Tesla Motors Posts $293M Second Quarter Loss

[HardOCP News]

I think it goes without saying that, after posting a whopping $293 million loss, Elon musk is being a bit optimistic when he told investors "I feel we’re in a good place at this point." I'd hate to see what he calls being in a "bad" place.

The most recent in a string of quarterly losses was much worse than Wall Street expected for the company, which is ramping up production of its Model X sport utility vehicle and making plans for its Model 3 mass-market sedan. Tesla’s mainstay car is the Model S sedan. Tesla’s revenue rose 33% from a year earlier to $1.27 billion, but its operating expenses jumped 34% to $512.8 million.

 

[Shmee]

Honestly with a company that does that much R&D, the loss isn't as bad as it sounds. It is like Amazon loosing all that money. They need to do it for awhile, and then they cash in. Same with Boeing or Airbus.

 

[Nukester]

Wonder how much money isn't being reported on the P&L for tax purposes. We all know how this works.

 

[Deleted member 184142]

Still a pretty young company that is R&D heavy right now, not very shocking.

 

[Jim Kim]

At least Tesla makes something.
Twitter Has Lost a Staggering Amount of Money
Twitter Has Lost a Staggering Amount of Money

 

[Kaitian]

Honestly with a company that does that much R&D, the loss isn't as bad as it sounds. It is like Amazon loosing all that money. They need to do it for awhile, and then they cash in. Same with Boeing or Airbus.

Boeing makes garbage. Full disclosure: I used to work for Boeing. The 737/777 are their only money makers right now and they're losing orders on them (for example, there's a huge production gap between the 777 Classic and the 777-8/-9). The 787 will never make them money even with their bullshit program accounting method and they've been desperately trying to find ways to cut cost even if that means letting go the very people that created the 787 programme like Alan Mulally who went to work for Ford after he got passed up in favor of McNerney. They're even thinking about stretching the 787 even further for a 787-11 which will only produced in Charleston like the 787-10. The other issue was they wanted to cut out a lot of Boeing in-house production because they thought they'd save money by outsourcing their production. But they ended up losing a lot of money on it and was forced to do the Alenia/Vought purchase in Charleston to get cost under control.

Airbus is in a better position because they are capturing markets that Boeing refused to capitalize on. The A380 was a good attempt but was just too costly for customers (economic downturns are impossible for customers to buy these A380 despite they make a good amount of money once in operation). The A350 has been eating a lot of shares between the 787 and 777 which is why it contributed to the production gap of the 777. The A320 is a cash king of the aerospace market because they're over 50% market share every year and still have dedicated customers. The only reason you see 737's is because Boeing has production slots available and Airbus doesn't so the customer fights for the earliest slots at Airbus as they can but not so much at Boeing. The A330Neo has no research & development costs and every plane they sell even the A330 MRTT makes a lot of money.

 

[ruffbytes]

I'm not a Musk fan boy, but I agree with Musk on this one... this sort of loss seems expected when you are trying to bring a new technology to market.

I think their product seems pretty dang good, albeit way outside my price range for a car.

 

[DukenukemX]

Still a pretty young company that is R&D heavy right now, not very shocking.

That's what I was thinking.

 

[raz-0]

Still a pretty young company that is R&D heavy right now, not very shocking.

Especially if it's taking up front hits fro building up manufacturing capacity right now. You'd have to see how the increased operatin expenses broke down to decide if it is really bad news or not.

 

[thesmokingman]

Their wait list is still freakishly long. My uncle said he'd let me have his spot... still thinking about it.

 

[sirmonkey1985]

I'm not a Musk fan boy, but I agree with Musk on this one... this sort of loss seems expected when you are trying to bring a new technology to market.

I think their product seems pretty dang good, albeit way outside my price range for a car.

yeah i really want the the model s but can't afford it. whats even more surprising is that i'm a huge classic car guy and i want to the model S.. so i'd say musk is doing a pretty damn good job with Tesla and making electric cars appealing to people that otherwise would of completely ignored them.

 

[thesmokingman]

yeah i really want the the model s but can't afford it. whats even more surprising is that i'm a huge classic car guy and i want to the model S.. so i'd say musk is doing a pretty damn good job with Tesla and making electric cars appealing to people that otherwise would of completely ignored them.

Check out the Model 3. My wife won't drive a sedan, some philosophical dilemma, that and minivans lol. But otherwise, the Model 3 looks damn appealing.

 

[Retronym]

Tesla is in the losing money business for now.

 

[Deleted member 184142]

That's what I was thinking.

