Tesla Co-Founder and CTO JB Straubel Is Stepping Down (techcrunch.com) 78
Tesla co-founder and CTO JB Straubel is stepping down as an executive at the automaker, CEO Elon Musk announced during a conference call with analysts Wednesday. Drew Baglino, vice president of technology, will take over his duties, Musk said. Straubel will stay on in a senior advisor role. TechCrunch reports: "I want to thank JB for his fundamental role in creating and building Tesla," Musk said during the call. "If we hadn't had lunch in 2003, Tesla wouldn't exist, basically," Musk added. Straubel described his time at Tesla as an adventurous 16 years. "I'm not disappearing, and I just wanted to make sure that people understand that this was not some, you know, lack of confidence in the company or the team or anything like that," Straubel said, adding that he loves the company.
Straubel's role at Tesla cannot be understated. The executive was responsible for some of the company's most important technology, notably around batteries. His understated yet steady presence along with his technological acumen gave provided stability even when its CEO became embroiled in controversy. Straubel is involved in another company called Redwood Materials, which emerged in 2017. An SEC filing in 2017 details a $2 million initial investment in the Redwood City, Calif.-based company that describes itself at its site as focused on "advanced technology and process development for materials recycling, remanufacturing, and reuse." In the second quarter of 2019, Tesla "built 87,048 EVs and delivered 95,356 of them," reports Ars Technica. "However, the company lost $408 million over the same three months according to the latest earnings report. Although it's the second loss-making quarter in a row, it's still an improvement of Q1 2019."
Straubel's role at Tesla cannot be understated. The executive was responsible for some of the company's most important technology, notably around batteries. His understated yet steady presence along with his technological acumen gave provided stability even when its CEO became embroiled in controversy. Straubel is involved in another company called Redwood Materials, which emerged in 2017. An SEC filing in 2017 details a $2 million initial investment in the Redwood City, Calif.-based company that describes itself at its site as focused on "advanced technology and process development for materials recycling, remanufacturing, and reuse." In the second quarter of 2019, Tesla "built 87,048 EVs and delivered 95,356 of them," reports Ars Technica. "However, the company lost $408 million over the same three months according to the latest earnings report. Although it's the second loss-making quarter in a row, it's still an improvement of Q1 2019."
Expenditures (Score:1, Informative)
Tesla did not lose $408 million. They spent that money on building the new factory in China. It was an investment, not waste.
Re:Expenditures (Score:4, Informative)
Capital investment is not considered to be a loss in GAAP unless the value of the capital drops.
Re:Expenditures (Score:4, Informative)
To clarify (lots of points to go over) - beyond the record production and delivery numbers which were already reported on on Slashdot:
* Tesla would have hit the EPS predictions (a loss was predicted this quarter, just smaller), except for a restructuring charge. Somie of the Q1 restructurings continued into Q2. The operating GAAP loss was only $167M.
* Tesla reported a free cash flow of $614M, which is very solid. This pushes their cash on hand up to $5B, the highest the company has ever had.
* Gross margins dropped 1,3%, from 20,2% to 18,9%. However, since non-regulatory credits were less than half this quarter what they were in Q1, this represents a ~2% increase in margins discounting credits. This despite a significant decline in ASP (average selling price); Tesla continues to make huge increases in production costs every quarter.
* Compared to earlier quarters to look at changes over time (say, Q3 and Q4 of last year), what really stands out is how much more efficient the company has become, in terms of not just production costs, but overhead (SG&A) per vehicle and other factors. A good illustration of the production cost and efficiency improvements is that they're now producing S&X - which one might have thought would be fully optimized out by now - at 15k/q with only a single shift, where in the past it was ~25k/q with 2-3 shifts.
* Despite significant ASP reductions due to price cuts, Model 3 margins (incl. non-regulatory credits) have roughly tracked ~-20% Q1 '18, ~0% Q2 '18, ~20% Q3 '18, ~20% Q4 '18, ~20% Q1 '19, and ~20% Q2 '19.
So how was Tesla yielding significant profits in Q3-Q4 and not Q2, with record sales and not a significant margin decline? It's rather simple: Beyond the restructuring costs, a significantly lower ASP represents less revenue, even when the margin holds steady. You also need to increase the production volume to correspond to the ASP reduction. While volumes increased, they didn't increase as much as the ASP relative to Q3/Q4 (although obviously a significant improvement relative to Q1). A side headwind was the fact that Tesla is currently focused on clearing out existing S/X inventory before increasing focus on the new Raven variants; inventory, obviously, has lower ASP and margins.
