First, those that know me know that I am a Tesla FANATIC. My girlfriend once challenged me to not talk about Tesla (motors, energy, something) for a 24 hour period. I dunno if I've ever done that honestly. I'm also an owner (no surprise given my fanaticism, lucky to be able to afford one). And I also own some TSLA.
Elon sent a company-wide email in Q3 to push sales to show profitability. I don't think its a fluke but they did something they never really do to help reach this number: they offered significant discounts on vehicles (new, pre-owned, showroom). Like, really big discounts (relative to the price of the car).
That certainly helped. Elon also sent an email at the start of Q4 that NO MORE DISCOUNTS are allowed. So I'm really very interested to compare Q3 to Q4 when that comes.
I also happen to know a lot of the people who bought a heavily discounted Tesla in Q3 feel kind of burned that right at the beginning of Q4 Tesla announced the new Autopilot hardware (that isn't retrotfitable on old vehicles). If you did your homework on Tesla though, this wasn't a surprise. It was expected that Tesla would make some big announcement to spur Q4 sales especially after Elon said there wouldn't be any capital raises in Q4 while he expected to hit Q4 numbers. You generally can't do that without some big news.
Just wanted to color this news with that. I'm still very excited!
Wow I guess this is the best proof of how Tesla is really changing the way auto owners think, this is something that wasn't unthinkable before Tesla and their over the air updates. Can you imagine a BMW owner complaining that his 2015 model does not have stuff that new 2017 models will get??
Check :)
I am complaining, at least inwardly :-)
Elon stressed in the call that they did not give significant discounts, and the few that did happen were not to be repeated.
"Our vehicle gross margin increased Q2 to Q3. One of the other things I've seen out there is that somehow we achieved these numbers as a result of widespread discounting. That is absolutely false. There were a few discounts but they were few and far between and that has been absolutely shut down to zero. You can see that in the fact that the vehicle profitability increased, even excluding ZEV credits, Q2 to Q3."
I think it's fair to assume that they discounted the price because they were close to announce an "hardware" update.
That doesn't make your latter point wrong though, that was probably true too!
Tesla likely reasoned that they would have a huge up in Q4 and instead of having one quarter with profitability (Q4) they could spread it out and show two consecutive profitable quarters with even higher profits in Q4.
This may indicate they will be attempting to raise more money early next year, it's the kind of 'good news' that investors like to see.
Tesla's main costs aren't the cost per unit but the engineer/software costs iirc.
I talk about Tesla a ton as well. My GF is similar, but with dogs. We made an agreement that whenever I talk about Tesla I have to replace 'Tesla' with 'dog'. She does the reverse.
Let me tell you, there is this new dog, it is so fast. And this dog has a low center of gravity which is great for handling. The craziest thing is that this dog can go from 0-60mph in just 2.8 seconds, it is ludicrous!
There were also some stories of people getting bigger discounts, like getting the 60kWh to 75kWh battery upgrade at no additional charge. Those were supposedly rare and were not supposed to happen, though.
By the way, huge fan of HashiCorp Mitchell. ;-)
Now I need to track down Elon Musk to discuss Consul.
Totally agree with you on this, long elon musk is always the play.
Presumably that is also why Elon doesn't want SpaceX to go public. That kind of push could easily end in a giant fireball there.
It's unfortunate there's a bit of a reality distortion field around discussion Elon Musk's companies sometimes. Maybe because everyone wants his companies to succeed...
[1] http://www.economist.com/news/business/21709061-entrepreneur...
[2] http://www.economist.com/blogs/economist-explains/2016/10/ec...
Surely the only ones who don't want dramatically cheaper space launches, cheaper, widely available solar PV installations and attractive, affordable electric vehicles are deeply entrenched incumbents whose continued profitability involves polluting the planet, or those who really hate the environment for whatever reason.
There are valid criticisms you can level at Musk (I wouldn't like to be a direct employee), but taking on the Wall Street quarter to quarter thinking with enormous, risky endeavours that have the potential to completely revolutionise some of the biggest industries out there (energy and transport) takes an extreme type of individual to succeed.
Though I think it's proof the system works! Offer tax incentives for electric cars, get electric cars. Though it seems like Musk isn't making a super sustainable business just yet....
Solar City is arguably "good solar", but that company hasn't done well enough to hold up on its own, getting the Tesla bailout.
Tesla's made the great push for electrics, and that's awesome.
Also, I imagine there are many people who do _not_ want SpaceX to waste its time sending stuff to Mars, but want it to be a successful sattelite launching company. Meanwhile they're a sattelite launching company that blows stuff up more than average
Electric cars are not something I'm interested in owning at the price Tesla is asking. Or even half what Tesla is asking.
Utility electricity works fine for me, is a small fraction of my monthly budget, and is reliable. I.e. something I never really worry about. Payments for and maintenance of a personal PV system do not interest me.
Space travel? Again if he wants to spend his money there, fine. But I don't see it changing my life.
