[HN Gopher] Q2 2020 Update
___________________________________________________________________
Q2 2020 Update
Author : marc__1
Score : 94 points
Date : 2020-07-22 20:26 UTC (2 hours ago)
(HTM) web link (ir.tesla.com)
(TXT) w3m dump (ir.tesla.com)
| xondono wrote:
| Why is "making most of your money from interest" better than
| "making most of your money from credits"?
|
| If you asked me what's more likely, for interest rates (to
| customers) to fall or for emission credits to stop, I know where
| I'd put my bets
|
| Edit: It's an actual question, not just rethorical
| xoxoy wrote:
| So many red flags
|
| Profit is all regulatory credits, actual auto sales flat to down,
| accounts receivable balance is now 1.4B or >20% of revenue,
| interest income is $8M (down -20%) even though global interest
| rates were cut to near 0 in Q2, R&D and service spending down
| despite dozens of projects the company claims to be working on.
| css wrote:
| On a TTM basis, GAAP OI is $1.23 billion against regulatory
| credits of $1.05 billion. They are actually barely profitable
| without the credits (though negative in the current quarter).
|
| Edit: re receivables, I don't necessary see a problem there -
| DSO of about 21 days - especially considering they also have
| all the residential receivables from their solar business.
| xoxoy wrote:
| potentially helped by partial shutdowns and furloughs and
| bonus cuts. they had inventory from Q1 they could sell.
| _ph_ wrote:
| Auto sales are down because their main factory has been closed
| down for quite some part of Q2. That they don't show huge
| losses as a consequence is outright amazing and a very good
| sign.
| unixhero wrote:
| Maybe it's red flags when you make conservative measurements
| against a traditional industry proxy measurement - and applying
| classic investment banking logic.
|
| However you have got to remember that this is not just another
| company, it's not just another brand. They've already changed
| the world, it's all there in their track record.
| realtalk_sp wrote:
| They don't have any significant monopolistic advantage and
| they're operating in a highly price-sensitive, competitive
| market.
|
| My personal theory is that Musk knows this and his real
| objective is to provoke car manufacturers into competing on
| electric. From Musk's point of view, the win is likely not
| Tesla making any significant amount of money for shareholders
| but instead it driving the whole market towards electric,
| thereby achieving the "real" objective of lowering emissions.
|
| Many of his behaviors over the years suggest this could be
| the case: publishing a 'master plan', releasing Tesla's
| patents, noting the stock price was "too high", and sinking
| all of his PayPal money into SpaceX, Tesla, and Solar City
| (and then borrowing to pay his rent).
| jeremiahhs wrote:
| Musk's only compensation for Tesla is related to share
| price. He is therefore doing everything he can to take a
| large market share from the incumbents - they have had 8
| years to respond to the Model S, and have done nothing.
| xoxoy wrote:
| i'm talking specifically about their questionable accounting
| outside of the product itself.
| [deleted]
| RivieraKid wrote:
| 120M net profit and 782M in regulatory credits in 1H 2020.
| bitxbit wrote:
| Can we be realistic here? I am 100% behind zero emission electric
| vehicles. However, we are still 10-15 years out from even
| reaching the necessary infrastructure to support more than 10%
| market pen. Certain patents will have expired by then. I also
| despise the fact that Tesla was largely funded by US tax payers
| and they will likely shift majority of manufacturing abroad in
| the near future.
| _ph_ wrote:
| How was Tesla funded by the tax payer at all?
| RandallBrown wrote:
| Electric vehicle tax credits?
| wenc wrote:
| Well, EV tax credits are subsidies for a "category" --
| electric vehicles -- not specific companies. Every EV
| customer gets them, and their intention is incentivize the
| transition to electric transportation, so they're working
| as they should.
| _ph_ wrote:
| That was not a funding going to the company, only to the
| customers. It made the cars a bit more affordable, that
| certainly helped. But it didn't fund the company. Also,
| they have long expired for Tesla, the only companies
| benefitting from the tax credits are the competing
| companies.
| stingrae wrote:
| Why do you think they will shift manufacturing abroad in the
| near future? The factories in China are building for the
| Chinese market to avoid import duties.
| bitxbit wrote:
| A) When it's significantly cheaper to produce vehicles
| outside of the US due to regulatory and labor costs, Tesla
| will do what's economically rational. B) US auto
| manufacturing is subpar. A big reason why I liked Tesla in
| the beginning was the narrative of US manufacturing revival.
| Thought they were serious about producing quality vehicles
| here. Past two years showed that's not the case.
| chollida1 wrote:
| Pre Close:
|
| - From Bloomberg re Robinhood and TSLA "number of Robinhood
| accounts holding Tesla shares (in some form) is at an all- time
| high of 496,890. Tesla is the second-most popular stock on the
| platform over the last 24 hours, and the 19th-most popular stock
| over the last 7 days."
|
| Looking at:
|
| - if profitiable check for amount of regulatory credits that
| Telsa gets from other automakers, this could be the difference
| between profitablity and not, though if this is what puts them
| over them edge then be a bit concerned
|
| - Is Texax truck factory happening or not? If so, what kind of
| tax incentives did they get as these types of tax deals are the
| first thing that could get cut if reports of Texas', um Texas
| sized, budget gaps exits, Tulsa is the other option, maybe with
| the SC ruling Tulsa is native land there could be some weird tax
| deal there??
|
| - Tesla's capex was cut way back from almost $3B forcats to under
| $1.3, helps make them look profitiable last year at the expense
| of that having to be made up this or next year, look for capex to
| be much higher
|
| - Model Y and X and S are only made in Fremont, though Shanghai
| will start producing the Y soonish, still lots of geographical
| risk as the pandemic and factory shutdown illustrated, Musk must
| do better here
|
| - Model Y was discounted and its brand new, Model S and X were
| discounted as well, TSLA really pushing to make their quarter for
| cars delivered, watch for gross margins to be down but numbers to
| be very juiced for a large beat
|
| Numbers:
|
| - Rev $6B vs $5.5B, down from previous highs, but with teh lock
| down, pretty darn good!!
|
| - profit of 50cents per share on a GAAP basis, nice, though
| credits really juiced this
|
| - 4 quarters of profitability, though not always pretty or
| organic is really nice to see
|
| - Net Income was $451M vs ($74M), nice but mostly a factor of
| major discounting of cars and credit sales
|
| - Cash and cash equivalents @ $8.5B, nice!!!
|
| - Solar, yawn, 27 MW installed, why even bother at this point?
|
| - handed over 90,000 vehicles, different from produced
|
| Outcome:
|
| - market cap is now $320B, wow!!
|
| - stock is flat on day as one would expect with so much vol
| leading up to announcement. The Post earnings drift traders are
| probably staying away as you need nerves of steel to trade TSLA
| earnings:)
|
| - Musk is now able to exercise an additional 1.69 million stock
| options, meaning he would reap a $2.1 billion gain if he
| exercised and could immediately sell the shares.
|
| - S&P 500 here we come, so /r/wallstreetbets and robinhood,
| congrats you guys did it!!!
| ksec wrote:
| >- S&P 500 here we come, so /r/wallstreetbets and robinhood,
| congrats you guys did it!!!
|
| Thanks for the summary. This should have been top comment.
|
| My risk appetite tells me not invest on something I dont
| understand. And I dont understand Tesla's valuation. But from
| an outsider perspective, this has been fun to watch.
| itsoktocry wrote:
| > _if profitiable check for amount of regulatory credits that
| Telsa gets from other automakers, this could be the difference
| between profitablity and not, though if this is what puts them
| over them edge then be a bit concerned_
|
| $400MM+ in regulatory credits.
|
| GAAP Profit is around $120MM so far in 2020, with almost $800MM
| in credit sales. Crazy.
