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Tesla Was Cash Flow Positive Last Week, CEO Musk Says

353 points by apaprocki 14y ago

tjic 14y ago
While I'm a huge fan of Elon Musk, and I even think Tesla is pretty cool, I'm a little underwhelmed. Every one of my ventures could be cash flow positive if I got a half BILLION dollar loan from the taxpayers and then was able to sell my product with a $8k tax credit stapled to the side of each unit. http://techcrunch.com/2009/06/23/the-government-comes-through-for-tesla-with-a-465-million-loan-for-its-electric-sedan/ http://techcrunch.com/2009/06/23/the-government-comes-throug...
- w1ntermute 14y ago
  That's rather disingenuous. Musk is selling an innovative product worth tens of thousands of dollars to individual consumers. Considering the engineering that had to go into making the Model S a reality, I would consider this very impressive. Moreover, there is no reason to think that Tesla will not continue to increase in profitability with each passing week.
  - perry5000 14y ago
    Cash flow positive != profitable
    - BCM43 14y ago
      What does it mean?
      - frankc 14y ago
        cash flow positive just means you had more money coming in that going out. Profit is calculated on an accrual basis, not a cash flow basis. For instance, if I sell you a car, I can recognize the revenue from that before you give me the cash. The debt you owe me is now an asset. On the other hand, there are things like depreciation of assets which count as expenses even though no cash changes hands right now. These are just a couple of examples on how cash flow and profit are not the same, but to get the full gist of it, you need to cover basically what gets covered in an intro accounting course.
    - jervisfm 14y ago
      What is the difference between the two ? Don't you need to have a net positive flow in order to be profitable ?
      - slap_shot 14y ago
        http://www.investopedia.com/articles/01/110701.asp#axzz2EC5J5aQ4 http://www.investopedia.com/articles/01/110701.asp#axzz2EC5J...
      - deleted 14y ago
        [deleted]
      - nhebb 14y ago
        An explanation is given in the Operating Cash Flow vs. Net Income, EBIT, and EBITDA section of this Wikipedia entry: http://en.wikipedia.org/wiki/Operating_cash_flow http://en.wikipedia.org/wiki/Operating_cash_flow
      - ChuckMcM 14y ago
        Being operationally cash flow positive means that on a day to day basis your bank balance is increasing. Being profitable means that all of the money comes in in greater than your total costs. So for example, if you look at HP's write down, they were operationally cash flow positive for the quarter but are 'writing off' 8+ billion dollars. So they "lost" over $8B this quarter. Aka not profitable during the quarter. So the milestones you look for as a company are that you are cash flow positive for the day (all of todays costs covered by revenue), cash flow positive for the quarter (net increase in cash on and over the quarter) and cash flow positive for the year (net cash increase for the year), and finally profitable (total income exceeded all costs, both tangible and intangible (like depreciation)).
        TeMPOraL 14y ago
        So to put it simply, cash flow is like a differential of profit? So you can have a profit of -1M$, but as long as the next month you get more (like -0.8M$), you're cash flow positive (+0.2M$), right? I'm having trouble parsing the examples given in this thread; the above sounds like what I more-less understood from them.
- rohansingh 14y ago
  Nothing stopping you from doing a venture that takes advantage of federal grants and tax incentives.
  - perry5000 14y ago
    $500M taxpayer-backed loans are available to anyone, now?
    - sp332 14y ago
      Instructions to sign up are right over here http://www.lgprogram.energy.gov/ http://www.lgprogram.energy.gov/
      - ImprovedSilence 14y ago
        It looks like ford has about 5B in loans from them. And Fisker Automotive has a lil more than Tesla in loans. and Fisker makes some damn sexy cars: https://www.google.com/search?q=fisker&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a&um=1&ie=UTF-8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=XYC_UPXzH4680QGgxICQDg&biw=1280&bih=863&sei=aoC_UOvtN8bJ0QHlioDwDg https://www.google.com/search?q=fisker&oe=utf-8&aq=t...
        timdorr 14y ago
        Yep, they're definitely hot cars: http://jalopnik.com/5956179/more-than-a-dozen-fisker-karma-hybrids-caught-fire-and-exploded-in-new-jersey-port-after-sandy http://jalopnik.com/5956179/more-than-a-dozen-fisker-karma-h... </snark>
        patrickk 14y ago
        Elon Musk doesn't regard Fisker as a serious competitor. He said something like: "Fisker is headed up by a car designer, not an engineer. The reason we haven't had electric cars isn't because they looked bad" (or words to that effect).
- j2bax 14y ago
