No surprise EVs a lot more profitable than ICE vehicles.

[Martin Williams]

I think Tesla has one huge asset denied the others. The super salesman Elon Musk. His gift for publicity is remarkable. He seems to be able to attract unlimited cash and spend it on all sorts of projects which to various degrees seem to me to be triumphs of optimism over common sense. His admirers seem to lap it up, and I find it extremely diverting myself. Why not try out a blue-sky notion like his 'Hyperloop' for instance or rockets that can land on a ship at sea? I am very happy to see how it all pans out, but would I put my money into them? Not a chance!

For those that do, I hope it works out and they make a huge pile of cash, it's its not for me.

I'm a bit surprised he has been so dismissive of hydrogen cars, by the way. I'd have thought it wise to hedge his bets, but having spent squillions on batteries I suppose he feels he can't.

 

[Domenick]

As for the dubious 25% margins on Model 3...

The 25% figure is a future target that will cover all Model 3 production. Presently, the Model 3 margin is a negative figure. Don't quote me, but I think Musk said he expects to only get to the 25% mark next year.

Historically, they've been pretty good about hitting margin targets, so I'm not too critical of that projection.

 

[Domenick]

I think Tesla has one huge asset denied the others. The super salesman Elon Musk. His gift for publicity is remarkable. He seems to be able to attract unlimited cash and spend it on all sorts of projects which to various degrees seem to me to be triumphs of optimism over common sense. His admirers seem to lap it up, and I find it extremely diverting myself. Why not try out a blue-sky notion like his 'Hyperloop' for instance or rockets that can land on a ship at sea? I am very happy to see how it all pans out, but would I put my money into them? Not a chance!

For those that do, I hope it works out and they make a huge pile of cash, it's its not for me.

I'm a bit surprised he has been so dismissive of hydrogen cars, by the way. I'd have thought it wise to hedge his bets, but having spent squillions on batteries I suppose he feels he can't.

Tesla has Elon Musk as a salesperson, but the OEMs have entire ad agencies and budgets at their disposal. Personally, I don't think it's his ability to speak is keeps the investments coming, but rather his ability to deliver, albeit typically late. He said he would offer an electric sportscar with unheard of range and awesome performance, and he did. I could go on and on.

Regarding his not investing in hydrogen -- and I don't want to turn this into another hydrogen thread -- but he's made it clear on many occasions why he doesn't think hydrogen fuel cells are a viable solution: he believes them to be too inefficient.

 

[Pushmi-Pullyu]

Looking at Ford's entire lineup globally and then comparing it against a single model for Tesla? With emerging market vehicles and cheap cars like the Fiesta or Focus in the mix... what's the point of comparing them in this way?

Yup. I'm not a "financial guy", but even I understand that smaller (lower volume) auto makers have to make up for their low volumes with higher profit margins. Or at least they do if they want to stay in business! This is doubly true for auto makers appealing to the "premium" market, as Tesla does.

Comparing Tesla Inc. to Ford Motors is definitely an apples-to-oranges comparison. A comparison between Tesla and Porsche or Aston Martin would be far more meaningful.
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[Pushmi-Pullyu]

If Ford and GM are 'structurally bankrupt', where does this leave Tesla?

As a rapidly growing company. Gentlemen like you will never, ever admit to the reality that financing for a rapidly growing company (like Tesla) is significantly different from financing for a company with more-or-less steady sales (like Ford).

Tesla’s global automobile sales totals:
2012: 2650
2013: 22,300
2014: 31,655 (+41.95%)
2015: 50,580 (+59.8%)
2016: 76,230 (+50.7%)
2017: 101,312 (+32.9%)

Serial Tesla bashers just hate it when I post this!
-

 

[Pushmi-Pullyu]

Regarding his [Elon Musk] not investing in hydrogen -- and I don't want to turn this into another hydrogen thread -- but he's made it clear on many occasions why he doesn't think hydrogen fuel cells are a viable solution: he believes them to be too inefficient.

To quote the man himself:

I don’t want to turn this into a debate on hydrogen fuel cells, because I just think that they’re extremely silly. There’s multiple rebuttals of it online. It’s just very difficult to make hydrogen and store it and use it in a car. Hydrogen is an energy storage mechanism, it’s not a source of energy. So you have to get that hydrogen from somewhere.

