Delay in model X launch?

[Matias]

From Q1 2015 conference call
Elon Musk
"I think we'll pass on sort of answering super-detailed questions about the X ramp. But the thing that really matters is not like when do the first deliveries of the X occur, but rather when do significant deliveries of the X occur. And for the S, we had quite a long ramp from – we're like six months from the very first deliveries to a significant volume. We're trying to compress that to maybe like two months or three months at most. I'll cut that in half or more for the X. And we want to make sure we're really delivering a product that has been thoroughly validated in hot and cold weather and through millions of miles of travel and everything."

Concidering, that it has now been almost four months since launch Elon's "two months or three months at most" doesn't hold.

- - - Updated - - -

That CC gives also others priceless quotes;

Deepak Ahuja - Chief Financial Officer
We do expect to be free cash flow positive in Q4. That doesn't change. And as we go along, clearly, we are optimizing for efficiency, which results in increase of our finished goods inventory. That makes sense for us to then establish some asset pipelines or credit which is backed by our finished goods inventory or raw materials. So we'll take those actions to make sure we have a solid balance sheet.
Elon Reeve Musk - Chairman & Chief Executive Officer
Yes. Things are looking pretty good for Q4. I think it's hard to predict full quarter exactly because that whole quarterly boundary and where does the exponential ramp of production fall exactly on that side of Q4 boundary. But I think it's extremely likely that cash flow is really good at the end of Q4.

 

[ankitmishra]

What is going to matter is the quality of the car and its features. Tesla has done very well with X in that area in my opinion. I think Tesla is going to sell a lot more cars than 50000 in this year.

 

[CarlK]

Many people familiar with me here at TMC know that I am one of the shareholders who has voiced alarm and extreme irritation at the design choices behind Model X. As an engineer, I found it alarming that Model X was very difficult to actually build, because part of engineering a mass-produced product is making it easier to mass produce. I remember Elon even saying some time ago that building 1 copy of something was easy, but building thousands and tens of thousands was the hard part. Why make the task that much harder? It makes no sense.

From a branding/marketing perspective, there is a silver lining: Model X is unique. Virtually every other mid-size luxury CUV has the same basic shape and 4-door/rear hatch form factor. There is absolutely no mistaking Model X for what it is: a Tesla. While Model S is designed to blend in (and indeed can be confused with everything from pricey Porche Panameras to pedestrian Ford Fusions), Model X screams uniqueness and exclusivity. In the luxury car market, where CUVs increasingly reign supreme, this is very important.

My instinct as a car guy is that Model X may well have drained resources from Model 3, but the flip side is that Model X cements Tesla's place in the luxury market. Everyone in the luxury space: BMW, Mercedes Benz, Cadillac and Acura and Lexus, and more, is a player in the CUV market. Model X says "we're here too. We're better. And we're here to stay".

Agreed that making an uniquely great car, if you can, is a good thing even with issues come with it. It would have been much easier if Tesla just go to make a bigger Leaf with a bigger battery and call it a day but in the long run that will never get Tesla to where it wants to.

Pretty much every high end car company, Mercedes, BMW or Porsche are looking to expand into the lower "mass" market while lower market companies, Toyota, Honda and even the Koreans want to attack the more profitable high end market. The thing is it's always easier for a high end car company to go after the lower market than the other way around. The estabilshed brand image make it much easier, or harder, to do depending on what customer's perception of that brand has been.

Tesla in a few short years has established a brand image that Toyota/Lexus and Honda/Acure tried for a quarter century but still could not achieve. People still buy those Japanes "luxery" brands only for the lower cost. Yes reliability too but reliabilty is just an ownership cost issue. Few, if any, would buy a LS over a S class or 7 series if total five year ownership cost of the them is the same. Tesla has no problem of luring any luxury, or non-luxury, buyers to buy its car with merits alone. Tesla does need to grow it manufacturing prowees but that's a much smaller challenge than try to alter people's perception of your car. It does not take a rocket sicentist, or even if it takes a rocket scientist, to figure that out.

 

[s+x+3]

It would appear that eds was pretty much spot on with predictions some 7 or 8 months ago re model x state of affairs. Could have saved a lot of money if I listen to them. But I chose not to as many people on this forum stated that statements made had to be wrong and I believed them. ...

 

[davidc18]

I was just at the Dania SC and was told that they have started a second shift and expect to be running a 3rd shift in the future for 24-7 operation. Perhaps this is a part of the plan to increase SC availability for the X and eventually the 3.

