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Tesla Posts Biggest Quarterly Loss, Slashes Production of Model X and Model S (yahoo.com) 260

Posted by BeauHD from the production-hell dept.
Tesla has reported the largest quarterly loss in its history, and said it was cutting production of its Model S and Model X vehicles. Here are the key third-quarter numbers with expectations via Bloomberg: Adjusted loss per share: -$2.92 (-$2.23 expected); Revenue: $2.98 billion ($2.39 billion expected); Free cash flow: -$1.4 billion (-$1.2 billion (expected). Yahoo News reports: The company said it plans to produce 10% fewer units of its Model S and Model X models in the fourth quarter and reallocate resources to the Model 3, its newest. Tesla expects to hit a Model 3 production rate of 5,000 vehicles per week by late Q1 2018. "While we continue to make significant progress each week in fixing Model 3 bottlenecks, the nature of manufacturing challenges during a ramp such as this makes it difficult to predict exactly how long it will take for all bottlenecks to be cleared or when new ones will appear," Tesla said in its statement. Tesla said in October that it produced only 260 vehicles, well below its target of 1,500. CEO Elon Musk said the Model 3 was "deep in production hell."
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Tesla Posts Biggest Quarterly Loss, Slashes Production of Model X and Model S More

Tesla Posts Biggest Quarterly Loss, Slashes Production of Model X and Model S

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  • "...difficult to predict exactly how..." (Score:4, Insightful)

    by turkeydance ( 1266624 ) on Wednesday November 01, 2017 @07:13PM (#55473177)
    As Mark Twain said, it is difficult to make predictions, particularly about the future.

  • Bond market tap turned off (Score:4, Informative)

    by fozzy1015 ( 264592 ) on Wednesday November 01, 2017 @07:14PM (#55473179)
    Their junk bond offering of just 3 months ago is now trading at 95 cents on the dollar, effectively wiping out their yield. The only way Tesla is going to get the cash to keep going is a massively diluting equity raise.

    Longs, get out while you can.
    • Please get into bond market and invest lots of money. We need a steady supply of saps, marks, rubes and assorted people playing way out of their league to keep our investments happy.

      Please don't understand that Tesla already got all the money. All it has to do is to pay interest and eventually pay off the principle. The day to day market price of its junk bond does not affect it directly. But pay no attention all that. Just bring in your money and invest in bonds using your super intelligent emotional self

    • So, that actually indicates that the market revised it's estimate of Tesla upwards and will give Tesla a lower interest rate next time.

      • No, it may indicate two things: investors have seen better yield/risk elsewhere and sold their bonds at a loss to buy better bonds, or some of them think Tesla will be unable to pay and are getting out while they still can.

    • Care to elaborate on this further? What the implications are? I've heard many many a sour note on $TSLA for almost a year on trading circles from people, significantly more wise than I am regarding investing and the market.

      They continue to shake their heads though at how somehow TSLA continues to defy odds.
      Elaboration would be useful, if you can.

    • There are a lot of criticisms around Tesla as a company, or at least a for-profit company, but having bonds trade at "95 cents on the dollar" is not one of them. Bond prices fluctuate all the time just like the stock market, and frequently go above and below par (IE 100 cents on the dollar). Bond prices are based around risk for a given level of yield. GM's bonds have gone well above and below par as well: http://finra-markets.morningst... [morningstar.com]

      The effective yield on TSLA bonds is 5.5%, this is nowhere near any s

  • Ok, So who unplugged the reality distortion field? Unicorns are falling from the sky and moonbeams can hardly be seen emanating form the Tesla factories.

    Is anyone surprised? I'm not. After all, when production numbers were low, what did Musk do? He started firing people in mass. I guess he's the only one left piecing parts of the Model 3 together while he isn't sleeping. Not bad, though. He can put 8 or 9 together a day.

    I do have to wonder, though, what are they spending all of that money on?

    • Re: (Score:3, Insightful)

      by Puls4r ( 724907 )
      Making cars is expensive. Making high tech cars is more expensive.

      Tesla isn't magic. Look at the sales numbers the big three have and how often they turn out new programs (that aren't really an entirely new product). The math is pretty simple. Tesla doesn't make enough money in their product line and is turning out a new program when the old ones aren't paying for themselves.

      It's a stock market thing, really. Look at the stock prices of the automakers. They continue to make successful products

      • Missing the point (Score:4, Insightful)

        by mschaffer ( 97223 ) on Wednesday November 01, 2017 @07:48PM (#55473361)

        Sure, making so-called high-tech cars is not super easy, it's really hard to make any money selling cars when you cannot produce enough.

        Also, since when are Tesla's cars "high tech". They are just reliability-riddled electric cars with fancy computers. More technology has been developed for the "run-of-the-mill" cars made by companies like Ford and Toyota than Tesla has. That tech, though, is just unappreciated, overlooked, and made to look easy by consummate automotive professionals that know what they are doing.

