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The headline is misleading ("loses more than $4000 on every car sold"). Tesla has a healthy gross margin of over 23% on each car sold (as of last quarter). T

The headline is misleading ("loses more than $4000 on every car sold"). Tesla has a healthy gross margin of over 23% on each car sold (as of last quarter). They have quarterly losses because of expansion and investments into growth. If they stopped expansion (stores, service centers, superchargers, equipment, etc) and investment into growth (new hires, new models, etc), then they could be profitable since that would lower their expenses and they could use their gross margin per car to fully cover expenses. However, since they see a huge market, they are foregoing current profit and investing all of that and more into expansion and growth. This is only to be expected of a high-growth company in its early stages of growth.

Dylan16807 11y ago
It's not misleading. It's a lie.
rev_bird 11y ago
It'd probably be more clear to not use car sales as the divisor of an equation that doesn't involve losses related to actual cars, but if that's the one that HAS to be used, I think "loses more than $4,000 FOR every car sold" might be a little more accurate.
- dang 11y ago
  Ok, we s/on/for/'d it.
Spooky23 11y ago
It's more than that. Tesla doesn't report with GAAP numbers, so they do stuff like exclude expenses and overbook revenues. For example: (From: http://www.zerohedge.com/news/2014-02-19/tesla-when-just-gaap-revenues-are-not-enough-unleash-non-gaap http://www.zerohedge.com/news/2014-02-19/tesla-when-just-gaa... ) "Here’s how it worked. In April, Tesla started a new financing program under which customers have the option to sell their vehicles back to the company after three years for guaranteed minimum amounts. The accounting rules say Tesla can’t recognize all of the revenue immediately in those instances and must account for such transactions as leases. So after Tesla takes customers’ cash, it records liabilities for “deferred revenue” and “resale value guarantee” on its balance sheet." They are a cool company, but figuring out how they are doing is non-trivial.
cardiffspaceman 11y ago
The headline uses the word "burn" and there's an unfair connotation of excess when you see it. Then internally the article uses the word "burn" for NORMAL expenses and investments.

Dylan16807 11y ago

It's not misleading. It's a lie.

rev_bird 11y ago

It'd probably be more clear to not use car sales as the divisor of an equation that doesn't involve losses related to actual cars, but if that's the one that HAS to be used, I think "loses more than $4,000 FOR every car sold" might be a little more accurate.

dang 11y ago
Ok, we s/on/for/'d it.

Spooky23 11y ago

It's more than that. Tesla doesn't report with GAAP numbers, so they do stuff like exclude expenses and overbook revenues. For example: (From: http://www.zerohedge.com/news/2014-02-19/tesla-when-just-gaap-revenues-are-not-enough-unleash-non-gaap http://www.zerohedge.com/news/2014-02-19/tesla-when-just-gaa... ) "Here’s how it worked. In April, Tesla started a new financing program under which customers have the option to sell their vehicles back to the company after three years for guaranteed minimum amounts. The accounting rules say Tesla can’t recognize all of the revenue immediately in those instances and must account for such transactions as leases. So after Tesla takes customers’ cash, it records liabilities for “deferred revenue” and “resale value guarantee” on its balance sheet." They are a cool company, but figuring out how they are doing is non-trivial.

cardiffspaceman 11y ago

The headline uses the word "burn" and there's an unfair connotation of excess when you see it. Then internally the article uses the word "burn" for NORMAL expenses and investments.