Seeking Alpha’s recent story on Tesla is highly critical:
What this above analysis tells us is that the opex is accelerating more rapidly than the installed base – even for existing products. Combined with anemic sales, we have accelerated cash burn, worse than expected operating cash flow and free cash flow. The need for cash has become direr.
We continue to highlight that Tesla does not have a sustainable business model and is completely dependent on capital infusions for survival.
The management narrative is increasingly fantastic and not credible.
All it takes is a dislocation in capital markets to have Tesla spiraling towards a disaster. The chances of bankruptcy remain significant.
The prevailing narrative about Tesla is of a fantastically innovative company on the cusp of revolutionizing the automobile industry. I’m skeptical. I think it’s more like a rent-seeking con man trying to coax more money out of credulous investors. Could it be both?
Volvo believes it,they say they will discontinue production of the internal combustion engine by 2015, partially to meet the challenge they say they face from Tesla. They’re going all electric or Hybrid.
I think it’s so much P.R., The highways are lined with gas stations, and I don’t see any recharging stations being built, not to mention the grid capacity to go all electric that soon, if ever.
From here, it sounds like the typical Silicon Valley startup. BTW, did you see the article a couple of days ago stating China Inc was going full tilt boogie on making house/car size lithium batteries? Interesting times ahead.
Or, said another way, they’re using their enormous overcapacity to dominate manufacturing in yet another industry. Anyone with half a wit knew that was inevitable. Something else that too frequently goes unmentioned: batteries made in China aren’t as green as those made elsewhere due to the higher energy intensity in China and their poor practical environmental standards.
Toyota, Honda and VW have actual, real models for how to make their electric divisions profitable. Tesla is one demand shock away from screaming for a bailout.
Innovation is not the same as a viable business model.
It should go without saying that if Ben is correct and a Toyota can do it, then Musk should do it. It’s not the taxpayers job to ensure the production of electric sports cars.
I rode in one yesterday for the first time. An Amsterdam taxi of all things. Nice enough car, but I wouldn’t trade it for a Porsche for all the tea…. I think that’s what people miss. Electric may be fine for a Prius everyday utility go to work vehicle, but only very few sports car drivers. Question #1: “Why do people buy?”
Whether Toyota has a viable business model for hybrids or EVs is still an open question. Relatively few continue to be sold and there’s still a waiting list.
I’m not saying their business models will be successful; just having a model isn’t a guarantee of profit ability. But they do have “blueprints” for guidance toward an objective. Musk seems unable to focus sufficiently to do the same, questing for a product without considering how that product would fit into Tesla’s longer-term success.
“profitability”
Personally I think that when the hysteria dies down and people really understand the total relative environmental impact of the two, and the miniscule, if any, benefit from electrics that it will all go away. In our lifetime at least.