TSLA corporate outlook

edatoakrun said:

=edatoakrun:
...And the revenue shortfall from lower sales could also result in even more doubt over TSLA's claim that "...it won’t need to tap the capital markets to finance its short-term expansion..."

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All in all, good news. They do seem to gloss over the "net cash-flow positive" Q2-Q3 we heard about pre-Model 3 and now assess it as unlikely due to ramping up to an aggressive Model 3 production schedule. Non-GAAP losses are still dramatically lower though so they are improving efficiency.
They are maintaining guidance for 80,000+ vehicles by the end of the year.
Demand for Model S has increased since Model 3 debut.
GF is on schedule and Model 3 cell production needs won't eat into Tesla Energy needs.
93% of Model 3 reservers are new to Tesla.
Model 3 production plans moved up, with volume production in 2017.

So I guess I'll be disappointed with the inevitable slip to my Model 3 delivery date... 6 months earlier than I was planning. Win-win.

I would hope they wouldn't sit on the sidelines with all this demand and squander an opportunity to make big impact in EV adoption at a more affordable price point. Some cash infusion will help all of us get our Model 3's sooner.
I also expect a cap raise to help their stock price. It has every time in the past.

edatoakrun said:

=edatoakrun:
...And the revenue shortfall from lower sales could also result in even more doubt over TSLA's claim that "...it won’t need to tap the capital markets to finance its short-term expansion..."

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I notice you said that back on Feb. 12, 2016 (page 9 of this thread), so at that time neither you, nor Tesla, knew there would be 400K reservations for the Model 3.

sparky said:

Non-GAAP losses are still dramatically lower though so they are improving efficiency.

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I guess you missed this:

Tesla reported a GAAP loss of $282.3 million, or $2.13 per share, compared to a loss of $154.2 million, or $1.22 per share, in the same quarter last year.

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It's O.K. when you have a public company, you're Elon, and you continually ignore GAAP, right?

sparky said:

They are maintaining guidance for 80,000+ vehicles by the end of the year.

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Until they can't achieve it and have to revise it downward like for 2015. Based on InsideEVs's data,
U.S. 2016 YTD S & X delievies were about 10.3K units or about 20K WW. Using that run rate, that's only
about 60K for 2016. Furthermore, the March deliveries (S/X) for the U.S. were about 6K versus about
only 1600 for April.

sparky said:

GF is on schedule and Model 3 cell production needs won't eat into Tesla Energy needs.
93% of Model 3 reservers are new to Tesla. Model 3 production plans moved up, with volume
production in 2017.

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All based on wishful thinking! And "volume" probably will be like the volume deliveries of the Model X
on the last day of Q3 of 2015 - 6 deliveries. He did achieve his commitment, though.

But to use a portion of a well known quote; "What difference does it make?", when you have irrational stock
investors who believe most all of Elon's hyperbole.

lorenfb said:

Tesla reported a GAAP loss of $282.3 million, or $2.13 per share, compared to a loss of $154.2 million, or $1.22 per share, in the same quarter last year.

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It's O.K. when you have a public company, you're Elon, and you continually ignore GAAP, right?

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Indeed... that means their accumulated net losses so far, since they've been reporting publicly is in the neighborhood of $2.3 to $2.4 billion or so. I think I need to start a spreadsheet sometime tracking all these numbers (their 1 profitable quarter + are their ones with losses) sometime.

lorenfb said:

I guess you missed this:

Tesla reported a GAAP loss of $282.3 million, or $2.13 per share, compared to a loss of $154.2 million, or $1.22 per share, in the same quarter last year.

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No. I didn't miss that nor did I miss that GAAP loss has decreased from $320M Q4. So, it is a trend sign-flip.

lorenfb said:

IIt's O.K. when you have a public company, you're Elon, and you continually ignore GAAP, right?

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It's not ignored. GAAP numbers are right in the Q1 statement.

lorenfb said:

All based on wishful thinking! And "volume" probably will be like the volume deliveries of the Model X
on the last day of Q3 of 2015 - 6 deliveries. He did achieve his commitment, though.
But to use a portion of a well known quote; "What difference does it make?", when you have irrational stock
investors who believe most all of Elon's hyperbole.

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Thank goodness for all those investors who signed up for this roller-coaster. Cynicism gets us 40 year old rocket technology, $10/W solar energy and VW diesels as the paragon of efficient transportation.

