back to article Tesla big cheese Elon Musk warns staffers to tighten their belts in bid to cut expenses (again)

CEO Elon Musk is to embark on a comprehensive expenses review at Tesla, according to Reuters. The 'leccy car maker recently completed a $2.7bn fundraising round to increase production. But at the rate it is spending money, that gives it less than a year to balance the books. In an email seen by the newswire, Musk warned staff …

  1. Commswonk Silver badge

    Gets worse, doesn't it...

    From the article: earlier this year it closed most of its dealerships and shifted to online-only sales.

    Might make servicing a bit of a problem. though. Who is going to buy a Tesla if the neaest servicing agent is <Deity> knows how far away?

    1. jmch Silver badge

      Re: Gets worse, doesn't it...

      I would have thought that servicing is a revenue generator?

      Or possibly they're keeping (most of) the servicing garages and only closing the showrooms? Maybe their marketing thinks they're doing so well that they think they can get enough sales online without punters ever going for test drives or seeing the car they're going to buy?

      Seems like short-term gain, long-term loss to me

      1. rg287 Silver badge

        Re: Gets worse, doesn't it...

        Or possibly they're keeping (most of) the servicing garages and only closing the showrooms? Maybe their marketing thinks they're doing so well that they think they can get enough sales online without punters ever going for test drives or seeing the car they're going to buy?

        They had a number of showrooms with no service or even forecourts attached (see the Knutsford "Store").

        They've evidently decided they're better off ditching those in favour of other marketing channels and delivering demo cars direct to people for 24hr test drives and the like. You can operate that sort of business out of a cheap industrial unit without paying high street rent and rates, or from your service locations.

        Customer Deliveries then take place at Service Centres or they'll deliver them direct to your home.

        Most maintenance is done by mobile service technicians, with only major work needing to go into a Service Centre. Pretty much everything is on a 2-year service schedule.

        The lack of service work is one of the reasons the dealerships in places like New Jersey have tried to hound them out. They see Tesla not only as a threat to their car sales but also a new (and less profitable) way of working with regards after-sales care. There's fundamentally less work per 100,000miles for a dealership to do on EVs.

    2. Sorry that handle is already taken. Silver badge

      Servicing

      Not a Tesla fanatic here by any stretch of the imagination, but have a think about what your traditional ICE-powered cars need servicing for.

      1. jmch Silver badge

        Re: Servicing

        True that an electric car doesn't need oil changes, filter changes, any of the 'regular' / annual servicing that an ICE car does. BUT I presume they are also not bulletproof, and occassionally some of them will have trouble that needs a garage to fix, and most likely anything involving electric motors / batteries / electricity will require special attention at a Tesla garage.

        Even with very high build quality, the more you build the higher the chances of a few of them having glitches. Of course it could always be the case that for a very high value of reliability, it might be cheaper that for the very occasional rare failures they just ship out a complete replacement car rather than have the cost of a local garage that is operating far below capacity. For example if they have problems with 0.1% (ie 63 of the 63000 Model 3s produced in a quarter), they could replace them all at a cost of a couple of million a quarter, drop in a bucket compared to their current expense and to building and running a network of garages. So maybe that's the sort of strategy they're going for?

        1. Anonymous Coward
          Anonymous Coward

          Re: Servicing

          well, them bloody servers are all ALL electric, sit all day in the shed, air-con and all that, and look - no need for servicing!

        2. quxinot Silver badge

          Re: Servicing

          Electric cars don't have tires that need inspection, inflation, nor rotation? They don't have brake pads and rotors that wear? They don't have suspension components that need lubrication? (I realize many modern cars are "permanently lubricated" in a number of ways... when you replace those parts, adding a zerk means that they last significantly longer...)

          No, they still need service. They don't need engine oil changes nor air filter changes (though the cabin filter still needs done periodically). But servicing is something you do at a realistic rate despite what a manufacturer says, not strictly per the book. Sometimes that means more often, sometimes less often, depending on the service item.

      2. Commswonk Silver badge

        Re: Servicing

        A fair point, but...

        Think "brakes" for starters. It also depends on how one chooses to define "servicing". Most of the visits my current car makes to a garage are unrelated to routine servicing but are to deal with things that have gone actively wrong, and (touch wood) none of those have been ICE related. Silly things like the tailgate release or the satnav no longer working and the like.

        @jmch commented I would have thought that servicing is a revenue generator and my experience would support that; with "every" query needing a "diagnostic check" (circa £70) followed up by a later visit to have some eye - wateringly expensive work done (IIRC fixing the tailgate release came in somewhere around £150) someone somewhere is profitting handsomely.

        And my car is not a "top of the range" model.

        1. Lee D Silver badge

          Re: Servicing

          Are we saying that electric cars don't need, say, oil, brake fluid, hermetically-sealed systems, moving parts, etc.

          Most of what I've ever taken a car to be serviced for consists of:

          - Consumables (brake pads, oil filters, air filters, tyres, aircon, etc. - almost all applicable to electric cars)

          - Failures of the car itself (e.g. suspension, exhaust, starter motor, radiator - mostly applicable, or analogous to, parts in electric cars)

          When a head gasket goes, or the gearbox fails, you throw the car away if the price is above what you consider acceptable for a non-MOT repair if you're a normal person, or get it serviced under warranty if it's vaguely new or the work still affordable. Few people rip out their engines, change pistons or anything like that in anything approaching a modern car, even people like my father who worked on nothing but car / lorry engines for 40+ years.

          On an electric car, no matter how fancy, there are still the same forces involved, still the same failures involved, still the same structures and parts and functions involves, they just might be on a different system. No different to a Wankel vs a 4-stroke, "electric" is just another type of engine. I can replace a dead battery myself, for instance, but I wouldn't be touching a Tesla's battery. The service work has just shifted to proprietary systems under electronic control, serviceable only by Tesla, that's all.

        2. Muscleguy Silver badge

          Re: Servicing

          I bought an extra big screwdriver so I could fix the tailgate myself. I only took it in for things I couldn't do myself. I would do the brakes if I had a proper jack and axle stands or a pit. But then my father was a mechanical Engineer so I got taught to maintain a car from a young age.

