TESLA Headed for Lack of Cash Again?

[CarlK]

Would you be like Cathie Wood of Ark Invest who is bullish about Tesla or would you be like critical like her news anchors:

Elon Musk gives new podcast interview about Tesla's growth and future

I've heard enough fears of dried up demand when the Roadster was in production. The same fear was also reproduced when Model S was in production.

The same fear also was repeated as Model X in production.

Panasonic took in the same fear when Tesla asked it to produce more batteries and join Tesla in Gigafactory. Panasonic thought that was a crazy idea because why anyone would need that many batteries?

That's now history in the past as Panasonic can't even keep up the battery demand currently.

It's another Déjà vu as the same fear also is now reinstated as Model 3 is in production currently.

The auto industry is projecting a down year for 2019 while Tesla is projecting its own production as up.

So, is Tesla wrong or it is just misunderstood?

Absolutely. The argument of dried up demand because everyone who wants a Model 3 has bought one is just hilarious. By that logic not only for Medel S/X but demands for Mercedes, BMW, Toyota, GM, Honda...should all have dried up because people who want one of those cars have already bought one too. Not everyone buys a car in 2018. Few would sell their 1~2 year old car or terminate their lease early so they could buy a particular new one. There will always people going into the market in 2019, 2020, 2021....to look for a new car. They'd buy a Tesla if they think it's the best car they want to own. From the pattern we are seeing demand for Tesla will continue to rise and for other brands will continue to fall.

 

[EVNow]

I've heard enough fears of dried up demand when the Roadster was in production. The same fear was also reproduced when Model S was in production.

The same fear also was repeated as Model X in production.

I think that comes from the mindset that EVs will remain a niche forever - and EVs won't continuously get better.

Even outside of EVs, I remember people laughing at the idea that HDTV would ever become mainstream.

Considering EVs are just 1% of the market - every indication is that the market will continue to grow. So, in the medium and long term Tesla's problem is lack of supply rather than lack of demand.

 

[CarlK]

Tesla messed up with the X, introducing FWDs and the large glass.

There is the misconception that Model X is a failure. If you look at latest sales figures it is actually catching up with or exceeding that of S's. Granted S is an older model and SUV in general is more popular but I would not describe a car that has outsold similarly priced SUV like Range Rover or Cayenne by large margins not a great success. It is also becoming more reliable as Tesla got over the growing pains of those new design features (falcon wing doors, pano windshield, pedestal second row seats, auto open/close front doors). Those have becoming more and more of a selling point too. Matter of fact even the kind of unconventional exterior shape starts to grow after a little getting used to.

Elon said he probably will not do this again because it's not worthy of the effort but nontheless the one he has produced is tuely a great car.

 

[StarFoxisDown!]

There is the misconception that Model X is a failure. If you look at latest sales figures it is actually catching up with or exceeding that of S's. Granted S is an older model and SUV in general is more popular but I would not describe a car that has outsold similarly priced SUV like Range Rover or Cayenne by large margins not a great success. It is also becoming more reliable as Tesla got over the growing pains of those new design features (falcon wing doors, pano windshield, pedestal second row seats, auto open/close front doors). Those have becoming more and more of a selling point too. Matter of fact even the kind of unconventional exterior shape starts to grow after a little getting used to.

Elon said he probably will not do this again because it's not worthy of the effort but nontheless the one he has produced is tuely a great car.

The Model X falcon doors were and continue to be one of, if not the biggest, show stopper in production vehicles. I'm not a huge fan of the egg shape in general but I marvel at the falcon wings from time to time and I've been following Tesla and have owned Tesla's for years now. The X to me is hands down the most futuristic vehicle on the market. I'm very much hoping they add some curvature/shape to it when they do the X refresh down the road. Once they do that, I'll be buying it to replace our S Btw if anyone happens to watch the new movie out, Cold Pursuit, someone on that project really liked to showcase the falcon wing's as well because they are prominent in the movie lol.

