Tesla and Uber Unlikely to Survive (Vol. 2)

[Burwood]

aparna said:

Burwood said:

That includes regulatory credits ($500M for the quarter and soon to be zero) and Solar is negative so it's closer to 20. Even then are we to ignore 'other costs'. NET profit GAAP is the real number. Gross margin and EBITDA are useless. It can easily be manipulated, say by offering an incentive to buy with the hit being taken below the GM line (marketing incentive). So no I can not see any path to profit. They will report more losses this quarter in my opinion. And no doubt 500M+ in stock awards.

I think you are probably wrong about the manipulation. Looks like a comfortably profitable range of cars to me.

Excluding regulatory credits (not selling cars) they have never made a penny. Never. But if you want to make various adjustments for restructuring, stock options and the like, sure, happy days.

Edited by Burwood on Tuesday 6th July 16:14

[aparna]

Burwood said:

Excluding regulatory credits (not selling cars) they have never made a penny. Never.

That doesn't mean the cars are not profitable?

You say without FSD their was no route to profit? Then you immediately gave me an example of another route where they were, in fact profitable without FSD?

But that aside, the cars have decent margin, so there is a potential route to profit without FSD. Selling cars .

[Burwood]

aparna said:

Burwood said:

Excluding regulatory credits (not selling cars) they have never made a penny. Never.

That doesn't mean the cars are not profitable?

You say without FSD their was no route to profit? Then you immediately gave me an example of another route where they were, in fact profitable without FSD?

But that aside, the cars have decent margin, so there is a potential route to profit without FSD. Selling cars .

Ironically the FSD software being sold presently is most likely the core reason the GM is so high (being software)

Put it this way, I would not be a buyer of the stock. It's a bit frothy

[aparna]

Burwood said:

Ironically the FSD software being sold presently is most likely the core reason the GM is so high (being software)

Put it this way, I would not be a buyer of the stock. It's a bit frothy

Agreed on the valuation. But potentially profitable without FSD + credits? Of course. They earn billions in automotive gross profit every year. That's not vapourware or an accounting trick. That's a real product.

Edited by aparna on Tuesday 6th July 16:40

[Burwood]

aparna said:

Burwood said:

Ironically the FSD software being sold presently is most likely the core reason the GM is so high (being software)

Put it this way, I would not be a buyer of the stock. It's a bit frothy

Agreed on the valuation. But potentially profitable without FSD + credits? Of course. They earn billions in automotive gross profit every year. That's not vapourware or an accounting trick. That's a real product.

Edited by aparna on Tuesday 6th July 16:40

What about the infrastructure around it that costs even more billions to run. It's not a fixed cost. Those factories don't have much capacity in them. They can't produce 2m cars. And if Tesla do end up making a profit, it's a 700B company. How much profit would be reasonable for such a business (tax paid net profit). I would suggest a PE of 50 is being very generous. That's 14B.

[aparna]

When do you think they will hit 2m cars?

[Burwood]

aparna said:

When do you think they will hit 2m cars?

absolutely no idea.3 years?

[hyphen]

aparna said:

Burwood said:

Excluding regulatory credits (not selling cars) they have never made a penny. Never.

That doesn't mean the cars are not profitable?

You say without FSD their was no route to profit? Then you immediately gave me an example of another route where they were, in fact profitable without FSD?

But that aside, the cars have decent margin, so there is a potential route to profit without FSD. Selling cars .

With all car makers moving to EVs, the revenue from selling their credits is on a downward slope.

[Greggsybabe]

aparna said:

Musk admits FSD is years away and the share price doesn't move.

This is bad for TSLA why?

In manufacturing terms Tesla are currently about the same as Volvo 700-800k cars per year, Volvo is valued at something around 20-30b and Tesla today are worth 621B with 99% of that value because of some misplaced faith in the value of Tesla's FSD (or even worse in Elon) so if now even Elon is admitting the technology isn't what they've advertised it as, then Tesla should haemorrhage share value.

in terms of the car themselves being profitable, there is 0 evidence anywhere that Tesla sells anything other than the model S at a profit. The company has been sustained by a mixture of government grants, enviro credits (nothing unique to them on those in fairness) and massive cashflow raised by the ridiculous shareprice whenever they were desperate. The fact that they are struggling to compete against the traditional manufacturers EV prices has led to them having to drop prices more and more on their more popular models, even with omitting radar, bolsters and other items to try and reduce their own costs this can't be sustainable for them at their current overhead cost?

[Dave Hedgehog]

aparna said:

When do you think they will hit 2m cars?

numbers will start to go up more quickly once the truck factory in texas and the factory in germany open and get up to speed

[skwdenyer]

Greggsybabe said:

aparna said:

Musk admits FSD is years away and the share price doesn't move.

