The Silicon Valley automaker is losing more than $4,000 on every Model S electric sedan it sells, using its reckoning of operating losses, and it burned $359 million in cash last quarter in a bull market for luxury vehicles. The company on Wednesday cut its production targets for this year and next. Chief Executive Elon Musk said he’s considering options to raise more capital, and didn’t rule out selling more stock.
Elon is an interesting guy. He set some aggressive goals for the company that Wall Street isn’t convinced he can meet.
I hope that there is a future for technology akin to Tesla’s cars if they don’t survive.
The only reason they are not turning a profit yet is because they are spending a whole lot of cash on upcoming Model X retooling and the Gigafactory. The Model X will start shipping in October. Last quarter, they sold a record number of cars, and their profit margin on each car remains at a healthy 23.4%. So this article is very misleading.
This is the same BS many analysts and pundits did with Apple for years; write a misleading doom & gloom article to get everyone in a panic, and then short the stock. The Model S has has a 25% profit margin and makes around $20,000 -$ 25,000 profit per car! Just because Tesla reinvests their profits doesn’t mean the Model S is losing money. Elon warns every quarter that they plan to spend spend spend on growth, with a goal to produce a half million cars per year by 2020.I guess if I make $100,000 per year, but then spend $104,000 per year on my next venture, my employer is actually costing me $4,000 per year?
Looks like Horace Dediu is right. He doesn’t think Tesla can be disruptive because it’s using the same 100 year old production model as the incumbents.
On the actual figures, the $4,000 per unit is operational losses. Money spent on new factories is not included. According to the Wall Street Journal, the gross margin is 23.4% but that’s not enough to pay for R&D etc.