TSLA corporate outlook

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GetOffYourGas said:
Depends on what they find during testing. Tesla decided to skip "soft tooling", which could be a costly gamble if they need to make significant changes. But it could pay off in spades if they don't. We'll know soon enough.
It sounds like they skipped soft tooling because it caused as many problems as it solved during Model X production ramp-up.

Plus, they feel that they can more quickly get tooling issues fixed since they bought their own tooling company (Riviera Tool in Michigan).
 
garsh said:
GetOffYourGas said:
Depends on what they find during testing. Tesla decided to skip "soft tooling", which could be a costly gamble if they need to make significant changes. But it could pay off in spades if they don't. We'll know soon enough.
It sounds like they skipped soft tooling because it caused as many problems as it solved during Model X production ramp-up.

Plus, they feel that they can more quickly get tooling issues fixed since they bought their own tooling company (Riviera Tool in Michigan).

Either way, skipping this step is a gamble. If testing goes well, and no major changes are required, it will greatly accelerate production. If testing finds something that requires retooling to fix, it will cause large delays and costs.
 
Everything is tooled. The whole gigafactory is "the machine that builds the machine". There could certainly be last-minute design changes which require new tools and/or don't require some that are already purchased/installed. I have no inside information to Tesla's operations, but I have worked on transitioning prototypes to production. I've been surprised at how seemingly minor changes can cascade into sweeping changes on the production floor.
 
Here is a good article about virtual assembly and finding flaws before final assembly begins.

https://arstechnica.com/cars/2016/0...s-are-making-the-auto-industry-more-flexible/

My favorite example is this: '"We found through CAD and a fluid dynamics software program that the actual shape of the grille holes created a pressure and flow drop from the specification." The team knew that flow spec was required for the vehicle's main and peripheral (transmission and oil) cooling systems. They literally had an airflow problem.

But rather than stop the pre-production schedule just ahead of the vehicle's launch, the team was quickly able to modify the shape and radius of the holes in the grille until reaching the designers' own self-imposed cubic feet per minute flow rate on the back side of that grille.'

Of course this is Toyota with decades of experience in identifying and solving automotive problems. In the past that grille would have been soft-tooled, road tested, then when the vehicle overheated it would have been redesigned before tooling capable of running off a million copies of the part was finalized. This example allowed them to skip the road testing step and go straight to hard tooling.

If Tesla did this well it would be a huge cost and time savings. If they missed something they only catch in the "release candidate" Model 3s running around in the real world it will be a monumental problem as some very expensive tooling will need to be scrapped and replaced before proceeding.
 
The reports below summarize the TSLA Q1 results and conference call:

Looking at the numbers, as TSLA has mastered only the easy part of building cars, huge losses continue:

Tesla has to turn potential into real profits

YIKES! TESLA'S PER-VEHICLE PROFIT IS NEGATIVE $15,855


General Motors earned an operating profit of $1,418 for every vehicle it sold around the world in the first quarter. Ford Motor Co. earned a little less: $1,174.

Tesla, by the same calculation, is in a whole different league, and not in a good way. Its per-vehicle profit comes in at minus-$15,855.

For every car Tesla sold, it lost more than a year’s pay at a minimum-wage job...

Yes, that’s an eye-popping figure, and one that’s not sustainable for a company that wants to be in business for very long.

But no, that’s not, on its own, a fair assessment of Tesla, an automaker that’s essentially still in its infancy.

Still, they’re numbers worth looking at and writing about here. Because they do show an inescapable truth about the auto industry: It’s easy to lose huge amounts of money building and selling cars, but it’s hard to eke out profit margins that would be laughed at in most other industries...
http://autoweek.com/article/green-cars/tesla-has-turn-potential-real-profits

Will the next TSLA product reverse these losses?

Hard to see how TSLA will make significant profits soon by entering the commodity market segment that produces the lowest (or negative) margins for its competitors with the model 3 sedan, and by suggesting the new model Y platform is still years away from production:

Tesla Desperately Needs a Crossover Hit

...Under Musk's leadership, Tesla has produced a series of undeniably desirable vehicles that helped it briefly become, on paper anyway, the most valuable automaker in the nation. But is has rolled these cars out in a frantic, iterative, inefficient and nonstrategic manner that shows why mainstream automakers tend to be run by "bean counters" rather than creative visionaries.

Nothing illustrates this dynamic quite like Tesla's crossovers, the Model X and the forthcoming Model Y. Crossovers are unsexy but highly pragmatic machines that are critical to profitability in the modern car business. With Musk revealing that the Model Y will not share a platform with the mass-market Model 3 sedan, as most analysts had expected, it's becoming clear that the firm still hasn't appreciated basic logic of the crossover market. As Tesla moves into the lower-margin mass market and comes under increasing pressure to show profitability, this unexciting but important lesson will have to be learned.

Decades of tough competition have eroded profit margins on sedans, turning the bulk of the car business's production volume into a commodity product. The industry's answer has been to build roomier, more capable crossovers using the platforms, drive-trains and other internal gubbins from their sedans, thus spreading the development costs of these shared components over more volume and improving margins. ...

Musk's most recent comments about the next-generation Model Y suggest that the company still has not learned the critical crossover lesson. Rather than making a small investment in a new, more spacious crossover body for the Model 3 and charging customers more for it, Musk confirmed that Tesla is developing an entirely new platform for the Model Y.

