Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

Making Tesla profitable?

Discussions about the economic and financial ramifications of PEAK OIL

Re: Making Tesla profitable?

Unread postby Cog » Mon 31 Jul 2017, 13:33:59

How many Model 3's has Musk produced so far? Thirty of them? Half a million models a year in 2018? Does he just throw numbers out there to see what will be believed?
User avatar
Cog
Anti-Matter
Anti-Matter
 
Posts: 9328
Joined: Sat 17 May 2008, 02:00:00
Location: Metro-East Illinois

Re: Making Tesla profitable?

Unread postby KaiserJeep » Mon 31 Jul 2017, 14:14:11

Cog wrote:How many Model 3's has Musk produced so far? Thirty of them? Half a million models a year in 2018? Does he just throw numbers out there to see what will be believed?


Manufacturing engineering is one of the hardest areas of the profession. It involves process design (very different from product design), logistics, and people management. The only way to succeed is to recognize your own limitations and hire the right team of people.

I have never known a good product design engineer who was also good at manufacturing engineering. In fact, I think they are exclusionary skill sets, and it's practically speaking impossible to be good at both. I recall ongoing criticism of Musk in this regard, his success now depends upon the team he hired more than it does on himself. If he can't step away from Model 3 production, I believe he will fail. The Model 3 was possibly the easiest to design of all his vehicles, and certainly - purely because of volume - the hardest to produce.
KaiserJeep 2.0, Neural Subnode 0010 0000 0001 0110 - 1001 0011 0011, Tertiary Adjunct to Unimatrix 0000 0000 0001

Resistance is Futile, YOU will be Assimilated.

Warning: Messages timestamped before April 1, 2016, 06:00 PST were posted by the unmodified human KaiserJeep 1.0
KaiserJeep
Fusion
Fusion
 
Posts: 4115
Joined: Tue 06 Aug 2013, 16:16:32
Location: California's Silly Valley

Re: Making Tesla profitable?

Unread postby baha » Mon 31 Jul 2017, 15:55:01

KJ - I will call your manufacturing engineer and raise you one automation engineer.

Not only is Tesla building a manufacturing plant he is trying to build an automated process. The theory goes...once he teaches the robots how to make the product, he just stands back and feeds them raw materials. And the cars just spit out the end :)

So even the manufacturing process itself will be different. Add another layer of complexity. You gotta love it. It keeps him moving on like you said. The excitement is building the manufacturing machine. Once the machine (assembly line) is making more machines (product) he goes on to the next project/factory. And starts raking in the bucks.

So much for theory...If he pulls this off the world is changed. GM and Ford can close up shop, or hire him as a consultant. Apple has a better chance of competing.

Of course this all goes on behind closed doors. We don't know how many humans were used to build the first 30. We won't know until it's 3000 or 30,000. If these things are really built by robots, quality will not change as it speeds up and should get better from lessons learned.

Elon - If you get too stressed out, come on out to the farm and we will sit around a campfire, smoke a joint, and roast toy chevys :)
A Solar fuel spill is otherwise known as a sunny day!
The energy density of a tank of FF's doesn't matter if it's empty.

https://monitoringpublic.solaredge.com/solaredge-web/p/kiosk?guid=19844186-d749-40d6-b848-191e899b37db
User avatar
baha
Intermediate Crude
Intermediate Crude
 
Posts: 727
Joined: Thu 12 Jul 2007, 02:00:00
Location: North Carolina, USA

Re: Making Tesla profitable?

Unread postby KaiserJeep » Mon 31 Jul 2017, 16:59:46

baha, he has people working double shifts, some of them sleeping on the grounds in nearby Fremont. He also has labor unrest, as you might imagine.
KaiserJeep 2.0, Neural Subnode 0010 0000 0001 0110 - 1001 0011 0011, Tertiary Adjunct to Unimatrix 0000 0000 0001

Resistance is Futile, YOU will be Assimilated.

Warning: Messages timestamped before April 1, 2016, 06:00 PST were posted by the unmodified human KaiserJeep 1.0
KaiserJeep
Fusion
Fusion
 
Posts: 4115
Joined: Tue 06 Aug 2013, 16:16:32
Location: California's Silly Valley

Re: Making Tesla profitable?

