough of the nonsense that Tesla is the next iPhone.Tesla is gone in three to five years.
I’ve spoken to tesla owners, all I heard from them sounded like they loved the car. Granted part of that love was/is like puppy love, as far as I can see. The real trouble, margins on cars is so slight. When competition hits the ground running and Tesla hasn’t already filled the niche…
And he was caught selling drugs to prop up his auto business.
Musk is simply going to destroy two companies instead of one.
Elon put together a team that figured out how to land his first stage rockets on tiny robotic platforms bobbing in the middle of the ocean, something most of us technical guys thought was impossible.
Henry Ford figured out production lines more than 100 years ago. It isn’t rocket science but there is an art to getting it all running smoothly at the same time, especially at the production rates he is trying for. Expect some glitches but they will get fixed, one by one.
Perhaps he will sell robots instead of cars, with the line “build your own”.
Greg: “Expect some glitches but they will get fixed, one by one” Agreed
The place where optimism most flourishes is the lunatic asylum.
— Havelock Ellis
The other place is in the minds of green apologists.
Elon Musk may yet prove to be the next Bernie Madoff.
Tesla is the next Leyland P76 .
I never did know what the “P” stood for. Perhaps Ponzi?
Glitches in production startups have to be fixed one by one, mostly because, except for some obvious exceptions, if the one step isn’t right the next step can’t be right either. If step one was designed for a range of 1mm but is running 2mm, step two will never be able to correct. A good example is drilling a bolt circle. Good CNC machines can reliably make bolt circles, but keeping an array of say 20 hole in a big array with all the holes within the same 1m spec for all the other 19 holes is still a problem.
GM built the Fiero design by putting the frame in an assembly jig to weld it together. It used the same jig to machine all the panel mounting pads and holes one one machine. Each panel was molded so the mounting holes could be placed pretty accurately.
The Delorean sports car from the 1980’s ran into similar production problems. It seems designing a car is simple compared to designing an economic production line for it.
An example is temperature control. Unless the storage and assembly area are kept at the same, exact temperature, the expansion coefficient of aluminum can getcha.
The “P” stands for “Pursuit”, as in the P51 Mustang.
As for why they’d name a car that, I assume because it sounded cool.
^¿^
“philo November 9, 2017 at 6:36 am
The Delorean sports car from the 1980’s ran into similar production problems.”
The main issues with the car was where and who he chose to make it. Those two factors are not synonymous with quality and reliability.
Reusable boosters are a problem looking for a solution. Pure electric cars are a solution looking for a problem. In the culture of engineering development, that makes a big difference.
Well, the problem in the minds of the many is that CO2 is a pollutant. If you accept this, then the rest makes sense to them. Never mind the fact that production and charging of EV’s is probably equally if not more polluting with far more attending hassle of ownership. Someone will always buy buggy whips if they can be convinced that they have more intrinsic utility than they really do.
Landing a rocket is simple compared to running a production line. I have tried both 🙂
, It isn’t rocket science but there is an art to getting it all running smoothly at the same time.
Oddly in you case it is rocket sceince and he is not getting it running smoothly most of the time. But never mind what ever else Tesla likes/dislikes, adoruation is one thing he can never get enough of so you will be fine.
Nobody thought it was impossible Greg. Everyone knew it was difficult.
Quit lying to cover up for your idol.
Maybe they owed them so much money, it was cheaper to buy them.
future tense: gonna owe them so much money…
Would be an interesting business stratagem — submit a proposal for far more than your firm is worth to generate a buyout from a customer.
It appears Musk is good at some things, such as building small run specialty machines when tight margins aren’t really an issue, such as SpaceX rockets and the Model S, as well as setting up large organizations to mine subsidies from government, such as Solar City and Tesla.
Efficient, large-scale manufacturing does not seem to be one of those things. Before this acquisition, there appeared to be much hubris in believing they are smarter than everyone else who has gone before.
This is probably a good move for Musk, and will add to the manufacturing expertise of the company, but he has as much chance of ruining it by micromanaging, unrealistic goals, refusing to listen to the collective wisdom of the team acquired, and losing this expertise if they walk, as not.