Especially if it's taking up front hits fro building up manufacturing capacity right now. You'd have to see how the increased operatin expenses broke down to decide if it is really bad news or not.

If they were really losing money on each car sold AND these sorts of losses, that would be very very bad, but everyone who puts out articles about "Tesla loses money on every car sold", base it off of everything, factoring in all costs, including current R&D, which is just not fair and ignorant of how things work with growing a company in early stages when you have the investors and money to do it. I am no fan of Tesla at all, I think Nissan deserves much of the credit Tesla gets, but the bashing Tesla gets most of the time is also not founded.

These kind of losses are self investment and growth, be it R&D or actual plants, Tesla is not like Nissan that has this already and just needs R&D time/money, they also need to build manufacturing capacity to hit production goals they are touting, because if they don't not only could that be a big public black eye, but also a monetary fail in recovering that investment money in time.

 

[acairman]

Hopefully this will continue until they/he is done.

 

[P4B]

i think i seen a story saying they are getting lots of lawsuits. that is most likely money for lawyers

 

[Spidey329]

Still a pretty young company that is R&D heavy right now, not very shocking.

Yeah, especially since they have a ton of preorders for the new model. They can't take full payment until they have a car ready to ship. But they can't have a car ready to ship without spending a metric ton of money expanding their operations.

To be expected.

Hopefully this will continue until they/he is done.

Eh? Reporting net loss != company hurting. It means that revenues did not equal all expenses, including those of R&D/expansion. They have a couple billion dollars worth of preorders that they have to build out to fulfill (and thus, collect on) and have dumped a ton of money into the gigafactory, their ability to get financing is superb right now. This company is healthy. I'd say in 5 years, they'll be generating a healthy dose of profit.

 

[sweeper240]

Boeing makes garbage. Full disclosure: I used to work for Boeing. The 737/777 are their only money makers right now and they're losing orders on them (for example, there's a huge production gap between the 777 Classic and the 777-8/-9). The 787 will never make them money even with their bullshit program accounting method and they've been desperately trying to find ways to cut cost even if that means letting go the very people that created the 787 programme like Alan Mulally who went to work for Ford after he got passed up in favor of McNerney. They're even thinking about stretching the 787 even further for a 787-11 which will only produced in Charleston like the 787-10. The other issue was they wanted to cut out a lot of Boeing in-house production because they thought they'd save money by outsourcing their production. But they ended up losing a lot of money on it and was forced to do the Alenia/Vought purchase in Charleston to get cost under control.

Airbus is in a better position because they are capturing markets that Boeing refused to capitalize on. The A380 was a good attempt but was just too costly for customers (economic downturns are impossible for customers to buy these A380 despite they make a good amount of money once in operation). The A350 has been eating a lot of shares between the 787 and 777 which is why it contributed to the production gap of the 777. The A320 is a cash king of the aerospace market because they're over 50% market share every year and still have dedicated customers. The only reason you see 737's is because Boeing has production slots available and Airbus doesn't so the customer fights for the earliest slots at Airbus as they can but not so much at Boeing. The A330Neo has no research & development costs and every plane they sell even the A330 MRTT makes a lot of money.

The R&D is one issue, production costs is another, what everyone needs to understand is that all the quality control processes that are required for these Aerospace products cost time and money but can be almost entirely automated today. Next week there is a user meeting in Long Beach CA where they are showing off several of the automated metrology systems used for aerospace, automotive, and consumer devices. Look up Universal Metrology Automation.

 

[Chaos Machine]

Tesla has one of the largest profit margins on their cars in the industry, they are losing money cause they are bringing battery production in house to further enhance those margins and control their own supply line. Any other car manufacturer would kill to have a wait list 300k+ deep on a car we won't see for a least a year. Anyone shitting on them now has tunnel vision.

 

[nutzo]

Guess they didn't get enough tax & green subsidies this year.

 

[Insula Gilliganis]

Sorry.. but for what I would pay for a new Telsa, I rather spend on buying this Nevada car.. I mean.. it is more amazing than Chitty Chitty Bang Bang, the Mach 5 and KITT put together!!

Look at all it can do..

 

[Deleted member 184142]

Tesla has one of the largest profit margins on their cars in the industry, they are losing money cause they are bringing battery production in house to further enhance those margins and control their own supply line. Any other car manufacturer would kill to have a wait list 300k+ deep on a car we won't see for a least a year. Anyone shitting on them now has tunnel vision.

The wait list for the new car is a bit over blown. First, it can be refunded in full at any time, you also only have to put 1k down, so this is current and future demand all at once, while Nissan has sold almost this many of actual EV cars in the same projected time frames. People are also jumping in on it to secure a price, in case they go up, as well as making sure they get the current government tax break for EVs which will no longer be in effect when the car hits production, but putting a deposit now will qualify you for that rebate.

