Tesla Says Model 3 on Track as Quarterly Loss Beats Estimates
bloomberg.com
bloomberg.com
Tesla's car business is very profitable:
Tesla also reported an automotive gross margin excluding SBC and ZEV credit (non-GAAP), of 22.2% in the quarter, up from 19.7% a year ago, but down from 25.0% in Q3...
huge growth:
Looking at the future, Tesla said it expects to deliver 47,000 to 50,000 Model S and Model X vehicles combined in the first half of 2017, representing vehicle delivery growth of 61% to 71% compared with the same period last year.
reinvesting operating profits into investments:
The company also expects to invest between $2 billion and $2.5 billion in capex ahead of the start of Model 3 production and continues "to focus on capital efficiency while also investing in battery cell, pack and energy storage production at Gigafactory 1. It also forecast that both Model 3 and solar roof launches are on track for the second half of the year.
This company is firing (no pun intended) on all cylinders
I don't follow. Tesla is down 1.4%. People who shorted Tesla made money today. Plus a lot of people made money shorting Amazon over Amazon's life.
Shorting a stock has less to do with a company's business plan/success and more to do with predicting the market itself and how they'll respond to various quarterly results (and the likelihood of such results).
Tesla is mostly just prop in the stock market "game."
The fact that Tesla rebounded after hours is neither here nor there. The shorts may have already paid out.
http://blogs.barrons.com/stockstowatchtoday/2017/02/07/tesla...
"Short sellers who believe shares of are due for an imminent decline are paying a hefty price to place their bets, with some shelling out what amounts to an annualized cost of between 90% and 120%" http://blogs.wsj.com/moneybeat/2016/09/22/teslas-short-selle...
White = information easily available to the public. Say, like SEC filings or press releases.
Grey = information between white and black. For example if you over heard a CEO mention something vague to a colleague at a bar and think you can act on it.
black = clearly material insider information
Unless they shorted a month ago or earlier.
All that said I feel Tesla is a good company but if I was focused on them I'd just as well look for shorting opportunities. If it's not evident, I'm a fan of short selling.
Personally I'm the opposite -- I only go long for the long term. But that's what I decided my risk tolerance was as a mid 30-year old. So far my long position in TSLA since late 2013 has been a pretty good result.
For any investment, one simply can not know everything. I gave TSLA up for another area which as paid well. I use to own in Google after the IPO, even during my ownership I would short at times. The same is true with any stock I'm long. If there is an opportunity that I'm comfortable with then I take it.
I think too often people talk about short selling without any real experience doing it. So often it's realities get distorted with chatter. 2008 I learned to short basically during hands on learning as there just wasn't any great opportunity when things were going crazy. There were other great opportunities, my personal favorite was the government shut down under Obama and the predictable re-opening. That was some glorious profiteering right there...
Gross margin ignores all the costs not directly associated with producing the vehicle (basically COGS). There are plenty of companies with positive gross margin (even under GAAP) that fail.
[1]https://www.troutmansanders.com/using-non-gaap-measures--obs...
I hope you're kidding, because the counter examples to this are endless.
As with anything, if you understand what the non-GAAP numbers represent, it's not a problem. If you don't..
That would be an interesting investing thesis to test. You are correct, non-GAAP numbers don't mean a company is hiding something, but it does make you ask why they felt the need to use non-standard accounting principles (the answer is it makes them look better).
In all cases, of course, it's important to understand what the numbers mean.
I'm already up 40%, and I'm holding (though not adding to it as my net worth grows). Such an obvious, incredible company that Wall Street will undervalue until the end of time.
(For the record: I don't recommend doing this. I am in a unique situation where I can own the risk and earn out of it quickly if it goes to zero.)
I accept the risk. I could go to zero and crawl my way back pretty quickly.
I own 3,000 Tesla shares. Purchased most shares at $30 after driving my model s from the factory. I have seen my net worth get cut in half when tsla went from $280 to $140, but never sold any.
LinkedIn, a crappy website, was recently purchased by Microsoft for $30 billion. That's about how much Tesla's market capitalization was 2 months ago.
Take a look at the all of the industries that will be impacted by the convergence of self driving cars, electric cars, and ride sharing.
The global parking industry alone, is a $100 billion dollar industry. Other impacted industries include oil, traditional auto, car insurance, auto repair/servicing/maintenance, auto dealers, etc.
Batteries are getting cheaper than anyone ever expected at this point. Solar recently became more competitive for electricity generation than fossil fuels.
The dam is about to burst.
Tesla is certainly a risk, but it's one of the few companies that actually has a plan which would lead to a trillion dollar market cap if successful. It's not insane to put the bulk of your net worth in an investment like that if you only care about potential upside, not the downside.
also you can try different strategies (search them online, and pick the one according to your risk taste).
