Thanks for the link. History repeats.
And this is not by coincidence. Whatever nitpickers want to say Tesla KNOWS what its doing although most of us couldn't see that until a few years later.
This article is missing one big distinction between Tesla a few years ago and Tesla now. Tesla's cash-burn and debt position has gotten radically worse. They simply had more leeway back then vs. now. They just don't have the luxury to fumble around like they did with the Model X rollout. They really do stand to run out of runway here.
I really hate the term "Cash Burn". It makes it sound like Elon and team are off on a cruise spending money on babes and booze.
The reality is it takes money to build large complex pieces of equipment like a car. In this case a car that uses unique technology like the motors and batteries are. They have no production line in place, they have to build from scratch. They have to build service centers and superchargers along with destination chargers. They don't have dealerships so that have to build boutiques as well. This takes money. They aren't burning it, they are investing it.
Mos6507 so, what was GM and Chrysler’s problem just before they filed for bankruptcy. It’s amazing how short people’s memory is. You and everyone else in U.S., is still paying for their bailouts. That never seems to come up when talk of how bad Tesla’s financials are.
mos, I tend to agree with you in that they have to get 'off the ground' financially', to build on your metaphor. But when you study the history of the company it has been that way since the Roadster. Tesla is constantly running out of runway, even before they went public. But somehow that runway always gets extended. I see it as a reflection of an idea whose time has come. The naysayers often have logical arguments on their side, but I'm not too worried because clearly fate is on Tesla's side. And fate is a powerful force.
"You and everyone else in U.S., is still paying for their bailouts."
Can you elaborate on what you mean by that?
The so called "cash burn" is a non-issue long as there are enough people who have confidence in the company to provide the "cash burn" for the future growth. Some investors looking at GE or GM only for their income. Other kind of investors who look at companies like Tesla, Netflix or Amazon only for their future growth potential. You could have a billion naysayers there but what they say is irrelevant. Tesla does not need them to be in business. Tesla only needs the few thousands or few millions investors to trust it with their money. Are there enough of them who trust Tesla? You can get the answer by looking at its stock price. Again those who say I will never buy the stock at this price are totally irrelevant in this scheme.
Consider the source of the post ginning up "cash burn!"
[The so called "cash burn" is a non-issue long as there are enough people who have confidence in the company to provide the "cash burn" for the future growth.]
That's not a given.
I know. I'm just happy that the troll provided me an opportunity to debunk that FUD.
I respectfully disagree with @Mos6507's position, and agree with @carlk. As a long time fan and supporter of Tesla, I strongly believe in EM and Tesla's mission. I took delivery of our first MS in early 2013, our second MS in 2015, and our M3 one month ago, and remember well the arguments that Tesla trolls were making about the company during the past five year period. I believe more now in Tesla-Energy than I did 5+ years ago, and love every car I have taken delivery on. I am incredibly excited about the M3 and believe it is a game changer. I am confident that they will resolve the M3 production issues. I will soon finally get my PW2 installation, and believe the solar, battery backup systems side of Tesla-Energy will also be a game changer. Tesla rocks!
Thanks @SeaDocs for the linked article trip down memory lane. I remember those times well.
This paragraph was friggin' AWESOME...
"If all of these claims hadn’t been thrown around for years with the Model S and Model X, they might make many of us more concerned about the Model 3. But the multi-year pre-game show seemed to immunize many of us against this anti-Tesla hype. What is new in the attacks on Tesla? What claims are people making about Model 3 production that they didn’t falsely or misleadingly make about Model S and Model X production? Who still claims these days that Tesla can’t mass produce the Model S? Who still claims today that the Model X is a scam, vaporware, impossible to build, a Koolaid-enhanced dream? Who will admit in one year — when Model 3 production is going full steam (or full electric?) — that they were wrong and Tesla would actually find a way to mass produce the car for millions of people?"
