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Tesla Burns Through $2 Billion In 2017 (theverge.com)
An anonymous reader quotes a report from The Verge: Tesla reported record revenue for 2017, floated by customer deposits of the recently announced Semi truck and Roadster sports car. Despite its optimistic sales numbers, Model 3 production issues and cash flow problems haunt the company, but Tesla insists its on track to meet its production goals of 5,000 cars a week by mid-2018. Tesla reported $3.3 billion in revenue, which was expected, but also posted a $771 million quarterly loss -- its largest quarterly loss ever. The company reported a negative free cash flow of $276.7 million. And it reported a net loss of $2.24 billion in 2017, a significant increase over the $773 million net loss it reported in 2016.
I don't care!
You gotta do things in order to get things done.
You gotta spend money to make money.
Except if you spend too much money and don't get enough results, bankruptcy for you. It doesn't matter how good your idea is or if it's going to change the world for the better. In most of the world, it only matters whether it can achieve ROI and there are constraints in the form of how much VC a firm is willing to put into your company before they don't think you're going to do anything else other than throw them under a bus.
We'll make great pets
Inb4 all the comments of Telsa being a failure for the amount of money they are losing. But, in reality, that money isn't a loss. It is investment. Look how long Amazon lasted before they turned their first profit.
Or at least an electric scooter. Come on, Tesla! Gimme something here.
The money they've spent is more or less gone whether they make another dime or not.
Calling it an investment depends on how they do going forward: if they're able to ramp up production of the model 3 and newer models going forward then you're right.
If not then it's only a matter of time before they burn through their current cash and they stop getting deposits, cause at a certain point people stop falling for the whole "no trust me THIS time we've got it figured out"
Let's not forget about all that rocket advertising they purchased.
That must have cost quite a bit, with the payoff expected in the near future.
So far, Tesla has produced enough so that people are eager to throw money at it. No problem raising funds.
They are making cars and have plans for new models and trucks and energy storage and solar panels and roofs. That takes money. As long as they deliver, they can continue to raise money to grow. If they stopped spending on new stuff today, they would be profitable but wouldn't have much of a future.
It took Amazon years to become profitable and now Bezos is world's richest man.
I don't read your sig. Why are you reading mine?
Over 8 Billion dollars in subsidies, and they're still bleeding billions a year. Where's the money going?
Sources -
http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html
http://www.businessinsider.com/tesla-stock-price-california-state-government-bailing-out-2017-7
Maybe you can arrange to be the driver of the next Tesla to go into space.
I don't read your sig. Why are you reading mine?
Isn't that pretty much the nature of a leading question? Can't a single individual run multiple businesses without being accused of evil intentions? Cars and rockets have basically nothing to do with each other.
Ezekiel 23:20
Everybody's taking a loss in 2017 and posting profits in 2018 to take advantage of the tax changes.
I don't respond to AC's.
Tesla reported record revenue for 2017, floated by customer deposits
Deposits are liabilities. They only turn into revenue when you deliver whatever it was the deposit was for.
Agreed. However, that does not mean that there is not a considerable risk attached to this approach too. One serious failure and it could all come crashing down. This is a high risk, high reward strategy with the added benefit that Tesla is producing potentially revolutionary products so even if they fail it will likely have long lasting benefits for society...and today there are sadly very few companies you can say that about.
"No problem raising funds." This is actually not true. Last time they raised funds they did so by selling bonds. Their corporate debt is rated below investment grade (in other words, they are "junk bonds."). I don't think they can easily issue new stock. That would have to be approved by the board and the shareholders.
It doesn't matter how high the stock price is. That doesn't really help them raise money in any significant way.
By including this sig, the copyright holders of this work or collection unreservedly place it in the public domain.
How about you go do that then? Get off your butt and go do it yourself instead of complaining about how someone else is running his companies. Also, unless you're a Tesla investor yourself then get off your high horse and stop being outraged on someone else's behalf. They don't need you to white knight for them and nobody else cares about your virtue signalling.
I doubt if GP commenter is an experienced (publicity) stunt driver.
I can't wait for those arrogant idiots to go bankrupt.
That will never happen. They'll continue to exist as a luxury brand.
Mike @ The Geek Pub. Let's Make Stuff!
Meh.
They invest what they have in a measured fashion to realize their plan. If they hit their stride on the Model 3 by the end of Q2, they should generate positive free cash flow at a minimum. At which point, they will likely invest in a ramp-up of the Model Y, which is expected to require an assembly line in China... and consume significant cash.
If I found anything disappointing in their financials, it was the fact that the energy business isn't doing as well as I would hope-- especially on the energy storage side. It looks like the windfarm battery plant in South Australia accounted for 60%+ of that revenue. I guess the other concern is the fact that sales/manufacturing of the S and X will be constrained by availability of the 18650 cells to 100k units.