This is bad for TSLA why?

In manufacturing terms Tesla are currently about the same as Volvo 700-800k cars per year, Volvo is valued at something around 20-30b and Tesla today are worth 621B with 99% of that value because of some misplaced faith in the value of Tesla's FSD (or even worse in Elon) so if now even Elon is admitting the technology isn't what they've advertised it as, then Tesla should haemorrhage share value.

in terms of the car themselves being profitable, there is 0 evidence anywhere that Tesla sells anything other than the model S at a profit. The company has been sustained by a mixture of government grants, enviro credits (nothing unique to them on those in fairness) and massive cashflow raised by the ridiculous shareprice whenever they were desperate. The fact that they are struggling to compete against the traditional manufacturers EV prices has led to them having to drop prices more and more on their more popular models, even with omitting radar, bolsters and other items to try and reduce their own costs this can't be sustainable for them at their current overhead cost?

In terms of profitability, let’s not forget that for many years Ford was “a bank that happens also to make cars” - trying to make money on only the selling of cars is historically pretty hard

[gangzoom]

Really interesting to see the initial results of 'Tesla vision'. The resolution is tiny at present, i wonder if this is lack of CPU power from HW3 or code that needs optimising.

Pretty mad they switch away from radar, but the camera vision does seem OK for depth perception.

https://twitter.com/greentheonly/status/1412597377...

[Greggsybabe]

skwdenyer said:

In terms of profitability, let’s not forget that for many years Ford was “a bank that happens also to make cars” - trying to make money on only the selling of cars is historically pretty hard

A fair comment and Tesla use every opportunity to remind people that they are a "hyper growth" company so not to expect any profits even if they seem to be pretty light on the growth part. The Plainsite website got details of their actual sales (rather than whatever Tesla try to define them as) in California, i.e their biggest domestic market, and sales in 2020 were something like 71k vs 79k in 2018 which is a pretty concerning trend. We'll no doubt get to revisit this when the next quarter sales figures are released but considering the massive drive to take up EV's worldwide it would be pretty concerning for their outlook as a Car company if they aren't able to capitalise.

[coetzeeh]

In other news Volkswagen reports 11 bn euro operating profit in H1 2021.

https://www.irishtimes.com/business/transport-and-...

[hyphen]

Also on that website

Tesla unveils cheaper SUV in China

https://www.irishtimes.com/business/transport-and-...

[Heres Johnny]

How do journalists get paid for these stories? They've launched the Standard range version of the MY which is 10% more than the SR version of the M3 just like the LR version of the MY is about 10% more than the LR version of the M3...

In other words... nothing really to see here and hardly worthy of "substantially cheaper SUV" as it's not, its just the MY with a smaller battery and a few speakers taken away and the heated rear seats and steering wheel deactivated,.

[hyphen]

It says that the price is designed for it to fall under a Chinese grant scheme.

So it's not Apple "we charge what we want, take it or leave it", the chinese Tesla customer is budget conscious.

[Greggsybabe]

Given Tesla's struggle to break into the Chinese market, especially against domestic competitors (lets assume the main issue is price, though China's nationalistic attitude and the CCP's aggressive stance against Tesla's combustibility, self-driving accidents and their "always on" cameras probably hasn't helped the demand) this seems a necessary move. Will they actually be able to make any money on them at this lower price though?

[hyphen]

The Solar City Court Case is happening. Musk was up yesterday and was being his normal self

musk said:

On the stand in the Delaware courthouse, Musk personally attacked the attorney cross-examining him, the prominent plaintiffs’ lawyer Randall Baron of Robbins Geller Rudman & Dowd, saying: “I think you are a bad human being.”

Musk added that he had “great respect for the court, but not for you”.

https://www.ft.com/content/4e21251e-355e-4884-97b2...

[Greggsybabe]

I didn't want to say anything for fear of it becoming an echo chamber but Musk could put on an all time performance over the next week or so of this case despite it being as blatant as could be that SolarCity was an Elon driven bailout rather than growth purchase but never mind.

the funny thing is Elon is showing both sides of the coin for him being the company CEO. On one hand his responses and the evidence of the claimant about his rash decision making and self servicing behaviour show why he's terrible to lead the company, but then he makes his statement of "He doesn't want to be the CEO of Tesla, he'd rather be designing/engineering (What he would be engineering with no actual engineering qualification/history is laughable but lets not ruin the myth) but Tesla would fail as a company without him" and he's right! Without the weird Musk cult to endorse his every move at Tesla and lap up his statements, plus his willingness to push the boundaries lets say they probably would have gone by now!