By on May 4, 2018

 

Tesla Motors is 15 years old and it is still not profitable. Hyperbolic stock values have encouraged investors to keep showering Elon Musk and his crew with billions of dollars to keep the EV company afloat and develop new products, but now the Bloomberg news agency says that Tesla’s cash burn is severe enough to make the company insolvent this year if they don’t raise new capital, something made more difficult by a recent 24% decline in that stock’s value.

Reporters Dana Hull and Hannah Recht did a deep dive into Teslas finances, both where their money has come from and where it’s been going. They came up with some interesting data. The company is going through cash at the rate of about $6,500 a minute, a bit more than $9 million a day. Free cash flow has been in the red for over a year. That’s how much money a firm generates after subtracting capital expenses.

The company’s cash situation is closely related to employment levels. In just three years, from 2014 until last year, Tesla went from about 13,000 employees to more than three times that number and they are still looking to hire thousands more as they try to ramp up production on their Model 3. The Model 3 is unarguably vital to the company’s success.

As the payroll increased, and with sales relatively flat before the Model 3 finally started shipping, revenue per worker dropped. Musk has often spoken of showing Detroit how to do things, but GM and Ford each take in more than twice as much revenue per employee as Tesla does. In the 4th quarter of 2017, Tesla paid out as much in interest on its debt as General Motors did, with Tesla earning one tenth of the revenue of GM. The revenue per employee problem is exacerbated by what Musk himself called a “Russian nesting doll” of contractors and subcontractors at the California assembly and Nevada battery plants.

At the start of 2018, Tesla had $9.4 billion in debt and $3.4 billion in cash. Moody’s says that $1.2 billion of that debt has to be repaid next year and over and above that, to stay operating it will need another $2 billion this year.

Tesla claims that it won’t require additional financing this year, save for existing credit lines, but that’s contingent on the positive cash flow that would result in the company actually hitting 5,000 units per week production level on the Model 3, something it hasn’t yet proven it can do.

Jeff Osborne of Cowen & Co. doesn’t believe Tesla’s claims, since Musk has made similar statements in the past and then gone out to raise more cash. Osborne thinks Tesla is going to try to raise $3 billion with a stock sale late this year, and another $2 billion late next year, to cover cash burn and debt retirement while still keeping more than $1 billion in cash reserves. I don’t believe that figure would include the $854 million in (mostly Model 3) deposits, but it likely includes the substantial interest earned on what amounts to interest free loans to the company.

If Tesla does collapse, those deposit holders would not be the biggest losers. That would be Musk himself. He’s Tesla’s single biggest stockholder and if his current compensation package vests, he’ll own more than a 1/4 of the company.

TTAC founder Robert Farago was highly skeptical of Tesla’s chances for success and the Tesla Deathwatch series was a staple here before Robert retired it a decade ago, after readers asked him to lighten up on the negativity. In light of Bloomberg’s report, our editor emeritus’ final post in that series sounds a bit prescient.

I still believe Tesla doesn’t have a hope in Hell of staying in business. But it will take a while for that to play out. 

I don’t think it’s time just yet to revive the Tesla Deathwatch, but maybe we should dust it off to have it ready just in case.

[Image: Bloomberg]

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77 Comments on “Time to Revive TTAC’s Tesla Deathwatch? Tesla Could Run Out of Cash This Year...”


  • avatar
    EBFlex

    Please let this happen. Tesla and con man Musk need to go away for the greater good of the planet.

  • avatar
    FreedMike

    “The company is going through cash at the rate of about $6,500 a minute…”

    That’s nothing – Chad Ochocinco did that every Friday night for about six years.

    But, seriously…

    Will Tesla survive on its’ own? I doubt it. My bet is that it ends up swallowed up in some kind of Renault/Nissan style “merger of equals.”

    The company has a serious talent for developing electric cars; what it needs is manufacturing expertise.

    • 0 avatar
      derekson

      Why would anyone take on Tesla’s liabilities in a merger? It will be bought up post-bankruptcy for the branding and software tech.

      • 0 avatar
        FreedMike

        Why would someone take on the liabilities? I can see why you wouldn’t, but if you did, you’d pretty much have a ready-to-make set of first class electric designs, plus a battery plant, and a brand with a s**tload of cachet among upscale buyers. With the manufacturing expertise any automaker has, they’d sell a LOT more of these. It’d be a risk, but if it paid off, it’d be a game changing company.

