edatoakrun
Posts: 4751
Joined: Thu Nov 11, 2010 9:33 am
Delivery Date: 15 May 2011
Leaf Number: 2184
Location: Shasta County, North California

Re: TSLA corporate outlook

Tue May 09, 2017 6:45 pm

Several uncertainties of TSLAs financial future described in the comment below.

TSLA's negative (real) margin, despite having an average vehicle sales price of well above $100k, is the most pressing problem, IMO.

Tesla Fairy Tale Is About To Become A Horror Story

Tesla earnings call tells a story of plateauing Model S/X sales. We have been cautioning readers about this for the last two quarters.

Tesla's gross margins do not mean what many investors think they mean. We highlight Tesla's broken business model.

Tesla is not only in danger of plateauing sales but a decline in Model S/X sales partly due to the Model 3 Osborne effect.


...Gross Margins and SG&A

There was a hint of hope in the earnings result for longs in the form of improved gross margin. At 27.4%, the gross margin appears high by industry standards. But appearances are deceptive when it comes to Tesla's unique business model. One of the biggest misperceptions about Tesla is that the gross margin is somehow comparable to other auto manufacturers. But that is not the case. Ignoring any expense categorization issues, traditional manufacturers sell products to dealers at wholesale prices whereas Tesla sells cars directly to customers at retail prices. To get a comparable gross margin number, we need to back out the sales and service expenses related to Tesla's retail sales channel. While this is difficult to do, let's get an idea of the scope of the problem.

Tesla's SG&A for the quarter was a staggering 29.6% of sales. In other words, Tesla's gross margin does not even cover its SG&A...
Make no mistake - investors and analysts measuring this stock by the strength of gross margins are seriously mistaken...

https://seekingalpha.com/article/406967 ... rror-story

LTLFTcomposite wrote:... (TSLA is) not losing money...

Of course it's not...

And "It's just a flesh wound!"

https://www.youtube.com/watch?v=zKhEw7nD9C4
no condition is permanent

sparky
Posts: 672
Joined: Fri Apr 23, 2010 10:55 am
Delivery Date: 08 Jan 2011
Location: SoCal

Re: TSLA corporate outlook

Wed May 10, 2017 5:10 pm

tattoogunman wrote:
cwerdna wrote:Re: Tesla's losses, indeed. I finally finished my spreadsheet computing their cumulative profits and losses, which I can now easily keep updating.

Since they've publicly reported P&Ls, they've accumulated ~$2.9 billion in net losses, including the most recent quarter, where they lost $330 million, attributable to common shareholders. If you go by some of the other figures on page 6 of http://files.shareholder.com/downloads/ ... Letter.pdf, one could argue it was $397 million in loss.


And this is why Tesla isn't even on my possibility list when it comes to EV cars. I am not convinced they are going to be around long term as a company with the way they are going. ...
I really wish you would consider it a possibility. I think every LEAF owner should.
Four years ago, I bought the best car I've ever owned, put 50k miles on it with multiple winter ski-trips, cross-country trips and everywhere else I used to drive my oil-burning SUV.
In 2011, I took a chance with Nissan and bought a LEAF.
In 2013, I took a chance with Tesla and bought a Model S. A car that is better today than when I first drove it home. A car built in my state, providing thousands of good jobs.
Still have both cars but Nissan won't get any more of my $. And their stock price ain't so great either.
Model 3 reserved. Model X queued up for 2018. Both can be paid for with TSLA stock I began buying in earnest when they could only make 100 cars / month and the Wall Street wisdom was they'd be bankrupt in 6 months.
I'm truly bummed the market disagrees with the doomsayers since I'd like another drop below $250 to buy a bit more before the Model 3 launch. Of course with this company we may indeed see a 10-15% drop for all kinds of reasons but the "losing $ on every car they sell" trope is just tired.
I think Tesla is fairly cash efficient. They invest in stuff that matters towards advancing their vision; e.g., Supercharging, Gigafactory and early rollout of Model 3.

Making a profit is not on their near-term horizon. Yes, they tend to keep pushing the envelope. God-speed.

GRA
Posts: 7563
Joined: Mon Sep 19, 2011 1:49 pm
Location: East side of San Francisco Bay

Re: TSLA corporate outlook

Wed May 10, 2017 6:44 pm

Via IEVS:
Bank Of America Downgrades Tesla Due To SolarCity Concerns
http://insideevs.com/bank-america-downg ... -concerns/

With a workforce cut by 20% in 2016 and amidst other financial struggles, SolarCity may be a burden to Tesla’s financial future. As such, at least one analyst has downgraded Tesla based on these concerns. . . .

