8 ms·

An Update from Elon Musk

380 points by JGM564 14y ago

JGM564 14y ago
Exciting quote emphasized in post: "we expect Tesla to become cash flow positive at the end of next month."
- codex 14y ago
  Well, cash flow positive until they decide to develop, test, and manufacture another model, which will again put them in the red. Building cars is a very expensive proposition.
  - witoldc 14y ago
    That's why Obama win is so important to Tesla Government Motors.
    - rdl 14y ago
      I think the DOE loan has probably hurt Tesla's stock price more than it's helped -- the rumors about late repayment, etc. have probably depressed it from 33-35 down to 29. If Tesla hadn't taken $1 from DOE, it would be able to attack Fisker and Chevrolet and others for being Government Motors, and wouldn't have gotten name-checked in Romney's debate answer tonight. The only money MuskCo's should be taking from the government is payment for services (like flying cargo to the ISS, Moon, Mars, selling cars or solar power to them, etc.), not using the government as VC. The government is a horrible VC or lender, and the MuskCo's could do a lot better.
      - jessedhillon 14y ago
        The government is a horrible VC or lender ... What is the proof for this statement? I'm not asking what are the theoretical underpinnings of this worldview; what is the evidence which compels this conclusion?
        PakG1 14y ago
        That's difficult to say, because government investments mostly go into infrastructure and enablement policies, not ventures. But let's give it a shot. USA: Green energy investments, of which some companies have turned out to be outright fraudulent. China: Massive infrastructure and housing overspending and bubble, with much shoddy construction. Housing and construction companies everywhere benefiting from the money only contributing to a high-probability disaster ending. Most Olympics-hosting nations, depending on what you perceive to be an acceptable measure of return.
      - mullingitover 14y ago
        > The government is a horrible VC or lender, and the MuskCo's could do a lot better. 96% success rate is 'horrible'? http://www.greentechmedia.com/articles/read/what-abound-solars-bankruptcy-says-about-the-doe-loan-program/ http://www.greentechmedia.com/articles/read/what-abound-sola...
        rdl 14y ago
        96% on this program so far is possible, but there are numerous other examples of the USG investing in businesses which fail, and even worse records for state/local governments (stadiums and convention centers being the classic example)
        pyoung 14y ago
        There are numerous intangible benefits to these programs beyond the success rate of the businesses. Jobs get created, technology is invented or improved, and supply chains and support networks are created or are made more efficient. While VC's might only care about the balance sheet, the government isn't in this to make money, they are in this to make our lives better.
      - toomuchtodo 14y ago
        If I recall correctly, the DOE loan is very low interest rate, repayment is based on metric milestones, and at the time financing via traditional capital markets was fairly difficult for almost anyone. Seems like Tesla got a great deal.
        jbooth 14y ago
        Yeah, but the government itself is borrowing money at absurdly low interest rates right now. If you agree with the notion that government intervention to get an edge in strategic industries can be a good idea, it looks like a good loan at whatever rate they got (assuming it's higher than a 1/8 of a percent, the gov't turns a profit, too).
        toomuchtodo 14y ago
        If you agree with the notion that government intervention to get an edge in strategic industries can be a good idea, it looks like a good loan at whatever rate they got (assuming it's higher than a 1/8 of a percent, the gov't turns a profit, too). I agree with this notion. Why not use whatever resources available to gain a competitive edge?
      - dredmorbius 14y ago
        The Government can be a fickle VC / angel investor, at times. Especially when there's no broad political support for a particular position. Much as any other investor representing a non-monolithic interest base can be fickle. When the government's all-in (oil, energy, ag, air travel, transport, military), it's very dependable.
    - hristov 14y ago
      Gimme a break. Every government with an auto industry to speak of has supported their auto indusstry at one time or another. And almost every government would love to have a company like tesla in exchange for a few loans that are about to be repaid.
loceng 14y ago
