Tesla Pleases Investors By Turning 3rd Quarter Profit

This is where Tesla fans get to throw a big "I told you so!" at all those annoying naysayers who have been touting the (ex)fact that Tesla loses and average $4,000 per vehicle sold, has never made a profit, and has analysts concerned because they have not presented a viable plan to profitability.

On the flipside, that being from the naysayers' camp, folks note that Tesla's "profits" came not from selling cars, but from selling a pile of "green points" they've accumulated to other companies. For those who aren't wearing their rose-colored glasses, these points are government "funny money" subsidies, awarded to car manufacturers for lowering vehicle emissions, so a maker of "zero emission" EVs[1], like all Teslas, accumulates a pile of these Government "points". This is not the only Government subsidy that Tesla depends upon for its very survival. Analysts also believe that Tesla will have to go to capital markets in 2017 for more cash so they can continue operating, and that the 3Q2016's "profit" is a "paper profit", and is not a sustainable model for corporate profitability.

Back to Tesla fans, this is where they get to ignore all that junk in the previous paragraph, cheer "profit is profit", and continue to believe that all is well in the House of Musk.


Disclosure: I don't "know" if Tesla will implode in the next few years. Just look how long Blackberry is lingering! I'm just telling you how I interpret information, possibly incorrectly. Time will tell how the Tesla Motors story actually plays out over the long term.

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[1] Zero emissions from the electric car while being driven, as the battery charging emissions are shifted to the electrical generating power plants, a huge chunk of which are burning coal, natural gas, garbage.

@TheSteve: you should pause for a moment from chewing the "government subsidy" bone and look up how "carbon credits" work. Here is a link to help you out:

https://en.wikipedia.org/wiki/Carbon_credit

For a reference point, also check out https://en.wikipedia.org/wiki/Energy_subsidies

A small tidbit you seem to forget is that the amount of money Tesla makes from selling these carbon credits is proportional to the number of cars they sell. If they can't sell their cars, they don't have any carbon credits to sell. So in a way, success breeds more success - that's not a bad business IMO.

If you continue to cry foul about Tesla, just take a look at your Audi Q5 and do some soul searching.

HenryN: Please note that your dismissive allegation of “crying foul” is purely in your imagination. I’m not making such claims of “no fair,” as you allege. I’m saying that analysts are skittish about Tesla, as they accurately point out Tesla’s long-standing pattern of dependency on subsidies for survival, and their negative cash flow. These are just part of analyst’s concerns.

Let’s see if Tesla continues to be “profitable,” quarter after quarter, like a BMW for example, or if this one month’s “profit” is, as analysts believe, a “paper profit” and Tesla returns to posting predictable losses and they turn to capital markets once again to shore themselves up.

I say let’s give this Tesla story some time to develop, and we’ll see how it goes. This past quarter might, in hindsight, have signaled The Great Tesla Turnaround To Profitability… or it might proven to be just what analysts said. We’ll see.

There was a time that Blackberry was the SALES leader in the smart phone industry and it sold A LOT of them to companies - which is why Blackberry is holding on.Tesla - has never sold in large quantities - and when it finally hits the market with the model 3 - will have competition - which will require a new sales model eventually. Those huge pre-sale numbers are speculators - expecting people to pay lots to get an early model.

The ZEV credits were a negligible contribution. Next quarter there is a good chance the company will be profitable again, and that is with massive capital investments. ZEV has zero impact on Tesla's survivability. It is also a hypocritical statement given how much gas is subsidized in the US. The true cost should be $5-6/gallon. I would love to see all subsidies eliminated for vehicles and fuel and see which companies and tech survive.

A capital raise in 2017 is not necessary, but might be a good idea in order to ramp up production even more, maybe start working on a second factory for Europe/Asia.

Also the margin for each car sold INCREASED. This is despite a lower average selling price due to the Model S 60. Tesla's efficiency is getting better, demand is still getting stronger, and supply issues are slowly being addressed.