 

[mope54]

Placing a deposit now does not qualify you for a rebate later. The rebate is paid out when the car is put into service, that is, once you take the keys and drive it off the lot.

My only concern with Tesla is that I don't see EVs as a growth market. Once they sell those initial pre-orders they're going to have a problem growing their base unless they are projecting International sales. The US market just doesn't have the appetite for the cars they need to produce over time. Once the fulfill the initial 300K orders, they're not going to be able to sell another 300K in the US for a long time.

 

[Exavior]

At least Tesla makes something.
Twitter Has Lost a Staggering Amount of Money
Twitter Has Lost a Staggering Amount of Money

I don't think twitter has ever made money, only lost it.

Boeing makes garbage. Full disclosure: I used to work for Boeing. The 737/777 are their only money makers right now and they're losing orders on them (for example, there's a huge production gap between the 777 Classic and the 777-8/-9). The 787 will never make them money even with their bullshit program accounting method and they've been desperately trying to find ways to cut cost even if that means letting go the very people that created the 787 programme like Alan Mulally who went to work for Ford after he got passed up in favor of McNerney. They're even thinking about stretching the 787 even further for a 787-11 which will only produced in Charleston like the 787-10. The other issue was they wanted to cut out a lot of Boeing in-house production because they thought they'd save money by outsourcing their production. But they ended up losing a lot of money on it and was forced to do the Alenia/Vought purchase in Charleston to get cost under control.

Airbus is in a better position because they are capturing markets that Boeing refused to capitalize on. The A380 was a good attempt but was just too costly for customers (economic downturns are impossible for customers to buy these A380 despite they make a good amount of money once in operation). The A350 has been eating a lot of shares between the 787 and 777 which is why it contributed to the production gap of the 777. The A320 is a cash king of the aerospace market because they're over 50% market share every year and still have dedicated customers. The only reason you see 737's is because Boeing has production slots available and Airbus doesn't so the customer fights for the earliest slots at Airbus as they can but not so much at Boeing. The A330Neo has no research & development costs and every plane they sell even the A330 MRTT makes a lot of money.

Just because they use loop holes for sales doesn't mean it is bullshit.

 

[EODetroit]

Stock is up 2% today. Seems like the pros don't care about the supposed bad news.

 

[Kaitian]

Just because they use loop holes for sales doesn't mean it is bullshit.

I'm not talking about sales. Program Accounting has little to do with sales. It only helps set the baseline of which they must sell the airplanes at. With over $28 billion in deferred production cost on the books for program accounting and less than 750 787's left on order, the baseline they have to sell at to breakeven for all those airplanes remaining is $38 million ON TOP of production cost which the cost is around $110-160 million to produce. The sales people then discount these planes heavily because otherwise they lose it to Airbus A330/A350 orders at around 45-50% discount. Hence why they could go for 787-11 because it gives the biggest unit cost in order to eliminate the deferred production cost. So the only way they can make money back is with AOG services / Airplane Health services (but!! Airplane Health is complimentary as part of buying the 787 but not with other platforms which is why we don't know where that MH plane is).

 

[YeuEmMaiMai]

Boeing makes garbage. Full disclosure: I used to work for Boeing. The 737/777 are their only money makers right now and they're losing orders on them (for example, there's a huge production gap between the 777 Classic and the 777-8/-9). The 787 will never make them money even with their bullshit program accounting method and they've been desperately trying to find ways to cut cost even if that means letting go the very people that created the 787 programme like Alan Mulally who went to work for Ford after he got passed up in favor of McNerney. They're even thinking about stretching the 787 even further for a 787-11 which will only produced in Charleston like the 787-10. The other issue was they wanted to cut out a lot of Boeing in-house production because they thought they'd save money by outsourcing their production. But they ended up losing a lot of money on it and was forced to do the Alenia/Vought purchase in Charleston to get cost under control.

Airbus is in a better position because they are capturing markets that Boeing refused to capitalize on. The A380 was a good attempt but was just too costly for customers (economic downturns are impossible for customers to buy these A380 despite they make a good amount of money once in operation). The A350 has been eating a lot of shares between the 787 and 777 which is why it contributed to the production gap of the 777. The A320 is a cash king of the aerospace market because they're over 50% market share every year and still have dedicated customers. The only reason you see 737's is because Boeing has production slots available and Airbus doesn't so the customer fights for the earliest slots at Airbus as they can but not so much at Boeing. The A330Neo has no research & development costs and every plane they sell even the A330 MRTT makes a lot of money.

business comes and goes and at least the Boeing pilots know if they are going to crash the plane... lol

 

[sirmonkey1985]

Check out the Model 3. My wife won't drive a sedan, some philosophical dilemma, that and minivans lol. But otherwise, the Model 3 looks damn appealing.

yeah the model 3 does look good especially for the starting price.

