Tesla Reports a Massive Loss



Posted by Ed 6 mths ago
Literally hours after we reported that Tesla was firing even more people at its Fremont, California factory – layoffs that appeared to have not been included as part of a disclosed plan – the company implemented even more significant cost-cutting efforts that have already affected employee work schedules and impacted the supply of parts used to make vehicles.

As CNBC reports, Tesla is sending employees home and cutting basic inventory at its Fremont factory.

The report stated that there were several new cost reduction measures launched by Tesla, but these haven't made public.

First, the company is apparently asking employees to work remotely and keep their travel costs to a minimum.

Second, the company is telling hourly employees at its Sparks, Nevada Gigafactory, where Tesla makes batteries and drivetrains, to leave in the middle of their shifts. The company is also telling employees to take paid or unpaid time off, according to the report.



Ed 6 mths ago
Tesla doesn't know where it will build the Model Y as it rolls out more layoffs and cost cuts


Ed 5 mths ago
Einhorn Gloats: "The Wheels Are Falling Off Tesla... Literally"

Some TSLA cars have faulty suspensions, such that the wheels sometimes fall off (referred to as “whompy wheels”). On February 24, a man driving in Davie, Florida, was tragically killed inside his Model S after hitting a tree, his front driver-side wheel severed from the wreck.

The car battery caught fire, and neither the driver nor first responders could open the doors, which were locked shut with the door handles retracted (This despite Elon Musk’s assertion via tweet on January 26, 2019, “All doors unlock automatically when the Tesla comes to a stop after an accident. There is both primary & backup power to doors, brakes, steering & airbags").

TSLA routinely touts its cars as the safest around, because they perform well in crash tests. The truth is, its overall safety is much lower because of events like this. TSLA’s inaptly-named features including “Enhanced Autopilot” and “Full Self-Driving” appear to contribute to the safety issue as they create consumer misperception of the cars’ capabilities (TSLA also reports data on crash frequency per mile driven both with and without Autopilot and with comparisons to national averages.

The comparisons are inherently misleading because Autopilot is mostly used on highways, where accidents in general are much less frequent). The fatality rate for TSLA drivers is much higher than it is for other luxury cars.

We recall the public concern when a handful of Samsung Galaxy phones spontaneously combusted in 2016. By way of comparison, a few people suffered burns, and there were no fatalities. Nevertheless, this led to a recall of millions of phones and a variety of new safety rules.

When Uber had a single fatality in its self-driving program in 2018, it suspended the program for nine months only to resume it with enhanced safety protocols. Recently, GM, Ford and Toyota announced a consortium to establish safety rules for development, testing and deployment of autonomous vehicles.

TSLA was notably absent from that group and continues to use its customers and other motorists, bikers and pedestrians sharing the roads with distracted or sleeping Tesla drivers as guinea pigs.

As for its operating performance, TSLA is in a difficult position. When 450,000 people made reservations to buy a Model 3 a couple of years before its launch, TSLA may have been constrained by its ability to produce enough cars to meet demand. Starting in 2019, that is no longer the case.

While Elon Musk promises annual global demand of 500,000 to 700,000 Model 3’s, the reality is quite different. U.S. sales for the Model 3 fell about two-thirds in the March quarter from the December quarter, as the demand from the enthusiastic portion of its customer base has already been satisfied. If Q1 is any indication, total annual global demand for the Model 3 is about 200,000 vehicles.

Wbroader e believe that TSLA’s poor reputation for quality and service and diminishing tax incentives are limiting demand.

Moreover, some combination of the availability of the cheaper Model 3 and emerging competition from Jaguar, Audi, Kia, Hyundai and others has crushed the demand for TSLA’s established high-end Model S and Model X. TSLA has responded with large price cuts, which to date have only generated minimal incremental demand.

In 2018, the Models S and X contributed over $2.5 billion of gross profit. Given the price cuts and reduced demand, we believe TSLA will be lucky to achieve even $1 billion of gross profit from those models this year.

The price cuts are also likely to have a significant impact on TSLA used car prices, to which TSLA has large exposure through its leasing program. When TSLA cars come off lease, TSLA appears to be reluctant to resell them, as used Model S’s and X’s compete with new Model 3’s, which have their own demand problems. Used Model S’s and X’s appear to be piling up in parking lots across the country.

The price cuts have also led to aggressive new lease terms. For example, in late March we found a TSLA payment estimator for a three-year lease on a 2018 Model S P100D for $7,000 down and $412 per month. This car was listed for about $135,000 in 2018.

On the payment estimator, the new car price is now about $86,000 with an estimated residual value of over $74,000. As a general principle, used cars don’t retain 85% of their original price after three years. We wonder how TSLA’s leasing partners are evaluating the impact of the price cuts.

