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Tesla’s $675 Million Loss Pulls Elon Musk Back To Earth After Stellar SpaceX Launch

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Elon Musk wowed millions of people who watched the livestream of a flawless first launch of SpaceX’s Falcon Heavy rocket, which carried a Tesla roadster into space, capped by the elegant, simultaneous landing of two boosters. Musk’s euphoria was undiminished as he shifted gears on Wednesday to Tesla, pointing to a silver lining for the high-flying carmaker that capped a year of big losses and production headaches for its critical Model 3 sedan.

The company reported a whopping $675.4 million net loss for the final quarter of 2017 and a $1.96 billion deficit for the year, the most ever on both counts. Loss per share was $4.01 on a GAAP basis, or $3.04 per share excluding some items. That was better than consensus estimates for adjusted EPS losses of $3.10 to $3.19, and likely the result of bigger than expected sales of emissions credits. Tesla shares plunged 8.6% to $315.23 on Thursday.

Musk and Tesla CFO Deepak Ahuja acknowledged 2017’s challenges in a letter to investors but also said the table was set for a much better year in 2018. Notably, they predict operating income will become “sustainably positive” at some point this year and that production of Model 3, as well as the S and X crossover, will continue to grow.

“2018 will be a transformative year for Tesla, with a high level of operational scaling,” the two said. “As we ramp production of both Model 3 and our energy products while keeping tight control of operating expenses, our quarterly operating income should turn sustainably positive at some point in 2018.”

The company stuck with its production guidance for the Model 3, nominally priced from $35,000, to reach 2,500 units a week by the end of the first quarter, and then 5,000 a week at the end of the second quarter. The Palo Alto, California-based company didn’t say when it will hit its ultimate target of 10,000 Model 3s a week, enough to hit Musk’s goal of 500,000 a year.

“Even this Tesla realist and Model 3 deposit holder has doubts about Tesla ramping up to 10,000 units/week, essentially promising production levels of over 250,000 units in 2018,” said Rebecca Lindland, executive analyst at Kelley Blue Book’s KBB.com. “I think they’ll be lucky to get 150,000 units out the door in 2018, and even that would be an incredibly impressive feat, requiring an average weekly rate of over 3,000 units for every single week left in 2018 with no breaks. Elon Musk needs a team of forecasters that he’ll listen to so he can finally provide Wall Street and depositors with achievable targets.”

READ MORE: Roadblock: Elon Musk’s Net Worth Drops $800 Million In A Day

Last month, Tesla cut its Model 3 production target for a second time after building just 2,425 in the fourth quarter. Total production, including the higher-priced Model S and Model X, was 101,027 units in 2017.

Still, the fact that the company affirmed its production goals, which were revised down in January, was the best news in the report, said Jeff Reeves, analyst and executive editor of InvestorPlace.com.

“There are never any guarantees, but Elon Musk hasn’t been shy about cutting back forecasts in recent months so he certainly would have pulled back on the reins if Tesla wasn’t confident,” Reeves told Forbes. The company also managed to burn far less cash in the fourth quarter, trimming it to $276.8 million in the quarter, compared with $1.42 billion in the third quarter and $969.8 million a year ago, he said.

“It’s always about growth with Tesla, not the bottom line,” Reeves said. “But it’s also encouraging to see a smaller-than-expected loss and a cash burn that dropped significantly from Q3 to Q4.”

Tesla’s sales of zero-emission vehicle, or ZEV, credits to other automakers that need them to comply with California’s tough emissions rules, were up significantly from a year earlier, to $179 million compared with $20 million in the final quarter of 2016. Barclays analyst Brian Johnson predicted $10 million for the quarter. Exceeding the forecast provided Tesla an adjusted net loss that was slightly better than expected.

Tesla completed the integration of SolarCity into its operations in 2017 and aims to significantly boost shipments of solar panels and power storage units this year.

“We expect energy storage products to experience significant growth, with our aim to at least triple our sales this year,” Musk and Ahuja said. “We expect energy generation and storage gross margin to improve significantly in 2018 as we enter the year with a backlog of higher-margin commercial solar projects and a more profitable energy storage business due to manufacturing efficiencies from scaling.”