Tesla’s recent acquisition of SolarCity has seen its fair share of negativity, but now it seems analysts are concerned over the financial outlook of the solar company, as well as the overall impact the merger has on Tesla. . . .

CNBC adds:

Quoting analyst John Murphy, from a note sent to investors:

“We believe the SolarCity acquisition introduces material risks to the longer-term viability of TSLA, while the recent capital raise only serves to further dilute potential shareholder value.”

Murphy predicts TSLA shares will fall to $165. He further states that Tesla’s earnings will be reduced in 2017. Here’s the synapsis:

“Murphy also said he is cutting his 2017 earnings estimate on the combined entity from a 25 cent loss per share to a $2 loss. Looking to 2018, he lowered estimates from $2.05 a share to $1.65 but set 2019 estimates “optimistically” at $4.55 a share. . . .”

Given the recent downturn in residential solar generally (not just Solar City) in California, prospects are problematic. See http://www.renewableenergyworld.com/ugc/articles/2017/04/15/residential-solar-market-turmoil-intensifies-as-california-declines-41-in-first-quarter.html

. . .The residential slowdown in California is primarily driven by two factors:

    High solar penetration in major solar markets,
    Changes in net metering that have made the financial case for homeowners less attractive.

Solar penetration, defined as the percentage of single family homes that have solar, exceeded 7 percent in California at the end of 2016 and exceeded 10 percent in certain areas (15 percent in San Diego). . . .

Hopefully the downturn is temporary, and now that we're mostly past the exceptionally rainy season we've had, things will pick up some.
Guy [I have lots of experience designing/selling off-grid AE systems, some using EVs but don't own one. Local trips are by foot, bike and/or rapid transit].

The 'best' is the enemy of 'good enough'. Copper shot, not Silver bullets.

cwerdna
Gold Member
Posts: 7260
Joined: Fri Jun 03, 2011 4:31 pm
Delivery Date: 28 Jul 2013
Location: SF Bay Area, CA

Re: TSLA corporate outlook

Thu May 11, 2017 1:56 am

sparky wrote:
tattoogunman wrote:
cwerdna wrote:Re: Tesla's losses, indeed. I finally finished my spreadsheet computing their cumulative profits and losses, which I can now easily keep updating.

Since they've publicly reported P&Ls, they've accumulated ~$2.9 billion in net losses, including the most recent quarter, where they lost $330 million, attributable to common shareholders. If you go by some of the other figures on page 6 of http://files.shareholder.com/downloads/ ... Letter.pdf, one could argue it was $397 million in loss.


And this is why Tesla isn't even on my possibility list when it comes to EV cars. I am not convinced they are going to be around long term as a company with the way they are going. ...
I really wish you would consider it a possibility. I think every LEAF owner should.
Four years ago, I bought the best car I've ever owned, put 50k miles on it with multiple winter ski-trips, cross-country trips and everywhere else I used to drive my oil-burning SUV.
In 2011, I took a chance with Nissan and bought a LEAF.
In 2013, I took a chance with Tesla and bought a Model S. A car that is better today than when I first drove it home. A car built in my state, providing thousands of good jobs.
Still have both cars but Nissan won't get any more of my $. And their stock price ain't so great either.
Model 3 reserved. Model X queued up for 2018. Both can be paid for with TSLA stock I began buying in earnest when they could only make 100 cars / month and the Wall Street wisdom was they'd be bankrupt in 6 months.
I'm truly bummed the market disagrees with the doomsayers since I'd like another drop below $250 to buy a bit more before the Model 3 launch. Of course with this company we may indeed see a 10-15% drop for all kinds of reasons but the "losing $ on every car they sell" trope is just tired.
I think Tesla is fairly cash efficient. They invest in stuff that matters towards advancing their vision; e.g., Supercharging, Gigafactory and early rollout of Model 3.

Making a profit is not on their near-term horizon. Yes, they tend to keep pushing the envelope. God-speed.

Currently, I have no interest in a Model S. It's way too expensive, its reliability is questionable and it looks like it'll be a big money pit once it's out of warranty. The Model X is even worse and I definitely have no use for a vehicle that size and of that class.

Judging by how bleeding edge Tesla likes to run, I have put in no deposit $ and have no plans to put in any deposit $ towards a Model 3 until the vehicles seem to have at least decent to good reliability after being on the road for 6 months to a year. That sounds rather unlikely judging by how many years it took for Tesla to get its drive unit noise and failure problems under control (amongst other things). That means I'll be waiting a long time or (more likely) buying/leasing some other company's long-range EV. I will credit TSLA for pushing the envelope and spurring on competition though.

