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Model S article in September 2012 Car and Driver

See http://www.caranddriver.com/reviews/2013-tesla-model-s-reviews

Definitely not a gushing review, but they appreciate the handling: "The Tesla is a double-bacon porker, but what it does with the pounds makes it magical. Somewhere, Colin Chapman is nodding."

Maybe some native speaker can translate?

"The [...] model we drove [...] strained its leash with its prodigious electric muscles and flat-tracked through 80-mph sweepers directed by fast steering with piano-wire tension to the wheels."

Huh?! I'm lost. Is this meant to be positive or negative?

@Volker.Berlin, it's positive.
"strained its leash" = metaphor for a dog pulling hard on its leash trying to break away from its master
"flat-tracked through 80-mph sweepers" = stayed flat through 80-mph turns
"piano-wire tension to the wheels" = tightly responsive steering

Nice, thanks! :-)

Original:
"The [...] model we drove [...] strained its leash with its prodigious electric muscles and flat-tracked through 80-mph sweepers directed by fast steering with piano-wire tension to the wheels."

Translation not trying to be clever:
"The model we drove responded well, acting as if it has more power at the ready. When taking curves at 80-mph, we didn't observe much body roll at all. Indeed, the steering was responsive and the cornering was crisp."

@brianman. I preferred you're wording of the statement.

"Though it may seem expensive, the more-made-in-America-than-most-“American”-cars Model S can’t possibly turn a profit at its price, given all that is clean-sheet new and novel about it—at least, not until Tesla has closed out a few Decembers at or near its 20,000-per-year sales goal, which, given the cruel history of the auto industry, may be never.

Various investors, from Toyota to ­Daimler (which supplies a Benz steering ­column to the Model S) to Uncle Sam—with its $465 million in loans—to Tesla’s shareholders on Wall Street, have all bet money and material that Tesla won’t flame out like Solyndra. Without them, there would be no Model S. And unless the car succeeds, there may be no more investors."

Elon would beg to differ. He claims TM is break-even at 8,000 Model Ses per annum. I think C&D underestimates the benefits of all that vertical integration. In a sense, TM "captures" every profit margin on every part it doesn't have to purchase. That adds up and multiplies fast.

Brian H, the part you quoted is the complete BS part of that article, IMO. They don't find any reason why the Model S should fail (or at least they don't name a single one), but conclude that, oh dear, WHAT IF IT FAILS?! Bullocks.

hmm... If the margin really is 25% and average car price is somewhere close to $80k then that's $20k * 8000 = 160 million. That means running costs are about that and they turn profitable, but it doesn't mean they can pay back all the loans with that few cars.

Tesla is not completely out of danger zone before it has sold a lot more than just 8000 cars, and that might take more than couple of years. I think Tesla "proof" of survival comes with GenIII, profitable it turns with Model S in next year, but unless reservations don't start to build up quite a bit faster than they do now it isn't enough.

Timo, I agree. I didn't say Tesla is out of danger zone. It isn't and it cannot be at this stage. That's just inherent to what Tesla tries to achieve. All I'm saying is that in those paragraphs of the article there is no argument at all, just fluffy hand-waiving panic-inspiring empty phrases.

In other words, they had to find something bad to say and they couldn't find anything bad about the car.

jerry3, that's my interpretation, exactly.

@BrianH One item I have to point out. Solyndra had government money too so that part of your argument doesn't hold water. I agree with the rest of your post.

Don't forget, Car & Driver has strong ties with the ICE industry from which they get numerous advertising and trip favors. From Tesla they got nothing except an invitation to a 10 minutes test drive.

Therefore their mixed review is understandable.

@Timo - Tesla is about to start paying back the US Gov loan, even though they still have much that they can draw down on. Elon has repeatedly stated they will generate >25% margins - this is a hard commitment to the market to support the share price

Solyndra failed because the price of thin-film PV dropped dramatically during the time their plant was built. The price dropped because China is able to produce PV much cheaper. This is due to heavy Chinese govt. Investment (much more than US) and cheaper labor cost resulting from Bejing keeping a lid on the value of the Yuan. So, more heavy subsidization on many fronts by the Chinese govt. caused Solyndra to fail. This will not happen in the near future to Tesla because no Chinese auto companies will be able to produce a good QUALITY luxury EV at a cheaper price anytime soon. Emphasis on quality.

