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Steve Funk  

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  • How Tesla's Business Model Blows Away Its Peers [View article]
    You leave so much out of your twisted Ford historical summary. You don't bother with a conclusion. Let me help draw some more parallels.

    Like Elon, Ford was a supreme salesman. Like Elon, Ford was a tireless worker and learned the fine art of financing without losing his company. Like Elon, Ford did not have any formal engineering education but insisted on guiding product design with an iron hand. That firm control on product development caused him to sell the Model T until sales began to collapse. In his eccentricity he closed the company for a year to come up with a new home run product. That strategic blunder allowed GM to come from a fraction of Ford sales to surpass Ford. Ford never regained the sales lead.

    Remember that the first three Ford companies failed. That is the probability of these large companies. Plain and simple Tesla's probability of surviving in its current form are slim indeed. If you want to bet on a long shot and watch an exciting business story, go for it. But to state with some certainty that Tesla will follow a Ford trajectory does not acknowledge all events 100 years ago or the politics of the current mature market.
    Nov 17, 2015. 11:05 AM | 3 Likes Like |Link to Comment
  • Why Tesla Will Fall Far Short Of Elon Musk's Model X Delivery Forecast [View article]
    Good article. Logical with solid analysis.

    One area I might give Mr. Musk an advantage and that is selling the vehicles. You seem to think there is a high probability that Tesla will have trouble selling all the vehicles produced. They will still be selling a relatively small number of vehicles into the world market. If there is one thing Mr. Musk can do, it is selling. One thing he seems to struggle with is making things. Manufacturing will be the constraining factor for 2016.
    Nov 12, 2015. 09:22 PM | 2 Likes Like |Link to Comment
  • Tesla's Next Growth Avenue: India [View article]

    Wikipedia lists the Model T with 14 factories worldwide and five years of 1 million plus production. A sixth production year was just under at 940,000.

    "The Ford Model T was the first automobile built by various countries simultaneously since they were being produced in Walkerville, Canada and in Trafford Park, Greater Manchester, England starting in 1911 and were later assembled in Germany, Argentina,[46] France, Spain, Denmark, Norway, Belgium, Brazil, Mexico, and Japan, as well as several locations throughout the US."

    So in today's dollars an assembly plant will run you USD 2-2.5 Billion. If Mr. Musk can scrounge up $28 billion next year he may approach Mr. Ford's accomplishment by 2020. I would not hold your breath.
    Nov 10, 2015. 03:04 PM | 2 Likes Like |Link to Comment
  • How Tesla's Business Model Blows Away Its Peers [View article]
    "Bob Lutz is as up to date as the fossil fuels his cars run on. "

    You do realize that Bob Lutz initiated the Volt program, don't you?
    Nov 10, 2015. 12:53 PM | Likes Like |Link to Comment
  • How Tesla's Business Model Blows Away Its Peers [View article]
    Two points to counter your thesis:
    1) Bob Lutz just penned an article in November Road & Track (maybe it was Car & Driver?) stating that he thought the Tesla venture was unravelling. A big part of the reason he gave was the inability of (all) car companies to completely control the channel.
    2) Checkout CarMax (KMX). It looks like they made about 4% on sales in 2014 FY. That will not help Tesla get where they need to go. The dealer part of the business will be a drag on earnings and difficult to manage. How do you set an used car price in Fargo while sitting in Fremont?
    Nov 9, 2015. 07:20 PM | 3 Likes Like |Link to Comment
  • Tesla's Next Growth Avenue: India [View article]
    Ford had plants in every major country in the world by the time the company was as old as Tesla. Ford had developed process secrets that Tesla does not have. Henry was worth $300B in today's dollars. Tesla is definitely not on track to be the next Ford story.
    Nov 9, 2015. 06:34 PM | 8 Likes Like |Link to Comment
  • Tesla Gives Us Further Information As The Bulls Strike At Strawmen [View article]
    The reports I have seen criticize the CO2 emissions estimate. The CO2 output is directly proportional to EPA mileage estimates and cars rarely achieve their estimates. Everyone knows these estimates do not reflect real driving and no rules are broken. Problem is worse in Europe due to different test protocols.
    Nov 5, 2015. 05:37 PM | 1 Like Like |Link to Comment
  • Tesla Gives Us Further Information As The Bulls Strike At Strawmen [View article]
    Johnson Controls and Lear provide a huge percentage of the seats in the US. Sounds like the rear seats are complex and suplliers may have wanted top dollar for low volume odd ball assembly line. Shipping of bulky seats would come from midwest. Tesla may wish they had not brought so many operations into Fremont when the Model III line is installed.
    Nov 5, 2015. 05:29 PM | 3 Likes Like |Link to Comment
  • Here's My Prediction For Tesla's 2015 Deliveries And More On Model X Foibles [View article]
    "We don't know ..... who controls it"

    "We" have a pretty good idea. I have searched Google Patents many times for battery chemistry and Tesla simply has not filed any patents. What you do come up with are many patents for pack construction, pack cooling and heating, algorithms to control power in the pack and between batteries, mechanical details of pack and cell construction, pyrotechnic lead disconnects. In short Tesla has spent most of their time becoming very expert at battery pack design and associated controls. That is clearly Tesla's forte. Panasonic owns chemistry IP.
    Nov 4, 2015. 11:13 PM | 5 Likes Like |Link to Comment
  • Tesla Motors keeps LG Chem in the mix [View news story]
    Check out the Gigafactory agreement attached to the 10K, it was either Q2 or Q3 2014. Tesla only has to fund the building shell. Tesla will move pack assembly to Nevada and will assume those costs and management responsibilities. Panasonic will provide all tooling, personnel and management for cell manufacture for the Model 3. Since the Model 3 is obviously delayed Panasonic will not install equipment until the Model 3 production is close. Power wall will probably help meet volume commitments.

