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> can see why Elon is going crazy on twitter, he'd almost turned around Telsa and now they may be in the worst cash crunch of their long life With 8 billion in
by tejohnso 7y ago
> can see why Elon is going crazy on twitter, he'd almost turned around Telsa and now they may be in the worst cash crunch of their long life
With 8 billion in cash, and 3-4 billion per year burn rate, that's a two year buffer assuming no improvement. That doesn't seem like the worst cash crunch of their long life. What am I missing?
- cloudwalking 7y agoIncreasing capex for new products.
- xkjkls 7y agoPlus there CapEx hasn't even met depreciation for years, indicating that they have been underinvesting in repairs and retooling.
- save_ferris 7y agoHe might be more concerned about the sales prospects instead of operational expenses. Automakers are getting hit really hard by this pandemic, and they need a healthy economy to sell cars. Many economic forecasts are saying that a full recovery is 2-4 years away, although there are many different opinions.
- xur17 7y agoPlus, the price of gas has gone down significantly, hurting one of the benefits of electric cars.
- blizkreeg 7y agoI don't believe the Tesla crowd bought theirs to save on gas anyway, so not sure if this is true.
- grecy 7y agoMaybe not, but if gas had continued to go up in 2020 and 2021, you'd have to think that would help convince move people to shift over to electric.
- blizkreeg 7y agoI've somehow never believed that theory. There are tens of thousands who buy gas guzzlers, at whatever price of gas was/is. If only people were that rational, they'd stop buying them to save our planet. You can tax cigarettes all you want, people are still gonna smoke.
- grecy 7y agoSure tens of thousands buy gas guzzlers because they can afford it / don't care. But there are also tens of thousands more that don't because they can't afford it.
- jsight 7y agoI've always felt like the base Model 3 and base BMW 3 series were very comparable. Add in a couple of thousand, and the 3 looks like a bargain. That becomes a harder sell when the Model 3 is actually more expensive to operate, as it is in some places now. Its not that they are buying to save money vs the economical choices, but it does make a difference relative to their comps (RWD & AWD sport sedans).
- caf 7y agoDo customers really believe the current exceptionally low oil prices are going to be a permanent feature?
- mrguyorama 7y agoLast time the oil price went down this aggressively coincided with the massive uptick in people buying SUVs
- Gwypaas 7y agoThis is mostly the US because the externalities aren't taxed. In EU the taxes on gas are much higher. With VAT and everything Sweden currently has $4.5 per gallon, down from $5.8 last autumn, this makes any electric car much more compelling.
- herdodoodo 7y agoSweden also has numerous tax breaks for buying electric vehicles, and does not properly tax the externalities of producing electric cars (running/refueling EVs, however, has very minimal negative externalities)
- Gwypaas 7y agoTrue, haven't looked at the data in some time but the breakeven point in regards to LCA comes fairly early though when comparing against ICE cars.
- xkjkls 7y agoIt depends greatly on the ICE car and driving assumptions. For someone who generally only makes short trips, a plugin hybrid is going to be a more environmentally friendly choice long term, given the significant amount of emissions needed to create the batteries for large range BEVs.
- threeseed 7y agoThe other problem is chargers. Before COVID-19 you were buying an EV knowing that there was a roadmap of chargers being rolled out. Now I would be wondering (a) are new ones going to be deployed at all and (b) are existing ones going to be maintained. Everything non-essential is going to be deprioritised over the coming years.
- 54351623 7y agoCouple with this the massive glut of used cars thats about to get worse, the fact that many cities are seriously considering long term conversion of roadways to be pedestrian only and all the oil field pickups that are about to get repo'd (pertaining to the cyber truck). What I'd really like to know is what will happen to Tesla's vehicles if the company goes under? Like will they get bricked essentially? I sincerely doubt Tesla will go under like that but, I'm curious none the less.
- tgsovlerkhgsel 7y agoI wonder if cities will also start designating streets (or as a softer approach, significant amounts of parking) as EV-only. A city that wants to electrify the vehicles driving there could do that very easily by converting a certain percentage of parking spots to EV-only every year. This will roughly ensure (at least) the same percentage of cars in the city being EVs (since if there's more, using a non-EV becomes extremely unattractive as you can't find parking).
- 54351623 7y agoMaybe but I doubt it, I feel like it would be all or nothing in regards to vehicles but who knows, would probably vary a lot. My understanding of the motivation is that it is only partially due to pollution and more to do with livability, comfort, health and that sort of thing. BYD did just get the largest electric bus order in history from LA https://t.co/YaWN2ZKtBs?amp=1 https://t.co/YaWN2ZKtBs?amp=1 as part of a green new deal, so you may not be far off in regards to cities moving towards focusing on accommodating electric vehicles.
- dzhiurgis 7y agoGov should require source-code escrow for certain technology and products...
