Archive for the ‘General’ Category

 

May 05

Tesla Sets Aggressive Production Goal of 500,000 Units Annually By 2018

 

The conference call is also interesting.

tesla-model-3-official-668x409-668x409

After last month’s deluge of almost 400,000 Model 3 reservations, Tesla chief Elon Musk had tweeted the company would have to revise production plans, and this it has done.

As disclosed in its shareholder letter today highlighting first quarter earnings and overall progress, Tesla is stretching to achieve 500,000 annual units produced in 2018. The goal which was originally slated for 2020 already had analysts and some armchair pundits alike with eyebrows raised. Last year the company sold just around 52,000 units worldwide meaning it wanted to grow almost 10 times in five years, and now it says it will do it two years sooner.

Musk said in a conference call with investors that his “best guess” for production by 2020 could be as much as one million vehicles in the year which is an effective doubling of Tesla’s previous forecast.

In making the news, Tesla’s letter signed by Elon Musk, Chairman & CEO, and Jason Wheeler, Chief Financial Officer, reiterated the 215-mile-plus range Model 3 will launch for $35,000 by late 2017, and the 500,000 unit production goal includes Model S, Model X, and Model 3.

“Given the demand for Model 3, we have decided to advance our 500,000 total unit build plan (combined for Model S, Model X, and Model 3) to 2018, two years earlier than previously planned,” said the letter. “Increasing production five fold over the next two years will be challenging and will likely require some additional capital, but this is our goal and we will be working hard to achieve it.”

The “five fold” increase is a rounding of an estimated production as high as 90,000 this year.

Model-X-668x4091-668x40912-668x409

What Tesla is reaching for comes amidst results that financial analysts are interpreting either bullishly or bearishly, as has been par for the course for the company that in one way or another keeps everyone guessing.

“Increasing volume to a half million a year (at an individual plant) is obviously a large task for any automaker and particularly difficult for an automaker that lacks experience in volume production,” said Michigan-based automotive analyst Alan Baum. “That said, Tesla has learned from its experience in production of the Model S and Model X and has already begun preparations for volume production of the Model 3. Moving the target forward from 2020 to 2018 is particularly challenging and will require huge efforts from Tesla and its supply chain.”

For its part, Tesla has acknowledged the challenge, and says it “will be holding both ourselves and our suppliers accountable to be ready for volume production.” On the immediate horizon, it says demand for existing product and production capacity is increasing.

“In Q1, we reached a new quarterly production record of 15,510 vehicles, up 10 percent from Q4,” said the company. “Q1 Model S production of 12,851 vehicles met plan, but Model X production of 2,659 vehicles was insufficient to meet our projected level of deliveries.”

That is a polite way of saying it has had issues with the Model X. By its own reckoning it will need to accelerate from the 15,510 record production this quarter to meet its previously set goal – reiterated yesterday – of 80,000-90,000 units for 2016. Citing broad global orders increased by 45 percent for the Model S as well Model X demand, Tesla says it is up for the challenge.

“The growth in Model S orders and the Model X reservation conversion rate support our plan of 80,000 to 90,000 deliveries in 2016,” said the company.

Two Executives Leaving

Tesla confirmed two key executives are leaving as Model X production is ramping up, and the company is preparing for Model 3.

These are Greg Reichow, vice president of production, and Josh Ensign, vice president of manufacturing.

modelkx

The automaker said Reichow was taking a leave of absence “so that he can have a well-earned break” and would remain at Tesla “as long as necessary until his successor is on board.”

No comment was offered on Reichow, and Tesla’s commentary contradicts a source cited by Bloomberg that the executives are leaving because of production delays and glitches, along with a recall that has plagued the company’s Model X crossover.

Stock Surges

The news of the executives’ departures contributed to a 4.2 percent decline in Tesla’s stock price, but the earnings report at the end of the business day in turn sent TSLA upward in after hours trading.

An hour-and-a-half after the 5:30 Eastern time news, TSLA is up 3.34 percent, and indeed it has been a reactive stock. Its 52-week high was $286.65, and its 52-week low was $141.05.

Financials

Tesla, which likes to report its numbers in both GAAP (generally accepted accounting principles) and non-GAAP terms beat analysts’ expectations slightly by non-GAAP reckoning,

By GAAP reckoning, Tesla’s first-quarter was $282.3 million, compared to $154.2 million lost one year prior. By non-GAAP, the first quarter loss was $75.3 million, or 57 cents a share.

