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."
"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."
Short sellers are going to be nuclear destroyed (Score:2, Informative)
Re:Short sellers are going to be nuclear destroyed (Score:5, Funny)
From r/wallstreetbets:
That page is a schadenfreude laugh riot right now ;)
Chickens have come home to roost already (Score:2)
Turns out they are really healthy and churning out delicious eggs at an increasing rate.
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Chefs have been raving over the eggs, too :) Demand is so high that European chefs don't even get any until next year :P
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Tesla: NY Post article accusing Elon Musk of fraud is a total fraud [redgreenandblue.org]
That article has been ridiculed so many times. Want more examples? Let me know when you're done with that one.
But golly gee, you're right about him being our God! Why, it's the ONE TRUE RELIGION! We have far more proof of our savior than any other religion, you know! (/snark)
Re: Short sellers are going to be nuclear destroye (Score:5, Interesting)
Fun fact: Tripp has denied both knowing how to code or use any sort of hacking tools. Funny story, people dug into his claims and found his Stack Overflow account, Adafruit acccount, Scribd, etc, and found that not only does he know how to code, he was even helping answer coding questions for others.
Trip responded by deleting all of his old accounts.
Fun fact #2: Want to take a guess as to the only other thing on his Scribd account apart from docs on packet sniffing tools and the like? If you guessed "NRA gun documents, you win a prize!" When asked about this, he had the most hilarious alibi ever: why, he was only had the NRA gun docs to trade for Kansas guitar tabs! Because that's a totally normal internet trade commodity, dontchaknow!
Fun fact #3: Tripp has gone back and deleted all of his old alibi tweets, and the tweets where he admitted to having Tesla property.
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Doxxing is digging into someone's personal info in order to attack them in real life. Googling their name and seeing that they have been programming for quite a while when they tell you they don't know how to hardly rises to that standard.
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"Doxing (from dox, abbreviation of documents[1]) or doxxing[2][3] is the Internet-based practice of researching and broadcasting private or identifiable information (especially personally identifiable information) about an individual or organization"
Finding posts on public forums is in no way "digging up private or identifiable information".
There was no "swatting". They received a threat that Tripp - a guy w
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.
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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)
Re:Huh? (Score:5, Insightful)
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)
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.
Tell this to Amazon (Score:2)
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 !~~
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But they make it up in volume.
Re:Huh? (Score:5, Interesting)
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.
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So is the fabled $35,000 Model 3 still going to be $35,000 even without the tax rebate?
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Technically the model wasn't cancelled but the price was removed from the ordering page so no one knows if it will actually be $35,000 when it's available in 9 months or not. There were stories that some of the expected cost savings from production scaling aren't appearing so it's anyone guess if it will ever arrive at that price point.
Of course that doesn't prevent reviewers from reviewing the $35,000 model 3 from Tesla, and then almost as an afterthought mentioning that the actual version their testing i
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It's British for "valorware", of course.
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Unless those were one time expenses related to ramping up production...
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You do realize Toyota has been at it a few decades longer, don't you?
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Yes, based on 50 years of experience and profits from several plants in production, they were able to ramp up a new plant much faster.
You did know Toyota had been around since the 1930's, didn't you?
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Actually, I am more or less neutral WRT Tesla. Toyota was already a huge corporation with it's own resources and an established investor base when they built a factory here and they already had factories up and running with the bugs out elsewhere. It is easier to copy than to start afresh.
It did make things a bit easier for Toyota that they ran on gasoline and so filling stations were already ubiquitous. They didn't need to also build them.
So how deep are you into your short position?
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Perhaps it's just that that memo is closer to the 3rd party objective position than the one you read. And so now you're confused.
Re:Huh? (Score:5, Insightful)
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Tesla was operating during the biggest boom of the century
So you're saying that the best years between 2001 and 2013 were the years 2003 to 2013? How unexpected!
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So, yeah, excluding the Bush crisis, 2003-2013 in the US were pretty good, and much better than 1933-1943 in Japan.
C'mon, everyone KNOWS that real estate dropping 10% and the resulting credit crunch and inability to buy a new car every year and afford three daily soy lattes is WAY WORSE than a war and daily firebombings of your cities!
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Toyota was making more ICE cars in the same plant
What same plant? Just because Telsa bought the plant doesn't make it the same plant. The insides are completely gutted, the production completely different, and surprise surprise the end product is different too.
The only thing Tesla and Toytoa share in common is the roof.
You should stop comparing to a company that isn't even selling the same product. Maybe look to those who are. e.g. The problem Porsche is having ramping up production of the Taycan.
Re:Huh? (Score:5, Informative)
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.
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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.
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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
Tesla is a good company and a bad stock (Score:2)
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)
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.
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"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.
EV-1 (Score:2)
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
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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)
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)
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.
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It would if the business plan weren't to use old EV packs once there's enough of them available.
Economies of scale (Score:2)
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
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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.
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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.
Producing EVs (Score:3)
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
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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
Special blends (Score:2)
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
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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.
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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
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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.
Depreciation (Score:3)
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
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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.)
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Amortization of fixed costs. (Score:5, Insightful)
Don't know if you have been in the business world, but capital is depreciated over the usable life of the investment.
Accountant speaking here. No capital investments are decidedly NOT always depreciated. In fact most companies prefer to avoid depreciating assets when they can avoid it. (depreciation does not always accurately reflect economic reality) Plus even if you do have a large amount of capex with depreciation attached there often are current period expenses attached to it that are not depreciated. For example if I buy a large press I would depreciate the press but I might not depreciate the cost of the riggers to place it, the upgrades to the electrical system to run it, the training of the labor to operate it, the slow productivity at first while we figure out how to use it, the extra workers hired to operate it, the engineers time to get it working, etc. It's not uncommon to have more costs that aren't capitalized (and thus depreciated) than the ones that are capitalized.
