Pops’ Rants: Tesla Needs to Learn that Hype and Fast Cars don’t Pay the Bills
Musk needs to wake up before it’s too late!by Pops, on
I don’t know about you, but I had way too much Tesla Roadster in my feed this week. If I read one more of those "oh my god, 1.9 seconds to 60 mph" I will probably puke. Heck, I actually feel like puking right now, but I popped in to say "I told you so!" In my previous rant, I slammed the second-generation Roadster and its incredible performance features for being Elon Musk’s desperate attempt to bring in some cash without actually giving something in return. Although the Roadster won’t be available until 2020, Tesla is asking $50,000 for preorders of the regular model and a full $250,000 down payment for the Founders Series. With the latter limited to 1,000 units, we’re talking at least $250 million from preorders for a car that’s three years away. And I’m not even including the Semi truck.
Tesla is in big trouble financially, and making matters worse is the fact that it can’t deliver new products. The Model 3 is behind schedule a few months, with orders for non-Tesla employees opened this month. But customers who have already ordered one won’t get it anytime soon, with full production to commence in March. If we are to believe Tesla of course because more delays are very likely. And the company is losing money big time. What’s more, according to Bloomberg, Tesla spent no less than $4.2 billion over the past 12 months. That’s $8,000 a minute or nearly half a million bucks an hour!
Keep reading for the full story.
The Massive Hemorrhage Behind the Hype
Tesla may be all bells and whistles when it comes to performance figures, but a carmaker cannot survive on numbers
Tesla may be all bells and whistles when it comes to performance figures, but a carmaker cannot survive on numbers. Likewise, it can’t survive on unveilings and rolling prototypes or concept cars. Tesla needs to roll out cars and needs to do it fast. And things are going as planned. While some customers complain about quality issues with the Model S and Model X, the Model 3, the company’s much-promised affordable EV, won’t be available until next year, despite initial plans to offer it in 2017.
And this is why Tesla is basically trying to survive with the hype that surrounds it and by previewing impressive, high-priced vehicles with expensive preorder tags. Elon Musk is effectively trying to keep the company afloat until the Model 3 arrives in dealerships and starts bringing in the much-needed cash. Sure, this strategy is far from unusual. It’s what most automakers do, and it’s precisely how many carmakers survive. But while giants like GM and Chrysler have managed to survive a bankruptcy, Tesla may not.
Tesla's current cash reserves won't last beyond August 2018
Another problem is that at the current spendings rate, Tesla’s current cash reserves won’t last beyond August 2018. Of course, the Model 3 might bring in more cash until then, as will preorders for the Roadster II and Semi truck, but if something goes wrong and the Model 3 is again delayed, Tesla may run into a lot of trouble financially. But assuming that things will go as planned over the next few months and the Model 3 rolls out on time and saves the company, Tesla may have similar issues when the Roadster and the Semi need to go into production. The company is obviously trying to do more than it can at this point, and this strategy could prove disastrous at some point.
Unless things pick up fast, Tesla may have the same fate as Fisker Automotive. And it would be tragic for the auto industry to lose a carmaker that has made tremendous progress in the EV field. But Musk needs to realize that hype and impressive performance figures won’t pay the bills.
Read our full review on the 2020 Tesla Roadster.
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