Tesla Reports Good News

By its own reckoning, investors and consumers have reason to stay confident in the growing company.

“With Model 3, our mission of accelerating the transition to sustainable transportation is more achievable than ever,” said the company citing what it accounts as $14 billion in future sales based on 325,000 reservations in the first week of its revealing despite no advertising or paid endorsements.

As for Model S demand, this has grown prior to updates making it better than ever, Tesla says.

newmodels

“We introduced the Model S refresh in April, with the largest single set of hardware changes (nearly 300 part changes in total) on Model S to date,” said Tesla. “Updates include an enhanced look for the front of the car, adaptive headlights, faster charging and more range, all for a minimal price increase. Air quality inside the car is just as important as it is outside, so we added the same HEPA air filtration system that Model X has. Now all of our new Model S and Model X customers can have access to Bioweapon Defense mode.”

The Model X has faced more challenges with Tesla forums, such as the Tesla Motors Club, filled with early owner accounts of numerous quality issues.

Owners have posted photos and detailed anecdotes of trials faced, often praising the level of service they get at service centers, but citing fit and finish issues, software glitches, and more for the crossover.

Tesla is aware of issues, and has sought to make good. Its warranty repair expenditures according to an analysis by Reuters has been higher than other automakers, but owners generally pleased with the company have been known to often look with forbearance on teething issues.

On a conference call yesterday with investors, Musk said he wants Tesla to become the world’s best manufacturer, and issued an open invite for the world’s best talent to join Tesla.

Otherwise, Tesla’s letter says the plan with the Model X is onward and upward.

“With respect to Model X, greater production has led to greater availability,” said the company. “In April, we launched online Model X configuration in North America and began to deploy Model X to many of our stores in the United States. Model X will be in the rest of our stores by year end.”

In anticipation also of the accelerated growth plans, Tesla says its service and sales presence is growing alongside its Supercharger station network.

Tesla_service-center-668x408

“To support the rapidly growing fleet of Tesla vehicles, we continue to expand our network of sales, service, and Superchargers worldwide,” said the company. “We remain on plan to open more than 70 additional retail and service locations in 2016, to bring our total to nearly 300 locations. We also energized 29 Supercharger locations and 311 Destination charging locations during Q1, bringing our total away- from-home charging locations to almost 615 and 2,200, respectively. Global Supercharger and Destination connectors now total over 3,600 and 3,700, respectively.”

Also an energy company, Tesla says it’s making progress on filling early reports of tens of thousands of Powerwall reservations.

“Tesla Energy posted strong growth in the quarter as well. During Q1, we delivered over 25 MWh of energy storage to customers in four continents,” says the company. “We delivered over 2,500 Powerwalls and nearly 100 Powerpacks in the quarter throughout North America, Asia, Europe and Africa.”

Looking Ahead

Next quarter, Tesla projects about 20,000 vehicles will be produced with most of these delivered in the quarter, but some spilling over into Q3.

“Due to a large number of vehicles in transit to customers in Europe and Asia at end of quarter, Q2 deliveries are expected to be approximately 17,000 vehicles,” said Tesla.

As for the big picture – the stretch goal of a half-million cars produced in 2018 – Tesla says as it accelerates Model 3 development after mid-2016, operating expenses should increase pushing non-GAAP operating expenses up for the entire year by about 20- 25 percent.

tesla-model-3-668x403

And, just to keep the analysts guessing, the aggressive target will tax cash flow and profitability further, says Tesla.

“Given our plans to advance our 500,000 total unit build plan, essentially doubling the prior growth plan, we are re-evaluating our level of capital expenditures, but expect it will be about 50 -percent higher than our previous guidance of $1.5 billion for 2016,” says the company. “Naturally, this will impact our ability to be net cash flow positive for the year, but given the demand for Model 3, investing to meet that demand is the best long-term decision for Tesla.”

The company said also it will need extra capital to open the Gigafactory earlier than originally planned, with the first cells coming in Q4 this year.

The Model 3 represents a goal the company’s original founders set more than a decade ago to “advance the world’s transition to sustainable transportation.”

Its $35,000 reported entry price may go to an average selling price of $42,000 said Musk. This, he says could be affordable for half of new car shoppers.