Take a look at their SEC filings like at http://ir.tesla.com/secfiling.cfm?filin ... IK=1318605, yourself. Look at page 34 and a few after that. If you take their supposed gross profit and subtract out Selling, general and administrative (SG&A), you're left with almost nothing. That's before subtracting R&D and all their other expenses.

Per the filing
Cost of automotive revenue includes direct parts, material and labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, vehicle connectivity costs, allocations of electricity and infrastructure costs related to our Supercharger network and reserves for estimated warranty expenses.


And from page 31
As of March 31, 2017 and December 31, 2016, the net book value of our Supercharger network was $214.9 million and $207.2 million, respectively, and as of March 31, 2017, our Supercharger network included 828 locations globally.


On page 37, it does say "In the three months ended March 31, 2017 we used cash of $276.6 million towards Gigafactory construction..." I'm not an accountant am not clear how this cash used figures into their P&L. From what I can tell, that $276.6 million spent towards Gigafactory does NOT show up on the table on page 5 and thus doesn't even count towards their loss, other than interest expense. Maybe someone can confirm this or tell me I'm wrong on this?

'13 blue Leaf SV w/premium package (owned)
'13 blue Leaf SV w/QC + LED & premium packages (lease over, car returned)
'06 Prius

WetEV
Posts: 1783
Joined: Fri May 04, 2012 8:25 am
Delivery Date: 16 Feb 2014
Location: Near Seattle, WA

Re: TSLA corporate outlook

Thu May 11, 2017 9:02 am

cwerdna wrote:On page 37, it does say "In the three months ended March 31, 2017 we used cash of $276.6 million towards Gigafactory construction..." I'm not an accountant am not clear how this cash used figures into their P&L. From what I can tell, that $276.6 million spent towards Gigafactory does NOT show up on the table on page 5 and thus doesn't even count towards their loss, other than interest expense. Maybe someone can confirm this or tell me I'm wrong on this?


I an NOT an accountant, this is more practical business than legal accounting. My take is:

Investments should not be expensed, but should be depreciated.

If you invest $1 in a widget making machine that will last 10 years, correct accounting would be to depreciate (account for the wear on the machine) the machine over 10 years. In other words, $1 goes into assets when built. Cost/life or $1/10 would be a depreciation expense every year the machine is used.
WetEV
#49
Most everything around here is wet during the rainy season. And the rainy season is long.
2012 Leaf SL Red (Totaled)
2014 Leaf SL Red

tattoogunman
Posts: 98
Joined: Tue Jun 07, 2016 6:17 pm
Delivery Date: 08 Jun 2016
Location: Plano, Texas

Re: TSLA corporate outlook

Thu May 11, 2017 10:54 am

sparky wrote:
tattoogunman wrote:
cwerdna wrote:Re: Tesla's losses, indeed. I finally finished my spreadsheet computing their cumulative profits and losses, which I can now easily keep updating.

Since they've publicly reported P&Ls, they've accumulated ~$2.9 billion in net losses, including the most recent quarter, where they lost $330 million, attributable to common shareholders. If you go by some of the other figures on page 6 of http://files.shareholder.com/downloads/ ... Letter.pdf, one could argue it was $397 million in loss.


And this is why Tesla isn't even on my possibility list when it comes to EV cars. I am not convinced they are going to be around long term as a company with the way they are going. ...
I really wish you would consider it a possibility. I think every LEAF owner should.
Four years ago, I bought the best car I've ever owned, put 50k miles on it with multiple winter ski-trips, cross-country trips and everywhere else I used to drive my oil-burning SUV.
In 2011, I took a chance with Nissan and bought a LEAF.
In 2013, I took a chance with Tesla and bought a Model S. A car that is better today than when I first drove it home. A car built in my state, providing thousands of good jobs.
Still have both cars but Nissan won't get any more of my $. And their stock price ain't so great either.
Model 3 reserved. Model X queued up for 2018. Both can be paid for with TSLA stock I began buying in earnest when they could only make 100 cars / month and the Wall Street wisdom was they'd be bankrupt in 6 months.
I'm truly bummed the market disagrees with the doomsayers since I'd like another drop below $250 to buy a bit more before the Model 3 launch. Of course with this company we may indeed see a 10-15% drop for all kinds of reasons but the "losing $ on every car they sell" trope is just tired.
I think Tesla is fairly cash efficient. They invest in stuff that matters towards advancing their vision; e.g., Supercharging, Gigafactory and early rollout of Model 3.

Making a profit is not on their near-term horizon. Yes, they tend to keep pushing the envelope. God-speed.


