Tesla Second Quarter 2018 Update • Hacker News Board

Re: Tesla Second Quarter 2018 Update

#11

Post by rory096 » Wed, Aug 01, 2018, 9:00 PM UTC

secabeen wrote: post #5

JumpCrisscross wrote: post #2

For the six months ending in June 2018 Tesla's operations burned $528 million of cash. It also spent $1.27 billion on CAPEX. At quarter's end, they have $2.2 billion of cash on hand. That's like 7 months of runway. What's keeping the boat plugged up is debt. Good news is, there are no obvious bond market bogeymen on the horizon in the very near-term.

Will they eventually reach a point where they can just run with the capital equipment they already have, and drop the CAPEX spending down?

Their goal is 10k cars/week, so perhaps then. There's also (reported today) $5B planned for the factory in China, expected to be raised largely in-country but with some American/international investment. And, of course, some capex is always necessary to replace depreciating stock and support new models (pickup, new roadster, and truck all planned).

Re: Tesla Second Quarter 2018 Update

#12

Post by chollida1 » Wed, Aug 01, 2018, 9:02 PM UTC

JumpCrisscross wrote: post #2

For the six months ending in June 2018 Tesla's operations burned $528 million of cash. It also spent $1.27 billion on CAPEX. At quarter's end, they have $2.2 billion of cash on hand. That's like 7 months of runway. What's keeping the boat plugged up is debt. Good news is, there are no obvious bond market bogeymen on the horizon in the very near-term.

> Good news is, there are no obvious bond market bogeymen on the horizon in the very near-term.

I actually see one. it depends on your definition of near term, but in march of next year Tesla has alot of debt coming due. This debt is convertible(to stock) at around $350ish.

However, reportedly, this debt allows tesla to raise the conversion rate such that it can convert the debt to equity at any rate it wants.

https://seekingalpha.com/article/4191711-tesla-stealth-capit...

I haven't verified that but I thought its an interesting thesis:)

Re: Tesla Second Quarter 2018 Update

#13

Post by _Microft » Wed, Aug 01, 2018, 9:02 PM UTC

JumpCrisscross wrote: post #2

For the six months ending in June 2018 Tesla's operations burned $528 million of cash. It also spent $1.27 billion on CAPEX. At quarter's end, they have $2.2 billion of cash on hand. That's like 7 months of runway. What's keeping the boat plugged up is debt. Good news is, there are no obvious bond market bogeymen on the horizon in the very near-term.

"$528 million in six month" sounds a lot worse than what the report itself says, namely

Cash outflow from operating activities in Q2 2018 was $130 million, which was significantly better than outflows of $398 million in Q1. This improvement occurred despite a substantial increase in finished goods vehicle inventory of $579 million as a result of the timing of deliveries.

Re: Tesla Second Quarter 2018 Update

#14

Post by lawrenceyan » Wed, Aug 01, 2018, 9:04 PM UTC

Looks like the bankruptcy short thesis has been pretty much debunked, cash burn way below expected.

Re: Tesla Second Quarter 2018 Update

#15

Post by sp332 » Wed, Aug 01, 2018, 9:06 PM UTC

Alex3917 wrote: post #10

> In July 2018, we delivered our 200,000th vehicle in the US, which means that our US customers will have access to the full $7,500 federal tax credit until the end of 2018 So basically they have until the end of the year to produce as many cars as possible and get their finances in good shape, otherwise they're in trouble.

It will drop to $3,750 in January and then $1,875 in July. https://arstechnica.com/cars/2018/07/tesla-sold-200000-cars-...

Re: Tesla Second Quarter 2018 Update

#16

Post by sp332 » Wed, Aug 01, 2018, 9:08 PM UTC

JumpCrisscross wrote: post #9

sp332 wrote: post #6

Earlier quoted context omitted.

Their burn rate varies dramatically as they start shipping new models of cars. https://arstechnica.com/cars/2018/07/teslas-cash-crunch-expl...

> Their burn rate varies dramatically as they start shipping new models of cars Sure, you have to build new tools, buy material, hire factory workers--all before you've sold your first vehicle. This is a known cash curve. The purpose of calculating a runway is to understand "we have to start selling lots of cars within 7 months, or else sell more debt or stock."

