Nostradumus: Tesla Predictions

Not a typo... NostraDUMUS as in dummy. Future predictions are always fraught.

Next week sees the start of Q3 of the calendar year which means the Q2 results for Tesla. If you have been keeping track that means an important question is going to get answered. Have they reached 5k per week or not? This is the goal set by Musk that is needed to reach profitability over the course of Q3 and Q4.

Today Tesla opened up the option for all current reservation holders to confirm their orders and make their build selections.

As tea leave signs go, I'd say this one augers well for the news at the Q2 call. Here is why...

There are ~300k + reservation holders. Those wishing to commit need to drop down another $2500 and select their build options among what is currently available (35k base model is not available yet). This goes 1 of 3 ways. Very few bite. Most bite. or Some bite. 1 in 3 biting would be 100k committed orders and at 5k a week production would represent roughly 6 months of production which neatly matches up with predicting numbers for Q3 and 4 so lets go there.

100k committed orders at $2500 nets a cool 250 million to Tesla. Not a bad take for 3 days. The current order options have been generating something around a $50k average sale cost. So somewhere north of 250 million in down payments leading to something around 5 billion (corrected earlier goof with 125 billion...) in sales across the next two quarters assuming they can manage a 5k average weekly production throughout the 2 quarters.

And if that all goes to plan then Elon Musk gets a lot of soiled underpants from those shorting Tesla for a Xmas present when Q4 results show Tesla in the Black. Probably gets some for Xmas in July if they are at or exceeding 5k a week and are above expectations on cash burn for Q2.

So the above is what I think more or less will be how things go barring some major new surprise. For example the tent production line blows/burns down literally or metaphorically (atrocious production quality issues perhaps?).

How could things go better? Higher take rate on higher optioned cars... but I doubt it. The notice sent out says 2-4 months to fulfill the orders. That seems to indicate they think less than 100k folks will commit with the current more expensive build options. Unless they have supireme confidence they can hit well above 5k a week production levels in the next 4 months. 100k+ takers ensures a longer period of $50k average sale price which drives profitability higher faster. But takes longer to clear the backlog before they can get to the lower spec builds.

How could things go worse? Very light commitment from the remaining pool and a mass exodus of reservation holders pulling their deposit back. I think that combination is what could cause Tesla to bleed out if they can't get from where they are to the lower build spec that is the foundation of the 3 concept.

Taking Musk's claim at face value that 5k a week production level means Tesla reaches profitability but thinking the rate to make the 35k build not eat them alive will have to be higher. I think the path forward for them is to bootstrap profitability at lower production rates with higher per vehicle sales then continue to ramp production to the point the base model sales and resulting lower avg sale price won't sink them. That said, one thing that is almost certain is that Tesla is not going to see 30% margins on their sales long term. That was based on early ideas of hitting 10k a week with a higher level of automation keeping cost of production per car down. Some of that is definitely gone with the removal of automation and increase in manual line work. But 30% margin leaves a lot of room to fall down from predictions and still make a decent profit.

Hard Predictions:

• Weekly production numbers a little shy of 5k a week... say 4750 +-100
• 50-60k commitments from the current window so 125-150 million in deposits
• Insignificant drop/no change in overall reservation churn (IE no large block exodus of reservation holders)
• ~4-5 billion in sales over the second half of the year
• Announcement of base model availability date at the end of the year leading to a significant net increase in reservations
• Massive furor will ensue over the fact the federal rebate will be at least half of what it is now by the time the baseline models begin delivery because the two quarters after the 200k delivery will be taken up delivering higher order commitments being made right now. IE no one will get a sub 30k model 3 after rebates. 
• Assuming the tent production line doesn't fall on its face... Tesla is close in Q3 and makes it into the black for Q4.  

Note to self... set alarm for January to come back and check on these...

The search for the new Family Truckster: Part 1 - The Contenders

The time has come. The need for a new Family conveyance is upon us and the search has begun. What to get?

First up... used? No. Why? Primarily because the active safety revolution is upon us and recent used cars with them are typically not that far off of used. And since these are electronic brain power based to a degree no other car technology has been it is also subject to rapid improvements from year to year and a plateau has not been reached yet... and may not for a while with the push on to autonomous driving. Of course.... the top car on my list from an emotional standpoint does not have active safety features. And for that reason... I am likely not going to be able to seriously consider it. More on that in a bit when we get to the contenders.