All told, even with the price cuts, TSLA only sold 63,000 cars in the first quarter – a quarter in which it benefitted from the introduction of the Model 3 into China and Europe and of lowerpriced variants in the United States.

Product introductions generate a surge of demand from enthusiasts, just as a new oil well starts with flush production. After the initial surge, demand deteriorates. American surge demand for the Model 3 happened in 2018 and European and Chinese surge demand was mostly satisfied in the first quarter of 2019.

TSLA is still guiding to quarterly demand of about 100,000 to 115,000 cars for the balance of the year. We don’t see what can possibly drive that much demand. In fact, we suspect that without initial surge demand elsewhere, TSLA will struggle to even maintain first quarter unit volumes.

TSLA: should car sales fall materially short of TSLA’s estimates, TSLA’s commitment to purchase batteries from Panasonic could become a big problem. Although TSLA does not disclose the details, we can make some assumptions: we estimate that TSLA must purchase about $3 billion of batteries from Panasonic in 2019.

If the average TSLA has a 70 kWh battery (based on a mix of Models 3, S and X) and TSLA pays $120 per kWh, the average battery cost per car would be $8,400. On that basis it would take about 360,000 cars to absorb a $3 billion commitment. A more realistic 250,000 cars would create a $900 million shortfall.

In the history of TSLA, there have been a number of times where Musk has reflected backward and admitted that the company was on the brink of failure, before he rescued it.

This happened as recently as November 2018 when Musk admitted that TSLA was bleeding money like crazy and within “single-digit weeks” of failure during the troubled ramp-up of the mass-market Model 3.

However, Musk never admits the crisis in real time. We believe that right here, right now, the company appears to again be on the brink.

The signs are everywhere, from the lack of demand, desperate price cutting, layoffs, closing-and-then-not-closing stores, closing service centers, cutting capex, rushed product announcements and a new effort to distract investors from the demand problem with hyperbole over TSLA’s autonomous driving capabilities.

TSLA has lost a significant number of senior executives and appears to be having a hard time recruiting replacements. After all, who would want to work in such an environment?

Last summer, Musk promised TSLA would be profitable and cash flow positive in every quarter going forward. He repeated that forecast as recently as the end of January.

TSLA’s share price declined from $332.80 to $279.86 in the quarter.

Ed 5 mths ago
More Tesla execs abandon ship:

The employee exodus at Tesla shows no signs of stopping, and the latest to fall victims to the constant turnover of Tesla staff are two members of the company's security team and its Director of Manufacturing Operations for the Model 3. About a week ago, it was reported that Tesla's information security chief, Karl Wagner, had left the company.

Nick Gicinto, the company's Senior Manager of Global Security and former manager of Uber’s Strategic Services Group, also looks to have left the company after only a year on the job.

And finally, Twitter sleuths uncovered that Pedro Padilla, Tesla's former Director of Manufacturing Operations for the Model 3, has also moved on to greener pastures. Padilla had been speculated by some to have helped oversee operations at Tesla's Gigafactory 1. His LinkedIn page shows his tenure at Tesla ending in just under two years. He has posted a new role as "Vice President of Operational Excellence" at a company called EFI.


Ed 5 mths ago
I thought about buying a Tesla .... I even went into the showroom on Queens Rd East and had a look around....

Then I approached one of the salespersons and I asked:

I am wondering.... I know these cars have giant lithium batteries inside them.... and when they are powered up they drive the wheels round and round .... and the car goes from A to B.

Yes sir said the salesman .... that is correct.... all without any pollution.... it's as clean as a spring at the top of mount Everest.... and you can proudly drive away right now ... knowing you are doing your part to save the planet....

Hmmmm..... that sounds really good I said.... but .... then ... it hit me ... like a diamond bullet.... between the eyes.... and I asked another question...

Ok ... great ... we've got this giant mobile phone battery ... that I am assuming grew on a tree.... and that unlike a phone battery will hold a charge for more than 2 years before massively degrading ....

But what about the power that charges that big ol battery?

The power? said he.... what do you mean the power...

The electricity... that stuff that spews out of the socket and into the car when you plug it in....

Oh the electricity..... ah I see.... well that comes from the socket.... well actually it's a special socket ... we have special Tesla sockets that pump out mega electricity so you can charge up your battery more quickly if you want to.....

To which I responded... yes I am familiar with an electricity socket.... I actually have a few of them in my home.... and I have been using electricity for many years now ... love it... great stuff.....

But... but..... that electricity that ejaculates through the socket.... to invigorate the battery..... how is it produced?

Oh right said he.... please wait a moment..... big scrum with the manager over in the corner.... a few minutes later he comes back and says....

Well you could charge your Tesla with solar panels.....

