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Businesses The Almighty Buck Technology

Tesla On Track To Turn a Profit This Year (cbsnews.com) 271

Thanks to gains in Model 3 output, Tesla's second-quarter revenue grew by more than $1 billion. Unfortunately, the company's net loss rose dramatically as a result. In a statement, Tesla said it achieved its target of producing 5,000 Model 3 vehicles per week and that it aims to make 6,000 per week by the end of August. It's expect to produce 50,000 to 55,000 Model 3 vehicles in the third quarter -- a sharp increase from the previous quarter.

"It took 15 years to execute on our initial goal to produce an affordable, long-range electric vehicle that can also be highly profitable," Musk and Chief Financial Officer Deepak Ahuja wrote in a letter to shareholders. "In the second half of 2018, we expect, for the first time in our history, to become both sustainably profitable and cash-flow positive." Tesla has only turned a profit in two quarters. CBS News reports: The electric vehicle company founded by billionaire Elon Musk reported an adjusted net loss of $717 million for the period on revenue of $4 billion. Tesla went through $739.6 million in cash between April and June, less than the $900 million Wall Street analysts had forecast. In another boost, the automaker said it has trimmed its capital spending by manufacturing the Model 3 on existing assembly lines, rather than building new lines. Although Tesla is burning through less cash, it continues to lose money. The company reported an adjusted net loss of $3.06 per share, more than analysts expected. The loss more than doubled from the same quarter a year ago. Slashdot reader Rei adds: After the release of Tesla's Q2 results and followed by the investor call, Tesla's stock surged around 9% in aftermarket trading today. Among the main drivers: automotive gross margins rose to 21%, Model 3 gross margins turned positive (before the start of sales of AWD and performance variants, which are making up half of all new orders), and the reiteration and reinforcement of guidance for sustainable profitability from Q3 onward. [...] While no longer using a reservation system in the U.S. for first-production orders (retaining it only for less expensive Model 3 variants and overseas orders), new North American first-production orders are making up a large portion of current orders; consequently, no changes are announced for timing of overseas orders. The average selling price is expected to remain high "for several quarters" due to "a richer mix in the initial wave of Model 3 deliveries to Europe and APAC"; the "normalization of the Model 3 average selling price" is anticipated in the second half of 2019, and is not expected to impact gross margins, due to improved production cost efficiency over time. On the conference call, Musk sounded tired and admitted to getting too little sleep. He apologized twice, but was told by an investor: "Don't let the trolls get you down, but we do like it when you tease the trolls a bit."
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Tesla On Track To Turn a Profit This Year

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  • by Anonymous Coward
    There are a lot of very big investors short Tesla. The carnage will be felt intensely.
    • by Rei ( 128717 ) on Wednesday August 01, 2018 @09:16PM (#57053712) Homepage

      From r/wallstreetbets:

      I'm holding 4 $305p 8/3s at 16.98ea. The fourth contract was bought on margin by accident during the fiasco this morning. I'm going bankrupt.

      Tesla up 9%, I officially have no f***** idea how the stock market works

      LOOOOOLLL.. My wife is going to kill me after I get margin called off these puts

      WHY CANT I MAKE ONE F****** TRADE OMG IM SO BAD AT THIS S***, ELON YOU F******* NOODLE HEAD

      What in the everliving f***

      i hope the conference call just f***** up the call holders - please dear god elon say the n-word

      "First options trade ever, 8/17 put at 250. Do I just assume my money is gone or can I recover some of this?" "LOL Musk would have to commit a mass shooting at the Fremont factory for this put to be worth anything."

      That page is a schadenfreude laugh riot right now ;)

  • Huh? (Score:2, Interesting)

    Tesla On Track To Turn a Profit This Year

    Unfortunately, the company's net loss rose dramatically as a result.

    So sales are up, losses are up - but they're on track to make a profit? Really? Something's not adding up... Losses for Q1 2018 were 17.5% of revenues. Losses for Q2 2018 (just announced) were 17.9%. Increasing losses as a percent of revenue does NOT lead to profit.