I am not an entrenched encumbent either. I just drive cheap, old cars and have no interest in visiting Mars. I don't even care for conventional air travel.
It's delusional to think that Tesla isn't in bed with the big banks and playing all the Wall Street games. In fact, I think they do it more than any prominent company out there.
If they don't play "quarter to quarter" games, what was the big rush to sell all the ZEV credits this quarter to get profitable? Why not just carry on as they were? My bet: there's another capital raise coming, and the argument will be, "See? We can be profitable whenever we want."
But I'm more concerned with TSLA the stock, not the company.
Does it? It makes for a good narrative, but are the burnout-inducing hours and unusall funding sources actually making them more likely to succeed than a company taking a more conventional approach would be, or less?
I also wanted to exploit the solar power that is available in moderate climates like the Bay Area. I did that by "over paying" for my solar install in 2003 but at the same time the creative financing that Solar City brought to the market enabled tremendous volumes (and a price war from the Chinese government helped of course but that is a different story).
I also want to go to space for less than $20M on a 1960's tech space ship to a kludged together of modules. Back when Regan's Star Wars vision was creating capital availability for companies like Rotary Rocket and DC-X I was hoping that would finally be the point where regular commercial access to space was made possible. It died and I spend a couple of decades wondering if we'd die as a species on this planet. Now Bezos and Musk are racing to create a capability that promises to take me to orbit for significantly less cash, I'm all for the product and so I want the companies working on that product to succeed.
It wasn't until the decade of the idle billionaire that this even became possible.
It was on the hn front page for at least 24 hours
> I thought it was important to write you a note directly to let you know how critical this quarter is, The third quarter will be our last chance to show investors that Tesla can be at least slightly positive cash flow and profitable before the Model 3 reaches full production.
> Total Q3 GAAP revenue was $2.30 billion, up 145% from Q3 2015, while total Q3 gross margin was 27.7%, compared to 21.6% in Q2. Total automotive revenue was $2.15 billion on a GAAP basis, up 152% from Q3 2015. Our final Q3 delivery count was 24,821,over 300 more than the estimated delivery count we shared on October 2nd. Deliveries increased 114% from the third quarter of 2015, and was comprised of 16,047 Model S and 8,774 Model X vehicles. In addition, 5,065 vehicles were in transit to customers at the end of the quarter. These vehicles will be delivered in Q4.
An almost 100% production increase Year over Year, they said it couldn't be done and yet here we are.
Given the new sensors, they need to update the loaner fleet.
"Expenses", in this sense is not "cash out". When you buy a building, you're just moving value from one store to another (cash -> assets). Only the deprecation (something like 5% p.a. for a building) has an impact on profits.
(although, for technology companies, investments often hurt profits more than for more traditional companies, mainly b/c typical tech investments are hard to value accurately and therefore deprecate immediately or faster – self-created IP as one example)
As long as Musk decides to roll all revenues back into operations, investors get nothing. Musk has a reputation as someone who doesn't really care all that much about his investors, this is a move carefully designed to massage that image. Musk still doesn't care about his investors, but throwing a little cash their way keeps their voices from building to a crescendo.
As for what humanity is getting out of the deal, they already got the Model S and X, it's soon going to get the 3.
EDIT: Elon just said on the investor call "Our current plan requires no capital raise whatsoever for the Model 3 production. Solar City will be neutral to cash contributor in Q4.
Note that this occurred while Model 3 production is still starting.
Gross Margin Jumped from 26.7% in Q2 to 33.2% in Q3.
For reference, MRQ,
GM gross margin: 13.9%
Toyota: 23.6%
VW: 19.9%
Granted, those are not luxury auto makers, but Tesla is more profitable on a gross margin basis. That margin fuels everything from cash flow to R&D spending. 33% for an automaker is huge.
http://www.zerohedge.com/news/2016-10-26/tesla-earnings-smas...
I believe I have read elsewhere that although GM will sell the Bolt in all 50 states, early inventory will be going to states with ZEV mandates.
With all that, I could see a future in which those ZEV credits aren't nearly so valuable.
https://www.arb.ca.gov/msprog/zevprog/zevcredits/2015zevcred...
Tesla provides 80+% of the ZEV credits transferred, and the 2 biggest buyers are Fiat and Ford. It could be that this quarter's transfers aren't in this table.
> The Tesla third quarter results reflect strong company-wide execution in many areas. Furthermore, we expect this to continue into Q4 and project positive GAAP net income (excluding non-cash stock-based compensation) despite ZEV credit sales in Q4 likely being negligible.
[0] http://www.huffingtonpost.com/entry/tesla-self-driving-car-n...
This clause is more like Microsoft saying you can't use Windows to write software for Apple computers.
http://www.bloomberg.com/news/articles/2016-10-26/the-goldma...
https://www.bigw.com.au/product/fisher-price-keyboard-mat/p/...
=== proof that something is very wrong with a world defined by speculators