 

[Chaos Machine]

The wait list for the new car is a bit over blown. First, it can be refunded in full at any time, you also only have to put 1k down, so this is current and future demand all at once, while Nissan has sold almost this many of actual EV cars in the same projected time frames. People are also jumping in on it to secure a price, in case they go up, as well as making sure they get the current government tax break for EVs which will no longer be in effect when the car hits production, but putting a deposit now will qualify you for that rebate.

It's still 1000$, are you going to let a company sit on $1000 of your money for over a year if you have no intention buying the car? I fail to see your point There is still more than 300k people that want this car, that i think is more than total sales of the chevy volt(which I lease btw and think is a fantastic car) since its inception BY OVER 3X. 300,000 cars at 35k each is 10 Billion dollars in revenue on 1 car in your lineup. This does not even factor in premium trim packages and whatnot.

 

[Deleted member 184142]

It's still 1000$, are you going to let a company sit on $1000 of your money for over a year if you have no intention buying the car? I fail to see your point There is still more than 300k people that want this car, that i think is more than total sales of the chevy volt(which I lease btw and think is a fantastic car) since its inception BY OVER 3X. 300,000 cars at 35k each is 10 Billion dollars in revenue on 1 car in your lineup. This does not even factor in premium trim packages and whatnot.

The 3 is slated to START production at the end of 2017, and if it is anything like the others will probably be pushed back once or twice, so it will not be till early 2018 people actually start getting cars, it will be years at the production ability to deliver the cars. Many people see it as a fully refundable (no risk) investment, one, if you get and keep the car you still get the huge government rebate that will be expired by then, two, you lock in a price that might go up, so even if you don't keep the car, you could resale it for far more than what you paid, even if the value or MSRP does not go up, people at launch will be missing the $7,500 federal rebate and possible state rebate, such as my state also gives a $2,500 rebate, that means I could place a fully refundable deposit, find someone at launch who want to buy one, sell it to them for $5,000 under sticker and walk away with $5,000 in my pocket, assuming they don't go up in price at launch, which many people think they might. And yes, many people have put deposits on them with no intentions of buying, or are not sure if they will buy it, however, they MIGHT so they are making sure to lock in the price and rebates. This is also backed up demand for years, and demand for the years to come until the car is released, putting it far behind the Leaf, which is already at 300k cars.

People have lots of doubts of them being able to meet the production goals, because one, they don't have the money to accelerate capacity like that, they would go broke doing so, they already sold off shares deluding the stock to try and make some cash to do this, but you can only do so much before pissing off investors or going broke. You also can't build to big to try and build those 300k cars, because people are thinking this is going to be a year to year production, but it is not, this was demand from years ago and for years to come, so you build all that capacity and you go bust from spending to much on manufacture. This can be seen on how the reservations had tapered off, and have now dropped back as in the first few weeks almost 10,000 people canceled, and that number keeps growing. The longer the wait, the bigger this becomes, just like any pre-order. The model X and S have only ever hit a max of 50,000 cars, and yet both have had major delays, and the model X still has them, how many people on the back end of that list do you think will back out once we are in 2020 and they still don't have a car? That is assuming they actually hit production goals and start production on time, which has not happened yet for any of their cars.

Love Tesla and what they do, however to many people get ahead of them selves when talking about them, acting like they are pure magic, I like to keep things a bit more realistic.

 

[sfsuphysics]

A quarterly loss is not really a big deal, could be the bought property, or paid off debts, need to look at the whole picture to see what's going on.

 

[krotch]

Eh? Reporting net loss != company hurting. It means that revenues did not equal all expenses, including those of R&D/expansion. They have a couple billion dollars worth of preorders that they have to build out to fulfill (and thus, collect on) and have dumped a ton of money into the gigafactory, their ability to get financing is superb right now. This company is healthy. I'd say in 5 years, they'll be generating a healthy dose of profit.

The problem is what happens leading up to those 5 years. The competition will be coming out or will be out during those 5 years and after them. A preorder is just a preorder. It's just an egg and counting it as a chick is not a smart move.

Either way, what they're doing makes sense. Lower production costs and increase production capacity. Something they should and need to do anyways, which is going to blow a lot of money. I imagine running in the red for a couple of years.

