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And their Chief People Officer, is not coming back from her leave. From the outside it looks like Telsa is about going to go into a tough winter like moment.

And their Chief People Officer, is not coming back from her leave. From the outside it looks like Telsa is about going to go into a tough winter like moment. They are almost losing by winning. They are at capacity in their Fremont factory but still not making a profit. They need to start designing and building out manufacturing facilities for their next car and the help bolster Model X manufacturing. Stop and think for a second that Tesla is one earthquake away from no longer being a company. - They are cash flow negative, - they have about a year of cash runway left( optimistically) You can't just collect insurance money and build a new factory like you can with a house, this is a many year project. Tesla can't afford to not build cars for multiple years. Forget the SEC investigation hanging over their head. From what I read, they are likely to get a large fine and a strong talking to. And the most worrying thing for them is that their next car will compete head on with Mercedes, BMW, Audi, and GM. That will be the first time they've had to compete head on with a competitor.

mathattack 8y ago
If they are at capacity, why don’t they charge more money?
- rcMgD2BwE72F 8y ago
  >They are almost losing by winning. They are at capacity in their Fremont factory but still not making a profit. Source? They are now at capacity and they are expected (by Tesla top management) to announce profitablity for this quarter. In other words, they were not a capacity last quarter and not profitable. That's why with the record sales and production of this summer, Q3 earnings publication will be very interesting. But we won't know the actual result until end of October. By then, the shorts (with billions in backing) will do all their best to give the company an extremely bad look. Because if Tesla manage to turn a profit this Q3, they'll lose dozens of billions. It's now or never for them.
  - matwood 8y ago
    > By then, the shorts (with billions in backing) will do all their best to give the company an extremely bad look. Please stop with this thought process. TSLA is doing a fine job all on its own making themselves look bad. On the business side, Musk has missed how many production estimates? There are also concerns about quality. On the personal side, he's still harping on this pedophile thing /facepalm. Then what looks like a complete lie about being bought out. The way you fix the shorts problem is to actually deliver on your promises and make some money. Deflecting that it's the shorts causing problems for TSLA is typical TSLA deflecting the horrible job they have done at running TSLA.
    - rcMgD2BwE72F 8y ago
      I don't think you realize how much FUD is disseminated daily in the mainstream media. Take this Reuters article for instance, which has been published and translated by dozens of top newspapers: https://www.reuters.com/article/us-tesla-germany-daimler/electric-mercedes-opens-german-assault-on-tesla-idUSKCN1LJ17Y https://www.reuters.com/article/us-tesla-germany-daimler/ele... 3rd paragraph: "The market for upscale electric cars is Tesla’s to lose, with sales of its entry-level Model 3 sedan expected to reach about 50,000 cars this year and almost double that in 2019." All sources indicates that Tesla has already produced 50K Model 3. In the first three quarters. There's is still one quarter to go in 2018. And Tesla plan to produce more than 300K Model 3 next year, not 100K. What kind of error is that? Reuters is aware of this "mistake" and they are not correcting it. All media who published the report and were made aware of the wrong numbers kept it "as is", even though the 50K has already been proven wrong. How can Reuters and co keep such blatant errors while knowing it's bullshit? For some reasons, the disinformation only increases as Tesla pressures the legacy automakers margin (Tesla surpassed both BMW and Mercedes in US car sales this summer while the German are losing big time). Reuters & co might not be short themselves. But they knowingly play the short game and kep spreading the FUD ("See these terrible numbers? Who can expect Tesla to turn a profit? Now, let's hear what competitors and short sellers have to say...").
      - compcoffee 8y ago
        >What kind of error is that? They've aware of this, they are not correcting. All media who published the report and were made aware of the "mistake" kept it, even though the 50K is already proven wrong. Who cares? What influence do you think this article and that estimate has? "Disinformation"; that's laughable. Tesla and Musk are being sued and investigated for stock manipulation, but you're crying about Reuters being off on their prediction. Who is showing bias? Where is the outrage? >And just as Tesla surpasses BMW and Mercedes in car sales in the US, it's only getting worse. Sedan sales, while the whole industry moves to CUVs and SUVs. Do you think this is sustainable, or is it clearing a backlog? Why can you get a car in 2 weeks now?
  - compcoffee 8y ago
    >They are now at capacity and they are expected (by Tesla top management) to announce profitablity for this quarter. Honest question: when did you start following this company? Elon has claimed profitability for years. Where is it? Where are the economies of scale that were promised? >By then, the shorts (with billions in backing) will do all their best to give the company an extremely bad look. The shorts will? Really? Which stories are false?
- jonknee 8y ago
  Who says they aren't? They're already charging $60k for their "mass market" $35k sedan. Update: I guess technically it's $50k, the other day I read the average selling price was $60k and that was stuck in my head. Regardless, far away from $35k!
  - rstupek 8y ago
    Why wouldn't you build out the higher priced orders first?
