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The article itself (despite the sensationalist title) is not extremely insightful - investors aren't expecting an auto-manufacturing startup to be cash-flow pos

The article itself (despite the sensationalist title) is not extremely insightful - investors aren't expecting an auto-manufacturing startup to be cash-flow positive while quickly scaling production. In addition the content at times even contradicts the title... "RBC analyst Joseph Spak, who has a $180 price target, said strong initial orders for the Model 3 could help Tesla achieve positive free cash flow" ... "In February, the company said it expected to be cash-flow positive in March." A more accurate title might be: "High Model 3 demand poses growth challenges and an increased need for capital."

ams6110 11y ago
Preorders are also not binding. Depending how long it takes, impatient customers or those who need a new car sooner could look at alternatives. By the time the Model 3 goes into production, it could face stiff competition from several entrants. The Model 3 might not have a lot of competition today, but it likely will in a few years time and it remains to be seen how many of the preorder customers will stick with their decision if/when other choices are available.
- aerovistae 11y ago
  This has always been the most laughable thing for me. Stiff competition. As if anyone is likely to come up with a car this compelling in the same time frame. Like some mass-produced awesome car is just going to appear out of nowhere. Yes, the big manufacturers have some things like the Bolt in the works. Have you seen it? It's pretty meh. You wouldn't expect any of them to rack up hundreds of thousands of pre-orders before anyone's even gotten their hands on the car in person, non-binding or not. Yet somehow all these internet analysts seem to think somehow all this incredible passion for the Model 3 will just magically fade away in favor of the exceptionally meh cars released by Chevy and Nissan and others. That's just not how things work. People have waited 12 years for this, you don't think they can wait two more? I swear to god, even after Tesla is selling 10 million cars per year, you're still going to have people sitting here saying "But can they keep it going? Here comes the Tesla-killer~" Extreme analogy, I know, but reminds me of Holocaust denialism. Some people are just determined to see past all available evidence to focus on one outcome which suits their personal biases.
  - deleted 11y ago
    [deleted]
  - ams6110 11y ago
    I'm sorry you're just coming off as a rabid fanboy. This is business, there are a number of realistic possibilites and not all are favorable for Tesla. Holocaust denialism? Join the rest of us in the real world please.
    - aerovistae 11y ago
      In the real world, I've been listening to people like you predict Tesla's failure for ten million increasingly humorous reasons for 10 years, while I've watched my stock go up twelve times over. Welcome to the real world.
  - sergers 11y ago
    "Extreme analogy, I know, but reminds me of Holocaust denialism. Some people are just determined to see past all available evidence to focus on one outcome which suits their personal biases." -very extreme analogy to the say the least, seems someone else here has a strong personal bias to use a crazy analogy. its great that you believe in a company strongly, but to downright shoot down any other possibility is bias. personally not ordering model 3 as: -dont want to be driving first iteration -contrary to your comment, alot can happen in 2 years. -i dont think they can meet demand, probably 2-3 years realistic -i will likely be in a comfortable spot (hope) to afford Model S by end of 2017 -too much unknowns for Model 3
    - aerovistae 11y ago
      A lot can happen in 2 years indeed. Can't wait to see what Tesla and SpaceX have accomplished by then. It's going to be nuts. I am indeed biased: I focus on available evidence. That's my bias. And all available evidence screams that Elon Musk's companies succeed at the things they set out to accomplish.
      - cmurf 11y ago
- Animats 11y ago
  If Tesla can't meet their production schedule, many of those pre-orders will evaporate. Tesla now has to get a huge factory up and running, and then learn to run it cheaply. That's not easy. Fast, cheap, good - pick two. My guess is they'll be a little late with the new cars, they'll be OK, and their manufacturing cost per unit will be higher than expected. [1] https://www.teslamotors.com/careers/job/project-manager-gen3-36125 https://www.teslamotors.com/careers/job/project-manager-gen3...
  - tamana 11y ago
    Either they have properly modeled the cost of building a car they claim to be able to sell for $35k, or they are another failed Kickstarter making empty promises.
    - grecy 11y ago
      Given they've already done it with the Roadster, Model S and Model X, I think we have to give them a lot more credit than just another Kickstarter. I'm pretty sure they know what they're doing, given they made the highest rated vehicle, ever.
      - barney54 11y ago
        They know what they are doing with regard to expensive, luxury, low-production volume vehicles. The question is whether they know how to scale and make money.
        Animats 11y ago
        It's a tough pivot from a high-cost, high-margin company to a low-cost, low-margin company. HP, SGI, and IBM all failed at it.
        phren0logy 11y ago
        Unlike those companies, the low end has been part of the plan since day one.
lotharbot 11y ago
> "High Model 3 demand poses growth challenges and an increased need for capital." which is a good problem to have. Especially for a company with the popularity and positive image of Tesla -- they should have a fairly easy time raising capital from outside investors, if they so desire. It's a challenge, to be sure, but not as difficult as the headline makes it sound. (After a nearly 3-year hiatus, it's good to have you back on HN.)
forgetsusername 11y ago
The problem, as is often the case with stories like TSLA, is that the "investors" are often momentum chasers and unsophisticated. If you doubt it, go read some message boards in Reddit or elsewhere. Very little analysis is actually performed.
- manicdee 11y ago
  What do subscribers on a Reddit subreddit have to do with Tesla investors?