If you get that hydrogen from water, you’re splitting H2O. Electrolysis is extremely inefficient as an energy process. If you took a solar panel and used the energy from that solar panel to just charge a battery pack directly—compared to try to split water, take the hydrogen, dump the oxygen, compress the hydrogen to an extremely high pressure—or liquefy it—and then put it in a car and run a fuel cell... it is about half the efficiency. It’s terrible.

Why would you do that? It makes no sense. Hydrogen has very low density. It’s a pernicious molecule that likes to get all over the place. If you get hydrogen leaks from invisible gas, you can’t even tell that it’s leaking. But then it’s extremely flammable, when it does, and has an invisible flame.

If you’re going to pick an energy storage mechanism, hydrogen is an incredibly dumb one to pick. You should just pick methane. That’s much, much easier. Or propane.

The best case hydrogen fuel cell doesn’t run against the current case batteries. So, then, obviously, it doesn’t make sense. That will become apparent in the next few years. There’s no reason for us to have this debate. I’ve said my piece on this. It will be super-obvious as time goes by.​

–-Elon Musk, January 13, 2015
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[Pushmi-Pullyu]

The 25% figure is a future target that will cover all Model 3 production. Presently, the Model 3 margin is a negative figure. Don't quote me, but I think Musk said he expects to only get to the 25% mark next year.

Historically, they've been pretty good about hitting margin targets, so I'm not too critical of that projection.

Right. There is no way the Model 3 is currently making an overall profit. Startup costs have been much too high, including a multi-billion dollar Gigafactory One.

Even on a per-unit basis, I seriously question the TM3 is yet making a positive gross profit. If we count ongoing development costs, such as the new production line for battery pack assembly which Tesla will soon be building at Gigafactory One, then the overhead for each car above and beyond merely the costs for parts and labor, surely is so high that it drives the per-unit profit margin into negative numbers.

But this shouldn't be seen as all that alarming. My understanding is that the average automobile starts making an overall net profit only in the second year of production. Automobile manufacturing is marked by very high costs and relatively low profit margins. It's not for the faint of heart, or for those looking to make easy money!

Given the very high demand for the Model 3, I don't think investors should be all that concerned about Tesla being able to -- eventually -- turn an overall profit on the car. On the other hand, given the delays and the unexpected expenses with the ramp up, I think it's safe to say that Tesla is going to have a harder time making a net profit than Elon planned for, and it will take more quarters (or years) for Tesla to become net profitable than Elon planned.

However, let's not forget that it was only about two years ago that Amazon.com started showing a consistent quarterly profit. Where are all the naysayers who were formerly saying exactly -- and I do mean exactly -- the same about Amazon.com as they're saying now about Tesla Inc.? Strangely, they seem to have "conveniently" forgotten how recently Amazon.com usually showed a net loss per quarter, just like Tesla is currently. Funny thing, that!
-

 

[Martin Williams]

I think the losses per car over the years make interesting reading:

2013: Loss per car $3,350
2014: Loss per car $9,500
2015: Loss per car $17,500
2016: Loss per car $10,200
2017: Loss per car $20,000

One expects losses per car to fall as the numbers produced rise, until they turn into a profit, but that seems to be as far off as ever, indeed the trend seems to be in the opposite direction.

 

[Feed The Trees]

As a rapidly growing company. Gentlemen like you will never, ever admit to the reality that financing for a rapidly growing company (like Tesla) is significantly different from financing for a company with more-or-less steady sales (like Ford).

Tesla’s global automobile sales totals:
2012: 2650
2013: 22,300
2014: 31,655 (+41.95%)
2015: 50,580 (+59.8%)
2016: 76,230 (+50.7%)
2017: 101,312 (+32.9%)

Serial Tesla bashers just hate it when I post this!
-

To be fair
2012: 1
2013: 2 (+100%)
2014: 4 (+100%)
2015: 8 (+100%)
2016: 16 (+100%)
2017: 32 (+100%)

Would be much more impressive if all you care about is the YoY % growth

 

[Martin Williams]

I think the idea of manufacturing and selling cars is to sell them for more than it costs to make them.

Whilst accepting that selling them at a loss in order to establish a market might be necessary for a period, one would expect the loss to decrease as the numbers go up. Instead, it is getting bigger and bigger! At some point, the per-unit loss might turn around and fall into profit - hopefully it will - but to babble about it being profitable at the moment is risible.

I also find promises of production levels of 5,000 turning into an actual level of about 250 worrying. A disparity between expectation and reality of 20 to 1 suggests someone doesn't exactly have his feet on the pedals.