They fell short of their goal of 80,000 vehicles in 2016. You're talking about almost doubling their production in 2017... and then doubling it again in 2018! Ain't gonna happen.
Tesla will need about two assembly lines each running two shifts to reach their production goal. Once they get the first line running, balanced, and up to speed, they should be able to build about one car per minute, or 120,000 cars a year, with one shift. They're running about 2000 cars a week now, which is a bit slow, but not unreasonable for a medium volume luxury car.
Long term, Tesla looks like it will be a reasonable company. But will it justify its stock price?
Tesla is a $45B company right now. Toyota is $188B (4.1x more valuable), VW is $78B (1.7x), GM is $58B (1.3x), Ford is $51B (1.1x), Nissan is $42B (0.9x), Fiat Chrysler is $17B (0.4x), Honda is $58B (1.3x), BMW is $56B (1.2x), Daimler is $79B (1.8x), and Mazda is $9B (0.2x). Tesla, right now, is still risky. Toyota's profits are real. GM's profits are real. BMW's profits are real. Tesla's profits might be great in the future - and that risk means the potential profits are worth less than actual profits. So, given that there's a good amount of risk and it's going to be a while before those profits come rolling in, it seems like Tesla would have to be the next Toyota to justify a $45B price tag. Let's say that in 20 years it becomes the next VW or Daimler. Would that justify a $45B price tag today? Probably not. It wouldn't be a high return and the likelihood that Tesla is going to become the next VW or Daimler is low. That's not a dig at Tesla so much as realism. No matter how great you are, it's hard to become one of the top 3 companies in an industry.
You note Tesla's non-GAAP margins of 22.2%. "During the past 13 years, the highest Gross Margin of Honda Motor Co Ltd was 29.06%. The lowest was 22.39%. And the median was 25.58%." 22.2% isn't bad, but selling more vehicles will put downward pressure on that. Gross margin doesn't include things like R&D so spreading that over more sales won't impact gross margins. Can they drive down COGS? Maybe, but serving a less enthusiastic audience also bings costs and challenges. It's easy for Tesla to lean on the enthusiasm and good will of early-adopters right now.
But Tesla also faces existential threats. Musk has said that they should have full self-driving capabilities by the end of 2017. For some people, owning a car will still make sense, but for many getting on-demand transportation means not having to deal with car ownership. Car sharing rates are going to drop to the floor. A self-driving cab can easily handle the load of multiple people that might own cars today. Even if the self-driving cab has a margin of 40%, if you're only paying for 1/5th of the vehicle, well, 140% * 20% = 28%. Given that cars are a major expense for many people, being able to cut 70% off that expense will be attractive to many - and will mean that the demand for cars will become smaller.
Similarly, Tesla has opened up all its electric patents to competitors. Musk has said that making electric cars is easier than making internal combustion ones. So, if Musk shows that electric cars can be profitable, won't everyone else add a huge amount of competition? I mean, Tesla is really cool for opening up its patents to competitors, but that indicates to me that Tesla is more about pushing the human race forward than it is about making money.
Tesla is certainly a cool company. I love that they're pushing us forward - and in cool ways. I love that Teslas don't look ridiculous like a BMW i3. I love that the solar roof they announced is something my parents would be cool with because it looks normal. But I'm also kinda glad that they're doing this with money that isn't mine. Musk is on a mission and it's a cool one. Self-driving electric vehicles with solar power and all sorts of coolness. I think there's a decent chance Tesla will become profitable. But the bet at its current market valuation is that it will become the next Toyota. Nothing short of that would justify the valuation. Eventually, automobiles just don't have the economics or growth of software and the PE ratios are generally in the 6-10 range. I mean, if Tesla becomes as big as Toyota, it won't likely be able to become 10x as big as Toyota. I mean, Toyota sells around 10M automobiles annually. The top 15 auto makers sell around 73M. So, if Tesla becomes Toyota, there's not a lot of growth past that. And based on its current price, if it only becomes GM or Ford or BMW in the next decade, it will have seen basically no growth in its value.
What's the likelihood that Tesla is the next BMW? It's low. Not because Tesla isn't cool. Not because I don't want them to succeed. It's because it's hard to go from 100k niche cars per year to 2.3M. Even if you think the chance if 50% 10 years from now, that means you're saying there's a 50% chance that Tesla should be worth 20% more than it's worth now in 10 years time.
