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Musk to review all of Tesla's expenses in new cost cutting plan

reuters.com

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Re: Musk to review all of Tesla's expenses in new cost cutting plan

#31

Post by marcinzm »

confiscate wrote: post #19

sounds like a misleading headline The original letter says the 2.4 billion raised a few weeks ago, would be used up in 10 months at current burn rate. It's for the money recently raised, not the entire company's bank account. Headline is misleading

Someone else in this thread has stated that a) around half of the raised money needs to be used to service debt b) Tesla had $900 million in the bank before raising money. Doing the math based on the letter's $200 million/month loss rate that comes out to 10 months before Tesla is utterly out of money.

Are those statements incorrect?

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#32

Post by gamblor956 »

SlowRobotAhead wrote: post #27

1. I don't know if that math is entirely solid. They got 2.4 billion and in the past quarter ran though 200 a month, thus 10 months before they're empty. But that's not exactly how it works, for all I or anyone knows the last quarter was very tooling heavy and they chose to pay costs all upfront instead of amortize costs. IDK. 2. I work in automotive. I was a the room with 3 VPs from a BIG 3. They weren't threatened…

for all I or anyone knows the last quarter was very tooling heavy and they chose to pay costs all upfront instead of amortize costs. IDK.

Many people do know...Depreciation is subject to specific tax and accounting rules. While for tax purposes some (but not all) of Tesla's spending is immediately depreciable, for accounting purposes, none of it is, so their tooling costs must be depreciated over the useful life of the equipment. Depreciation also isn't relevant to a discussion of cash flow, as depreciation is merely an abstract number representing estimated wear and tear.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#33

Post by gambiting »

negamax wrote: post #20

Few thoughts 1. Is anyone still buying car? May be it's a huge necessessity in US but most of the cities are fairly packed and have good public transport and improving 2. Idea of self driving car will indeed be a big selling point. Still people will pool those and cost of transport in general will come down because of Uber's fleet. Self ownership will still not go up significantly unless idea is to buy for long dista…

>>1. Is anyone still buying car? May be it's a huge necessessity in US but most of the cities are fairly packed and have good public transport and improving

Is this like....a joke? I mean I get it - I used to live in a big city where owning a car just seemed stupid and wasteful. But once you live outside of the metropolis, where yes, there is public transport(in a form of a bus or two going every two hours), and you have kids and things to do, then yes, cars are still a necessity.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#34

Post by TAForObvReasons »

hi5eyes wrote: post #16
JohnJamesRambo wrote: post #14

Earlier quoted context omitted.

Yikes. It’s bizarre that they just now realize this and implement it. Reminds me of something a teenager would do at the last possible minute before something bad happens.

look up elons promises of battery swaps, 35k m3, 2020 roadster, "full self driving", and the closing of stores but then cancelling that and teslas solarcity/solar shingles shitshow i want to remind everyone.. any mention of "self driving" is a scam, fraud. on a site like hackernews im still surprised the teslemmings are still regurgitating this idea

Irrespective of the technical merits, a significant portion of the HN user base likely invested in $TSLA years ago and are financially incentivized to support all of Musk's claims, even if they wouldn't support the outlandish claims normally.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#35

Post by kaesar14 »

gamblor956 wrote: post #15

In the letter, Elon stated they have burned through over $200m/month this year after the cost reductions from last year and January and again in March. (That's net $200m lost each month, not $200m spent each month.) They raised $2.4 billion a few weeks ago, about half of which must go toward servicing existing debt, and had about $900m in the bank before the offering, leaving them about $2.1billion in cash. Or in oth…

Won’t they just get more funding?

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#36

Post by Waterluvian »

Am I right to assume that if Tesla files for bankruptcy protection, all car deposits basically vanish? I assume there's miles of higher priority creditors lined up than consumers who paid a deposit. Do we have any sense of how many outstanding deposits there are still?

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#37

Post by gamblor956 »

omgwtfbyobbq wrote: post #23
gamblor956 wrote: post #15

In the letter, Elon stated they have burned through over $200m/month this year after the cost reductions from last year and January and again in March. (That's net $200m lost each month, not $200m spent each month.) They raised $2.4 billion a few weeks ago, about half of which must go toward servicing existing debt, and had about $900m in the bank before the offering, leaving them about $2.1billion in cash. Or in oth…

Based on the burn rate as of 2018Q2 (~$720 million per quarter), they should already be bankrupt. https://ir.tesla.com/static-files/7235e525-db16-470c-8dce-9e... They aren't because things change and the burn rate for 2018Q2 didn't represent 2018Q3/Q4.

Context matters, as does reading comprehension. $200m/month = $600m/quarter...after 3 rounds of expense cutting.

That's $200m/month in net losses during a purely operational stage. It doesn't even include the costs of a planned Model Y launch or self-driving network.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#38

Post by TAForObvReasons »

davej wrote: post #28
JohnJamesRambo wrote: post #14

Earlier quoted context omitted.

Yikes. It’s bizarre that they just now realize this and implement it. Reminds me of something a teenager would do at the last possible minute before something bad happens.

I didn’t read it like that. I read it more like... yes, we just got some money from investors but the drive for profitability is still a huge priority.

This type of belt tightening message also usually predates a mass layoff

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#39

Post by Solar19 »

negamax wrote: post #20

Few thoughts 1. Is anyone still buying car? May be it's a huge necessessity in US but most of the cities are fairly packed and have good public transport and improving 2. Idea of self driving car will indeed be a big selling point. Still people will pool those and cost of transport in general will come down because of Uber's fleet. Self ownership will still not go up significantly unless idea is to buy for long dista…

1. Yes, many millions of people are still buying cars. Some of us love cars. Real men drive, and drive well – they don't ride bikes or trolleys to work. Driving is an essential element of grown-up level autonomy and freedom of movement.

2. Most people won't share their cars like Musk's car sharing scheme envisions. Why would you want strangers driving your car at all hours, and putting miles and wear and tear on it?

Autonomous cars are still not ready anyway.

3. Tesla can't go private for various reasons.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#40

Post by asaph »

charlesdm wrote: post #24
whyenot wrote: post #18

Earlier quoted context omitted.

Your link is to what is represented as the authentic text of the memo. If genuine, to me, this seem like the most important bit: "It is important to bear in mind that we lost $700 million in the first quarter this year, which is over $200 million per month. Investors nonetheless were supportive of our efforts and agreed to give us $2.4 billion (our net proceeds) to show that we can be financially sustainable. That is…

> With relatively low gas prices at the moment, decreasing federal subsidies for electric cars, and more players entering the market, it seems like Tesla is in a pretty tough spot. Nothing you couldn't see coming 5 years ago, however.

To be fair, the current competition is largely a reaction to Tesla's accomplishments.
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