Am I the only one who's worried that Tesla is really starting to bite off more than they can chew? Right now their finances are a mess, they are publicly struggling to produce their most important car ever, their CEO is spending time figuring out how to dig holes underneath LA...and now they're announcing a semi truck and a roaster in the same day? Don't get me wrong, Teslas are incredible cars. But this seems like an overreach considering they are struggling to figure out how to meet demand on the Model 3. It's also insane to announce this car with what boils down to a bunch of CGI! These are some very bold announcements and there isn't much explanation for how these goals will be met. I hope this all turns out as advertised, but I'm very skeptical.
You have been reading too many finance blogs. Their finances are far from a mess, they are just not what finance people like to see. They have cash on hand and a roadmap to execute on. If they don't execute they will go out of business, and they will take my money as an investor with them. I'm OK with that and as long as they continue to have a path to profitability I am all on board. I want to see them burning money to get market share, especially as they do something new. The idea that companies must always operate within a specific set of financial metrics is why GE is going out of business
If Amazon listened to those same finance blogs that are chastising Tesla, they wouldn't be where they are today. Wall Street hates companies that invest every cent they make into future growth; they want solid companies like GE and IBM that pay out regular profits to investors, and end up old dinosaurs because they didn't invest in innovation.
The market analysts and financial blogs may hate companies like AMZN and TSLA, but Bezos and Musk will be laughing all the way to the bank because they didn't focus on short-term profits at the cost of long-term innovation.
Remember, every company on this planet has to constantly reinvent itself, or it will be disrupted by someone else. Musk is doing that. Don't listen to the financial blogs and analysts.
> Their finances are far from a mess, they are just not what finance people like to see. They have cash on hand and a roadmap to execute on.
In other words, their finances are a mess. Negative free cash flow of $1.4b in the most recent quarter with $3.5b in the bank is cutting it very close. They're going to have to raise a ton more capital or issue debt just to execute on the Model 3, let alone all the other stuff they keep talking about (anyone remember the Solar Roof?). Their recently issued junk bonds are already trading off par, another issue is going to be expensive.
Spending money while building out your main product pipeline is perfectly acceptable to me. How many quarters of runway would you want them to hold on hand? If in six months when their cash on hand gets low they can issue a new round of funding and investors can decide if its worth pumping more money into the company or if they won't be able to turn a profit. This would be the exact behavior you get from any company in a high growth phase, the only difference is most of the time the only people who get a look at the books of these companies are the investment firms who lead crazy valuation rounds since the public doesn't have access to pre IPO startups.
That's kind of the point though - it's much more acceptable (to the markets) for a private company to be doing crazy things, low runway, etc, because if the company goes broke, the damage is limited to 'skilled' investors (those with enough means and know-how to get in on the investment). If a public company goes bust (which is the risk here) the damage is much more widespread, and will undoubtedly hit retail investors as well as professionals.
I bought a bunch of put options on the cheap, so I'm betting on reckoning next year, but not a bankruptcy.
Based on their valuation being too high for where they are, I'm guessing they'll do a share offering to get cash. This could cause they're shares to tumble and I'll make 400-1200% or not. I'm ok with writing off such a small bet, but wow what a fun ride it'll be to see how this all turns out.
Exactly. As a small investor in them I fully support them. Even if I lose all my money I know it went to cool research that has benefit the progress of science in a cool way.
I mean, that's fine and dandy, but then you're really just donating your money to "science" and not investing it. Which goes back to the original claim that their finances are a mess.
I have done the same with two fusion energy companies, almost zero chance of payback but always the slim chance for a breakthrough to save the world. Think of it as a lottery ticket for rich and middle income people. Tesla is a lottery ticket that will probably pay dividends many years down the line, and if not they have at least kickstarted a better future.
> struggling to produce their most important car ever
Isn't this part of not executing the roadmap as planned? Put another way, how do you know if they are on the right trajectory to profitability? How much are they ahead/behind?
Tesla projected that it would produce 5K Model 3s per week by the end of 2017. In all of Q3 they produced 260! That kind of shortfall is clearly not part of any plan, unless it's one drawn up by GM and Ford. Source: http://autoweek.com/article/green-cars/tesla-model-3-product...
