Are Tesla's Earnings as Good as They Look?

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Aug. 8 (Bloomberg) -- Autopacific Manager of Product Analysis Dave Sullivan discusses Tesla's earnings with Alix Steel on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Arbor, michigan with a skeptical view.

We have a surprise second quarter beat for tesla.

What are the numbers not telling us?

There's a few things -- thank you for having me, by the way -- there are a few things missing.

One is i would really like to see more focus on the gap numbers instead of the non-gap numbers.

What does that mean?

What kind of accounting footwork does that mean?

If you look at the framework for an automaker and tesla is by no means a ford or gm, but they have a focus on their gap numbers and what they publish in their press releases.

A lot of people took the press releases and ran with it and in light of that, they walked away thinking the numbers were really rosie last quarter.

They lost over $30 million.

The quarter before that, they made money.

But i would like to see people really dig into those numbers.

I'm not an investor, i don't have any type of tesla stock myself, but i would like to see -- investors should be concerned because the largest component of tesla, the most expensive thing is the battery.

When we look at the fisk or batteries, that it them out of business.

One hiccup here and tesla could be in a world of hurt.

I would like to see them have a bigger contingency plan with money put aside for any issue that may arise, recalls were buybacks in the future.

I think that's a glaring issue or me when i dig into the numbers.

I want to get down to what you are ultimately driving at.

Do you believe because tesla is losing money it's simply not going to be a success or are you just saying people are overlooking some pretty obvious holes in the income statement and there should be more concerned about that and more concerned about tesla's potential for earning money in the short run than survivability in the long run?

In the short-term term, it's going to be great.

There are a lot of early adopters who want one of these and want the latest electric car.

But long-term here, we are forecasting by 2016, they are not even going to sell 10,000 in the u.s., yet they will have other models on the market.

Elon musk says they will sell 40,000 model s sedan's eye 2014. in the following year, you don't think they're going to sell 10 grand?

We think there will be just under 10,000 sold that year.

He's banking on a lot of international sales.

We think there'll be a lot of early adopters who will already have the car and it's still out of the reach of a lot of people.

Even with their new leasing program and these expectations?

When you dig into the leasing program, you realize it's not that great a deal.

It's still a very expensive acquisition for people.

It is $700 or $800 a month.

Some of them are over $1000 a month.

It's not the great bargain it was made out to be.

You've got to dig into the numbers and get past the public relations aspect of it and then you can get a better idea of what's going on.

What do you believe is finally going to prove tesla's undoing?

The fact that it's small and cannot bring costs of enough down to make its car or that other manufacturers like ford, gm, chrysler or bmw or mercedes are going to get into this business and make electric cars for less?

The problem is a lot of these automakers, other than tesla, other automakers offer powertrains from diesel, hybrid , plug-in cars and they are working on hydrogen.

Hydrogen that's going to come from our natural gas infrastructure that we already have.

We have seen white a few of the automakers form collaborations together to develop that

This text has been automatically generated. It may not be 100% accurate.


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