Last year we saw a steady steam of headlines here on /. which basically said "Tesla is Evil",
That it was because they were keeping out the unions.
The last one was in November:
Tesla Is a 'Hotbed For Racist Behavior,' Worker Claims In Lawsuit
Which followed the en masse firings of October and it's headlines.
I suspect the financial and technological challenges of breaking the traditional moulds of the motor industry are insignificant in comparison to the political challenges.
It's all a stupid numbers game.
Inasmuch as knowing what your resources, financial position, and outlook are is a "stupid numbers game" ...
The worst run companies can post positive numbers year after year while rotting inside.
The worst run companies don't run positive numbers year after year. Not unless someone is cooking the books, which is fraud, not accounting. It is true that sometimes short term numbers hide long term issues, but that's usually a case of management only caring about the short term (blame investors for that), looking at the wrong numbers, or refusing to invest in upgrades to capacity or capability. And it's certainly not a situation that can continue year after year.
R&D is treated as an expense, not capital acquisition.
Capital acquisition isn't a thing. Capital can refer to either the cash invested into a company, or to the company's total equity. Expenditures other than inventory are either expensed (if an asset is not acquired for the expenditure) or capitalized (if an asset is acquired). R&D is treated as an expense because no asset is acquired for the expenditure. Patents that result from R&D are capital, and are treated as such. Process improvements that result from add to the top line, which can in turn result in more capital if you reinvest your net income rather than distributing it. But the process of research and development is rightly considered an expense because the expenditure does not directly lead to the acquisition of an asset.
Employee salaries are like any other purchase in that they are subtracted from income.
To be clear, they are subtracted from gross profit, not net income. Also, other purchases are not necessarily subtracted from revenue. Inventory purchases are subtracted from revenue. Salaries are expenses because the company does not acquire an asset for the expenditure.
If you try to gear up for anything new yourself it's a heavy loss. But you could "acquire" the same result by buying up a competitor and it would be glowingly positive, even though all the consultant fees would triple the cost.
This doesn't make any sense. In both cases, assets are acquired. In both cases, it requires cash or equivalent that may be provided by debt or take from treasury. If you can find a company to purchase that has the same assets you would otherwise be acquiring directly from vendors, you're going to be paying a premium for their other assets that you don't need, or you're going to be getting assets with shorter life spans, or you're going to be taking on the acquired company's liabilities. The exact same assets will not be available for drastically different costs.
Just because you don't understand how something works, or why it's done the way it's done, doesn't mean that that thing is bullshit.
Does Tesla? AFAIK, theyâ(TM)re non-GAAP for generating their numbers. That, plus the junk bond issuance? Run.
Amazon didn't *LOSE* 2 billion dollars a year. The just didn't make much of a profit for a company that had so much revenue.
Tesla is really going places in 2018.
"Nine times out of ten, starting a fire is not the best way to solve the problem." - my wife
Cars and rockets have basically nothing to do with each other.
I wouldn't say that...
And, of course, the obligatory movie clip...
Let me get this straight. Tesla is booking significant revenue from cars they haven't yet built and likely won't build for years and THEY ARE STILL LOSING MONEY? Did Elon take a business management course from Donald Trump?
Yes, Tesla has a great story, but ...
Not all great stories have a happy ending. In this case, there may be a great success story. But looks like there is a significant chance that the company name and some products will survive as a division of some other car maker, but the current investors and bondholders will end up with nothing more than a tax writeoff.
You can't see ANYTHING from a car, You've got to get out of the goddamned contraption and walk...Edward Abbey
Drive a BFR!https://www.youtube.com/watch?v=E4FY894HyF8&t=1964s
The fact is, that Tesla lost LESS than what the markets had been expecting for some time.
And as has been pointed out, that once they are somewhere between 4000 to 5000 cars per week, they will be in the GAAP black.
I prefer the "u" in honour as it seems to be missing these days.
I had no need to hear the quarterly results after I saw this video.
It was crystal clear that he's burning through the cash he has hand over fist and is losing the confidence of the investors who could give him more.
His personal tesla was launched into space, because SPACEX had to launch some weight. This was cooler than simply putting in lead.
Solar CIty was doing fine, except towards the end, a number of companies were targeting SC. And now, SC, who has 1/3 of the installation, will be back to do so.
Huh. Tesla sold a product at a profit that has now saved Aus. state gov millions of $. As such, nearly all of the Aussie states want to work with Tesla so that all make money. And yes, Tesla made money on that contract.
I prefer the "u" in honour as it seems to be missing these days.
And that same Australian government that commissioned the battery has now commissioned solar roofing for 50,000 houses from Tesla. No more free batteries required either after the first, now it's order taking and (you'd expect) profit making for that part of the Tesla group.
Go ahead.
