FYI, "bakkie" comes from the Dutch word "bak" since the South Afrikaner 
language stems from the settlers from The Netherlands, hundreds of years ago.
"Bak" means container (or bin, tub, vessel, manger, trough, vat, holder) but 
can be use used (often derogatory) as a slang word for car.
It has many other (slang) uses, such as a jail/prison, a racket or joke and can 
also refer to a cup of coffee in the form "bakkie".
That has nothing to do with the title of the article though, it is simply the 
slang version of the official "bakje" which is a small "bak".
Dutch places "je" after a noun to make it a small person/item/place or to make 
it cute.
So, "bakkie" in the title is slang for a small or cute car.


-----Original Message-----
From: EV [] On Behalf Of brucedp5 via EV
Sent: Wednesday, March 07, 2018 9:27 AM
Cc: brucedp5
Subject: [EVDL] Sending an electric bakkie into space is Tesla's marketing ...
Sending a car to space, electric bakkie... is Tesla's marketing as effective in 
2018-03-07  Isabelle Chaboud, Professeur associé d’analyse financière, d’audit 
et de risk management, Grenoble École de Management (GEM)

Falcon Heavy Test Flight  / (SpaceX)

San Francisco - Elon Musk is the undisputed champion of communication. Day 
after day announcements keep coming to reassure investors and the financial 
markets. In Tesla’s 2016 annual report, Musk stated that the company would 
produce 500 000 vehicles in 2018. In November 2017, he unveiled the Semi Tesla, 
a fully electric semitrailer that generated significant interest and orders. 
And on February 6, 2018, he sent a car into space.

Behind Musk’s magic tricks, what is the reality? Is the marketing genius as 
effective in production? And where are the fundamentals of the Tesla group?

Far-reaching communication

The president and founder of Tesla and SpaceX, Elon Musk completed a master 
stroke by using the February launch of SpaceX’s Falcon Heavy to put a red Tesla 
Roadster in space. It even had a driver, a mannequin called “Starman”.
It was a beautifully orchestrated operation, and the video shows images of the 
Earth below, with David Bowie’s “Space Oddity” playing in the background.

The stunt made headlines around the world, and was one of the most far-reaching 
advertising messages ever – and was enough to distract investors from the fact 
that Tesla’s financial situation is far from idyllic.

An undisputed champion of marketing and a mythical character, Elon Musk is 
making people believe their dreams can become true. Not only does he make the 
company’s current and potential customers dream, but he also makes the 
financial markets dream. By taking the analysts and investors with him, Musk 
has been able to propel Tesla’s share price to great heights. Introduced to the 
stock market in June 2010 at $17, Tesla’s shares reached $352.05 on February 
23, 2018, an increase of 1 970%.

Tesla’s capitalisation exceeds that of Ford and GM

With a price of around $299 per share at the beginning of April 2017, Tesla 
Motors’ market capitalisation reached $48.2 billion and was ahead of Ford Motor 
Company on April 3, 2017. In early May 2017, Tesla’s market capitalisation 
reached $52.6 billion, surpassing General Motors’ by $1 billion.

Since then, the stock price (judged at the highest point) has continued to 
rise, reaching a market capitalisation of $59.4 billion on February 23, 2018, 
more than double that of Renault-Nissan (25.4 billion euros, and the world’s 
largest automaker by sales volume and more than General Motors
($57.4 billion) and Ford Motor Company ($41.7 billion) as of February 23, 2018.

Yet Tesla has so far sold far fewer cars than Ford, General Motors and 
Renault-Nissan, and has accumulated losses since its inception. So what 
elements justify such enthusiasm on the part of investors? While the company’s 
tremendous growth prospects and position as the sole builder of 100% electric 
vehicles in the world undoubtedly contribute to the appetite of investors, 
emotional factors seems to be the key drivers. It’s Elon Musk who leads the 
dance – charismatic, iconoclastic, innovative and driven by his wildest dreams.

A new concept of transport

The California-based automaker Tesla was founded in 2003 by Martin Eberhard and 
Marc Tarpenning, and has been successful in attracting customers to the concept 
of a high-performance, fully electric car with that’s simple to use despite 
being extremely complex. The company initially focused on luxury models with 
the Model S and Model X, costing nearly $100,000 each. Since then Elon Musk has 
worked to expand its offerings with the more affordable Model 3, with a 
starting price of $35,000.

Musk’s marketing genius lies above all in his ability to unite clients around a 
new concept: driving differently, being eco-responsible and participating in 
the fight against pollution. Despite the hype, however, Teslas may not be as 
green as you might think. The question of the vehicles’
limited range also remains to be solved.

Beyond dreams, myths, what about reality?