 

[gnuarm]

The Model X falcon doors were and continue to be one of, if not the biggest, show stopper in production vehicles. I'm not a huge fan of the egg shape in general but I marvel at the falcon wings from time to time and I've been following Tesla and have owned Tesla's for years now. The X to me is hands down the most futuristic vehicle on the market. I'm very much hoping they add some curvature/shape to it when they do the X refresh down the road. Once they do that, I'll be buying it to replace our S Btw if anyone happens to watch the new movie out, Cold Pursuit, someone on that project really liked to showcase the falcon wing's as well because they are prominent in the movie lol.

Just to be clear, when I said the cars were failures, the context was in terms of reaching the stated production goals. In many ways I love my X. It is a bit of a PITA as lots of things are wrong and many are very inconsistently wrong. I literally never know when the driver's door will open for me other than it always opens when I don't want it to and often doesn't open when I do. lol

Once I was in a turn lane waiting for the light and I saw someone in another lane staring at the car and seemed to be pointing to the rear doors. So I gave him a bit of a show by opening the FWD on his side. His eyes lit up!

Still, I've read reports of the FWDs dumping water on passengers when opening after a rain when parked on a slope. Seems the seals can get in states where they create water pools that dump on passengers when opened.

Oh yeah, and I need to leave the car with Tesla for a while. Among the many other issues with the car, I've developed the hard acceleration shudder. You don't even need to be in Lud mode to see this. Sport mode is enough.

 

[MarcusMaximus]

Does anyone actually expect to see model Y cars rolling off a production line in any real volume by the end of 2019 like they are forecasting?

You keep saying this, but it’s still not true. They forecast *beginning* production by the end of 2019.

“Additionally, this year we will start tooling for Model Y to achieve volume production by the end of 2020, most likely at Gigafactory 1” -Elon Musk, Jan. 29, 2019

 

[gnuarm]

I see Musk is supporting my point by saying there won't be profit in 19Q1. It is going to be a tough year for Tesla no matter how you cut it. Selling model 3s at $35,000 will be very hard on the bottom line and not very good for the cash flow.

 

[gnuarm]

You keep saying this, but it’s still not true. They forecast *beginning* production by the end of 2019.

“Additionally, this year we will start tooling for Model Y to achieve volume production by the end of 2020, most likely at Gigafactory 1” -Elon Musk, Jan. 29, 2019

When you say "keep saying this" you mean you read that I said it once and didn't read far enough to see my correction. It is the Shanghai factory Musk claims will be in volume production by the end of 2019, the Y will be in volume production in 2020 as you say.

The point is I doubt the forecast for the Shanghai factory in 2019 and I see no reason to believe Tesla will put the model Y into production on the schedule they expect. Everyone keeps saying the model Y is very much like the model 3 and so there won't be production problems. This completely ignores that this task will require a US company to convey their knowledge of producing model 3s to a Chinese run factory. Yeah, that's sure to go exactly as planned...

We came out with the model S late because it was our first volume produced car and we won't make those mistakes again.

We came out with the model X late because we made it too complicated and we won't make those mistakes again.

We came out with the model 3 late because it was our first high volume produced car and we won't make those mistakes again.

We came out with the model Y late because (fill in the blank) and we won't make those mistakes again.

I'm not saying the company is going to fail. I'm just saying this is not a good company to invest a bunch of money into long term without careful supervision.

 

[MarcusMaximus]

When you say "keep saying this" you mean you read that I said it once and didn't read far enough to see my correction. It is the Shanghai factory Musk claims will be in volume production by the end of 2019, the Y will be in volume production in 2020 as you say.

The point is I doubt the forecast for the Shanghai factory in 2019 and I see no reason to believe Tesla will put the model Y into production on the schedule they expect. Everyone keeps saying the model Y is very much like the model 3 and so there won't be production problems. This completely ignores that this task will require a US company to convey their knowledge of producing model 3s to a Chinese run factory. Yeah, that's sure to go exactly as planned...

We came out with the model S late because it was our first volume produced car and we won't make those mistakes again.

We came out with the model X late because we made it too complicated and we won't make those mistakes again.

We came out with the model 3 late because it was our first high volume produced car and we won't make those mistakes again.

We came out with the model Y late because (fill in the blank) and we won't make those mistakes again.

