Giuseppe Sandro Mela.
«La “house of cards” eretta da Elon Musk è sul punto di essere
spazzata via dalla tempesta: Tesla produce poche auto e
dalla sua nascita ha già bruciato 10 miliardi di dollari.»
«Tesla Inc (NAS:TSLA) Long-Term Debt & Capital Lease Obligation: $9,585 Mil (As of Sep. 2017) =GURUF(“NAS:TSLA”,”Long-Term Debt & Capital Lease Obligation”)
Long-Term Debt is the debt due more than 12 months in the future. Tesla Inc’s long-term debt & capital lease obligation for the quarter that ended in Sep. 2017 was $9,585 Mil.
Tesla Inc keeps issuing new debt. Over the past 3 years, it issued USD 4.4 billion of debt.
LT-Debt-to-Total-Asset is a measurement representing the percentage of a corporation’s assets that are financed with loans and financial obligations lasting more than one year. The ratio provides a general measure of the financial position of a company, including its ability to meet financial requirements for outstanding loans. It is calculated as a company’s long-term debt divide by its Total Assets. Tesla Inc’s long-term debt for the quarter that ended in Sep. 2017 was $9,585 Mil. Tesla Inc’s Total Assets for the quarter that ended in Sep. 2017 was $28,107 Mil. Tesla Inc’s LT-Debt-to-Total-Asset for the quarter that ended in Sep. 2017 was 0.34.
Tesla Inc’s LT-Debt-to-Total-Asset increased from Sep. 2016 (0.19) to Sep. 2017 (0.34). It may suggest that Tesla Inc is progressively becoming more dependent on debt to grow their business.» [Fonte]
Msn constata mestamente:
«Tesla will pay about $4,500 in interest for every car it will sell this year, making the production ramp-up increasingly urgent.
Even when production will be increased, it is estimated that each Model 3 will likely sell at a loss, meaning that Tesla will have to continue going into debt.
Given that Tesla cannot finance itself internally and the high stock valuation makes investors less tolerant of stock dilution, Tesla is in danger of developing a debt problem.»
«in laying the groundwork for an electric and autonomous future, he took one risk too many»
Non sarebbe mica la prima volta che persone prima osannate, siano dopo additate come associazioni per delinquere. Ma fra il prima ed il poi c’è stato in mezzo un gigantesco fallimento.
– Tesla will pay about $4,500 in interest for every car it will sell this year, making the production ramp-up increasingly urgent.
– Even when production will be increased, it is estimated that each Model 3 will likely sell at a loss, meaning that Tesla will have to continue going into debt.
– Given that Tesla cannot finance itself internally and the high stock valuation makes investors less tolerant of stock dilution, Tesla is in danger of developing a debt problem.
As I often like to point out, one of the most important factors I like to look at when assessing a company’s health is its interest on debt to revenue ratio. For mining companies, I tend to view a company with some skepticism once interest on debt starts to take up more than 10% of its revenues. Revenues are of course very volatile in mining, for the obvious reason that commodity prices also tend to be very volatile, which is why I tend to measure their interest/revenue ratio during the worst of times. For a car manufacturer like Tesla (TSLA), there is no such thing as “worst of times” due to car price volatility, nevertheless this might be getting close to being the worst of times for Tesla, if it continues to fail to ramp up Model 3 production for much longer.
It is not an official tally, and it may be subject to change, but inside EVs just reported a very weak month of October for Model S and Model X deliveries in the US. The two models saw combined deliveries for the month fall below 2,000 units. The word on Model 3 deliveries is that they are being built by hand and for October 145 units were delivered. In other words, there is no increase in total production happening at this point in time. What’s likely happening, if we are to see a large number of Model 3 cars being delivered in the fourth quarter, is that current production capacity may be diverted from Model S and Model X production to the Model 3. The automated production of Tesla cars, which we were told will lead to yearly sales of 500,000 cars per year, will have to wait a while longer. Until Q1 2018, according to Elon Musk.
Odds of Tesla running out of cash.
As we well know, there are three major sources of cash that a company can tap. There is the internal cash flow situation. In Tesla’s case, that is problematic, because it has been spending more than it has been taking in. With some analysts seeing a net loss of as much as $3,000 for each base Model 3 once they will finally be produced, it is unlikely that we will see a situation where Tesla will be able to self finance its operations and future aspirations from internal resources. There also is the option of offering more shares, in other words, stock dilution. It is something that Tesla has relied on as a means of financing itself in the past few years, especially last year.
As we can see, there has been a steady increase in the stock supply, which has been alright, for as long as Tesla’s market cap kept increasing. Problem is that it is currently already more or less priced in as a car maker that sells millions of cars, while it is currently struggling to get past the 100,000 unit sales per year mark. I personally think that stock dilution has now become a dry well for Tesla. It mainly played out that option last year, which is not something that Tesla can expect the market to tolerate again for some years to come.
It is something it can no longer heavily rely on, because its investors already are being pressured by the simple fact that this stock has gotten so far ahead of reality, as well as the fact that reality seems to keep hitting obstacles to reaching the point that its investors are expecting it to reach. If Tesla were to try to attempt larger scale stock offerings again, it would most likely lead to a significant selloff, because the argument to being in this stock at this price currently is not very strong, to say the least.
Interest expenses totaled $117 million in the third quarter, on revenue of just under $3 billion. That is just about 4% of total revenue that went on servicing its debt. By many accounts that is not a lot. A more interesting measure of what this debt servicing costs means is if we equate it to interest per car delivered in Q3. Given sales of just over 26,000 units, it comes out to almost $4,500/car. The reason why I find this measure interesting is because Tesla investors and supporters often cite its lack of legacy costs as one of the reasons it is likely to out-compete its larger rivals. Debt is emerging as Tesla’s own legacy cost of sorts, and it is showing more and more signs of getting out of control. Long-term debt is now sitting at $9.6 billion, which is a very significant increase from the end of 2016, when it was just under $6 billion. The shift to more financing of activities through long-term debt, from previous year’s focus on stock offerings, is in my view something that happened out of necessity. Stock holders had to be given something as a reason to hang in there, given how far ahead it was getting of itself. A reprieve from more stock dilution was just the thing that helped Tesla stock advance this year.
