It was a bunch of news with short term and/or minimal financial repercussions, except for the Moody's downgrade, which itself was based on said news with short term and/or minimal financial repercussions. And it is irrelevant to Tesla as, even if one believes they're "running out of money" (which is a nonsense claim), with $3,4B in the bank they'd still have no need to go to the markets in the short term and they have fixed terms with their suppliers, so whatever rating Moodys happens to give them today is of little to no bearing.
I don't expect the Q1 results to shut these people up (as the current increase in production rates won't be well represented in it), but I expect the Q2 results to do a pretty good job at it. Even if production rates average 2k/wk and even if margins didn't improve at all (which they obviously should as the line gets up to higher rates), across Q2 that'd be a massive revenue increase without a correspondingly large SGA increase.
It's too late for that - they've already stopped the capital investment, for over a year already,
Tesla spent, $1,7B on R&D last quarter alone. And capital investment at both Fremont and Gigafactories 1 and 2 continue, and the Supercharger network is expanding faster than it ever has (just in the past week work has started on the Trans-Canada highway and the North Dakota gap)
If they don't hit certain production numbers they are going to have to raise money (again) via investors or go bankrupt and let their creditors tear them apart.
1) I don't know why you linked to a blog when you can get that graph (up to date) straight from the Bloomberg site. 2) That's actually a terrible graph from Bloomberg, since those are supposed to be S curves, not straight lines (aka, starting out slower, then speeding up). 3) Go further back.
I wouldn't put too much faith in that. Tesla 25% margin is not plausible even for their higher-end cars except perhaps the Performance trims
So you're saying that Tesla has been lying to the SEC for years? The average margin on S and X was 25%. Their overall automotive margin is down to 18% now because of the problems with the 3 dragging down their average, but that's to be expected; you can't have a line designed for 5000/wk running at a fraction of that and still expect to get your design profit margin.
Ford, for example, converted their largest NorthAm truck factory to aluminum production of their flagship F-150 in only 8-10 weeks
From your link:
was a four-year process that involved no shortage of nail chewing, because to pull it off required, essentially, building an entirely new factory where a perfectly good one was already standing
Four. Years. The line downtime was 8-10 weeks, but it took four years to tool up.
Reminder: at the end of Q4, it was ~250/wk average in December, a ~450/wk average in January, and an "extrapolated" 1000/wk rate from the last few days of the quarter. This is significant growth regardless.
Meanwhile, the Grohmann line (replacing the downed zones #1 and #2 on the battery line) was shipped to Tesla last month and should be going live over the course of the next couple months.
What "moving the goalposts"? Even with their delays, they brought a new EV to market in higher volumes faster than GM. So where's your "the big automakers are going to teach upstart Tesla a lesson" coming from? If they're so good at making EVs, well, why don't they? Why is it that Tesla, even with half a year of delays, can tool a brand new line and churn out EVs faster than them?
Give it 5 years. The traditional, old school makers will put Tesla out of business.
Exact same line we've been hearing for the past ten years. Meanwhile, Tesla sells more nearly-six-figure-average vehicles in the US than its closest EV competitors sell econoboxes to a vastly larger customer base and half a million people are waiting on the Model 3, a vehicle designed to - like the S and X - turn a profit 25% margin.
Did you ever stop and think that maybe, just maybe, the ability to make a good, affordable EV doesn't just get magicked into existence because you're a "big automaker", that you actually have to invest billions of dollars a year in research and infrastructure to make it happen? Did you ever stop and think that the reason that the big automakers haven't pushed harder on EVs is because they don't want to, because they're all tooled up and researched to build ICEs?
This article is a press release. It comes on a day when Tesla Motors stock declined over 11%. In one day.
Meanwhile, in the real world, Tesla declined 5,13%, only 3,23% worse than the Dow (which also declined today).
Elon is trying to staunch the bleeding by emailing this "story" out to every single media outlet on the planet.
The "story" was an email sent to employees. Not to the media. Now you may argue that it was sent to employees with the expectation that some of them would leak it to the media. But please get your facts right.
Bloomberg's figures have always been messed up; they seem to have some sort of very long running average and thus catch neither downtimes nor increases in production rates.
S and X production were only down for one day. Lines have to go down periodically regardless; tooling does not last forever, even if you're not doing upgrades.
Seriously, there was literally no news with a long-term impact that affected this slide, apart from the Moody's statement, which was itself based on no news with a long-term impact. The plunge in price was due to a surge in short positions based on a bunch of short term bad news. And the liquidity arguments are absurd.