I'm not saying the company is going to fail. I'm just saying this is not a good company to invest a bunch of money into long term without careful supervision.

Admittedly, I replied before realizing this thread was several pages long. Apologies.

For the Shanghai factory, I’m not sure what you mean by “volume”, but I believe the estimate is 3,000/mo Model 3 from it by the end of the year. Thus far they seem to be ahead of schedule in the construction.

 

[anthonyj]

You obviously don’t understand this companies business model. The point of Tesla is to be a complete nuisance to legacy car makers. They are starting to do so. Ever since Larry joined the team, we’ve seen a shift in Tesla’s aggressiveness. Layoffs, referral program ended, closing stores, cutting prices three times in two months.

Also, Model Y preorders will replenish a ton of cash, so they have ways to avoid running out.

I would be surprised if they turn a profit again before FSD is released. They want to transition to a software company, where they sell the cars at cost, and sell you autopilot/FSD/range after the sale. Maybe Tesla is betting on Tesla Network releasing soon and being a major success.

Profits don’t matter at all for a hypergriwth company, especially for Elon who can pull money out of nowhere. He loves to live on the edge

 

[Sudre]

You think losing better part of a billion each quarter was big news before? Wait until that is happening *after* selling 60,000 model 3s a quarter.

I don't think I have seen your direct loss thoughts for Q1. From your first post it appears you are expecting Tesla's lucky to make a profit in Q1 which has now turned into a most likely no profit to actually turn out to be a billion dollar loss?

Just looking for clarification.

 

[voip-ninja]

You obviously don’t understand this companies business model. The point of Tesla is to be a complete nuisance to legacy car makers. They are starting to do so. Ever since Larry joined the team, we’ve seen a shift in Tesla’s aggressiveness. Layoffs, referral program ended, closing stores, cutting prices three times in two months.

Also, Model Y preorders will replenish a ton of cash, so they have ways to avoid running out.

I would be surprised if they turn a profit again before FSD is released. They want to transition to a software company, where they sell the cars at cost, and sell you autopilot/FSD/range after the sale. Maybe Tesla is betting on Tesla Network releasing soon and being a major success.

Profits don’t matter at all for a hypergriwth company, especially for Elon who can pull money out of nowhere. He loves to live on the edge

Where have Tesla indicated they will sell the hardware at cost?

 

[gnuarm]

You obviously don’t understand this companies business model. The point of Tesla is to be a complete nuisance to legacy car makers. They are starting to do so. Ever since Larry joined the team, we’ve seen a shift in Tesla’s aggressiveness. Layoffs, referral program ended, closing stores, cutting prices three times in two months.

Also, Model Y preorders will replenish a ton of cash, so they have ways to avoid running out.

Talking about a "ton" o' cash doesn't make it significant. The model 3 took in a round $400,000 of which no small part is still in their fists and can be recalled at will by the donors. I can't see the same effect happening with the model Y. The big deal with the model 3 was the $35,000 price tag which failed to materialize for over a year. The model Y will require something new to incentivize buyers. I don't think they will be falling out of the wood work like they did for the model 3.

I'm not saying the model Y won't sell, I'm just not expecting the pent up demand to create months of backlog. Then there is the impact on model 3 sales the new model Y will have. Just like with many devices, it is best to not play up the new product until you are about ready to sell it lest it kill sales of your current model. Companies have literally been driven out of business by this mistake.

I would be surprised if they turn a profit again before FSD is released. They want to transition to a software company, where they sell the cars at cost, and sell you autopilot/FSD/range after the sale. Maybe Tesla is betting on Tesla Network releasing soon and being a major success.

I've never read anything that indicates Tesla wants to be a software company. Just the opposite. Musk has clearly said he sees Tesla as the vehicle to get EVs into mainstream production and use.

Profits don’t matter at all for a hypergriwth company, especially for Elon who can pull money out of nowhere. He loves to live on the edge

Unfortunately, you can't continue hypergrowth without either more investment or profits. At some point investments end because the worth of the company is spread too thin to continue to issue new stock. If the company keeps installing production lines for more vehicles and fail to make money on them, they simply won't be able to keep installing new production lines or even run the ones they have set up.

