Tesla and Uber Unlikely to Survive...
Discussion
Burwood said:
I see absolutely no path to profitability for years at current growth rates. In fact when China is operational they will have to pay even more in 'rent' (however that deal was structured). I bet it's punitive. You can forget about Solar. It's a basket case and losses money too. It's Self Drive or bust so to speak.
FSD revenue isn't recognised in those numbers you post, it's defferred, i think.
Current uptake is over 30%, so presuming that wasn't just a spike after FSD day, there is profit there , if they can upsell it.
Sambucket said:
Fair enough. But I read they make their own phone chips? And hope to make their own mac chips in future too, in order to more tightly integrate their product range? Not an expert, but find it interesting.
Seems to be out of necessity.On the phone front: Apple don't get on well with Qualcomm who charge too much, and Intel were cheap but kept missing deadlines. Apple already design the Arm CPUs.
Probably Apple will stick to designing the chips but get some far east firm to build.
Edited by hyphen on Friday 16th August 16:31
Burwood said:
No they don't. Taiwan Semi do the physical manufacturing. Samsung still produce some but this will likely change. It does seem crazy they use Samsung(necessity but that will change). Their storage(Nand Flash) comes from Sandisk and Samsung, screens from LG and Samsung, NVDA and various other vendors supply the GPU. Qcom as well hence delay in 5G if you recall the dispute.
Apple have just agreed to buy Intel’s modem chip business, so they can dump Qcom fairly quickly if they need to.The delay was due to a combination of (a) the Qcom dispute and (b) Intel dragging feet and then deciding not to play (in part due to Qcom).
The Apple deal here has been quite smart - deal with Qcom to head off dispute, at the same time buy Intel’s disputed modem business. As a part of Apple, Qcom then can’t continue to go after the Intel modem business as they’ve settled with its new owners...
Looks like some very astute deal-making there, of the sort that’s hard to do unless you have a large cash pile sitting around allowing you to act decisively.
I suspect Qcom thought they’d pulled off a coup in forcing Apple to settle (and continue to buy) whilst forcing Intel out of the market completely. I suspect they may be less smug now more cards are on the table.
Trophy Husband said:
Is it not possible that Tesla will become like a Bosch or Siemens type tech business? Batteries and drivetrains and tech sold to other manufacturers to load their models with? Surely that's their trajectory? They're just doing it with their own mule for now.
Sell to? Everyone else is spending many many times what Tesla is and making a decent fist of it. And to comment on same 1m cars. That's a very long way off. It's 4-5 years away. The growth rate is tailing off and we may even see a dip very soon. Not to mention we are seeing recessionary signals. The whole car industry is holding its breath. Tesla needs more capital and they need a Golf id type offering. 20-25k cars.Trophy Husband said:
Is it not possible that Tesla will become like a Bosch or Siemens type tech business? Batteries and drivetrains and tech sold to other manufacturers to load their models with? Surely that's their trajectory? They're just doing it with their own mule for now.
Probably too late to do this now and the other manufacturers strategies are all setup and contracts signed. Also Batteries are in arrangement with Panasonic.
Burwood said:
Sell to? Everyone else is spending many many times what Tesla is and making a decent fist of it. And to comment on same 1m cars. That's a very long way off. It's 4-5 years away. The growth rate is tailing off and we may even see a dip very soon. Not to mention we are seeing recessionary signals. The whole car industry is holding its breath. Tesla needs more capital and they need a Golf id type offering. 20-25k cars.
In fairness, it isn’t obvious that anybody is managing to get close to Tesla’s system efficiency right now - they just seem to get more miles out of a joule than anyone else right now.But why would Tesla wish to sell to anyone else? Cooperation is the last roll of the dice for existing companies who’ve commoditised their offerings, somewhere Tesla isn’t.
Sambucket said:
That's very obviously not true. Tesla has positive gross margins. The more cars they sell, the lower the loss.
Sambucket said:
Tesla's currently strategy is to prioritise volume over margin to increase market share. So I would define success as a million car sales per year by 2022 and 5BN cash in the bank. Which would be CAGR of 40%.
The last quarter, in terms of record production and financial results, suggests a drastically different scenario.They do not produce the cars for a couple of bucks. Shout about positive margins all you want, then read the balance sheet.
DragonflyTrumpeter said:
The last quarter, in terms of record production and financial results, suggests a drastically different scenario.
They do not produce the cars for a couple of bucks. Shout about positive margins all you want, then read the balance sheet.
So if they had built and sold twice as many cars at the same margins with the same unit costs to produce and sell the car, as Q2, the loss would be less or more?They do not produce the cars for a couple of bucks. Shout about positive margins all you want, then read the balance sheet.
skwdenyer said:
Burwood said:
Sell to? Everyone else is spending many many times what Tesla is and making a decent fist of it. And to comment on same 1m cars. That's a very long way off. It's 4-5 years away. The growth rate is tailing off and we may even see a dip very soon. Not to mention we are seeing recessionary signals. The whole car industry is holding its breath. Tesla needs more capital and they need a Golf id type offering. 20-25k cars.
