Do you guys remember the Tesla roadster?
Not the classic version but the new one that Elon announced in 2017.
The new roadster was supposed to have it all, a 1.9 second 0 to 60, a top speed of 250 mph,
and a range of 620 miles.
Coming it at a starting price of $200,000, the first roadsters were expected to be delivered
in 2020.
But clearly, that didn’t happen.
And now, it seems like roadsters won’t be hitting the road till at least 2023.
So, what in the world happened to the Tesla roadster?
Taking a look at the timeline of Roadster delays, it’s actually not too exciting.
The timeline mostly consists of Tesla not giving any updates and then delaying the car
right before it was supposed to come out.
The most recent update we got was in January of 2021 when Elon tweeted that engineering
would be finished by the end of 2021, and that production would begin in 2022.
Given that roadster prototypes apparently hit all of their promised numbers years ago,
what’s the big hold up?
Well, likely the biggest obstacle that they didn’t expect to face when announcing the
roadster was a near death experience.
Around the time the roadster was initially announced, the model 3 was finally hitting
the market.
In July of 2017, the first 30 model 3 production vehicles were delivered, and Tesla had a small
celebration event.
Ironically though, there wasn’t too much to celebrate as Elon as well as the Tesla
employees knew that ramping up production of the model 3 was going to be a nightmare.
You see, the first 30 model 3 vehicles were mostly built by hand and Tesla was yet to
employ their massive automated assembly line.
Tesla knew that ramping up automated production was going to be rather challenging, but they
didn’t expect it to nearly wipe them out.
When Tesla started production, issues would spring up instantly.
The robots kept misaligning parts of the car, the software kept crashing, and the worst
part was that no one really knew why.
Tesla had spent over a billion dollars building the Gigafactory, but it looked like the factory
was a lemon.
Hundreds of quote on quote under performing employees would be fired and the remaining
ones would be pushed extremely hard to meet production numbers.
Even with this intense pressure though, Tesla was nowhere near their 5000 cars a week production
goal.
Every week, Tesla didn’t meet production numbers, they were burning loads of money,
and at one point, Tesla was within single digit weeks of dying.
The company would eventually figure it out, and the answer was to simply use less automation.
But reaching production numbers was just the first of their worries.
Once the cars were manufactured, they actually had to be delivered, and the problem was that
each delivery was built to order.
Generally, when you buy a car, you just go to the closest dealer and pick out a car from
their lot.
With Tesla though, everyone custom builds their cars online.
There are only a limited number of options, but given the relatively low volume of cars
Tesla was building, it was especially hard to come up with an efficient delivery plan
which led them to losing even more money.
Considering this massive debacle Tesla experienced, it’s not hard to see why the roadster would
be the last thing on their list.
It should be noted that even if Tesla didn’t experience the model 3 production nightmare,
the roadster would still be last priority.
Here’s the thing, the roadster targets an extremely niche market and it's unlikely that
Tesla will crack the six figures and maybe even the 5 figures in terms of sales.
So, it makes little sense for them to devote much effort into the roadster.
This is especially true when you consider that Tesla still has lots of room to grow
within their fundamental business itself.
Just last year, they started production of the Model Y and looking forward, they want
to start cyber truck production by the end of this year.
And the Austin Gigafactory where the cybertruck is supposed to be produced is still under
construction itself.
It’s also likely that Tesla would prefer to avoid a production nightmare when it comes
to the cybertruck and their new gigafactories.
Evidently, there’s plenty of things to focus on in their primary business itself.
So, the roadster has never been a priority and likely won't be one moving forward either.
The roadster is not only a low priority, but it also comes along with a massive price tag
in terms of research and development.
Just think about it, the roadster is supposed to have a sub 2 0 to 60, a 620 mile range,
and it’s of course supposed to be fully electric.
Developing something like this would no doubt cost tens if not hundreds of millions of dollars.
For a company like Tesla that's really just breaking even at this point, such an expense
is not negligible by any means.
Moreover, this money could be spent in other sectors which would be much more beneficial
for Tesla.
For instance, they could use the money to make the austin gigafactory bigger and produce
more cars.
Or they could use the money for self driving R&D which could accelerate Tesla’s vision
of creating robotaxis.
Now, money spent on roadster R&D isn’t a waste per se.