| sbahr001 wrote:
| I am really surprised how solid their finances are. $320
| billion is definitely over-value in term of profit/value ratio.
| They are starting to be valued as a tech company which is good
| and bad. It looks that Elon is not valuing Tesla as a tech
| company in the traditional sense, but a utility/car company. It
| builds custom tech to improve those services.
|
| Their intellectual capital is undervalued in my opinion and may
| worth more than $100 billion. No car company at this moment,
| can come close to Tesla, and they are all spending billions, to
| develop batteries, vehicles, self driving tech, and
| infrastructure. They are even working together as they can't
| cover the costs on their own.
|
| Imagine Tesla selling their
| batteries/engines/platform/superchargers to every car
| company(like an intel for cars). They can sustain their revenue
| by providing the supercharger network(cloud service) to go with
| it; with a supercharger network being the new gas station,
| using clean energy(near zero cost energy). Then add their self-
| driving platform auto companies can lease.
| giacaglia wrote:
| Given their net income is positive, what is the probability that
| they are added to s&p500?
| pruthvishetty wrote:
| High.
| marc__1 wrote:
| High, because of the Criteria to join the S&P500[0]:
|
| - a market cap of $8.2 billion - its headquarters in the U.S. -
| the value of its market capitalization trade annually at least
| a quarter-million of its shares trade in each of the previous
| six months - most of its shares in the public's hands - at
| least a year since its initial public offering - the sum of the
| previous four quarters of earnings must be positive as well as
| the most recent quarter.
|
| [0]
| https://www.spglobal.com/spdji/en/documents/methodologies/me...
| jfengel wrote:
| If they are added to S&P 500, does that mean that a bunch of
| index tracking funds buying it all at once?
|
| I would assume that's already been priced in, if so.
| laluser wrote:
| Eventually, but it doesn't necessarily need to happen right
| away.
| knrz wrote:
| It does, but the rebalancing occurs in September I think.
| hrpnk wrote:
| A company can issue new shares for the index funds
| instead of requiring those to buy the shares on the
| market. Otherwise, with the low free float, such demand
| would move the price higher.
| jcheng wrote:
| Is there a reason the company would want to do that? Why
| wouldn't they just let the price move higher?
| easde wrote:
| The quarterly rebalancing of the S&P 500 is only relevant
| when companies already in the index change their free
| float (usually by issuing / buying back shares). New
| companies can be added at any time (with a few days
| advance notice).
| [deleted]
| AgloeDreams wrote:
| Positive financial results, one surprise to be seen here is a
| massive reduction in model S builds, more than 60% drop-off QoQ
| Presumably due to COVID, but maybe not?
| sbahr001 wrote:
| I would argue that the model S/X should be updated for their
| respective costs; They pretty much sell a 6 year old interior
| that was "space age" at the time. Since then their have been
| minor interior/exterior and looks extremely dated as the
| competition has "caught" up and the cheaper models surpass it.
| The only main changes to the car have been better battery and
| performance, the latter doesn't improve the day to day
| experience of the car.
|
| When your spending 100k on a car you expect Mercedes type of
| luxury. Previously, Tesla didn't have to compete on that
| because the Model S/X were ahead of its time an proof of
| concept cars, with the release of Model 3/Y there is no reason
| to have one, unless you need the additional size and want to
| have an electric vehicle on principle.
| grecy wrote:
| > _When your spending 100k on a car you expect Mercedes type
| of luxury_
|
| This is the old way of thinking, and it illistrates perfectly
| why the other auto manufacturers have been caught flat footed
| re EVs.
|
| For many decades what you said held true - more money on a
| car meant a higher quality interior.
|
| Now things have changed dramatically, because what we thought
| of as a "car" has changed so much.
|
| You can now spend 100k to get a car that never emits a single
| toxic chemical while being used. A vehicle that much cheaper
| to drive and own. A vehicle that requires significantly less
| maintenance, a vehicle that is silent and less fatiguing to
| drive, etc. etc.
|
| This are all the reasons besides "I got a more luxury
| interior", and they're the kind of reasons that make an EV
| compelling.
| reducesuffering wrote:
| All those reasons apply to buying a 38k Model 3 instead.
| Tesla is agreeing with grandparent as they are planning to
| next-gen the S and X. As a customer, what compelling reason
| is there to spend on the S and X over the 3 and Y? Sales
| and production are strongly reflecting that.
| alonmower wrote:
| I don't think they disagree with this, but that Tesla now
| has the 3/Y that get you all of the benefits of an electric
| car, with interiors that aren't too far off of the S/X for
| a fraction of the cost. If they want to continue to sell
| the S/X for a big premium they now need to offer a
| differentiated product (whereas pre 3/Y you were paying the
| premium to get a fully electric car)
| henrikschroder wrote:
| > You can now spend 100k to get a car that never emits a
| single toxic chemical while being used.
|
| Yes, but if the EV part is most important to me, why would
| I spend $100k on a Model S, when I can spend way less on a
| Model 3?
|
| And if the luxury is most important to me, why would I
| spend $100k on a Model S, when I can spend the same amount
| of money on a Porsche Taycan, get a similarly performing
| EV, but with a luxury interior that blows Tesla completely
| out of the water?
|
| The Model S has very little going for it right now, which
| is why the price has dropped _considerably_ in the last
| year. It finally has competition, and it 's simply not
| holding up very well.
| itsoktocry wrote:
| The difference in the narrative versus the financial data is
| stark:
|
| Quarterly revenue has not shown any growth for nearly 2 years,
| despite introducing more models and expanding global deliveries.
| Their sales of regulatory credits _this year_ is greater than all
| of the net income ever earned in their entire history.
| marc__1 wrote:
| Tesla posted positive free cash flow (CFO - capex) for 4 of the
| last 5 quarters (page 24) and it the only company with increase
| in # of deliveries among the 10 largest autos globally (page
| 7). Gross margins >20% is also best in class in the auto
| industry
|
| The list goes on in terms of growth & profitability
| ckastner wrote:
| > "The list goes on in terms of growth & profitability"
|
| It better. Tesla has a market cap of 4x that of VW, a car
| maker with EUR256bn revenue and ~EUR17bn profit in 2019.
|
| It is beyond me why anyone would buy this stock over VW, let
| alone pay 4x the price for it. Even if Tesla could put out
| _900K_ cars in a quarter instead of the current 90K, they 'd
| still not come even close to the competition is terms of
| financial success.
|
| Tesla would need to utterly dominate the car market to live
| up to its current valuation. Dominate as in market share, not
| relative quarter-to-quarter growth.
| bryanlarsen wrote:
| VW has over $200 Billion in debt, and are spending $100B on
| the transition to electric. Buying VW at this point is
| crazy risky.
|
| There are currently ~10 major automakers outside of China
| and India. In a decade, there will be less than 10. The
| only one I am confident that will be sticking around is
| Tesla. The others have a difficult transition to electric
| ahead of them and possibly a difficult transition to self-
| driving and will possibly have to deal with strong Chinese
| competition. Not everyone will successfully transition.
| Perhaps spending heavy on the electric transition like VW
| is the right approach. Perhaps letting everybody else take
| all the risks and swooping in late like Toyota is the right
| approach. I don't know.
|
| The only manufacturer that I'm confident of being around in
| 10 years is Tesla. Some of them will transition well and
| will likely sell more cars than Tesla and have an
| enterprise value larger than Tesla in 10 years. And some of
| them will go bankrupt or be swallowed cheap like FCA-PSA.
|
| That being said, I significantly reduced my holdings in
| Tesla this year. I'm pro-Tesla, but not at current prices.