    • Re: (Score:3, Funny)

      by iggymanz ( 596061 )

      you must be one of those "trolls" the summary talked about, with that dated notion that a company must make more money than it spends or it'll go out of business.

      Pshaw! I say. Hype, hooplah, and happy feelings are the currency now.

      • Re:Huh? (Score:4, Funny)

        by LynnwoodRooster ( 966895 ) on Wednesday August 01, 2018 @08:42PM (#57053588) Journal
        Silly me and my antiquated notion of profit!
        • Re:Huh? (Score:5, Insightful)

          by bgarcia ( 33222 ) on Thursday August 02, 2018 @05:28AM (#57055294) Homepage Journal

          Silly me and my antiquated notion of profit!

          Yes, you don't go straight from "I have an idea for a business" to "profit". There's the part called "investment" that happens in there, and it takes a LOT of money to create a new car company.

          Tesla's goal is to switch the world to sustainable energy. They're doing that buy becoming an automobile manufacturer. This is an old, well-established market where it's more likely that an existing company dies than for a startup to succeed. Now, you could plan on being a "boutique" manufacturer, like Lamborghini. Make a few, very-expensive cars, sell them to rich people, have a profit, and call it a day. But selling $200k roadsters isn't going to switch the whole world to sustainable energy. For that, you need to sell less expensive cars, and you need to make a lot of them.

          The short-term goal is to gain a ton of market share. All revenue is shoveled back into additional development of even more vehicles. If you're trying to grab a big piece of the market, you better borrow as much money as you can so that you can develop additional vehicles more quickly.

          This isn't the "local pizza shop" business model you learned in Econ 101. This is the Amazon model. Grab the entire market, damn the costs.
          Some references:
          Amazon Never Makes Money But No One Cares [investopedia.com]
          Amazon’s epic 20-year run as a public company, explained in five charts [recode.net]

          • Re:Huh? (Score:5, Insightful)

            by torkus ( 1133985 ) on Thursday August 02, 2018 @10:35AM (#57056770)

            It's not even that business model.

            It's called operating at a loss while you build out your infrastructure and develop your product. Granted, most companies don't spend 15 years doing that but most companies don't jump head-first into something so unique and difficult and heavily regulated.

            Never mind they've had multiple successful products over those years and this was literally Musk's plan from the very beginning.

      • Yep, you should have told it to Amazon [qz.com] (AMZN), that they should have started making profit from year 1, instead of them losing money by stupidly spending it on useless stuff like expanding their infrastructure (and basically becoming THE CLOUD since then)~~

        I'm sure, If they had listen to you they would have been successfuly [nypost.com] instead of going down crashing and flaming as Tesla motors (TSLA) is going to do any moment soon !~~

    • Re: (Score:3, Funny)

      by Anonymous Coward

      But they make it up in volume.

    • Re:Huh? (Score:5, Interesting)

      by Freedom Bug ( 86180 ) on Wednesday August 01, 2018 @08:47PM (#57053610) Homepage

      The big difference is that much of the "loss" for this quarter is due to the fact that they stockpiled a bunch of cars. They wanted to make sure they didn't hit the 200,000 EV milestone in Q2 so their customers could enjoy the tax rebate for a little bit longer.

      • by AmiMoJo ( 196126 )

        So is the fabled $35,000 Model 3 still going to be $35,000 even without the tax rebate?

    • by sjames ( 1099 )

      Unless those were one time expenses related to ramping up production...

    • Re:Huh? (Score:5, Informative)

      by Aighearach ( 97333 ) on Wednesday August 01, 2018 @08:51PM (#57053622)

      If you can understand the story, losses were high on purpose, because of capital investment, and now capital investment will be slower and production will result in profits. Production done using the equipment represented by said capital investments. Simple.

      • and now capital investment will be slower and production will result in profits. Production done using the equipment represented by said capital investments. Simple.

        Tesla's market cap is about the same as GM's. GM produces about 8,000 cars per day (averaged over the year), or 56,000 cars per week. An order of magnitude more than Tesla. If Tesla wants to justify its market cap, they need to spend about 10x more capital investment on production equipment as they spent just to get to 5,000 cars per week.