 

[Pushmi-Pullyu]

I think the losses per car over the years make interesting reading:

2013: Loss per car $3,350
2014: Loss per car $9,500
2015: Loss per car $17,500
2016: Loss per car $10,200
2017: Loss per car $20,000

Gosh then, they'd better stop making cars right now!

Well, if what you said was actually true then they certainly should; but of course, it's 100% false.

I'd like to credit "Nix", in one or more comments to InsideEVs news articles, for pointing out that this nonsense about a company investing in future growth being considered a "loss", in financial discussions, is a fairly recent phenomenon. It used to be that companies would regularly reinvest much or most of their profits in growing the company, or buying back stock, or other financial activities which put the company on a more sound financial footing. Sadly, that is no longer the case for many or most large companies, which now focus on short-term profits and stock dividends. Thank goodness that in this matter, Tesla is more old-fashioned in its approach to business!

Now, the fact that Tesla is borrowing more and more money every year to finance their increasing rate of growth should be a worry from the investor's viewpoint, but to call it a "loss" when (again, according to Nix) Tesla's fixed investment (physical assets such as factories, machinery and equipment) are appreciating in value faster than its debt is increasing... well, again, to call growing assets a "loss" is nothing but bull pucky. That's no more a "loss" than investing in your own 401(k) retirement account is a "loss".

And repeating that false claim a million times won't magically turn a falsehood into Truth.

But I "thank" you, Martin, for that fine example of unabashed, naked Tesla bashing FUD.

I also find promises of production levels of 5,000 turning into an actual level of about 250 worrying.

Another favorite tactic used in Tesla bashing FUD: Calling an estimate of future production, or a corporate goal, a "promise". If such goals were actually promises, then corporate financial statements would not regularly include disclaimers explicitly pointing out that statements made about the future are not promises, and are dependent on future events and conditions, some of which may be unforeseen or out of the company's control.
-

 

[Martin Williams]

I think the losses per car over the years make interesting reading:

2013: Loss per car $3,350
2014: Loss per car $9,500
2015: Loss per car $17,500
2016: Loss per car $10,200
2017: Loss per car $20,000
Gosh then, they'd better stop making cars right now!

Well, if what you said was actually true then they certainly should; but of course, it's 100% false.

Well, if I have this 100% wrong, feel free to substitute more accurate figures. As I'm not an investor, its only of academic interest to me, but it seems that a growing loss on growing production is a very bad sign for any company.

As to whether stopping all production now is wise is, of course, up to Tesla. But certainly, it cannot go on getting worse like this indefinitely. Perhaps they can turn it around. I hope they do.

My point, however, is merely to observe that talking about 'profitability' is somewhat nonsensical at this stage.

 

[Pushmi-Pullyu]

Well, if I have this 100% wrong, feel free to substitute more accurate figures.

I think I made it pretty clear that it's not your exact dollar amounts which are wrong, it's claiming that there is a "loss per car" that is wrong. Logically, it's gibberish. It implies that Tesla would stop losing money (or would at least lose less money) if it stopped making cars.

It really astonishes me that this nonsensical type of financial analysis is so prevalent in discussions of automobile manufacturing. I'm very far from a "financial guy", but even I understand that it's very important to distinguish between sunk costs and ongoing (or per-unit) costs. Charging the sunk costs of R&D and tooling-up against current production, as if all those costs had to be paid for by a single year's production... Why would anyone do that? It's brain-dead. It makes no sense at all.

Auto makers don't operate that way, period. It's the financial equivalent of "Oh you need little teeny eyes for reading little teeny print like you need little teeny license plates for bees." That's amusing nonsense, but who would discuss it as if it's a serious subject?
-

 

[Martin Williams]

Well if Tesla had stopped operations at the beginning of 2017, its shareholders would be $2 billion dollars better off than they are now, for that is the annual audited loss for 2017. The production figure of 102,000 cars was supplied by you. Divide the annual loss by the annual production and you get the loss per vehicle. $20,000.

It may (or may not) be worth hanging on for an even bigger profit one day when the tooling costs have been amortised, but $20,000 dollars a car loss at the moment is an awful lot to make up. Moreover, his record is to introduce yet another model well before this point is reached so that another huge loss is incurred. There seems to be no end to it.

