25 ms·

Tesla's 1.5B reduction of cash on hand was largely due to the 920M convertible bond payment — but that only happened because TSLA didn't perform to the level n

Tesla's 1.5B reduction of cash on hand was largely due to the 920M convertible bond payment — but that only happened because TSLA didn't perform to the level necessary for conversion (~$360 IIRC). I wonder what changes in terms this'll warrant for future capital raises. Then they mention that they missed a lot of revenue due to missing half their shipments overseas, and onto Q2 (But also expecting a loss in Q2). Sales for their higher-margin vehicles seemed to have cratered, explained by seasonality, lower US tax credits going forward, and inventory/demand mismatch. Panasonic has halted their planned battery plant expansion, which implies a lot about future demand. I don't want to be a downer, but I'm having a hard time seeing the way forward for Tesla in a manner that isn't very unfavorable for them. https://ir.tesla.com/static-files/b2218d34-fbee-4f1f-ac95-050eb29dd42f https://ir.tesla.com/static-files/b2218d34-fbee-4f1f-ac95-05...

sandworm101 8y ago
A few more years of this amd they may be bought out by the likes of BMW. The tesla brand is worth something, even if on the hood of a german car.
- kylec 8y ago
  BMW doesn't need to pay top dollar for a prestigious brand, they already have one. Tesla will be bought out by the likes of Geely or Tata who don't have strong brands of their own, but have already been going around and scooping up smaller car brands like Volvo and Jaguar.
  - onlyrealcuzzo 8y ago
    Right. And if things go badly for Tesla, the brand likely won't be as valuable.
  - kec 8y ago
    They have history of doing so though: They own both Mini and Rolls-Royce now.
    - olivermarks 8y ago
      It's quite possible something similar to the Fisker bankruptcy might happen - Fisker's assets were bought out by Wanxiang Group who then launched Karma Automotive, resuming manufacture of their 'Revero' plug-in hybrid car, which is an improved version of the old Fisker Karma.
      - hi5eyes 8y ago
        didnt fisker just announce partnership with rimac and pinifirina
        olivermarks 8y ago
        yes fisker retained the name but not the karma
    - _pmf_ 8y ago
      BMW bought the brand rights to Rolls Royce for 120 million EUR. BMW will not buy Tesla at anything above a eighth of their current stock price.
    - Neil44 8y ago
      They saw the value of the Mini brand and didn't want to put a BMW badge on a lower end car, so they held onto it when they jetisoned the rest of the Rover group. The RR brand is selling to different customers than the BMW brand is. But I don't see that BMW would need the Tesla brand, there's too much overlap there IMO.
    - _fizz_buzz_ 8y ago
      Not really. They merged with Rover and bought Rolls-Royce in the 90s. At the time the BMW management wanted to expand. Mini is a holdover from the Rover merger. This merger is largely seen as a failure and BMW divested from all Rover brands (except Mini). For more than 20 years BMW has not expanded.
- deleted 8y ago
  [deleted]
- golfer 8y ago
  Tesla has about $9B in debt. They are not an attractive takeover candidate. They've never turned an annual profit.
  - azinman2 8y ago
    Apply bankruptcy and sell the assets for cheap... Id imagine many would want to pick up the remains...
    - golfer 8y ago
      Specifically what remains? They are basically the only OEM pushing self driving without lidar. Their manufacturing facilities are childish compared to other large automakers. Solar City, powerwall, and the solar roof are huge money losers and barely make a dent in the P&L statement. Maybe just the brand name? But will the brand have the cache once it suffers bankruptcy? Maybe it will.
      - newsoul2019 8y ago
        Did you mean cachet?
      - sliken 8y ago
        Seen the Cornell paper "Pseudo-LiDAR from Visual Depth Estimation: Bridging the Gap in 3D Object Detection for Autonomous Driving" or the more consumer friendly "Elon Musk Was Right: Cheap Cameras Could Replace Lidar on Self-Driving Cars, Researchers Find"? Looks like a pair of cheap cameras with good stereo separation (distance between the cameras) provides very similar data to Lidar. All without the giant domes on the roof (like the waymo cars).
        dan678 8y ago
        Not in scenes with poor lighting, not in rain, not in fog, not in scenes with poor surface variation, and not at the ranges needed for safe on highway driving.
- m3kw9 8y ago
  Elon would sell to Apple, and not these old school car manufacturers that has their tails covering their behinds
  - NeedMoreTea 8y ago
    I'm sure countless startups thought similarly until an evil old-school behemoth like Microsoft turned up offering tons of money.
    - m3kw9 8y ago
      I think Elon isn’t the typical startup CEO that is only looking for the biggest cash pile, which ironically Apple has probably the biggest cash pile on earth as a corp.
  - kakwa_ 8y ago
