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The Almighty Buck Transportation

Tesla Burns Through $2 Billion In 2017 (theverge.com) 188

An anonymous reader quotes a report from The Verge: Tesla reported record revenue for 2017, floated by customer deposits of the recently announced Semi truck and Roadster sports car. Despite its optimistic sales numbers, Model 3 production issues and cash flow problems haunt the company, but Tesla insists its on track to meet its production goals of 5,000 cars a week by mid-2018. Tesla reported $3.3 billion in revenue, which was expected, but also posted a $771 million quarterly loss -- its largest quarterly loss ever. The company reported a negative free cash flow of $276.7 million. And it reported a net loss of $2.24 billion in 2017, a significant increase over the $773 million net loss it reported in 2016.
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Tesla Burns Through $2 Billion In 2017

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  • by the_skywise ( 189793 ) on Thursday February 08, 2018 @05:51PM (#56091697)
    I don't care!
    • It's just accounting.

      He can claim the 140 million miles to Mars his red convertible makes this year as business expense ($0.54 per mile)

      Perhaps he also got a bill from SpaceX for the publicity stunt that he an claim as well. :-)

  • by darkain ( 749283 ) on Thursday February 08, 2018 @05:52PM (#56091711) Homepage

    Inb4 all the comments of Telsa being a failure for the amount of money they are losing. But, in reality, that money isn't a loss. It is investment. Look how long Amazon lasted before they turned their first profit.

    • Re: (Score:3, Insightful)

      ...except Amazon has had little competition. There's a quite a few other companies producing successful electric and hybrid models, and they have been for many years. Is Tesla a failure? Only if they try to compete in the mass market. As a luxury brand they should do fine, but they decided to play with the big boys and it's not going to work out well. Especially considering that the Model 3 is a terrible design from a usability standpoint. If I could buy a Model 3 today, it's the last choice I'd make, elect
      • by Idou ( 572394 )
        >...except Amazon has had little competition.
        Any competitor list [investopedia.com] that includes "Walmart" is not "little competition."
        • Back in the days that Amazon was burning cash and not posting any profits they were still mostly known as being an e-commerce book company. And today there's no company that competes with them on selection, prices, delivery speed, and customer service. When you want to go buy something online, where do you go first most of the time? The only real competition they face right now is in streaming media and cloud services.
          • When I want to buy something, I usually have several choices. Some of them involve going somewhere the item is offered for sale, buying it, and having it immediately. That can be a lot better than saving some money and getting Amazon Prime shipping.

      • Uh, Tesla outsells all EVs and Hybrids, except for Hybrids in China.
        Assuming that Tesla will hit 5000 cars / week with M3 by june, then they will be #1 in the world of all EVs/hHybrids.
        • by AmiMoJo ( 196126 )

          The Nissan Leaf is the best selling EV by a fair margin.

          • by stooo ( 2202012 )

            >> The Nissan Leaf is the best selling EV by a fair margin.
            Not for long
            BAIC or BYD will probably overtake the leaf this year.

            • by AmiMoJo ( 196126 )

              That's true. BYD are shifting a lot of EVs, and the infrastructure in China is quite impressive. They actually sell some BYD cards in Europe, particularly as taxis and other commercial vehicles.

          • No. They had been. The model 3 is going to leave the leaf in the dust this year. Yes, Tesla is behind with their predictions. However, they are now doing about 1000 cars / week. With more equipment on the way, they are supposed to hit 5000 cars / week before end of June. The leaf does not come close to that level.
    • Inb4 all the comments of Telsa being a failure for the amount of money they are losing. But, in reality, that money isn't a loss. It is investment. Look how long Amazon lasted before they turned their first profit.

      There is a difference with Amazon in that their expenses were largely fixed (building out their infrastructure) and their per-transaction cost was very low. It was fairly clear that at any point they could just tune down the investments and R&D and profit off their ecommerce margins.