Unread postby baha » Mon 31 Jul 2017, 17:24:20

No wonder he's so stressed out...It's sad that the drive for money and success makes us forget that workers are also people and friends.

OTOH - There is this thing called 'opportunity cost'. Sometimes you have to give a little to get a lot more in the long run. I paid mine in college. No more long nights for me. I just get in my car and drive home. Show up the next day bright eyed and what can they say :)
A Solar fuel spill is otherwise known as a sunny day!
The energy density of a tank of FF's doesn't matter if it's empty.

https://monitoringpublic.solaredge.com/solaredge-web/p/kiosk?guid=19844186-d749-40d6-b848-191e899b37db
User avatar
baha
Intermediate Crude
Intermediate Crude
 
Posts: 727
Joined: Thu 12 Jul 2007, 02:00:00
Location: North Carolina, USA

Re: Making Tesla profitable?

Unread postby EdwinSm » Thu 03 Aug 2017, 04:20:12

Revenues double, losses grow, share price up 8%.

The company reported revenue of almost $2.8bn (£2.1) in the three months to 30 June, up from $1.3bn during the same period last year.

Losses increased to $336m, compared with $293m last year.

But investors were encouraged by the firm's prospects and shares rose by more than 8% in after-hours trading.
.....
Tesla told shareholders it expects revenue to grow "significantly" in the second half of the year, while expenses hold steady.

The firm delivered more than 47,000 of its earlier high-end Model S and Model X cars in the first half of 2017, growth of more than 50% from the prior year.

Since it rolled out its latest car, Model 3, last week, it is averaging more than 1,800 reservations for the car a day, it added.

http://www.bbc.com/news/business-40808862

It still has a long way to go before making it profitable, but a good fan base will help with that!

ps. regarding the original post in this thread, the solar section is not adding a lot. The above report had $2.3 billion out of $2.8 billion attributed to the car division.
EdwinSm
Heavy Crude
Heavy Crude
 
Posts: 335
Joined: Thu 07 Jun 2012, 03:23:59

Re: Making Tesla profitable?

Unread postby Cog » Thu 03 Aug 2017, 04:25:41

Producing more product at a loss does not exactly inspire one with confidence.
User avatar
Cog
Anti-Matter
Anti-Matter
 
Posts: 9328
Joined: Sat 17 May 2008, 02:00:00
Location: Metro-East Illinois

Re: Making Tesla profitable?

Unread postby baha » Thu 03 Aug 2017, 05:33:26

I wish I knew how this stuff works...He only reported losing 2/3rd as much as they expected so we're off to the races. It's not me :), I'm just along for the ride. Who are these people who jump in and out like rabbits? Maybe it's just an ALGO :) , sucking from the asset trading teat.

50% growth for the Model S ain't bad...and the yuppies have finally seen the future coming and are starting to buy in. Solar is also a good fit for EVs. Yuppies who charge with the sun can feel morally superior :)

Maybe they are!

The PV side of this equation comes next. You have to create a demand before you can satisfy it...Elon is definitely on a long term path. I respect someone who can also set long term goals and follow thru...
A Solar fuel spill is otherwise known as a sunny day!
The energy density of a tank of FF's doesn't matter if it's empty.

https://monitoringpublic.solaredge.com/solaredge-web/p/kiosk?guid=19844186-d749-40d6-b848-191e899b37db
User avatar
baha
Intermediate Crude
Intermediate Crude
 
Posts: 727
Joined: Thu 12 Jul 2007, 02:00:00
Location: North Carolina, USA

Re: Making Tesla profitable?

Unread postby Outcast_Searcher » Thu 03 Aug 2017, 16:19:41

baha wrote:I wish I knew how this stuff works...He only reported losing 2/3rd as much as they expected so we're off to the races. It's not me :), I'm just along for the ride. Who are these people who jump in and out like rabbits? Maybe it's just an ALGO :) , sucking from the asset trading teat.

50% growth for the Model S ain't bad...and the yuppies have finally seen the future coming and are starting to buy in. Solar is also a good fit for EVs. Yuppies who charge with the sun can feel morally superior :)

Maybe they are!