The solution to its debt problem is of course to grow out of it, which is where the need to get those large scale Model 3 deliveries out the door as soon as possible becomes more and more urgent. At first sight, that seems like a sure solution, given that if Tesla is to indeed deliver 500,000 cars/year by 2019 (2018 not likely to be the year for that milestone). Given the assumption that the debt load will not grow very significantly from current levels, we could be looking at a decline of its interest/car from the roughly $4,500 last quarter, to perhaps just $1,500-$2,000 in 2019.
As good as the legacy cost per car decline sounds however, based on the assumption that those 500,000 cars per year sales volumes will materialize, it will not be as great of an achievement financially speaking as it may seem. It will only serve to buy more time. One of the main flaws with the assumption that the eventual successful roll-out of the Model 3 will resolve Tesla’s financial situation lies in the fact that it is assumed the sale of this model will be profitable. At the moment it is estimated that Tesla will take a loss of about $2,800/base Model 3 sold at the base price of $35,000. The study also estimates that it will take the purchase of an average of $6,000 in extra options per car just for Tesla to break even on each Model 3 it will deliver. While some may assume that this is likely to happen based on past experiences with Model S and Model X customers, we should keep in mind that the income demographic of the Model 3 customers is likely to be very different from that of the more affluent buyers of the previous models, which range in price from $70,000, to $145,000.
By my rough estimate, fewer than 50,000 future buyers of the Model 3 will benefit from the $7,500 federal EV subsidy, given that there is a 200,000 unit cap on the subsidy for each and every maker, after which the subsidy is phased out. This means that buyers of the Model 3 will end up paying more and more starting next year as the subsidy is phased out, to the point where by 2019, the subsidy level for Tesla will reach zero. The reason why I believe this can potentially be a major problem for Tesla in terms of its Model 3 sales, as well as the potential sale of extra features, is because as I pointed out in previous articles, a $35,000 base price sedan is not the typical price range of a sedan model that typically makes it into the top 10 of the US sales ranking.
The top 10 selling sedan models in the US all have a price tag that is under $24,000. While I do believe that the Model 3 will break into this top 10 sales ranking, at least for a year or two, we should keep in mind that it will be based on consumers making a very atypical choice to buy a sedan priced at that level, in such a high number. What this means is that effectively hundreds of thousands of people who would ordinarily not pay $35,000 or more for a midsize sedan will now do so, out of ideological convictions, rather than rational consumer considerations, such as price/utility. This fact suggests that the typical Model 3 buyer will be very price sensitive. Going back to the Model 3 profitability issue, if it will indeed depend on the average Model 3 customer opting for an extra $6,000 in additional options, it is very probable that it will not happen, meaning that the Model 3 will sell at a loss, even after mass production will be scaled up, meaning that Tesla will continue to rely on stock dilution or bond offers as a means to finance itself for the foreseeable future.
While the ramp-up of the Model 3 will not be Tesla’s savior, because it does not lead to an improvement in the financial situation, we should also keep in mind that there are still many obstacles in the way of the Model 3 even reaching the stated goal of helping Tesla reach sales of 500,000 units per year. Questions remain with regard to just how committed the potential customers who put down the refundable deposit really are. Furthermore, it seems the rate of growth in those deposits is more or less reaching stagnation. Customer deposits have grown by $22 million, to a total of $686 million for the first nine months of the year. What this means is that if we are to assume that as many Model S and Model X cars are currently reserved as being delivered, then only 22,000 Model 3 cars were booked for future delivery during these nine months. Of course, assuming that the other two models are in balance in terms of booking to sales is not necessarily realistic, but it does nevertheless help put the deposits situation into perspective. I think it may be a sign that Tesla demand growth is fading. I personally believe that Tesla is benefiting from pent up ideologically-driven demand for its cars. That pent-up demand may fade once deliveries finally start to make a dent in this particular consumer demographic segment.
There also are the issues of manufacturing problems, as well as the issue of having to secure some of the raw materials that go into its batteries and electric motors. All these obstacles that need to be overcome, just so Tesla can end up producing a car that it is likely to lose money on, or break even at best, and only if customers will end up opting for a lot of extras. Nor is the volume of half a million cars sold per year the level needed to justify its current market cap. So while Model 3 success, if it will eventually happen, will go a long way in meeting the company’s need to ramp up production volumes that can justify its market cap, it will not lead to profitability, most likely, therefore it is not a solution to its financial problems.
The need to finance production as well as new product development means that Tesla is set to continue borrowing significant amounts of money for many years to come. Whether it will be through more stock dilution, which I believe will be met with more and more investor hostility, therefore it will be less and less successful, or through bond issuance, the path Tesla is on is very problematic financially speaking. Debt financing in particular will act as a growing financial strain on the entire operation, especially if the market will eventually decide to no longer give Tesla the benefit of the doubt in terms of its odds of ever reaching profitability, leading to much higher interest rates in the future. While I’m not advocating for this outcome as being the most likely scenario, it is a scenario that in my view has now become a lot more likely to occur, given the trends and events we observed in the past few months. Tesla will not have imminent problems, because I believe it still has the faith of its investors going for it, but eventually there will come a point where that investor confidence will become shaken to the point where there will be no way of re-gaining it, at which point this already delicate balancing act will become untenable.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Twenty miles east of Reno, Nev., where packs of wild mustangs roam free through the parched landscape, Tesla Gigafactory 1 sprawls near Interstate 80. It is a destination for engineers from all over the world, to which any Reno hotel clerk can give you precise, can’t-miss-it directions. The Gigafactory, whose construction began in June 2014, is not only outrageously large but also on its way to becoming the biggest manufacturing plant on earth. Now 30 percent complete, its square footage already equals about 35 Costco stores, and a small city of construction workers, machinery and storage containers has sprung up around it. Perhaps the only thing as impressive as its size is its cloak of secrecy, which seems of a piece with Tesla’s increasing tendency toward stealth, opacity and even paranoia. When I visited in September, a guard at the gate gave militaristic instructions on where to go. Turning to my Lyft driver, he said severely: “When you complete the drop-off, you are not to get out of the car. Under any circumstances. Turn around and leave. Immediately.”