Why not just buy their expertise? Buying the company seems risky, as you point out it risks loss of the expertise they hoped to acquire if the engineers don’t like the new management style.
If I wished to wax metaphorical I would say that Musk is attempting to purchase industry “maturity”. Tesla has a lot of money. It may work. His main problem seems to be that he believes he can compress ordinary lead times that have been settled upon in auto manufacturing for decades.
There’s a reason the 2016 Camaro I rented last year was running MS Vista as its in-dash OS. If you’re going to make cars cheaply you have to get everything right before starting the assembly lines. The ordinary lead time for creating, setting up, and debugging a production line is two years AFTER every SINGLE BIT of the car design is locked down and written in stone. Musk thinks all that dotting of i’s and crossing of t’s was unnecessary. He may be right. He is more likely wrong.
Hiring a few engineers or consultants wouldn’t give him what he needed.
A few years ago I went down to a Hyundai dealership looking at one of their new cars.
The sales guy was busy so while I was waiting for him I talked to the service manager.
The service manager had just got back from a visit to the factory in Korea.
What he said – “The production line for certain models of Hyundai are 99.9% automated using robots. There was only two jobs robots couldn’t do – one was bolt down the seats”
Every car that comes of the production line is identical. That’s why they could offer a 7 year warrantee.
This was at least 5 years ago. The models in question at the time have been superseded.
The real question was – what in the future would people do for work? So many humans put out of work by robots..
If the Hyundai 7 year warranty was for the drive train, that is up to 10 years/100k.
Regarding the loss of expertise comment above, that apparently has already happened and is a big reason for the current Model 3 delays. Engineers will endure the vise for a while, but most won’t forever.
Les, the secret, should government ever get out of the way is that robots allow things to be made cheaper. That means that over time humans don’t have to work as much to earn the money they need to buy things.
If we ever reach the point where robots were able to make everything, even factories to make new robots, then everything could be free. Of course this will never happen, but that’s the way to think about robotics.
@Les
” So many humans put out of work by robots..”
You have no idea. Just estimate the number of slave people working for you would be required without robots, right now. 100 human equivalent, just for you Average Joe, is a sound estimate. And, of course, more for richer people.
For some tasks, like posting your comment for everyone in the world to see if he wants, millions of humans would be required, but it would take years, not second, for them to do the job.
Robots already do ~99% of the work. 99% of the work already disappeared from human hands, and you didn’t even notice. You think you will notice much more, when the 99% will turn 99.9% (1000 slave robots), and then 99.99% (10,000 slave robots), etc?
Nothing to worry about. This in itself is no threat to anyone.
Probably afraid that his people would decamp to Perbix anyway…
This was not unexpected. In July Musk himself said “It’s an amazing car, but we’re going through six months of manufacturing hell. It’s going to be pretty great, but it’s going to be quite a challenge to build this car”.
Let’s see. Tesla represents the best chance the US currently has of retaining volume EV production (none of the traditional majors have access to sufficient volumes of batteries), but if it fails the US still has resourceful innovators who might be able to play catch up.
Tesla does not control the lithium battery market and is using a battery certain to be made obsolete by Toshiba’s new battery design, due out in a year or so.
2019. 200+ miles range on a 6 minute charge. Retains 90% capacity after 5000 charges. That’s once a day for 14 years. Those are the claims for Toshiba’s battery.
Mr Benz was told that he was wasting his time on his ICE vehicles because faster charging, longer range batteries were “just around the corner”, we are very lucky he ignored them.
Tesla doesn’t own the baterry technologies, Panasonic retains all the chemistry and packaging details and does not share. If (when) Tesla tanks, that technology can be marketed to actual car makers. Having Elon’s cult contribute to Panasonic, and it’s battery development is a sweet move.
The problem with Elon and Tesla is that the integration time isn’t on their side. Usually this is something that gets done at the beginning, develop your concepts and do the hard work of detailing how it all gets done, pull in expertise when needed. Pulling in at this time period doesn’t bode well, getting everyone up to speed and managing integration without massive delays isn’t easy. Kind of like a football team, at the start of the season you bring in guys and sort out how things will work and develop them into a team, throwing in a bunch of guys mid season doesn’t make a good chance at going to the big game.
