Tesla admits to underpricing Roadsters | Hacker News Reader

Tesla admits to underpricing Roadsters

engadget.com

14 pointspclark11 comments

Supply and sourcing are curious animals. I'm reminded of this every time I go to Ikea to buy $30 "Stolmens" to get 14 feet of that beautiful anodized aluminum tube for projects that would cost me more than $100 to buy raw from my local metal place.

Well, IKEA probably buys 14,0...0 feet of aluminum tube a year, and their volume allows them to take lower margins than your local metal place, so it makes perfect sense, really.

"Elon Musk has issued an email confessing that it had no idea actual production costs for the $92,000 Roadster would run closer to $140,000."

There will be some interesting times ahead of us. There are many business people like this in the United States today. It is a little endemic to the type of education we receive in my opinion.

Business people here can give you the formula for compound interest off the top of their heads. And tell you how much money they are making on the cash they have in the bank with impressive detail. Yet when you get to the part of due diligence where you ask them about amortization issues on their plan to manufacture a new type of widget, the eyes glaze over and you can hear the song and dance in their reply.

So even though you know it's not the best thing for the country . . . you recommend that they outsource manufacturing.

What's special to the United States about this?

A car manufacturer without a genius supply chain management team is dead in the water.

But Tesla is starting from scratch, not decades of experience. Provided they can learn and improve quickly they should hopefully be more competitive soon.

they have/had plenty of cash in the bank to hire experts from other fields.

Tesla's problem is that they are a low volume maker. When you only need 100 transmissions, you have to pretty much pay msrp.

So while a transmission for Honda costs them $500, a transmission for Tesla costs $10,000. Same with all other parts.

The Tesla sedan might help here....although now that the gas is back down to less than $1.50 I don't see it selling in high enough volume(10-20,000+ units) to offset the costs.

It's even more complicated than that, right? Tesla can't always use commodity parts because of the technical decisions they made.

Getting the transmission right, for example, delayed production of the Roadster for a long time IIRC.

So, not only do they have to engineer an awesome car, they have to engineer a whole new supply chain -- maybe even a new kind of supply chain. If they can get through these problems they'll be golden, but I certain don't envy their position in the market.

Exactly. A Toyota transmission, while a unique overall design, contains commodity parts from a variety of manufacturers. Tesla essentially invented a new transmission (among other things) and that will require a whole new supply chain.

Tesla's struggles show just how hard it is to make dramatic strides in a low-margin, high-capital cost, supply chain dependent industry such as automobile manufacturing.

Yet another reason why this company is a complete business failure. Techcrunch wrote some ridiculous sap piece about how Tesla "deserved" some of the Auto bailout money. It doesn't sound like anyone at that company knows anything besides engineering.

I'm not sure why anyone would bother investing in a company that gets it's production cost estimates off by more than 50%.

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