Tesla: Revenues up, losses deepen, in start to 'exciting' 2017 Elon Musk’s ‘leccy car firm Tesla has boosted its revenues and deepened its losses, according to its latest quarterly results. Total revenues for the first quarter of fiscal year 2017 were $2.96bn, more than double the $1.15bn figure for Q1 last year. Net profits were negative, being a loss of $397m. Last year the company made …
Or maybe the fact that the styling is so, er, minimal as to render them virtually identical??
I think this is evidence of Tesla's immaturity as a car maker. The old hands at the game know that they need a strong family resemblance (not having any does reduce sales across the board), but they also know that they need to keep the models distinct enough to protect higher value sales and make each vehicle a clearly separate proposition. Tesla have learned lesson one, but not lesson two. At the moment the company enjoy considerable innovation benefits of not doing things the established way, but they also suffer because they're going to have to relearn some important lessons everybody else already knows. Another example is the shonky bodywork quality, where a mid to low end Skoda has better bodywork and paint than a high end Model S.
If Tesla survive long enough they'll learn. My guess is that Tesla's business model is at risk of crumbling once other established car makers have a range of competitive EVs, and there will then be a bun-fight to see who can buy ("merger of equals with") Tesla, solely for the brand and the IP.
Another example is the shonky bodywork quality, where a mid to low end Skoda has better bodywork and paint than a high end Model S.
Made in America... Several auto makers in Japan, even Korea, and Europe understand "quality". American ones just don't get it, don't even see the difference. They never have and they probably never will; it's as much a cultural thing as anything else.
"Quality" is not the same as "Expensive"...
Toyota developed an algorithm (QFD) to determine what "quality" is, and it transformed them into the world's largest manufacturer. The American manufacturers tried the same algorithm, didn't believe the results, didn't change... QFD is a way for engineers to force themselves to see things from a customer's point of view. The results are often very counter intuitive for engineers ("who would want a car that boring?"), but in Toyota's and GM/Ford's case the results were undeniably correct. Toyota went with it, GM/Ford didn't.
that the Solar City component counted for so little of the overall Tesla income. They've got grants and subsidies up the wazzoo here in California as well as lots and lots of customer installations.
Are they simply not active much of anywhere else in the country or something? I'd expect the solar biz to have outpaced the car biz by now.
I'd expect the solar biz to have outpaced the car biz by now.
Price per sale is far lower for PV than EVs, in general the subsidies are drying up (all round the world), PV is heavily commoditised (difficult to charge premium prices), and where they are going through a third party installer Tesla will only collect around half the sale price.
I think profiles for power demand varies a bit around the World, but generally electricity is more expensive in daytime than at night due to higher demand - we have a three step tariff (hours change between Summer and Winter) with low rate between 22 and 8 (or so).
In our climate AirCon is mostly used when the Sun is shining - and that is rather a lot in the Algarve.
"In our climate AirCon is mostly used when the Sun is shining - and that is rather a lot in the Algarve."
In sunnier climates where the demand profile is reasonably consistent with solar energy, I think that PV is an excellent idea, and the wholesale price profile actively works in favour of PV. Here in the UK, energy demand peaks in winter, after dark, and demand is lowest on sunny days because we don't use aircon very much.
Sadly, in the panic to save the world, the British government has splashed vast subsidies to the owners of around 10GW of PV which generates power at those times of low demand and low wholesale prices. Sadly, because our peak demand is when there are no renewables, we still need that thermal plant to stay operational, and have to pay additional "capacity" subsidies to thermal plant to make up for the reduced running time due to the crappy PV (and wind).
I think you might be surprised what a wide array of 18650 style cells can produce. More than enough for cooking. Maybe not enough for heating an entire house for an entire night just yet. For that you need a quite deep stack of storage.
There are a few people doing DIY "power wall" setups
Some mad bastard of an Ozzy is up to 50kw/h and and can pull 5kw from his setup, Don't know if it would do a full 5/kw for the whole 10 hours but....
Things are getting very interesting in the home power storage arena. Telsa's power wall v1 offering seems a little anaemic, but an iteration or two may well change the game :)
I didn't buy my PV system to make money, well not directly. I bought it to make charging my PHEV zero (or as close to it as possible) cost to me and thus allowing me to do all my local driving without using Fossil Fuels.
I've generated more than 0.5MWh of leccy so far this year and this is from a small 6 panel system.
Any profits Solar City might have generated are probably more likely wiped off by getting rid of their direct sales teams. Also Tesla are selling off parts of the SC business where the panels were 'rented' to the homeowner possibly at a loss.
In the long run, a Tesla Outlet will not only sell Cars/SUV's/Pickups/Trucks/Busses but Solar Installations and Battery Storage. All under one roof.
There's an old saying / joke in the car manufacturing industry.
How do you make a small fortune manufacturing cars?
Start with a large one.
I do wish Tesla great things, but i also wish they would show a path to profitibility. Mind you, Amazon spent years doing the same, so I guess the VC's aren't that worried. I do wonder exactly where these VC's seem to get these bottomless piles of cash though.
I do wonder exactly where these VC's seem to get these bottomless piles of cash though.
That's easy. They get it from having successfully done it before. Their aim is to get in on a new idea early, get rights to a disproportionately large slice of cake (they're the ones with the money after all), and cash in once the business takes off.
To be honest I think it depends on what causes the loss. If it's heavy investment in added space, equipment then that's fine, they're growing the business. If it's down to the cars selling under cost then that's bad, eventually.
Aston Martin were notorious for making small fortunes out of large ones. For a lot of their history every single car was sold at a loss. Same with Jaguar.
