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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

#181

Post by zaroth »

jmpman wrote: post #10
xeromal wrote: post #9

Earlier quoted context omitted.

You just have to call in to get the 35k version

Sure... I was planning on buying the $27,500 (after rebate) version. As the rebates have expired, that theoretically priced Model 3 no longer exists. At $27,500 it was an amazing deal - better than an Accord or Camry.

A Tesla Model 3 at $27,500 would have been such an absurdly sweet deal the demand would be ludicrous.

If they could have snapped their fingers and manufactured as many as they needed, I would guess based on passenger vehicle sales numbers, they could have sold 300,000 in a single quarter at that price. They barely build that many in a year.

I’m sorry, you were never going to see a Model 3 for $27,500. With the way the credit phases out, they could never have built up the capacity to fulfill $35k orders under the full credit, just to have the price then spike as the credit phased out and be left with huge excess capacity as it came back to full price.

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

#182

Post by dang »

abduhl wrote: post #120
ajross wrote: post #110

Earlier quoted context omitted.

Even buying the burn rate in the title, Tesla's losses are like 8% of revenue. That's not at all far off from where Amazon and Google were in their early years. Again, it's not that there isn't an accounting worry here, what concerns me is the... hate. Just the visceral hate about this company that wants it to fail so badly that it leads people to apply these crazy double standards.

How many shares do you own bro?

This breaks the site guidelines. Would you mind reviewing them and not posting like this here?

https://news.ycombinator.com/newsguidelines.html

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

#183

Post by zaroth »

nathanaldensr wrote: post #75
aortega wrote: post #72

Traditional car companies must be damn scared to have to publish this FUD. Tesla cannot be possibly dying out. Don't you see Tesla cars everywhere in the US? yes they are spending money, buying things to grow as they are so incredibly successful they cannot satisfy demand. Dying out? you make me laugh. If you spend 10M dollars buying equipment that in a year is worth 100M dollars, you are not dying out.

No, I do not see Teslas everywhere in the US. In fact, I see the same brands I've seen forever: Fords, Chevys, Hondas, Toyotas, etc. etc. Tesla makes a niche product for a dedicated few. How is this debatable?

Is BMW, Ausi, and Mercedes also all for a dedicated few?

Tesla Model 3 outsold them all in 2018. Not cumulatively, but the Tesla Model 3 was the top selling luxury car in the US in 2018.

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

#184

Post by zaroth »

bondolo wrote: post #138

A friend who worked on the charging system for the Model S reported that a few weeks before the vehicle shipped they were way behind schedule for building vehicles and falling further behind as the release date approached. One Sunday morning the entire engineering team was on the manufacturing floor helping the struggling manufacturing team build vehicles and Elon appeared trailing a gaggle of execs. They started pok…

I believe the last paragraph. The original powertrain in the Model S was an epic failure.

By comparison, Elon claims the drivetrain in the Model 3 is the same unit that they are putting in the Semi, and that they test it to 1 million miles.

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

#185

Post by digsy »

taf2 wrote: post #161
barbecue_sauce wrote: post #122

Earlier quoted context omitted.

$100 seems like a pretty extreme threshold. Would make more sense to have a budget for a group or an individual, then only require approval once the budget has been depleted (though I guess this could potentially incentivize overspending instead).

* 1000 to 10000 people making those $100 purchases maybe not too extreme? Said they posted over a billion so I’d guess pretty large number of employees

The issue isn't the $100 limit - the issue is having the CEO give approval.

I would expect that such a small amount would be approved by someone much closer to the engineers on the hierarchy.

Not to mention what a poor use of the CEOs time!

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

#186

Post by windexh8er »

jjeaff wrote: post #147
windexh8er wrote: post #94

Earlier quoted context omitted.

This is my foundational fear of losing Tesla. Love them or hate them if they were to sink I feel the large drive to compete with them goes away and we go back to business as usual burning dead dinosaurs. While Tesla isn't perfect by any stretch I do think they continue to be very important to the overall market progression and higher expectations of auto manufacturers.

Is there really a large drive to compete with them? So far they have proven that unit profitability is difficult if not impossible with current tech. And meanwhile, Ford is selling a quarter million F-150 trucks every quarter compared to Teslas total units per quarter around 40k. I don't think the big automakers are worried yet.

There is. Buyers of an F150 are not buyers of any Tesla product. Ford just invested heavily in Rivian [0]. That's Tesla's backyard for sure and is a departure from those buyers of the F150.

[0] https://www.nytimes.com/2019/04/24/business/ford-rivian-inve...

While maybe not "worried" Ford sees a risk.

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

#187

Post by pbreit »

navigatesol wrote: post #3

> On Jan. 30, Musk told investors he thought Tesla would continue making money after finally turning its first back-to-back profits during the third and fourth quarters of last year, fulfilling his previous forecast that Tesla would become “sustainably profitable” from the third quarter of 2018 onward. Followed by a massive quarterly loss of $700MM and the pronouncement that the company has less than 10 months of cas…

He later said there’d be a loss in Q1.

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

#188

Post by trca »

confiscate wrote: post #171
new_realist wrote: post #162

Earlier quoted context omitted.

No, they have two large balloon payments due in 2019 from prior debt.

I thought they had 2B in the bank before the raise. Granted, I am sure Elon exaggerates numbers, but shouldn't that be factored in?

Tesla had ~$2.5B in the bank before the capital raise, and are going to be receiving a multi-hundred million to $1B payment from Fiat Chrysler (https://www.ft.com/content/7a3c8d9a-57bb-11e9-a3db-1fe89bedc...) to offset their emissions. They have plenty of money in the bank for the foreseeable future, but they won't if they don't cut their expenses or increase sales. To me, this just looks like a company exiting startup wild-west spending and maturing into a full-fledged company with hard-set processes for company expenses.

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

#189

Post by omgwtfbyobbq »

gamblor956 wrote: post #37
omgwtfbyobbq wrote: post #23

Earlier quoted context omitted.

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.

Speaking of reading comprehension, of the $600 million/quarter you're referencing, nearly $200 million was from non-recurring items.

>In Q1, we experienced non-recurring items that negatively impacted our net loss by $188 million.

https://ir.tesla.com/static-files/b2218d34-fbee-4f1f-ac95-05...

The drop in S/X deliveries from the updates to their production lines, discontinuation of the 75kWh pack, and the pull-forward from Q4 of last year due to the reduction in the US tax credit also reduced profits by ~$300-400 million.

Like I said, a single data point doesn't make a trend.

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