        • by Corbets ( 169101 )

          You might be right in your end results, I don’t know, but your rationale is not... rational. Number of units produced has no direct linkage to where market cap should be; rather, market cap *should be* (and I’m not saying *is*) linked to expected profits.

          If GM’s margins are 2% of what tesla’s are, then this could still make sense.

          In any case, I’m a believer in this company. I have no problems with them recording losses in the mid term due to capital investment in order to have

          • Number of units produced has no direct linkage to where market cap should be; rather, market cap *should be* (and I’m not saying *is*) linked to expected profits.

            There is no plausible scenario whereby Tesla will make enough profit in the next 5 years to justify their current market cap by any reasonable valuation. I'm not saying they won't be worth that amount someday. But currently their market cap is detached from their economic reality. You just can't rationally expect a decent ROI on the stock if you buy it today at the current price. You're just gambling, not investing. Tesla having a market cap larger than GM is basically saying that you expect the net pr [wikipedia.org]

        • Re:Huh? (Score:5, Insightful)

          by Bruce Perens ( 3872 ) <bruce@perens.com> on Thursday August 02, 2018 @12:58AM (#57054542) Homepage Journal

          Tesla rose $28 in after-hours trading. It might be an interesting morning for the shorts.

          If GM took EVs seriously starting when they produced EV-1 and kept going until now, there would be no need for a Tesla. The fact that GM discarded any lead they might have had is more meaningful than how many internal combustion cars they can make.

          • by haruchai ( 17472 )

            "If GM took EVs seriously starting when they produced EV-1 and kept going until now, there would be no need for a Tesla. The fact that GM discarded any lead they might have had is more meaningful than how many internal combustion cars they can make"

            Toyota cucked themselves, too. If they worked diligently at making the Prius approach the RAV4 EV battery pack capacity over the past 2 decades and made it plug-in capable a decade sooner, they would OWN the EV market.

          • by sjbe ( 173966 )

            If GM took EVs seriously starting when they produced EV-1 and kept going until now, there would be no need for a Tesla.

            Maybe. The EV-1 tends to get looked at with some rose colored glasses today and almost certainly was not a viable mass market car when it was available. I know it had some fans but it was the very definition of a niche vehicle and GM was losing a substantial sum on each one sold. The biggest problem was the battery tech simply wasn't there yet. The first commercial Li-Ion battery was released around 1991 and they weren't really ready for vehicle use when the EV-1 was in production. The lead-acid and late

            • Yes, I know that the EV-1 was meant to satisfy a California requirement that enabled them to sell their I.C. cars, rather than to be a cost-effective vehicle for the company. It's been interesting to see Phil Karn KA9Q's old EV-1 at the National Museum of American History. Kind of cool that it belonged to a friend of mine.

              If GM had enough of a future vision back then, they would own the lithium battery technology now, not Panasonic. They could have developed it with what would have been chump change for GM.

        • Re:Huh? (Score:5, Insightful)

          by sfcat ( 872532 ) on Thursday August 02, 2018 @01:01AM (#57054548)

          and now capital investment will be slower and production will result in profits. Production done using the equipment represented by said capital investments. Simple.

          Tesla's market cap is about the same as GM's. GM produces about 8,000 cars per day (averaged over the year), or 56,000 cars per week. An order of magnitude more than Tesla. If Tesla wants to justify its market cap, they need to spend about 10x more capital investment on production equipment as they spent just to get to 5,000 cars per week. If they now slow down investing in production equipment as you're theorizing, they're basically saying "Our stock should only be priced at $35 a share."

          Sure, GM makes a lot of cars. But, there is no growth story for GM. There is no real reason to think that GM will be making 2x the revenue in 2 years. But with Tesla, that's not just a possibility...its likely. That's the difference and why there is a difference in the market cap (really a different multiple). The other thing is that people actually want Tesla's cars. GM's cars aren't nearly as desirable to the public and aren't sold with even close to the same margin. Tesla makes about 3x what GM makes per car of profit on the Model S and by the end of the year make that much on a Model 3.

