I can't tell if that last post was sarcasm or not

Tesla has lagged the market for a long time, it's obscenely overvalued EVEN ASSUMING they get to 5 million cars/year (a 50x increase!!) WITH a 10% profit, in < 10 years.

Mark Spiegel doesn't need any good news. The people buying or holding Tesla at $245 here are investing fish. The end.

As for autopilot, it's great news for Tesla that Apple is reportedly winding down, just as it was bad news that they were scaling up. I don't even understand what everyone is going on about. People are posting some gotcha when Apple winds down their car effort, saying it's obviously good for Tesla (it is), while arguing black and blue that Apple increasing its car effort and poaching Tesla talent isn't bad for Tesla. It's kind of hilarious. How about a little consistency, guys?

Regarding the Tesla decapitation of that driver, Tesla desperately and hastily updated their sensors after the decapitation, to avoid a recall. Looks like it worked.
Tesla autopilot is nonsense/PR. Hardware deep learning solutions like the nVidia Drive are going to be what cracks autonomous driving. Not a ****ty sensor set and uploaded data. It's the boundary cases that matter, and high end processing units and sensors are what solve that. Not anything Tesla is doing.

Some speculations from TMC:
Tesla are using nVidia for their AP2. Don't know the exact chip, but it seems to be as capable as a DrivePX2.

ToothSayer, heltok:



Is Google broken for you guys? I searched "tesla autopilot nvidia" and in 5 seconds found a picture of a NVIDIA Drive PX 2 inside a HW2 Tesla.

SubFallen, test for you:

Why is Tesla finally using what all the other carmakers are, terrible news for Tesla reaching full autonomous driving before anyone else?

What do you mean, "Finally using what all the other carmakers are"? Have other carmakers already put Drive PX2 in production vehicles as of today, Jan 20 2017?

That would be news to me; as well as further GREAT NEWS for Mark Spiegel.

Can you name some other production car with a DrivePX or DrivePX2 system?

I have developed on the DrivePX. I thought it was mainly a development platform so I was a bit surprised when Tesla took it into production. I still want to see some actual pictures of it to see if it the same we developers use or if it is some custom solution.

We will see what the other car manufacturers do, some of them have strong collaborations with Mobileye and Intel. And Tesla claimed that AMD's offer was almost was attractive as nVidia's, still not sure what that was about. And who knows what Google and Uber are using in their cars.

It's amazing. Look at Spiegel's "Tesla is a Zero" presentation, and it's just slide after slide of screenshots of automakers announcing that they intend to make compelling electric cars with self-driving options in like 2020+.

To be a committed Tesla short, afaict you must have his absolute, implicit faith that all incumbents are really going to reinvent their core competencies and become vertically integrated electrical and software engineering powerhouses in less than five years.

It seems Spiegel has exhausted all his reserves of skepticism in doubting the smartest person to ever run a manufacturing concern, and has none left for the empty suits at the top of the legacy carmakers. Amazing stuff.

Why would you mass produce one now? It makes zero sense.

WTF are you talking about? First of all, you don't need "all" the encumbents. You need a few, out of maybe 10, to take the wind out of Tesla's sails.
Vertical integration is a negative in the car industry, not a positive. It's one thing when you charge $70K-$120K car, losing money in the process, and can't get suppliers for the **** you need because you're a two-bit nobody with a habit of exaggerating.

It's entirely another thing to compete in the cutthroat sub-$35K market, which is where the revenue is if Tesla wants to justify its valuation.

It's like you know how software works but don't know how a business works...

Just how ****ing hard do you think it is to build a battery car? You think it's harder than pushing the last few percent out of an internal combustion engine? Pass some of what you're smoking, bro. In essence, this is why Tesla as a carmaker is doomed. An electric car is:

- A battery pack. This will rapidly becoming commoditized and irrelevant; once you reach a certain power flow and a certain range, there is no longer a differentiator. It is a commodity. Tesla has no advantage in cell chemistry or making batteries cheaply; indeed, their Nevada factory will doom them vs the many multi-billion dollars ones sprouting up in China by players like LG Chem.

PLUS

- An electric engine. People way smarter than nerd-Trump have been making these for over a century.

