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Q2 2020 Update

ir.tesla.com

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Re: Q2 2020 Update

#211

Post by rconti »

bitxbit wrote: post #172

Can we be realistic here? I am 100% behind zero emission electric vehicles. However, we are still 10-15 years out from even reaching the necessary infrastructure to support more than 10% market pen. Certain patents will have expired by then. I also despise the fact that Tesla was largely funded by US tax payers and they will likely shift majority of manufacturing abroad in the near future.

Tax credits may have made the difference between making Tesla survive and not (I don't think any of us can know that, but I'm being generous here), but that's not the same thing as a business being "largely funded by US tax payers". That needs a huge [citation required], not to mention an analysis as to whether these are outsized taxpayer subsidies for Tesla + electric infrastructure and subsidies vs internal combustion automakers + petrol infrastructure and subsidies.

Re: Q2 2020 Update

#212

Post by shuckles »

bryanlarsen wrote: post #206
shuckles wrote: post #197

Earlier quoted context omitted.

You first point is around whether it’s economical. A carmaker can scale a program in ~3 years, so that they haven’t is almost certainly a conscious choice. Furthermore, the Bolt shares a production line with the Sonic so the process concerns are limited. In terms of competitiveness, the Bolt offered longer range at a lower price than the Model 3 at launch and still does. Here people respond by saying the Tesla is a m…

> All that said, Tesla also doesn’t build and sell cars profitably. Selling credits is the source of their profits. GAAP gross margin is 21%. They're making excellent profits on their cars.

There are a lot of accounting choices that go into gross margin, and a forensic accountant could dedicate a year to understand the various shell games played by car companies between financing, depreciation on equipment, and warranty.

So as a simple matter, it helps to double check the reported gross margin against EBIDTA. And with that measure, my comment stands: Tesla’s reported profits depend on continuing to sell regulatory credits.

Re: Q2 2020 Update

#213

Post by dmurray »

baggachipz wrote: post #125
xoxoy wrote: post #99

Earlier quoted context omitted.

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.

Again, they are not required to report that so there is no reason to. I'm sure they have squirreled away lots of these credits in their war chest to break out at opportune times (like today). They're not fabricating the numbers, they are audited and exist. There's nothing illegal about it. They just don't have to disclose them publicly so they don't, because it would needlessly give information to competitors.

If Tesla own something that's worth money, they generally are required to disclose that publicly. They need to include it on their balance sheet and send that to the SEC quarterly in their 10-Q or 10-K filing. That's the main requirement of being a public company.

Tesla's accountants know this and follow the SEC rules, even if Musk doesn't. Is there some special treatment for these tax credits? Are they rolling this credit in with something else? Otherwise I don't believe they can be "squirreled away" to make the numbers look good "at opportune times".

Re: Q2 2020 Update

#215

Post by realtalk_sp »

Already__Taken wrote: post #207
realtalk_sp wrote: post #102

Earlier quoted context omitted.

They don't have any significant monopolistic advantage and they're operating in a highly price-sensitive, competitive market. My personal theory is that Musk knows this and his real objective is to provoke car manufacturers into competing on electric. From Musk's point of view, the win is likely not Tesla making any significant amount of money for shareholders but instead it driving the whole market towards electric,…

I'm pretty sure musk had literally said this is not your theory. that's why there was there patent stunt. It not some plot rather being the change you want to see, a even if Tesla collapses they moved the EV needle.

I can assure you that Musk has at no point intimated that Tesla is not a worthy investment and that he's not interested in profit maximization. He has only ever hinted at this peripherally, as described.

Re: Q2 2020 Update

#217

Post by protastus »

philwelch wrote: post #119
adventured wrote: post #107

Earlier quoted context omitted.

> It is beyond me why anyone would by this stock over VW, let alone pay 4x the price for it. The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs; along with the inevitable rise of China's domestic automakers, which will eat a very large amount of market and sales away from the old giants. VW's position is its weakness, it ha…

> The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs VW is an EV manufacturer and is investing heavily in the transition to EVs themselves. And they’re already at a much larger scale than Tesla in terms of distribution and manufacturing the rest of the car.

Too many automakers have claimed to be investing in EVs yet delivered nothing of merit or long-term value.

Tesla's market cap is crazy, but is a reflection of having actual products.

Re: Q2 2020 Update

#218

Post by russellbeattie »

Anecdotal story: I registered to buy a Model Y. But then covid hit and I'm now working at home and really have no need for a new car, plus with the economy in freefall, I have no desire to pick up that much debt. Combine this with Musk's threats to leave California, his other crazy rants, and tweets about the red pill, there's zero way I'm going to buy a Tesla any time soon, if ever.

I may or may not be representative of Tesla's target customer, but if you go by the Warren Buffet school of investing in what you know, then I would suspect Tesla's immediate future does not look good.

Re: Q2 2020 Update

#219

Post by marvin »

BbzzbB wrote: post #181
xchaotic wrote: post #134

Purely anecdotal but we are in the market for a new car when our current lease runs out. We were looking at Tesla and the quality is not there and dealerships means we can’t test etc. The valuation is crazy, VW can literally flip the switch and start producing more e-Golfs etc when the demand is there.

Not to defend TSLA's valuation, but the argument of other car giants being "able to flip a switch and make something better" has been proven wrong many times. There are plenty of rational "TSLAQ-arguments", that one is no longer on that list.

I think we're beyond TSLAQ by now. Are you saying there is a high likelihood that Tesla will go out of business? (The 'Q' means de-listed from the stock exchange).

Maybe the valuation is a bit steep, sure. But there aren't many reasonable arguments left for the company going under, apart from perhaps investment overextension due to some future initiative, or some magical and incredible accounting fraud.

Re: Q2 2020 Update

#220

Post by marvin »

_mog1 wrote: post #208
andrewxdiamond wrote: post #143

Earlier quoted context omitted.

If VW could do that, why havent they? Tesla proved there is a market

Tesla hasn't proved that you can make a reasonable amount of profit compared to your investment when selling to that market. Hell, they haven't showed you can make any profit on that investment, they're still deep in the red. It would take them something like 10+ more years at their current income to even break even. Is it really such a surprise that companies that need to make money aren't dying to get into that mar…

Then, suddenly, the day arrives when battery tech has advanced to the point where it's obvious even to casual observers that battery tech is the future. Hell, it's the present by then. We're almost there. Battery tech is still following an exponential decline in price/performance.

Problem is, now the rest of the industry is 10 years behind. They were hoping to just buy this tech from their suppliers, but so is everyone else. All profit gone in a bidding war. Making your own requires double-digit billions of investments (OK, plausible) and 10 years lead time. Let's be super charitable and say 5 due to the existence proof and leaky personnel. Now they've got to catch up while their newly equal-sized competitor eats their lunch.

Classic innovator's dilemma, and it's as obvious today as it was in 2013. Probably more.

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