Earlier quoted context omitted.
Tesla also just lost another CFO. Deepak Ahuja announced he’s leaving. Again. https://www.cnbc.com/2019/01/30/musk-says-tesla-cfo-deepak-a...
And this much turmoil in an accounting department is never good. In the last year, they've lost 5 finance VPs, their CFO, and a CAO that they hired and left a month into his tenure. That would be shocking for any other $50 billion market cap company.
Tesla Q4 2018 Earnings Letter
71–80 of 99 posts
Re: Tesla Q4 2018 Earnings Letter
#72Earlier quoted context omitted.
I am not so sure. Its really not just about their cars being electric. Its the whole technological package that's miles and miles ahead of the competition. I just bought a new Honda with Lane Keep Assist and Adaptive Cruise Control and a whole host of other features. Compared to my boss's tesla the "self-driving" features of the Honda are nothing. My honda doesnt even really have a way to get OTA updates to any softw…
Was your Honda 50,000, which is I think the minimum to get the tesla self driving features? I believe with paying for the 5,000 option you get no self driving features on the tesla, just old school cruise control.
Re: Tesla Q4 2018 Earnings Letter
#73Earlier quoted context omitted.
You're essentially saying that tens of thousands of dealers and hundreds of billions of dollars worth of car companies are going to go out of business because they can't find a mutually beneficial incentive structure. It would be far from the first time. One of the biggest problems is for a company whose internal incentives and business model are based around one set of market assumptions to rethink it all and do som…
Yeah, I've read them too. But you're not saying that it's a challenge the industry will face, you're saying the death is a fait accompli, and the entire traditional auto industry is not real competition to Tesla (your words from your linked post). I don't need to wait ten years to decide that you're wrong; even if your prediction turns out to be correct (which it might), assigning a 100% probability to this outcome i…
As for your hypothetical, the reason is that the dealers that try to do that won't make a sufficient profit to their business model unless they sell EVs at a very significant premium to published list price. And it will be very hard to sell consumers on letting them do that.
Even if you could get consumers to accept those prices, the industry would then face the problem that the margins on EVs from traditional car manufacturers have much higher margins than the EVs from startups like Tesla. Which will make them uncompetitive in the marketplace. This gets us back to the classic problem that it is hard to get organizations to significantly cut their margins. And even harder to convince your business partners to do so for your benefit.
Re: Tesla Q4 2018 Earnings Letter
#74These numbers are unreal. From 100 cars in 2011 to 140,000 Model 3s (+100K Model X and S) in 2019. And all electric. I personally am not interested in minor changes in financials, and want to just sit back and marvel the machine that Tesla and Elon Musk has created. Kudos to everyone at Tesla.
$TSLA annual revenue (billions) 2018: $21.46 2017: $11.76 2016: $7.00 2015: $4.05 2014: $3.20 2013: $2.01 2012: $0.41 2011: $0.20 2010: $0.12 2009: $0.11 2008: $0.01 CAGR: 2 yr: 75% 5 yr: 60% 10 yr: 107% source: https://twitter.com/TeslaPodcast/status/1090719629922746374 It's interesting to overlay Tesla 2014 - 2019 with Apple 2002 - 2007. Now what Apple did from there will be tough to match (not to mention the margi…
Re: Tesla Q4 2018 Earnings Letter
#75Earlier quoted context omitted.
Yeah, I've read them too. But you're not saying that it's a challenge the industry will face, you're saying the death is a fait accompli, and the entire traditional auto industry is not real competition to Tesla (your words from your linked post). I don't need to wait ten years to decide that you're wrong; even if your prediction turns out to be correct (which it might), assigning a 100% probability to this outcome i…
The probability is not 100%, but I believe it to be very high. As for your hypothetical, the reason is that the dealers that try to do that won't make a sufficient profit to their business model unless they sell EVs at a very significant premium to published list price. And it will be very hard to sell consumers on letting them do that. Even if you could get consumers to accept those prices, the industry would then f…
They don't get their physical presence for free, and the cost is baked in to the sales price just the same way.
Maybe Tesla can pull that off but there's no reason to expect other EV manufacturers will until they hit massive scale.
Re: Tesla Q4 2018 Earnings Letter
#76Earlier quoted context omitted.
