Elon reveals Cybertruck details / production expectations on Q3 2023 call

[charliemagpie]

Insource or outsource
Outsource or insource
Insource or outsource
Outsource or insource

In my life I have seen this sew saw to and fro a few times..


When NASA outsourced, they forgot how to go to the moon.
It's taking an 'insource' company to go to Mars. (Spagettiengish ;ol)


People can make up their own mind.

Sponsored

 

[Knucklehead]

I prefer the dealership model because it gives me more choices and I can actually negotiate a deal instead of being told the price. I like getting a good deal.

And I have had good experiences with the dealers I have worked with. Yes, they have tried to get more revenue by offering things I don't want, but you can say "no".

My local Ford service department is great. So is the local Cadillac one.

When your entire business depends on your reputation in your local community sometimes you get better results. When my small local community is just a drop in Tesla's ocean, do the really pay me the the same level of attention? Not likely.

The closest Tesla service center is one hour from my house. The closest Ford dealership is 5 minutes. The Cadillac dealer is 10 minutes away. Why would I want to drive an hour when I can drive 10 minutes?

 

[cvalue13]

Anyway, compare McDonald's to In-N-Out. I guarantee you owners of McDonald's franchises dream they could have an In-N-Out franchise.

Sure, I’ll take your analogy** if you prefer it:

In-And-Out
• # of locations: 387
• # if countries: 1
• # US States: 7
• # of employees: 20,000

McDonald’s:
• # of locations: 40,031
• # if countries: 119+
• # of US states: 50
• # of employees: 200,000

Try to pay for, own, and operate 397 locations in a total of 7 jurisdictions under a single federal regulatory regime, then try with 40K locations under around ~300 state and federal regimes.

Note as an indices of these dynamics McDonald’s employee compliance load is, relatively, 52 employees per store for In-And-Out, vs 5 employees per store for McDonald’s.

Among the things you’ll find, with market penetration like McDonald’s, is that you require more items on more regular rotation of your menu. You’ll also be subject to, in addition to the regulatory compliance load, the micro-economics of each jurisdiction.

None of which is to say McDonald’s is the better or only approach. Nor that the analogy is perfect (such is the purpose of an analogy). It’s only to say that scale and market penetration have various effects on a business, that make a good strategy for a smaller company (in operational complexity) and poor strategy for a larger one.

Ford is in 125 federal/country jurisdictions, at least another 450 state-equivalent jurisdictions, 48 plants, 10,000 dealerships, and has 100 years of market penetration and growth, and dozens of direct competitors.

Tesla is in 35 countries (presumably leaning towards the easier ones), ~10 plants (vehicle related), 400 ‘stores’ globally, ~20 years of (relevant) market penetration and growth, and effectively zero competition.

Notably, Ford and Tesla have roughly the same number of employees - 183K vs 128K, respectively. A distortion no doubt influenced by Tesla having to man the last mile of distribution - the cooks, waiters, and hostesses. Note this similar dynamic as between In-And-Out and McDonald’s: Ford with 18 employees per dealership, while Tesla has 300 employees per ‘store.’

If Tesla never plans to expand as far as Ford, it’s irrelevant to the point being made. The point, the question being asked, is how “obvious” is it that *if* Tesla were as big as Ford that the strategy of complete D2C vertical ownership continues to be an all-things-considered advantage.

Using only the employee numbers required, as a rough ratio: if Tesla scales from 400 stores to 10,000 stores, it would imply 3,200,000 employees. That’s a million more than Wal-Mart, the largest private employer in the world.

Is the ‘store’ model better, assuming continued increased market penetration, growth, and competition? Don’t know.

Only know it’s far from f*n “obvious.”





