Tesla Earnings Show Record Revenues With Record Losses (techcrunch.com)

TechCrunch reports of Tesla's recent Q1 2018 earnings: Tesla reported its Q1 2018 earnings today, posting adjusted losses of $3.35 per share with revenues on $3.4 billion. This is technically a beat, as analysts expected Tesla to report a loss of $3.48 a share with revenues of $3.22 billion, up from $2.7 billion a year ago. Tesla also ended Q1 with $2.7 billion in cash, down from $3.4 billion in cash at the beginning of the year. This quarter, Tesla's net losses were a record $784.6 million ($4.19 per share). So, while it's revenue was higher than ever before, it also reported record losses. At market close today, Tesla was trading at $301.15. In after-hours, Tesla is trading around $287. In its letter to investors, Tesla provided some updates to its Model 3 production, noting it hit 2,270 cars produced per week for three straight weeks in April. Tesla said demand for the Model S and Model X is still quite strong as it hit its highest order number in Q1. "Tesla said it produced 24,728 Model S cars and X vehicles, while delivering a total of 21,815 of them," reports TechCrunch. Tesla also went on to say that they expect to be profitable in Q3 once they reach their 5,000 Model 3 cars produced per week goal.

CEO Elon Musk said the automaker will launch production of the Tesla Model Y crossover in 24 months, which Musk claims to be a "manufacturing revolution." Additionally, Musk said Tesla will publish quarterly reports about the safety of its Autopilot driver assistant feature following a high-profile Autopilot crash in March.

Comments

As usual promises for the future

[grungeman]

and disappointments for the present.

Keep in mind that currently only the more expensive Model 3 is produced, which is supposed to yield in higher profit (or lower loss in Tesla's case) than the base model, which most people want.

And the model Y will be a manufacturing revolution? I would be more inclined to believe that it if Tesla got their shít together on producing the Model 3.

Finally Musk's behaviour on the phone conference was more than awkward. The pressure seems to be leaving marks on him.

Re:As usual promises for the future

[djinn6]

I previously wrote about Tesla's troubles based on their Q4 results. Looking at Q1, it seems like nothing's changed.

Unfortunately, they're already in a bad spot, so they really need a big change to keep it afloat. Production numbers are still low at 2500 per week. Better than before, but not nearly enough. Their margin is not bad at 19%, but that's all coming from Model S and X. Even if Model 3 could reach that level, selling 5000 per week still only comes out to $344 million in gross profit. They would have to produce and sell triple that number to be in the black.

They didn't have any stock offerings this time, so most of the losses were covered by new debt. The remainder came from their enormous pile of $2 billion in cash.

Re: As usual promises for the future

[Richard_at_work]

Boeing had a 7 year backlog on the 787-8, and isn't going to make a single penny in profit on any of them because of the level they fucked up - the current forecast for the entire 787 program (787-8, -9 and -10) is for it to start being profitable sometime next decade.

After a 1000 aircraft has been delivered.

Boeing only just stopped adding to its debt pile on the 787 last year - a decade after it was first supposed to fly.

So no, there's no real reason to get excited about the backlog, because a massive backlog does not automatically equate to a success.

Re: As usual promises for the future

[Rei]

First off, it would have been only $400M, except they had $120Ms more inventory backlogged due to transit delays than last quarter and a $169M hit on accounts receivable due to production skyrocketing at the end of the quarter (aka, more expenses but the revenue doesn't come until delivery). That money rolled into April.

The simple fact is that at Tesla's Q1 burn rate it would have plenty of quarters left to achieve profitability (the only debt due this year is $200M in November). But it doesn't need plenty of quarters. Almost all of Q1 was spent at ~1000/wk Model 3 production, but it jumped to 2k/wk - sustained - right at the end of the quarter. Now Gigafactory is running at 3k/wk sustained, with bursts already up to the Q2 target of 5k/wk. Most of Fremont is up to 3k/wk except general assembly and the paint shop.

There's a reason that Tesla is so confident that they've resumed expanding Gigafactory.

esla's had some people waiting more than two years for the cars they placed deposits for

And? The number of reservation holders was confirmed to be over 450k.

and one can count the number of profitable quarters in the company's 15-year history on one hand.

