Tesla shareholders reject bid to strip Musk of chairman role

That role looks the same role as any medium/large company would have for social media engagement.

Musk played Trump's "fake news" card. If you now try to say anything negative about this company, the fans will brush it off as "fake news" and ignore it.

Remember when the HackerNews crowd told us they were too smart to fall for such things?

Therefore, while it is extremely interesting to ask if concentrating power is a cause or consequence of institutional rot, I don't think we can complain about a sample size of 1 if the argument doesn't say that this one case proves the effect.

But yes, it is extremely interesting to ask whether removal of oversight causes rot, or if it is a consequence of rot. In other words, if we randomly appoint certain successful CEOs to chair their own boards, will their companies do worse than a control group that retain separate governance?

Hard to conduct that experiment, but it would be interesting. Thanks for the suggestion.

The grandparent ignored these, but didn't exclude them. Neither line item is included in gross profit.

>I don't see why gross margin is enough to judge profitability.

While you're right that it's insufficient to judge overall net profitability, it does make sense as a refutation of OP's claim:

>Around 40% of their cash in hand is from refundable deposits, many from people who thought they would get a $35k car

>Tesla cannot make $35k Model 3s at a profit(this is generally accepted, and even Tesla hinted at it), they'll probably lose money even making $42k cars.

They're not-so-subtly implying that Tesla's gross margin on vehicles under $42+k is negative so Tesla would lose money making each unit, and thus those reservation holders hoping for a $35k car will never receive it, depleting Tesla's cash position when they cancel their reservations. It's an erroneous conflation of net and gross margin - Tesla's marginal cost per unit is (presumably) significantly lower than when you factor in fixed costs. That's why we see them making expensive cars first, not because they're precluded from making cheaper cars once they have the spare production capacity by losses on each unit.

In other words, OP is claiming that Tesla's Model 3 strategy is "we lose money on every sale, but make it up in volume," when in fact it's a conventional scenario of increasing volume covering the fixed costs at scale with margin baked into each unit.

For some reason people think that R&D will go down to nothing, even though the other major players spend multiples on R&D than does Tesla.

We've been hearing for years that as Tesla "scales up", these costs will diminish. We're now at, what, 150,000 cars annually? And costs are increasing at an increasing rate. Still waiting to see those economies of scale.

This a complex topic so I won’t fully develop the point but I can see a rational basis for CEOs to not treat their companies as a “shared” resource and I would argue that when an investment is made in a company there is an implicit understanding that you are being invited to participate in the economic opportunity but not so much in the control.

To work off your analogy, it is akin to “going along for the ride” as opposed to sharing the car. Yes, you own 20% of the car but you agreed that someone else would do the driving and chart the course. If you don’t like the way they are driving, get out and hop into another car. I think it is a bit much to be a minority investor and expect the entire operation to retool when that is a significantly more expensive proposition for the company than it is for you to simply exit the position and buy someone else’s stock.

Again, I am not totally confident in this view...

What you are talking about are the concrete technical differences. We have no disagreement on those.

From the perspective of a person starting a company, he has to decide how to obtain money for building the company. He can borrow or he can issue stocks. Both methods give him money. The difference is in how the risk is spread and how the benefits are spread.

The person starting a stock company can't pay profits to himself without also doing so in equal measure to other stock owners. With the bank he only has to pay the interest on the loan.