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Tesla Suffering Cash Flow Issues; Every Model S Means a $4,000 Loss
An anonymous reader writes: The latest reports from Tesla show a trend of missing positive cash flow targets. Despite previous guidance to the contrary, Tesla is losing more than $4000 per car in operating margin and no sign of near term improvement as they are now reducing their production targets at a time when they are also experiencing pricing pressure. A scan of articles published today on this news reveals a common opinion that Tesla will need to raise more capital soon.
A small slice of the Reuters report linked: Tesla has signaled capital spending will drop next year because the company won't be spending on a major vehicle launch. In 2017, Tesla plans to launch its Model 3 line, which the company says will start at about $35,000 and push total sales toward the goal of 500,000 vehicles a year by 2020.
Barclays analyst Brian Johnson disagreed with the company's estimates, and said he expects Tesla's capital spending will go up in 2016 and 2017 as the company ramps up its battery factory and Model 3 development. "Their small scale means the cash generation is not as great as they might have hoped for," he said.
I can't believe the stupidity of the financial press. Tesla actually makes 23% profit on every car. The company is investing heavily in new production capacity (batteries,production lines,new models) so they loose money but they have a lot of investors willing to finance their expansion.
I don't read your sig. Why are you reading mine?
"The financial press is criticizing a company I like so I'm going to make up a stat that says they're actually doing well and call the press stupid"
Seriously, you throw out "actually making 23% profit" but then put no source what so ever. And you say that investing heavily in new production capacity means that it's fine to lose money. You can only do that for so long. I used to work for a company (the name will go unmentioned for anonymity reasons, but I'll say the were a competitor to Tokyo Joes) that on a per store basis was extremely profitable, but then they tried to expand to quick, ran out of cash and went out of business.
They have an extremely healthy positive operating margin of over 20% per car (well better than the industry at large).
And as the revenue from every car goes towards both variable costs and a portion of the fixed cost of the factory and capital equipment to make the cars, they can make it up in volume. The significant positive gross margin per car tells you that they more than cover the variable cost of each car, thus every additional car produced makes them more profitable.
Not to mention that operating profit at Tesla includes accounting for costs of installing new superchargers, building new sales locations, new Tesla energy business, etc. all of which they continue to significantly invest in the growth of.
The linked article was written by someone who at best has no idea what they are talking about, and at worst, was purposely spreading FUD.
Looking forward to the automated electric car revolution that Tesla will bring us in the coming decade. Got my popcorn ready.
They are getting about 16 bucks from every American, and not 'per car'. Musk's scams have gotten him 5 billion in federal aid. 'Bootstrapper' indeed. http://www.latimes.com/busines...
As much as I'm a fan of electric vehicles, this analysis looks pretty flawed. They talk about "energy" efficiency (and cite "electricity + natural gas" as money spent by refineries), then immediately turn around and assume it's all electricity.
it can be estimated that about 21,000 Btu—the equivalent of 6 kWh—of energy are used per gallon of gasoline refined.
It is a simple fact that the refining of gasoline requires approximately 6 kWh of electricity per gallon of gasoline.
Here is a counterpoint that seems to make more sense. http://longtailpipe.com/ebooks...
Main points:
1) Not all the energy they use is electricity, most is actually burnt oil.
2) The process of refinement produces several products; it's unfair to attribute all the electricity to the gasoline produced.
They have an extremely healthy positive operating margin of over 20% per car (well better than the industry at large).
You should be careful with such a generic statement. Most other car manufacturers include product specific R&D, overhead, and sales in their margins. There are different acceptable accounting practices, and so comparing apples to apples can't be done without a little digging and pointing out the differences. It appears that Tesla does not include administrative overhead nor sales and marketing in their operating margin calculation, which I think is kind of odd, but that's Wall Street for you. If you include everything but R&D, they are closer to break even.
The $4.9 billion includes SpaceX and SolarCity as well. It also includes loans which have been paid back.
Nope. Learn the difference between operating losses versus capital investments. Yes, Tesla is losing money on every car they make.
And in reality, Tesla has a $14,000 operating loss per car. (not the $4,000 using Telsa's creative accounting.)
Scams? Ridiculous. The government did the Republican thing by incentivizing business on the cutting edge of desirable technology. Elon Musk is just an entrepreneur doing what he is legally responsible to do for his shareholders by pushing boundaries where the government is giving money and preferential loans for companies to innovate in.
Hardly something to fault him for.
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