back to article Largest ever losses fail to dent Tesla's bulging order book

Tesla has posted its largest ever loss in its latest quarterly financial results, continuing its trend of burning ever greater quantities of cash. Although the company also posted its highest ever quarterly revenues of $2.28bn, beating analysts' estimates, this was set against chief exec Elon Musk warning that Tesla faces six …

  1. Voyna i Mor Silver badge

    Only one comment

    If Musk thinks they have six months of manufacturing hell, I conclude he has no experience of manufacturing. He is just starting to get the treadmill moving, and when he gets up to speed he will realise why volume car makers are so cautious.

    1. Aladdin Sane Silver badge

      Re: Only one comment

      I'm sure the 16 billion in revenue coming in from Model 3 orders being filled will help ease the pain.

      1. beast666

        Re: Only one comment

        Not if they spend 30 billion fulfilling the orders. Musk is a conman. SpaceX is cool though.

        1. Anonymous Coward
          Anonymous Coward

          Re: Only one comment

          .... and they've got half a billion in deposits from people wanting to buy Model 3's for now ... I assume he's not following the Charles Ponizi playbook!

    2. 0laf Silver badge

      Re: Only one comment

      And then 6 months after they get delivered we'll start to read the reports of build quality issues since they'll have thrown them together to meet the deadlines.

      Is it just me that thinks the front of the Model 3 just looks unfinished? That big slab of flat plastic just looks weird.

    3. Voyna i Mor Silver badge

      Re: Only one comment

      Replying to the anonymous downvoters to my original post - I know a guy who was a troubleshooter for one of the big motor manufacturers. He therefore had his choice of virtually any company car he wanted. His important criterion was that the car had had to be in production for at least 18 months because that was how long it took to debug fully (and of course he saw the bug reports.)

      Perhaps one of you will actually respond and explain how it is that an experienced volume carmaker can take so long to fix teething troubles while someone who has never had a volume product at all is going to fix the problems in six months? Even Edison couldn't walk on water.

      1. Blank Reg

        Re: Only one comment

        "Even Edison couldn't walk on water"

        Of course not, no one else had done yet it so he had no way to steal the idea.

    4. MachDiamond Silver badge

      Re: Only one comment

      Elon will also have to accept whatever happens due to their truncated testing phase of a release candidate version. Other manufacturers test new models for 18 months or so to work out bugs. Tesla announced their final candidate months ago. In the event they need to recall and repair emerging problems, where will customers get the work done in a timely manner?

  2. Anonymous Coward
    Anonymous Coward

    Musk & co is a socialmedia 2.0 geniues

    http://www.zerohedge.com/news/2017-08-02/tesla-burns-record-13-million-day-q2-and-its-about-get-worse

    most journalist just rewrite his hyperbole news without verifying it with facts ...

    take " Some 455,000 people have reserved Model 3 cars so far "

    Nice number but it doesn't say much, it's just hype.

    How does this compare against the reserved number for for example the launch of the new BMW 3 or VW golf or Toyota Corolla ? is it big or just small ?

    1. Anonymous Coward
      Anonymous Coward

      Re: Musk & co is a socialmedia 2.0 geniues

      Well it was some time ago but when VW launched the Golf in 1976 they predicted 5,000 sales. Since then they have sold a couple of million more so a pre-order of 455,000 looks pretty good to me.

    2. R 11

      Re: Musk & co is a socialmedia 2.0 geniues

      455k reservations are at $1,000 a shot. That's almost half a billion dollars in down-payments. I think BMW, VW or Toyota would love to see that.

      Musk has somehow managed to create a kick-starter for cars, getting punters to fund large chunks of capital outlay without expecting any of the stock a venture capital firm would demand.

      1. DougS Silver badge

        Re: Musk & co is a socialmedia 2.0 geniues

        The deposits are refundable, so not all of them will result in a car order. Given the inflated prices for earlier models I could see some people reserving a few just in case they can be resold for above sticker price, and if not they can cancel for a refund.

        Have $1000 laying around you can afford to tie up for a couple years, and want a chance that you might get a return of several times that? Might as well throw it down as a deposit and see what happens.

        1. MachDiamond Silver badge

          Re: Musk & co is a socialmedia 2.0 geniues

          There are stories that getting a refund can be harder than people thought.

  3. Steve Davies 3 Silver badge
    Joke

    Don't worry UK

    We won't be lucky/fortunate/unfortunate (delete as applicable) to get any RHD ones here for another 15 months at least.