| coliveira wrote:
| Everyone investing on Tesla is counting on it becoming a
| kind a Facebook for Cars, using the power of its stock to
| kill and buy competitors. That reasoning is not far from a
| possibility given the aggressiveness, bordering on the
| illegality, practiced by the company in its dealings with
| governments and the stock market.
| jedberg wrote:
| Tesla doesn't just make cars. They are really a battery
| company that happens to make cars that use their batteries,
| but they also make whole home batteries, which include
| recycling the ones from the cars, as well as solar panels
| to charge those batteries and charging systems that can be
| deployed to charge those batteries.
|
| I'm not saying the valuation makes sense, but to compare
| them to a car company doesn't make a ton of sense.
| DanCarvajal wrote:
| Nonsense. Tesla doesn't even make batteries, they pay
| Panasonic to make their batteries with some Chinese
| batteries on the side.
| adventured wrote:
| > It is beyond me why anyone would by this stock over VW,
| let alone pay 4x the price for it.
|
| The better answer is that nobody should buy VW either.
| Their business has zero potential upside and a huge
| downside risk in the transition to EVs; along with the
| inevitable rise of China's domestic automakers, which will
| eat a very large amount of market and sales away from the
| old giants. VW's position is its weakness, it has
| everything to lose and nothing to gain from the peak
| they've reached.
|
| Which also isn't the same as saying that Tesla should be
| bought at its present absurd valuation.
| philwelch wrote:
| > The better answer is that nobody should buy VW either.
| Their business has zero potential upside and a huge
| downside risk in the transition to EVs
|
| VW is an EV manufacturer and is investing heavily in the
| transition to EVs themselves. And they're already at a
| much larger scale than Tesla in terms of distribution and
| manufacturing the rest of the car.
| brianwawok wrote:
| To some extent, the 1900s distribution model of
| dealerships is a burden.
|
| When you buy a tesla, tesla gets 100% of the revenue.
|
| When you buy a VW or a ford, what % cut does the
| dealership take?
|
| How much does it cost to have 800 cars sitting on a lot,
| vs order on demand?
|
| Auto industry is ripe for innovation, glad we have
| someone innovating. I will hopefully never need to talk
| to a car salesmen or do the dealership thing again.
| ckastner wrote:
| > _VW 's position is its weakness, it has everything to
| lose and nothing to gain from the peak they've reached._
|
| I think that's a very reasonable argument to make.
| However, Tesla is not even close to this peak VW might
| have reached, and is valued (roughly speaking) at 4x
| that.
|
| VW might lose its peak, Tesla never had it in the first
| place.
| kelnos wrote:
| It's speculation, and irrationality, neither of which is
| new to the stock market.
|
| People think the stock will go up, because it's a hot
| company with a lot of press, so they buy it. More people
| buy it, and it becomes a self-fulfilling prophecy: the
| stock goes up.
|
| Eventually Tesla will either find their groove and be a
| breakout success, or the stock price will fall. It's just a
| matter of time, and depends on when people get tired of
| waiting.
|
| Remember also that VW is, comparatively, a super boring
| company.
|
| These are all bad reasons for Tesla's stock price, but they
| _are_ reasons.
| lazyjones wrote:
| VW is shrinking, its leaders are not innovative and their
| suppliers are dying while VW is scrambling to bring
| component development back in-house.
|
| Estimates for Q2 2020 are around -3,2 EUR per share (EPS)
| for Volkswagen while Tesla posted a profit.
| qeternity wrote:
| For bulls, TSLA isn't a car company. It's _the_ climate
| change company. They are the best bet right now to upend
| the entire power mix.
|
| I'm not saying I agree with this. Even if achieved, the
| amount of future success being priced in today is
| extraordinary. Combine that with a stock that's become
| "cool" to own with retail, and the huge short
| interest...and well it starts to make sense.
|
| TSLA price action at the moment is really down to a lack of
| sellers. Shorts have been bent over in a way not seen at
| this scale since (ironically) VW. Simply put: everyone who
| has said TSLA is overbought has paid dearly. The bubble
| will burst, but it's never shorts that pop bubbles.
| thecopy wrote:
| >It's the climate change company
|
| What does this mean? ELI5 pls
| bradly wrote:
| Every house/business with solar roof and battery wall,
| with the elimination of energy utility monopoly across
| most of the world. Same thing spacex is doing for
| broadband and their are other companies pushing for self-
| contained residential water systems as well (although
| this one is harder for the public to swallow than the
| others).
| darawk wrote:
| It means that all the dollars that people expect to
| eventually spend fighting climate change will largely be
| captured by Tesla.
| WJW wrote:
| They mean that in the mind of "the general public", Tesla
| is the foremost company "doing stuff" about climate
| change. Therefore, by owning Tesla stock you can get warm
| glowy feels about making a difference. You might also
| gain coolness points by mentioning that you are "a Tesla
| investor" to people that care about such matters.
| ncallaway wrote:
| I may be wrong--I own no TSLA and I'm pretty much the
| furthest thing from a professional investor--but I didn't
| think the comment about being "the climate change"
| company was actually about warm fuzzies, I thought it was
| about the potential financial upside.
|
| My understanding is that very likely--whatever green
| energy technologies win out--energy storage and load
| shifting will be a major issue.
|
| The entities that can build energy and power storage
| effectively and at scale will have a new and large market
| opening before them.
|
| Tesla is in a decent position--by being near the front-
| edge of battery production and scaling there's real room
| for Tesla to be a major player in the world energy
| market.
| qeternity wrote:
| There's an element of this amongst retail but I'm talking
| about professionals. A diversified portfolio has to have
| some aggressive do or die growth stocks. TSLA is (or was)
| probably the best of this breed. So if you're going to
| own a change-the-world-or-die-trying stock, TSLA is the
| go to for many.
| megablast wrote:
| How do you make money on climate change? Buying Tesla is
| one way.
| almost_usual wrote:
| Off of credits though right? Also isn't Tesla considered a
| "tech" stock by a lot of investors? A 20% gross margin is not
| good for a tech stock.
| toomuchtodo wrote:
| "Regulatory credits" are getting paid for making electric
| cars other automakers won't make.
|
| Fiat alone must pay Tesla $2B for credits to keep selling
| internal combustion vehicles in Europe.
| DanCarvajal wrote:
| > "Regulatory credits" are getting paid for making
| electric cars other automakers won't make.
|
| The problem long term is that's basically not the case
| anymore aside from FCA.
| [deleted]
| almost_usual wrote:
| So Tesla is a good investment because they get paid by
| other automakers to make cars they don't want to make
| right now?
|
| This doesn't seem like a good long term strategy.
| toomuchtodo wrote:
| My Tesla stock with a $17/share cost basis says
| otherwise.
|
| Take the the other side of the bet and short it if you
| doubt the long term value. The world isn't going to
| suddenly stop supporting climate change mitigation
| through policy. It's only going to ramp up, leaving
| legacy Orgs in the dust.
| zacksinclair wrote:
| Your good investment from _years_ ago does not make Tesla
| a good investment at today 's price.
| itsoktocry wrote:
| > _My Tesla stock with a $17 /share cost basis says
| otherwise._
|
| Tesla's IPO price was $17. So you got in right on the
| lowest price the stock has ever been and never bought
| another share since? Amazing.
| toomuchtodo wrote:
| Mostly correct. I performed swing trading along the way
| up, but still hold all of the initial IPO investment
| (yolo'd my Roth IRA). Was sold after my first Roadster
| test drive.
| zaroth wrote:
| OP never said all his stock had a $17 basis, just that
| they held stock with a $17 basis. I agree, the capital
| appreciation of TSLA stock is truly amazing though.
| xoxoy wrote:
| they earn 100% margins on selling $400M in mysterious
| regulatory credits
| baggachipz wrote:
| There's nothing mysterious about them. Car companies are
| required to produce clean vehicles, or they can instead buy
| credits from companies who do. Companies are paying right
| now rather than producing, and Tesla is there to benefit
| from it. There's nothing shady or mysterious here.