The PV side of this equation comes next. You have to create a demand before you can satisfy it...Elon is definitely on a long term path. I respect someone who can also set long term goals and follow thru...

In the short run, it's about results reported vs. expectations. Lots of people were worried about much worse earnings. Or about the shortfall in vehicles produced in 1Q, which was reported to be about a battery availability shortfall.

So, I'm pretty sure that if more of that bad battery induced poor shipment news had been reported, the stock would have been down perhaps 8%. (Prior to earnings options were pricing in a 7.5% price swing either way, according to a CNBC report).

Instead, revenues were up more than expected, and earnings were about 50 cents a share better than expected.

I THINK this led lots of investors to see over the next year or so, things like:

1). Less cash burn and less need for more funding (i.e. less stock issued to raise capital, which is dilutive to earnings) to get the Model 3 to a break-even level. Consistent with that, Musk reportedly said no further capital raises are planned for 2017.

2). Less of a perceived problem with the battery pipeline. Since the model 3 will clearly depend on a HUGE and relatively trouble-free supply of batteries, meaningful problems there would be a disaster for Tesla, at least in the short run.

3). Less of a perception of a huge cannibalization problem where most Model S and Model X customers just wait for Model 3's, due to the "bargain" price. (i.e. the better sales and revenues indicate they'll still be selling a "lot" of those expensive cars -- which is very helpful to Tesla in the short term.

.....

(This is only a small example of the kinds of things investors, short and long term, think about). It's just some highlights from what I gather from reading and from my understanding of how the market works short term, from 35ish years of investing in it.

.....

Now in the long run, the market is all about the perception of cash flows, and the cash flows that future earnings growth (or not) implies. Obviously, if Tesla is wildly successful in 5 or 10 years, then it could be selling a dramatic number of cars at a relatively huge profit margin (Tesla fanboi bull case). And of course if Tesla has big problems, they could still go bankrupt or have to HUGELY dilute the stock to survive -- which would mean the stock is worth only a small fraction of the current value (Tesla hater bear case).

I'm not making ANY unhedged bets. Too wild and risky for my blood. For me it's popcorn, a comfy chair, reading glasses, and a keyboard. :lol:

....

What I am sure of is, it's not random (though the price chart may seem that way day to day), and it's not a "conspiracy", but there are a hell of a lot of BIG uncertainties out there, with lots of news impacting cars and the EV market and potential every week. And that's why Tesla is both a lot more expensive and a LOT more volatile than say, Ford or Toyota.

...

Now, those opinions and $2 will get you a cup of coffee, most places. 8)
Outcast_Searcher
COB
COB
 
Posts: 3876
Joined: Sat 27 Jun 2009, 20:26:42

Re: Making Tesla profitable?

Unread postby baha » Thu 03 Aug 2017, 18:18:57

Thanks OS,
That makes sense. Except the part about the cheap coffee :)

I try to stay level-headed. Not bear and not bull. I buy and do things that I think are important and useful. I am hoping my investment is going toward making the world a better place.

I did mention my seat-of-the-pants feel for it all...That's where the comfy chair comes in :)
A Solar fuel spill is otherwise known as a sunny day!
The energy density of a tank of FF's doesn't matter if it's empty.

https://monitoringpublic.solaredge.com/solaredge-web/p/kiosk?guid=19844186-d749-40d6-b848-191e899b37db
User avatar
baha
Intermediate Crude
Intermediate Crude
 
Posts: 727
Joined: Thu 12 Jul 2007, 02:00:00
Location: North Carolina, USA

Re: Making Tesla profitable?

Unread postby Outcast_Searcher » Fri 04 Aug 2017, 21:25:44

baha wrote:Thanks OS,
That makes sense. Except the part about the cheap coffee :)

I try to stay level-headed. Not bear and not bull. I buy and do things that I think are important and useful. I am hoping my investment is going toward making the world a better place.

I did mention my seat-of-the-pants feel for it all...That's where the comfy chair comes in :)

I hear you loud and clear on buying and doing things you think are important and useful.

I call that "voting with my wallet" when I'm buying products. When I bought my first cell phone (bag phone -- really just a modem for the signal part) in about 1992, so I was comfortable driving my pretty beaten up old Celica on rural KY roads at night (vs. getting a new or much newer car) -- I considered that a good investment in not making car payments. (I HATE car payments. And I hated it a LOT when I was trying to save for retirement).