In broader terms, the bear argument is that Tesla is not going to be able to pay off 900-and-something million in bonds due in spring 2019. Not a typo: 2019. And if that sounds like a lot of money, remember that even in Q1, Tesla's gross profit (quarterly gross profit) was $2,2 billion dollars. Tesla is already producing twice as many vehicles per week as they averaged in 2017. Averaged over Q1? No, it was only the upgrades during recent Fremont downtime that pushed them up that high. But it's important to remember that that gain is just *one* quarter of production acceleration. Even if you want to pretend it's a burst rate (in which it's probably more like 2500/wk extrapolated in order to have the whole week average 2000/wk), and that the 2000/wk is really smoke and mirrors and sustained is really more like 1000-1500/wk, a quarter ago the sustained rate was ~250-450/wk with a burst rate of 1000/wk
Yes, there's also Tesla's SGA expenses which in Q4 were roughly equal to their gross profits, but those don't grow linearly with gross profits; SGA expenses have to scale up before production and sales, and there's no reason to expect SGA growth to anywhere near match gross profit growth. Even at present, SGA is roughly equal to gross profit; the losses were because of ~$1,4B in R&D, which A) can be cut at any time, and B) doesn't increase at all with production scaleup.
Tesla had $3,4B cash on hand as of Q4. Go ahead and subtract the ~200M due in November and call it $3,2B. Now remember what was previously written: after the Fremont downtime earlier this month now up to double the rate as in 2017. Does that mean double the revenue? No, it's even better than that, because they have operations costs and depreciation on their production hardware regardless of how many vehicles it turns out; this means that they simultaneously grow the margin as they scaleup.
This isn't going to dramatically alter Q1's figures, although the quarterly loss will be smaller than Q4's. But it's going to have a profound impact in Q2, and depending on the rate of growth during Q2, even more profound in Q3 and Q4.
Of course the bears live in another world where Tesla is actually secretly super broke and going "bankwupt" tomorrow and will never produce anything and blah blah blah. We know this. TTAC's Tesla Deathwatch is dead, so long live Seeking Alpha, right?
It's worth remembering that the attack that led to the Shadow Brokers leaks involved AV sending scanned files under the guise of virus detections - and that the way it knew what to look for was that "files of interest" were presented as virus signatures.
I take from this that you missed your chance to short the stock? Don't worry, you still can - they're going bankrupt, right? So why not short? Easy money, right? Come on, put your money where your mouth is. Don't tell me that you have literally no money in your bank account. Or do you not actually believe what you preach? If you believed you had a sure thing, then it's free money, and why on Earth would you choose a couple percent interest over that?
Right. They put money on the line for literally years, yet suddenly they're all going to decide "nah...". Got it. Because that's totally normal human behavior.
The same hardware does not make batteries and electric motors as makes ICEs. Half a million people waiting years for Model 3s says otherwise about what people feel they need.
I hope you got your shorts in while the stock was around $350;) If not, hey, you can still jump in, I know some people who missed their chance to buy because they had set triggers for $250 but it only got down to $253 (I bought at $268 - as I have no pretension of being a psychic, I had no interest in trying to "time the bottom").
If you did short (nearly a third of Tesla's stock is in short positions), then - and I mean this completely seriously - I want to offer you my sincere thanks for doing so. I was worried that I was never going to get a chance to buy in at an affordable price before the Model 3 rampup. It's short-sellers who made this possible.
1) The current versions are LR + PUP. Whether you want AP or not has no bearing on your delivery schedule; you can add it or not when you configure, just like wheels, paint options, etc.
2) RHD has been estimated by Musk (so unofficial at this point) at the middle of next year. Europe deliveries are supposed to start at the start of next year. There are a couple people who have shipped US-spec Model 3s to Europe, however.
It absolutely is available in the configurator. What you don't get is to jump to the front of the half-million-long line for a base model. Production is tightly constrained right now, and won't be up to the scale to start producing variants until later this year.
The current variant - which has the long-range package and the premium upgrades package - is $35k + $9k + $5k = $49k. Then -$7,5k for the tax credit, since it's just US buyers right now (well,starting to get into Canada) = $41,5k. Plus $1k doc and delivery charges, but all manufacturers have something like that.
It's $59,5k (not counting the tax credits) if you add literally every option currently available to it. Including one (FSD) that currently does absolutely nothing.
Slashdot Mirror
Ed: year, not quarter. Shuold prorfraed betur :P
Learn the difference between margins and profits. Thanks.