        • Well, the fancy computers which manage battery power and such are reasonably 'high-tech' for one. The batteries themselves could be argued either way, I guess, but let's just say that the technology for the battery storage and powering they are doing didn't exist 25 years ago.

          I hadn't heard that they had reliability problems. In fact, I thought one of the chief selling points of an electric car, generally speaking, is that it should be much more reliable and require significantly less service than an I

      • Re:The emperor has no clothes! (Score:5, Informative)

        by WrongMonkey ( 1027334 ) on Wednesday November 01, 2017 @08:15PM (#55473467)
        Tesla must really be in trouble. Shills are shilling so hard that this one posted the same comment twice from two different accounts

        https://news.slashdot.org/comm... [slashdot.org]

      • Making cars is expensive. Making high tech cars is more expensive.

        High tech gasoline cars, anyway. A combustion engine with pistons and valves and injection and associated powertrain is expensive. With modern electric cars, the main complexities are probably the battery and the software. Both areas in which Tesla has quite some expertise, not less than any others anyway -- I think no other manufacturers produce more *electric* cars than Tesla does (except maybe Renault-Nissan). The others just produce more gas cars -- you know, the ones that are more complex in all the ar

    • Re:The emperor has no clothes! (Score:4, Interesting)

      by aaarrrgggh ( 9205 ) on Wednesday November 01, 2017 @08:31PM (#55473547)

      Apparently the vendor that was building the power packs in the Gigafactory had an automation system that didn't work. Tesla had to hand-build the modules after firing them, and it will take time to ramp up.

      None of this stuff is really a surprise. Tesla expects a break-even status on the Model 3 in Q4, with margins improving in 2018. Yeah... it might push back a quarter... judging by history. At the same time, they are stabilizing the PV business and growing the energy storage business significantly, which now represent 20% of revenue.

      They will start 2018 with about $2.3B in cash, and likely be positive cashflow soon after.

    • https://dailykanban.com/2017/1... [dailykanban.com]

      Production Hell? How about Tesla as a business-to-business customer-from Hell.

  • In Australia at least the Model S is over $AU 112,000 the Model 3 is not really available until 2019 at around $AU40,000. So there's that. I am kind of surprised that the main players are not pushing up production e.g. Ford Electric etc because I thought that Tesla gave away most of their patents.

    • Re: (Score:2)

      by bakes ( 87194 )

      Some of the manufacturers are starting to do so, but it's a very slow process. Hyundai's Ioniq line will be available in Australia next year apparently, as well as the revised Leaf, and several other makes/models (all electric, plug-in hybrid, and hybrid).

  • Go Elon! (Score:2, Insightful)

    by Anonymous Coward

    I hope it ramps back up soon! So many pessimists in this crowd, when Elon is our best shot at an EV future.

  • Two ways to make money in a new market (Score:5, Interesting)

    by tttonyyy ( 726776 ) on Wednesday November 01, 2017 @07:31PM (#55473259) Homepage Journal

    Be the first is to lead the market, which requires huge investment, is risky, but can lead to lots of cash in the bank.

    The second is to follow the leader, making products that fit the newly exposed demand - not cutting edge, but fit for purpose at a reasonable cost with reduced risk.

    Add into the mix that cars are notoriously hard to get right (Tesla reportedly has lots of niggles that established car manufacturers have already solved) and now that vehicles like Volvo's Polestar and the ilk are on the horizon, from a brand reputed for reliability (albeit manufactured in China), and that Germany are building their own battery gigafactory -
      Musk should be worried. The only way he'll make money is cashing in on that first wave, and it's already being spread out.

    • from a brand reputed for reliability

      Are you fucking kidding?? They haven't made a "reliable" vehicle since they discontinued the 700/900 series over twenty years ago.

      • He says that Volvo is "reputed" for reliability and when it comes to sales it's your reputation that actually matters, not how well you're actually doing. Just look at Masterlock. They're a joke among locksmiths and people who just pick locks for fun, but still somehow a market leader.

        As for reliability, can't say I've got much experience with their post-90s cars, but I know plenty of people who have owned original V40s and V70s and they've all been solid cars. This may be an anecdote, but my parents bou

  • Slashing? Really? (Score:5, Informative)

    by LesFerg ( 452838 ) on Wednesday November 01, 2017 @07:36PM (#55473293) Homepage

    The company said it plans to produce 10% fewer units of its Model S and Model X models in the fourth quarter

    Is it just me or does that sound like a small reduction, not really qualifying as "slashes production" at all?
    Shouldn't there be a journalistic rule for when something qualifies as slashing, say maybe over 50%?

    Lets not get too melodramatic with the headlines.

