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Master Plan, Part Deux

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Re: Master Plan, Part Deux

#641

Post by vonmoltke »

dragontamer wrote: post #622
chc wrote: post #355

Earlier quoted context omitted.

This seems more like a sneer than a legitimate criticism. AFAIK Tesla's business is fundamentally pretty solid. They make a net profit on their cars, but they are currently investing it all into aggressive expansion. Is it surprising that a young, growing company is spending a lot on growth compared to a century-old company? Do you think it would be better for Tesla if they didn't invest in the future?

> They make a net profit on their cars, but they are currently investing it all into aggressive expansion Citation needed. The numbers I'm looking at are the following: http://ir.tesla.com/secfiling.cfm?filingID=1564590-16-18886&... As of March 2016: $ 182,482,000 in Research and Development last Quarter. $ 282,267,000 net loss in the quarter. So even if we got rid of Tesla's ENTIRE R&D department, they lost $100 Mil…

The statement you linked clearly shows a gross profit and net loss. "Selling, general and administrative" is not a cost of revenue, hence why it does not count against the gross profit. These are fixed costs not tied to the sales volume that covers the basic operation of the company, advertising, executive compensation, and other overhead costs not directly tied to generating revenue or R&D (since it is a separate line item).

Tesla takes in more revenue than their cars cost to build. It currently is not enough to cover all the other expenses of the company.

Re: Master Plan, Part Deux

#642

Post by jharger »

Alupis wrote: post #567
chc wrote: post #355

Earlier quoted context omitted.

This seems more like a sneer than a legitimate criticism. AFAIK Tesla's business is fundamentally pretty solid. They make a net profit on their cars, but they are currently investing it all into aggressive expansion. Is it surprising that a young, growing company is spending a lot on growth compared to a century-old company? Do you think it would be better for Tesla if they didn't invest in the future?

Unlike Ford, GM, etc... Tesla has a much narrower market potential. Yes Tesla's cars are "cool" and everybody wants one, but even the new "cheaper" model costs far more than the average person spends on a car. Right now, Tesla caters to the luxury market, and is viewed as a "cool alternative" to more traditional luxury makes. Ford, Toyota et al, have models that cover just about every price range and every type of cu…

> Yes Tesla's cars are "cool" and everybody wants one, but even the new "cheaper" model costs far more than the average person spends on a car.

Where do you get your numbers from, because this[1] seems to be about right at the Tesla price point.

[1]: http://mediaroom.kbb.com/record-new-car-transaction-prices-r...

Re: Master Plan, Part Deux

#643

Post by Alupis »

jharger wrote: post #642
Alupis wrote: post #567

Earlier quoted context omitted.

Unlike Ford, GM, etc... Tesla has a much narrower market potential. Yes Tesla's cars are "cool" and everybody wants one, but even the new "cheaper" model costs far more than the average person spends on a car. Right now, Tesla caters to the luxury market, and is viewed as a "cool alternative" to more traditional luxury makes. Ford, Toyota et al, have models that cover just about every price range and every type of cu…

> Yes Tesla's cars are "cool" and everybody wants one, but even the new "cheaper" model costs far more than the average person spends on a car. Where do you get your numbers from, because this[1] seems to be about right at the Tesla price point. [1]: http://mediaroom.kbb.com/record-new-car-transaction-prices-r...

Not a fair comparison.

The Model 3 (Tesla's cheapest option) starts at $35,000, which means average price point is well above your link's cited $35,000 (remember, those prices in the link are after upgrades, very few people buy a completely stock vehicle).

Re: Master Plan, Part Deux

#644

Post by dragontamer »

vonmoltke wrote: post #641
dragontamer wrote: post #622

Earlier quoted context omitted.

> They make a net profit on their cars, but they are currently investing it all into aggressive expansion Citation needed. The numbers I'm looking at are the following: http://ir.tesla.com/secfiling.cfm?filingID=1564590-16-18886&... As of March 2016: $ 182,482,000 in Research and Development last Quarter. $ 282,267,000 net loss in the quarter. So even if we got rid of Tesla's ENTIRE R&D department, they lost $100 Mil…

The statement you linked clearly shows a gross profit and net loss. "Selling, general and administrative" is not a cost of revenue, hence why it does not count against the gross profit. These are fixed costs not tied to the sales volume that covers the basic operation of the company, advertising, executive compensation, and other overhead costs not directly tied to generating revenue or R&D (since it is a separate li…

I'm combating the "aggressive expansion" meme that people don't understand.

Tesla could stop ALL R&D they're doing and they will still be an unprofitable company.

Re: Master Plan, Part Deux

#645

Post by macns »

ilamont wrote: post #469

Once we get to the point where Autopilot is approximately 10 times safer than the US vehicle average, the beta label will be removed Musk misreads the public's attitude about vehicle safety. Human error is understandable, mechanical failure is unacceptable. Society can live with 10 people driving themselves off a cliff (and blame the drivers, road conditions, or poor signage) but they will not accept a car driving it…

The public's attitude is slowly changing in favor of machines. By the time autopilot is super-safe, self-driving car passengers will probably feel like passengers of an airplane or a river boat; yes there are risks of not driving yourself but the benefits greatly overcome those.

Re: Master Plan, Part Deux

#646

Post by paul_milovanov »

Hermel wrote: post #519
rjdagost wrote: post #489

Earlier quoted context omitted.

Remind me- is Tesla a for-profit corporation or are they a non-profit organization? Making a profit is sort of the main point, though obviously not the only point. They've been around since 2003 so it's not like they're a scrappy Y-Combinator incubator company.

