Really great news! But something that shouldn't be overlooked is the discounts they gave in Q3 to push deliveries up.<p>First, those that know me know that I am a Tesla FANATIC. My girlfriend once challenged me to not talk about Tesla (motors, energy, something) for a 24 hour period. I dunno if I've ever done that honestly. I'm also an owner (no surprise given my fanaticism, lucky to be able to afford one). And I also own some TSLA.<p>Elon sent a company-wide email in Q3 to push sales to show profitability. I don't think its a fluke but they did something they never really do to help reach this number: they offered significant discounts on vehicles (new, pre-owned, showroom). Like, really big discounts (relative to the price of the car).<p>That certainly helped. Elon also sent an email at the start of Q4 that NO MORE DISCOUNTS are allowed. So I'm really very interested to compare Q3 to Q4 when that comes.<p>I also happen to know a lot of the people who bought a heavily discounted Tesla in Q3 feel kind of burned that right at the beginning of Q4 Tesla announced the new Autopilot hardware (that isn't retrotfitable on old vehicles). If you did your homework on Tesla though, this wasn't a surprise. It was expected that Tesla would make some big announcement to spur Q4 sales especially after Elon said there wouldn't be any capital raises in Q4 while he expected to hit Q4 numbers. You generally can't do that without some big news.<p>Just wanted to color this news with that. I'm still very excited!
The Economist recently did a good article on the financing of Elon Musk's companies that flew under the radar of Hacker News that probably warranted further discussion [1] [2]. (Though the author of that piece completely misses the relative importance of each company to Musk, suggesting "he could try to sell [...] SpaceX, through gritted teeth, to a defence firm")<p>It's unfortunate there's a bit of a reality distortion field around discussion Elon Musk's companies sometimes. Maybe because everyone wants his companies to succeed...<p>[1] <a href="http://www.economist.com/news/business/21709061-entrepreneurs-finances-are-jaw-dropping-inventive-and-combustible-his-space?fsrc=scn/fb/te/pe/ed/countdown" rel="nofollow">http://www.economist.com/news/business/21709061-entrepreneur...</a><p>[2] <a href="http://www.economist.com/blogs/economist-explains/2016/10/economist-explains-21?fsrc=scn/fb/te/bl/ed/canelonmusksbusinessempiresurviveandthrive" rel="nofollow">http://www.economist.com/blogs/economist-explains/2016/10/ec...</a>
Related, at the beginning of Q3 Elon Musk sent email to employees urging to cut costs:<p>> I thought it was important to write you a note directly to let you know how critical this quarter is, The third quarter will be our last chance to show investors that Tesla can be at least slightly positive cash flow and profitable before the Model 3 reaches full production.
Direct link to the letter: <a href="http://files.shareholder.com/downloads/ABEA-4CW8X0/3100415019x0x913801/F9E5C36A-AFDD-4FF2-A375-ED9B0F912622/Q3_16_Update_Letter_-_final.pdf" rel="nofollow">http://files.shareholder.com/downloads/ABEA-4CW8X0/310041501...</a><p>> Total Q3 GAAP revenue was $2.30 billion, up 145% from Q3 2015, while total Q3 gross margin was 27.7%, compared to 21.6% in Q2. Total automotive revenue was $2.15 billion on a GAAP basis, up 152% from Q3 2015. Our final Q3 delivery count was 24,821,over 300 more than the estimated delivery count we shared on October 2nd. Deliveries increased 114% from the third quarter of 2015, and was comprised of 16,047 Model S and 8,774 Model X vehicles. In addition, 5,065 vehicles were in transit to customers at the end of the quarter. These vehicles will be delivered in Q4.
One thing to note, I have a few friends who work at Tesla service centers. They cut A LOT of corners when it comes to service to show profits this quarter. For example, for the location that one of my friends works at (which happens to be one of the busiest locations in Southern California), they sold almost every single loaner vehicle as a used car.
I imagine this is because the majority of revenue is spent on growing the buisness, rather than going into profit (As profit = revenue - expenses). As Tesla still has a lot more space to grow. Same method Amazon did until recently for years.
SCTY acquisition is locked up.<p>EDIT: Elon just said on the investor call "Our current plan requires <i>no capital raise whatsoever for the Model 3 production</i>. Solar City will be neutral to cash contributor in Q4.
The biggest news in this release is gross margin.<p>Gross Margin Jumped from 26.7% in Q2 to 33.2% in Q3.<p>For reference, MRQ,<p>GM gross margin: 13.9%<p>Toyota: 23.6%<p>VW: 19.9%<p>Granted, those are not luxury auto makers, but Tesla is more profitable on a gross margin basis. That margin fuels everything from cash flow to R&D spending. 33% for an automaker is huge.
Another take on the Tesla financial story:<p><a href="http://www.zerohedge.com/news/2016-10-26/tesla-earnings-smash-expectations-after-dramatic-change-reporting-methodology" rel="nofollow">http://www.zerohedge.com/news/2016-10-26/tesla-earnings-smas...</a>
Cashed in a large amount of ZEV credits, for a one-time revenue bump of $140MM. Excluding that, GAAP loss was $117MM. Big increase in accounts payable. But, all things considered, that's not bad.
Can someone explain what this[0] means? It would seem that when you buy the car, you don't own it after all.<p>[0] <a href="http://www.huffingtonpost.com/entry/tesla-self-driving-car-network-uber-lyft_us_5810cebfe4b001e247df8fe2" rel="nofollow">http://www.huffingtonpost.com/entry/tesla-self-driving-car-n...</a>
It may even be a bad things if they have profits considering the kind of revolution they are attempting on the car industry. I hope though, that it means things went better for them than expected.
I'm impressed and skeptical of the substantial increase in production. A 70% increase in production in one year would likely require substantial changes in the production stages. Hopefully Tesla didn't cut any corners to hit this production number; I'm hopeful that they just scaled back their production initially and now show their "full potential", or added a lot of new machinery in their production line(s). Maybe they will reach the 500,000 target.
I've been reading the book about Elon Musk, great read. This is all the more impressive considering all the stories of times they almost went bankrupt.
"Of 20 analysts covering the company, seven have a "sell" rating on the stock, four rate it "buy" or higher and nine have a "hold", according to Thomson Reuters data."<p>=== proof that something is very wrong with a world defined by speculators