    • You're right, they should've said Tesla was decimating production levels, not slashing.

    • "Decimating" would be the correct word.

      • Yes. But "decimate" has been so misused that most people don't understand it means "eliminate 1 in 10."

        They're not cutting total production. They're reallocating resources for a different model. "Slashing" is a totally inappropriate description of that, but if you want click bait, it works.

    • That, and the source for the "slashing" seems to be based on round number projections for 2017 annual production volumes.

      Stock is down ~8% though, FWIW.

    • Isn't that literally "decimation?"

    • Lets not get too melodramatic with the headlines.

      That's unfortunately a tall order in this day and age when barely anybody wants to pay for subscriptions (so you pretty much have to do clickbait) and per-click revenue is just getting lower and lower (so you have to out-clickbait your competition if you want to stay afloat).

      It's a pretty sad state of affairs when you think about it... To be able to sell subscriptions, the closest thing to an antidote to clickbait, they need people to trust them, but to stay afloat they have to do clickbait, which makes

  • I only see a few outcomes for Tesla (Score:4, Interesting)

    by bravecanadian ( 638315 ) on Wednesday November 01, 2017 @09:18PM (#55473777)

    1) After their ridiculous stock valuation drops to a reasonable amount, they get scooped up by a real automaker as a premium badge.

    2) They remain a niche premium car maker.

    3) They become a battery company.

    They don't have the infrastructure to compete on a world wide scale with the big automakers.

    As soon as electrics are well accepted by the public and hit critical mass, the big automakers are going to destroy Tesla.. because unlike Tesla they can actually build cars. Lots of them. They haven't been doing nothing and being disrupted by Tesla. They've been waiting until it makes sense economically.

    • You're giving the traditional car companies far too much credit. Look at Toyota for example, they are still trying to promote hydrogen fuel cells. They don't know that that technology has been beaten.

      GM and Hyundai have good EVs, but just like Tesla they can't produce even a fraction of what the market is demanding.

      The only traditional car company that's doing as well as Tesla is Nissan.

      • You're giving the traditional car companies far too much credit. Look at Toyota for example, they are still trying to promote hydrogen fuel cells. They don't know that that technology has been beaten.

        Yes, I'm sure they are unaware of what Tesla is doing.

        GM and Hyundai have good EVs, but just like Tesla they can't produce even a fraction of what the market is demanding.

        They produce millions of cars a year. If the market was demanding EVs they would be making them. We aren't there yet.

        The only traditional car company that's doing as well as Tesla is Nissan.

        Doing as well as Tesla? Tesla sells a rounding error worth of cars each year in comparison to the traditionals.

        • Re:I only see a few outcomes for Tesla (Score:4, Insightful)

          by BasilBrush ( 643681 ) on Wednesday November 01, 2017 @10:36PM (#55474051)

          Yes, I'm sure they are unaware of what Tesla is doing.

          Which wasn't an answer to the point I posed. My point was about the dead-on-arrival technology of Hydrogen Fuel cells, not Tesla.

          They produce millions of cars a year. If the market was demanding EVs they would be making them. We aren't there yet.

          I'm afraid you are ignorant of the market. There is a demand for Bolt (Ampera E in Europe) that is not bieng fulfilled by GM. In fact you can't even order the Ampera E in Europe any more as they have no stock being delivered.
          Similarly with Hyundai and the Ioniq EV. Current waiting times are 9-10 months from order.

          It's a fact that the demand there and GM and Hyundai are unable to fullfill it.

          And I didn't even mention the other car manufacturers that don't even have a credible EV yet.

          Doing as well as Tesla? Tesla sells a rounding error worth of cars each year in comparison to the traditionals.

          Again you are being mislead by old technology. We're talking about their ability to service the EV market. The number of old tech ICE vehicles they produce is irrelevant. As you can see from the Bolt and Ioniq examples I gave.

    • Re: (Score:2)

      by olau ( 314197 )

      They don't have the infrastructure to compete on a world wide scale with the big automakers.

      Ah, see, but that's where it gets interesting: the big automakers don't have the infrastructure either to compete on a world-wide scale with Tesla on BEVs.

      Apparently it's not unusual that it takes some time to work out the production line for a new car model. The difference here is that we a) get served an overly optimistic timeline, b) get to hear about it because news about Tesla always make it to the front page. It's too early to tell if it's going to pan out or not.

    • As soon as electrics are well accepted by the public and hit critical mass, the big automakers are going to destroy Tesla

      Which was actually the original goal Musk had for Tesla.

    • .. because unlike Tesla they can actually build cars. Lots of them.

      I seem to recall when some of the big American auto makers were in trouble that Tesla was just waiting for some factories to get sold off so that they could buy them up, and hire all or most of the people that used to work there. Instead they when to Uncle Sam and got a sweet "loan" to keep them afloat. The companies can't build cars. Much of their revenue, last I checked, was in loans for car buyers. Most of their expenses are in the sweet health care deals they make for their workers.