Blackberry is one of the least innovative companies over the last decade of its life--you are grasping for straws. There is no analogy to Tesla, if anything the Apple of 6 years ago would be the more accurate comparison.

Dear Elon,
Thanks for the update and congratulations on a good quarter. I have not reviewed the 10Q earnings release, so I don't know I there any big issues or questionable accounting. So, congrats!

Now, where can I put down a deposit on a 'Tesla Miata' as shown in photo-shop form on the interweb a few days ago?

I think Henry is a bit harsh on The Steve. Having said that, I do see The Steve always dismantle every signs/postings of progress that Tesla seems to show, then throw in a cursory "let's see" at the end of his post. If you're a naysayer, just say it. I do agree that there are some people here that truly believe Tesla will succeed bigly (gotta put that in) and I'm sure that drives the Wall Street analyst-wannabe here crazy. All I can say is that I hope Tesla succeed and give the market more choices.

nguyenvuminh: I don't believe Tesla Motors, as we know it today, will be a thriving concern in a decade, much in the way that Research In Motion (now known as Blackberry) is no longer a thriving concern, though technically, they're not dead yet.

That's what I *believe*, so you can label me a Tesla "naysayer." I'm also "wise" enough to know that what I believe isn't always right. I've been wrong before. Lots of times, in fact! That's why I entertain the possibility that I might be wrong about Tesla, and I realize the only way to know what the future actually brings us wait until the future brings it.

That's why I keep on saying to give it time to play out, and to see what actually happens, rather than being pissed because someone is or isn't a Tesla Believer. I do note that there are a number of Tesla Fans who are deeply pissed that others are not Believers. I *assume* that they are just fans, and not people who believe they "know" what will actually happen in the future (i.e., prophets, oracles, soothsayers, etc.)

LOL. An additional 1B in capex expected during 4Q. Ouch!
Per Marketwatch today:

P/E n.a.
Div/Yield n.a.
EPS -8.45

@nguyenvuminh wrote: "The Steve always dismantle every signs/postings of progress that Tesla seems to show, then throw in a cursory "let's see" at the end of his post" - he does that on practically every topic, not just this one.

Despite his apparent intelligence, TheSteve continues his pointless contentions in reciting "government subsidies" and intentional disinformation such as "electrical generating power plants, a huge chunk of which are burning coal, natural gas, garbage". For that, I don't think I was harsh enough.

PS: Merriam-Webster definition of apparent: "seeming to be true but possibly not true"

@HenryN: Since you’re so keen on definition, I suggest you look up the term “Argumentum ad Hominem”.

It’s a fallacy of argument, and its definition is as follows: “(abusive and circumstantial): the fallacy of attacking the character or circumstances of an individual who is advancing a statement or an argument instead of trying to disprove the truth of the statement or the soundness of the argument.”

In plain English, “Argumentum ad Hominem” is a term used for “attacking the man instead of his argument.” This applies excellently to your post above!

With respect to your statement -- “TheSteve continues his… intentional disinformation such as "electrical generating power plants, a huge chunk of which are burning coal, natural gas, garbage"…” -- I suggest you look to sources from the United States government (such as this https://www.eia.gov/tools/faqs/faq.cfm?id=427&t=3), who are likely to give you the most OPTIMISTIC (i.e., environmentally friendly) view, in which they clearly and openly state that 1/3 of the USA’s electricity comes from burning coal, and another 1/3 from burning natural gas. That makes up 2/3 of all electricity generated in the United States, and which ends up in “clean”, zero-emissions electric vehicles such as every Tesla. *I* consider 2/3 to be “a huge chunk” (as per my prior statements), though it’s possible you might not. Also note that this specific US Government web page makes no mention of burning garbage to generate electricity (see my comment about optimistic statements), though we know it does happen. It's a hot-potato topic most governments and their agencies, even at the municipal level, would rather avoid!

Did I mention that I think the Model S looks like a Fusion with elephantitis?