    Elon Musk only controls 20% of Tesla shares, the board can force a sell upon him if the other shareholders agree on one. And I'm not sure why Apple would buy a car company, it's too far of their core business (aka selling computers ranging from phone sized to desktop size). The other car manufacturers are not blind idiots, they are seeing EVs are becoming a thing, but it's also in its early stages. The question for them is when should they start switching their line-up, and that's the difficult decision. Too early, and they end-up with too expensive and less convenient cars compared to IC vehicules, too late and you have basically miss the bus.
    - pbreit 8y ago
      All three of your paragraphs are incorrect.
      - kakwa_ 8y ago
        Thanks, could you develop?
        8y ago
- rdtfjgykh 8y ago
  This is probably the most likely endgame for Tesla. One of the other carmakers buys them, liquidates physical assets, and sells their own cars under the Tesla brand.
sliken 8y ago
I find the Panasonic thing very weird. Tesla claims to be battery limited, and also mentioned that their popular and in demand power walls are being throttled by lack of batteries. Does make me wonder. Is Panasonic blackmailing Tesla with limited supply to influence Tesla's battery supply in China? Is Panasonic and/or Tesla lying about the situation?
- nihonde 8y ago
  My take: Panasonic is moving its chips from Tesla to Toyota/Mazda and betting the incumbent Japanese makers will be better positioned to capitalize on EV sales over the long term. It’s not strange for a 100+ year old company playing the long game. I also think Tesla’s function for many of its suppliers was to prove that Americans will buy EVs, and their expectations are fairly low about how much more Tesla will accomplish.
  - sliken 8y ago
    Well the weird thing is Panasonic is complaining about not selling enough batteries. Seems kinda crazy considering the rapid scale of Tesla's ramp up, not to mention secondary uses like powerwalls and grid sized battery systems.
    - hef19898 8y ago
      I won't speculate why Panasonic is putting the brakes on. Could be anything from financing to some new guy at Panasonic not liking the color choices of the Model Y. But it is telling us something that the most integrated of Tesla's partners is putting on the brakes. And I remember some reports about less then optimal conditions in the giga factory. And these conditions, even if they are only half true, would the opposite of what Japanese companies would like to see
  - samstave 8y ago
    Personally; ding ding ding. This is why american MBAs are utter useless garbage.. The asian incumbents in heavy industry are going to own, simply because they are capable and willing to play the long-game. China is pretty much buying all of Africa. They havea 100 year plan. And anyone who isnt aware of that fact, is simply behind the game and already losing. We had a post about KPCB earlier, and good riddance - the arrogance of the SV VC mind and short-term thinking of the US industries are literally what has the US in ruin come 25 years from now.
newsoul2019 8y ago
I was close to buying a used Tesla from Tesla, but this is making me pause. Am I being unreasonable? I live in the Bay Area where I feel like the only person without a Tesla or two.
- Spooky23 8y ago
  I would only lease a Tesla. Why be stuck holding the bag if the proverbial shit hits the fan?
  - YjSe2GMQ 8y ago
    What's the potential problem for a consumer? No battery replacements? Someone's gotta be making parts even if Tesla goes bust.
    - semi-extrinsic 8y ago
      Unlike other car manufacturers who go bust (like Saab 7 years ago), Tesla has worked hard to limit third-parties from repairing their cars. So if they go bust, you have to hope that their service business gets spun out into a company that lives on, and that this company (which retains a monopoly) doesn't charge you ridiculous rates.
    - newnewpdro 8y ago
      Unless I'm mistaken a major component of the Tesla value prop is the supercharger network. I presume "shit hits the fan" includes goodbye supercharger network. Furthermore, unless I'm again mistaken, a bunch of people are under the impression that they'll have unlimited free supercharger access for the life of the car.
    - Spooky23 8y ago
      Just like with SaaS, when things go boom, you’re screwed. With Tesla, i would assume that in car features like autopilot would go poof, along with the proprietary chargers and spare part availability. Also, who knows what over the air maintenance is happening. With a lease, your liability is capped to the lease payments. With ownership, you can ride it down to zero.
rjdagost 8y ago
This wasn't reported much, but Tesla also expanded their ABL (Asset Based Lending) credit agreement by $500M in March 2019: https://ir.tesla.com/node/19561/html https://ir.tesla.com/node/19561/html Without that, they would have $500M less cash on hand. They shipped half of their cars in the final 10 days of Q1. Finances must have been pretty tight at the start of March. That was around the time they announced they are closing all stores, firing sales personnel, and in general tightening the belt significantly. They also had the Model Y reveal in the middle of March, presumably to raise capital via deposits. Cutting prices multiple times towards the end of March must have helped to move a lot of metal, at the expense of gross margin. Speaking of the Model Y, I also found it suspicious that on the conference call Elon Musk wouldn't divulge the number of deposits. When the Model 3 deposits were skyrocketing he talked about the reservation count frequently. I can only suspect that the number of Model Y deposits isn't so impressive.