          No other auto maker will be able to mass produce an EV in the next 5 years (BWM is the closest and won't be there for about 4 1/2 years at the earliest). The reason for this is while the auto makers can make cars, they can't make the EV batteries. Also, they don't have secured supplies for the Li and other rare earth metals they need. Finally, they don't have the knowledge of the battery chemistry to make those batteries efficient enough to sell them (or the EVs that contain them) at a profit.

          This is why Tesla has a huge multiple. Because even the most ardent Tesla Bear will admit that many people want an EV and will be buying them in the next 5 years. Because the EV market will be in the millions by most projections in the next 5-8 years. During that time, Tesla will have the only option on the market. The question is can they hold that lead. Most say yes for a variety of reasons: 1) Auto makers hate EVs to the very core of their soul 2) Dealerships hate EVs because they mess with their business model 3) you need to be the world's largest producer of batteries (Tesla) to make EVs profitably.

          • Re:Huh? (Score:5, Interesting)

            by Freischutz ( 4776131 ) on Thursday August 02, 2018 @02:47AM (#57054878)

            No other auto maker will be able to mass produce an EV in the next 5 years (BWM is the closest and won't be there for about 4 1/2 years at the earliest). The reason for this is while the auto makers can make cars, they can't make the EV batteries. Also, they don't have secured supplies for the Li and other rare earth metals they need. Finally, they don't have the knowledge of the battery chemistry to make those batteries efficient enough to sell them (or the EVs that contain them) at a profit.

            It's not that Tesla is the only company that has any knowledge of battery chemistry, or that US companies have a monopoly on battery chemistry tech, not even close. There are plenty of batter manufacturers in Asia and Europe who can compete there. It's more that there has been a race to secure the existing Li supply and the early birds (like Tesla) got the worm. People who decided to "wait and see if this electric vehicle fad leads to anything" are now having trouble obtaining Li for battery production. Estimates I've seen are that it will take something like 10 years to *begin* ramping up mining operations to extract the amounts of Li required to supply an electric vehicle (and grid storage/battery wall) duck curve. Those who made long term contracts for Li supplies have a huge head start.

            • About those storage and wall batteries: That Tesla Wall thing isn't cheap as it uses just about the most expensive type of batteries on the market. Wouldn't it be a lot more economical to use cheaper but bulkier batteries, since space and weight are much less of an issue in that application?
              • It would if the business plan weren't to use old EV packs once there's enough of them available.

              • About those storage and wall batteries: That Tesla Wall thing isn't cheap as it uses just about the most expensive type of batteries on the market. Wouldn't it be a lot more economical to use cheaper but bulkier batteries, since space and weight are much less of an issue in that application?

                Not currently no it wouldn't. Tesla is trying to get the unit cost of batteries much lower and to do that you need to make and sell as many of them as possible. The Powerwall just provides another sales channel to help them do this. In the long run it might not make sense to use Li-Ion batteries for this application but only once we've reached some sort of supply constraint. As long as Tesla can sell all the batteries they can make and don't run into resource constraints on the supply side it makes all

            • by AmiMoJo ( 196126 )

              LG seems to be their main competitor at the moment. The packs they are making for Hyundai, Kia, Nissan and GM are cheaper per kWh and have better warranties than the Panasonic/Tesla ones.

            • by bigpat ( 158134 )

              It's not that Tesla is the only company that has any knowledge of battery chemistry, or that US companies have a monopoly on battery chemistry tech, not even close. There are plenty of batter manufacturers in Asia and Europe who can compete there.

              Competition sounds good for consumers.

              Tesla has demonstrated they can't meet demand for electric cars so there is plenty of demand if manufacturers want to step up and accelerate their plans to offer more and better electric cars... and incidentally Tesla have also demonstrated it isn't trivial to set up a supply chain, manufacturing line, distribution and sales channels to produce tens of thousands of cars each year on a completely new type of platform. So there is that.

