Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Tesla Was Cash Flow Positive Last Week, CEO Musk Says

bloomberg.com

Post reply on HN
Print view View original

41–50 of 246 posts

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#41

Post by endersshadow »

jervisfm wrote: post #30
perry5000 wrote: post #10

Earlier quoted context omitted.

Cash flow positive != profitable

What is the difference between the two ? Don't you need to have a net positive flow in order to be profitable ?

Great question! The answer is a resounding no! Also, just because you're profitable doesn't mean you have a positive cash flow!

Profit is what's called Net Income (for argument's sake, let's do EBIT--Earnings Before Income Taxes). Cash flow is simply your delta in cash from one period to the next.

Lots of things go into net income, but essentially it's revenue minus costs. Because of GAAP (Generally Accepted Accounting Practices--only in the US), you recognize revenue when it is earned not when it is collected. So, let's say you buy a car and you pay $5,000 down on a $30,000 car. The car company records revenue of $30,000. In their balance sheet, they also add $5,000 to cash, and $25,000 to what's called Accounts Receivable. Their cash flow is now $5,000.

Let's further say that they owe payroll, to the tune of $10,000 for that month. And you were the only poor bastard that bought a car from them that month. They have to pay $10,000 in cash for payroll, and that also gets logged as an expense. So, their profit shows a $20,000 net profit, but they have -$5,000 in cash flow.

You can extend the example to make it positive for a company that's not profitable, if you'd like.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#42

Post by frankc »

BCM43 wrote: post #26
perry5000 wrote: post #10

Earlier quoted context omitted.

Cash flow positive != profitable

What does it mean?

cash flow positive just means you had more money coming in that going out. Profit is calculated on an accrual basis, not a cash flow basis. For instance, if I sell you a car, I can recognize the revenue from that before you give me the cash. The debt you owe me is now an asset. On the other hand, there are things like depreciation of assets which count as expenses even though no cash changes hands right now. These are just a couple of examples on how cash flow and profit are not the same, but to get the full gist of it, you need to cover basically what gets covered in an intro accounting course.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#43

Post by twoodfin »

nicholassmith wrote: post #23
twoodfin wrote: post #20

Earlier quoted context omitted.

Just for future reference, what's the benchmark for calling Romney's prediction accurate? Do they have to liquidate or is it enough that they fail to be able to continue to independently deliver cars to the market? I'd love it if Tesla would succeed sheerly because their product seems so slick, but I agree with Romney that the government is a lousy institution to be picking companies that "should" get half-billion do…

Governments for the most part can take long term(ish) views on things, whereas other investors might be more bullish about seeing a return a lot quicker, for better or for worse. Even traditional bank based investment wouldn't have worked, so it's unlikely something like Tesla would be able to get off the ground and get running. If Tesla does succeed the US Government gets a nice feather in the cap as well, if it goe…

What's the "long term view" on Tesla? What's the benefit of them selling electric cars vs. Toyota or GM? The latter have clearly shown their capability to do so. Tesla just thinks a different approach to the market is superior. They'll be proven right or wrong in the next few years. That's well within the time horizon for an investor to make a reasonable decision: Who's more likely to make a profit with their electric car plans? Toyota, GM or Tesla? This is the kind of thing markets are good at. If the government wants more electric cars, just subsidize everyone's cars (which they're doing, of course). Don't try to be a super-VC.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#44

Post by benajnim »

thematt wrote: post #40
brandall10 wrote: post #29

Earlier quoted context omitted.

Do you have any idea whatsoever how hard it is to have a successful venture in the automotive industry? You really should watch the Bloomberg Risk Takers documentary on Elon. I'm against handouts as much as anyone (it's a loan though), but try making a comment like this afterward. The difficulties he went thru to keep Tesla afloat were outrageous. By this time he been dumping his fortune into both this and SpaceX and…

How about a third option? The government doesn't bet on anybody and let's the market sort out the winners.

While this would be a good option in the spirit of the free market, many parts of the transportation industry are subsidized already making the play-field unfair to begin with.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#45

Post by king_magic »

thematt wrote: post #40
brandall10 wrote: post #29

Earlier quoted context omitted.

Do you have any idea whatsoever how hard it is to have a successful venture in the automotive industry? You really should watch the Bloomberg Risk Takers documentary on Elon. I'm against handouts as much as anyone (it's a loan though), but try making a comment like this afterward. The difficulties he went thru to keep Tesla afloat were outrageous. By this time he been dumping his fortune into both this and SpaceX and…

How about a third option? The government doesn't bet on anybody and let's the market sort out the winners.

