Why almost everyone was wrong about Tesla’s cash flow situation • Hacker News Board

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#101

Post by ryandrake » Fri, Oct 26, 2018, 3:14 PM UTC

jartelt wrote: post #43

madeuptempacct wrote: post #15

Earlier quoted context omitted.

"Why does anyone spend $35,000 - $50,000 on a car? It just feels like a number that is at least 5x too high." If someone makes $250,000+ a year, it's not unreasonable. "My 2005 Ford Focus sedan was $3,000 and should last me about 3 years before I need to make a decision about major repairs, so that's less than $100 a month in ammortized costs." That's completely unrealistic. You have some sort of competitive advantag…

Seriously - I just sold a 1999 Civic with 150,000 miles for $2,000. The car made so many noises and did not feel safe at all. Yet, someone paid real money for it and was happy about it. Most cheap used cars are pretty junky. That is fine if you want a beater to drive to work and back or if you have mechanic know-how. It's a lot sketchier if you want a car to drive your kids around in or if you want to drive on longer…

As someone who prefers cheap cars, one of the keys is basic maintenance know-how. Anyone can learn to do the basics (oil changes, air filter, spark plugs, brake pads, etc.) with a few hours of learning on YouTube.

I'd never waste my money on a new car. My current car is 10 years old and it feels so uncomfortable new. I felt like I was spoiling myself when I bought it.

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#102

Post by phkahler » Fri, Oct 26, 2018, 3:15 PM UTC

anoncoward111 wrote: post #3

Serious question, and I'm not a Tesla hater either: Why does anyone spend $35,000 - $50,000 on a car? It just feels like a number that is at least 5x too high. A used car from a fairly reputable source can be had for between $3,000 - $6,000, depending on mileage and cosmetic appearance. My 2005 Ford Focus sedan was $3,000 and should last me about 3 years before I need to make a decision about major repairs, so that's…

>> A used car from a fairly reputable source can be had...

EVERY used car was once a new car. How many times do you think a car gets sold? Perhaps 3 or 4 including the original new sale? If so then 25 percent of car sales are new car sales. Another thing to consider is the resale price of a car. With an old used car you may think you'll drive it until it's used up and junk it, while the previous owners kept it until it was "used up" in the sense that they sell it and get some money for it.

Sure new cars are generally over prices, but TCO is still an important consideration.

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#103

Post by Marsymars » Fri, Oct 26, 2018, 3:15 PM UTC

moduspwnens14 wrote: post #55

anoncoward111 wrote: post #3

Serious question, and I'm not a Tesla hater either: Why does anyone spend $35,000 - $50,000 on a car? It just feels like a number that is at least 5x too high. A used car from a fairly reputable source can be had for between $3,000 - $6,000, depending on mileage and cosmetic appearance. My 2005 Ford Focus sedan was $3,000 and should last me about 3 years before I need to make a decision about major repairs, so that's…

My prior car was new and I later decided that the added expense of a new car did not justify it. My plan was to get a few-years old "A to B" used car (like a Corolla or something) when it started needing work. But I did change my mind and get a Model 3. * Autopilot is quite nice. I'd compare the experience to driving a car with cruise control as compared to one that doesn't have it. It's not the end of the world, but…

> * They're taking a risk with the interior of the car, with the lack of gauge cluster and spartan design. To me this looks like what happened when the software industry switched from "as many UI buttons and features as possible" in the '90s to the simplified, "overall user experience" focus we see in modern software. And I want to support that.

I guess this is fine if you live in California, but a car that I can't operate while wearing heavy mittens is literally unusable to me for nearly half the year.

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#104

Post by jjoonathan » Fri, Oct 26, 2018, 3:16 PM UTC

seer wrote: post #91

madeuptempacct wrote: post #15

Earlier quoted context omitted.

"Why does anyone spend $35,000 - $50,000 on a car? It just feels like a number that is at least 5x too high." If someone makes $250,000+ a year, it's not unreasonable. "My 2005 Ford Focus sedan was $3,000 and should last me about 3 years before I need to make a decision about major repairs, so that's less than $100 a month in ammortized costs." That's completely unrealistic. You have some sort of competitive advantag…

I'm not sure how much it varies country to country - I'm in Eastern Europe myself (lower labor costs, higher import / taxes etc) but my trusty toyota corolla was bought for about $3000 with no "friend discounts", just a general recommendation that Japanese cars are reliable and a bit of quick looking around the local car craigslist equivalents. I've been driving it for about 7 years (12 years old in total) with no ma…

> Eastern Europe

Geographic variation in pricing not only fully explains the difference but actually leaves me mildly surprised that the difference is so small.

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#105

Post by ianai » Fri, Oct 26, 2018, 3:16 PM UTC

bflesch wrote: post #6

Shouldn't we wait for the fully audited FY2018 results before making these bold claims? I feel with Tesla it is always swinging to the extremes. You could do a lot of accounting magic to make one quarter appear great, but it will show up in the full year's numbers. We have to remember that they have a lot of churn in the financial department, for example the CFO left in April (see https://www.business-standard.com/ar…

Churn should be a strong indicator of managerial issues. But I think it’s not because of how much wealth companies and certain people amassed.

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#106

Post by ericb » Fri, Oct 26, 2018, 3:17 PM UTC

AllegedAlec wrote: post #51

ericb wrote: post #47

Earlier quoted context omitted.

