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My link shows that Tesla sales increased and all the others went down (comparing 2014 to 2015). If Tesla just sold the Model S, they would be profitable. Margi

My link shows that Tesla sales increased and all the others went down (comparing 2014 to 2015). If Tesla just sold the Model S, they would be profitable. Margins are pretty good for each Model S. But selling just the Model S is not the plan, hence the huge cash burn.

ddeck 10y ago
>If Tesla just sold the Model S, they would be profitable. Margins are pretty good for each Model S. But selling just the Model S is not the plan, hence the huge cash burn. I'm curious where you draw this conclusion from. Tesla definitely burns a ton of cash, but it's primarily capex ($1.6bn in 2015), which doesn't directly affect their profitability. 2015 R&D was $718 million. Even if we assume none of that is related to the model S and add it back, they still would have lost $170 million (net profit). And this is the marginal profitability, ignoring all the R&D expense from prior years that went into the model S. Telsa are loss leading, hoping to grow their brand and technology to the point and out compete their rivals by the time the vehicles are truly profitable. If the capital markets remain favorable to them for a long enough time, they might just do it. Or established brands may acquire their technology once they deem the market to be sufficiently mature for them. Or we may have a problem in the markets, and Tesla's continuing cash requirements might lead them into difficulty.
- codeulike 10y ago
  I'm basing it on what Elon Musk said at the 2015 North American International Auto Show. And the often mentioned 20% margin on the Model S. http://uk.businessinsider.com/heres-everything-elon-musk-said-at-the-detroit-auto-show-2015-1 http://uk.businessinsider.com/heres-everything-elon-musk-sai...
  - ddeck 10y ago
    I'm typically inclined to look at the financials rather than what executives have to say ;) I presume he's talking gross margin, which excludes prior R&D (except capitalized), marketing, distribution & sales costs, office/admin expenses, financing costs etc.

ddeck 10y ago

>If Tesla just sold the Model S, they would be profitable. Margins are pretty good for each Model S. But selling just the Model S is not the plan, hence the huge cash burn. I'm curious where you draw this conclusion from. Tesla definitely burns a ton of cash, but it's primarily capex ($1.6bn in 2015), which doesn't directly affect their profitability. 2015 R&D was $718 million. Even if we assume none of that is related to the model S and add it back, they still would have lost $170 million (net profit). And this is the marginal profitability, ignoring all the R&D expense from prior years that went into the model S. Telsa are loss leading, hoping to grow their brand and technology to the point and out compete their rivals by the time the vehicles are truly profitable. If the capital markets remain favorable to them for a long enough time, they might just do it. Or established brands may acquire their technology once they deem the market to be sufficiently mature for them. Or we may have a problem in the markets, and Tesla's continuing cash requirements might lead them into difficulty.

codeulike 10y ago
I'm basing it on what Elon Musk said at the 2015 North American International Auto Show. And the often mentioned 20% margin on the Model S. http://uk.businessinsider.com/heres-everything-elon-musk-said-at-the-detroit-auto-show-2015-1 http://uk.businessinsider.com/heres-everything-elon-musk-sai...
- ddeck 10y ago
  I'm typically inclined to look at the financials rather than what executives have to say ;) I presume he's talking gross margin, which excludes prior R&D (except capitalized), marketing, distribution & sales costs, office/admin expenses, financing costs etc.