Your imperious tone aside, I agree with some of what you posted on this. I find Tesla's altered direction puzzling. They were hell-bent on a GAAP profitable quarter this year and profitable 2016 (non-GAAP). So, 3-6 months ago, Musk set them on that course. A profitable Q3-Q4 would have been a huge boost to the stock price and marker that sustainability can be achieved.
Then with that behind them they'd easily do a cap-raise for the big Model 3 push.

Musk threw all that out the window.
Model 3 reservations are apparently a huge surprise and so Tesla seems in react mode rather than strategy and execute mode. It strikes me as odd and a little out of character. After stepping in hubris with the Model X they seem to be laying a bunch of land-mines with a fast and vast Model 3 production schedule. Pushing the throttle on the exact thing they're weakest at. Musk is not dumb and really not that reckless. And yet, I don't quite get his calculus.
I'm in TSLA long term. Bought at the IPO and more later but sold about half at the most recent climb above $255. Watching for another buying opportunity like the recent slide to $140. Market seems unimpressed with yesterday's report so I may get my chance soon.

sparky said:

... I find Tesla's altered direction puzzling. They were hell-bent on a GAAP profitable quarter this year and profitable 2016 (non-GAAP). So, 3-6 months ago, Musk set them on that course. A profitable Q3-Q4 would have been a huge boost to the stock price and marker that sustainability can be achieved.
Then with that behind them they'd easily do a cap-raise for the big Model 3 push.

Musk threw all that out the window.
Model 3 reservations are apparently a huge surprise and so Tesla seems in react mode rather than strategy and execute mode. It strikes me as odd and a little out of character. After stepping in hubris with the Model X they seem to be laying a bunch of land-mines with a fast and vast Model 3 production schedule. Pushing the throttle on the exact thing they're weakest at. Musk is not dumb and really not that reckless. And yet, I don't quite get his calculus.
I'm in TSLA long term. Bought at the IPO and more later but sold about half at the most recent climb above $255. Watching for another buying opportunity like the recent slide to $140. Market seems unimpressed with yesterday's report so I may get my chance soon.

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When conditions require a change, a company reacts.
400,000 reservations for a car 2 years or more out is a pretty impressive indicator of demand, and no other company is stepping up to the plate.
GM is doing something, but there estimated production is tiny, and they are saddled with dealers that don't want to sell EVs.

Nissan is probably doing something, but they are playing it so close to the vest, we have no idea what it will be.

If Tesla wants to accelerate the adoption of sustainable transportation, it looks like they will need to do more than they already have.

Can they do it? Time will tell, but I am not one to make the mistake of betting against Musk.

Zythryn said:

...
When conditions require a change, a company reacts.
400,000 reservations for a car 2 years or more out is a pretty impressive indicator of demand, and no other company is stepping up to the plate.

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Zythryn said:

...
Musk threw all that out the window.
Model 3 reservations are apparently a huge surprise and so Tesla seems in react mode rather than strategy and execute mode. It strikes me as odd and a little out of character. After stepping in hubris with the Model X they seem to be laying a bunch of land-mines with a fast and vast Model 3 production schedule. Pushing the throttle on the exact thing they're weakest at. Musk is not dumb and really not that reckless. And yet, I don't quite get his calculus.
I'm in TSLA long term. Bought at the IPO and more later but sold about half at the most recent climb above $255. Watching for another buying opportunity like the recent slide to $140. Market seems unimpressed with yesterday's report so I may get my chance soon.

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I think their hand was forced to change focus from profitability to production due to the number of reservations. Assuming that they met their targets of 500k in 2020 there would be people who put an order for Model 3 this year who would not get a car until 2020, and that would be a disaster for them and a huge opportunity wasted. By moving the 500k production up two years, they can then more closely match the rate of demand for the vehicle. As an investor, the dilution is ok with me. If the company production goes up 10x in two years instead of four years, but if it gets diluted by 20% it means that my value in two years is 1.8 versus 1.5. Sounds like a win to me. This obviously overlooks some big obstacles, but in simple terms it looks like the right decision for Tesla. As stated earlier, now they run into their weaknesses trying to achieve this new goal. They have always had a hard time meeting these stated goal dates as well as goal price targets. The advantage is that they have learned a lot about manufacturing from the building of Model S and Model X, and we can hope this knowledge goes into the design of Model 3 such that it is easy to build. Based on what I heard in the conference call this should be true. Their suppliers should know to trust Tesla's goals and be ready with anything they promise to them, unlike the issues on S and X where suppliers did not believe dates and volume levels and were not prepared. Overall, I'm happy with all this, and as noted, it looks like the market is confused and the price may go down in the near term, and that will just provide me with a buying opportunity.

