An update on the production of the 3 "model could be the most important factor" in Wednesday's earnings
Photographer: Dania Maxwell / Bloomberg
A quarter later, speculators speculate not only about the magnitude of the last loss of Tesla and the silver burn, but also if Musk strikes a patient or irritating tone. "We expect Elon Musk to be more measured on the earnings appeal," said Gene Munster of Loup Ventures, who warned that a new performance would result in "a material loss of investor confidence . "
to be labeled "boring, bone issues" again by Musk:
Are you really sure you have enough capital?
Musk has ruled out the need to sell new stocks or bonds this year, insisting that Tesla will be able to finance itself as it manufactures more model 3 sedans. It was [tweetéen19659012] last April that he expected Tesla to be profitable and to have a positive cash flow in the third and fourth quarters, "so no need to raise money," and reiterated it since
]. likely to push the CEO on s & # 39; he can afford to stay so categorical. On average, they predict that Tesla will report negative free cash flow of about $ 900 million for the second quarter, according to data compiled by Bloomberg. At the end of March, after burning at least $ 1 billion in the last three quarters, the company had $ 2.7 billion in cash.
Joel Levington, Bloomberg's credit analyst, estimates that Tesla will need at least $ 2 billion. This year, while Cowen's Jeff Osborne is expecting a $ 2.5 billion convertible debt issue in the fourth quarter.
For the future, Musk has drawn up a long list of future expensive projects, including construction factories in China and and bring out new vehicles such as the semitrailer the car Roadster sport and the Y model crossing . According to David Tamberrino of Goldman Sachs, the company may have to raise $ 10 billion by 2020.
This giant tent from the Tesla factory in Fremont, California has allowed the company to "clean up. company to win the race to achieve a weekly production goal of 5,000 cars. model 3.
Photographer: David Paul Morris / Bloomberg
Can you continue to take the pace of production with model 3?
Tesla managed to make more than 5000 models 3 in the last week of June, thanks to Hail Mary heroics. The company landed on a production line from Germany aboard a cargo plane, adopted a 24-hour program and erected a massive tent in the car park from its assembly plant. "The understanding of where the production of Model 3 is today is the number one priority for most investors," wrote ISC analysts George Galliers and Arndt Ellinghorst, in a report. "Investors want to know what is the constant rate today and when it reaches 5,000 units a week, it would also be useful to know the steps and cash requirements to get to 10,000 units a week."
An update on the production of the 3 "model could be the most important factor" in the publication of the results, Ben Kallo said in a note to customers. "We continue to believe that Tesla could have a higher sustainable production rate than many expect and that management's comments could be a positive catalyst."
How profitable are these sedans?
Another measure that is the subject of much speculation is the gross margin that Tesla achieves with Model 3, a measure of the income that the company retains after the costs associated with its production.
versions of the vehicle, with a high-profile $ 35,000 base model that is still not in production. But pulling all the stops to make these cars may have been expensive. CNBC reported Tuesday that the company had sent out-of-state employees to equip its assembly lines with vehicles and batteries and place them in hotels.
"The manufacturing margin on Model 3 is the main driver for Tesla to reach a positive operating cash flow," writes Colin Rusch, an analyst at Oppenheimer in a report. The results will be dictated by labor costs, recovery costs and the share of production and deliveries that are the most profitable, he said, warning that the company " currently has an abnormally high level of activity for Model 3 ". Tesla manufactures components such as seats itself instead of buying them from suppliers, according to a Consumer Edge analyst, James Albertine, who will start paying. "Like the scales in Model 3, these outsourcing decisions will reap considerable benefits over the margin of 25% or more of Model 3's gross margins," he wrote in a report
Tesla working at the company. Fremont factory.
Photographer: David Paul Morris
Does your service need repairs?
Tesla owns and operates all of its delivery and service centers, avoiding traditional dealers. As the customer base grows, these operations are showing signs of tension, particularly in key markets as in Norway.
It is also not known who is responsible for service efforts after a series of departures.
Jon McNeill, who was President of Sales and Service, left Tesla in February and is now the COO of Lyft. Karim Bousta, vice president of global service and customer experience, also left for the ride-hailing company. Musk announced in June that Tesla would fire 9% of the workforce, and that service representatives and technicians were among those who were cut off.
How did the demand for Model 3 stand up?
The "net number of remaining model 3 bookings" was about 420,000 at the end of the previous month.
Then, a few weeks after inviting all Model 3 reservation holders in the United States and Canada to set up their car, the company opened the flood gates. He made the ordering process available even to those who had not thrown the $ 1,000 deposits that he had started to receive from potential customers in March 2016.
Relocations raised questions on the status of the queue and demand. Tesla crossed the cumulative threshold of 200,000 US vehicles in July, which means that in 2019, customers will no longer be entitled to the total federal tax credit of $ 7,500 for the purchase of electric cars. demand for the different version of the vehicle would greatly benefit investors, "said Cowen's Osborne.
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