    - jonknee 8y ago
      The more concerning part is that they're still losing a fortune while only building out the supposedly high margin top end models.
      - zaroth 8y ago
        Tesla gross margin on an AWD Model 3 with Autopilot is ~$20,000. Twenty thousand dollars. And they are outselling BMW’s entire passenger car lineup. It cost them a pretty penny to get here but cash is literally pouring in for Tesla right now.
        jonknee 8y ago
        > It cost them a pretty penny to get here but cash is literally pouring in for Tesla right now. And also pouring out, they are losing a massive amount of money every quarter.
- secabeen 8y ago
  They did. I put in my order on August 1st, and they increased prices by about $1000 per car on August 3rd. I just got in before the increase.
martinald 8y ago
They can't afford any capex on new factories though. They are extremely close to breaching covenants on their debt and personally can't understand why they are not raising equity money as their stock price, despite Musk's crazy antics, is holding up well.
- debacle 8y ago
  Their stock price has been highly volatile in the last year. It's "holding up," but only by the hairs on its teeth. They're hovering very close to their 52 week low when the rest of the market is having a banner year.
- rcMgD2BwE72F 8y ago
  Management said they don't need to raise funds to cover the capex needed to ramp up Model 3 sales to 7/week, which is (as confirmed multiple times by Musk) more than needed to turn a profit. They just need to turn a profit in Q3 to get the stock price back up and then, they might raise funds to finance the next products (Model Y, truck and Semi). Why raise funds when Wall Street bet on the company to go bankrupt? Raising capital in this environment would mean that the management don't believe in their ability to turn a profit. But then, why raise further equity and make the problem worse? Occam razor: they expect to be profitable this quarter and are more patient than short-term speculators.
  - scottkduncan 8y ago
    "Wall Street" is not betting on them to go bankrupt. Collectively, investors value this company that produces, at best, 7K cars a week at $45 billion. The idea that one quarter of profitability achieved through slashing capex to the bone fundamentally would fundamentally change their valuation doesn't carry much water in my view.
    - rcMgD2BwE72F 8y ago
      >Collectively, investors value this company (...) Most large investors are just holding. The small amount of shares that are exchanged every day are bought/sold by speculators and they are backed by institutions that get paid for this intraday activity. Also, with all the short positions on TSLA, the bank are risking an almost infinite sum of money (in case of a short squeeze). Since Tesla doesn't intend to raise capital for the foreseeable future, banks can only gain from volatility or from a major event that would force Tesla to raise funds.
rightnow 8y ago
Same comments for 6 years now. Bla bla bla
covercash 8y ago
Maybe that’s his backup plan if it doesn’t work out... use a BoringCo drill to “accidentally” trigger an earthquake, collect insurance money, funnel it all into SpaceX and launch himself to Mars.
- SmallDeadGuy 8y ago
  Taking the meaning of "playing the long game" further than anyone else ever has.
- deusofnull 8y ago
  Maybe he's gonna use a BoringCompany drill to DRILL to Mars. Ever think of that?
  - djstein 8y ago
    Tengen Toppa Gurren Lagann?
  - perl4ever 8y ago
    There was an old story that I can't seem to find by Googling, but the gist of the plot that I recall was that Mars was stealing Earth's atmosphere through a kind of vortex, like a huge double ended tornado, and some guy in an old plane flew through it, getting to Mars without a spaceship.
api 8y ago
I have a friend who bought a Tesla and is now asking for a buy-back. His experience has convinced me the negative hype isn't all just shorts propagandizing and "Musk fatigue." This company has huge, huge problems. When he first got the Tesla it had huge body panel alignment problems. Eventually these were fixed, but it took too long and was difficult to get Tesla to fully acknowledge them. After that he had a range of little annoying problems, many of which were likely software bugs, but then he (actually his GF) experienced something in autopilot mode known on the Tesla forums as "shadow braking" -- the car braking hard on the highway because it seems to see the shadow of an overpass and think it's a wall. This is extremely dangerous. It was on the I-405 (SoCal) going 70-80mph, and such a thing could easily cause a rear end collision. At that point they're starting the process of returning the car. Not only have there been many problems including a major safety issue, but Tesla has apparently been evasive and difficult getting them fixed. I hate to type this because I love most of what Musk has done and I really credit Tesla with helping get the ball rolling on EVs. EVs are tipping now, and I'm not sure that would have happened without Tesla. It at least would likely have taken longer. But... it is what it is. I'm just telling the truth. Reading between the lines a little Musk seems horribly burnt out. If I could give him advice I'd say pass Tesla to someone with more experience in the car industry, start gracefully exiting Tesla, take a break and do a little personal inventory, and then focus 100% on SpaceX. The latter is the far more important of the two companies and is in much better shape. I also feel like it's his real true love. If Telsa can't be righted its fate will probably be purchase (or purchase of its assets in bankruptcy) by another car company. That's fine. As I said: EVs are tipping. Finally to speculate a bit... I wonder if Tesla is an indirect victim of the latest wave of AI hype? It seems like they were on the right track until they decided to go all in and shift their major focus from making a great electric "driver's car" to self-drive or bust. Self-drive probably consumed insane amounts of capital, and has greatly harmed the company's reputation by causing serious accidents because it is clearly not ready. The shadow braking thing really reveals how primitive "AI" actually is-- this is something a bumblebee would not do, and its brain consumes milliwatts of power. From what I've read self-drive is really just object recognition combined with spatial mapping, path finding, and a lot of heuristics. The latter is what worries me. "Expert systems" can't capture complex problem domains due to the exponential nature of a combinatorial explosion. There will always be edge cases. Needless to say we will not be uploading consciousness anytime soon, nor will fully autonomous AIs be taking over the world.
