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Comment by aguyfromnb | Hacker News Reader

>They'll sell the most lucrative products first while ramping up the R&D to tap into more markets when those eventually saturate.

People keep saying stuff like this, which has no basis in reality. Here is the data:

https://ycharts.com/companies/TSLA/r_and_d_expense

They haven't even doubled R&D with the Model 3, from a low base, and R&D has actually DECREASED since 3 years ago. Where do you see them "ramping up the R&D"?

Tesla is averaging about $1.5B annually in R&D spend. For comparison, GM spent $7.8B last year. VW spent over $13B.

Tesla aren't even investing fast enough to keep up with their capital depreciation, but somehow people keep saying things like, "they're re-investing all their profits". If they are, show the data.

>They have the Tesla semi ready to go as well in limited volumes

Really? Where are they building it?

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GM has revenue of around USD 150B. VW of around USD 260. Tesla's was USD 20B in 2018. So compared to revenue, Tesla spends much more on R&D. And don't forget that a lot of the traditional car manufacturers' R&D is spent on combustion engine improvements and other tech that is not related to EVs whereas Tesla is only spent developing EV tech. Further, Tesla has been developing EV tech for 17 years now, the last 8 years at some scale. The traditional car manufacturers have only just begun in earnest 3-5 years ago.

I do agree that Tesla isn't investing that heavily in R&D but they also cannot afford to. They are not turning profits. And they are already 5-10 years ahead of many competitors on tech, so I think it's wise to invest in production capacity instead. This year and in 2021, VW, GM, Mercedes, BMW etc. are getting into the EV market with cars that in specs seem to be competing with Tesla's 2012 model S.

The most important spec right now is price and range. None of the old companies are close to delivering competing range at a competing price. None of them have a charging network or battery efficiency or battery production capacity close to what Tesla has.

> The most important spec right now is price and range. None of the old companies are close to delivering competing range at a competing price.

The Hyundai Kona, the Volkswagen ID.3 Pro, and the Chevy Bolt are all cheaper than the Tesla Model 3 Standard Range Plus and all have more range.

>So compared to revenue, Tesla spends much more on R&D

No, they don't spend "much more".

Old, dying GM and high-flying, take-over-the-world Tesla spend nearly identical amounts as a percentage of revenue. How can that be possible? One is building factories and semi-trucks and solar roofs and AI chips and robo-taxis and "ramping up investment" and the other is going out of business (so I hear).

>None of them have a charging network or battery efficiency or battery production capacity close to what Tesla has.

Tesla arguably makes the best EV on the market right now, that's true. But this idea that no one wants anything else, once again, flies in the face of the data. Competitors are selling well all over the world. And that's what we want, isn't it?

>None of them have a charging network

The charging network was a genius way to get people to buy EVs at time when range anxiety was an issue. It was one of Elon's best moves.

But the days of it being a real competitive advantage are almost gone. Car companies don't own gas stations. It's cost center. Did you see the lines over the Thanksgiving and Christmas holidays? Who wants that?

R&D isn't the only place you can invest profits. Building some of the world's largest factories, filling them with equipment, and hiring employees to fill them, is not cheap upfront. It is an investment which should pay dividends.

Semi is likely at least a year away from any significant scaling.

The chinese factory was built with loans, not reinvested profits.

Show us where it shows up on the financial statements then? I bet you cant. Because after stiffing Nevada[1], Buffalo[2], and California [3], Tesla went hat-in-hand to China for special loans and promises to pay taxes there[4]. I guess you could say it's "smart business", in the same way that PE buying a company, gutting it and selling it off for parts is "smart business". But make no mistake: China owns that factory.

This is not conspiracy, it's in their disclosures. I simply cannot understand what people root for a company doing these things.

[1] http://thestoreyteller.online/2020/01/17/tesla-surges-to-92b...

[2] https://nypost.com/2019/08/28/cuomos-buffalo-billion-tainted...

[3]https://www.vox.com/identities/2019/9/30/20891314/elon-musk-...

[4]https://www.autonews.com/china/tesla-pay-china-323-million-y...

Make no mistake: USA owns that other factory!

Tesla and Musk are a religion at this point for many people. Thanks for shedding some light with real numbers.

> Where do you see them "ramping up the R&D"?

Elon Musk has, on a few occasions, blamed "ramping up", be it R&D or production lines, as a reason for not meeting goals.

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