Damn. You want to get it straight, we tried to let you get it straight, but then in the very next thing you write you get it wrong. Deposits are not revenue. They don't affect the profit/loss in any way.
So far, Tesla has produced enough so that people are eager to throw money at it.
And? All companies get investment, until they don't. It's a tautology so I'm not sure what that sentence is supposed to prove.
I'm a minority race. Save your vitriol for white people.
Tesla makes batteries, cars and solar panels (and roof tiles which act as solar panels.) The cars are the highest profile and highest risk part of the business. Their first big problem is that they are struggling very much to get car production up to the theoretical capabilities of their factory. A second big problem is that they have competitors with very very deep pockets (and who know how to make their factories work well) in the existing car manufacturers.
If they solve their manufacturing problems, and keep some combination of technical and marketing edge over the big car manufacturers, Tesla could hit the big time. However, they might also crash into bankruptcy, or less drastically, they might be forced to abandon car manufacture to stay in batteries and solar panels.
So, how are the battery and solar panel parts of the business doing? Might they emerge (like a smoking detached wheel rolling down the road) from a crash of the car business?
(My take: I am generally very impressed by what Musk has done, and I think the haters who paint him as a con man are either delusional or trolls. However, he is not an angel (he is not morally impeccable) nor a god (he is not omnipotent) so he can fail, and he and his companies can legitimately be criticized. In particular, I'm very dubious about hyperloop, somewhat dubious about tunnels, and cautious about the cars.)
Quattuor res in hoc mundo sanctae sunt: libri, liberi, libertas et liberalitas.
...look at my car in space! Both launched on the same day. A nice sleight of hand, Elon.
not true https://www.morgan-motor.co.uk...
"The hands that help are better far than lips that pray." - Robert Ingersoll (1833-1899)
here we go again, it's called "investing in extremely large factories", not "burning"
burning would be buying useless sports cars for executives
oh wait... tesla actually BUILDS those !
No, it is true. Despite all the hyperventilating last fall, Tesla finished Q4 with their third highest (nearly second highest) cash-on-hand, $3,4B (#2 was $3,5B in Q3, #1 was 4B in Q1). And now they're actually getting meaningful revenue from Model 3s, and that will only increase throughout 2018. The guidance is now to become GAAP-profitable on a more or less permanent basis later this year.
The stock price is a reflection of the fact that - whether you do or not - people believe in the future of Tesla, regardless of short-term hiccups. There's a huge number of people who want to buy low to ride what they see as its huge long-term growth potential (again, whether you do or not). And helping drive that is public enthusiasm for their products. There's a half million people on the waiting list for the Model 3 alone - the waiting list. Many of whom have been waiting for nearly two years. Again, regardless of whether you personally are enthusiastic for them.
I don't know if you've ever hung out with any TSLA investors (I'm not an investor, but I know quite a few). These are people who've profitted hand-over-fist betting on the company while listening to people like you talk about how the company is doomed for the past decade, and laughed their arses off at people shorting the company while shouting doom and gloom about some sort of imminent bankruptcy, and then losing their shirts. They see each quarterly report as win-win. If the stock goes up after the quarterly report, they make a ton of money. If it goes down, they get to buy on the low.
It's time for Operation Crazy Plan.
Pick a brand. Now google phrases like "problems with my X" or "problems with my new X", where X is the brand. You'll find tons and tons of pages of people complaining about it. And of course you will, because you're deliberately imparting selection bias to your search.
It's amazing the difference I see reading these "Tesla build quality is terrible!" articles / vids people share, versus the reports over on the Model 3 forum of random people documenting their delivery processes as they happen and going over their car with a fine-toothed comb afterwards. From the former, you'd think that they're held together by gaffer tape and carpenter's glue. From the latter, it's nothing even remotely resembling that.
There is a measurement of how satisfied customers are with their cars overall, and that's... wait for it... customer satisfaction. If you don't want a statistical bias, that's your measure. And of course, Consumer Reports tracks it. Guess what? Tesla is almost always at the top of the list. The question you should be asking yourself is not "Why are 10% of Tesla owners unsatisfied", it's "Why are 38% of BMW owners unsatisfied"? "Why are 24% of Audi owners unsatisfied?" "Why are 30% of Lexus owners unsatisfied?" "Why are 40% of Infiniti owners unsatisfied?" "Why are 36% of Cadillac owners unsatisfied?" Etc. And it's worth pointing out that most Tesla customers came from other luxury brands.
Re your "no safe exit from the back" remark:
1) Model 3 unlocks the doors automatically in the event of an accident. P. 33 of the manual. Listed in the crash events alongside the airbags going off, hazard lights going on, interior lights going on, and HV disabled. Note that it takes 12V to trigger the airbags as well, so if your airbags are going off, your rear doors are getting unlocked.