In fairness, it isn’t obvious that anybody is managing to get close to Tesla’s system efficiency right now - they just seem to get more miles out of a joule than anyone else right now.But why would Tesla wish to sell to anyone else? Cooperation is the last roll of the dice for existing companies who’ve commoditised their offerings, somewhere Tesla isn’t.
Sambucket said:
DragonflyTrumpeter said:
The last quarter, in terms of record production and financial results, suggests a drastically different scenario.
They do not produce the cars for a couple of bucks. Shout about positive margins all you want, then read the balance sheet.
So if they had built and sold twice as many cars at the same margins with the same unit costs to produce and sell the car, as Q2, the loss would be less or more?They do not produce the cars for a couple of bucks. Shout about positive margins all you want, then read the balance sheet.
Sambucket said:
So if they had built and sold twice as many cars at the same margins with the same unit costs to produce and sell the car, as Q2, the loss would be less or more?
If their fixed costs doubled at the same time then their losses would double as well. In the last quarter they made more gross profit but their overheads increased significantly too, so they lost money overall. oop north said:
Sambucket said:
So if they had built and sold twice as many cars at the same margins with the same unit costs to produce and sell the car, as Q2, the loss would be less or more?
If their fixed costs doubled at the same time then their losses would double as well. In the last quarter they made more gross profit but their overheads increased significantly too, so they lost money overall. jjwilde said:
So far these new EVs which are apparently Tesla killers are selling in small numbers compared to the 3. How do you explain the Norway sales, why are the big boys not outselling Tesla? Could it be the Tesla is faster, goes further, has better tech and has a reliable charging network?
You’d think they’d be laughing their tits off wouldn’t you. Like scrounge mcDuck diving into piles of cash. The only one drinking champagne, flying private jets and smoking weed is?Burwood said:
Don’t you mean variable cost? Fixed cost would be fixed, no or am I missing something ?
There is no such thing as a fixed cost in the long term. If they are making the max number of cars they can with the factories they have; then they need twice as many fixed costs/factories to make twice as many carsoop north said:
Burwood said:
Don’t you mean variable cost? Fixed cost would be fixed, no or am I missing something ?
There is no such thing as a fixed cost in the long term. If they are making the max number of cars they can with the factories they have; then they need twice as many fixed costs/factories to make twice as many cars[/quoteI’m merely pointing out your misquote . Occupational hazard.
jjwilde said:
So far these new EVs which are apparently Tesla killers are selling in small numbers compared to the 3. How do you explain the Norway sales, why are the big boys not outselling Tesla? Could it be the Tesla is faster, goes further, has better tech and has a reliable charging network?
Could be. Could be that Tesla has the better brand name/awareness for EVs.Could be the 'big boys' are not putting cars in show rooms, marketing them badly, or only selling a bare minimum to meet various subsidy targets.
Without a more detailed analysis of the market, it's a bit of a guess, isn't it? And if Telsa can't expand beyond their current numbers, the big boys just have to play a waiting game. I'm not sure this is the position Musk wants to be in.
The mainstream manufacturers have been disinscenvised from selling EVs by fleet CO2 average rules. Bizarrely, it's better for them to sell fewer right now, as each manufacturer's future target is based upon their current average. Go politicians!
When the penalties start to bite, that's when you'll see big changes; starting in 2020, and really taking off by 2022. Tesla needs to make hay while the sun shines.
When the penalties start to bite, that's when you'll see big changes; starting in 2020, and really taking off by 2022. Tesla needs to make hay while the sun shines.
Burwood said:
skwdenyer said:
Burwood said:
Sell to? Everyone else is spending many many times what Tesla is and making a decent fist of it. And to comment on same 1m cars. That's a very long way off. It's 4-5 years away. The growth rate is tailing off and we may even see a dip very soon. Not to mention we are seeing recessionary signals. The whole car industry is holding its breath. Tesla needs more capital and they need a Golf id type offering. 20-25k cars.
In fairness, it isn’t obvious that anybody is managing to get close to Tesla’s system efficiency right now - they just seem to get more miles out of a joule than anyone else right now.But why would Tesla wish to sell to anyone else? Cooperation is the last roll of the dice for existing companies who’ve commoditised their offerings, somewhere Tesla isn’t.
15% is the difference between say 300 miles, and 345 miles.
Tuna said:
jjwilde said:
So far these new EVs which are apparently Tesla killers are selling in small numbers compared to the 3. How do you explain the Norway sales, why are the big boys not outselling Tesla? Could it be the Tesla is faster, goes further, has better tech and has a reliable charging network?
Could be. Could be that Tesla has the better brand name/awareness for EVs.Could be the 'big boys' are not putting cars in show rooms, marketing them badly, or only selling a bare minimum to meet various subsidy targets.