To hear its executives tell it, Tesla is misunderstood because it is still perceived as a car manufacturer, when its goals are more complex and far-reaching. But at least some people have bought into these grand ambitions. This summer, Tesla’s stock-market valuation at times rose above those of Ford and General Motors, and its worth exceeded $60 billion. It did not seem to matter to investors that the company had never made an annual profit, had missed its production targets repeatedly and had become enmeshed in controversy over its self-driving “autopilot” technologies, or that Tesla’s chief executive, Elon Musk, had conceded that the value of his company, of which he owns about 22 percent, was “higher than we have the right to deserve.” Tesla was a headlong bet on the future, a huge wager on the idea of a better world. And its secretive Gigafactory was the arsenal for a full-fledged attack on the incumbent powers of the car and fossil-fuel industries. The factory would help validate Musk and his company’s seriousness about leading humanity’s turn to greener technologies, with a vision now encompassing solar roofing tiles and battery packs for home and industry. Most crucial, it involved producing millions of Tesla cars and trucks, all of which would be sleek, electric and self-driving.
If ambitions were all it took, Tesla would be crowned the colossus of the global car industry. But rapidly accelerating new technologies have brought uncertainty as well. Automakers are encountering three destabilizing forces all at once: automation, electrification and sharing. And sizing up which companies will be the winners and losers in their wakes is in no way obvious. In terms of self-driving cars, it seems likely that long-established companies — General Motors and Ford, as well as BMW and Audi — will benefit from their substantial reserves of cash and deep manufacturing experience. Because these automakers can invest deeply in research (and spend hundreds of millions of dollars to buy start-ups), they can remain competitive with companies less inherently cautious, like Tesla and Waymo, the spinoff of Google’s self-driving projects.
Tesla’s goal has always been focused on going green, rather than creating the driverless future. (Its mission is emblazoned on its factory walls: “To accelerate the world’s transition to sustainable energy.”) Yet as the automobile industry settles on the consensus that self-driving cars are coming — their promise to improve safety and to help ride-sharing replace car ownership for many Americans propels their inevitability — Tesla finds itself in the midst of a contest to do both. This set of challenges should be enough for any company, especially one led by a chief executive whose time is compromised by other business commitments as a founder of a rocket company (SpaceX), a new tunneling operation (the Boring Company), a company planning a human-computer interface (Neuralink) and a nonprofit focused on the dangers of artificial intelligence (OpenAI). But Tesla has given itself a few others too. One is to essentially reinvent modern manufacturing processes at the Gigafactory. Yet another is to create the first mass-market electric car ever. In the meantime, a company that has never made much profit needs to somehow figure out how to do so — that is, to put itself in the black before financial losses and missed deadlines curdle any hope that Tesla inspires, among customers or stockholders, into skepticism.
Four hundred possible sites all over the western United States were winnowed down to this Nevada location. I hopped into a Chevy Suburban at the Gigafactory with several Tesla employees to take a look around. We drove through an expansive parking lot and up a steep hill so we could overlook the sprawling building and commotion below. The Gigafactory is often described, somewhat reductively, as a plant where Panasonic, a large tenant within the space, manufactures customized lithium-ion batteries that Tesla then installs in its products. Such an enormous plant allows for long production lines and economies of scale, which company engineers believe will help them lower significantly the price of the batteries, and thus the price of electric cars. The logic within Tesla is that only by “scaling up” — making billions of cheaper batteries for millions of cars — can it have an actual impact on our worsening pollution and increasing amounts of carbon dioxide in the atmosphere. The Gigafactory had to be big, Musk noted at its opening in July 2016, “because the world is big.” But the plant’s utility is actually in the sum of countless small improvements. As one Tesla executive involved in its design told me, the goal here was not only to minimize the movement of materials like lithium and cobalt but also to shorten the path of every molecule that moves through the plant. “Because the further a molecule needs to travel,” he said, “the more cost gets added into it. We actually think of it in terms of molecular distance.”
Still, the Gigafactory is considerably more than a battery factory: It’s the physical embodiment of various technological breakthroughs the company — which just manufactured its 250,000th car — is trying to bring to its cars and energy-storage systems. Tesla makes motors here for its new Model 3 car, for instance, which are then trucked to its assembly plant in Fremont, Calif., 240 miles away. When we went inside, after a labyrinthine walk through offices and up and down stairways, we reached a rapidly moving automated factory line, where batteries were being installed into Powerwalls and Powerpacks — the residential and industrial units that store energy collected from solar panels (or any electrical generator). Later in the month, devices like these would make their way to Puerto Rico, where Tesla rebuilt the power infrastructure for a children’s hospital, and southern Australia, where the company is involved in a vast public project to shore up the country’s electrical grid. “We think of this building as a product, because it is a product,” my guide told me as we walked alongside a production line. Every machine had been scrutinized, every inch mapped out, every efficiency contemplated. Tesla had taken the highly unusual step of setting up a separate entity to take full control of the building’s design, engineering and construction, reflecting Tesla’s D.I.Y. ethos to achieve levels of vertical ownership and quality control that its executives believe are unreachable otherwise. The company had even concocted its own Tesla blend of coffee to serve near its cafeterias. “If we cannot get exactly what we want from the world,” one executive told me, “then we have to go do it ourselves.”
Tesla’s grand plans in many respects depend on how much innovation the company can bring to the process of battery making. If the Gigafactory succeeds in reducing costs — one battery-industry analyst, Sam Jaffe, the director at Cairn Energy Research Advisors, told me he thinks the company should be able to drive down the price of its cells by 30 percent — multiple dividends will accrue to Tesla. Cheaper batteries mean more than cheaper cars. They mean Tesla can put larger battery packs into cars for the same cost, increasing the vehicles’ range, power and appeal compared with the competition. At the same time, they could make its home energy-storage systems more efficient. Tesla could also gain an advantage in the race to produce autonomous vehicles, or A.V.s. The electric vehicles, or E.V.s, that Tesla wants to make autonomous have zero emissions. If self-driving cars go on rotation, say, in Uber and Lyft fleets, they could run 24-7, possibly leading to more cars on the road. “One of the concerns about automation is that it’s going to drastically increase the miles we drive,” Stephen Zoepf, the executive director at the Center for Automotive Research at Stanford, told me. “So if we expect as a society that we’re going to be driving a lot more, we obviously want to mitigate the environmental impact.”