| xoxoy wrote:
| they don't break out who the buyers of these credits are.
|
| i cannot find any information from a Ford or Toyota or GM
| describing the millions of credits they've purchased from
| Tesla _shrug_
| baggachipz wrote:
| So this suggests to you that it's somehow shady or below
| the table? Why would they disclose that information if
| they don't have to?
| xoxoy wrote:
| yes it is objectively shady because it appears they have
| full discretion to decide when to recognize these
| credits, and also unclear who is actually buying them.
|
| they also don't have credits listed as an asset on their
| balance sheet when you'd otherwise expect these credits
| to go from asset -> revenue when they decide they should
| be recognized, instead it is as if these credits just
| appear out of thin air and sold.
| baggachipz wrote:
| Again, they are not required to report that so there is
| no reason to. I'm sure they have squirreled away lots of
| these credits in their war chest to break out at
| opportune times (like today). They're not fabricating the
| numbers, they are audited and exist. There's nothing
| illegal about it. They just don't have to disclose them
| publicly so they don't, because it would needlessly give
| information to competitors.
| MLR wrote:
| https://www.teslarati.com/tesla-pooling-fca-avoids-
| co2-fines...
| matthewdgreen wrote:
| I think the question is whether it's sustainable as a
| business. And whether Tesla's other businesses are
| growing quickly enough that they can make up for the loss
| of those credits when other manufacturers start producing
| more EVs.
| baggachipz wrote:
| I think it'll surprise you how long it lasts. These big
| car companies take a long time to change in a meaningful
| manner and every month they spend trying to do that is
| time Tesla is advancing themselves. These credits should
| stick around (albeit in a diminishing manner) for at
| least a few more years.
| xoxoy wrote:
| look at the pipeline for EVs coming to market in
| 2021/2022. there are dozens.
| baggachipz wrote:
| "There are dozens of us! Dozens!"
|
| Though many cars have been announced, I can virtually
| guarantee most of them will be late or never arrive. Not
| one EV has arrived on market when it was actually
| announced to do so. These take lots of time and money to
| produce.
| xoxoy wrote:
| right there's like a dozen EVs coming to market in
| 2021/2022. it will disappear very quickly over the next 2
| years.
| jupp0r wrote:
| I'm not convinced. New vehicles have been announced each
| year in the last couple of years now and they have been
| largely unsuccessful so far. I think it will be hard for
| other manufacturers hit the same sweet spot that the
| Model 3 is hitting. That being said, there are lots of
| segments (vans, pickup trucks, ...) that are still open
| for grabs.
| shuckles wrote:
| Pretty odd to consider that every other carmaker,
| obsessed with optimizing their business, would rather pay
| Tesla straight cash than rush out an electric drivetrain
| car. Across the Taycan, i3, and Bolt, there's certainly
| plenty of evidence that they can.
| baggachipz wrote:
| That's because they could build them, but not
| _profitably_. Changing the design wholesale and then
| retooling your lines to build the cars at scale is
| insanely expensive and will take a long time to do. The
| i3 and Bolt are objective failures (in the US) because
| they 're just not that good compared to what Tesla is
| doing at about the same price.
|
| The dealers also have an inverse incentive to sell them
| so one has to go way out of their way to purchase an
| electric from the legacy manufacturers. It's a classic
| disruption case against entrenched players who refuse to
| adapt. The only one making a real effort is VW and
| they're currently paying dearly for it.
| shuckles wrote:
| You first point is around whether it's economical. A
| carmaker can scale a program in ~3 years, so that they
| haven't is almost certainly a conscious choice.
| Furthermore, the Bolt shares a production line with the
| Sonic so the process concerns are limited. In terms of
| competitiveness, the Bolt offered longer range at a lower
| price than the Model 3 at launch and still does. Here
| people respond by saying the Tesla is a much better
| driving experience because of software, but if that's the
| case they'd be much more profitable selling their in car
| experience software on top of ICE vehicles.
|
| All that said, Tesla also doesn't build and sell cars
| profitably. Selling credits is the source of their
| profits.
|
| EVs are not disruptive in any well-defined sense of that
| word. They are more expensive and do not create demand
| against non-consumption of automobiles. The disruptive
| electric mobility option is the explosion of personal
| form factors such as ebike, scooters, and the like.
| jeffbee wrote:
| It costs them almost nothing to pay the credits.
| Meanwhile here in the second age of free gas the gross
| margins on trucks are more than good enough to cover this
| small expense. Ford alone makes $10 billion annual in
| gross profits on just the F150 model. The regulations are
| enough to carve out a little niche for Tesla to hoover up
| a few dollars, but not enough to change the industry.
|
| Pass a realistic carbon tax and see what happens.
| shuckles wrote:
| If Tesla would thrive in a world where gasoline was
| priced correctly, it would surely fail in a world where
| automobile infrastructure (parking, highways, sprawl) was
| priced correctly. This is not a reassuring line of
| reasoning.
| DanCarvajal wrote:
| Let's be clear we're mostly talking about, Fiat is the
| company buying tons of Tesla credits. This might be
| better for everyone all around. Would you want a Fiat EV?
| jupp0r wrote:
| Sure, if they made an electric Dodge Charger or an
| electric RAM Rebel ....
| curious_fella1 wrote:
| > and it the only company with increase in # of deliveries
| among the 10 largest autos globally
|
| I'm sure others have commented, but this is some real silly
| logic. Yes, going from (fake numbers) 100k -> 110k cars sold
| is a lot easier than going from 1M -> 1.1M.
| brianwawok wrote:
| May be easier, but it means something. Growing in a down
| market is a thing.
| itsoktocry wrote:
| > _Tesla posted positive free cash flow (CFO - capex) for 4
| of the last 5 quarters_
|
| Can you explain how their capex is decreasing as they build
| out more factories and invest in new technology? Seems odd,
| doesn't it? Yet is sure makes that cash flow number look
| good. These are the kinda things that analysts consider red
| flags.
|
| > _it the only company with increase in # of deliveries among
| the 10 largest autos globally_
|
| Do you think this is a reasonable comparison when Toyota
| builds as many cars in a few days as Tesla does in a quarter?
| Tesla can futz a few thousand cars with a fleet sale or
| inventory build and drastically change their growth
| trajectory.
|
| By the way, what's a "delivery"? I don't think I've ever seen
| them define it. I would _assume_ it means "car delivered to
| customer", and yet they build inventory. Very opaque.
| zaroth wrote:
| > _Can you explain how their capex is decreasing_
|
| Capital efficiency. It should not be surprising that a
| greenfield factory built in China based on a spec you
| iterated on in Fremont, CA results in a much higher
| $/Cars/Day, a.k.a capital efficiency. Iterating on a live
| line in Fremont, CA is significantly more costly. It's like
| $/sq ft. for renovating your house versus buying new.
|
| Also, look at the flow diagrams they've published on the
| floor layout and the path through a factory a car takes to
| go from start to finish in Fremont vs. GF3. This is also
| why they're moving to Austin.
|
| > _By the way, what 's a "delivery"? I don't think I've
| ever seen them define it._
|
| Of course they define it. In their Annual Report, under a
| section titled "Critical Accounting Policies and
| Estimates", under a sub-section titled "Automotive Segment
| - Automotive Sales Revenue";
|
| _We recognize revenue on automotive sales upon delivery to
| the customer, which is when the control of a vehicle
| transfers. Payments are typically received at the point
| control transfers or in accordance with payment terms
| customary to the business._
|
| > _and yet they build inventory. Very opaque._
|
| I'm not sure what you're asking here.