It basically encapsulates my thoughts when responding to FUD, which some try to pass off as 'concerns' instead. When it comes to FUD, there is nothing new under the Sun. The same old, same old, with no variation in theme, content, or delivery. And always WRONG. It seems to often be compositions made by randomized comment bots from the same group of critical quips or contrarian FUD, like 'cash burn', 'debt position', 'radically worse', 'more leeway', 'fumble around', or 'run out of runway', for instance.
I also meant to add that I backup my belief in the company by purchasing TSLA stock at IPO in 2010, 2.5 years before I got my first MS.
I don't own a Tesla, yet. But, watching Tesla slowly and smartly elbow its way into the car manufacturing business over the years has just been a JOY to witness!! Say what you want about the company and its weird quirks, but many of us have longed for another player like Tesla to show up that could truly COMPETE WITH, PUSH AND CHALLENGE the big players like Ford, GM, Toyota, BMW, Volkswagen, etc. The fact that Tesla is (slowly) doing this with a fundamentally different power source makes it all the more astounding.
So again, one has to give Tesla credit for not only surviving, but for repeatedly re-inventing and re-investing in itself and turning out it's 6th groundbreaking model and 4th production car in a decade plus. While we all know they have had help and bailouts (like much of the US auto industry), whatever happens to the company, history will remember that a small auto-EV startup rose to challenge the biggest players on the block and fundamentally changed the automotive and EV industries for decades to come.
When I stand back and objectively look at what Tesla has really accomplished on the World's automotive-stage, I'm humbled to be a tiny part of it.
Tesla-David Great for you. I think many of us believers did the same too. Some bashers seem to imply we are fanbois because we own Tesla stock. It's really the other way aroung. We buy Tesla stock because we believe the company. The real sad thing about those non-believers here is that they missed this one of the greatest investment oppotunities of our life time. Fine for majority of people in the world who knew very little about Tesla. For people who are so involved there is really no excuse other than blaming it on one's own poor judgement.
Fan boy is not an appealing term for me. I don't do cosplay and with the exception of my alma mater, you'd probably never know I was a fan of anything.
But yes, I have been a fan of Tesla, and for the most part all of Musk's ventures and ideas. Here's what sets Elon Musk and Tesla (et al) apart: Electric vehicles are not new, and clean tech is not new. I knew people more than 20 years ago (and let's not forget about some people in my parents' generation) talking about living 'off the grid' and being green and pollution-free. But many of them were just preaching to the choir through an echo chamber, or they were taking the initiative for themselves, maybe doing the right thing on their own, leading by example, but not getting far. Tesla is *doing it*. They're taking the ideas many of us believe in, and making them real on a massive scale. In style. So people can talk about 'cash burn' and try to cast doubt as much as you want, but even if my part is exceptionally small, I am DAMN WELL standing my ground and going to play it, to move things forward, even if there are some bumps in the road. Tesla can count on me and on my money. And in the words of John Lennon...I'm not the only one. (Far from it). Scoff all you want. People who have doubted Tesla at any time just don't get it.
Another way history may repeat itself is demand for Model 3 could be MUCH higher than Tesla's production plan of 10K/week (500K/year) just as demand for the Model S quickly became much higher than Tesla's initial Model S production plan of 20K/year.
A recent survey by a very credible source (Gene Munster/Loup Ventures) asked 519 people in the U.S. whether they would buy a Tesla Model 3. 17% said "yes" and 22% said "maybe." (I didn't know that many people even knew what a Model 3 was ; ) )
The U.S. market is about 17 million cars/year, so even discounting the numbers significantly this suggests that demand may translate into sales of much greater than 500K Model 3/year or even 1.5 million/year (500K Model 3 and 1M Model Y), especially factoring in Europe, Asia and other parts of the world. There are of course limitations to the survey but the historical pattern suggests it should not be ignored or dismissed.
Just as Tesla quickly shot past its initial production target of 20K/year Model S and now sells almost triple that, it could do the same with the Model 3 once we get through "production hell." The next couple years could be very interesting!
@Carl Thompson | March 4, 2018
"You and everyone else in U.S., is still paying for their bailouts."
“Can you elaborate on what you mean by that?”
"what was GM and Chrysler’s problem just before they filed for bankruptcy"
I think they had too many cars no one wanted to buy....