Mydrrin…
We have to remember that these production lines are all deeply programmable from the robots down to the stop/start buttons. If they have something to manufacture, it may take some time but they will solve the serious bottlenecks and change the software that guides the automated hands and tools.
This is why GM invented the PLC. Let’s build a Vega today and a Chev next week. No rewiring.
Sure, it isn’t all software and procedure, it may also be machine vision, materials and logistics but these too are solvable.
Now he may run out of money before that solution is crafted. That might not be solvable.
“Lee L November 8, 2017 at 11:03 pm
This is why GM invented the PLC. Let’s build a Vega today and a Chev next week. No rewiring.”
All car makers use Japanese mfg techniques and processes. I would suggest that Chev and Vega share the same floor pan. The only differences would be cosmetic.
Actually, I suspect the issue is California. A number of suppliers and companies in California have really screwed up their production and meeting their deadlines. Airbus had huge difficulties with a seat manufacturer. Such delays and problems is spreading though industry like their wild fires they have.
The problem is often hiring practices. While California has a rather strong technical field, it fast becoming rather liberal. The result is a whole bunch of companies are running into trouble – their employees are not so grounded in the real world – too much “bubble” mentality is spilling over from the education pool they hire from into their industry. In fact I believe this is one of the GREATEST challenges that industry in California faces – finding good people. Most technical people now want to move to Texas, or Seattle. California lost that real magic that allowed it to draw the best talent.
Tesla really does have lots of amazing people, but their switch from aluminum to steel to reduce costs for the model 3 is the issue. They don’t have production experience for welding steel cars. It is a learning curve that auto manufactures have to master – and it takes time if you don’t have a lot of experience in that area. Toss in the rather liberal state, and your find many of your hires are like government employees – quite poor at getting things done.
I sure they will figure this out – but this problem comes at a bad time, and it likely a good number of months more before they work out their manufacturing challenges.
It is rather amazing the progress that space-X had made. They really show how poor NASA is at innovation, and just outright getting things done. Timelines for space-x are like half, or even 1/3 of what it takes NASA to get things done. (it simply amazing how fast they get things done).
I think that Musk’s plans for Mars are WAY, but WAY WAY off in terms of optimism. Regardless, Musk does have a habit of setting rather optimistic goals. And their cost reductions in terms of launch vehicles is really amazing. No one can really compete with them.
I wish them well, but this model 3 production issue is a setback, and comes at a bad time for them.
They will eventually figure this out – but it sure not fun when you under such pressure to get things moving along – there is no magic wand, but lots of hard with along with the required talented people.
Regards,
Albert D. Kallal
Edmonton, Alberta Canada
Your take on the labor force in California is interesting. But there is something wrong somewhere. The educated masses are all coming from the same molds. In which case there is no reason to single out California.
And, having left Seattle a handful of years ago, I’d suggest to you Seattle=California.
Which reminds me, sixty years ago Seattle was NOTHING more than a waypoint for Alaska. Well there was Boeing.
Not denying what you say, just throwing sand into the machinery.
“their employees are not so grounded in the real world – too much “bubble” mentality is spilling over from the education pool they hire from into their industry”
This is one of the symptoms of having allowed the transfer of most manufacturing to China.
There just aren’t enough places for young engineers to cut there teeth on and be mentored. Those places are largely GONE.
You didn’t really think that a kid graduating from engineering school actually knows anything practical did you?
The manufacturing was driven to China by a combination of high taxes, high regulations and unrealistic wage demands from unions.
I saw this at Google, which tries to hire smart people by recruiting from elite Universities. Unfortunately, many of the children coming out of those universities are snowflakes to the N’th degree, largely because their education tends to be polluted by far left ideology. They all think that they’re the smartest people in the room, but they can’t handle conflict or even different points of view without crying.
Years ago, I used to read G Harry Stine’s column in Analog SF magazine. He commented on one aerospace company he worked at having an argument about staffing. “Do we need PhDs, or can we settle for Masters?”. Stine’s answer was “How about somebody who can DO the job?”. Speaking as a retired aerospace, then software engineer, I can say that it was my APPRENTICESHIP, not my BSc, that got me into my various jobs. I knew how to do the job. Now, I’m wondering about (a) the employers’ insistence on pieces of paper (sheepskins?) and (b) the actual quality of education that goes into getting those pieces of paper.