** FYI, Crackerbarrel:
• # of locations: 660
• # if countries: 1
• # of US states: 45
• # of employees: 73,000

And unlike In-And-Out but like Tesla, Crackerbarrel also sells all kinds of things other than food - they have a ‘general store’ with rocking chairs, etc. m

 

[PilotPete]

When NASA outsourced, they forgot how to go to the moon.
It's taking an 'insource' company to go to Mars. (Spagettiengish ;ol)

After the Apollo missions, NASA (feeling quite spunky and heady) became a political acronym bureaucracy, just like all the others, and lost their mission focus. That is the reason they forgot how to go to the moon. The outsourcing was just part of their lack of understanding of what got them to where they were. And then all the people that were mission oriented, retired. And there was no knowledge transfer, as all the new people were there for advancement and politics, and not for the mission. (of course, I speak mostly of the upper end of the GM/SES pay scale, and not as much about the GS peeps.

And because of all of that, they killed way too many people and lost too many vehicles.

And nothing has changed.

 

[Arctic_White]

Sure, I’ll take your analogy** if you prefer it:

In-And-Out
• # of locations: 387
• # if countries: 1
• # US States: 7
• # of employees: 20,000

McDonald’s:
• # of locations: 40,031
• # if countries: 119+
• # of US states: 50
• # of employees: 200,000

Try to pay for, own, and operate 397 locations in a total of 7 jurisdictions under a single federal regulatory regime, then try with 40K locations under around ~300 state and federal regimes.

Note as an indices of these dynamics McDonald’s employee compliance load is, relatively, 52 employees per store for In-And-Out, vs 5 employees per store for McDonald’s.

Among the things you’ll find, with market penetration like McDonald’s, is that you require more items on more regular rotation of your menu. You’ll also be subject to, in addition to the regulatory compliance load, the micro-economics of each jurisdiction.

None of which is to say McDonald’s is the better or only approach. Nor that the analogy is perfect (such is the purpose of an analogy). It’s only to say that scale and market penetration have various effects on a business, that make a good strategy for a smaller company (in operational complexity) and poor strategy for a larger one.

Ford is in 125 federal/country jurisdictions, at least another 450 state-equivalent jurisdictions, 48 plants, 10,000 dealerships, and has 100 years of market penetration and growth, and dozens of direct competitors.

Tesla is in 35 countries (presumably leaning towards the easier ones), ~10 plants (vehicle related), 400 ‘stores’ globally, ~20 years of (relevant) market penetration and growth, and effectively zero competition.

Notably, Ford and Tesla have roughly the same number of employees - 183K vs 128K, respectively. A distortion no doubt influenced by Tesla having to man the last mile of distribution - the cooks, waiters, and hostesses. Note this similar dynamic as between In-And-Out and McDonald’s: Ford with 18 employees per dealership, while Tesla has 300 employees per ‘store.’

If Tesla never plans to expand as far as Ford, it’s irrelevant to the point being made. The point, the question being asked, is how “obvious” is it that *if* Tesla were as big as Ford that the strategy of complete D2C vertical ownership continues to be an all-things-considered advantage.

Using only the employee numbers required, as a rough ratio: if Tesla scales from 400 stores to 10,000 stores, it would imply 3,200,000 employees. That’s a million more than Wal-Mart, the largest private employer in the world.

Is the ‘store’ model better, assuming continued increased market penetration, growth, and competition? Don’t know.

Only know it’s far from f*n “obvious.”





** FYI, Crackerbarrel:
• # of locations: 660
• # if countries: 1
• # of US states: 45
• # of employees: 73,000

And unlike In-And-Out but like Tesla, Crackerbarrel also sells all kinds of things other than food - they have a ‘general store’ with rocking chairs, etc. m

Earlier, I gave you the benefit of the doubt but you are really severely underinformed when it comes to Tesla, its financials, and how well it operates.

As you said, Tesla has 10 factories (by my count, they have 6 but let's go with your figure). Tesla's current 10 factories already have installed capacity of 2.4M vehicles, annually. Tesla's stated goal is to get to 20M, meaning they need to increase their factory count by 2.4x. Or 24 total factories according to your number, or ~14 if we go by actual factories.

But wait, Tesla's next-gen platform will require half the size (and be half the cost). There is more: Tesla has planned to double its production capacity on both the Berlin as well as the Shanghai factory.

Do you really think Tesla would need to increase headcount that much considering how much automation there is already (and more to come), as it scales to 20M annual vehicle sale?

