Tesla: Q4 operating income stable – positive cash flow beyond Q1 2019

According to the Tesla (TSLA) CEO Elon Musk last year was the most pivotal year in Tesla’s history. Mr Musk commented the year in the shareholder letter conserning 2018 and Q4 figures.

– During our Model 3 production ramp, we went through significant challenges with the battery module line at Gigafactory 1 in Nevada, and later with our general
assembly line in Fremont. Thanks to the hard work and ingenuity of our
manufacturing teams, by mid-2018 we successfully overcame these
challenges and stabilized Model 3 production at high volumes, he said on Wednesday.

Tesla´s  Q4 figures:

– Q4 operating income stable compared to Q3 at $414M, operating margin of 5.7%
– Operating cash flow less capex improved from Q3 to $910M in Q4
– Cash and cash equivalents of $3.7B at Q4-end, increased by $718M in Q4
– Q4 GAAP net income of $139M impacted by $54M non-cash charge
– Model 3 GAAP and non-GAAP gross margin remained stable at >20% in Q4

Elon made his estimates of the Model 3 production this year and commented the production shift.

– Model 3’s production rate progressively improved through Q4, with December 2018 being our highest volume month ever. In our Fremont facility, we are now past the steep portion of the production S-curve, and we expect our production rate to continue to
gradually improve. Every part of the Model 3 production process has demonstrated over a 24-hour period the ability to produce at an extrapolated rate of 7,000 vehicles per week. By the end of this year, we expect to be able to produce Model 3 at this rate on a
sustained basis, he stated.

– In Q4, we delivered 27,607 Model S and Model X vehicles to customers. For the full year, we delivered 99,475 Model S and Model X vehicles, which was in line with our guidance. We recently stopped taking orders for the 75 kWh versions of Model S and Model X and
will focus on the longer-range versions of these flagship products instead, with the recent introduction of a 310 mile range base Model S and 270 mile range base Model X, he reminded.

– In total, we are expecting to deliver 360,000 to 400,000 vehicles in 2019, representing a growth of approximately 45% to 65% compared to 2018. In this range, we are expecting to have positive GAAP net income and to generate positive free cash flow
(operating cash flow less capex) in every quarter beyond Q1 2019. We believe these results will be substantially driven by our restructuring action and the ongoing financial discipline with which we are managing the business, Elon said.

– Our 2019 capex, the vast majority of which will be to grow our capacity and develop new vehicles, is expected to be about $2.5 billion. We believe this amount should be sufficient to continue to develop our main projects, such as Gigafactory Shanghai, Model Y and Tesla Semi, as well as for the further expansion of our Supercharger, service and retail networks. We expect to arrange financing through local banks in China to fund most of the capex for Gigafactory Shanghai, he said.

Tesla published its figures after the Wall Street trading, but the company shares closed higher to 302 dollars, up 3,80 %.

 

Business Tech

Stocks started up in Wall Street – Tesla and Apple in headlines

The financial markets ended slightly up on Wednesday trading in Wall Street. The year´s first trading day started with a small downside, but at the end of the day, the direction was positive with all the major Wall Street indices.

The electric car manufacturer Tesla (TSLA) announced its production figures from the fourth quarter and according to the information, the company produced 63.150 Model 3 Sedans during that period. Totally the company annual electric car production was about 245.200 in 2018. The official quarter figures are still to be published, the day is not yet confirmed. Tesla shares fell sharply first, but ended down 6,81 % to 305,50 dollars due to the published price cuts. The company informed that the car prices will be lowered by 2000 dollars in the US markets.

The second surprice for the markets was the mobile phone manufacturer Apple (AAPL), who said that the revenue forecast will be lower due to the economy situation in China. According to CEO Tim Cook, the China economy slowdown has been greater than earlier expected. Apple´s announcement sent the stock price to about 7 % decline.

Apple´s announcement was the first big information about the China economy and the trade talks situation. The President Donald Trump and his Chinese collaque President Xi Jinping are expected to continue the talks next week. During the holiday weekend president Trump indicated that the US and China trade talks have had positive signs.

In the US markets, the goverment shutdowns have continued and after the political leaders meeting the outcome was, that the shutdowns are expected to continue.

In the UK, The Brexit situation is the same as Prime Minister Theresa May said that the situation is not changed. According to Financial Times, PM May is going to have discussions with some of the European leaders during this week.  The UK Goverment has urged pharma companies and supermarkets to reserve enough drug and food stock in the case of no-Brexit. The UK Parliament is expected to vote on the deal in the middle of January.

Dow Jones -index ended up 0,08 % to 2344 points, S&P 500 -index ended up 0,12 % to 2509 points and Nasdaq-index ended up 0,46 % to 6665 points. In London the FTSE 100 -index was up 0,09 % to 6734 points and in Germany the DAX-index ended up 0,20 % to 10580 points.

