> Much the same way Starbucks isn’t really a coffee company, Tesla isn’t really a car company.
> Tesla is a promise company. It makes promises to its customers, various governments, and other businesses. Those promises require up-front payment, and whether they come to fruition or not, the company keeps the money while continually blowing through deadlines.
This is a silly statement to make. It produced the world’s top selling car in Q1 2023.
But we cannot deny the fact that, musk introduced the roadster out of desperation to get some up-front payment and save Tesla.
It is possible that roadster specs were made up and now the RnD department is suffering to achieve the same, delaying the deliveries of the final product.
So he basically did sell the promise but now Tesla has to deliver it as 6 years is a very long gap.
That’s not a fact, you just made that up and it’s pretty obviously false if you look at their cash flow statement and how much cash they got from the new roadster.
Tesla trades at an insanely inflated multiple compared to other car manufacturers. It’s pretty clear they’ve had no difficulty raising money.
The alternative would have been a credit line from a bank, that also needs to be reimbursed, eithbinterest! Reimbursed down payments from customers are an interest-free credit. Well played actually... And quite despicable.
> Tesla does note that the reservation is still refundable, so if the final price is too high or it doesn't materialize, you can cancel and get your money back.
If you don’t wish to trust the media, here’s the Reservation Policy itself:
Yet it still sells vaporware. I was really excited for this company, but the self driving promises and fails, in addition to build quality issues made it a no go for me. While I buy new/unproven tech all the time, I guess I draw the line at cars.
It should. Cars get recalled for serious flaws. That means Tesla is shipping flawed products to paying customers that get used in the road, and then try to fix those OTA like some app on a phone. That is bad engineering, period.
Well, I don't think I'd be much bothered if I'm honest. Instead of going to the mechanic's it just gets fixed while parked outside? I think I would prefer that to my Subaru.
You still don't get it. If a product requires so many fuxes after being shipped, it was not fully developed when shipped, and defective in tip of it. Hardware ain't software, and those recalls are just the peak of the iceberg, because a lot smaller issues come along withbsaid bad engineering that cannot be fixed with a recall: suspension, power train...
And the latter already shows in data published by the German TÜV (cars here get an official road safety check every two years, the results of which are being aggregated by brand and model and published regularly): Teslas are among the cars with the highest failure rates for cars older then three years.
I mean, my car doesn't have a boombox or pedestrian warning system, so the former can't beat the latter on it. If the latter is louder than the former I wouldn't exactly be actually upset.
This honestly sounds like the conversations I'd have with people about the iPhone. Somehow it was the worst thing ever made but everyone who had a lot of money was buying one. When I eventually got around to getting it, it was awesome.
A car with quality issues on structural and safety critical parts, e.g. suspension, is more like a faulty board in a phone that risks making the battery go boom. Nothing that can be fixed OTA, but something that needs repairs in a workshop. And statistics, now that Teslas are on the market long enough for us to have those, show that being the case with Teslas.
This is decidedly not a problem of the entertainment system. And all those recalls Tesla has, hint at some engineering deficiencies. Same for all other brands and cars with similar problems, which absolutely do exist. E.g. VW quality is in decline for decades by now.
Just want to remind you that Tesla was delivering vehicles that didn't even have their seats attached properly[0]. Build quality issues are certainly something legacy automakers deal with -- but Tesla has generally brought these issues to an entirely new level.
Citation badly needed, because the evidence is against you.
I bought a Model X three years ago. It's been in service more than 10 times. My neighbor bought a Model X this year. I asked him what was broken on it, and he laughed and said "Everything".
I bought a brand new Scion FR-S, the first year if the first model ever. I've had zero issues and zero build quality issues in 100k miles. Same with our F-250.
>This is a silly statement to make. It produced the world’s top selling car in Q1 2023.
A company, on the whole, can operate as described therein while still simultaneously producing "the world's top selling [whatever]".
I mean, this article basically proves that point - Tesla took up-front payments from people six years ago for a car that it still hasn't delivered, and the Model Y was the best-selling car of Q1 this year.
I am not defending Tesla making promises, but does anyone who popped down $250k on a preorder with no release date care? They probably are on a secret mail list with Musk and are enjoying the secret progress updates.
Ah, got it. Just a heads up, maybe try and refrain from quoting long sections about a company making promises and then immediately follow that section with, "This is a silly statement to make". I don't think I would've misunderstood your approach had you only quoted that first sentence about Tesla not being a car company.
> They probably are on a secret mail list with Musk and are enjoying the secret progress updates.