        At a minimum, a NUMMI-style partnership might make sense, but I can’t see Musk’s ego lending itself to that.

      • 0 avatar
        jthorner

        A future sale of the business might well be structured as an acquisition of selected assets at “market price” rather than acquiring the entire company. This shields the new buyers from most kinds of old liabilities.

      • 0 avatar
        CarnotCycle

        Buy big TSLA piece cheap when things existential; restructure debt with creditors (many, many ways) as part of deal. Assuming liabilities is a price for sure; but maybe a (especially debt-restructured) fair price to seriously buy into an ongoing business concern completely intact as corporate legal entity, and perhaps with a big upside. Also referred to as ‘gambling.’

        Any other way going to be lawyer-war over carcass for years. A high price for a maybe decent upside. Also referred to as ‘misery.’

      • 0 avatar
        Big Al from Oz

        derekson,
        I’d bet a Chinese interest will take Tesla ……… next year.

    • 0 avatar
      Big Al from Oz

      Freedmike,
      I don’t agree.

      Tesla doesn’t have the talent to design and engineer electric vehicles.

      If Tesla had its design correct there would be far fewer issues on proction.

      The problem is the vehicle design makes for inefficient production.

      Tesla might be able to produce very expensive niche vehicles as in the past. This means Tesla’s existing EV production is overpriced for what they are.

      Tesla should of gradually ramped up production of its vehicles.

      Tesla had little experience in mass production, which means there was little transferable production knowledge to pass onto the vehicle designers.

      Tesla will go ass up.

  • avatar
    VW4motion

    Won’t go under. But will be bought by some billionaire.

    • 0 avatar
      Sigivald

      Why?

      I mean, “I’m a billionaire and I think I can do better with this company than Elon Musk did, and I totally WANT to try, so lemme just buy all them liabilities” seems like it fits a very, very, very small set.

      Probably an empty set.

  • avatar
    30-mile fetch

    That graph looks bad until you see the last data point. See? No trend here!
    .
    .
    It’s easy to pillory Tesla for Musk’s personality/hubris, for company performance, for the stigma that accompanies an electric car apparently affordable only to coastal tech elites who ride shotgun in autopilot mode before ramming a jersey barrier and spreading their accoutrements of triple-certified coffee, organic kale, and yoga mats across 4 lanes of Bay Area freeway to the detriment of Real Americans.

    I’d really like to see the company succeed, though. These are fast and nimble cars that shake the perception of EVs as goofy dork-mobiles that cannot get across town without running out of juice. It’s a unique addition to our automotive landscape, and if they can manage to put out a $35K Model 3 with a 0-60 of 5.1 seconds, 50-70 of 2.8(!!), and crisp handling, why wouldn’t that be appreciated?

    This demonstrates just how difficult it is to build a new automobile company that can survive the nascent phase. Incredibly competent people can fail miserably at it, and it could be argued that a long history has allowed incredibly incompetent companies to survive from sheer momentum.

    So if Tesla disintegrates, I’m not going to cheer.

    • 0 avatar
      tremorcontrol

      +1
      Cheering for an American company to go bust seems counterproductive. Also, people should double-down on American innovation instead of waiting for bureaucratic Detroit companies to penny pinch their way to better products. (I’m guessing the snarky answers will boil down to “California isn’t America”, but I might actually agree with that.)

      Ford or GM should buy Tesla and/or inject the money, then keep the bean counters at a reasonable distance until things can start to be optimized. Musk wants to deliver.

      • 0 avatar
        Sigivald

        I cheer for *badly run* companies to go bust, because the alternative is a massively inefficient waste of resources.

        That’s *how markets allocate resources*, eh?

        “But it’s American” gets them nothing at all – otherwise “but American” lets people coast with inferior product.

        Compete or fail.

      • 0 avatar
        joeaverage

        What 30-mile and tremorcontrol said…

        I’m hugely impressed with what Tesla is accomplishing and what SpaceX has accomplished.

        We need diversified energy sources and transportation. Nobody has tried to build a GOOD EV as hard as Tesla (and maybe Toyota).