  Considering what he's up against in the industry, I'd say what he's done is fairly remarkable. My concern would be that if at any point one of the big three see Tesla as a threat they will put efforts into creating an electric car that undercuts Tesla's offerings and catapults Tesla into a high end niche oblivion. That said, if it comes to that, I will see that as a different means to the same end of reducing our gas guzzling obsession in America, and I can only see that as a positive.
  - rikf 14y ago
    I think you would be surprised I think Tesla's strategy has three stages. 1) Niche high cost vehicle sold in low volumes(Roadster) 2) Medium cost luxury vehicle sold in medium volumes(Model S) 3) Low cost high volume vehicle sold in high volumes. (Model ???) Obviously this is a gross over simplification but I imagine that part of the engineering that is going on at TESLA is figuring out how to build 3 cheaper and at a higher quality then anybody else.
    - j2bax 14y ago
      I am aware of their strategy, I just worry that the big automakers with their massive distribution and infrastructures already in place could easily come in and be 10 steps ahead of Tesla and provide a vehicle that isn't as sexy but has the same appeal to the electric car market. I could be overestimating their ability to innovate after so many years of sitting on the same old tired technology, but something tells me that they'd be willing to step up if it means they are going to be completely left in the dust of a tiny (by comparison) company.
      - alxndr 14y ago
        "the big automakers ... could easily come in and be 10 steps ahead of Tesla and provide a vehicle that isn't as sexy but has the same appeal to the electric car market" Aren't they already trying to do that? Chevy's Volt, Nissan's Leaf, Ford apparently makes a fully PEV Focus now, as does Honda with a version of the Fit, and Toyota's gotta be working on the Prius...
- brandall10 14y ago
  Do you have any idea whatsoever how hard it is to have a successful venture in the automotive industry? You really should watch the Bloomberg Risk Takers documentary on Elon. I'm against handouts as much as anyone (it's a loan though), but try making a comment like this afterward. The difficulties he went thru to keep Tesla afloat were outrageous. By this time he been dumping his fortune into both this and SpaceX and was essentially at the point of personal bankruptcy (ie. was friends/associates time to keep moving, no one was willing to continue investing). Note in the article the sentence "Last month, Mercedes’ parent company Daimler also invested $50 million for a 10 percent stake in Tesla." Do yourself a favor and learn what Tesla actually did to make this happen. Yes, you may have heard they retrofitted Smart Cars with the Tesla power train, but how they did that is a breathtaking example of innovation and teamwork for a company at the brink of death. In short, this loan saved the company. This article we're discussing right now would not exist. Tesla Motors would be another footnote in history that people could point to - "automotive startups are a losing proposition, do not invest". Would you rather the government bet on a guy like Elon who's actually putting his all into carrying out on a promise to change the game, or industry stalwarts who pissed away good will by incompetence and greed?
  - thematt 14y ago
    How about a third option? The government doesn't bet on anybody and let's the market sort out the winners.
    - benajnim 14y ago
      While this would be a good option in the spirit of the free market, many parts of the transportation industry are subsidized already making the play-field unfair to begin with.
    - king_magic 14y ago
      Does the market always pick the highest quality of winners? I really don't think it does. I'm not saying government does either - TBH I don't really have faith in either the market or the government to accurately pick winners.
stephenhuey 14y ago
Great news! Here's hoping they're able to place superchargers across the country within a year as planned. As much as one part of me wants to see Elon Musk succeed just to prove Romney wrong for calling Tesla a loser, it's more important to see Tesla do well for the benefits we may reap from companies like this trying to make better solutions and provide excellent competition to the status quo. That being said, I'm feeling pumped and want to shout out Sarah Lane's dorky-but-apt response to Romney: "Romney just called Tesla a loser company? ENGAGE LASERS, SILICON VALLEY!" https://twitter.com/sarahlane/status/253670586834890752 https://twitter.com/sarahlane/status/253670586834890752 Be inspired today!
- twoodfin 14y ago
  Just for future reference, what's the benchmark for calling Romney's prediction accurate? Do they have to liquidate or is it enough that they fail to be able to continue to independently deliver cars to the market? I'd love it if Tesla would succeed sheerly because their product seems so slick, but I agree with Romney that the government is a lousy institution to be picking companies that "should" get half-billion dollar loans/guarantees.
