Tesla is refocusing on service as its top priority now that it has stabilized production and delivery for Model 3, CEO Elon Musk said yesterday on the company's Q4 2018 earnings call. Elon said on the call, “One of our major priorities for this quarter is improving service operations,” with a specific focus on North America, which is home to the majority of Tesla's vehicles
Tag: Electric vehicles
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Tesla is betting big on China, and here’s what Elon Musk had to say about it
Aly Song | Reuters
Tesla CEO Elon Musk and Shanghai's Mayor Ying Yong attend the Tesla Shanghai Gigafactory groundbreaking ceremony in Shanghai, China January 7, 2019.
To tap into a growing market for electric vehicles in China, Tesla is betting big on the region — and executives talked up the company's efforts there on an earnings call this week.
Specifically CEO Elon Musk and Tesla's retiring CFO Deepak Ahuja emphasized their aims to get the Tesla Shanghai Gigafactory up-and-running this year, and to deliver U.S-made Model 3 sedans to customers in China immediately. Musk expressed concern that trade tensions between China and the U.S. could escalate, resulting in higher import taxes or tariffs, and other problems for Tesla.
Electric vehicle sales have grown more rapidly in China than other parts of the world, and already comprise about 4 percent of the substantial market there. The growth is thanks, in part, to a shifting array of federal and local incentives for electric vehicle makers, and subsidies for people who buy these cars in China. Tesla wants to establish a stronger foothold in this massive market, before the subsidies and incentives go away.
The industry ministry of China expects annual “new energy vehicle” output to rise to 2 million in 2020, and sales of 7 million new energy vehicles in China by 2025, representing about 20 percent of the overall autos market there.
Tesla faces serious competition from domestic Chinese companies like: the Warren Buffet-backed BYD; SAIC, which makes Roewe electric cars; and Geely, the parent company of Volvo. It also faces competition from foreign automakers that produce electric cars or hybrid, and already know their way around manufacturing in China, like Ford, Hyundai and Toyota.
Here are some of Tesla's biggest plans for China that execs outlined Wednesday's fourth-quarter earnings call, as transcribed by FactSet:
Funding the Shanghai Gigafactory:
“The purchase of the land is a 50-year lease with the government of China. So, it's not capex, but it's operating lease, and that shows up as the cash flow from operations. However, the capex that we will invest is our equipment, and we fully own it. So that will show up as capex. The plan, as we have indicated in the letter, is still to get funding for majority of that capital spending from local China banks. And we expect very attractive rates based on the dialogue we've had and there's a lot of interest.” — Deepak Ahuja
“Yeah. I mean, as a ballpark figure, probably something in the order of $500 million in capex to get to the 3,000-vehicle rate in Shanghai, ballpark figure. And as Deepak was saying, hooking up a very competitive debt financing in China really extremely compelling interest rates and so we do not expect that to be a capital drain on the company.” — Elon Musk
Tesla's advantages in China:
“If you're in the automotive industry you understand how significant this is, but maybe it's not as obvious to everyone. Tesla has the first wholly owned manufacturing facility in China of any automotive company. So, this is profound. And we're very appreciative of the Chinese government allowing us to do this. I think it is symbolic of them wanting to open the market and apply and it farewells to everyone. I'd just say like an order of appreciation for the Chinese government in allowing us to do that. It's a very significant thing.” – Elon Musk
On making batteries in Shanghai:
“We'll be making the module and the pack. So, it's really just production of cell supply. And you can essentially use any high-energy density, 2170 chemistry. We expect it to be a combination of cells produced at our Gigafactory in Nevada, cells produced in Japan and cells produced locally in China. And we feel confident of sufficient supply to hit 3,000 units a week.” — Elon Musk
Delivering a lower-priced Model 3:
“We need to bring the Shanghai factory online. I think that's the biggest variable for getting to 500,000-plus a year. Our car is just very expensive going into China. We've got import duties, we've got transport costs, we've got higher costs of labor here. And we've never been eligible for any of the EV tax credits. A lot of people criticize Tesla for being so dependent on incentives. In fact, for a company making EVs, we have the least access to incentives. It's pretty crazy. Because there's so many countries that have put price caps on the EV incentive which differentially affect Tesla. And in China, which is the biggest market for EV's, we've never had any subsidies or tax incentives for vehicles.
