Chevy Volt a Failure - GM to Layoff 1,300

The last couple of years, non-GAAP earnings have been the bullshit used by people to keep their heads in the sand about valuations -- and buy, buy, buy. Rather than admit that valuations have gotten ridiculous (as earnings weren't keeping pace), companies have actually been encouraged to use creative accounting that removes any expenses and charges that they simply don't like. It's accounting with crayons -- as long as you make EPS grow on paper, the casino stays in business. So everyone pretends the world hasn't gone insane.

Tesla is among the worst. Just on the things we know about (because where there are crazy irregularities, there are likely way more than the ones that people have caught). ... it had to restate earnings in 2011 and 2012 because its auditor (PWC) said they took it way overboard -- no internal controls.

Since then, they have just kept at it -- it is the culture Musk has created. ... bullshit, bullshit and more bullshit. As long as you can get away with it, why not?

Last year there was no way around reporting its loss -- what you were looking at in your link. Although, they did play a ridiculous non-GAAP earnings game (and I can share the particulars if you really care).

2014 was the year that almost gave me a stroke. Its accountants actually came up with some of the most creative bullshit ever seen to try to create a profit that didn't exist. The company lost about $300 million on a GAAP basis. But it reported a non-GAAP profit of around $20 million. Most companies that play this game, goose their numbers by backing out random expenses -- treating them as if they don't exist. Tesla is no different. It simply removed $150+ million of stock-based compensation (the employees furiously putting down $1,000 deposits today to try to pump the stock price back up!). But the biggest boost to it's non-GAAP number came from an increase in top-line revenue due to them actually having the chutzpah to turn hundreds of millions of liabilities into sales -- I can explain if you really care, but the short of it is that they added deferred profits from what is essentially a leasing program back to their net income. I seriously wanted to short the stock when I first was put onto it, but as I said, a market can be irrational a lot longer than I can remain solvent. Luckily I sat on my hands.

 

What does that even mean?

Cash flow and profitability are two different things. A company can lose gobs of money and have positive cash flow -- especially if it is borrowing money and adding it to the coffers (which Tesla does over and over again!). In the case of Tesla, it isn't even a company that loses money and has positive cash flow. It burns through cash -- something I have pointed out over and over again (and that you don't seem to understand). It has borrowed billions of dollars. ... and spent like mad. Its burn rate has been more than $400 a million a quarter for the last year + -- and it is accelerating. I have no idea what you think you are looking at, but in the fourth quarter of last year Tesla wasn't cash flow positive (not that a liquidity measure from one quarter would be meaningful for any discussion we have had). The company generated about $179 million in cash from operations in the quarter (some of that government subsidy, for what it is worth -- for example, the sale of ZEV credits!!). It's capital spending was $411 million -- depleting its cash reserves yet more.

 

If what you just said is true. ... all things being equal, it wouldn't matter if you own an EV or a gasoline powered car (unless you have an evangelical love of one or the other). The thing is, all things aren't equal. The battery technology that makes electric vehicles run is expensive -- particularly if you want a car that allows you to travel any distance before having to recharge. The comparable EV costs significantly more than a gasoline-powered car.

It also is less convenient. You fill up your gasoline-powered car with fuel and you go on demand. If you own a Chevy Volt or a Nissan Leaf, every 50 miles or so you need to charge the battery for 4 to 20 hours, depending on how depleted the battery is and how many volts you are charging at.

That is why, 1) What you said isn't the only flaw related to the cars, and 2) The actual practical limitations are why EVs have found nothing but a small market of evangelicals -- even with subsidization that has given their producers a corrupt advantage at a cost to everyone else.