  - nicholassmith 14y ago
    Governments for the most part can take long term(ish) views on things, whereas other investors might be more bullish about seeing a return a lot quicker, for better or for worse. Even traditional bank based investment wouldn't have worked, so it's unlikely something like Tesla would be able to get off the ground and get running. If Tesla does succeed the US Government gets a nice feather in the cap as well, if it goes horrifyingly wrong then, well, there's already a couple of trillion in the hole, what's another half a billion between friends.
    - twoodfin 14y ago
      What's the "long term view" on Tesla? What's the benefit of them selling electric cars vs. Toyota or GM? The latter have clearly shown their capability to do so. Tesla just thinks a different approach to the market is superior. They'll be proven right or wrong in the next few years. That's well within the time horizon for an investor to make a reasonable decision: Who's more likely to make a profit with their electric car plans? Toyota, GM or Tesla? This is the kind of thing markets are good at. If the government wants more electric cars, just subsidize everyone's cars (which they're doing, of course). Don't try to be a super-VC.
debacle 14y ago
Tesla was cash flow positive, as of last week, or Tesla was cash flow positive last week? Edit: It appears the be the latter. Not really impressive, but a good sign.
- alxndr 14y ago
  Wouldn't it take until the end of this week to find out? (But yeah I'm guessing it's just the latter too.)
- danielweber 14y ago
  Yeah, I think some people don't realize how easy it is to have a week where more money is coming in than going out, even if the company is failing. Not that I think Tesla is failing. But having a bunch of orders/payments come through in one week that you aren't buying much stuff can easily happen. (Specifics depend on cash versus accrual accounting.)
  - mkopinsky 14y ago
    "We pay our employees on the 1st and the 15th" I'm sure there are ways that accounting compensates for that though...
aioprisan 14y ago
yes but they're still not profitable. big difference
fxthea 14y ago
Mmm my favorite kind of musk, CEO musk.
salimmadjd 14y ago
Is twitter now accepted by SEC, or does Tesla need to file bunch of paperwork just because of this tweet?
dave1619 14y ago
Tesla Motors is in great shape. I've been following the company for a while and recently drove the Model S. Amazing car in almost every way. What struck me was that it's not an incremental improvement but really a radical (might I say disruptive) improvement in terms of ride quality (super quiet), handling (low center of gravity with skateboard powertrain), electronics (17" touchscreen), cargo space (heard of the frunk?), reliability (electric cars have far less moving parts), and store experience (Tesla retail stores are a way better customer experience than a typical car dealership). It's difficult to drive a Model S and NOT say that you've driven the future. The Model S is so good that all they need to do is make it into a SUV (Model X) and they'll have the coolest high-end SUV (coming 2014). Then, they just need to make the Model S smaller (GenIII Bluestar) and then they'll have the best small luxury sport sedan on the market (ie., BMW 3 series, Lexus IS, Audi A4 market). Elon Musk has said they're going after the BMW 3 Series market with the GenIII car, and he's determined to make a best car in that market. Just like the Model S is better than a BMW 5 Series in most regards, the GenIII will be better than the BMW 3 Series in most regards. I know it might be difficult for many people to accept that (especially since the BMW 3 Series is legendary) but Tesla's got all the right pieces and has proven they can do it with the Model S. Again, they just need to shrink the Model S and make it more affordable. But GenIII is slated for 2015 at the earliest and it takes a while to dominate a car segment even after you have a stellar car. I expect Tesla to become increasingly competitive (in terms of # sales) to the BMW 3 series by 2020 and perhaps dominant by 2025 (if not earlier). Elon Musk has repeatedly said that Tesla Motors is not a typical car company but rather a technology company that will innovate at a blistering pace. As long as they continue to do that, they'll be fine.
- yid 14y ago
  Great comment, thank you. I'd just like to add that the "frunk" isn't new -- I've been stashing my gym bag in my Porsche 911's frunk for years (it's a rear-engined car). Edit: While I absolutely live the Model S, I can assure you that exceeding stalwarts of the 5-series category, like the BMW M5, will not be as easy to disrupt as the market the Model S aims for.
  - dave1619 14y ago
codex 14y ago
