Gigapress
Trying to be less wrong
The 10-Q says that inventory increased QoQ from $13.6B to $16.0B which is a $2.4B increase. $1.7B of that came from finished goods. The rest was mostly work in process and raw materials, probably from the Cybertruck production lines ramping up.Seriously? You cannot dismiss it because it's not happened for some time. Nor because it is directly attributable to inventory (you do not know if it's all 'in transit') or AI. Really it does not matter exactly how it happened. That it did is a major issue. Explaining it away doesn't eliminate it. Another clue, eliminating the advertising team (an experiment that proved to be a waste), eliminating the Lithium project (no longer needed, write it off and move one) plus the other major steps.
The actions themselves show how serious the deficiencies were. There is no way to diminish them. Now our only question si how the recovery process is going.
Bluntly, I sold a while ago and avoided worse, primarily because my triggering event preceded the other evidence. The question for me is only: How soon will the resuscitation projects result in tangible progress so i can buy back in. In all probability it will be about the time the price moves to meet my original sales price.
Given TSLA structure major improvement in share price will follow provable improvement in future prospects. There is hopium now, and hints, China developments are positive, but we've not heard from the counter issues from US and EU regulators. Nor do we have good enough data on TE.
When all that happens and the path is clear, then there will be serious appreciation. I trust that Ron Baron is already convinced.
Random forex fluctuations, for which Tesla does not hedge, were a headwind in Q1. The deck says $0.2B impact.
Capex spiked up $0.5B QoQ to an all-time high of $2.8B. This happened for good reasons: increase in AI compute capacity, ramping Cybertruck, and investing in the next-gen vehicle platform.
If the lithium project has been delayed, I would think that's most likely because we're currently in a buyer's market for refined lithium hydroxide. It's cheap and readily available again because other companies have been reducing and cancelling orders.
On the other hand operating cash flow did plummet because completed vehicle inventory increased. The question is why. The reasons provided were:
- Q1 is usually the weakest of the year
- "Uncertain macroeconomic environment"
- "EV adoption rate globally is under pressure"
The new CFO Vaibhav Taneja said "We expect the inventory build to reverse in the second quarter and free cash flow to return to positive again"
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