| guardiangod wrote:
| >capex is decreasing
|
| Could you give more detail on that? The last big capex
| increase was due to Model Y rollout. Now that most of the
| lines are completed, it's just replicating what Fermont's Y
| production line has in Shanghai's.
|
| I do, however, agree that Tesla's definition of 'delivery'
| is suspect.
| itsoktocry wrote:
| > _Could you give more detail on that? The last big capex
| increase was due to Model Y rollout_
| Capex: 2017 - $4 Billion 2018 -
| $2.5 Billion 2019 - $1.5 Billion 2020
| to date - ~$1 Billion
|
| Where was the big increase in capital expenditure?
| marc__1 wrote:
| >Can you explain how their capex is decreasing as they
| build out more factories and invest in new technology?
| Seems odd, doesn't it? Yet is sure makes that cash flow
| number look good. These are the kinda things that analysts
| consider red flags.
|
| From 2017 to 2018, they were focused in ramping-up
| production at the Fremont factory [0]. And compared to Q2
| 2019 Capex is actually 118% * higher ! * (546m vs 250m), so
| I can't see how they are slowing investments.
|
| >Do you think this is a reasonable comparison when Toyota
| builds as many cars in a few days as Tesla does in a
| quarter? Tesla can futz a few thousand cars with a fleet
| sale or inventory build and drastically change their growth
| trajectory.
|
| I do believe they did a tremendous job in ramping-up
| deliveries (page 18) in such a short period of time). It is
| 2x the number from just 3 years ago.
|
| >By the way, what's a "delivery"? I don't think I've ever
| seen them define it. I would assume it means "car delivered
| to customer", and yet they build inventory. Very opaque.
|
| By delivery Tesla probably needs to recognize revenue
| according to ASC 606, or when the product is delivered
| instead of paid. I'm sure theirs auditors must pay close
| attention to this number.
|
| [0] https://en.wikipedia.org/wiki/Tesla_Factory
| itsoktocry wrote:
| > _I 'm sure theirs auditors must pay close attention to
| this number._
|
| I'm sure they do.
|
| https://finance.yahoo.com/news/wirecards-auditors-ey-
| were-vi...
|
| > _And compared to Q2 2019 Capex is actually 118% higher
| ! (546m vs 250m),_
|
| And yet they were building a factory in China then.
| guardiangod wrote:
| One would expect a widget-manufacturer that is supply-
| constrained to have flat revenue until new factories are
| opened, unless you are talking about raising prices to increase
| profitability. It doesn't seem Tesla is that concerned with
| short-term profitability.
| mamon wrote:
| If Tesla cars were really in high demand, and supply was the
| problem then I would expect them to raise prices, thus
| increasing revenue. They haven't done that, which means
| Tesla's are probably not as sexy cars as they try to paint
| them.
| tuatoru wrote:
| Companies that raise prices in exceptional situations take
| a major reputational hit.
|
| The canonical example is snow shovels after a blizzard.
| jupp0r wrote:
| They are betting on market growth driven by climate change
| as well as technology advancements that will drive battery
| prices down. Both are coming, imho.
| slg wrote:
| >Quarterly revenue has not shown any growth for nearly 2 years,
| despite introducing more models and expanding global
| deliveries.
|
| Isn't this pretty easily explained by the total number of
| deliveries not growing? They might be expanding internationally
| to new markets or introducing new cars, but total deliveries
| have been pretty consistently around 90k for the last 2 years
| also. They still seem to be selling every car they produce and
| aren't able to produce cars fast enough to increase total
| deliveries. The real question is what happens when some of
| those new factories come online and at what point is demand
| saturated.
| xoxoy wrote:
| that's not true. they have a lot of inventory on their b/s
| slg wrote:
| What specifically do you mean? On page 6 it shows that
| global inventory is currently lower than it has been in 3
| of the last 4 quarters.
| xoxoy wrote:
| 17 days of inventory is on par with previous quarters
| except Q1...
| slg wrote:
| Well yes, that is the point. Tesla's deliveries have been
| limited by their production capability for a while now.
| If the problem was a lack of demand, you would expect
| inventory to grow or production to slow, but neither of
| those have happened (beyond a slight decrease in
| production due to COVID related closures).
| xoxoy wrote:
| well there are rumors they are shutting down parts of
| Fremont for "upgrades" soon. likely because their
| inventory is higher than they want.
| slg wrote:
| Are you admitting that your opinion on Tesla's inventory
| is based entirely on rumors? I am basing my opinion on
| the linked document which show excessive inventory isn't
| an issue. Maybe the rumors are right and the document is
| wrong, but that would constitute fraud and would mean
| there are bigger problems at Tesla than their inventory
| levels.
|
| EDIT: This was comment was downvoted multiple times so I
| rephrased it to be less aggressive than how it was
| originally written.
| DanCarvajal wrote:
| They're actually building another tent to make cars in
| right now. Not sure it's an upgrade but it's something.
| [deleted]
| nickik wrote:
| When almost ever other car company is burning money, sustaining
| massive investment in multiple new massive factories, launching
| new products, and producing cars with pretty good margin and
| not losing money is an pretty big accomplishment.
|
| Its not that long ago people were arguing even a small crisis
| would wipe out Tesla.
| itsoktocry wrote:
| > _producing cars with pretty good margin and not losing
| money is an pretty big accomplishment._
|
| If you back out the regulatory credits they've lost money on
| every car they've ever sold, for almost 20 years. Where do
| you get "good margins" from?
|
| This is an example of narrative versus financial data.
| nickik wrote:
| The margins on the car are actually very good, this is
| evident in the official data and confirmed by expert
| breakdowns.
|
| They don't make money because they are investing lots of
| money all the time. People seem to miss that they only
| launched their first large production cars a few years ago.
|
| Its insanely difficult to start a car company and to scale
| it to the level Tesla is now with a product that basically
| nobody else can do profitable is a gigantic achievement.
|
| They are currently building 3 huge new factories.
| SEJeff wrote:
| Tesla's first car was the Roadster, and it was released in
| 2008. How do you get "almost 20 years" when the first car
| they released was 12 years ago? Tesla was founded in 2003,
| but even that is not 20 years.
| [deleted]
| modeless wrote:
| Gross margin on cars is 25% this quarter, 17% after
| removing regulatory credits. What "financial data" are you
| using to come to the conclusion that they don't have good
| margins?
| itsoktocry wrote:
| > _Gross margin on cars is 25% this quarter_
|
| You can go broke with 99% gross margins.
| modeless wrote:
| You were _specifically_ arguing that their margins are
| not good.
| wyldfire wrote:
| > Its not that long ago people were arguing even a small
| crisis would wipe out Tesla.
|
| It would be very challenging for them if the political
| environment changed and regulatory credits disappeared
| altogether.
| nickik wrote:
| That would not wipe Tesla out. The credits are nice bonus,
| specially in COVID times, but not having them would not get
| them near bankruptcy. They would maybe had to raise some
| more money and not invest as much.
| modeless wrote:
| They're investing aggressively in new factories and new product
| lines. If they wanted to show profits today they could give up
| building and expanding factories and stop entering new product
| categories. But that would be stupid.
| bqe wrote:
| The parent commenter was discussing revenue and not profit.
| If they were aggressively expanding, I would expect that
| profits to remain small or negative, but I'd expect revenue
| to grow as a result.
| sbelskie wrote:
| Yea, if they are adding product lines without an increase
| in revenue that seems (possibly) concerning, though
| obviously the current economic situation makes it hard to
| know how to value year over year comparisons.
| H8crilA wrote:
| Just to make it more clear what bqe is saying: they are
| selling the ~same amount of cars as 2 years ago. Both in
| terms of $ and in terms of #. Growth is completely flat.
