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AukeHoekstra @AukeHoekstra
, 20 tweets, 9 min read Read on Twitter
In tonight's earnings call it became official.
@Tesla is making money and realized a dream 2 decades in the making:
start a car company that produces a mass market electric vehicle.

Tonight has proven most financial analysts wrong.
thread
wccftech.com/tesla-quarterl…
I've been telling this story for a couple of years now so I also feel a bit vindicated myself 😃

For me it was always about three simple questions:
1) Can they make money on the Model 3?
2) Can they sell the Model 3?
3) Can they ramp up production before they run out of money?
Question 1: I've done my own theoretical tear down (with a couple of master students I supervised) and concluded @Tesla could make ~15-20% profit on the Model 3.
Munro recently did a tear down and put it closer to ~30% due to a "symphony of engineering".
cnet.com/roadshow/news/…
So to answer question one: yeah, Tesla can make money on the Model 3.

And my calculations show that a few years from now internal combustion engines will be uncompetitive with electric cars. If you want to know more you can still follow our course:
online-learning.tudelft.nl/courses/electr…
Question 2: can @Tesla sell the model 3? It started out well with an unprecedented 400k of (money down!) reservations that mostly stayed loyal, even though the car was delayed. And with glowing reviews recently the demand is still extremely strong.
cleantechnica.com/2018/08/01/tes…
So yes: they can definitely sell the Model 3.

Shout out here to @zshahan3 who rightly got called out in the earnings call for his in depth reporting. Zachary is an unabashed Tesla fan but his @cleantechnica backs it up with more solid reporting than anybody else.
Question 3: can they ramp up production before they run out of money?

Many analysts did not think so. Tesla is the most shorted stock on the US market (cnbc.com/2018/04/11/tes…) and focus on cash out by e.g. @danahull was relentless (bloomberg.com/graphics/2018-…).
I've always been perplexed by the short shortsightedness of people calling themselves financial analysts. Everybody knows that cash out is greatest when you are ramping up production but are not yet shipping product right?
Well apparently not for most financial analysts.
I got the suspicion analysts where not very bright when I researched this for a radio appearance in the Netherlands. I noticed how treating wall street journalists impolite was apparently more important than lowering the battery prices. The collective incompetency was staggering.
The numbers where always clear: Tesla was burning through ~$750 million a quarter the last two quarters but promised to become profitable with ~$2 billion still on the bank when it reached a production of 5000 a week. And lo and behold:
bloomberg.com/graphics/2018-…
So by now the bleeding has stopped. The cash is no longer flowing out but flowing in. On a profitable product that's selling like hotcakes.

This is it: game set and match.

I've been following this story for over ten years and I cannot stress enough how remarkable this is.
Instead of admitting they where short sighted morons with very little knowledge of what Tesla was actually doing, analysts are now trying to move the goalposts by asking questions like: but you will still need to raise money for new projects right?
I for one hope Tesla raises money for more GigaFactories because they are currently producing the best, cheapest and lightest batteries and demand for batteries is quickly ramping up. So multiplying the goose with the golden eggs makes sense.
Especially since new gigafactories in China will apparently be half the price: ~$2 billion instead of $5 billion for the current one according to estimates of @elonmusk. But Tesla says it will tap local debt funds in Shanghai.
reuters.com/article/us-tes…
The Tesla Semi project is almost as important. If there is one industry that needs disrupting even more than the car industry it's the trucking industry.
As I've explained before the business case for electric trucks is very strong. livinglabsmartcharging.nl/nl/Nieuws/elec…
Trucks use 18% of all oil (cars 26%) and a heavy truck uses about 1500 kWh of energy every day!
Electrifying them makes them 3x as efficient and they can run on renewables.
And once they are cheaper, adoption will be rapid because truck industry margins are razor thin.
So I hope they will give the Tesla Semi priority over the Model Y because I think in terms of @elonmusk's mantra ("Try to be useful") this should be almost as important as new Gigafactories and keeping Model 3 production going.

But all that's for tomorrow.
Let's focus on today.
This is the day that a couple of people with the crazy idea to start an electric car company and make a mass market electric vehicle can rightfully say:

We did it!

Congrats to @Tesla for writing history and good luck with making the world a better place while making a profit.
Just to be abundantly clear: @Tesla did not claim profit in Q2.
But it IS clear (based on price per car, sales and number of cars produced) their claim that they are profitable from now on is true.

With all the focus on bad news this is a milestone we should celebrate!
I don't put much stock in the stock market (pun intended) but it seems like it's celebrating with us today. Except for the shorts of course.
marketwatch.com/story/tesla-sh…
reuters.com/article/us-tes…
cnbc.com/2018/08/01/tes…
cnbc.com/2018/08/02/cra…
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