edatoakrun
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TSLA corporate outlook

Sun Aug 09, 2015 8:17 am

Quarterly results and conference call last week indicate the next year is going to be interesting.

IMO, TSLA will probably need to raise more cash, and how welcome it finds itself to be in the debt/equity markets is highly dependent on whether it can meet the (lowered) 2015 sales projections it announced last week.

Reuters gives the basics, below:

NEWS ANALYSIS

Tesla burns cash, loses more than $4,000 on every car sold

DETROIT (Reuters) -- It's crunch time for Tesla Motors.

The Silicon Valley automaker is losing more than $4,000 on every Model S electric sedan it sells, using its reckoning of operating losses, and it burned $359 million in cash last quarter in a bull market for luxury vehicles. The company on Wednesday cut its production targets for this year and next.

CEO Elon Musk said he's considering options to raise more capital, and didn't rule out selling more stock.

Musk has taken investors on a thrill ride since taking Tesla public in 2010. Now he's given himself a deadline, promising that by the first quarter of 2016 Tesla will be making enough money to fund a jump from making one expensive, low volume car to mass producing multiple models, and expanding a venture to manufacture electric power storage systems.

Tesla's shares fell almost 9 percent on Thursday and slipped another 2 percent on Friday as investors and analysts weighed the risks of Musk's ambitious plans for expanding Tesla's auto and energy storage businesses. Tesla had just $1.15 billion on hand as of June 30, down from $2.67 billion a year earlier...

Capital spending

The company said it plans $1.5 billion in capital spending this year, mainly to launch its Model X, battery powered SUV with eye-catching, vertical-opening "falcon wing" doors. Tesla reported $831 million in capital spending during the first half of the year, indicating it will spend roughly another $700 million.

During the second quarter, Tesla said operating costs and r&d spending rose, while average selling prices for the Model S lineup, which starts at $70,000 before federal and state electric vehicle tax breaks, fell 1 percent...

Tesla has signaled capital spending will drop next year because the company won't be spending on a major vehicle launch....

Barclays analyst Brian Johnson disagreed with the company's estimates, and said he expects Tesla's capital spending will go up in 2016 and 2017 as the company ramps up its battery factory and Model 3 development. "Their small scale means the cash generation is not as great as they might have hoped for," he said...

"A capital raise, given the way they're burning cash today, given the fact that they have future investment needs, seems very likely at some point," said UBS Securities analyst Colin Langan, who has a sell rating on the stock.

Musk has steered Tesla out of tight corners before. In September 2012, the company faced a cash crunch, but raised money by selling shares and renegotiating the terms of a federal loan. The Model S started production in mid-2012...


http://www.autonews.com/article/2015080 ... y-car-sold
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javan
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Re: TSLA corporate outlook

Sun Aug 09, 2015 9:11 am

I've been reading "A Random Walk Down Wall Street" by Burton Malkiel and his ideas about irrational exuberance and stocks seem to fit Tesla. I certainly hope Tesla makes it and is successful (and I have a Model X reserved). They make compelling vehicles and have new methods of continuous upgrades that seem to me to be the way vehicles should be done, not to mention having a vision needed for survival on a warming planet, but as many people have noted in the past, making cars is a tough, capital intensive business.
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Re: TSLA corporate outlook

Sun Aug 09, 2015 2:18 pm

I'm not sure if people realize that Tesla has accumulated about ~$1.5 billion in net losses since they started reporting their P&L.

I posted the info when I re-researched this recently at http://www.teslamotorsclub.com/showthre ... ost1081008. Since I posted that, http://ir.teslamotors.com/common/downlo ... Letter.pdf points to a recent net loss of another $184 million, so

(these are in millions)
-1381 - 184 = -1565

So, that's ~$1.565 billion in net losses accumulated so far.

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dhanson865
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Re: TSLA corporate outlook

Sun Aug 09, 2015 7:01 pm

cwerdna wrote:I'm not sure if people realize that Tesla has accumulated about ~$1.5 billion in net losses since they started reporting their P&L.

I posted the info when I re-researched this recently at http://www.teslamotorsclub.com/showthre ... ost1081008. Since I posted that, http://ir.teslamotors.com/common/downlo ... Letter.pdf points to a recent net loss of another $184 million, so

(these are in millions)
-1381 - 184 = -1565

So, that's ~$1.565 billion in net losses accumulated so far.


True they have spent a lot of money setting up the businesses. You can't divide that by the number of cars sold in the past though. A lot of that money was spent to support selling hundreds of thousands of cars in the future.

Most accept that if not for expansion the net per car is +20% to +25% not -$4,000 (-5%).

Any headline that divides startup costs of a multibilion dollar company by number of cars sold in the past is just FUD trolling.
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cwerdna
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Re: TSLA corporate outlook

Sun Aug 09, 2015 7:08 pm

Do also keep in mind that although Tesla is a very new car company compared to the "Big 3" in the US in and Japan, they were founded in 2003 (http://www.teslamotors.com/about).

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dm33
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Re: TSLA corporate outlook

Sun Aug 09, 2015 7:53 pm

cwerdna wrote:Do also keep in mind that although Tesla is a very new car company compared to the "Big 3" in the US in and Japan, they were founded in 2003 (http://www.teslamotors.com/about).

And GM loses a bunch of money on every Volt sold despite having recently been bailed out.

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Re: TSLA corporate outlook

Sun Aug 09, 2015 8:02 pm

dm33 wrote:
cwerdna wrote:Do also keep in mind that although Tesla is a very new car company compared to the "Big 3" in the US in and Japan, they were founded in 2003 (http://www.teslamotors.com/about).

And GM loses a bunch of money on every Volt sold despite having recently been bailed out.

But the Volt is just a tiny drop in the bucket vs. the rest of their US vehicle sales.

And per http://www.gm.com/content/gmcom/home/co ... eases.html, GM had net income of (positive) $1.1 billion last quarter.

Per http://media.gm.com/content/dam/Media/g ... y-2015.pdf from http://www.gm.com/content/gmcom/home/co ... ction.html, in the US, YTD, 6,935 Volts were sold YTD out of GM's 1.78 million vehicles sold YTD in the US.

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Re: TSLA corporate outlook

Mon Aug 10, 2015 4:42 am

This is a FUD article.

This is like saying Apple lost thousands of dollars on every iPhone they sold the day of the launch.
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Alric
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Re: TSLA corporate outlook

Mon Aug 10, 2015 8:22 am

Just ask yourself two questions:

Will the model 3 be popular?

Will batteries decrease greatly in price.

If this two are true, and in my opinion they are, TSLA will do great.

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Re: TSLA corporate outlook

Mon Aug 10, 2015 8:46 am

Alric wrote:Just ask yourself two questions:

Will the model 3 be popular?

Will batteries decrease greatly in price.

If this two are true, and in my opinion they are, TSLA will do great.
Perhaps, assuming that they get their QC and service issues resolved.

BEVs are supposed to be reliable and inexpensive to maintain. Thus far the Model S has been anything but that. $600 for routine annual service? I can't think of any new ICEV that costs that much. An extended service plan that has a $200 per item deductible? Service centers that are few and far between and essentially no independent service options? Parts completely unavailable outside Tesla's service centers? (Forget about DIY.)

Tesla has a long way to go yet.
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