    • 0 avatar
      RobC

      +1

    • 0 avatar
      SCE to AUX

      @30-mile: Agreed on all your points.

      However, Tesla’s biggest asset and liability is Mr Musk himself. They are selling more cars in the US than Porsche, yet they obviously don’t have Porsche-level quality control. I believe it’s not for lack of talent (both automotive and otherwise), but it’s due to Mr Musk’s micromanagement of everything from design to production. His people are shackled.

      It may be too late for the short run, but he should stay as Chairman and let some other CEO run the business.

      As for their failure: I don’t believe it will happen. “Too big to fail” comes to mind, but there is also an army of investors willing to bolster the company for a long time. Single-digit billions are relatively easy to generate.

  • avatar
    dukeisduke

    I think the company can survive, but only if it’s split off from the rest of the Tesla enterprises, and run by someone with car manufacturing experience.

    Build a new plant to assemble the Model 3 and Model Y (it could be built in the Southeast), and rethink the whole assembly process, so that the projected production volumes can be met. Forget about the supercar for now. Maybe the heavy trucks can be built, but I think they’ll need their own plant as well.

  • avatar
    vvk

    M3 is truly a next generation car and is already shipping in quantities exceeding those of its direct competitors. Once the AWD and the base battery become available this summer, the flood gates will really open. Achieving economies of scale will surely help to achieve profitability. And once the average Joe gets his hands on the affordable/desirable long range EV, you can bet that the demand will increase ten fold. Because who would not want to save tons of money on gas with gas prices on the rise, not to mention amazing drivability, autopilot, freedom from looking for gas, etc. Anyone who thinks the industry is going to be dominated by the same old ICE vehicle 10 years from now is sorely mistaken.

    Tesla has obtained tremendous competitive advantages by being the first player in this market. Most competitors are not in the same league, with the Bolt being the cheap, terrible econobox that it is and all the rest being either compliance cars available in very limited quantities and markets, or being vaporware that keeps automotive writers busy but not much else. Nothing else with 200+ mile range is currently for sale, nothing. Another strategic advantage for Tesla is the huge land grab they have done with their supercharger network. The number of locations that can support 8-12-30 cars charging simultaneously at 400 mph is SEVERELY limited by the existing electric infrastructure. The rest of EV makers will have to pay Tesla for the use of its supercharger network and there is no way around it. No other EV will be a practical ICE replacement, unless super fast charging is readily available on all major routes. Think about that.

    • 0 avatar
      pinkslip

      I will dispute your argument below, but first I must nit-pick your abbreviating the Model 3 as “M3”. M3 is already a model name used by BMW.

      To your comments about the average Joe and ICE domination: about half this country lives in apartments- places not set up to provide EV charging stations. As you pointed out, our electric charging infrastructure is severely lacking. I want BEVs to succeed and flourish, but it may require all the major manufacturers to come together on a universal battery swap design (on a subscription) before half of us can even consider shopping for one. That, or supercharging will have to bring an empty battery to full charge in ~20 minutes- which current technology doesn’t accommodate. The current superchargers take about 40 minutes to get you 50% charge on a large battery. There is no way someone living in a flat is going to consider spending 75 minutes charging a dead battery unless the charger is where they already park.

      • 0 avatar
        vvk

        > I will dispute your argument below, but first I must nit-pick your
        > abbreviating the Model 3 as “M3”. M3 is already a model name used by BMW.

        That is what Tesla owners call Model 3. BMW can sue me. Considering I am their biggest fan and a loyal customer, I doubt they would.

        > To your comments about the average Joe and ICE domination: about half
        > this country lives in apartments- places not set up to provide EV
        > charging stations. As you pointed out, our electric charging

        I have trouble believing this.

        > That, or supercharging will have to bring an empty battery to full
        > charge in ~20 minutes- which current technology doesn’t accommodate.

        You don’t need full charge when you travel. 20 minutes is about average time spent at a supercharger. Superchargers are about 100-150 miles apart.

        > The current superchargers take about 40 minutes to get you 50% charge on a large battery.

        This is simply not true. I have used hundreds of superchargers and 99% of the time the car waits for me. 40 minutes is almost full charge (80%) most of the time. Now, this may be different in places like California were there are not enough superchargers to accommodate all Teslas, but outside of California were there is seldom any cars charging when you arrive, you get 400 miles of range per hour.

