Bad news, as Tesla has lost money in excess of $293 million in Q2 2016 alone. The company, it has been reported, was unable to recover from what many in the publishing industry, including Tesla employees, have called a “Production Hell”.
Recent months have been anything but rosy for Tesla as the company has come under intense scrutiny from the media.
Many questions have been raised regarding Tesla’s ability to strengthen its production facilities to cater to more than 400,000 Tesla Model 3 orders.
Not only that, but Tesla is also under immense pressure to ramp up its production scale so that it can handle even more orders that will, almost certainly, follow after Tesla Model 3 car is released.
Those post-launch orders alone are expected to be in hundreds of thousands if not more.
But the adage “the best predictor of future performance is past performance” does not apply to a technology company with the expertise of Tesla.
Tesla’s founder Elon Musk is often considered to be the real life incarnation of Tony Stark (famous character behind the mask of Iron Man), and he certainly has the resume for it.
He is the founder (or co-founder in some instances) of companies such as PayPal, SpaceX, Tesla Motors,X.com, Zip2, and Musk Foundation.
If that wasn’t enough, then he also is an engineer (along with being an inventor) and has a Ph.D. degree from Yale University. The Ph.D. degree was an honorary one but who cares as long as you get one.
With Elon Musk’s achievements out of the way, it isn’t surprising to see industry insiders backing Tesla Motors even though so much could go wrong with the company.
In fact, some aspects of Tesla are already on a downward spiral as the company released its financial earnings and reported a loss of $293 million for only Q2 of this year.
Do keep in mind that the loss of $293 million that Tesla has suffered, is on a GAAP basis. GAAP, here, stands for Generally Accepted Accounting Principles.
If Tesla is scored on a non-GAAP basis, then the company has lost about $150 million last quarter i.e., Q2 of 2016.
The non-GAAP basis gives consideration to concepts like leases which GAAP basis does not account for. That could explain why the non-GAAP-based loss for Tesla is lesser in amount than the GAAP-based one.
These figures don’t necessarily mean that Tesla didn’t take home any cash at all. According to figures, Tesla took in about $150 million in cash flows, this quarter, from operations. This $150 million figure is on based on GAAP.
The $150 million cash flow takes into account the order deposits for Tesla Model 3 car.
But the problem with Tesla’s financial reports is that the company spent about $295 million on things like customer service, production capacity increase and of course the much touted GigaFactory (on which the company is betting its entire future).
Despite the $295 million loss, Tesla has put out a statement saying that the firm is on track and will deliver the planned 50,000 Model X and Model S Tesla cars in the remaining six months of the year.
Tesla has also been criticized for promising its shareholders and its followers that the company will be producing half a million batteries for its electric cars every year at its Gigafactory.
No doubt, Gigafactory is a massive structure even now when it isn’t anywhere near completion. And when it does get finished some time in the future, it would be the world’s biggest factory by a country mile.
But that, as mentioned before, hasn’t happened yet. Right now, Tesla is struggling to allay fears that the company won’t be able to provide actual cars let alone batteries for those cars.
Tesla has to prove that it can provide its customers electric cars before it can even begin to think about providing batteries for those potential electric cars.
We have to remember that Tesla did run into problems when it first started production for its Tesla Model S car and even now, the situation for Tesla Model X car doesn’t look all that bright.
The task is no doubt very uphill from here on for Tesla, and it will push the company to its absolute limits if it wants to “electrify” American car market.
Who can forget how many problems Tesla had with the company’s previous Tesla models?
Reports pointed towards problems with the seats of Tesla Model X cars, and there were also problems with the doors.
Not only that, Tesla Model X had a gigantic Windshield which caused problems for a lot of its customers.
Though the enormous windshield on Tesla Model X looked exquisite but it caused drivers double vision problems at night. Drivers also reported getting blinded by sun rays during sunny days.
It was more than an embarrassment for Tesla as the company had hoped that the new feature of a gigantic windshield would prove to be a great idea.
And to some extent, the windshield did provide a great view for the driver. Not to mention that the curves on windshield’s glass looked very attractive. Unfortunately, all that couldn’t make up for the aforementioned problems.
Maybe that experience along with subsequent events forced Elon Musk to admit recently that the company had to go through “production hell” in the first six months of this year.
During, Tesla’s Q2 earnings call, the CEO of the company also said that the brutal schedule resulted in the company getting “hurt”.
No prizes for guessing that despite Elon Musk’s reassurances the company’s production cycle isn’t in top notch condition and proceeding smoothly.
Elon Musk did tell the media that the only reason why Tesla has been having so many production problems is that Tesla is different from all other companies who make cars and sell them.
The CEO said that his company, Tesla Motors, unlike any other company, not only has to make cars and also make the machines that make those cars.
And to give Elon Musk some credit, that is probably true. One shouldn’t forget that the Tesla Model X indeed has some remarkably unique features such as the monopost design of the seats and trendy falcon-wing doors.
Various media outlets have recently reported that Elon Musk does not look like a confident CEO at the moment and that his speeches related to Tesla sound much less exciting than before.
Elon Musk, despite the criticism the company has received from the media, has talked a lot about the efficiency Tesla Motors has been able to achieve in its manufacturing processes.
If he could only talk more about how many Tesla cars are actually ready to be rolled out to the public then perhaps critics would go easy on Tesla. For a while.
Everybody knows how Elon Musks likes to see his company move forward in the future. In an ideal world, Elon Musk would have a Tesla factory that can produce cars through an entirely automated process.
Not only that, but he would also want the process to be super quick. If his talks are anything to go by, then it seems that Elon Musk would also like to see his Tesla factory without workers on the production line since human workers always slow down the pace of any given manufacturing process.
It is also possible that the only humans Elon Musk would have at his factory would be the ones who do stuff related to maintenance, upgradations, and repairs of the super-speed automated car producing machines.
He did refer to Tesla’s Gigafactory as an alien battleship in a recent interview. For the time being, no one knows if Tesla has been able to solve production problems that has cost Tesla so much money and PR headaches.
In fact, the company lost more money than expected and because of that, Tesla has admitted that the company is clearly disappointed with the sale numbers it has been able to put up this past quarter.
Tesla also said that it had reached its funding limit from a banking partner. When banks start to NOT give you money for production, that’s when you know that the company isn’t going in the right direction.
Of course, Tesla can raise a decent amount of money from stock sales and other one-time incentives.
And just for clarity’s sake, Tesla is a company that hasn’t turned a profit in years. In fact, you would be hard pressed to remember if it indeed ever turned a profit.
Though that hasn’t stopped Tesla from babbling about how the company puts most of its money into areas such as research and development instead of saving it to show profits on its financial sheets.
With that said, Tesla is aiming to turn profitable by the end of this year through sales of Tesla Model S and Tesla Model X line of cars.
- Pavlov VR Not Launching Oculus? Here’s How To Fix It - July 26, 2021
- EaseUS Data Recovery Wizard – The Best free data recovery software - October 16, 2018
- The Best 3 Hovershoes Money Can Buy Right Now - September 14, 2018