I think people underestimate what an agile and lean startup like Elon seems to be running can accomplish. He's a super intelligent guy with a growing positive trackrecord. The vehicle industry has been waiting for disruption for 20+ years, and the giants finally have lost control and whatever unnatural advantages they tried to maintain. Technology for electric vehicles will only continue to improve, and costs will go down. Luckily for economies very attached to oil they can shift to systems like free re-fueling once a vehicle is purchased; That's pretty incredible and something I never even thought about or imagined possible, though it makes sense and works once the puzzle pieces are all in front of you. P.S. Elon's my new Man Crush.
- toomuchtodo 14y ago
  So I'm not the only dude with an Elon Man Crush. I'm off to go buy a ton more TSLA stock. And apply at an Elon company. Doesn't even matter which one.
  - knodi 14y ago
    I truly believe TSLA stock is a good investment. TSLA is on its way to be the Apple of car manufactures. $ whoami > nobody
    - samstave 14y ago
      I wish we could buy stock in Elon directly which would translate into a spread between all his ventures.
      - toomuchtodo 14y ago
        An Elon Musk ETF? YES.
      - AndrewKemendo 14y ago
        It's always possible to create an index fund portfolio.
chintan 14y ago
What a timing - "Romney Calls Tesla a ‘Loser’" in first debate: http://www.wired.com/threatlevel/2012/10/romney-tesla-loser/ http://www.wired.com/threatlevel/2012/10/romney-tesla-loser/
- reitzensteinm 14y ago
  That makes me think that the DOE wanting to accelerate the loan repayments was a purely political decision. Wasting money on Solyndra in this economy makes Obama vulnerable - using Telsa as a success story would go far to mitigate that, and news of accelerated loan payments is soundbite-y enough for that purpose.
  - cantankerous 14y ago
    I read it similarly, though I saw it more as the DOE having an "oh crap" moment and wanting to get itself out from under these loans that have been at the center of controversy and get back under the radar. I'm not sure how much micromanaging is going on when it comes to these loans from the White House, but I would bet that the heads at the DOE don't want any more heat.
- klinquist 14y ago
  Paraphrasing Chris Sacca, Elon Musk is one of the most under appreciated entrepreneurs of our time. Talk about someone willing to tackle the impossibly big problems...
  - aik 14y ago
    >> Elon Musk is one of the most under appreciated entrepreneurs of our time. I'm sure his time will come (already starting to). He's built and talked, but other than Paypal the world hasn't yet in a huge way reaped the benefits of his labor. With Tesla and SpaceX both (somewhat recently/soon) reaching a point of having products in heavy use, it'll come soon I'm sure. Though maybe he should have some reward for attempting to tackle the big problems as well.
    - 14y ago
droithomme 14y ago
Musk's public statements are the nicest and most logical ones I've seen made by a modern CEO. No sense of spin. Always a pleasure to read.
- loceng 14y ago
  He's grounded, confident. Great role model. I hope he continues to be relatively transparent and lets us get to know him more.
- hristov 14y ago
  Ok, even though i am generally pro tesla and like musk, in order to prevent this from becoming a total worshipfest i will provide some facts that elon is not sharing. It is true that tesla has made all their payments under the doe loan agreement. But they were not in total compliance with said agreement. The agreement required that tesla keep certain financial ratios up to certain levels, and tesla failed to do that. As a result, tesla asked trhe government to change the terms. The government complied but wanted something in exchange. What they wanted was early repayment of their loans. That is why he is talking about early repayment. And that is probably one of the reasons why they raised extra money (although elon is unlikely to admit that). So that is the full story. It is no big deal, i think tesla are very unlikely to default on the loan, but elon was definately not giving you all relevant info.
  - droithomme 14y ago
    Oh definitely so. But his statements have no sense of any of that, one would never suspect anything is being withheld, they come across perfectly sincere and warm and from him and not from some lawyer, it's masterful. Yeah, there's some dodgy stuff, a lot of information about these cars, such as the reality about their batteries and how much energy they really use to go from A to B over time has high spin when I start looking into details. Was genuinely surprised. Thanks for the details about what the financing is really about, that's very interesting info.
    - 6ren 14y ago
eldavido 14y ago
"Nonetheless, we have a duty at Tesla, having accepted this loan as a portion of our capital, to repay it at the earliest opportunity." Not sure why Elon and a lot of SV entrepreneurs feel this way. You take a loan; if it reduces your weighted average cost of capital, you roll it and/or pay it slowly. As a Tesla shareholder, I hope such cheap financing remains in place as long as possible to maximize shareholder return on equity by keeping cost of capital as low as possible -- and by improving Tesla's cash position (helping it to operationally succeed) to boot. Another guy thinking about buying Tesla stock.