This is good news, but being cash flow positive over a week is not really an impressive achievement. It's easy enough to game this milestone by rescheduling payments, if they chose to do that. Even if they didn't, it's such a short time frame it's hard to measure anything because there's so much noise. Will they announce full profitability over a 24 hour period in Elon's next tweet? One hour? That said, I'm impressed with the early reviews of the car, if not by the massive amount of cash that Tesla lost in the past year.
- jonknee 14y ago
  I suggest that you start a car company, invent the whole stack, build out a giant factory in Fremont, and a nationwide network of retail outlets. If you're profitable during any part of that exercise, you can then start to talk about it not being an impressive achievement.
codex 14y ago
This is good news, but being cash flow positive over a week is not really an impressive achievement. It's easy enough to game this milestone by rescheduling payments, if they chose to do that. Even if they didn't, it's such a short time frame it's hard to measure anything because there's so much noise. Will they announce full profitability over a 24 hour period in Elon's next tweet? One hour? That said, I'm impressed with the early reviews of the car, if not by the massive amount of cash that Tesla lost in the past year.
confluence 14y ago
I have a significant fraction of my net worth invested in TSLA and have done so since the IPO. I believe TSLA will become a $50 billion dollar company over the forthcoming decade as it rides 2 cost trends and global GDP growth. Elon Musk does too - his renumeration package has TSLA pegged at a possible ~ $43 billion (http://seekingalpha.com/article/786711-a-43-billion-tesla-musk-s-incentives-of-interest http://seekingalpha.com/article/786711-a-43-billion-tesla-mu...). I add to my position every month when vol. gets high - so please don't buy it :) Fundamentally what people must understand is that electric cars have reached ICE parity in cost, use and ease of maintenance. Furthermore they either have, or will surpass, ICE vehicles in all categories over the coming decades on a total cost of ownership calculation. Finally by the end of the decade the lump sum cost of a comparable middle class electric vehicle at the dealer (or website) will be lower than an equivalent ICE vehicle on the day that you buy it. There are 2 fundamental price forces driving this phenomena - and that is peak oil, in addition to Li-on battery production related to the explosive growth of smartphones/laptops/tablets over the last decade. Indeed this is what I look for in any investment strategy - where is the falling waterfall in cost, who is going to get fucked, and who is going to ride the barrel down. Falling prices drive the future - look for converging falling cost trends and a convergence of secondary technologies (http://www.youtube.com/watch?feature=player_detailpage&v=1FyhLQOsNac#t=1410s http://www.youtube.com/watch?feature=player_detailpage&v... || http://www.amazon.com/Running-Money-Honchos-Monster-Markets/dp/B000GG4ZJK http://www.amazon.com/Running-Money-Honchos-Monster-Markets/... || http://gigaom.com/2006/10/26/jawed-karim-how-youtube-took-off/ http://gigaom.com/2006/10/26/jawed-karim-how-youtube-took-of...). > In the talk, which is about 45 minutes long, Karim also points to the confluence of broadband penetration, Flash 7, digital cameras and phones, and cheap bandwidth as environmental factors for YouTube’s birth on February 14, 2005. Then he plays the company’s very first video. Uploaded April 23, 2005, it shows Karim himself standing in front of elephants at the zoo. “The cool thing about these guys it they have really, really, really long trunks,” he says. That’s about it. Gas prices will increase over the next 2 decades whilst battery costs will fall, squeezing ICE vehicles out the affordability range of most Americans. Back in 1900 electric vehicles died because battery tech was not cost competitive with ICE vehicles, and rightly so, they sucked. In 2012, ICE vehicles began to die, because they were no longer competitive with electric vehicles. Welcome to the future.
weisser 14y ago
Any innovation from regular car companies will be the result of intrapreneurship. Tesla was built to do things differently. It will take a massive company-wide change in philosophy for these other car companies to compete with Tesla, but even then they will be dealing with an entire workforce that is used to the old way of doing things. They might not intentionally resist the change-it may just be an issue of being able to adapt to it.
ameen 14y ago
While I'd been a Tesla fanboy in the past. I have serious doubts about the role it would play in Mankind's future. Electric cars themselves require massive battery packs, most of which emanate toxic materials and/or require many toxic materials in its production and it's ability to be recycled is doubtful at best. A better alternative would be having Public transit systems (alternately fuelled?) in place, so that fuel/road volume is used efficiently.