“So, it's difficult. Once a car is made there, it is eligible for that. That sounds like that's going to be reducing in China in the coming years. But really, bottom line is, we need the Shanghai factory to achieve that 10,000 rate and have the cars be affordable. It's important to appreciate, the demand for Model 3 is insanely high. The inhibitor is affordability. It's just that people literally don't have the money to buy the car. It's got nothing to do with desire. They just don't have enough money in the bank account. If the car can – if we made it more affordable, the demand is extraordinary.” — Elon Musk
On how demand in China stacks up versus Europe:
“Our relationship actually with Europe and China is how do we get the cars made and on order such that it reaches customers before end of quarter and we don't have a massive number of cars on the order. That's our biggest challenge. It's not demand. It's how do we get the cars there fast enough…I mean, we're not even really trying, I should point out. Our factory is like right now only making cars for China and Europe. That's all it's doing with respect to Model 3. And our whole focus is okay, how do we get those cars made, get them on a ship as fast as possible.” — Elon Musk
On U.S.-China trade relations:
“We don't know what's going to happen with the trade negotiations. So it's very important to get those cars especially to China as soon as possible. We hope the trade negotiations go well, but it's not clear. But we need to get them there while there's sort of de facto sort of a truce on the tariff war. And demand gen is really not one of the things we're thinking about.” — Elon Musk
WATCH: Elon Musk says demand for Model 3 is “insanely high,” but cost is too high
Elon Musk: Demand for Model 3 is 'insanely high,' but cost is too high
7 Hours Ago | 01:40
Ford Motor Company Recognized as Global Sustainability Leader in Water and Climate Change Efforts
Ford Motor Company has received an A grade for its water security efforts from CDP, the environmental impact nonprofit that drives sustainable economies Ford’s climate change efforts earned the company an A- for the third year in a row This marks the fourth year in a row CDP has rewarded Ford with an A for… Continue reading Ford Motor Company Recognized as Global Sustainability Leader in Water and Climate Change Efforts
Porsche 911 Hybrid sports car tech will arrive in two forms
2020 Porsche 911 Carrera S, Valencia, Spain, January 2019
Porsche is known as an engineering company. Its technical solutions are often complex and unusual, but often provide inspiration for others to follow.
Now details have filtered out about Porsche's new hybrid-electric powertrain for its upcoming 911, which could inform what engineers are thinking about in terms of bringing hybrid power to other sports cars.
The details were first revealed in an interview with Porsche's recently retired sports-car product chief, August Achleitner, in Autocar magazine in Britain last month.
DON'T MISS: Porsche Taycan sold out for a year—to mostly Tesla drivers
Autocar reports that there will be two versions of the new 911 Hybrid throughout the model's expected seven-year design life, a mild-hybrid system that adds torque but requires the gas engine for propulsion, and a more sophisticated full hybrid system. It's not clear whether the mild torque-assist system might precede the full hybrid, or whether they could be offered simultaneously, with full-hybrid being a more expensive option (which seems more likely to us.)
We'll focus on the full hybrid system, which is more interesting, and about which Achleitner provided more details.
The new system won't follow in the footsteps of Porsche's recent mid-range plug-in hybrid systems for its more family-oriented Cayenne and Panamera e-Hybrid models.
Even full-hybrid 911s will have no plug-in range, for instance, though they will be able to motor short distances on electricity.
Porsche Taycan prototype
Although Autocar reports that Porsche has yet to decide how far up the 911 model range the Hybrid should live, the system is engineered to have electric power to the front wheels, as well as a thin electric motor housed with the rear-mounted 8-speed, dual-clutch gearbox, which has shrunk to accommodate it but can now handle the higher torque loads of an electric motor.
A small battery lies low in the front of the car, which could help improve handling. It will still have a version of Porsche's 4.0-liter flat-6 engine, which may be turbocharged if Porsche decides to offer the 911 Hybrid in higher trims.
