That first line after the chart is the big takeaway in my opinion. The backlog of orders increased this quarter which is both good news, since it shows demand is not a problem, and bad news, since Tesla still can't produce cars fast enough.
Model 3 is cannibalising sales of the S and X models. Which means their ARPU and gross margin has rapidly decreased causing impacts to their revenue and profit.
Tesla's fiscal position is simply unsustainable.
Lowering ARPUs and tightening gross margin % are an issue - yes. But the single most important factor here is gross margin in absolute terms. If sales volume increases to offset decreasing ARPUs, this doesn't make 'Tesla's fiscal position simply unsustainable'.
That's the problem. And you only have to look at Tesla's profit numbers to see this.
June 30, 2019 590.40M
March 31, 2019 -944.80M
Dec. 31, 2018 880.66M
Sept. 30, 2018 831.52Mhttps://www.macrotrends.net/stocks/charts/TSLA/tesla/net-inc...
Answer: a $5 Billion factory costs $0 in terms of profit. Its a capital-expenditure, affecting Cash Flow (not profits). Depreciation is how factories "wear out" in the income statement.
Tesla is not selling enough cars to make up for its $5 Billion investment in the Gigafactory. After many years, Tesla will only have made ~$4 Billion from a $5 Billion factory, by the time it has to replace all the equipment and pay $5 Billion again. (Made up numbers to roughly estimate what is going on here).
Tesla needs to make more cars out of the factory it has already built if they want to be able to rebuild the factory by the time all the parts wear out.
Tesla's CapEx has been disappointingly low. Any kind of improved automation will require new equipment. Unless Tesla can scrape together more cash to improve their CapEx figures, its basically impossible for them to get "Better equipment".
IMO, Musk is spending too much money on unnecessary projects (ex: Cuphead ported to Tesla. Full-self driving custom designed chip. Etc. etc.) and not enough money on simple & boring stuff like better factory equipment.
People like you have been predicting every quarter for the last 10 years that Tesla was on the verge of going out of business, and yet it keeps going from one success to another.
That's incorrect.
These other differences (eg. a few extra battery cells) are so chickenshit that if a factory level product engineer was making these changes 99% of the time it would be signed off by max one other engineer. I know because I used to be one of those engineers. The gist of what I'm saying is totally true. It's not like they are using different battery chemistries on their different models. All their big stuff has moved or is moving to a common platform.
From what I understand, most domestically produced, internationally branded vehicles are sold within the county. (Audi, VW, Mercedes all manufacturer cars in China for domestic consumption)
But GF3 is what will push them from 8,500/wk ultimately to above 10,000/wk, and depending on exactly how quickly that ramp happens in Q4 will determine whether they end the year with 360k, or 380k cars sold.
They will head into 2020 at or close to an annualized production rate of 500k, which is what Elon predicted back in February. [1]
Assuming no further increases at Fremont, this requires GF3 to be producing at a rate of ~2,250/wk. Tesla has stated they expect to be producing between 1,000 - 2,000 cars per week at GF3 by the end of the year, rising to 3,000/wk in 2020. So more likely there are still some gains to be made in Fremont before the end up the year in order to hit 500k annualized.
By comparison Fremont was making 2,250/wk roughly 1 year after the first TM3 was produced (July 2017 - July 2018). This goes to show how much faster the production ramp can be the second time around. Unlike the first time when Tesla had never mass produced s vehicle before and was expecting “production hell”.
[1] - https://twitter.com/elonmusk/status/1098080063801585664?s=21
So the Chinese factory is purely for domestic sales.