Yes, welcome to the world of growth stocks. If you don't like growth stocks, stay out of the water. Growing a company from "nothing" to "one of the largest in the world" takes monstrous amounts of capex, which gets spent well ahead of the revenue that it returns.

3.5 years of backlog isn't anything to be cheerful about either - eventually people are going to lose patience

Yes, you've been saying this for two years now. How's this hypothesis been working out?

Yes, some people have, but they've been more than replaced by new reservation holders - and the majority have not. Why? Because - hype notwithstanding - the competition is a joke. The "competition" literally takes twice as long to charge on a road trip, from an inferior network, and gives you a lot less vehicle for your money, with far less interesting options packages. Yes, some people disagree, but the vast majority demonstrably do not. Look at the number of people buying Bolts, for example, vs. those waiting in line for a Model 3.

Why is it that the hype from competitors never plays out as a serious threat? We're back to capex. Making good, profitable EVs takes vast amounts of capex, both in R&D, and in production. And at present, Tesla is the only company that's been doing that. Some companies are - finally, and I'm glad - talking about majorly upping their EV capex, and I cheer that. But the benefits of that will take years to materialize. Without a major capex spend, you either have to make a worse vehicle at a given price point, or subsidize it. And they certainly can subsidize it, but if they do so, they can only afford to make it available in limited markets. Either way, it becomes "not a threat".

Example: most companies today are working on "next generation" li-ions for EVs with cathodes at an 8:1:1 ratio of nickel:cobalt:manganese-or-alumium. You want to keep the cobalt down because it's the most expensive part. Tesla today already has the highest energy density cells in the industry and they're better than 8:1:1 already. Mercedes, when they heard about Tesla's Semi plans, said they "break the laws of physics". No, they just have better batteries than you. That's 500 miles with their current cells; they think they may be up to 600 by then. Batteries are just one component, mind you; capex affects everything.

Re: As usual promises for the future

[Rei]

Other things we learned yesterday, while we're at it:

1) 5k is targeted at the end of Q2 (actually 6k, but that's to make sure they can at least get to 5k). From the newsletter: "After achieving a production rate of 5,000 per week, we will begin offering new options such as all-wheel-drive and the base model with a standard-sized battery pack."

2) Concerning the FUD that Tesla is "giving up" on factory automation, Tesla is actually doubling down on it. What they were getting rid of was a small number of specific systems that were cases of serious automation overreach. One that Musk couldn't restrain himself from self-deprecating laughter on was "FluffBot". Part of the battery pack assembly process involves careful placement of a "fluff", and they designed a robot to do it. "Fluff" being one of the hardest things you could think of for a robot to have to handle. And they had to make this elaborate computer vision system for it, and it still kept coming up with new, interesting ways to either fail to pick up the foam or to place it in unexpected places. They were paying a lot more on engineers to try to keep FluffBot working and correct its constant problems than it would have cost just to pay people to place the fluff, so of course they scrapped it.

3) GAAP automotive gross margins en route back up 25% after being dragged down by the 3 - now up to 19,7%. S and X gross margins *over* 25%. But Model 3 margins still negative in Q1. Non-GAAP automotive margins (without ZEV credits) saw a nearly 5% boost.

4) Bosch is on the hook for the S recall - as expected, but which lots of people here were making a storm in a teacup about.

5) Both solar and energy storage are expecting a major ramp in Q3-Q4. Musk hinted at a 1GWh battery project in the works, dwarfing the Australia one.

6) Before the downtime near the end of Q1 that boosted production, it took 7 hours to assemble a battery pack. It's now 17 minutes.

7) Model 3 is now nearly the best selling sedan in its class. Not "electric sedan" - all sedans in its class. This month it should take the lead, and by the end of the year take almost half the market.

8) The per-unit depreciation on the production system is around $2k per vehicle, well below its competitors.

9) Based on their results so far, Tesla expects to be able to continue to reduce the cobalt, to "almost nothing".

10) While Musk didn't care much for the question, when asked about integration of SpaceX broadband into Tesla vehicles, his answer was about three years for that.

11) Model Y capex is not to become significant until 2019, with production starting in 2020 ("about 24 months from now"). But the unveiling will be this summer. Production will not be at Fremont.

12) Model 3 gross margin is expected at 20% by the end of Q4, hitting 25% early next year.