CHECK OUT: 2019 Porsche Cayenne E-Hybrid: the subtly earthy type
The car will use an electrically operated brake booster to maximize braking regeneration.
The Hybrid will eventually appear on the next-generation 911, known in Porsche-speak as the 992, which is first expected to arrive in November as a 2020 model. The hybrid version, however, won't arrive for another four years after that, Achleitner said, which would put it toward the end of the model's lifespan.
By then, sales of the company's upcoming new Taycan electric car, which is also expected to go on sale late this year, should also be in full swing. Porsche has said that the Taycan is sold out for its first year of production.
Tesla revamps Model S and X lineups without battery size numbers
2017 Tesla Model S
As Tesla struggles to balance prices to maintain profitability in the face of lower tax credits for its cars, the company is simplifying its Model S and Model X lineups.
After Tesla cut prices across the board to make up for a reduction in the federal tax credits and CEO Elon Musk announced earlier this month that the company would stop taking orders for the base 75D versions of its Model S and X, the company on Wednesday posted new model lineups for both cars.
READ MORE: Musk axes affordable Tesla Model S, X 75D
New base versions of the Model S and Model X will have no additional designations. Above that, longer-range versions of both cars will be called the Extended Range Model S or Model X, above which will be Performance versions of both cars.
All three models now share the largest 100-kilowatt-hour battery from the previous models, indicating that base models are now limited by software, not cell capacity. Buyers will have to turn to the actual range numbers to tell them apart.
The company has also cut prices by another $1,000.
DON'T MISS: Tesla cuts prices $2,000, almost hit 250,000 vehicles in 2018
For the Model S, the base version starts out at $85,000 and offers 310 miles of range. Buyers can opt for an extra 25 miles of range for an extra $8,000. Performance cars will be rated at 315 miles of range, but will no longer come standard with Ludicrous Mode. Buyers can order the extra 91 horsepower of Ludicrous Mode for an extra $20,000.
The Model X follows the same pricing structure for $3,000 more. With its bigger, heavier, and less aerodynamic body it gets lower range estimates of 270 miles for the base model and 295 with the Extended Range option, which costs the same as it does on the Model S. Performance versions of the Model X are rated at 289, and also require an extra $20,000 to enable Ludicrous Mode.
VW buggy, Porsche 911 Hybrid, Shell chargers, Tesla profits: Today’s Car News
2018 Tesla Model S and 2018 Tesla Model X
Tesla reported profits, and revealed new model lineups for its Model S and Model X—and another price cut. Volkswagen announced it will build a concept electric dune buggy for the Geneva auto show. Details of the upcoming Porsche 911 Hybrid have emerged. And Shell has bought its first charging network in North America. All this and more on Green Car Reports.
Profit reports are key, especially for a company like Tesla that has built a following of evangelists hoping to change the world, but whose ability to survive hinges on shoring up its shaky finances. In its most recent quarterly earnings call, Tesla revealed that it turned a profit and built up its cash reserves in the last quarter of 2018, while producing more cars than ever before.
The company also cut prices and introduced new base versions of the Model S sedan and Model X SUV with shorter range batteries limited by software, not cells.
VW will add to its portfolio of throwback electric models, at least in concept, with a new concept version of the classic Meyers Manx dune buggy based on the company's new “affordable electric” MEB architecture. It will reveal the concept at the Geneva auto show in March, and is considering putting it into production.
U.S. charging network operator Greenlots announced it has been bought by oil giant Shell. Shell has been gradually expanding into the electric-car charging business, but Greenlots chargers will be its first in the U.S.
Details have leaked out about two new hybrid systems that Porsche plans to put in its new 911. Unlike Porsche's other models, however, neither will plug in.
The Chinese company that builds electric Saabs, NEVS, bought a large stake in Swedish exotic carmaker Koenigsegg, which leads to speculation about more upcoming electric supercars.
Finally, there could be some consolation this weekend for fans whose team loses the Superbowl. Ride sharing service Uber is offering free rides in Los Angeles or Boston if their team loses the big game.
