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Comment by gamblor956 | Hacker News Reader

Tesla makes a 20% profit per car if you ignore standard auto industry accounting practices and use magic voodoo accounting and ignore the capex that goes into developing and building those cars. Notably, the only sites claiming that Tesla realizes per-car profits are tech companies which defend the use of non-standard accounting practices.

Note: Most other car companies make hundreds of thousands of cars at each of their factories, and sell hundreds of thousands to millions of cars each year, which substantially reduces the per-car capex. Tesla sells comparatively very few cars, so its per-car capex dwarfs the rest of the industry.

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Except that Tesla is now producing at a weekly rate equivalent to hundreds of thousands of cars per year at their Fremont factory, comparable to other car companies.

But they're still ramping up. The factory will be outputting something like 500,000 to 700,000 cars per year after they're done ramping. They'll need Model Y and/or Semi and at least another factory before they're going to be comparable to other mid-range manufacturers. They'll need at least half a dozen factories to be a major manufacturer. Or they'll need to change how cars are made entirely.

If they can get millions of cars from a single factory, then the high automation that they're shooting for (and which Model 3 had to back off of) might make sense (and is required for getting that kind of production from a single line). But even that will likely need multiple factories to justify the R&D into the factory line itself.

Tesla is now producing at a weekly rate equivalent to hundreds of thousands of cars per year

That's only true if you're a time traveler from the future. But it's only April 2018 here, and Tesla is producing about 2600 cars a week. They produced 12000 cars during the first 3 months of the year.

https://www.bloomberg.com/graphics/2018-tesla-tracker/

Also it would be very difficult to get millions of cars out of the Fremont facility.. they already ran out of space there over a year ago.

You forgot the ~2000/week Model S and Xes they’re making in the same factory (although not the same line, obviously).

It's an annualized rate of hundreds of thousands if you include all the models. For the model 3, 2600/wk makes for well over 100k/yr. Model S and X combined are going at an annualized rate of about 100k/yr, extrapolating from last quarter's 24,728 number. Altogether it's over 200k annualized.

you're right.. I missed that it said model 3.

although q1 production was 34k x 4 = 136k.. so they still have some growth before it's hundredS.

It's not "magic accounting" it's looking at different aspects of the business. You can look at the cost to make each vehicle (in terms of components + labor) vs. the price you're selling it at, or you can look at the cost to run the entire business divided by the total number of sales.

Both are important, but if you're looking to invest in a business that's growing, you care more about the first number because you're assuming that if the business grows enough then the second number will take care of itself. If Tesla has been in business for 100 years and is unlikely to grow its base, like more established automakers, then you care alot more about that second number. And you also care about a lot of other numbers like the dividends paid out, how likely that something will change to move the stock price, etc.

I don't know accounting stuff so I can't say, but I wonder if they stopped every and all activities except building and delivering cars and fired all personnel not involved in those, would they stay afloat?

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