Right, but since they did just start selling a lot of cars, the runway calculation is now moot.

Re: Tesla Second Quarter 2018 Update

#17

Post by Alex3917 » Wed, Aug 01, 2018, 9:09 PM UTC

sp332 wrote: post #15

Alex3917 wrote: post #10

> In July 2018, we delivered our 200,000th vehicle in the US, which means that our US customers will have access to the full $7,500 federal tax credit until the end of 2018 So basically they have until the end of the year to produce as many cars as possible and get their finances in good shape, otherwise they're in trouble.

It will drop to $3,750 in January and then $1,875 in July. https://arstechnica.com/cars/2018/07/tesla-sold-200000-cars-...

Even that phaseout will probably result in a lot of cancellations from people who have been on the waiting list for several months already but who haven't taken delivery by the end of the year. Especially for the orders at the lower end of the price spectrum, which haven't even started shipping yet.

Loss aversion is real, and people aren't going to be happy about being asked to suddenly pay ~20% more for the exact same car. Since the base models haven't started shipping yet, it stands to reason that after the end of the year that will be mostly what's left on the waiting list. So if they lose a lot of those reservations, they're stuck with huge capital expenses and a potentially very significant decrease in orders.

Re: Tesla Second Quarter 2018 Update

#18

Post by secabeen » Wed, Aug 01, 2018, 9:11 PM UTC

_Microft wrote: post #13

JumpCrisscross wrote: post #2

For the six months ending in June 2018 Tesla's operations burned $528 million of cash. It also spent $1.27 billion on CAPEX. At quarter's end, they have $2.2 billion of cash on hand. That's like 7 months of runway. What's keeping the boat plugged up is debt. Good news is, there are no obvious bond market bogeymen on the horizon in the very near-term.

"$528 million in six month" sounds a lot worse than what the report itself says, namely Cash outflow from operating activities in Q2 2018 was $130 million, which was significantly better than outflows of $398 million in Q1. This improvement occurred despite a substantial increase in finished goods vehicle inventory of $579 million as a result of the timing of deliveries.

> finished goods vehicle inventory of $579 million as a result of the timing of deliveries.

AKA, we delayed delivering a lot of cars to not trigger the tax credit expiration in Q2.

Re: Tesla Second Quarter 2018 Update

#19

Post by kgwgk » Wed, Aug 01, 2018, 9:11 PM UTC

matt4077 wrote: post #8

JumpCrisscross wrote: post #2

For the six months ending in June 2018 Tesla's operations burned $528 million of cash. It also spent $1.27 billion on CAPEX. At quarter's end, they have $2.2 billion of cash on hand. That's like 7 months of runway. What's keeping the boat plugged up is debt. Good news is, there are no obvious bond market bogeymen on the horizon in the very near-term.

Cash flow was -$528M Jan-Jun, i. e. Q1 and Q2, yes. But it was only -$128M in Q2. Tell us why you chose the longer time frame for your prediction, exactly? Your math also has some basic problems, because $2.2 billion / ($1.27 billion / 6 months) != 7 months == 11 months. More importantly: you're mixing some completely different levels of accounting: cash flow may or may not correspond to changes in capital structure…

Your parent is not mixing different accounting concepts. Those are two lines taken directly from the statement of cash flows ("Net cash used in operating activities" and "Capital expenditures").

Re: Tesla Second Quarter 2018 Update

#20

Post by _Microft » Wed, Aug 01, 2018, 9:13 PM UTC

secabeen wrote: post #18

_Microft wrote: post #13

Earlier quoted context omitted.

"$528 million in six month" sounds a lot worse than what the report itself says, namely Cash outflow from operating activities in Q2 2018 was $130 million, which was significantly better than outflows of $398 million in Q1. This improvement occurred despite a substantial increase in finished goods vehicle inventory of $579 million as a result of the timing of deliveries.

> finished goods vehicle inventory of $579 million as a result of the timing of deliveries. AKA, we delayed delivering a lot of cars to not trigger the tax credit expiration in Q2.

I interpret it like that as well, yes.