A sobering fact not mentioned here, Albert: In a competitive environment, one does not have the luxury of time. Having the Musk glamour doesn’t change that truth.
Albert D. Kallal
November 8, 2017 at 11:25 pm
Hello there, should I call you Elon?!!!
————
“They will eventually figure this out – but it sure not fun when you under such pressure to get things moving along – there is no magic wand, but lots of hard with along with the required talented people.”
————–
The only magic wand and talented people required, will be in what is needed to keep having on and going on with the cash burner furnace…..the longer it will persist the better for Elon, regardless of much else.
No so good for the victims in the end, but hey…..shit happens….that is what you hear in the end of the day when your wealth is burned out, by a ponzy con artist…..no much any one can do then at that point…..
———–
“It is rather amazing the progress that space-X had made. They really show how poor NASA is at innovation, and just outright getting things done. Timelines for space-x are like half, or even 1/3 of what it takes NASA to get things done. (it simply amazing how fast they get things done).”
————
That is completely silly,only considered clever in the prospect of a con…….and the space-X, from any angle seems the most expensive and clever one at that, and very profitable to it’s “master” if it manages to be successfully triggered and lunched…a dud but never the less very very clever and as much much more expensive, I must say…..but still the most expensive ever ponzy con attempted scheme thus far…..
Sorry for pushing and showing so openly my lack of optimism for such as .
Elon versus NASA, for lack of better word is indeed silly to consider, unless one really wants do depart with his/her wealth in the most quicker way ever imagined, and still upholding Elon at that point as their most worshiped personal hero ever……amazing!
cheers
Tesla will be sold to a Chinese firm within 7-years.
They’re just waiting until it’s worth . . . well not much.
Wouldn’t want to be a creditor or minor shareholder when it happens.
Manufacturing will progressively move to Chongqing.
Musk will represent it as a positive outcome and talk big about the future!
It’s kind of like when Blackberry bought QNX. It didn’t rescue their handset business. On the other hand, it doesn’t look like Blackberry has wrecked QNX. 🙂 It does allow Blackberry into markets other than telephones.
Buying QNX made sense to me. It should have made Blackberry’s products a lot better technically. Blackberry’s problem, IMHO, wasn’t the technical goodness of their handsets.
I always thought QNX was amazing. I don’t see what’s so great about Perbix … but then I don’t know much about the robotics industry. 🙂
“apparently with the intent of making the Tesla factories themselves into products”
Tesla has always intended its factories are a product just as much as its cars
(I read a long article about that yesterday – and as always happens today I can’t find it!)
At present, fur coat and no knickers
Reasons to buy.
1. Vertical integration to decrease the margin stack. A few of his aquistions and attempted acquistions
are these types of plays.
2. They saw an expertise that was strategically important.
3. The robot company wasnt sufficiently focused on Tesla as a customer, and Elon wants control.
Musk isn’t stupid. The observations I’ve made previously have been written about for weeks or months. This acquisition is buying auto manufacturing maturity in one fell swoop. It may or may not work out well for them.
Musk’s skills is his ability to dream, inspire and lead.
These are lots of people that have these qualities but it is rare to see in one person at these genius-like levels.
He is not designing the car or the production lines himself. He is standing in front of a crowd of engineers and saying “I want to go to Mars. You guys are going to make that happen. I’m coming back next week and you will outline that plan. “. A video of Mars’ landscape is on the screen in the background. Over the next 3 years, he has met with each sub-team 100 times and each individual engineer dozens of times, and fired and rehired dozens of them and let the team leaders rise to the top.
“I want a reusable rocket that can go to Mars. You guys are going to make that happen.”
“I want you Perbix engineers to design the best production line the world has ever seen and I’m coming back next week …”
Historically, these people eventually become the success they inspire to be and inspire future generations or they fail and become a footnote. I think Musk’s story is not written yet. The stock is betting the success side and it might be right in the long-run.