pjc50 8y ago
> Tesla is one earthquake away from no longer being a company. So is most of Silicon Valley, which is actually in an earthquake zone that some believe is overdue an earthquake.
- sofon 8y ago
  Are many/most companies with billion dollar valuations so exposed? I would imagine most billion dollar companies have multiple sites and manufacturing and data centers spread across multiple sites.
- microtherion 8y ago
  Most of Silicon Valley is not as highly indebted as Tesla. Apple, for instance, could literally afford to send all of its employees on vacation for 10 years while their headquarters is being rebuilt, without going into debt (Not that they would, of course).
- bdcravens 8y ago
  Your typical Internet startup wouldn't lose its means of production, which are people with computers, assuming they are deployed to the cloud. Even those that do any kind of hardware (say scooters) aren't the factories elsewhere and then shipped?
this_user 8y ago
> they have about a year of cash runway left( optimistically) Much less than that actually. At their current burn rate they won't even be making it to the end of this year without either selling enough M3 to generate some real cash, or by raising some new money from the market. Also, they have a lot of debt come due next year (and even more over the following years) while yields are up to over 8%. However, M3 production numbers are actually looking good now, and they are hitting their targets for the first time. And their cash burn for Q2 came in lower than expected after some cost cutting. So they might be able to turn the corner just in time. Musk has repeatedly stated that the company will not need to raise new money, but had also done that before some previous financing rounds, so the market does not put that much faith in his words at this point. It all hinges on the M3 now. Can they get production (and sales) numbers to where they need to be in order to become cash flow positive?
- toomuchtodo 8y ago
  They're also going to sell somewhere between $100 and $200 million in ZEV credits this quarter.
- dunpeal 8y ago
  Don't they also have some heavy debt obligations coming due very soon?
- compcoffee 8y ago
  >However, M3 production numbers are actually looking good now, and they are hitting their targets for the first time. Really? Where can I read the official quarterly numbers? Of what quality are these cars? Do they all need to be reworked? >Musk has repeatedly stated that the company will not need to raise new money He said that prior to raising cash the last 3 times. He also said he was going to take the company private at $420. For some reason, I'm doubtful.
  - ben_w 8y ago
    Given that he knows his memes, and that “420” is a weed meme, and given it was a ridiculously stupid thing for him to tweet, I’m of the opinion he was literally high when he said that.
nickik 8y ago
With their current production rate they have 11 billion in revenue from the Model 3 alone. They guidance suggest they should be profitable this quarter because as of right now they are hitting their production target.
- chollida1 8y ago
  May i see your napkin math for the 11 Billion figure?
  - jakobegger 8y ago
    5000 cars per week * 52 weeks * 50000 average selling price = 13 billion dollar revenue per year
    - deleted 8y ago
      [deleted]
  - flexie 8y ago
    I think that would be something like 5,000 cars per week times 52 weeks times the average price of 42,000 dollars per car
martythemaniak 8y ago
Kind of depressing that yours is the top comment, given how many outright lies it is based on. >From the outside it looks like Telsa is about going to go into a tough winter like moment. From the outside, it looks like they have a product that's a generation ahead of the competition and is flying off the shelves. > They need to start designing and building out manufacturing facilities for their next car and the help bolster Model X manufacturing. They are. Apart from the Shangai one, they've never actually stopped building the Reno factory, which still has to triple in size before it reaches its final form. >They are cash flow negative, they have about a year of cash runway left( optimistically) Based on 2 quarters during which they built up a factory. Their guidance for Q3 or Q4 has them turning a profit. Usually, people doing these wild extrapolations form the basis of jokes (ie Discu Stu's record sales). > And the most worrying thing for them is that their next car will compete head on with Mercedes, BMW, Audi, and GM. That will be the first time they've had to compete head on with a competitor. This is growing the EV market as a whole. Tesla does not want to own 100% of a sub-5% EV market. They want to own a decent chunck of a 100% EV market. People really, really don't like hearing this particular point, but their cars are approximately a generation ahead of other EVs. Specs wise, Taycan and EQC are essentially matching a 2016-era Model S / Model X and will be available about 2 years from now. Everybody seems to have forgotten how the Bolt was supposed to be the "Tesla Killer". Look, I even found one specifically from the same source as this article: https://twitter.com/business/status/554725778420957184 https://twitter.com/business/status/554725778420957184 Then people were "worried" about their ability to manufacture at scale: https://www.theatlas.com/charts/HkNUFo57f https://www.theatlas.com/charts/HkNUFo57f The problem is that when you actually have to put real money down and these theoretical comparisons become real, things go the opposite direction. Current Bolt sales are flat/declining around ~1500/month, while Tesla is pushing out 5000+ Model 3s per week.