      The likes of GM

    • "They don't have the infrastructure to compete on a world wide scale with the big automakers."

      So only established players can play? History is full of counter examples. IBM, Kodak, and Blockbuster to name a few. Sure, they can't build the infrastructure overnight, but they already have enough factory capacity to produce the Model 3, which was their original purpose.

      The "big automakers" have shown little motivation and even some hostility towards moving to E.V.'s. They've lobbied against increasing fuel

  • ... guess Elon knew the situation and was cutting staff/production

  • Ouch (Score:4, Insightful)

    by DrXym ( 126579 ) on Thursday November 02, 2017 @04:01AM (#55474871)
    The production plan for the model 3 was absurdly short and ambitious, so much so that it strains credulity that anyone thought it could be met. Those first cars are going to be rife with kinds of flaws - poor quality control, failing components, welding and other structural issues, recalls etc.

    That said, detailed videos of the model 3 are appearing and it's still a stylish, well designed, technologically advanced vehicle. After tens of thousands of cars have rolled off the production line and their owners have beta tested the bugs out it, I think it will become a classic.

  • Neat designers, but totally inept in execution. Cars are screwed together for over a century in mass production and they cannot figure it out? Totally pathetic!

    • Re: (Score:2)

      by enjar ( 249223 )
      Apple has the largest market capitalization of any company. If that's inept, I'd certainly like to be more inept.
  • 6 months from now, we'll be talking about how they resolved the Gigafactory battery production kinks caused by vendors who under-delivered and Model 3s flying off the assembly line.

    Every business like this has its highs and lows.
  • Sometimes I wish he would drop some of his programs and concentrate on cars. I think it would be a big loss to humanity if the company sank. There's always room for improvement on the highway.

    • This does seem to be a common thing for Elon - he's stretched very thin, and he takes on unnecessary risk.

      I can't imagine trying to run Tesla and SpaceX at the same time. SpaceX seems to be doing pretty well, though I don't follow it as closely as Tesla. But Tesla... geez, I shake my head at some of the decisions they've made.

      On the subject of unnecessary risk, I think it made sense for Tesla to not use dealerships. They would have had the same problem that Apple had trying to sell through third parties who

  • Good (Score:3)

    by Tighe_L ( 642122 ) on Thursday November 02, 2017 @07:51AM (#55475413) Homepage
    Battery powered cars aren't the future. Hydrogen combustion engines, and if made safe nuclear cars. https://www.cnet.com/roadshow/... [cnet.com]

  • First and foremost, Musk is worth 20 billion dollars, more or less. Tesla ain't going anywhere. Along with SpaceX, Tesla is his child and he says he's never giving it up. He can float the company for years even if he sells nothing. And he will sell.

    The Model 3 (E, let's be real) is the most sought after car on the planet right now. There are problems somewhere in the manufacturing process. Rumor has it that the batteries are being hand-assembled. This is not a problem: they will automate it after it shakes

  • Tesla is a technology company that also makes cars (Score:3)

    by jlv ( 5619 ) on Thursday November 02, 2017 @10:37AM (#55476483)

    Someone up above says that Nissan is doing as well in the EV business as Tesla. In 4 years I've put 29K miles on my LEAF and I commute in it nearly every day. It's a fine car, but it's still something made by the old-guard car manufacturers. It's controls were slow and dated when I bought in 3 years ago (they are all effectively unchanged since originally designed in 2010). The radio/nav is terrible. Remote access to it is so unreliable Nissan decided to never charge for it (not to mention that the 3G module drains the 12V battery because it gets "stuck"). Thankfully mine is not affected, but Nissan has had some terrible battery issues (both the first 24kWh battery in the 2011/2012 and the first 30kWh battery in the 2016 models have serious high deterioration rates). This says to be very wary of the 40kWh battery coming in the 2018 model.

    The LEAF just wanes in comparison to my Model S. In 7 months I've put 13K miles on the S (almost all highway miles on trips trips of 200-600 miles on-way). There's no surprise since the S costs almost 3x the LEAF: it should be better. But the S is a marvel. The tech level in the car is amazing, and the OTA updates of the interface software mean that things get fixed or improved.

    As an aside, I think the S is too big a car for my tastes, but I didn't want to wait any longer for a long-range EV. I still have a 3 reservation (to replace the LEAF), but I may cancel it and just keep the LEAF. Also, my S had a minor issue with the driver's door panel that I needed to bring it in to service for 3 times to get fixed correctly. But hey, when I got the LEAF, it had a issue with the heater leaking that had it sitting at the dealer for almost a month while they waited for parts. This things happen.

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