So... wanting active safety features has me looking new.

A minivan? I'll be honest for a second. Pretty much any family with 2 kids and a dog would do well with a minivan. I can admit that. But on a purely emotional, subjective level, neither I nor my wife have any desire to drive one. So do as I say and get a minivan... and not as a I do... which will be to get anything other than a minivan. Really... almost literally anything else. For some strange reason I don't think we are alone in that viewpoint.

So... we could use minivan space I grant. Emotional disconnect aside... we don't need the space day to day so a minivan is a bit overkill for us and I would hate it as a daily... and it would be my daily as my Wife is not giving up her imminently practical but absolute blast VW GTI. If we had a third human child instead of the 3rd being of the four legged variety I imagine we would be shopping swagger wagons no matter what our feelings about them were. Bet we are not.. nor at this point will we have a 3rd. So we can cross them off the list.

So after scratching used and minivans from the list lets look at the check list for the contenders to try and stack up to...

• Reliability, Reliability, Reliability. Easy to come by these days compared to decades past. I expect this vehicle to be a 10 year minimum addition to the family. 
• Active Safety Features, namely emergency collision breaking assistance. Why? This feature is largely credited with reducing insurance claims in cars that have the feature by more than 10%. I put this at the top of the list and it has killed my number one choice I arrived at before really giving the used vs new serious consideration. DOUGHT. 
• 4x4. Preferably with a Transfer case (low range) and some useful ground clearance. We are talking some back woods creek crossing capability... not a bit better in the rain AWD. 
• 5000lbs of towing. Not a deal breaker to have less... but this allows use of max size Uhaul trailer which is a capability I like to have. 
• Something I (Dad) will at least not actively hate while daily driving. I have a 3 pedal Mustang GT with the 5.0 Coyote to scratch the performance itch when needed. But not looking for a penalty box that I spend the most time in. Mostly this means nice adjustable leather seats, first choice color... and not a minivan.  
• 3rd Row would be nice, but not a deal breaker to me.... may be one to my Wife. We shall see. 
• My wife can drive it.... most likely kills any notion of a manual transmission... even if such a beast could be found in this category that meets our needs. 

After roaming the wilds of the internet car sites and review sites etc... what did I find that met enough of the above for consideration? 

The contenders:

• Jeep Grand Cherokee with Quadratrack II
• Jeep Cherokee Trailhawk
• Jeep Wrangler Unlimited
• Toyota 4Runner
• Subaru Ascent
• Ford Flex
• Toyota Tocoma
• Chevy Colorado
• F-150 Super Crew (and similar half ton trucks)

What got canned from the list before I even started test driving? 

F-150 (and similar). To Damn Big... and yet still to small. Two kids and a dog could probably work in the back seat. Having a truck bed would be nice for Home Depot runs and the like. But not enough to put up with its size. And DAMN did they get expensive. Lariat F-150 super crew with 4x4 stickers out in the 50's only if you pretty much ignore the options list. Granted they deal pretty hard in this category but still. Odd case of over and under kill at the same time. 

Colorado and Tacoma go the same route. The ZR2 and TRD PRO packages are tempting. The ZR2 Diesel in particular, or TRD PRo with a stick would be nice but they bomb out on usable family trip space. Do not think a dog could go in the rear with the kids. Especially as they get older. Rear leg room was less than our current GTI..... NOPE. 

Ford Flex. Were it not for the desire to be able to get off pavement this one would merit a harder look. As well as the more common 3 row CUVs like the Highlander, CX-5, Pathfinder, Explorer etc. I like the Flex in this class because it is distinct and it has racked up a pretty solid reputation on the reliability front. I wouldn't say they are attractive. But its lower set makes for a nice drive and it has all the space you could ask for. But it is definitely pavement limited. It is a practical non minivan minivan option that I think I could otherwise live with if I could give up on the off road chops. 

At the other end of the off road capability spectrum you find the Wrangler Unlimited.... which is a bit too rough. Held out some hope the JL would tame it a bit. But the early reviews are in... and its is still a wrangler. That is a good thing mind you. But a bit rough around the edges even for my taste. If it had a bit more cargo space I'd be tempted just because it has the option for a manual. Resale is awesome. Reliability is hard to judge as it is type of vehicle that gets abused. The V6 is solid, and a manual gets around the transmission gremlins.   