          I'm not a petrol head, just mechanically competent and frustrated by modern engines. I don't even have a plug spanner which can fit and remove the plugs for gapping/cleaning now. Time was I could diagnose and fix things myself. Now you need to plug a tablet/laptop in and interrogate the car that way.

        3. jmch Silver badge

          Re: Servicing

          "Think "brakes" for starters. "

          Of course there will still be some routine maintenance required, the point is that it is much less frequent. Even with regard to brakes, regenerative braking works like a generator ie creates an opposing force to the wheel that forces a current through to recharge the battery, slowing down the wheel without contact needed i.e. no brake pads.

          Brake pads only for emergency braking means much less wear

      3. juice Silver badge

        Re: Servicing

        Oddly, I'm about to book a full service for my aged Mondeo. Let's see how much of the checklist would apply to an eCar...

        Bodywork checks

        Light checks

        ABS

        Horn

        Windscreen

        Power steering

        Battery checks

        Handbrake

        Coolant system

        Suspension

        Mountings

        Wheel bearings

        Brake disks/pads

        I don't know how many of those have direct analogues in an eCar, but it's certainly above zero, and there's going to be things which are specific to eCars (e.g. regenerative braking systems).

        Fundamentally, and regardless of the engine technology, a car is stuffed full of moving parts and is generally left outside at the mercy of the weather, which in many places means it has to deal with freezing temperatures in winter and boiling temperatures in summer, alongside all the other little things which can cause corrosion and wear (e.g. salt on the roads during winter).

        So you're always going to need some degree of regular servicing and/or inspections.

        1. Charlie Clark Silver badge

          Re: Servicing

          You forgot tyres.

          1. juice Silver badge

            Re: Servicing

            Your eCar doesn't have hover capabilities? How 21st century.

            1. Stevie Silver badge
              Pint

              Re: Servicing

              Very witty, juice. Have some e-juice.

          2. Anonymous Coward
            Anonymous Coward

            Re: Servicing

            @ Charlie Clark

            Upvote for spelling tyres correctly

            Cheers...Ishy

        2. Timmy B Silver badge

          Re: Servicing

          Our Leaf just had an interim service and MOT. The service took less than 1/2 an hour. It is basically plug in computer, check results, check anything wheel related (breaks/tyres) and that's about it. The garage owner said he felt bad billing us for 1/2 an hour but it's the lowest time they do. He also said he's glad he's retiring as when everything is electric they will have hardly anything to do.

          The MOT is very similar to a normal MOT - lights. tyres, blah, blah.. Except there is still a section to be filled in for emissions....

          1. imanidiot Silver badge

            Re: Servicing

            They'll probably have plenty to do as leccy cars are generally heavy and the drive trains have comparatively large amounts of torque. That means lots of tire, brake, bearing and suspension wear on these cars. We don't currently see this a lot because there's not that many leccy cars out there to begin with and the ones that ARE out there are not that old. The AVERAGE age of a car on the road in for instance Britain is 8.1 years, but very few of the electrical cars out there will actually be that old. Most are probably under 5 years old at this time.

            It's way too early to say that electrical cars really need less maintenance work than ICE powered ones. Personally I'm skeptical of that notion. (Especially on the Tesla cars as they've made some "a-typical" design choices, so well have to wait and see how it works out)

            1. quxinot Silver badge

              Re: Servicing

              >They'll probably have plenty to do as leccy cars are generally heavy and the drive trains have comparatively large amounts of torque.

              To be fair, despite the significant torque available, it's made continuously, not in the pulses of a piston engine. This means that the tires...tyres... round black things that touch the pavement.... have a much easier life than they otherwise would. It's the same reason that a motorcycle with two cylinders has better grip than a four does, less frequent disruption of the rubber by a "hit" of power.

              Of course, that advantage goes immediately out the window if you allow the tire to slip at all. And it stays out the window when you're suddenly adding a huge amount of weight as a constant load, though that can be designed around to some extent (for a price, naturally).

            2. Timmy B Silver badge

              Re: Servicing

              "The AVERAGE age of a car on the road in for instance Britain is 8.1 years, but very few of the electrical cars out there will actually be that old. Most are probably under 5 years old at this time."

              Worth saying that our Leaf is 5 years old. We have seen no battery degradation and no tyre, break, etc wear in excess of any other car we've had of a similar age. What we have seen is that it's held it's price very-very well and we can sell it now at a loss of only £3-4K. That's not bad at all.

              1. Aitor 1

                Re: Servicing

                The thermal management of the Leaf is just terrible.

                In the UK this is not a big issue, as we have cold weather most of the time, but in most places it is a big big issue, and they degrade quite fast.

                1. Timmy B Silver badge

                  Re: Servicing

                  "The thermal management of the Leaf is just terrible."

                  For the first generation and the low end version of the new generation this is true. You need to buy the version with active thermal management in order to get the best. Your information is a fair bit out of date.

            3. Timmy B Silver badge

              Re: Servicing

              "They'll probably have plenty to do as leccy cars are generally heavy and the drive trains have comparatively large amounts of torque."

              Difference between our Leaf and a Note (the Nissan of about the same size with an ICE) is around 200Kg. That's not a huge difference and I suspect if you fill the tank of a Note that will eat a fair chunk out of that difference.

            4. John Dawson

              Re: Servicing

              Actually on a Tesla there is minimal brake wear because of regenerative braking. You can drive the car almost entirely on one pedal.

              1. Cederic Silver badge

                Re: Servicing

                That doesn't make sense. If I don't use the brake pedal I expect the car to bleed speed at a slow rate, not act as though I was actually braking.

              2. MachDiamond Silver badge

                Re: Servicing

                The problems with brakes on some EVs has shifted to the parts rusting/corroding as they don't get as much use. There may be some need to increase the quality of materials used on EV's so the brakes operate as designed even without being used as much.

                If you drive very aggressively, you will be using the brake pads and a hard day at the track can wear them out. You really don't want to know how much the replacements go for on a Tesla. It can put you off of your dinner.