PLUS

- A regular car for everything else. Despite his corny "machine that makes the machine" aka "Make Manufacturing Great Again!" from nerd-Trump (isn't it already great?), the majors have got him killed on this one. They are more competent, have far more experience, far more capital, and superior supply networks that take a decade+ to build up.

I want to step back from this sentence, examine it, do a grep for ironies, and if you don't burst out laughing, remove your nose from Musk's butthole and smell the clean air.

Yes, "empty suits" who print money in a cutthroat global business on ultra-tight margins.

1. I think what Tesla has done so far is incredibly ****ing hard. You and Spiegel think it's easy.
2. I think that Tesla has a non-zero shot at executing on their roadmap, which is obviously and permanently out of reach for any other organization on the planet, because nobody but nerd-Trump can capture the talent necessary to do things like that. You and Spiegel think he's a con man.

Time will tell.

Oh, and successful vertical integration is a massive, massive advantage.

It's just the hardest ****ing thing in the world to execute on, so nobody else tries.

But don't worry too much, I'm sure Chris Lattner will be the last, just the absolute last, wizard to go all in on nerd-Trump's vision. The magic is just about to wear off, I'm sure.

TS,
I assume you are a good options trader but you are absolutely clueless with regards to manufacturing and how a company needs to be run in order to ensure going concern.

If you don't have a prototype of an electric car today, you will not have one by 2020. It's the nature of manufacturing. It's not easy to build an electric car, especially not if you're entire company does something completely else today.

To design a new production facility that is capable of mass producing a completely different product takes years, most of the car manufacturers have zero today. Refining the process and making tit for that improvements is not done over night. Look at Tesla which had top talent from other car manufacturers available and they still had issues.

"Why would you mass produce one now?" is the epitome of your wrongful thinking. In order to stay relevant, they need to cannibalize their own business model - they are simply not willing to do that.

It's laughable that you actually think vertical integration is a bad thing - it absolutely isn't. The money is always in complexity reduction. If you are able to do something that is vastly less complex than a substitute of it today then you are going to make a killing. The reason why car manufacturers have so many suppliers is the fact that they are not capable of vertical integration. In order to reduce the complexity in the manufacturing process they had to outsource and specialize.


And last but not least, most car manufacturers don't print money. And they surely will not make money when the time comes and they have to let go of 50-70% of their employees because they build a completely different product then.

From WI:

This is just plain wrong. First of all there are electric prototypes at every big car manufactorer today. Second of all, have you ever been to one of the really big production facilities like VW in Wolfsburg Germany or Toyota in Japan?
VW can go from producing the small electric Golf to building the biggest conventional Audis at the same assembly line within hours, if they need to (they normally don't). There's no need for any of the big producers to build new plants, they can get ample capacity within days if demand was shifting to electric cars.

All of the world's brightest minds and major manufacturing businesses have gone from vertically integrated to highly decentralized. They've done so in spite the risk, enormous complexity and management headache that entails.

Why does Boeing, for example, outsource the manufacture of all its components? Why has it increasingly moved in that direction despite massive risk to its business and the organizational headache?

Do you think Boeing are capable of making rivets? Do you think that is a difficult thing to do, for people that make ultra-complex planes that sell for hundreds of millions? Yet they have refused to vertically integrate rivet production. Why? Multiply that hundreds of components they could easily make, and in fact used to make (it's hardly the hardest thing in the world to own a rivet factory!), but now don't.

Two options here: Boeing are either ******s who are incapable of vertical integration, without a "genius" like Musk, and thus have moved away from an already vertically integrated business into a less vertically integrated one, OR, your claims about vertical integration simply aren't true.

I completely get the simplistic case that nerd-Trump is offering to his MMGA followers. It's also nonsense. Basically, you're arguing:

- Vertical integration means you can design a perfect fit for your product, reducing costs
- Vertical integration means you control and can customize all aspects of your design
- Vertical integration means you have supply lines less vulnerable to disruption or the errors of others
- Vertical integration means you get to keep the middle profits
- Vertical integration means reduced shipping and assembly costs.

So like above, I ask you as well, why have most complex manufacturing companies moved completely away from this model, despite all of the benefits you believe it has.

Explain to me how you're not falling for the Musk genius fallacy like Trump voters are falling are the Trump genius fallacy? You guys claim that Musk has a "special something" that will make the "very very hard to do" vertical integration work, where others have had that model and moved far away from it. This from the guy who set his company many months behind schedule because, like a kid, he wanted gull wing doors on the Model X and was too stupid to realize the manufacturing complexity that would create.


