Cars

Tesla earlier today announced that it was pushing back the release of its highly anticipated Model X until the third quarter of 2015. Explaining the delay, Tesla relayed the following in its quarterly shareholder letter:

Work continues on the finalization of Model X with the testing of Alpha prototypes and initial builds of the first Beta prototypes. Model X powertrain development is almost complete with the early introduction of Dual Motor drive on Model S. We recently decided to build in significantly more validation testing time to achieve the best Model X possible. This will also allow for a more rapid production ramp  compared to Model S in 2012.

During Tesla’s earnings conference call on Wednesday, Tesla CEO Elon Musk shed a bit more light on all things Model X.

While articulating that work on the Model X’s drivetrain and chassis are nearly complete,  Musk said that the company is still working on some of the features that distinguish the Model X from the Model S, most notably the vehicle’s Falcon Wing doors and the extra seating.

“We’re adding some new stuff that’s really not out there,” Musk explained. “Stuff that has never existed in a way that was useful before.”

When asked if Tesla was encountering some overarching engineering challenges in finishing up the Model X, Musk indicated that the delay, in part, is the result of Tesla’s obsession with getting every small detail exactly right. Tesla, Musk proudly stated, is perfection-obsessed when it comes to future products.

There’s no big thing, it’s a bunch of little things. It’s really about getting all the details right. And I think people will appreciate that we get the details right. If you get all the details right, its the difference between a diamond with a flaw and a diamond without out a flaw. It’s damn hard to do that but thats what we’re going to do.

On a related note, Musk also took some time to point out that manufacturing a complex and advanced car on a massive scale is no small feat.

People don’t quite appreciate how hard it is to manufacturing something…  Making one of something is quite easy. Making lots of something, consistently, that can last a long time is extremely hard. In fact, it is way harder to make the machine that makes the machine than to make the machine in the first place.

So we have Model X  Alphas done… and it would certainly be easy for us to make a handful of production units, but that doesn’t really move the needle.  So what really matters is at what point can we scale production of a really high quality car, and that’s really in the third quarter.

And we also learned this lesson in manufacturing; you have issues that are sometimes 1 out of 100, and unless you make 100 of something you don’t see it… but you don’t necessarily know which 1 out of 100 so you have to look at all 100 cars. Once you get into volume manufacturing, there are statistically rare issues, but you really have to make a bunch of something to know it’s there. And we want to make sure we do that with the X experience.  It’s a lesson we’ve learned. I do think the X is going to be something quite special. It’s hard to get there. It’s hard to engineer and it’s hard to produce.

It’s also worth pointing out that while some folks who have already submitted a deposit for the Model X may get the vehicle come Q3 2015, Musk indicated that anyone ordering the Model X today won’t likely get the car until 2016.

I think realistically if someone is ordering the Model X right now, the car is gonna get delivered in early 2016. So we’re essentially sold out of 2015.

As for how the Model X will resonate with consumers, Musk confidently stated that the car will do well, noting numerous times that it’s a “phenomenal” and “really special” car that will address a different market segment than the Model S.

So while the delayed release of the Model X is undoubtedly frustrating for eager consumers, the following excerpt from Tesla’s shareholder letter should nonetheless assure buyers that when their Model X finally comes off the line, it’s gonna be a best-in-class vehicle.

This also is a legitimate criticism of Tesla – we prefer to forgo revenue, rather than bring a product to market that does not delight
customers. Doing so negatively affects the short term, but positively affects the long term. There are many other companies that do
not follow this philosophy that may be a more attractive home for investor capital. Tesla is not going to change.

