Not sure I 100% agree with Paul Graham, but I haven't thought about the situation this way before

https://twitter.com/paulg/status/650690930878447616
Paul Graham
‏@paulg
Now that software is eating cars, other car cos won't catch Tesla unless they can hire first rate programmers. Which they can't.

People respond "Oh, but what about Apple?!" (I guess ignoring Google because their focus seems to be on self-driving software right now)

https://twitter.com/paulg/status/650720567843119104
Paul Graham
‏@paulg
Between Apple and Tesla I would bet on Tesla. Apple took years to ship a watch. How long would a car take?

What makes you think car companies can't hire first rate programmers?

GM alone has almost 10k programmers, many of them are "top" grads in any reasonable sense of the word. It's quite possible, if not likely, that GM will have more programmers than Apple within the next 2 or 3 years.

And yes, they pay top dollar.

That sounds like a question for PG.

From a pure comp perspective, they're off at least 20% at the mid-range with equity having little upside. A Senior software engineer at GM or Ford makes 132k all in(less at other automakers, even less in Germany). A good senior software engineer has no problem making 150k base and closer to 165k all in. The top guys make 200k-350k even outside the Bay Area.

Not to mention no software engineer in this kind of market would willingly live in Detroit. Further, most young engineers are more likely to see legacy automakers as stodgy and lacking in innovation. A legacy automaker is seen similar to a defense contractor like Boeing, Lockheed or Raytheon - they attract a lot of very average talent while the Googles, Ubers, Facebooks and Netflixs of the world are attracting the top tier. If you really want to work on rockets and do something innovative you're joining a new space company like SpaceX, Sierra Nevada, Virgin Galactic, etc. rather than a place where you can't innovate, the bureaucracy is high, and software engineering practices are 10 years behind.

Yeah I'll admit I don't know the specifics but it seems unlikely to me (from the perspective of working with developers daily) that top developers are flocking to GM. Also I think it's relevant to point out that top grads aren't as strongly correlated with top talent compared to most other industries.

Since autonomous cars are right around the corner, wouldn't the best way to evaluate Tesla be how they fit into the future of that industry? Whether that be supplying Uber, competing with Uber, outright replacing Uber, etc..

If their future is just trying to compete with BMW then I'd think their upside is pretty capped from here on out even if everything goes right. However, if they are the #1 manufacturer of autonomous cars to the integrated ride sharing/taxi system (or own the system) then I would think they would have potential to be a lot more profitable. Robots don't fatigue and you could put a car on the road like 15 hours a day, monthly/quarterly/annual membership packages for 1/10th the cost of car ownership, etc.

I don't really understand how any car company (nevermind TSLA) would maintain valuation if sales start dropping 5-10% a year within 8-10 years. Don't they all just have to revamp at that point? Unless they can fearmonger and stave off the disruption.

I think Paul Graham's assumption that software is the more difficult part of car manufacturing is unfounded. The old line auto industry should easily be able to hire what they need. In fact they've been doing it for decades.

I assume that's the reason why Google and others are selling software to them or the carmakers buying startups.

Carmakers cant compete on software, it's utter non-sense to think differently. Their expertise lies in the supply chain and product execution not software.

Some comments in here make me think people have never worked in a large multi national company. The 10k programmers comment is the perfect illustration of that. They are terribly inefficient in that regard.

Carmakers lose on software but if it becomes that relevant before IT firms catch up with the carmaking side of things is to be determined.

Tesla is looking more and more finished. The Model X was a blunder on several levels:

- Kind of ugly; lacks cool and mass appeal. The "falcon wing" doors look like they're trying way too hard. Huge blunder.
- Far too late
- Significantly more expensive than expected/promised
- Bad engineering decisions that made things run a couple of years late.
- Bad design decisions such as the rear seats not folding forward, which is very dumb and frankly unfathomable.

Even Morgan Stanley, a hyper Tesla bull, makes note of these things. Meanwhile, alternatives like the 2016 Chevy Bolt are coming out:



It's a nice looking car and you get most of your green cred/cost savings/around town electric cruising without the absurd bull**** of range anxiety and having to find a charger and stop for half an hour on long trips.

What's more, it's $33,000 in 2015 as opposed to $100,000 (or $35,000 in 2018). As batteries continue to improve more and more cars are coming out at more and more price points that will smoke Tesla, from pure electric to more compelling hybrids (imagine the 2016 Bolt in 2018 with improved performance and 2x electric range), why would you own a Tesla?

Been shorting the last couple of days, I think it's probably worth continuing to.