 

[Arctic_White]

The interesting part of this discussion to me, is how Cvalue13 wants to show support for the Dealership business model. I agree there are massive benefits for a manufacturer to that model. But, not so much for the customers. That is why ALL the legacy manufacturers thought Tesla would never survive, and also why they ignored and resisted going to EV's. They thought wrongly that they could ignore Tesla because they would go away.
Now that Tesla has been able to survive spending Billions on Service Centers, Supercharging stations worldwide, with building 6 GIGA factories, and hiring a workforce of 127,000 Non-Union employees. AND MAKE PROFITS. All the other manufacturers KNOW that Tesla has a HUGE advantage.
I can't imagine any legacy auto manufacturers that aren't envious of Tesla's business model, and wish they too could do that. But it's not going to be possible, and they know it. They are all scrambling to find their way through this new tech revolution. And yes, there's going to be a bloodbath. Even Sandy Munro is saying that.

There is a funny side story. Back in 2018, when Tesla had a really high chance of going bankrupt, GM purposefully tried to screw over Tesla by ordering excess car seats from a manufacturer that was (supposed to) supply Tesla with these car seats.

So what did Tesla do? They created their own car seats! They ended up insourcing this and becoming even more vertically integrated. So GM's stupid decision ended up making Tesla even stronger.

I. Hate. GM. Mary Barra is by far the worst auto CEO, and she will run that once-amazing company to the ground.

 

[cvalue13]

Earlier, I gave you the benefit of the doubt but you are really severely underinformed when it comes to Tesla, its financials, and how well it operates.

you keep saying just that, then following it with nothing remotely interesting, non-obvious, or on point

this response is a classic example:

Tesla's current 10 factories already have installed capacity of 2.4M vehicles, annually. Tesla's stated goal is to get to 20M, meaning they need to increase their factory count by 2.4x. Or 24 total factories according to your number, or ~14 if we go by actual factories.

But wait, Tesla's next-gen platform will require half the size (and be half the cost). There is more: Tesla has planned to double its production capacity on both the Berlin as well as the Shanghai factory.

Do you really think Tesla would need to increase headcount that much considering how much automation there is already (and more to come), as it scales to 20M annual vehicle sale?

After all I said, you talk about factory count and headcount? you may as well have just told me I didn’t use an Oxford comma, and left at that - would have been a more meaningful (and relevant) contribution, as well as at least being intellectually honest.

I mentioned factories amongst a litany of various datapoints to broadly indicate the relative comparative scope of overall operations. (BTW, Regardless of how few factories Tesla needs to build 20M cars/year, it’s going to need a helluva lot more stores/service centers to sell them**.)

I mentioned headcount for the same limited reason of various data contrasting overall operational scope, adding further that it provides a rough glimpse at possible trends caused by dealership vs store model - retail businesses requires a lot of headcount, and the relative employees ratios appear to possibly reflect that in part (as with In-And-Out vs McD’s). (BTW, Regardless of whether Tesla automates it’s factories, it’s going to need to staff enough stores / service centers to deliver & service 20M new cars/year.**)

The topics of number of factories and total headcount each ancillary to the obvious central point RE dealerships vs stores model. You latch on only to these sorts of ancillary points, where you feel you manage to have something to say, and hope no one notices you’re side-stepping the substantive point - but even then don’t make any real insightful point even about the ancillary topics.




Which gets us back to the point: no, it’s not “obvious” that a clear advantage of In-And-Out compared to McDonald’s is that In-And-Out owns its own retail arm.

That could only become “obvious” if/when In-And-Out scales to the operational footprint and market penetration of McDonald’s.

Business models requiring distributed infrastructure rarely scale linearly. How to optimally run a business that mows 10 yards is rarely how you also optimally run a business that mows 10,000 yards.


Given the above principle, how about instead of me being tasked with proving a negative, *you* describe how it’s “obvious” that Tesla owning it’s retail arm continues to be an advantage when it has not 400 stores in a few jurisdictions, but 8,000 stores in a hundred jurisdictions? Or whatever numbers you imagine will be required to service the retail arm of 20X the number of vehicle’s it’s currently selling /year.

