Tesla Earnings Slide 37%
investors.com
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It’s a meaningless number for the most part as long as the business is cashflow positive and still has ~$25B in cash equivalents on hand.
For comparison, half of public companies aren’t profitable.
https://medium.com/short-business-articles-by-svyatoslav-bir...
Why is Elon railing against work from home then, if he cares so much about the climate?
>It’s a meaningless number for the most part as long as the business is cashflow positive and still has ~$25B
"It's a meaningless number, unlike this other meaningless number I prefer and may not understand."
We are arguing different OSI layers (wealth and securities, shared delusions, vs physical manufacturing and supply chains). The most ideal outcome is Tesla remaining profitable enough to continue rapidly expanding EV and battery storage deployments (dragging legacy auto and electrical generation towards net zero) while not so profitable it materially improves Elon's wealth.
Unfortunately, I am just a moderately well off internet pleb, not someone who can fire Elon, entice JB Straubel (phenomenal engineer, excellent human, proven leader) to return as CEO, and merge up Redwood Materials into the Tesla org to fully vertically integrate and spin up faster. C'est la vie.
[1] https://www.statista.com/chart/30758/most-popular-plug-in-el...
[2] https://supercharge.info/map
[3] https://electrek.co/2023/04/19/tesla-reports-massive-increas...
Cash flow is not profit. How much of that cash is in China, unable to be repatriated? How much increase is due to more debt? What are the "cash equivalents", and are they marked properly? How much is due to subsidies, which I'm fine with, but could disappear tomorrow?
This company is not a financial juggernaut, there are still many risks.
The financials I reference are public in EDGAR, I currently do not have access to material non public information and would not share if I did.
Don't believe me? Pick up https://www.amazon.com/Innovators-Dilemma-Revolutionary-Chan..., and read the chapter on electric cars. Starting with the first edition back in the 1990s, it correctly stated that 2020 would be about when mass market electric vehicles would start to make economic sense, and the transition would be inevitable a few years after that. Tesla was only slightly early to that party, and now basically every car company has acknowledged that electric is the future.
And even then the base from where these investments sarted was massivly higher because all companies had increasingly experimented with EVs. The Roadster making EV cool and desirable and the Model S really showing what a modern car was.
Battery investment doesnt come from knowwhere either. You need products that actually allow for continues battery scaling. Tesla investing huge amounts into Giga Nevada was necessary to build batteries in these quantities. And the other battery companies took note and also started to think way bigger.
Those battery factories is what allowed for things like the Model 3. Consumer electronic alone wouldnt have driven battery demand so agressivly since the Model S. Battery improving comes from increase investment and research drivien by expectation of growth in the demand. And Tesla unquestionably was the most important driver behind the believe in future demand.
Tesla is ahead of the curve. Their aggressive efforts on supply chains and factories have reduced the cost of batteries for them relative to everyone else. But the end result is not a change in which technology will win. Instead it is a question of getting there a single digit number of years earlier.
You also needed investment for supply chain built up, increasing lithium mining and refining, cobalt mining and refining.
https://europe.autonews.com/automakers/uk-pushes-2030-combus...
As https://www.canalys.com/newsroom/global-ev-sales-2022 says, if you want to find the mass market for electric cars, go to China.
Don't forget. The main driver of this transition in the long run is that batteries still improve at about 7% per year for the same price point, while ICE engines barely budge. The lifetime cost of ownership for electric cars is below ICE right now. And the cost of initial purchase is falling.
As long as the battery tech is there, someone will figure out how to sell it. But it won't be anyone who has dealers whose business model centers on no longer needed maintenance.
Where does this come from?
According to Kelly Blue Book, a Tesla costs about $600 a year in maintenance, which is higher than many ICE cars.
So either the cars are relatively expensive to maintain, or Tesla is milking its captured customer base, which people accuse dealers of. Which is it?
Yes, I know, I follow their finances closely. "They have $25B in cash according to their balance sheet" is practically meaningless. I understand this might be a difficult concept to grasp for some mental models, but there are many historical analogs to look at why that's the case. They'll produce whatever numbers simple minded analysts will post on Twitter. Look at the discourse around their decrease in COGS. Many metrics are trending down.
Of course, I'm not a "they're going bankrupt" person; I just believe they'll be a much smaller company than most imagine.
Tesla has exeptionally low debt, ist almost hilarously low compaired to other car makers.
