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Tesla Motors Turns a Profit For the First Time 248

Posted by Soulskill
from the even-a-blind-squirrel dept.
d0rp writes with news that Tesla Motors has reported earning a profit for the first time in its six-year history. Sales of the $109,000 Roadster earned the company $20 million in revenue, which settled out to $1 million in profits. "Most of that money rolled in after Tesla delivered cars customers had already placed deposits on. Although the company has, according to spokeswoman Rachel Konrad, seen a 'surge' in orders for the Roadster and the higher-performance Roadster Sport (price: $127,500), it isn't likely to keep rolling cars out so quickly. Konrad says Tesla is 'definitely on pace' to meet its goal of 1,000 to 1,200 cars a year but didn't say when that might happen. Tesla has so far delivered about 609 Roadsters since production started in March, 2008." The company is working on a new 'Model S' sedan, with the help of $465 million in government loans, and has also entered into a partnership with Daimler to help the German auto company produce electric Smart cars.
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Tesla Motors Turns a Profit For the First Time

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  • First... (Score:5, Funny)

    by Anonymous Coward on Saturday August 08, 2009 @10:30AM (#28995799)

    ...year of profits!

  • by lapsed (1610061) on Saturday August 08, 2009 @10:42AM (#28995843)
    This should be taken with a bit of skepticism. There's a difference between positive cash flow (more cash coming in than going out), positive net income (what most people think of as 'profit') and positive EBITDA (earnings before interest, taxes, depreciation, and amortization, or profit from operations). TFA doesn't mention which Tesla is reporting.
    • by seanadams.com (463190) * on Saturday August 08, 2009 @10:55AM (#28995899) Homepage

      There are lies, damned lies, and accounting.

      earnings before interest, taxes, depreciation, and amortization

      The latter two of which are absolutely huge for a brand new manufacturing operation that is not running at capacity. EBITDA always makes me chuckle a little. See it started as EBIT, then became EBITDA because the PHBs said no, really we need to look profitable so we can get this loan or whatever. Pretty soon it'll be EBITDAP (payroll) and then EBITDAPHAB (hookers and blow) etc.

      Kind of like how the mortgage brokers in their heyday were allowed to use a modified credit rating, essentially calculated as "here's what your credit rating WOULD be if we overlooked all the negative stuff". I wish I was kidding.

      • See it started as EBIT, then became EBITDA because the PHBs said no, really we need to look profitable so we can get this loan or whatever. Pretty soon it'll be EBITDAP (payroll) and then EBITDAPHAB (hookers and blow) etc.

        This is a standard accounting operating procedure for Silicon Valley startups. In fact, compared to the late 90s "boom", this is positively conservative.

        Kind of like how the mortgage brokers in their heyday were allowed to use a modified credit rating, essentially calculated as "here's wha

    • by russotto (537200)

      I'd take it with a LOT of skepticism. They shipped 109 cars in a month, which probably means they booked the revenue for those cars in that month. But they probably didn't make (and thus book the costs of) anything like 109 cars in that month. So it's just a blip.

    • by legirons (809082)

      This should be taken with a bit of skepticism. There's a difference between positive cash flow (more cash coming in than going out), positive net income (what most people think of as 'profit') and positive EBITDA (earnings before interest, taxes, depreciation, and amortization, or profit from operations). TFA doesn't mention which Tesla is reporting.

      It's not "positive cash flow while being given $465 million" then?

  • by smallshot (1202439) on Saturday August 08, 2009 @11:13AM (#28995985)
    How does a company that makes $1,000,000 in profit over 1 full year, get 465 Million dollars in loans from our government?? How will they pay that back in a reasonable time?
    • by FooAtWFU (699187) on Saturday August 08, 2009 @11:25AM (#28996033) Homepage
      It's "green". Duh.
    • by hoggoth (414195)

      Exactly what I was thinking!

      Why should I pay taxes to give $465 million dollars to a company that GROSSES $20 million a year?!

      I guess my big mistake is not having a company that knows how to play the government game and get people to fund my pet projects.

      • Re: (Score:3, Interesting)

        by Dragonslicer (991472)

        Why should I pay taxes to give $465 million dollars to a company that GROSSES $20 million a year?!

        Ideally, the company will make enough of a profit in the future (I'm using the old-fashioned definition of "future" of a few to maybe even 20 years, not the new corporate definition of "this quarter") that they can pay back that loan. Not quite as ideal, but still not bad, is that even if they don't end up paying back the entire loan, the technology that comes out of it will save more than $465 million in fuel use and environmental cleanup. Whether or not either of these outcomes actually happens, of course

    • by Vellmont (569020) on Saturday August 08, 2009 @11:38AM (#28996091)


      How does a company that makes $1,000,000 in profit over 1 full year, get 465 Million dollars in loans from our government?