It was a bunch of news with short term and/or minimal financial repercussions, except for the Moody's downgrade, which itself was based on said news with short term and/or minimal financial repercussions. And it is irrelevant to Tesla as, even if one believes they're "running out of money" (which is a nonsense claim), with $3,4B in the bank they'd still have no need to go to the markets in the short term and they have fixed terms with their suppliers, so whatever rating Moodys happens to give them today is of little to no bearing.
I don't expect the Q1 results to shut these people up (as the current increase in production rates won't be well represented in it), but I expect the Q2 results to do a pretty good job at it. Even if production rates average 2k/wk and even if margins didn't improve at all (which they obviously should as the line gets up to higher rates), across Q2 that'd be a massive revenue increase without a correspondingly large SGA increase.
TSLA is up 1,2% in afterhours trading. Is this all the shorts have? Surely they're not "going wobbly" so soon!
Tesla spent, $1,7B on R&D last quarter alone. And capital investment at both Fremont and Gigafactories 1 and 2 continue, and the Supercharger network is expanding faster than it ever has (just in the past week work has started on the Trans-Canada highway and the North Dakota gap)
Read this.
*Swoon*! Oh you spoony bard - I am vanquished.
I shall retreat for the evening and drown my sorrows with Teslaquilla.
(Rei has left the party)
1) I don't know why you linked to a blog when you can get that graph (up to date) straight from the Bloomberg site.
2) That's actually a terrible graph from Bloomberg, since those are supposed to be S curves, not straight lines (aka, starting out slower, then speeding up).
3) Go further back.
So you're saying that Tesla has been lying to the SEC for years? The average margin on S and X was 25%. Their overall automotive margin is down to 18% now because of the problems with the 3 dragging down their average, but that's to be expected; you can't have a line designed for 5000/wk running at a fraction of that and still expect to get your design profit margin.
From your link:
Four. Years. The line downtime was 8-10 weeks, but it took four years to tool up.
Reminder: at the end of Q4, it was ~250/wk average in December, a ~450/wk average in January, and an "extrapolated" 1000/wk rate from the last few days of the quarter. This is significant growth regardless.
Meanwhile, the Grohmann line (replacing the downed zones #1 and #2 on the battery line) was shipped to Tesla last month and should be going live over the course of the next couple months.
What "moving the goalposts"? Even with their delays, they brought a new EV to market in higher volumes faster than GM. So where's your "the big automakers are going to teach upstart Tesla a lesson" coming from? If they're so good at making EVs, well, why don't they? Why is it that Tesla, even with half a year of delays, can tool a brand new line and churn out EVs faster than them?
Exact same line we've been hearing for the past ten years. Meanwhile, Tesla sells more nearly-six-figure-average vehicles in the US than its closest EV competitors sell econoboxes to a vastly larger customer base and half a million people are waiting on the Model 3, a vehicle designed to - like the S and X - turn a profit 25% margin.
Did you ever stop and think that maybe, just maybe, the ability to make a good, affordable EV doesn't just get magicked into existence because you're a "big automaker", that you actually have to invest billions of dollars a year in research and infrastructure to make it happen? Did you ever stop and think that the reason that the big automakers haven't pushed harder on EVs is because they don't want to, because they're all tooled up and researched to build ICEs?
Meanwhile, in the real world, Tesla declined 5,13%, only 3,23% worse than the Dow (which also declined today).
The "story" was an email sent to employees. Not to the media. Now you may argue that it was sent to employees with the expectation that some of them would leak it to the media. But please get your facts right.
Meanwhile, Tesla produced its first 10k Model 3s in the time it took GM to produce its first 1000 Bolts. I guess that's that "decades to tune their processes and supply chains" they had going for them, eh? And it costs Tesla $10k less per vehicle.
Welcome to Bear World, where pointing out facts is "spin".
The only reporting that described people from the S and X lines working on the 3 line described it as a 1-day downtime.
The full quote was, "If things go as planned today, we will comfortably exceed that number over a seven-day period”".
Bloomberg's figures have always been messed up; they seem to have some sort of very long running average and thus catch neither downtimes nor increases in production rates.
S and X production were only down for one day. Lines have to go down periodically regardless; tooling does not last forever, even if you're not doing upgrades.
What financial statements? SpaceX is a privately held company. And it's on a roll.
You're thinking of Tesla. They already went bankwupt ;)
Seriously, there was literally no news with a long-term impact that affected this slide, apart from the Moody's statement, which was itself based on no news with a long-term impact. The plunge in price was due to a surge in short positions based on a bunch of short term bad news. And the liquidity arguments are absurd.