    By then the Tesla Frenzy will be enthralling the nation. Forget the queues of Fanbois/hipsters waiting patiently in line for their new Jesus Phone, this will cause M25 sized traffic jams around the Tesla outlets.

    Then unless you are driving a Model 3 you are just not hip or cool.

    Apple, prepare to be dethroned...You a no longer the cool company.

    Joking aside, EV's are the way to go. I'm biased as I have one and love it. I just don't rate Tesla's. The Model S and X are just way too expensive. The Model 3 may change that but it is still a lot more expensive than the average family car (circa £20K on the road).

    1. Aladdin Sane Silver badge

      Re: Don't worry UK

      Jesus phone? I want one of these.

  4. Bruce Ordway

    16 billion

    Share price from $181 to $347 since December 2016?

    Betting "there will be profit"?

    >>why volume car makers are so cautious

    Introducing a brand new, defect free model does seem like a lot to ask.

    Good luck to them.

    1. DougS Silver badge

      Re: 16 billion

      No, like Amazon shareholders they aren't betting that there will ever be enough profit to justify a fraction of the share price. They are only betting a bigger sucker will come along later.

      1. Jim Cosser

        Re: 16 billion

        Seems like the real value would be in the battery tech, energy storage is going to be an exploding market...I'm not sure if battery will be the tool of choice but it's probably going to have its place.

        I'm not close enough to know who is owning the patents in this space on next gen if it is Tesla then that would be a reason to invest, if it's just a brand using other folks tech then the yeah it's a ponzi.

        1. Adam 52 Silver badge

          Re: 16 billion

          https://www.tesla.com/en_GB/blog/all-our-patent-are-belong-you

        2. Anonymous Coward
          Anonymous Coward

          Re: 16 billion

          Seems like the real value would be in the battery tech, energy storage is going to be an exploding market

          Doubt that. The falling price of batteries, and the likely emergence of several hundred GWh of storage on car wheels will certainly transform energy markets, but the generic value of storage will plummet, other than for specific locations and times. Battery makers will make money from the transport demand, car makers will make money from new cars, but the currently high value of energy storage per se will fall dramatically.

          1. Jim Cosser

            Re: 16 billion

            I agree price would decline (and needs to) but the market will dramatically increase, a patent on something revolutionary in that energy storage sector would be of real value.

        3. MachDiamond Silver badge

          Re: 16 billion

          …. and the battery cells in Tesla cars are made by Panasonic. The Model 3 will be using a custom size cell only made in the Nevada Gigafactory. If they get snowed in or the roads close over the Sierra Mountain range during the winter, Tesla will have battery delivery issues again. Inconvenient for S and X production, but a WMD for the Model 3.

  5. Herby Silver badge

    Lose a little on each one...

    ...And make it up in volume.

    Sounds like the model Elon is attempting to follow. Electric cars don't make much sense when you take into account such things as battery life and subsidies. Both of these are kinda glossed over in the grand scheme of things. Battery life after enough charge/discharge cycles eventually goes to ZERO, and the replacement cost (parts and labor) is through the roof. It just doesn't make any sense. If you have a "plug-in hybrid", the worst thing you can do is plug it in, and cycle the battery to wear it out. I doubt that anyone would buy a "standard" (petrol) vehicle that would require a complete new engine after the warranty ran out.

    Nice company you have there, Elon. Too bad it is doomed to fail.

    p.s. I hear Twitter is sinking, you might try that.

    1. Spanky_McPherson

      Re: Lose a little on each one...

      Oh for goodness sake.

      Tesla make a gross profit on each car. Their losses are due to capital expenditure.

      1. Steve K Silver badge

        Re: Lose a little on each one...

        Not true - capital expenditure does not hit the Profit & Loss account - it will show up on the Balance Sheet though.

        1. Roopee
          Facepalm

          Re: Lose a little on each one...

          Unless you can persuade your shareholders to stump up all the readies, which is rare, then usually capex DOES hit the P&L, as interest payments. Basic finance.

          1. This post has been deleted by its author

          2. Steve K Silver badge

            Re: Lose a little on each one...

            The OP implied that the losses were due to Capex, implying that Capex is deducted from revenue and hence explains the losses.

            Interest costs (and depreciation or write-offs of Capital Expenditure for that matter) will indeed be charged to the P&L.

            Gross profit of $1.3b for the 6 months ended 30 June 2017 was caned by R&D ($0.69b) and Sales/General/Admin ($1.4b including Depreciation of $0.76b) to give an operating loss of $0.5b.

            Net Interest (expense) was then a "mere" $0.2b so it looks like the shareholders have stumped a lot of the readies.

            At the moment it doesn't look like Capex on its own explains the losses.