Zythryn said:

Can they do it? Time will tell, but I am not one to make the mistake of betting against Musk.

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Two things on this: The trouble with failure, given their current finances is insolvency. It's fairly safe to bet against Musk's schedules. For medium term trading what's difficult is guessing how the market reacts to the inevitable 10-20% miss.

I'm wondering if Tesla already has the capital raise negotiated. I don't recall hearing from Goldman Sachs on Tesla's latest plans.
edit: Per Patrick Archambault, GS remains neutral on TSLA. Raised target from $245 to $250.

Perhaps, as speculated on TMC forum, cap raise has to happen this month to get suppliers on board for accelerated schedule. So, that forced their hand.
From sea-landing rockets to self-driving software, Musk does deliver; though late. I don't bet against his determination.

Fun to watch all this. Nerve-wracking when it's your money. Bet it's more nerve-wracking to be on the Tesla production team right now.

leafkabob said:

edatoakrun said:

=edatoakrun:
...And the revenue shortfall from lower sales could also result in even more doubt over TSLA's claim that "...it won’t need to tap the capital markets to finance its short-term expansion..."

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I notice you said that back on Feb. 12, 2016 (page 9 of this thread), so at that time neither you, nor Tesla, knew there would be 400K reservations for the Model 3.

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Of course, TSLA's plans to finance its current losses and cash burn by using deposits on future deliveries, is an extremely risky and unorthodox decision.

If, for any reason, doubts spread about TSLA's financial condition among those who have placed deposits, TSLA could find itself with immediate problems.

For example, if TSLA fails to deliver the model 3 at the price, volume, specifications, and delivery dates promised, the ensuing panic and demand for refunds could require TSLA to find (laterally overnight) an alternate source of funds to pay off the 400 (or more) million dollars of refundable-on-demand deposits.

Notice that even analysts who have been largely parroting the TSLA party line for some time now find the latest production forecasts utterly implausible:

Tesla Motors Production Acceleration Plan Spooks Some Investors

“On our current forecasts, we don’t predict Tesla will achieve 500,000 units of volume before 2025 – 7 years after their current target – and we do not reach 1 million units in our forecasts at any time before 2030,” Jonas said...

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http://www.forbes.com/sites/neilwinton/2016/05/06/tesla-motors-production-acceleration-plan-spooks-some-investors/2/#1e783ef865fa

edatoakrun said:

Of course, TSLA's plans to finance its current losses and cash burn by using deposits on future deliveries, is an extremely risky and unorthodox decision.

If, for any reason, doubts spread about TSLA's financial condition among those who have placed deposits, TSLA could find itself with immediate problems.

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Elon made it clear in the conference call that they do not plan to use the deposit money to finance anything.

transcript of Confernce call said:

John J. Murphy - Bank of America Merrill Lynch

Good afternoon. Just a first question on the capital needs. I mean, it looks like there's a little over $400 million left on the ABL, and given the preorders or the reservations for the Model 3, it seems like you'll have at least another $400 million flowing in in the second quarter. So just curious, I mean as you look at that kind of cash potential or liquidity and potential inflow, do you really think you need to do a capital raise this year, or could you get by with those sources of cash?

Elon Reeve Musk - Chairman & Chief Executive Officer

Well, I don't think we want to rely too much on customer reservation money as a source of capital. Maybe there is a buffer or something, but it's not as a primary source of capital. So yeah, I mean, I think it's going to make sense for us to raise some amount of money, some combination of equity and debt and make sure the company has a good buffer of cash on hand. I think it's important for de-risking the company.

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http://seekingalpha.com/article/3971543-tesla-motors-tsla-elon-reeve-musk-q1-2016-results-earnings-call-transcript?part=single

In the transcript you just posted, Musk states that the~ $400 million of deposits will not be enough to finance the model three launch, which contradicts your statement that:

"Elon made it clear in the conference call that they do not plan to use the deposit money to finance anything."

Musk also implies that TSLA will need to seek much more cash from other sources before the end of the year.

palmermd said:

edatoakrun said:

Of course, TSLA's plans to finance its current losses and cash burn by using deposits on future deliveries, is an extremely risky and unorthodox decision.

