Tesla Motors In The Black, This Week, Tweets CEO Musk

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'Revenge of the Electric Car' premiere: Elon Musk arrives in a Tesla Roadster

'Revenge of the Electric Car' premiere: Elon Musk arrives in a Tesla Roadster

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Some of the biggest news of the year has been broken on social networking site, Twitter.

For Tesla CEO Elon Musk, that includes regular tweets about the company.

Yesterday, he tweeted that Tesla Motors [NSDQ:TSLA] was in the black.

"Am happy to report that Tesla was narrowly cash flow positive last week. Continued improvement expected through year end", he announced.

No doubt the news is music to the ears of Tesla fans, not to mention Musk himself--but at the same time, it's important to put things in context.

While Musk expects things to improve further, this is still only one week. As such, it's a minor success, rather than a major one--and Musk no doubt knows that there's still a lot of hard work to come.

That includes keeping up enough cash flow to stay in the black. Not necessarily the easiest of tasks, particularly as some buyers are still waiting for their cars, delayed by production slippages and EPA certification.

Tesla's expenditure will increase as it ramps up production, and needs to deliver cars quickly to cover its costs. Tesla has also had to delay production this year, owing to delays in acquiring parts from suppliers. Small setbacks like this aren't uncommon, and will ultimately lead to fluctuating profitability.

We've been here before, of course. Tesla achieved profitability back in 2009 while it was building the Roadster--but that didn't continue, and it's unlikely to continue this time--at least in the short term.

It's certainly not an insurmountable challenge, but the message here is simple: positive cash flow won't necessarily stay that way.

One swallow does not make a summer...


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Comments (32)
  1. Adding a negative tone to good news?

  2. I prefer "realism", John.

  3. Realism yes but can't Tesla have at least one article on GCR that congratulates them when they're having a good day? They won Motor Trend's car of the year but instead of an article about the award GCR jumped on Elon's comments about Mitt Romney's debate comments. Couldn't we give them a pat on the back without a reminder of possible doom and gloom?

  4. An unconfirmed tweet from a CEO is not a legal financial report.

    While Musk is certainly in a position to know, "profitability" or "breakeven" at Tesla has been somewhat questionable before--as in the single month in 2009 that the company claimed to be "profitable" which most analysts concluded was a requirement for the granting of DoE ATVM loans.

    The important financial data will come in the company's next SEC quarterly filing, within the next few weeks. At that point financial analysts can weigh in on the various commonly accepted financial metrics.

    Tweets from Musk are nice, but the last time we wrote about one, the company itself asked us to add a qualification to our piece. Ahem.

  5. Ok I'm just saying we don't always need a reminder of negative things when positive or potentially positive news is reported. We all know Tesla needs to stay hard at work to stay afloat, I'm not trying to start an argument.

  6. Absolutely. Also, Tesla with its Roadster has changed the auto industry. We have all these variety of plug-in cars today only because Tesla Roadster has shown everyone that battery vehicle is possible and its production can be profitable.

  7. CDspeed - if you've not found any Tesla-positive articles on GCR, then you're really not trying hard enough.

    Here, I'll help get you started: http://www.greencarreports.com/news/tesla-motors

    If you can find any indication of permanent negativity towards Tesla, rather than what we're ACTUALLY doing - balanced reporting - then I owe you a drink next time I'm in the U.S.

  8. Without checking your provided links, yes GCR does produce excellent articles on Tesla. But some articles that you'd expect to end on a high note sometimes end up sounding like a cautionary tale or end by reminding us of things we'd like to put behind us like the presidential election. I meant no insult, I read this site regularly because its one of the best on the net.

  9. Realism could also have been adding context that unlike other EV companies, Tesla is still in business. They have shipped cars with relatively few problems and won a host of awards. all that in addition to making positive cash flow for one week, pretty good additional context available.

    I can't help but think the context would be different for another car company. If this had been Toyota bring out a new car, would there be so much negativity centered around them possibly being in the red on it for six months? I don't think so.

    There is a long distance between reaching Tesla fan-boi status in this writing and current unnecessary negativity.

  10. If by "adding context" you mean the hundreds of other articles we've written on Tesla since the company started, then we've already been doing that.

    You can appreciate that we can't say *everything* about the company in one article, and must attempt to concentrate on the story at hand.

    Again, it's not even a particularly negative article - just a realistic one.

  11. Are you kidding me?
    "It's certainly not an insurmountable challenge,.." is not the language of impartial journalist to news of a company being in the black.

    If I had you speak at my birthday party, it would be something like this.

    "Yes it is true that John has made it another year. However, there are a lot of bad things that could happen to him in the year ahead. For a man of his age, prostate cancer is a strong possibility, I mean just look at his family history. Also, all this bicycling to work... he may well be hit by a car and seriously injured.
    After all, one year of life doesn't mean you will do it again the next year.
    Just keepin' it real bro."

  12. Oh Antony, and just when I had forgiven you for the whole "no map pockets = lack of interior storage space" thing. Now this. Two swallows don't make a summer either, but we're into multiple birds here.

  13. Cash Flow positive is a good thing but that's typically EBIDTA, Earnings before Interest, Taxes, Depreciation, Amortization.

    It's good, but, the oddity of accounting is one can be profitable and die from cash crisis, or one can be generating cash and lose money like mad.

    The best news in my opinion for Tesla was Car of the Year, it's a big deal and will really drive sales.

    What's interesting is in 2010, the Volt was Car of the Year, now in 2012, the Tesla is Car of the Year. That' makes in the last 5 years 2 of the top 5 green vehicles.

  14. Agree. Musk added a qualifier ("narrowly"), so it's not like this is news. It was clear from the tweet (well, to most of us) that while good news, there is a long road ahead still.