He has hinted beyond this an even lower priced car is also being planned, but next to no information has been revealed about that.

Shareholder letter

This article appears also at HybridCars.com

 

May 04

Volt sees mild increase in April sales

 

The Volt has basically been holding to the sub-2,000 sales level thus far.

By Tim Healey
2016-Chevrolet-Volt-010-2-668x409-668x409-668x409-668x409

The Chevrolet Volt sales saw sales in April of 1,983 units representing a mild uptick from 1,865 units in March.

April 2016’s 1,983 units furthermore is 119 percent over the 905 units sold in the same month last year. For the first four months of 2016 the Volt is up 115 percent, with 5,970 units sold, as compared to 2,779 in the first four months of 2015.

Comparing year-over-year sales, the Volt is indeed doing relatively well, but a couple qualifiers are in order. Last year it was selling relatively fewer per month, finished the year with 15,393 sales, and this was less than its strongest years of 2012 and 2013 which saw sales of 23,000 and some each year.

Sales in 2012/2013 averaged close to 2,000 sales per month, which is where the Volt has been trending the past few months, though notable is this was the best April to date in the Volt’s history since 2011 model year. In April 2014, a year of 18,805 sales, it sold 1,548 – 435 fewer than April 2016’s 1,983 – and it was the former Volt’s previous-best April.

That’s a positive sign while plug-in car sales and hybrid sales are generally down, and eyes will be on whether the Volt breaks out to a new year-end high.

SEE ALSO: 1,865 Chevrolet Volt Sales In March

Why the improvement? Well, for 2016 the Volt was redesigned, and the second-generation extended-range EV offers 53 miles electric-only range compared to a former 38 miles before, as well as a total driving range of 420 miles. It also has five-passenger seating for the first time (technically, as the rear middle seat is still too small for adults) and offers Apple CarPlay. It’s also restyled.

SEE ALSO: 2016 Chevrolet Volt Review – First Drive

The all-electric Nissan Leaf – which was launched the exact same month of December 2010 – was traditionally considered the Volt’s most natural rival, despite the fact that the cars aren’t directly comparable. The Leaf is also a counterpoint, a different kind of plug-in solution, and the two represented an East meets West matchup as well.

So, if one wants to compare sales numbers, the Leaf, which is still on its first generation with at most 107 miles range for just over $35,000 less $4,000 cash back at the moment, didn’t fare as well last month. Specifically, it was down 49 percent year-over-year, with 787 units sold. Through the first four months of 2016, the Leaf was down 34 percent, with 5,638 vehicles sold through the first four months of 2015, and 3,718 sold so far in 2016.

That’s likely more of a function of the fact that the Leaf hasn’t had a major redesign or refresh yet than it is a comparison with the Volt. Either way, the Volt has had a strong 2016 to this point.

This article appears also at HybridCars.com.

 

May 03

Taxis Could Be Ideal for Bringing Self-Driving Cars to Streets

 

GM reportedly is working on self-driving cars, but we’ve seen little in the way of concrete announcements.

By Jon LeSage

Delphi-self-driving-car-668x409

With safety being the biggest concern for the viability of self-driving cars, taxis could be the ideal testing ground over the next five years.

Jeff Owens, chief technology officer and executive VP at Delphi Automotive, says that the largest barrier for self-driving cars will be legal issues. City governments can quickly adopt the legal framework for testing taxis, and its much faster than federal safety regulations.

“The first autonomous vehicles will probably be taxis,” Owens said. “That could happen in five years because the regulatory environment is a little easier. It takes between 5 and 8 years to significantly change national traffic regulation, but in cities or municipalities this change can take weeks, not years; the legal framework is much simpler if a vehicle is for hire rather than owner driven.”

Automakers are making huge strides forward in autonomous vehicle technologies, but there’s always the safety regulations and legal issues that can block finalizing the concepts into cars driven on roads. One example would be a vehicle being blocked by a cyclist in front and a double line in the middle prohibiting passing; it would require the car’s technology to make a decision that could go outside the laws.

SEE ALSO: Delphi Autonomously Crosses The U.S.

Owens thinks this challenge could be solved with powerful algorithms which would be able to peer ahead to make sure the coast is clear. “At the end of the day, technology won’t be the inhibitor, it will be the legal framework,” he said.