To be brutally honest, I cannot afford a Tesla (or any other new EV due to their prices). Even if I could, I wouldn't take the chance on a company that I am not convinced will be around for the long haul. What happens to all of the people with a Tesla if the company goes under and they start needing repair work done? Tony's Auto Repair on the corner isn't going to be able to do it and you're going to have lots of people with expensive electric bricks sitting in their garages.

I think one of two things is going to happen - Tesla is either going to be king when and if their gambles pay of or, if their gamble does not pay off, they are going to be an interesting footnote in American automotive history and will be an interesting topic in college business and economics classes :)

cwerdna
Gold Member
Posts: 7260
Joined: Fri Jun 03, 2011 4:31 pm
Delivery Date: 28 Jul 2013
Location: SF Bay Area, CA

Re: TSLA corporate outlook

Sun May 14, 2017 3:11 am

WetEV wrote:
cwerdna wrote:On page 37, it does say "In the three months ended March 31, 2017 we used cash of $276.6 million towards Gigafactory construction..." I'm not an accountant am not clear how this cash used figures into their P&L. From what I can tell, that $276.6 million spent towards Gigafactory does NOT show up on the table on page 5 and thus doesn't even count towards their loss, other than interest expense. Maybe someone can confirm this or tell me I'm wrong on this?


I an NOT an accountant, this is more practical business than legal accounting. My take is:

Investments should not be expensed, but should be depreciated.

If you invest $1 in a widget making machine that will last 10 years, correct accounting would be to depreciate (account for the wear on the machine) the machine over 10 years. In other words, $1 goes into assets when built. Cost/life or $1/10 would be a depreciation expense every year the machine is used.

Thanks! I got an answer to my question over at TMC. Others can chime in as to whether it's correct. Makes sense to me now, if that guy is right.

https://teslamotorsclub.com/tmc/threads ... st-2103042
https://teslamotorsclub.com/tmc/threads ... st-2103057
https://teslamotorsclub.com/tmc/threads ... st-2103061
tattoogunman wrote:To be brutally honest, I cannot afford a Tesla (or any other new EV due to their prices). Even if I could, I wouldn't take the chance on a company that I am not convinced will be around for the long haul. What happens to all of the people with a Tesla if the company goes under and they start needing repair work done? Tony's Auto Repair on the corner isn't going to be able to do it and you're going to have lots of people with expensive electric bricks sitting in their garages.

For me, I can easily afford buy a Model S w/o loan. But the car is way expensive and leases are way expensive. For that kind of $, unless there's a really good reason, besides other things, it needs to have great reliability, which Tesla is nowhere near. I just refuse to drop that kind of $ given that and even more so given that the Bolt's out and more long range affordable EVs are coming soon.

Sure, if I had an S, I could ditch my Prius but that car was paid off from day 1, doesn't depreciate that rapidly anymore and doesn't need much maintenance since I drive it so little. And, removing a car from insurance doesn't save me much (I checked). I'm positive that deleting the Prius and replacing my Leaf w/a Model S will make my insurance go way up.

And, as for Tesla going under, it seems like the chances of that has gone down a lot over the years, but I still keep wondering how much longer they can keep up this continued buildup of losses and whether the financing gravy train and stock craziness will dry up.

'13 blue Leaf SV w/premium package (owned)
'13 blue Leaf SV w/QC + LED & premium packages (lease over, car returned)
'06 Prius

tattoogunman
Posts: 98
Joined: Tue Jun 07, 2016 6:17 pm
Delivery Date: 08 Jun 2016
Location: Plano, Texas

Re: TSLA corporate outlook

Sun May 14, 2017 11:30 am

cwerdna wrote:
WetEV wrote:
cwerdna wrote:On page 37, it does say "In the three months ended March 31, 2017 we used cash of $276.6 million towards Gigafactory construction..." I'm not an accountant am not clear how this cash used figures into their P&L. From what I can tell, that $276.6 million spent towards Gigafactory does NOT show up on the table on page 5 and thus doesn't even count towards their loss, other than interest expense. Maybe someone can confirm this or tell me I'm wrong on this?


I an NOT an accountant, this is more practical business than legal accounting. My take is:

Investments should not be expensed, but should be depreciated.

If you invest $1 in a widget making machine that will last 10 years, correct accounting would be to depreciate (account for the wear on the machine) the machine over 10 years. In other words, $1 goes into assets when built. Cost/life or $1/10 would be a depreciation expense every year the machine is used.