It’s common to develop new technology on flagship experimental vehicles, and then slowly
bring down that technology to lower tiers of vehicles.
With the roadster, Tesla has to develop more powerful motors and higher density batteries,
and these technologies could definitely be brought down to the model s and x and even
the 3 and y eventually.
But, though having a model 3 with a range of 1000 miles or something like that would
be insane, would tripling the range of a model 3 really triple the sales of the model 3.
Not really.
So, Tesla isn’t really in any rush to develop this advanced technology and bring it down
to their lower models.
But wait a minute, didn’t Tesla reveal that they already have working prototypes that
can hit all of the specs they outlined?
In that case, most of the R&D is already completed right?
Well, that only indicates that Tesla has completed tech based R&D not cost based R&D.
Not only is Tesla promising specs that destroy Bugattis, but Tesla is promising to slash
the price over 10 fold.
It’s very possible that Tesla figured out how to achieve the Roadster’s specs years
ago, but the problem is that it cost $5 or $6 million to produce.
With scale, maybe they can bring it down to $1 to $2 million, but that’s still a far
ways off from $200,000 a car.
So, the engineering challenge holding back Tesla may very well be a cost based one as
opposed to a tech based one.
Until now, we’ve discussed a bunch of financial and technical challenges in bringing the roadster
to market, but I don’t think the main reason has anything to do with objective obstacles.
Rather, I think the main reason the roadster has yet to hit the roads is because it's a
marketing tool more than anything.
The roadster isn’t built to generate profit or reduce costs or advance Tesla’s technology.
No, the roadster is built for one reason and one reason only which is building clout for
Tesla.
Since the original roadster, Tesla has focused on growing organic interest by showcasing
how electric cars could be cool.
In the early 2000s, electric cars were seen as slow, boring, and unreliable.
Tesla created the original roadster to disprove that notion.
Using the profits generated by the sports car, Tesla created the luxury model s and
x.
And using the profits generated by the luxury models, Tesla created everyday people models
which are the 3 and y.
But at this point, there’s no longer a need to generate hype for electric vehicles and
especially for Teslas.
Right now, Tesla is facing a supply problem not a demand problem as they have way more
demand than they can handle.
Tesla didn’t exactly expect this.
Sure, they expected the model 3 and y to sell better than any previous model, but the massive
influx of hype following the announcement of the Cybertruck throughout 2020 was unprecedented.
Tesla no longer needed an extreme sports car that showed that electric cars were cool.
The truth was that most Tesla owners didn’t actually buy a Tesla because it's electric.
They actually bought a Tesla because it carries a certain social status and it had a super
cool feature which is of course self driving.
The electric aspect of Teslas were simply a side benefit that made tesla owners feel
better about themselves.
More times than not though, the electric aspect of teslas were not what pushed customers to
actually buy a Tesla.
Basically everyone understands that electric cars are the future.
Sure, there’s some disagreement on when EVs will take over, but nearly everyone agrees
that it's inevitable.
So, at this point, Tesla’s primary marketing goal is no longer to convince people to go
electric, but rather to go Tesla.
And the best way to accomplish this is to build off of their strengths which is their
brand image and their autonomous features.
Considering this shift in market sentiment, the roadster no longer plays a critical marketing
role in convincing customers to go electric and buy a tesla.
And so, there’s no rush in bringing the Roadster to market.
When will the roadster actually come out then?
Well, in the 2020 q2 earnings call, Elon Musk suggested that the roadster would be built
in the Fremont factory in California.
The Fremont factory is Tesla’s primary production plant right now though, so I don’t think
Tesla will want to devote Fremont’s production capacity to the Roadster till their total
total production output is much higher.
Fortunately, the upcoming gigafactories in Berlin and Austin are expected to be completed
by the end of 2021.
If this is the case, they should be able to ramp up production throughout the first half
of 2022 which would heavily alleviate the pressure on the Fremont factory.
And at that point, Tesla could start producing the roadster at the Fremont factory which
would mean that the first deliveries would take place in the second half of 2022.
There’s almost always delays though, so a more conservative estimate would be the
first half of 2023.
So, there’s still about 2 years till we see roadsters being delivered, but it does
seem like it’s finally going to happen.
Why do you guys think the roadster has been pushed back so much?
Comment that down below.
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