- dogsgobork 8y ago
  The pool of people that put down $1000 thinking they were going to buy a $35k car, has to be much larger than the people willing to plunk down $2500 for a $48k car (the cheapest pre-order currently available). The multi year wait for the $35k version to be available (and quickly abandoned) can't help.
  - TaylorAlexander 8y ago
    I was surprised by your claim so I checked... the Tesla website currently allows me to configure a Model 3 that is $39,500 before discounts for estimated delivery in two weeks. Not $35k but far less than $48k too.
    - cheeyoonlee 8y ago
      The $35k configuration is still available but by phone/in person order, not online
    - deleted 8y ago
      [deleted]
sytelus 8y ago
There is a definitely path forward for Tesla. They needs to be 1908 Model-T but for EVs of 2019. This means only two things: (1) aggressively lower the manufacturing cost and, (2) scale the battery production. I want to see Tesla that costs $18K and has a range of 300 miles. This would turn auto-industry upside down. I think this is completely doable.
- iamaelephant 8y ago
  Why would this be doable for Tesla but not every other car manufacturer?
  - sytelus 8y ago
    Incumbent car manufacturers are actually lightyears behind in experience that Tesla provides. Just look at their dealership model that is design to robe user at every step in the process. From tech perspective, majority of Toyota line up still doesn't even have good smartphone connection story in 2019. Honda still have bare minimum driver-assist. Toyota Sequoia hasn't been literally updated for years and a giant car like this doesn't have basic safety features that one would expect in 2019. Keep in mind these are the biggest, wealthiest and most powerful car manufacturers in the world for who money in not an issue. They have perhaps 10X more people working on improving designs than Tesla but at the end of year nothing really comes out. If you look at model differences between 2018 vs 2019 for large majority of incumbent manufacturers, you will see no difference or something tragically trivial such as offering new shade of color. You may think what the hell their design staff of thousands of people did this entire year? Tesla's main strength is design, courage and agility. Everything from door handles to dashboard is made to delight the user. They are tech company that became car company, they move fast and they deeply care about delighting users. Ideas don't boggle down in bureaucracy. Model-3 is upgraded even before year was over. Model-3 is designed for million mile life. No incumbent manufacturer would dare go in this territory. The difference is same as incumbent software giant vs new startup.
    - jcfrei 8y ago
      The reason incumbent car manufacturers seem lightyears behind is probably because they run a sustainable business model. While the Tesla experience seems superior it doesn't yet appear capable of turning a profit. I really doubt that lack of ingenuity on the incumbent side is the reason for the gap you describe.
sytelus 8y ago
I'm still trying to figure out the root cause. Is it because, production is not keeping up to demand? Or is it because demand is dying? So far it seems former, not later. Some analysts are saying random things like impact of tax credit and competition coming in to EV market. I still don't see anything close to Tesla offering in EV space, at least in US. They really need to focus on offering EV at $18K price point with 300 mile range. Keep self-driving stuff for later. I love Tesla and hope they would come through this.
- jaabe 8y ago
  EV are still too expensive and Tesla ridiculously so. That’s not a problem if you can’t keep up with demand, but competition creeps up. Why would you buy a Tesla when you can buy a Hyundai Kona for a lot less? We need better leadership though. I live in Denmark where EVs aren’t very widespread because of taxes. In Norway more than half of new vehicles sold are EV. Norway has more money than us, but they didn’t really need it for this transition and nothing they did are things we couldn’t have. They simply had better political leadership than we do. I know some Americans might call free market, but we have 150 years of history to show that big advances in society are driven mainly by the public sector if they are to benefit all and happen quickly.
  - _ph_ 8y ago
    First of all, you basically cannot buy a Hyundai. The production is far below Model 3 levels. Here in Germany, you are looking at 12 months wait time due to demand far exceeding supply. Also, the Model 3 is a very attractive offering. It is the faster car, aims at the typical BMW audience, and most of all, has the supercharger network available.
    - neuronic 8y ago
