Elon Musk Gambled Tesla to Save SolarCity • Hacker News Board

Re: Elon Musk Gambled Tesla to Save SolarCity

#261

Post by dragonwriter » Tue, Aug 27, 2019, 1:20 PM UTC

coldtea wrote: post #260

xkjkls wrote: post #176

Earlier quoted context omitted.

> Now Tesla shareholders, who overwhelmingly voted for the merger, made a big mistake. But Tesla shareholders own the company, they are allowed to make whatever decisions they want. They voted for the merger based on Musk's claim that SolarCity had a good financial position and that they were releasing a revolutionary solar shingle product. Both of those were wrong.

> They voted for the merger based on Musk's claim that SolarCity had a good financial position and that they were releasing a revolutionary solar shingle product. Both of those were wrong. Well, if the arguments at the time were good enough to convince them, sucks to be them. What are they gonna do? Unless they were given tampered numbers or false factual information, Musk could oversell SolarCity prospects six ways…

> Unless they were given tampered numbers or false factual information, Musk could oversell SolarCity prospects six ways from Sunday and they can't do anything about it.

That would be true if Musk had owned SolarCity but not been CEO of Tesla: puffery short of actual fraud would be fine. As Tesla CEO, though, Musk has a fiduciary duty to Tesla shareholders, which means his (enforceable, legal) obligation is greater than just avoiding outright fraud.

Re: Elon Musk Gambled Tesla to Save SolarCity

#262

Post by duckymcduckface » Tue, Aug 27, 2019, 1:32 PM UTC

dragontamer wrote: post #187

xkjkls wrote: post #176

Earlier quoted context omitted.

> Now Tesla shareholders, who overwhelmingly voted for the merger, made a big mistake. But Tesla shareholders own the company, they are allowed to make whatever decisions they want. They voted for the merger based on Musk's claim that SolarCity had a good financial position and that they were releasing a revolutionary solar shingle product. Both of those were wrong.

Note: the financial positioning of SolarCity was obvious to anyone who could read a 10k. SolarCity never made a profit, and it spent tons of money chasing imaginary products (similar to a lot of other Musk-based properties). 10k documents exist for a reason. https://www.sec.gov/Archives/edgar/data/1408356/000156459017... In 2016, SolarCity lost a full, solid, $Billion. The Tesla investors who voted for SolarCity / Te…

Worth noting that when a merger or acquisition happens the company sends you a big ass document with details of everything

Re: Elon Musk Gambled Tesla to Save SolarCity

#263

Post by tptacek » Tue, Aug 27, 2019, 2:14 PM UTC

mschuster91 wrote: post #254

jcranmer wrote: post #235

Earlier quoted context omitted.

NYC has 5 4-track trunks moving 10-car trains through its densest core. If that's insufficient, then the only thing that's going to improve throughput is getting everybody out and having them walk. And there are places (hi Times Square!) where that is insufficient to move the demand. NYC has a throughput problem. High speed doesn't improve throughput, it worsens it.

> NYC has a throughput problem. High speed doesn't improve throughput, it worsens it. With ultra-dense city cores the only way to fix them is proper city planning - meaning: tearing down skyscrapers outright or converting them from offices into affordable housing to reduce the hordes of low-income staff travelling for hours just to get to work. The "free market" has failed here because stuff still works (=people get…

In what major city have skyscrapers been torn down outright to lessen congestion?

Re: Elon Musk Gambled Tesla to Save SolarCity

#264

Post by legacynl » Tue, Aug 27, 2019, 2:20 PM UTC

semi-extrinsic wrote: post #257

marvin wrote: post #251

Earlier quoted context omitted.

All of Tesla’s models have a healthy gross margin, meaning that their economics get healthier with every car they sell. Tesla as a whole still operates at a loss, but that’s to be expected with the massive expansion of production capacity they’ve been continuously doing since 2012.

OK, I should rephrase that. They are not losing money on every car. But they are still far from being profitable selling hundreds of thousands of $35k cars. According to the letter Musk himself posted in early January of 2019, he said they can squeeze out a tiny profit when selling the top end Model 3s at $45k+. And that they have a big effort ahead to make a profit selling $35k cars. This is a far cry away from a he…

There is a healthy margin on every car they sell. They just invested so much that they are still not making a profit. The way I'm reading it is that they can make a profit if they sell them at 45k, but they rather sell them at 35k to sell MORE. Expansion has a cost, and it's the reason why they're not making a profit.

Re: Elon Musk Gambled Tesla to Save SolarCity

#265

Post by dragontamer » Tue, Aug 27, 2019, 2:27 PM UTC

dehrmann wrote: post #245

FPGAhacker wrote: post #233

Earlier quoted context omitted.

> In 2016, SolarCity lost a full, solid, $Billion. Amateurs. Uber does that every quarter.

I'd love to see Uber's projections on what fare chances to do the demand curve. How much would they have to raise fares (accounting for decreased demand) to break even? If it's <5%, they're actually in a pretty good spot.

Uber doesn't have a yearly 10k yet. But their 10Q (quarterly) data for first-half (aka: 1H) 2019 is as follows:

$6.2 Billion in revenue, $(6.2) Billion in net loss.

So Uber roughly, has to increase prices by 100% to break even. http://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/bb9ba252...

I wish I were kidding. But that's what the data says. Page 5 of the above link, Revenue: $6,265 and Net (6,262) if you want to ctrl-F things.

Uber spent $6 Billion more this half-year on Cost-of-Sales, R&D, and Administrative costs (compared to the 1H 2018).