Owens said vehicle connectivity could be a bridge between current technologies and fully automated cars of the future. Connectivity allows cars to talk to each other and share data with algorithms playing its part.

“Vehicle control algorithms will be ready to take on all kinds of problems including that cyclist example,” Owens said. Cars like the Mercedes S class and the Audi Q7 already allow drivers to set the “auto pilot on the highway which allows hands-off driving.” The driver will still be keeping watch, but it offers the driver a more relaxed experience, Owens said.

Following are a couple videos, one on the Delphi car that went from SF-NY, another documenting safety concerns.


Owens said Gothenburg in Sweden or Singapore in Asia might well be the first cities to try to ease heavy traffic density as an excuse to test for and allow self-driving cars. The biggest catch, according to Owens, is how much are consumers willing to pay for the new technology?

“The biggest question is, how much will consumers pay not to have a driver?” Owens said.

The Detroit News

This article appears also at HybridCars.com.

 

May 02

Chevy product manager shares some tidbits about the Bolt and Volt

 

2017-chevrolet-bolt1-668x409-668x409

Recently a few takeaways were offered about the Chevy Bolt and Volt.

In an interview with the LA Times, Shad Balch, manager of new product answered questions on the new-generation Volt and the 200-plus-mile Bolt due to begin production at the end of this year, and start at $37,500.

No, the Bolt’s EPA range and efficiency numbers were not among the answers, those are expected sooner or later, but Balch did say Chevrolet is not worried the Bolt will cannibalize Volt sales.

While both are zero emission, Balch said they are “different cars for different consumers.”

Obviously the Bolt does what the Volt does – and longer – by providing a higher range gas-free driving experience, but the Volt’s genset adds a dimension to the Volt.

“The Volt is for someone who still needs a car with a gasoline engine that can make that long drive,” said Balch .

He noted also that Chevrolet has had success with the Volt and this should help it counter findings from a study that showed hybrid and plug-in loyalty is low.

cq5dam.web.1280.1280

“We’re at about the 100,000 mark for Volts sold and we are the No. 1 bestselling plug-in hybrid in the U.S.,” said Balch adding Chevrolet has had top customer satisfaction with the Volt, and many existing Volt owners want to get the second generation.

But, Balch was asked, how does Chevrolet get people to “go electric” when gas is cheap, SUVs are trending, and the electric car market is flat of falling?

“That’s the challenge. We have to get people to drive the car. Once they do, they realize it’s not just about the price of gas.” Said Balch. “It’s about the performance — the torque at zero RPM, the silence, the lack of vibration. These are things we try to engineer into gasoline-powered cars, but they’re all inherent in electric vehicles.”

What about the Model 3, “Does that help or hurt the Bolt EV’s prospects?” Balch was next asked by the LA Times.

Balch said it helps the whole industry to have the huge attention on Tesla’s 3. Others have suggested GM may be feeling pressure, but Balch indicated nothing of the sort in his answer.

“Every story about the Model 3 includes a mention of the Bolt EV and our target date is ahead of theirs,” said Balch noting pre-production Bolts have already been built, and regular production is on schedule for end of year with customer deliveries to begin right after that.

As for Bolt trim levels, there won’t be many, said Balch.

“There will be some options, but the base car will have most of our content and connectivity features, including active safety features,” he told the LA Times. “That will all be standard from the lower trim level.”

 

Apr 29

2 more 200-mile BEVs announced this week

 

There are now five automakers known to have said they will have an affordable (i.e., probably under $40,000 to start) BEV.

You know about the Bolt, Model 3, Leaf, and add top this Hyundai and potentially Ford. Ford only hinted with no details, but here are the basics.

Both stories by Jon LeSage

Hyundai Expected to Launch 200-Mile Range Electric SUV in 2018

Hyundai Ioniq. NOT the proposed BEV.

Hyundai Ioniq. NOT the proposed BEV.

As part of its challenge of becoming No. 2 in green car sales by 2020, Hyundai will be rolling out an all-electric SUV by 2018.

According to Korean news coverage, the electric SUV will have a range of 200 miles per charge. It will be competing directly with the Chevrolet Bolt, Tesla Model 3, and the second-generation Nissan Leaf.