The article you link says taxpayers lost $11 billion in the bailout of GM and "saved 1.2 million jobs and avoided the loss of $129.2 billion in personal income."
However, that doesn't answer my question. How are we "still paying for their bailout?"
"I am confident that they will resolve the M3 production issues."
How long would you be willing to maintain that position? Another three months? Six months? A year? Two years?
When you don't have skin in the game you can keep the faith as long as you want. Those who do will eventually want Tesla to be accountable for extended delays while they rack up a higher and higher debt-load.
I'm not so much doomsaying as trying to impress upon people that in the lifecycle of every startup is a point beyond which they can't stretch themselves any further, when all hail-mary pass attempts fail. At the core of a short's hitpiece on Tesla is this sort of reality check.
There's no way for this to sink in until the other shoe drops and Tesla declares bankruptcy or agrees to some sort of last-ditch merger or buyout.
Tesla simply does not have an infinite blank-check to keep spending overhead with such a delayed return on that investment.
Bank's consider 500K times $42.5K(pick a number) in Model 3 reservations a very big asset far in excess of Tesla's $500 million liability in deposits.
From a banks point of view all Fixed Overhead at this point are sunk costs and will not enter into the calculation of incremental costs of producing the reserved cars.
God mos you are seriously a broken record. You honestly believe the production issues won't be resolved? Like, EVER? You are seriously maintaining that position?
@Carl Thompson - depends how you look at it I suppose. We are trillions in debt. This 11.1 billion was just added to the pile and we are now paying interest.
One could look at it as First in first out. We are possibly just now paying for things put on the debt from the 1980’s. Total guess of course.
And BTW, always the same naysayers on every thread....it's really old.
Mos should just hang out on the GM forums.
The article speaks as if the matter is settled, but:
“Tesla never intended to sell a $35,000 Model 3 and never will.”
There is no $35k Tesla. I personally doubt there ever will be one in a large scale way. I do believe Tesla will produce some of their $36k Teslas and as quickly as they can retire them, thus raising up the base price.
I just looked at their 10K, and I'm not seeing too much to be alarmed about yet. Nearly 20 pages of risks is a bit spooky. But their total debt is about equal to their revenue now (~$12B), and interest payments are only 4% of revenue. They could sustain another year or two of losing $1B/yr and still be OK as long as they are making progress. Not out of whack for a startup. Interesting note - they have $854K in customer deposits, $200K more than last year. I guess a lot of that is from Roadster and Semi presales? I'm also guessing a lot of that is still M3 reservations too.
johnyi Not to mention if Elon says I need more money to sustain/grow the company there will be a bunch of people with money come knocking on the door and ask how much? Those people are not fools or they won't be what they are today. They all know how to do the risk/reward math and know it's a worthy investment.
Honestly TSLA has been rather stagnant for the last 10 months or so and has only gone up 10% per year over the last 4 which isn't very good considering the amount of money that's being dumped in it and the potential risk.
That's just my opinion, though. Maybe this is the year it will shoot up and make it worth the risk.
"You honestly believe the production issues won't be resolved?" It's not about whether Tesla can ever resolve them. It's whether they can resolve them IN TIME. Mark Cuban has said that timing is the most important factor in a company's success. You have to be at the right place at the right time.
Musk owes his fortunes to just that, from his experience at PayPal. If you tried to start a PayPal like service today it would have a snowball's chance in hell of taking off. He had the idea ahead of the curve of everyone else and then it became a veritable monopoly, as with so many dominant internet players.
There are multiple ticking clocks looming on Tesla's horizon as I've explained. The problem with fanbois is they suffer from irrational exhuberance, or "this time it's different" mentality. No different from the mania behind any bubble before it pops. There is simply no way to talk sense into people who are wrapped up in this euphoria. I understand it. It's addicting. But it's simply disconnected from reality.
Well, naysayers lost when Tesla delivered Roadsters. But more importantly, naysayers were wrong when Elon succeeded in 6 categories of technology.
"if Elon says I need more money to sustain/grow the company there will be a bunch of people with money come knocking on the door and ask how much?"