Tesla Motors – Third Quarter 2014 Shareholder Letter PDF File
• Highest ever quarterly deliveries at 7,785 vehicles, despite factory shutdown in July
• Highest ever peak deliveries in a single day of 907 vehicles
• Majority of Q3 deliveries in North America; 65% increase in NA Sept 14/Sept 13
• Dual Motor and Autopilot introductions further accelerate Model S demand
• Model S orders and deliveries alone expected to increase by 50% in 2015
• Reducing number of Model S options to ramp production faster

Notably, toward the end of the letter, this on the Model X (emphasis mine) Update from the earnings call: Model X delayed until Q3 2015

Work continues on the finalization of Model X with the testing of Alpha prototypes and initial builds of the first Beta prototypes. Model X powertrain development is almost complete with the early introduction of Dual Motor drive on Model S. We recently decided to build
in significantly more validation testing time to achieve the best Model X possible. This will also allow for a more rapid production ramp compared to Model S in 2012.

TSLA Shares are up in after hours trading.

Later this afternoon, all eyes will be on Tesla as the automaker is slated  to release its Q3 2014 earnings report.

The consensus on Wall St. is that Tesla will report a loss of $0.01 a share on revenue of $892 million. On the low end of the earnings spectrum, one analyst anticipates a loss of $0.15 a share while, on the high end, one analyst anticipates earnings to check in at $0.10 a share. During Tesla’s third quarter last year, the company reported earnings of $0.12 per share.

Financial figures aside, it’ll be interesting to keep a close eye on the number of Model S vehicles delivered for the quarter, with analysts expecting the figure to check in at 7,800 units. By way of comparison, Tesla, during the same quarter a year-ago, delivered 5,500 Model S vehicles. Last quarter, Tesla delivered 7,579 Model S vehicles.

Now given that Tesla is able to sell Model S vehicles as fast as they can make them, it stands to reason that the company may very well surpass the 7,800 estimate. What’s more, recall that a right-hand drive version of the Model S went on sale in the UK and in Hong Kong this past summer. Naturally, both of these launches will help boost overall sales figures for the quarter.

You might also recall that Elon Musk, in response to a WSJ article claiming that Tesla Model S sales were slumping, tweeted out the following about a week ago.

Article in @WSJ re Tesla sales is incorrect. September was a record high WW and up 65% year-over-year in North America.

— Elon Musk (@elonmusk) October 28, 2014

An earnings call will follow Tesla’s earnings report where we will hopefully gain some more information regarding the highly anticipated Model X, the newly christened Gigafactory, and of course, the even more hotly anticipated Model 3.

[youtube=https://www.youtube.com/watch?v=q-mVR4F7tfY&start=2461]

RIP Tom Magliozzi

We’ve seen Tesla’s CHAdeMO adapter in the wild and it might soon be hitting the streets. The Tesla Motors Shop now has the adapter, with the same “Coming Soon” designation but with a drastically reduced $1000 $450 price tag.  That means there is some movement on the product and you might actually be able to buy one soon.

The one we saw a few months ago was working well but our tipster said that because of the variances between CHAdeMO stations it was still being tuned.

Tesla launched in Japan last month where CHAdeMO stations are plentiful. But as you can see from the map of CHAdeMO adapters from the standard body’s site, they are also plentiful and growing in the US.

CHAdeMO is the official DC fast charging option used by Nissan for the Leaf and a few other Japanese electric car manufacturers. As of October 7th, 2014, the CHAdeMO Association web site states that there are 2,129 DC Quick Chargers installed in Japan, 1327 in Europe, 731 in the USA and 54 elsewhere

Tesla charging times vary depending on the amperage on the stations but the fastest will approach the speeds of Tesla’s Superchargers.

@llsethj correction. Just rechecked:118 mi/hr 351v 105a. So halfish SC speed. May be faster elsewhere, we shall see.

— PlugShare (@plugshare) April 10, 2014

In a recent interview with AutoExpress, Tesla VP of Engineering Chris Porritt (formerly of Aston Martin) strongly hinted that the highly anticipated Tesla Model 3 will be part of a vehicle platform that may ultimately comprise a few varied designs.

Tesla has revealed that its new BMW 3 Series rival, the Tesla Model 3, will spawn a number of derivatives that could include an SUV and an estate in order to attract a broader spread of customers.