              The alternative to this "there are plenty of companies that could do it" view is that there are plenty of companies that haven't done it and choose instead to get as much value out of their existing and proven design and manufacturing capabilities without taking the risk of making major capital and R&D investments since they aren't sure they can make work.

              It is the old problem of how to balance getting the most from old investments and the risk of making new investments. Plenty of examples of companies that successfully leveraged their previous success into new successes, plenty of examples of companies that decided to play it safe and had many years of steady revenue and profits, plenty of examples of companies that missed the boat on technology they themselves could have brought to market... Xerox Palo Alto is the classic case study of inventing much of modern computing and then deciding that it would undermine their paper printing business, and to underlie the real risk of making big new capital investments there are plenty of examples of old successful solid companies with new management deciding they need to leverage the company to make some huge new capital investments to remake the company only to fail to grow revenue spectacularly and be eventually crushed by their debt load.

          • Sure, GM makes a lot of cars. But, there is no growth story for GM.

            Probably true but there is a strong cash flow and dividend story from GM. It's hard to make a huge company a lot bigger in a short time period. But GM kicks off a LOT of profit and cash and the dividend yield right now is pretty good. A company doesn't have to grow at 20% or more per year to be a good investment.

            But with Tesla, that's not just a possibility...its likely.

            Sure, growing from tiny to bigger is a lot easier. But the value of a company should be roughly the net present value of all future free cash flows. There is no plausible scenario whereby you c

            • by sfcat ( 872532 )

              I have a Chevy Bolt sitting in my garage that says otherwise. Nissan has sold over 300,000 Leafs [wikipedia.org] to date. If that's not mass production I'm not sure you understand the term. Pretty much every major auto company already has put serious money into electrification but there still is a huge market (much larger than the EV market) in ICE vehicles for them to serve too. EVs are coming and I'm a true believer in them but it's not going to happen overnight and your claim that no automaker could mass produce an EV in the next 5 years is just clearly not true.

              The reason for this is while the auto makers can make cars, they can't make the EV batteries.

              There are plenty of battery companies and Tesla doesn't really make their own batteries either. Panasonic does the heavy lifting for Tesla on batteries. You were aware that Panasonic is the one that made the majority of the investment for the gigafactory right?

              You have a Bolt. How nice...I have a Volt (its my second one). Neither are mass produced cars. Each sell about 2,000 units a month. The Model 3 sells about 2.5X of that in a week. The Leaf sells in similar numbers to the Volt and Bolt. Also, the Bolt is a chastity belt on wheels. If you think the Bolt proves that GM loves EVs, then you don't understand cars at all. If GM had really wanted to sell a lot of Bolts, they would have given it nicer styling and not made it look like a golf cart. The Bolt

              • You have a Bolt. How nice...I have a Volt (its my second one). Neither are mass produced cars.

                Strange. I thought I had actually stood on an assembly line in Lake Orion Michigan where they were made. Must have been imagining that. And unlike the Tesla assembly line, it's fully functional and they aren't scrambling to figure out how to make cars or making them in tents. The Bolt has installed and functional production capacity for theoretically as many as 90,000 vehicles per year right now. A car doesn't have to sell in F150 numbers to be mass produced. Your argument is ridiculous.

                The Leaf sells in similar numbers to the Volt and Bolt.

                The Leaf sold

        • GM isn't the greatest example of a well run company.

          GM sold its European operations to PSA recently. GM Europe had lost money for a long time. PSA has turned it around and it is now profitable in about a year.

          The potential profits from Tesla may be higher than those of GM. Revenue isn't profit. GM has a much higher revenue and today, actual profit, but investors are betting on Tesla making lots of profit in the future. GM is just one large increase in gas prices away from bankruptcy.

          • "GM is just one large increase in gas prices away from bankruptcy AGAIN". - fixed that one for you :)
        • by torkus ( 1133985 )

          Wow you're naive. Market cap is fuzzy money, not cash-in-hand.

          The reason TSLA is worth so much is because of the outlook. It's at the forefront of what many analysts expect cars will be. Their IP, their brand, their business model, their cars are all cutting edge and very much an industry disruption.

