
Tesla Q1 2019: losses 4x more than expected, revenues 12% less - listenallyall
https://www.cnbc.com/2019/04/24/tesla-earnings-q1-2019.html
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Sohcahtoa82
How much of Tesla's losses are caused by spending money on continuous
expansion of manufacturing capacity?

I've always thought that FUD regarding Tesla is mostly caused by short-
sightedness and that they're not profitable because every dollar they make is
going towards expansion.

Is this accurate?

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gamblor956
A lot of Tesla's cash goes toward covering Elon's mistakes, like: the unused
billion-dollar-plus "alien dreadnought" manufacturing line gathering dust, the
SEC settlements, spending on SolarCity and BoringCo, Elon's hundreds of
flights each year, purchasing hundreds of auto trailers for deliveries because
Elon goofed on the logistics schedule, last-minute storage in port because
Elon goofed on the basic paperwork, parking lots near their factory to storage
unsold cars or cars awaiting replacement parts, shrinkage due to
repairing/replacing parts on the factory line because they were broken or
improperly installed the first time around because Elon doesn't believe in
letting employees having time to do things properly.

Very little of their cash actually goes to expansion of manufacturing.

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maxthegeek1
As far as I know, Tesla has has little to no relation to BoringCo beyond the
fact that they are both owned in large part by Elon Musk.

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gamblor956
Boring Co uses Tesla's lot as its base of operations, and a number of its
engineers are actually just Tesla engineers pulling double duty (without extra
pay). Also, BoringCo's PR staff is just Tesla's PR staff. BoringCo doesn't
really have much in the way of its own assets except for TBM.

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dforrestwilson
If you can get past the smarmy attitude there is a Twitter account called
Tesla Charts that does a great chartroll each quarter:

[https://twitter.com/TeslaCharts/status/1121167252559151104](https://twitter.com/TeslaCharts/status/1121167252559151104)

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melling
Someone mentioned all the cash from customer deposits. Does Tesla still have a
large backlog of undelivered Model 3s?

There’s a lot of schadenfreude on Twitter but the stock price has barely
budged in after hours trading.

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navigatesol
They have about $750MM in customer deposits. That's cash on hand, but it's
also deferred revenue. It's a deposit, after all.

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astrodust
If you're not lucky that "deposit" might turn into an "investment".

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woodandsteel
Two points. One is that you have to look at the trends over the years, not
just quarterly ups and downs, and there Tesla is doing remarkably well.

But by far the more important point is that the EV revolution is finally
taking off. Thanks to Tesla's example and plunging battery prices (down %35 in
the last year alone), a whole bunch of EV's are going to come on the market in
the next few years. And sticker price for the larger ones is predicted to
match ICE's around 2023, and keep falling after that.

This is going to turn the auto industry upside down, and be a huge step in
saving the environment. So don't focus so much on Tesla, look at the larger
trends.

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dragontamer
> Two points. One is that you have to look at the trends over the years, not
> just quarterly ups and downs, and there Tesla is doing remarkably well.

[https://fairlyvalued.com/company/TSLA](https://fairlyvalued.com/company/TSLA)

Tesla has NEVER posted a yearly net income in its entire life. Q1 2019 is
quite a bad start, with another $700 Million loss to start this year. That's
the trend: losing money by any measurement on a yearly basis. Free Cash flow?
Negative. Net Income? Negative. Etc. etc.

> This is going to turn the auto industry upside down, and be a huge step in
> saving the environment. So don't focus so much on Tesla, look at the larger
> trends.

Tesla lost 1.5 Billion this quarter and is down to $2.2 Billion in cash. A
capital raise is absolutely necessary to prevent this company from going
bankrupt.

I mean, I wanna stop global warming as much as you do. But an unsustainable
business model is doomed to fail. This company needs to start making a profit
(and not just a quarterly non-GAAP profit... I mean a real GAAP profit
measured on a yearly basis)

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windexh8er
> I mean, I wanna stop global warming as much as you do. But an unsustainable
> business model is doomed to fail. This company needs to start making a
> profit (and not just a quarterly non-GAAP profit... I mean a real GAAP
> profit measured on a yearly basis)

So many darlings don't ever post profits though. Palo Alto Networks is a prime
example. They've never posted a GAAP profit, ever. Yet... It trades at ~38x
and the stock has rocketed over the years. Non-GAAP reporting is a racket and
should be illegal.

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dragontamer
Fair enough. But there's a big difference between losing 127 million / year
like Palo Alto networks, and losing 700 million / QUARTER like Tesla just did.

Yes, 700 million gone in one quarter.

