Tesla Now Delivering Model S, But Cash Crunch Judgment Waits For Financials Page 2

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Tesla Model S

Tesla Model S

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We'd add that building cars is not only breathtakingly expensive, it's also very, very hard to do right. That's why it usually takes new car companies 10 to 20 years to learn how to design and build cars to global standards.

Today, speculation on whether Tesla is in the midst of a cash crunch is relatively pointless.

No analyses can assess the company's situation as of mid-January, because Tesla has not released data since September on production, sales, revenues, expenses, or average transaction price and cost basis per car sold.

All public financial data is now more than three months old, and Tesla now appears to be building hundreds of cars a week, whereas on September 30, it obviously wasn't.

Wait for February

So, Tesla could be perilously close to a cash crunch, or it could now be covering each week's outflow with revenue from cars delivered.

And analysts will only be able to weigh in on whether the company is headed toward financial sustainability once they see that data--and likely that of several more quarters as well.

After all, while achieving something few thought could be done--building a fast, stylish, comfortable, all-electric luxury sedan--is a remarkable achievement, it's a separate accomplishment from doing so profitably and generating enough cash to fund expansion and new models.

One encouraging sign: So far, no major quality issues with the Model S cars delivered to date appear to have surfaced. A few owners report that their car would not release the charging cable, but the problem seems to be limited.

Tesla still tiny

Finally, note that Tesla's market capitalization of roughly $4 billion would still be a drop in the bucket if a major global automaker wanted to buy the company.

That $4 billion is less than half the annual R&D budget of a Toyota or Volkswagen or General Motors.

While Tesla Motors has already done remarkable things, it is still a tiny company by global automaking standards.

Which means that if it survives a near-term cash crunch--or even if it doesn't--it may be coveted by one of those global makers.

Is pessimism warranted?

Sinal is clearly negative, saying Tesla's stock "in worse shape even than such high-profile Internet IPO flameouts as [online game developer] Zynga and [social group-couponing company] Groupon." Others disagree, clearly.

What do you think? Is Tesla Motors stock a sensible investment for the short term? Long term? Will the company survive?

Leave us your thoughts in the Comments below (and, please, stay respectful).


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