- chollida1 8y ago
  > Kind of depressing that yours is the top comment, given how many outright lies it is based on. Most of the time I comment, its more to get my ideas clarified, if you think I've outright lied then please correct me. As your comment stands you didn't actually refute any of my points. Is the Reno factory going to be building cars if not then its irrelevant to the topic of factories to build cars with? The China factory hasn't started yet, so I think I'm on strong footing with this. Tesla has also been cash flow negative for not just two quarters, but almost its entire life, now to be fair to Tesla, this was by design. It's possible with all the cost cutting and M3 sales that they could be profitable in Q3 but does anyone think they have finally turned the corner and will leave their trail of losses behind them? I'm not convinced of that:) I'm looking for actual thoughtful dissent to change my mind, but so far you haven't actually provided any facts or even opinions to show "outright lies" in my statement.
dmode 8y ago
Tesla's liquidity issues are completely overblown. Nevermind that their cashflow and spend numbers are improving. People also tend to overlook the amount of investor liquidity we have in the market. SoftBank has a $100bn fund. Saudi's have a $1 trillion sovereign wealth fund. I believe the UAE have something similar as well. Raising a couple billion dollars in this environment would be extremely easy. Especially when you have a backlogged demand on your product and the product has a 20% gross margin
- jcranmer 8y ago
  The complaint isn't that Tesla faces challenges in raising money, but that Tesla is delusional in believing that it doesn't need to raise money.
  - dragontamer 8y ago
    Yeah, but Musk always said that he won't raise money, but does so anyway. I bet you Musk does another stock offering by the end of the year. Its kind of a yearly-tradition at this point, with exception of 2014 when Musk decided to raise a few billion in bonds instead.
- seebee 8y ago
  Tesla automotive does not have a 20% margin, it's much closer to 10%. In the '18-H letter they claimed 20% margins including ZEV/GHG credits and added back Services & Other (in all Tesla 10-Q's the Services & Other are subtracted). Tesla calculates gross margin by not only including the ZEV/GHG credits but by basing the margin on the retail price of the vehicle rather than the bulk invoice. Cost of stores and R&D expense are also omitted from the gross margin.
  - dmode 8y ago
    Can you point to a source ? I am looking at Q2 statement and gross margin before ZEV is 20%. With ZEV it is 21%. It's on page 2 here http://ir.tesla.com/static-files/7235e525-db16-470c-8dce-9ecac0ad7712 http://ir.tesla.com/static-files/7235e525-db16-470c-8dce-9ec... Also, gross margin is literally margin after cost of goods. Doesn't include SG&A expense.
AnthonyMouse 8y ago
> Stop and think for a second that Tesla is one earthquake away from no longer being a company. This is highly unlikely in the short term and in the long term they'll be building more plants. It's also something anyone can insure against by placing a bet that an earthquake will destroy their factory in the next five years. You'll presumably get 50:1 odds or better (a good chunk of which is the vig), which means the insurance would cost less than 2% of the sum you want insured. > they have about a year of cash runway left( optimistically) Unless they turn a profit (or come closer to it), which it's plausible they're about to do. > You can't just collect insurance money and build a new factory like you can with a house, this is a many year project. No, but you can buy insurance in the amount of the value of the output (or of your shares) rather than the cost of building a new facility, if you were really that worried about it. > And the most worrying thing for them is that their next car will compete head on with Mercedes, BMW, Audi, and GM. That will be the first time they've had to compete head on with a competitor. The entire EV market is production capacity constrained and will be for a couple more years at least. They can't lose sales to Mercedes or BMW EVs because they'll all already be selling 100% of the EVs they can manufacture, all of which are coming at the expense of petrol cars.
gaius 8y ago
compete head on with Mercedes Tesla’s brand is strong enough that they can charge Mercedes level prices with poor quality interior fittings. Sit in a Tesla, it feels like a car costing half as much. If Mercedes can maintain their user experience in EVs without a significant price premium, Tesla is toast.
georgeecollins 8y ago
I agree on all points except that the most worrying thing is the entry of Mercedes, BMW etc. First of all, GM and BMW have sunk a lot of money in electric cars that are on the market and being crushed by Tesla in sales. Second, and most importantly, car brands are incredibly valuable. People said that the Prius would go away when other car makers started making hybrids. After years of competition, the Prius still dominates. Why? Because the economic reasons for owning a hybrid really aren't that compelling. The social signaling reasons are. So, if you want to say those things about yourself you own a Prius because everyone knows you are driving a hybrid at a glance. A Tesla makes a different-- but I would argue equally powerful-- statement to all who behold it. If Tesla goes into bankruptcy the brand and the cars will be revived.