 

[gnuarm]

I don't think I have seen your direct loss thoughts for Q1. From your first post it appears you are expecting Tesla's lucky to make a profit in Q1 which has now turned into a most likely no profit to actually turn out to be a billion dollar loss?

Just looking for clarification.

You seem to be putting words in my mouth.

“I really didn’t say everything I said,” Yogi Berra

 

[anthonyj]

Talking about a "ton" o' cash doesn't make it significant. The model 3 took in a round $400,000 of which no small part is still in their fists and can be recalled at will by the donors. I can't see the same effect happening with the model Y. The big deal with the model 3 was the $35,000 price tag which failed to materialize for over a year. The model Y will require something new to incentivize buyers. I don't think they will be falling out of the wood work like they did for the model 3.

I'm not saying the model Y won't sell, I'm just not expecting the pent up demand to create months of backlog. Then there is the impact on model 3 sales the new model Y will have. Just like with many devices, it is best to not play up the new product until you are about ready to sell it lest it kill sales of your current model. Companies have literally been driven out of business by this mistake.



I've never read anything that indicates Tesla wants to be a software company. Just the opposite. Musk has clearly said he sees Tesla as the vehicle to get EVs into mainstream production and use.




Unfortunately, you can't continue hypergrowth without either more investment or profits. At some point investments end because the worth of the company is spread too thin to continue to issue new stock. If the company keeps installing production lines for more vehicles and fail to make money on them, they simply won't be able to keep installing new production lines or even run the ones they have set up.

Bears say that this company is a complete sh*tshow, and bulls think this company is genius. Me personally? I think it’s a constant sh*tshow as Thursday proved to us. Nothing seems planned, everything is impulsive. Not sure why people watch Netflix when you can be entertained for free by watching this Tesla drama.

The greatness about Tesla/Elon is that they always seem to wiggle out of a crisis. He can use his equity in SpaceX as collateral to supply cash to Tesla. He can ask his buddy Larry for a loan. Chinese government. Bailey Gifford’s even said they would give Tesla cash. Elon can keep the sh*tshow running until FSD/Tesla Network becomes an actual thing.

If they are able to create an autonomous Uber service like Elon envisions (I really, really doubt it, but I don’t know *sugar* about autonomy) the company will be worth trillions in the absence of competition

 

[gnuarm]

Bears say that this company is a complete sh*tshow, and bulls think this company is genius. Me personally? I think it’s a constant sh*tshow as Thursday proved to us. Nothing seems planned, everything is impulsive. Not sure why people watch Netflix when you can be entertained for free by watching this Tesla drama.

The greatness about Tesla/Elon is that they always seem to wiggle out of a crisis. He can use his equity in SpaceX as collateral to supply cash to Tesla. He can ask his buddy Larry for a loan. Chinese government. Bailey Gifford’s even said they would give Tesla cash. Elon can keep the sh*tshow running until FSD/Tesla Network becomes an actual thing.

If they are able to create an autonomous Uber service like Elon envisions (I really, really doubt it, but I don’t know *sugar* about autonomy) the company will be worth trillions in the absence of competition

Interesting take on it all.

I don't know that it is all about the FSD thing. Personally, I think that will be some years away, maybe 5, maybe 10. It isn't on the horizon.

I think your enthusiasm for Musk getting funds is a bit strong. He can still get money. Yes, that is true. But who is going to continue to give money to a company if it can't make a profit no matter what they do? A positive quarter here or there won't do the job. At some point the money will dry up.

I don't care who is putting money into this company, they are doing it to make a profit and if the company can't provide those profits the money won't keep coming in. There are other companies traveling down the same road now and more in the future.

We'll see how they do in 19Q1 and what they forecast for Q2.

 

[anthonyj]

Interesting take on it all.

I don't know that it is all about the FSD thing. Personally, I think that will be some years away, maybe 5, maybe 10. It isn't on the horizon.

I think your enthusiasm for Musk getting funds is a bit strong. He can still get money. Yes, that is true. But who is going to continue to give money to a company if it can't make a profit no matter what they do? A positive quarter here or there won't do the job. At some point the money will dry up.