Going forward, guidance for Q3 is for a relatively steady or only slightly decreased ASP - this despite yet more price cuts. The price cuts only represent a small decrease in the entry price, with more significant increases to the upper end, in order to get a higher take rate on higher-margin variants, at the cost of said variants returning lower margins. With ASPs stabilizing, the other sides of the picture are production and sales. Production is no issue; it increased over the course of Q2, so even if it holds steady at the rates of late June, Q3 production will be significantly higher than Q2. As for the orders side, Tesla reports Q3 orders tracking higher than Q2 orders at this point in time. The European countries which report realtime tracking show Q3 deliveries catching up to Q2, despite Q2 starting out with an advantage of thousands of undelivered vehicles in transit. Deliveries for in many markets (particularly RHD) have been continually pushed back, frequently to September - again, indicative of high demand. Tesla can, of course, always increase demand at any point in time just by expanding into new markets, including some of the world's largest (Russia, India, eastern/southeastern Europe + IS, Brazil, Saudi Arabia, etc); however expansion bears one-time capital cost hits (inventory increases, new infrastructure costs, new employee training, etc), and there's a time-value to money, so expansions always get pushed off until they're actually needed. The only problems come when you don't expect you need to expand for a quarter but you actually do, or your expansion rollout goes awry (Q1 '19 was a good example of the latter).
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Tesla continues to make huge increases in production costs every quarter.
Is *that* something you want to do?
Re:Expenditures (Score:4, Informative)
Yeah, unfortunately you can't correct posts on Slashdot :P
* "Somie" -> "Some"
* "huge increases in production costs" -> "huge improvements in production costs"
* "While volumes increased, they didn't increase as much as the ASP" -> ".... didn't increase as much as the ASP decreased"
Probably more that I haven't noticed.
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Hi, it's Gary from Tesla's PR department. Good work as usual. You were a little late in posting but we understand the time differences are a factor. However, in our meeting last week it came to our attention that some of our "preferred influencers" are having problems with formatting.
We'd like to remind you that we recommend at least 1 blank line between each bullet point provided to you. It helps keep our material more professional and makes it easier to read for our audiences. Keep up the good work and fe
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"Hi, it's Gary from Tesla's PR department. Good work as usual." ... good to see you, buddy, how've you been? Things have been okay for me, except that I'm a zombie now.... I really wish you'd let us in....
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Tesla reported a free cash flow of $614M, which is very solid. This pushes their cash on hand up to $5B, the highest the company has ever had
Well, when this happens:
Tesla "built 87,048 EVs and delivered 95,356 of them,"
You better be able to make some sort of profit. Selling more vehicles than you actually produced? Yeah - that's not going to be normal. And they STILL lost operational money, even shipping more products than built...
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Tesla did not lose $408 million. They spent that money on building the new factory in China. It was an investment, not waste.
They never said it was a waste. It is simply the net income/loss of the company on its income statement. Their balance sheet shows their total assets grew over the past six months. Tesla's financial statements still show a company which is generally losing money but is investing in growth, which matches up with what the summary said.
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Yep, cash flow less capex was a positive $614M. So they actually made money, but spent it by investing in growth and also "lost" some in accounting for past expenses written off over multiple quarters.
Basically they're doing just fine.
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Tesla hasn't released their financial statements for Q2 yet, so your opinion is just based up what little information is in the 2019 Q2 letter and it Tesla/Musk fanboy delusion.
A loss is a loss. Past expenses that are carried forward are in fact expenses and a loss. Tesla is losing money because of piss poor management. GAAP was created so that there are standards and you don't have unscrupulous business managers doing the statements their way - Figures don't lie but liars can figure. GAAP standards are
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In the basic sense of "they spent more money than came in" yes they lost money.
What did they spend the majority of the deficit on? Capital expenditure. They're paying for future revenue growth. Which is generally a good thing.
If the deficit was to operational expense, that would be bad. It turns out there might be some nuance to this beyond "OMG RED INK BAD." Maybe that's why they have detailed reporting and shit?
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So because they spent less on capital expenditure than the huge sums they spent in the past, but still plan to spend over a billion dollars on capex this year, that means they aren't growing all of a sudden?
What the fuck?
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Actually, what you're describing here is FCF, which was positive $614M, putting Tesla at its highest cash on hand ever. :) GAAP net income is affected by liabilities, however - delivering FSD is an example of one (an example of deferred revenue).
Liabilities aren't generally a big issue for a growth company, even things that aren't deferred revenue that simply gets recognized later as milestones are achieved, because the growth c
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The deficit was spent on SG&A, i.e. the costs of running the business. Nothing to do with capex. In fact their capex is so small it's less than depreciation. Both capex and R&D are rock bottom at Tesla because they're broke.
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What on Earth does a driver, unassisted [go.com] (not like EAP does city driving), running a stop light, have to do with the brand?
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Never hesitate to invent a conspiracy theory when the facts disagree with your narrative.
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They have zero evidence auto pilot wasn’t on.
That desperation of yours! It's so enjoyable.
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When it's a non-Tesla brand, nothing.
When it's Tesla, where there are irrational haters everywhere, and especially when it is purely the operator's fault, brand has EVERYTHING to do with it, because TESLA KILLS PEOPLE. Like, literally tens! Don't pay any attention to the 100+ people killed by GM trying to dodge a recall on their starter switches - this is TESLA we're talking about here! Pay no mind to the 170,000 annual vehicle fires [fema.gov] in the US that are overwhelmingly gasoline-powered vehicles, because OM
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Capex was not "at an all-time low" - it's just down because Model 3 production is finally going smoothly and GF3's hardware purchases are done - and autopilot was not on in the accident [go.com], and I'm not sure why you think 4-5 deaths (Tesla wasn't allowed to investigate the China case to even see if AP was on) in a billion and a half miles is a bad record for a car.