The world would be better if Tesla became the next BMW. We'd have a lot of lower-polluting vehicles on the road and other manufactures would follow Tesla. But I think it's very far from a sure thing and a lot of investors are pricing Tesla like it's a sure thing that Tesla will be the next Toyota. Tesla is so cool and they're pushing us toward a better world. They're making great strides. At the same time, looking at their current valuation, it's hard to see the upside. Maybe the vertical integration will be wonderful. Maybe people won't want self-driving cabs (though that seems unlikely). Maybe other manufacturers won't compete effectively with electrics. But that's a lot of "maybes" in the path of becoming one of the most valuable car companies out there. I hope they do it because I'll have a better world, but I wouldn't bet my money on it.
You have this exactly backwards. For instance, you could have made the exact same argument about Walmart versus Amazon. What you're missing is that the investments that Tesla is making, which hurt short-term profitability, literally create new lines of business that power future revenue streams. The fact that car manufacturers are hoarding profits and failing to invest in the future is precisely why they are overvalued.
I would say there are better ways to make money than a 50 percent chance to make 20 percent more.
Also these predictions are 10+ years in the future. How often have people actually predicted that far from the future? Almost none. The only ones I can think of are bets on fragility: more downsides than upsides as time progresses.
Tesla is a slave to the Lithium Ion process of Panasonic. If a new chemistry breakthrough comes out tomorrow (ie: Redox Flow has huge potential in the utility space, even if it has little potential in the retail space)... Panasonic will be able to switch to the new chemistry but Tesla's battery tech is basically Lithium Ion only.
Tesla's battery technology is literally the battery electronics. Not the chemical cells. Tesla seems to employ chemical experts so that their battery-electronics can better predict the effects of the chemistry... but really... they're only putting together cells. Tesla doesn't make the 18650, Panasonic does. Tesla just puts a bunch of 18650 together, as well as have some sort of algorithm to make them charge / discharge at high efficiency.
Tesla is completely dependent on Panasonic's chemistry. The speed at which LG was able to build a "Silicon-Lithium Ion" battery pack of GM's Bolt only demonstrates how "easy" the battery-pack problem is.
Or that they will sell/license batteries and technology to the top 3 car companies in the world.
So nobody deserves a return on risked capital? That's insane.
Tesla is expected to execute better because it hasn't just set up a department to prototype EVs. Tesla is dedicated to EVs. The company is built on the technology. That results in a lack of legacy distractions, faster iteration cycles, effective vertical integration, and a wholly different culture and brand.
It's a classic startup disrupting incumbent story. It isn't a sure thing, but it's enough to make Tesla very valuable.
Perhaps that sounds like a lot. But consider that Uber is valued at $68B.
But consider that future Tesla will probably be owning/running a service like Uber. Add to that grid storage, solar power installation (from which it makes interest on loans to the consumer), powerwalls, battery production for other industries (including possibly every other car manufacturer), and whatever else Tesla branches out into once those markets are established.
Excessive vertical integration is over-valued, unless you holds a monopoly position in at least one of the component of the vertical.
They're going to own about half of the world's battery production capacity at ~30% reduction in cost per kwh over current production. Plus they're planning three more factories.
Selling core tech to other car companies seems like a lucrative long term move.
How would it do that? And why are self-driving cars a separate category when it comes to battery suppliers?
> They're going to own about half of the world's battery production capacity
There should be about 200 GWh of worldwide production capacity by the time GF1 is fully ramped up. That means they'll have about 17% of it, not half. BYD alone will match that. So will Foxconn and Boston Power. Then there's LG Chem, Samsung SDI, SK Innovation, etc.
These names have committed over $20 billion to additional battery factories over the next 2-3 years, many of which have already broken ground. They're also largely ahead of Tesla's position in the battery business already, are better capitalized, and have no intention of dropping out of the market rather than expanding to meet the expected future demand.
It's easy to get roped in by Tesla's press releases and marketing materials, where they do things like compare the GF's expected production rate at the end of 2018 to worldwide production numbers from 2013. The rest of the market isn't standing still.
I don't think that's going to happen. It might happen on some roads, in order to reduce congestion or whatever, but there's no reason to ban human drivers in general.
That's because "autopilots" can run in passive/safety mode, ready to take over and prevent you doing anything really stupid. This is already starting to happen, in fact, with AEB to be installed in all new cars by 2022.
I have been hearing the same argument for the last 3 years now.
Yeah, I'd say it would not be unfair to compare future Tesla to a company like GE ($270B mkt cap).
Optimistic, but not irrational.
GE Healthcare alone employs >40 000 people and does >4x the revenue of Tesla today.
Maybe if Tesla merged with SpaceX and also with five-six other large companies you'd be about right.