mathattack 8y ago

If they are at capacity, why don’t they charge more money?

rcMgD2BwE72F 8y ago
>They are almost losing by winning. They are at capacity in their Fremont factory but still not making a profit. Source? They are now at capacity and they are expected (by Tesla top management) to announce profitablity for this quarter. In other words, they were not a capacity last quarter and not profitable. That's why with the record sales and production of this summer, Q3 earnings publication will be very interesting. But we won't know the actual result until end of October. By then, the shorts (with billions in backing) will do all their best to give the company an extremely bad look. Because if Tesla manage to turn a profit this Q3, they'll lose dozens of billions. It's now or never for them.
- matwood 8y ago
  > By then, the shorts (with billions in backing) will do all their best to give the company an extremely bad look. Please stop with this thought process. TSLA is doing a fine job all on its own making themselves look bad. On the business side, Musk has missed how many production estimates? There are also concerns about quality. On the personal side, he's still harping on this pedophile thing /facepalm. Then what looks like a complete lie about being bought out. The way you fix the shorts problem is to actually deliver on your promises and make some money. Deflecting that it's the shorts causing problems for TSLA is typical TSLA deflecting the horrible job they have done at running TSLA.
  - rcMgD2BwE72F 8y ago
    I don't think you realize how much FUD is disseminated daily in the mainstream media. Take this Reuters article for instance, which has been published and translated by dozens of top newspapers: https://www.reuters.com/article/us-tesla-germany-daimler/electric-mercedes-opens-german-assault-on-tesla-idUSKCN1LJ17Y https://www.reuters.com/article/us-tesla-germany-daimler/ele... 3rd paragraph: "The market for upscale electric cars is Tesla’s to lose, with sales of its entry-level Model 3 sedan expected to reach about 50,000 cars this year and almost double that in 2019." All sources indicates that Tesla has already produced 50K Model 3. In the first three quarters. There's is still one quarter to go in 2018. And Tesla plan to produce more than 300K Model 3 next year, not 100K. What kind of error is that? Reuters is aware of this "mistake" and they are not correcting it. All media who published the report and were made aware of the wrong numbers kept it "as is", even though the 50K has already been proven wrong. How can Reuters and co keep such blatant errors while knowing it's bullshit? For some reasons, the disinformation only increases as Tesla pressures the legacy automakers margin (Tesla surpassed both BMW and Mercedes in US car sales this summer while the German are losing big time). Reuters & co might not be short themselves. But they knowingly play the short game and kep spreading the FUD ("See these terrible numbers? Who can expect Tesla to turn a profit? Now, let's hear what competitors and short sellers have to say...").
    - compcoffee 8y ago
      >What kind of error is that? They've aware of this, they are not correcting. All media who published the report and were made aware of the "mistake" kept it, even though the 50K is already proven wrong. Who cares? What influence do you think this article and that estimate has? "Disinformation"; that's laughable. Tesla and Musk are being sued and investigated for stock manipulation, but you're crying about Reuters being off on their prediction. Who is showing bias? Where is the outrage? >And just as Tesla surpasses BMW and Mercedes in car sales in the US, it's only getting worse. Sedan sales, while the whole industry moves to CUVs and SUVs. Do you think this is sustainable, or is it clearing a backlog? Why can you get a car in 2 weeks now?
- compcoffee 8y ago
  >They are now at capacity and they are expected (by Tesla top management) to announce profitablity for this quarter. Honest question: when did you start following this company? Elon has claimed profitability for years. Where is it? Where are the economies of scale that were promised? >By then, the shorts (with billions in backing) will do all their best to give the company an extremely bad look. The shorts will? Really? Which stories are false?
jonknee 8y ago
Who says they aren't? They're already charging $60k for their "mass market" $35k sedan. Update: I guess technically it's $50k, the other day I read the average selling price was $60k and that was stuck in my head. Regardless, far away from $35k!
- rstupek 8y ago
  Why wouldn't you build out the higher priced orders first?
  - jonknee 8y ago
    The more concerning part is that they're still losing a fortune while only building out the supposedly high margin top end models.
    - zaroth 8y ago
      Tesla gross margin on an AWD Model 3 with Autopilot is ~$20,000. Twenty thousand dollars. And they are outselling BMW’s entire passenger car lineup. It cost them a pretty penny to get here but cash is literally pouring in for Tesla right now.
      - jonknee 8y ago
        > It cost them a pretty penny to get here but cash is literally pouring in for Tesla right now. And also pouring out, they are losing a massive amount of money every quarter.
secabeen 8y ago
They did. I put in my order on August 1st, and they increased prices by about $1000 per car on August 3rd. I just got in before the increase.

