XPost: alt.global-warming, rec.arts.tv, alt.society.liberalism   
   XPost: sac.politics   
   From: failure@barackobama.com   
      
   Tesla Motors Inc. pulled a pretty slick fake-out on investors   
   and fans Monday by revealing, to their surprise, that it had   
   delivered only 14,820 cars to customers in the first quarter of   
   2016, well short of its projected deliveries of 16,000 cars.   
   Tesla Founder Elon Musk attributed the miss to the "hubris" of   
   stuffing so much new technology into its top-of-the-line Model X   
   (base price: $80,000) that its suppliers couldn't produce parts   
   fast enough to keep up the pace.   
      
   The news took down Tesla stock by about 2%, to $242.02, in the   
   first minutes of trading Tuesday. That's steeper than Tuesday's   
   selloff in the broad market, but given how Tesla shares have   
   been on a tear lately, the decline could almost be counted as a   
   victory, especially since the shares started to recover within   
   the first hour of trading. That's been Tesla's recent pattern:   
   Investors walk nervously past signposts of trouble, and finally   
   fetch up at the stand where Musk dispenses his proprietary brand   
   of unalloyed optimism. [UPDATE: Tesla shares closed Tuesday at   
   $255.47, up 3.43%, its highest close thus far this year..]   
      
   The Model X is an amazing car. Honestly, I think it's probably,   
   I think it's the best car ever. I'm not sure anyone's going to   
   make a car like this again.   
   Elon Musk does his best Donald Trump impression for analysts on   
   Feb. 10.   
   Musk deserves admiration for his dedication to the cause of   
   clean transportation and the battle against climate change, or   
   at least to shifting emissions from auto tailpipes to electrical   
   generation, which is increasingly fueled by renewable sources.   
   His corporate mission was on display last week, when he unveiled   
   Tesla's Model 3 sedan, which will be mass-marketed at a   
   projected starting price of $35,000, to great acclaim. But   
   declaring one's commitment to the climate and driving the auto   
   press around in prototype cars is relatively easy (especially if   
   you don't let anyone look under the hood) compared to mass-   
   manufacturing actual vehicles.   
      
   There's no reason to gloss over some cold, hard facts. Monday's   
   disclosure underscores several disquieting aspects of Tesla's   
   business performance and Musk's management. One is Musk's   
   tendency to overpromise results and make up the difference with   
   hype when he comes up short. Another is the magnitude of the   
   challenges facing the company as it attempts to ramp up   
   manufacturing to meet demand for the Model 3 sedan, expected to   
   hit the streets as early as year-end 2017. (We delved last week   
   into the likelihood of that happening.)   
      
   In fact, no one should be surprised at the shortfall in   
   deliveries. Musk telegraphed the manufacturing problems as   
   recently as Feb. 10, during a conference call about Tesla's   
   fourth-quarter earnings. That's when he originally used the term   
   "hubris" to explain manufacturing problems with the Model X.   
      
   "We put too many new features and technologies, too many great   
   things all at once into a product," he said. "I do think there   
   was some hubris there with the X. The net result, however, is   
   that I think the Model X is an amazing car. Honestly, I think   
   it's probably, I think it's the best car ever. I'm not sure   
   anyone's going to make a car like this again."   
      
   Musk and his team also hinted at the sheer unpredictability   
   they've discovered to be a feature of the auto manufacturing   
   process. They ran into supply bottlenecks not only with advanced-   
   tech parts, such as the X's large glass windshield, but small   
   things. Musk referred to problems with the finish around the   
   front window, especially the seals. "The seals have been a huge   
   bane. Essentially, the seals had to be redesigned. Then the   
   seals that we did have had to be reworked by hand in order to   
   fit correctly."   
      
   Other glitches alluded to included problems with the paint shop   
   at Tesla's California manufacturing plant, write-offs for excess   
   and obsolete inventory, and quality problems with existing cars   
   that translate into warranty costs. Musk and his executives   
   maintained on the Feb. 10 call that they're putting these   
   problems behind them. But they point to the reality that in   
   manufacturing products as complicated as automobiles, new issues   
   crop up all the time.   
      
   Musk maintained that the Model 3 has been designed specifically   
   for ease of manufacturing. Yet it won't be entirely off-the-   
   shelf. The prototype unveiled to great eclat last week   
   incorporates an all-glass roof designed to look like a single   
   pane running from windshield to rear trunk. Actually, it's at   
   least two pieces with an invisible seam, but that will require   
   manufacturing tolerances that may not be so easy to meet,   
   especially at high volume. One supply glitch in an assembly line   
   ramping up to 500,000 cars per year, Musk's goal, and a lot of   
   hopes can come crashing down.   
      
   Tesla executives tried to gloss over these uncomfortable   
   implications in their Feb. 10 presentation, at which they   
   reaffirmed the projection of 16,000 deliveries. When an   
   investment analyst on the call misspoke and referred to "16,000   
   deliveries this year," CFO Jason Wheeler interrupted to say,   
   "This quarter." As Chuck Jones of Forbes observes, that was   
   "pretty far into the quarter," when executives "would have been   
   in full knowledge of the parts problems."   
      
   Tesla's ability to cloud investors' judgments resembles that of   
   some other subjects of intense media attention. In the business   
   world, there's Apple, but in the broader context, the publicity   
   bonanza Tesla reaped last week by unveiling a prototype   
   automobile that won't actually be available for sale for at   
   least another 18 months was almost Trump-esque. Musk even   
   alluded to the phenomenon during the earnings call.   
      
   "Tesla does not advertise," he said. "We don't pay for any   
   endorsements. We do not discount our cars for anyone, including   
   me." Nor did he seem to think that any conventional advertising   
   would ever be necessary: "I think I could see us doing   
   advertising where that advertising was interesting,   
   entertaining, and people don't regret seeing it, which   
   unfortunately is not the case for most advertising."   
      
   Why pay for advertising when it comes for free? News   
   organizations devoted reams of newsprint and untold pixels to   
   covering the Model 3 introduction — The Times ran no fewer than   
   eight articles from a few days before to a few days following   
   the April 1 event, and most drew heavy readership.   
      
   As we pointed out last week, Tesla's future hinges in part on   
   maintaining a strong stock price, which would lower the cost of   
   its raising new capital through a secondary stock offering. So   
   it's fair to expect continued expressions of optimism from Musk   
   and his devotees. There will be regular announcements of new   
   milestones in pre-orders for the Model 3 — the latest figure is   
   276,000, released by Musk on Monday. That's impressive,   
   particularly if one overlooks that these orders are wholly   
   conditional; customers need plunk down a deposit of $1,000, but   
      
   [continued in next message]   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)