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Tesla reports great Q3 results, expects to be cash flow positive by Q4

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Re: Tesla reports great Q3 results, expects to be cash flow positive by Q4

#11

Post by codex »

I don't understand why Tesla's losses keep increasing; now they're losing $33M a month, up from $20M a month a year ago and roughtly the same as last quarter. That with $50M in revenue this quarter and actual shipping product. Can someone explain? Are they still purchasing capital equipment? Are their overheads that high?

That said, $30M a month is not that many cars. If they can sell them, and losses don't increase as a function of sales, which seems to be the case now, they will eventually be in good shape.

EDIT: TL;DR: This quarter they lost the same amount as last quarter but sold 25 million more in cars. That means for every additional dollar in car they sold over last quarter, they lost that dollar. Not exactly scalable but hopefully temporary.

Re: Tesla reports great Q3 results, expects to be cash flow positive by Q4

#12

Post by thematt »

codex wrote: post #11

I don't understand why Tesla's losses keep increasing; now they're losing $33M a month, up from $20M a month a year ago and roughtly the same as last quarter. That with $50M in revenue this quarter and actual shipping product. Can someone explain? Are they still purchasing capital equipment? Are their overheads that high? That said, $30M a month is not that many cars. If they can sell them, and losses don't increase…

Probably, all those new charging stations come to mind.

Re: Tesla reports great Q3 results, expects to be cash flow positive by Q4

#13

Post by orangecat »

redwood wrote: post #6
hayksaakian wrote: post #3

Great news. Its interesting how in some political ads I've been seeing, a politician is 'called out' for supporting funding for companies like Tesla specifically.

There's this idea floating around that governments shouldn't support businesses. I guess there is nuance in that some might say: government should support business sectors, but not specifics businesses over others. Anyway it's an odd argument when we look at the history of the country where governments and specific companies often worked hand in hand and continue to do so in so many areas. Many argue that the America…

I guess there is nuance in that some might say: government should support business sectors, but not specifics businesses over others.

And I wouldn't even agree with that. We've seen what happens when government decides to support Hollywood.

Re: Tesla reports great Q3 results, expects to be cash flow positive by Q4

#14

Post by dkhenry »

rayiner wrote: post #10
dkhenry wrote: post #9

Earlier quoted context omitted.

Just because other countries are corruptly sponsoring businesses to line the pockets of politicians doesn't mean we should be doing that in America. There needs to be an ideological line drawn that says we will _not_ pick winners in a market, and we will _not_ protect failing businesses. That means large and small companies get the same levels of "support" from the government, none. Once you stop doing that you end u…

Yes! We should do things based on ideology! Not results! Not empiricism! Instead: principles and handwaving. Singapore proved that heavy government subsidization of research can pay enormous dividends in economic growth. Other countries are having tremendous success doing the same.

So what do you say when the government doesn't decide to support your start up, but instead picks your competitor and runs you out of business because they happen to be related to a senator ? The ends don't always justify the means.

Re: Tesla reports great Q3 results, expects to be cash flow positive by Q4

#15

Post by rayiner »

dkhenry wrote: post #14
rayiner wrote: post #10

Earlier quoted context omitted.

Yes! We should do things based on ideology! Not results! Not empiricism! Instead: principles and handwaving. Singapore proved that heavy government subsidization of research can pay enormous dividends in economic growth. Other countries are having tremendous success doing the same.

So what do you say when the government doesn't decide to support your start up, but instead picks your competitor and runs you out of business because they happen to be related to a senator ? The ends don't always justify the means.

Leaving aside the silliness of deciding macroeconomic policy on hypothetical edge cases for a moment... How often does that happen? The US government is utterly paranoid about nepotism, to the extent that we waste a huge amount of money in the bidding process for government contracts because we don't want to seem as if we're favoring anyone, even if that favor is the result of something like having done good work in the past. It's an imagined problem.

Re: Tesla reports great Q3 results, expects to be cash flow positive by Q4

#16

Post by vitobcn »

codex wrote: post #11

I don't understand why Tesla's losses keep increasing; now they're losing $33M a month, up from $20M a month a year ago and roughtly the same as last quarter. That with $50M in revenue this quarter and actual shipping product. Can someone explain? Are they still purchasing capital equipment? Are their overheads that high? That said, $30M a month is not that many cars. If they can sell them, and losses don't increase…

Tesla refers to short term costs associated with the production ramp.

Their statement is available at: http://ir.teslamotors.com/secfiling.cfm?filingID=1193125-12-...

"The third quarter was a fundamental turning point for Tesla as we successfully transitioned to a mass production car company, growing from manufacturing 5 cars per week at the beginning of the quarter to 100 cars per week by the end. That rate has doubled since last month and is now at over 200 cars per week or 10,000 cars per year, which is at the critical threshold needed for Tesla to generate positive operating cash flow. One month from now, we expect Tesla to double production again and achieve the target rate of 400 cars per week or 20,000 per year. Despite many short term costs associated with the ramp, Tesla nonetheless expects to get approximately halfway to the 25% gross margin target by end of year."

edit: until they are not producing at least 200 cars / week, the operating cost of their manufacturing line is actually larger than the money they make from those cars produced. So, based on that logic Tesla should be losing money but less than in the past. However, in this quarter they went from manufacturing 5 cars/week to 100, which is something you can probably only do by revamping your operations (e.g. acquire new machinery, hire new people, etc.) Therefore, you have to incur a cost now in order to get the benefits in the future.

Re: Tesla reports great Q3 results, expects to be cash flow positive by Q4

#18

Post by btilly »

dkhenry wrote: post #9
redwood wrote: post #6

Earlier quoted context omitted.

There's this idea floating around that governments shouldn't support businesses. I guess there is nuance in that some might say: government should support business sectors, but not specifics businesses over others. Anyway it's an odd argument when we look at the history of the country where governments and specific companies often worked hand in hand and continue to do so in so many areas. Many argue that the America…

Just because other countries are corruptly sponsoring businesses to line the pockets of politicians doesn't mean we should be doing that in America. There needs to be an ideological line drawn that says we will _not_ pick winners in a market, and we will _not_ protect failing businesses. That means large and small companies get the same levels of "support" from the government, none. Once you stop doing that you end u…

...we will _not_ pick winners in a market, and we will _not_ protect failing businesses.

Then let's start by getting rid of chapter 11, which allows businesses to go bankrupt, then go back into existence again. Most countries do not have anything like it, and its existence has been horrible for some sectors, for instance the airline industry.

Re: Tesla reports great Q3 results, expects to be cash flow positive by Q4

#19

Post by Cushman »

dkhenry wrote: post #14
rayiner wrote: post #10

Earlier quoted context omitted.

Yes! We should do things based on ideology! Not results! Not empiricism! Instead: principles and handwaving. Singapore proved that heavy government subsidization of research can pay enormous dividends in economic growth. Other countries are having tremendous success doing the same.

So what do you say when the government doesn't decide to support your start up, but instead picks your competitor and runs you out of business because they happen to be related to a senator ? The ends don't always justify the means.

What do you say when Apple does the same thing? "Well, crap," I imagine.

Re: Tesla reports great Q3 results, expects to be cash flow positive by Q4

#20

Post by mtgx »

codex wrote: post #11

I don't understand why Tesla's losses keep increasing; now they're losing $33M a month, up from $20M a month a year ago and roughtly the same as last quarter. That with $50M in revenue this quarter and actual shipping product. Can someone explain? Are they still purchasing capital equipment? Are their overheads that high? That said, $30M a month is not that many cars. If they can sell them, and losses don't increase…

They're going to ship a lot more cars.
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