Tesla Was Cash Flow Positive Last Week, CEO Musk Says • Hacker News Board

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

#61

Post by nicholassmith » Wed, Dec 05, 2012, 4:49 PM UTC

twoodfin wrote: post #53

nicholassmith wrote: post #50

Earlier quoted context omitted.

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…

So the difference in "sexy" between Ford making a few hundred thousand electric cars and Tesla making a few hundred thousand electric cars is worth risking half a billion dollars of the taxpayers' money?

Note, not American so my interest in American tax dollars is pretty slim. But, in general yes it's worth the risk.

America, like most countries, is looking for a new industry to keep the economy moving on up. Manufacturing used to do it, then that shifted away, then the financial sector was the keeping the economy ticking over and that went a bit awry, now there needs to be a next thing. Investing in Tesla is a chancy risk (although I imagine the US.gov has taken steps to minimise the risk), but if it pays off and helps develop a new economic motivation industry with green tech it could help as a job creation strategy and also attract investment from outside the country.

Tesla looks and sounds sexy, they're a new darling with no baggage, they've got this guy involved who's daring and reasonably well liked with huge ideas, the cars themselves are gorgeous. That's much more exciting than Ford making electric cars.

$500m sounds like a hell of a lot of money when it's out there, but the US spent $700b on the military in 2011. Compared to that $500m on Tesla is not a huge amount. Without being glib, $500m is a rounding error on the military spend, if Tesla strapped some rockets and bullet proofing it could slip into the budget.

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

#62

Post by Sumaso » Wed, Dec 05, 2012, 4:52 PM UTC

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.

Government doesn't bet than society as a whole loses out.

Ideally your government should be attempting to maximize everyone's utility (read:society). Private corporations are attempting to maximize their utility (In the case of modern economies: money).

Having an organization giving money to projects that are a net monetary loss, but provide a social benefit is the core reason why we have a government in the first place.

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

#63

Post by mkopinsky » Wed, Dec 05, 2012, 4:53 PM UTC

danielweber wrote: post #13

debacle wrote: post #9

Tesla was cash flow positive, as of last week, or Tesla was cash flow positive last week? Edit: It appears the be the latter. Not really impressive, but a good sign.

Yeah, I think some people don't realize how easy it is to have a week where more money is coming in than going out, even if the company is failing. Not that I think Tesla is failing. But having a bunch of orders/payments come through in one week that you aren't buying much stuff can easily happen. (Specifics depend on cash versus accrual accounting.)

"We pay our employees on the 1st and the 15th"

I'm sure there are ways that accounting compensates for that though...

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

#64

Post by twoodfin » Wed, Dec 05, 2012, 4:57 PM UTC

jbooth wrote: post #56

twoodfin wrote: post #31

Earlier quoted context omitted.

That's not the same thing, and just my point. The government didn't give Intel, Microsoft or Netscape $200M (or whatever the inflation-adjusted figure would be).

The market's an optimization system, it's not some religious object with holy precepts. Sometimes you need to give optimization systems a hint.

The government has dozens of ways to structure incentives without making half billion dollar investments in particular companies.

Telecom reform in 1996, for example, was a huge boon for the internet and related industries, and it didn't require picking one specific company over another.

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

#65

Post by nathan_long » Wed, Dec 05, 2012, 5:10 PM UTC

king_magic wrote: post #45

thematt wrote: post #40

Earlier quoted context omitted.

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.

Define "highest quality". I'd say "of most utility to the largest number of people." By that metric, the market picks the highest quality of winner pretty much by definition.

Exceptions I can think of are cases where individuals don't have enough info to decide (eg, a product will cause cancer, but the company can get rich before consumers find out) and Tragedy of the Commons issues (eg, every individual has incentive to pollute and only collectively do we have incentive to prevent it).

You might argue that the pollution exception applies here, but I'd still want the market involved. For instance, "the government will award $LargeAmountOfMoney to the first company who sells X vehicles meeting the following efficiency requirements..."

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

#66

Post by enraged_camel » Wed, Dec 05, 2012, 5:10 PM UTC

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.

Horrible idea. Especially in industries that are capital intensive (i.e. high starting costs), the markets heavily favor the existing players, who have a vested interest in preserving the status quo. In such markets, if you want innovation then you need government assistance for startups.

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

#67

Post by decasteve » Wed, Dec 05, 2012, 5:11 PM UTC

j2bax wrote: post #6

tjic wrote: post #2

While I'm a huge fan of Elon Musk, and I even think Tesla is pretty cool, I'm a little underwhelmed. Every one of my ventures could be cash flow positive if I got a half BILLION dollar loan from the taxpayers and then was able to sell my product with a $8k tax credit stapled to the side of each unit. http://techcrunch.com/2009/06/23/the-government-comes-throug...

Considering what he's up against in the industry, I'd say what he's done is fairly remarkable. My concern would be that if at any point one of the big three see Tesla as a threat they will put efforts into creating an electric car that undercuts Tesla's offerings and catapults Tesla into a high end niche oblivion. That said, if it comes to that, I will see that as a different means to the same end of reducing our gas…

> ...if at any point one of the big three see Tesla as a threat they will put efforts into...

They will pull every dirty trick in the book, i.e. Laywer up, before they build a competing car to the Model S. (see Tucker 1948: http://en.wikipedia.org/wiki/1948_Tucker_Sedan)

Then there are more modern scenarios like the Bricklin (http://en.wikipedia.org/wiki/Bricklin_SV-1) and the DeLorean.

All of those never made it as far as Tesla has, for a lot of reasons, but failed mostly the Big Three's stranglehold on the market. In the Bricklin's case I would point to the parts/supplies cartel at the time.

Elon has a good opportunity in today's market with the decline of the Big Three's influence.

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

#68

Post by xxpor » Wed, Dec 05, 2012, 5:11 PM UTC

tjic wrote: post #57

rohansingh wrote: post #4

Earlier quoted context omitted.

Nothing stopping you from doing a venture that takes advantage of federal grants and tax incentives.

Nothing except my own ethics. I don't like to take money from people who haven't consented to hand it over. Smells too much like theft. #dont_be_evil

Hope you don't drive anywhere.

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

#69

Post by ImprovedSilence » Wed, Dec 05, 2012, 5:12 PM UTC

sp332 wrote: post #16

perry5000 wrote: post #8

Earlier quoted context omitted.

$500M taxpayer-backed loans are available to anyone, now?

Instructions to sign up are right over here http://www.lgprogram.energy.gov/

It looks like ford has about 5B in loans from them. And Fisker Automotive has a lil more than Tesla in loans. and Fisker makes some damn sexy cars: https://www.google.com/search?q=fisker&oe=utf-8&aq=t...

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

#70

Post by njharman » Wed, Dec 05, 2012, 5:14 PM UTC

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…

> with their massive distribution and infrastructures

That is a disadvantage. Along with their size that represents massive costs and massive inertia.

The actual threat from incumbents is regulation(lobbying for) and legal. Both of which they can afford due to massive size and have established the "infrastructure" for.