Fair enough (though I'd think the oil & gas you mention would count), but look at any energy company today and you'll see similar numbers. Another poster in this thread compares to Exxon; similarly favorable.
You may not think Tesla will make it there, and you might turn out to be right. But those that do are optimistic; not stupid.
Strength I see for Tesla is unlike the other car companies they don't have capital tied up in the legacy car business. Granted legacy is 97% of the market right now, but it won't be in ten years.
According to this link[2] gas peaker plans were 50% of energy installs in 2013, the best link I could find from a quick search.
[1] Interesting talk on this topic: https://www.youtube.com/watch?v=Kxryv2XrnqM
Yes, there is considerable risk and other players might get there faster than Tesla, but they are certainly in the running and their existing cars collecting real-world data could give them a leg up against the competition. I would also factor in the fact that car manufacturer's and their culture are not used to building and iterating on software services like this quickly. Think about how Microsoft tried to make phone operating systems for years before the iPhone or Android phones launched, and they are now completely side-lined in that space because they just couldn't innovate or copy fast enough before network effects kicked in and locked them out. Similarly, many of those same network effects can exist with cars.
I can see a world where consumer decide to purchase cars based on their technology and charger networks alone. This could even include an App store where a large number of apps available for the car become an important deciding factor.
Once you get out ahead, I think it will be really hard for others to catch up.
Note: I'm note an owner in Tesla, but I'm bullish on their ambitious long-term prospects.
Once there's an autonomous driver it's really just about the cabin accoutrements.
* using clever techniques to stretch the life of batteries
* keeping them in good condition in extreme weather
* keeping them cool
* keeping them safe in an accident
Telsa is figuring all this out much earlier and at bigger scale than most other manufacturers. They can sell their knowledge to other car companies once the Gigafactories start churning out large quantities of batteries.
But will it justify its stock price?
No amount of metrics can or will justify a company like Tesla's current stock price. At this juncture, you are mostly getting into a wild ride. I state this for the following reasons:
1. Tesla is not a car company. Not anymore. It's an energy company. So all comparisons to existing car companies are void. You need to make new comparisons with energy companies. But then, there is no energy company like Tesla. Exxon is probably a good comparison but heck by that measure, Tesla is super cheap.
2. Tesla is run by a Maverick CEO. Admittedly, none of the car or energy company CEOs fit that bill. Tillerson probably came close but he is not with Exxon anymore. What Musk can or will do, is hard to predict. Simply put, there isn't enough data to support such predictions. Tesla's past has been very volatile. So basically it's very hard to model Musk's future plans. He has started digging tunnels now.
One can just go wild imagining the possibilities for Tesla.
They could become a utility company. They could be the storage backbone of many utility companies.
The supercharger network in itself can be highly valuable. Imagine if all cars were to go electric and Musk strikes a deal with all the automakers to make their cars compatible with the supercharger network.
We are just getting started with Tesla and it's super difficult to put a future value on them. Even a 12 month projection is pretty hard.
So analysts are doing the best they can. Draw projections based on tangible raw numbers. Gigafactory growth and Model 3 growth. This growth will not be linear by any measure. So expect dips in the stock price accordingly.
> No amount of metrics can or will justify a company like Tesla's current stock price. At this juncture, you are mostly getting into a wild ride.
FWIW, as a "fan" I've made a great return on my investment in the wild ride.
And this is incorrect. It's very easy to model things like "What if every person on the planet buys a Model S every year at X price and X margins.", and create a valuation model from there. Then make more reasonable projections.
This dismissal of numbers here is disturbing. Believe it or not, Tesla isn't the most original company ever to grace the earth; it has to do business in the business world like everyone else.
And here's the thing: TSLA is priced to become one of the biggest car companies on the planet. Anything short of that, from an investment standpoint, is a failure. If Tesla achieves that..your returns will be mediocre, even though the company has been wildly successful. What is the difficulty in understanding that?
As an investor but not a fan of Tesla, I share his view. "Maverick CEO" just means that he's unpredictable and has made several major pivots before, so expecting Tesla to follow the trajectory of existing car manufacturers is quite imperceptive.
And my post is about how these things are just said, without any evidence. I thought this is a forum of critical thinkers? And yet we have people saying that "well, it's not really a car company" or "but Elon!" trumps actual data.
>so expecting Tesla to follow the trajectory of existing car manufacturers is quite imperceptive
This isn't about the path to get there. At the end of the day, cars are cars, and Tesla isn't the only one building EVs now. To think that they are going to, somehow, have margins in the multiples of existing companies in both the automobile, solar or battery business requires explanation. "Elon is unpredictable" isn't one.
The commenter above is right on this one and it is not a subjective statement. This is a fact.
