tita wrote:asg70 wrote:I have to admit that I have stopped watching every move with Tesla. I thought they were near death when all of its executive started fleeing and its stock tanked but they seem to be able to limp onward like a zombie.
There was quite a slowdown this year, but Tesla managed to keep sales numbers up, introducing gradually cheaper variants and lowering prices of the more expensive variants. Anyway, Model S/X sales plunged while Model 3 sales increased. Also, Tesla cut costs wherever they could.
Each quarter seems like a challenge. Now, Tesla must reach 106k deliveries in Q4 to reach lower guidance. So far, Tesla lost $1.1 billions in the first two quarters and is expected to show a loss in Q3.
The major things this year was the fundraising of over $2 billions and the financing of the Shanghai Factory by Chinese lendors.
As long as investors throw money, there is no reason for Tesla to fail.
From my analysis and watching on places like Seeking Alpha, that's all absolutely right.
The real question is (IMO), "In the face of all the financial issues like all the debt and ongoing interest expense, and in the face of the growing competition, is there any realistic path to sustained meaningful profitability for Tesla in a reasonable timeframe?'
Because if there's not, then it's just more debt, more interest expense, more capital raises, and at some point, even Tesla fanbois aren't going to want to keep throwing money at the cash burning furnace.
One issue I can't ignore is that in order to CLAIM positive cash flow, Tesla has taken to paring CAPEX to the bone. Well, that works on the accounting statements, but in a company relying on high growth, innovation, and the introduction of lots of new products (which take a lot of research and capital), how realistic is that?
One thing the new competition arriving in '20 and '21 will almost certainly do is continue to drive ASP (average selling prices), and thus gross margins lower. That seems to apparently eat up any cost savings that the bulls are counting on as the means to profitability, at least thus far. Oh, and it won't help the growth story any, which is already radically slowing.
Of course, there's the Shanghai plant, which will likely produce 100,000+ cars in 2020, and there's the Model Y, both of which bulls tout as the next "promised land" for Tesla.
We'll see I guess. I think the Shanghai plant will help with margins. Far less sure about quality. But I think the Model Y will just heavily cannibalize the Model 3 (it's a sedan, not an SUV).
So it's an interesting show to watch. I enjoy my popcorn. My bets, re the success of the EV industry overall are with the competition, their experience, quality, service, know-how, reputation, etc. vs. Tesla's clown-car antics, but that's just me.
However, I do NOT agree with the shorts who keep claiming Tesla is about to go bankrupt short term. Even if they keep losing lots of money, they could potentially keep the show going for quite a few years with fundraising. And while I'm not buying the bull arguments of exponential growth and profits forever, Shanghai COULD get them near parity re profits over time -- which buys them time.
Oh, and the other wild card, IMO, is the regulators and all Tesla's quality and safety problems and accounting issues (think solar roofs, etc) might well start hitting a lot harder re lawsuits, recalls, etc. It would be ironic for the bulls if Tesla would reach operational profitability, but keep piling up debt by dealing with the fallout of all of THAT.