Q2 2020 Update • Hacker News Board

Re: Q2 2020 Update

#91

Post by baggachipz » Wed, Jul 22, 2020, 9:21 PM UTC

shuckles wrote: post #74

baggachipz wrote: post #45

Earlier quoted context omitted.

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.

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.

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.

Re: Q2 2020 Update

#92

Post by Lendal » Wed, Jul 22, 2020, 9:21 PM UTC

michaelmior wrote: post #49

elil17 wrote: post #10

Earlier quoted context omitted.

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.

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.)

No, according to other commenters they would be paying it to the government anyway, if they weren't paying it to Tesla.

Re: Q2 2020 Update

#93

Post by baggachipz » Wed, Jul 22, 2020, 9:22 PM UTC

xoxoy wrote: post #50

baggachipz wrote: post #45

Earlier quoted context omitted.

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.

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

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?

Re: Q2 2020 Update

#94

Post by jeffbee » Wed, Jul 22, 2020, 9:22 PM UTC

shuckles wrote: post #74

baggachipz wrote: post #45

Earlier quoted context omitted.

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.

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.

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.

Re: Q2 2020 Update

#95

Post by _ph_ » Wed, Jul 22, 2020, 9:22 PM UTC

xoxoy wrote: post #30

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.

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.

Re: Q2 2020 Update

#96

Post by xoxoy » Wed, Jul 22, 2020, 9:23 PM UTC

slg wrote: post #83

xoxoy wrote: post #77

Earlier quoted context omitted.

17 days of inventory is on par with previous quarters except Q1...

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).

well there are rumors they are shutting down parts of Fremont for “upgrades” soon. likely because their inventory is higher than they want.

Re: Q2 2020 Update

#97

Post by donor20 » Wed, Jul 22, 2020, 9:24 PM UTC

xenophon wrote: post #34

modeless wrote: post #20

Earlier quoted context omitted.

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.

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.

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).

Re: Q2 2020 Update

#98

Post by jeffbee » Wed, Jul 22, 2020, 9:25 PM UTC

JMTQp8lwXL wrote: post #9

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.

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.

Re: Q2 2020 Update

#99

Post by xoxoy » Wed, Jul 22, 2020, 9:25 PM UTC

baggachipz wrote: post #93

xoxoy wrote: post #50

Earlier quoted context omitted.

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

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?

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.

Re: Q2 2020 Update

#100

Post by knrz » Wed, Jul 22, 2020, 9:25 PM UTC

jfengel wrote: post #69

marc__1 wrote: post #12

Earlier quoted context omitted.

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…

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.

It does, but the rebalancing occurs in September I think.