For reasons that defy comprehension, a purposefully misleading narrative about Tesla has been gaining traction in the press this week. In an article originally published on Reuters, Joseph White and Paul Lienert laughably claim that Tesla loses $4,000 on every car it sells. Even their chosen headline is an exercise in bombastic and deceptive journalism: “Insight: Tesla burns cash, loses more than $4,000 on every car sold.”

Insight. An ironic choice of words.

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The article begins as follows:

The Silicon Valley automaker is losing more than $4,000 on every Model S electric sedan it sells, using its reckoning of operating losses, and it burned $359 million in cash last quarter in a bull market for luxury vehicles. The company on Wednesday cut its production targets for this year and next. Chief Executive Elon Musk said he’s considering options to raise more capital, and didn’t rule out selling more stock.

Tesla, most of whose cars are built to order directly, delivered 11,532 cars in the second period and said it had an operating loss of about $47 million, for an operating loss per car of about $4,000.

At first glance, and indeed this is the intention of the authors, the takeaway here is that Telsa is losing money on each and every Model S it sells. The implication being that Tesla is in a lose-lose situation where the more cars that they sell, the more their losses pile up.

Truth be told, the exact opposite is true.

The margins on the Tesla Model S are some of the best across the entire auto industry. The Model S is unequivocally profitable. It’s not even up for debate.

So what gives? Where did the $4,000 loss per vehicle narrative emerge from, and why has it spread like wildfire?

As to the second point, it’s spread across the web because it makes for a tantalizing, albeit false, headline. As to the first point, the authors of the story simply looked at all of Tesla’s operating expenditures, including development costs, and spread it out across the volume of cars Tesla happened to sell during the quarter. In effect, the authors were examining the profitability of each Tesla through the prism of the company’s full gamut of operational expenditures. This makes absolutely no sense, but apparently makes for a rather clickable headline.

An astute comment on the topic from Reddit reads:

There is a big difference between losing money for every car sold and spending more money than you make. Considering the profit margin on the Model S is over 25%, Tesla is actually in the latter category. Making the Model S is profitable. Rapidly expanding into a major car manufacturer while making the Model S is not.

*Edit: look at it this way. You want to open a McDonalds. It will cost you $500,000, which you borrow from a bank. The first year you bring in a million dollars in revenue, and make $100,000 profit from sales. However, you borrowed and spent $500,000 opening the store, which means you sort of lost $400,000 that first year.

Would Reuters say you lose $2.00 for every Big Mac sold? I guess so.

Tesla isn’t losing money on each car sold, plain and simple. The reality is that Tesla, despite its early success, is still very much in start-up mode. It’s making huge and bold bets that electric cars will be the wave of the future, bets that typically require huge outlays of cash. And speaking of the future, the the reservation list for the upcoming Tesla Model X is already over 20,000 strong, not too bad for a car that no one has yet even sat in for a test drive.

Following the Model X, Tesla’s ultimate plan is to release a mainstream electric car in the form of the Model 3. Indeed, much of the ‘cash burn’ the Reuters article mentions are investments Tesla is making in itself to facilitate growth and expanded operational activities down the line.

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