            5. Stephen Beynon

              Re: Servicing

              Very little brake wear on my leaf as it is almost entirely regenerative braking. (To the extent that at my recent MOT they suggested I should try heavy breaking occasionally to stop excessive rust building up on the brake disks !)

          2. Anonymous Coward
            Anonymous Coward

            Re: Servicing

            So, basically, my little Toyota needs half an hour more servicing a year than a Leaf, some oil, and an annual emissions test. When I bought it, it cost 2/3 the price of a Leaf, had four times the range and a somewhat faster refuelling time.

            My feeling is that Tesla is showing the same irrational exuberance as many other US new technology companies of the past. Only extremely low interest rates have made it possible to sell so many cars which are a lot more expensive that liquid fuel equivalents, but really and truly battery technology is not there yet. A managed economy like China can see a rapid uptake of EVs - many of which would not meet European or US safety standards - but in the West an expensive car with an insufficiently developed technology is actually a hard sell except to people who see them as a status symbol or, more rarely, can make use of incentives like free parking and charging.

            That being so, Tesla needs to be making luxury car margins to survive - and those gross margins tend to be 50% and more. Generally, the more expensive the car, the higher the gross margin because they cost so much more to sell and warranty. Econoboxes just sell on what the local dealers sell and what people can afford.

            1. Anonymous Coward
              Anonymous Coward

              Re: Servicing

              Downvote for casual racism. Leave China alone!

            2. Chris Parsons
              Headmaster

              Re: Servicing

              Downvote for starting post with 'so'....why do people do this now?

            3. MachDiamond Silver badge

              Re: Servicing

              I'm waiting for a company to come out with a fleet vehicle that's optimized for the task. If postman Pat was doing all of his stop and go driving in an EV postal van, the van may be more money up front but for a fleet as large at the Post Office runs, savings can be very significant. There would also be less need to handle liquid fuels. At the end of shift, the van gets plugged in and the charger starts up in the wee hours when tariffs are at their lowest. While a luxury car may bring a pretty good profit, a no-frills fleet vehicle could be a good money spinner too. Tesla/Elon still have a gadget fetish. Everything has a motor or an actuator on it like the plug door. That's just more stuff to break and more cost to manufacture. A postal van might only have a motor on the driver's side window and just one cupholder with the plug door manually operated or perhaps even fitted with wireless charging.

              I don't see battery technology changing all that much in the immediate future. It's likely to take a big breakthrough in electrical storage to get 25-50% more energy density. Yes, I see the twaddle about "solid state" batteries, but I haven't seen any science behind what they mean by "solid state". BTW, TNT has 10x the energy density of the average LI-ion battery. It's just not very useful for transportation (in the long term. Only useful for short, one-time, trips). Petrol/Diesel can be safer because the fuel is kept (mostly) separate from the oxidizer until right before it's used. With something like TNT, both are mixed together (kinda).

          3. Flywheel Silver badge
            WTF?

            Re: Servicing

            said he's glad he's retiring as when everything is electric they will have hardly anything to do

            Hmmm.. that never seems to stop them finding something. Are you sure you took it to an actual garage?

        3. John Brown (no body) Silver badge

          Re: Servicing

          "So you're always going to need some degree of regular servicing and/or inspections."

          I'm a little surprised at the 100,000 mile service interval. There are still mechanical subsystems that need things like seals checking and re-greasing related to at least steering, suspension, brakes etc. My diesel car has a 20,000 mile service interval. Some items are checked every second or third service, but there are things which need to be checked at every 20,000 miles that have direct equivalents on an EV.

          1. Anonymous Coward
            Anonymous Coward

            Re: Servicing

            IIRC a Tesla had its suspension fail at around 80000 miles because the owner lived down a dirt road.

          2. MachDiamond Silver badge

            Re: Servicing

            It might be surprising, but the Tesla Model 3 has an oil filter on the motor packs, so oil changes/inspections and new filters are part of the maintenance regime.

      4. Starace
        Alert

        Re: Servicing

        Don't need sevice centres if you can't supply spare parts.

        Seriously it seems easier and cheaper to get parts for long discontinued models from collapsed manufacturers than it is for a Tesla.

        Maybe the constant updates don't help or maybe they just aren't properly organised. Strange omission though as not only is it a customer relations issue but spares is also usually a massive cash cow.

    3. Steve Davies 3 Silver badge

      Re: tesla & dealerships ??? WTF?

      Tesla has many, many faults and problem but having 'dealerships' or if you prefer, 'stealerships' was never their thing. They did direct sales. That has caused them problems in places like Michigan and Connecicut where the Stealerships have made sure that only they can sell cars to the public.

      Their showrooms were only ever staffed by Tesla employees. Most of them had a service centre attached. It was the showrooms that they closed or rather tried to close. Many got a repreive.

      Would you part with £100K+ for a Model X without having sat in one or going for a test drive? That's what Elon Musk wants to happen.

      1. Stevie Silver badge

        Re: tesla & dealerships ??? WTF?

        Clearly you prefer "stealerships".

        You know, you could take that to the next level by replacing one, two or even all three "s"s with dollar signs.

      2. MachDiamond Silver badge

        Re: tesla & dealerships ??? WTF?

        Tesla was following Apple with the placement of many of their showrooms by putting them in malls and other high traffic retail locations. The service shops are mostly in industrial areas where buildings are cheaper. The mass closure of Tesla showrooms was partly reprieved when Tesla found out that they didn't have an out on their lease contracts. To get out of a mall, you almost need to go BK to break the contract. Malls don't want vacant stores and it's getting hard for them to get tenants these days. Elon spoke sooner than the backend lawyer work was done and had to backtrack (again). They may have been able to close a mall store, but they may also have still been on the hook for full rent plus a penalty every day the store was not open (another typical mall contract clause). It may have made more sense to just keep the store open and plan to close it when the lease expired.