------------

Operational income / Operational Margins are negative as well. Sooo... yeah... somewhere around 100% price increases across the board for Uber to break even.

Realistically, Uber will only become profitable if they cut back on marketing (aka: giving incentives to drivers), raise rates, and cut back on their R&D spending (all this self-driving car nonsense... Uber isn't rich enough to fund such a project).

Re: Elon Musk Gambled Tesla to Save SolarCity

#266

Post by AndrewBissell » Tue, Aug 27, 2019, 2:40 PM UTC

standyro wrote: post #65

boyadjian wrote: post #56

Tesla is a Ponzi scheme.

Ponzi schemes don't produce anything of value, like amazing supercars that cost By that same logic, any Y Combinator "unicorn" startup is a ponzi scheme. Overvalued, unrealistic investor expectations. Granted, this SolarCity deal was definitely not in Tesla's best interest... having chatted with a former engineer there who left because of their dysfunction.

Literally lol at calling the Model 3 a "supercar"

Re: Elon Musk Gambled Tesla to Save SolarCity

#267

Post by AndrewBissell » Tue, Aug 27, 2019, 2:45 PM UTC

chiefalchemist wrote: post #120

One person's "gambled" is often another person's (e.g., entrepreneur)opportunity. Musk and his ilk are where they are for a reason. They don't fear risk, they go toe-to-toe with it and mitigate it. Words like "gambled" fit a narrative and get attention, but they are also misleading.

Musk and his ilk are where they are because of luck and enormous amounts of political rent seeking and outside capital to paper over losses.

Musk's career arc is "internet yellow pages sold in the dotcom bubble" -> "payments company he was drummed out of so Peter Thiel could clean up his mess" -> "rockets and electric cars which have needed huge infusions of government and investor money to stay afloat since their inception"

Re: Elon Musk Gambled Tesla to Save SolarCity

#268

Post by semi-extrinsic » Tue, Aug 27, 2019, 3:39 PM UTC

legacynl wrote: post #264

semi-extrinsic wrote: post #257

Earlier quoted context omitted.

OK, I should rephrase that. They are not losing money on every car. But they are still far from being profitable selling hundreds of thousands of $35k cars. According to the letter Musk himself posted in early January of 2019, he said they can squeeze out a tiny profit when selling the top end Model 3s at $45k+. And that they have a big effort ahead to make a profit selling $35k cars. This is a far cry away from a he…

There is a healthy margin on every car they sell. They just invested so much that they are still not making a profit. The way I'm reading it is that they can make a profit if they sell them at 45k, but they rather sell them at 35k to sell MORE. Expansion has a cost, and it's the reason why they're not making a profit.

No, the point is they are currently not selling any at $35k. They are filling the high-end orders first, hoping that they can do $35k profitably in the end.

Re: Elon Musk Gambled Tesla to Save SolarCity

#269

Post by lowii » Tue, Aug 27, 2019, 4:57 PM UTC

pmorici wrote: post #213

spiderfarmer wrote: post #102

For all the negativity here about Musk and his business decisions, there is something to be said for integrating transport and energy services in one great package. I consult for a large energy conglomerate that wants to get into this market from the energy suppliers side, but the problem is that they are completely clueless when it comes to expanding beyond their traditional business. In their vision, they'll supply…

Maybe Musk will be proven right in time but having followed Tesla for a long time and having recently purchased a Model 3 (It's an incredible car). The Solar City purchase is the one thing that never made a lot of sense to me. Even if you start from the premise that it makes sense for Tesla to be in the solar business, it's hard to rationalize that the best way to break into that market was to buy a debt laden solar…

Electric cars are not much greener than normal cars if they use electricity produced in coal plants. I think it makes a lot of sense to push for solar power when you are in the electric car business. Without renewable energy they are really not that green after all.

Re: Elon Musk Gambled Tesla to Save SolarCity

#270

Post by gamblor956 » Tue, Aug 27, 2019, 5:42 PM UTC

btilly wrote: post #210

gamblor956 wrote: post #193

Earlier quoted context omitted.

I reminded of the early days of Silicon Valley when it was mostly suburbia, farmland, and chip manufacturers and I think of all the hardships they must have gone through creating startups in their parents' garages. CA is one of the most regulated, least risky places, on Earth and yet has led the way in innovation in multiple industries for decades. More likely, Mars will be like Antarctica: a desolate and undesired r…

CA is one of the most regulated, least risky places, on Earth and yet has led the way in innovation in multiple industries for decades. You are mixing cause and effect. CA started off as an unregulated wild west. It became a center for innovation, and then added regulations. But retained critical innovation mass as it went. However the regulations came after. You can verify this by looking at industries. Gold mining,…

In all cases regulation came later, often much later. And the result is that many industries that got going in California, such as the manufacture of semiconductors at scale, wound up moving elsewhere. But so far, at least, we've been lucky enough to dream up new ones. :-)

This is empirically false. California's fastest growth for technology (i.e., Silicon Valley post-chip manufacturing), entertainment (i.e., films, video games, and music), and agriculture all took place after the introduction of regulations.

Silicon Valley flourished because regulations protected workers' rights. Entertainment flourished because local governments passed laws incentivizing film production and protecting workers' rights. Agriculture flourished because water-use regulations protected agricultural uses over residential/commercial usage.

In all cases, yes--the industry came first. But these industries didn't flourish until after the regulations came.

And the crazy thing is that despite all the regulation, CA's industries are still flourishing. It turns out that a company that can survive the costs of CA regulation can survive pretty much anything; a company that can't simply doesn't have a viable business model.