The platform for the new SUV is expected to be separate from that used in the Ioniq, a sedan that will go on sale in the U.S. later this year. The Ioniq – its name being a merger of ion and unique – will be the auto industry’s first-ever model available in hybrid, plug-in hybrid, and battery-electric iterations.

SEE ALSO: Who Else Besides Toyota Will The Hyundai Ioniq Threaten?

It’s likely that Hyundai will later offer the electric SUV with a larger battery pack and longer range – up to 300 miles. For now, competing in the 200 mile range will be enough.

The electric SUV is expected to have something in common with the Ioniq. The Ioniq platform is shared by Hyundai’s sister brand Kia in the Niro utility vehicle. The upcoming all-electric SUV architecture will likely be the platform for an upcoming Kia electric SUV.

Hyundai Blog

Ford Aiming to Lead 200-Mile Range Electric Vehicle Segment

16FOCU_E-668x409

CEO Mark Fields says Ford Motor Co. is aiming to build the best-in-class 200-mile range electric vehicle.

Fields was asked during a conference call yesterday about the company’s plans to compete with Tesla and General Motors by rolling out a 200-mile range EV. To this, Fields responded Ford is aiming to be at the top of the segments in which it competes regarding cost, quality and range.

“Our EVs come down to making sure we’re the best or among the leaders in those areas,” Fields said. “When you look at some of the competition, clearly that’s something we’re developing for.”

The disclosure adds to Hyundai’s news this week it is building a 200-mile EV by 2018, and joins also the 2017 Chevy Bolt, 2018 Tesla Model 3, and next-generation Nissan Leaf – in theory making Ford the fifth automaker with a mainstream-priced 200-mile EV in the works.

Fields’ statement further counters Ford’s apparently having written itself off the 200-mile range EV segment this month when its head of EVs said the company was focusing only on its 100-mile-range upcoming 2017 Focus Electric.

SEE ALSO: Ford May Have Had Good Reason Not To Have Let Tesla Use the ‘Model E’ Name

Fields didn’t offer any details on when a 200-mile range EV will be launched however, or if it will be built on its own platform.

In December, the company announced that it will invest $4.5 billion in EV research and add 13 new EVs by 2020.

It could be badged as the Ford Model E. Ford took the trademark rights on that name years ago. That blocked Tesla CEO Elon Musk from naming its recently launched 200-mile electric car the Model E. Musk was unable to secure the name rights from Ford, and opted for the Tesla Model 3.

The Detroit News

###

First and line, and for all intents and purposes, the only confirmed 200-plus mile BEV.

First in line, and for all intents and purposes, the only confirmed 200-plus mile BEV.

 

Apr 28

Model 3’s battery is smaller than Bolt’s; profitability remains an open question

 

tesla-model-3-668x403

A recent conference call between an analyst, former Chevy Volt chief engineer Jon Bereisa – and Tesla – revealed the Model 3’s battery will be a little smaller than the Chevy Bolt’s, may cost less, but Tesla still might not make a profit selling it for $35,000.

All this is still up in the air, but the context for the call was to answer skepticism by UBS analyst Colin Langan who asked Bereisa to help make his points. Initially, Tesla was not on the call, but its head of investor relations did join somewhere along the way.

Bereisa, now President and CEO of Auto Lectrification, spent 35 years at GM back to the EV1 and before, and said he had doubts Tesla could profit at its $35,000 entry price.

Bereisa's expertise dates back before being the head engineer of the Chevy Volt, and includes involvement with the EV1.

Bereisa’s expertise dates back before being the head engineer of the Chevy Volt, and includes involvement with the EV1.


According to StreetInsider, Bereisa chronicled slowing progress of li-ion chemistry since 2014 and how engineering has focused on optimizing battery packs to squeak out gains in efficiency and cost.

Based on his knowledge in hand, Bereisa offered that a best-case scenario through 2025 for the cost for a completed battery pack is $133-$155/kWh.

Following a detailed breakdown of why he thought this, Bereisa said bottom line the Model 3’s factory variable cost (FVC) would bring the vehicle to $1,510 above the base $35,000 Tesla is promising.

In short, it would be dead in the water and not welcome news to a line of 400,000 and counting people who placed reservations based on this assumption.

Making matters worse for Tesla – or better for GM – Bereisa reportedly said the Bolt’s FVC would come in at $4,980 below its $37,500.