They also moved this timetable up a year due to high demand, meaning more CapEx required. A few months won't scare people in the know, and thinking this would work without a hitch would have been naive anyway.
A three month delay on their first mass market car is hardly struggling. We get insight into where they are on that road map every three months. Come February they will have slipped even more, made up some of that delay or stayed three months behind. Right now they have more then enough money to get them to May of next year, if they miss again in Februrary and then can't raise more funds they need to change their plan.
Your comment reveals that you don't know what you're talking about. Very fast cars are rare so their rate of acceleration looks strange to someone that's not used to it.
I'm curious as to why you choose to believe that their was a conspiracy to release a sped up video rather than the fact that the car really is just that quick. Cognitive dissonance? Shorting Tesla stock?
It's not like you're mentally deficient or anything so there has to be a logical reason in your mind as to why you ended up thinking this. I would be very keen to know what that is.
I don't think it's altered video. I'm just describing possible things that people could see in that video, which might lead to that conclusion:
1. an odd camera motion;
2. scared spectators jerking; or,
3. altered video.
I do, however, think the people downvoting me have significant reading comprehension problems. However, that's a thing they will have to reflect on, internally, and has no bearing on me.
God damn....that acceleration is almost cartoon-like.
I'm kinda sad about the $200k price tag. I was planning on budgeting $125k for my next car in 2022. Obviously options have yet to be announced, but I'd really like to see a 100 kwh option for a cheaper price. That would give about a 300 mile range which would be plenty for me. Considering they announced 200 kwh as the base though, I'm not exactly holding my breath.
I think that the 200kwh battery pack is probably important for getting the instantaneous power out of the pack to hit their performance numbers.
More battery cells in parallel = more current draw. The range is probably more of a bonus side effect of having enough battery cells to hit the power and acceleration targets.
I've been waiting for details on the next Roadster for quite a while now, really on the edge of my seat for the price. My plan was to get a Nissan GT-R in 2021 if the Roadster ended up being too expensive.
But since it was announced and too expensive, I'm still on the fence. I don't want to spend $120k on a GT-R and feel disappointed that I settled. I'm thinking I'll just have to save money for a couple years to make a serious down payment. Maybe I'll pick one up used depending on what kind of warranty Tesla will offer on a used one.
Only problem there is, I expect Tesla won't be making very many of these for at least the first few years, so I doubt they'll depreciate much, if at all, on the used market. Could actually sell at a premium, as you see with other hard to buy supercars.
You can probably get a P150D or whatever it will be at that time. Which will give you Roadster like acceleration, probably 400-500 mile range, and will still be a family sedan.
I don't want a family sedan, I want a small, reasonably agile coupe. My current car is a Subaru BRZ. I want something that still has that kind of handling.
No, I haven't. I've been told they handle really well for their size and weight since the center of gravity is so low, but that they still don't handle super tight like a sports car.
Founder series limited to 1000 requires full deposit, that's $250 mil
Base model requires $45k deposit.
Not sure what semi requirements are.
Even if they are biting off more than they can chew, they can gauge reaction and devote more/less to this. I'm thinking that these ventures give their engineers a space to get really creative and push the envelope. And, these advancements make their way into the mainstream models.
They laid off "a ton of people" but a small fraction of their workforce, not affecting their burn rate much. Watch out for those financial press headlines, Tesla is one of the most shorted stocks out there.
oh please. they're putting money into R&D and into the ramp up. Your statement makes it sound like they're using the money to wipe their @$$es. No, they're putting the money to work. And if the analysts and shareholders didn't believe that, the stock would tank.
I think that may be the core point of why they are doing this. They are in a cash crunch, if they get enough deposits it can certainly help their bottom line... without dilution.
Developing a car like to a car to that state (drivable at the event) will have taken 2 or 3 years already so I doubt it originally started as a fix for cash flow.
Agreed, but I would be surprised if that didn’t play into the math. One of Elon’s greatest strengths is to think ahead strategically and position himself for maximum upside towards his goals. So yes, I am sure he didn’t think he would need this to help with Model 3, but I am sure he knew he would need more cash on hand to make another “big bet”. Unfortunately it looks like this cash will go to current projects rather than a brand new initiative. Unless of course this was to help with Tesla Semi...