Tesla cash isnt even remotly an important problem right now.
Subsidies means lots of things in different context. Regulatory credits, arguable not subsidies, are a small part of the overall buissness bur this quarter is a fair bit of the profit as they went up and profit was down.
Removing tax credit would actually help Tesla as they are in a far far better postion to relative to the rest. Other need the subdidies and credits desperatly to not lose even more money.
Tesla is having profit and cash flow while doing upgrades accross their factories, massive investment in service, charging, new factories, data centers, robots, lithium refineries and many other things. Tesle has its own battery factories with its own battery designs, something only BYD has. A huge advantage that people still don't appriciate.
While their are short term issues in the EV market the long term trend is still clear. And Tesla continues to be in a good position to ride that wave up. US is only 8% penetration of EV.
Plus for all Tesla problems, looking at the wider market is advised. Ford has opened their EV finacials, and they are horrible. GM just moved back many EV product and reduced their volume forcadt further (after horribly missing their forcast from a few years ago). Some people point out Tesla inhouse battery production isnt growing as fast as claimed, meanwhile GM factory with a reputable battery partner is even worse. Honda/Toyoto have barly realized EVs even exist.
Other western car makers are massivly struggling in China. VW the company everybody thought would roll over Tesla has massice issues there and also has issues in Europe. Not running plants at capabity and having to fire people, plus delaying prodicts and other factories.
The comming 5 years will be even harder on the automotive industry them the last 5. At some point profitable ICE sales wont be able to compensate for selling EV at non existant markets.
The reality is, right now in the US outside of Tesla prett much nobody is operating profitably and they all desperatly wont more scale but because so many companies try the same plan with the same prodycts and issues. Dealers continue to be a huge problem.
I also would mention Tesla energy buissness is growing really well and is profitiable. And that looks good grow quicky as the demand for grid stabalisation and home energy story is hardly gone slow down.
So Tesla isnt a finacial juggernaut but they are in a hell of a good position in two large and growing markets. With lots of competitors not executing very well. Their position isnt very riscy and the have plenty of cash.
The biggest risk for Tesla is China really makeing a big move into Europe and later the US. But again Tesla is more likely to compete in that market them legacy OEM who are struggling against Tesla already. It takes years for that to really happen and poleticians are already moving against it. It will take more years for China companies to build up local factories, because just like Tesla they will have to do that.
Admittedly their financials are better than many automakers, but their age and business model are different. But so what? Debt is one way you finance your company. Tesla continuously dilutes its shareholders instead. Is that better?
>Removing tax credit would actually help Tesla as they are in a far far better postion to relative to the rest. Other need the subdidies and credits desperatly to not lose even more money.
Hilarious. Remove the subsidy, and how profitable are they? Why aren't they lobbying for it? Other companies would simply stop producing these unprofitable cars.
>With lots of competitors not executing very well. Their position isnt very riscy and the have plenty of cash.
I agree with the first part, but keep in mind their market cap.
Ask far as cash, I pose the same to you: how much of that "cash" is RMB that can't be repatriated? How much is BTC or some other shitcoin? How much are "cash equivalents" that aren't properly marked?
>The biggest risk for Tesla is China really makeing a big move into Europe and later the US.
No, the biggest risk for Tesla is that China says "you're out", which would bury the company. What percentage of revenue/profit come from there?
Other than that you list a bunch of intangible things that may or may not have a material impact on financials. As if no one else is investing in factories, robots, and data centers.
If you don't understand what the issue with lots of debt is I don't know how to help you.
> Tesla continuously dilutes its shareholders instead. Is that better?
As an investor I can tell you that most of the time when Tesla did raise money the stock price went up, because they had credible investment targets and people wanted Tesla to raise money.
Also, Tesla hasn't raised money in many years. The last time they raised was in 2020 and they didn't really need to raise, they just added some cash to be safe.
> Hilarious. Remove the subsidy, and how profitable are they? Why aren't they lobbying for it? Other companies would simply stop producing these unprofitable cars.
Musk has actually talked about how subsidies aren't the solution in the long term and he wasn't a huge supporter.
My comparison was against the other electric car makers, all electric car makers profit from subsidies against ICE makres.
What Tesla mostly lobbied for was when the tax credit only allowed for 250k and Tesla and GM had used up its credit while foreign companies came in and used their credits years after when battery cost had fallen. That was nonsensical policy that needed to be changed.