In broader terms, the bear argument is that Tesla is not going to be able to pay off 900-and-something million in bonds due in spring 2019. Not a typo: 2019. And if that sounds like a lot of money, remember that even in Q1, Tesla's gross profit (quarterly gross profit) was $2,2 billion dollars. Tesla is already producing twice as many vehicles per week as they averaged in 2017. Averaged over Q1? No, it was only the upgrades during recent Fremont downtime that pushed them up that high. But it's important to remember that that gain is just *one* quarter of production acceleration. Even if you want to pretend it's a burst rate (in which it's probably more like 2500/wk extrapolated in order to have the whole week average 2000/wk), and that the 2000/wk is really smoke and mirrors and sustained is really more like 1000-1500/wk, a quarter ago the sustained rate was ~250-450/wk with a burst rate of 1000/wk
Yes, there's also Tesla's SGA expenses which in Q4 were roughly equal to their gross profits, but those don't grow linearly with gross profits; SGA expenses have to scale up before production and sales, and there's no reason to expect SGA growth to anywhere near match gross profit growth. Even at present, SGA is roughly equal to gross profit; the losses were because of ~$1,4B in R&D, which A) can be cut at any time, and B) doesn't increase at all with production scaleup.
Tesla had $3,4B cash on hand as of Q4. Go ahead and subtract the ~200M due in November and call it $3,2B. Now remember what was previously written: after the Fremont downtime earlier this month now up to double the rate as in 2017. Does that mean double the revenue? No, it's even better than that, because they have operations costs and depreciation on their production hardware regardless of how many vehicles it turns out; this means that they simultaneously grow the margin as they scaleup.
This isn't going to dramatically alter Q1's figures, although the quarterly loss will be smaller than Q4's. But it's going to have a profound impact in Q2, and depending on the rate of growth during Q2, even more profound in Q3 and Q4.
Of course the bears live in another world where Tesla is actually secretly super broke and going "bankwupt" tomorrow and will never produce anything and blah blah blah. We know this. TTAC's Tesla Deathwatch is dead, so long live Seeking Alpha, right?
It's worth remembering that the attack that led to the Shadow Brokers leaks involved AV sending scanned files under the guise of virus detections - and that the way it knew what to look for was that "files of interest" were presented as virus signatures.
I take from this that you missed your chance to short the stock? Don't worry, you still can - they're going bankrupt, right? So why not short? Easy money, right? Come on, put your money where your mouth is. Don't tell me that you have literally no money in your bank account. Or do you not actually believe what you preach? If you believed you had a sure thing, then it's free money, and why on Earth would you choose a couple percent interest over that?
Come on, short it!
Right. They put money on the line for literally years, yet suddenly they're all going to decide "nah...". Got it. Because that's totally normal human behavior.
The same hardware does not make batteries and electric motors as makes ICEs.
Half a million people waiting years for Model 3s says otherwise about what people feel they need.
I hope you got your shorts in while the stock was around $350 ;) If not, hey, you can still jump in, I know some people who missed their chance to buy because they had set triggers for $250 but it only got down to $253 (I bought at $268 - as I have no pretension of being a psychic, I had no interest in trying to "time the bottom").
If you did short (nearly a third of Tesla's stock is in short positions), then - and I mean this completely seriously - I want to offer you my sincere thanks for doing so. I was worried that I was never going to get a chance to buy in at an affordable price before the Model 3 rampup. It's short-sellers who made this possible.
Minor corrections.
1) The current versions are LR + PUP. Whether you want AP or not has no bearing on your delivery schedule; you can add it or not when you configure, just like wheels, paint options, etc.
2) RHD has been estimated by Musk (so unofficial at this point) at the middle of next year. Europe deliveries are supposed to start at the start of next year. There are a couple people who have shipped US-spec Model 3s to Europe, however.
It absolutely is available in the configurator. What you don't get is to jump to the front of the half-million-long line for a base model. Production is tightly constrained right now, and won't be up to the scale to start producing variants until later this year.
The current variant - which has the long-range package and the premium upgrades package - is $35k + $9k + $5k = $49k. Then -$7,5k for the tax credit, since it's just US buyers right now (well,starting to get into Canada) = $41,5k. Plus $1k doc and delivery charges, but all manufacturers have something like that.
It's $59,5k (not counting the tax credits) if you add literally every option currently available to it. Including one (FSD) that currently does absolutely nothing.
Trying again...