          3. Anonymous Coward
            Anonymous Coward

            Re: Lose a little on each one...

            At current rates, it will hardly show at all, but it will accumulate. Tesla is probably paying a fair bit in interest anyway. Depreciation will also hit the P&L, but again slowly over time.

            You really need to understand basic finance and not just parrot things back.

      2. Anonymous Coward
        Anonymous Coward

        Re: Lose a little on each one...

        No they don't, they make a current loss on each sale. Their losses aren't due to Capex, capex is NOT expensed it is capitalized and depreciated (unless specific tax rules allow differently). Their losses are also much lower than their cash burn, they burnt through over a billion dollars and it is reasonable that the additional $600M or so is capex. That means that they went through their entire advance deposit windfall in that one quarter.

        At this stage it IS a Ponzi scheme, but if they can somehow solve their manufacturing issues AND improve their tech they might just crawl out of it.

        And I've actually been in a Tesla, you'd have to pay me to buy one.

    2. Steve Davies 3 Silver badge

      Re: Battery Life

      I guess you don't drive an Ev or PHEV then?

      I do and with my PHEV I can change individual cells and not the whole battery. Far cheaper. That should be the way things go IMHO. But in 2.5years my battery is still at around 96% of the original capacity.

      Tesla generally put in more cells than is needed. One older Model S variant could be 'upgraded' with a sofware update (and $$$$) to the next higher capacity version.

      Battery costs are coming down rapidly and will soon be the same price as a recon Engine for an ICE vehicle. The technology is improving all the time so for me, battery life is not the prime issue.

      The biggest problem I have with EV's is Charging Points. At the moment, there are enough in place but just a fraction of the numbers that will be needed in the future.

      That means I charge my PHEV at home. The power for this is mostly sourced from my own PV array (when the sun is shining).

      I drive around 15K miles a year. Pretty well all my local driving is on Battery. My overall costs for that 15K miles is around 50% of what it would cost for a similar petrol powered version of my car.

      What's not to like eh?

      You can't look at EV's in Isolation. If you have space then put in some PV panels and even a Battery (mine is being installed tomorrow morning long with my Type 2 charging point).

      Since I had the PV System (After the car) my Electricity consumption from the Grid is less than half what it was before.

      So less hydrocarbons burnt and less leccy that I have to pay for and the PV system has put £10K on the value of my house so what's not to like eh?

      So why do I use a PHEV and not a pure EV?

      That's because I tow a trailer 2-3 times a month. The PHEV can tow 1.5Tonnes. Towing hammers the range of pure EV's. and I can't afford a Tesla that works like my Outlander PHEV. The Model X starts around £65K...

      That's my worthless views on the topic. Take them or leave them but they are based upon my own experiences.

    3. MachDiamond Silver badge

      Re: Lose a little on each one...

      You work in software, not hardware, right?

  6. Mikel

    Not gunning for profit.

    There will be a time for profit taking at Tesla, but for now they are about exponential growth.

    Seeing more and more of their cars these days. And they're only just now shipping their "people's car".

    1. Voyna i Mor Silver badge

      Re: Not gunning for profit...And they're only just now shipping their "people's car".

      The first Model 3s actually cost over £30 000, even at the pre-Brexit $1.50 rate. They are hardly a "People's car".

      I want to know how Musk is going to take a car which loses money, and cut the price by $10 000 basically by using a smaller battery and putting all the other parts in but not turning on some of the software. The whole scheme has some of the smell of the original Volkswagen. Workers paid into the scheme and were promised them when they started to roll off the production line. Which they did not do.

      Unfortunately there's no sign of a Major Ivan Hirst on the horizon.

  7. russell 6

    Personally I'm betting against Tesla

    It isn't that there is no market for battery powered cars. The major players, such as Toyota, which also has the premium Lexus brand will eat Tesla for breakfast when they make the step, probable around 2020. Tesla doesn't make a profit, the big auto makers do and they are doing a lot of R&D inti EV's. A company in Germany annouced today it is going to construct a 34 Giga factory, with the backing of the German government and probably also German auto makers even if it didn't say so directly. Tesla is a minnow in a big pond with no experience of mass production. Kudos to Musk for getting the Tesla the ball rolling but its share price is not justified

    1. russell 6

      Re: Personally I'm betting against Tesla

      The day after I wrote this comment, Toyota and Mazda announce a joint venture to produce EV's in the USA, starting with 300,000 cars per year, beginning in 2021

  8. Anonymous Coward
    Anonymous Coward

    The future is diesel

    The future is diesel, not electric. Here's why:

    1. There is already a network of pumps that serve diesel in the UK. There are no pumps that dispense liquid electricity.

    2. Manufacturers are already making diesel cars and people can buy them right now (or at least when the forecourts open). Apart from a handful of manufacturers, no-one makes electric cars.