To the extent you say anything, I expect they’ll be non-sequitur points about, e.g., low numbers of factories, automation of factories, cars that float, how you understand Tesla’s financials deeply (but for some reason never say any insightful thing about them), and any number of xwitter quips that have nothing squarely to do with how the advantages of the strategy of owning the retail distribution arm for 1.3M/Yr sales will “obviously” scale linearly (or better!?) toward the sale of 20M/Yr.

But hey, I told you it wasn’t “obvious” to me, not that it was impossible, and so it was always an invitation for you to make it obvious.




** bonus points to explain the following based on your deep understanding of the Tesla business model:

• Tesla says it will sell 20M cars a year

• Tesla also says FSD and robotaxi will (conservatively) increase the utility if each car by 10X - which means Tesla purports it will be responsible for selling the utility-equivalent of 200M new cars each year

• where today’s average car lasts 200K miles, Tesla also says it will build cars that regularly last 1M miles, or another 5X in utility, which means Tesla purports it will be responsible for selling the utility-equivalent of 1 billion new cars each year


But last year only 67M new cars were sold.

QUESTION: how does Tesla sell the utility-equivalent of 1 billion new cars/year?

 

[Sirfun]

There is a funny side story. Back in 2018, when Tesla had a really high chance of going bankrupt, GM purposefully tried to screw over Tesla by ordering excess car seats from a manufacturer that was (supposed to) supply Tesla with these car seats.

So what did Tesla do? They created their own car seats! They ended up insourcing this and becoming even more vertically integrated. So GM's stupid decision ended up making Tesla even stronger.

I. Hate. GM. Mary Barra is by far the worst auto CEO, and she will run that once-amazing company to the ground.

That is an interesting story about the seats. That's exactly how many large corporations work. They will try to starve the competition. They have lots of dirty tricks in their playbook.

 

[Sirfun]

Sure, I’ll take your analogy** if you prefer it:

In-And-Out
• # of locations: 387
• # if countries: 1
• # US States: 7
• # of employees: 20,000

McDonald’s:
• # of locations: 40,031
• # if countries: 119+
• # of US states: 50
• # of employees: 200,000

Try to pay for, own, and operate 397 locations in a total of 7 jurisdictions under a single federal regulatory regime, then try with 40K locations under around ~300 state and federal regimes.

Note as an indices of these dynamics McDonald’s employee compliance load is, relatively, 52 employees per store for In-And-Out, vs 5 employees per store for McDonald’s.

Among the things you’ll find, with market penetration like McDonald’s, is that you require more items on more regular rotation of your menu. You’ll also be subject to, in addition to the regulatory compliance load, the micro-economics of each jurisdiction.

None of which is to say McDonald’s is the better or only approach. Nor that the analogy is perfect (such is the purpose of an analogy). It’s only to say that scale and market penetration have various effects on a business, that make a good strategy for a smaller company (in operational complexity) and poor strategy for a larger one.

Ford is in 125 federal/country jurisdictions, at least another 450 state-equivalent jurisdictions, 48 plants, 10,000 dealerships, and has 100 years of market penetration and growth, and dozens of direct competitors.

Tesla is in 35 countries (presumably leaning towards the easier ones), ~10 plants (vehicle related), 400 ‘stores’ globally, ~20 years of (relevant) market penetration and growth, and effectively zero competition.

Notably, Ford and Tesla have roughly the same number of employees - 183K vs 128K, respectively. A distortion no doubt influenced by Tesla having to man the last mile of distribution - the cooks, waiters, and hostesses. Note this similar dynamic as between In-And-Out and McDonald’s: Ford with 18 employees per dealership, while Tesla has 300 employees per ‘store.’

If Tesla never plans to expand as far as Ford, it’s irrelevant to the point being made. The point, the question being asked, is how “obvious” is it that *if* Tesla were as big as Ford that the strategy of complete D2C vertical ownership continues to be an all-things-considered advantage.

Using only the employee numbers required, as a rough ratio: if Tesla scales from 400 stores to 10,000 stores, it would imply 3,200,000 employees. That’s a million more than Wal-Mart, the largest private employer in the world.

