Did the oil companies make Elon Musk a bazzilionaire?

I was just reading about record profits at Exxon, Chevron and Shell. And Tesla is making more profit then any other car company, save maybe Porsche.

Don't you think record high fuel prices push more people to EV's? So is the greed of the big oil companies helping the transition away from ICE vehicles? 

Seems like the oil companies would be better of with just ordinary rediculously high profits instead of super ridiculously high profits. Who'd buy an EV if gas was $2.00.

Slower EV sales would mean less reason to deploy charging infrastructure. Less charging infrastructure means the mandatory EV dates would surely have to have been pushed back (IMO, they still will).

So in short, did oil companies greed made musk a very rich man while hastening their own demise?

I know this is super simplistic but...Thoughts?

Doesn't make sense to buy an EV even at these fuel prices,so its marketing and doom and gloom nonsense thats pushing people to EV's.

Elon made an exciting EV that wasnt a little embarrassing underpowered joke. Also, they closely resemble a regular car. Ive always said that was one of the issues with earlier EV's. They made them look crazy, futuristic and frankly silly. Then the performance sucked.
 That combined with other things like spacex and paypal has made him so rich. And good for him. He puts up huge $ rather than just sit on it and get fat. 

I'm not the most well read on it, but a large chunk of what they earn profit on is selling carbon credits to other oems. As the other oems begin building more EVs I think the viability of that business model will fade. Where this will leave Tesla is anybody's guess.

Apexcarver said:

I'm not the most well read on it, but a large chunk of what they earn profit on is selling carbon credits to other oems. As the other oems begin building more EVs I think the viability of that business model will fade. Where this will leave Tesla is anybody's guess.

Tesla recorded $344 million in regulatory credits for Q2 2022, down 49% from Q1 which was $679 million. The credits account for 1.7% of the overall gross margin for the quarter, down from 2.9% last quarter.Jul 20, 2022

Tesla sold 1.4 million expensive cars last year with an average gross margin in the 33% range. The carbon credits were barely even rounding error for them. 

If oil companies controlled the price of oil, how do you explain the years in which they lose money?

The market controls the price of oil based on human perception of supply and demand.  During Covid, oil companies lost billions and shut down their less profitable refineries including some that were rarely profitable.  The economy rebounded much faster than anticipated, demand returned, and yet the supply is now smaller for the foreseeable future.  Higher prices are the obvious outcome.  With politicians beating on oil companies and threatening investment in carbon based energy, most oil companies are not adding capacity.  The exception is ExxonMobil who are in the midst of adding 100,000 barrels a day at their Baytown TX refinery. 

Since the onset of the global pandemic, the United States has lost nearly 1 million barrels per day of oil refining capacity, with more set to be shuttered in the next few years.  The trend will continue in 2023 and 2024.  What do you think that does to prices? 

Lyondell is slated to close their 263,000 barrel a day Houston refinery at the end of this year if they can't find a buyer because they are not willing to invest what is required to keep it operational.

Phillips 66 is converting its 120,000 barrel a day refinery in Rodeo, CA to process renewal feedstock only.  After the conversion in early 2024 it will produce only 50,000 barrels a day of biodiesel.

Disclaimer FWIW: I work for an oil company.  Sadly they don't sponsor my racing habit.

Edit:  I do see a few Teslas in the employee parking lots at both refineries and corporate headquarters.   I'll probably buy an electric car one day for local shopping trips, but it won't replace one of my "fun" cars. 

One thing that Tesla doesn't get enough credit for IMO is trying to advance manufacturing techniques. Things like the Giga Press. Think of what a high percentage of the wealthiest people get there primarily through playing with money. Elon's a guy who still makes things -  good things, and on a massive scale. Some of his politics aside, the man's a big hero of mine. (No, I don't own a Tesla). 

In reply to dculberson :

You used gross margin, not net margin. The carbon credits go to the bottom line, so they were $344 million out of about "only" $2.36 billion, or around 15%. It's a big drop from previous, but still incredibly significant. No company on earth would consider 15% of their net a rounding error. 
 

Edit to answer the original question. Investors made Musk a billionaire. Most of his wealth isn't from cars that he has sold, but from the value of his company based on speculation on how many cars he will sell. That's why despite the fact that there are many automakers with much greater sales than Tesla,  Tesla is the most valuable. 

Holy berk!

In reply to Boost_Crazy :

Still not a "large chunk" and definitely not an existential problem for the company if they go away 100%. 

Elon made over a Billion dollars selling his PayPal stock , 

Now he has some competition  , hopefully that will push him to get the quality a little better....

Kreb (Forum Supporter) said:

One thing that Tesla doesn't get enough credit for IMO is trying to advance manufacturing techniques. Things like the Giga Press. Think of what a high percentage of the wealthiest people get there primarily through playing with money. Elon's a guy who still makes things -  good things, and on a massive scale. Some of his politics aside, the man's a big hero of mine. (No, I don't own a Tesla). 

If you want to see a program that explains Tesla  watch the National Geographic program  on Disney  BUILT IN A DAY  program 1 cars.  Absolutely fascinating.  

In reply to dculberson :

In reply to Boost_Crazy :

Still not a "large chunk" and definitely not an existential problem for the company if they go away 100%. 
 

