Tesla is Burning Cash At The Rate Of $8000 A Minute - Could Run Out In August

Maybe Lutz knows of what he speaks!

Yup. Being "cash negative" has always been a problem for Tesla. That's why they're frequently selling yet more shares or issuing junk bonds (unsecured) or borrowing more money, just to stay alive. It has always been Standard Operating Practice for them.

Unfortunately, investor perception might be changing for the worse. Tesla has once again failed to deliver on their promise of Model 3 sales (not orders), Model 3 production ramp up, and the initial build quality of the first few units has raised concerns. If Tesla Motors loses investor confidence, then the next time they try to raise cash through a stock offering, things could quickly turn south in a big way.

The Model X was the beginning of the end. The falcon doors move was moronic. A dead-conventional premium crossover EV would have scorched the market especially if they had really contained costs. THAT should have been their stab at the mass market. The Model 3 will be their demise for two reasons (1) it's a sedan in a dying market and (2) they cannot seem to actually build it. Rushing it to market was DUMB. They should have done an emergency redesign of the Model X to give it conventional doors. The Model 3 should have been pulled and reconfigured into a crossover.

I'm already looking for a job for @SanJoseDriver who will be out of a PR job when this implodes. If I knew that he was young and cute, I could fix him up with an older cougar and he could ride that out to inheritance and be financially set.

No need to prove once again you are an asshole. We already know.

Well,
1.) I don't work for Tesla but would not be opposed to it.
2.) There are $16 billion in potential sales with the Model 3, all they need to do is build the cars and do it with some sort of margin and there will not be any sort of cash issue. Today non-employees started getting invites to configure their Model 3 for delivery in late Dec, so they are slowly getting out there. I did not get my invite yet unfortunately.

WEll - the problem remains - did Tesla price the Model 3 for profitability - something we DO NOT KNOW. THAT They are pushing higher end content is NOT a good sign for that. That 16 Billion in "potential" sales includes lots of speculators who want to sell their cars to make a quick buck - and the instability of the manufacturer - who is the only new sales/parts source - could create a situation where Tesla would not have the money to refund the deposits if they take too long. WE also do not know what the "refund"of deposit rate is - they have never published any such data.

Frankly - showing more models is not encouraging as well. WHat they really need to do is fix the manufacturing problems - and get the cars produced - remembering that we do not currently have a car in the USA produced in ONE plant - that approaches 10K cars a month - or even 5K cars a month.

@fortysix, if it was for cost saving then they would not have handed out promotions and raises at the same time.

@TomM, the target margin for the Model 3 is 25%, *BUT* that is at a production rate of 5,000 cars per week. Either below or above that number and it will be less. They have not communicated the exact cancellation number, just that net reservations are growing (new reservations > churn). It is a small sample size, but in my small office there are 8 reservations not including mine and everyone has kept theirs. There are some good unbiased reviews out there that highlight pros and cons. I think overall people are going to be really happy with it and it will expose a lot more people to the brand.

@SanJose That 25% is gross margin not profit. All the loaded expenses for R&D, Marketing and Sales, Finance and Admin have to be deducted from that. Somewhere in all that set of numbers are the costs for the truck, the roadster,this weeks event. the next generation as well as updates to software, free charges for customers, all those local direct showrooms, etc. etc. If the target gross margin is 25% at 5000 units, every week they produce less than that they are losing more money. and burning cash faster than they budgeted. IF they ever get above 5000/week they should be increasing gross margin a lot from economies of scale, especially with a highly automated factory. IF they ever get to profitability they won't pay taxes for years thanks to the all the losses they have stored up.

@Vette71 Agree with everything you said. One extra point is if they go over 5,000/week, they will need to spend substantial CAPEX for another line or do a major overhaul to the existing line (which is freakin massive btw, it dwarfs the two Model S/X lines). On investor calls they said while the current Model 3 line is designed for 5k cars per week, they might be able to get to 6-7k without major infrastructure changes. They are nearly out of space on the floor and would have to expand the Fremont factory and move some production to the Gigafactory to hit 10k+.

Building the Model 3 is a potentially fatal mistake. It would have been far better for Tesla's profitability to build new roadsters instead at $300k apiece. Even if the roadsters are handmade they would cashflow positive.

Ok, you did not listen. No prob.
You should tweet your valuanle advice to Elon.

Elon needs to get Google to be his sugardaddy.

His ego is too big to be the bottom.

Elon's problems are so big and so rapidly accelerating, he may need to do a four-way with Google, Facebook, and Geely. Ouch.

Both Google cofounders were early investors already and both have Model S's.

@mre30 Elon in a 4 way as the used bitch he is would be lovely.

Relax people. Everything's going to be okay.

Believe it or not...Too big to fail.

It would not surprise me if after the first of the year, the Chinese went on a buying spree and gobble up Tesla and FCA.

Companies get bought when the buyer can see upside potential, hence a return on investment. For the Chinese firms its there for parts of FCA. At this point Tesla is overpriced for an acquisition. Wait til the stock price sinks, plus there is that debt to be paid off. Also what do they get buying Tesla?