It often feels like the people discussing Tesla have zero experience with some of these other companies.
Of course, most of the revenue today is generated from selling cars. But we were talking about the value of the company. And this includes expected _future_ returns. And, obviously, Tesla has more than just aspirations. They have built a large part of the Gigafactory already.
Honda certainly is not a car company - but much more than this as well. This was not a good example for your case. Same with GM. I am not sure if your intention was to list companies that are much more than car companies? You were just making my case.
You were talking about what Tesla is. Despite its aspirations, Tesla is a car company right now.
> I am not sure if your intention was to list companies that are much more than car companies?
That was my intention. The discussion was about how we can't compare Tesla to GM or Honda because Tesla "isn't a car company". My point is that those other companies are not either, and so that is not an argument to reject the comparisons out-of-hand.
If I were a Tesla stockholder, I'd want Tesla to focus harder on manufacturing and scaling production of electric cars instead self-driving technology.
BMW is the next BMW; they are fully capable of ramping up their EV line, it just does not make sense at the moment, since they generate more profit producing gas guzzlers. Tesla has done tremendous things related to the charging infrastructure, but their exclusivity regarding high-end EV vehicles itself is just imaginary.
And as others have said, this is just about the EV market. But there's also the extremely high growth potential battery storage market as well as the solar market.
This here. BMW makes more in profit than Tesla is earning in revenue. BMW sells 2.5 million cars a year, 25 times as many as Tesla. And both companies are valued roughly the same? How? Totally overvalued. If Tesla catches up to BMW 25x output (and this is a big If) would it then be worth a trillion dollar? No this is already priced into the stock.
> Musk has said that making electric cars is easier than making internal combustion ones. So, if Musk shows that electric cars can be profitable, won't everyone else add a huge amount of competition?
CWhat is not easy to make is a self-driving car and Teslas battery-Gigafactory also an advantage. Still the statement that an electric car is simple is troubling for a luxury/premium brand. You generally don't want to be in a market where things are easy to make and there is disruption by a race-to-the-bottom. I think the big car makers are more at risk having their lunch eaten by upcoming cheap car makers in China or India than Tesla.
Tesla is like BMW + some BMW suppliers. In that way Tesla is really 4 companies right now, a car company, a component supplier to Toyota and others, a battery company, and a solar company. Energizer is worth 3.3B and has 5,000 workers. Solar city is 'worth' ~$6 billion.
Thus, directly comparing Tesla to BMW is missing the boat.
If there is a big shift overall to electric then the capital expenditures that BMW has already made aren't so valuable.
Yes, they (BMW) are indeed making money now. But have they invested in the right direction? I don't know. Allegedly the market does (as reflected in the relative stock prices)... but the market is often stupid. It is often smart too, but it can sometimes be hard to tell.
isn't BMW behind the proposed european standard for electric vehicle charging?
Are you familiar with how companies are valued? You only seem to be factoring in present considerations. What might happen in the future is a major factor in determining these prices, especially in an industry with so much potential upheaval not too far away. (e.g. what if Tesla profits are 10x BMW's in 20 years? Then they are probably undervalued right now.) If you are confident in your assessment though, you can always put money behind it and make yourself rich.
Instead of looking at the situation through the lens of "Tesla vs other car companies", let's take a step back and look at the battle of "electric vs gasoline". The better EVs do, the more charging infrastructure gets built, and the more receptive people are to buying EVs in general. These kinds of effects disproportionately help Tesla; their whole business is electric cars, whereas EVs are only a tiny slice of the pie for every other established car company.
Because there is so much room for growth in the EV market, we're also not necessarily dealing with a zero-sum game right now. Helping other companies sell more electric cars does not necessarily mean Tesla will suffer reduced demand; it may actually have the opposite effect. Even simple lack of awareness is still a big obstacle for EVs: https://electrek.co/2017/01/03/electric-vehicle-adoption-awa...
Related to this is people getting stuck on the idea of an "EV market", which I don't think was ever really a thing. Tesla has been competing in the same car market that every other car company competes in. The electric drivetrain may be a major factor in enabling a superior design, but most people don't care. I think many short sellers are attributing Tesla's sales to "EV buyers" rather than to "people that buy cars that are better than other cars". These are two very different beliefs about what's going on.
The financial arguments are (in my opinion) largely after-the-fact rationalizations.
I don't know that Tesla is a good stock to own right now; I don't know if they'll be as wildly successful in the long run. But you can't just outright dismiss the previous poster's comparisons to the iPhone.
Tesla has a profitable revenue stream and much better cohesion overall it seems.
No, it isn't. Gross margin isn't profit.
I ask this of all the bulls: at what price would you start selling TSLA rather than buying?