martinald 8y ago

They can't afford any capex on new factories though. They are extremely close to breaching covenants on their debt and personally can't understand why they are not raising equity money as their stock price, despite Musk's crazy antics, is holding up well.

debacle 8y ago
Their stock price has been highly volatile in the last year. It's "holding up," but only by the hairs on its teeth. They're hovering very close to their 52 week low when the rest of the market is having a banner year.
rcMgD2BwE72F 8y ago
Management said they don't need to raise funds to cover the capex needed to ramp up Model 3 sales to 7/week, which is (as confirmed multiple times by Musk) more than needed to turn a profit. They just need to turn a profit in Q3 to get the stock price back up and then, they might raise funds to finance the next products (Model Y, truck and Semi). Why raise funds when Wall Street bet on the company to go bankrupt? Raising capital in this environment would mean that the management don't believe in their ability to turn a profit. But then, why raise further equity and make the problem worse? Occam razor: they expect to be profitable this quarter and are more patient than short-term speculators.
- scottkduncan 8y ago
  "Wall Street" is not betting on them to go bankrupt. Collectively, investors value this company that produces, at best, 7K cars a week at $45 billion. The idea that one quarter of profitability achieved through slashing capex to the bone fundamentally would fundamentally change their valuation doesn't carry much water in my view.
  - rcMgD2BwE72F 8y ago
    >Collectively, investors value this company (...) Most large investors are just holding. The small amount of shares that are exchanged every day are bought/sold by speculators and they are backed by institutions that get paid for this intraday activity. Also, with all the short positions on TSLA, the bank are risking an almost infinite sum of money (in case of a short squeeze). Since Tesla doesn't intend to raise capital for the foreseeable future, banks can only gain from volatility or from a major event that would force Tesla to raise funds.

rightnow 8y ago

Same comments for 6 years now. Bla bla bla

covercash 8y ago

Maybe that’s his backup plan if it doesn’t work out... use a BoringCo drill to “accidentally” trigger an earthquake, collect insurance money, funnel it all into SpaceX and launch himself to Mars.

SmallDeadGuy 8y ago
Taking the meaning of "playing the long game" further than anyone else ever has.
deusofnull 8y ago
Maybe he's gonna use a BoringCompany drill to DRILL to Mars. Ever think of that?
- djstein 8y ago
  Tengen Toppa Gurren Lagann?
- perl4ever 8y ago
  There was an old story that I can't seem to find by Googling, but the gist of the plot that I recall was that Mars was stealing Earth's atmosphere through a kind of vortex, like a huge double ended tornado, and some guy in an old plane flew through it, getting to Mars without a spaceship.

api 8y ago

I have a friend who bought a Tesla and is now asking for a buy-back. His experience has convinced me the negative hype isn't all just shorts propagandizing and "Musk fatigue." This company has huge, huge problems. When he first got the Tesla it had huge body panel alignment problems. Eventually these were fixed, but it took too long and was difficult to get Tesla to fully acknowledge them. After that he had a range of little annoying problems, many of which were likely software bugs, but then he (actually his GF) experienced something in autopilot mode known on the Tesla forums as "shadow braking" -- the car braking hard on the highway because it seems to see the shadow of an overpass and think it's a wall. This is extremely dangerous. It was on the I-405 (SoCal) going 70-80mph, and such a thing could easily cause a rear end collision. At that point they're starting the process of returning the car. Not only have there been many problems including a major safety issue, but Tesla has apparently been evasive and difficult getting them fixed. I hate to type this because I love most of what Musk has done and I really credit Tesla with helping get the ball rolling on EVs. EVs are tipping now, and I'm not sure that would have happened without Tesla. It at least would likely have taken longer. But... it is what it is. I'm just telling the truth. Reading between the lines a little Musk seems horribly burnt out. If I could give him advice I'd say pass Tesla to someone with more experience in the car industry, start gracefully exiting Tesla, take a break and do a little personal inventory, and then focus 100% on SpaceX. The latter is the far more important of the two companies and is in much better shape. I also feel like it's his real true love. If Telsa can't be righted its fate will probably be purchase (or purchase of its assets in bankruptcy) by another car company. That's fine. As I said: EVs are tipping. Finally to speculate a bit... I wonder if Tesla is an indirect victim of the latest wave of AI hype? It seems like they were on the right track until they decided to go all in and shift their major focus from making a great electric "driver's car" to self-drive or bust. Self-drive probably consumed insane amounts of capital, and has greatly harmed the company's reputation by causing serious accidents because it is clearly not ready. The shadow braking thing really reveals how primitive "AI" actually is-- this is something a bumblebee would not do, and its brain consumes milliwatts of power. From what I've read self-drive is really just object recognition combined with spatial mapping, path finding, and a lot of heuristics. The latter is what worries me. "Expert systems" can't capture complex problem domains due to the exponential nature of a combinatorial explosion. There will always be edge cases. Needless to say we will not be uploading consciousness anytime soon, nor will fully autonomous AIs be taking over the world.