      As another German I can definitely tell you that no one here sees a Model 3 at anywhere near a BMW in production quality. If Tesla intends to market the Model 3 at the "BMW audience" - whatever differentiates them from, say, the "Audi audience" - they are horribly miscalculating at what German people expect from a car. It is not limited to EV range. Also, Volkswagen is ramping up production on their Modular Electric Drive Matrix (MEB) [1] and within 2-3 years cars with this technology will hit the market. I wonder if Tesla can keep up when Volkswagen, Toyota or other car heavy weights begin serious EV production once they belief the market is ready. Diesel sales are better then ever in the last years, so they simply could afford to wait and continue to make money until infrastructure ramps up and technology improves. Tesla cannot do that. [1] https://www.volkswagen-newsroom.com/en/modular-electric-drive-matrix-meb-3677 https://www.volkswagen-newsroom.com/en/modular-electric-driv...
deleted 8y ago
[deleted]
Proven 8y ago
What downer? That's all great news. Tesla has overpromised and underdelivered, doesn't make any profit (that is, it's useless to anyone who owns their shares) and has plundered millions through state and federal subsidies. To hell with those parasites.
hef19898 8y ago
It still comes down to a race between Tesla figuring out the complete automotive supply chain and competitors figuring out EVs. Tesla had, and I would assume still has, production hell. Now it's delivery hell. Both are solved, controlled and executed constantly by other car companies (VW has an exception with the new Golf 8 that proves the rule). The competition is still struggling to solve EVs, some like Jaguar and Audi and BMW and others seem to be ahead of others. Advantage Tesla: EV brand, EV dedicated basis for their cars, software and experience with batteries Advantage competition: scaling production and delivery, economies of scale I would argue that the window of opportunity for Tesla is closing now. Which might not be good news for them. And given the ever shorter life cycles in the automotive sector the window ever was max. one facelift / model replacement. Which again is something the competition is doing constantly for decades now. Tesla never did it once. So I see the advantage on the competition but not by a big margin. Had Tesla solved their production and supply chain earlier the margin wouldn't be there at all or Tesla even be a head of others. The biggest risks for Tesla are a) to miss the window of opportunity they have and be b) to run out of cash before their issues are solved. Both are related and I suspect Elon is much a help regarding the cash side as he is a hindrance regarding the rest.
- kmonsen 8y ago
  Sure Tesla can make good cars, but not if it has to sell them at a profit. Over the lifetime of Tesla, each car has been subsidized by like 10k from shareholders and 7.5k from government. Both subsidies are going away as we speak.
  - jsight 8y ago
    That is really not true. Each individual car is sold for more than the cost of manufacturer. Statistics like this tend to take fixed costs and historical costs into account in a way that shouldn't be divided by unit volume. I caution you to read more about this, as you see statistics like this quoted often in the press. It is almost always an indicator of issues with article quality.
  - lonnyk 8y ago
    I read earlier that model 3s had. 20% gross margin. I’m happy to find the source again if you’re interested, but I'd also love to see your source.
mtw 8y ago
Toyota and Tesla merging would be great. Toyota masters scaling and world-wide logistics but doesn't have EV technology. Their software is also very basic. Tesla doesn't control logistics but master EV and autopilot. Them merging is not impossible, Toyota once had a stake in Tesla.
- bravo22 8y ago
  Elon would be a roadblock to such a merge. Toyota won't be able to function with him in any managerial position. I doubt he'll accept anything less than full control. He won't be content as an "evangelist".
  - mtw 8y ago
    If his dream is really to have the world switch from ICE to EV cars, then he should consider this. That would be an engineering and laudable feat, and he would be in the annals of history. He can then focus on SpaceX and go to Mars. But if his dream is to become ultra-wealthy and be like Stark in Ironman, then I guess he can keep to himself Tesla.
    - bravo22 8y ago
      His dream is to go down in history. Everything else is a means to an end.
    - dforrestwilson 8y ago
      This is a guy with 5 Beverly Hills mansions and a private jet. All financed via his Tesla stock. It seems as though any sacrifices related to "the mission" are expected to come from Tesla and SpaceX employees who have to suffer through periodic rounds of layoffs. https://variety.com/gallery/elon-musk-buys-fifth-bel-air-home/ https://variety.com/gallery/elon-musk-buys-fifth-bel-air-hom... https://www.latimes.com/business/la-fi-elon-musk-mortgages-morgan-stanley-20190222-story.html https://www.latimes.com/business/la-fi-elon-musk-mortgages-m...
    - rak00n 8y ago
      You never know if Toyota would shut down Tesla after merging. This has happened so many times before.