        • 0 avatar
          mcs

          >>~20 minutes- which current technology doesn’t accommodate

          It depends on how you define current technology. Superfast Chargers capable of sub-10 to 15-minute charges are being deployed now. Cars that can handle that charge rate are in the pipeline starting with Porsche at 350 kW charging capability. ChargePoint now has chargers capable of 500 kW.

          https://electrek.co/2018/04/16/porsche-ev-charging-network-north-america-mission-e/

          https://www.chargepoint.com/products/commercial/express-plus/

          Do the math on a P100D charging to 80% capacity at 500 kW.

          • 0 avatar
            Asdf

            20 minutes is ridiculously slow. EVs need to charge MUCH faster (i.e. not as slowly) as that. 5 minutes from an empty to a full battery should be the ABSOLUTE maximum.

      • 0 avatar
        joeaverage

        Adding chargers to apartment parking lots is small beans though. Add some circuits to the building electrical service, run cables, add the charging posts and outlets. No worse than running power to a detached garage.

        Apartments that want to attract a BEV resident and a Tesla owner looking for an apartment will likely find each other when the time is right. Not that different from people looking for certain amenities in apartments. Want a pool or club house. Want a gate and a guard, etc.

        • 0 avatar
          Big Al from Oz

          joeaverage,
          Judging by the required current draw for a charging station, individual subs will be required.

          If all had EVs and required charging it would not surprise me if the cost would be nearly the same as providing power to all domestic homes in the US.

          For each vehicle you would require at least two charging stations, one at your place of residence and another, at work, travelling around, shopping, tourism, etc.

          EVs themselves are already an expensive subsidised dream. When and if (a big if) they become common much investment is needed to provide energy to them.

          With gas stations each indiviual gas station can cater to thousands, how many, even 15 minute charging stations will be needed?

          Also, if EVs become mainstream the size of a service station will need to be greatly expanded to accommodate idle vehicles charging.

          I don’t see EVs as a viable alternative to our vehicle fleets.

          • 0 avatar
            ilkhan

            Not true. You need a charger at work *or* at home, don’t need both. Your car spends plenty of time at either one to charge to 80-90% every day.

            And with 300+ mile ranges you really only need to charge once a week or thrice every two weeks anyway.

          • 0 avatar
            Big Al from Oz

            ilkhan,
            I wish we humans were like you. Convenience is what will impede the success of EVs.

            It would be a horses ass to have to manage vehicle charging. People will not like it. I would view it almost on par with the hassle of using public transport.

            At work we have all the PPE for our workers, protective suits, respirators, etc. Do they use it all the time? No. Because the way in which we manage the equipment makes it harder than need be. I told my superiors that if they want all to be safety minded you must have the PPE located like a supermarket, easy to get to, basically in front of you.

            To make EVs viable the biggest hurdle other than the steep prices is charging the batteries.

            The business to own in the future is a truck with a humungous battery pack on the back making EV owners pay $100 a pop to give them enough charge to get to a charging station.

    • 0 avatar
      turbo_awd

      Spot the Tesla shareholder.. :-)

      FWIW, I canceled my M3 reservation 6 weeks ago. I was worried they might go under and I’d lose it. Plus, the car just doesn’t appeal to the car fanatic in me – can’t get over that interior.. And a model S is just a little too expensive for a fun model.

    • 0 avatar
      Sigivald

      “Anyone who thinks the industry is going to be dominated by the same old ICE vehicle 10 years from now is sorely mistaken.”

      Yeah, it’ll be dominated by smaller ICE engines with turbos, and some more hybrids.

      It won’t be dominated by pure electrics.

      (“Freedom from looking for gas” is *amazing* in its chutzpah, as if “looking for charging stations” is somehow *totally different and more awesome*, right?

      And much less stressful because they’re so omnipresent compared to those rare “gas station” places!)

      • 0 avatar
        vvk

        > (“Freedom from looking for gas” is *amazing* in its chutzpah, as if
        > “looking for charging stations” is somehow *totally different and more awesome*, right?

        > And much less stressful because they’re so omnipresent compared to
        > those rare “gas station” places!)

        Except I have a charger in my garage and my Tesla is always full in the morning, ready for all the driving I need during the day.

