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Tesla has not failed and is clearly not a failure.
by nickik 7y ago
Tesla has not failed and is clearly not a failure.
- rainyMammoth 7y agoLet's wait a couple more quarters before being able to say it is clearly not a failure. The only reason they are still alive is the hype around Elon Musk.
- toomuchtodo 7y agoI wouldn’t discount hundreds of millions of dollars in free cash flow. They have a product that is in heavy demand. I’ve been hearing about the death of Tesla for almost 10 years. It’s getting old.
- rapsey 7y agoI mean don’t they still make a loss on every car. They have been alive for the duration of the stock market bull run. being sceptical of their chances in a recession is normal.
- jurmous 7y agoThe cars are not produced at a loss. Each car is profit. The negative cash flow is created by investing heavily in factory expansion like the model 3/Y production line and the record time construction of gigafactory 3. More about profit margins in second quarter report. It seems it is currently 19% per car. https://ir.tesla.com/static-files/1e70a30c-20a7-48b3-a1f6-696a7c517959 https://ir.tesla.com/static-files/1e70a30c-20a7-48b3-a1f6-69...
- gamblor956 7y agoThe cars are not produced at a loss. Each car is profit. Only under magical unicorn fantasy accounting. Under the same accounting standards every other car maker uses (GAAP), Tesla still loses money on each car. From Tesla's own financial report: "excluding regulatory credit revenue, automotive gross margin improved by ~200bp (compared to a decrease of 125bp on a GAAP basis). [emphasis added]
- bryanlarsen 7y ago"Fantasy" number is 19% gross margin. GAAP number is 15% gross margin. Still positive.
- deleted 7y ago[deleted]
- danhak 7y agoTotally false on both counts. 1) Tesla's GAAP gross margin was (positive) 14.5% for the most recent quarter [https://ir.tesla.com/static-files/1e70a30c-20a7-48b3-a1f6-696a7c517959 https://ir.tesla.com/static-files/1e70a30c-20a7-48b3-a1f6-69...] 2) Breaking out GAAP and non-GAAP figures is totally standard and commonplace among publicly traded companies. Take a look at Ford's Q2 letter, for example, which has a whole page describing why they use Non-GAAP financial measures to supplement GAAP figures [https://s22.q4cdn.com/857684434/files/doc_financials/2019/q2/updated/2Q19-Financial-Release.pdf https://s22.q4cdn.com/857684434/files/doc_financials/2019/q2...]
- erulabs 7y agoAs of August 2018 that appears to not be the case: Tesla says that the Model 3’s gross margin “should grow significantly” to approximately 15 percent in the third quarter and 20 percent in fourth quarter, thanks to “continued reduction in manufacturing costs and to some extent an improving mix.” From here on out, CEO Elon said during a call with analysts Wednesday evening, “the goal is to be profitable and cash flow positive every quarter going forward.” Source: https://www.theverge.com/2018/8/1/17639588/tesla-earning-q2-2018-model-3-production https://www.theverge.com/2018/8/1/17639588/tesla-earning-q2-...
- bryanlarsen 7y agoLast quarter's gross margin was 15%. Given that the small number of Model S and X's probably have much better margins, the Model 3 margin is below 15%, but probably not much below. https://ycharts.com/companies/TSLA/gross_profit_margin https://ycharts.com/companies/TSLA/gross_profit_margin
- eatbitseveryday 7y ago>Tesla says that the Model 3’s gross margin “should grow significantly” to approximately 15 percent in the third quarter and 20 percent in fourth quarter, thanks to “continued reduction in manufacturing costs and to some extent an improving mix.” From here on out, CEO Elon said during a call with analysts Wednesday evening, “the goal is to be profitable and cash flow positive every quarter going forward.” Please do not quote by using a code box. Use italics (put an asterisk on either end) or a carrot > to indicate a quote, rather than creating a endlessly long sideways scroller.
- gamblor956 7y agoImportant caveat: this is under Tesla's made-up accounting rubric. Under GAAP accounting (i.e., the standardized accounting methods everyone else uses) they lose money on each car, i.e., they have a negative gross margin.
- rainyMammoth 7y agoThis should be upvoted to the top of the page. I'm not rooting against or for Tesla, but they are extra shady regarding accounting. They are losing money on each car. There is so much misinformation around this pushed by Tesla fans and the company itself though that you might easily believe they are profitable, but they are not!
- bryanlarsen 7y agoTesla's Gross Margin is 15%, the same as Ford's. They make a sizable profit on every car. R&D etc is what turns that profit into a loss.
- ChrisClark 7y agoYeah, that keeps getting repeated by the anti-Tesla crowd. But they make a great profit on every car, and have consistently keep growing in sales. Right now they just can't manufacture the cars fast enough for the demand. They'll have to keep building factories which takes a big chunk from their cash.
- dmode 7y agoI have been waiting for Tesla’s failure for 10 years. Tesla naysayers have been asking us to wait for couple of quarters for a decade now
- nickik 7y agoThe person was makeing a factually false statment. I corrected it. What your opinion about the future of the company is doesn't matter about what current situation is. People have been saying Tesla will fail 'soon' for a long time. Once they actually do fail, then we can say they have failed. Before then its just personal opinions.