    Putting the capex on suppliers is common in the auto industry. The supplier gets their investment back through higher prices. That is why I do not believe pack cost savings will be as great as many believe. Panasonic will get the cost savings.
    Oct 28, 2015. 04:30 PM | 3 Likes Like |Link to Comment
  • Tesla: More Musings On Model S Reliability [View article]
    Check statements by Tesla and Elon Musk. It sounds like there are very nearly the same number of components. And, obviously, that is counting the 7,000 cell pack as a small number of components. There is a large support system for the battery pack, motor controls, regeneration controls, and pack heating and cooling. The Tesla advantage is not going to be from reliability or manufacturing cost. I am not saying reliability or manufacturing cost are bad, because I just can't find enough "real" data.

    For sales of luxury cars neither reliability nor manufacturing cost is going to kill the company. A decade and more ago BMW had much worse reliability than Cadillac and Mercedes had poor manufacturing costs. Both have have passed Cadillac in spite of those short comings.

    It is marketing and control of capex in a downturn (and a downturn will come) that will make or break Tesla.
    Oct 16, 2015. 03:57 PM | 1 Like Like |Link to Comment
  • Tesla: More Musings On Model S Reliability [View article]
    "20 improvements to Model S EVERY WEEK"

    Classic case of meaningless numbers. What kind of improvements? Is that different than what any other car builder does? Probably not, but I forgot that Tesla does not have to compare itself to others to know where it is at technologically.

    Here is the thing. There are four thousand parts on a car. That means that Tesla changes 0.5% of the parts per week, or roughly 25%/ year. There are probably three or four sets of tires offered on the Model S. Tire models are often updated during the model year so there you have 16 part number changes, maybe 32. Many changes are driven by manufacturing needs. These changes do not imply an improved vehicle. Just part of the auto business.

    From an investment standpoint, the more important point from your article is that Tesla has an awesome marketing machine. They routinely take normal facts about the auto industry and advertise them as advantages. The metrics of the auto industry are amazing so there is no shortage of material to work with. I think that marketing and advertising is Elon Musk's true talent and Tesla's most important competitive advantage.
    Oct 16, 2015. 01:19 PM | 1 Like Like |Link to Comment
  • Tesla: More Musings On Model S Reliability [View article]
    "They can improve based on their own data"
    Really Peter, can you share with us how you have such industry insight? It does not seem that you have worked in the industry.

    To an extent some processes can be improved in a vacuum. How do you know when it is "good enough"? There is no end to the money you can put into improving plant processes and there needs to be a mechanism for allocating scarce manufacturing engineering dollars. Sooner or later you have to ask; What are others doing?

    The other good reason to share quality data can be illustrated by the Takata air bag incident and recall. Not all air bags had the problem. It turned out that salt air had an adverse impact and by sorting data by region and pooling ALL cars with the Takata air bag you would be able to more quickly determine root causes, circumstances, etc.
    Oct 14, 2015. 08:29 PM | 1 Like Like |Link to Comment
  • Tesla: More Musings On Model S Reliability [View article]
    "Steve claims we should trust self-reporting of the auto manufacturers"

    You don't get to see the industry data. It is restricted to members only. There are some summary reports that are released to the media with "winners" in certain categories, but those summaries are not very meaningful either. The data is not for you or the public. JD Powers produces statistically valid information that the industry uses to compare themselves to each other and work on improving their processes. It is very sensitive data that is guarded on the inside. Anyone who has access to JD Powers data and revealed it on this site (other than the official PR Releases) would be fired.

    Since the datasets are only shared among the "club" members, they would only be screwing up the quality data that they themselves use to improve production processes.

    Not sure why Tesla does not belong to the club. Could be they want to keep quality data a trade secret for now. It is also expensive and a chore for the IT department. Since Tesla does not have dealerships it is probably harder to collect detailed warranty data. Dealerships are mandated to enter exact repairs and part numbers in order to get warranty reimbursed.
    Oct 14, 2015. 03:07 PM | Likes Like |Link to Comment
  • Tesla: More Musings On Model S Reliability [View article]
    "CR's data is skewed in the opposite direction from what bears hope"

    As soon as you make assumptions in statistics you will likely be wrong. The only valid reliability statistics that I know of are from JD Powers. Perhaps there is a competitor now, but I doubt it. All the major manufacturers belong to the Powers "club" and they submit actual warranty data. The quarterly reports, printed, are three inches thick. Unless you break it down to that level with data coming directly from the field you cannot begin to have valid statistics. All you have is wild speculation which is what you have here on SA. Consumers Reports are well known in the Auto Quality field to be invalid. They are not privvy to JD Powers data so they create their own. To the extent that extrapolated data gives comfort to some buyers, good for them. That does not make their data statistically valid. And it is a big assumption on your part to assume that the CR data is consistently skewed one way. It most likely is not but since CR methods are private no one will ever know.
    Oct 14, 2015. 02:05 PM | Likes Like |Link to Comment