        You may call out my chutzpah, I call out your refusal to understand that public charging stations DO NOT MATTER. I would not care if there were no public charging in the world at all, other than super fast ones along the highways. Most public stations are so slow that it just does not make sense to even use them, unless you are staying in one place for many hours, such as a hotel overnight. I would even argue that most public Level 3 fast chargers are too slow, since I do not have two hours to recharge on my way to Florida. 1/2 hour at a supercharger is ok, but not 2 hours at a public L3 charger.

        • 0 avatar
          Asdf

          All EV charging stations are slow, whether public or private. Fast charging stations for EVs do not exist.

          • 0 avatar
            mcs

            With a ChargePoint 500 kW ultrafast charger you could theoretically put 252 miles of range into a Model S 100D in 9.6 minutes.

            As far as I know, none of those chargers are deployed yet and no one has announced a 500 kW capable car either, but the technology is there.

          • 0 avatar
            Asdf

            252 miles of range in 9.6 minutes is unremarkable. My old beater of a car can get 400+ miles of range in approx. 3-5 minutes.

          • 0 avatar
            joeaverage

            Asdf – then EVs are not for you. Don’t let them distract you. Keep on driving your beater. ;)

          • 0 avatar
            MBella

            The ultrafast chargers will also rapidly degrade the battery. If you use them much more than an occasional recharge during a yearly road trip you’ll be buying a battery.

          • 0 avatar
            mcs

            @mbella: Not as much an issue with the newer batteries. Here, let me check my count… 238 50kW quick charges and it looks like 3116 level 1/2s. Most of those quick charges were not full cycle, but from 40% to 80%.

            My battery is fine with all twelve bars and I got 7.7 miles on the twelfth on mixed backroad and 55 mph highway this morning at 60F.

            For one thing, the charge rate is managed. If it’s too cold or too hot, the rate is slowed. Once you hit a certain percentage of charge it slows down. Anything that charges at 500kW probably won’t be using any of the current chemistries. I think even the new NMC 811 cells that are just rolling out in mass production now will be fine with vastly improved durability, but we probably won’t see 500kW until we get solid state batteries. 350kW charging is soon with Porsche being the first rollout.

      • 0 avatar
        Big Al from Oz

        Compression ignition is the future.

  • avatar
    tallguy130

    I’m not going to bet against him. SpaceX came to within one launch of bankruptcy before turning it all around. Still plenty of people who want those cars and working out production “should” be manageable. He still has the option on selling some of that stock too.

  • avatar
    cicero1

    Do they own the land the factory is on? can it be mortgaged? That land is probably worth more than all Tesla’s auto revenue for the last 5 years.

    • 0 avatar
      derekson

      Pretty sure the land has negative value once you account for the environmental cleanup that would be required to repurpose it. Hence NUMMI divesting the plant to Tesla for free.

  • avatar
    incautious

    So Tesla added all these extra humans to build a car that according to accounts they lose money on because of the extra cost involved by hiring all these humans. Great business model” we lose money on every sale but we’ll make it up on volume”

    • 0 avatar
      pinkslip

      “we lose money on every sale but we’ll make it up on volume”

      That’s a funny stereotype of the car sales industry, but is a reality for dealers selling on a volume bonus structure.

      While Tesla is getting long in the tooth for a start-up, it is not uncommon for companies to run negative for several years. I believe Amazon was in the red for ten years. And considering Tesla has been designing/building/selling the Model S and 3, building a supercharger network (for what that’s worth), and building a battery factory, I am not surprised they are not yet in the stage of profiting from those investments.

      • 0 avatar
        MBella

        That’s only a reality for dealerships if you ignore all the other incentives the dealers get for selling cars besides direct profit on the car itself.

  • avatar
    gmichaelj

    Although I have been skeptical for years now*, I think it’s still too early to call “Fail” on Tesla.

    They have a Strong Brand: see all those deposits?

    They have Strong Performance: All serious reviews laud the driving dynamics and acceleration, and the crash results were impressive.

    They have IP and R&D: millions of miles driven from which to improve self-driving.

    Subjectively, they are run by a guy who seems focused on improving, and is willing to admit mistakes, which gives the Company a big leg up on its competition.