If, for any reason, doubts spread about TSLA's financial condition among those who have placed deposits, TSLA could find itself with immediate problems.

Click to expand...

Elon made it clear in the conference call that they do not plan to use the deposit money to finance anything.

transcript of Confernce call said:

John J. Murphy - Bank of America Merrill Lynch

Good afternoon. Just a first question on the capital needs. I mean, it looks like there's a little over $400 million left on the ABL, and given the preorders or the reservations for the Model 3, it seems like you'll have at least another $400 million flowing in in the second quarter. So just curious, I mean as you look at that kind of cash potential or liquidity and potential inflow, do you really think you need to do a capital raise this year, or could you get by with those sources of cash?

Elon Reeve Musk - Chairman & Chief Executive Officer

Well, I don't think we want to rely too much on customer reservation money as a source of capital. Maybe there is a buffer or something, but it's not as a primary source of capital. So yeah, I mean, I think it's going to make sense for us to raise some amount of money, some combination of equity and debt and make sure the company has a good buffer of cash on hand. I think it's important for de-risking the company.

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http://seekingalpha.com/article/3971543-tesla-motors-tsla-elon-reeve-musk-q1-2016-results-earnings-call-transcript?part=single

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No, it doesn't contradict it at all.
The funding needed will be more than $400 Million.
Tesla will not rely upon deposits for the source of that funding.

They prefer to us funds from sales, however, other sources will likely be needed. But other than a short term buffer, Tesla will not be using the reservation funds.

edatoakrun said:

In the transcript you just posted, Musk states that the~ $400 million of deposits will not be enough to finance the model three launch, which contradicts your statement that:

"Elon made it clear in the conference call that they do not plan to use the deposit money to finance anything."

Musk also implies that TSLA will need to seek much more cash from other sources before the end of the year.

palmermd said:

edatoakrun said:

Of course, TSLA's plans to finance its current losses and cash burn by using deposits on future deliveries, is an extremely risky and unorthodox decision.

If, for any reason, doubts spread about TSLA's financial condition among those who have placed deposits, TSLA could find itself with immediate problems.

Click to expand...

Elon made it clear in the conference call that they do not plan to use the deposit money to finance anything.

transcript of Confernce call said:

John J. Murphy - Bank of America Merrill Lynch

Good afternoon. Just a first question on the capital needs. I mean, it looks like there's a little over $400 million left on the ABL, and given the preorders or the reservations for the Model 3, it seems like you'll have at least another $400 million flowing in in the second quarter. So just curious, I mean as you look at that kind of cash potential or liquidity and potential inflow, do you really think you need to do a capital raise this year, or could you get by with those sources of cash?

Elon Reeve Musk - Chairman & Chief Executive Officer

Well, I don't think we want to rely too much on customer reservation money as a source of capital. Maybe there is a buffer or something, but it's not as a primary source of capital. So yeah, I mean, I think it's going to make sense for us to raise some amount of money, some combination of equity and debt and make sure the company has a good buffer of cash on hand. I think it's important for de-risking the company.

Click to expand...

http://seekingalpha.com/article/3971543-tesla-motors-tsla-elon-reeve-musk-q1-2016-results-earnings-call-transcript?part=single

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="Zythryn" No, it doesn't contradict it at all.
The funding needed will be more than $400 Million.
Tesla will not rely upon deposits for the source of that funding...

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Sure.

And it's just a flesh wound...

https://www.youtube.com/watch?v=zKhEw7nD9C4

="Zythryn"....They prefer to us funds from sales...

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And poor sales are just why TSLA is running out of cash faster than anticipated, as I posted on p 12, Before Musk admitted he faced an immanent cash shortfall:

After yesterday's report that US Tesla sales dropped by more than two-thirds last month from March, meaning TSLA has delivered only ~10,440 BEVs in total in the USA during the first third of the year, I expect the "..80,000 to 90,000 vehicles this year..." worldwide sales target may no longer be seen as credible.

http://insideevs.com/monthly-plug-in-sales-scorecard/

And the revenue shortfall from lower sales could also result in even more doubt over TSLA's claim that "...it won’t need to tap the capital markets to finance its short-term expansion..."

