That Tesla has caused a small revolution with their electric cars, is nothing new. Elon Musk, the man who is being hailed as visionary, brought his vision to life successfully. That was, and still does not go without a fight, because behind the sleek models lies a financial slump.
So for years, it is said that Tesla should ‘settle’ money to produce the cars. An evocative and somewhat populist description. Tesla Inc. – Such as the company name since early this month officially states – indeed presented quarter after quarter loss-making numbers, even hundreds of millions.
Clever math was enough to stick the label ” thousand dollar loss per car. Critics seem to forget the shape, the huge investments that should make the company to achieve the lofty goals. You will be a pretty good guy if you can start-up a company of this size with this level of aspiration without losing ground.
They who analyzes the figures slightly sharper understand the eternal optimism of Musk. In 2010, the year of the IPO, Tesla could be marked a turnover of 117 million. Five years later, the sales counter was about $ 4 billion. 50,000 Tesla’s were sold in 2015, in 2016 76 230. In other words: the line is considerably increased. The huge losses (889 million in 2016) are mainly explained by massive investment in research and development and the creation of huge factories. Investments that cause losses, but cashing the existence of Tesla.
Is a pessimistic view, rightly or wrongly? Of course, Tesla is a risky project since day one. In 2008 the company went almost bankrupt. Musk, wasn’t even the CEO of Tesla, and takes the company over at the low point and officially announced hefty cuts too. As he recently said. “We barely survived. The financing round was closed on Christmas Eve, 2008, in the very last hour of the last day that it was possible. ”
On the edge, but it worked: Musk can count on $ 40 million. It turns out not to be enough, there is more needed to keep their heads above water. Auto multinational Daimler will get an interest of 9 percent in the company for $ 50 million (this share has been sold again). Toyota also bought $ 50 million, but not much later the Japanese sold the share again. In 2010, Tesla goes public. The company sold 13.3 million shares for $ 17 each. This produced 226.1 million.
The main investments are made by Musk, the tipping point is going on. So they are building a huge plant in Nevada, which will be operational from 2017 and should be supplying 500,000 batteries annually from 2020. The batteries are the biggest price tag, the massive approach should drop by 30 percent in costs. In combination with two manufacturing plants in California and Tilburg, it is possible to produce efficiently which increases sales & margin.
After rain comes sunshine
The third quarter of last year, the company was finally able to present profitable figures: 22 million net profit – the best quarter so far. Tesla’s Financial Director Jason Wheeler has an explanation for that. “We invested $ 400 million per quarter in 2015. This year we come to 260 million quarterly investments. We also have repaid a large amount of our debt. “
Presenting profitable figures was a smart move to keep investors and shareholders happy. Especially since it proved to be short-lived. After this peak, Musk had turned the money tap again to make an investment round – a billion just in the fourth quarter. This is the mass production of the Model 3 – the budget model that goes for $ 35,000 over the counter. In 2018, Tesla wants 500,000 Model 3’s roll out of the factories.
Continue to innovate
To cut a long story Musk makes intentional skyrocketing costs to ensure innovation which he so firmly believes in. Does this mean that Tesla is in bad shape? No definitely not. The number of sold Tesla’s grew by 92 percent last year, a development that will continue only with the advent of the Model 3. Will Tesla by then finally be financially sound? Doubtful, Elon Musk thinks identifies a new project that he again will cost billions. And that’s exactly what he’s supposed to do.