        Tesla needs a whole bunch more service centers. It's very inefficient to bring the mechanic/tools/parts to the customer than to bring the car to the service center. About the best they might do is triage where the car is to get parts ordered as quickly as possible. Service is the one big advantage to having dealerships. A Ford dealer has also got a big room full of common wear parts, filters, belts, etc. Some superstores have an even deeper depth of parts so in a country as big as the US, the part you might need to repair your car has a good chance of being available nearby. Most of those parts are going to be owned by the dealer so the manufacturer isn't carrying that inventory on their books nor do they have to warehouse those items. A friend of a friend with a Model 3 has been waiting over a month for a replacement headlight with an estimate of two more weeks. Water got in and corroded the PCB. Yep, a circuit board in the leaky headlight assembly. One would think that a headlight would be available from local stock or no more than a day away for such a new model. Nope.

    4. 's water music

      Re: Gets worse, doesn't it...

      Might make servicing a bit of a problem.

      Shirley tesla servicing involves an engineer sshing into your car and polishing up the firmware remotely

      1. MachDiamond Silver badge

        Re: Gets worse, doesn't it...

        Not if the SSD has been burnt out by too many write cycles.

  2. Paul Herber Silver badge

    Headcount

    Are comments concerning headcount in bad taste here?

    1. Charlie Clark Silver badge

      Re: Headcount

      Musk never seems to worry about taste.

    2. Commswonk Silver badge

      Re: Headcount

      Since when did considerations of taste prevent people posting things here?

  3. Andre Carneiro

    I don't get it...

    The Tesla Model 3 is probably one of the most desirable cars out there right now.

    The reviews are universally great. Owners rave about them.

    It appears they can't make enough for all the reservations and they're selling like hot cakes.

    "If you build it, they will come" and all that....

    And they're still in trouble?

    1. jmch Silver badge

      Re: I don't get it...

      IIRC I saw an article last year showing that based on a strip-down of model 3, Tesla was making an estimated margin of around 20% on the model 3, and for long-term sustainability they needed a margin closer to 30%. Of course as the make more of them they will learn to do it more efficiently, particularly with the batteries.

      1. Charlie Clark Silver badge

        Re: I don't get it...

        And that's assuming they can keep the price where it is, given the competition from China and elsewhere is for the mass market, then that assumption is probably wrong.

    2. Charlie Clark Silver badge

      Re: I don't get it...

      Eveyone else has seen this coming.

      Making cars is about economies of scale and the Model 3 has to sell in huge volumes to make any money. Musk has done some very clever stuff at Tesla but to break into the mass market was always going to require a lot more capital than his down-payment, snowball-like scheme was ever going to provide. For a while there was first-mover advantage but now others have caught up technologically and have the scale to be able to compete on price and still turn a profit.

      Basically, Musk is putting Tesla up for sale and cutting costs is like putting on lipstick.

      1. Ben Tasker Silver badge

        Re: I don't get it...

        He's also resolutely failed to learn from existing industry.

        Like his attempt to increase automation. The existing motor industry learnt about that the hard way quite some time back, which is why they don't do that. Sounds good on paper, doesn't work in practice and all that.

        1. John Brown (no body) Silver badge

          Re: I don't get it...

          Yeah, that whole episode of the fluffbot or whatever it was called struck me as typical DevOps/Agile where the people implementing it don't understand it. All that development money and time on a robot installer only to find that not only can people do it better, but that the damned soundproofing mats didn't work anyway. WTF? Did no one ever check the effect of the sound dampening mitigations as part of the system before deciding to go into production?

    3. petur

      Re: I don't get it...

      I think battery production is still a limiting factor but Panasonic last said that things were improving.

    4. Lee D Silver badge

      Re: I don't get it...

      It's easy to give away the farm and make a loss by supplying a decent product to people below the actual cost of production.

      You just have to have a rich idiot bankrolling it... or pulling it out of bankruptcy a couple of times, or maybe a few investors convinced that "one day we'll be selling thousands upon thousands a day"...

      No different to "Moviepass" in the US - that was a great deal for anyone who was a consumer. Pay a pittance, then watch as many movies in as many cinemas as you like! Wonderful! Doesn't mean it's a good business idea.

      For centuries people have implemented business models that resulted in wonderful value for the consumer, and great product, but at a loss. It's nothing new. The whole dot-com boom was basically the same thing. Here, have everything, for free, because it's "online". Now... whoops... who's paying for that?

      Musk bankrolls all his companies, he has legitimately insane amounts of money from his youth, most of his places have neared bankruptcy at least once, he's injected huge amounts of cash into them, because to him it's just a hobby / vision, not a business. Some of them "profit" in the short term (e.g. SpaceX) but most never see their full investment back ever. Even if they did, the investors would want their money back first before prices started to drop for the consumer.

      There's a reason that the shareholders in Tesla aren't particularly sad to see him gone from the board, and why they immediately raised prices and/or cut costs once he'd gone.

      Tesla, SpaceX, etc. are Musk's toy projects to spend his billions on. That's it. When the funding goes, the business underneath is basically unsustainable in the condition that it's currently run in. He's like the rich kid running a lemonade stand from his dad's Porsche and never making a cent. When he pulls out, and takes his funding with him, all that's left is a vastly unprofitable business. But, sure, he makes good lemonade with only the most expensive and finest Sicilian lemons...

      1. vtcodger Silver badge

        Re: I don't get it...

        "Tesla, SpaceX, etc. are Musk's toy projects to spend his billions on."

        Despite frequent claims to the contrary, government aerospace is and almost always has been basically a cost plus (modest) fee business. As long as you sell product, you will generally make (some) money.

        Automobiles OTOH ...

      2. Roq D. Kasba

        Re: I don't get it...

        We lose a dollar on each but make it up with volume!

        I suspect there's not actually that much of Musk's own cash in these projects, but a lot of local and national government money/tax breaks/incentives plus a bunch of hype cash from Silicon Valley

      3. Jellied Eel Silver badge

        Re: I don't get it...

        Musk bankrolls all his companies, he has legitimately insane amounts of money from his youth, most of his places have neared bankruptcy at least once, he's injected huge amounts of cash into them, because to him it's just a hobby / vision, not a business.