That means nothing. Only the end product.

You're overvaluing. At 500 miles and 0-60 in 3 seconds, no one cares any more. It's game over; there is no longer a differentiator between car makers except for the ones that exist today, on which everyone has Tesla smoked.

No I haven't, but from what I've seen it's a rare writer who gets access to Musk who doesn't lick his butt and call it the best thing they've ever tasted.

The waitbutwhy guy is a perfect example. He was gushy and no that bright and ideologically on board with everything, so Musk's assistant called him up and gave him two hours with a very busy man. In return for a serious brown noser of an article.
Musk is an incredibly careful handler of PR. On par with a full blown sociopath IMO (the effect he has on people adds to this IMO; narcissists usually have people gush about them). I have the benefit that you don't of watching Tesla all the time (it's my most profitable stock by far, both long and short), and I watch its announcements, and how the PR cycle is handled. Musk is more talented than a first rate pump and dumper. For example, when Tesla was having its battery fires destroy its car from road debris due to its ****ty design, Musk publicly claimed that he'd asked the NTSC to investigate, in order to get ahead of the news cycle amidst his tanking stock. More examples:

NHTSA: Musk claim is false
Tesla hand slapped by feds over safety rating claim

Then there's constantly missed production and price targets, which your genius consistently overestimates (why?), "announcements" of new things, creative accounting, tweets or premature data releases conveniently timed when the stock is tanking or there is bad news, etc. Saying he's "comfortable" with the level of cash right before selling $750 million to bag holders to keep the company going.

Musk is an absolute genius at handling the PR cycle, and part of it is maintaining this "Great Man" image.

It's a shame you've bought the bull****. You're an intelligent guy. I guess we all need our heros.

I actually agree with that statement. It doesn't mean what you think it does. And people who fill Great Men memes gets all kinds of gushy stuff said about them. There are some choice Hitler, Stalin and Mao quotes out there if you want to find them. It's the nature of the world.

As for his achievements - SpaceX is a wonderful achievement and a Ford-like improvement in process engineer and thinking differently about how to do things. Musk can take credit for investing in it and getting on top of it. His engineers and co-founders did the rest of the (and the real) work.

The real problem is when this is transferred to other things, like Tesla. Tesla is an expensive disaster paid for by pump-and-dump bag holders, which like I said has made no difference to anything (electric car adoption, climate) and never will. Electric cars were always coming. It was purely a matter of battery chemistry catching up. The rest is irrelevant. Nothing Musk is doing is making that happen faster. There are thousands of researchers around the world working in labs on better and better batteries; truly extraordinary amounts of money are being poured into it. Musk makes no difference to that. The high performance, long range, low cost pure electric car was always inevitable post 2018-2020 purely from technology. We just needed the battery chemistry to be there, which it almost is. I know he's hoisted his flag on this cause, but Musk has made no difference, and he is going to do jack **** for climate change or electric cars. You're smart and will understand that if you actually stop and think about it.

You overestimate people. And if they say what they truly think about Great Men. And it's not really about fooling. SpaceX makes him worthy of that praise. It's the bull**** that bothers me.

He's very intelligent and not afraid to think big and has an enduring drive to succeed and do which he puts into action. It's the latter that makes him praiseworthy. The rest is just hyperbole.

I remember reading the Morgan Stanley report few months ago that put a price target of $500 on TSLA.

They had the energy division and car sharing division valued at like 20-25B alone IIRC. Two businesses that barely exist right now. It was a good illustration of how persuasive Musk can be.

Maybe the Model X is a faliure, but its pretty rich to suggest the Chevy Bolt is going to spell doom for Tesla. (or anything coming out of GM for that matter given what we have seen from both companies.)

First, you have posted a picture of the 2016 Volt, there is no such thing as a 2016 Bolt. Second, the electric range of the car you have posted a picture of is less than 60 miles. It's a hybrid.

The Bolt is GM's upcoming pure EV that you think will spell doom for Tesla. (Slated for late 2016 early 2017 delivery)



Projected price for the Bolt LT 33k; Bolt premier is 37.5k. So about inline with the Model 3 projected price. Range on the Bolt is projected at 200 miles; so in the absolute worst case the Model 3 will be even on range.

If you think people will overwhelmingly prefer that POS in the pic above to what we've come to expect from Tesla for approximately the same price then we'll just have to agree to disagree.



lol. Nice red button bros.

Firstly, your picture (including the button) is a test car. I agree it's a mess.