pjc50 8y ago

> Tesla is one earthquake away from no longer being a company. So is most of Silicon Valley, which is actually in an earthquake zone that some believe is overdue an earthquake.

sofon 8y ago
Are many/most companies with billion dollar valuations so exposed? I would imagine most billion dollar companies have multiple sites and manufacturing and data centers spread across multiple sites.
microtherion 8y ago
Most of Silicon Valley is not as highly indebted as Tesla. Apple, for instance, could literally afford to send all of its employees on vacation for 10 years while their headquarters is being rebuilt, without going into debt (Not that they would, of course).
bdcravens 8y ago
Your typical Internet startup wouldn't lose its means of production, which are people with computers, assuming they are deployed to the cloud. Even those that do any kind of hardware (say scooters) aren't the factories elsewhere and then shipped?

this_user 8y ago

> they have about a year of cash runway left( optimistically) Much less than that actually. At their current burn rate they won't even be making it to the end of this year without either selling enough M3 to generate some real cash, or by raising some new money from the market. Also, they have a lot of debt come due next year (and even more over the following years) while yields are up to over 8%. However, M3 production numbers are actually looking good now, and they are hitting their targets for the first time. And their cash burn for Q2 came in lower than expected after some cost cutting. So they might be able to turn the corner just in time. Musk has repeatedly stated that the company will not need to raise new money, but had also done that before some previous financing rounds, so the market does not put that much faith in his words at this point. It all hinges on the M3 now. Can they get production (and sales) numbers to where they need to be in order to become cash flow positive?

toomuchtodo 8y ago
They're also going to sell somewhere between $100 and $200 million in ZEV credits this quarter.
dunpeal 8y ago
Don't they also have some heavy debt obligations coming due very soon?
compcoffee 8y ago
>However, M3 production numbers are actually looking good now, and they are hitting their targets for the first time. Really? Where can I read the official quarterly numbers? Of what quality are these cars? Do they all need to be reworked? >Musk has repeatedly stated that the company will not need to raise new money He said that prior to raising cash the last 3 times. He also said he was going to take the company private at $420. For some reason, I'm doubtful.
- ben_w 8y ago
  Given that he knows his memes, and that “420” is a weed meme, and given it was a ridiculously stupid thing for him to tweet, I’m of the opinion he was literally high when he said that.

nickik 8y ago

With their current production rate they have 11 billion in revenue from the Model 3 alone. They guidance suggest they should be profitable this quarter because as of right now they are hitting their production target.

chollida1 8y ago
May i see your napkin math for the 11 Billion figure?
- jakobegger 8y ago
  5000 cars per week * 52 weeks * 50000 average selling price = 13 billion dollar revenue per year
  - deleted 8y ago
    [deleted]
- flexie 8y ago
  I think that would be something like 5,000 cars per week times 52 weeks times the average price of 42,000 dollars per car

martythemaniak 8y ago

Kind of depressing that yours is the top comment, given how many outright lies it is based on. >From the outside it looks like Telsa is about going to go into a tough winter like moment. From the outside, it looks like they have a product that's a generation ahead of the competition and is flying off the shelves. > They need to start designing and building out manufacturing facilities for their next car and the help bolster Model X manufacturing. They are. Apart from the Shangai one, they've never actually stopped building the Reno factory, which still has to triple in size before it reaches its final form. >They are cash flow negative, they have about a year of cash runway left( optimistically) Based on 2 quarters during which they built up a factory. Their guidance for Q3 or Q4 has them turning a profit. Usually, people doing these wild extrapolations form the basis of jokes (ie Discu Stu's record sales). > And the most worrying thing for them is that their next car will compete head on with Mercedes, BMW, Audi, and GM. That will be the first time they've had to compete head on with a competitor. This is growing the EV market as a whole. Tesla does not want to own 100% of a sub-5% EV market. They want to own a decent chunck of a 100% EV market. People really, really don't like hearing this particular point, but their cars are approximately a generation ahead of other EVs. Specs wise, Taycan and EQC are essentially matching a 2016-era Model S / Model X and will be available about 2 years from now. Everybody seems to have forgotten how the Bolt was supposed to be the "Tesla Killer". Look, I even found one specifically from the same source as this article: https://twitter.com/business/status/554725778420957184 https://twitter.com/business/status/554725778420957184 Then people were "worried" about their ability to manufacture at scale: https://www.theatlas.com/charts/HkNUFo57f https://www.theatlas.com/charts/HkNUFo57f The problem is that when you actually have to put real money down and these theoretical comparisons become real, things go the opposite direction. Current Bolt sales are flat/declining around ~1500/month, while Tesla is pushing out 5000+ Model 3s per week.