| Brakenshire wrote:
| They've lost a $7500 subsidy in the US during that time
| period, and just recently had Coronavirus. So it's not
| that surprising.
| guerby wrote:
| Q2 2018: 53,339 vehicules produced Q2 2020: 82,272
| vehicules produced
|
| 2 years ago flat?
|
| Source: https://en.wikipedia.org/wiki/Tesla,_Inc.
|
| Tesla production will be around 100k+ per quarter until
| they open a new factory (Berlin, july 2021) or expand
| current ones.
|
| If they're still production limited the only growth in
| production numbers for the next 12 monthes will be in
| their China factory and may be a bit in Fremont (p7 of
| PDF).
|
| Tesla announced they hope to be close to 500k produced
| vehicules in 2020 (p10 of PDF) so that makes 157k/quarter
| for the next two quarters. I don't think they'll reach
| 500k in 2020.
|
| But of course the thing you have to look at is results
| from other automakers (hint: ugly).
| H8crilA wrote:
| Not exactly 2 years: look up Q3 2018 onwards.
| samfisher83 wrote:
| Most companies have shown big declines due to covid. Just
| being flat is good.
| H8crilA wrote:
| It was flat pre-covid too. It has been flat for 2 years.
| itsoktocry wrote:
| > _If they wanted to show profits today they could give up
| building and expanding factories and stop entering new
| product categories_
|
| Can you show me in the financial statements where this
| "aggressive investing" in factories is, and how it affects
| net profit? Why are they doing it if revenues are stagnant?
| modeless wrote:
| Factory construction expenses aren't explicitly broken out
| in the financials. But cutting R&D could more than double
| their net income this quarter, if they wanted. What's your
| point? Do you believe that doubling their number of vehicle
| factories along with significant expansions at both
| existing factories isn't having a material impact on their
| expenses?
|
| They are doing it because they need more capacity to
| increase revenue, because their ASP is lower in the new
| markets they've entered. And because they need local
| factories to reduce tariffs. And do you really think that
| comparing _this_ quarter YoY is a good way to evaluate
| their revenue growth?
| itsoktocry wrote:
| > _But cutting R &D could more than double their net
| income this quarter, if they wanted. What's your point?_
|
| What's _your_ point? That if we exclude all expenses from
| their income statement they 'd be profitable?
| Unfortunately, they can't do that.
|
| > _They are doing it because they need more capacity to
| increase revenue_
|
| Are any of their factories running near capacity?
|
| > _And do you really think that comparing this quarter
| YoY is a good way to evaluate their revenue growth?_
|
| Probably not. Q1 y-o-y wasn't great either though.
| modeless wrote:
| My point is succinctly stated here:
| https://news.ycombinator.com/item?id=23921383
| xoxoy wrote:
| huh? they've had four quarters of profits.
| xenophon wrote:
| OP referenced revenue growth, not margin expansion. All else
| equal, you'd expect to see existing products take share and
| generate movement on the top-line.
|
| Though it could be the case that their investment in new
| product development reduces their ability to meet current
| demand and therein throttles revenue; not sure if the 10Q
| references their order backlog.
| donor20 wrote:
| I think they have taken share recently, but total volumes
| are down.
|
| That said, I think tesla is WILDLY overpriced (and I used
| to own tesla stock).
| [deleted]
| SECProto wrote:
| > Quarterly revenue has not shown any growth for nearly 2 years
|
| Revenue is actually down 4% year over year. I'd say a lot of
| this is because their Model S/X sales were down 56% from the
| same quarter last year. Huge reduction in high end vehicle
| sales was essentially replaced with the sale of regulatory
| credits (8000 cars at 60,000 each is 480million, regulatory
| credit sales were up 317 million). Free cash flow was +418
| million. Even without the regulatory credits, they would've had
| positive cash flow during a quarter where their factory was
| closed for a significant chunk of time.
|
| I actually take this as a good sign - it shows that they can be
| profitable without counting on high margin model S/X.
| samfisher83 wrote:
| What are regulatory credits? I thought the 7500 credit ran out?
| [deleted]
| antoncohen wrote:
| People have mentioned the US ZEV credits. But there are also EU
| emission pools. In the EU car makers have to meet an average
| CO2 emissions target across their fleet, if they don't they pay
| fines. Car markers can pool with each other. Tesla, with a lot
| of sales and zero emissions, is very valuable in a pool. FCA
| (Fiat-Chrysler) has paid Tesla to form an emissions pool with
| them. Here is a video about it:
| https://www.youtube.com/watch?v=PwXsY7IcrO8
| elil17 wrote:
| This is separate from the consumer EV tax credit.
|
| Every car manufacturer must produce a certain percentage of
| electric cars. If their actual EV sales aren't enough to cover
| that requirement, they can purchase "EV credits" from companies
| that exceeded their regulatory requirements to avoid a fine.
|
| Essentially this policy gets car companies that aren't
| producing EVs to subsidize the ones that are.
| michaelmior wrote:
| Interesting! I wasn't aware of this credit. How it's
| structured is fascinating in that they essentially have to
| pay their competitors for not meeting the quota. (Of course
| the markets for EV vs ICE is somewhat different, but not
| disjoint.)
| Lendal wrote:
| No, according to other commenters they would be paying it
| to the government anyway, if they weren't paying it to
| Tesla.
| elil17 wrote:
| Yeah it's an awesome system! Similar ideas exist for
| controlling carbon emissions (like a cap and trade system,
| where, to oversimplify it, everyone gets an equal amount of
| "greenhouse gas points" which you can either spend on
| polluting or sell to others)
| mamon wrote:
| Actually, this system is counterproductive, I think.
| Starting production of EVs costs you money, but it also
| takes time, and the penalties for not meeting quotas are
| something you have to pay right now. So, in the end, the
| money you spend buying "EV credits" is the money taken
| away from your R&D budget on EVs.
|
| You might argue that the company receiving money for "EV
| credits" would invest them in increasing the production,
| but that's often not the case - since they have already
| met their quotas and are off the hook, they are free to
| simply hand this money out to shareholders in form of a
| dividend.
| [deleted]
| [deleted]
| yakz wrote:
| The manufacturers can trade between each other, e.g. if GM
| sells mostly vehicles that are heavy polluters, they can buy an
| offset from Tesla whose product does not burn gasoline.
| danans wrote:
| It's not the federal tax credit for purchasers, but rather the
| state ZEV credit which manufacturers trade.
|
| "California, and nine other U.S. states that have adopted its
| ZEV regime, require automakers that sell internal combustion
| engine-based vehicles to earn a certain number of ZEV credits
| every year by selling zero-emission vehicles. The credit
| requirement is typically determined by the number of vehicles
| that the manufacturer sells in the state. If an automaker
| doesn't produce enough electric cars to meet its quota, it can
| choose to buy credits from other manufacturers who do or pay a
| $5,000 fine for each credit it is short."
|
| https://www.forbes.com/sites/greatspeculations/2017/09/01/te...
| sbahr001 wrote:
| There are still state credits, just no federal.
|
| I also don't know if they selling carbon credits in this
| category or not.
| JMTQp8lwXL wrote:
| I've seen a great deal of speculative investment in Tesla as of
| recently. I pray no middle class people will lose their entire
| net worth, much less in the middle of a crisis.
| jeffbee wrote:
| Old people on my Nextdoor are asking whether they should buy
| some TSLA, which was as good a signal as any I've ever seen
| when the same people were asking if they should maybe get some
| bitcoins (at $20k each). TSLA like every other US equity right
| now is supported by retail momentum alone.
| xnx wrote:
| TSLA is absolutely the present-day BTC.
| donor20 wrote:
| Wish they would fix their customer service story.
| kccqzy wrote:
| Off topic but why is the document written with painful amount of
| tracking? (By tracking I mean in the typography sense, i.e.