ams6110 11y ago

Preorders are also not binding. Depending how long it takes, impatient customers or those who need a new car sooner could look at alternatives. By the time the Model 3 goes into production, it could face stiff competition from several entrants. The Model 3 might not have a lot of competition today, but it likely will in a few years time and it remains to be seen how many of the preorder customers will stick with their decision if/when other choices are available.

aerovistae 11y ago
This has always been the most laughable thing for me. Stiff competition. As if anyone is likely to come up with a car this compelling in the same time frame. Like some mass-produced awesome car is just going to appear out of nowhere. Yes, the big manufacturers have some things like the Bolt in the works. Have you seen it? It's pretty meh. You wouldn't expect any of them to rack up hundreds of thousands of pre-orders before anyone's even gotten their hands on the car in person, non-binding or not. Yet somehow all these internet analysts seem to think somehow all this incredible passion for the Model 3 will just magically fade away in favor of the exceptionally meh cars released by Chevy and Nissan and others. That's just not how things work. People have waited 12 years for this, you don't think they can wait two more? I swear to god, even after Tesla is selling 10 million cars per year, you're still going to have people sitting here saying "But can they keep it going? Here comes the Tesla-killer~" Extreme analogy, I know, but reminds me of Holocaust denialism. Some people are just determined to see past all available evidence to focus on one outcome which suits their personal biases.
- deleted 11y ago
  [deleted]
- ams6110 11y ago
  I'm sorry you're just coming off as a rabid fanboy. This is business, there are a number of realistic possibilites and not all are favorable for Tesla. Holocaust denialism? Join the rest of us in the real world please.
  - aerovistae 11y ago
    In the real world, I've been listening to people like you predict Tesla's failure for ten million increasingly humorous reasons for 10 years, while I've watched my stock go up twelve times over. Welcome to the real world.
- sergers 11y ago
  "Extreme analogy, I know, but reminds me of Holocaust denialism. Some people are just determined to see past all available evidence to focus on one outcome which suits their personal biases." -very extreme analogy to the say the least, seems someone else here has a strong personal bias to use a crazy analogy. its great that you believe in a company strongly, but to downright shoot down any other possibility is bias. personally not ordering model 3 as: -dont want to be driving first iteration -contrary to your comment, alot can happen in 2 years. -i dont think they can meet demand, probably 2-3 years realistic -i will likely be in a comfortable spot (hope) to afford Model S by end of 2017 -too much unknowns for Model 3
  - aerovistae 11y ago
    A lot can happen in 2 years indeed. Can't wait to see what Tesla and SpaceX have accomplished by then. It's going to be nuts. I am indeed biased: I focus on available evidence. That's my bias. And all available evidence screams that Elon Musk's companies succeed at the things they set out to accomplish.
    - cmurf 11y ago
Animats 11y ago
If Tesla can't meet their production schedule, many of those pre-orders will evaporate. Tesla now has to get a huge factory up and running, and then learn to run it cheaply. That's not easy. Fast, cheap, good - pick two. My guess is they'll be a little late with the new cars, they'll be OK, and their manufacturing cost per unit will be higher than expected. [1] https://www.teslamotors.com/careers/job/project-manager-gen3-36125 https://www.teslamotors.com/careers/job/project-manager-gen3...
- tamana 11y ago
  Either they have properly modeled the cost of building a car they claim to be able to sell for $35k, or they are another failed Kickstarter making empty promises.
  - grecy 11y ago
    Given they've already done it with the Roadster, Model S and Model X, I think we have to give them a lot more credit than just another Kickstarter. I'm pretty sure they know what they're doing, given they made the highest rated vehicle, ever.
    - barney54 11y ago
      They know what they are doing with regard to expensive, luxury, low-production volume vehicles. The question is whether they know how to scale and make money.
      - Animats 11y ago
        It's a tough pivot from a high-cost, high-margin company to a low-cost, low-margin company. HP, SGI, and IBM all failed at it.
        phren0logy 11y ago
        Unlike those companies, the low end has been part of the plan since day one.

lotharbot 11y ago

> "High Model 3 demand poses growth challenges and an increased need for capital." which is a good problem to have. Especially for a company with the popularity and positive image of Tesla -- they should have a fairly easy time raising capital from outside investors, if they so desire. It's a challenge, to be sure, but not as difficult as the headline makes it sound. (After a nearly 3-year hiatus, it's good to have you back on HN.)

forgetsusername 11y ago

The problem, as is often the case with stories like TSLA, is that the "investors" are often momentum chasers and unsophisticated. If you doubt it, go read some message boards in Reddit or elsewhere. Very little analysis is actually performed.

manicdee 11y ago
What do subscribers on a Reddit subreddit have to do with Tesla investors?