- karamazov 14y ago
  The spirit of the loan was to help a promising company make progress on its technology. By repaying the loan early, the DOE will be able to make more loans out of that fund to other such companies. This might not minimize Tesla's cost of capital, but I'd say it's the right thing to do if it doesn't add undue risk to the company.
  - intended 14y ago
    No you would never do this. Right or wrong as a matter of managing your finances this is just not something a competent CFO would allow on his watch. You accepted a loan, the loan originator had some terms and you are both in compliance and acceptance of those terms. There is no rational or financial reason to make that choice. I understand doing good, but there is a consistency in the choices firms which do good make. This is inconsistent.
    - saraid216 14y ago
      Okay, you've called this action incompetent, irrational, and inconsistent, but you haven't actually explained why it is any of these things. Maybe it's obvious to someone with more working knowledge of accounting, but it's not clear to me. Could you explain?
      - pyoung 14y ago
reneherse 14y ago
I'm a huge Elon Musk/Tesla/SpaceX fan, and have often felt it would be the ultimate opportunity to work at either company (Tesla would be my first choice, as automotive interface tech is one of my passions). However, doing a quick bit of research earlier today, a search for "Tesla working environment" turned up more than a handful of reports by former and current employees that hint at an unpleasant company culture. Six to seven day workweeks, below average compensation, hyper-political management, management that is quick to fire, and a generally chaotic environment. These factors seemed to be reported even by folks who cited other benefits such as a high degree of autonomy and the opportunity to work with other highly passionate top level engineers on important emerging technologies. One additional oft-repeated concern was that the pace at which Tesla works its engineers is unsustainable, and will lead to burnout for lack of work-life balance. Can anyone closer to the Valley than I am comment on whether these concerns ring true? And how does this compare to work at other highly innovative and passionate industrial startups? Elon's explanation of the latest round of fundraising is welcome news, and personally I'm gunning for Tesla to become the Apple of the auto industry. (I plan on buying stock as soon as I'm able.) Is there anything we can infer from these employee reports about the health of Tesla's organizational core/DNA, and what effect that might have on the company's prospects for long term success? [Edited for clarity]
- richardw 14y ago
  I'm guessing, but the culture clash might come from an intersection of "car factory" meets "startup mindset", with the latter introducing an against-all-odds urgency. If you want to put a rocket in space or create the first viable electric car company, you probably can't initially go home at 5pm. You're probably less forgiving of those that can't keep up with the insane pace. Here's hoping it calms down, and that the people who helped make the vision a reality are well rewarded.
  - potatolicious 14y ago
    Hogwash. If you can't do something at a sustainable pace, you can't do it at all. In startup environments crunch time has a nasty tendency of becoming normal time, and you get nosediving morale, massively increased attrition, and lower overall productivity. It's lose-lose all around. So sure, in a startup you'd expect some late nights. When late nights become the norm though, you are now officially in dysfunctional company territory - don't let naive founders with rainbows and unicorns in their eyes convince you otherwise. Very sick of this Valley attitude that you must push yourself to the very edge of death-by-exhaustion to achieve anything worthwhile.
codex 14y ago
As of last quarter, Tesla had $777M in assets and a whopping $715M in liabilities--leaving a net balance of only $64M. Given that their balance sheet is decreasing by an extraordinary $30M a month, that would have left only two months until the company was insolvent. No wonder the U.S. government wants their $465M paid back more quickly than planned. The company has lost over $850 million since being founded in 2003.
- westicle 14y ago
  That isn't actually what "insolvent" means. Insolvent refers to a situation in which an entity is unable to pay its debts as and when they fall due. Not whether they have a positive or negative asset position. Strictly speaking, the balancesheet is irrelevant to Tesla's solvency. My tennis club owns a property worth $20m from which it operates. It has debt of only $1m and repayment obligations of $100,000. It generates net revenues of $90,000. It is insolvent, with net assets worth $19m. My startup technology company has no assets other than goodwill and intellectual property. It has no revenues. It has a line of credit from a financier sufficient to cover all expenses. It is solvent, with $1m of net liabilities.