        Which is probably Tesla's problem. Musk may be a visionary, but Tesla's a large business with a lot of investors looking for an ROI. Plus there's the usual hot CEO issue of personal worth, ie tech billionaires only being that on paper & due to the value of their shares. Which can lead to problems, like good'ol Bernie Ebbers borrowing/investing based on his WorldCom stock, and coming seriously unstuck with margin calls. AFAIK Musk has borrowed heavily against his Tesla stock, so could be similarly vulnerable. Especially if that borrowing has been used to fund his other non-Tesla ventures, like Space-X, the Boring Company etc etc.

        Personally I suspect he's only got a couple of quarters left as Tesla CEO before being forced to hand over operational control to an auto industry exec who can try driving it into profit.. Which would probably also be good for Musk's health & sanity as he can't micromanage all his ventures at once. Especially if one or more hit crises.

        Plus there are mistakes becoming apparent, eg-

        https://www.youtube.com/watch?v=o-7b1waoj9Q

        Where the great 'RIch Rebuilds' highlights how you can brick an entire Tesla due to excessive OS logging.. Which is really a noob error from an 'IT' shop.

        1. MachDiamond Silver badge

          Re: I don't get it...

          "Where the great 'RIch Rebuilds' highlights how you can brick an entire Tesla due to excessive OS logging.. Which is really a noob error from an 'IT' shop."

          Rich or Pete hit the problem on the head with the comment about stuff being designed by software people. The problem that Pete found shouldn't have happened and wouldn't have if there were somebody on the team more oriented towards hardware design. AM vs. FM (Actual Machines vs. F'ing Magic). Getting to that board is a project in the S and X, but a nightmare in the Model 3. It's also a SPP (Single Point of Failure). That chip failing while the car is driving itself might be pretty frightening.

      4. Killing Time

        Re: I don't get it...

        @Lee D

        'There's a reason that the shareholders in Tesla aren't particularly sad to see him gone from the board, and why they immediately raised prices and/or cut costs once he'd gone.'

        I'm really interested, when did this happen?

      5. MachDiamond Silver badge

        Re: I don't get it...

        Most of Elon's wealth is on paper. If Tesla were to fail, he would be sunk and so would SpaceX due to loans between the companies. His money is not cash in the bank and he's been cash poor to the point where he's had to borrow money from friends to keep the power on at his house. It's not hard to find the stories. If he had billions in liquid funds, he could keep buying Tesla shares and take the company "private" personally.

        The product is not too bad, but it's a binary set. If the company goes away or gets sold through bankruptcy, will somebody else still honor the free Supercharging for the older S's and X's? Will they honor the rewards programs where some people are in line for a free Roadster 2.0? Will there be updates to onboard maps and will all of that legacy automation hardware be supported in a future software release? Without the promised and implied support, the car itself loses a tremendous amount of value. I don't sense that same uneasiness about Kia or Hyundai going belly up and their recent EV releases have line ups to buy them. When I looked at the Kona EV at my local dealer, they told me the battery has a lifetime guarantee. That pretty much knocks down a whole load of arguments about EVs. I'm not sure of the particulars, but the estimates on usable battery life in-car is around 10 years right now with another 10 years of expected life in a backup application. That means that if/when the battery is replaced in the car, it will still have resale value.

    5. Anonymous Coward
      Anonymous Coward

      Re: The model 3

      Is a decent enough car but unless you are into total minimalism and doing everything through the huge single point of failure (remember them IT People) aka the touchscreen then don't go near it.

      If that screen cracks then it is upwards of £1500 to get it replaced.

      Get rear ended? Repairs will start at £15,000 and it is not even an Aluminuim body.

      I borrowed one in California last year and frankly hated it. Even after five days and close to 800 miles.

      When I got back home, I cancelled my Day 1 Reservation on a Model 3 and put the money down on an I-Pace.

      That really does put a smile on my face and I got it 4 months before I'd get my Model 3.

      1. Anonymous Coward
        Anonymous Coward

        Re: The model 3

        Interesting, I have been considering both, and I found that the iPace gets very expensive compared with the Model 3 partly due to the long list of expensive extras for the Jaguar. Also, there seems to be nothing comparable to the Tesla Supercharger network.

        Not sure how likely I would be to crack the touchscreen in the Model 3 and puzzled as to why Model 3 repairs might be more expensive than for the iPace.

        Currently still undecided but there are ex-demo iPaces available for immediate delivery which is tempting.

        1. Anonymous Coward
          Anonymous Coward

          Re: I-Pace vs Model 3

          I went for the Jag over the Model 3 for a number of reasons.

          - I was fed up waiting for it. Now more than 3 years and AFAIK, none have reached UK customers yt

          - Didn't like the minimalism. As unsure but found it bland and boring.

          - The screen is how you control the car and didn't like not being able to glance down to see the speed.

          - You have to pay for supercharging now and so far with the Jag (and 8400 miles) I've not had an issue with chargers. Most of it is done at home.

          Yes it is more expensive but I just found it a totally differen driving experience. It felt like a luxury car and not a typical american car.

          Why not take an I-Pace out for a test drive? Give it some welly as well.

        2. MachDiamond Silver badge

          Re: The model 3

          "Also, there seems to be nothing comparable to the Tesla Supercharger network."

          Visit Chargepoint.com and set the filters for DC fast chargers/non-tesla. There are lots of them out there and more going in all of the time. The big question is, how much of the time are you making >300 mile trips? Tesla has published that over 90% of Tesla owners do the vast majority of their charging at home. Do you work somewhere with free charging or could you lobby the higherups to put some in? There are government programs to subsidize EV charge points at company locations. Sometimes the local power company will offer a rebate/incentive.

          There is always the option of renting from Hertz if your trip doesn't take you past DCFCs all of the way. That also keeps the miles off of your own car from those long trips and you can get something that is optimized for the trip you are making. You also get the benefit of no worries about service if something breaks miles from home and you get a replacement car to continue on. Next year a couple of new charging stations may make that same trip dead simple.

          There's a million ways to crack a laptop screen. It's not just the cost to replace, it's having to wait possibly months to get the replacement. They also replace the whole module, so you are paying for much more than just the display. A crack may be no worse than all of the phones I see being used with busted screens, but it could also blank out a portion that doesn't let you turn off the heat or AC or any other function that could be annoying not to be able to adjust. I love mechanical switches for certain things.