Your number was off by more than a factor of 10.  15% of any company's bottom line is a huge chunk when every percent is important. 
 

Look at it this way. They were around 14% overall net margin- which is very good for any manufacturer. So it took about $18.5 billion in revenue to make around $2.3 billion in net margin. That is a lot of work. So to get another $344 million to the bottom line without doing any more work- aside from lawyers and paperwork to claim the credits- is huge. 

Tesla will be facing some serious obstacles in the future. The carbon credits were not just a large part of their revenue over the years. Receiving them meant that the other automakers were not competing directly with them. So not only are the credits drying up, but the much larger automakers are turning their resources to EV's that will compete directly with Tesla.

But Tesla has a massive head start on the competition. 
   Ford GM Chrysler are at an absolute minimum 5 years behind. Plus the have a dealership network that works.  Instead of selling a bunch of cars at a deep discount  to dealers.   Tesla  simply delivers the cars already sold.  And Tesla profits  off the trade ins. 
    Walk up and down my neighborhoods,  those with Tesla's rave about the quality.  Stuff  they've had to take a day/ part of a day  off. Is fixed on line.  Or at their home.  The latter tends to be really rare.  
      A major part of that is getting people out of production.   Robots will do  the task repeatedly to the speed and quality  programmed in.  Us mere  mortals  just aren't perfect.  
 

 Not to mention Tesla has  brand new factories with state of the art equipment.    You can see where antique thinking about layout is gone. Regarding material handling.    In all probability the cost benefit wasn't there, yet but when that threshold is past it's easy to see how automation will work.  They already have the required overhead space. 
     

frenchyd said:

But Tesla has a massive head start on the competition. 
   Ford GM Chrysler are at an absolute minimum 5 years behind.

? You think the big traditional automakers didnt have EV's until tesla launched?  
 

the dealerships are also ALL corporate and do what the automaker dictates. 

Elon just did it better.  

I think we're saying the same thing.   What's introduce to the public is probably 5-6 years behind planning.  At best maybe companies were forced to introduce a year earlier  due to Tesla's success?  
       As far as dealerships go?   They are all typically privately held.  At most the corporate world might  be a little more generous regarding terms and conditions  if a previously successful  dealership is falling on hard times.   But the condition is contingent upon the dealership agreeing to corporate  bailout terms which usually requires sale to a more likely successful  owner.   

In reply to frenchyd :

Or Tesla spent years losing money to convince the public that EV's are an acceptable alternative. The traditional automakers aren't behind, they were letting Tesla do the heavy lifting while they waited for the right time. Even now, many are just sticking their toe in the water. 

TJL (Forum Supporter) said:

Elon made an exciting EV that wasnt a little embarrassing underpowered joke. Also, they closely resemble a regular car. Ive always said that was one of the issues with earlier EV's. They made them look crazy, futuristic and frankly silly. Then the performance sucked.

I've always wondered if the Prius would have done better or worse if they had made them look like a Corolla or Camry. They seem to be really great appliances, but I think the styling was hard for a lot of people to get past. On the other hand, they were the first hybrid to hit it big and they made them easily recognizable. Theres no way to know, but its interesting to think about.

I just want to  know what made him such an insufferable little vajajay.

93EXCivic said:

I just want to  know what made him such an insufferable little vajajay.

He is definitely a lot more PT Barnum than Henry Ford.

Is Tesla really that "far ahead" of other OEM's? 

Maybe a little in EV tech and batteries but certainly not as a business. The legacy dealers are in place and operating service centers nationwide and even worldwide. None of these hundreds of thousands of employees work for the OEM's. And all of the other costs that go along with them; real estate costs, parts inventory costs, healthcare, retirement, etc, etc.

It's already difficult to get a Tesla serviced in a timely fashion. Try to buy parts to do your own repairs. Good luck.

Over the next years Tesla is going to have to either spend billions of their own money or franchise service centers and parts distribution network. Good luck with this.

There have got to be a LOT of Teslas that are nearing the end of their battery life and virtually zero capacity to deal with battery swaps. So will cars get scrapped? That's not going to be good for their reputation.

gearheadmb said:

93EXCivic said:

I just want to  know what made him such an insufferable little vajajay.

He is definitely a lot more PT Barnum than Henry Ford.

I am pretty sure if you gave Henry Ford a twitter account you would be... less than impressed.

Boost_Crazy said:

In reply to frenchyd :

Or Tesla spent years losing money to convince the public that EV's are an acceptable alternative. The traditional automakers aren't behind, they were letting Tesla do the heavy lifting while they waited for the right time. Even now, many are just sticking their toe in the water. 

 You've got to be impressed with his work accomplishments.    He's really the first guy I've seen who really needs a private jet and uses it not as a status symbol but a proper work tool.    
   I'm sure he's tough to work for but when he sets his mind to achieving something, it gets done. 
      

In reply to aircooled :

There is a lot about Henry Ford  not to respect.  His friendship with Hitler,  his anti Semitic  views and close  involvement with his employees lives.

  Brutal way he tried to break the Union.  Willingness  to stick with a given formula ( the Model T ) even against competition out selling his product.