Does the market always pick the highest quality of winners? I really don't think it does.

I'm not saying government does either - TBH I don't really have faith in either the market or the government to accurately pick winners.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#46

Post by freehunter »

j2bax wrote: post #11
rikf wrote: post #7

Earlier quoted context omitted.

I think you would be surprised I think Tesla's strategy has three stages. 1) Niche high cost vehicle sold in low volumes(Roadster) 2) Medium cost luxury vehicle sold in medium volumes(Model S) 3) Low cost high volume vehicle sold in high volumes. (Model ???) Obviously this is a gross over simplification but I imagine that part of the engineering that is going on at TESLA is figuring out how to build 3 cheaper and at…

I am aware of their strategy, I just worry that the big automakers with their massive distribution and infrastructures already in place could easily come in and be 10 steps ahead of Tesla and provide a vehicle that isn't as sexy but has the same appeal to the electric car market. I could be overestimating their ability to innovate after so many years of sitting on the same old tired technology, but something tells me…

Well, Ford and Toyota are buying electric drivetrains from Tesla to put into their electric vehicles. The big automakers are easily able to match Tesla just by buying Tesla's parts, which Tesla is more than willing to sell them.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#47

Post by jbooth »

thematt wrote: post #40
brandall10 wrote: post #29

Earlier quoted context omitted.

Do you have any idea whatsoever how hard it is to have a successful venture in the automotive industry? You really should watch the Bloomberg Risk Takers documentary on Elon. I'm against handouts as much as anyone (it's a loan though), but try making a comment like this afterward. The difficulties he went thru to keep Tesla afloat were outrageous. By this time he been dumping his fortune into both this and SpaceX and…

How about a third option? The government doesn't bet on anybody and let's the market sort out the winners.

Well, they've already built an interstate highway system and the US state dept and military are already going to bat for us worldwide ensuring access to oil.

But yeah. THIS is the real case of the government getting too involved in the market.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#49

Post by iyulaev »

alxndr wrote: post #17
j2bax wrote: post #11

Earlier quoted context omitted.

I am aware of their strategy, I just worry that the big automakers with their massive distribution and infrastructures already in place could easily come in and be 10 steps ahead of Tesla and provide a vehicle that isn't as sexy but has the same appeal to the electric car market. I could be overestimating their ability to innovate after so many years of sitting on the same old tired technology, but something tells me…

"the big automakers ... could easily come in and be 10 steps ahead of Tesla and provide a vehicle that isn't as sexy but has the same appeal to the electric car market" Aren't they already trying to do that? Chevy's Volt, Nissan's Leaf, Ford apparently makes a fully PEV Focus now, as does Honda with a version of the Fit, and Toyota's gotta be working on the Prius...

This +1

What Tesla has done is made an electric car and marketed it as more luxurious and different from what's on the market. The Leaf is for hippies, the Volt is nowhere to be seen. The Tesla on the other hand is sexy.

A bigger concern is how Tesla will expand from this market. For most manufacturers, the high-end cars are not the major money-makers, and the quantities they move are just too small (Lexus sells over 8 IS/GS for each LS they sell). We'll see if they manage to expand from the niche they're in.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#50

Post by nicholassmith »

twoodfin wrote: post #43
nicholassmith wrote: post #23

Earlier quoted context omitted.

Governments for the most part can take long term(ish) views on things, whereas other investors might be more bullish about seeing a return a lot quicker, for better or for worse. Even traditional bank based investment wouldn't have worked, so it's unlikely something like Tesla would be able to get off the ground and get running. If Tesla does succeed the US Government gets a nice feather in the cap as well, if it goe…

What's the "long term view" on Tesla? What's the benefit of them selling electric cars vs. Toyota or GM? The latter have clearly shown their capability to do so. Tesla just thinks a different approach to the market is superior. They'll be proven right or wrong in the next few years. That's well within the time horizon for an investor to make a reasonable decision: Who's more likely to make a profit with their electri…

I'd say partially it's new and sexy, but I imagine the suggested long term is it could help show America as a leader in green tech which should help attract outside investment into other green tech ventures, helping to kickstart a new economic driver.

What Tesla is doing is creating an entire new venture from scratch from nothing, for them to hit profitability and make any solid return is likely to take a decade. VCs are unlikely to dump $500m for a 10 year wait, sure they'll know within a few years whether it was a good investment, but it's not likely to be viewed as a safe bet.

Post reply on HN