13) Tesla has no near-term plan to go to 350kW for cars. Their perspective is that it's a dumb idea to go to higher C-rate cells, which come with lower energy densities; Musk compared it to having a phone that charges quickly but only lasts a few hours; it doesn't make a good product. Tesla prefers to go to more cells per vehicle to boost net charging speeds than higher density cells. Thinks 350kW starts to make sense around 200kWh (unsaid: the new Tesla Roadster is expected to have around 200kWh)

14) Repeated that they would like for other automakers to support supercharging, and they'd be glad to let them onto the network, so long as the designers accepted the Tesla plug and the owners paid the cost of charging. No other automaker has expressed an interest. "Moats are lame. They're nice and sort of quaint in a vestigial way, but if your only defense against invading armies is a moat, you won't last long. Pace of innovation is your only defense. "

15) Expects Semi to hurt rail's margins - just from the reduced trucking cost to begin with, but in particular after platooning comes in. Rail is efficient, but suffers from major "last leg" problems for most go

Re:As usual promises for the future

[Rei]

It's not really a mass-market sedan at $35k starting price, with lots of ways to option it out. It's a small entry-level sports sedan, akin to a BMW 3-series or Audi A4. Now, its TCO may be mass market, but its purchase price isn't. BMW's margins are usually around 20%.

Also, Tesla is a lot more vertically integrated than most manufacturers. Auto parts suppliers have higher margins than automakers. Lastly, Tesla has a number of very popular software options. They're almost entirely profit. If there was no margin at all on the base model, autopilot alone (no FSD) would push it up to a 14% margin.

Several big players have huge short positions

[Maxo-Texas]

And they are pushing negative news all over the place. I see it show up in my Yahoo feed.

If Tesla doesn't fail, they will take huge losses.

I'm rooting for Tesla.

Actually losing money

[Anonymous Coward]

Until now I've been shrugging off much of the criticism of Tesla "losing" money as it has been recording gross profits on each vehicle sold, but overall "losing" money because it has been spending a lot on capital plant and equipment.

The latest results though show that Tesla is selling each Model 3 at a loss. While the company states that it expects to break-even in Q2 and start making money in 2H, the only version of the Model 3 that it is currently selling is the high-spec one which should be more profitable.

Ramping up production and selling at a loss (negative gross margin) isn't exactly a recipe for corporate longevity....

Re:long term.

[Calydor]

Amazon forged into semi-explored territory: Everyone wants to buy stuff, the question was how much and how willingly they'd do it online.

Tesla is forging into semi-explored territory: Everyone wants to have cars, the question is how willingly they'll buy electric cars with a reasonably high degree of automation.

Re:Meanwhile at a REAL car manufacturer...

[Rei]

Which is totally a reasonable point, because stock is totally priced based on companies current revenue and profit, right?

Better tell that to all of the naive dupes that own Tesla's stock. Here, I'll give you a list of the biggest ones: Fidelity owns nearly 10% of Tesla, in its OTC portfolio, which is in turn mainly owned by Apple, Amazon and Alphabet. The next biggest dupe is Harbor Capital. Followed by those morons over at JP Morgan. Vanguard is next on the suckers list.

Clearly the smart money is on the short-selling echo chamber over at Seeking Alpha, rather than the rubes at major investment firms.

Re: long term.

[Rei]

Wow, a guy worth 20 billion dollars spending $700 million on himself, with the rest tied up in change-the-world type companies. What a selfish prick.

Meanwhile, Sergei Brin is having a one of the largest airships ever made built for him, to serve as his private flying yacht.

Re:Once Fords, GMs, Toyotas seriously push electri

[Rei]

BMW is the current EV king with their I3. For ever Tesla I see on the road, I see 5 or 6 i3's.

Maybe where you live. But even in Europe, in 2017 while 10,5% of European BEV sales were i3s, 11,5% were Model S. Nissan was barely ahead of Model S, at 12,9% (Zoe had the lead at 22,7%), which I'll never understand.

As for the UK specifically, in 2017, 41,1% of BEV sales were Leafs, but Model S was #2 at 17,9%. i3 was 5th place at 8,3%.

Re:Once Fords, GMs, Toyotas seriously push electri

[Rei]

The reason that EVs have been more common at taking over the higher end has nothing to do with "who's producing them". It's because - opposite of gasoline cars - adding range is expensive but adding power is cheap. You need a roughly constant amount of batteries whether you're going for the high end or the low end, and those batteries cost money that makes it hard to compete at the low end. So you might as well start at the high end and work your way down.