          There is the issue with the iPace being considerably more expensive than the M3, though. I'm not a fan of leasing, but EV tech is changing so fast that leasing something for 3-4 years as a bridge until even more models are released might not be a bad path to take.

      2. jmch Silver badge

        Re: The model 3

        "Get rear ended? Repairs will start at £15,000 and it is not even an Aluminuim body"

        If I get rear-ended I would expect the culprit's insurance to pay

        1. MachDiamond Silver badge

          Re: The model 3

          "If I get rear-ended I would expect the culprit's insurance to pay"

          You just hope they are insured and have enough coverage to pay for the damages. With Teslas, insurance companies lean more towards totaling the car than they do for other brands due to the lengthy and expensive repair process, which you also have to slog through. I don't think you can pin the person that hits you with 4 months of car hire while your car is being repaired.

    6. vtcodger Silver badge

      Re: I don't get it...

      "The reviews are universally great."

      Five minutes with a search engine will turn up a plethora of negative reviews. Typing 'tesla model 3 "negative" reviews' into Google got me 19,400,000 hits.

      1. Andre Carneiro

        Re: I don't get it...

        I meant reviews from automotive publications.

        It's easy to find lots of people with gripes on Google :)

        1. Anonymous Coward
          Anonymous Coward

          Re: I don't get it...

          based on how unreliable other product-related reviews are, particularly in consumer electronics, I'd imagine that reviews from automotive publications are likewise of little value and merit, partly, because most of them are paid-for adverts, and partly, because they're so short term, that they fail to pick up on underlying, recurring, problems with that product.

          The only reliable reviews are those coming from a _large_ number of hands-on users (and even these can be skewed, either on purpose, although less likely for expensive products, or the opposite way, because humans prefer to moan than to praise).

          1. MachDiamond Silver badge

            Re: I don't get it...

            "large_ number of hands-on users (and even these can be skewed,"

            I saw one video on YouTube where a guy was riding in his friend's Model 3 and they were gushing about it. The car only had one problem, the screen didn't work. That didn't affect their Tesla love fest one bit. Hmmmmm. I'd say they were both pretty forgiving when the only display in the whole car doesn't work and there is no way to adjust anything, see a map, know how fast you are going or what the battery status is.

        2. Charlie Clark Silver badge

          Re: I don't get it...

          Car reviews have for years been paid for by the magazine's main customers: the advertisers. Every "car of the year" award is really just an "advertiser of the year" award.

          And as anything coming out of Silicon Valley generally generates more buzz, it also automatically generates more favourable reviews thanks to excellent PR. Critical reviewers OTOH soon find themselves cut off from the freebies.

          All this said, there is a lot to admire about Tesla and how it has shaken up a bloated and complacent industry but the finances were always shaky and got worse when Musk von Lipwig used the company to bail out his brother.

          1. Steve Davies 3 Silver badge

            Re: Car Reviews

            Tesla does not advertise so there are no advertising revenues to protect.

            Others have said many times...

            the best thing about Tesla is Elon Musk

            the worst thing about Tesla is Elon Musk

            1. Charlie Clark Silver badge

              Re: Car Reviews

              Silicon Valley has virtually perfected advertising as PR, and, with enough PR you don't need to advertise. Hence, the "right" people and publications get early access to the new hotness in the knowledge that it will drive sales of their publications, which keeps their customers – the advertisers – happy.

              The Valley also likes to suck up the oxygen of publicity so that competitors elsewhere in the world have a harder time getting headlines or investors. This is why we hear all the time about Tesla and less about Rimac and the Chinese company Neo?, and the rest.

              The timing of Hyundai's proposed tie-up with Rimac is probably just coincidental…

              1. MachDiamond Silver badge

                Re: Car Reviews

                I agree about the O2 deprivation. There have been lots of stories about Tesla building a pickup, but one rarely hears about Workhorse trucks that have been out for a few years and are set up for people that use their trucks for work.

      2. Mark 85 Silver badge

        Re: I don't get it...

        I daresay most of those hits can't possibly be reviews as Tesla has sold very many yet by comparison.

        1. veti Silver badge

          Re: I don't get it...

          Pro tip: the numbers of results that Google claims to have found should not be taken literally.

          When Google claims there are 19 million results to your query, sometimes it's worth paging through some. Quite often I find the results dry up after 20, 30 or so pages (i.e. well under 1000 actual results).

    7. planetzog

      Re: I don't get it...

      Try the Jaguar i-Pace. A better car in my view,

  4. Charlie Clark Silver badge
    Stop

    A translation for employees

    Better dust off your CV because unless I can find a buyer then we'll have to fold. And even if I do find a buyer you're most likely out of a job as GM/Toyota/whoever will probably mainly want the IP. Stockholders will probably get a nice deal but for the rest of you, last year's t-shirt is probably as good as it gets.

    Because "zero-based budgetting" has worked so well for Kraft-Heinz, hasn't it?

  5. jmch Silver badge

    "In the first quarter of 2019, Tesla lost more than $700m despite sales of $4.5bn"

    Since they keep ramping up production, especially of model 3, that points to annual revenue close to $20bn which is pretty impressive. On the other hand those numbers indicate it isn't just a bit of belt-tightening that's required, they need to shave almost 15% off costs to become profitable. Question is, how much of that expense is structural (salaries and production costs), how much is one-off (eg factory building and tooling costs), and how much is financial (debt-related). It also depends on whether they're immediately booking revenue for orders and pre-orders or accruing them to match the manufacturing / deliveries.

    Depending on the mix of those expenses / revenue booking rules, those bottom-line numbers could be extremely healthy or extremely unhealthy

    1. Andre Carneiro

      That was actually a very cogent comment. Thank you :)

    2. MachDiamond Silver badge

      "Since they keep ramping up production, especially of model 3"

      They're pretty close to maxed at the Fremont plant. They have been able to get the production numbers they have been doing due to the young age of the equipment. Older car plants spend more down time doing regular maintenance so they aren't shutting down the line doing repairs. Tesla will find the same thing out before long. If they have to ask people to clock out and go home very often, they will clock out permanently and find a better job. The paint plant is another bottleneck. California is a nightmare when it comes to painting or any other process that creates fumes or particulate matter. A little bit of arithmetic shows how fast the robots have to paint each car to keep up and there could be other processes that just take the time they do regardless of any "plans" formulated by C-level executives. The only way around the bottlenecks is to create secondary lines and there doesn't seem to be any more room for more tents unless employees park their cars someplace else and are bussed in.