 

[ecarfan]

I was just at the Dania SC and was told that they have started a second shift and expect to be running a 3rd shift in the future for 24-7 operation. Perhaps this is a part of the plan to increase SC availability for the X and eventually the 3.

You mean that Tesla Service Centers will start running multiple shifts?

 

[aesculus]

I was just at the Dania SC and was told that they have started a second shift and expect to be running a 3rd shift in the future for 24-7 operation. Perhaps this is a part of the plan to increase SC availability for the X and eventually the 3.

This statement scares me quite a bit unless it's just temporary to deal with all the 'hand holding' early Model X cars need. But I thought they were taking the pressure off of the SC by moving initial quality control at the factory instead of at the SC? Some of us speculated that they initially used the SC's to get 'all hands on deck' to help push the first units out before end of year.

IF they are truly going to a more people based model, this does not bode well. One of the biggest draws to me is that Tesla is trying to get so much automation into the process. Needing people, in any stage of the game from manufacturing to service, is going to kill them.

This reminds me of the push the airline industry did a number of years ago with regional jets. They looked at the numbers and discovered they were flying a bunch of empty seats around using expensive fuel. So they cut the planes down in size to be more efficient.

Now they have an issue that the staff (pilots/attendants) ratio is much higher (and that is a huge cost - such items as salaries, benefits and healthcare skyrocketed), pilots are getting in short supply (another subject) and fuel is cheap. Add to that you cannot just add seats to a plane. So the regional jet idea turned out to be real bad.

 

[pvogel]

I think the point was that some SCs are adding shifts for SERVICE since in some areas like the SF Bay Area just the Model S has a long wait time for appointments

 

[aesculus]

I think the point was that some SCs are adding shifts for SERVICE since in some areas like the SF Bay Area just the Model S has a long wait time for appointments

But even adding for service, and not just MX quality control is troubling. People costs will kill you.

For the Tesla (EV) model to work, service needs to be minimized. This is an area of concern I have (and that came out with the Consumer Reports report and dismissed by many that it was just early Model S's). I only want to go into service when something wears out, not needs adjustments or fixes.

 

[ptsagcy]

But even adding for service, and not just MX quality control is troubling. People costs will kill you.

For the Tesla (EV) model to work, service needs to be minimized. This is an area of concern I have (and that came out with the Consumer Reports report and dismissed by many that it was just early Model S's). I only want to go into service when something wears out, not needs adjustments or fixes.

Sorry to disagree, but it is less expensive to add additional shifts than to build out additional SC's, and add people, due to the increasing numbers of Tesla's on the road.

 

[davidc18]

Sorry to disagree, but it is less expensive to add additional shifts than to build out additional SC's, and add people, due to the increasing numbers of Tesla's on the road.

This is what I was assuming (when told of the current second shift) and it sounded like a good thing.

 

[aesculus]

I am all for that if the increased need is based on increased sales rather than increased service needs. Let's see where it goes.

 

[smac]

I think the point was that some SCs are adding shifts for SERVICE since in some areas like the SF Bay Area just the Model S has a long wait time for appointments

It's a more global problem unfortunately I had an 8 week wait for a service in the UK.

TBH as a non-shareholder I really don't care how they fix it: multiple shifts, more SC's, heck I wouldn't be adverse to them offering an "approved partner" for routine servicing and sharing the investment burden. (The service checklist is so simple even I could do it!)

I'm lucky as I didn't finance my car, but I know how aggressive "off hire penalties" are for late service stamps in our primarily lease hired ICE company fleet from experience. (Yes these same penalties are in the small print of the Tesla finance agreements, so while you can skip them and still keep warranty, there could be a nasty surprise bill down the line from the finance company.)

 

[Lump]

I don't get what is the news here.

>> 1. Build few hundred, mostly, press cars

What else did we expect? First vehicles off the line are always aimed at PR tasks. Loaners, test vehicles, media, press, ...

>> 2. Deliver less than 100 cars to customers by end of the yea

100, 200 or 300, it does not change the fact that deliveries begin in Q4.

>> 3. Call it successful launch of the new model

Because even a single delivered vehicle is a launch. If numbers are not high enough to one liking, it is his problem.