If you don't have an answer than I question your analysis.
The big difference is I can buy those cars today, and for almost all of that last the past couple years, while the Model 3 is still waiting release. I don't think most Tesla fans realize how behind Tesla is in delivering the sub $40,000 EV. We've had them in the market for quite some time. If anything, Tesla is the last major player in this space.
Amazon was the opposite of this. It had all the products and stores while its competitors had less, not more, available product. I have no idea if shorting them is wise right now, but the idea that they're in the same position as Amazon is a bit generous.
Let's see what its real world range is and its real world price is when it actually gets in the hands of consumers, on top of how quickly the $7500 rebate ceiling gets hit for Tesla and what the real cost at the dealership will be for Joe Public.
I have high hopes, but like I wrote, there are many good EV's right now and they aren't selling like hotcakes. Gas is cheap, gas cars are cheap, and they don't have range anxiety. Comparing Tesla to Amazon is ridiculous, everything about Amazon was more convenient than brick and mortar stores. Everything about EV's is less convenient and more expensive than gas cars. Being bearish on Tesla stock is a perfectly rational move right now. The market for a Model 3 is probably much smaller than technophiles at HN think it is. I'm a techie too, but EV's don't fit a lot of my use cases and seem annoying to own. If guys like me aren't frothing at the mouth for this, I can't imagine what its like for Joe Public.
But honestly, let him have it, I say. He's earning it. He's taking huge risks and succeeding where others weren't willing to try.
It would cost something like $5 billion today and would take ~2,000 people ~5 years. Which is relatively speaking a lot less expensive. Put another way, Bill G could build ~17 of them in his lifetime and not be broke.
The point is that technology can be lost. Sure, we may have re-learned the technology in the intervening millennia, but we wouldn't have to re-learn it if it wasn't lost in the first place.
Awesome! What's at one time only the province of the greatest empire on the planet could become just one of many of a billionaire's projects. Let's scale this out from the present day with something of seemingly unattainable current value: How about The United States of America? Maybe several decades hence, a billionaire will have made himself the equivalent? Colonization of Mars, anyone?
Also, he's planning to spend your money on it, not his.
I don't think the Egyptians used magic, perhaps they knew a trick or two we don't know about, i don't think there's any writing left about the construction techniques.
The Egyptians' "trick" was massive amounts of human labor over a long timespan. Nothing you couldn't do a lot faster today if you were willing to spend the money (and manage to get the permits).
The construction of the pyramids is not impressive from a technological point of view, but perhaps from a logistical point of view.
Musk actually said that technology does not move forward if there is nobody (or no company or no government) to push it forward.
Technology is both economics and engineering. Just because something can be done, doesn't mean it should be done if no one is willing to cover the costs.
The absence of a business case is not the same as the absence of technology.
Technology for supersonic aircraft has moved forward since the Concorde. Economically viable applications for that technology for commercial passenger transport have not, however, appeared. (Or, if they have, they haven't been recognized.)
Given their extreme noise, pollution, and ozone layer disruption it's certainly a good thing there aren't hundreds or thousands of Concorde-equivalents plying the skies today.
Plans are 10% of actually building something, at that level. Materials aren't legos, each product needs to be qualified and have its idiosyncrasies addressed. Even at the consumer level, when you change manufacturers you often have to retool your process because while the specs are the same, you're delivered something different.
Keeping technology at the same level requires ongoing engineering. When that engineering is removed, the technology decays. It very quickly becomes a matter of reinvention rather than rebuilding.
Something often forgotten when companies offshore production.
Willing, or able.
What I am disappointed by is how his fans react to criticism. There's healthy respect and there's unhealthy worship. When you have a bunch of people who will get really upset due to any criticism that is on the worship side of the coin. Any community with voting arrows (HN/Reddit) suppresses anything negative said (no matter how supportable/well constructed the criticism may be).
Plus these same fans love to attack competition who are also doing really cool stuff instead of supporting them (e.g. Orbital ATK, Faraday Future, NIKOLA ONE, et al). Using arguments that are often double standards or ignore Tesla/SpaceX's own history to make them work.
But he's changing the world. So I give the guy wide latitude with my opinion. At least he's not yet another useless silicon valley billionaire. He is the least terrible billionaire industrialist IMHO.
This is a great place to meet in the middle between the cynics and fanboys.
I'd say Bill gates still retains that title.
This is condescending and not constructive. You should know better than to post like this on HN.
Yes, he has done great things since he left. But he set the computer industry back decades with his predatory business tactics.
A big part of the reason why we have so many walled gardens now is because he started the trend. And we're lucky we have multiple walled gardens. If he had succeeded a little longer we'd still only have one big one.
