Very excellent points:
(( I kind of like Rubio. )) Agreed. His tax policies would actually hurt me but I honestly believe that flattening the income tax helps everyone.
Currently we hide regressive taxes. This distorts the politics. We need regressive taxes (because the rich don't pay taxes) but they should be visible. The poor and working class should see what they are paying.
((( Again you are saying that everytthng from an electric skateboard to a Model X is "an EV" and in the same segment. ))
This is about investing.
Q.) Can you identify any feature or characteristic of Tesla products that will reverse the massive losses and cash burns?
A.) Nope. But you can say "skateboard."
Awesome. Stupendous. Well said. You are smarter than I.
((( CapEx in 2016, as we've said in the past will be less than it was in 2015. )))
What happened to 500,000 sales in 2020 (4 years ) ?
What happened to the giga-factory ?
If the guy was answering questions on the fly then I say cut him some slack. But if they actually do cut CAPEX - doesn't the growth story go away ?
((( we've learned some important lessons on how to do that well, and having a really robust pilot build in the plant and enforcing rigorous numbers there )))
Sounds good but where do they get the money to do this?
IMO they are making their final mistake. Instead of downsizing and trying to make a profit they are going for broke. They are going to spend billions and billions on a small electric car.
Why? We already know these cars are not in demand.
There is nothing to suggest a small Tesla car will outsell the other electric cars already on the market.
((( The BMW i3 fares best with a $13,000 rebate. )))
A $13,000 tax payer funded welfare check for a foreign made BMW ?
Does any one make solar powered guillotines.
((( This hogwash about not being committed is just an excuse to do something Musk wanted to do from the beginning, eliminate dealer partners, )))
Musk is an ego maniac and is convinced that he can do everything better than everyone else just because he can.
Keeping retail in house made *some* sense to those who believed in the EV revolution. If customers were lining up to buy Tesla cars then why should Tesla cut the dealers in on any of the action. With or without hindsight it was a mistake. Tesla is saddled with non-productive stores. Tesla is not making money. If they approached a dealer chain now - they would not get favorable terms.
((( join the world friend )))
Elons world (6/22/2009):
CEO Elon Musk deciding to set the record straight in a ginormous blog post. Bottom line: He expects the company to be profitable next month.
Five years later and Tesla is still losing money. Tesla lost over $300 million last quarter alone.
1.) Capital expenses are not expenses on the Profit & Loss statement. They are an investment. Spending Capital does not increase losses. The profits and losses are related to operations.
2.) When the Capital Expense "goes to work" for the business - then it must be depreciated. ONLY the depreciation shows up on the Profit and Loss Statement.
((( I see 2016 as reaping the benefits from those investments to fund the Model 3. )))
Any assets that become productive in 2016 will create costs (depreciation) on the profit and loss statement and increase losses. The revenues the assets create might offset these new costs or they might not.
((( As production increases and expenses stay flat ..)))
Expenses do not stay flat. Depreciation expenses actually spike when the assets come on line. The cost to make the product also increases. If you make 50 cars you need to buy 200 doors handles, if you make 100 cars then you have to buy 400.
((( Not one of the these guys see it! )))
Everyone sees it .. except maybe you. You don't seem to understand Capital expenses. These costs are 100% hidden from the profit and loss statement until they are being used. After they are placed in use they must be depreciated.
Exception: If the asset becomes unusable before it is fully depreciated - then it gets written off. This is a one time charge. Example: The Tesla Roadster was cancelled - so any special tooling and design work that was being depreciated became worthless (the business was not going to generate any revenues with it) and thus it should have been written off.
The whole purpose of depreciation is so that the Profit and Loss models the on going business. You want to know if the business is profitable or not.
Example: Building a factory. If GM builds a new factory in 2016 and it costs $1 billion it doesn't effect the profit and loss. Its not part of the ongoing business, it represents future revenues.
((( Tesla reported $218 million in Q4 gross profit )))
In Q3 they claimed $231 million gross margin.
In Q4 they sold significantly more cars and the gross margin went down ?
Your insights have been awesome. You nailed the Q4 loss better than everyone else.
Tesla is a scam. They are doing something with the accounting to claim a 20% margin when in fact the more they sell the more money they lose. I still don't fully get it. I haven't seen any evidence of massive discounting but people here claim it was happening.
Anyways. The Model 3 is a pathetic joke. They don't much cash left. They are behind on the Nevada factory. They are still trying to get the Model X going. Gasoline is $1.70 and dropping. The Bolt is at least 1 year ahead of it. Government incentives are going away. The debt is coming due and the business doesn't produce cash.
I kind of like Bernie but he's way off on economics.
