Tesla: Focus on standard-range Model 3

Tesla has today published a blog and according to it, the company will cut workforce by 7 % in order to meet the targets regarding the Model 3 production and focusing also more in mid-range models.

-Starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles. Moreover, we need to continue making progress towards lower priced variants of Model 3.
Right now, our most affordable offering is the mid-range (264 mile) Model 3 with premium sound and interior at $44k. The need for a lower priced variants of Model 3 becomes even greater on July 1, when the US tax credit again drops in half, making our car $1,875 more expensive, and again at the end of the year when it goes away entirely, the CEO Elon Musk writes.

-Sorry for all these numbers, but I want to make sure that you know all the facts and figures and understand that the road ahead is very difficult. This is not new for us – we have always faced significant challenges – but it is the reality we face, he continues.

– As a result of the above, we unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors. Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months. Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company. There isn’t any other way, he says.

Tesla shares were trading down, -9,9 % to 312,79 dollars, after the blogging in Wall Street on Friday. Company also reminded that it made 4 % profit during the Q3. The last quarter figures of the year 2018 are not yet published.

– In Q4, preliminary, unaudited results indicate that we again made a GAAP profit, but less than Q3. This quarter, as with Q3, shipment of higher priced Model 3 variants (this time to Europe and Asia) will hopefully allow us, with great difficulty, effort and
some luck, to target a tiny profit, he estimated.

 

 

Lifestyle Travel

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

Elon Musk: 1 million cars by 2020

 

Tesla Motors (TSLA) CEO Elon Musk said that he still believes the target of 1 million cars by 2020 is relevant. He confirmed his earlier estimate of the growth during the conference call this week.

The company announced last year figures, which stated that the company is
targeting a weekly Model 3 production rate of 2,500 by the end of Q1 and 5,000 by the end of Q2. Tesla is also focused on achieving its target of 25% gross margin for Model 3 after company´s production stabilizes at 5,000 cars per week.

In the company press release Tesla said it will be the best manufacturer of automotive industry. The Model 3 reservations remained stable during the last quarter of the 2017, but in recent weeks the growth has continued. Combined Model S and Model X deliveries increased by 10 % during the last quarter, which was also an 28 % increase from year earlier.

During the last quarter Tesla continued to open new stores and service locations and now there are 330 locations globally. There are 1128 Supercharger stations globally at the moment.

In the outlook statement Elon Musk expects  the company  quarterly operating income to turn sustainably positive at some point in 2018.

 

 

 

Lifestyle

Musk: Tesla to become the world leader in manufacturing

According to Elon Musk, the CEO of Tesla (TSLA:US) the company is aiming to become the world leader in the manufacturing processes in the automotive industry. Speaking in the company quarterly meeting, Mr Musk said that he believes in manufacturing and that the most potential innovations in the automotive industry is there.

– We believe in manufacturing and that is why Tesla wants to become the leader in the manufacturing in automotive industry. We believe that in production there are more potential for innovations than for example in design. We are increasing our vertical integration, he said on Wednesday.

He also explained about the problems in the manufacturing process at the moment with 6000-7000 components and how it will affect the whole manufacturing process, timetable and quality if some of the components are missing. – That is also why, we are exploring ways, how to minimize risks in our production, but also that our R&D cycle is 2-3 years, not 6 years, he stated. This also means that the current supply chain has to adapt to the new cycle of doing things.

Tesla also announced that they are expecting to reach the mass production by the second half of next year and that would give the company the benefit to scale rapidly by using modern technology and design.

In the interim report Tesla also estimates that they will be producing 500.000 cars by 2018. Mr Musk was expecting that 100 000 would be S-cars, 150.000 X-cars and the rest of, 250.000 the new model 3-cars.

Musk did not want to comment about the possible new production plants in the near future. – It is obvious that California is not the best possible place for shipments for example to Asia. This will happen at some point, when we have reached the mass production and it is up and running, he said. In the first quarter report the company says it will open more than 70 new sales & service locations globally.

The orders of the new Model 3 have reached 400 000 and 93 % of the customers are new, according to the company.  Musk also pointed that the way Tesla is differentiating from its competitors like Google and Apple, is that they have their own production and he believed that by this way Tesla can attract the best manufacturing talent as well.

During the first quarter, the company revenues were 1,1 billion dollars and net loss was 278 million dollars. The net loss per share was 2,13 dollars compared to 2,44 dollars at the year end. Elon Musk did not want to disclose any plans for new capital for this year. Tesla share jumped after the full-year delivery forecast, but ended down 4,2 percent to 222,56 dollars in New York.

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Business Tech

Tesla on track with Model S deliveries – new CFO from Google

The Californian electric car manufacturer Tesla (TSLA) announced yesterday evening its third quarter results. According to the press release, the deliveries of the sport utility vehicle (SUV) Tesla S-model is on track and the company said it will reach the year targets this year. Tesla said it has delivered a record of 11.603 new cars during the quarter and expect the shippings to be 17.000 – 19.000 vehicles during the last quarter.

Tesla said also that the orders related to the new luxury crossover Model X have been accelerated during the period. The shippings are expected to happen during the next year in Europe. Third quarter revenue were 936 million dollars, compared to 954 million dollars during the previous quarter. Gross margin was 25,1 percent. Loss before income tax was 228 million dollars compared to loss of 188 dollars during the previous quarter. The loss per share was 1,78 dollars.

The company also said it has updated about 40 000 cars with its new autopilot programm. It helps drivers to avoid risks related to front and side collisions and keep the car on the road. On the other hand Tesla is also thinking ways how to enhance the safety issues among drivers when using autopilot.

Company also announced a new CFO, Jason Wheeler, who will start his job during November. He is former executive in the Google´s Finance division.

During the conference call, an analyst from Morgan Stanley, asked about Tesla´s long term strategy related to ondemand autoplatform. The idea of this, if Tesla is seeking also new cash generated income models through sharing economies, like Tesla´s own on-demand autoplatform. CEO Elon Musk did not close any comment on that.

Tesla (TSLA) shares closed down 2,5 percent to 208,35 dollars, but after hour trading the share was up nearly 9 percent.

Business Tech

Tesla to fund the growth – 500 million dollars stock offering

Tesla Motors Inc. (TSLA) has announced a 500 million dollars stock offering. According to the company release this public offering will accelerate the growth of Tesla Energy, development of the new Model 3 and the Gigafactory.

Underwriters for this offering are Goldman Sachs, Morgan Stanley, JP Morgan Chase, Deutsche Bank, Bank of America and Wells Fargo.

Elon Musk, the CEO of the company, will buy shares worth 20 million dollars. The company made the IPO in June 2010 and raised capital worth 226 million dollars. After that the company has raised debt offerings including also the credit line of max 750 million dollars in June 2015.

According to the company interim report in early August 2015 the company said it will expand its network of Tesla Stores, service centers and Supercharges. The new model of Tesla car, the Model 3, is expected to the markets during 2016 and the world´s largest battery manufacturing facility is expected to be ready during 2017. The factory is based in Nevada and the initial investment of the facility and equipment was 5 billion dollars.

Finance Tech