What's even more amazing is that F or GM couldn't possibly do this. First mover advantage plus the allure of someone like Musk is what is needed. I know many bash him for spreading himself too thin among all his other ambitions but it gives him good will capital (which can translate to economic capital) when needed.
Ford or GM couldn't possibly do what? Pre-sales? The new Ford GT cost $450K and will only be available to select buyers during the first production year. I imagine GM does something similar with the higher-end Corvettes. Dodge did the same with Viper.
If they need more cash then they can just have another investor round. There's enough fan boys that would invest.
I would prefer that Ford and GM not do this... I don't see how producing a $250,000 car will help the common folk, which is who Ford and GM serves.
Tesla had first mover advantage with their Model 3 and now they are floundering. GM's Chevy Bolt is out producing and out selling the Model 3 despite first movers advantage and all the 'good will' Tesla generated... Despite people saying 'GM could never do this'.
I also don't know why you would say Ford or GM couldn't do it when they produce vehicles that race in Nascar and have R&D for that sport.
Ford and GM are mature companies and expected to actually make money, while Tesla is expected to make good will and headlines.
I'll be more excited when Tesla meets their originally projected production numbers.
Don't underestimate the importance of these flagship cars. They serve a purpose. Why do you think Ford has the GT? They are a test bed for new technologies and increase brand prestige.
Ford and GM can absolutely do this. Tesla is "hot", but Ford is successful.
People underestimating the big players and cars aren't thinking about the economics right. Ford markets are almost two orders of magnitude more than Tesla is producing. If Ford sees the global opportunity to sell 10-20 million EVs a year they'll build the crap out of them.
Ford sells pieces of shit and then tells you you're crazy every time you report a problem -- until a month after your last complaint when there's a company-wide recall.
I am never doing anything that gives them my money again.
"First mover advantage" is a concept that applies to platforms, and not to a millionaire status symbol/fashion statement. Most people spending $200,000+ on a vehicle want to be among the only people at the country club with it. This looks like a hot car, but I wouldn't hesitate to test drive Aston Martins or Ferrari's if I was playing with that kind of cash.
Also, GM and Ford do highly profitable business with the wealthy - Ford pickups are the most owned vehicle among millionaires and Cadillac keeps turning profits that Musk should envy.
They DID show a monster of a pickup truck at the unveiling as well. It's almost like a /second/ roadster but aimed at the millionaire truck lover. Of course, they aren't taking reservations for that because someone probably convinced Musk the number of rich truck lovers who also would love electric is small enough that it's not yet worth spending too much energy on the idea.
It's based on the semi truck. They didn't announce reservations for it or anything. It might be fair to call it a concept truck at this time, but I doubt it's the last we'll see of it.
They have planned this for years. The "new roadster" and even plaid has been announced for years. More than that, Production starts 3 YEARS from now. If they still have model 3 problems by then, I'll be surprised.
> It's also insane to announce this car with what boils down to a bunch of CGI!
They had multiple real Roadsters at the announcements. You can see a red one in the main event video, and there are pictures of a silver one on Twitter.
That’s exactly why they need this. They are running out of money. $250k reservations provide cash now and the promise of a semi might convince more investors to invest.
Yes. It is only human to be worried. They lose money on every car they sell. And the losses are accelerating. If you bought $TSLA at $300. And are looking to hold on for dear life. The next 12-24 months is gut check time.
But there is so much to be optimistic about! Uber or Lyft or Didi could place 100K size orders of Model 3s for their driverless fleets, with substantial support contracts, by 2019. Powerwalls may become standard components in emerging market power grids in the global sun belt. And envisioning charging stations as travel lounges or overnight rest stops is a stealth real estate and hospitality investment.
Tesla is acting as if the Model 3 will change the game. My personal bias is that the analysts are neglecting the raw consumer demand for this brave new electrical world. And if that holds true, continuing to raise cash to finance their production via stock, debt or pre-orders shouldn't be the hard part. Especially if 12 month price targets in the $350-375 range hold ;)
They don't lose money on every car they sell. Because they have a lot of NRE and other capital expenses they start out deeply in the hole before they sell any cars. But each extra car they sell after that hole increases their profits by something like $20,000 so they're making a lot of money when they sell cars even if their net divided by the number of cars sold is negative.