- Scipio_Afri 7y agoOil prices don't help the EV argument. However the main issue is that they have to deal with their products being priced high compared to the rest of the industry at a time when wages are likely to fall.
- kenhwang 7y agoTesla relies on high volume to make money; the other automakers are pricing EVs based more on margin. An economic slow down hurts volume much more than it hurts margins. Tesla also relies heavily on first-mover advantage to grow. With the virus stalling everything, all the more cash rich automakers get time to catch up on R&D, while Tesla is stalled from being unable to physically expand. Tesla also becomes more cash starved from falling stock prices than other automakers. Then there's the drop in gasoline prices which naturally makes Tesla much less cost competitive vs ICE vehicles in its major markets (US/China). Added bonus of traditional automakers benefiting from low gasoline prices because historically consumers buy higher margin vehicles (truck/SUVs) when gas prices are low. So it's multiple various disadvantages hitting Tesla all at once that's likely to continue for a couple of years.
- michaelyoshika 7y agoIsn't China restricting the sale of new gasoline cars like what EU is doing? I agree US market could be hit badly as CA is still under lockdown and tech companies are laying off.
- tigershark 7y agoI don’t really think that any other automaker has a 25.5% margin on their mass produced electric vehicles.
- clouddrover 7y agoMaybe the Porsche Taycan. The Porsche 911 was the most profitable car in 2019 with a 47% margin: https://europe.autonews.com/automakers/porsche-911-most-profitable-car-2019 https://europe.autonews.com/automakers/porsche-911-most-prof... Porsche is Volkswagen's most profitable brand.
- alasdair_ 7y ago>Porsche is Volkswagen's most profitable brand. Which is pretty ironic, given the whole mess involved with Porsche trying to buy Volkswagen a few years ago.
- cco 7y agoI'm honestly surprised that Elon hasn't made some sort of tweet intimating that "Bioweapon Defense Mode" on Teslas may filter out covid-19.
- refurb 7y agoI think Tesla falls firmly in “luxury good” and with mass unemployment, Tesla might see much less demand for much longer than just the lockdown.
- ashtonkem 7y agoI’ve personally gone from “should I upgrade from a Mazda 3 to a Tesla 3” to “Should I just not get a car at all once this lease is up?” In a shockingly short period of time.
- pcurve 7y agoI bought 2014 3 HB GT manual when it first came out. Even though I used to be a huge car guy, I just don't care to own nicer car. Maybe it's because I'm 40 and have owned nicer cars before. Cars are so expensive these days, but a $25k compact car is so nice, why pay another $20k for incrementally nicer car? Keep your Mazda 3 for 10 years. It's a good car.
- ashtonkem 7y agoI’d actually prefer to not own a car at all. Since I work from home now, and walked to work before, I’d rather just not have one. But I agree, the marginal value of nicer cars is questionable at best. The benefit of a Model 3 was mostly going to be tax rebates and access to the car pool lane for my wife in crowded Los Angeles.
- xkjkls 7y agoIt seems pretty impossible to go completely carless in Los Angeles. In somewhere like New York/Chicago/DC you could do it, but LA seems way to spread out to not have a car.
- ashtonkem 6y agoI have gone carless in LA before. I could & would do it again. You just need to be willing/capable to pay enough to live near work. My wife on the other hand would need a career change.
- aguyfromnb 7y agoFor one, accounts payable is almost $4B.
- loganfrederick 7y agoThere's also a lot of questions on how much of that cash is tied into the China plant and Chinese relationship. Some analysts estimate that's about $2 billion of the $8B, so maybe a $1.5 billion buffer, and that's assuming some level of pre-covid demand. Plus there's an argument to be made that a company isn't likely to actually run the cash all the way down to zero before waiving the desperation flag (I recall hearing GM had $1-$2 billion in cash when they filed bankruptcy in 2009). Without knowing what the rest of 2020 demand looks like and the concerns above, the time horizon could easily be cut from your estimated 2 years down to 1. Only one year left to survive is a precarious situation. Not saying that's guaranteed to happen, but the are plenty of valid concerns one would have as a common stock shareholder.
- tenpies 7y agoTesla's way of counting cash is . . . quite imaginative to say the least. If you used conventional metrics their cash is more like $2 BB, and a bunch of that is stuck in China (as in their agreement for Tesla Shanghai stipulates that cash cannot leave the country). There is a real liquidity problem in there, but the people buying Tesla shares are not exactly the sharpest knives, or they're investing on the Tesla story, not financials.
- xkjkls 7y ago1. Not all of that cash is accessible; much of it is tied up in other countries like China, so with certain bills they won't be able to access it. 2. Tesla still has a large number of debt payments to make in that time period 3. Cash at the end of quarter is not equivalent to cash during the quarter. Tesla generally optimizes its financials to display a high number for cash at the end of the quarter. If you look at the interest they are getting on savings throughout the quarter, you'll see that the average cash they have in the bank throughout the total quarter is much less than stated value.