From a strategic standpoint, this makes a load of sense. Indeed, Tesla is already implementing this strategy with the Model X which is based on the same platform as the highly revered Model S.

Lending more weight to Porrit’s statements, check out the following slide taken from a recent presentation given by Tesla CTO, and all-around battery guru, JB Straubel.

Right there in black and white, the Model 3 platform will include a Sedan and likely a crossover vehicle down the line.

Again, this is a shrewd strategy that shouldn’t come as a surprise to anyone. There’s no denying that the Model S is a certified hit, and if pre-orders are any indication, Tesla will be selling Model X vehicles as fast they come off the production line. Still, for electric vehicles to truly gain mainstream traction, Tesla will not only need to release a more affordable car (which is the plan), but they’ll also have to have models that can appeal to the varied tastes of the masses.

On this note, Porritt adds:

We don’t know what type of customer we’re trying to appeal to yet, but we want to speak to more customers… Lots of them! We’ve got specific customers for Model S, we have an idea with Model X, but we need to appeal to more people with Model III.

Looking ahead, the impeccable and elegant design of the Model will certainly serve to raise expectations for the Model 3, a car which Tesla chief designer Franz von Holzhausen previously explained would be “more expressive” and have more of a “couture” look than the Model S.

On the materials side of the equation, Porritt noted earlier this summer that the Model 3 won’t rely as much on aluminum as the Model S, explaining that Tesla has to be more cost conscious to truly make the Model 3 widely affordable.

The plans to introduce a Model 3 Crossover may have also cut the Toyota RAV4 EV program short. The program was abruptly stopped a few months ago with Musk noting that future plans with Toyota weren’t out of the question.

[youtube=https://www.youtube.com/watch?v=y13jbl7ASxY&start=4450]

Great talk by Tesla/SpaceX Elon Musk given at MIT this month. Most of the talk is about SpaceX but the Q&A hit some points on Tesla (and the Hyperloop). At 1:14:10 (queued up above) Musk lays out his future vision of the Superchargers which would be built around solar or renewable power sources and a battery backup that would not only be carbon neutral but also be able to avoid grid downtimes and outages.

Even more interesting for me is Musk’s recent obsession with AI and the singularity. I say recent but it seems to have started publicly with this tweet in August:

Worth reading Superintelligence by Bostrom. We need to be super careful with AI. Potentially more dangerous than nukes.

— Elon Musk (@elonmusk) August 3, 2014

Since then, just about every opportunity he’s gotten, he’s brought up his fear of AI and the Singularity.

This video is no different.  When asked a question about AI at 1:07:25, Musk goes real serious-like – like he’s “seen some shit”

Musk: I think we should be very careful about artificial intelligence. If I were to guess like what our biggest existential threat is, it’s probably that. So we need to be very careful with the artificial intelligence. Increasingly scientists think there should be some regulatory oversight maybe at the national and international level, just to make sure that we don’t do something very foolish. With artificial intelligence we are summoning the demon. In all those stories where there’s the guy with the pentagram and the holy water, it’s like yeah he’s sure he can control the demon. Didn’t work out.

Questioner: So I’ll take it there’ll be no HAL9000 going to mars?

M: Heh. HAL 9000 would be easy to deal with in comparison to the AI he’s talking about. It’s way more complex… it’d put HAL9000 to shame. That’s like puppy dog.

Then he’s asked another question about telecommunications and he’s not listening. He’s still thinking about AI and is clearly a little shaken and needs to be asked again.

I’d like to imagine Musk had a HAL9000 moment with one of his advanced prototype Tesla Model S head unit stacks or something. Like “Elon, wouldn’t you rather run over those people who don’t own Teslas?”

That this fear is coming from a man like Musk, who has seen and executed the future better than almost anyone is a bit rattling. He’s even advocating for government control and oversight which seems strangely uncharacteristic for an entrepreneur like Musk.