          Market cap doesn't really represent the cash-out value of a company today, but the speculative value in the longer term...which is one of the fundamental principles of the stock market.

          Besides, EM has flat ou

      • Capital purchases don't have a huge impact on profits in the short term, although they do directly affect cash.

        The cost of capital purchases are usually amortized over some period of time.

        • Capital purchases don't have a huge impact on profits in the short term, although they do directly affect cash.

          That's routinely not true. Capital purchases even when subject to a deprecation schedule can easily affect near term profits both directly and indirectly. For example a few years back our company bought a press for about $100,000. We then had to hire an employee costing about $50,000 to operate it, train the employee (more $), install the press (more $), reconfigure work flows and rearrange floor space, hire riggers, add electric service, add engineering time, and more. Even though we depreciated the co

          • Capital purchases of tangible equipment are depreciated, not amortized. Functionally the same thing really but just being pedantic about the proper words. You would amortize an intangible asset like a patent purchase. Why they make the distinction has never been entirely clear to me since functionally it is the same activity. Finance and accounting are weird that way.

            Don't forget depletion! Same concept applied to natural resource extraction (mines, wells, etc.)

    • Re:Huh? (Score:5, Informative)

      by Rei ( 128717 ) on Wednesday August 01, 2018 @09:13PM (#57053704) Homepage

      First off, here's the full post I submitted. It goes into much more detail:

      After the release of Tesla's Q2 results [tesla.com] and followed by the investor call, Tesla's stock surged around 9% in aftermarket trading today. Among the main drivers: automotive gross margins rose to 21%, Model 3 gross margins turned positive (before the start of sales of AWD and performance variants, which are making up half of all new orders), and the reiteration and reinforcement of guidance for sustainable profitability from Q3 onward. Q3 production rates are expected to be around 4k/wk average while achieving a 6k/wk line speed, and a Model 3 gross margin of 15% is expected (25% is targeted in Q1-Q2). Some lines are on track to reach 10k/wk before the end of the year, but achieving that rate with all lines and suppliers is not anticipated until next year. Sales in Q3 will be boosted as the current delivery backlog clears, while restructuring and severance costs, realized in Q2, will reduce expenses starting in Q3. Cash on hand in Q2 declined from $2,66B to $2,23B; no ZEV credits were claimed during this period. While no longer using a reservation system in the US for first-production orders (retaining it only for less expensive Model 3 variants and overseas orders), new North American first-production orders are making up a large portion of current orders; consequently, no changes are announced for timing of overseas orders. The average selling price is expected to remain high "for several quarters" due to "a richer mix in the initial wave of Model 3 deliveries to Europe and APAC"; the "normalization of the Model 3 average selling price" is anticipated in the second half of 2019, and is not expected to impact gross margins, due to improved production cost efficiency over time.

      On the conference call, Musk sounded tired and admitted to getting too little sleep. He apologized twice, but was told by an investor: "Don't let the trolls get you down, but we do like it when you tease the trolls a bit"

      Secondly: your Q1 number is wrong. Loss attributed to shareholders in Q1 was 20,8% of revenues, not 17,5%.

      But again, companies aren't valued based on past revenue. They're based on the present value of future revenue. A past balance sheet may draw your attention to a company (for good or bad reasons), but it does not substitute for modeling the company's fundamentals. Which includes what margins they'll be getting on sales in upcoming quarters, what production numbers will be in upcoming quarters, etc, as well as properly handling deferred revenue and one-time costs. And as noted above, Q2 was full of them, all of them to the benefit of Q3 and beyond.

      If you don't understand why the market is up over 9% after this report, you probably shouldn't be investing in this stock. The numbers in this report make it quite clear that Tesla is highly likely to be profitable in Q3. And this is the result of years of capex, R&D, and a long-hard scaleup slog. You pay, then later you reap the rewards. Not simultaneously.

      • I'm using data from Yahoo [yahoo.com], and using operating income/loss, especially since Tesla loves to talk about non-GAAP and operating income/losses only. Or are these different numbers?
      • by Rei ( 128717 )

        *** present value of future profits. Not revenue.

      • ok, I guess I was wrong, this is a financial website.
        • Re:Huh? (Score:5, Interesting)

          by Rei ( 128717 ) on Wednesday August 01, 2018 @10:04PM (#57053944) Homepage

          Would you rather some nerdier colour from the conference call? Okay, here's one.