Thanks! I got an answer to my question over at TMC. Others can chime in as to whether it's correct. Makes sense to me now, if that guy is right.

https://teslamotorsclub.com/tmc/threads ... st-2103042
https://teslamotorsclub.com/tmc/threads ... st-2103057
https://teslamotorsclub.com/tmc/threads ... st-2103061
tattoogunman wrote:To be brutally honest, I cannot afford a Tesla (or any other new EV due to their prices). Even if I could, I wouldn't take the chance on a company that I am not convinced will be around for the long haul. What happens to all of the people with a Tesla if the company goes under and they start needing repair work done? Tony's Auto Repair on the corner isn't going to be able to do it and you're going to have lots of people with expensive electric bricks sitting in their garages.

For me, I can easily afford buy a Model S w/o loan. But the car is way expensive and leases are way expensive. For that kind of $, unless there's a really good reason, besides other things, it needs to have great reliability, which Tesla is nowhere near. I just refuse to drop that kind of $ given that and even more so given that the Bolt's out and more long range affordable EVs are coming soon.

Sure, if I had an S, I could ditch my Prius but that car was paid off from day 1, doesn't depreciate that rapidly anymore and doesn't need much maintenance since I drive it so little. And, removing a car from insurance doesn't save me much (I checked). I'm positive that deleting the Prius and replacing my Leaf w/a Model S will make my insurance go way up.

And, as for Tesla going under, it seems like the chances of that has gone down a lot over the years, but I still keep wondering how much longer they can keep up this continued buildup of losses and whether the financing gravy train and stock craziness will dry up.


Yeah, I've had people tell me about their insurance going up and that is something that I am also looking into when considering one of these (EV). But like you, even if I had the money, I would never spend that much money on a car ;)

finman100
Posts: 285
Joined: Thu Sep 20, 2012 10:42 am
Delivery Date: 06 Jun 2014
Location: Albany, OR

Re: TSLA corporate outlook

Tue May 16, 2017 9:48 am

thank u sparky for a great post.

Go Elon!
Albany, Oregon
2014 Silver SV with charge/LED package. June 2014, I'm in the EV game!
42,000 miles
18.0 kWh on 100% charge (52-ish Ah), down 1 bar
4.2 miles/kWh average
Best trip: all of 'em. They're all no-gas!

GRA
Posts: 7563
Joined: Mon Sep 19, 2011 1:49 pm
Location: East side of San Francisco Bay

Re: TSLA corporate outlook

Wed May 17, 2017 7:34 pm

Via IEVS (not sure if this is a repeat of other sources, or new):
Morgan Stanley Predicts Very Low Tesla Model 3 Deliveries In 2017
http://insideevs.com/morgan-stanley-pre ... ries-2017/

. . . In a note to investors, Adam Jonas from Morgan Stanley wrote (via Electrek):

“Following 1Q results, we have updated our model and now have a higher estimate of OP loss in 2017 and 2018. Following these adjustments (mainly higher R&D, SG&A and the impact of higher capex), we now expect Tesla to remain loss-making on a US GAAP basis until late 2019.

Our estimate of cash burn for 2017 widens to $3.1 billion from $2.3 billion previously, taking our forecast of gross cash to under $1 billion by the end of 2018. By itself, these changes to our model would have taken our price target to $292. Rolling forward the starting point of our DCF of the core business to May 1st (from Jan 1st) was an equal offset. Our price target thus remains unchanged at $305, or roughly 6% downside from the current stock price.”


Jonas warns investors that Model 3 deliveries are likely to be lower than Tesla’s forecast in 2017 and 2018. Tesla says that sales of the Model 3 should be in the 5-digit range for 2017 and 6-digit range for 2018, Jonas meanwhile disagrees. According to Jonas, Tesla will deliver no real volume of Model 3s in 2017.

Here’s Jonas’ statement of the Model 3:

“Model 3 expectations appear to have recovered substantially over the last 4 months. Earlier this year investor expectations for Model 3 hit a trough with most investors we spoke with at that time expecting zero deliveries of the model during 2017 A series of subsequent reiterations from management and the spotting of release candidates testing on public roads have increased expectations of timing and volume significantly.

Although we cannot quantify what the market expectation is at this point, we believe our forecast of 2k Model 3 deliveries this year is substantially below current market expectations. Looking to 2018, we believe our 90k volume forecast is also far below Street expectations, possibly one-half or one-third market expectations for Model 3 volume next year. . . .”


Guy [I have lots of experience designing/selling off-grid AE systems, some using EVs but don't own one. Local trips are by foot, bike and/or rapid transit].

The 'best' is the enemy of 'good enough'. Copper shot, not Silver bullets.

Return to “Other Electric Cars & Plug-In Hybrids”