    They MIGHT have to merge, at some point, but I don’t see any kind of Liquidation Sale coming anytime soon

    * I have a finance valuation background, and it is pretty much impossible to accurately quantify the value of intangible assets. It is much easier to quantify the value of positive cash flow streams. So a market value of Equity in excess of Ford, which makes ~$7 Billion/yr still mystifies me.

  • avatar
    jonsey

    The chart you posted seems to contradict the idea Tesla will run out of money. Historically, Tesla spends a great deal of money ramping up production of a new model, then goes briefly profitable before starting ramp of a new model. The chart shows this.

    They went deeply in the red on the run up to the model S and X. Now they are doing the same for the 3. History (and that chart) show that the same will happen this time.

    • 0 avatar
      Sigivald

      “Huge losses and brief small profits” is … not a sustainable business model.

      It’s a sustainable hobby for Elon Musk, sure, but not a *business*.

      • 0 avatar
        jonsey

        Huge losses are associated with the ramp up for a new model. If they don’t ramp another model line right away they could have any number of profitable quarters (until they attempt to start a new model).

  • avatar
    JMII

    Never understood the Telsa hate here. Its an America company that makes a fast, sleek product with cutting edge design and technology. They have production issues, they have a CEO that doesn’t fit the mold, they do things different because they are building a unique product. Don’t like the product? Fine don’t buy it (I can’t afford one). Think their stock is worthless? OK don’t buy that either. But compared to the shear stupidness of GM over many, many years, being run so poorly the government had to step in to save them I don’t have a problem with Telsa in comparison.

    As for a deathwatch – I don’t see Telsa failing, someone will buy them… they do enough stuff right to be worth saving. I assume their production headaches could be fixed by a company with more experience. Telsa’s current problems seem to be related to scaling up. Silicon Valley has never had an issue with scale before, because the answer was just more bandwidth and servers. Telsa needs labor, parts, assembly and production to be scaled up, those things are much harder, but clearly not impossible to achieve. Maybe Apple will just buy them.

    • 0 avatar
      pinkslip

      I find it odd that people think of Tesla as a tech firm- even more so when that viewpoint is used to justify it’s manufacturing shortcomings. It is an auto manufacturer and is expected to pull off all the same tricks every other auto manufacturer does. Is it really just the HQ location that has people thinking of Tesla as Apple? Volvo and others are also working on semi-autonomous tech, so that can’t be it.

    • 0 avatar
      jthorner

      Obviously you missed the “silicon” part of silicon valley. Scaling integrated circuit manufacturing and design was astronomically difficult and is an industry which has now spread around the globe in search of labor, materials, cash and markets.

      The “bandwidth and servers” part came after the “silicon” part, which in turn came after the “magnetic storage” part. All three are necessary for us to be chatting this way on an online forum.

      There is a whole lot of hardware running all that software.

  • avatar
    SCE to AUX

    One elephant in the room is the soon-to-evaporate EV Federal subsidy.

    Tesla, GM, and Nissan (in that order, I think) will soon round the bend on 200k EVs sold in the US, triggering the wind-down of the subsidy for each one in 2018-19.

    My prediction: Sales will suffer (duh), but *much* more so for GM and Nissan. Smaller EV mfrs may benefit, such as Kia and soon VW. So Tesla’s EV dominance will not only continue, but expand.

  • avatar
    thelaine

    Tesla is a wandering ghost that does not know it is dead. The denial is strong in the ScienTeslology crowd.

    The patient has been living on massive and constant transfusions. He is now running out of donors as it becomes obvious that he is never going to rise off his back.

    In retrospect, after the crash, everyone will comment on how obvious this all was. It should be blindingly obvious right now.

    Tesla was always a creature of government subsidies and mandates. Only the taxpayers can save them now.

    Elon may be really smart, but he is also a bullsht artist, con man and cult leader.

    • 0 avatar
      ilkhan

      So put your money where your mouth is and short the stock. You’ll make a ton of cash.

      Except, you know, if they don’t fail.

      • 0 avatar
        28-Cars-Later

        Up is down, black is white, right is wrong, and companies without profit -or even hope for profit- have multi billion dollar market caps. Hedge accordingly.

  • avatar
    James2

    Apple should buy Tesla.