| letter spacing, not that the document is tracking you.) It almost
| seems like they don't want people to actually read the document.
| eyesee wrote:
| I suspect they're not embedding the correct font in the PDF,
| leading to strange spacing.
| cozzyd wrote:
| Indeed, it's using some font named GothamSSm which is not
| embedded and getting replaced by some random Sans font by
| your PDF viewer. What idiotic PDF generator doesn't
| automatically embed non-standard fonts? (apparently
| Powerpoint...)
| ehsankia wrote:
| I know the domain name is there, but shouldn't the post title
| contain "Tesla"?
| bobsoap wrote:
| Seconded. A hint that it links to a PDF would also be welcomed
| by everyone on a phone.
| dhritzkiv wrote:
| Out of curiosity, why is viewing a PDF unwelcome on a mobile
| device?
| Lendal wrote:
| Unnecessary. Tesla is the only company whose quarterly updates
| regularly make the front page of Hacker News. For some reason.
| simonebrunozzi wrote:
| Google, Microsoft, Amazon, they all somehow make the front
| page of HN with their quarterly reports. Not just Tesla.
| jennyyang wrote:
| Revenues down Year over Year, and yet their stock price is 8x.
| Profiability increased, but its market cap is larger than Toyota
| which has over 10x the revenues. This stock is truly one for
| /r/wallstreetbets.
| danhak wrote:
| You realize their factory was shut down for much of this
| period, right? Comparing YOY quarterly figures here is very
| disingenuous.
| reducesuffering wrote:
| Only 2 months out of the year
| danhak wrote:
| About half of the quarter under discussion.
| jennyyang wrote:
| Their stock price rose 8x. There's nothing in these numbers
| that justifies this type of meteoric rise exception pure,
| unadulterated speculation. They wouldn't have even been
| profitable if they couldn't sell their regulatory credits.
| How is that justifiable for an 8x YoY increase?
| sacred_numbers wrote:
| The potential upside for Tesla is huge. If they can become
| the Apple of electric cars and if electric cars become
| standard, they could be worth trillions. The reason their
| valuation was not in the trillions is because there is a
| risk that they will go bankrupt, that other companies will
| take the lead in EVs, or that EVs will not be where the
| market is headed in the foreseeable future. The reason for
| the jump in valuation is that those risks are being
| steadily reduced. EV competition is scarce, Tesla's cash
| reserves and consistent free cash flow hugely reduce the
| risk of bankruptcy, and the market is continuing to
| demonstrate that it wants electric cars (at least Tesla
| electric cars, that is), even during a pandemic. There is
| certainly an element of speculation and retail investor
| FOMO, but if Tesla's institutional investors didn't think
| this valuation could be justified at all they probably
| would have sold by now. Time will tell how reasonable the
| valuation really is, but betting against Tesla has not
| worked out very well so far.
| ChrisKnott wrote:
| > "they could be worth trillions"
|
| Trillions? 50x the size of Ford? Bigger than,
| essentially, the current combined value of every car
| company in the world at the moment?
|
| How?
| zaroth wrote:
| Ford has $150 billion in debt. 50x the size of Ford would
| be an enterprise value of $7.5 trillion, even if Ford's
| share price was $0.
| yoavm wrote:
| But why would they become the Apple of electric cars? Why
| do you think they have better chances than anyone else?
| The market, to me, seems to show that most people still
| buy non-electric cars. Once that flips, any other much
| bigger car manufacturer could start producing more
| electric cars. There doesn't seem to be any rocket
| science to it.
|
| Back in the 90s I bought a Rio PMP300. Before anyone knew
| what MP3s were, it was the first mp3 player out there.
| That didn't help them when people _did_ care about mp3
| players - bigger players just came and ate the cake. I 'm
| not sure what makes Tesla a different story. Seems like
| it was supposed to be "Autopilot", but we all know how
| good that's going.
| stingrae wrote:
| I do think Tesla is way over valued at the moment. How
| could they be worth more than the market cap of all the
| vehicle companies combined? There isn't going to be
| largely more numbers of vehicles bought each year.
|
| As to why Tesla could be the winner? One reason is that
| all the other automakers are failing to produce mass
| market EVs that anyone wants to buy.
| ProAm wrote:
| stock price is always speculation, it just depends if its
| short term or long term.
| marvin wrote:
| Before that 8X rise, though, stock price was basically
| unchanged since 2014. While revenue in that period has
| grown 10X.
|
| So you could make a reasonable argument that the huge stock
| price appreciation in the last 12 months was in fact a re-
| pricing to reflect that the stock market now believes Tesla
| has a decent shot at becoming one of the world's leading
| tech companies.
|
| It doesn't reflect that something magical has happened in
| the last two years; something good has happened in the last
| 6 years and the stock market at large has only recently
| realized this.
| duncanawoods wrote:
| They now have two factories...
| xoxoy wrote:
| and yet their costs never went up after adding a second
| factory
| FireBeyond wrote:
| And yet their stock price went up 8x, with factories shut
| down. That's not a valid question, though?
| grecy wrote:
| (I've posted this before, it's worth repeating)
|
| I think the current TSLA situation is simply about betting on
| the future, and it's easy to see why they're so much higher
| than Toyota. The stock price of a company not only represents
| what it's doing right now (sales, profits, whatever) but also a
| prediction of what it might do into the future.
|
| Tesla are doing OK now, (kind of) breaking even, and making a
| decent number of cars. I think most would agree they're more
| solid now than ever before, and it seems like they're probably
| here to stay. But much more importantly we have to look at what
| they could be doing in 5-10 or 20 years.
|
| Often people say Tesla isn't anything near the behemoth that is
| Toyota (true), and their stock shouldn't be higher than
| Toyota's. Toyota now make just under 9 million cars per year
| worldwide [1], exactly the same as they made in 2007.
|
| In 2007 their share price was ~$75USD and now it's roughly
| similar. While they make a ton of cars and are profitable,
| they're not growing or really doing anything drastically
| different to almost 15 years ago. It's very likely in 10 or 15
| more years they'll still be trundling along, doing the same
| things, making a similar number of cars. That's solid and good,
| and their stock price reflects that.
|
| Tesla, on the other hand, are going all out for expansion. With
| the new factory going up in Germany, and one about to be
| announced in the USA for Cybertruck, it seems like they have no
| intention of slowing down, and plan to continue to grow
| extremely rapidly. In 10 years they may be making as many cars
| as Toyota is now. In 20 years they might be twice the size of
| Toyota (in terms of units produced).
|
| Whether you believe they can pull that off or not is a matter
| of speculation that isn't worth getting into. That "guess the
| future" is exactly what we're seeing in the stock price.
| Toyota's stock price is not skyrocking because they're not
| doing anything radical, and aren't growing exponentially. On
| the other hand Tesla's stock price is skyrocketing, which we
| can read to mean a huge number of investors think they can pull
| off massive growth.
|
| Of course time will tell, and in the mean time we can all
| gamble on what we think will happen.
|
| (Note - I haven't even touched on Tesla's plans for self-
| driving, their "revolutionary" new battery chemistry, home
| storage, large scale storage or whatever else they're (maybe)
| cooking up. Also important is the inevitable extinction of the
| internal combustion engine. Those are heated topics of
| disagreement, but again, the fact the stoke price is climbing
| so fast shows people think Tesla have a very bright future)
|
| [1] https://www.statista.com/statistics/267272/worldwide-
| vehicle...
| jpdus wrote:
| Sure, stock prices are forward looking. However, nothing what
| you wrote is new information. All this was priced in BEFORE
| Tesla's stock price quadrupled again.
| grecy wrote:
| But now they have a factory in China, the one in Germany is
| going ahead quickly, and they just announced the one in
| Texas.