Musk founded Tesla with a vision to make the world more sustainable, and not with the vision to become obscenely rich. Being profitable is a means to an end for him, and not the other way around. And that's fine. The founders of a company are free to specify its purpose in the company's articles. There is no legal requirement that says corporations must seek profits.

Are you kidding me? Fiduciary duty ring any bells?

Re: Master Plan, Part Deux

#647

Post by int_19h »

jacalata wrote: post #433
int_19h wrote: post #385

Earlier quoted context omitted.

This would imply that there isn't enough space for everyone. Is that true, though? It feels like most dense concentrations of people are created artificially - either directly through borders (e.g. Haiti vs Dominican Republic), or indirectly through economic limitations (have to live close to where jobs are and commute is too expensive etc). If so, then this is a solvable problem. One other point I wanted to address.…

No, that's not the implication. The implication is that each person wants space around their house, but would ideally be close to all the amenities they visit (like restaurants, doctors, groceries) in order to avoid wasteful transport - think a manor house with a village around it. But instead everybody builds space around their house and now they all live a long way away from everything they need to get to.

Right. So people are willing to live further away from amenities for the sake of having more space. Seems like the desire for more room is pretty strong. Why, then, is dense urban living preferable? Why shouldn't we be trying to start with the premise that less dense is better, and design from there?

Re: Master Plan, Part Deux

#648

Post by paul_milovanov »

For a bit of a reality check, go take a look at Financial Times coverage of Tesla.

Tesla will require regular infusions of capital over, say, the next 5 years. The only source for that is more equity, and to do that you need to actually start meeting some of your self-declared profitability goals. Up to now, Tesla hasn't.

The tactic of diverting attention with "but look, here's this great awesome world-changing thing we'll do next" has worked so far but it's rapidly getting old. In general, the frequency with which sleights of hand are starting to be employed is concerning. Remember the "but don't just take my word on it — I myself will be buying $20M of new stock!" thing? Sure you will to reassure investors, given that loss of confidence will cost you personally far more than $20M.

SolarCity? "If Musk thought Tesla really needs a solar company, he might as well buy a good one. But it doesn't" [FT Lex]. Given how important it is that they are able to keep raising capital through equity offerings, taking the risk of freaking the investors out with SolarCity acquisition (otherwise expected to go into bankruptcy protection by next year) makes sense only if letting SC fail presents a bigger risk of the same. The Musk fairytale would certainly take a hit from a SC bankruptcy.

And Musk setting these crazy numbers goals practically guarantees he's setting TSLA shareholders up for disappointment.

Non-profit-making Amazon has been raised as a counterargument in the comments on this thread; the amount of trust the market has extended to Bezos for the time that it has is practically unprecedented; and Bezos has worked hard to make that happen by making investment/direction choices & providing information to earn the trust of the market. Musk, to the contrary, is doing everything to the opposite.

Now, what's the likelihood of a macro downturn within the next 2-5 years? Massive. That might trip up the availability of capital a bit—those refundable $1000 deposits too but who cares about them (by the way, much of T's capital has been raised during the period of literally historically unprecedented low cost of capital)

I didn't even begin to talk about competition. Or that Panasonic, T's critical gigafactory partner, isn't just sitting around twiddling thumbs (or the Chinese).

So, it'd be prudent to curb your enthusiasm. There might not be a part trois.

Re: Master Plan, Part Deux

#649

Post by int_19h »

rospaya wrote: post #408
int_19h wrote: post #339

Earlier quoted context omitted.

Dense urban areas create anxiety for me, while suburbs give the nice quiet retreat with plenty of open space, and no random annoyances. I bet I'm not alone in this. Don't assume that your subjective personal experiences translate to everyone. Here's a question for you. If suburbs are "the least optimal configuration", then why did urban sprawl occur in the first place? Why did so many people leave the cities and soug…

Low density remote developments or just typical suburbs cause higher pollution, higher service costs, segregation, hurt smaller businesses and have a negative impact on health. Modern urbanism is very opposed to urban sprawl because of those and many other reasons. Transport is just one aspect of it.

I'm curious about your "have a negative impact on health" approach. The density of a typical city is orders of magnitude greater than anything that our ancestors have seen in nature; and, historically, cities have been a breeding ground for all kinds of diseases (because sanitation is harder and spreading is easier). Can you clarify what exactly you meant?

I'm not sure that higher pollution is innate in lower densities, or whether that is due to the specific way our suburbs are designed today, and the technologies (such as ICE for transportation) that we use to enable them. It feels like an engineering problem.

And sure, putting everyone into a giant anthill might make it cheaper to contain and dispose of all the generated pollution. But then we should be honest and admit that it's about cost, not about what's best.

Small businesses - I don't think there's any innate value to them, in a sense that we need as many as we need to serve our needs, but there's no "right" for any particular small business to be viable in a world with changing conditions. If suburbs can sustain fewer small businesses, so be it.

Segregation is an orthogonal issue. I think you meant stuff like "white flight", but it is a symptom rather than a cause. If you prevent people from moving away, it will not resolve the tensions that make them desire to move - indeed, it may well exacerbate them.

What you refer to as "modern urbanism" sounds like an ideology that insists that it's the right solution for everyone, and those who disagree should be forced into it for their own good. I think that different people have different preferences in this aspect, as they do in most others, and that any approach should, ideally, try to respect those preferences, rather than ignoring them, or pretending that they are irrelevant.

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