Musk Attributes Falcon Wing Door Debacle to “Hubris,” Says Software Will Fix It

This guy is going to make vertical integration work when other highly successful companies have deliberately moved away from it? OK.

Yes, exactly. As you say, "The money is always in complexity reduction". I would argue that by far the greatest level of complexity and cost (and importantly, capital requirement!!) reduction is outsourcing.

Ford has a P/E of 7, dude. They print money. You can buy $7 billion a year in profit with a 5% dividend for the price of Tesla. When you think about how many years it's going to be before Tesla returns any money, how high the valuation is already compared to people who makes 50x more cars and already compete successfully, you can see I think you're out of your tree and being conned by Trump-lite and his "trust me I'm smart, I'll Make Manufacturing Great Again" PR for the masses.

They produce on platforms, the same platform is supported but not a completely different one. Maybe you should actually understand how a car manufacturing facility is build today.

Complexity reduction is currently done via outsourcing due to the fact that they are unable to mass produce the parts they need in a just-in-time fashion. Where do you think those suppliers sit? They sit right next to the manufacturing plants in a lot of cases. This isn't exactly global outsourcing.

The biggest companies in the world moved towards outsourcing because the entire world moved in this direction. It used to be cheaper, it becomes increasingly less the case.

Your Boeing example is just perfect. Musk has proven that he can do what Boeing does at a fraction of the costs. And stop with your Ford nonsense, time and time again you repeat how great Ford is. They were quasi-bailed out by the government. If Chrysler & GM would have gone fully bankrupt, a lot of the Ford suppliers would have done the same due to the fact they are outsourcing just about everything.

Did TS answer this question yet? Or just wall of text other topics?

There is no question to answer. Clue is in the first quote...

Yes, I'm sure Boeing has enormous problems producing just-in-time rivets for their planes.

Here is what the correct quote looks like:
It is precisely global outsourcing. There's local outsourcing too, but these are complex global supply chains which are near universally chosen despite the downsides of same.

Yes, it was all just follow the leader. It wasn't that, you know, no one could survive and make a profit if they kept in the old-world vertical model, which is far more expensive and capital intensive.

You could make these companies trillions of dollars if you just went there and explained that guys, you're going in the wrong direction!!! Stop being a sheep! Be a leader!
That's why they all still do it. Because it has no worthwhile benefit.

Musk is building planes now?

Musk has proven he can successfully suck off a government teat, by bypassing normal safety procedures. Commercial success is non-existent in any of Musk's businesses.

Who cares what happened in 2008?? Lots of profitable businesses went bankrupt in 2008. How do you think Tesla, which relies on an inflated tech bull market and easy liquidity to keep their credit lines open, would have fared in 2008?

Tesla only exists because of government bailouts, by the way.

No, but he is building rockets:
http://www.boeing.com/space/space-launch-system/

I worked a couple of summers at the Volvo global spare parts storage 15 years ago. It's a huge amount of different parts and that have to be available a long time after production of a model stopped. When I opened up a new crate the parts boxes were sometimes miss labeled VW instead of original Volvo, also saw the Audi logo stamped in the metal of some parts in a Volvo original box.

It really does not make sense that a car manufacturer could produce all these parts in much lower volumes as efficient as a global parts supplier.

Some parts are extremely bulky some are very heavy some have a high turnover rate others rarely moves of the shelves, how could these parts possibly be stored when a model is out of production?

Just in time made the storage facility work and not only the manufacturing was outsourced but in a sense most of the warehousing as well.

Hey Toothsayer, I thank goodness you're back. I love your political posts but I hugely value your BFI posts. I was about to compose a letter to Mason explaining that if anything, Toothsayer absolutely needs to be back in BFI if anyone values money.

I have no position either way but I think once Tesla starts actually mass producing they're going to have unreal P/E compression .... just look at the type of P/E's that automakers and Tier 1 suppliers trade at, and don't tell me that BMW, GM, Magna, Linamar, etc all employ a bunch of dummies

Don't see the point in shorting now either though - Tesla is still selling a story and you can have an infinite P/E on a story.

Tooth is right about batteries though - batteries are chemistry and chemistry doesn't follow Moore's Law