      Tesla's problem is that building a car is still really expensive, especially when you take into account things like recalls. And the R&D and factory construction are huge sunk costs. There's a real risk they can't sell e

      • by jezwel ( 2451108 )

        Tesla's energy business saw an increase in sales of its Powerwall storage battery, Tesla said. The company expects sales of energy storage products to triple in sales and gross margins to improve in 2018.

        This is where the real money is. Tesla cars are an moving advert for the non-sexy parts of the company. Who notices anything about Gigafactory 1 & 2?

      • by Rei ( 128717 )

        There is a difference with Amazon in that their expenses were largely fixed (building out their infrastructure)

        Same with Tesla.

        and their per-transaction cost was very low.

        And so was their per-transaction profit.

        Tesla's problem is that building a car is still really expensive,

        Tesla has historically had around 25% margin on S and X, and should get the same on 3 when production is up to speed (due to the low Model 3 rate their current overall automotive margin is 18,9%). There's nothing bad at all about a 25

    • Amazon didn't *LOSE* 2 billion dollars a year. The just didn't make much of a profit for a company that had so much revenue.
    • Inb4 all the comments of Telsa being a failure for the amount of money they are losing. But, in reality, that money isn't a loss. It is investment. Look how long Amazon lasted before they turned their first profit.

      While I wouldn't call Tesla failure, yet, there are some significant differences between Tesla and Amazon. For starters, much of Amazon's stock is not paid for by Amazon until it is sold, so they don't have to tie up funds and take losses on unsold goods. They make money off of logistics and can scale a lot more easily then Tesla. Amazon can also return old inventory to free up space if they don't want need it; and for other sellers on Amazon who hold the stock themselves Amazon doesn't even have storage co

  • Or at least an electric scooter. Come on, Tesla! Gimme something here.

  • Let's not forget about all that rocket advertising they purchased.
    That must have cost quite a bit, with the payoff expected in the near future.

  • Tax changes (Score:5, Interesting)

    by DogDude ( 805747 ) on Thursday February 08, 2018 @06:14PM (#56091855)
    Everybody's taking a loss in 2017 and posting profits in 2018 to take advantage of the tax changes.
    • by zlives ( 2009072 )

      lol, nice try i think elon just launched his 2018 profits to mars

      • You really think people would be willing to pay him to launch multi-million dollar satellites on an untested platform? That wasn't launching profits to mars. That was setting a max limit on how high SpaceX can pile it's money after that demo.

  • by magarity ( 164372 ) on Thursday February 08, 2018 @06:17PM (#56091869)

    Tesla reported record revenue for 2017, floated by customer deposits

    Deposits are liabilities. They only turn into revenue when you deliver whatever it was the deposit was for.

    • Deposits are liabilities. They only turn into revenue when you deliver whatever it was the deposit was for.

      Exactly, and that deposit is nothing more than a loan with interest attached to it when it costs them 1.5X the price to deliver the car.

      Example: Car costs 50K. Deposit is 50K. Car costs 75K to make and deliver with overhead. 50K deposit is actually a liability for 75K.

    • Depends on how you do it.

      A co-worker put down a deposit on a Model 3 and was informed that he should have it early in 2019 (it was pushed back from mid-2018). So while deposits are liabilities, as in it isn't necessarily your money to spend, if you take all those deposits and put them somewhere, you can do pretty well with the interest.

    • Tesla reported record revenue for 2017, floated by customer deposits

      Deposits are liabilities. They only turn into revenue when you deliver whatever it was the deposit was for.

      Exactly, cash is not always revenue. Every dollar of deposit must have an offsetting liability until the product is delivered. They can still burn through the cash and ultimately leave the deposit holders in the lurch with a bankruptcy restructuring.

  • by aaarrrgggh ( 9205 ) on Thursday February 08, 2018 @07:04PM (#56092183)

    Meh.