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And if you listened to the conference call you would have heard that after the Model 3 reveal the demand for Model S went up due to awareness of what Tesla has to offer, and they have finally in the last week got the majority of the bugs worked out on the production of Model X and for the first time they had a run of cars that all made it through without having to send any to the secondary manual assembly area of the production line. Because of this production rates are going up. This is all good news for sales and delivery of vehicles.

palmermd said:

And if you listened to the conference call you would have heard that after the Model 3 reveal the demand for Model S went up due to awareness of what Tesla has to offer, and they have finally in the last week got the majority of the bugs worked out on the production of Model X and for the first time they had a run of cars that all made it through without having to send any to the secondary manual assembly area of the production line. Because of this production rates are going up. This is all good news for sales and delivery of vehicles.

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Well, if you choose to believe Musk, since a fantastic future always lies ahead for TSLA, you never need to be concerned by its current failures.

However, since Musk has failed to deliver on virtually every other promise since he took over TSLA, I'd suggest instead you focus on reality, instead.

And the reality is, TSLA fell well short of promised BEV deliveries in the first quarter, and US sales collapsed to much lower levels in April.

...The company delivered 14,810 cars in the first quarter, but built 15,510, according to a Tesla shareholder letter.

It notes that the 15,510-car figure represents a quarterly production record, and a 10-percent increase over fourth-quarter 2015.

However, the deliver total of 14,810 was lower than the 16,000 units Tesla had expected.

(The company also lowered the final figure by 10 units from the total announced right after the end of the quarter.)

Tesla said it produced 12,851 Model S sedans in Q1, which met its expectation, but that its Model X production of 2,659 units fell short.

There were "severe" parts shortages in January and February, but those were resolved by the end of the quarter, according to Tesla.

Early Model X builds have also experienced well-publicized quality issues, including doors that refuse to open, and poorly-installed trim...

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http://www.greencarreports.com/news/1103846_tesla-projects-total-2016-sales-of-80000-to-90000-electric-cars

edatoakrun said:

...TSLA fell well short of promised BEV deliveries in the first quarter...

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7.5% short. C'mon.

What I get out of all of this is that Tesla sucks at predicting how well it will perform with quarter-by-quarter precision. But if they continue on their current trajectory, history is going to view Tesla as an incredible success. Quarterly guidance for stock traders don't matter one bit when you're making history.

edatoakrun said:

However, since Musk has failed to deliver on virtually every other promise since he took over TSLA, I'd suggest instead you focus on reality, instead.

And the reality is, TSLA fell well short of promised BEV deliveries in the first quarter, and US sales collapsed to much lower levels in April.

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Hyperbole ?

Compared to what Ghosn & Lutz achieved vs promised, Musk has been a spectacular success with EVs.

aarond12 said:

edatoakrun said:

...TSLA fell well short of promised BEV deliveries in the first quarter...

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7.5% short. C'mon.

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That's the shortfall from Musk's most recent promise.

How many times has Musk revised delivery targets down since S/X production began?

Just since ~2014?

Tesla: The Cost of Elon Musk’s Model 3 Vision

Elon Musk’s electric ambition could turn into a problem for Tesla shareholders

...the latest promises have ratcheted expectations significantly higher, and they warrant skepticism. To put the 2018 goal in context, Tesla forecasts 80,000 to 90,000 deliveries in 2016. Even that could be ambitious; the company expects to deliver about 30,000 in the year’s first half. Two years ago, Mr. Musk said Tesla would deliver cars at an annualized rate above 100,000 units by the end of 2015...

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http://www.wsj.com/articles/tesla-the-cost-of-elon-musks-model-3-vision-1462894305

A few interesting tidbits from the Tesla shareholder's meeting today:

Supercharging with Model 3 will not be "free".
First cells will roll off Gigafactory (GF) this year.
"Namplate capacity" of GF may be as much as 150GWh annually. Roughly 35 GWh needed for 500k cars.
Tesla Energy revenue could end up roughly equivalent to Tesla Motors revenue.
Vehicle to grid (V2G); unlikely from Tesla. J.B. Straubel said it's not a good application for a vehicle battery.
In an earlier talk given by J.B., he says it makes more sense for old Tesla car packs to be melted down and recycled rather than employed in stationary applications.

Biggest issue with Falcon Wing Doors seems to be software. "We're almost there in making the doors useful", says Musk. FWD will eventually be better doors than regular doors but they aren't right now.
Most of the very long presentation portion of the meeting covered succinctly here:
http://fortune.com/2016/05/31/elon-musk-confessions-tesla/