The problems with vertical integration were discovered way back in the late 1800’s.
On paper it sounds good to be able to own everything from the factory to the showroom floor.
In reality it doesn’t work, no company can be good at everything.
Eastman Kodak was good at vertical integration for almost 100 years. However that requires a consistent product line over that century (e.g. photographic film, paper and chemicals.)
But what do you do with a Gelatin plant in Peabody Mass when your entire product line is replaced by a small electronic device? (It doesn’t help that YOU invented that electronic device!)
There is an article in Automotive News….auto production lines are usually set up and fully tested by their manufacturer and fully tested before being disassembled and then reassembled at the assembly plant. Tesla is said to have skipped this step. Also lines take up to a year or more to be fully certified. Tesla also skipped this step. The question now is the Tesla cash burn which was 1.6 billion in the last quarter going to beat the revenue creation of the Tesla 3 production line (250 cars built in the last quarter). A 35K electric car has a lot less profit than a 75K electric car, and big production volume is needed to make this line profitable. Tesla has 10,000 workers at their Fresno plant, the average auto maker with similar production volumes at full capacity have between 2,500 and 4,500 workers…..
It is interesting observing the true believers versus the skeptics or just plain Elon Musk haters (there are more than a few, many were his customers, now suing his company for fraudulently selling an option [autonomous driving] that did not exist, for $8,000, followed by several false claims about its imminent appearance). The biggest blunders the pro Tesla stock analysts have made are several claimed Tesla advantages : a supercharger network in operation, a long driving range, a fast recharging battery. They call these advantages “Tesla’s moat” which protects Tesla from competition. Laughingly, the day after one analyst proclaimed Tesla’s recharge speed unequaled “for the next 10 years” an article appeared about Porsche’s first electric – the Mission e – in testing and due in showrooms in 2019. It had a battery that could accept 350KW of input (as opposed to Tesla’s second generation supercharger at 145KW) – it could recharge to 80% in 15 minutes,
something that required over 30 minutes by a Tesla supercharged vehicle. It also sported a 300 mile plus driving range. And last week several announcements about CCS charging networks -(CCS Combo is the standardized charging protocol that is currently used by all American and European autmakers and will certainly be adopted by the Asians as well). Firstly, the CCS protocol
a has been uprated to allow 350KW and 500KW power levels. Secondly, a consortium of German automakers has started the ball rolling by building 400 stations along the German and Western European highways – to be located in existing gas stations. Also, Royal Dutch Shell has acquired a charging company and will be the first, but by no means the last, oil company to begin transitioning their gas pumps to charging pods. And the Chevy Bolt bested the Tesla Model S 75kWhr model in driving rnage -a car half as expensive as the Model S. It also bested the base Model 3 model
as well. And Tesla, the wonder company, is still trying to get its Model 3 production line up and running. Of course, ever the blowhard, Elon Musk proclaims a 3 month delay an insignificant nothing for a car he claims is a “10 year project.” He doesn’t realize just how much progress 3 months can mean to an industry transitioning over to his business arena.
“Is Tesla hoping Perbix’s expertise will help fix Tesla’s production line problems?”
Of course not, you don’t have to buy a company to have them do their job. You just need a proper contract, as they already had before.
I see only two reason to do that.
The first is, you can have it cheaper that it is worth. Sort of “sell, or the contract terminate and you are screwed, bankrupt”
The second is the other way round: Tesla may had no choice. Sort of “buy us, or the utter failure we participated in (and know all about) goes public and into the courts, and you are screwed, exposed, sued, bankrupt”
I’ll bet for the second.
I agree, hard to believe that Perbix would have bet the farm on the Tesla contract with all that they would have known about Tesla. I hope they got cash and not Tesla shares!
Something to spend it on perhaps. ‘Torqeedo has made state-of-the-art automotive battery technology available for boats by offering BMW i high-capacity batteries …’ Interestingly Torqeedo has just been bought by Deutz.
http://www.torqeedo.com/en/news-and-press/news-and-press/blog-2017-07-05.html
Tesla, the princess of ‘green sustainabilityness’ and having-your-green-cake-and-eating-it, is actually just a royal car crash in slow motion. The regrets will be large when the joyride comes to an end.
http://www.private-eye.co.uk/pictures/covers/full/1451_big.jpg
“Now he may run out of money before that solution is crafted. That might not be solvable.”