Secondly, I'm talking about the Volt (the car linked/pictured), and yes I know it's a hybrid (sorry for the confusion with Bolt). It's an example of how hybrids are getting more and more compelling. It's a nice looking car and you get most of your green cred/cost savings/around town electric cruising without the absurd bull**** of range anxiety and having to find a charger, and stop for half an hour on long trips. In short, it's a less expensive Model 3 without any range problems, that's available right now. Imagine what it will be in five years, when Tesla is supposed to be ramping up its "low cost" mass production car.

Have a read of the review for the first glimpse of why "pure electric" vs "range extended EV" is going to matter less and less in term of getting the EV experience, and the latter's huge advantages will win until batteries range problems are over.

Volt sales are near cancellation worthy. Sales are off 40% compared to 2014, and dealers can't clear out the 2015 models before the remodeled 2016 arrives.

detroit free press

A brief glance at HEV and EV sales suggests that your hypothesis is incorrect:



Additionally, from the Detroit Free Press article linked above:

Love the detailed posts.

http://insideevs.com/monthly-plug-in-sales-scorecard/

If you watch the X kickoff video, the Tesla is one of the safest cars and it also cuts air pollution inside with a massive filter. It can park itself, and avoid accidents. When you walk up to the car the door opens you sit in it and it closes without touching anything. That should cut down on grime on the doors. The falcon doors are nice. The suv looks very good to me, actually the S does not look that good to me, ok but not elite. X looks much better.

Do I own it, no. Do I short it, no but I don't short anything. If I was going to short it I would write call options if I could afford call options. p/s is about 10, that is not Elon's fault. If I were Elon I would issue a bunch of stock to eliminate all debt,as that is what the stockholders want. TSLA only has 2 billion in debt, GM issues 4 billion in debt a QUARTER and has no cash flow. But most car companies have p/s of about .3, so in terms of sales per share you are paying 30X for TSLA. TSLA seems to suffer from miners insanity (trying to mine the most gold rather than seek the most profit).

If I were TSLA, I would scrap is model 3 and try to make the S and X as cheap as possible, maybe 1/3 the current price. I would also look at the truck and RV space. A TSLA RV with solar panels and a 300 mile battery would be awesome. How about a massive truck faster than any gas car on the track.

TS -

Thanks for the reply---especially interesting because you follow Tesla so closely, which I didn't realize.

You've shifted my perspective toward yours on two items; made me disagree even more strongly on a third; and confused me so thoroughly on a fourth that I suspect you're leveling a bit ITT.

First, I agree that I'm overrating the Captains of Industry across the board. In pure math (most of my background) the very best people are extremely influential. But the long-term behavior of technological progress is much more complicated, no doubt.

Second, I'll also concede that I'm underrating the ability of the existing automakers to build, market, and flat-out sell cars. (Even the ones from Detroit.) Whenever they finally get serious about BEVs, I guess they'll make some pretty passable vehicles.

Third, you are just way off still trying to put Musk on the narcissist spectrum next to Trump. He's a genuine eccentric, a child prodigy who was buried in an avalanche of trauma and abuse and came out of the thaw as, well, a bit of a freak and a pretty weird dude. (Skim Vance's book---it's straightforward journalism really.)

Fourth, you keep saying that Tesla is "finished." What, precisely, do you mean by this?

If you said Tesla was "finished" when it was a two-man startup whose strangely douchey founders decided to build EV's to "solve the oil problem"---then I would know exactly what you meant.

If you said Tesla was "finished" in 2008 when an embattled Elon was using refundable customer deposits to keep the company liquid while looking for the next loan (according to Vance's book)---again, I would know what you meant.

But today, when Tesla has best-in-class customer satisfaction, record-breaking reviews, 10k+ employees, snowballing political access, and a CEO who is (given the most uncharitable assessment) a machiavellian PR genius who has suddenly become a celebrity...what do you mean, Tesla is "finished as an automaker"? Who or what is going to finish them, given they've made it this far?

Musk is both an extremely skilled motivator and communicator along with someone who has had companies under federal investigation for fraud along with dubious earnings based on very likely fraud.

I don't see how people can dispute these facts. It is like disputing ice is cold.

He also talks like an idiot. I'm shocked Peter Thiel didn't slap him in the mouth whenever he spoke. But maybe he learned this sort of antisocial idiocy. Or perhaps it is the same stupidity that leads people to invest in uBeam.

He is a very high order genius who grew up with an abusive father who's not allowed to meet any of his grandchildren, while spending most of middle school as the target of violent bullying that hospitalized him at least once.