So... that leaves us with 4 contenders. 4Runner, Ascent, Trailhawk Cherokee and the Grand Cherokee. 

I test drove the two Jeeps this weekend. Here are my thoughts on them. 

Jeep Cherokee Trailhawk Elite (2019). Olive green option looks very nice in person. Works very well with the Trailhawk black graphics on the hood. Interior does not impress. The elite has the nicest seats on offer in the Cherokee and from 10 minutes in the lot and 20 minutes of test driving I never got them where I liked it. Good visibility though. And not awful seats by any stretch. They may wear in nice. But for a vehicle with a sticker of 41k... color me unimpressed. While we are on the subject of value for the money.... the overall sensation in the cabin was of vehicles of a lower tier... in a mid 20's base that pushed just into the 30's it would be on the bubble. Pushing into the 40's this was a deal breaker for me. Beyond that... it is a bit small for what we need. It would be smaller than the current Grand Cherokee we have though a tad bigger than the GTI which we are using for family trips now. Would still be using a roof box with it. That said... it is a unique proposition in what it is. The 4x4 capability of the Trailhawk is surprisingly robust and the approach, break over and departure angles are better than the Grand Cherokee unless it is on the quadra II system and jacked up on the air suspension max. It is probably a tougher system as well. Towing is at 3500 so not what I was after but definitely useful. Jeep is dealing hard on them... the one I drove could have been had at 35 before any real hard haggling. 33 to 34 was probably doable if I was in signature mode. Overall.... not bad. But it is punching well below its MSRP unless you are after that better than average 4x4 capability. And even if you are like I am.... it is way to close to the Grand Cherokee's to take to seriously (at least at MSRP). An Elite at sub 35k may still be something I consider once it comes time to take on the payment. But it is now at the bottom of the pack after the test drive... but still on the list. Biggest knock on it is not enough of an upgrade in space... bad first impression on the interior quality front was only in regards to what I was comparing it to. Was still a pretty nice ride. 

Grand Cherokee, Drove a Summit but would be after a Limited (lower trim) or Trailhawk. Like the color, interior options on the Limited more. The key is the drive train I am after. The V6 and Quadra Track 2 4x4 system (same as in Trailhawk). Limited is the first trim it is available in. It is also the lowest trim that enables you to select the active safety package. And that is key for me to consider this option. The air suspension in the Quadra II system is a tricky proposition. It is a complex solution that enables you to do very impressive off road feats in a very comfortable vehicle. However... .it has a bit of a glass jaw reputation. If you are going into the Boonies routinely this system would not be a fantastic choice. But as an every once in a while option? It does a fantastic job of retaining serious Jeep Chops while also helping in day to day comfort. The ride in the Grand Cherokee with this system was miles better than the Cherokee Trailhawk... and in a different world than the dual solid axle rattle bucket ride I currently have in my '04. Overall this was a superb vehicle. The feel was in line with its sticker. Bit richer than I am looking for in this trim but the ride is the same in the Limited I am after. The test drive put this option back in serious contention when I had largely thought I would not consider it due to fears of FCA quality issues. 

I have yet to Drive the Subaru Ascent. It is a new kid on the block. And while it is firmly in the CUV line.... Subaru has done their usual good enough 4x4 schtick here and you find a class leading 8.7" clearance which while nothing to scream about is roughly the same as my current Grand Cherokee. It has very competitive pricing. Perhaps the most usable 3rd row in the class (seems a toss up between this and the Atlas) and 5000lbs of towing on all but the absolute base model. On Paper this one was at the top of the heap until I test drove the Jeep. The added refinement of the current Grand Cherokee and additional 4x4 chops is going to make me look hard at it. But the Ascent is cheaper, has better active safety (standard mind you... on ALL of them), and considerably more space in a package I think I can swallow as it has Subies decent split bias 4x4 system with some rough stuff auto control modes rather than a fwd first awd solutions that barely improve wet weather handling. Some of you might be thinking why not get an Outback? And it is a legitimate question. But... it has pretty much no advantage to me over the Grand Cherokee except MPG and maybe cost. Thee two are more or less twins in terms of space. But 4x4 and towing are definite wins to the Cherokee. The Ascent brings big wins to the table in terms of MPG and space and pulls enough behind it. I am concerned about the drive train.... but Subaru has a LOT riding on this vehicle being rock solid. By the time I can buy something there should be some early returns on whether or not the combination of the turbo 4 and CVT transmission are not up to the task. All the early take reviews have been surprised at how competent the combination has proven. The power is there. And I have long thought the turbo 4 probably should be the primary engine in damn near every thing. Twin scroll turbo's have eliminated turbo lag and they have plenty of torque. Reliability is largely solved as well though end life maintenance is still something of a concern. But stacked against fuel savings... it is mostly a wash at this point. The real question to me is the CVT, but Subaru seems to have the engineering on them licked as they have not had the same issues most other brands have been having with them. 