  - codex 14y ago
    "Insolvent" can be defined either relative to cash flow or to the balance sheet; from http://en.wikipedia.org/wiki/Insolvency http://en.wikipedia.org/wiki/Insolvency: "Cash flow insolvency involves a lack of liquidity to pay debts as they fall due. Balance sheet insolvency involves having negative net assets—where liabilities exceed assets. Insolvency is not a synonym for bankruptcy."
  - csomar 14y ago
    Nope, your tennis club is not "insolvent". It's illiquid. It means it doesn't have cash but enough worth to take pay his obligations. At least, that's what Sal has explained in his KA videos.
- jordanb 14y ago
  > The company has lost over $850 million since being founded in 2003. I seem to recall that it takes the big 3 on the order of a billion dollars to bring a new automobile model to market. That includes the engineering, marketing, and the cost of tooling in the factories. With that in mind, 850 million dollars doesn't strike me as being all that much capital for creating an entirely new automobile company.
anovikov 14y ago
Hope some good news come on SpaceX, too. What's up with F-H with its so dubious payload figures, especially for high energy trajectories? How's the cross-feed system is coming along (if it haven't been dropped yet)? Where is the 'super efficient staged combustion methane engine' you mentioned a year back, any idea what thrust class it is and what is the fuel combination?
confluence 14y ago
I've been 100% long TSLA since the beginning and really don't understand the reasoning behind the doubts people have - given how little they actually know about a) the car industry and b) electric batteries and c) the ability to think on first principles and not by analogy. But I guess everyone has the right to an opinion - even if most of them aren't a) warranted b) backed up or c) logically reasoned. We are past peak oil. Battery tech will reach oil parity within the decade. Solar PV will reach grid base line within the next 2 decades. Fusion will be introduced within the next 3 decades. Electric engines already run 92% efficiency (vs the combustion engines 15%) and global warming externalities are finally being priced. The electric car is a no brainer (it wasn't a decade ago, and it'll be too late a decade from now) just like the electrification of trains were. This company will electrify suburbia and reduce costs while they are at it. Timing + skill = Very nice stock returns (timing is about 10x more important). Disclaimer: Goes without saying - I am long TSLA and will continue to be long for the foreseeable future.
- aidenn0 14y ago
  Battery tech will not reach oil parity within the decade. Oil parity would be batteries with roughly 1/3 the energy density of oil (maybe 1/4 if you factor in the fact that electric motors are lighter than ICE motors). Predictions are hard, but I'm going to go on the record (and am willing to wager) saying that the batteries in EVs produced in 2012 will have an energy density lower than 9MJ/L. Ultimately that doesn't matter though. The ED in the Model S is already almost good enough, it's the cost that matters, and I think that will go down. If you end up having a car that is a bit bigger and a lot heavier than an equivalent ICE car would be, you can still sell it.
  - stcredzero 14y ago
    > If you end up having a car that is a bit bigger and a lot heavier than an equivalent ICE car would be, you can still sell it. The Tesla Roadster was heavier than the Lotus car it was based on, but had quite respectable performance. That fact, combined with the electric car cachet was enough to sell it. If they can keep putting the batteries in the floor, they could consistently wind up with a roomier and more versatile vehicle than the equivalent ICE car. Then again, what Ford is doing with Ecoboost is very impressive. I suspect there's a lot of untapped potential for different form factors with ICE technology.
tatsuke95 14y ago
Not sure if anyone else noticed, but Romney made a crack about Tesla (in the same sentence as Solyndra) as a useless pet project that Obama subsidizes. I wonder how this will play out politically, especially if Tesla gets into trouble financially. That story is already being spun.
debacle 14y ago
> we expect Tesla to become cash flow positive at the end of next month. Never in my wildest dreams did I expect that to become a reality. We truly live in amazing times.
MattGrommes 14y ago
Sarah Lacy did what I thought was a great hour-long "Fireside Chat" with Mr. Musk: http://pandodaily.com/2012/07/12/pandomonthly-presents-a-fireside-chat-with-elon-musk/ http://pandodaily.com/2012/07/12/pandomonthly-presents-a-fir... It's well worth listening to.