There is also the looming threat of technological breakthroughs which can make much of the investment junk. I might mention Bristol University's supercapacitor with an energy density greater than the 7,000 Lithium batteries Tesla packs into its cars, and which can be charged as fast as you care to pump charge into it. What is THAT going to do for Tesla's massive investment in battery technology if it proves a winner? Or hydrogen. FCEVs seem to be growing at six times the rate of BEVs, despite there being only 40 filling stations in the USA. The potential for disrupting Tesla seems rather more than significant.

 

[101101]

Also on the Ford and GM FCFO... when they have cash as a public company they have the obligation to put it to the best use possible. If they feel they have so much cash they can't invest it internally on projects with a good projected ROI then they issue it to owners. If however they have enough good ROI projects in house to use the money on, and they feel it's a better investment than returning it to owners, then they will use it. So seeing these 2 using cash and calling them 'bankrupt' because of it doesn't add up in my book. They're investing for the future which they're supposed to. Now Apple, they have so much cash on hand they do get to the point of turning it back to owners via the anticipated $120B buyback, but these 2 are not there.

With Apple not something Jobs ever would have done. What a waste. Yesterday the Electric editor was wondering why some red neck truckers were so pissed at Tesla. One of the commenters tried to attributed it to people thinking that Tesla was using up public funds- but clearly they foolishly think petrol doesn't and by extension likely think that petrol front firms like GM don't. Thinking back to Cheney's energy talks they had to be classified because they didn't want the public to know petrol is probably sucking down a quarter of the federal budget with its actual subsidies and still regularly failing. What has to be kept in mind is that firms like GM get this trickle down largess from this corruption. So yes bankrupt likely 1000s of times over the course of big 3 history- public just doesn't know it yet. Thinking back to the OPEC embargo- that was a coup attempt on the US by the petrol fraudsters. When will we bring these people to justice? Just being able to pull their tribute like subsidies would be a start.

 

[101101]

Well if Tesla had stopped operations at the beginning of 2017, its shareholders would be $2 billion dollars better off than they are now, for that is the annual audited loss for 2017. The production figure of 102,000 cars was supplied by you. Divide the annual loss by the annual production and you get the loss per vehicle. $20,000.

It may (or may not) be worth hanging on for an even bigger profit one day when the tooling costs have been amortised, but $20,000 dollars a car loss at the moment is an awful lot to make up. Moreover, his record is to introduce yet another model well before this point is reached so that another huge loss is incurred. There seems to be no end to it.

There is also the looming threat of technological breakthroughs which can make much of the investment junk. I might mention Bristol University's supercapacitor with an energy density greater than the 7,000 Lithium batteries Tesla packs into its cars, and which can be charged as fast as you care to pump charge into it. What is THAT going to do for Tesla's massive investment in battery technology if it proves a winner? Or hydrogen. FCEVs seem to be growing at six times the rate of BEVs, despite there being only 40 filling stations in the USA. The potential for disrupting Tesla seems rather more than significant.

Yes that is what a constructive capitalist firms (even capitalism is long dead) look like, they are a net profit for society but not necessarily for short sighted money grubbers.

If a break through battery tech comes through Tesla will be all over it. Even constructing the Giga factory to be flexible to retool if necessary for disruption (read that somewhere,) a speed bump- nothing like the sunk cost the ice makers would have to work with.

The idea that FCV is growing faster than BEV is such a joke- like they went from .0000000000001 market share to .0000000000005 in a single year and have a 500% gain in a single year. To call FCV fool cell is way to kind.

 

[Pushmi-Pullyu]

Well if Tesla had stopped operations at the beginning of 2017, its shareholders would be $2 billion dollars better off than they are now...

If Tesla had stopped operations, then its stock would soon drop to a "penny stock", and shareholders would be wiped out. The only people that would benefit is those with a financial motive for seeing the company fail, which apparently includes you, Martin. At least, I can see no other reason for your persistant anti-EV agenda here.

Divide the annual loss by the annual production and you get the loss per vehicle. $20,000

Whee! Let's have fun with meaningless math! Let's see, Tesla offers six paint colors for the Model 3, so that we could say that Tesla is losing ($2.24 billion ÷ 6 =) $373,333,333 per paint color! That would be every bit as meaningful as claiming Tesla is "losing" XXX per car.