@nickjhowe, 8000 cars is break-even. That means they need to have at least that annually before they can survive. Current buildup of reservations is not enough, that ~15k what we have now has been building up in about two years which means they barely get to break-even. That's where the danger hides. If the reservations start to build up faster (which I believe it will) then they survive. OTOH it could be that potential market gets saturated by Model S and reservation rate goes down after just few thousand cars.

We will know in next two years if Tesla timing is correct. That's what this is, a timing issue. A bit lower price tag with same margin and same tech would be guaranteed success, and we can get that in next few years (battery development). Only question here is does Tesla survive to that point. I believe and hope they do, but I also realize that it isn't sure thing yet. It's gamble with huge reward if you succeed.

But many of the reservations were more recent which is a good sign, Also no one has seen these on the road. Once they are out in the wild orders should ramp up even more.

I also think there is risk because people are reserving these right now with few actually facts. We are just discovering them now. All the answered questions so far have been good ones. Many people are stretching their budget to get the car and may differ or cancel if some bit of information is not in their favor.
The Punch List thread lists them for the most part.

@Theresa | August 10, 2012
@BrianH One item I have to point out. Solyndra had government money too so that part of your argument doesn't hold water. I agree with the rest of your post.

Solyndra was running a (real-world) negative profit margin. My argument holds up just fine.

Timo | August 10, 2012
hmm... If the margin really is 25% and average car price is somewhere close to $80k then that's $20k * 8000 = 160 million. That means running costs are about that and they turn profitable, but it doesn't mean they can pay back all the loans with that few cars.
.
Tesla is not completely out of danger zone before it has sold a lot more than just 8000 cars, and that might take more than couple of years. I think Tesla "proof" of survival comes with GenIII, profitable it turns with Model S in next year, but unless reservations don't start to build up quite a bit faster than they do now it isn't enough.

"Profitable" has various definitions, but the minimum is covering production and overheads plus 1¢. If the retiring of long-term debt is (as usual) included in overheads, then perhaps he does include loan retirement in that figure. (I don't know the repayment term, etc., so can't comment.)
--
Timo: @nickjhowe, 8000 cars is break-even. That means they need to have at least that annually before they can survive. Current buildup of reservations is not enough, that ~15k what we have now has been building up in about two years which means they barely get to break-even.

There are about 2,500 new reservations since the end of June. That extrapolates to a rate of about 25K/annum. The release of actual hardware into the wild, and the flood of stellar reviews, is evidently sufficient to boost demand to more than adequate levels. "Production-limited sales" is the reality.


electricblue0303 | August 10, 2012
Solyndra failed because the price of thin-film PV dropped dramatically during the time their plant was built. The price dropped because China is able to produce PV much cheaper. This is due to heavy Chinese govt. Investment (much more than US) and cheaper labor cost resulting from Bejing keeping a lid on the value of the Yuan. So, more heavy subsidization on many fronts by the Chinese govt. caused Solyndra to fail. This will not happen in the near future to Tesla because no Chinese auto companies will be able to produce a good QUALITY luxury EV at a cheaper price anytime soon. Emphasis on quality.

Don't blame the Chinese. Solyndra's innovation (tubular PVs, etc.) was never going to be the latest-greatest-cheapest long enough to capture much market. And the management and investors skimmed/ripped off the loan money shamelessly. It was pixie dust dreams or deception from the get-go. The real difference with Tesla, and why TM is likely to be the ONLY stellar success of the Green Gusher from the gubmint, is Elon Musk, and his all-in commitment, rigid cost constraints, and ethics. Solyndra had none of those.

Sudre_ | August 11, 2012
I also think there is risk because people are reserving these right now with few actually actual facts. We are just discovering them now. All the answered questions' answers so far have been good ones. Many people are stretching their budget to get the car and may differ defer or cancel if some bit of information is not in their favor.