380 points by JGM564 14y ago

JGM564 14y ago

Exciting quote emphasized in post: "we expect Tesla to become cash flow positive at the end of next month."

codex 14y ago
Well, cash flow positive until they decide to develop, test, and manufacture another model, which will again put them in the red. Building cars is a very expensive proposition.
- witoldc 14y ago
  That's why Obama win is so important to Tesla Government Motors.
  - rdl 14y ago
    I think the DOE loan has probably hurt Tesla's stock price more than it's helped -- the rumors about late repayment, etc. have probably depressed it from 33-35 down to 29. If Tesla hadn't taken $1 from DOE, it would be able to attack Fisker and Chevrolet and others for being Government Motors, and wouldn't have gotten name-checked in Romney's debate answer tonight. The only money MuskCo's should be taking from the government is payment for services (like flying cargo to the ISS, Moon, Mars, selling cars or solar power to them, etc.), not using the government as VC. The government is a horrible VC or lender, and the MuskCo's could do a lot better.
    - jessedhillon 14y ago
      The government is a horrible VC or lender ... What is the proof for this statement? I'm not asking what are the theoretical underpinnings of this worldview; what is the evidence which compels this conclusion?
      - PakG1 14y ago
        That's difficult to say, because government investments mostly go into infrastructure and enablement policies, not ventures. But let's give it a shot. USA: Green energy investments, of which some companies have turned out to be outright fraudulent. China: Massive infrastructure and housing overspending and bubble, with much shoddy construction. Housing and construction companies everywhere benefiting from the money only contributing to a high-probability disaster ending. Most Olympics-hosting nations, depending on what you perceive to be an acceptable measure of return.
    - mullingitover 14y ago
      > The government is a horrible VC or lender, and the MuskCo's could do a lot better. 96% success rate is 'horrible'? http://www.greentechmedia.com/articles/read/what-abound-solars-bankruptcy-says-about-the-doe-loan-program/ http://www.greentechmedia.com/articles/read/what-abound-sola...
      - rdl 14y ago
        96% on this program so far is possible, but there are numerous other examples of the USG investing in businesses which fail, and even worse records for state/local governments (stadiums and convention centers being the classic example)
        pyoung 14y ago
        There are numerous intangible benefits to these programs beyond the success rate of the businesses. Jobs get created, technology is invented or improved, and supply chains and support networks are created or are made more efficient. While VC's might only care about the balance sheet, the government isn't in this to make money, they are in this to make our lives better.
    - toomuchtodo 14y ago
      If I recall correctly, the DOE loan is very low interest rate, repayment is based on metric milestones, and at the time financing via traditional capital markets was fairly difficult for almost anyone. Seems like Tesla got a great deal.
      - jbooth 14y ago
        Yeah, but the government itself is borrowing money at absurdly low interest rates right now. If you agree with the notion that government intervention to get an edge in strategic industries can be a good idea, it looks like a good loan at whatever rate they got (assuming it's higher than a 1/8 of a percent, the gov't turns a profit, too).
        toomuchtodo 14y ago
        If you agree with the notion that government intervention to get an edge in strategic industries can be a good idea, it looks like a good loan at whatever rate they got (assuming it's higher than a 1/8 of a percent, the gov't turns a profit, too). I agree with this notion. Why not use whatever resources available to gain a competitive edge?
    - dredmorbius 14y ago
      The Government can be a fickle VC / angel investor, at times. Especially when there's no broad political support for a particular position. Much as any other investor representing a non-monolithic interest base can be fickle. When the government's all-in (oil, energy, ag, air travel, transport, military), it's very dependable.
  - hristov 14y ago
    Gimme a break. Every government with an auto industry to speak of has supported their auto indusstry at one time or another. And almost every government would love to have a company like tesla in exchange for a few loans that are about to be repaid.

loceng 14y ago

I think people underestimate what an agile and lean startup like Elon seems to be running can accomplish. He's a super intelligent guy with a growing positive trackrecord. The vehicle industry has been waiting for disruption for 20+ years, and the giants finally have lost control and whatever unnatural advantages they tried to maintain. Technology for electric vehicles will only continue to improve, and costs will go down. Luckily for economies very attached to oil they can shift to systems like free re-fueling once a vehicle is purchased; That's pretty incredible and something I never even thought about or imagined possible, though it makes sense and works once the puzzle pieces are all in front of you. P.S. Elon's my new Man Crush.