At the Gigafactory, J.B. Straubel, a Tesla founder and the company’s chief technology officer, recounted the plant’s origin story. In 2012, he did a back-of-the-envelope calculation and realized that if Tesla were to sell something on the order of 500,000 cars a year, it would require the world’s entire output of lithium-ion batteries at the time. “We realized, holy crap, this means we need a huge factory,” he said, “because there was no way to do this just by putting in an order with some cell company and have them ship a few more.” His projections were not far off. When we met in September, orders for the Model 3, which began production in midyear and has been billed as the company’s first mass-market car, were around 455,000 through July, suggesting that the demand for E.V.s is far larger than any of the traditional automakers ever imagined. In the future, Straubel told me, Tesla plans to put up many more Gigafactories around the world, “ones that are actually quite a lot bigger than this one” — and it would construct those itself too. “This isn’t just a big building that’s full of equipment,” he added. “There’s this idea here of the machine that builds the machine, and it’s really true. This place is the embodiment of that.”
The impression he wanted me to have, I think, was that Tesla, once it gets this prodigious machine humming, will become robotically unstoppable at cranking out smaller machines, a great big clean-energy perpetual-motion device. At the same time, the company’s executives, from Straubel and Musk on down, were urging potential customers not to view each Tesla product in isolation but as parts of an ecosystem. The Tesla customer could soon use Tesla solar roof tiles during the day to charge up a Tesla Powerwall unit, filled with Gigafactory-made batteries — at night the Powerwall could in turn recharge the Tesla sedan. Perhaps the customer very much liked to drive? In that case, he or she might occasionally stop at one of the hundreds of Tesla “supercharger” stations in cities or along highways. Or maybe the owner didn’t like to drive at all and preferred to be driven automatically. Tesla would soon straddle our peculiar moment, the transitional era where humans begin to take their hands off their machines. “Every car made since October of last year,” Musk promised in early August, “is capable of full autonomy, we believe.”
The day after I toured the Gigafactory, I visited Tesla’s California headquarters in Palo Alto to see Doug Field, a top executive involved with the Model 3. Its price begins at $35,000, which gets you an average range of 220 miles on a full battery charge; a model with a larger battery pack (and a range of 310 miles) begins at $44,000. Even that price is a significant step down for the company, whose other cars’ most basic configurations start at about $70,000. I had driven from Reno to Palo Alto in a rented Tesla Model S valued at about $145,000; it was a four-hour trip, not including a 40-minute stop at a Tesla recharging station in Vacaville, Calif., and with the car’s neck-breaking acceleration it seemed the drive could have taken half that time but for speed limits. As the company’s flagship vehicle, the Model S is outfitted with several large LED screens but still has the feel of a conventional luxury car. The smaller Model 3 is a different machine altogether — spry and strikingly austere. One large touch-screen in the center of the dashboard essentially controls all the car’s driving and interior settings, while also monitoring the battery charge. When I arrived in early September, the first Model 3s had just come off the assembly line, and Field, a rangy engineer who spent a good part of his career at Apple, met me in front of the offices in a metallic blue model. He slid into the passenger side and invited me to take the wheel. “I’ll give you a quick orientation,” he said, “and then we’ll drive off.”
Field quickly showed me the controls. There weren’t many except for a few dials on the steering wheel. The screen to its right served as the car’s dashboard. “This looks forward to an era of autonomy,” Field explained, “but it’s also simpler and easier to manufacture.” That meant cheaper too, which was crucial: Tesla had concluded that every dollar saved on the cost of making the car would mean 100 more families could buy it in a year. As we drove through Palo Alto, the car was nimble and responsive, with the same kind of leaping acceleration that characterizes the Model S. But it took some time to get used to checking the screen to my right for my speed and autopilot settings. Field told me his team had concluded that it would be natural and intuitive for a younger generation. “It’s interesting when you put young people in the car,” he said. “This is the way all kids navigate technology.” It’s also possible that the kids might do more navigating, or giving the car orders, than driving. Franz von Holzhausen, Tesla’s design chief, later told me that in creating the car’s interior, he faced the question of making a car that was affordable and stylish but also relevant for a future era. There was vigorous debate within the company about what to do if the Model 3 became truly autonomous. As time went on, von Holzhausen’s group reasoned, this car would be driven less and would be driving more. Thus the decision to jettison dials and controls made sense, because the need for driver information would be reduced, and the central screen could mark routes and arrival times and double as an entertainment center. Those would be the essential tools. Or, as von Holzhausen put it, “The screen then became the hero of the vehicle.”
All of Tesla’s cars, including the Model 3, come with cameras and sensors; the sensors are small radar and ultrasonic devices situated around the car’s exterior that could enable it, presuming the right software is eventually developed, to become self-driving. Because each Tesla car maintains a cellular connection, over-the-air improvements dispensed by the company are a regular feature — tweaking acceleration or braking capabilities through uploaded instructions, for instance. Sometimes the extent to which the company can improve or alter its cars’ performance, even years after they left the factory, can be startling or unsettling, as was the case when Tesla temporarily extended the battery range for some drivers fleeing Hurricane Irma in Florida this summer. Self-driving, which Field assured me would ultimately come to pass with the right software and which Musk has repeatedly promoted to investors and customers, would allow Teslas to become something much more than they are. In the parlance of the Society of Automotive Engineers, which has quantified the capabilities a car must have to be considered self-driving, the vehicles will have nearly attained Level 5. This level denotes a safe and fully autonomous car that can operate in any place, and any conditions, without a driver.
At the moment, Teslas are at Level 2. Their cameras, sensors and software support a more modest capability known as “enhanced autopilot,” which costs an additional $5,000 in a new Model S or Model 3. In certain road and weather conditions, the cars can regulate speed and braking in traffic, steer automatically, change lanes and parallel park autonomously. By some industry rankings, these features now help make Teslas among the safest cars on the road. But following the deadly crash of a Model S driver who was using autopilot in Florida in May 2016, the company reconfigured what the cars permit. When I tried the automated steering on my Model S during the drive from Reno to Palo Alto, for instance, the car chimed frequently in distress and warned me through a dashboard notice when I took my hands off the wheel for a few seconds. I’d been informed that if this happened three times, the car would slow down, stop and rescind my autopilot privileges altogether. I didn’t push it. Clearly, the car — and Tesla, too — still needed its driver.