Just how much would we have to change your Tesla bashing assertion to make it actually true? Let's try:

Tesla is attempting to ramp up to a production of about 500,000 cars within two years. Due to the great expense of this highly ambitious rate of ramping up production, Tesla's investments and expenses exceeded its revenue for the year 2017 by $2.24 billion. This is reflected in its tangible assets, which are increasing in value faster than its debt. In 2017, Tesla produced 101,312 cars. Altho it would be highly misleading and almost completely meaningless to mischaracterize Tesla's negative income, on this short-term basis, as a "loss per car" -- despite most of that amount being investments, plus expenses not directly related to building cars, and not a loss at all -- if we were nonetheless to do so, it would come to $22,110 per car.

And that, gentle readers, would (if my understanding is correct) actually be a true summary of Tesla's 2017 financial performance; rather far from the kindergarten-level gross distortion -- not merely an oversimplification -- of describing it as a "loss per car".

There is also the looming threat of technological breakthroughs which can make much of the investment junk. I might mention Bristol University's supercapacitor with an energy density greater than the 7,000 Lithium batteries Tesla packs into its cars, and which can be charged as fast as you care to pump charge into it. What is THAT going to do for Tesla's massive investment in battery technology if it proves a winner?

If some breakthrough in electrical energy storage appears, which company will be best positioned to capitalize on it? I submit that it will be the young, growing company which is already the leader in EV tech. That is: Tesla Inc.

But regarding capacitors: Having spent too many years and far, far too many hours reading and posting to the now-defunct TheEEStory forum, you're going to have a very hard time convincing me that supercapacitors can replace li-ion batteries in electric cars. It's not impossible, but it would require supercapacitors which are very different from any which are being made today. EEStor claimed two orders of magnitude improvement in energy density, to achieve what would at that time have been twice the energy density of commercial li-ion batteries. Given that li-ion batteries continue to improve in energy density every year, it would take about that much improvement in supercapacitors to even achieve rough parity with current li-ion batteries. But that would do nothing for the other significant problem with supercapacitors, which is that most of the charge leaks away within several hours. Oh, and as I recall, EEStor also claimed an order of magnitude reduction in cost.

Looks very much like wishful thinking to me!

Or hydrogen. FCEVs seem to be growing at six times the rate of BEVs, despite there being only 40 filling stations in the USA. The potential for disrupting Tesla seems rather more than significant.

Speaking of wishful thinking... I think we should stop treating your science denying assertions about fool cell cars as anything more than a joke. Given that you describe yourself as a "scientist", one suspects you're the one who's joking. Surely you must know better? But if not, then the joke is on you!
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[Martin Williams]

Well, there are only two FCV cars on the market and they are both selling more than most plug-incars. Given the paucity of filling stations in your country, that is a remarkable achievement, which I think Musk is foolish to ignore.

 

[Martin Williams]

Enjoyed your meaningless maths. Most entertaining. But the bottom line is that 100,000 cars were produced in 2017 and the company was $2 billion deeper in debt. Last year, they operated at a loss. Will it improve? Perhaps. I hope so anyway. Contrary to what you accuse me of I have nothing against Tesla.

As to supercapacitors, the EEV scam was obviously just that from day one! You would have to be an idiot to take it seriously for a second! Had I been interested enough to point out why I would no doubt have been howled down by people to whom facts were of little interest. When I looked at the forum it seems to consist exclusively of deranged enthusiasts. You can't convince idiots of anything with reason.

As a matter of interest, I am currently assembling a chest of drawers for my lab/workshop. In the interests of speed and simplicity, it uses 'pocket hole' screws and there are a lot of them. I am using, for this, a supercapacitor-powered drill/screwdriver. This is designed to run on Lithium batteries (12v) but I modified it to run on supercapacitors. It runs satisfactorily from 15 volts down to about 8 volts. I can recharge it at 40A in about 30 seconds which is why I use it. The last time I used it was about three months back when I left it charged to 15v. When I dug it out for this project the voltage was 12v. Supercapacitors lose charge, yes, perhaps faster than lithium batteries, but it is slow process. If this is the case for these new ones (and we shall have to wait and see) and they have energy density comparable with Lithium batteries, then they will be fine for cars. The problems of charging them in 2 minutes will get a lot worse of course!

 

[101101]

Well, there are only two FCV cars on the market and they are both selling more than most plug-incars. Given the paucity of filling stations in your country, that is a remarkable achievement, which I think Musk is foolish to ignore.

What are you talking about? The Mirai and the FCV Clarity? These two cars suck and they cannot be selling in any numbers that were not rigged. You know highly subsidized sales to businesses that really should know better?