So one became a humanitarian statesman? And the other became king of the patent trolls, the most feared man in the Valley? Or perhaps soon, humanitarian statesman and inquisitive chef? Image management is mazing.
Tesla is reaping the rewards for making a good EV and backing it with the right infrastructure, its not rocket science.
If the motor industry had actually not made a half bothered attempt at EVs and actually tried to innovate they would have had similar success.
They have that too!
https://trends.google.com/trends/explore?date=all&q=elon%20m...
Which only started picking up after the Model S was released and started getting great reviews.
The idea that Musk is a "master salesman" or whatever is pretty dumb if you watch any of his interviews. He's definitely good at business, but his fame has been fueled by his achievements alone.
He is a brilliant business man with a vision that is refreshing compared to others. He deserves a superhero status for that. Genius engineer ? That's going a bit too far and I guess that rubs the people you mentioned the wrong way.
What is "tank secured?"
Consumer Reports's testing which went off their scale[0], and the NHTSA crash testing which apparently broke the machine for the roof crush test[1]
[0] http://www.autonews.com/article/20150827/RETAIL03/150829910/...
He's taking huge risks because other people are footing the bill.
And FedEx has a huge implicit subsidy via road maintenance. And Walmart, via various welfare policies. And insurance companies heavily benefit from various government policies.
I can think of these all day.
Billions in loans? Tesla received a $465M loan from the department of energy in 2010, which they paid back in full, with interest, by 2013.
As for subsidies (ZEV credits, EV incentives, state tax credits, etc)? Tesla receives absolutely nothing that isn't available to all US car manufacturers.
I'd much rather have a car company take some of my money in taxes than take my health by polluting.
Remember leaded gasoline? That's only been fully banned in the US for about two decades. Entire generations were damaged, like Flint, MI on a national scale.
But ooh noo, Elon Musk takes some of our taxes, the horror.
Loss was 69 cents vs 53 cents expected.
Revenues beat estimates, though.
Straight from the article.
"Adjusted loss of 69 cents a share, worse than expected."
"Analysts expect an adjusted fourth-quarter loss of 53 cents a share"
Now I don't know what to believe.
Edit: I guess it depends on who's doing the estimating. The linked article says "The fourth-quarter loss, excluding some items, was narrower than the $1.14 a share average estimate among analysts surveyed by Bloomberg."
A more accurate statement would be something like, "The tangible value of the company's assets, as far as anyone can reasonably ascertain with any degree of certainty, declined by 53 cents per share this quarter".
The question is whether the company is making good investments. If you believe its infrastructure investments will provide long-lived, strategic advantages which support the reduction of cost (increasing margins and free cash flow), decreased time to market (making more revenue accessible, more quickly), or other things, these "losses" are hardly bad things. [1]
[1] Of course, this assumes the company has access to continued financing on good terms, which seems to be the case.
Not sure if I buy "got better deals from suppliers" story, but it would be awesome if it was true. Most likely they've hit delays with suppliers.
[0] Q4 2016 update from shareholder letter on http://ir.tesla.com/
[1] http://www.businessinsider.com/tesla-capex-goal-means-1-bill...
Or they just shifted capex spending so that it doesn't fall on this quarter.
I'm not knocking Tesla for doing this, all companies do this (shift costs and revenue around to meet earnings expectations).
They state pretty clearly that is what happened in the letter.
> we continue to negotiate more favorable payment terms with our capital equipment suppliers, pushing some payments closer to the start of Model 3 production and some payments beyond the start of production
So, the "deals" are that they don't have to pay for certain things until later when they have more cash.
It isn't. If you look at their 8-K, it shows that like 99% of publicly traded companies, cap-ex does not show up on the P&L statement.
A regressive mindset.
There is a difference between Tesla, the car company (good) , and TSLA, the stock, which I belive is overpriced and has grey area accounting (bad). Sometimes they get confused.
I think often people react really strongly to others liking something or wanting it to succeed. The more people like something, the more others react.
GM + GE + Exxon = $765 billion
Tesla at $45 billion is still just 6% of that market. There's a lot of uncertainty there, so only a small slice of that $765 billion is getting priced into Tesla's stock, but it's enough to make the people comparing to Ford wonder what the heck is going on.
Energy is an undifferentiated low-margin commodity. (Unless you're getting sweetheart resource extraction rates.) Especially when it comes to grid energy - there is zero synergy between being a producer of it, and selling products that consume it.
> Later this year, we expect to finalize locations for Gigafactories 3, 4 and possibly 5 (Gigafactory 2 is the Tesla solar plant in New York).