Whether the current fleet of Teslas can become A.V.s is not merely a technical question for the company; it may prove crucial as Tesla struggles to become a major automaker. In 2006, when Musk began to articulate his aspirations for Tesla publicly, he posted what he called his “Master Plan” on the company’s blog. He wrote that Tesla would transition from making an expensive electric sports car built in small numbers to making a luxury electric vehicle that expanded its manufacturing competence and market share before ultimately entering the electric mass market. The money from one project would be used to fund each successive project. And the larger idea was not to sell cool cars, or even fast cars, but to hasten the transition of automobiles from gas and diesel to electricity. Steve Jurvetson, an early venture investor in Tesla who now sits on its board, told me that there wasn’t much talk of a self-driving future at the start. “I don’t recall a discussion of autonomous vehicles and driving being part of the original pitch of Tesla,” he said. “It was a big-enough issue to prove that an electric drive train could be a success.” As he and Musk knew, there had not been a start-up American car company that had succeeded in nearly a century.
In the summer of 2016, Musk updated his vision for the company — “Master Plan, Part Deux.” In the decade since Part 1, the acceptance of electric vehicles had grown to the point where some traditional carmakers, in a surprising turn, were beginning to speak of an inevitable transition to an era when all models were battery-powered. Entire countries (like China) and enormous markets (like California) were also considering eventual bans on internal-combustion engines. As E.V. technology seemed ascendant, a variety of factors outside the auto industry were creating real potential for self-driving vehicles: great gains in computer-processing power, cheaper hardware sensors, better mobile connectivity, advances in artificial intelligence and enhanced mapping software. In his updated master plan, Musk stated that every Tesla would now have self-driving capabilities and that the application of “fleet learning” — a variation on machine learning — would help the company someday deliver a car that was 10 times safer in self-driving mode than when controlled by a human.
Musk also explained a new fundamental goal of the company. Tesla, he said, wanted to “enable your car to make money for you when you aren’t using it.” In other words, any new Tesla could in due time be part of a sharing network, able to taxi strangers around while its owner worked, slept or did whatever. Most Americans’ cars stay parked about 95 percent of the time. A Tesla would not. In the same way that Tesla’s electric drive train made the American car more efficient, the Tesla network would make the total utilization of the vehicle more efficient, too.
App-based sharing networks for cars already exist: These companies — Turo and Getaround, for instance — are different from, say, Zipcar, because they depend on peer-to-peer communications to arrange for rentals. In essence, they function like mobile Airbnbs, and in some cases have drawn the ire of users in the wake of driver crashes and insurance issues. A Tesla network would push this concept much further, involving perhaps hundreds of thousands or millions of cars, all of them already connected to the internet. Yet such a business network, one Tesla executive told me, most likely wouldn’t succeed unless Tesla’s cars were fully autonomous. Any concerns about insurance and lending a car to a risky driver would disappear, he argued, if autonomous driving proves to be much safer than manual driving. Just as important, autonomy makes irrelevant the problem of getting the car to where it’s needed next — it can be sent wherever it needs to go via mobile app. What’s crucial here is that the Tesla network, if it becomes functional, can defray the cost of an electric car like the Model 3, which is billed as Tesla’s affordable car but can easily surpass $50,000 with various options. If your car is making money for you when you’re not using it, it effectively becomes a tool that uses the virtues of A.V.s to promote the market adoption of E.V.s.
Over the course of several months, I often asked people at Tesla, as well as those working on autonomous technologies elsewhere, how far away the self-driving future might be. There was no solid consensus beyond somewhere between two and five years. I tended to believe that the timeline might extend much further and would depend on how tightly we regulate such vehicles and how we agree to define autonomy. Does it mean interstate driving on a sunny day? Or driving within a dedicated area on city streets? Is it a Level 5 overnight trip through heavy rain from Boston to Washington? A driverless taxi pickup on a crowded street under partial construction — orange cones, backhoes, chaos — as a nightclub lets out? Part of the debate concerns hardware and whether the collection of sensors that automotive engineers now build into their A.V.s can collect enough data to create a fully autonomous car. These sensors generally include radar, cameras and Lidar, the expensive laser-based technology that Tesla has so far declined to use. Many other A.V. researchers consider it essential. Lidar uses light waves, rather than radio waves, to map and “read” a car’s environs.
Musk has promised that before the end of this year, a Tesla vehicle will drive itself coast to coast completely on autopilot. A number of competitors — especially Waymo and General Motors — seem to be closing in on similarly ambitious goals. But it’s worth noting that no Level 5 car has ever been publicly deployed, and it’s doubtful one even exists; the coast-to-coast trip on autopilot, Musk suggested, wouldn’t yet be an instance where a driver could, say, go to sleep at the wheel. What’s more, no Level 4 car, where the vehicle is self-driving under certain weather and geographical conditions, has been put in regular service, either. In fact, while driver-assistance tools like autopilot can greatly reduce crash rates, no company or researcher has ever demonstrated that a robotic automobile can consistently operate in the everyday world more safely than a car with a human driver.
An executive close to Musk told me that his boss believes that creating a true A.V. is a “solvable” problem, one probably less difficult than others he has encountered in various business endeavors — for instance, creating cheap, reusable rockets for SpaceX, his other major company, or pushing Tesla’s Model S to such unlikely success. This may indeed prove true. But unlike other tech innovations, the development of driverless cars cannot count on something like Moore’s Law, which has projected a doubling of computing power at regular intervals and has allowed Silicon Valley entrepreneurs a clear window into the future. Based on conversations with engineers on the A.V. front lines, the most difficult problem is rigging cars with sensors and software that can take a rich, clear, picture of every element in the surrounding environment — people, bikes, signs, obstacles — and then algorithmically choreograph the future.