      The same way the banks got billions of dollars of loans that LOST billions of dollars. A failing economy.

      You're right that it doesn't make a lot of sense from a loan perspective. But I at least feel better about money going towards developing a product that may help out ongoing energy problems than it going towards lining the pockets of investors and million dollar bonuses for bank executives.

      The whole thing is part of the economic stimulus of the economy. The idea being that in a down economy nobody wants to spend money.. because the economy is down (so the process self-perpetuates). The only entity that can afford to spend a lot of money in a down economy is The Government. The massive government spending that occurred to produce all the crap for WWII is the only thing that got us out of the depression.

      • I at least feel better about money going towards developing a product that may help out ongoing energy problems

        Just because its all electric doesn't mean it will solve our energy problems. It just offloads the burden to another infrastructure. Currently our use of fossil fuels is generating most of our electricity, dump a few million electric cars on the grid and sure you save some gas and emissions (and coal plants have much better filtration and carbon capture than combustion engines) but at the cost of stressing our electric grid. The efficiency of converting gas into kinetic energy is relatively high, as far a

        • Re: (Score:3, Interesting)

          Maybe not, but it will sure solve a lot of smog problems out here in Southern California. We get our power from natural gas, nuclear and a little bit of hydro and wind. The smog is from the cars.
        • by Anonymous Coward on Saturday August 08, 2009 @01:02PM (#28996619)

          I call bs on this statement: "The efficiency of converting gas into kinetic energy is relatively high, as far as energy conversions go. Converting fuels into electricity is far less efficient, not to mention losses from battery storage."

          The efficiency of converting gas into kinetic energy is NOT relatively high, Theoretical max of ~30%, in a high efficiency car it will be in the upper 20s.
          Converting fuels into electricity is NOT far less efficient, Theoretical max of ~70%, and this is just using a steam turbine generator, ie coal plant.

          The truth is that ~70% of the energy stored in gas is heat, ~30% is expansion. The internal combustion engine uses the expansion of gasses, and then uses energy to throw away the heat.

          In order for gas to be more efficient you have to have over 50% loss. The loss areas include: electric transmission 92.8% efficient, storage in lithium batteries 90%, and the electric to kinetic( the electric motor) 89%. This is equivalent to over 48% net efficiency. and 48% >> 28%. This is not even taking into account the benefit of regenerative braking.

          If you convert the cost per mile (of energy ie electricity) of a tesla to mpg, is will be in the 230 mpg range. Find me a internal combustion engine that can support that.

        • No need to fight wars for a nuclear, or solar or wind energie or geo-energie.

          That is the beauty of the electric grid. it don't give a damn what you hook up to it.

          Petrol cars run on petrol.

          Electric cars run on anything that pump out juice.

        • by Vellmont (569020)


          The efficiency of converting gas into kinetic energy is relatively high, as far as energy conversions go. Converting fuels into electricity is far less efficient

          No really. A power plant is far more efficient at converting energy into a usable form than a gas-combustion engine. Power plants are in the range of 36-40% efficient. An internal combustion engine is around 18-20% efficient. That's a factor of 2 times more efficient for a power plant. Power plants are essentially always going to be more effici

    • by johannesg (664142)

      How does a company that makes $1,000,000 in profit over 1 full year, get 465 Million dollars in loans from our government?? How will they pay that back in a reasonable time?

      The same way that companies that make billions in losses get billions of loans from your government, I suspect...

    • by ucblockhead (63650) on Saturday August 08, 2009 @11:51AM (#28996163) Homepage Journal

      Because it is extremely doubtful that Tesla Motors will make a steady $1 million every year for the foreseeable future. There are two likely scenarios.

      1) Tesla will be successful, and rapidly expand into a moderate sized care company, where $100 million in profits in a year is reasonable.
      2) Tesla will go bankrupt.

      For a startup, it is more about projected profits than current profits. At this stage in its growth, Tesla should not be concerned about profits at all. Best case for it is to funnel all money into growth and have $0 in profit.

    • Re: (Score:3, Insightful)

      by tomherbst (888500)
      Telsa has a valuation in the billions of dollars. The way they pay back the loan is by having what the VC's call a "positive exit" - the company going public or being acquired by a larger company. Even growing organically they could do it - they are manufacturing constrained right now, the loan is all about expanding manufacturing. Personally, I would have rather seen the gov't broker a deal for Telsa to use the NUMI manufacturing plant in Fremont rather than get big gov't loan to build a new plant at t
    • by shway (1614667) on Saturday August 08, 2009 @12:00PM (#28996225)
      The government loan was not for their Roadster business (of which they just posted a profit) it was to create the upcoming Model S sedan. They will pay back the loan by selling the Model S, which they plan to start in 2011 after they build use their government loans to build a manufacturing facility.
    • Re: (Score:3, Insightful)

      by hey! (33014)

      By applying.