    They invest what they have in a measured fashion to realize their plan. If they hit their stride on the Model 3 by the end of Q2, they should generate positive free cash flow at a minimum. At which point, they will likely invest in a ramp-up of the Model Y, which is expected to require an assembly line in China... and consume significant cash.

    If I found anything disappointing in their financials, it was the fact that the energy business isn't doing as well as I would hope-- especially on the energy storage side. It looks like the windfarm battery plant in South Australia accounted for 60%+ of that revenue. I guess the other concern is the fact that sales/manufacturing of the S and X will be constrained by availability of the 18650 cells to 100k units.

    • uh no.
      So far, Musk, nor any of the top tesla ppl, have said that they will do a Chinese line for MY. They have said that they will move some work in there, but they have been VERY CAREFUL on how it is phrased.
      And it would be foolish and idiotic of them to put ANYTHING in China. Far better to go with Australia and EUrope first and cater to 5/6 of the planet, while ignoring 1/6 whose only interest is in destroying manufacturing in the west.
      • You might want to double-check the notes from the conference call. They indicate that the Model Y will be targeted primarily at the China market, which will require more automation, lower labor cost, and local production (partially by extension).

      • China, India, and SE Asia contain 50% of the world's population. Europe, Australia and North America are about half that...
  • Last year we saw a steady steam of headlines here on /. which basically said "Tesla is Evil",
    That it was because they were keeping out the unions.
    The last one was in November:
    Tesla Is a 'Hotbed For Racist Behavior,' Worker Claims In Lawsuit [slashdot.org]
    Which followed the en masse firings of October and it's headlines.
    I suspect the financial and technological challenges of breaking the traditional moulds of the motor industry are insignificant in comparison to the political challenges.

  • by Trogre ( 513942 ) on Thursday February 08, 2018 @08:00PM (#56092435) Homepage

    Tesla is really going places [whereisroadster.com] in 2018.

  • by WindBourne ( 631190 ) on Thursday February 08, 2018 @09:13PM (#56092719) Journal
    The fact is, that Tesla lost LESS than what the markets had been expecting for some time.
    And as has been pointed out, that once they are somewhere between 4000 to 5000 cars per week, they will be in the GAAP black.
    • The fact is, that Tesla lost LESS than what the markets had been expecting for some time.

      Cite? This graph [nasdaq.com] shows earnings per share consistently more negative than forecasts for at least the past year. As a cross-check, TSLA dropped nearly 9% [google.com] the day after its earnings call.

      • Here is the main one. [bfy.tw]
        Here is BI [businessinsider.com]
        Here is CBS [cbsnews.com]
        Here is Market Watch. [marketwatch.com]
        Here is WSJ [wsj.com]
        In fact, other than Faux News, BreitBart, and Daily Stormer, they all say the same thing. That yes, Tesla had losses but not as much as forecast some time ago.
        • Sarcasm doth not become you. Your cut-and-paste spray of links (the ones that aren't paywalled -- did you read them yourself?) all give different supposed EPS forecasts that TLSA "beat," which should have set off a big alarm bell in your head about their subjectivity. I posted a year's worth of statistics from NASDAQ showing they've missed expectations every quarter for the past year, and today's stock performance is utterly consistent with that and utterly inconsistent with your hypothesis. I note you to

  • I had no need to hear the quarterly results after I saw this video [space.com].

    It was crystal clear that he's burning through the cash he has hand over fist and is losing the confidence of the investors who could give him more.

  • Tesla makes batteries, cars and solar panels (and roof tiles which act as solar panels.) The cars are the highest profile and highest risk part of the business. Their first big problem is that they are struggling very much to get car production up to the theoretical capabilities of their factory. A second big problem is that they have competitors with very very deep pockets (and who know how to make their factories work well) in the existing car manufacturers.

    If they solve their manufacturing problems, and

  • here we go again, it's called "investing in extremely large factories", not "burning"
    burning would be buying useless sports cars for executives
    oh wait... tesla actually BUILDS those !

Time to take stock. Go home with some office supplies.

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