This challenge is as arduous for Tesla as it is for engineers everywhere working to solve it. And yet the exigencies of Tesla’s business model add an additional layer of complexity. To reach its sustainability goals and become profitable, the company must make lots of cars that are electric and sporty and increasingly affordable; meanwhile, to prepare for the future, Tesla has to build cars that eventually won’t need us. Some of the most experienced researchers working on A.V.s believe that these are two separate and possibly irreconcilable ambitions and that it makes more sense to focus on a pure driverless car, even if it proves to be a very expensive proposition at first, rather than follow Tesla’s incrementalist policy, which would involve rolling out software on a regular basis until the driver does less and less and finally nothing at all. With the second approach, one Silicon Valley engineer said, “the market pressures that are going to be applied to those technologies mean that you’re not going to climb up the safety and reliability curve” to build a true A.V. Keeping the vehicle affordable is in constant tension with making the vehicle autonomous. Musk’s optimism alone can’t change that.
The first company to succeed at A.V. technology won’t necessarily capture the market in a way that, say, Facebook did with social media. Tesla might have time to make its current strategy work, and it could be that what matters more in the near term are the company’s advantages in batteries and electric vehicles (assuming it can manage the transition to mass-market production). Jurvetson, the early Tesla investor, told me that he thought the company with the best artificial-intelligence systems would come to dominate the auto business of the future. But he did not put a time frame on it, and he did not see it as a winner-take-all prospect. Vivek Wadhwa, a prominent tech entrepreneur and Tesla enthusiast, told me that he sees Tesla’s success prefigured in the smartphone market. “After five years, Tesla will become the Apple in the industry,” he predicted, based on the fact that it is best positioned to capitalize on the potential combination of E.V. and A.V. technologies. But Wadhwa pointed out that phones running on Google’s operating system, rather than Apple’s, are the ones that dominate the world. “Musk will be exactly where Tim Cook will be,” he said. “Tesla will be the iPhone of cars — more elegant, better designed. Maybe even safer.”
Musk declined my interview requests over the course of several months. By early November, the number of Model 3 cars coming out of the factory had fallen far short of what Musk had promised, the company’s stock price had taken a nose-dive and there appeared to be serious software and robotic glitches at the Gigafactory. Musk was said to be too busy to talk, which did not always square with his social-media postings: jokes, poems, photos of tunnels he was digging, links to stories about the dangers of artificial intelligence and, in one instance, footage of a camping excursion on the roof of the Gigafactory.
The company’s evasiveness and secrecy extended to self-driving cars, a subject it was unwilling to discuss in any detail. One Tesla engineer I spoke with, who works on autopilot systems, maintained that the company’s camera and sensory hardware will prove good enough to get his team where it wants to go, which as a near-term goal means cars with a self-driving capability that is twice as good as a human driver (rather than 10 times as good, per the second master plan). By November, Musk was telling investors that the actual goal was to get the system simply on a par with a human driver and that that might require a more powerful computer in the cars, which Tesla would swap in free if necessary. Some customers have already paid $3,000 for a Tesla “self-driving” package (on top of the $5,000 for “enhanced autopilot”), based on Musk’s assurances that the new cars have all the hardware necessary and will be autonomous once regulations and functional software are worked out.
There’s no clear indication of whether these efforts are on track, and in the past year, several engineers who ran Tesla’s autopilot unit have left the company. In early October, Scott Miller, an executive involved with General Motors’ self-driving efforts, charged publicly that Musk was “full of crap” for claiming that his cars could offer self-driving capabilities with their current hardware. His assertions echo those of some other Tesla critics I spoke with: Without Lidar, or a more expensive hardware approach, Musk’s cars may be at a significant disadvantage. Indeed, several people familiar with the company’s A.V. work viewed its self-driving approach as a perilous one, given that there is no definitive way to predict how long it could take Tesla to satisfy the promises made to customers. In the best case, if A.I. and software breakthroughs ultimately transform cars like the Model 3 into self-driving vehicles, Musk will have pulled off something that perhaps seems impossible today. In the worst case, hundreds of thousands of owners will have cars that won’t achieve the status of true A.V.s and can only hope that the sharing network of the master plan will someday become a reality.
Tesla’s setbacks, Musk noted in November, shouldn’t eclipse the fact that the company has already grown faster by some measures than Ford when it rolled out the Model T in the early 1900s. He takes a longer view of his business than Wall Street analysts. In a recent TED interview, while discussing his plans for cities on Mars, he argued that it’s a mistake to assume that technology gets better as time goes on. “It does not automatically improve,” he insisted. “It only improves if a lot of people work very hard to make it better, and actually it will, I think, by itself degrade.” He cited the Egyptian pyramids and Roman aqueducts and how the knowledge to build them was lost for hundreds, or even thousands, of years afterward. The relevance is striking in a time when the federal government would rather subsidize the growth of the coal and fossil-fuel industries than renewable energy and electric cars.
Long before anyone saw Tesla as a legitimate player in the auto industry, Musk also appears to have understood that in taking chances that no established carmaker would, Tesla could be an innovative force to quicken our slow, plodding progress in transportation. Imagine Tesla didn’t exist, Steve Jurvetson told me. “What would the world look like? I have this sinking suspicion it wouldn’t look that different than 10 years ago. A bunch of hybrid cars. A bunch of noise about hydrogen vehicles. You know, I don’t think the world would look anything like today — where entire nations are saying, ‘We’re going to stop making gas cars.’ ”
The company’s impact, real and potential, is all the more surprising considering that Musk has staked Tesla’s success on the industrial equivalent of a shoestring, lacking the resources of established carmakers. He has used customer revenue, his own wealth, venture capital, bank and government loans, investments by other automakers and the American stock and debt markets to effectively fund a multibillion-dollar research-and-development project. In that way, he has led the industry to the start of a new era. And now his company, hindered by debilitating manufacturing bottlenecks and its extravagant promises of self-driving, is poised to find out whether, in laying the groundwork for an electric and autonomous future, he took one risk too many.
La “house of cards” eretta da Elon Musk è sul punto di essere spazzata via dalla tempesta: Tesla produce poche auto e dalla sua nascita ha già bruciato 10 miliardi di dollari.