Uh, yeah, he's socially awkward.

Does the abusive father take credit for the complete bull**** timelines? Or is that all Elon?

What about the fraud? SolarCity federal investigation? The ongoing issues with California ZEV credits? Is it fraud if it isn't convicted? I don't know.

Perhaps we could touch on SpaceX's success at achieving what NASA did in the 1950s... I guess only 70 years till Mars?

He is a great businessman, but the reverence towards him just results in idiotic fanboys or haters.

Subfallen, I haven't read his biography. Do you think he has something like Aspergers? I don't believe in a lot of the psychobabble, but they are a useful clustering of observable traits.

As for Tesla being "finished", I mean they've been too slow at what they're doing (years behind their own schedule, and at strangely heavily inflated prices from what was planned), have made major mistakes, and will continue to make more by the looks of it, such that their stock will enter a death spiral of declining confidence. The Model X has screwed them in various ways - too slow, overengineered, a little try hard (both of the last two with the falcon wing doors), and without the "wow" factor of earlier cars.

The major battery and auto makers are already at $145/kWh. This is death for Tesla, and means their gigafactory will be irrelevant.

There are three differentiators for Tesla right now:

- Pure EV and all the benefits - smooth, quiet, instant response etc
- Range ahead of competitors due to using large battery packs and the excellent design decision of batteries forming the base of the car (handling benefits from low center of gravity, etc).
- Also from large battery packs, sports car like acceleration (0-60 in 3 seconds).

Take that out, and what do you have? A highly inferior luxury car compared to what's out there. It also potentially is believed to have a fourth differentiator due to the gigafactory:

- Large volume battery supply with a huge price advantage.

All of Tesla's advantages disappear when other car makers can make cars with:

1. a large enough for all day distance driving or multi day local driving (at least 400 miles)
2. acceleration on par with a sports car - 0-60 in 3 seconds is the max, basically.

That day is coming very rapidly. By the time the Model 3 comes out (2018), the cost per kWh will be even lower, and the chemistry improved, such that the range in (1) above is achieved at roughly the same cost as whatever Tesla does. The cheaper and more power dense batteries get, the smaller the differentiator on battery pricing. GM has already shocked everyone with their announcement of far lower than expected cost; there will be more.

(2) is trivial engineering; once the range is there, there's no reason not to add more power, and car makers will.

That leaves the car makers competing on all the other things - non-EV design (they have Tesla smoked), range of options (Tesla is smoked), cost of production (they have Tesla smoked), marketing and dealership ability and networks (they have Tesla smoked), reliable long established supply chains (etc).

I don't believe that Tesla has a cost or chemistry advantage that will endure (the battery space is too broad and too lucrative, and they lack the R&D funds). I also don't believe there will be any capacity problems (in fact, there is overcapacity due to lack of electric demand and extensive build out happening in Asia including China which is entering this space in a big way and has unlimited deep pockets).

So when I say they're finished I mean that there share price is too high, that it's coming down quite rapidly given recent mistakes, and that they are not going to get far enough ahead of the market to compete in the cut-throat auto business.

As for Musk, I concede your points. I think I'm overreaching on his personality. He's simply managing his baby rather zealously while believing he's saving the world. I do think he's doing things with regard to his stock and public statements that would be regarded as unethical, though.

By the way, do you think the bullying/apparent abuse/unhappiness has given him his drive to succeed and to know?

“The market can stay irrational longer than you can stay solvent.”

One thing I did notice the GM borrows at 0.8% interest. TSLA borrows at about 4%. Thus, next month the X should show a big increase in sales, as there is probably a backorder til next year. Spun the right way it might take years before price changes up or down. GM right now makes no money yet buys tons of stock and pays a 5% dividend off of debt. At 1% interest that is probably less than the inflation of the cars. So their profit is the debt.

There's backorder for Model X until mid next year. There are about 25,000 preorders I believe, possibly less now given the unexpected very high price they're starting with, and lack of fold downs, and it's going to take a while to ramp production.

I don't think the Tesla news cycle is over by any means - you could spin production or sales or projections a number of ways, which Musk has done multiple times to keep the stock price up - but the writing is on the wall now in a way it wasn't before the Model X.

I mostly day trade Tesla options; I'm not holding short for the long term.

Musk adressed the poaching issue. I'm personally not buying it.

http://www.cnbc.com/2015/10/09/elon-...orkers-go.html

I posted the article in which he said that earlier in the thread. But that's the only time he publicly said it, it just emerged in English speaking media now.

I don't buy it either but I don't think it's that threatening.