This is a good point. They probably have his phone number and call him up to chat when they can’t sleep. They probably have one long tandem bike that they ride around on together but you’ll never see the mainstream media report on that
Arguably, Starbucks is a mid-sized bank that also sells coffee.
“Here's the shocking part -- Starbucks has about $1.6 billion in outstanding gift card balances. That info comes courtesy of its annual 10-K filing with the SEC.
This essentially means Starbucks is getting a $1.6 billion loan from its customers at a 0% interest rate. And it's paying that loan back in coffee, not cash.
It's already a great deal for Starbucks, but it gets even better. Some customers don't end up redeeming their gift card balances, which means the coffee chain doesn't even need to pay back the full "loan" amount. For the 2022 fiscal year, Starbucks reported $196 million in breakage, meaning unused gift card balances…”
Starbucks gets prepayments for goods and services and just has a neat bit of accounting and marketing gimmick around it. Besides being a sensationalist take, it's also misunderstanding what makes a company into a "bank".
You can't withdraw your balance in cash, as you can with a bank account. You can't transfer your balance to someone else like you can with a bank account. And, unlike a bank, your Starbucks gift card balance expires after some period of time. Can you imagine your bank telling you that all the money in your account is theirs because you haven't used the account in a few months?
Actually true in a technical sense. At least for Starbucks, their gift cards don't expire anywhere globally. In accounting terms though, the company still reduces the value of its gift card liability every year by about 10-15% [1], and claims that this is based on historical data.
Now clearly, there are circumstances in which banks do something similar and close accounts of account holders that are unknown. However, if that occurred at even one hundredth of the Starbucks breakage rate, all regulatory hell would break loose on the bank.
[1] Starbucks reports breakage of around $212.7m in FY22 ($181.1m in FY21). Their liabilities to Stored Value Cards are $1,641m and $1,596m respectively, coming out to a breakage ratio of 13.0% and 11.4% respectively.
Anything from fool.com is as bad as forbes.com these day -- in my eyes. They pump out so much sensationalist garbage that masquerades as good investment advice. Fifteen years ago, they were really impressive -- the original authors.
I've heard similar things said about airlines, but I'm not convinced; this relegates every company selling something they'll exchange their products for a "bank" rather than what they obviously are - supermarkets, department stores, airlines, coffee shops, petrol stations. Apple, Amazon, Netflix, Spotify, Steam? Banks. Chipotle? Bank.
Even if it technically conforms to a broad sense of the word, what's the point?
I go to Starbucks to buy coffee. So it's a coffee shop.
I guess the way to look at it is does Starbucks sell coffee to make profit or does it sell coffee to get people to buy gift cards to make profit. The idea of a loss leader being part of the core visible business isn’t that strange. Even better if you can make money on both though!
Hopefully there is enough nuance in the world to recognise that they are both coffee shops and a bank. In the same way Google is both a search company and ads company.
This arguments feels like it's trying to be an inch too smart.
Consider the following: Amazon isn't really an online retail company; it doesn't really sell goods to the consumer. What it does is use "goods" that it delivers as a loss leader to get people to click on buttons to give Amazon money.
Starbucks is a coffee company, that introduces an optional extra step of gift cards for other consumer convenience reasons. The fact that there is a comically large amount of money held in the gift cards system is just that: a slightly comical fact.
Your attempted example isn’t the same though. It’s much more apparent if you look at the search example. Without search there would be no ads business (to a degree)but search itself only loses money and gets compromised in favor of the ads business
Nit pick: It would be better to compare Starbucks coffee profits vs gift card "profits". Without expired gift card balances, the profit margin is zero (or negative) on gift cards.
That absolutely wasn't the issue. Starbucks cost pretty much the same as everyone else. The coffee was dreadful. We have a massive coffee culture in Australia and in general good quality coffee can be found in most urban centres.
I have been told that what most Americans call good coffee we find undrinkable.
Well, there is also that its competitor (also from the US but failed there) Gloria Jeans happened to fill its niche. The fact that each chain won in one country and failed in another seems to suggest it is just luck.
Being a "company that builds cars" and being a "car company" are different things. Tesla is a sales and R&D company, which happens to occasionally produce cars worth buying.
> Tesla is a promise company. It makes promises to its customers, various governments, and other businesses. Those promises require up-front payment, and whether they come to fruition or not, the company keeps the money while continually blowing through deadlines.
This is a silly statement to make. It produced the world’s top selling car in Q1 2023.