sandworm101 8y ago

A few more years of this amd they may be bought out by the likes of BMW. The tesla brand is worth something, even if on the hood of a german car.

kylec 8y ago
BMW doesn't need to pay top dollar for a prestigious brand, they already have one. Tesla will be bought out by the likes of Geely or Tata who don't have strong brands of their own, but have already been going around and scooping up smaller car brands like Volvo and Jaguar.
- onlyrealcuzzo 8y ago
  Right. And if things go badly for Tesla, the brand likely won't be as valuable.
- kec 8y ago
  They have history of doing so though: They own both Mini and Rolls-Royce now.
  - olivermarks 8y ago
    It's quite possible something similar to the Fisker bankruptcy might happen - Fisker's assets were bought out by Wanxiang Group who then launched Karma Automotive, resuming manufacture of their 'Revero' plug-in hybrid car, which is an improved version of the old Fisker Karma.
    - hi5eyes 8y ago
      didnt fisker just announce partnership with rimac and pinifirina
      - olivermarks 8y ago
        yes fisker retained the name but not the karma
  - _pmf_ 8y ago
    BMW bought the brand rights to Rolls Royce for 120 million EUR. BMW will not buy Tesla at anything above a eighth of their current stock price.
  - Neil44 8y ago
    They saw the value of the Mini brand and didn't want to put a BMW badge on a lower end car, so they held onto it when they jetisoned the rest of the Rover group. The RR brand is selling to different customers than the BMW brand is. But I don't see that BMW would need the Tesla brand, there's too much overlap there IMO.
  - _fizz_buzz_ 8y ago
    Not really. They merged with Rover and bought Rolls-Royce in the 90s. At the time the BMW management wanted to expand. Mini is a holdover from the Rover merger. This merger is largely seen as a failure and BMW divested from all Rover brands (except Mini). For more than 20 years BMW has not expanded.
deleted 8y ago
[deleted]
golfer 8y ago
Tesla has about $9B in debt. They are not an attractive takeover candidate. They've never turned an annual profit.
- azinman2 8y ago
  Apply bankruptcy and sell the assets for cheap... Id imagine many would want to pick up the remains...
  - golfer 8y ago
    Specifically what remains? They are basically the only OEM pushing self driving without lidar. Their manufacturing facilities are childish compared to other large automakers. Solar City, powerwall, and the solar roof are huge money losers and barely make a dent in the P&L statement. Maybe just the brand name? But will the brand have the cache once it suffers bankruptcy? Maybe it will.
    - newsoul2019 8y ago
      Did you mean cachet?
    - sliken 8y ago
      Seen the Cornell paper "Pseudo-LiDAR from Visual Depth Estimation: Bridging the Gap in 3D Object Detection for Autonomous Driving" or the more consumer friendly "Elon Musk Was Right: Cheap Cameras Could Replace Lidar on Self-Driving Cars, Researchers Find"? Looks like a pair of cheap cameras with good stereo separation (distance between the cameras) provides very similar data to Lidar. All without the giant domes on the roof (like the waymo cars).
      - dan678 8y ago
        Not in scenes with poor lighting, not in rain, not in fog, not in scenes with poor surface variation, and not at the ranges needed for safe on highway driving.
m3kw9 8y ago
Elon would sell to Apple, and not these old school car manufacturers that has their tails covering their behinds
- NeedMoreTea 8y ago
  I'm sure countless startups thought similarly until an evil old-school behemoth like Microsoft turned up offering tons of money.
  - m3kw9 8y ago
    I think Elon isn’t the typical startup CEO that is only looking for the biggest cash pile, which ironically Apple has probably the biggest cash pile on earth as a corp.
- kakwa_ 8y ago
  Elon Musk only controls 20% of Tesla shares, the board can force a sell upon him if the other shareholders agree on one. And I'm not sure why Apple would buy a car company, it's too far of their core business (aka selling computers ranging from phone sized to desktop size). The other car manufacturers are not blind idiots, they are seeing EVs are becoming a thing, but it's also in its early stages. The question for them is when should they start switching their line-up, and that's the difficult decision. Too early, and they end-up with too expensive and less convenient cars compared to IC vehicules, too late and you have basically miss the bus.
  - pbreit 8y ago
    All three of your paragraphs are incorrect.
    - kakwa_ 8y ago
      Thanks, could you develop?
      - 8y ago
rdtfjgykh 8y ago
This is probably the most likely endgame for Tesla. One of the other carmakers buys them, liquidates physical assets, and sells their own cars under the Tesla brand.