Hence the neurotic focus of TM on up-front first-deliveries quality control. Dissatisfaction based on matters of taste are GB's concerns, but Elon is focussed on execution: given the design decisions made, NO F-UPS! Ounces of prevention rather than pounds or tons of cure.

Michael Emrich | August 10, 2012
Don't forget, Car & Driver has strong ties with the ICE industry from which they get numerous advertising and trip favors. From Tesla they got nothing except an invitation to a 10 minutes test drive.
.
Therefore their mixed review is understandable.

"...after a walk through the factory, a visit to a dealer showroom, and an hour-and-a-half spent driving the car on a mix of roads, my eyes are wide and my jaw has dropped.

Not 10 minutes, 90. And a jaw-dropped "mixed" review? Heh.

Note that habit made him call the Tesla store a "dealer showroom". One more datum than his effort to focus on the new paradigm could absorb? ;)

P.S. to all: a wee TM Forum formatting trick. To make the tags "persist" across a paragraph break, put a period in the empty line. See above.

:)

typo above: close quote at "...has dropped."

Timo wrote:

"hmm... If the margin really is 25% and average car price is somewhere close to $80k then that's $20k * 8000 = 160 million. That means running costs are about that and they turn profitable, but it doesn't mean they can pay back all the loans with that few cars."

If he meant that 8000 Model S per year alone would make them profitable, then building drivetrains for other companies would add to the profit.

But, they plan to add the Model X. How much will adding the X cost?

ItsNot;
There is a static or existing "new product design" team or capacity at Tesla, whose focus will evolve over the years. So maybe not too much more there. The existing line can be reprogrammed and run on other shifts, so that's not too bad. And much of the S-lore will carry over directly.
So Elon doesn't expect the X to cost anything near what the S did to create and start building. But numbers are still pretty hard to come by.
I expect that he plans to have the income from 20,000+ S sales per annum to draw on, not just the bare-survival 8K-volume revenue.

@Brian H

However, there are reasons for at least temporary optimism for Tesla. We only got 10 minutes in the car so we couldn't test its range

This is from the Car&Driver article, the 90 minutes you are referring to is from the MotorTrend article

Besides, the C&D artice says model S has "AC permanent-magnet synchronous electric motor" and if they can't get that right, why would anyone take them seriously

Of the 15 000 reservations elon is talking about, 10 000 were made before the deliveries in june. Those are all people that went and saw the alpha and the beta vehicles, shareholders, roadster owners. So 5000 new reservations in 2 months. And this is without ANY advertisement, with only a few stores opened in the US with model S on display, and none in Europe. There is a huge potential for growth when deliveries start coming and people know that they can order a car and have it delivered in 2-3 months. This will happen sometime in Q3 of 2013, when they have worked through the reservations, and start production of the smaller battery packs.

Vall,

Agreed. The only thing I can think of that would derail Tesla is if there was some major problem with the Model S in the first 5000 cars. I don't believe this is likely to happen.

Vall, I agree. The first 5000 cars on the road will determine Tesla's future. If they perform as expected we have a winner. Problems either technical or operator based will cause real problems.

Vall | August 12, 2012
...
There is a huge potential for growth when deliveries start coming and people know that they can order a car and have it delivered in 2-3 months. This will happen sometime in Q3 of 2013, when they have worked through the reservations, and start production of the smaller battery packs.

I don't know if they'll get there that fast. I anticipate at least 20K more reservations between now and then (maybe 30K). But total deliveries would have been only 5K + 10K or so. So current 10K res + 20K more = 30K res, less 15K deliveries = 15K backlog. Assuming 5K/quarter production, that's 3 quarters, 9 months. Even if TM, per Elon's hopes, gets up to 30K/annum rates, that's 5K + 15K delivered, leaving 10K backlog, 2 quarters.

So keep your eyes on the res-rate. Since June, it's running at 24K/yr. or so.

Correction, 10/7.5 = 1 1/3 quarters, or 4 months. So that's closer.

Place yore bets, ladies and germs!


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