Without a more detailed analysis of the market, it's a bit of a guess, isn't it? And if Telsa can't expand beyond their current numbers, the big boys just have to play a waiting game. I'm not sure this is the position Musk wants to be in.
Tesla has to sell EVs as thatbis their sole reason to exist. They sell them even though they lose money in doing so. The mainstream car manufacturers simply have no need to sell products at a loss and more importantly they aren’t allowed to by their shareholders, whereas Tesla shareholders have invested specifically to lose money in order to win market share.
That’s the enormous difference between investment capital wanting dividend income today versus investment capital hoping for enormous capital returns tomorrow. Two completely different worlds that create two completely different types of business. It is almost a coincidence that the two types of business are aiming long term to sell the same product such is the total difference of the short to medium term paths.
A start up looking to just sell one product has no choice but to build its model around the risks of Government taxation policy but conversely an incumbent has no need or interest or mandate to bring on that risk.
So what you have is Tesla fronting all these risks in the here and now and hoping for the massive capital reward for navigating through them but the incumbents have absolutely no need or desire to bafflingly change to a start up, capital burn model nor any permission to do so but instead are delivering in the correct way for that type of business. For most firms the whole EV arena is mostly just about doing enough to benefit from the brand marketing upside and doing enough to keep on top of the learning curve but for them there is no commercially profitable market for EVs (nor is there for Tesla at this moment in time) and so there is absolutely no reason to be churning them out.
I think that a big issue from the Tesla side is that there is a lack of objectivity due to the love of the product. It is this that prevents some from comprehending the simple reality of two absolutely opposing business models both aiming for the same end achievement but having to go about it in completely different ways. At the same time this passion also seemingly blocks the rational understanding that no one actually needs an EV or that they are not the perfect answer but just an answer to a certain group of car users and that this is why ICE will still be a huge seller in twenty years time unless something significantly better and cheaper than LI batteries comes to market.
It may help if people compare the rise of the challenger bank in the traditional banking market place.
On the surface these challenger banks look like something amazing that will kill off the stagnant old incumbents and why aren’t these incumbents fighting back?
The reality is that the challenger banks are not doing anything new, they are simply taking the loss making element of global banking (basic retail cash deposits) and wrapping it up in a pseudo slick interface (easy to do when all you offer is the most basic element of the global banking industry) and cutting a few corners, or at least running zero buffer zone in the regulatory and legal framework. All of which is completely loss making and needs to be financed by venture capital.
And what are they hoping to achieve? Well the single objective is to take enough market share before the venture capital runs out so that they can then start bogging themselves down with all the cumbersome but actually profitable side of retail banking.
They are burning risk capital in order to become big enough to become an identical operator to the cumbersome incumbents.
And once you realise that is how it all works you can then suddenly appreciate why there is nothing in it for the incumbents for doing likewise as they are already there! There is nothing to win at the end of losing all that money, no reward. All they can do is slightly tinker around the edges of their existing offering to keep apace with the evolving client side.
And that is the key to understanding Tesla v Incumbents.
The Tesla killer won’t be a product. That’s your overly simplistic penny share gambler’s perspective that is caused by newco being based around one product, the assumption that the risk comes from someone else appearing with the same product via the same business model. It’s not about product. It’s in reality about process.
All firms are targeting holding a key level market share at X date in the future and are travelling to that point via differing paths. The product is almost irrelevant as they are all making the same product. It’s the path that is critical. It’s who has the most robust and most potentially profitable path and often, the lowest risk.
VW has forced themselves into the game well in advance of what they ever wanted but the threat to VW’s venture isn’t Tesla but China. China is the biggest entity in EVs by magnitudes and it has been on its path for longer than anyone else, has total State backing including global material control and already has the dominant market share.
VW is standing in the massive shadow of the Chinese EV machine and looking up. It’s not got any time, nor is there any potential reward, to look down at a low volume, premium EV manufacturer that is only able to sell product where governments incentivise sales and those products are currently loss making.
From VW’s and the other incumbents’ perspectives their long term and potentially life threatening problem is China, China is the absolutely enormous storm front that is heading towards them. Tesla is just the puddle next to them and they’ve already got wellies on.
Tesla sell some premium products to rich folk in rich countries and can only do that because those countries give away taxpayer funds. The incumbents sell millions of cheaper products to the middle and poor demographics and their premium products are mostly to assist in marketing and selling those normal products to the normal market. And the big threat to their future and business is that the Chinese state controls the global market for the key raw materials, the Chinese state has been bankrolling the new EV manufacturers and the Chinese state has created the largest consumer market for EVs via heavy tax subsidies. And why has China done this? Because they want to export more than just plastic tat at Christmas to the West. They want to totally dominate the global
Car market and have specifically opted to control and dominate the global EV market.
The existence of China and its now twenty year old strategy for global dominance of the automotive industry is why Tesla in the grand scheme of things is an irrelevance to the Western incumbents. It’s a wasp flying a bit too close to your ballbag but while an enormous tiger is about to pounce on you.
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