Were they took the enormous amount amount of money they got from investors, and put it into making electric Suzuki Alto lookalikes, they would've been bathing in cash now.
But no, those guys not only did not recognise Tesla's failure, but they doubled down on it, and ran a car company as if it was some Internet dotcom.
I’ve been hearing about the death of Tesla for almost 10 years. It’s getting old.
More about profit margins in second quarter report. It seems it is currently 19% per car. https://ir.tesla.com/static-files/1e70a30c-20a7-48b3-a1f6-69...
Only under magical unicorn fantasy accounting. Under the same accounting standards every other car maker uses (GAAP), Tesla still loses money on each car.
From Tesla's own financial report:
"excluding regulatory credit revenue, automotive gross margin improved by ~200bp (compared to a decrease of 125bp on a GAAP basis). [emphasis added]
1) Tesla's GAAP gross margin was (positive) 14.5% for the most recent quarter [https://ir.tesla.com/static-files/1e70a30c-20a7-48b3-a1f6-69...]
2) Breaking out GAAP and non-GAAP figures is totally standard and commonplace among publicly traded companies. Take a look at Ford's Q2 letter, for example, which has a whole page describing why they use Non-GAAP financial measures to supplement GAAP figures [https://s22.q4cdn.com/857684434/files/doc_financials/2019/q2...]
Tesla says that the Model 3’s gross margin “should grow significantly” to approximately 15 percent in the third quarter and 20 percent in fourth quarter, thanks to “continued reduction in manufacturing costs and to some extent an improving mix.” From here on out, CEO Elon said during a call with analysts Wednesday evening, “the goal is to be profitable and cash flow positive every quarter going forward.”
Please do not quote by using a code box. Use italics (put an asterisk on either end) or a carrot > to indicate a quote, rather than creating a endlessly long sideways scroller.
I'm not rooting against or for Tesla, but they are extra shady regarding accounting. They are losing money on each car. There is so much misinformation around this pushed by Tesla fans and the company itself though that you might easily believe they are profitable, but they are not!
1) Tesla's GAAP gross margin was 14.5% for the most recent quarter [https://ir.tesla.com/static-files/1e70a30c-20a7-48b3-a1f6-69...]
2) Breaking out GAAP and non-GAAP figures is totally standard and commonplace among publicly traded companies. Take a look at Ford's Q2 letter, for example, which includes a whole page describing how and why they use Non-GAAP financial measures to supplement GAAP figures [https://s22.q4cdn.com/857684434/files/doc_financials/2019/q2...]
Right now they just can't manufacture the cars fast enough for the demand. They'll have to keep building factories which takes a big chunk from their cash.
What your opinion about the future of the company is doesn't matter about what current situation is.
People have been saying Tesla will fail 'soon' for a long time. Once they actually do fail, then we can say they have failed. Before then its just personal opinions.
Electric cars (heck, automotive manufacturing in general) are a tough business. Tesla is now competing at a (soon) $7500 disadvantage in the US compared to most of their competitors due to the phase out of the EV credit. Gas prices are incredibly, ridiculously low. And yet they're still in very high demand, outselling everyone else in the US in raw unit sales and globally in revenue.
That's no guarantee that things couldn't get worse, but Tesla has outlived many of its detractors before, and it's not just because of Elon Musk.
The 7500$ is a huge advantage for Tesla today that was pushed through a lot of lobbying. It literally means that everyone's tax money is subsidizing luxury cars for the rich.
Once this gets phased out, they will have to compete with regular prices against normal car and their high price point will make it way less attractive.
It is true that soon competitors will still get the 7500$ tax cut while Tesla exhausted theirs. That's simply because they use all their credits and now need to come to a price point that makes sense without subsidies.
The $7500 credit is all but completely phased out already for Tesla (it's only $1,875 right now). And yet they're STILL outcompeting the other Plug-in electric cars in the US by a large margin (13,150 Model 3s in August versus 2500 Prius Prime, the next most-sold plug-in vehicle). That is my point.