353 points by apaprocki 14y ago

tjic 14y ago

While I'm a huge fan of Elon Musk, and I even think Tesla is pretty cool, I'm a little underwhelmed. Every one of my ventures could be cash flow positive if I got a half BILLION dollar loan from the taxpayers and then was able to sell my product with a $8k tax credit stapled to the side of each unit. http://techcrunch.com/2009/06/23/the-government-comes-through-for-tesla-with-a-465-million-loan-for-its-electric-sedan/ http://techcrunch.com/2009/06/23/the-government-comes-throug...

w1ntermute 14y ago
That's rather disingenuous. Musk is selling an innovative product worth tens of thousands of dollars to individual consumers. Considering the engineering that had to go into making the Model S a reality, I would consider this very impressive. Moreover, there is no reason to think that Tesla will not continue to increase in profitability with each passing week.
- perry5000 14y ago
  Cash flow positive != profitable
  - BCM43 14y ago
    What does it mean?
    - frankc 14y ago
      cash flow positive just means you had more money coming in that going out. Profit is calculated on an accrual basis, not a cash flow basis. For instance, if I sell you a car, I can recognize the revenue from that before you give me the cash. The debt you owe me is now an asset. On the other hand, there are things like depreciation of assets which count as expenses even though no cash changes hands right now. These are just a couple of examples on how cash flow and profit are not the same, but to get the full gist of it, you need to cover basically what gets covered in an intro accounting course.
  - jervisfm 14y ago
    What is the difference between the two ? Don't you need to have a net positive flow in order to be profitable ?
    - slap_shot 14y ago
      http://www.investopedia.com/articles/01/110701.asp#axzz2EC5J5aQ4 http://www.investopedia.com/articles/01/110701.asp#axzz2EC5J...
    - deleted 14y ago
      [deleted]
    - nhebb 14y ago
      An explanation is given in the Operating Cash Flow vs. Net Income, EBIT, and EBITDA section of this Wikipedia entry: http://en.wikipedia.org/wiki/Operating_cash_flow http://en.wikipedia.org/wiki/Operating_cash_flow
    - ChuckMcM 14y ago
      Being operationally cash flow positive means that on a day to day basis your bank balance is increasing. Being profitable means that all of the money comes in in greater than your total costs. So for example, if you look at HP's write down, they were operationally cash flow positive for the quarter but are 'writing off' 8+ billion dollars. So they "lost" over $8B this quarter. Aka not profitable during the quarter. So the milestones you look for as a company are that you are cash flow positive for the day (all of todays costs covered by revenue), cash flow positive for the quarter (net increase in cash on and over the quarter) and cash flow positive for the year (net cash increase for the year), and finally profitable (total income exceeded all costs, both tangible and intangible (like depreciation)).
      - TeMPOraL 14y ago
        So to put it simply, cash flow is like a differential of profit? So you can have a profit of -1M$, but as long as the next month you get more (like -0.8M$), you're cash flow positive (+0.2M$), right? I'm having trouble parsing the examples given in this thread; the above sounds like what I more-less understood from them.
rohansingh 14y ago
Nothing stopping you from doing a venture that takes advantage of federal grants and tax incentives.
- perry5000 14y ago
  $500M taxpayer-backed loans are available to anyone, now?
  - sp332 14y ago
    Instructions to sign up are right over here http://www.lgprogram.energy.gov/ http://www.lgprogram.energy.gov/
    - ImprovedSilence 14y ago
      It looks like ford has about 5B in loans from them. And Fisker Automotive has a lil more than Tesla in loans. and Fisker makes some damn sexy cars: https://www.google.com/search?q=fisker&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a&um=1&ie=UTF-8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=XYC_UPXzH4680QGgxICQDg&biw=1280&bih=863&sei=aoC_UOvtN8bJ0QHlioDwDg https://www.google.com/search?q=fisker&oe=utf-8&aq=t...
      - timdorr 14y ago
        Yep, they're definitely hot cars: http://jalopnik.com/5956179/more-than-a-dozen-fisker-karma-hybrids-caught-fire-and-exploded-in-new-jersey-port-after-sandy http://jalopnik.com/5956179/more-than-a-dozen-fisker-karma-h... </snark>
        patrickk 14y ago
        Elon Musk doesn't regard Fisker as a serious competitor. He said something like: "Fisker is headed up by a car designer, not an engineer. The reason we haven't had electric cars isn't because they looked bad" (or words to that effect).