sliken 8y ago

I find the Panasonic thing very weird. Tesla claims to be battery limited, and also mentioned that their popular and in demand power walls are being throttled by lack of batteries. Does make me wonder. Is Panasonic blackmailing Tesla with limited supply to influence Tesla's battery supply in China? Is Panasonic and/or Tesla lying about the situation?

nihonde 8y ago
My take: Panasonic is moving its chips from Tesla to Toyota/Mazda and betting the incumbent Japanese makers will be better positioned to capitalize on EV sales over the long term. It’s not strange for a 100+ year old company playing the long game. I also think Tesla’s function for many of its suppliers was to prove that Americans will buy EVs, and their expectations are fairly low about how much more Tesla will accomplish.
- sliken 8y ago
  Well the weird thing is Panasonic is complaining about not selling enough batteries. Seems kinda crazy considering the rapid scale of Tesla's ramp up, not to mention secondary uses like powerwalls and grid sized battery systems.
  - hef19898 8y ago
    I won't speculate why Panasonic is putting the brakes on. Could be anything from financing to some new guy at Panasonic not liking the color choices of the Model Y. But it is telling us something that the most integrated of Tesla's partners is putting on the brakes. And I remember some reports about less then optimal conditions in the giga factory. And these conditions, even if they are only half true, would the opposite of what Japanese companies would like to see
- samstave 8y ago
  Personally; ding ding ding. This is why american MBAs are utter useless garbage.. The asian incumbents in heavy industry are going to own, simply because they are capable and willing to play the long-game. China is pretty much buying all of Africa. They havea 100 year plan. And anyone who isnt aware of that fact, is simply behind the game and already losing. We had a post about KPCB earlier, and good riddance - the arrogance of the SV VC mind and short-term thinking of the US industries are literally what has the US in ruin come 25 years from now.

newsoul2019 8y ago

I was close to buying a used Tesla from Tesla, but this is making me pause. Am I being unreasonable? I live in the Bay Area where I feel like the only person without a Tesla or two.

Spooky23 8y ago
I would only lease a Tesla. Why be stuck holding the bag if the proverbial shit hits the fan?
- YjSe2GMQ 8y ago
  What's the potential problem for a consumer? No battery replacements? Someone's gotta be making parts even if Tesla goes bust.
  - semi-extrinsic 8y ago
    Unlike other car manufacturers who go bust (like Saab 7 years ago), Tesla has worked hard to limit third-parties from repairing their cars. So if they go bust, you have to hope that their service business gets spun out into a company that lives on, and that this company (which retains a monopoly) doesn't charge you ridiculous rates.
  - newnewpdro 8y ago
    Unless I'm mistaken a major component of the Tesla value prop is the supercharger network. I presume "shit hits the fan" includes goodbye supercharger network. Furthermore, unless I'm again mistaken, a bunch of people are under the impression that they'll have unlimited free supercharger access for the life of the car.
  - Spooky23 8y ago
    Just like with SaaS, when things go boom, you’re screwed. With Tesla, i would assume that in car features like autopilot would go poof, along with the proprietary chargers and spare part availability. Also, who knows what over the air maintenance is happening. With a lease, your liability is capped to the lease payments. With ownership, you can ride it down to zero.

rjdagost 8y ago

This wasn't reported much, but Tesla also expanded their ABL (Asset Based Lending) credit agreement by $500M in March 2019: https://ir.tesla.com/node/19561/html https://ir.tesla.com/node/19561/html Without that, they would have $500M less cash on hand. They shipped half of their cars in the final 10 days of Q1. Finances must have been pretty tight at the start of March. That was around the time they announced they are closing all stores, firing sales personnel, and in general tightening the belt significantly. They also had the Model Y reveal in the middle of March, presumably to raise capital via deposits. Cutting prices multiple times towards the end of March must have helped to move a lot of metal, at the expense of gross margin. Speaking of the Model Y, I also found it suspicious that on the conference call Elon Musk wouldn't divulge the number of deposits. When the Model 3 deposits were skyrocketing he talked about the reservation count frequently. I can only suspect that the number of Model Y deposits isn't so impressive.

