Let's wait a couple more quarters before being able to say it is clearly not a failure.
The only reason they are still alive is the hype around Elon Musk.
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Please do not quote by using a code box.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.