j2bax 14y ago
Considering what he's up against in the industry, I'd say what he's done is fairly remarkable. My concern would be that if at any point one of the big three see Tesla as a threat they will put efforts into creating an electric car that undercuts Tesla's offerings and catapults Tesla into a high end niche oblivion. That said, if it comes to that, I will see that as a different means to the same end of reducing our gas guzzling obsession in America, and I can only see that as a positive.
- rikf 14y ago
  I think you would be surprised I think Tesla's strategy has three stages. 1) Niche high cost vehicle sold in low volumes(Roadster) 2) Medium cost luxury vehicle sold in medium volumes(Model S) 3) Low cost high volume vehicle sold in high volumes. (Model ???) Obviously this is a gross over simplification but I imagine that part of the engineering that is going on at TESLA is figuring out how to build 3 cheaper and at a higher quality then anybody else.
  - j2bax 14y ago
    I am aware of their strategy, I just worry that the big automakers with their massive distribution and infrastructures already in place could easily come in and be 10 steps ahead of Tesla and provide a vehicle that isn't as sexy but has the same appeal to the electric car market. I could be overestimating their ability to innovate after so many years of sitting on the same old tired technology, but something tells me that they'd be willing to step up if it means they are going to be completely left in the dust of a tiny (by comparison) company.
    - alxndr 14y ago
      "the big automakers ... could easily come in and be 10 steps ahead of Tesla and provide a vehicle that isn't as sexy but has the same appeal to the electric car market" Aren't they already trying to do that? Chevy's Volt, Nissan's Leaf, Ford apparently makes a fully PEV Focus now, as does Honda with a version of the Fit, and Toyota's gotta be working on the Prius...
brandall10 14y ago
Do you have any idea whatsoever how hard it is to have a successful venture in the automotive industry? You really should watch the Bloomberg Risk Takers documentary on Elon. I'm against handouts as much as anyone (it's a loan though), but try making a comment like this afterward. The difficulties he went thru to keep Tesla afloat were outrageous. By this time he been dumping his fortune into both this and SpaceX and was essentially at the point of personal bankruptcy (ie. was friends/associates time to keep moving, no one was willing to continue investing). Note in the article the sentence "Last month, Mercedes’ parent company Daimler also invested $50 million for a 10 percent stake in Tesla." Do yourself a favor and learn what Tesla actually did to make this happen. Yes, you may have heard they retrofitted Smart Cars with the Tesla power train, but how they did that is a breathtaking example of innovation and teamwork for a company at the brink of death. In short, this loan saved the company. This article we're discussing right now would not exist. Tesla Motors would be another footnote in history that people could point to - "automotive startups are a losing proposition, do not invest". Would you rather the government bet on a guy like Elon who's actually putting his all into carrying out on a promise to change the game, or industry stalwarts who pissed away good will by incompetence and greed?
- thematt 14y ago
  How about a third option? The government doesn't bet on anybody and let's the market sort out the winners.
  - benajnim 14y ago
    While this would be a good option in the spirit of the free market, many parts of the transportation industry are subsidized already making the play-field unfair to begin with.
  - king_magic 14y ago
    Does the market always pick the highest quality of winners? I really don't think it does. I'm not saying government does either - TBH I don't really have faith in either the market or the government to accurately pick winners.

stephenhuey 14y ago

Great news! Here's hoping they're able to place superchargers across the country within a year as planned. As much as one part of me wants to see Elon Musk succeed just to prove Romney wrong for calling Tesla a loser, it's more important to see Tesla do well for the benefits we may reap from companies like this trying to make better solutions and provide excellent competition to the status quo. That being said, I'm feeling pumped and want to shout out Sarah Lane's dorky-but-apt response to Romney: "Romney just called Tesla a loser company? ENGAGE LASERS, SILICON VALLEY!" https://twitter.com/sarahlane/status/253670586834890752 https://twitter.com/sarahlane/status/253670586834890752 Be inspired today!

