Text/"Autobot" Huang
As of the afternoon of March 23rd, US Eastern Time 18, there were 432 14 confirmed cases in COVID-19, USA, and 8794 confirmed cases were added within 18 hours that day, and the number of confirmed cases in the United States has soared to the third place in the world.
The epidemic in the United States is characterized by flowers everywhere in the country, especially in the rich areas on the east and west coasts. However, judging the epidemic situation in the United States according to the number of confirmed cases is of little significance. Due to the serious shortage of detection methods, a considerable number of virus carriers failed to detect in time. Therefore, the data itself is not reliable except that the proportion of each state is relatively reliable.
It has been 1 1 day since the United States entered the "national emergency", but it was not until the 20th that it really paid attention to this issue. It is reported that the US Army Corps of Engineers is planning to take over hotels and university dormitories and transform them into medical facilities.
Short-term resumption of production is hopeless
In this situation, before February 18, GM, Ford, FCA, Honda and Toyota all announced that they would stop production in the United States. Their suspension of production is tentatively scheduled for the end of the month, but everyone knows that there will be no suspense in the extension.
Tesla's suspension of production is embarrassing. 16 February, Musk still claimed to "maintain the minimum production". He tried to keep 25% of the workers working and prevent the fremont factory in the San Francisco Bay Area of California from closing completely. The factory is Tesla's only factory in the United States, with more than 65,438+00,000 employees.
Officials in Amidal County, where the factory is located, believe that Tesla is not an "essential business" and can only maintain "minimum basic operations", which is actually to shut it down. Under pressure, Tesla announced that the factory would stop production, but Tesla still claimed that the "super factory" in Nevada and the California super charging station would still operate. However, Panasonic announced on February 2 1 that the "super factory" will stop production from the 23rd 14 days.
In this way, Tesla's return to work in a short time is completely hopeless. However, Tesla claims that the company now has $8.6 billion in cash and $3 billion in credit line, "enough for five quarters". Unlike the low-key of other OEMs, Tesla likes to "show muscles" in cash flow. But of this $8.6 billion, $2.3 billion is the arbitrage of stock price highs. Tesla reached a high of $956 in early February, and its share price has now halved, less than half of its high point.
This reveals Tesla's cash flow, of which 26.7% is not obtained from business operations. This kind of thing, the stock price roller coaster, can be met but not sought. If you fire yourself, you may be severely punished for "insider trading". So Tesla still depends on business cash flow.
Due to the hopeless resumption of production, Tesla's revenue has dropped to 10%. According to the Q4 financial report of 20 19, Tesla spends $344 million in operating costs and $400 million in sales costs every month, and consumes $744 million in cash every month. Then the question is, what is Tesla's cash consumption during the shutdown period? This determines how long Tesla can last.
How long will it last?
The bad news is that in a special period, the cost of Tesla is actually higher than that of traditional car companies.
Tesla will bear the cost of all retail terminals, including hiring staff, leasing the experience center and maintaining the minimum operating expenses, as well as the high cost of sending cars to the door (if there are cars for sale), so Tesla's sales cost can only be reduced by 20%; In terms of operating costs, workers have to pay full salary when they go home on holiday, but overtime and other expenses can be saved.
As the core competitiveness of Tesla, the software development department is located in the Bay Area, which is famous for its high consumption and high salary. The average wage is $250,000/year, which is much higher than the cost of front-line workers of $76,000. There are 3000 employees in this batch, so it is natural to raise them. Musk didn't even want these employees to work from home before, because their output determined Tesla's competitiveness, and Tesla has always been known for "squeezing employees to the last drop." Now this cost has not been reduced. And OTA service, super charging station service, etc. Both need surgery. Therefore, the operating cost can only be reduced by 10%.
From this point of view, even if financing is not considered, Tesla's cash on hand can last 13 months, which looks good. But in fact, this does not include the expenses of the "super factory" in Nevada. Although the factory has been closed, Tesla still has to bear the personnel expenses and fixed expenses together with Panasonic. Considering this, Tesla's cash flow is enough for six months. However, this has been Tesla's biggest cash flow in the past three years. Unfortunately, if we don't return to work as soon as possible, the money is estimated to no longer belong to Tesla.
