By on May 4, 2017

Elon Musk + Tesla Model S Circa 2011

Tesla CEO Elon Musk isn’t getting any. By that we mean profits, as the electric automaker reported a $397 million first-quarter loss yesterday, adding to the red ink spilled in the previous quarter.

While the company’s revenue rose 18.4 percent in Q1 and deliveries climbed 12 percent, spending on Model 3 production more than offset the increase in cash flow. Musk took the loss in stride, playing the long game in a quarterly investors call, and claimed a combination of higher production numbers and lower operating costs will send those gray clouds packing.

Finances aside, the conference call yielded far more interesting topics, including details of the upcoming Model Y. Also, it seems people are becoming confused by Tesla’s naming strategy, and Musk has no one but Ford — and a dirty mind — to blame.

Back in 2014, Musk explained efforts to trademark the Model E name were deep-sixed by Ford, which threatened to sue if Tesla didn’t drop the moniker. Having already created the Model S and X, Musk and a friend joked that “E” would make a great name for the automaker’s third model. The joke — a lineup that spelled “SEX” — stuck. However, when Ford (which plans to roll out its own Model E) intervened, Musk was left looking for new name.

He chose Model 3 because the number is just E backwards, which is awkward at best and confusing for customers. Musk said during yesterday’s conference call that some would-be buyers have avoided purchasing a Model S because they think the Model 3 is just a newer version of the larger sedan.

“It’s a bit confusing because one is a letter and one is a number,” Musk, declining to say how many orders were lost due to the misunderstanding.

The CEO claims Model 3 production remains on schedule for a July start date, with the company’s Fremont, California plant expected to hit a production rate of 5,000 vehicles per week later this year. That number should double some time next year, he added, casting doubt in his previous prediction of hitting the 500,000-vehicle-per-year mark in 2018.

To lay the groundwork for the Model 3’s service needs, Tesla has announced a plan to add 100 mobile repair trucks in the second quarter of this year. Existing service locations are few, meaning Tesla would be overburdened (and impatient customers angered) without an alternate solution. Musk claims 375,000 reservations exist for the Model 3.

“Tesla’s mobile strategy is unique given the direct relationship we have with our customers and because our cars are designed so that most repairs can be done without raising the car on a vehicle lift,” the company said in a financial statement. “Our mobile strategy scales quickly, is capital efficient and lowers cost because proactive service and scheduling more than offset technician drive time to the customer.”

Thinking beyond the Model 3, Musk provided a few clues about the company’s next product — a crossover called the Model Y. (“S3XY” doesn’t sound nearly as cheeky as the intended lineup.) Musk plans to develop a new platform for the Model Y, providing the underpinnings for a next-generation Model S and X. The new model should start production in 2020, he said, adding that it will ditch the traditional 12-volt electrical system.

[Sources: Los Angeles Times; TechCrunch] [Image: Tesla]

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41 Comments on “Model Confusion, Losses and a Distinct Lack of SEX at Tesla...”


  • avatar
    narcoossee

    Dunno…he’s prolly “getting” just fine: http://www.stuff.co.nz/life-style/love-sex/91902973/elon-musk-posts-intimate-photo-with-girlfriend-amber-heard

    • 0 avatar
      FreedMike

      Well, given that Johnny Depp is likely to write Ms. Heard a nine-figure check in the very near future, maybe Musk is looking for a biz partner.

      If you ain’t no punk, holla “we want prenup”….

  • avatar
    Pete Zaitcev

    Funny how Autoblog leads with “Tesla’s revenue more than doubles helped by record deliveries” – on the same material! You need to read down to paragraph 5 to find the net loss numbers. http://www.autoblog.com/2017/05/03/tesla-first-quarter-earnings-elon-musk/

    • 0 avatar
      FreedMike

      It also mentions they apparently have plenty of cash in the bank. The stock is trading for $296 a share as this is written, so Wall Street apparently isn’t that worried.

      • 0 avatar
        dash riprock

        They were over $600 million cash flow negative for the quarter

        Musk has stated they would need to spend 2 Billion in capex during H1 2017 to get the model 3 in production. They spent.5 Billion in Q1. So another 1.5 in Q2 gone

        They have over $ 2 billion in payables

        Guiding for lower S and X sales

        Musk says that margins on the 3 initially will be horrible

        That 4 Billion in cash can be gone real quick

      • 0 avatar
        APaGttH

        When you’re burning $400MM a quarter (give or take) and have massive capital expenses coming up with Model 3 production and continued R&D, $4000MM in the bank (give or take) isn’t a nice cushion.

        Stock price is not reflective of viability of a company that trades more like a tech stock than an auto company. TSLA moves on hype, as long as the hype sustains, the cash burn is ignored. There are plenty of examples of stocks that were doing amazing to crash, stunningly, when investors tired of a lack of return on investment.

  • avatar
    akatsuki

    Ah – the endless Tesla bashing continues.

    They are profitable except that they are spending money on development of a higher volume model that will then

    Their naming convention is inane because they didn’t pick some random letter and tack a number or two on it. Or is it three meaningless letters like ATS? Or CT6 or Q60? Yeah – nobody cares except web journos who need to fill space and are recycling stories from years ago at this point.

    • 0 avatar
      Sigivald

      It’s inane not because “it’s not like Cadillac or Infiniti”, but because *it is literally a joke*.

      Nothing wrong with that, as such.