Should be an exciting conference call. (5:30pm EST)
http://files.shareholder.com/downloads/ABEA-4CW8X0/394401180...
Gigafactory 4: Asia
Gigafactory 5: Where? Another one in the US?
We have the land, we have the lithium, we have the sunshine and we have a massive car market - 1.2 million cars sold in 2016.
We also have a good automotive manufacturing base... about to go into idle mode. Aussie federal and state governments have been very willing to support local manufacturing, and I'm sure they'd love to hear from Tesla.
I also hope Musk reconsiders his strategy of not making much cheaper EVs "because everyone will pay to be driven by an autonomous vehicle soon".
I think he's way overestimating how soon that will happen. I don't think most people, even in the U.S., where a "Tesla Network" may actually be viable, let alone in the rest of the world, will do that by 2025, if not 2030. That leaves a lot of wasted opportunities for Tesla to become a "market leader" in EVs - or rather to maintain its EV leadership in the market.
By 2025, there will definitely be EVs from Renault and others that cost less than $20,000 and have 200-mile ranges. At half the price of a Model 3, those cars are going to gain a lot of market share, fast, even if Tesla's numbers continue to grow as well.
I know Musk has already mentioned that Model Y will be cheaper, but we don't know just how much cheaper. Hopefully, it will be like $25,000. That would be a nice price-point for an EV by 2020. But I think Tesla needs to go down to $15,000 or at least 18,000 by 2025, as well, even if for that price point and by that moment in time, those cars can't be "Level 5" - although if Model 3 will have that hardware, I think so will the $15,000-18,000 car by 2025 (it will probably need to be more like 2023, and announced in 2021, though, as a lot of EVs will start to come out in 2021-2022).
I'd be careful with figures like this. It's possible they are investing with the idea to ramp up production and get to profitability with scale, or with predicted reductions in battery price. It's also possible that the way CAFE rules calculate an average over a manufacturers entire fleet mean that by taking a loss in one place they can earn or save money in another.
Why do you care whether Tesla has a good car or GM has a good car, rather than, overall, we have many good cars to choose from?
>I know Musk has already mentioned that Model Y will be cheaper, but we don't know just how much cheaper. Hopefully, it will be like $25,000.
We haven't even seen the M3, or heard the price. But we're already talking about the next, cheaper model?
Of course I'd love to have many good cars to choose from, but there's no sign of that happening any time soon.
I'll bet that the cars from Tesla and GM within similar price range will have similar features and performance. Why would you think that Tesla, operating at a much smaller scale, will necessarily be able to do everything cheaper and better? That seems counterintuitive; GM has scale and a dialed in supply chain.
I couldn't tell you exactly why Tesla is able to do better than GM, despite GM having vastly more resources, but it's quite clear that they will.
You know for a fact that a car that doesn't exist yet is faster than one that does? That's interesting.
I, on the other hand, will wait until there's a comparable Bolt and Model 3 on the market, with a similar price, to determine what's better. A 3 series BMW is also "better" than Bolt, but that's irrelevant.
>"The charging infrastructure for long distance travel in the Bolt is awful"
You realize that there are far more regular chargers across the nation than superchargers, right?
"You realize that there are far more regular chargers across the nation than superchargers, right?"
You realize that the vast majority of "regular chargers" are L2 units putting out 6-10kW and are therefore completely worthless for long distance travel? And that the CCS infrastructure is woefully incomplete in the US? And that even if CCS were ubiquitous, the Bolt maxes out at 180MPH charging, which is terrible?
Plan a drive from NYC to LA using the Supercharger network and "regular chargers" and compare how long the trips would take. And that's assuming that the CCS units, which are often installed in single units, aren't blocked or broken.
This is different from a "fact".
>Plan a drive from NYC to LA using the Supercharger network and "regular chargers" and compare how long the trips would take.
Plan a drive across Canada, where I live, and see how far you get with the Supercharger Network. I'll be stranded 300 miles from where I start.
But guess what? Charging infrastructure isn't rocket science. It can be ramped up quickly.
Sceptics emphasise the difference between Tesla's market cap (£40 bn) vs its current sales (75,000) and profits (close to -$1bn). I can imagine a state of the world where they grow dramatically and justify this price tag, but in that case I see serious problems for Daimler.
Similarly, if Daimler flatlines and doesn't see a crash in sales of Mercedez, I'm seriously pessimistic about Tesla.
One analyst specifically took aim at the fourth quarter results, calling out the beat as "phantom" given the exclusion of the SolarCity acquisition from consensus estimates.[1]
[1]http://www.zerohedge.com/news/2017-02-23/market-sours-teslas...
Timing earnings without informational edge, it's gambling.