          We all know the story of how Tesla's original plan for GA3 (General Assembly 3) was to have an automated conveyor belt system transport parts from the warehouse to each of the assembly workstations. Unfortunately, it just didn't work; they had to tear it out and do the transport manually. However, when general assembly became a bottleneck, they built a whole new line (GA4) in a Sprung structure, partly out of scrap - including said conveyor system, which now transports the cars down the line as they're assembled.

          What we found out today, however, was that they had a problem with the conveyor system in the engineering phase: since it was designed for transporting parts, not whole cars, it wasn't up to the job. It could hold a car fine, but the motors weren't strong enough to move it reliably. Their solution? Let gravity give them a boost. The GA4 line is built at a 1% downward grade, which reduces stress on the motors to within their design tolerances.

          Interestingly enough, the Sprung structure solved the warehouse transport problem on its own. Since it's a long, narrow structure surrounded by roads, trucks could just back up to each workstation and unload their boxes of parts right there - no centralized warehouse needed, and no redundant unloading / reloading work

          • Yes, that is better :)
          • by AmiMoJo ( 196126 )

            Strange that they thought the warehouse was a good idea, most other manufacturers moved to the just-in-time delivery model they ended up with long ago. The Honda plant in the UK, for example, has 15 minutes of stock on hand and it's all on the assembly lines, with the same set up where trucks deliver directly to where the parts are needed. It's well established, tried and tested.

            I'd love to know what drove that decision. Maybe they just felt it might help them ramp up since they didn't have the experience t

            • by GNious ( 953874 )

              When I was in Automotive, convincing US manufacturers that JIT/JIS was the way to go was neigh impossible.
              Pretty much the whole world uses it, but I can think of only a few places in the US who went to a full JIT (let alone JIS) setup.

              • by AmiMoJo ( 196126 )

                Ah, that explains it then. It's just a cultural thing, I guess part manufacturers in the US aren't set up for making deliveries that way either so it's hard for a relatively small outfit like Tesla to convince them to start.

    • by Ungrounded Lightning ( 62228 ) on Wednesday August 01, 2018 @09:24PM (#57053752) Journal

      So sales are up, losses are up - but they're on track to make a profit? Really? Something's not adding up...

      What's not adding up is that you're conflating recurring and nonrecurring expenses (NREs).

      If all the money being spent now were recurring expenses - the money you spend on making a car in Q2 that you'll have to spend again to make another car in Q4 - then you'd be right.

      But a LOT of that money is being spent on putting together the plant to make the cars. You do that once. Then you don't have to do it again (beyond maintenance as stuff wears out and the like).

      Or at least you don't have to do it again until you EXPAND the plant to INCREASE PRODUCTION or BUILD ANOTHER TYPE OF CAR. (Guess what Tesla has been doing...) That's why companies have to spend a lot of money - that they get from investors - when starting up, that they don't earn back right away.

      Their balance sheet for the quarter includes both the REs and NREs. If you allocate it ALL to the current production of cars, and project that into the future, you'll be 'way low on the bottom line once the NREs have been paid off and the plant is still making cars.

    • Havenâ(TM)t you noticed many people on here believe anything Elon says. He said on the call today they were still going to make money this year so it must be true.
      • Havenâ(TM)t you noticed many people on here believe anything Elon says. He said on the call today they were still going to make money this year so it must be true.

        Anything he says on investor calls or in SEC filings, yes, of course. It's possible that his predictions won't come true, but lying to investors or the SEC does nothing but make you a target for the SEC Hammer (TM).

    • So sales are up, losses are up - but they're on track to make a profit? Really? Something's not adding up... Losses for Q1 2018 were 17.5% of revenues. Losses for Q2 2018 (just announced) were 17.9%. Increasing losses as a percent of revenue does NOT lead to profit.