Is the ‘store’ model better, assuming continued increased market penetration, growth, and competition? Don’t know.

Only know it’s far from f*n “obvious.”





** FYI, Crackerbarrel:
• # of locations: 660
• # if countries: 1
• # of US states: 45
• # of employees: 73,000

And unlike In-And-Out but like Tesla, Crackerbarrel also sells all kinds of things other than food - they have a ‘general store’ with rocking chairs, etc. m

Wow, you really get wound up over this stuff. I'm here to have fun, and find information about Tesla and Cybertrucks. I'm sorry but just reading all of that comment was more effort, and time than I'm interested in allotting on this subject. This is not what I'm here for. You win, I'm tapping out.?

 

[Knucklehead]

you keep saying just that, then following it with nothing remotely interesting, non-obvious, or on point

this response is a classic example:




After all I said, you talk about factory count and headcount? you may as well have just told me I didn’t use an Oxford comma, and left at that - would have been a more meaningful (and relevant) contribution, as well as at least being intellectually honest.

I mentioned factories amongst a litany of various datapoints to broadly indicate the relative comparative scope of overall operations. (BTW, Regardless of how few factories Tesla needs to build 20M cars/year, it’s going to need a helluva lot more stores/service centers to sell them**.)

I mentioned headcount for the same limited reason of various data contrasting overall operational scope, adding further that it provides a rough glimpse at possible trends caused by dealership vs store model - retail businesses requires a lot of headcount, and the relative employees ratios appear to possibly reflect that in part (as with In-And-Out vs McD’s). (BTW, Regardless of whether Tesla automates it’s factories, it’s going to need to staff enough stores / service centers to deliver & service 20M new cars/year.**)

The topics of number of factories and total headcount each ancillary to the obvious central point RE dealerships vs stores model. You latch on only to these sorts of ancillary points, where you feel you manage to have something to say, and hope no one notices you’re side-stepping the substantive point - but even then don’t make any real insightful point even about the ancillary topics.




Which gets us back to the point: no, it’s not “obvious” that a clear advantage of In-And-Out compared to McDonald’s is that In-And-Out owns its own retail arm.

That could only become “obvious” if/when In-And-Out scales to the operational footprint and market penetration of McDonald’s.

Business models requiring distributed infrastructure rarely scale linearly. How to optimally run a business that mows 10 yards is rarely how you also optimally run a business that mows 10,000 yards.


Given the above principle, how about instead of me being tasked with proving a negative, *you* describe how it’s “obvious” that Tesla owning it’s retail arm continues to be an advantage when it has not 400 stores in a few jurisdictions, but 8,000 stores in a hundred jurisdictions? Or whatever numbers you imagine will be required to service the retail arm of 20X the number of vehicle’s it’s currently selling /year.

To the extent you say anything, I expect they’ll be non-sequitur points about, e.g., low numbers of factories, automation of factories, cars that float, how you understand Tesla’s financials deeply (but for some reason never say any insightful thing about them), and any number of xwitter quips that have nothing squarely to do with how the advantages of the strategy of owning the retail distribution arm for 1.3M/Yr sales will “obviously” scale linearly (or better!?) toward the sale of 20M/Yr.

But hey, I told you it wasn’t “obvious” to me, not that it was impossible, and so it was always an invitation for you to make it obvious.




** bonus points to explain the following based on your deep understanding of the Tesla business model:

• Tesla says it will sell 20M cars a year

• Tesla also says FSD and robotaxi will (conservatively) increase the utility if each car by 10X - which means Tesla purports it will be responsible for selling the utility-equivalent of 200M new cars each year

• where today’s average car lasts 200K miles, Tesla also says it will build cars that regularly last 1M miles, or another 5X in utility, which means Tesla purports it will be responsible for selling the utility-equivalent of 1 billion new cars each year


But last year only 67M new cars were sold.

QUESTION: how does Tesla sell the utility-equivalent of 1 billion new cars/year?

Tesla has already started using the franchise model with their charging infrastructure. I wonder how long it will be before they announce the first franchise Tesla dealership? Maybe never, but I bet nobody thought they would do it with their charging network either. It seems Tesla has figured out there are advantages to that business model.