The probability is not 100%, but I believe it to be very high. As for your hypothetical, the reason is that the dealers that try to do that won't make a sufficient profit to their business model unless they sell EVs at a very significant premium to published list price. And it will be very hard to sell consumers on letting them do that. Even if you could get consumers to accept those prices, the industry would then f…
You are assuming that Tesla and future competition can operate their own dealerships more efficiently. They don't get their physical presence for free, and the cost is baked in to the sales price just the same way. Maybe Tesla can pull that off but there's no reason to expect other EV manufacturers will until they hit massive scale.
As someone interested in more profit, which store would you rather own?
The argument you're responding to wasn't "Tesla's stores are dramatically more efficient".
The argument is that Tesla stores sell Tesla's EV cars effectively (because that's the only thing they sell) and traditional dealership anti-sell EV cars because they make more money on selling ICE cars.
This is not a conjecture. In addition to plenty of anecdotal evidence, there were qualitative studies both in US and Europe where researches sent "mystery shoppers" pretending to be interested in buying EV cars.
The results were dismal. Many dealerships didn't know much about EVs themselves and in the worst case, they would literally lie about how bad EVs are.
That will be a problem for GM, Ford, and others when they finally have good EV cars to sell.
And there's no obvious solution to that. Car makers and dealerships are frenemies so it's not like GM can dictate terms to their dealers or that they can force dealers to do a good job selling EVs.
The obvious solution (heavily subsidize dealers with bigger discounts) is bad for profit margins. Investors like profit margins and it'll look doubly bad because when they finally have EV cars to sell, they'll go through the same "loss due to low volume / production ramp" that Tesla went through in first half of 2018 and will be competing with Tesla's 2021 heavily cost optimized production.
Re: Tesla Q4 2018 Earnings Letter
#77Earlier quoted context omitted.
> Tesla is significantly ahead of the pack so far Not really. Audi e-tron, Jaguar iPace and BMW i3 are all well reviewed. And 2019/2020 will see a wave of car companies e.g. Hyundai, Mercedes entering the market including plenty of interesting startups coming out of China. So Tesla is going to need far more to differentiate themselves than just range.
Audi e-tron and Jaguar iPace compete with the Model S; BMW i3's small range puts it in another category entirely. There's no competition for the Model 3 yet, and I don't think there will be for a while.
Not surprised there isn't much competition for the Model 3 given that sedans are out of fashion at the moment. Car companies are far more focused on the crossover market.
Re: Tesla Q4 2018 Earnings Letter
#78Earlier quoted context omitted.
For me the next couple of years are going to make or break Tesla. You have pretty much every car manufacturer releasing flagship electric cars in 2019/2020. And most of them are either cheaper than Tesla or offer far more value i.e. premium branding and better interiors. And whilst they have their Supercharger network I suspect that pretty soon we will governments intervening to regulate standards and build out infra…
> For me the next couple of years are going to make or break Tesla. Maybe, but haven't people been saying that about Tesla for 15 years now?
Companies like Mercedes, Audi, Jaguar own the mainstream, premium car market and they've only just joined the game.
Re: Tesla Q4 2018 Earnings Letter
#79Earlier quoted context omitted.
You are assuming that Tesla and future competition can operate their own dealerships more efficiently. They don't get their physical presence for free, and the cost is baked in to the sales price just the same way. Maybe Tesla can pull that off but there's no reason to expect other EV manufacturers will until they hit massive scale.
Let's say there are 2 grocery shops. All their costs and expenses are the same but one grocery shop sells twice as many products per square foot / unit of time. As someone interested in more profit, which store would you rather own? The argument you're responding to wasn't "Tesla's stores are dramatically more efficient". The argument is that Tesla stores sell Tesla's EV cars effectively (because that's the only thin…
Feel free to argue with my prisoner's dilemma point earlier in the thread if you want, which is in my view how this will play out. I've already agreed that what you're describing is an issue (and am at a loss why you took the time to write it out), I'm merely asserting that it's not going to spell the end of a quarter trillion dollars worth of wealth.
Re: Tesla Q4 2018 Earnings Letter
#80I think Tesla may start to face issues when the other automakers start coming out with electric cars within the next few years. I sold off all my stock in Tesla, although I think they may still be a good short term bet. The supercharger network and cool factor is their big advantage at the moment, but I think in the future they won't do as well when there's more competition.
I am not so sure. Its really not just about their cars being electric. Its the whole technological package that's miles and miles ahead of the competition. I just bought a new Honda with Lane Keep Assist and Adaptive Cruise Control and a whole host of other features. Compared to my boss's tesla the "self-driving" features of the Honda are nothing. My honda doesnt even really have a way to get OTA updates to any softw…