I think you are missing the point - a loss is a loss in Wall Street reported earnings. Special one time stuff is often very well called out.
This isn't special one time stuff for the most part and if you actually read their financial statements you would know that.
Wheeling out a ton of cash now in the build up for something in the future would be a footnote on current earnings.
Have you actually read Tesla's financial statements [tesla.com] including the footnotes? They actually talk about issues relating to gross margin which basically are amortization of fixed costs from the assembly line and productivity improvements. They have this new and expensive assembly line which A) isn't running at full speed yet and B) costs a lot to operate no matter how many vehicles they make. Until they can amortize the fixed costs over enough cars per unit time they are going to lose money.
I truly admire this (or any other EM) company's ability to say "look over here, don't look at reality".
You might actually consider figuring out what reality actually is before making judgements about it. Tesla's situation isn't an uncommon one, just more high profile than most.
Re:Huh? (Score:5, Informative)
First off, here's the full post I submitted. It goes into much more detail:
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.
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*** present value of future profits. Not revenue.
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Re:Huh? (Score:5, Interesting)
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
Re: Huh? (Score:2)
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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
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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.
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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.
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Correct. Wow, you can do math.
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If you have interest in Tesla (and regardless of how it turns out, it really is the financial story of the decade, with such passion and huge bets on both sides of the aisle - and will be talked about for many decades to come), you should read the quarterly newsletters and join the investor calls. All of this comes from there. Old conference call transcripts are kept public at Seeking Alpha (you can probably find audio of them on YouTube), and you can find the quarterly newsletters here [tesla.com]. There won't be a
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Followed by Amazon. [thestreet.com]
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You conflated REs and NREs (Score:5, Informative)
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.
Re: Huh? (Score:2)
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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).
Re: Huh? (Score:4, Funny)
If they were concerned about the environment they wouldn't be "investing" in a company that makes $60,000 cars!
Right. Because a car's degree of compatibility with the environment can be fully determined by the price of the car.
Reality? how does it work again?
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So...much...mistake...in so...few..words......can't resist...
It is basically a cult. Rei is a huge cult member.
A little exaggeration here? May I help you with the definition of a cult? [merriam-webster.com]
It makes no sense to be so devoted to a company
Let's see... /. have always be the nest of Programmers, Engineers and scientists and Elon Musk portfolio kinda fall in all three categories. And in case you didn't noticed, he make an "American Space" company that make an rocket that land on the very own launch pad, a new "American Car" company that created the very first successful electric car, an Online Bank to pay for yo
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Rei has more knowledge on the subject than you'll ever have
But of course! That's precisely what I'm saying, on the subject of Tesla talking point memos, "Rei" will always have"more knowledge" than me, because they are being paid to distribute it. Day and night, 24x7, year after year, on several sites.
It isn't even one troll, it is a whole Russian bot factory.
Said the AC.
Complain as much as you want, I've always found that /. was the nest of three flocks. Programmer, Engineer and scientist. Elon Musk have every reason to be a center of interest of the whole lot.
You may prefer article about the
latest Red Hat version [slashdot.org]
but as an engineer and a (pretty) old 6 digits (5 digits if I weren't lazy), after years of member arguing about Who Killed the Electric Car this is a breath of fresh air.
You think Rei is "paid" to "share the good news"? You have a very high respect of slashdot influence
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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.
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There is no time to explain -let me sum up (Score:2)
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.
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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.
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When a company invests into additional production the costs of that always show up on the balance sheet months before th
Not unusual (Score:3)
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
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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
LOL (Score:2)
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.
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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.
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Affordable? (Score:2)
It's going to take a lot more than 15 years because at those prices, "affordable" does not apply.
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Mostly true, partly fiction (Score:2)
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.
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A luxury Model 3 is within $1000 / year of what a Camry costs. TM3 is much more luxury and a great deal faster than even top Camry. [loupventures.com]
In the states, we see that Camry sales have been dropping for the last 3 years. [goodcarbadcar.net] Again, in the states, we see that Accord sales have also dropped this year. [goodcarbadcar.net]
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Las Vegas.. its pretty shitty.
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wouldn't it have been cheaper to buy a small auto plant (or even a whole company) instead of re-inventing the assembly line from scratch?
The NUMMI plant was a complete building when Tesla occupied it, operated by GM and Toyota from 1984 to about 2010. Is that what you meant?
As for the assembly line itself, it was two generations older and set up for a different type of car. Tesla's investment is not only for the car design but the process to build it.
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I wouldn't say they purchased a plant, just the building.
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Correct. The factory was gutted except for some small equipment purchases.
Re:Not Invented Here (Score:5, Insightful)
Or contract it out to someone who knows what they're doing, like Jaguar did with the i-Pace
No one knows how to build EV's at the scale Tesla does. They're working it out as they going along too.
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Or contract it out to someone who knows what they're doing, like Jaguar did with the i-Pace
I always wanted an all electric vehicle from "The Prince of Darkness"! [jalopnik.com]
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yeah, right. a report from an opponent of renewables who reports of behalf of major utility and fossil fuel interests
Is it really? I took a look at the Wikipedia pages of each company to see what kind of investments these companies have.
like Exelon;
They sold off their holdings in coal. They have huge investment in nuclear and hydro. Bought up a bunch of wind and solar projects. Stands to benefit greatly from carbon cap-and-trade.
Occidental;
Sold off all their holdings in coal 25 years ago. Produces a lot of natural gas, which would be needed as backup power for wind and solar, and therefore would benefit from expanded wind and solar investm