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Musk to review all of Tesla's expenses in new cost cutting plan

reuters.com

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Re: Musk to review all of Tesla's expenses in new cost cutting plan

#151

Post by dmix »

proee wrote: post #101

I worked for a company that had a similar take on spending. The company was extremely profitable and brought in greater than 1 billion dollar in revenue. Yet any PO that was greater than $100 needed approval by the CEO. Not only that, the PO had to be typed on a manual typewriter (this is 2007) using carbon paper, and hand-delivered to a number of people to start moving up the chain. The process intentionally took MO…

Usually cost cutting at a high-spend early stage company entering a mature phase doesn't usually meaning counting pennies at the expense account level.

High growth companies that rapidly expand as they try to penetrate the market and conduct plenty of R&D have lots of exploratory avenues and quickly-signed deals with partners that could easily result in cost saving without affecting the primary business model or the vast majority of workers.

This is different than an older company with zero growth potential trying to find more profitability by choking out their squeeze the pennies from an existing business in order to keep investors happy.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#152

Post by jjeaff »

cosmodisk wrote: post #140
atq2119 wrote: post #111

Earlier quoted context omitted.

This ignores the fact that EVs are currently the only viable path towards road-based transport that is compatible with the continued existence of our species. The transition isn't urgent due to oil prices. It's urgent due to greenhouse gases making the planet inhospitable for humans.

Oh,is that so? Try to guess where's the electricity coming and the inpact it has on environment.

Depends on where you live. If Vermont, more than 90% of their grid is powered by renewables and other non carbon sources like nuclear.

Not to mention that the equivalent mpg for a Tesla is 100mpg.

Add to that the fact that mass produced grid electricity is massively more efficient and clean than everyone generating energy themselves. (ala internal combustion engine).

It would be like saying that everyone having their own gas generator at home is just as bad as having a single gas power plant that powers the grid.

Sure, there are other sources of pollution like the batteries but "all in", electric cars are still significantly better for the environment.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#153

Post by MaulingMonkey »

mprev wrote: post #96
mprev wrote: post #87

Earlier quoted context omitted.

If you spend $10 million making things that you sell for $9 million dollars then it doesn’t matter how wildly popular your product is, unless you have another source of income to cover that $1 million then you will be out of business when your reserves are depleted.

Are you downvoting math?

Arotega's post outright states Tesla is spending money to grow to meet unmet demand, and that seems to be backed by actual Tesla unit and income numbers. You've countered with a static, ungrowing fixed income/cost model, with numbers pulled out of thin air, with no rationalization behind those assumptions.

I haven't downvoted you, but you've posted what's at best a toy mathematical model unrelated to Tesla. Others might be downvoting under the assumption that it was supposed to be related to Tesla, in which case they're probably downvoting based on the misapplication of math.

Expanding your math model by the tiniest bit - if $2M of those costs are fixed, merely doubling production could bring you to break-even (2x9=18, 2+2x8=18), assuming income and costs linear with unit volume. Further growth would enter profitability. But even this is super unrealistic - the entire industrival revolution was basically driven by our ability to use automation to drive costs sublinear faster than income goes sublinear, which also leads to profit.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#154

Post by jjeaff »

m0zg wrote: post #127
charlesdm wrote: post #24

Earlier quoted context omitted.

> With relatively low gas prices at the moment, decreasing federal subsidies for electric cars, and more players entering the market, it seems like Tesla is in a pretty tough spot. Nothing you couldn't see coming 5 years ago, however.

5 years ago "gas will be $5 a gallon" would seem like a very safe bet.

Not to anyone who understands economics and/or has followed the historical rise and fall of gas prices.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#155

Post by patrick5415 »

paulsutter wrote: post #98

Please Elon focus on SpaceX and Boring Company. Tesla has already succeeded. You’ve made gasoline cars uncool and all the major car companies are coming out with electric models. Tesla is just a giant drain in your time now.

Eh, I still think a v8 with a flowmaster is pretty cool.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#156

Post by pbreit »

marcinzm wrote: post #31
confiscate wrote: post #19

sounds like a misleading headline The original letter says the 2.4 billion raised a few weeks ago, would be used up in 10 months at current burn rate. It's for the money recently raised, not the entire company's bank account. Headline is misleading

Someone else in this thread has stated that a) around half of the raised money needs to be used to service debt b) Tesla had $900 million in the bank before raising money. Doing the math based on the letter's $200 million/month loss rate that comes out to 10 months before Tesla is utterly out of money. Are those statements incorrect?

No. The 10 months was based on the $2b+ raised. Tesla reported another $2b+ in cash at end of Q1.

The shorts are everywhere and they are not reliable.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#157

Post by pbreit »

jancsika wrote: post #43

Suppose you buy a Tesla and in 10 months they fold. Who then maintains the proprietary software that keeps the vehicle running?

In the unlikely event that Tesla goes bankrupt, that actually keeps the company going while it sorts out its debts.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#158

Post by [deleted] »

barbecue_sauce wrote: post #122
proee wrote: post #101

I worked for a company that had a similar take on spending. The company was extremely profitable and brought in greater than 1 billion dollar in revenue. Yet any PO that was greater than $100 needed approval by the CEO. Not only that, the PO had to be typed on a manual typewriter (this is 2007) using carbon paper, and hand-delivered to a number of people to start moving up the chain. The process intentionally took MO…

$100 seems like a pretty extreme threshold. Would make more sense to have a budget for a group or an individual, then only require approval once the budget has been depleted (though I guess this could potentially incentivize overspending instead).

[deleted]

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#159

Post by gpm »

proee wrote: post #101

I worked for a company that had a similar take on spending. The company was extremely profitable and brought in greater than 1 billion dollar in revenue. Yet any PO that was greater than $100 needed approval by the CEO. Not only that, the PO had to be typed on a manual typewriter (this is 2007) using carbon paper, and hand-delivered to a number of people to start moving up the chain. The process intentionally took MO…

I think there are a few critical differences here.

It sounds like this is a retroactive review, not an approval process. Which should mostly get rid of any waiting for approval problems.

Also, there is no typewriter involved ;)

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#160

Post by SlowRobotAhead »

gamblor956 wrote: post #32
SlowRobotAhead wrote: post #27

1. I don't know if that math is entirely solid. They got 2.4 billion and in the past quarter ran though 200 a month, thus 10 months before they're empty. But that's not exactly how it works, for all I or anyone knows the last quarter was very tooling heavy and they chose to pay costs all upfront instead of amortize costs. IDK. 2. I work in automotive. I was a the room with 3 VPs from a BIG 3. They weren't threatened…

for all I or anyone knows the last quarter was very tooling heavy and they chose to pay costs all upfront instead of amortize costs. IDK. Many people do know...Depreciation is subject to specific tax and accounting rules. While for tax purposes some (but not all) of Tesla's spending is immediately depreciable, for accounting purposes, none of it is, so their tooling costs must be depreciated over the useful life of t…

I said amortization and tooling. Not depreciation.

And the point is, it’s foolish to assume that what happened last quarter is what will happen this quarter. If you don’t think so, please show me the billions you’ve made in the stock market.

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