- option 7y agopeople wait in lines and put deposits to buy Tesla’s product
- Robotbeat 7y agoI don't know why you're down-voted. Tesla's brand is super valuable; their electric car tech (particularly their efficiency and energy density and charging technology--not just raw rate, but the form factor of their charging tech) is heads above their competitors. If they ran into serious trouble, someone would buy them up so hard. Electric cars (heck, automotive manufacturing in general) are a tough business. Tesla is now competing at a (soon) $7500 disadvantage in the US compared to most of their competitors due to the phase out of the EV credit. Gas prices are incredibly, ridiculously low. And yet they're still in very high demand, outselling everyone else in the US in raw unit sales and globally in revenue. That's no guarantee that things couldn't get worse, but Tesla has outlived many of its detractors before, and it's not just because of Elon Musk.
- rainyMammoth 7y agoSorry but WHAT? That's not how it works. The 7500$ is a huge advantage for Tesla today that was pushed through a lot of lobbying. It literally means that everyone's tax money is subsidizing luxury cars for the rich. Once this gets phased out, they will have to compete with regular prices against normal car and their high price point will make it way less attractive. It is true that soon competitors will still get the 7500$ tax cut while Tesla exhausted theirs. That's simply because they use all their credits and now need to come to a price point that makes sense without subsidies.
- Robotbeat 7y agoIt IS how it works. The $7500 credit is all but completely phased out already for Tesla (it's only $1,875 right now). And yet they're STILL outcompeting the other Plug-in electric cars in the US by a large margin (13,150 Model 3s in August versus 2500 Prius Prime, the next most-sold plug-in vehicle). That is my point. It's an advantage to conventional carmakers who wait to the last minute to invest in electrification, after someone else has done all the hard work, and just integrate some off the shelf electric drivetrain. It puts those who actually invest in a full, cleansheet efficient electric drivetrain domestically in the US (like Tesla and GM) at a big disadvantage versus foreign firms or for multinational corporations like the Volkswagen group who have multiple subsidiaries like Audi, VW, Porsche who each get their own group of credits (even though the Volkswagen Group's MEB platform will be available to all their subsidiaries). It makes no sense and incentivizes the wrong behavior: advantages foreign firms above domestic. Advantages latecomers over those with the foresight to invest early (Tesla and GM, for example). There either should be one big pot of credits, or the credits should be sunsetted on a global timeline (instead of by number). And until conventional cars are paying for their full externalities from carbon emissions (and others), they are being implicitly subsidized and an EV credit of some sort (although imperfect) will be needed to level the playing field.
- SuoDuanDao 7y ago>The only reason they are still alive is the hype around Elon Musk. The same was true of Apple and Steve Jobs, once upon a time.
- sixQuarks 7y agoPeople that think Tesla is a failure at this point are classified in the same category as anti-vaxxers and flat-earthers in my opinion. That being said, Tesla has shown how difficult it is to start a successful car manufacturing company. Elon says it's way harder than SpaceX. Let that sink in for a minute. Tesla's long-term success is not guaranteed, but even if they fail long-term, they're a success in my book. They literally built a better vehicle and have ignited other manufacturers to go electric. When I see the difficulties Tesla had in ramping up large-scale manufacturing, I really don't see how companies like Rivian and NIO are going to make it. The only way is if they stay as a small boutique manufacturer.
- magashna 7y agoI think one of the best things they did was make electric cars cool. For so long Prius had the rep of a dorky car for hippies.
- merpnderp 7y agoI'm not so sure this latest battery innovation hasn't guaranteed their success. As I'd happily pay their premium for an ultra safe car and my only real concern, battery life, completely alleviated. A battery that outlives the frame will market itself. The safety, cheap operation, and less stressful augmented driving are just frosting at that point.
- jason0597 7y ago>but even if they fail long-term, they're a success in my book. >People that think Tesla is a failure at this point are classified in the same category as anti-vaxxers and flat-earthers in my opinion. Some people don't have the same definitions for words as you do, so you can't put them in the same category as flat-earthers.
- mdorazio 7y agoHonestly, players like Rivian and NIO shouldn't try to manufacture their own cars - they should contract that out to someone who knows what they're doing and already has the capital invested in production tooling (ex. Magna). Rivian/NIO & co. are best suited to design and engineering until they reach a market threshold where it actually makes sense to spin up a dedicated factory.
- neogodless 7y agoI think Tesla is making the best electric cars you can buy, although they are still a little too expensive for the mainstream. But as a company, they still have to find a way to make money, and that is not a given at this point. https://qz.com/1674199/teslas-losses-are-piling-up-despite-record-sales/ https://qz.com/1674199/teslas-losses-are-piling-up-despite-r... You cannot say they have failed, because they haven't yet closed the doors. But I don't see how they are "clearly not a failure" if you include "profitable business" in their list of goals.
- natch 7y agoA $40k Tesla is on equal footing with a $25k ICE car in terms of TCO so I’m not sure why you think they are still expensive. They have come down a lot. And many people who walk onto a car sales lot with $25k in mind end up getting talked into a $35k car, so with all the savings Tesla really can be the cheaper option. With Tesla if you get talked into the $50k+ stealth performance you’re still on equal footing with the $35k car until you add future self driving.
- ndiscussion 7y agoWhere can I find a breakdown of the TCO like this? Is there any source? I would think that Tesla TCO would be through the roof once the cars start aging. It's one thing to have the dealership fix every little thing under warranty - quite another to pay $5,000 to have your sunroof fixed because it requires a special encryption chip.
- neogodless 7y ago