Economic situation

[neroden]

I am waiting for my LR Rwd.
These sort of news really worry me...
Musk says Tesla will be out of money in 10 months without ‘hardcore’ changes

This is a misunderstanding of what Musk wrote.

The company actually has over $4 billion in the bank, can borrow another billion on demand, and the cash flow is much better now than it was in Q1 (which had a lot of one-time negative events). Musk is trying to motivate his employees to do the extra cost cutting which is helpful to get to actual long-term profitability, but in reality they have well over a year before they would have any cash problem; if they can just get enough cars out and delivered, they'll be breaking even. The main issue is that they didn't manage to deliver enough cars in Q1 for various reasons (battery cell scrap rate, delivery logistics problems, etc. etc.).

 

[neroden]

No,
he said that even though the $2.4 Billion they just raised seems like a lot of money, if you divide it by the Q1 loss rate, it would only last 10 months.
Simple math to make a point, not a prediction on their future financials.
Full text here: Read the email Elon Musk sent to Tesla employees calling for 'hardcore' control of expenses

Right. Musk did not mention that they had $2.2 billion before raising the additional $2.4 billion, and he did not mention that they were absolutely planning to lose less money / make more money in Q2 than in Q1 (which should be easy for various reasons). When you actually put that stuff together, it becomes clear that Tesla can still fumble around for several years before hitting long-term profitability and still be OK -- though of course we'd all like them to get their act together and become long-term profitable ASAP. That depends on producing more cars, though -- and on making them more cheaply, which is what the email was about.

 

[glide]

This is a misunderstanding of what Musk wrote.

The company actually has over $4 billion in the bank, can borrow another billion on demand, and the cash flow is much better now than it was in Q1 (which had a lot of one-time negative events). Musk is trying to motivate his employees to do the extra cost cutting which is helpful to get to actual long-term profitability, but in reality they have well over a year before they would have any cash problem; if they can just get enough cars out and delivered, they'll be breaking even. The main issue is that they didn't manage to deliver enough cars in Q1 for various reasons (battery cell scrap rate, delivery logistics problems, etc. etc.).

Then he needs to get a PR person. Because what he writes matters and this was not interpreted as a “motivational” memo.

 

[dmurphy]

Then he needs to get a PR person. Because what he writes matters and this was not interpreted as a “motivational” memo.

Musk’s biggest downfall.

 

[Leafdriver333]

Then he needs to get a PR person. Because what he writes matters and this was not interpreted as a “motivational” memo.

He needs to stop talking or twitting about company matters.

 

[mongo]

He needs to stop talking or twitting about company matters.

You are suggesting the CEO of a company is supposed to not communicate with the employees?

 

[Leafdriver333]

You are suggesting the CEO of a company is supposed to not communicate with the employees?

Yes. I will let him communicate with his employees about the company matter.

Don't tweet to the world about it.
Maybe Elon will never learn.

 

[mongo]

Yes. I will let him communicate with his employees about the company matter.

Don't tweet to the world about it.
Maybe Elon will never learn.

The current news storm is about an internal e-mail he sent, not a tweet.

 

[glide]

You are suggesting the CEO of a company is supposed to not communicate with the employees?

He should not be communicating with them like an idiot.

He should know whatever he writes has a chance of leaking out.

 

[mongo]

He should not be communicating with them like an idiot.

He should know whatever he writes has a chance of leaking out.

Hey...
yeah...employees
If you could watch that spending...
yeah...
That would be great....
Oh, and here is the updated TPS cover sheet


(I liked his e-mail)

 

[Grossie]

Here's my defense, a little different from other defenses.

I have driven a model S for the last 3 years, it's an amazing vehicle. It has never been in the shop. I have spent about $60 on windshield wipers, that has been the maintenance cost for me. I'm about to buy (actually lease) a model 3. If the company goes bust in a year or two I'll be ok, the car will drive even beyond bankruptcy. Someone will buy up the remains if it happens and I will be ok. If no other company buys the remains I'm f-ed, gotta figure out a way to get repairs, but someone will fill that space so really I'll be ok there too.

If getting a model 3 was going to stress my financial situation I might not buy it because of Tesla's instability. But then if a car potentially puts me in a poor financial situation there is no real justification to buying it, regardless of the brand name on the car, be it Tesla, BMW, or Chevy.

This is my 2 cents. Summed up: the world might end tomorrow, in which case at least I have driven a Tesla for a few years! If it doesn't end then I'll figure out a way to carry on.

 

[ZoomsansVroom]

Then he needs to get a PR person. Because what he writes matters and this was not interpreted as a “motivational” memo.

Exactly right, even in our small company, we talk about anything, before telling the employees. He should have an "English Department/librarian" to track, and monitor all research, and to review all broader forms of communication.

 

[Triplett]

Another "the world will end at 12:01 Saturday" thread.

 

[Triplett]

Wall Street doesn't lend 2 billion to companies collapsing tomorrow.