 

[cvalue13]

Wow, you really get wound up over this stuff. I'm here to have fun, and find information about Tesla and Cybertrucks. I'm sorry but just reading all of that comment was more effort, and time than I'm interested in allotting on this subject. This is not what I'm here for. You win, I'm tapping out.?

some people have wordle and the crossword…

and as ever, all posts are optional reading

 

[Bill837]

There is a funny side story. Back in 2018, when Tesla had a really high chance of going bankrupt, GM purposefully tried to screw over Tesla by ordering excess car seats from a manufacturer that was (supposed to) supply Tesla with these car seats.

So what did Tesla do? They created their own car seats! They ended up insourcing this and becoming even more vertically integrated. So GM's stupid decision ended up making Tesla even stronger.

I. Hate. GM. Mary Barra is by far the worst auto CEO, and she will run that once-amazing company to the ground.

Related, in 2016 when Tesla was in need of help in making assembly lines better, they could have contracted with a company known for such things. Instead they bought one of the best in the world, Grohmann.
https://electrek.co/2017/05/10/tesla-acquisition-grohmann-engineering/

FF four years, and the fact that Tesla required Grohmann to cut ties with former customers caused issues for Mercedes, and maybe others who were not as candid about it.

https://insideevs.com/news/395392/tesla-grohmann-acquisition-taking-toll-mercedes/

Daimler’s works council chief Michael Brecht told Manager Magazin that one of the reasons the company is struggling to meet battery demand is because Tesla bought Grohmann Engineering, a battery automation specialist hired by Mercedes-Benz to build up its own battery manufacturing capacity.

 

[jerhenderson]

When has Elon ever been right about the timing of anything Tesla has built? He is always off by orders of magnitude. If the stock tanks (and it might) Tesla with their already significantly reduced vehicle margins will look even worse. Not a pretty picture.

your margin concern is flawed, as none of the legacy manufacturers make profit on EV. for Tesla to make 10% is a testament to their business model.

 

[wtibbit]

Wow, you really get wound up over this stuff. I'm here to have fun, and find information about Tesla and Cybertrucks. I'm sorry but just reading all of that comment was more effort, and time than I'm interested in allotting on this subject. This is not what I'm here for. You win, I'm tapping out.?

Some people look for new insights and depth in understanding how their world works. They read this forum to focus on the Cybertruck and Tesla, parts of the world that affect them, and interests them. Those people often find that objective information - numbers and hard data - is the key to that whole process. They find that it's especially gratifying when that process ends with an "ah ha!" moment of clarity and new understanding.

That is what I'm here for, to better understand the product, the company that designs and builds it along with the environment that drives the whole situation. When I see a post like this one from cvalue13, it adds to that understanding and I win. That's my kind of fun.

Thanks, @cvalue13 for the research, the post and the ah-ha moment it generated!

 

[cvalue13]

Some people look for new insights and depth in understanding how their world works. They read this forum to focus on the Cybertruck and Tesla, parts of the world that affect them, and interests them. Those people often find that objective information - numbers and hard data - is the key to that whole process. They find that it's especially gratifying when that process ends with an "ah ha!" moment of clarity and new understanding.

That is what I'm here for, to better understand the product, the company that designs and builds it along with the environment that drives the whole situation. When I see a post like this one from cvalue13, it adds to that understanding and I win. That's my kind of fun.

Thanks, @cvalue13 for the research, the post and the ah-ha moment it generated!

thanks for that. I’m not tone deaf, and have no small amount of self-consciousness about how nerdy, ultimately unimportant (in the grand scheme), and time consuming all this is. To say nothing of embarrassing when I let myself get sucked into the mud.

Ultimately, I rationalize that there are worse things I could use this spare time on, and much of it is actual directly or indirectly relevant learning for my business/industry (edge compute and AI, also distributed infrastructure).

Plus, I find the mystery-unraveling fun, and that there are at least a few like-minded folks who don’t mind - and who tend to be the ones that also give me ‘ah ha’s’

You included - thanks again

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