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Comment by a8da6b0c91d | Hacker News Reader

Good thing they're making up the per unit losses with volume.

They make money on cars (gross margin). They lose money on R&D and expanding the production line.

Any car company growing this rapidly would lose money. Any car company this small designing a new model would lose money.

I know why so many financial commenters harp on and on about Tesla losing money. What mystifies me is why so many HN commenters do the same, given that most of us are startup people. Many startups lose money for the same reasons.

Most car companies include R&D in COGS. So it's fair to point out that Tesla does not.

Indeed, Tesla does things like startups do, not like big car companies. If you have a steady-state business, including R&D in COGS makes sense.

Another way that Tesla is different is that they don't announce monthly sales numbers. That means that a fair number of analysts ignore them; here's an example [1].

http://www.nytimes.com/2015/07/02/business/us-monthly-auto-s...

Though, to be fair, Tesla's monthly numbers would be like 4k/month, which in the ballpark of Porsche, and you don't see them on the analyst's list either...

Porche had no chance of nearly being the fastest growing car, 52% (Tesla) vs 55% (Elantra). Of course it's always up to what the financial reporter thinks is important, but I'd bet that Tesla's slightly-late release of their quarterly number vs. reliable monthly updates from existing companies played a role.

Most car companies already have mature vehicle platforms (engines, transmissions, chassis and body experience, etc) to work off of and thus only have to charge R&D for a particular car against that car.

When you're developing a new car you have to do a lot of general R&D and a lot of car-specific R&D. What gets charged against the car and what are considered general? Who gets to decide? Why would they decide in a particular way?

It's not super obvious to me where you'd bill things even if they're ostensibly just for the Model S because in another year or two they might release a Model S2 with not a lot of R&D because they just stole parts from the Model S, Model X and Model 3.

Not saying it will happen, but it could. Then the R&D costs would be too low on that car and they'd have to go back and adjust their gross margin back as far as they've been selling the other cars and then the whole thing is a nightmare since I'm pretty sure the SEC won't let you do that.

It's not a indefensible position. But it is different, and makes direct comparisons more difficult.

The numbers released to the public include enough information to make direct comparisons. The problem is that it's really apples-to-oranges: large, not-growing-very-fast car companies are a very different beast from small, rapidly-growing, risky new entrants.

I suppose. Most car companies (i.e. all other car companies) don't have 56% year-over-year growth numbers either (per the linked article). So my money is with the "apples and oranges" crowd here.

Analyzing an investment in Tesla according to the rules you use for GM or Daimler is going to lose you a lot of money. Or realistically already has -- most people whining are whining because they didn't get in on the Tesla boom and are looking for reasons to prove it's a bubble.

Just a data point, I became an investor just this year and I'm up 35%. If you're still whining instead of acting then nobody can help you but you.

> If you're still whining instead of acting

Please don't be personally rude on HN. This comment would be fine with just the first sentence.

Did you read the parent comment? Mine wasn't directed at him but reiterating his sentiment.

Oops, pattern matching fail. I get it now. Sorry!

> They make money on cars (gross margin)

No they don't. Net operating cashflow has been hugely negative for their entire existence and there is no conceivable path to profitability.

Tesla is a taxpayer subsidized wall street scam that is going to blow up sooner or later.

Net operating cashflow is negative because they're piling money into expansion. Their gross margin is about 25%. If they wanted to be profitable in the short term all they'd have to do is stop spending money on expansion and just pull in the sweet profits from current sales.

> No they don't. Net operating cashflow has been hugely negative for their entire existence and there is no conceivable path to profitability.

Sure they do. They're just always spending it elsewhere, like Amazon. Amazon doesn't sell products at a loss, their prices have become much less competitive over the years.

But the lack of profitability at Amazon isn't because the various business units are all operating at a loss. It's because the older units which make a profit finance the new ones that are starting up and not profitable yet.

Telsa may well be taxpayer subsidized and it may blow up. But on 2014 revenue of 3.2b the odds that they're cooking the books are vanishingly small.

Even if you include R&D into the COGS they make a profit on each car sold.

Here is Q4 2014 - http://www.bloomberg.com/research/stocks/financials/financia...

$3.2B total revenue $2.3B COGS $0.4B R&D

$0.5B gross profit including R&D

Their net income for Q4 2014 was -$0.3B, so they're not nearly as far off from profitability as you make it sound.

Tesla is a taxpayer subsidized wall street scam that is going to blow up sooner or later.

As opposed to any car that runs on petroleum? That's not taxpayer-subsidized at all, I suppose.

And it's missing the point: Tesla is a battery and infrastructure R&D company that's kept afloat by selling cars.

It's clear that Elon is going for the long haul on this.

> It's clear that Elon is going for the long haul on this.

Doesn't he always?

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