2) Depending on how the rear latch mechanism works (I don't know this), it may well *default* to unlatched upon loss of 12V. Has anyone actually checked what type of electronc latch it has? (or for that matter, checked for an emergency release under trim, like the X)? I'd wager it probably stays latched, but without checking, it's not something you can flatly assert.
3) Even if it did not auto-unlock, even if it did not passive fail to unlocked... how would it be any worse than a coupe? How would it be any worse than child safety locks on most cars (most cars, not Teslas - child safety locks are disabled in the event of an accident in a Tesla)? Where is your doom-and-gloom public safety campaign against coupes and child safety locks?
Funny, because for me finding a panel gap on a Tesla has been somewhat of a unicorn. I keep hearing about this supposed problem of widespread panel gaps, and yet I'm yet to find one in real life - despite trying. I don't doubt that they exist somewhere, but as of yet? I'll keep hunting for them ;)
FYI, Consumer Reports ranks the current Model S as "above average" reliability.
It's time for Operation Crazy Plan.
The fact that there are huge numbers of people out there who want to "buy low" - the reason Tesla's stock has held its value through the Model 3 delays - means that they can raise money through stock if they ever need to. Easily. The only time Tesla will not be able to raise money from stock is if the market suddenly decides that it has no future - aka, customers stop having interest in their products and/or they show signs of sustained negative margins on their products. Neither are even close to reality. Interest is sky high, and Tesla - despite all the capex from scaleup - has solid margins.
Try reading a post next time before commenting: "Despite all the hyperventilating last fall, Tesla finished Q4 with their third highest (nearly second highest) cash-on-hand, $3,4B (#2 was $3,5B in Q3, #1 was 4B in Q1). And now they're actually getting meaningful revenue from Model 3s, and that will only increase throughout 2018. The guidance is now to become GAAP-profitable on a more or less permanent basis later this year."
It's time for Operation Crazy Plan.
I don't think you're going to tempt him away from his 'tesla is doomed' comfort blanket.
I do not want your cheap brainburning drugs. They are useless for work. And I am a working man today.
So far, Tesla has produced enough so that people are eager to throw money at it. No problem raising funds.
They are making cars and have plans for new models and trucks and energy storage and solar panels and roofs. That takes money. As long as they deliver, they can continue to raise money to grow. If they stopped spending on new stuff today, they would be profitable but wouldn't have much of a future.
It took Amazon years to become profitable and now Bezos is world's richest man.
Amazon went into a completely uncontested market, in 1995 no-one had even considered e-commerce. Musk is entering a market where he will not only compete with existing ICE cars, but electric cars from existing manufacturers with far deeper pockets.
Single trick companies are notorious for failure in the automotive world. Musk is depending on subsidies to make his products palatable to buyers and isn't profitable. If you've ever seen a map of who owns bits (or in entirety) of who you'd realise why Tesla is doomed to failure, the entire industry is incestuous.
Calling someone a "hater" only means you can not rationally rebut their argument.
From the article: "Tesla reported record revenue for 2017, floated by customer deposits of the recently announced Semi truck and Roadster sports car...."
Apparently they really are booking the deposits as revenue. That's not entirely unreasonable. My belief is that the IRS to expects you to report income in the year that you get constructive use of the funds. Unless Tesla is putting the deposits in escrow, I reckon they'd probably have to book the deposits as revenue.
I have no idea what GAAS says you should do wrt to the future costs associated with the transaction. Perhaps they are booking some sort of offsetting debit for the expected future costs of manufacturing the goods. ... or maybe not.
You can't see ANYTHING from a car, You've got to get out of the goddamned contraption and walk...Edward Abbey
Basically there are two ways for a public company to raise money. They can sell bonds, or they can issue new stock. Tesla's bonds are rated below investment grade by industry rating agencies. Big Tesla shareholders will not allow Tesla to issue new stock, because it will dilute their percent ownership. When existing shares of stock change hands, the company doesn't get any of that money. You may already know this, but from your comments it sounds like you don't realize that. It sounds like you think that somehow, when the stock price goes up, the company somehow receives money. But that is not the case.
Tesla has accomplished many amazing things and advanced the state of the art. They have proved that there is a market for electric vehicles. But they have not yet proved that a company can turn a profit selling electric cars. (Tesla has not yet achieved profitability.) And the last time they had to raise cash (August 2017), they did so by selling 1.8 billion in junk bonds at 5.3% yield. That is one reason why they have so much cash on hand. Because they just sold 1.8 billion in junk bonds.
Now everything hinges on the model 3. If they cannot get it on track, they are going to be in financial trouble. If they try to sell more bonds, the market will not react well. It will reek of desperation. Based on anecdotal stories from the inside, things are not going well. I am not a Tesla hater. I just think the stock is over-valued.
https://www.cnbc.com/2017/08/1...
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