And capital costs do not stem from "who's making it". They stem from "how much you invest in making it". Historically, Tesla has invested far more in capex than the major automakers, and that puts the latter in a competitive disadvantage from an economics situation - either having to make less competitive vehicles, or having to subsidize them (and thus limit total production to keep costs down).

This situation looks to be changing (e.g. VW's capital plans are no slack, for example), and I look forward to a more competitive market a few years from now. But you can't make up this sort of deficit overnight.

Re:long term.

[Rei]

Exactly and it astounds me that Tesla has so many problems when even the low-end car makers have it down to a science.

Meanwhile in the real world, even with the delays, from the start of tooling, Tesla made its first 10k vehicles faster than GM made the first 1k Bolts.

Tesla sets absurdly fast timelines for itself relative to normal product development timelines. That they frequently miss those timelines doesn't mean that they've done a bad job, it means that the company's employees aren't magicians.

Re:Fast follower

[tomhath]

there's few people waiting for a Bolt, while Tesla has half a million people waiting for the Model 3.

GM sold all the Bolts they chose to make last year, an order of magnitude more than Tesla sold Model 3's.

GM is still in what Musk likes to call the "capex" phase of electric car production, that's true.They won't ramp up production until the cost of production justifies it.

Re:Different strategies for different size compani

[Rei]

Not even remotely true. Your should check the news [reuters.com]. The big automakers are making big investments [reuters.com] into EVs

Read my other posts elsewhere in this thread, where I've discussed their investments. I think it's great that some of them have finally, recently started making (frequently backloaded) capex investments of appropriate scale. But these won't pay off for several years. I really look forward to seeing real competition several years from now. But pretending that this is equivalent to the short term market is wishful thinking.

??? Spending money just to spend money is idiotic.

Developing technology that works in a real world, mass-manufacturing environment, while simultaneously securing market share and real-world data collection, is in no way "spending money just to spend money". Weak EV R&D spending and weak production volumes just do not compete; they guarantee you fall behind.

A chassis is still a chassis.

Actually, EV chassis are generally quite different from ICE chassis, at least in design. The battery pack functions as a stiffening element, and the loadbearing needs and available space are totally different. Real-world driving data shows how effectively your designs play out in practice.

A suspension is still a suspension.

Given that even well-known Tesla hater Sandy Munroe has referred to the Model 3's new suspension design as amazing and among the components that other automakers ignore at their own peril, and its handling has received glowing reviews, you could have picked a better example. No, it's not EV specific, but since you bring it up... (and actually, being an EV does affect suspension because of the lower weight distribution)

The vast majority of the vehicle is more or less identical to stuff Ford and GM have been doing forever.

The "dinosaur technology" is something any company - including Tesla - can hire countless existing people from the existing auto industry all around the world to fill its ranks with. That's a meaningless issue. The problem is that the rest of the auto industry can't do the reverse, at least not nearly to the same extent. They can leach random Tesla talent, and do from time to time, but there's just not enough people with EV component experience to go around. And not nearly as much EV tech is public and well established knowledge.

EV tech is the core of the vehicle. You start with the batteries, which are in turn a composite of cathode, anode, electrolyte, separator and structural tech elements and their integration thereof into an efficient mass manufacturing process. I know your plan is just "hire an existing batterymaker". Sure, if you've got years and billions in capex, go ahead. But that's precisely the point: these things don't happen overnight or without massive investments.

Cells are of course just a small part of the picture. From the cells you make batteries, which are far more complex beasts than most people give them credit for, in regards to charge management, heat management (between different vehicle subsystems), fire protection, structural integrity, etc. The charger's costs need to be kept down and the power kept up. Motor tech is a particularly complex research field with many fronts advancing simultaneously, and Tesla's PMSRM work is at the forefront. Again, motor tech determines cost, weight, power, and efficiency, and thus other factors like range and handling.

Then you have the broader infrastructure developed alongside the EV powertrain. For example, Tesla has already migrated the Model 3 to a hub-based communication and power system, cutting the wiring harness in half compared to a typical car (both connections and weight). Model Y is looking to take it even further and upgrade to a HV wiring harness, eliminating most of the 1