For the most part socialism is not what he is offering. He's really offering freebies. He mentions taxing "someone else" but most people know that isn't going to happen. He appeals the young who haven't hear the old "tax the rich" slogan 80 billion times.
About 5-10 years after school most of these kids will be hit with the tax burden and become Republicans or Reagan Democrats.
A vote for Bernie is a vote for gridlock in Washington. Very tempting.
((( guidance negates any poor Q4 numbers. investor confidence has been restored. )))
Keep word is confidence.
Even though Tesla is doing great and doesn't need cash - they will dilute the shares just to give more people the opportunity to own a piece of this amazing scam.
((( Wasn't it your prediction Tesla was done 6 years ago? )))
I predicted Tesla would initially be very profitable but as their Model S aged its profits would fade. The initial profits were tiny and then Tesla started to post increasing losses.
I thought the launch of the Model X would help but it hasn't happened yet. So last quarters loss was a record.
The only part of this scam I don't get is why the losses are so large. They claim they have a 20% margin yet the loss increases as sales grow.
Thank for the anecdotal information.
I have never personally known anyone who needed to have the software in their car patched or fixed or modified. As an investor I don't think it matters much. People can love a problematic car. I know people who have had serious problems with Subarus but keep going back for more. They are a Subaru family and will probably always be that way.
(((( this is taco bell trying to sell filet mignon at $7.95, )))
If you assume it costs Taco Bell $11.50 to make and market the filet then yes.
In 1963 Bernie Sanders was arrested at a demonstration against segregation in public schools.
He's the real deal.
I truly wish he'd realize that socialism is the problem, that private schools were far ahead of public schools when it came to accepting all Americans. But like so many people who have been victimized by government he wants more government.
((( . Panasonic, IMO, wants nothing to do with Tesla as a partner. ))))
The economies of scale are not significant because these things are already mass produced by the billions. Onsite production does nothing for Panasonic. They probably agreed to move production to please tesla - a big customer.
This is a cost to Tesla. For each car they must assemble a pack. You are talking about thousand of components. Tesla to design a battery pack that can be assembled with automation.
Onsite production of cells that feed directly into the battery pack assembly save handling costs. If you assume that the cells are being shipped in barrels and hand c\scooped and dumped into a vibratory bowls and fed into a battery pack assembly machine - then you might be able to eliminate the barells, shipping, and bowls and feed the cells directly into the battery packs assembly machine.
This savings is trivial.
The labor cost in the USA is high compared to most of Asia. But US workers are more productive. The labor content in a Lithium cell is just about zero, Panasonic gets no benefit from moving to Nevada but its costs do not rise much.
This is the biggest problem with centralized production of a product shipped across the globe. Every nation on Earth with an auto industry protects their auto industry. Even the USA has had protections. Making cars in the USA for export is rarely a good idea.
Everything made in the USA is at a disadvantage overseas when the US dollar is strong. The giga factory is located in the USA. Tesla is a captive buyer - they cannot easily shop around for lower prices because they have sunk so much capital into the factory.
Summary: Tesla is gleefully defying the status quo - and this has many people cheering. But the cheering people don't know why things are the way they are.
((( TSLA's record losses accompanying record unit sales testify to this. )))
But how do they do that when they claim there is a 20% margin.
If you assume average transaction price is $80,000. A 20% margin is $16,000 per units. They sold 17,478 units. That's up from 11,603 sales in Q3. The difference is 5,875 units. Which means their gross margin increased by about $94 million.
I'm not an accountant - but it seems they *might* be fudging the margin. There are moving some variable costs out of the cost of goods sold. There are a lot of judgement calls that the accountants can make.
Oh well ... if we all just step back we can see that Tesla's true margin is negative. The more they sell the more they lose.
((( I wouldn't be surprised if gm sells more bolts this year than tesla does model X's )))
Within reason GM (or Tesla) can sell as many cars as it wants. The question is how much do they want to lose:
a.) Set the price of the Bolt at $35,000. And leave it alone. No ads. No incentives. No leases. And just see what happens. I predict 5,000 sales.
b.) Push the cars onto the dealers and consumers with every stinking gimmick out there, bringing actual price down to $25,000. Then maybe 10- 20,000 sales.
c.) Insane example: Throw enough cash on the hood that the Bolt rolls out the door for say $10,000. With rebates in some states the car is free. Then you will see a massive numbers of cars sold.
GM will try to find the sweet spot.
PS: In the past GM would give cars away for free. They would "sell" thousands of cars to daily rental companies with a very generous repurchase agreement where the daily rental company essentially paid nothing for the cars - just depreciation.
They lost millions on these deals and ended selling program cars to retail consumers rather than selling them new cars.