READ MORE: Musk’s Multi-Billion-Dollar Tesla Comp Plan Is Shrewd Marketing Amid Rocky Patch

Capital expenditures will continue to rise in 2018, to expand output at the Gigafactory battery plant in Nevada and continued investment in production capacity at Tesla’s Fremont, California, plant, the company said. Tesla will also start investing this year to add production of the Model Y, a small electric crossover that will be the next vehicle in its lineup.

“We are going, as you suspect, to need to make some capital investments in the second half of this year, in late Q3, Q4, for Model Y. We want to wait probably three to six months before announcing any definitive plans on production location or details associated with that,” Musk said in a conference call with analysts.

His expectations for Model Y, which hasn’t yet been unveiled, are enormous.

“To give you some flavor for optimism for Model Y… we might aim for something like maybe capacity of a million units a year, just for Model Y alone. I think we’ll be able to do that for capex that is less than Model 3 capex at the half-million-unit level”, Musk said.

Notably, customer deposits for Model 3, as well as the recently announced Semi and Roadster became a major balance sheet item for Tesla, totaling $858 million at the end of 2017, up from $663 million a year earlier. While most of those funds are from the nearly half-million reservations Tesla has for the Model 3, a growing portion comes from the battery-powered Class 8 truck and high-end sports car.

Separately, Musk said that Jon McNeill, who had been head of the company’s sales and service group, had left the company. Musk said he’ll oversee those functions himself. Lyft said it hired McNeil as its chief operating officer.

“Jon is a world-class leader who brings deep experience as a highly successful entrepreneur and executive,” Lyft CEO Logan Green said in an emailed statement. “Last year, the Lyft community experienced more growth than in all previous years combined, growing rides by 2.3x and increasing market share by more than 50%. Jon is the right leader to build upon this momentum with his unique background of starting companies from scratch and managing at scale.” – Written by 

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The Nearly $2 Million Aston Martin Valhalla Is A Gift From The Gods

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Proving, again, there is often truth to rumor, Aston Martin chief executive Andy Palmer confirmed that the previously code-named Aston Martin AM-RB-003 s hypercar will be officially called Valhalla, continuing with the manufacturer’s Norse god naming theme.

“Norse mythology contains such powerful language and rich storytelling it felt only right that the AM-RB 003 should follow the Valkyrie’s theme,” Palmer told reporters.

“For those fortunate enough to own one I’m sure they will recognize and appreciate the name’s connotations of glory and happiness, for there can be few more hallowed places than the driver’s seat of an Aston Martin Valhalla.”

Inside the new Aston Martin Valhalla.
Speed Racer: The dash might be minimal, but the F1-style steering wheel is anything but. ASTON MARTIN

Joining the stunning Valkyrie and extreme Valkyrie AMR Pro, the all-new gift from the gods will compete for bragging rights with the likes of the Ferrari LaFerrari and the McLaren Senna.

As we reported earlier this year, only 500 of the hybrid hypercar will be built, every single one of them clad entirely in carbon fiber.

Aston Martin Valkyrie.
Sibling Rivalry: The Valhalla borrows much of its styling from older brother, the Valkyrie (shown here). ASTON MARTIN

The Valhalla will look much like its bigger brother, the Valkyrie (the rear diffuser and air tunnels appear to be nearly identical). However, it will sport a more traditional mid-engine supercar layout, with high-exit exhausts, a jet-fighter-style canopy, and active aerodynamics and suspension.

It will be powered by an all-new V6 engine that will feature some level of hybridization and turbocharging to aid performance. Total output: 1,000 horsepower. However, that is still just a rumor. We’ll have to wait and see. Also available will be an 8-speed F1-inspired dual-clutch transmission, a limited-slip differential and an e-AWD system.

All new Aston Martin Valhalla
Powerful Beast: The Valhalla’s turbocharged hybrid V-6 is expected to develop 1,000 horsepower.ASTON MARTIN

Aston Martin is targeting a 0-62 mph sprint time of 2.5 seconds and a top speed of more than 220 mph.

If you don’t have the almost $2 million ticket to ride this 200 mph-plus hybrid hypercar, you can see it in the upcoming 007 movie now in production starring Daniel Craig as James Bond. It is set to be one of a trio of Aston Martins to appear in the film. Send me a secure tip.