chollida1 8y ago
> Kind of depressing that yours is the top comment, given how many outright lies it is based on. Most of the time I comment, its more to get my ideas clarified, if you think I've outright lied then please correct me. As your comment stands you didn't actually refute any of my points. Is the Reno factory going to be building cars if not then its irrelevant to the topic of factories to build cars with? The China factory hasn't started yet, so I think I'm on strong footing with this. Tesla has also been cash flow negative for not just two quarters, but almost its entire life, now to be fair to Tesla, this was by design. It's possible with all the cost cutting and M3 sales that they could be profitable in Q3 but does anyone think they have finally turned the corner and will leave their trail of losses behind them? I'm not convinced of that:) I'm looking for actual thoughtful dissent to change my mind, but so far you haven't actually provided any facts or even opinions to show "outright lies" in my statement.

dmode 8y ago

Tesla's liquidity issues are completely overblown. Nevermind that their cashflow and spend numbers are improving. People also tend to overlook the amount of investor liquidity we have in the market. SoftBank has a $100bn fund. Saudi's have a $1 trillion sovereign wealth fund. I believe the UAE have something similar as well. Raising a couple billion dollars in this environment would be extremely easy. Especially when you have a backlogged demand on your product and the product has a 20% gross margin

jcranmer 8y ago
The complaint isn't that Tesla faces challenges in raising money, but that Tesla is delusional in believing that it doesn't need to raise money.
- dragontamer 8y ago
  Yeah, but Musk always said that he won't raise money, but does so anyway. I bet you Musk does another stock offering by the end of the year. Its kind of a yearly-tradition at this point, with exception of 2014 when Musk decided to raise a few billion in bonds instead.
seebee 8y ago
Tesla automotive does not have a 20% margin, it's much closer to 10%. In the '18-H letter they claimed 20% margins including ZEV/GHG credits and added back Services & Other (in all Tesla 10-Q's the Services & Other are subtracted). Tesla calculates gross margin by not only including the ZEV/GHG credits but by basing the margin on the retail price of the vehicle rather than the bulk invoice. Cost of stores and R&D expense are also omitted from the gross margin.
- dmode 8y ago
  Can you point to a source ? I am looking at Q2 statement and gross margin before ZEV is 20%. With ZEV it is 21%. It's on page 2 here http://ir.tesla.com/static-files/7235e525-db16-470c-8dce-9ecac0ad7712 http://ir.tesla.com/static-files/7235e525-db16-470c-8dce-9ec... Also, gross margin is literally margin after cost of goods. Doesn't include SG&A expense.

AnthonyMouse 8y ago

> Stop and think for a second that Tesla is one earthquake away from no longer being a company. This is highly unlikely in the short term and in the long term they'll be building more plants. It's also something anyone can insure against by placing a bet that an earthquake will destroy their factory in the next five years. You'll presumably get 50:1 odds or better (a good chunk of which is the vig), which means the insurance would cost less than 2% of the sum you want insured. > they have about a year of cash runway left( optimistically) Unless they turn a profit (or come closer to it), which it's plausible they're about to do. > You can't just collect insurance money and build a new factory like you can with a house, this is a many year project. No, but you can buy insurance in the amount of the value of the output (or of your shares) rather than the cost of building a new facility, if you were really that worried about it. > And the most worrying thing for them is that their next car will compete head on with Mercedes, BMW, Audi, and GM. That will be the first time they've had to compete head on with a competitor. The entire EV market is production capacity constrained and will be for a couple more years at least. They can't lose sales to Mercedes or BMW EVs because they'll all already be selling 100% of the EVs they can manufacture, all of which are coming at the expense of petrol cars.

gaius 8y ago

compete head on with Mercedes Tesla’s brand is strong enough that they can charge Mercedes level prices with poor quality interior fittings. Sit in a Tesla, it feels like a car costing half as much. If Mercedes can maintain their user experience in EVs without a significant price premium, Tesla is toast.

georgeecollins 8y ago

I agree on all points except that the most worrying thing is the entry of Mercedes, BMW etc. First of all, GM and BMW have sunk a lot of money in electric cars that are on the market and being crushed by Tesla in sales. Second, and most importantly, car brands are incredibly valuable. People said that the Prius would go away when other car makers started making hybrids. After years of competition, the Prius still dominates. Why? Because the economic reasons for owning a hybrid really aren't that compelling. The social signaling reasons are. So, if you want to say those things about yourself you own a Prius because everyone knows you are driving a hybrid at a glance. A Tesla makes a different-- but I would argue equally powerful-- statement to all who behold it. If Tesla goes into bankruptcy the brand and the cars will be revived.