    There were all those rumors; why not make them real. Most of the hard lifting has been accomplished. Apple has so much money it wouldn’t sweat the current cash burn and since Tim Cook is supposedly a logistics master he could help fix Tesla’s manufacturing issues. This way Elon wouldn’t have to answer any more questions and could sleep in his own bed instead of at the factory.

    • 0 avatar
      FreedMike

      I’ve wondered about this myself, and I think it’d be a hell of a mashup.

      The key problem, I’d think, is Musk. For better or worse, Tesla is his little personality cult, and I don’t think he’d be a good fit with a more stratified organization like Apple.

    • 0 avatar
      SCE to AUX

      “Tim Cook is supposedly a logistics master he could help fix Tesla’s manufacturing issues”

      But, but, but the conventional wisdom around here is that Tesla just needs to hire ‘car guys’.

      TTA-Tesla is that they *did* hire a bunch of car guys. Mr Musk simply won’t let them run a factory (or a design) the way it should be run.

  • avatar
    RedRocket

    There are enough kool-aid drinkers out there (*cough*vvk*cough*) that another round of share financing will likely find buyers. But a sudden downturn in the economy could lead to some very nasty consequences for them and the company.

  • avatar
    Asdf

    TTAC should run an EV death watch series. The reappearance of EVs in the marketplace, and the lack of technological development that we’ve seen since, shows us that EVs are yet again dead on arrival, just as they once were oh so many decades ago. All EVs currently launched are perennially defective by design, without a single automaker managing to address the problems of extremely long charging times, extremely short ranges and extremely high prices.

    It’s sad, but true, even though the handful of EV(il) fanbois on this site make enough noise to fool some of the people some of the time.

    • 0 avatar
      mcs

      @asdf: We’re not necessarily EV fanbois, but individuals that want what we think is the best way to power a car regardless of what that mechanism is.

      All I care about is that when I hit that accelerator I get instant response. I don’t care about saving money and I’m not in it for green purposes. I’m in it for the performance. ICE just doesn’t do it for me anymore. I can’t stand that lag. I’m not alone. As more people actually experience them, the fanbase increases.

      It’s not about green and it’s not about economics. It’s about the sheer joy of driving one. They’re not for everyone, but some of us absolutely love these things.

      youtu.be/Wd5TO-WpzqM?t=68

    • 0 avatar
      SCE to AUX

      “…EVs are yet again dead on arrival”

      So why does Tesla outsell Porsche by 23%, and Jaguar by 2x?

      https://www.thetruthaboutcars.com/2018/05/april-2018-a-best-sales-tally/

      • 0 avatar
        28-Cars-Later

        We lose our shirt on each one but we make it up in volume!

        Porsche is profitable.
        Jaguar is profitable.

        But when you bend the rules of time and space you can not be profitable and somehow be considered a success.

    • 0 avatar
      joeaverage

      Maybe you’re trolling I don’t know but EVs have come a long way in the past 20 years. Maybe you don’t know that much about them. Maybe you haven’t read up on very real battery improvements that allow more storage in the same battery packaging. Incremental improvements over the long term, not these occasional miracle battery stories we read about in the news.

      I built an electric bicycle last year to ride back and forth to work. The 18650 cells I bought have already gone up in storage capacity 15% so by the time I wear this battery out in five or six years I’ll be able to buy the same battery for half the price, or build a battery that has the same capacity in half the size or increase my range by a significant amount.

      The same thing is happening with EVs.

      If they don’t appeal to you then please move on and continue to drive your ICE powered vehicle. However, EVs are here to stay and slowly they’ll make inroads in our towns and cities as people buy them new and used and enjoy them.

      I’m planning to buy an EV to replace our commuter car (wife and I carpool). I’ll save the big ICE crossover for weekend trips.

    • 0 avatar
      28-Cars-Later

      Thank you.

  • avatar
    V16

    At the start of 2018, Tesla had $9.4 billion in debt and $3.4 billion in cash. Moody’s says that $1.2 billion of that debt has to be repaid next year and over and above that, to stay operating it will need another $2 billion this year.

    Musk and his empty promises of production goals, had better soon be translated into ‘physical inventory’ that can be sold.

    • 0 avatar
      indi500fan

      Based on some of the pics shown on biz websites, a lot of that “physical inventory” is sitting around on pallet racks in NorCal job shops waiting to be reworked. Model 3 production appears to look a lot like the GM X-car quality back at launch in 1980.