Capex will go back up when they have to start buying production hardware for Model Y. Although probably not as much as before, since MY shares most
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Yes, "record cash on hand, and increasing by $610M/quarter" = "Bankrupt". Totally. ;)
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Words have meanings. Bankrupt companies actually file for bankruptcy protection, which Tesla has not done, and won't be doing any time soon with $5B cash in the bank.
You are kind of an idiot.
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Also their shit autopilot system just killed a pedestrian. Their body count is up to 5 now. 6 is the wife doesn’t recover.
Uh...fake news? [sfgate.com]
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One problem Tesla has is that they can't recognize most of their FSD revenue under GAAP; it just continues to accumulate on the books without recognition. Whenever they declare FSD to be feature complete (which does not mean any given level of reliability, or that regulatory approval has been granted - only that all features are implemented and rolled out, and the car can drive itself between arbitrary points), they can recognize all accumulated FSD revenue. Beyond any additional revenue they'd get at the
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Good point. Don't forget to buy the dip, Rei. You will get rich real soon now.
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Under "Liabilities and Equity", it's "Deferred revenue". Increased liabilities (e.g. FSD) get subtracted from GAAP net income but not FCF. It thus accumulates in "Total current liabilities". This gets subtracted as FSD features are delivered.
As for the part vs. whole, part of FSD revenue is recognized at present, but not all.
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They can't recognise FSD revenue because it doesn't exist. Musk is selling literally nothing. He's stacked up huge liabilities, billions that might have to be paid back.
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They didn't make money, they lost it. Profit is different from cash flow. Their cash flow was high because of capital raises and selling cars they made in Q1. Tesla loses money manufacturing and selling cars, their business model is inherently unprofitable. They don't invest any profits in growth, they pay for growth with debt.
so CAPEX? (Score:3, Informative)
Tesla did not lose $408 million. They spent that money on building the new factory in China. It was an investment, not waste.
That's not where the $408 million loss came from. The Q2 2019 financial statements haven't been released yet but a capital expenditures wouldn't be recorded that way.
Many companies that had great ideas went bust because they expanded too fast with capital investment. Iridium is a prime example. Great concept. But they had these huge grandiose plans and went under. Their assets were bought during bankruptcy and now is a viable company.
Capital costs money. So do assets. Money ain't free. You buy all the h
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Pretty hard to go bankrupt when you have +$610M FCF/quarter and $5b cash on hand.
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your linked citation https://www.thedrive.com/tech/... [thedrive.com] actually almost says the opposite. Not in words, but the fact it was written more than a year ago and predicted Tesla would be in bankruptcy by now. Not only is Tesla not in bankruptcy but it is looking a lot better. Less dept, more income, more cars, more cash on hand. Pretty much every metric is better.
And it's not just doom and gloom, its FUD. It also attacks the guy (musk) and spacex. Looking at all the other pages on that site, it looks like a FUD
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I love how you guys always point to accounts payable and never to accounts receivable. How you always point to liabilities and never to assets.
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Pretty hard to go bankrupt when you have +$610M FCF/quarter and $5b cash on hand
Classic Elon -- manipulate the hell out of the numbers for one quarter and then declare it to be an endless trend.
Q1 free cash flow was nearly a billion in the red. Q2 net profit was $400M in the red. $610M FCF is not real or sustainable.
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"cannot be understated" (Score:2)
Can I have his money? (Score:2)
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you don't need money for that.
*** Incoming Rant ***
The problem with the education system is that everyone thinks of money first. It's one of the most intellectually dishonest bits of propaganda out there.
I am a high-school drop out, ZERO College and yet I managed to make some decent money despite everyone else telling me it was impossible my entire life, even now still have people tell me that what I have done is impossible or stupid. Even though we have plenty of rich folks that did much the same as me a
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I'm talking about the education system, not funding my college degree. I'm not going back to college; I'm looking to redevelop primary education into an advanced, highly-effective model.
Also it was a joke.
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There is nothing unusual about the average executive stay length at Tesla [dropbox.com], according to TSLAQ's own list (particularly when you account for the fact that those who leave will by definition have a shorter tenure than those who haven't left). Nor is there any trend in executive departure rates beyond the total size of the company (e.g. number of executives).
But that doesn't stop the media from turning any random departure of the Junior Executive Manager of Production Zone 3 at Gigafactory 1 as if it's the en
Comment removed (Score:3)
Wait, what? JB Straubel did not found Tesla. (Score:2)
Neither JB Straubel, nor Elon Musk founded Tesla.
It was founded by Marc Tarpenning and Martin Eberhard.
Elon Musk and JB Straubel just hopped onto a rocket ship, and now think that they built the rocket ship.