This is the most capital intensive industry. They will require billions of dollars to proceed with the infrastructure build out. We are talking new factories ,R&D , Service centers ,Super Charger network ,Showrooms, Warranty repairs,New model retooling etc. etc. .They have negative cash flow. so where is the money going to come from ? You guessed it more and more dilution. Tesla has slowed the spending down all fronts, Model X is now 2015 (originally late 2013), There are 23 Super charge sites instead of the 75 that were supposed to up by summers end. Service Centers are jammed packed and people are driving 100's of milles to get their new cars fixed.
With $600 million in cash and no debt tesla can do almost anything. They have the nummi factory that was put together for model S for less than a billion. While Daimler spends 5 times as much for a factory in china. Not to mention tesla has the highest margin in the auto business from direct sales to consumer. Give this baby time and it'll grow into a giant!!
I guess you do not read financial statements ? No Debt, check out the last 10q. Direct sales and light infrastructure will be tesla's downfall. Quality control is falling and it is falling fast. Go to the forums and read whats really happening.
Yet with all this tailwind and the highest margins in the industry Tesla is burning cash. Take out ZEV credits and it is not profitable even on its own pro forma basis.
Tesla's $600 million cash will buy it production capacity of another 20k vehicles per year. What then? How will they scale up to hundreds of thousands units beyond this? Hope is one thing; spending real cash to ramp up real production is entirely different matter. This is capital intensive business.
Daimler does indeed plan to spend $2.7B in China to scale up production. However, it produced 100k vehicles in China in 2012 and plans to ramp up China production to 200k by 2015 and sell 300k vehicles over there. They have resources and do not need to issue shares to execute this plan. Feel the difference!
Correct. And many analysts are throwing out numbers like 500,000 cars made each year by 2020. Don't they have any clue on how difficult it is to grow from 20,000 a year to 500,000 a year when no profit is being made by selling the cars? Just expanding the service centers alone is so expensive.