toomuchtodo 14y ago
So I'm not the only dude with an Elon Man Crush. I'm off to go buy a ton more TSLA stock. And apply at an Elon company. Doesn't even matter which one.
- knodi 14y ago
  I truly believe TSLA stock is a good investment. TSLA is on its way to be the Apple of car manufactures. $ whoami > nobody
  - samstave 14y ago
    I wish we could buy stock in Elon directly which would translate into a spread between all his ventures.
    - toomuchtodo 14y ago
      An Elon Musk ETF? YES.
    - AndrewKemendo 14y ago
      It's always possible to create an index fund portfolio.

chintan 14y ago

What a timing - "Romney Calls Tesla a ‘Loser’" in first debate: http://www.wired.com/threatlevel/2012/10/romney-tesla-loser/ http://www.wired.com/threatlevel/2012/10/romney-tesla-loser/

reitzensteinm 14y ago
That makes me think that the DOE wanting to accelerate the loan repayments was a purely political decision. Wasting money on Solyndra in this economy makes Obama vulnerable - using Telsa as a success story would go far to mitigate that, and news of accelerated loan payments is soundbite-y enough for that purpose.
- cantankerous 14y ago
  I read it similarly, though I saw it more as the DOE having an "oh crap" moment and wanting to get itself out from under these loans that have been at the center of controversy and get back under the radar. I'm not sure how much micromanaging is going on when it comes to these loans from the White House, but I would bet that the heads at the DOE don't want any more heat.
klinquist 14y ago
Paraphrasing Chris Sacca, Elon Musk is one of the most under appreciated entrepreneurs of our time. Talk about someone willing to tackle the impossibly big problems...
- aik 14y ago
  >> Elon Musk is one of the most under appreciated entrepreneurs of our time. I'm sure his time will come (already starting to). He's built and talked, but other than Paypal the world hasn't yet in a huge way reaped the benefits of his labor. With Tesla and SpaceX both (somewhat recently/soon) reaching a point of having products in heavy use, it'll come soon I'm sure. Though maybe he should have some reward for attempting to tackle the big problems as well.
  - 14y ago

droithomme 14y ago

Musk's public statements are the nicest and most logical ones I've seen made by a modern CEO. No sense of spin. Always a pleasure to read.

loceng 14y ago
He's grounded, confident. Great role model. I hope he continues to be relatively transparent and lets us get to know him more.
hristov 14y ago
Ok, even though i am generally pro tesla and like musk, in order to prevent this from becoming a total worshipfest i will provide some facts that elon is not sharing. It is true that tesla has made all their payments under the doe loan agreement. But they were not in total compliance with said agreement. The agreement required that tesla keep certain financial ratios up to certain levels, and tesla failed to do that. As a result, tesla asked trhe government to change the terms. The government complied but wanted something in exchange. What they wanted was early repayment of their loans. That is why he is talking about early repayment. And that is probably one of the reasons why they raised extra money (although elon is unlikely to admit that). So that is the full story. It is no big deal, i think tesla are very unlikely to default on the loan, but elon was definately not giving you all relevant info.
- droithomme 14y ago
  Oh definitely so. But his statements have no sense of any of that, one would never suspect anything is being withheld, they come across perfectly sincere and warm and from him and not from some lawyer, it's masterful. Yeah, there's some dodgy stuff, a lot of information about these cars, such as the reality about their batteries and how much energy they really use to go from A to B over time has high spin when I start looking into details. Was genuinely surprised. Thanks for the details about what the financing is really about, that's very interesting info.
  - 6ren 14y ago

eldavido 14y ago

"Nonetheless, we have a duty at Tesla, having accepted this loan as a portion of our capital, to repay it at the earliest opportunity." Not sure why Elon and a lot of SV entrepreneurs feel this way. You take a loan; if it reduces your weighted average cost of capital, you roll it and/or pay it slowly. As a Tesla shareholder, I hope such cheap financing remains in place as long as possible to maximize shareholder return on equity by keeping cost of capital as low as possible -- and by improving Tesla's cash position (helping it to operationally succeed) to boot. Another guy thinking about buying Tesla stock.