Under current rules, I'm pretty sure it is legal to try and destroy a company by destroying its reputation and maligning its financials and profit by shorting it while you kill it. That this is allowed seems anti-competitive and takes away from the notion that shorts "make a market healthier by bringing balance."

> Under current rules, I'm pretty sure it is legal to try and destroy a company by destroying its reputation and maligning its financials and profit by shorting it while you kill it. Yeah, it's legal, but that doesn't mean it's not malevolent.

I think we're in agreement about everything including its malevolence. Destroying otherwise healthy companies does nothing beneficial for the country's competitiveness, so if it could be done carefully, I'd support laws reigning this behavior in.

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#107

Post by saiya-jin » Fri, Oct 26, 2018, 3:17 PM UTC

InTheArena wrote: post #41

anoncoward111 wrote: post #3

Serious question, and I'm not a Tesla hater either: Why does anyone spend $35,000 - $50,000 on a car? It just feels like a number that is at least 5x too high. A used car from a fairly reputable source can be had for between $3,000 - $6,000, depending on mileage and cosmetic appearance. My 2005 Ford Focus sedan was $3,000 and should last me about 3 years before I need to make a decision about major repairs, so that's…

There are both sociological and economic reasons for it. On the sociological - new cars can be a status symbol - especially in the Luxury markets. Interestingly enough - the European luxury car market is roughly twice that of the United States, despite per-capita earnings being lower then the United States. Are you German and driving a beat up Honda Civic? Not a good look. Tesla is benefiting from this - the cars are…

Ah, the good old fool's logic of trying to impress people you don't actually care about. How stupid this can be... Can you actually be impressed by somebody's car? I can't for more than 1-2 minutes even if we talk about porsche/ferrari. Lasting positive impression can't be bought, no matter how much cash you throw at it.

Reliability of an old car can be an issue, but if you find a good mechanic, he will go over junky car, fix and replace what is needed, and on top of 3-5k you spend maybe another 3-5k at most. Even better is to have an used car be shopped around up by such a mechanic, but that often requires a friendship on some level. Voila, reliable car for 6-10k, you just need to get a check once a year (shouldn't be costly if initial one was done properly).

I have 15-yer old BMW 3-series, amazing car. Won't change it till it dies/crashes/gets stolen. Fiancee bought before old Toyota Corrola combi for 5k - amazing workhorse. Driving experience is crap compared to BMW, but it just keeps working, consumes nothing (diesel 2l engine). New one costs easily 4x more, for very little added value.

Unless your pay directly depends on you being reliably on time someplace, or you commute over longer distances in some higher white collar job, this is enough.

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#108

Post by wjnc » Fri, Oct 26, 2018, 3:18 PM UTC

bflesch wrote: post #6

Shouldn't we wait for the fully audited FY2018 results before making these bold claims? I feel with Tesla it is always swinging to the extremes. You could do a lot of accounting magic to make one quarter appear great, but it will show up in the full year's numbers. We have to remember that they have a lot of churn in the financial department, for example the CFO left in April (see https://www.business-standard.com/ar…

I had the same feeling. Could use an accountant chiming in here.

On the one hand the third quarter update clearly states 'Unaudited' above the statement of operations and balance sheet. On the other hand, they present GAAP-figures. As far as my practical knowledge of working with accountants go, they would frown quite heavily upon using 'new and improved' accounting methods for their Q3-update. Even for 'unaudited' GAAP-figures 'we' (investors) should be able to expect a continuous accounting practices from the firm. But it's good practice to read any statement of an accountant dilligently (ever read an ISAE-statement?) and read non-audited statement with even more caution.

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#109

Post by RivieraKid » Fri, Oct 26, 2018, 3:18 PM UTC

simonebrunozzi wrote: post #21

The article seems very imprecise on factual data. > With $3 billion in the bank and a growing cash cushion, Tesla won't need to raise any cash to pay off the big $920 million loan that's coming due next March. Except that there's less in the bank, and that Tesla owes something like $3B to suppliers. I am not a financial expert, but I'd think that the situation is not as easy as it is depicted here.

Agreed, the article is a very basic and imprecise overview of Tesla's finances, it brings no new insight. The more informed shortsellers and investors go to much more depth. The headline is quite... bold, given that the author doesn't know much about Tesla's finances and corporate finance in general.

By the way, last quarter was a big surprise to everyone, bulls and bears.

Re: Why almost everyone was wrong about Tesla’s cash flow situation

#110

Post by thomaskcr » Fri, Oct 26, 2018, 3:18 PM UTC

AllegedAlec wrote: post #19

I'm not sure I'm sold on the perspective that the worst Tesla detractors were actually just misinformed or wrong about the subject, rather than being actively malevolent by trying to gain money by shortselling while funding anti-Tesla articles.

The victim complex with this company and the Musk fans is ridiculous.

The company was a financial dumpster fire losing exectives at an alarming rate (they had their Chief Accounting Officer leave after 29 days this quarter). It's just less of a financial dumpster fire now. Their payables increased by more than their earnings and are still more than their cash.

Would you consider yourself financially healthy if you had $3000 between your savings and checking accounts but a $3500 credit card bill (that has been growing QoQ)?

I haven't checked lately how many liens were filed against them but last count I noted was 18 filed this year - vendors aren't getting paid anywhere near terms, this isn't just managing cash - there are still a lot of red flags even if you think (and I would agree with this) the situation seems to be improving.