from Hacker News

Tesla Q2 2019 Letter

by quico on 7/24/19, 8:48 PM with 182 comments

• by jtchang on 7/24/19, 10:09 PM

  Being able to test your code out in the real world and dark launch a feature gives Tesla a ridiculous advantage. No other company has the infrastructure to be able to do that. Plus they can even tell if the decision the neural net made was wrong because I assume even Tesla knows you got into an accident. And this over thousands of cars. The speed at which they are collecting data is unprecedented.

• by flyGuyOnTheSly on 7/24/19, 9:02 PM

  Judging by the nosedive that the stock price is taking in after hours trading (down over 12% from $264.88 at close an hour ago to $236 right now), the outlook of this letter isn't great.

• by nisten on 7/24/19, 11:10 PM

  In 2017 Intel acquired mobileye( the makers of the autopilot radar in the early Teslas), for 15.3 Billion. That begs the question, if Tesla were to sell their autopilot system tomorrow, , given it's safety record, amount of training data, and new FPGA processor IP, how much would it be worth? 15, 20, 40?

  This is why I find their delivery numbers completely and utterly irrelevant to company value. This is a just a technology company that has produced a great user experience and is now scaling it.

  Their main bottleneck is battery production and they're very competitive at it.

  If the bottleneck was auto-manufacturing they would have no trouble raising enough investment to just buy out a car company.

• by boldslogan on 7/24/19, 9:17 PM

  anyone care to talk about this part "This feature is currently operating in “shadow mode” in the fleet, which compares our software algorithm to real-world driver behavior across tens of millions of instances around the world."

  that seems very juicy?

  edit: it seems people put a disclaimer on their ownership of tesla stock on hn about tesla threads. i dont own any.

• by danhak on 7/24/19, 9:17 PM

  Looks like the cash situation is finally under control.

  They generated over $600 million in FCF in Q2. Compare this to only $200 million by Ford over the same period, also announced today: https://s22.q4cdn.com/857684434/files/doc_financials/2019/q2...

• by Animats on 7/24/19, 10:59 PM

  "GAAP net loss of $408M" - the number that matters.

  Tesla isn't doing that badly. But now that they have some production volume, they have to be evaluated as a car company, not a startup. Can they make lots of cars at a profit? They got the production quantity up by throwing people, money, and a big tent at the Fremont plant. That ran up the cost per car. Although it's better than their previous state of low production with a full staff. Can they get to a smooth running production plant with labor hours per car comparable to Detroit? (About 30-50 labor hours per car is typical in the industry.)

  "Model 3 average selling price was stable at approximately $50,000."

  That's nice, but the Model 3 was supposed to be $35,000. Tesla has caught up with their backlog, and you can now buy a Tesla Model 3 off the lot, just like regular car dealers.[1] That's good; they're now like a normal car company. But it also means they've saturated the market at their high price point, which is about where BMW is.

  They're also at the point where all their models need a refresh or a replacement. Tesla is slow at new models compared to the competition.

  [1] https://www.extremetech.com/extreme/289911-what-shortage-tes...

• by jaimex2 on 7/24/19, 10:58 PM

  Looking healthy to move along for Chinese factory, Model Y and pickup truck later this year.

  I like that they don't stop moving even if it scares a few investors with heavy capex spending on their next products.

• by Despegar on 7/24/19, 9:21 PM

  Tesla's stock has massively under-performed over the past 5 years (will be up 8% over that period if the after hours price action holds). The opportunity cost of owning it has been huge while the rest of the market ripped up.

• by justapassenger on 7/24/19, 11:02 PM

  Most recent story of Tesla's profitability was built around Musk's manufacturing innovations, that will make Model 3 much cheaper to produce. Experts disagreed, got fired, and alien dreadnought continued. It was such a huge failure, that to this day, portion of Model 3 production is happening a tent. With forklifts, leaking roof and space-heaters.

  Tesla now has new profitability story - Musk's innovations in FSD, will make them a lot of money, and make cars appreciating assets. Experts disagreed, got fired, and FSD continues. Wonder how will that end?

• by mettamage on 7/25/19, 8:05 AM

  So can someone explain to my why the Tesla stock made a nose dive to about $170 and is now almost back to where it was 3 months ago?

  I don't understand how such huge volatility could happen assuming that the efficient market hypothesis is real.

• by eanzenberg on 7/24/19, 10:00 PM

  Sidenote: I can't stand the ipad in the middle of Tesla cars (and other carmakers who choose this path). I got a BMW because of the sheer usefulness of physical buttons while driving / keeping eyes on the road.

• by ianlevesque on 7/24/19, 9:14 PM

  They jumped the shark with the Model 3, and I really wanted to like it.

• by HereBeBeasties on 7/24/19, 9:54 PM

  They've achieved a 0.5% increase in production volume in Q2, compared to Q4 2018, to 87,084 vehicles. I'd hardly call that "rapid progress". For comparison, Toyota make around 2.2 million vehicles per quarter.

  A more reasonable brand comparison might be Mercedes-Benz Cars, which made 575,639 vehicles in Q2. It's quite impressive that Tesla have got to about 15% the volume that Merc do, but they're hardly going to take over the world with that kind of growth rate.

  IMO they should stop chasing volume sales of lower cost vehicles and concentrate on premium vehicles with higher margins. What's the point of killing themselves trying to lift production numbers to try to make all the analysts who seem to be obsessed with that happy, which doesn't yet seem to be working, if the margins aren't worth bothering? It won't end well.

• by WheelsAtLarge on 7/24/19, 10:13 PM

  I know at least one person that's decided not to buy a Tesla simply because their future is so murky and is not sure if they will be around for repairs. That's a problem they need to tackle now before it spirals out of control.

  Also, it seems to me that Tesla should work with one of the big three automakers on manufacturing. Tesla has spent a lot of resources reinventing car manufacturing and yet they can't produce a vehicle that meets their needs. They need to focus on the high tech aspects and leave the mundane manufacturing to experts.

  At the very least, Musk should trust his manufacturing experts on how to produce a car rather than try to make every decision by himself. He's a great marketer and should focus on that role and leave the rest to the experts.

  Too bad they can't lower the cost of batteries enough. If they did that, they could lower the price of the car to a point where it would be a no brainer to buy one.

• by techntoke on 7/24/19, 9:05 PM

  Here's to hoping that they hire some creative talent to help make letters that don't look like they are from the 90's.