dogsgobork 8y ago
The pool of people that put down $1000 thinking they were going to buy a $35k car, has to be much larger than the people willing to plunk down $2500 for a $48k car (the cheapest pre-order currently available). The multi year wait for the $35k version to be available (and quickly abandoned) can't help.
- TaylorAlexander 8y ago
  I was surprised by your claim so I checked... the Tesla website currently allows me to configure a Model 3 that is $39,500 before discounts for estimated delivery in two weeks. Not $35k but far less than $48k too.
  - cheeyoonlee 8y ago
    The $35k configuration is still available but by phone/in person order, not online
  - deleted 8y ago
    [deleted]

sytelus 8y ago

There is a definitely path forward for Tesla. They needs to be 1908 Model-T but for EVs of 2019. This means only two things: (1) aggressively lower the manufacturing cost and, (2) scale the battery production. I want to see Tesla that costs $18K and has a range of 300 miles. This would turn auto-industry upside down. I think this is completely doable.

iamaelephant 8y ago
Why would this be doable for Tesla but not every other car manufacturer?
- sytelus 8y ago
  Incumbent car manufacturers are actually lightyears behind in experience that Tesla provides. Just look at their dealership model that is design to robe user at every step in the process. From tech perspective, majority of Toyota line up still doesn't even have good smartphone connection story in 2019. Honda still have bare minimum driver-assist. Toyota Sequoia hasn't been literally updated for years and a giant car like this doesn't have basic safety features that one would expect in 2019. Keep in mind these are the biggest, wealthiest and most powerful car manufacturers in the world for who money in not an issue. They have perhaps 10X more people working on improving designs than Tesla but at the end of year nothing really comes out. If you look at model differences between 2018 vs 2019 for large majority of incumbent manufacturers, you will see no difference or something tragically trivial such as offering new shade of color. You may think what the hell their design staff of thousands of people did this entire year? Tesla's main strength is design, courage and agility. Everything from door handles to dashboard is made to delight the user. They are tech company that became car company, they move fast and they deeply care about delighting users. Ideas don't boggle down in bureaucracy. Model-3 is upgraded even before year was over. Model-3 is designed for million mile life. No incumbent manufacturer would dare go in this territory. The difference is same as incumbent software giant vs new startup.
  - jcfrei 8y ago
    The reason incumbent car manufacturers seem lightyears behind is probably because they run a sustainable business model. While the Tesla experience seems superior it doesn't yet appear capable of turning a profit. I really doubt that lack of ingenuity on the incumbent side is the reason for the gap you describe.

sytelus 8y ago

I'm still trying to figure out the root cause. Is it because, production is not keeping up to demand? Or is it because demand is dying? So far it seems former, not later. Some analysts are saying random things like impact of tax credit and competition coming in to EV market. I still don't see anything close to Tesla offering in EV space, at least in US. They really need to focus on offering EV at $18K price point with 300 mile range. Keep self-driving stuff for later. I love Tesla and hope they would come through this.

jaabe 8y ago
EV are still too expensive and Tesla ridiculously so. That’s not a problem if you can’t keep up with demand, but competition creeps up. Why would you buy a Tesla when you can buy a Hyundai Kona for a lot less? We need better leadership though. I live in Denmark where EVs aren’t very widespread because of taxes. In Norway more than half of new vehicles sold are EV. Norway has more money than us, but they didn’t really need it for this transition and nothing they did are things we couldn’t have. They simply had better political leadership than we do. I know some Americans might call free market, but we have 150 years of history to show that big advances in society are driven mainly by the public sector if they are to benefit all and happen quickly.
- _ph_ 8y ago
  First of all, you basically cannot buy a Hyundai. The production is far below Model 3 levels. Here in Germany, you are looking at 12 months wait time due to demand far exceeding supply. Also, the Model 3 is a very attractive offering. It is the faster car, aims at the typical BMW audience, and most of all, has the supercharger network available.
  - neuronic 8y ago
    As another German I can definitely tell you that no one here sees a Model 3 at anywhere near a BMW in production quality. If Tesla intends to market the Model 3 at the "BMW audience" - whatever differentiates them from, say, the "Audi audience" - they are horribly miscalculating at what German people expect from a car. It is not limited to EV range. Also, Volkswagen is ramping up production on their Modular Electric Drive Matrix (MEB) [1] and within 2-3 years cars with this technology will hit the market. I wonder if Tesla can keep up when Volkswagen, Toyota or other car heavy weights begin serious EV production once they belief the market is ready. Diesel sales are better then ever in the last years, so they simply could afford to wait and continue to make money until infrastructure ramps up and technology improves. Tesla cannot do that. [1] https://www.volkswagen-newsroom.com/en/modular-electric-drive-matrix-meb-3677 https://www.volkswagen-newsroom.com/en/modular-electric-driv...