    3. Diesel exhaust pipes are near the ground. If you are older than around 4 (5 for girls) and have survived, you're now safe because you're too tall to breathe the fumes. If there were any. Electric shocks can kill.

    4. The so-called 'particles' emitted by diesel engines are so tiny they can't possibly be doing anyone any harm. Contrast that with lightning. See?

    5. Many trains are electric, and look at how many are late or are cancelled, or are standing room only.

    6. Electric cars need either batteries (the size of caravans), or overhead power lines (like trains) or long mains leads (like hoovers). The manufacturers are keeping very quiet about that.

    7. Electric cars are useless in parts of the country that don't have electricity like Wales and Slough.

    8. Where as diesel cars make a manly roar when driven, all electric cars sound like Katie Price explaining lipstick to hyenas.

    9. Look at this: https://www.gm.com/owner-assistance/hummer/h3x.html - If it was electric, it'd be pink.

    1. Sorry that handle is already taken. Silver badge

      Re: The future is diesel

      Haha what is this Gish Gallop nonsense

      1. Steve Davies 3 Silver badge

        Re: The future is diesel

        That original comment must be from someone who works for :-

        - A traditional Car maker/dealer that is not in even Hybrids

        - An oil company.

        - or is an employee of the Koch Brothers in the USA.

        Either way, it is a load of cobblers and [redacted] [redacted]

        The future is Renewable Energy and Electric Vehicles. Burning hydrocarbons is on its way out, thank god.

        1. Vic

          Re: The future is diesel

          Either way, it is a load of cobblers

          I thought it was an attempt[1] at satire...

          Vic.

          [1] A pretty poor one, for sure.

          1. Steve K Silver badge

            Re: The future is diesel

            I think it's quite a clever attempt actually - channelling Jeremy Clarkson I'd say

    2. Anonymous Coward
      Anonymous Coward

      Re: The future is diesel

      You're so right - my neighbour who's a complete lefty Guardian reading liberal bearded arts student Apple Watch wearing waste-of-space type has just, with his lank haired dull-as-dishwater 'partner' (because the term 'wife' seemingly has white slave connotations) and his nasty entitled brat of a son (named 'Alfie' - not Alfred mind you, just Alfie) purchased on the usual rip-off finance scheme a BMW i3. Their levels of utter planet-saving smugness are so high, they are almost permeating the walls. If that loathsome family truly wanted to save the planet, they'd offer their bodies up to the nearest running combine harvester as fertiliser.

      To irritate them, I just leave my car idling in the drive all day with the exhaust pointing at their house. The cost of a tank of diesel is minuscule compared to the satisfaction received.

    3. VulcanV5
      Happy

      Re: The future is diesel

      Wow. Eleven down-voters took your post seriously. . .

    4. unwarranted triumphalism

      Re: The future is diesel

      List fails without blaming cyclists.

    5. MachDiamond Silver badge

      Re: The future is diesel

      Nearly every car maker with diesel offerings is completely halting diesel passenger car production in the next few years.

  9. joea

    Tesla . . . meh . . .

    Gimmie a Toyota Mirai (and a place to fuel her). Hydrogen fuel cell powered electric vehicles make much more sense, to me, than storage battery based vehicles.

    Longer range, faster "re-fueling" and it could double as an emergency power generator if equipped with an inverter.

    1. Steve Davies 3 Silver badge

      Hydrogen cells

      The only place for them in the future is for energy storage.

      The reductions in the cost of Wind and Solar that have taken place over the past few years makes Hydrogen on the move silly.

      However for storing excess leccy produced by wind and PV then it has a place but even that could be made redundant as the price of batteries fall and grid scale battery storage becomes economic.

      Parts of California and Australia are already installing large Battery systems (Tesla) to improve grid resilience. There is a Wind Farm coming on stream next year that will include large batteries so that the power generated can be used at times when the demand is greatest.

      1. Adam 52 Silver badge

        Re: Hydrogen cells

        Tesla's big South Australia battery is 100MW. Dinorwig is just under 1800MW. If we go solar/wind/nuclear then we'll likely need a lot more Dinorwig sized storage facilities.

    2. Anonymous Coward
      Anonymous Coward

      If only the boiling point of hydrogen was a bit higher than −253°C it could indeed be a practical fuel...