karamazov 14y ago
The spirit of the loan was to help a promising company make progress on its technology. By repaying the loan early, the DOE will be able to make more loans out of that fund to other such companies. This might not minimize Tesla's cost of capital, but I'd say it's the right thing to do if it doesn't add undue risk to the company.
- intended 14y ago
  No you would never do this. Right or wrong as a matter of managing your finances this is just not something a competent CFO would allow on his watch. You accepted a loan, the loan originator had some terms and you are both in compliance and acceptance of those terms. There is no rational or financial reason to make that choice. I understand doing good, but there is a consistency in the choices firms which do good make. This is inconsistent.
  - saraid216 14y ago
    Okay, you've called this action incompetent, irrational, and inconsistent, but you haven't actually explained why it is any of these things. Maybe it's obvious to someone with more working knowledge of accounting, but it's not clear to me. Could you explain?
    - pyoung 14y ago

reneherse 14y ago

I'm a huge Elon Musk/Tesla/SpaceX fan, and have often felt it would be the ultimate opportunity to work at either company (Tesla would be my first choice, as automotive interface tech is one of my passions). However, doing a quick bit of research earlier today, a search for "Tesla working environment" turned up more than a handful of reports by former and current employees that hint at an unpleasant company culture. Six to seven day workweeks, below average compensation, hyper-political management, management that is quick to fire, and a generally chaotic environment. These factors seemed to be reported even by folks who cited other benefits such as a high degree of autonomy and the opportunity to work with other highly passionate top level engineers on important emerging technologies. One additional oft-repeated concern was that the pace at which Tesla works its engineers is unsustainable, and will lead to burnout for lack of work-life balance. Can anyone closer to the Valley than I am comment on whether these concerns ring true? And how does this compare to work at other highly innovative and passionate industrial startups? Elon's explanation of the latest round of fundraising is welcome news, and personally I'm gunning for Tesla to become the Apple of the auto industry. (I plan on buying stock as soon as I'm able.) Is there anything we can infer from these employee reports about the health of Tesla's organizational core/DNA, and what effect that might have on the company's prospects for long term success? [Edited for clarity]

richardw 14y ago
I'm guessing, but the culture clash might come from an intersection of "car factory" meets "startup mindset", with the latter introducing an against-all-odds urgency. If you want to put a rocket in space or create the first viable electric car company, you probably can't initially go home at 5pm. You're probably less forgiving of those that can't keep up with the insane pace. Here's hoping it calms down, and that the people who helped make the vision a reality are well rewarded.
- potatolicious 14y ago
  Hogwash. If you can't do something at a sustainable pace, you can't do it at all. In startup environments crunch time has a nasty tendency of becoming normal time, and you get nosediving morale, massively increased attrition, and lower overall productivity. It's lose-lose all around. So sure, in a startup you'd expect some late nights. When late nights become the norm though, you are now officially in dysfunctional company territory - don't let naive founders with rainbows and unicorns in their eyes convince you otherwise. Very sick of this Valley attitude that you must push yourself to the very edge of death-by-exhaustion to achieve anything worthwhile.

codex 14y ago

As of last quarter, Tesla had $777M in assets and a whopping $715M in liabilities--leaving a net balance of only $64M. Given that their balance sheet is decreasing by an extraordinary $30M a month, that would have left only two months until the company was insolvent. No wonder the U.S. government wants their $465M paid back more quickly than planned. The company has lost over $850 million since being founded in 2003.