It's an advantage to conventional carmakers who wait to the last minute to invest in electrification, after someone else has done all the hard work, and just integrate some off the shelf electric drivetrain. It puts those who actually invest in a full, cleansheet efficient electric drivetrain domestically in the US (like Tesla and GM) at a big disadvantage versus foreign firms or for multinational corporations like the Volkswagen group who have multiple subsidiaries like Audi, VW, Porsche who each get their own group of credits (even though the Volkswagen Group's MEB platform will be available to all their subsidiaries).
It makes no sense and incentivizes the wrong behavior: advantages foreign firms above domestic. Advantages latecomers over those with the foresight to invest early (Tesla and GM, for example). There either should be one big pot of credits, or the credits should be sunsetted on a global timeline (instead of by number).
And until conventional cars are paying for their full externalities from carbon emissions (and others), they are being implicitly subsidized and an EV credit of some sort (although imperfect) will be needed to level the playing field.
But as a company, they still have to find a way to make money, and that is not a given at this point.
https://qz.com/1674199/teslas-losses-are-piling-up-despite-r...
You cannot say they have failed, because they haven't yet closed the doors. But I don't see how they are "clearly not a failure" if you include "profitable business" in their list of goals.
And many people who walk onto a car sales lot with $25k in mind end up getting talked into a $35k car, so with all the savings Tesla really can be the cheaper option.
With Tesla if you get talked into the $50k+ stealth performance you’re still on equal footing with the $35k car until you add future self driving.
I would think that Tesla TCO would be through the roof once the cars start aging.
It's one thing to have the dealership fix every little thing under warranty - quite another to pay $5,000 to have your sunroof fixed because it requires a special encryption chip.
https://www.edmunds.com/mazda/3/2015/cost-to-own/#style=2007...
So I'm allowed to think the Model 3 is expensive. Of course, I'm just me, I'm not "mainstream." I think it's too expensive for mainstream because the only person I know that bought one is accustomed to driving high-end German cars, and she paid $60k for her Model 3. I get the feeling the mainstream doesn't believe a Tesla is affordable. Maybe they are wrong, in that if they have a garage for charging, they'd save enough in gas and maintenance to make up the difference, but most people don't buy cars based on TCO (well, I don't know that for sure, but I have a feeling that's true.)
1) If you are in a crash, spare parts/body work takes months to complete, I can't afford to be without a car for 3-6 months.
2) Requires charging. I live in an apartment, it is unclear where I can charge.
I don't doubt that Tesla has more issues with parts availability than other manufacturers, but if you need a car every day, you should have a backup plan -- eg, rental car add-on to your insurance policy so you have something to drive while your primary vehicle is being repaired. I've had gas-powered cars that were in the body shop for a month or more.
[0] - https://www.sfgate.com/cars/article/tesla-repair-wait-time-c...
The body work issues you mention are mostly in the past. And you wouldn’t be without a car.
So, red herrings.
In the American market. In Canada, a Model 3 now costs the same as a Model S did at launch. Other manufacturers have worked out ways to soften the price increase due to currency fluctuations.
Every so often I run numbers on electric cars for my use, but I'm never able to get a break-even point that isn't measured in decades.
If you have purchased a Tesla before that point, others will be paying you for rides in your self-driving car as part of a ride-hailing fleet. Just a thought, might not pan out, as with any investment.
It's not so much about what you support... the tax will come down from above with or without your support. It's more about what investments are you willing to make personally, because that part is really up to you. There are risks, to be sure, but in the meantime it's a fun, safe car that doesn't cost as much as people think.
They advertise the cheapest Model 3 at being on equal footing with a $30,315 ICE car. In a quite misleading way I must say.
Please clarify this. I don't know of any tax regime where it pays to deliberately lose money (eg. setting money on fire).
I-R<T
and a lot of tech companies go nuts as a result with ridiculous acquisitions. In that sense, Tesla has a relative advantage because a factory's value is unlikely to go to zero.
Tesla has losses _because of_ record unit sales.
Increasing manufacturing capacity is capital intensive. It would be much easier for Tesla to stop expanding and just sell luxury vehicles, but that's not the goal of Tesla (and it would be a bad long term financial decision).