      There is not enough information to say either way. Any new industry generally loses big before it can possibly make big.
      They could equally continue to lose, but losing now is not enough to be a predictor of future state.

    • but if you are heading into profit and profit on a day to day basis, the losses reduce. Maybe the accounting year will be a loss but following years will be better if they are in profit. Yet again, more unrealistic expectations from you, one quarter profit should equal monster profit for a company still in growth, get real or forever be a troll
    • TSLA shorts were all betting Tesla could never make cars at volume with any margin. Turns out Tesla figured out production while still keeping a large margin....

      So Tesla is the obvious Apple of cars now. This is roughly equivalent to the point when the first iPhone came out.

      So, TSLA shorts are fucked, seriously fucked, like federal prision child sex offender fucked.

      And there as so many shorts, it will take a long time to complete the fucking with some absurd things to come because of that.

    • So sales are up, losses are up - but they're on track to make a profit? Really? Something's not adding up...

      Yes when you remove several variables and then conflate equations with two different times you will typically find your math doesn't add up.

      But hey if entire business reports were able to be condensed into 2x 4 word statements then you wouldn't need accountants or financial reports the size of a decent novel.

    • Considering that they've been investing pretty heavily into expanding their production capacity with the increased production they're buying more components, which obviously don't come out the other end as revenue exactly overnight, it's completely to be expected. We're talking both their loss and revenue being within 5% of analyst predictions so there's even less to be surprised about.

      When a company invests into additional production the costs of that always show up on the balance sheet months before th
    • So sales are up, losses are up - but they're on track to make a profit? Really?

      I haven't looked carefully at their financial statements but situations like that happen pretty often. What I suspect in this case is that Tesla has a lot of one time expenses during the quarter during ramp up which will not repeat in future quarters. So it makes the financials look worse during the current quarter than is expected for future quarters. There also are issues of inventory - you make the product and then deliver it but until Tesla gets paid for the car they have tied up cash (costs) in inve

    • by torkus ( 1133985 )

      Oh man, I try not to feed the trolls but ...

      You realize you're referring to two quarters where they very heavily invested in building out their plant? You know...where massive capital and opex investment resulted in a working volume production line that they have today?

      Oh wait, you don't. You just want to look at whatever information suits your point in a complete vacuum so no other relevant information can possibly intrude. Kudos for getting me to reply, but 0/10 actually having a defensible point.

      Maybe

  • by mark-t ( 151149 )

    It took 15 years to execute on our initial goal to produce an affordable, long-range electric vehicle...

    If you want to call costing twice as much as conventional vehicles that are otherwise in the same or similar class based on size and general exterior asthetic "affordable"... sure.

    • It took 15 years to execute on our initial goal to produce an affordable, long-range electric vehicle...

      If you want to call costing twice as much as conventional vehicles that are otherwise in the same or similar class based on size and general exterior asthetic "affordable"... sure.

      And what class is that? The Model 3 is in the same class as the BMW 3, which costs roughly the same amount. The Model 3 isn't in the same class as a Civic or Camry.

    • Comparing within the class isn't a good way of looking at it. An electric supercar that competes with a Koenigsegg Regera, but costs only a quarter as much is not actually affordable, as most people can't afford a half million dollar car. Similarly, I don't think a car that sells for a minimum of 49,000 qualifies as "affordable" in the real world. That's nearly twice the median personal income in the US.
  • It took 15 years to execute on our initial goal to produce an affordable, long-range electric vehicle...

    It's going to take a lot more than 15 years because at those prices, "affordable" does not apply.

    • and yet, the average price of a new in America is ~$35K. Yes, the $35K model 3 is on hold, but should be starting around the end of the year, into early next year.
  • It took 15 years to execute on our initial goal to produce an affordable, long-range electric vehicle

    True - if you play fast and loose with the definition of "affordable"... The base model is only "affordable" (under standard guidelines) to the 70th percentile (of average household income) and above. Basically, still a vehicle for the upper crust rather than one for the masses.

Philosophy: A route of many roads leading from nowhere to nothing. -- Ambrose Bierce

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