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windexh8er
The amount is only relevant if it's a trend or unfounded. I know it's en vogue
to be a Tesla naysayer, however they _have_ posted profits previously. My
point was that with Palo Alto Networks they have zero quarters of profit over
25+ quarters. And, while they are the example I chose, they're very much not
alone.

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dragontamer
This isn't a software company. Tesla is a car company with only ~15% gross
margin.

It wasn't ONLY Tesla that lost a bunch of sales last quarter. Across the
board, Toyota, Ford, GM, and more have been closing factories and preparing
for an incoming slowdown in sales. Car sales are well known to be cyclic:
people only buy new cars when they need a car... and we're entering the cycle
where most people don't need a new car.

A ~70,000 cars delivered quarter (like Q1 2019) results in a loss of
$700,000,000. Tesla can only do this maybe 4 or 5 more times before they
completely run out of cash (depending on how many capital raises / additional
debt they take on. They currently only have $2.2 Billion, so their cash-burn
currently extrapolates to a little over ~3 quarters !!).

And general economic conditions make it look like things are getting worse,
not better, for Tesla and the general car industry.

> My point was that with Palo Alto Networks they have zero quarters of profit
> over 25+ quarters.

When you're spending $1 Billion/year on sales/marketing, and losing $100
Million/year, you have a sustainable business.

Palo Alto Networks is profitable as long as they drop their marketing expenses
just slightly (~10% less marketing). I'm willing to give Palo Alto Executives
the benefit of the doubt: that their marketing costs are worth the debt. Its
also not a very big loss: Palo Alto Networks can sustain this net-loss for
another 10+ years (Cash on Hand is ~1 Billion, and they are losing only ~100
million/year)

Tesla on the other hand has... like 7 quarters... at the current burn rate.
And unlike Palo Alto Networks, there's no easy solution in their financial
sheets: Tesla's financial statements look relatively lean, no fat in there and
yet they are unable to consistently make a profit.

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windexh8er
> When you're spending $1 Billion/year on sales/marketing, and losing $100
> Million/year, you have a sustainable business.

If I read this correctly you're defending spending $1Bn in marketing to
generate $100M loss when you're business is at run rate? Cash on hand doesn't
matter. If it truly takes that level investment in marketing to get to that
level of profit you're just delaying the inevitable.

As an aside Palo Alto Networks is not a software company. >50% of their
revenue comes from hardware firewall sales (a dying market). If you do the
long term math on them the business looks much weaker than you posit because
margins are much tighter on the software portions of the products. You can't
sell a virtual firewall for 6-figures on hardware you build for less than
$15k.

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childintime
Big changes happened this quarter with a sudden shift in demand, to Europe.
Such sudden changes always incur a cost, so the losses may well be incidental,
and the next quarter should be fine.

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navigatesol
Can you please elaborate in this? How does shipping cars create a loss? Other
manufacturers do it all the time. Maybe your margins shrink,but what explains
the massive loss?

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consumer451
I believe Tesla doesn’t count the cash from a car sale until it is in the
customers’ hands.[0] I remember reading that there were a lot of cars mid-
shipment to the EU at the end of that quarter.

[0] I believe other auto manufacturers count the cash earlier in the delivery
process, like when sold to a dealer, correct?

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dforrestwilson
But the cash in many cases is already deposited with Tesla isn’t it?

If so, then it has already been counted.

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consumer451
I know little about the financial world, but I used to listen to their
earnings calls for fun. I remember Musk and their previous CFO saying that
they didn’t count the cash of a sale until the customer received the car. But
again, I could have misunderstood.

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navigatesol
I thought it was profits from here on out though? I'm sure robotaxis will fix
it!

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dragontamer
Hey @Dang,

I've flagged this story, mostly because there's another Hacker News post with
a "more direct link" to the story:
[https://news.ycombinator.com/item?id=19743051](https://news.ycombinator.com/item?id=19743051)

I would argue that the direct information from Tesla's website is the primary
document. Maybe merge the topics together? Thanks.

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reitzensteinm
I don't think flagging the story with momentum and commenting on the story
with no upvotes is the right thing to do, it'll result in two buried threads
(a flag is a potent downvote). Just ask them to update the URL of this post
instead. Usually mods are pretty quick to do a swap for posts that are on the
front page.

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dragontamer
Hmmm... well I've unflagged the topic then. I just didn't know exactly how to
get the mod's attention.

At this point, it seems clear that "this" topic has more momentum. But both
the topics were at only ~3 votes when I made my post.

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greenyoda
You can contact the moderators by e-mailing hn@ycombinator.com.

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dragontamer
Cool. I'll do that next time. Its a bit late for this topic, since it has so
much more momentum than the other topics now.