  • avatar
    hpycamper

    1)Tesla builds cars people actually want to buy; something Ford, a very experienced company, is throwing in the towel on.
    2)The time to recharge is a non-issue for people with home chargers. No waiting in line for gas.
    3)Little or no profit for a long time- see Amazon. Any of the naysayers here think Amazon is going away?

    I don’t own a Tesla. I might not ever have one. But I am happy Tesla exists and hope it succeeds. The negativity that comes through the comments on TTAC, not just this posting, continues to puzzle me.

    • 0 avatar
      geozinger

      @hpycamper: I agree with a lot of what you’ve posted here. I don’t get the negativity about EVs, either. Admittedly, I was not a huge fan of hybrids back in the day, but I’ve changed my mind.

      There was a time when we thought that for hybrids to be successful they had to have xx% market share, the xx being some fairly large number. The odd thing is, I don’t believe we’ve gotten into the double digits for hybrids (in the USDM), but no one is doubting their staying power. We have way more choices for hybrid cars now than we did even five years ago. I suspect that the same will apply to EVs, too.

      I love my ICE cars; I imagine I will still want one for years to come, too. But I would think that more people would applaud the fact that we have the choice to drive something entirely different than our parents and grandparents (but not necessarily our great grandparents, amusingly).

    • 0 avatar
      jkross22

      @hpycamper,

      Fanboyism has overtaken rational thought in the same way that allegiance to sports teams or political teams has done the same.

      The problem is that it’s not enough that your team wins, but that everyone else loses.

      It’s like this cartoon:

      https://www.pinterest.com/pin/324048135659850527/?lp=true

      As for Tesla and Musk, Musk comes across like a more arrogant Steve Jobs. Smart visionary, but someone unwilling to listen to others around them.

      • 0 avatar
        hpycamper

        jkross22
        I am not a fanboy, and as I wrote, do not own a Tesla or its stock. I just don’t get the negative responses. Also, you did not counter any of the points I wrote. Tesla may eventually fail, but I hope they don’t.

  • avatar

    i miss farago and his acerbic style. that’s what attracted me to ttac in the first place. still a worthy site but it was more fun back then.

  • avatar
    kurkosdr

    I find it satisfying that one of the proponents of “human labour is obsolete” had to hire more workers than those the NUMMI plant had under GM-Toyota ownership in order to compensate for the failures of his beloved robots.

  • avatar
    hreardon

    In the short run the question is whether Tesla can continue to raise sufficient capital to outrun both the German EVs coming to market within the next 18 months and the lack of profitability in their own product line.

    I suspect that if the upcoming product from Porsche, Audi and BMW do extremely well – investors will begin to flee Tesla. If they fail to make a big impact upon launch, Tesla’s first mover advantage remains and investors may be more willing to keep giving them cash.

    The next 18 months is going to be significant for the EV market.

  • avatar
    Eliyahu

    The probability of success, as I see it, comes down to production capacity and the dealer (or service) network. At the moment, the Tesla is a higher-end fad car. This in no diminishes the positive attributes of the vehicle. But fads come and go. High end pickups have replaced Mercedes and BMWs. Tesla replaced Prius for status. Prius and Camry hybrids might not have status, but lets compare dealer networks, production capacity, and actual sales. The winner might not be the company with the car in orbit.

  • avatar

    I drive 30k per year, so that is a lot of gas. I’ve considered Tesla, but the problem is twofold. Most places I go do not have any charging, unless you count running a 110v cord to the wall and borrowing power (this is how I’ll know EV are mainstream…when all the outlets outside public buildings have locks on them). I also don’t go the same places or route consistently.

    The price of the Tesla is still E class, so the benefits of “no gas” are outweighed by the “70k” price point. Much like diesel, the extra costs up front have a long payback time….if at all, as I learned the hard way.

    Any new enterprise requires a great persuader, who can also be seen as a con man, according to your worldview. His arrogance prevented him from learning from the established automakers, who while unglamorous did know something about making cars. I don’t own any Tesla.

    The EV will have a niche. It won’t replace a majority of ICE cars, but I’m guessing 10 years out it may have 10% of the market.

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