deleted 8y ago

[deleted]

Proven 8y ago

What downer? That's all great news. Tesla has overpromised and underdelivered, doesn't make any profit (that is, it's useless to anyone who owns their shares) and has plundered millions through state and federal subsidies. To hell with those parasites.

hef19898 8y ago

It still comes down to a race between Tesla figuring out the complete automotive supply chain and competitors figuring out EVs. Tesla had, and I would assume still has, production hell. Now it's delivery hell. Both are solved, controlled and executed constantly by other car companies (VW has an exception with the new Golf 8 that proves the rule). The competition is still struggling to solve EVs, some like Jaguar and Audi and BMW and others seem to be ahead of others. Advantage Tesla: EV brand, EV dedicated basis for their cars, software and experience with batteries Advantage competition: scaling production and delivery, economies of scale I would argue that the window of opportunity for Tesla is closing now. Which might not be good news for them. And given the ever shorter life cycles in the automotive sector the window ever was max. one facelift / model replacement. Which again is something the competition is doing constantly for decades now. Tesla never did it once. So I see the advantage on the competition but not by a big margin. Had Tesla solved their production and supply chain earlier the margin wouldn't be there at all or Tesla even be a head of others. The biggest risks for Tesla are a) to miss the window of opportunity they have and be b) to run out of cash before their issues are solved. Both are related and I suspect Elon is much a help regarding the cash side as he is a hindrance regarding the rest.

kmonsen 8y ago
Sure Tesla can make good cars, but not if it has to sell them at a profit. Over the lifetime of Tesla, each car has been subsidized by like 10k from shareholders and 7.5k from government. Both subsidies are going away as we speak.
- jsight 8y ago
  That is really not true. Each individual car is sold for more than the cost of manufacturer. Statistics like this tend to take fixed costs and historical costs into account in a way that shouldn't be divided by unit volume. I caution you to read more about this, as you see statistics like this quoted often in the press. It is almost always an indicator of issues with article quality.
- lonnyk 8y ago
  I read earlier that model 3s had. 20% gross margin. I’m happy to find the source again if you’re interested, but I'd also love to see your source.

mtw 8y ago

Toyota and Tesla merging would be great. Toyota masters scaling and world-wide logistics but doesn't have EV technology. Their software is also very basic. Tesla doesn't control logistics but master EV and autopilot. Them merging is not impossible, Toyota once had a stake in Tesla.

bravo22 8y ago
Elon would be a roadblock to such a merge. Toyota won't be able to function with him in any managerial position. I doubt he'll accept anything less than full control. He won't be content as an "evangelist".
- mtw 8y ago
  If his dream is really to have the world switch from ICE to EV cars, then he should consider this. That would be an engineering and laudable feat, and he would be in the annals of history. He can then focus on SpaceX and go to Mars. But if his dream is to become ultra-wealthy and be like Stark in Ironman, then I guess he can keep to himself Tesla.
  - bravo22 8y ago
    His dream is to go down in history. Everything else is a means to an end.
  - dforrestwilson 8y ago
    This is a guy with 5 Beverly Hills mansions and a private jet. All financed via his Tesla stock. It seems as though any sacrifices related to "the mission" are expected to come from Tesla and SpaceX employees who have to suffer through periodic rounds of layoffs. https://variety.com/gallery/elon-musk-buys-fifth-bel-air-home/ https://variety.com/gallery/elon-musk-buys-fifth-bel-air-hom... https://www.latimes.com/business/la-fi-elon-musk-mortgages-morgan-stanley-20190222-story.html https://www.latimes.com/business/la-fi-elon-musk-mortgages-m...
  - rak00n 8y ago
    You never know if Toyota would shut down Tesla after merging. This has happened so many times before.