-Chuck Tannert; Forbes Staff

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How Google Is Using AI To Make Voice Recognition Work For People With Disabilities

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Want to schedule an appointment? Just ask your phone. Need to turn on your bedroom lights? Google Home has you covered.

Now a $49 billion market, voice-activated systems have gained popularity among consumers, thanks to their ability to automate and streamline mundane tasks. But for people with impaired speech,  technologies that rely on voice commands have proved to be far from perfect.

That’s the impetus for Google’s newly formed Project Euphonia, part of the company’s AI for Social Good program. The project team is exploring ways to improve speech recognition for people who are deaf or have neurological conditions such as ALS, stroke, Parkinson’s, multiple sclerosis or traumatic brain injury.

Google has partnered with nonprofit organizations ALS Therapy Development Institute and ALS Residence Initiative (ALSRI) to collect recorded voice samples from people who have the neurodegenerative disease, one that often leads to severe speech and mobility difficulties.

For those with neurological conditions, voice-activated systems can play a key role in completing everyday tasks and conversing with loved ones, caregivers or colleagues. “You can turn on your lights, your music or communicate with someone. But this only works if the technology can actually recognize your voice and transcribe it,” says Julie Cattiau, a product manager at Google AI.

The company’s speech recognition technology utilizes machine learning algorithms that require extensive data training. “We have hundreds of thousands, or even millions, of sentences that people have read—and we use them as examples for the algorithms to learn how to recognize each,” says Cattiau. “But it’s not enough for people with disabilities.”

With Project Euphonia, the team will instead use voice samples from people who have impaired speech in the hope that the underlying system will be trained to understand inarticulate commands.

While the goal is to create technology that is more accessible for people with speech impediments, the end result is still unclear.

“It’s possible that we will have models that work for multiple people with ALS and other medical conditions,” says Cattiau. “It’s also possible that people, even just within ALS, sound too different to have such a machine learning model in place. And in that case, we may need to have a level of personalization so that each person has their own model.”

Google’s speech recognition technology can comprehend virtually any voice command for people without speech impairments, due to the large data set that has been available for training. But some uncertainty exists about how broadly speech technology will be able to understand and act on directives from those who have difficulty speaking. The Project Euphonia team has only a limited number  of voice samples from people with speech impediments, which allows it to focus only on specific-use words and phrases such as “read me a book” or “turn off the lights.”

Though Cattiau’s team has collected tens of thousands of recorded phrases, she says it needs hundreds of thousands more. That’s partly why Google CEO Sundar Pichai unveiled this project at the company’s annual developer conference in May.

“We are working hard to provide these voice-recognition models to the Google Assistant in the future,” he said, calling on people with slurred and impaired speech to submit their voice samples.

“Impaired speech is a very difficult data set to put together. It’s not as simple as asking people to record phrases, and there’s no data set just lying around,” Cattiau says. “We have to first put it together, and that’s a lot of work.”

Perhaps the most groundbreaking of Project Euphonia’s initiatives is its work on new interactive AI systems for people who are completely nonverbal. Also in its early stages, these systems are being trained to detect gestures, vocalizations and facial expressions, which can then trigger certain actions like sending or reading a text message.

“We want to cover the full spectrum of people—and not only those who can still speak,” says Cattiau. Although Project Euphonia is still in its infancy, it could eventually have a great impact on those with disabilities, giving them the freedom and flexibility to live independently.Follow me on Twitter.

-Ruth Umoh; Forbes Staff

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Nigeria Needs A More Effective Sanitation Strategy Here Are Some Ideas:

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In November last year, Nigeria declared that its water supply, sanitation and hygiene sector was in crisis. This was partly prompted by the fact that the country has struggled to make progress towards ending open defecation.

Almost one in four Nigerians – around 50 million people – defecates in open areas. They do so because access to proper sanitation, like private indoor toilets or outdoor communal toilets, has not improved in recent years.

In fact, it’s got worse: in 2000, 36.5% of Nigerians had access to sanitation facilities that hygienically separate human excreta from human contact. By 2015 the figure had dropped to 32.6%, likely driven by rapid population growth and a lack of sufficient private and public investment.

Open defecation comes with many risks. It can lead to waterborne diseases, cause preventable deaths, and hamper education and economic growth. It also infringes on people’s privacy and dignity.

