I hate to be a told you so, but I told you so. If you were to read the all the tech web sites that cover Tesla. You’d think that Tesla has had a year of profitability. You’d be wrong. Without subsidies, there are no profits. You’d also think that cash flow was finally moving in the right direction, you’d be wrong again. And the S&P 500 just sided with me by excluding Tesla from their index.
An unemployed man can have a year of positive cash flow if he sells his belongings and takes out cash advances from his credit card. Over the last 24 months Tesla has been borrowing money and selling equity like there’s no tomorrow. That’s because their core business of selling cars is in trouble.
The Model 3 was supposed to be the car that changed everything for Tesla. It was supposed to bring economies of scale that would make Tesla a sustainable business. It failed. Tesla was forced to cut prices faster than it could cut costs. It drove Tesla further into debt and eroded, not improved, gross margins.
The Model S and X are obsolete and withering on the vine. The Model Y is a disappointment and cannibalizing Model 3 sales. And at the rate that Tesla has slashed their R&D budget, there won’t be a pickup truck for years.
When you back out government regulatory credit for Tesla, they lost over $100 million per month in their last 2 quarters. And this was in a favorable environment where Tesla had almost a complete monopoly in EVs. The world now appears headed for a global economic slowdown. And there appears to be some real good competitor EVs coming from all directions.
I would never purchase a Tesla vehicle because underneath the shiny exterior, I suspect are myriad quality problems. The suspension is allegedly prone to failure allowing wheels to go flying. Windshields will crack unexpectedly. Center consoles screens will get discolored. The roofs often have problems with being water tight. Then there’s the software problems like sudden unexpected braking, or unintended acceleration. I wouldn’t touch a Tesla with a 10 foot pole.
At a higher level, the S&P 500 commission took a look at Tesla and came to the same conclusion. The sudden departure of the entire accounting leadership team. The warranty accruals that seem woefully underfunded. The unexplained explosion in accounts receivable. The dubious accrual of future regulatory credit revenue. The existence of new offshore subsidiaries that hide liabilities. The S&P 500 decided that they wouldn’t touch Tesla with a 10 foot pole.
The Model 3 was supposed to be the car that changed everything for Tesla. It was supposed to bring economies of scale that would make Tesla a sustainable business. It failed. Tesla was forced to cut prices faster than it could cut costs. It drove Tesla further into debt and eroded, not improved, gross margins.
The Model S and X are obsolete and withering on the vine. The Model Y is a disappointment and cannibalizing Model 3 sales. And at the rate that Tesla has slashed their R&D budget, there won’t be a pickup truck for years.
When you back out government regulatory credit for Tesla, they lost over $100 million per month in their last 2 quarters. And this was in a favorable environment where Tesla had almost a complete monopoly in EVs. The world now appears headed for a global economic slowdown. And there appears to be some real good competitor EVs coming from all directions.
I would never purchase a Tesla vehicle because underneath the shiny exterior, I suspect are myriad quality problems. The suspension is allegedly prone to failure allowing wheels to go flying. Windshields will crack unexpectedly. Center consoles screens will get discolored. The roofs often have problems with being water tight. Then there’s the software problems like sudden unexpected braking, or unintended acceleration. I wouldn’t touch a Tesla with a 10 foot pole.
At a higher level, the S&P 500 commission took a look at Tesla and came to the same conclusion. The sudden departure of the entire accounting leadership team. The warranty accruals that seem woefully underfunded. The unexplained explosion in accounts receivable. The dubious accrual of future regulatory credit revenue. The existence of new offshore subsidiaries that hide liabilities. The S&P 500 decided that they wouldn’t touch Tesla with a 10 foot pole.
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