Tesla retreats from one-piece "gigacasting" manufacturing process
reuters.com
reuters.com
I’m surprised the stock is still north of $100.
You would need to convince the shareholders to give stock compensation to the employees and convince the employees to be paid in stock instead of dollars.
Startup people are primed to think that cash accounting is what's actually important for a company in terms of doing things, going bankrupt, etc. It largely is for startups. For large companies, however, it's actually the opposite: cash accounting is a sort of boring task left to the accounting department, whose job is usually to keep a minimum amount of cash lying around, and your balance sheets and income statements are actually what determines your access to business opportunities.
So whats your point? Because regular employee pay sure as shit does.
You said it's incorrect, and then in the next sentence stated how it is correct.
Yes, Tesla has shares on it's balance sheet. Yes, giving out those shares is a loss in assets. But doing mark-to-market and calling it cash is a bit of woo-woo because no, shares are not cash and they don't become cash until shareholders hand over that cash.
Here is a thought experiment: Tomorrow investors just decide to stop buying Tesla stock, and the price goes to zero. Mass brain control or something. The share price just sits at zero. No buy orders anywhere.
The company still sells cars. They still have cash coming in. They still can pay suppliers and pay employees. There is profit and everything. The people paid with shares though are screwed. Their compensation is zero. Why is it zero? Because shareholders aren't giving their cash for shares.
Also, the situation you just described isn't a $0 share price, it's an illiquid market. That's very different. Aside from being practically unreachable to any company with a positive enterprise value.
This isn't some sort of hypothetical libertarian fantasy land where cash is all-powerful and all other economic assets are just worthless paper that can be thrown around. Your scenario might as well say that every company is worthless because that's not cash either, and the same mass-psychosis might hit Google. Most public companies can live for about 2-3 weeks in the situation you just described, even the ones with massive cash reserves, because of how corporate finance works in the real world.
But shareholders still bear the cost of CEO compensation. Whether Elon gets paid 100 shares or 100,000,000 shares, the company still has the same amount of (actual) money to pay employees.
This really is not difficult to grasp.
I can flip the though experiment around to "People completely stop buying all Tesla vehicles and products, but the brain damaged Muskites, swept up in his announcement of a time machine, drove the stock up to $10,000." Now there is a situation where Musk's compensation would be in the trillions, but the company itself would be cutting employees left and right.
Employees aren't paid with stock. So stop comparing stock compensation to cash compensation.
The practical reality for public companies is that cash and stock are pretty much fungible. You can issue shares and give them to Musk, or you can issue shares, sell them on the open market, and get cash to pay your employees. If you have excess cash, you can buy back shares from the open market. Companies actually frequently do this - most of them have a department called the "treasury" which, among other things, day trades their own stock (within limits set by public announcements) in order to get cash at a good price - but you never hear about it.
$1 of stock and $1 of cash are roughly equivalent in actual value. In both cases, the shareholders are dilluted by $1 extra.
Company revenue is in trouble? Just do an offering! Stocks = cash! Surely ownership is fine with bankrolling dead weight.
Also, I'm not arguing about the approval of the compensation package.
Layoffs.
But when you are CEO you can inform the board of this magic money source called offering, where you can keep bloated headcounts and not lose profits. I'm sure they will listen to you.
None of it makes any sense.
https://www.reuters.com/technology/baidu-tesla-agree-mapping...
From a corporate financials perspective, Tesla is a very healthy company: low debt, high profit. Their stock does seem to be at risk of dramatic re-pricing, and that can have knock-on effects in the long run (harder to use stock as compensation, high performers with unvested grants may leave, etc). But certainly bankruptcy does not seem to be in the cards.
(disclosure: early TSLA investor, no current exposure because I like to sleep at night now)
If you're asking very broadly "where would you invest early stage today to realize explosive investment growth due to the size or value of the total addressable market," I don't have a specific company or domain answer to that. Speculative investments have a domain expertise component (know what you're investing in), a timing component (being early or late is the same as being wrong, see Webvan circa 1996-2001 vs Amazon), and a luck component (you can do everything right and the trade moves against you through no fault of your own). Charlie Munger once said:
“You’re looking for a mispriced gamble. That’s what investing is. And you have to know enough to know whether the gamble is mispriced. That’s value investing.” ... “You should remember that good ideas are rare — when the odds are greatly in your favor, bet heavily.”
