7 ms·

Let'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 ago
I 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 ago
  I 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 ago
    The 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 ago
      The 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 ago
        Totally 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 ago
    As 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 ago
      Last 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 ago
      Important 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 ago
        This 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 ago
    Tesla'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 ago
    Yeah, 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 ago
I 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
- deleted 7y ago
  [deleted]
- viklove 7y ago
  Yeah I guess no one expected investors (and government subsidies) would keep pumping money into a sinking ship, yet here we are.
  - deleted 7y ago
    [deleted]
  - rconti 7y ago
    So they're all dumber than the naysayers, or.... ?
    - viklove 7y ago
      Well, yes.
nickik 7y ago
The 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 ago
people wait in lines and put deposits to buy Tesla’s product
- Robotbeat 7y ago
  I 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) $7500 disadvantage in the US compared to most of their competitors due to the phase out of the EV credit. Gas prices are incredibly, ridiculously low. And yet they're still in very high demand, outselling everyone else in the US in raw unit sales and globally in revenue. That's no guarantee that things couldn't get worse, but Tesla has outlived many of its detractors before, and it's not just because of Elon Musk.
  - rainyMammoth 7y ago
    Sorry but WHAT? That's not how it works. The 7500$ 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 ago
      It 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.

toomuchtodo 7y ago

I 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 ago
I 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 ago
  The 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 ago
    The 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 ago
      Totally 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 ago
  As 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 ago
    Last 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 ago
    Important 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 ago
      This 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 ago
  Tesla'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 ago
  Yeah, 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 ago

I 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

deleted 7y ago
[deleted]
viklove 7y ago
Yeah I guess no one expected investors (and government subsidies) would keep pumping money into a sinking ship, yet here we are.
- deleted 7y ago
  [deleted]
- rconti 7y ago
  So they're all dumber than the naysayers, or.... ?
  - viklove 7y ago
    Well, yes.

nickik 7y ago

The 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 ago

people wait in lines and put deposits to buy Tesla’s product

Robotbeat 7y ago
I 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) $7500 disadvantage in the US compared to most of their competitors due to the phase out of the EV credit. Gas prices are incredibly, ridiculously low. And yet they're still in very high demand, outselling everyone else in the US in raw unit sales and globally in revenue. That's no guarantee that things couldn't get worse, but Tesla has outlived many of its detractors before, and it's not just because of Elon Musk.
- rainyMammoth 7y ago
  Sorry but WHAT? That's not how it works. The 7500$ 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 ago
    It 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.