Per Tesla è il tempo della resa dei conti. Detto all’ottimista maniera di chi non smette di dare credito al vulcanico Elon Musk, oppure con il senso classico di quando la festa è finita, gli azionisti pretendono risposte e lo staff tecnico di primo livello prepara la fuga. Il momento della verità ormai è fissato, nove mesi da ora senza deroghe: oltre le promesse non possono portare.
L’ultima crepa alla casa di cristallo di una azienda che produce entusiasmo è l’addio di Jon Wagner, il responsabile dello sviluppo degli accumulatori elettrici, ovvero in casa Tesla un personaggio chiave negli incroci tra prodotti in arrivo e novità allo studio. Wagner abbandona con signorilità nel momento peggiore, con la nuova Model 3 ferma al palo di 260 pezzi usciti dalle catene di montaggio in un mese, contro le 1.500 previste a settimana, lontani dall’obiettivo dei 20.000 veicoli ogni 30 giorni sbandierato agli azionisti come possibile entro il 2017, e ormai rimandato vagamente al 2018.
Vetture montate a mano, un “collo di bottiglia” nella produzione di batterie che ha portato ad un disarmante rallentamento dei processi industriali. Il caos che Elon Musk affronta ancora dall’alto di una azienda che vive di fama, giudicata visionaria e giustificabile in tutto, con le sue azioni in grado di crescere il 61% negli ultimi 12 mesi, il 900% negli ultimi cinque anni, del 1200% dal lancio nel 2010. Peccato siano i crudi conti economici a svegliare la finanza americana dal sogno d’aver trovato un nuovo Steve Jobs.
Tecnicamente, Tesla ha venduto nel terzo trimestre di quest’anno 26.000 vetture tra Model S e Model X, dunque una crescita del 4,5% rispetto al terzo trimestre del 2016 e del 17,7% rispetto al secondo trimestre. Sarebbe tutto bello se l’azienda volesse limitarsi a raggiungere il dignitoso obiettivo 2017 di vendere e con molto profitto un totale di 100.000 auto. Finisse qui Tesla, ne parleremmo come di una caso al limite del clamoroso nell’aver coniugato con successo l’auto elettrica ad una immagine di lusso raffinato e quasi culturale, guadagnandoci anche bei soldi. Peccato però che il sistema Tesla purtroppo vada oltre e vada peggio, nato com’è prestando il fianco alla speculazione finanziaria che ha portato le sue azioni a valere un totale attuale di ben 51,10 miliardi di euro, e distorto da una facilità di finanziarsi, chiedendo capitali agli azionisti, che non ha precedenti nella storia finanziaria statunitense.
Ennesimo colpo ad effetto, il 16 novembre Tesla svelerà il suo prototipo di camion elettrico, con Elon Musk intenzionato nonostante a dimostrarsi ancora capace di progettare e progredire. Gli analisti si domandano in questi giorni se però sia mai stato in grado banalmente di contare. Come noto, Tesla ha chiuso il periodo luglio-settembre 2017 con una perdita drammatica di 619 milioni di dollari, e i fatti raccontano che l’azienda sia stata in grado di trovarsi in attivo soltanto in due trimestri sui 30 della sua vita. Dopo la tempesta, c’è il dramma.
Negli ultimi 12 mesi l’azienda ha chiesto e ottenuto la cifra stratosferica di 3,15 miliardi di dollari come aumento di capitale da parte dei soci, ma il disordine tra investimenti e ritardi nella industrializzazione della compatta elettrica Model 3 avrebbero portato a svuotare così rapidamente le casse da garantire da oggi appena nove mesi di liquidità. Tesla avrebbe bisogni di ricorrere a nuovi crediti entro la prima parte del 2018, ma non può perché nessuno se la sente più di ignorare un dato terrificante, i 10 miliardi di dollari letteralmente bruciati dal momento della sua nascita, diventando la più grande compagnia quotata in borda della storia a non aver mai prodotto utili.
E dunque l’ora dei bilanci è arrivata, nonostante le premesse e le promesse di Elon Musk nel voler accelerare drasticamente la produzione della Model 3 per riportare in asse la compagnia. Il dramma sta nel piano industriale così limitato che era impossibile da non criticare, a patto di volersi solo occupare di speculazioni e non di strategia industriale. Tesla non ha mai approcciato la produzione di massa, il suo unico stabilimento di Fremont in California ha una capacità produttiva che non potrà superare in nessun caso i 500 mila veicoli anno, guarda caso proprio l’obiettivo di vendite che lo stesso Musk aveva per la Model 3 dal prossimo anno.
Le promesse sono conti che non possono tornare. Ancora lui ha annunciato la realizzazione di ulteriori 10 o 20 Gigafactory identiche all’impianto di Sparks in Nevada che attualmente neppure riesce a produrre in modo automatizzato le batterie per la nuova vettura. Si assembla a mano, in condizioni di lavoro tutt’altro che idilliache, mentre a Fremont 700 tra impiegati e operai sono stati licenziati senza una spiegazione, senza poter continuare a partecipare alla favola americana della genialità che trasforma radicalmente l’industria e la società. Nel frattempo avanza la proposta del partito repubblicani al Congresso Usa di eliminare l’incentivo fiscale da 7.500 dollari per l’acquisto di una auto elettrica. Finora il prezzo fissato per la nuova Model 3 era rivoluzionario nello sfiorare la cifra quasi popolare di 35.000 dollari, lasciando comunque molti dubbi sul profitto che l’azienda riuscisse a ricavarne. Al momento della resa dei conti, di sicuro questo non potrebbe affatto tornare.
– Perbix had been supplier to carmaker for almost three years
– Musk alluded to machines ‘limping along,’ holding back Model 3
Tesla Inc. has acquired Perbix, a closely held maker of automated machines used for manufacturing, as the electric-car maker struggles to boost production of its most important new model.
Perbix has been a supplier to the automaker led by Elon Musk for almost three years, according to a Tesla spokesman, who declined to disclose the terms of the deal. James Dudley, Perbix’s president, will receive about $10.5 million in Tesla stock, according to a regulatory filing.