Hopefully, he’s just read too much science fiction :\
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PALO ALTO, Calif., October 20, 2014 – Tesla announces that it will post its financial results for the third quarter ended September 30, 2014, after market close on Wednesday, November 5, 2014. At that time, Tesla will issue a brief advisory release containing a link to the Q3 2014 Shareholder Letter, available on the company website. Tesla management will hold a live question & answer webcast at 2:30pm Pacific Time (5:30pm Eastern Time) to discuss the Company’s financial and business results and outlook.

What: Tesla Motors, Inc. Q3 2014 Financial Results Q&A Webcast

When: Wednesday, November 5, 2014

Time: 2:30pm Pacific Time / 5:30pm Eastern Time

Shareholder Letter: http://ir.teslamotors.com

Webcast: http://ir.teslamotors.com (live and replay)

Approximately two hours after the Q&A session, an archived version of the webcast will be available on the Company’s website for a period of one year.

Bloomberg:

Tesla Motors Inc. began taking online orders for its Model S electric car in China today, joining General Motors Co. and Volkswagen AG in selling vehicles through Alibaba Group Holding Ltd.’s online shopping mall.

Buyers can place a 50,000-yuan ($8,200) deposit for the electric car through Alibaba’s Tmall.com, according to Tesla China spokeswoman Peggy Yang. “Tmall offers us an opportunity to reach out to general customers,” she said by telephone.

So much for kicking the tires.

Nice Freakonomics show this week. (Transcript)

@elonmusk Picking up my Model S today!!! I hope it's all charged up so I can make it back home 😉 #dontwanttogetstuckinthemiddleofnowhere

— Comedian Ben Bailey 🚕 aka Cash Cab Guy (@RealBenBailey) October 17, 2014

I’ve said it before and I’ll say it again: You can measure your state government corruption level by how they deal with Tesla. Michigan citizens, your government (yet again) has failed you.

On October 1, the Michigan Automobile Dealers Association succeeded in passing a bill that is harmful to consumers. The bill, HB5606, was originally a single amendment to existing law designed to ensure that the car dealers can tack additional fees on to the purchase price for all vehicles (from any manufacturer) sold in Michigan. Such fees have a controversial history, are generally regarded with skepticism and have been the subject of consumer concern in other states.

Not content with enshrining their ability to charge consumers dubious fees, on the last day of the legislative session, the dealers managed to make a last-minute change to the bill in an attempt to cement their broader retail monopoly. Using a procedure that prevented legislators and the public at large from knowing what was happening or allowing debate, Senator Joe Hune added new language in an attempt to lock Tesla out of the State. Unsurprisingly, Senator Hune counts the Michigan Automobile Dealers Association as one of his top financial contributors, and his wife’s firm lobbies for the dealers.

Just about everyone is pressuring the governor to veto the bill. Read this piece in the Detroit Free Press.

Perhaps Tesla should set up a state ranking list where it concisely lists the states that bar “American engineered and manufactured, clean electric cars”. Something like a Wall of Fame/Shame.

As a precedent, the Economist has the Big Mac Index where economies/currencies are ranked by the cost of a Big Mac.

THE Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. For example, the average price of a Big Mac in America in July 2014 was $4.80; in China it was only $2.73 at market exchange rates. So the “raw” Big Mac index says that the yuan was undervalued by 43% at that time.

Tesla should also skip the North American Auto Show in Detroit in January in protest. By any measure, they’ve proved they can draw a crowd and internet interest with their recent D event in LA.

From the Tesla Blog:

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[tweet https://twitter.com/Tesla_Europe/status/522673381842247680]

[youtube=https://www.youtube.com/watch?v=S0-sHtlCZ7M]

Slashgear:

Tesla will open its first battery-swap station within the next few months, the electric car company has confirmed to SlashGear, offering drivers of the Model S a ninety second way to “refuel” their cars. First demonstrated in June 2013, the battery exchange system eschews even the rapid charging of Tesla’s Supercharger network in favor of a wholesale exchange of the batteries themselves. The process would be fully automatic, too, meaning the driver won’t even need to step out of the car in order to replenish their charge levels.