It's a wonderful life. Yes, this is how modern business really works.
This is how TESLA works.
Naysayers lost when Tesla delivered Roadsters, produced the best car ever in the Model S, implemented technologies in cars others have never even thought of, made dual motor ludicrous performance the world had never seen before, built the supercharging infrastructure, built the gigafactory for future low cost battery, showed prototypes of revolutionary semi and a supercar better than anything out there, and most importantly built a super strong brand name that allows it to have half a million reservations of a new model, with 100,000 of them before they even knew what the car is like...all those were done is a few short years. The time took for others to make simple model changes of pretty much the same car. None of those naysayers saw those things Tesla did coming yet they are still keep claiming Tesla is doomed. Talk about disconnected from reality!
The idiot has no idea those people who invested in Tesla indeed have a wonderful life.
LOL ok yeah Tesla is going to go under because they have 500K reservations for the most anticipated car in history but can't get production issues solved "in time."
I get what you're saying about the debt and cash burn - but EM will not let Tesla go under now. It's not gonna happen. If there truly is a brink, he'll get the money.
@Carl Thompson, I brought the stock in 2010 @~$25/share and the stock was rather stagnant not going up much for the next 1.5 years. It never worried me that it took time to get things sorted out for the MS, MX, and now the M3. After one month of ownership in the M3, I am very excited about this car, and know it is a winner. The reaction of people around Seattle confirms my observations with thumbs up, video tapping our car, and the smiles I see on people's faces when they see the car. It is fun to drive, and it will be a success. Tesla will sort out the production problems, and people will get their cars!
I agree it's a great car. Thus far it doesn't seem to be boosting Tesla's stock very much.
But I hope they sell millions of them and you make even more money. But even if that happens I won't second guess not putting my money in it.
I have not invested a dime into Tesla. But i will be a part of the community of demand for their cars in which the company grows in response to. Thats a pretty good investment.
Never second guess it, Carl. It's too late for YOU, even if Elon hits all of his milestones and the value goes up 12X.
I just keep buying shares every year. Adding to my IRA. Started at $27. Laughing all the way to an early retirement.
LOL! My company's stock is doing a lot better than Tesla's the last 4 years or so with much less risk. So I'm not too worried about potentially missing the boat on TSLA. I'm not going to be starving any time soon.
Sure buddy . . . you are the millionaire with all the time to not know how Tesla works or where batteries come from.
@Carl Thompson - that’s what Enron shareholders bragged about at one time too. Don’t gloat too much.
Even with the production delays, the Model 3 is still the best selling EV so far this year. It beat every other EV! I can only imagine what the sales numbers will be later this year when production ramps up even more. Yeah, it is looking good for the Model 3. Tesla's goal of bringing an affordable EV to the mass market is going to happen folks!
"Even with the production delays, the Model 3 is still the best selling EV so far this year. It beat every other EV! I can only imagine what the sales numbers will be later this year when production ramps up even more. Yeah, it is looking good for the Model 3."
Completely agree. The Model 3 is the EV to beat right now sales-wise and no other EV will even come close when this year is said and done.
And . . . there is nothing else out there that competes or even on the horizon.
Great morality, play. Let's do it again in the other threads.
Shock: ‘The article speaks as if the matter is settled, but:
There is no $35k Tesla. I personally doubt there ever will be one in a large scale way. I do believe Tesla will produce some of their $36k Teslas and as quickly as they can retire them, thus raising up the base price.’
Great way to take a quote out of context, as though the article was agreeing with your constant FUD about the base model.
STOP claiming the destination charge is part of the price of the vehicle. Unless you get every other auto maker to start lumping the delivery charge into their MSRPs, it is the height of hypocrisy to claim that Tesla is lying about the price of the base model.
Everyone likes to say things like "its not a $35,000 car" because its not in production yet. Well, you're not wrong about that. So if it makes you feel better to say that, and drill it in 500 times, then good for you. Tesla is already not producing the $35,000 configuration, so i dont know why you feel the need to point your finger at it yelling with your arms flailing.