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Musk not worried about Tesla Model 3 demand, Wall Street thinks otherwise
(Reuters) – Tesla Inc shares fell on Thursday as Wall Street wondered if demand for its mass market Model 3 sedan could be sustained while it tries to make substantial inroads in China. FILE PHOTO: A Tesla logo is seen at a groundbreaking ceremony of Tesla Shanghai Gigafactory in Shanghai, China January 7, 2019. REUTERS/Aly… Continue reading Musk not worried about Tesla Model 3 demand, Wall Street thinks otherwise
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Surprise exit of Tesla CFO unnerves analysts: ‘Significant loss of institutional knowledge’
Watch three Tesla experts debate the electric car maker's mixed earnings report
4 Mins Ago | 01:58
Tesla's announcement that Chief Financial Officer Deepak Ahuja is retiring has unnerved Wall Street's top analysts and overshadowed the company's sales beat in the fourth quarter.
Many viewed the loss of the longtime executive as the most significant in a string of high-profile departures as the electric car manufacturer struggles to retain talent. The company said in September that chief accounting officer Dave Morton was leaving the company after less than a month on the job, while head of human resources Gabrielle Toledano decided last year not to rejoin the company after a leave of absence.
Others chose to highlight Ahuja's unseasoned replacement, Zack Kirkhorn, who will take the financial reins of the $53 billion public company just six years out of business school.
“We see the departure as a significant loss of institutional knowledge, and note that Kirkhorn is a first-time public company CFO,” wrote AB Bernstein analyst Toni Sacconaghi.
To be sure, Tesla reported better sales in the fourth quarter than Wall Street analysts had expected with revenues of $7.23 billion, more than double its $3.29 billion in revenue during the same quarter in 2017. And while profit fell short of projections, the company's stock crept higher immediately following its earnings announcement based on the solid sales numbers and a decent 2019 outlook.
However, the equity quickly declined after CEO Elon Musk announced during the earnings conference call that Ahuja is leaving after almost 11 years at the company. The stock fell 3.7 percent Thursday morning.
Here's what Wall Street analysts thoughts about Deepak Ahuja's departure.
AB Bernstein (Market Perform)
“Surprisingly, Tesla's CFO Deepak Ahuja announced that he was retiring, and would be succeeded by Zack Kirkhorn, Tesla's current VP Finance. We see the departure as a significant loss of institutional knowledge, and note that Kirkhorn is a first-time public company CFO, just six years removed from business school.”
Goldman Sachs (Sell)
“Management announced that CFO Deepak Ahuja would be retiring from his position at the firm in 2019 and would be replaced by Zach Kirkhorn, who joined Tesla nine years ago. Mr. Ahuja had previously left his position as CFO of Tesla in 2015, but returned in early 2017. We believe the changeover may cause some uncertainty for investors as Tesla just saw two consecutive quarters of profitability and positive cash flow, and we see potential for a less stable path forward due to a sequential step-down in deliveries, working capital headwinds and convertible debt payment.”
J.P. Morgan Chase (Underweight)
“We expect investors to react negatively to the replacement of Deepak Ahuja, 56, as CFO with Zack Kirkhorn, 34, Tesla's current Vice President of Finance, given Mr. Ahuja's long automotive industry experience and 11-year tenure as the firm's CFO (across two separate stints), during which he provided relative stability to the firm's finance staff that has otherwise seen a great deal of churn.”
Barclays (Underweight)
“While the call had some positives around cash (largely due to under spending on capex and opex), those were overshadowed by the announcement of departure of the CFO and the absence of an experienced Silicon Valley (much less automotive experienced like ex-CFO Ahuja) vet to replace him. We remain underweight with a $210 price target.”
Morgan Stanley (Equal-weight)
“At the very end of the analyst conference call, Elon Musk announced that CFO Deepak Ahuja was retiring and will be replaced by Zack Kirkhorn who is VP of Finance and has been at the company for 9 years. CFO changes are significant events and we look forward to meeting Mr. Kirkhorn.”
— With reporting by
Michael Bloom
.