The anti-Tesla articles I’ve read on Seeking Alpha recently say that the production bottlenecks mean that Tesla will need to dilute the stock to raise cash within the next six months. And that Tesla can’t make money selling the model 3 at less than $50,000 or $60,000. And that at that price there won’t be many buyers. So many of the half-million prospective purchasers will want their deposits back. And bond holders and suppliers will want to be paid before big cash starts coming in. And other cash-crunch-related issues are working against the company. What can Tesla do then? Offer to pay them in stock?
PS: TSLA is down almost 2% (to under $300) this morning (in a 0.5% down market). I suspect that institutional holders are going to “sell the rallies” in the future and attempt to lighten their holdings steadily in light of the increased riskiness of their investments revealed in the latest earnings report and 10-Q. I suspect it’s taken their analysts and decision-makers a few days to absorb that info and adjust their attitude to the stock.
Reminiscent of another mo(u)ld breaker the original Mini.
‘British Leyland are selling the Mini at a loss despite the latest price increase and the fact that after 14 years it is still their top export model. Mr John Barber, BLMC’s deputy chairman and managing director said yesterday: “The Mini is a wonderful car though I think insufficient attention was paid during the design stage to the inherent problems of production costs. Even though we have increased the price it is still not a profitable model.”
He added that because of the profitable replacement parts business generated by Mini sales it was “more in the nature of a break-even operation.”
It also improved prospects for the group’s dealers by providing them with a more complete range of models. Since it was launched in 1959 Sir Alec Issigonis’s pioneering design has introduced standards of roadholding and passenger space for small cars which have been copied by motor manufacturers throughout the world. For the first 10 years of its life it was widely known that the Mini’s complicated and expensive engineering prevented it being sold at a profitable price.’
Musk,continues to add more debt, not a mark of a successful company.
My financial advisor TWO years ago predicts that Musk WILL eventually fail since he doesn’t have a credible business model to work with. It is just more adding debt without future solvency factored in.
On the contrary, Musk has a very good business model.
He has a novel product that is unmatched in the marketplace. He has a loyal customer base, who are prepared to shell out deposits years before receiving their product. He has the technical expertise to deliver the product, and government subsidies to make an expensive product cheaper. And government subsidies to install the systems needed to run the product (charging facilities). What company could wish for more???
The problem he has – that any new company has – is not overspending during the development phase. Now that is, and always has been, a very difficult juggling act.
R
EVERY company he owns has NEVER been in the black,he own debt ridden assets only. NONE of them are forecast to make real profits. Elon is basically living on the backs of taxpayers to keep his overblown company alive.
Normally a good business model would allow for getting out of,or significantly reduce debt,but that is not the case here as he borrows hundreds of millions yearly just to keep his company alive. It is living at the edge with borrowed money, generous subsidies and far into the future prepay sales for a car that is increasingly being competed against by large car manufacturing companies that will in time take away part of his future sales.
There is no indication that he will ever manage his debts successfully.
By all accounts SpaceX is profitable – even with its huge $1 billion startup debts.
R
Not according to this website:
How Profitable Is SpaceX, Really?
“Dissecting SpaceX’s finances
As revealed in the Journal’s report, SpaceX turned just a small fraction of its $1 billion in 2014 launch revenue into operating profit — much less net profit. The numbers aren’t entirely clear from the Journal’s chart, but appear to show SpaceX earning an operating profit of perhaps 0.2% on $1 billion in revenue — profitability far below the 10%-ish profit margin that Boeing earns on its space operations, or the 12.6% operating profit margin at Lockheed Martin.
That bleak situation got even worse in 2015 when a small reduction in launch revenue sufficed to push SpaceX deeply into the red, and forced the company to record a $260 million loss on $945 million in revenue.”
https://www.fool.com/investing/2017/02/05/how-profitable-is-spacex-really.aspx
Barely made a profit in 2014,been losing a lot since.