In Asia the Wednesday trading was on negative side, while in Tokyo the stocks fell and Nikkei-index ended down 0,31 % to 20014 points and in Hong Kong  the Hang Seng index declined 2,77 % to 25 130 points.

Euro declined 1,04 % to 1,13 dollars as did the UK sterling, 1 % to 1,26 dollars.

Business Finance

Highlights of the year 2018 – Brexit, trade talks and green finance

The year 2018 was a year of Brexit, electric cars and trade talks. It included special moments in the financial markets and in the company side. Green Bonds and Green Finance were getting more attention in the markets and trade talks and Brexit were the topics during the year 2018 along. Climate Change and low carbon landed also in the agenda of central banks.

Investors were also asking what is the role of the City as a global financial hub. Should it have its own rules in spite of the Brexit? In the financial hub competition, Frankfurt and Paris were the European cities to get more new financial offices as financial companies were moving some operations to the EU side.

The UK Parliament is expected to vote of the Brexit during Janury 2019 after very intensive debate about the deal during the year.

Climate Change has become part of the everyday life in the financial markets and for example one of the biggest insurance companies in the US, Berskhire Hathaway informed in February 2018, that it has got 3 billion dollars losses of the natural catastrophies, the hurricances in the US. Several central banks, including the European Central Bank and some Asian ones, have also agreed about the co-operation in the climate issues and how to monitor the impact on the markets.

In the tech-side augmented reality and ioT were the themes for the year. Apple, Amazon, Google, Tesla, Intel  and Samsung  were one of the tech-companies to deliver new services related to the new technology. On the other side of the topic, Facebook was dealing with the privacy issues globally. New tech- companies listed in the markets were for example Spotify and Xiaomi.

Year 2018 was a year of electric cars in many countries. The e-cars breakthrough with charging issues was one of the tech topics as well. Telsa founder Elon Musk was the leading industry sector figure as he estimated that Tesla would make one million cars by 2020 in February 2018.

Also the German automakers announced new investments and concept cars. For example the BMW Group launched an autonomous driving campus in Munich in March 2018.

Year 2018 was also a year for luxury goods and services. The Basel World 2018 -fair announced its good selling and for example the CEO of Hublot, Ricardo Guadalupe,  told ComteamPUB+ that the company expects double digit growth for the year and that the Chinese customers will be the leading segment.

In the debt markets the US Uber and Netflix issued their junk bonds to investors. Uber, the ride-sharing company, is said to plan an IPO for the year 2019 according to the secret filings to the SEC.

One of the biggest infrastructure projects ever, the China Silk Road, is getting more attention from the green investors side, while the organization made its first announcement of the green principles for the project co-operation and operators. The ancient Silk Road is expected to rise the GDP growth by 4 % or 240 billion dollars in the countries invlolved according to Credit Suisse analysis.

The aim of the Roman time Silk Road is to connect the western Europe with the eastern coast of China and to renew the infrasturcture in between. This means also that the 10 world largest container ports are located along the route.

Trade talks between different countries have continued lively during the year. US and China have been in the headlines, but also the EU with its agreement with Japan.  The political situation and rising volatility in the financial markets tell the direction for the next year. Geopolitical easing is needed.

Päivi Härkönen, co-founder, ComteamPUB+

 

 

Business Finance Lifestyle

Volkswagen Passat Hybrid – economical driving

Volkswagen Passat GTE Hybrid offers good performance.  The electric range of about 50 km and the range of 1000 km with petrol shows how family travelling with electric car is possible, even with long distances.

The car is also embedded with different solutions that help the driver to focus on road safety issues. So called Front Assistant is a system which alarms you if there is an pedestrian on the road and brakes automatically if needed. The Park Assistant helps you with parking in the city environments.

The infortainment system in the car is very clear and all the possible connectivity functions as well. On the other hand, the voice navigation could have different voice options, but the navigation itself and its operations are easy to use.

One of the useful functions is also the e-Manager, which enables you to set charging  beforehand. For example you can leave the car ready to be charged, but the e-Manager takes control how much earlier  the car has to be charged in order to get it ready in time. During the winter mornings this would enable smooth travelling with enough power and range.

It is also possible to integrate the infortainment system with Apple CarPlay and Android Auto applications, but this has to be done with USB cabels. For example with BMW this integration is wireless.

The combined consumption in Volkswagen Passat Hybrid is about 1,7 litres per 100 km according to the company information. And the CO2 is 38 g per kilometer. The charging time range is from 3-4 hours with the litium-ioni batteries. The car uses electric about 13,4 kwh per each 100 kilometer.

In short, one can say that driving with Volkswagen Passat GTE plug-in-hybrid is  economical. It offers also enough space for goods and even small cargo. It is a combination of classic style with modern technology.

 

 

 

 

Travel