      There was a really great 3-part series with James May as they followed a car through the Mini plant. It's a treasure trove of information about modern mass production of cars and worth digging around to find a copy somewhere. A Mini comes off the line there every 63 seconds when the line is running. The really good bits are when they talk about automation and what holds makers back from using even more automation. Find it and have a watch if you are interested in the car biz.

  6. Trollslayer Silver badge
    Flame

    Battery fires

    Let me guess - testing was cut short.

    The usual story in such cases.

    1. Magani
      Flame

      Re: Battery fires

      Yesterday the company updated battery software on Models S and X following vehicle fires in Hong Kong and Shanghai. Tesla said it was acting out of "an abundance of caution" and its engineers are still investigating the incidents.

      Is this the same sort of 'abundance of caution' used by Boeing in the B737 MAX?

      Asking for a friend...

      1. MachDiamond Silver badge

        Re: Battery fires

        I find it funny that even though Tesla admits they don't know why those fires started, they are sending out a software patch. Hmmmmm. If they REALLY don't know, it could be a hardware problem or are they dialing back something that they knew was sorta close to the edge?

        The joke at the rocket shop was that we'd just "fix it in software". Most of the time, hardware changes were a complete bastiche to do since systems were packed pretty tight. The problem was that the software department was really good and it was usually a hardware issue. Smaller rockets can actually be harder to implement than the big ones.

  7. juice Silver badge

    Are expenses really that significant a cost?

    In the overall scheme of things, are expenses really a measurable element of a company in the manufacturing industry (as opposed to a media or marketing company)?

    I've worked for several companies where there's been repeated rounds of "cost efficiency" drives; each pass usually involved moving approvals further up the management chain, together with new restrictions on what could be claimed. Along with various tricks to move as much stuff as possible into the Capex budget, since this made things look better in the EOY summary.

    Unfortunately, this also led to employees having to spend more time working around these limitations and/or spending their money to get stuff done, which in turn measurably impacted both efficiency and morale.

    So arguably, the intangible costs far outweighed the financial benefits. Alas, the former doesn't tend to be visible on the bottom line!

    1. Anonymous Coward
      Anonymous Coward

      Re: Are expenses really that significant a cost?

      As people have stated above, it's generally a sign the management at the top are out of good ideas and are reading 'the pointy haired boss guide to management'.

      I used to work for a rather large plane builder that believes safety equipment is an optional extra. They outsourced the expenses process to a 3rd party, which meant whenever you put through expenses, the third party would always try and find something to query and ask you to provide a detailed report on all costs (this obviously makes them look really busy to the idiots paying their fee).

      Most of the time the expenses queried were for small items like a coffee or sandwich, which was bought when a flight or train was delayed. Cost of expense a few pounds, actual cost to the company paying for an employee to produce a report on all their expenses, many pounds. So the company was really losing a significant chunk of change, chasing a small amount of money.

      Setting a minimum threshold that would just be accepted would have saved them so much money in the long run

      1. John Brown (no body) Silver badge

        Re: Are expenses really that significant a cost?

        "Most of the time the expenses queried were for small items like a coffee or sandwich, which was bought when a flight or train was delayed. Cost of expense a few pounds, actual cost to the company paying for an employee to produce a report on all their expenses, many pounds. So the company was really losing a significant chunk of change, chasing a small amount of money."

        It's been such a well known process that there's even a very old saying already in place for just such occasions: Penny wise, pound foolish.

    2. MachDiamond Silver badge

      Re: Are expenses really that significant a cost?

      QSC amplifiers stopped inventorying screws and other cheap parts. Instead they required vendors to make sure that there were always enough on hand in the bins or they'd lose their contract. The company already had a very good idea about how many parts hit the floor, are defective or damaged during productions so vendors can't rip them off for more than a few bucks here and there.

      What this did was allow them to get rid of the cost to count things where the labor in the counting far exceeded the value of the parts being counted. All of those small parts were "expensed" as they were purchased since inventory was often not more than a couple of weeks at the most and usually measured in hours for the most common parts. That's the sort of thing to look for that makes a good manufacturing engineer worth his salt. Another idea might be to get rid of dental insurance and hire a full time dentist or two and build them an office on site. Why pay the executive salaries at the insurance company? There are probably dentists that wouldn't mind chucking the hassle of running their own practice in exchange for a good salary and no worries about equipment. What else? I'm sure there are plenty more ideas to wring more savings from things.

  8. Chronos
    Facepalm

    Critical vs Functional

    Yesterday the company updated battery software on Models S and X following vehicle fires in Hong Kong and Shanghai.

    Batteries, particularly those on fire, are strictly in the hardware domain. Software updates that "stop" them raise the question of how the giddy frig software is allowed to overcharge/under-regulate charge and discharge cycles in the first place. That, I would have thought, should be the job of the pack designer who, one would hope, adds at least a thermistor to the region around each cell and makes things stop/slow down quite outside the firmware's control when one is noticed to be going a little high-R (PTC thermistor, if anyone cares, as they'll fail high-R if a leg falls off and trip the protection).

    Or do we not separate critical and functional any more? Nothing stopping the critical bits throwing a CANbus message out saying "whoa, 4Q, sunshine, you're overtaxing the cells" but the resultant action should be to go ahead and limit the current anyway, regardless of the artificial stupidity's decision.

    1. Anonymous Coward
      Anonymous Coward

      Re: Critical vs Functional

      No, PTC thermistors you do not need as the resistance changes very rapidly around the Curie point. The solution in battery packs is obvious and a certain aircraft company might have heeded it. You have lots of thermistors, but not one per cell because cars have thousands of the things, in the downstream of the cooling circuit. Then you look at the temperatures. Even tiny, cheap microcontrollers have lots of analog inputs these days, and can tell if a channel has gone O/C or S/C. PTC not needed.