westicle 14y ago
That isn't actually what "insolvent" means. Insolvent refers to a situation in which an entity is unable to pay its debts as and when they fall due. Not whether they have a positive or negative asset position. Strictly speaking, the balancesheet is irrelevant to Tesla's solvency. My tennis club owns a property worth $20m from which it operates. It has debt of only $1m and repayment obligations of $100,000. It generates net revenues of $90,000. It is insolvent, with net assets worth $19m. My startup technology company has no assets other than goodwill and intellectual property. It has no revenues. It has a line of credit from a financier sufficient to cover all expenses. It is solvent, with $1m of net liabilities.
- codex 14y ago
  "Insolvent" can be defined either relative to cash flow or to the balance sheet; from http://en.wikipedia.org/wiki/Insolvency http://en.wikipedia.org/wiki/Insolvency: "Cash flow insolvency involves a lack of liquidity to pay debts as they fall due. Balance sheet insolvency involves having negative net assets—where liabilities exceed assets. Insolvency is not a synonym for bankruptcy."
- csomar 14y ago
  Nope, your tennis club is not "insolvent". It's illiquid. It means it doesn't have cash but enough worth to take pay his obligations. At least, that's what Sal has explained in his KA videos.
jordanb 14y ago
> The company has lost over $850 million since being founded in 2003. I seem to recall that it takes the big 3 on the order of a billion dollars to bring a new automobile model to market. That includes the engineering, marketing, and the cost of tooling in the factories. With that in mind, 850 million dollars doesn't strike me as being all that much capital for creating an entirely new automobile company.

anovikov 14y ago

Hope some good news come on SpaceX, too. What's up with F-H with its so dubious payload figures, especially for high energy trajectories? How's the cross-feed system is coming along (if it haven't been dropped yet)? Where is the 'super efficient staged combustion methane engine' you mentioned a year back, any idea what thrust class it is and what is the fuel combination?

confluence 14y ago

I've been 100% long TSLA since the beginning and really don't understand the reasoning behind the doubts people have - given how little they actually know about a) the car industry and b) electric batteries and c) the ability to think on first principles and not by analogy. But I guess everyone has the right to an opinion - even if most of them aren't a) warranted b) backed up or c) logically reasoned. We are past peak oil. Battery tech will reach oil parity within the decade. Solar PV will reach grid base line within the next 2 decades. Fusion will be introduced within the next 3 decades. Electric engines already run 92% efficiency (vs the combustion engines 15%) and global warming externalities are finally being priced. The electric car is a no brainer (it wasn't a decade ago, and it'll be too late a decade from now) just like the electrification of trains were. This company will electrify suburbia and reduce costs while they are at it. Timing + skill = Very nice stock returns (timing is about 10x more important). Disclaimer: Goes without saying - I am long TSLA and will continue to be long for the foreseeable future.

aidenn0 14y ago
Battery tech will not reach oil parity within the decade. Oil parity would be batteries with roughly 1/3 the energy density of oil (maybe 1/4 if you factor in the fact that electric motors are lighter than ICE motors). Predictions are hard, but I'm going to go on the record (and am willing to wager) saying that the batteries in EVs produced in 2012 will have an energy density lower than 9MJ/L. Ultimately that doesn't matter though. The ED in the Model S is already almost good enough, it's the cost that matters, and I think that will go down. If you end up having a car that is a bit bigger and a lot heavier than an equivalent ICE car would be, you can still sell it.
- stcredzero 14y ago
  > If you end up having a car that is a bit bigger and a lot heavier than an equivalent ICE car would be, you can still sell it. The Tesla Roadster was heavier than the Lotus car it was based on, but had quite respectable performance. That fact, combined with the electric car cachet was enough to sell it. If they can keep putting the batteries in the floor, they could consistently wind up with a roomier and more versatile vehicle than the equivalent ICE car. Then again, what Ford is doing with Ecoboost is very impressive. I suspect there's a lot of untapped potential for different form factors with ICE technology.

tatsuke95 14y ago

Not sure if anyone else noticed, but Romney made a crack about Tesla (in the same sentence as Solyndra) as a useless pet project that Obama subsidizes. I wonder how this will play out politically, especially if Tesla gets into trouble financially. That story is already being spun.

debacle 14y ago

> we expect Tesla to become cash flow positive at the end of next month. Never in my wildest dreams did I expect that to become a reality. We truly live in amazing times.

MattGrommes 14y ago

Sarah Lacy did what I thought was a great hour-long "Fireside Chat" with Mr. Musk: http://pandodaily.com/2012/07/12/pandomonthly-presents-a-fireside-chat-with-elon-musk/ http://pandodaily.com/2012/07/12/pandomonthly-presents-a-fir... It's well worth listening to.