This means that instead of spreading the Model 3's fixed development costs across more, higher-margin vehicles, Tesla will sink tens (if not hundreds) of millions of dollars into a bespoke platform for its second crossover. For a small-scale automaker, lacking the efficiencies of scale enjoyed by its established manufacturers, Tesla's decision to develop four platforms for its first five vehicles is all but incomprehensible...
https://www.bloomberg.com/view/articles/2017-05-05/tesla-desperately-needs-a-crossover-hit

Maybe you just have to be on the right drugs to understand TSLA's business plan...

You have to be on drugs to get Tesla's business

After Tesla's stock sank over $15 on Thursday following its earnings report, Jim Cramer looked into the company to try and understand its high-flown forecasts.

"If you're an analyst, I think the only way to handle an Elon Musk conference call is to take some mind altering drugs so you can really tune in and turn on the whole psychedelic story," the "Mad Money" host said of Tesla's CEO.

While Cramer admires Musk's confidence, he sympathized with those who try to make mathematical sense of his ultra-positive musings.

Watch the full segment here...
http://www.cnbc.com/2017/05/04/cramer-you-have-to-be-on-drugs-to-understand-teslas-business.html
 
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/ABEA-4CW8X0/4408350461x0x940721/8E9FC98F-343C-4D2E-8516-491DEFB9B69B/TSLA_Q1_2017_Update_Letter.pdf, one could argue it was $397 million in loss.
 
Via IEVS:
Excessive DC Charging Of Tesla Model S, X Leads To Permanently Reduced Charge Rate
http://insideevs.com/excessive-dc-charging-tesla-model-s-x-leads-permanently-reduced-charge-rate/

. . . Naonak notes that to the best of his knowledge, this is his DC charging breakdown to date:

6,685.603 Energy (kWh)
245 Total Charge Ups

“That does not include Supercharging. You can add probably another 50 – 60 Supercharges to that I would estimate (I can get an exact number at some point, I have records). That number above is 99% CHADeMo charging since March 2016.”

Naonak later posted the actual technical explanation from the Tesla service center after raising his concerns to upper management. Its reads as follows:

  • Concern: Customer states: speed of charging at Superchargers is topping out at lower
    speeds then previously observed. This has happened at multiple superchargers recently.

    Pay Type: Goodwill

    Corrections: Supercharger General Diagnosis Conclusion: No Trouble Found
    Review vehicle logs and verify charging is topping out a lower rate than observed on
    earlier DC charging sessions. According Tesla engineers once vehicle has been DC fast
    charged over a specified amount, the battery management system restricts DC charging to
    prevent degradation of the battery pack. According Tesla engineers, this vehicle has seen
    significant DC fast charging and is now has permanently restricted DC charging speeds.
    Important to note, supercharging will always still be available to the vehicle and the battery
    pack has not yet experienced significant degradation due to the amount of DC fast
    charging performed on the pack up until this point in time. Vehicle is operating as
    designed. . . .
 
cwerdna said:
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/ABEA-4CW8X0/4408350461x0x940721/8E9FC98F-343C-4D2E-8516-491DEFB9B69B/TSLA_Q1_2017_Update_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. Musk cannot keep throwing money at other ventures and expansions to existing infrastructure without turning a profit eventually. Tesla is either going to rule the world or they are going to be a footnote in history and an interesting company to talk about in college business classes :)
 
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/4069671-tesla-fairy-tale-become-horror-story

LTLFTcomposite said:
... (TSLA is) not losing money...
Of course it's not...

And "It's just a flesh wound!"

https://www.youtube.com/watch?v=zKhEw7nD9C4
 
tattoogunman said:
cwerdna said:
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/ABEA-4CW8X0/4408350461x0x940721/8E9FC98F-343C-4D2E-8516-491DEFB9B69B/TSLA_Q1_2017_Update_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.
 
Via IEVS:
Bank Of America Downgrades Tesla Due To SolarCity Concerns
http://insideevs.com/bank-america-downgrades-tesla-due-solarcity-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...-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.
 
sparky said:
tattoogunman said:
cwerdna said:
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/ABEA-4CW8X0/4408350461x0x940721/8E9FC98F-343C-4D2E-8516-491DEFB9B69B/TSLA_Q1_2017_Update_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?filingID=1564590-17-9968&CIK=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?
 
cwerdna said:
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.
 
sparky said:
tattoogunman said:
cwerdna said:
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/ABEA-4CW8X0/4408350461x0x940721/8E9FC98F-343C-4D2E-8516-491DEFB9B69B/TSLA_Q1_2017_Update_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 :)
 
WetEV said:
cwerdna said:
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/2017-investor-roundtable-general-discussion.83409/page-766#post-2103042
https://teslamotorsclub.com/tmc/threads/2017-investor-roundtable-general-discussion.83409/page-767#post-2103057
https://teslamotorsclub.com/tmc/threads/2017-investor-roundtable-general-discussion.83409/page-767#post-2103061
tattoogunman said:
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.
 
cwerdna said:
WetEV said:
cwerdna said:
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/2017-investor-roundtable-general-discussion.83409/page-766#post-2103042
https://teslamotorsclub.com/tmc/threads/2017-investor-roundtable-general-discussion.83409/page-767#post-2103057
https://teslamotorsclub.com/tmc/threads/2017-investor-roundtable-general-discussion.83409/page-767#post-2103061
tattoogunman said:
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 ;)
 
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-predicts-low-tesla-model-3-deliveries-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. . . .”
 
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