Bereisa estimated Tesla’s completed pack, assuming a similar size of 60 kWh as the nominal size for the Chevy Bolt’s pack, was $260/kWh whereas GM paid around $215/kWh thanks to more favorable supplier pricing from LG Chem.

Tesla Dials In

At this point, head of Tesla investor relations Jeff Evanson called in to the conference discussion to correct some of Bereisa’s assertions.

One correction was the Model 3 would be only partially aluminum, not all aluminum, cutting costs assumed by Bereisa. Another was Tesla’s cost for a completed battery was already less than $190/kWh, more than $70/kWh less than Bereisa estimated, $25/kWh cheaper than he estimated GM was paying.

Hearing this, Bereisa reportedly expressed skepticism Tesla is paying this little, saying raw materials cost prior to assembly into completed packs is about $160/kWh assuming the supplier makes a margin of 40 percent.

668x416x668x416xModel_S-skateboard_chassis.jpgMic_.NtVnTcWpre.jpg.pagespeed.ic_.NtVnTcWpre

And if Tesla’s pack is smaller than 60 kWh, it cannot be much smaller, reportedly said Bereisa, who said 55 kWh was a minimum to achieve 200 miles range, and Tesla is promising a minimum of 215.

Analyst Langan also chimed in saying he too doubted Tesla was paying less than $190/kWh for a completed Model S pack.

Langan reportedly cited discussions with other experts, and that FVC excludes operating costs like depreciation, engineering, research, development, overhead, selling, general and administrative expenses, and more.

FVC (factory variable costs) include only parts, material, and assembly labor per car, and so Evanson’s assertion of its costs left Langan in doubt.

The analyst concluded that although Evanson’s assertions could mean the price of a Model 3 might exceed FVCs by $4,500 more or less, little room would remain for operating profit after all other costs Tesla will have to bear.

Carmakers usually need a 45-55 percent markup above FVC to break even, and thus even assuming Tesla is paying just $190/kWh, the analyst figures it needs to actually sell the Model 3 for $45,000-$48,000 to break even.

More to See

Just as armchair pundits are trying to see into the future, so are those much closer to making it happen, and still there is disagreement.

Undoubtedly more will need to be disclosed, but as has been an ongoing case with skeptical financial analysts, and others, Tesla maintains it can deliver what it promises and doubt has been expressed.

Bolt_EV-668x409

As for the battery size issue, GM’s engineers recently said the nominal size of the Bolt’s pack is 60 kWh, but the precise number is a secret.

GM has also not announced exactly what the EPA-rated range for the Bolt’s 60-kWh battery will be. It has consistently said more than 200 miles but how much more is unknown. One journalist at the Las Vegas media drive in January said Chevy personnel told him it was as much as 235 miles, but this was never officially confirmed.

Without specifying how much smaller, Evanson said the Model 3’s pack has less capacity than what is to come in the Bolt.

Tesla has promised at least 215 miles range, so if it aims to do that, the understatement here might be it will need to find efficiencies.

Incidentally, one would assume this range is for the rear-wheel drive Model 3, as 215 miles is promised at entry level, but noteworthy also is Tesla has found improved efficiency in its AWD versions to date.

Model-3

Other factors contributing to an electric car’s range include curb weight, system efficiencies, coefficient of drag, tire friction, percentage of the battery pack used, and more.

GM has said most of the Bolt’s battery will be used, implying it needs 60 kWh for a car that may weigh in the ballpark, but be less aerodynamically efficient. Undisclosed is the percentage of this 60 it will hold in reserve to prevent cells from going bad, but this is typically at least 5 percent, more likely closer to 10 percent or so.

Tesla CEO Elon Musk has said Tesla’s engineers are trying to beat the class-leading 0.24 coefficient of drag enjoyed by the Model S, potentially getting it as low as 0.21. At least clear is the Model 3 will have less frontal area than Model S being not as wide.

A Model 3 is also expected to weigh several hundreds of pounds less than a Model S, and Tesla’s former RWD 60-kWh version was EPA rated for 208 miles range.

If one wanted to guess the pack size needed for the Model 3, there are so many variables and assumptions not specifically known that it is still hard to speculate. Tesla has not even said what its real baseline EV range target is other than it is at least 215.

Add this to the list of unknowns, as people scan for more information on the approaching horizon.

StreetInsider