So, to maximize success, know how to spot opportunity when it crosses your path, maximize those opportunities, and maximize exposure at the opportunity. Being lucky doesn't hurt. Good luck.
(not investing advice, i am just an internet rando)
That said, this does seem like a good move from a business perspective. They already simplified carriage construction. Single-body casting may have diminishing returns.
Because according to this only a few manufacturers have had reductions in sales Q1 2024 (Tesla being one of them) and other than the most recent quarter almost all had increases:
https://caredge.com/guides/electric-vehicle-market-share-and...
Not sure why they would be reducing production. Growth is strong across the board.
[1] https://m.economictimes.com/industry/renewables/why-elon-mus...
In China they are getting crowded out by brands that better understand the local market, for example rear leg room at the cost of vehicle length/handling. They also have lots of self driving solutions that have no chance of making it to the West any time soon.
Chinese people also like Chinese brands. American does not mean better. The honeymoon for Western brands is over. With PCs, why would a sensible Chinese person buy some HP or Dell thing when Huawei have that extra touch of quality to them at a better price? Tesla along with GM's Buick, VW and the others making e-cars have this problem.
https://en.wikipedia.org/wiki/History_of_Tesla,_Inc.#Timelin...
I think they're growing just fine. looking at the quarterly breakdown, sales stall every so often, but pick up later.
Sort of like California real estate prices. People always say it can't go on, but it does.
They've talked about some future vehicle platform using a single gigacast, but I never heard them talk about this as a sure thing, or as replacing the manner their current vehicles are produced. Their "model 2" was always described as using the "unboxed" approach, which to me would be incompatible with the single massive gigacast approach from the beginning.
It may or may not be accurate. The only thing I recall Tesla saying about their next car is using an unboxed assembly method, and I believe they said they may scale that back during the last investor call.
https://www.reuters.com/technology/gigacasting-20-tesla-rein...
Back when the Ford Crown Victoria was still around, there were basically two bodies - the normal one, and a long wheelbase version for taxi service. The extra room went to taxi customers who needed more room to enter/exit and sit.
A front and back casting would allow more passenger space to be inserted between if there was a taxi.
or a loooooong wheelbase for a str333tch limo
The news uncritically letting a company just invent a new branded term for an existing technology and parroting it in their reports comes across as very weak journalism. Honestly it means I have no trust that the journalist is bringing any insight/analysis/critical reading etc.
Does that warrant a new word? I don’t know. But there is an innovation here in how it is manufactured.
> Tesla has been a leader in gigacasting, a cutting-edge technique that uses huge presses with thousands of tons of clamping pressure to die-cast large sections of the car’s underbody. On a typical vehicle, the underbody can consist of hundreds of individual parts.
Also, other car companies are copying Tesla.
> Japan
> In June 2023 Toyota announced that it was adopting casting technology for its electric vehicles.
> In 2023 Japanese auto parts supplier Ryobi announced plans to cast large electric-vehicle body parts and expects to reduce car body manufacturing costs by 20%.
> Volvo
> By November 2023, orders had been placed for two 9000-tonnes-force Giga Press machines for a new Volvo electric vehicle factory at Košice, Slovakia.
It would be like, TSMC would branding a new technology while ASML is actually doing the shit.
> Tesla has backed away from an ambitious plan for innovations in gigacasting, its pioneering manufacturing process,
> Tesla has been a leader in gigacasting, a cutting-edge technique that uses huge presses with thousands of tons of clamping pressure to die-cast large sections of the car’s underbody. On a typical vehicle, the underbody can consist of hundreds of individual parts.
https://macrodynepress.com/hydraulic-presses/automotive-indu...
Even if they don't manage it for the whole car, it does seem to have worked out for the front and back castings, since other companies have started working on the same thing.
One of the minor plot points is the ease of repairability for his small ship which is made up of several hull pieces versus the unibody of the ships made by his own navy. (He acquired his ship by stealing from an enemy)