Little did I know how cell phones would blanket the planet in a couple decades, but even if it ended up being "wasted money", I liked the idea of helping that product class along.

So yes, I completely get you about that idea.

I'm a tea drinker (at 4 cents a generic bag, which I use twice), so if I screwed up the coffee joke -- sorry about that. :)
Outcast_Searcher
COB
COB
 
Posts: 3876
Joined: Sat 27 Jun 2009, 20:26:42

Re: Making Tesla profitable?

Unread postby EdwinSm » Mon 07 Aug 2017, 08:57:50

Oops! I need a little more cash, €3bn is not enough to have in hand :roll: :oops: .....

US electric car manufacturer Tesla plans to raise $1.5bn (£1.15bn) to fund production of its new Model 3 car.

Tesla will raise the money by selling bonds to professional investors, despite the company having $3bn in cash.

The company says it has 518,000 orders for its new car, whose price starts at $35,000.
........
Tesla, which also makes batteries and solar panels, has been burning through its cash at a rapid rate.


http://www.bbc.com/news/business-40850187
EdwinSm
Heavy Crude
Heavy Crude
 
Posts: 335
Joined: Thu 07 Jun 2012, 03:23:59

Re: Making Tesla profitable?

Unread postby Outcast_Searcher » Mon 07 Aug 2017, 12:54:34

EdwinSm wrote:Oops! I need a little more cash, €3bn is not enough to have in hand :roll: :oops: .....

US electric car manufacturer Tesla plans to raise $1.5bn (£1.15bn) to fund production of its new Model 3 car.

Tesla will raise the money by selling bonds to professional investors, despite the company having $3bn in cash.

The company says it has 518,000 orders for its new car, whose price starts at $35,000.
........
Tesla, which also makes batteries and solar panels, has been burning through its cash at a rapid rate.


http://www.bbc.com/news/business-40850187

Yeah, I saw this, and said "What the hell?", since he'd said no more capital raises for 2017 very recently. However, he gets by on a technicality, looking back at that quote.

http://www.cnbc.com/2017/08/02/elon-mus ... point.html

Tesla is not considering raising more equity at this point, CEO Elon Musk said Wednesday

"We are not at this point considering an equity raise, we are thinking about debt," Musk said on the company's second-quarter earnings call. "But we are not thinking about an equity raise."


OK. As though issuing (junk) bonds to cover short term cash needs isn't raising cash. :roll:

At least it doesn't directly further dilute the stock.

Since the story for Tesla's finances in 3 to 5 years is likely rags or riches (they succeed spectacularly, making the stock look cheap (believe it or not), if everything goes well), or they go down in flames. If they go down in flames, what's a few unpayable bonds in the scheme of things? Bankruptcy is bankruptcy.

Disclosure: I have no idea which way things will go for them, but it's fun to watch.
Last edited by Outcast_Searcher on Mon 07 Aug 2017, 13:06:45, edited 1 time in total.
Outcast_Searcher
COB
COB
 
Posts: 3876
Joined: Sat 27 Jun 2009, 20:26:42

Re: Making Tesla profitable?

Unread postby Outcast_Searcher » Mon 07 Aug 2017, 13:04:24

EdwinSm wrote:Oops! I need a little more cash, €3bn is not enough to have in hand :roll: :oops: .....

I suppose the one thing to say for this is it helps cover unexpected problems. That kind of flies in the face of the expectation to be producing 5000 Model 3's a week by the end of 2017, 10,000 a week by the end of 2018, and 20,000 a week by the end of 2019. With high quality, good margins, and everything else like the Model Y, electric semi-truck, solar roofs for homes, batteries for home and business, scaling up more Gigafactories around the world, and all going just peachy, of course. (Including ongoing very heavy demand for the cars, getting the cars sold to the middle class (lack of dealerships), getting the cars serviced in a timely manner like the middle class will demand (which is NOT happening today with the small volumes of the model S), etc.

So this seems to conflict with his confidence that no major issues are expected. OTOH, that's what CEO's do (project a confident, positive image -- almost no matter what).