|
| Before they promised very rapid growth, now they're
| actually doing it.
| zaroth wrote:
| Future-looking means considering both upside and downside.
| A company like VW and GM is all downside. Back when TSLA
| stock was at $200, TSLA had a lot of perceived downside as
| well. The "word on the street" was...
|
| - That Tesla would be going bankrupt any day now. That they
| were insolvent. That they were "structurally unprofitable".
|
| - That Elon was personally broke and was about to get
| margin called on his lavish lifestyle and multiple
| mansions.
|
| - That no one would buy a Model 3 without the tax credits.
|
| - That the factory in China was just a mudfield and a
| marketing campaign.
|
| Today TSLA has now cleared hurdles for becoming ~0.8% of
| the S&P500, which opens up ETF demand for an estimated 25
| million shares, and is _uniquely_ showing growth in the
| most challenging auto market in history.
| jliptzin wrote:
| The price was artificially low due to abuse from short
| sellers who have finally given up over the last few months.
| You can see based on the chart of short interest vs. stock
| price. Now it may have swung in the opposite direction, the
| stock seems to be crashing up due to gamma squeeze. But in
| my opinion if you are a long term investor (5-10) years the
| stock is still undervalued.
| lubujackson wrote:
| TSLA in some ways reminds me of Amazon at the beginning. Way
| overpriced, but kept reinvesting into new things as it went and
| the stock price kept going up and profits stayed zero forever
| while the company kept building itself bigger and bigger. So I
| can see the bull perspective.
|
| However...
|
| Car manufacturing is not the same as slinging books online.
| Profits are consistently thin and Tesla's only edge is in battery
| tech and being a status symbol. So it is trying to be the Apple
| of cars but also grow like Amazon. And their aren't breakeven
| without credits, so it is kind of like if 2004 Amazon was able to
| reach breakeven only because Barnes & Noble had to pay Amazon for
| not having a website.
|
| Also, I am unconvinced that one car brand will be the "Apple of
| cars" since there is no ecosystem lock-in and at the end of the
| day it is a fashion/trend symbol - precisely when unemployment is
| nuts and the economy is in the shitter. It quickly could become
| more of a overly flashy negative than cool aspirational thing,
| kind of a rich-is-bad type of reach that Hummer had with gas-is-
| bad.
|
| Maybe Elon pulls it off, but at this price it is really investing
| in a future that hasn't been built or even imagined yet.
| dawnerd wrote:
| > Tesla's only edge is in battery tech and being a status
| symbol.
|
| You might want to do some research into Tesla if that's all you
| think they have going for them.
|
| Their software, energy generation, and charging infrastructure
| are also setting them way apart from everyone.
| michalxnet wrote:
| They can go on energy market where you can create local
| decentralized energy hubs running as franchise where they rent
| the infrastructure and you can throw internet package to the
| offer.
| agumonkey wrote:
| is it battery tech only ?
|
| I heard they were using non traditional electric motors too
| (switched reluctance ?)
|
| Also note that 'only battery tech' may become extremely
| important in the post fossil fuel world.
| lazyjones wrote:
| > _Car manufacturing is not the same as slinging books online.
| Profits are consistently thin_
|
| Margins in retail shopping used to be consistently _very_ thin,
| that 's not generally the case with cars (think Ferrari...).
| _ph_ wrote:
| Some comments to the results:
|
| - Production was very limited in Q2 as the Freemont factory was
| completely down for quite some time. Getting the delivery count
| they managed, was a small miracle, of course helped by the
| ramping up Shanghai factory. So making still a profit is a great
| result. If the factory does not get closed down in Q3, sale
| numbers should be quite a bit better.
|
| - Yes, they certainly moved all profits they could legally book
| into Q2 to help the numbers, that is a quite normal practice, the
| booking rules set clear limits to what is possible.
|
| - Tesla won't make huge profits however good the business will be
| going, as they are investing a lot into growth. They are still
| extending the Shanghai factory, building the Berlin factory and
| just announced in the earnings call, that they are starting to
| build the next factory in Austin, Texas. Tesla is going from 1
| factory in 2019 to 2 in 2020 and possible 4 at the end of 2021.
| Kareem71 wrote:
| I remember Elon at one time claiming that model y demand will
| outstrip model 3, x, and s combined. It's getting harder and
| harder to believe his claims
| jeremiahhs wrote:
| Well the Model Y has been on sale since March in the middle of
| a pandemic. The Model 3 has been on sale for 3 years.
|
| I think we'll have a better view on Model Y demand in the
| coming year.
| jt94mf90d wrote:
| infinity squeeze time
| xchaotic wrote:
| Purely anecdotal but we are in the market for a new car when our
| current lease runs out. We were looking at Tesla and the quality
| is not there and dealerships means we can't test etc. The
| valuation is crazy, VW can literally flip the switch and start
| producing more e-Golfs etc when the demand is there.
| Crash0v3rid3 wrote:
| But can VW produce batteries at the scale of Tesla?
|
| I doubt it.
| andrewxdiamond wrote:
| If VW could do that, why havent they? Tesla proved there is a
| market
| CydeWeys wrote:
| So you'll be getting the e-Golf? I just looked it up and its
| range is only 123 miles; is that enough?
| jliptzin wrote:
| You need 300 mile rated range bare minimum or you are going
| to be in for a lot of headaches. That range is only actually
| 300 miles when the climate is good (not too cold) and you are
| driving like a grandma. If you're in a cold climate or you
| want to do 80 on the highway or a lot of quick
| accelerating/stopping or elevation changes that range goes
| down.
|
| On top of that, you really don't want to drive the car down
| to 0% charge for obvious reasons so you want to give yourself
| at least a 5-10% cushion to your destination (aka you never
| get below that threshold), so slice another 5-10% off the
| car's useful range.
|
| Then of course the battery natural degrades after a lot of
| charge/discharge cycles. I love my model 3 long range and
| this is why other car companies producing EVs under 300 mile
| range for the same price as a tesla are a joke.
| BbzzbB wrote:
| Not to defend TSLA's valuation, but the argument of other car
| giants being "able to flip a switch and make something better"
| has been proven wrong many times. There are plenty of rational
| "TSLAQ-arguments", that one is no longer on that list.
| codeulike wrote:
| _VW can literally flip the switch and start producing more
| e-Golfs etc when the demand is there._
|
| No they can't. For one, the e-Golf is roughly competitive with
| the Nissan Leaf but has nothing on the range/performance of a
| Tesla. VW have been faffing about trying to launch their new
| ID3 EV for ages (has that launched yet?). Building decent EVs
| is hard. If the efficiency is not there in the drivetrain, then
| the car is either too short range or too expensive.
|
| And you need to source batteries. Either gotta build your own
| huge factory, or squabble with all the other carmakers to
| source them from the same places as everyone else.
|
| Look at recent efforts by Audi and Porche to make 'tesla
| killers'. They are barely Tesla ticklers. Maybe they have one
| strong metric or whatever (track handling for the Porche,
| charging speed for the Audi) but they aren't really anywhere
| close in price/range/overall package terms.
|
| Here's a press relase from 2013, when VW declared they would
| lead the world on EVs by 2018.
|
| September 9, 2013 /PRNewswire/ -- The Volkswagen Group has set
| its sights on global market leadership in electric mobility.
| "We are starting at exactly the right time. We are electrifying
| all vehicle classes, and therefore have everything we need to
| make the Volkswagen Group the top automaker in all respects,
| including electric mobility, by 2018", Prof. Dr. Martin
| Winterkorn, CEO of Volkswagen Aktiengesellschaft, said on the
| eve of the 65th International Motor Show in Frankfurt am Main.
|
| https://tass.com/press-releases/700457
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