      Ford got 5.9 Billion, and they expect to lose money this year. They're going to retool their factories. The Telsa loan is in some ways less risky, since we're not betting on the survival of an industry that is, on it's own, dying in this country: building ICE automobiles.

      Everybody in the auto industry is in bad shape. The idea of the loan program isn't just to stem the cash bleeding until the next economic upturn, but to reclaim technological leadership. The 465 million is supposed to result

    • Re: (Score:2, Troll)

      by Theolojin (102108)

      How does a company that makes $1,000,000 in profit over 1 full year, get 465 Million dollars in loans from our government?? How will they pay that back in a reasonable time?

      Imagine you have an account at a bank that has unlimited ability to borrow money from other banks. Now imagine that bank actually borrows money from other banks to pay the interest on the previously borrowed money. It's not a problem for the bank because if the interest payments get too large, the bank can---and will---borrow still more money. Now say you ask to borrow money from that bank. The amount is less than an hour's worth of revenue (real and borrowed) for the bank. If you default on the loan,

    • Because Congress didn't work for that $465,000,000 loan. My kids will. Therefore, congress doesn't care.
      • Re: (Score:3, Interesting)

        That 465 million dollar loan can lead to billions in business for 50+ years. Would you think that's worse than giving a dying company billions?
    • Because their planned expansion and the new model(s) they're developing will allow them to repay the loan.

      I made $50k last year, my first year of production. My business is growing. My business plan is a.) viable b.) verifiable c.) shows I'll likely make $100M over the next decade. I need $10M for a building, tooling, R&D, and to cover short-term costs while ramping up. Does the bank turn me down because I only made $50k last year?

    • Re: (Score:3, Insightful)

      by Bigjeff5 (1143585)

      It's $1,000,000 more profit in a year than any other US car company made, and the rest didn't just get loans, they got free money too. Except Ford, they just took the loans. They still didn't make any profit though.

  • by Anonymous Coward on Saturday August 08, 2009 @12:42PM (#28996461)

    I noticed a lot of negative comments but the news was amazing. We aren't even talking 18 months after they delivered their first car they showed a profit! I've never heard of that from anyone in recent history. Breaking even for a car maker takes years not months. Yes I know it's not a true profit to the investors but that was always going to take years, probably 5 to 10 years and they all knew it. Ask any investor if they are happy or disappointed and I'll bet you couldn't wipe the grin off their faces. I've seen claims Tesla won't survive 3 years get modded Insightful. I'd mod it shortsighted. Dan hasn't peaked yet so declaring their death is a little premature. They are doing the right thing and expanding their car line to more afordable models. They are partnering up with established companies. They seem to be doing all the right things to not only survive but thrive. People have called the roadster expensive but haven't pointed out that it can beat a car costing twice as much in the straightaway. Once batteries get lighter they'll corner better and they can beat them in the corners as well. People say electrics must be cheaper to be acceptable because of range and recharge limitations. How's half priced for cheaper? Yes they can't make a family car cheaper and they probably never will. The range and recharge will improve over time. You've got to remember a Tesla car is exactly the same as a hydrogen car it just uses batteries instead of a fuel cell. The cars could use fuel cells just as easily. The batteries are the major expense. Electric motors tend to be cheaper than gas engines and they lack all the extra bits like fuel pumps and such to keep them going. How much geekier can you get than an electric car??? Time to celibrate. Also you've got to remember the single biggest point. They did it in the middle of the worst economic downturn since the Great Depression! Two out of the big three car makers just declared backruptcy!

  • by Animats (122034) on Saturday August 08, 2009 @01:23PM (#28996757) Homepage

    They've spent far less money than GM spent on the EV-1, and have almost as many cars on the road. About 1100 EV1 cars were produced.

    The current version of the Tesla roadster is a reasonably good sports car. Speed is good, acceleration is very good, the range is 200 miles, and it looks good as it whooshes by. It's overpriced, but there's hope of getting that down as volume goes up.

    They had some initial problems stemming from trying to make it go fast. First they had motor overheating problems at high revs, so they put in a two-speed transmission. That was a disaster; shifting under load ate up the transmission because the two speeds were too far apart. Then they went back to a simple single speed transmission, but water-cooled the motor, which simplified the mechanics and got them the desired top speed. The current drive train seems to be holding up well. Top speed is only 125MPH, which is low for $100K+ sports cars, but few customers really take their Ferraris to a track anyway.

    I see Teslas on the road almost daily. I live near the Silicon Valley dealership and on a road the sales reps use for demos. They change lanes very smoothly, with all that battery mass holding the center of gravity down.

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