twoodfin 14y ago
Just for future reference, what's the benchmark for calling Romney's prediction accurate? Do they have to liquidate or is it enough that they fail to be able to continue to independently deliver cars to the market? I'd love it if Tesla would succeed sheerly because their product seems so slick, but I agree with Romney that the government is a lousy institution to be picking companies that "should" get half-billion dollar loans/guarantees.
- nicholassmith 14y ago
  Governments for the most part can take long term(ish) views on things, whereas other investors might be more bullish about seeing a return a lot quicker, for better or for worse. Even traditional bank based investment wouldn't have worked, so it's unlikely something like Tesla would be able to get off the ground and get running. If Tesla does succeed the US Government gets a nice feather in the cap as well, if it goes horrifyingly wrong then, well, there's already a couple of trillion in the hole, what's another half a billion between friends.
  - twoodfin 14y ago
    What's the "long term view" on Tesla? What's the benefit of them selling electric cars vs. Toyota or GM? The latter have clearly shown their capability to do so. Tesla just thinks a different approach to the market is superior. They'll be proven right or wrong in the next few years. That's well within the time horizon for an investor to make a reasonable decision: Who's more likely to make a profit with their electric car plans? Toyota, GM or Tesla? This is the kind of thing markets are good at. If the government wants more electric cars, just subsidize everyone's cars (which they're doing, of course). Don't try to be a super-VC.

debacle 14y ago

Tesla was cash flow positive, as of last week, or Tesla was cash flow positive last week? Edit: It appears the be the latter. Not really impressive, but a good sign.

alxndr 14y ago
Wouldn't it take until the end of this week to find out? (But yeah I'm guessing it's just the latter too.)
danielweber 14y ago
Yeah, I think some people don't realize how easy it is to have a week where more money is coming in than going out, even if the company is failing. Not that I think Tesla is failing. But having a bunch of orders/payments come through in one week that you aren't buying much stuff can easily happen. (Specifics depend on cash versus accrual accounting.)
- mkopinsky 14y ago
  "We pay our employees on the 1st and the 15th" I'm sure there are ways that accounting compensates for that though...

aioprisan 14y ago

yes but they're still not profitable. big difference

fxthea 14y ago

Mmm my favorite kind of musk, CEO musk.

salimmadjd 14y ago

Is twitter now accepted by SEC, or does Tesla need to file bunch of paperwork just because of this tweet?

dave1619 14y ago

Tesla Motors is in great shape. I've been following the company for a while and recently drove the Model S. Amazing car in almost every way. What struck me was that it's not an incremental improvement but really a radical (might I say disruptive) improvement in terms of ride quality (super quiet), handling (low center of gravity with skateboard powertrain), electronics (17" touchscreen), cargo space (heard of the frunk?), reliability (electric cars have far less moving parts), and store experience (Tesla retail stores are a way better customer experience than a typical car dealership). It's difficult to drive a Model S and NOT say that you've driven the future. The Model S is so good that all they need to do is make it into a SUV (Model X) and they'll have the coolest high-end SUV (coming 2014). Then, they just need to make the Model S smaller (GenIII Bluestar) and then they'll have the best small luxury sport sedan on the market (ie., BMW 3 series, Lexus IS, Audi A4 market). Elon Musk has said they're going after the BMW 3 Series market with the GenIII car, and he's determined to make a best car in that market. Just like the Model S is better than a BMW 5 Series in most regards, the GenIII will be better than the BMW 3 Series in most regards. I know it might be difficult for many people to accept that (especially since the BMW 3 Series is legendary) but Tesla's got all the right pieces and has proven they can do it with the Model S. Again, they just need to shrink the Model S and make it more affordable. But GenIII is slated for 2015 at the earliest and it takes a while to dominate a car segment even after you have a stellar car. I expect Tesla to become increasingly competitive (in terms of # sales) to the BMW 3 series by 2020 and perhaps dominant by 2025 (if not earlier). Elon Musk has repeatedly said that Tesla Motors is not a typical car company but rather a technology company that will innovate at a blistering pace. As long as they continue to do that, they'll be fine.