Really? But I cannot even run a washing machine by hooking it up to solar panels .... I would need an inverter and batteries and various other bits and pieces if I wanted to run a washing machine.....

To charge a battery that would be powerful enough to charge a Tesla battery I'd need a football field filled with solar panels and a storage battery what would cost a small fortune.... and of course a piece of land the size of a football field in HK would be worth hundreds of millions of dollars....

Really? said he.

Yep ... really.

Back to square one.

So what are my options? Do any of your clients use solar to charge their car?

Well ... no....

So where does the power come to charge the battery?

Uh.... from China Light and Power.... I suppose.....

Ah-ha - progress!!!! Good stuff....

And where does CLP get the power from......

Uh.... well.... they get most of it from burning coal...... and some from the nuclear plant in south China.....

I see said the blind man.... so basically if I buy a Tesla .... I am indirectly burning coal ... to get from A to B.

Well..... if you want to put it that way then .... yes.

So that would mean that I am making the pollution in Hong Kong worse.... because at least with a petrol car there is a catalytic convertor cleaning up the worst of the emissions whereas with coal plants they just bellow black death into the air.....

Well ... if you want to put it that way then ... yes.

So ... I decided to buy a push bike instead

Ed 5 mths ago
We’re going to skip over all the glossy stuff and go straight to the financial statement, more specifically to the bottom line of the income statement, where Tesla reported a zinger of a net loss of $702 million, its third-worst quarterly net loss ever.



Ed 5 mths ago

Ed 5 mths ago
She's warming up....


Ed 5 mths ago
This is actually good news... given Tesla vehicles in Hong Kong are charged with electricity produced from coal...

Soon we'll have slightly less smog blanketing the city

Ed 5 mths ago
In the meantime... Porsche.... the maker of ultra high quality vehicles that has spare parts available and established service centres that don't make you wait months if you dent a fender ... will launch an EV in 2020... sadly it too will burn coal... but never mind...

New 2020 Porsche Taycan EV Details Revealed in Spy Photos

The latest set of spy shots show a bunch of new features of Porsche's upcoming electric car.



Which guy would you prefer to buy a car from?



I'm thinking... I'd go with the German guy....

There's that engineering pedigree.... and it might soon be difficult to find spare parts for a Tesla....

Now if only someone could invent a car that doesn't burn coal ... or petrol.... a car that would run on Coca Cola .... or Sprite....

Ed 5 mths ago
Ride-hailing platform Shenma Zhuanche is demanding that Tesla compensate them for losses incurred after claiming that more than 20% of their cars are faulty, according to the Global Times.

Shenma Zhuanche, an online car hailing platform based in Chengdu in Southwest China's Sichuan Province, is seeking compensation from Tesla over defective vehicles, and the company has made its demands known on three billboards in Times Square in New York City, according to an announcement made by the company's official account on Sina Weibo on Friday.

According to information released by the company, Shenma Zhuanche is the biggest buyer of Tesla cars in the Asian Pacific region, having purchased 278 vehicles from 2016 to 2017. However, the company claims that out of the 278 vehicles produced by Tesla, over 20 percent experienced electromechanical malfunctions.

The company also complained about the inefficiency and unresponsiveness of Tesla's customer service. It claimed that some of the vehicles took as long as a year and seven months to be repaired, causing the company direct economic losses of up to 6.5 million yuan ($970,000).

On the billboards that Shenma Zhuanche put up in Times Square, the company demanded Tesla repair defective vehicles, compensate the company for its loss and admit the quality issues in its products.


Me thinks that in this case... all publicity.... (billboards at Times Square)..... is not good publicity....

Ed 5 mths ago
Tesla Discloses Record Pollution Credits for Q1: Without Them, it Would Have Lost $918 Million and Bled $1.14 Billion in Cash

The surprise in the SEC 10-Q filing when no one was supposed to pay attention.

Today, when no one was supposed to pay attention any longer, Tesla filed its quarterly report Form 10-Q with the SEC. Tesla had reported “earnings” on April 24, a doozie of a net loss of $702 million. But today, after the hoopla of its earnings report had died down, Tesla disclosed a slew of things that it hadn’t disclosed last week, including a record amount of sales of pollution credits.

Without those taxpayer-funded pollution credits that Tesla gets from the government and sells to other companies, its loss as automaker and solar-panel company would have been $918 million and its negative cash flow wouldn’t have been a cash drain of $919 million but a cash sinkhole of $1.14 billion

Without those credits:

Gross profit wouldn’t have been $566 million but merely $350 million.

Net loss wouldn’t have been $702 million but $917.6 million, which would have been its largest loss ever by far.

Operating cash flow wouldn’t have been the whopper of a negative $919.5 million that it disclosed on April 24, but a negative $1.137 billion!



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