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How much would their cars cost if they actually made a profit? And if they were sold at those prices would anyone but them? My point: their customer service,

How much would their cars cost if they actually made a profit? And if they were sold at those prices would anyone but them? My point: their customer service, tech and everything else people love about them is being subsidized by debt. They're not the U.S. government, they can't print money forever...

sjwright 7y ago
Tesla is in debt largely because of their rapid ramp-up with costly investments in design, development, manufacturing and supply chain. My layperson understanding is Tesla have been in a structurally profitable state for quite some time—but for their investments geared towards scaling up ever further. The question you need to ask is "if you build a factory, across how many units should the cost of that factory be spread?"
- tertius 7y ago
  > Tesla is in debt largely becaus Yes, massive debt with no income. Ambitious for sure.
  - sjwright 7y ago
    That's right, because Tesla has famously never sold a single car to anyone.
  - nwah1 7y ago
    4.5 billion in income this quarter, and has been rising consistently. They have a cash flow problem, not a revenue problem.
sliken 7y ago
Google "tesla profit over time". You'll see losses from 2011-2013 (12 quarters or so) and a profit, that was the ramp up to the model S. Then a series of losses up to 2016 (13 quarters) where they shipped the model X. Then a series of losses up to 2018 (7 quarters) then 2 quarters of profit for the model 3. So generally Tesla has large costs for expanding battery production and new assembly lines for new models, and then starts profiting. Their annual production is heavily up (277,000 in the last 4 quarters). If they stopped expanding they would be quite profitable. Given that their most popular car is very likely to be the model Y (at least in the USA the crossover/small SUV is by far the most popular). Things look pretty promising for Tesla.
- tertius 7y ago
  > If they stopped expanding they would be quite profitable. That's like saying if I stop eating I'd lose weight. Yes, but pretty soon I'll die. If they need to invest 1b to make 100m we know where that ends up. They can't scale back in the long term. Well, they can but they're not doing it right. It's hard to fix manufacturing after you're in the hole as deep as they are.
  - sliken 7y ago
    I don't follow, stolen from another comment on this post: Quarter: Model 3 shipped ======= ============ Q1 2019: 63,000 Q1 2018: 29,980 Q1 2017: 25,000 Q1 2016: 14,820 Q1 2015: 10,045 Q1 2014: 6,457 Q1 2013: 4,900 Q1 2012: 0 If Tesla stopped hugely spending R&D for new products and new products they would be quite profitable. Keep in mind that 63,000 model 3 cars were likely on average $52k = $3.25B. 20% gross margin = $693M. Ah, found the actual number, automotive revenue = $ 3,723,861,000 but that includes the model X and Y as well as the 3. Sure there would be some expense keeping the products up to date, but nothing like what is required to ramp up volumes and adding products like they have been doing. So basically Tesla has been heavily reinvesting their revenue into future growth... and it's been working. If needed, they could slow growth and increase profit. Many of the Tesla competitors in the luxury segment would LOVE to fail and "only" ship 63,000 cars costing $50k each. Tesla doesn't need new factories and products to not die, they could easily exist by keeping the model 3, S, and X up to date. Seems a poor decision to not finish the Y, but they could greatly reduce costs by changing an existing model 3 production line into a model Y production line. The cost should be greatly reduced since they share around 75% of the same parts. So why can't they scale back? They just repaid $920M, they have $2.2B on hand, and had a automobile revenue of $3.7B with a 20% gross margin this quarter. I don't get the "hole" they are in. Sure they will likely need loans to grow as crazy fast as they are (from last place to first in 7 years in the luxury/premium segment). But they could decide to just grow slower, why would that kill them?

sjwright 7y ago

Tesla is in debt largely because of their rapid ramp-up with costly investments in design, development, manufacturing and supply chain. My layperson understanding is Tesla have been in a structurally profitable state for quite some time—but for their investments geared towards scaling up ever further. The question you need to ask is "if you build a factory, across how many units should the cost of that factory be spread?"

tertius 7y ago
> Tesla is in debt largely becaus Yes, massive debt with no income. Ambitious for sure.
- sjwright 7y ago
  That's right, because Tesla has famously never sold a single car to anyone.
- nwah1 7y ago
  4.5 billion in income this quarter, and has been rising consistently. They have a cash flow problem, not a revenue problem.

sliken 7y ago

Google "tesla profit over time". You'll see losses from 2011-2013 (12 quarters or so) and a profit, that was the ramp up to the model S. Then a series of losses up to 2016 (13 quarters) where they shipped the model X. Then a series of losses up to 2018 (7 quarters) then 2 quarters of profit for the model 3. So generally Tesla has large costs for expanding battery production and new assembly lines for new models, and then starts profiting. Their annual production is heavily up (277,000 in the last 4 quarters). If they stopped expanding they would be quite profitable. Given that their most popular car is very likely to be the model Y (at least in the USA the crossover/small SUV is by far the most popular). Things look pretty promising for Tesla.

tertius 7y ago
> If they stopped expanding they would be quite profitable. That's like saying if I stop eating I'd lose weight. Yes, but pretty soon I'll die. If they need to invest 1b to make 100m we know where that ends up. They can't scale back in the long term. Well, they can but they're not doing it right. It's hard to fix manufacturing after you're in the hole as deep as they are.
- sliken 7y ago
  I don't follow, stolen from another comment on this post: Quarter: Model 3 shipped ======= ============ Q1 2019: 63,000 Q1 2018: 29,980 Q1 2017: 25,000 Q1 2016: 14,820 Q1 2015: 10,045 Q1 2014: 6,457 Q1 2013: 4,900 Q1 2012: 0 If Tesla stopped hugely spending R&D for new products and new products they would be quite profitable. Keep in mind that 63,000 model 3 cars were likely on average $52k = $3.25B. 20% gross margin = $693M. Ah, found the actual number, automotive revenue = $ 3,723,861,000 but that includes the model X and Y as well as the 3. Sure there would be some expense keeping the products up to date, but nothing like what is required to ramp up volumes and adding products like they have been doing. So basically Tesla has been heavily reinvesting their revenue into future growth... and it's been working. If needed, they could slow growth and increase profit. Many of the Tesla competitors in the luxury segment would LOVE to fail and "only" ship 63,000 cars costing $50k each. Tesla doesn't need new factories and products to not die, they could easily exist by keeping the model 3, S, and X up to date. Seems a poor decision to not finish the Y, but they could greatly reduce costs by changing an existing model 3 production line into a model Y production line. The cost should be greatly reduced since they share around 75% of the same parts. So why can't they scale back? They just repaid $920M, they have $2.2B on hand, and had a automobile revenue of $3.7B with a 20% gross margin this quarter. I don't get the "hole" they are in. Sure they will likely need loans to grow as crazy fast as they are (from last place to first in 7 years in the luxury/premium segment). But they could decide to just grow slower, why would that kill them?