Engadget believes that the renewed interest in the swap point, which will first be somewhere in between San Francisco and LA and doesn’t require the drivers to leave the car during the 90 second transaction, is due to revised California ZEV Credits. I’m not so sure that this just isn’t an ordinary ramp up time period.

Tesla may have decided to redouble its battery station efforts for economic reasons, too. As pointed out by Bloomberg, California stripped Tesla of some of its zero-emission vehicle (ZEV) credits earlier this year after revising its rapid refueling rules. The new standard requires that cars be fueled to a 285 mile range in 15 minutes, meaning the Model S — which can receive a 160-mile supercharge in about 30 minutes — no longer qualifies. Meanwhile, hydrogen-fueled cars continue to receive the maximum ZEV credits, since they can easily be refueled in that time. Prior to the decision, Tesla had been selling the excess ZEV credits to other automakers, which is one of the reasons it turned a profit for the first time last year.

Another reason for the slow ramp of the swap stations? Tesla might be trying to get its superchargers up to that standard. In an interview last year with the MIT Technology Review, CTO JB Straubel said that Supercharger technology would continue to improve to the point where Tesla could meet California’s new standards.

“It’s not going to happen in a year from now. It’s going to be hard. But I think we can get down to five to 10 minutes,” Straubel said in an interview with MIT Technology Review. He noted that the current superchargers, which deliver 120 kilowatts of electricity, “seemed pretty crazy even 10 years ago.” Conventional public charging stations deliver well under 10 kilowatts.

Tesla has already reduced its Supercharger times in half going from 40 minutes to 20 minutes for a half charge. A few more ‘half times over the next few years and we’ll be there. One of the barriers of this type of charging is heat so this might involve external or internal cooling for battery charging.

One challenge of fast charging is that delivering power to a battery very rapidly can cause it to overheat. To avoid damaging the battery, the outside charger needs to communicate with the electronics that monitor the state of the batteries, including their voltage and temperature, and quickly adjust charging rates accordingly. “To do that kind of charging, everything has to be designed and working in perfect synchrony,” Straubel says.

Achieving five-minute charges will require not only further improving the charging system, but also improving the interface with the electrical grid. As it is, only some places on the grid can handle 120-kilowatt charging. Drawing large amounts of power from the grid also incurs demand charges from the utility, increasing the cost of the system.

But Straubel says that Tesla plans to get around these problems by equipping supercharging stations with solar panels and batteries.

And perhaps Tesla could automate that charging so you don’t need to get out of the car to supercharge. Musk mentioned his intensions there at the D event but already solutions are being devised (this from Geneva motor show via Reddit):

Tesla’s Model S (or a wrecked one) got the IHS Supply teardown treatment and if you are wondering what makes the car tick, it is a worthy watch/read (PDF). Notably Tesla “really wanted to do things differently and employed virtual controls—rather than physical knobs and buttons—to take over the user experience. This approach required a major investment in big displays and touch panels, similar to the approach Apple took when designing the iPhone and iPad.”

It is no secret the NVidia processor runs the display and the center stack. Other notables:

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Not much new here but perhaps a dumbed down explainer about dual motors and autonomous driving timeframe.

[youtube=https://www.youtube.com/watch?v=W6XS6HE178I]

The acceleration is violent. Jarring. There is no other way to put it. It is like a roller coaster and actually puts your head back whether you want to or not. Watching the speedometer go from 0-75 so quick also doesn’t seem like real time.

Former Apple/Segway Hardware Exec Doug Field gave us our test drive and was able to explain in real time what was happening with the sensors as they read the street signs and followed the road lines through the maze. Touching the turn signal told the car to change lanes. It stopped slowly as it approached the car in front of it. All the while Field wasn’t touching the foot pedals or steering wheel.

Having a car go that fast and then drive itself is an unforgettable experience and by itself worth the trip to Los Angeles.

Checking in pic.twitter.com/cLJca1mf3e

— Seth Weintraub (@llsethj) October 10, 2014

Let’s just watch this together, OK?