Tesla do need to be careful. The size of the market for electric cars is hard limited. There's only so many electric cars that can be supported by the electricity grid. Once there's too many electric cars on the road the price of electricity is going to start rising dramatically; the suppliers really do have to to maintain a balance between supply and demand, otherwise there's power cuts.
It might even result in non linear pricing simply to discourage the heavy domestic consumers (those with electric cars). Plus the regulators will at some point have to start considering the pollution caused by electricity generation in deciding how to tax electric cars and the electricity they consume.
OK, so Tesla's point is that the grid and generation ought to be evolved to support the move to electric cars. But Tesla cannot force that to happen, and if it doesn't then the electricity price will rise. And their own market will saturate.
Take the UK for example. We can barely generate enough to keep the lights on, never mind run all the country's cars too if they become electric. Given that paucity of spare capacity, they don't need to sell too many electric cars before the grid starts complaining...
It's going to cost untold billions to expand the grid and generating capacity if we're to switch to electric vehicles in any meaningful way. And we're talking about serious numbers of nukes... With the level of NIMBYism in this country it'd take decades to do it. Personally speaking I can't see electric vehicles really becoming universally viable until they've got nuclear fusion power stations on stream, and found more reserves of copper...
Back of envelope numbers. A Tesla model 3 is expected to take 4000 kWh to do 10,000 miles. The UK has a generating surplus of 33TWh. So we can support roughly 8 million cars out of our generating surplus.
There are 25 million cars registered and we replace 6 million a year, so if we go all electric then that's one reactor a year for 4 years, assuming a 30TWh/year reactor like Hinkley C.
Hopefully my mental arithmetic hasn't missed a 10^3 anywhere. Numbers all from Wikipedia and BBC.
The UK has a generating surplus of 33TWh. So we can support roughly 8 million cars out of our generating surplus.
Problem is electricity doesn't work like that. It's not like, say, petrol or diesel where you can store it in a tank for people to fill up on demand. Challenge is the demand profile, ie when 8 million cars are going to want to be recharged. If that's from say, 0830-1200 and 1900-0000 then it's additional load at peak times, where generating surplus may be tighter. Or cost of extra energy a lot higher, ie payments under the UK capacity mechanism.
Tesla's attempting to work around those challenges by offering an entire ecosystem. So buy your car, then your solar panels/tiles and a battery array, which adds to the TCO for the car but won't entirely negate the grid impact. There are suggestions for grid-scale battery storage, but all that does is add cost.
So buy your car, then your solar panels/tiles and a battery array, which adds to the TCO for the car
Don't forget the freestanding or semi-detached home to put those solar cells on and a garage or other facility to house the charging station and storage battery. That adds a chunk to the TCO.
Lots of people in the UK and elsewhere don't have a roof or a garden to put solar cells and a kickass battery pack or an off-road location to park their car. They rent their property and/or live in a block of flats in a city centre with a roof covering several properties and restricted public parking. This will make plug-in-only electric vehicles a high-end option for quite some time to come.
"Problem is electricity doesn't work like that. It's not like, say, petrol or diesel where you can store it in a tank for people to fill up on demand"
Having 600GWh of storage capacity attached to the grid changes grid balancing somewhat. The slack between midnight and 5am is perfect for charging prior to the morning commute, and the dip at 10am should be a nice top-up. You could even see some price incentives for using cars to contribute supply for the 8am peak.
Grid balancing's a bit like the old Economy7 system to keep baseload generation happy. Problem with using cars is how the Shinfield posse can switch cars from 'suck' to 'blow'. That would need smarter meters that are currently being installed, and export metering. Plus car owners to opt-in easily, and probably be opted out of any liability for damage to batteries. Price incentives would then require more subsidies added to electricity costs.
And if we continue with the Climate Change Act and it's decarbonisation requirements, car charging will have to load share with electric heating and cooking.. Which adds to the grid demand/balancing challenges, especially when that policy also increases the amount of intermittent generation. Then there's the problem of charging points, as pointed out previously. The maximum pollution benefit is in dense urban areas where it's hardest & most expensive to provide charging points. While EVs are a niche product, companies like Tesla can externalise those costs, but as they become mainstream, that will be more challenging. So potentially EV taxes instead of subsidies.
But then a fair chunk of Tesla's revenues come from EV subsidies, and it's still losing around $13k per vehicle. So competion from other makers will just make that problem worse.
The slack between midnight and 5am is perfect for charging prior to the morning commute, and the dip at 10am should be a nice top-up.
This works if there's only a few EVs in the fleet. Once you get significant market penetration then you need to actively manage charging, in response to System Operator calls, DNO load management needs, wholesale prices etc. That requires a lot of technology we don't yet have, and it requires giving somebody else control of charging your EV.
The whole distribution system was built for something approaching current levels of energy demand. In broad brush terms, swapping your car from ICE to EV doubles your electricity use. With the Official Climate Change Religion, they intend to "decarbonise" heating, so even with the dubious technology of heat pumps and extra insulation that will add a further doubling of electricity demand.
We don't have "surplus capacity" of that scale, and you're overlooking the intended closure of all remaining coal by 2025, the closure of the AGRs from 2019-2028, the likelihood that Hinkley C won't be on line until 2032, the Moorside consortium for new nuclear has fallen apart, tand I'd suggest Hitatchi are looking at the sinking hulk of Toshiba, and wondering if the Horizon consortium is such a good idea after all. And what remains of our generating fleet is mostly ageing CCGTs built as part of the first "dash for gas". Renewables won't fill the gap - even if we filled the North Sea with wind turbines, they can't deliver on the coldest days, and storage is pure incremental expense.
Not really a good situation to be in.
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