> Other companies would simply stop producing these unprofitable cars.
No they wouldn't. You don't seem to be informed about the car market. Car companies simply can't opt out of EV profitable or not. Because regulation is pushing them in Europe and China. They know that if they don't have EVs they won't survive in the long run.
> how much of that "cash" is RMB that can't be repatriated?
I don't have that information but I don't think it matters. Having cash in RMB is very useful as they are huge in the market in China and need cash there as well. And its not that its impossible to exchange either.
> How much is BTC or some other shitcoin?
Why don't you look stuff like that up. Its basically nothing.
> How much are "cash equivalents" that aren't properly marked?
They are using the same definition of 'cash equivalents' as any other cNo, the biggest risk for Tesla is that China says "you're out", which would bury the company. What percentage of revenue/profit come from there?ompany. So you can ask the same question for every company. Have you looked at their financial statements and have any actual information on these being especially bad.
Simply asking leading questions aren't arguments.
> No, the biggest risk for Tesla is that China says "you're out", which would bury the company. What percentage of revenue/profit come from there?
Yes but in the real world this will simply not happen. Because if China kicked out Western car makers then they would respond in kind and not allow exports from China. And China whole policy for 20+ years has worked towards them being able to export cars.
Tesla is amazing for China because Tesla actually achieved what they wanted, exporting China made cars all over the world. Tesla has great relation with their local government as well.
So sure if China just randomly said 'fuck you' then that would be bad, but that is true for basically every large company on the plant. So its not really something to worry about overly much.
Unless you have an actual clear cut exploitation why Tesla is in a high risk situation with regards to China, it just doesn't really work as an argument.
> Other than that you list a bunch of intangible things that may or may not have a material impact on financials. As if no one else is investing in factories, robots, and data centers.
Well, lets actually think about it. Most car makers use dealers, so they are not investing in service centers and thus will profit less from cars coming of warranty. Most car makers don't make their own batteries, thus they don't have nearly as much investment in battery research and battery factories. Other car makers don't have their own major charging network. Most other car makers don't work on robots. And most other car makers haAnd as for Factories, Tesla is building new factories from the ground up to EXPAND capacity, while most other car makers convert existing factories while having SHRINKING capacity.
ve stopped trying working on self driving tech themselves and instead buy a driving assist solution from suppliers.
Or please tell me where GM own super charging network is located? Or Toyotas? Or Kias?
And as for Factories, Tesla is building new factories from the ground up to EXPAND capacity, while most other car makers convert existing factories while having SHRINKING capacity.
So yes, investing lots of money has an effect on financials, denying that is just baffling. And yes, Tesla with their vertical integration strategy has to invest more but they will also get more of the long term benefit.
Service for example used to be a huge money loser for Tesla, but over time it has turned profitable and over the next 10+ years it will turn incredibly profitable. Current car companies make huge money from selling parts because they have millions and millions of cars out of warranty. Tesla because they are growing has most cars in warranty, over time, as millions of Tesla's are off warrant having their service centers vertically integrated will be huge for Tesla.
Can someone explain the “near infinite mass” claim?
https://www.thedrive.com/news/19529/watch-a-tesla-model-x-pu...
Might refer to the fact that EVs have high torque, hence high bollard pull force, which is the maximum force that a vehicle can generate at zero speed.
That said, I don't see that quote in the article…
The Cybertruck is electric. Electric engines have theoretically infinite torque at 0 MPH, decreasing with speed. The actual limit is the materials, the friction of the tires, and the point at which the vehicle flips over.
Between a heavy vehicle, good tires and a low center of gravity, it can tow several times its own weight.
The basis for this claim is that an electric engine can generate torque at an arbitrarily low RPM, so given low enough friction on the load it can move an arbitrarily massive object. That particular given, of course, renders the whole claim BS.
But yes, if I was in the market for spaceflight, those do beat all the competition.
Plus Tesla fleet all follow the newest generation outmatic breaking regulation that is still voluntary. While many car makers including trucks don't yet implement that.
So in general, yes all pickup trucks are bad but this one seems better rather then worse.
In general keeping all these things should be severly restricted for private use, specially in cities.
They might exist and just be rare, but I normally see things like a Ford Transit with an open cargo section, and that cabin has much better visibility than the standard US shape:
http://heavycherry.com/machineinfo/ford/-transit_ft_350_flat...