The last I also have not test driven. That is the 4runner. I haven't tested it because I want the unicorn TRD Pro and it is damn near impossible to find one on a lot, or even an off road with the upgraded suspension. On paper before I did my research on active safety I had pretty much settled on this one. It isn't the most practical. But... it is about as bullet proof a drive train as can be had currently. The 4x4 capability is bested only by Rubicon trim Wranglers but they are far more daily livable. It has 5k towing. Space is about the same as the Ascent though without any 3rd row. Resale is phenomenal... and if I get the Voodoo Blue option in 2019 there is a decent chance it will never drop much below MSRP and it could be a rare enough unicorn it never goes below. 3 year old TRD Pro 4runners with 50k miles are going for damn near MSRP. That is the good... .the bad is a 5 speed slush box and 4 liter V6 from 10+ years ago that gets the package real world MPG under 20. That kind of dulls the shine on the likely 300k plus life time. Lastly, it has the dubious distinction of being the only offering in the entire Toyota fleet that does not have active safety. It is a standard option across all other vehicles they often. It is not available on the 4Runner. and it isn't coming in 2019. Bastards. I am still damn tempted. But right now it is sitting 3rd in the list behind the closely matched Ascent and Jeep Grand Cherokee. 

I still don't have a clear choice. But I still have plenty of time before I will be getting to any kind of paper signing. Need to sell our old house for starters. Here is where they sit. 

Where the 4Runner is a rock solid monolith head and shoulders above damn near anything else out there when it comes to reliability. The Ascent is an unknown quantity coming from a manufacturer that is currently growing rapidly largely based on its resurgent reliability numbers. The Jeep is a dubious quantity in this regard. But most of the Major chinks in the Grand Cherokee armor have been addressed. The transmission programming has been sorted. I am actively avoiding the bells and whistles electronics/luxury package... they couldn't pay me to take it. The 3.6 liter V-6 is well regarded. Even the HEMI is well regarded if thirsty. The knock on the Jeeps is not the drive train... but the electronics. And for the most part that is a long term problem reflected in the not so fantastic re-sale (though it isn't terrible). I think my largest core concern is regarding the air suspension. So.... Cost, Space and active safety go to the Ascent. The Subaru system is a much more highly regarded system  than the one in the Jeep. As an added bonus, none of it is mounted in the front bumper which makes it less likely to incur expensive repairs. True 4x4 with active safety defaults to the Grand Cherokee. If it had the cargo capacity of the other two it would be hard to beat.  Reliability, Space and Top 4x4 goes to the 4Runner. The reliability and true rough and tumble capability along with a decent upgrade in cargo capacity had it at the top of my list. And it still has my heart. My head says we should probably get the Ascent... room to haul Grandma and the kids, or couple of kids friends etc... in a package that can still get a bit off the beaten path is damned enticing. The compromise between the practical choice and the heart choice looks to be the Grand Cherokee. I gave my wife the job of researching the active safety front and she has the power to veto the 4Runner that I still can't stop thinking about. If she nixes it I will have to make the call between practical options and the one with better 4x4. That choice got a lot harder after test driving the Grand Cherokee. The Trailhawk Cherokee remains a long-shot.... but I don't think it would be cheaper than the Ascent... and it is WAY less practical. But it is probably just big enough... and surprisingly capable when the pavement ends. 

Part 2 will be more about why I didn't look at some other options... Tall wagons, Sedans. The more mainstream CUVs etc... and a bit about why I am somewhat concerned buying anything right now with the potential electric and automated driving revolution underway.