Writing out some of the main uncertainties reminded me of why the bond rating agencies are confirming the bonds will be junk credit quality.
Outcast_Searcher
COB
COB
 
Posts: 3876
Joined: Sat 27 Jun 2009, 20:26:42

Re: Making Tesla profitable?

Unread postby Cog » Mon 07 Aug 2017, 13:46:07

Less than a week ago Tesla said it wouldn't need to raise more money because scaling generates cash.

At the moment they said that they were already arranging this issuance of junk bonds. At least Barnum and Bailey provided popcorn and elephants.

For comparison sake:

Image
User avatar
Cog
Anti-Matter
Anti-Matter
 
Posts: 9328
Joined: Sat 17 May 2008, 02:00:00
Location: Metro-East Illinois

Re: Making Tesla profitable?

Unread postby pstarr » Mon 07 Aug 2017, 15:05:43

Siri told me to buy Tesla. So I ran out an converted all my doomer/bugout stuff into stock. I feel so much better :)
Haven't you heard? I'm a doomer!
pstarr
NeoMaster
NeoMaster
 
Posts: 26105
Joined: Mon 27 Sep 2004, 02:00:00
Location: Behind the Redwood Curtain

Re: Making Tesla profitable?

Unread postby Outcast_Searcher » Mon 07 Aug 2017, 15:22:06

Cog wrote:Less than a week ago Tesla said it wouldn't need to raise more money because scaling generates cash.


As I said/showed in a post above today, that's not quite true. In the earnings release Musk said they wouldn't raise capital with equity (i.e. wouldn't sell more new stock) in 2017. But a sentence later Musk said they were pondering debt, and now here comes the debt only one week later.

Not that more debt is good, and not that I'm giving them a pass. But at least it wasn't the kind of outright blatant lie that politicians get caught in frequently. And at least they're not diluting the stock even further, for now.
Outcast_Searcher
COB
COB
 
Posts: 3876
Joined: Sat 27 Jun 2009, 20:26:42

Re: Making Tesla profitable?

Unread postby Cog » Mon 07 Aug 2017, 15:43:49

Don't you think that Musk could have mentioned this a week ago when he was pumping the Model 3? Now I've never tried to coordinate the issue of $1.5 billion on junk bonds with a Goldman Sachs or other investment bank, but it seems to me he knew about it for a while.

Either way, when the Tesla stock crash comes its going to be somewhat spectacular.
User avatar
Cog
Anti-Matter
Anti-Matter
 
Posts: 9328
Joined: Sat 17 May 2008, 02:00:00
Location: Metro-East Illinois

Re: Making Tesla profitable?

Unread postby Outcast_Searcher » Mon 07 Aug 2017, 15:50:49

Cog wrote:Don't you think that Musk could have mentioned this a week ago when he was pumping the Model 3? Now I've never tried to coordinate the issue of $1.5 billion on junk bonds with a Goldman Sachs or other investment bank, but it seems to me he knew about it for a while.

Either way, when the Tesla stock crash comes its going to be somewhat spectacular.

He did mention the idea of using debt. Sorry I'm not being clear.

He didn't say the amount, but for such things Tesla is ALWAYS dealing in $billions. He didn't say next week, but the implication was, as needed.

Again, I'm not defending Tesla overall -- I'm just pointing out that on this point at least -- he's not a big fat liar. (Those junk bond interest rates are an expense against potential future profits. If things are delayed significantly on the production ramp-up, this only makes things worse.)
Outcast_Searcher
COB
COB
 
Posts: 3876
Joined: Sat 27 Jun 2009, 20:26:42

Re: Making Tesla profitable?

Unread postby Cog » Mon 07 Aug 2017, 15:55:45

I'm not hoping he fails. I'd like him to sell millions. If he goes under its going to drag down more than just Tesla stock. Bad for a lot of bottom lines, not just mine. But his whole way of doing business does not inspire confidence.
User avatar
Cog
Anti-Matter
Anti-Matter
 
Posts: 9328
Joined: Sat 17 May 2008, 02:00:00
Location: Metro-East Illinois

Previous

Return to Economics & Finance

Who is online

Users browsing this forum: No registered users and 17 guests

cron