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Comment by viscanti | Hacker News Reader

Would we expect Tesla to optimize for profitability ex-regulatory credits? It seems like they know what they'll get from that, and they invest in building out new gigafactories based on the total net income they have, or they pass the savings onto customers (which leads to more sales). What makes ex-regulatory credit profitability a metric that anyone should care about?

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Regulatory credits and net profit don't change what they optimize for. They have lot of cash and can easily raise more.

This wasn’t always true years ago when decisions about building these factories were made. Tesla has had a cash crunch more than once in its history.

>and they invest in building out new gigafactories based on the total net income they have

Oh look, another person making the claim capex comes off top line income.

I didn’t interpret the comment that way. If a company is trying to be cash flow neutral, they could (very roughly) consider the net income to be the amount left over for capex.

Is that how you imagine billion dollar automotive factories get built? Tesla saves up some money and buys the parts as they have the cash?

Of course not, finance people make a bunch of spreadsheets and then the factories poof into existence. The regulatory credits factor into those spreadsheets.

Tesla just announced they were profitable for the full year of 2020. What's the compliant about top line income? They make money from sales and from credits because governments want to incentivize the sale of electric cars.

My point is that the relevant thing seems to be unit economics. They seem to make a profit on most models, and the ones that aren't profitable at the point of sale, seem to have the price of the credits factored in. What value would anyone get from looking at profitability ex-credits?

Why are tiny unit economics so important? Are you one of these people who believe that they will own 50% market share?

The automotive world is competitive, as seen by Tesla fighting for share as we speak. They need to make money sooner than later. Building cars is expensive, you can't scrape by. They should be crushing it right now, with little competition.

These financials don't look good to me, all I'm saying. YMMV.

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