It will be interesting to see if he can get enough buyers to spend $62 MILLION for a single rocket launch. He might make it if Bezos,Branson and others don’t crowd the market with their own rockets in the near future.
Just discovered that Musk, plans to DROP the research on the Falcon line for a Rocket Branson and Bezos has already been working on. It is a much bigger rocket for the Moon/Mars missions:
Can SpaceX afford its new Mars rocket — and will there be a market for it?
“On Friday, SpaceX CEO Elon Musk laid out his vision for SpaceX’s future: the company is going all-in on a next-generation vehicle called the BFR, or Big Fucking Rocket. This rocket, which will be capable of going to the Moon and Mars, will eventually become SpaceX’s primary vehicle for launching satellites and traveling to the International Space Station, too.
It’s a radical move for the company, which has a fairly reliable rocket already. But can SpaceX afford this change? In his presentation, Musk discussed how SpaceX plans to fund the cost of developing the vehicle — though he didn’t mention any dollar figures — as well as what it will be used for when it’s complete. His ideas may be enough to fund the transition and keep the company profitable, but there are some fairly obvious gaps in the plan.
Developing the rocket
Musk made one thing very clear: SpaceX’s future is the BFR. The company is no longer going to put resources into improving its current line of Falcon 9 vehicles or its bigger, next-generation Falcon Heavy. Instead, all of the company’s research and development resources will go into creating the new monster rocket.”
https://www.theverge.com/2017/9/30/16384096/elon-musk-spacex-bfr-mars-rocket-development-business-demand
Bwahahahahahahahaa!!!
…while tunneling under LA.
The Model S’s battery weighs 1,700 lbs, and yet the car is a performance monster. Years ago I contacted Tesla’s engineering manager to discuss a gasoline or Diesel motor-generator set that could lighten the vehicle by 1000 lbs, increase performance to beyond anything Ferrari ever made, reduce manufacturing expense, and permit cross-country travel. I was told, “Musk’s business model is all-electric.” Guy can’t see the forest for the trees…
The Tesla has performance beyond just about any any ICE car. That is the great advantage of an electric vehicle – massive four-wheel torque, combined with unmatched traction control.
The problems with Teslas are:
Battery weight.
Battery energy density.
Source of the energy being used.
When those can be sorted out (especially the last one), then EVs will become as common as ICE cars and trucks.
R
A Tesla does not out perform our 2007 Corolla. It accelerates and merges onto the highway just fine. We then can drive 400 miles before filling up at 80 mph.
“unmatched traction control”
So you are saying the coefficient of friction between the road and tires on a Tesla is different than any other car?
Every car on the road has to meet handling criteria. Since I do not drive on the drag strip, I do not care about your criteria.
“When those can be sorted out…”
When is never!
Meanwhile those Electric cars will need a lot charging stations on the road and new power plants to make it viable.
If you’re trying to save the planet why do you need that level of performance?
I concur. A pure EV is only good for a tiny smart car sized runabout car with a 40-50 mile range. This will meet a lot of current customers use. But for a large universal EV to be used in various climates, it should go without saying that a dedicated Micro ICE generator of some type would be a given, seeing that the infrastructure is not in place for large scale recharging, either at home or while travelling.
Not to mention cold/hot weather issues that really suck as parasitic loads in A/C or cabin heating and battery protection. Too bad Tesla can’t figure out the purist version of an EV doesn’t really work for its cars and not see the obvious benefits of Micro ICE dedicated generator to fix a hole in this and see that a PHEV is the best option to pursue if it wants to salvage its electric car company. I will buy a PHEV with a dedicated Micro ICE but never a pure EV for a larger scale automobile.
“I will buy a PHEV…”
Why? Because you are a sucker for marketing? I might consider PHEV or even a hybrid when independent testing show is it a better choice for what I need.
Road and track did a comparison road test using professional drivers for a trip on actual roads. The VW TDI got the best mileage. The vette was the most fun to drive. The Jeep SUV did the best job of carrying all the gear.
The Pious did not live up to expectations.