>> 1. Tesla are still doing design changes to some components as they are realising post RC1 build that they have significant number of “challenges”

Model S has already been delivered in +70k instances and it still getting design changes to some components and tesla still realizes there are significant number of challenges left to overcome. It is a never ending battle, the product is never complete, never done. It is just good enough to release.

>> 2. RC2 build vehicles will be “sellable” vehicles but will have number of prototype components that will not be at final specification and therefore inferior to production components that will come in early next year.

As every new model does. Everyting on it is still prototype until it gets replecated in thousands instances and proves it is good enough,

>> 3. Several suppliers do not even have their new machines up and running to provide components; their production tooling is only going to be completed around late Oct / early Nov 2015…

Remember the parcel shelf that was year+ behind schedule? Such things happen, again no news.

>> Significant challenges in supplier base management. I prefer not to go into details at this point

Remember flying the tires by plane from Chech republic? Or shopping for USB cables in wallmart? Such problems are no news. They arise and are resolved.

>> All this is because Elon M does not want to see the share price plummet by announcing that they will miss the launch of Model X this year and that there are number of important issues that they have not resolved/do not know how to resolve yet

Pure speculation bordering on FUD.

>> I would not buy early cars as they will be severely compromised in numerous areas

I wold not buy ANY first year model as they ALL are severely compromised in numerous areas. A fact of live.

Really, there is NO real news in this 'disclosure', just facts of life and production.
Model X will be delayed if there is some big enogh problem that cannot be fixed afterwards in SC. No such thing has been disclosed.

Todays X recall reminded me of Ed, since his posts were deleted all I can find that sums up his predictions are found in "WarpedOnes" reply.

 

[AnxietyRanger]

From what he said himself, he was not 'temporarily banned', but rather put on moderation. A temp ban would have meant 1) his status would show up as 'Banned' under his username for a specific period of time (never happened), and 2) he would have been unable to post during that time frame (also untrue). Being put on moderation means that before his posts were public, a moderator would review first. (Note that posts critical of TMC and/or Tesla would be and have historically been approved.)

Though he seemed to like to refer to it as having been banned, by his own description (and by what was obvious in terms of visibility), he was in moderation. That usually happens when the site administration feels there is valid reason for a person's posts to be reviewed by a moderator prior to public posting. I can't speak to the reason he would have been put under moderation (I had quit moderating at that point), but reasons for others have included things like deliberately trolling, ignoring requests from mods to stop taking potshots at other members, including advertising in posts, or other TOS violations that administrators don't feel rise to the level of an actual ban from the site. In reality, moderation is commonly used as a last warning to a member before bans happen - and moderation is usually lifted after a period of time if moderators feel the person *gets it*.

Anyway, he was under moderation with his post requiring review, never was banned.

Hi guys.

Moderation is theoretically right, but in practice it was different: I was open-endedly banned from writing PMs and all public posts were moderation-queued, of which most (very benign messages) never did appear on the forum - I wrote tons more than appeared - at least not within a period of several days I kept track. Effectively it was an open-ended ban, at least in practice if not in theory. When you consider the effort i used to put into my messages, it got kind of wasted effort very fast.

It was probably a bit more difficult than a normal timed ban. It was open-ended and you never knew if the messages would get through or not. Also, just to clarify, my account was put on moderation by a moderator, for no particular reason I know of - there was a vague email of reports and it happened during the time when a record number of people were banned or moderated on TMC. Continuing the conversation was difficult in that sense as well, because there was no specific point to avoid.

A few messages did get through. Since all moderated messages appear inside old threads, not as the latest, they probably didn't get read by many anyway - so it was kind of pointless to continue writing messages that may or may not appear several days later inside old pages of threads that few people read, as the conversation has moved on. This continued at least until early 2016 and then I lost track of it. Just wanted to set the record straight to those who asked, no need to dwell on it further.

Peace. -AR

 

[Electroman]

- I wrote tons more than appeared - at least not within a period of several days I kept track. Effec

There you go. That's your problem

 

[Krugerrand]

I see nothing has changed.

 

[AnxietyRanger]

There you go. That's your problem

I see nothing has changed.

Thank you, mkjayakumar. I am the first to admit the longevity of my posting style is characteristic as it can be irritating. I doubt it had much to do with anything in this scenario, though, but that is water under the bridge.

Krugerrand, I would have been surprised to say this a year ago, I missed you - and all you guys. In all seriousness. After a year of doing so much else than hanging around here, it is surprising how nostalgic one can feel popping back a bit. So, good to virtually see you.