 

[krotch]

You also can't build to big to try and build those 300k cars, because people are thinking this is going to be a year to year production, but it is not, this was demand from years ago and for years to come, so you build all that capacity and you go bust from spending to much on manufacture.

Ya, you definitely want to have higher production capabilities, but having way too much would be a problem too. Unless you can get some type of coop with other car manufacturers. Like how Subaru produces some Toyota vehicles in their plants, as Toyota simply doesn't have the capacity, nor do they really want to build new plants. So Subaru's underutilized plants make money for them, Toyota doesn't have to build a new plant or expand a plant, and they work on projects together.

I think Tesla would have a lot to gain by doing a coop with BMW, Mercedes, VW, etc. They could actually move into the luxury category and possibly charge more for those type cars. Instead of being essentially a premium Accord.

 

[Deleted member 184142]

Ya, you definitely want to have higher production capabilities, but having way too much would be a problem too. Unless you can get some type of coop with other car manufacturers. Like how Subaru produces some Toyota vehicles in their plants, as Toyota simply doesn't have the capacity, nor do they really want to build new plants. So Subaru's underutilized plants make money for them, Toyota doesn't have to build a new plant or expand a plant, and they work on projects together.

I think Tesla would have a lot to gain by doing a coop with BMW, Mercedes, VW, etc. They could actually move into the luxury category and possibly charge more for those type cars. Instead of being essentially a premium Accord.

Indeed, however a lot of companies that do this have other ties and it works for both, Tesla is sort of on its own, and unproven, having delays with their own already low production would also not really tempt people into using them. The other problem? Most mfgs are not full EV, and Tesla would be missing alot of the tools and space for building these cars, Tesla is not even building all of its own, lots will be out of house work. Musk wanted to do more in house once the reservations started to climb, but runs into the problem of to much capacity down the line for ROI in a limited time. Suppliers also stated that for the gear and tooling needed to do it in house is unGodly expensive and would take another 18-24 months to just have made and installed, which would put production start dates even further back.

Building cars at this scale is no joke, big time for a small and young company, this can really be a make or break time for them.

 

[Trepidati0n]

Stock is up 2% today. Seems like the pros don't care about the supposed bad news.

Because it wasn't bad news...it is just click bait title. Our company has had one profitable quarter in over 25 years ;P Long game investors are about revenue and growth...if there is ever a profit, that is a bonus.

 

[krotch]

Indeed, however a lot of companies that do this have other ties and it works for both, Tesla is sort of on its own, and unproven, having delays with their own already low production would also not really tempt people into using them. The other problem? Most mfgs are not full EV, and Tesla would be missing alot of the tools and space for building these cars, Tesla is not even building all of its own, lots will be out of house work. Musk wanted to do more in house once the reservations started to climb, but runs into the problem of to much capacity down the line for ROI in a limited time. Suppliers also stated that for the gear and tooling needed to do it in house is unGodly expensive and would take another 18-24 months to just have made and installed, which would put production start dates even further back.

Building cars at this scale is no joke, big time for a small and young company, this can really be a make or break time for them.

They could increase production capacity for parts that other manufacturers could use. Like batteries or electric motors. I doubt they could build another company's cars, nor would half the companies out there even require it. Although if they were to bust out a full EV, why not get Tesla to build it instead of setting up production to self build. Just to a like test launch to see how it does and if it goes well, then start creating production facilities for yourself and migrate off Tesla.

Although, that'd be them gambling that Tesla can get there and can do it. Safer bet to just self build them on what available production capacity you can set aside, instead of trying to work with Tesla. If they did technology sharing, that would help give some incentives.

I'd personally see it go the other way. Manufacturers hook up with Tesla for battery and electric motor tech, while Tesla gets to have cars produced on someone else's production lines while they build up their own.

 

[SLee]

Tesla has one of the largest profit margins on their cars in the industry, they are losing money cause they are bringing battery production in house to further enhance those margins and control their own supply line. Any other car manufacturer would kill to have a wait list 300k+ deep on a car we won't see for a least a year. Anyone shitting on them now has tunnel vision.

Tesla has one of the largest gross profit margins because they sell at retail but they are losing money because they also have the have the highest cost of selling, administration and generation expenses in the industry because they sell at retail. All that R&D and capital expenditures require constant equity raises to pay for.

The reservations numbers are pretty impressive but Ford sells nearly a million F-series trucks a year every year. Honda and Toyota will sell 300,000+ Accords, Camrys, Civics, Corollas, CRVs, RAV4s every year.