Musk last week alluded to automation challenges as among the reasons the Model 3 sedan, which starts at $35,000, has gotten off to a bumpy start. The chief executive officer pushed back a projection for when Tesla will make 5,000 of the cars per week by about three months, to the end of the first quarter of next year. Tesla said in a filing last week it’ll wait until reaching that intermediate target before taking steps to boost weekly output to 10,000 units, allowing the company time to optimize its automation and conserve spending.
“With Model 3, either the machine works, or it doesn’t, or it’s limping along and we get short quite severely on output,” Musk said on an earnings call with analysts last week. By contrast, with the Model S sedan or Model X sport utility vehicle, “because a lot less of it was automated, we could scale up labor hours and achieve a high level of production.”
The Perbix purchase comes about a year after Tesla announced the acquisition of German manufacturing-technology specialist Grohmann Engineering to boost production and reduce manufacturing costs. Tesla will expand its presence in the Minneapolis area where Perbix is based, the spokesman said.
Tesla built only 260 Model 3 sedans in the third quarter, trailing its 1,500-unit forecast.
Tesla still working on making a factory the “machine that builds the machine.”
On Tuesday, Tesla announced that it had purchased an automation and machining company called Perbix. Perbix has supplied Tesla with parts for its high-tech factories in Fremont, California, and Sparks, Nevada, for the past three years, according to CNBC. Although it’s unclear how much Tesla paid for Perbix, the company says it made an offer of cash and stock, and SEC filings show that Perbix owner James S. Dudley received 34,772 shares of Tesla stock, which reflects about $10.6 million at today’s share price of $305.59.
he purchase comes exactly a year after Tesla acquired German firm Grohmann Engineering, which then became Tesla Advanced Automation Germany. The Germany-based engineering department specializes in factory automation, much like Perbix does. Tesla CEO Elon Musk has stressed high-level automation as critical in boosting Tesla’s delivery numbers. Tesla struggled for years to make delivery quotas on the Model S and the Model X vehicles, and Musk told investors last year that his solution was to make each of his factories look like an “alien dreadnought.” An oft-repasted phrase from Tesla executives is that the company is focusing on factory automation to build “the machine that makes the machine.”
Although Tesla is largely making its quotas now with respect to the Models S and X, the electric vehicle maker had a very disappointing third quarter with respect to the Model 3. The “budget” vehicle aimed to bring long-range EVs to the market for a mere $35,000 by mid-2017. But after a debut event at the end of Q2, the company admitted it had only built 266 Teslas in Q3, claiming that bottlenecks in battery-pack construction were hindering its ability to churn out the pre-ordered cars.
Tesla said on its most recent earnings call that it was aiming to deliver 5,000 cars a week by the end of Q1 2018. On the same earnings call, Musk also called out a supplier “dropping the ball” as the main cause for the Model 3 bottlenecks. That supplier evidently wasn’t Perbix. In a statement today, the company praised Perbix’s reliability, saying that it “has executed flawlessly on a number of extremely complex automation projects.”
Perbix is based north of Minneapolis, Minnesota, and it will remain there after the purchase. At 150 people, Perbix is smaller than 700-person Grohmann Engineering was. According to the Minneapolis Star-Tribune, Perbix has built “a system that makes the drive-unit rotors” in Tesla cars, and it has supplied the automaker with equipment for Gigafactory operations.
Tesla launched its IPO on June 29, 2010. Trading on the NASDAQ, Tesla offered 13.3 million shares at a price of $17 per share. It raised a total of just over $226 million.
Tesla’s stock price was essentially flat for several years after the 2010 IPO. There wasn’t a lot going on. In 2008, the carmaker had endured a near-death experience, and in the lead-up to the IPO and afterwards, it was selling only one car, the original Roadster. The business plan at this point was for CEO Elon Musk and his team to keep the lights on long enough in order to roll out Tesla’s first built-from-scratch car, the Model S sedan. Which eventually happened in 2012.
In 2013 Motor Trend named the Model S its Car of the Year. It was at this point, Tesla’s stock price took off. If you bought Tesla stock right after the IPO and held on, you’d be looking at an 1,000%-plus return today.
Since the sudden growth in 2013 Tesla’s stock price history has been one of extreme volatility. Although a stable stock price wasn’t expected or widely predicted. Investor confidence would soar, then collapse, with sentiment turning on every news event, product announcement or delay, quarterly earnings report, and market-moving tweet by Elon Musk
At one point, Musk himself said that the company’s stock price was overvalued. Unlike the rest of the industry, with its slow, predictable stock price behavior for publicly traded carmakers, and with its long business cycles, Tesla was behaving more like a Silicon Valley tech company.
Stock analysts fixated on the pace of deliveries as the best indicator of how Tesla’s stock price was performing. Wondering if there was sufficient demand for Tesla electric cars, in a market that otherwise didn’t seem to want them, to justify the monumental valuation. Eventually, Tesla began reporting quarterly sales, mainly to give the Wall Street analysts and stock investors something to go on.
In 2015, the long-awaited Model X SUV was added to the lineup, enhancing sales and giving Tesla a vehicle to use to compete in the booming crossover market. But the Model X arrived three years late, and the tremendous complexity of the car meant that Tesla spent the first half of 2016 sorting out myriad production issues.Some compensation arrived in the form of the reveal of the Model 3 mass-market vehicle. Tesla quickly racked up 373,000 pre-orders for the vehicle, at $1,000 a pop.
Despite improvements in product. Wall Street was losing the thread, however. And Tesla’s stock price would routinely suffer. Tesla wasn’t considered very good car manufacturer in the traditional sense, consistently missing its deliveries guidance, and investors began to figure this out. Tesla’s stock price volatility had briefly faded, only to return. And until the tail end of 2016, Tesla was enduring a slow stock price slide. Fortunately for Musk, the company had executed a capital raise before the skepticism set it.
However since then Tesla’s stock price has continued toward its all-time highs and broken $300 a share for the first time in the company’s history. At first, it looked like a massive short squeeze — Tesla has always been a popular stock to short. But Tesla stock steadily consolidated its gains.
Tesla has had a highly volatile stock price that has at times baffled investors. There was only one period of smooth price growth, and it gave way to a reliable pattern of volatility that preceded a massive drop.
Up until the recent rallies, it could be argued Wall Street had figured out that Tesla was a car company, not a tech company, and had reset its expectations about growth for the stock price.