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The government has tried several strategies to address this problem. In 2008 it adopted an intervention called “Community Led Total Sanitation”. This is a community-level intervention aimed at reducing open defecation and improving toilet coverage.

It draws in community leaders and ordinary residents so they can understand the risks associated with open defecation. By 2014 the intervention was deployed in all 36 Nigerian states, covering around 16% of the country’s 123,000 communities.

We wanted to know how effective the programme has been, if at all. So we conducted a study and found that community-led total sanitation programmes alone will not eradicate the practice of open defecation. But they could be part of the solution.

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We found that the programme currently works quite well in poor communities but is less effective in richer places – that is, places with higher average ownership rates of assets such as fridges, motorcycles, TVs, smartphones and power generators.

Poorer communities distinguish themselves from richer ones in other ways, too. They tend to have higher levels of trust among their citizens, lower initial levels of toilet coverage and lower wealth inequality. But none of these characteristics is, on its own, as strong a predictor of where the intervention works better than community wealth.

Low community wealth is a simple measure that encompasses all these different features, and is associated with greater programme effectiveness.

The intervention

Community-led total sanitation typically starts with mobilisation. This initially involves community leaders and then, through them, communities more broadly. Then, a community meeting is held at which residents typically start by marking their household’s location and toilet ownership status on a stylised map on the ground. They also identify and mark regular open defecation sites.

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Facilitators use the map to trace the community’s contamination paths of human faeces into water supplies and food. A number of other activities may follow, such as walks through the community that are often referred to as “walks of shame” during which visible faeces are pointed out, to evoke further disgust and shame.

Another common activity involves calculating medical expenses related to illnesses that are caused by open defecation practices.

The research

In 2015 we worked with the charity organisation WaterAid Nigeria and local government agencies in the states of Ekiti and Enugu to design a field experiment in areas with no recent experience of community led total sanitation, or similar interventions.

The community-led total sanitation programme was implemented in a random sample of 125 out of 247 clusters of rural communities.

To study the intervention’s effectiveness, we interviewed 20 randomly selected households before community-led total sanitation took place. We followed up with these households eight, 24 and 32 months after the intervention.

We found that the programme’s roll-out didn’t lead to any changes in sanitation practices in richer communities. But it worked in the poorest communities. The prevalence of open defecation declined by an average of nine percentage points in poorer communities when compared to other poor areas where the programme wasn’t implemented. This drop was accompanied by a similar increase in toilet ownership rates.

Impact depends on wealth

Our results are in line with observations by the designers of the programme. But we are the first to show quantitatively that community asset wealth is a good predictor of whether the intervention can be expected to be successful. Unfortunately, our data does not allow us to pin down why households in poorer communities are more susceptible to the programme. However, these results have important implications for more cost effective targeting of the programme.

Most countries, including Nigeria, have access to readily available datafrom household surveys that can be used to measure how asset-poor a community is. These data can be used to identify and target communities where community-led total sanitation is likely to have the biggest impact.

Eradicating open defecation is not just a Nigerian priority. Today, an estimated 4.5 billion people globally don’t have access to safe sanitation. So we also looked at data and research about this same intervention from other parts of the world.

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Community-led total sanitation intervention was first developed in Bangladesh in 1999. It has now been implemented in more than 25 Latin American, Asian and African countries.

We used information from evaluations of this intervention in Mali, India, Tanzania, Bangladesh and Indonesia. The studies found widely differing impacts. These ranged from a 30 percentage point increase in toilet ownership in Mali to no detectable impact on toilet ownership in Bangladesh.

Using a measure of wealth for these countries, we found that sanitation interventions have larger impacts in poorer areas, such as Tanzania, and low or no impact in relatively richer areas, such as Indonesia. This supports the idea that targeting poorer areas maximises the impact of community led total sanitation.

Conclusion

Our research shows that while community-led total sanitation is effective in Nigeria’s poorer areas, there are two main challenges.

First, community-led total sanitation had no perceivable impact in the wealthier half of our sample. There, open defecation remains widespread. And second, even in poor areas, a large number of households still engaged in open defecation after the intervention.

This suggests that while community-led total sanitation can be better targeted, it needs to be complemented with other policies – subsidies, micro-finance or programmes that promote private sector activity in this under-served market.

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