yid 14y ago
Great comment, thank you. I'd just like to add that the "frunk" isn't new -- I've been stashing my gym bag in my Porsche 911's frunk for years (it's a rear-engined car). Edit: While I absolutely live the Model S, I can assure you that exceeding stalwarts of the 5-series category, like the BMW M5, will not be as easy to disrupt as the market the Model S aims for.
- dave1619 14y ago

codex 14y ago

This is good news, but being cash flow positive over a week is not really an impressive achievement. It's easy enough to game this milestone by rescheduling payments, if they chose to do that. Even if they didn't, it's such a short time frame it's hard to measure anything because there's so much noise. Will they announce full profitability over a 24 hour period in Elon's next tweet? One hour? That said, I'm impressed with the early reviews of the car, if not by the massive amount of cash that Tesla lost in the past year.

jonknee 14y ago
I suggest that you start a car company, invent the whole stack, build out a giant factory in Fremont, and a nationwide network of retail outlets. If you're profitable during any part of that exercise, you can then start to talk about it not being an impressive achievement.

codex 14y ago

confluence 14y ago

I have a significant fraction of my net worth invested in TSLA and have done so since the IPO. I believe TSLA will become a $50 billion dollar company over the forthcoming decade as it rides 2 cost trends and global GDP growth. Elon Musk does too - his renumeration package has TSLA pegged at a possible ~ $43 billion (http://seekingalpha.com/article/786711-a-43-billion-tesla-musk-s-incentives-of-interest http://seekingalpha.com/article/786711-a-43-billion-tesla-mu...). I add to my position every month when vol. gets high - so please don't buy it :) Fundamentally what people must understand is that electric cars have reached ICE parity in cost, use and ease of maintenance. Furthermore they either have, or will surpass, ICE vehicles in all categories over the coming decades on a total cost of ownership calculation. Finally by the end of the decade the lump sum cost of a comparable middle class electric vehicle at the dealer (or website) will be lower than an equivalent ICE vehicle on the day that you buy it. There are 2 fundamental price forces driving this phenomena - and that is peak oil, in addition to Li-on battery production related to the explosive growth of smartphones/laptops/tablets over the last decade. Indeed this is what I look for in any investment strategy - where is the falling waterfall in cost, who is going to get fucked, and who is going to ride the barrel down. Falling prices drive the future - look for converging falling cost trends and a convergence of secondary technologies (http://www.youtube.com/watch?feature=player_detailpage&v=1FyhLQOsNac#t=1410s http://www.youtube.com/watch?feature=player_detailpage&v... || http://www.amazon.com/Running-Money-Honchos-Monster-Markets/dp/B000GG4ZJK http://www.amazon.com/Running-Money-Honchos-Monster-Markets/... || http://gigaom.com/2006/10/26/jawed-karim-how-youtube-took-off/ http://gigaom.com/2006/10/26/jawed-karim-how-youtube-took-of...). > In the talk, which is about 45 minutes long, Karim also points to the confluence of broadband penetration, Flash 7, digital cameras and phones, and cheap bandwidth as environmental factors for YouTube’s birth on February 14, 2005. Then he plays the company’s very first video. Uploaded April 23, 2005, it shows Karim himself standing in front of elephants at the zoo. “The cool thing about these guys it they have really, really, really long trunks,” he says. That’s about it. Gas prices will increase over the next 2 decades whilst battery costs will fall, squeezing ICE vehicles out the affordability range of most Americans. Back in 1900 electric vehicles died because battery tech was not cost competitive with ICE vehicles, and rightly so, they sucked. In 2012, ICE vehicles began to die, because they were no longer competitive with electric vehicles. Welcome to the future.

weisser 14y ago

Any innovation from regular car companies will be the result of intrapreneurship. Tesla was built to do things differently. It will take a massive company-wide change in philosophy for these other car companies to compete with Tesla, but even then they will be dealing with an entire workforce that is used to the old way of doing things. They might not intentionally resist the change-it may just be an issue of being able to adapt to it.

ameen 14y ago

While I'd been a Tesla fanboy in the past. I have serious doubts about the role it would play in Mankind's future. Electric cars themselves require massive battery packs, most of which emanate toxic materials and/or require many toxic materials in its production and it's ability to be recycled is doubtful at best. A better alternative would be having Public transit systems (alternately fuelled?) in place, so that fuel/road volume is used efficiently.