      I suspect Tesla has already done this - because having used lithium batteries in the past, I would - but need to adjust thresholds.

      You can't simply limit current to the motor because it has to be converted to multiphase AC; the motor control circuitry must be told to restrict maximum power, you can't simply put a honking great MOSFET in the DC input and use it as a current regulator, because the downstream voltage will drop and soon after your MOSFET will melt.

      tl;dr there is a feedback loop involved - the battery temperature has to be used to tell the motor controller what voltage to apply to the motor, thus reducing battery temperature.

      1. Chronos

        Re: Critical vs Functional

        Even tiny, cheap microcontrollers have lots of analog inputs these days, and can tell if a channel has gone O/C or S/C. PTC not needed.

        Except you still need code to handle the error. If silly-con valley employee #183453 fat fingers one line, all bets are off. You need to do this in a hard-wired, can't be pissed about with way on each cell pack. if (analog.read(A0) < BATTERY70CPOINT) then pwm_global_bias--; simply isn't good enough. As I said, there's nothing wrong with a bit of feedback as long as you have a good old-fashioned crowbar-like failsafe with a bipolar attitude to thermal runaway. KISS principle for safety, always.

        You can't simply limit current to the motor because it has to be converted to multiphase AC; the motor control circuitry must be told to restrict maximum power, you can't simply put a honking great MOSFET in the DC input and use it as a current regulator, because the downstream voltage will drop and soon after your MOSFET will melt.

        I said nothing about limiting current in the traditional sense. PWM. You don't leave a power FET in between its off and saturation point; a honking great MOSFET (probably HEXFETs in this application) is usually a fuckton of them parallelised and the power wasted from a load of those in limbo would probably fuel a miniature sun. Basic, assumed practice which I shouldn't have to explain here.

        As for multiphase AC, assuming you meant that literally, these things are either "honking great" steppers, i.e. pseudo AC which is really just a DC source being alternated between windings or pure PM units, either of which means you can recover energy through regenerative braking, which is where the concern about rare earth mining for these electrojalopies comes from. If Tesla are using energised field coils and fancy waveforms, someone's not doing their design properly and it's no wonder Jezza can't get 300+ miles from a fancy milk float.

        I still maintain there should be an autonomous safety system segmented from the "upgradable" firmware that any old jumped-up skiddie with a massaged CV can piss about with and push OTA which can overrule the likes of the infotainment system when the owner sticks it in OMFG, THE TORQUE! mode. I'm sure most rational human beings would rather their car lose a bit of oomph or stop than lose all power and catch fire which, ironically, also disables Tesla's fancy door latches which, as far as I can ascertain, were only implemented so they can open and close the doors in "celebration" mode. Yes, there's a bit of string in the rear quarter for first-responders but that's little consolation when you're sitting there wondering why it's so hot and there's an overwhelming smell of roast pork coming from your trousers.

        That last point emphasises my concern with fancy bollocks over safety.

  9. Anonymous Coward
    Anonymous Coward

    cut expenses

    I'm sure they'll appreciate he's saving for his little Martian rocket, and given he's up against two other ego-wankers, Bronson and Bezos, the race is heating up and you have a moral duty to support your boss. Or else.

    1. DJO Silver badge

      Re: cut expenses

      What a pickle, I suspect you meant Beardy (Sir Richard Charles Nicholas Branson), not "Bronson" who was either an actor or a criminal.

      1. Anonymous Coward
        Anonymous Coward

        Re: cut expenses

        yes, sorry, Bronson was the bike-flying bloke in a Nazi circus (and a security guard in Mexico ;)

  10. JoMe

    Having been in the automotive industry in the past

    If Tesla are operated in any way similar to the likes of Ford or GM, then the amount of spend waste would be ridiculous.

    1. Anonymous Coward
      Anonymous Coward

      Re: Having been in the automotive industry in the past

      And if they are anything like Toyota or VAG? But I jest.

  11. Anonymous Coward
    Anonymous Coward

    I get that Musky-boy is a visionary genius blah blah blah but all his companies sound shit to work at, even as far back as PayPal.

  12. Stevie Silver badge

    Bah!

    I wonder if all this belt-tightening has put the kybosh on the eagerly awaited automatic pre-collision "YeeeHaaa!" klaxon?

    1. 's water music
      Mushroom

      Re: Bah!

      I wonder if all this belt-tightening has put the kybosh on the eagerly awaited automatic pre-collision "YeeeHaaa!" klaxon?

      They probably won't be able to afford the royalties for the Slim Pickens sample any more. A shame because segueing into 'We'll Meet Again' post-impact would have also made sense and would have cut down on the costs of audio editing.

      obvs-->

      1. Stevie Silver badge

        Re: Bah!

        I was thinking more of the one used in "I Want My Baby Back".

  13. Anonymous Coward
    Anonymous Coward

    Maybe the company is going too fast?

    Musk should check the Paedo. Speedo, I meant speedo!

  14. Howard Hanek
    Holmes

    Collect Belts and Shoelaces

    ...so they won't hang themselves before the end.

  15. Anonymous Coward
    Anonymous Coward

    Too expensive to buy and service

    I'll stick with my ancient-organic-material-powered dinosaur.

    Sorry kids of the future, petrol power/sound/smell was like no other.

    Brrrrrrrrrrrm.

  16. Colin Bain

    Numbers

    Judging by the number of Teslas I see on my relatively commute through relatively affluent Toronto, I am surprised at the relatively large quarterly sales. The number of the loss on those sales is not that high really and the price needs a bit of tweaking. Perhaps the subsidies from various governments is drying up, as it ought to, as the product in theory should stand (or run) on its own four tires (tyres).

    The range of the electric vehicles is not large, which may account for the lower maintenance, and they are luxury/status items which I might suggest are used less and more for showing off.

    I am less convinced that electric vehicles are going to be really viable in colder climes, like Canada, so we have a ways to go. My impression is that historically, the leader will start the pack off, make all the mistakes, and eventually fail economically, but succeed reputationally. Coming second is nearly always more profitable!

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