Tesla's Profit Claims Are Lies
Published: February 2nd, 2010
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We overlooked a key point in our write-up on Tesla’s IPO plans: the profits Elon Musk has been touting are a mirage. As this balance sheet from Tesla’s IPO prospectus [read the whole thing at the SEC here, it’s a giggle] proves, Tesla might have fudged a one-month profit, but the company is hardly on a sustainable footing. Unless you consider seven million bucks in “gross profit” (including Zero Emissions Vehicle credits) enough to offset a nearly $29m operating loss, in which case, I’d like to talk to you about underwriting TTAC’s budget. This also puts into Tesla’s disclosure that it faces declining revenue into some scary perspective. Notch another one up for Farragoian skepticism…
More by Edward Niedermeyer
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@FreedMike I'm afraid this is a bit off-topic; I haven't read Tesla's financials and don't have any real comments on that. But I did want to address FreedMike's issue of "the PR flack missing the point". It seems to me the flack was right on target. CD implied Tesla's range was not realistic, and I think it's been adequately shown that it is. The 244-mile number is a government number that is easily achievable under similar conditions. Tesla has a chart on their site (http://www.teslamotors.com/blog4/?p=70) showing anywhere from 80 miles range (at 120mph) to over 400 miles range (at 20mph) that seems quite accurate from user experience. (Note that a gas vehicle's range will vary by a somewhat similar percentage at such disparate speeds; when gas vehicles mention range, they sure don't assume worst-case). CD didn't start with a full battery, and went well over the ~55mph in the government test. The range they did get matched Tesla's chart very nicely. You bring up a separate point that even if 244 miles is accurate, it's "a joke". If you regularly drive more than that in a day, it's obviously not the car for you, but I don't see how that qualifies it as a joke. Unless I take a road trip in it (which I am planning to do, just for fun), I don't think I will ever drive more than that in a day--remember that you start with a full "tank" every morning. I never visit a gas station, and I drive anywhere I want. I don't even bother to look at the range numbers, because I know there's always enough. It's MORE convenient for me than my old gas car! I don't see how that can be a "joke", even if it doesn't suit every possible need--no car does. By the way, I was the one that made the comment about A/C and electric accessories. I actually said they don't matter much, while we were discussing range issues. If you want to get the max possible range, or efficiency, sure you can turn them off. But I never do; I don't have to. The same applies to a gas car--if you want max range or mpg, turn off your electrical accessories.
Never been sure why TTAC has such a hard-on about bashing Tesla. At least they are out there doing something. But then again, "those who can't do..." Nobody goes in to buy a Tesla and expects anything like a regular car purchase experience - they all know what they are getting into. Of course Tesla is bleeding cash - they are a Silicon Valley startup. As for their accounting statements, maybe, if you want to be journalists, you should have an accountant look at them and get a real evaluation? Nah, that would be too responsible. But then again, TTAC seems about an inch from joining the tea partiers in the political spectrum - uninformed and running around brandishing opinions like facts. Maybe you guys are angling for a Fox buyout? Actually it would be nice if TTAC would go back to reviewing cars again? Those reviews seems to be thin on the ground lately.
Tesla isn't just "an inch" from joining the political process, they've already joined, and are a firm part of Government Motors, if you pay attention to the tax breaks and other benefits they've received (which Ford has benefited from as well, quiet as it's kept). If Tesla can stand on its own, great. I doubt they will. This IPO may tell the tale.
The Tesla falls into the same category as a motorcyle (or any other two seater). You can't carry big stuff, doesn't do well in bad weather, might not be the vehicle you'd choose to long, long trips in and so forth. This is "new tech". No, the auto industry has been able to build EVs for over a decade now with all the standard creature comforts. Tesla is one of the early companies actually building them though and you're going to pay for the "early adopter" status. Just like early laptops. Just like early LCD or LED TVs. Just like any cutting edge technology. Tesla just isn't set up to build 5,000 of these everyday. They aren't large scale building stuff at minimize cost yet. Give them time. Hopefully they will sell alot of cars and get on the profitable side soon. Can't imagine any of the big three buying them up though. So not their style of product. GM could just sell us the current European market Opel GT two seater with an EV package if they wanted.