I don't care who is putting money into this company, they are doing it to make a profit and if the company can't provide those profits the money won't keep coming in. There are other companies traveling down the same road now and more in the future.

We'll see how they do in 19Q1 and what they forecast for Q2.

Jet.com is a great example of losing money yet winning in the end. They annoyed the big boys while losing stupid amounts of money until they were bought out. Same *sugar* with Uber, they are valuing that company at $120b at IPO lol. They killed the Taxi industry, while losing money. Disruption requires losing money. As long as Tesla is stealing market share, it will live on.

 

[Singuy]

Bears say that this company is a complete sh*tshow, and bulls think this company is genius. Me personally? I think it’s a constant sh*tshow as Thursday proved to us. Nothing seems planned, everything is impulsive. Not sure why people watch Netflix when you can be entertained for free by watching this Tesla drama.

The greatness about Tesla/Elon is that they always seem to wiggle out of a crisis. He can use his equity in SpaceX as collateral to supply cash to Tesla. He can ask his buddy Larry for a loan. Chinese government. Bailey Gifford’s even said they would give Tesla cash. Elon can keep the sh*tshow running until FSD/Tesla Network becomes an actual thing.

If they are able to create an autonomous Uber service like Elon envisions (I really, really doubt it, but I don’t know *sugar* about autonomy) the company will be worth trillions in the absence of competition

You sure that nothing was planned? I was listening Tesla Daily today and he found Elon saying Model Y reveal March 15th and SR coming Q1 of 2019 months prior...

So is Elon finally keeping his promise and moving things ahead of schedule now considered "everything seemed rushed and unplanned"? Perhaps people just feels uncomfortable when that Elon time friend of yours show up early to the party finally.

Watch FSD gets released in Nov and "everyone loses their mind" because it's "not part of the plan" -Joker.

 

[anthonyj]

You sure that nothing was planned? I was listening Tesla Daily today and he found Elon saying Model Y reveal March 15th and SR coming Q1 of 2019 months prior...

So is Elon finally keeping his promise and moving things ahead of schedule now considered "everything seemed rushed and unplanned". Perhaps people just feels uncomfortable when that Elon time friend of yours show up early to the party finally.

I didn’t say Model Y or SR wasn’t planned.

What’s unplanned:

Closing stores 9 days after stating in annual report that retail will be expanding

Screwing over people who bought the FSD Vaporware in 2016-2018. They were told that adding FSD later would cost more, not less. FSD still does nothing.

2-4 week delivery for SR, but Elon just tweeted that it won’t be in volume production until June. If it’s in light production now, why is it still 2-4 week delivery? Lots of confusion

Elon’s battle with the SEC... again. That was kind of expected though

 

[Singuy]

I didn’t say Model Y or SR wasn’t planned.

What’s unplanned:

Closing stores 9 days after stating in annual report that retail will be expanding

Screwing over people who bought the FSD Vaporware in 2016-2018. They were told that adding FSD later would cost more, not less. FSD still does nothing.

2-4 week delivery for SR, but Elon just tweeted that it won’t be in volume production until June. If it’s in light production now, why is it still 2-4 week delivery? Lots of confusion

Elon’s battle with the SEC... again. That was kind of expected though

A lot of confusion on what is going on I agree. We don't know what exactly is being said around the table during their meetings.

Could just be Elon is giving all the think tank a goal of "I promised SR Q1 of 2019 and we are still not there yet, how can we get there before Q1 ends" and someone most likely came up with this store closure for low productive stores.

As for EAP and FSD...Tesla most likely found they were priced too high to begin with. And since the hardware are already in every car, might as well get the acceptance rate as high as possible. Ideally you want a 90%+ acceptance rate for hardware you already given to the customer but they have yet to pay for it. Perhaps I can see how early adopters felt they got screwed, but each M3 coming off the line in early 2018 was DRAMTICALLY more expensive vs all the M3s coming off the line in 2019. I mean those 260 M3 Teslas that came rolling off the line in Q1 2018 were like million dollar each per car to produce.