      1. joea

        Clearly you and apparently others, have no clue how Hydrogen Fuel cells work. Google among others might be your friend.

        Clearly, your Engineering and other research is far superior to Toyota. This is proven of course, by your refraining from investing even a penny, where Toyota has squandered so many millions on this inferior technology.

        1. Alan Brown Silver badge

          "Clearly you and apparently others, have no clue how Hydrogen Fuel cells work."

          Most of us have a pretty good idea how they work. The reality is that hydrogen under pressure is a bitch of a substance to work with on a number of levels.

          Embrittlement, leaking through most materials (permeation), explosive deflagration (tanks bursting due to pressure cycling) - and that's just on the cars.

  10. John Smith 19 Gold badge
    Unhappy

    So Tesla issues no dividends, makes no profit and the shares are several $100 each....

    Amazon 2.0 ?

    Either you buy them and hold them, but they give you no value, or you buy them and hope they will rise, then off load them on bigger mug than you.

    As for LH2

    It costs about 3x more to compress or cool than to make in the first place. It's intellectually satisfying ("pollution" is water) but otherwise it's an enormous waste of money, given most of it made in CA is from natural gas anyway.

    1. Alan Brown Silver badge

      Re: So Tesla issues no dividends, makes no profit and the shares are several $100 each....

      "It costs about 3x more to compress or cool than to make in the first place. It's intellectually satisfying ("pollution" is water) but otherwise it's an enormous waste of money, given most of it made in CA is from natural gas anyway."

      The only practical way to produce hydrogen without carbon is using nuclear powered process heat and if you're doing that you might as well tack on a few carbon atoms to make it easier to handle. There are more hydrogen atoms in a litre of gasoline than a litre of LH2 and if you're making synthetic octane the pollutant levels are low.

  11. Anonymous Coward
    Anonymous Coward

    All hail the bloke off this island earth

    I want the weird coiffured one to win here but cant help thinking of the pioneering at the time canals/tube lines/cable companies that failed and were sold off for a few beans to someone unencumbered with all the debt.

    Maybe a load of dozy old gits like gm or ford get to own it one day but with a bit of luck they will be toast first.

    1. Steve Davies 3 Silver badge

      Re: Maybe a load of dozy old gits like gm or ford

      Nice one! A wonderful description of them. Unless they get their act together big time, it will be them not Tesla that go to the wall.

      GM has a few thousand Bolt EV's sitting at the factory in the USA. There are orders for more than this number from Norway alone but they won't ship them to Norway. Why? Who knows eh?

      The Model 3 is built for the USA. Saloons are not the most popular vehicle type in Europe. That is the Hatchback. Tesla don't yet sell an affordable Hatchback or SUV/Crossover. That gives other makers a chance to get their act together. The Model 3 is also priced pretty high for most people here.

      The new Leaf (to be build in Sunderland) is the sort of car Europe needs but it needs at least 200 miles of range and to cost less than £30K on the road. Get that right and it will be a winner.

      VW and BMW are talking about 2020 or even 2022 for mass market EV's. Good luck to them.

  12. MMR

    The sales are increasing yet people still can't wait for Tesla to collapse and Musk to fail. As if it will give them a great joy to say "I told you so".

    Creating an automotive company from virtual zero in this age is incredibly difficult, nevermind challenging existing carmakers and most importantly consumers and their backward thinking.

    1. Voyna i Mor Silver badge

      "The sales are increasing yet people still can't wait for Tesla to collapse and Musk to fail. As if it will give them a great joy to say "I told you so"."

      Far from it.

      A lot of us would like him to succeed, but we know enough about engineering and its history to know that pioneers usually fail. Economics is said to be the dismal science; engineering is about the affordable.

  13. Anonymous Coward
    Anonymous Coward

    I think it's going to be a combination of technologies - horses for courses as it were that prevails as leccy power is unfeasible for me if it wont get to Glasgow and back in a day, total distance 896 miles. Right now, I can do that on one tank of diesel.

    Since I'm too lazy to separate the posts...

    - Hydrogen Fuel cell. By product is water (vapour). Does a 71% water world need more?

    - Musk reminds me of that Delorean fella.

    1. Adam 52 Silver badge

      "leccy power is unfeasible for me if it wont get to Glasgow and back in a day, total distance 896 miles"

      I've never understood this argument. How often do you do Glasgow and back in one day? The market size for people who need 900 mile range and can't rent a car for the once a year that they do must be vanishingly small.

      "Hydrogen Fuel cell. By product is water (vapour). Does a 71% water world need more?"

      Ah, we don't get the joke icon on the mobile version.

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