Production difficulties

Despite Musk’s announcements and the promises of record numbers, Tesla is 
facing serious production problems that are causing delivery delays and pushing 
up inventories. In a June 3, 2017 article titled “Elon Musk: Tesla factory 
injuries ‘break my heart’ ”, Business Insider revealed that the workplace 
accident rate at Tesla’s Fremont production site were higher than the industry 
average in 2014 and 2015. In a January 4, 2018, article in the _Washington 
Post, “Why are you even reading that Tesla announcement?, Bloomberg’s Liam 
Denning laid out how Tesla has not kept its promises in terms of production.

Production figures are constantly being revised downward and fewer than
25,000 vehicles were produced in the last quarter of 2017. The level of vehicle 
production has remained virtually stable between the last quarter of
2016 and the last quarter of 2017. Musk announced in early November 2017 a 
weekly production of 5,000 units of Model 3, this was revised down to 2,500 
units per week for the 1st quarter of 2018. And in the last quarter of 2017 
only 2,425 units were produced, according to Denning.

In a press release issued on February 7, 2018, Tesla’s management acknowledges 
the production difficulties and delays, especially with the Model 3. However, 
it indicated that Tesla wants to use state-of-the-art robots to become "the 
best automaker”.

Fragile fundamentals

Tesla’s financial statements reveal that the company’s fundamentals are far 
from solid. The group’s debt (total financial debts/shareholders’ equity) 
reached 200% in 2016 (including resale value guarantees) and its net debt – 
(total financial debt less cash and cash equivalents)/shareholders’ equity – 
rose to 129%.

In other words, Tesla had more debt than funds. However, there was a debt 
reduction in 2016 following two share capital increases: one to finance 
additional investments for the launch of its Model 3 electric sedan and another 
for the acquisition of SolarCity in November 2016.

Total debt (total debt/equity) is a staggering 352%, meaning that Tesla’s debts 
represented more than 3.5 times its equity in 2016. Add to that, Tesla has only 
posted losses since its inception. At the end of 2016, cumulative losses were 
close to $3 billion, despite a turnover of $7 billion in 2016, up 73% from 2015.

Beyond the losses, another worrying issue concerns the company’s operating cash 
flow. Although the situation improved significantly between 2015 and 2016, from 
a negative operating cash flow of $524 million to a negative operating cash 
flow of $124 million, Tesla has yet to post a positive operating cash flow at 
year end.

Admittedly, the group had a positive cash position on its balance sheet of
$3.4 billion at the end of 2016, but when we analyse this balance in detail, it 
is clear that Tesla’s liquidity comes only from external financing (debts or 
issuance of shares). This is a crucial point to follow, as Tesla needs 
significant amounts of cash to cover investments in its Fremont plant and 
Gigafactory 1 and 2, continue with Supercharger installations, support its R&D 
efforts (around 11.7% of total revenues) and accelerate production (in 
particular the Model 3).

Cash flow that isn’t

In a Fortune article “Why Tesla’s cash crunch may be worse than you think”, 
Shawn Tully warns that starting in the fourth quarter of 2015, Tesla would have 
added cash received from banks for leased vehicles with a resale value 
guarantee to its operating cash flow. This practice would have improved Tesla’s 
operating cash flow when in fact cash was not generated from operations but 
from a bank loan, distorting its true operating cash position.

The final results for 2017 have been filed and the group announced on February 
7, 2018 that despite the increase in total revenue of 55% (organic
growth) from 2016 to $11.8 billion to the end of 2017, Tesla experienced a net 
loss of $1.96 billion (compared to a loss of $675 million in 2016).

This loss was caused by production difficulties on the Model 3, unexpected 
start-up and other operating costs, and financial expenses of almost $500 
million. Indebtedness jumped again with a total debt-to-equity ratio of 543%. 
In other words, Tesla’s debts now represent more than five times its funds.

Despite fragile fundamentals and significant cash requirements, it seems that 
the dream of Tesla and its growth prospects continue to attract investors. They 
certainly see Tesla’s massive efforts in R&D and large-scale projects are a 
clear path to becoming the car manufacturer of the future.

The ConversationMusk, who reacted to the launch of Falcon Heavy by saying 
“Crazy things can come true”, embodies this vision. While he can seduce the 
crowds with conviction, let’s not forget that he owns almost 20% of Tesla’s 
share capital and that it’s crucial for him to maintain the support of the 
financial markets. It remains to be seen if his announcements will continue to 
persuade those who finance his company – and in so doing, maintain its share 
price above $300 and keep the “Tesla bubble” from bursting.
Borrowed from Afrikaans bakkie, from dialectal Dutch bakkie, from bak (“a 
tough/cool car”, slang)
(the original article)
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