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Published on June 24, 2018 |
by Carlo Ombello
June 24, 2018 by Carlo Ombello
Originally posted on opportunity: energy
This is the time to do or not to do for Tesla and his detractors because the first half of the year 2018 will end in the next few days. An overload of new Tesla over the past year has resulted in a passionate and passionate debate about the future of the company that is definitely changing the global auto industry. Perhaps the most resounding of all is the "cash burn" mantra that many media, such as Bloomberg, as well as Wall Street people, have continued to spread on the web, television and newspapers like Elon Musk is pushing Model 3. All this noise and doubts should now come to an end, the forecasts being replaced by real numbers at the end of the second quarter. What to expect?
Bloomberg is quaint, but the superficial representation of how Tesla invests his money.
A host of updates are expected, whether in the official Tesla Q2 reports to investors or through a very likely series of Twitterstorms by Elon Musk (short sellers are warned). Let's not forget that separate major announcements from Tesla should not be ruled out in the coming weeks, leading to a revenue call in early August that promises fireworks. All of this will come from the unprecedented amount of capital that Tesla has increasingly invested (or burned, according to some) in order to get into the production of electric cars in the mass market.
Vehicle production will undoubtedly make the headlines first, because everyone's obsession with model 3's ramp numbers will not fail to find some relief in the actual numbers. No more uncertain forecasts or wild assumptions. All of this has been made important because Tesla has repeatedly missed its own forecasts since last summer, halving its target of 5,000 model 3 weekly units by 6 months until the end of the month. June. In a previous article, I anticipated T2 production between low and high scenarios, which would translate into something between 25,000-38,000 units produced from April to June. Cumulative production is important because weekly numbers have so far been a very unreliable metric (check out Bloomberg's Model 3 for more confusion).
It seems likely that some 26,000 units will have been produced by June 30, a weekly average of 2,000 units. If confirmed, this is good news, as it would clarify uncertainties about the progress of the ramp. If not achieved, he may cast new doubts. Any higher figure will inevitably look very positive, and a sustained peak in production in late June could very well be the most significant element. With the new line of tents at Fremont now operational, weekly rate updates are also paramount for the overall feeling. As a result, we can expect to focus on June's weekly data, as well as forecast production figures for July and longer term. These numbers will set the media on fire. So how about Model S and X instead? While Model 3 has diverted information, flagship models should not be overlooked, as the expansion of Tesla also depends on their continued success. Many bear Tesla will look at these models to find a possible weakness.
Bloomberg's Tesla cash flow chart shows a lot of red.
Then, on the agenda, there is the cash flow. The famous Bloomberg chart above highlights what many see as a very bearish indicator for Tesla, who would now be gone with a thin line of life before returning to the markets in search of more money. It can be noted that this is actually an indication to the contrary, the company pushing to the final breakthrough after a 10-year run to electric dominance, which inevitably requires heavy investments before profitability.
The second quarter results will only be known in August, but it seems likely that Elon Musk will add good financial news to Twitter, which suggests the forecast of the third quarter and fourth quarter that will not fail to delight Tesla shorts. Profitability is the word, and though the second quarter may well lead to another period of deep red (perhaps the worst), Musk has repeatedly promised a shift in the coming quarters, supported by recent news of layoffs and restructuring. Any specifics on the profitability levels of Model 3 could also cause shockwaves in the markets, as Elon Musk clearly intends to prove that the shorts are not correct with the recent warnings of A "next level short of the century". If Elon Musk for once be timely and over-delivered on the above, then his flamethrower Boring Company will be helpful.
Is it then? Not even close, more news could come from many sides. The progress made on Tesla Energy could be interesting unexpectedly, as will the news on battery costs, which are reduced to a level that Tesla competitors are unable to match. To add more fuel to the fire, an update on the new factories in Europe and China is imminent, as well as on the Supercharger infrastructure. Oh, and what is this new batch of expansion at Nevada Gigafactory 1? Or, how about a technological breakthrough to widen the gap with competitors and increase the Tesla advantage in the electric vehicle and energy market. We also need to hear about the Semi, the new Roadster, the Model Y, and who knows what else, which could lead Tesla to exponential growth so well led by Musk and his core team. After all, silver mountains have been "burned" and we will soon see if they have actually become ashes or perhaps something more substantial. Meanwhile, we could very well be surprised by announcements on joint ventures or new investors joining the Tesla battle for sustainability with other ideas and capital.
Whatever the case may be, history is going on for Tesla, for the future of the auto industry and for many – many – speculators in the stock market. The show begins next week. Stay tuned.
About the author
Carlo Ombello Carlo Ombello is an environmental engineer based in London. He writes about the environment, sustainability and green technologies on his blog: Energy.
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