    Adding the negative spin was unnecessary. The tweet was realistic. And should be celebrated for what it is.

  15. "There is a long road ahead still"

    Yes, and we've added context to this, using both current operations and past evidence.

    Yet again: It's not "negative spin" - it's realism. We're not here to report sunshine and butterflies, we're here to report news. Musk saying that Tesla has broken into the black is undoubtedly news, but as you've pointed our yourself, "there is a long road ahead still."

  16. The repeat cries of "it's realism" and "we have written other articles" only confirms the negativity.

    I'm with Bonnie, Musk's tweet was qualified, no need to pile on with doom.

  17. I disagree. If Tesla managed to make money with current production rate they will certainly make it with bigger rate planned next year. The only potential problem is demand, possibly after 13000 or so cars are sold to fulfill current reservations. But I think many more people will be willing to buy Model S when it's readily available. Just in US. And if you remember, Tesla's business model is to make about 25% profit on each car sold. That's a lot to keep the company afloat. Also, Model X and other model are coming. I'll better go buy some more TSLA stock :)

  18. an all electric car does appear to have a lower assembly cost as the skateboard handles most of the nasty stuff in a ICE car. the cockpit becomes much more simple

  19. To be clear, I don't believe Musk was implying that Tesla had reached the point of operations that indicated that Tesla was profitable, or long term cash flow positive. But if it's the first time since they started production of the Model S, then it's a milestone worth tweeting.

  20. How did we go from 1) Telsa is in the black, to 2) a long list of concerns, to 3) well at least these are not"insurmountable" problems.

    Oh yeah, that is a positive piece. Things are dicey at Telsa, but the good news is that they are not "insurmountable."

    The news of Tesla being in the black (if only marginally) should have been greeted with an hint that things at Tesla might be improving compared to the past.

  21. I think this is more smoke & mirrors, financially speaking. They were $85M cash flow positive at the end of the third quarter, after booking $200M in additional funding because of offering additional stock to be sold (and orignial stock holders diluted) so they could pay their bills.
    Tesla appears to be building vehicles at twice the price they are selling them for. This is not sustainable. Their long term debt also increased dramatically and as did their inventory as they shifted costs of goods sold to their balance sheet as inventory.
    At end of 3rd quarter the spent more on sales and marketing, then goods sold! Also not sustainable.
    What surprised me was in their SEC 3rd Qtr investor report, they are leaving warranty costs out; why?

  22. @Anthony: I challenge the statement that Tesla was profitable when building the Roadster. According to the SEC reports, I have reviewed, Tesla has never had a profitable quarter. Can you correct me?

  23. http://www.greencarreports.com/news/1033998_tesla-motors-achieves-profitability

  24. Maybe Tesla was profitable on paper only to receive that government loan. But they were close to profitability at least and they were spending money on new model development. Let's just wait for a year or so and see if Tesla goes up or down.

  25. I don't know if any of the above is accurate, but it is certainly a more interesting critic about the state of health of Tesla. It would be interesting to see more details about Tesla financial condition compared with other similar companies (assuming they exist).

  26. GCR seems a bit of a reputation for taking a negative angle in most reporting on Tesla but I don't really see what facts warrant raining on Elon Musk's parade in this case. Musk tweets "Continued improvement expected through year end" and I see no reason why that should not be the case. Tesla is leaving the cash bleeding development phase and moving into the cash earning production and sales phase. So unless the author has hard facts supporting the theory that this might just be that one swallow that does not make a summer other than some reminders of past problems that have little bearing on the phase Tesla is currently in, this negative slant on otherwise positive news just seems negativity for negativity's sake.

  27. i take this ONLY to mean that the on the fly balance sheet is in the black. does not mean they have paid off their debts. only means that today they made more money than they spent today. still have to address yesterday's red.

    its still progress. problem is how long can you sustain selling a top tier vehicle? they are still meeting initial demand. they need to get something that can sell in sustained volume soon

  28. when Tesla is scooting around on MARS
    people will be dropping,yes,their JAWS
    TESAL ELECTRIC,on MARS,driven by ,guess who,yaah

  29. Antony, the readers have spoken. Ditch your "realism" and instead take on "impartiality". Realism is just a pragmatic term for negativity after all.

  30. Not all readers, by any stretch. And your claim that realism just means negativity is ridiculous, as I assume you really understand.

    GCR wouldn't need to be so "negative," , meaning using real world facts and a broader perspective, if so many ignorant Tesla fan boys didn't seem oblivious to so much. How many comments have we read here about Tesla "never missing a deadline" and now look at the internet where this has already become "Tesla is already profitable," showing that few people have even the slightest clue about cash flow, margins, EBITDA/EBIT, and true profitability.

    Musk's announcement is not verifiable and is good news but the context of Tesla still facing long terms hurdles is true, fan or not. No need to sugarcoat to appease.

  31. No need to bitter coat either, which is clearly the case in this article. That's what I mean by negativity posing as realism.

    Yeah, we get that Tesla isn't there yet. But their product is fantastic, and they're making progress on the other fronts. I like John's analogy of birthday speeches.

  32. If it's clearly the case, I guess I didn't get the message. I agreed that the tone of one previous article here was unnecessarily negative, but if you really consider a brief mention of Tesla's long term struggles "bitter coating," then there's really no point in a discussion.

    I respect John Briggs' opinion, but the birthday speech analogy was childish and so far over the top I was embarrassed for him. Talk about bitter!

    The fact remains that Tesla's cash flow positive info was from an unverifiable tweet and that long-term problems remain and will continue to do so. If that's negativity, I suggest you never read a word in Ward's, Automotive News, etc...

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