      “Inane” doesn’t mean “bad”.

    • 0 avatar
      dash riprock

      No, they are not cash flow positive.

      BTW….every one of the major auto manufacturer spends billions on capex each year and yet they are cash flow positive and are able to show actual profits.

      You can love the vehicle, buy the stock, believe in the future, but that does not change the cold reality that this company spews out losses.

    • 0 avatar
      Big Al From 'Murica

      Bashing?! They get a pass on so much. If BMW had a 7 series model hang around this long even the most generous of reviews would call the design out as being “long in the tooth”. Heck the one benefit of buying a model that old is the bugs are typically worked out yet we get cracked A pillars and a litany of issues with them. If they want to be a real car company then they should be judged as such. If GM turned out such a product it would quickly be billed the new x body. Tesla does not get hate…they get passes on many shortcomings that people wouldn’t have let slide in a Yugo.

      • 0 avatar
        HotPotato

        When BMW makes a 7 Series that requires no gasoline, you may have a point. Until then, hogwash.

        • 0 avatar
          Big Al From 'Murica

          Thanks for proving my point. All the lackluster quality and aging design is forgiven because the Tesla is Electric. Tesla is Apple only Apple products are at least very well put together.

    • 0 avatar
      jkross22

      “Tesla bashing continues.”

      Reporting financial data is equivalent to bashing Tesla? Please.

      If you don’t want to know the facts, no problem. Don’t read the article.

      But don’t complain when facts are reported.

    • 0 avatar
      APaGttH

      …They are profitable except that they are spending money on development…

      Famous last words of far too many companies to list.

      They’re spending on R&D and they’ll make it up in volume.

    • 0 avatar
      JimZ

      “They are profitable except that they are spending money on development of a higher volume model that will then”

      you’re an idiot. *EVERY* car company spends money on development of future models. except almost every other car company can spend money on future product development and yet still have money left over. you know, the definition of “profit.”

      Only Tesla fanboys act like “Tesla is profitable except for all that money they spend on product development.”

  • avatar
    zerofoo

    Model 3 is more confusing than Lexus, Infiniti, Mercedes or Cadillac’s alphabet soup naming conventions?

    I don’t understand the Tesla hate – don’t like electrics don’t buy them.

    If Tesla’s investors want to gamble – so what? It’s their money.

    • 0 avatar
      SuperCarEnthusiast

      Telsa is only a couple of billion less then GM in market capital! After the Model 3 is release; I expect it to be price at half of Apple market capital! It will be the fourth biggest company in the world!

    • 0 avatar
      JimZ

      I don’t care what investors do with their money. I *do* care when the mainstream press picks up on a story they don’t really understand and relentlessly runs it over and over. Like the whole “Tesla is bigger than Ford! and now GM!” stuff that ran the past couple of weeks. Market cap is only an indicator of what it would more or less cost to buy the company outright. But if Elon tweets the wrong thing tomorrow and their stock price nosedives (taking market cap with it) can you really say they were “worth” that much?

  • avatar
    SuperCarEnthusiast

    Tesla got around 400K in backorders to fill in the Model 3. If they price it right; they make back all the losses!

    • 0 avatar
      indi500fan

      WS analysts (yeah I know they were pimping mortgage options in 2008) estimate Tesla will lose about 7 grand per car on the new 3 model.

    • 0 avatar
      dash riprock

      No, they have a number of refundable deposits. Last year Tesla proudly announced 373,000 of these $1,000 deposits (basically reserving a place in line). Since then, they have neglected to provide an update.

  • avatar
    dukeisduke

    Does Ford own the trademark for Model T? I would guess they do. That would be a good name for a truly low-cost Tesla.

  • avatar
    turbo_awd

    So, have they actually released any specs on the Model 3 (other than 215 miles, 0-60 under 6)? Such as battery pack size, upgrades, options, etc? Deliveries start in 2 months and I still haven’t heard a peep. I reserved on day 1, but online, so I’d probably see one around December..

    • 0 avatar
      SCE to AUX

      There is a ton of information here:

      http://insideevs.com/category/tesla/

      Most of it is based upon reasonable speculation. Battery size is likely around 55-60 kWh, 75 kWh max optional. Glass roof will be optional. AWD and “P” packages will be available. Autopilot hardware is fitted on all. Supercharging will be limited to so many free kWh per year (I forget the number); after that you pay.

  • avatar
    indi500fan

    Saw my first ever Model X today (OK I’m in backwater Indiana).
    It’s really a weird looking car, not at all gorgeous like the S.

    • 0 avatar
      James2

      Yeah, the X is like the Porsche Panamera all over again. Trying to graft 911 (Model S) design cues to the detriment of our eyes. That curving tail does the Model X’s utility factor no favors either.

  • avatar
    Nick

    He’s a smart guy, and I don’t want to see TESLA fail, but boy does it ever seem like a balloon about to burst.

  • avatar
    EBFlex

    This company is such a joke. Watching it fail has been one of the greatest things ever.

    We are going to need a bigger board to tally up all the quarterly losses at this failed company.

  • avatar
    Master Baiter

    They’re losing money on every car they sell…

    But they’ll make it up with volume.
    .
    .

  • avatar
    Sam Hall

    Here I’ve been thinking all along that Model 3 is an obvious, if boring, choice for a model that will compete in roughly the same space as the BMW 3-series and all its imitators that use 3 in the name somewhere.

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