If you listened to CEO Elon Musk on the Tesla Q4 post-investor letter conference call, you might think that Tesla’s dreams are all coming true. He started out by calling 2017 “obviously a big year for Tesla.” He described a very sophisticated automated parts conveyance system at the Fremont vehicle plant. Excitement about how the company is designing the Model Y. The competitive strength of Tesla long-term when centered on the factory. 100,000 units a year as a reasonable expectation for the company’s production in the next four years. It was an all-smiles, let’s-get-happy afternoon of sharing good news for investors and for the media frenzy who love to love All Things Tesla.
But should we examine only Tesla’s dreams as we anticipate the 2018 full Tesla financial picture?
Let’s take a look in this edition of the “Gas2 Week in Review” at Tesla’s dreams, yes, and its progress, certainly, but also its woes from the perspectives of the Tesla insiders as well as how others less embedded within the Tesla culture interpreted the company’s statements.
Tesla’s Dreams: Too Much or Just the Right Amount of Optimism?
Martin Viecha, head of investor relations at Tesla, opened up the February, 2018 conference call by pointing out the day’s objectives to outline “our business outlook and make forward-looking statements.” The intensive hour was dominated by the intellectual visionary Musk, who punctated the dialogues with light humor, a bit of sarcasm, and sharp insights.
With only a $3.04 loss per share in Q4 2017, Tesla did skate by analysts’ more dire predictions, and, with revenue for automotive sales up 36% compared to the same quarter a year ago, the 35% increase in deliveries seems pivotal to the company’s long-term success. Automotive revenue for the year was up 52% over last year. The company booked $170 million from sales of zero-emissions vehicle (ZEV) credits in Q4 in contrast to the previous quarter in 2016 in which ZEV revenue was $20 million.
So far, so good.
The increase in demand for Tesla’s commercial energy storage product, the Powerpack, was another bit of enthusiastic news, “with more electric utilities and governments around the world recognizing the reliability, environmental, and economic benefits of this product.” The opportunity in large scale energy storage is clearly Tesla’s in grasp.
The unveiling of the Tesla Semi — “a super heavy-duty truck” — and the next-gen Roadster –“which we believe will exceed gasoline sports cars on every dimension” — continued the pitch of positive outlooks to the Tesla investor pool. Ebullient congrats from industry analysts about the SpaceX recent launch dotted the conversations, such as from Adam Michael Jonas of Morgan Stanley & Co. LLC, who said, “That twin Falcon landing was probably the sickest thing I’ve ever seen in my life.”
But is Elon Musk’s boldly wild imagination and high tolerance for risk an efficacious combination for future investor ROI?
Is Elon Musk’s Inventiveness Matched with Risk a Good Bet for Tesla Investors?
Technology is a highly segmented sector that also has the potential to “assuage the detrimental effects of our industrial activity on the planet,” according to Anurag Harsh in Thinking Tech: Thoughts On the Key Technological Trends of Our Times. Yes, technology requires social assessment, and often those assessments of what’s necessary to move a society forward contain deep and far-reaching differences of meaning and vision.
So, when Tesla reminds us of the company’s recent progress, it does transition beyond a futuristic sense of Tesla’s dreams to a pragmatic reality. Advances that Tesla is making on the neural net front. Launch of company’s first mass-production vehicle, the Model 3. Design, installation, and operation of the world’s largest battery in South Australia.
Ambiguity over what is really at issue as the world attempts to limit carbon emissions, though, is at the core of many Tesla overall health assessment debates. If we are to move emissions levels to below 2 degrees Celsius above pre-industrial levels and to possibly limit the temperature increase even further to 1.5 degrees Celsius, per the Paris Agreement, then companies like Tesla necessarily must move climate change action past a merely cultural innovation trend.
So this week, when Tesla’s Space X produced a successful launch of the first Falcon Heavy rocket, with Elon’s personal Tesla Roadster inside, the narrative was all about synergy. (Yes, and the event contained a good deal of Elon Musk-does-PT Barnum showmanship.) The Falcon Heavy is twice as powerful as any rocket in the world today, with 3 Falcon 9 rockets merged to create one big launch vehicle. The Roadster-enhanced payload parked for 5 hours before being sent on its way toward a rendezvous with the Red Planet several months from now.
Founded by Musk in 2002, SpaceX designs, manufactures, and launches spacecraft and advanced rockets toward the ultimate goal of enabling human life on other planets. Yet the SpaceX goal of creating reusable space hardware continues to thread through current debates about environmental risks and policies. An essential human–cultural political dimension runs alongside the momentary excitement about SpaceX. The oft-discussed “making life multiplanetary” mission leads us to ask questions about what kind of humans we aspire to be and in what kind of human world do we want to live. We wonder if the immediacy of climate change action has been radically subverted and marginalized by a scientific–institutional risk culture that SpaceX embodies.
The dimensions of this debate are not easily broken into binaries, into yes- no, black-or-white dimensions when we consider the future financial viability of Tesla. Certainly, the synergies that occur across technological innovations at Tesla and its subsidiaries are emblematic of great possibilities. Last summer, for example, when Tesla engineers found a quality problem with a cast aluminum auto part that was taking hours to diagnose and fix, they reached out to their counterparts at Space Exploration Technologies Corp. The collaborative solution was to use ultrasound sensors to isolate the problem. These discourses took shape and were projected by the institutional and scientific policy discourses of risk within the Tesla organization.
Woes or Wonderings: The Current State of Tesla
Many elements contribute to the overall fiscal picture of Tesla. Its stock has seen numerous fluctuations, yet its trend is largely upward. At the point when 7 years had passed since the company’s IPO, Tesla’s market value had surpassed Ford’s, that stalwart Top Three US automaker. As of the end of 2017, Ford’s stock market capitalization was $49.9 billion, while Tesla’s had reached $52.3 billion.
Production of the Tesla Models S and Model X during Q4 was limited to 22,137 vehicles, which the company attributes to reallocation of some of the manufacturing resources to Model 3 production. While it would seem as if Model 3 visibility in stores would affect overall all-electric vehicle sales, customer foot traffic increased and so did orders for Model S and Model X.
Sometimes the thought community at Tesla is much more practical than seems with the pervasive backdrop of innovation, imagination, and technological risk. When Tesla signed contracts with the New York state government to build its second Gigafactory, it promised workers and more workers: 1,460 people to work at the new factory and another 1,440 jobs resulting in the local supply chain. The deal, which began to take shape in 2016 with about $750 million in support from the state’s taxpayers, also included an exclusion clause: “the contract also lets Tesla avoid penalties if circumstances arise that are beyond its control.” The Trump solar tariff may, indeed, fall into such a category, should the Tesla lawyers win. Foreshadowing, in this case, produced Tesla prudence.
Risk has become the form of public discourse through which public meaning is given to technology and innovation, as defined in institutional discourses within government, media, legal, and commercial circles. In the climate change arena, Tesla is demonstrating how framing meaning of amorphous scientific concepts at the outset, albeit with clear objective referents to climate sensitivity, can have positive fiscal outcomes. It’s just that the vision is so disruptive and a bit ADD that some investors continue to wiggle in their leather office chairs uncomfortably.
Photo on Foter.com