Failure spiral
After returning to work, the problem came again. The basic consumption of life will usher in a retaliatory rebound, but the first thing to be abandoned after the arrival of the bitter period is luxury goods. Models? 3 defined by middle-class families on the east and west coasts as the second and third commuter cars and models in the family? The sales momentum of 3 will be interrupted; What about the more expensive model? X and model? The United States will be more likely to fall into a sales downturn.
Goldman Sachs had predicted that the GDP of the United States would fall by 5% in the second quarter. However, on the evening of February 23rd, the Federal Reserve announced unlimited QE, that is, no quantitative easing. Market confidence has fallen to a worse level than in 2008. Therefore, the continuous small decline of GDP in 2008 and 2009 (0.3% and 2.8%) is probably not repeated. The worst seems to have happened.
Like traditional car companies, Tesla focuses on the assets of the production side; Unlike traditional car companies, Tesla alone controls the retail business. In times of crisis, the latter has become a great burden, not to mention the infrastructure construction that Tesla has been trying to promote. This mode of promoting business growth by expanding expenditure will have a devastating impact on its cash flow and balance sheet in depressed years. The premise of its cost structure is that the market demand continues to rise, and Tesla can't actually cope with the production reduction situation. If the production is reduced by 20%, Tesla will have negative cash flow within three months of resuming production.
To make matters worse, by the end of 2020, Tesla will have $3.8 billion in accounts payable to suppliers. In the past, when the cash flow was tight, Tesla often started a short-term financing mechanism, issued bills, delayed the pressure of cash flow, and then offset the previous payables with income. However, when the output decreases (Tesla has never suffered a large-scale production reduction), this mechanism is broken and Tesla will not have enough sales revenue to offset the bill. In order to stabilize suppliers, Tesla has provided billions of dollars in order commitments, which may be as high as 5.7 billion dollars in 2020. This year's promise will definitely not be fulfilled, and Tesla will pay liquidated damages.
Short-term financing cannot be fulfilled, and promised supplier orders cannot be paid. Tesla will face new difficulties. Tesla's cash flow has never been so severely tested when it lost money in the past. Under this circumstance, there is great doubt whether Tesla's so-called credit line can still be fulfilled.
1 and will Tesla's short-selling forces, which suffered serious losses in February, let go of the embarrassing Tesla? Moreover, because Musk himself pledged an unknown number of Tesla shares (much better than the Jia Yueting family pledged LeTV 100% shares), under the strong financial pressure, Musk himself may be forced to participate in shorting Tesla.
For more than a decade, Tesla still maintains a belief that the demand for products will continue to rise. It is believed that Tesla is far from releasing its production potential, and the constraint is that the investment is not large enough. Tesla suppliers, syndicates supporting Tesla, investors and consumers all believe this. This belief has not wavered in the continuous short selling of Tesla shares.
Once the market demand enters the shrinking stage, Tesla will not only be suppressed by the stock price, but also be regarded as a company with shrinking business and extremely high risks. This is also the reason why Tesla's share price exceeds millions of large-capacity companies with a production capacity of hundreds of thousands of vehicles, such as General Motors and Ford. The bankruptcy of faith will lead to the collapse of a series of supporting factors, thus entering a "failure spiral".
Because of the reduction of working capital, customers will question Tesla's maintenance commitment, OTA service and the expansion ability of charging network, which will further lead to the reduction of sales volume and the deterioration of financial situation. Suppliers will also demand stricter terms, even pay as you go.
If cash endangers the operation of the production line, the factory will go on strike and the customer will refund the deposit. Tesla will not be able to support a large number of technical developers, most of whom put up with Musk's bad temper and harsh management style for high salaries. By then, Tesla will usher in a fundamental collapse of competitiveness.
Some people think that no company will go bankrupt because of a single factor. However, the epidemic is an unprecedented powerful external force, and Musk has never had the operational experience of the global economic recession. His expansion strategy is always based on a prosperous market.
Tesla's Shanghai production capacity will gradually increase, which will increase Tesla's stability. However, if we refuse to change course when the global economic momentum is not good, Tesla's prospects are not good. Whether Musk's adventurism allows him to adopt a contraction strategy will be worth seeing. In any case, a few months after the outbreak, the resumption of work will determine Tesla's fate. (Text/"Autobot" Huang, part of the picture source network) Copyright statement This article is the exclusive original manuscript of Autobot, and the copyright belongs to Autobot.
This article comes from car home, the author of the car manufacturer, and does not represent car home's position.