No, I will buy it because I have ‘free’ surplus electricity that I produce myself. But as I said, I am not buying any full sized EV sedan that does not have some type of mini on-board charging system that gives me heat and extended range or will charge me up if I have to because I am not in proximity of a grid charger. Why didn’t you stick to the subject of EV’s and/or PHEV’s instead of comparing a bunch of ICE vehicles from Road and Track. Perhaps you are the sucker for marketing, Retired.
You can’t fix stupid.
This particularly applies to the arrogance of the brilliant. Being brilliant in one are pretty much dooms to be stupid in another.
You can not innovate your way around basis science. To become an engineer you start with chemistry and physics. Then you progress to things like thermodynamics and metallurgy.
Liberal arts majors like to list success stories when so called experts predicted failure. They do not bother to list predictions of epic failure, that indeed were epic failures over and over again.
My the time I was junior in college, I could explain why some ideas would fail. For example a turbine driven car will fail because of angular momentum.
BEV and HFC will fail because the second law of thermodynamics and the weight added to the vehicle.
The idea that hydrogen fuel cell are more efficient that ICE or coal or nuke plants only works after you innovate the perpetual motion machine. An economist writes a book and the next thing you governments are pouring money into HFC programs.
Of course hydrogen does not grow on trees. Wood grows on trees. During WWII, gasifiers were slapped onto ICE because of fuel shortages. It works too. Lots of research to make it work on a practical basis as a source of renewable energy for transportation.
On the planet earth, hydrogen for fuel is attached to carbon atoms. Not a bad thing unless you buy into carbon bad, bad, bad!
So the brilliant folks at Google set to replace coal with solar. Epic failure! The brilliant Bill Gates set out to build traveling wave reactors. Epic failure.
It takes two things to achieve success. It has to comply with the laws of science. You have to do it better.
Some turbine cars from Rover and Jaguar for everyone’s enjoyment. The Jaguar is a hybrid and highly desirable in my opinion. Its turbines use air bearings.
http://www.rover.org.nz/pages/jet/jet5.htm
https://www.autocar.co.uk/opinion/motorsport/insight-rover-brm-gas-turbine-powered-le-mans-racer
http://www.bladonjets.com/applications/automotive/jaguar-c-x75-concept-case-study/
Nigel, thanks for the links,
Here is mine: https://en.wikipedia.org/wiki/STP-Paxton_Turbocar
I when to high school in Indiana. The exciting events in Indiana are the state basketball tournament, the Indy 500, and the corn crop.
STP turbine car was a big deal when I was in high school. Operating steam turbines in the navy replaces excitement over puny cars. I went back to Indiana to attend Purdue where I learned turbines cars is a really bad engineering concept.
‘Concept cars’ are a marketing tool to show case what you are selling. Epic failure occurs when you can’t sell sh!t.
My high end motor home was made in a small town northern Indiana. The Amish are well regarded for craftsmanship. Also manufactured in Indiana is the Cummings diesel engine and Onan propane generator.
I do not think micro turbines are desirable as indicated by sales figures. There is a US company out of San Diego that also sells them.
I am amazed that a company that can’t make a profit selling a product can have so much money available to do this kind of thing.
Short sellers are amazed too, until they come back for another try.
magic shows are always intriguing.
I worked for Elon once upon a time.
The whole “tell magical stories and expect the staff to pull a rabbit out of a hat” is very familiar.
I admire the crap out of him for taking his money and making hardware with it, it’s much harder than spinning up some home-sharing app.
But, yeah, what’s going on with the Model 3 is not remotely a surprise. He overpromised and expected his whole supply chain to pull his backside out of the fire, and it’s not surprising that they’d say “eh, what? We know this crap and you don’t.”
Is this a quiet warning shot to the auto unions?
Just ban the humans and everything will work smoothly.
http://money.cnn.com/2017/11/09/technology/self-driving-bus-accident-las-vegas/index.html
Sounds like a great strategic move by Musk. He is emulating Honda perhaps. One director for the whole ensamble, well done Elon Musk.
Has Tesla provided new guidance on their production. It looks like they are defrauding investors with their claims.
@Earthling2
“Perhaps you are the sucker for marketing, Retired.”
I read a magazine in the dentist office.
I not the one talking about buying something based on BS reasons.
Nothing set my BS meter off like the word ‘free’ used in the same with electricity.