A "ponzi scheme" that happened to make almost 250,000 cars last year.. funny idea of a "ponzi scheme."
A "ponzi scheme" that happened to make almost 250,000 cars last year.. funny idea of a "ponzi scheme."
In reply to dculberson :
Just a similar vibe. Ponzi schemes do often produce something tangible. Whether it's the stereotypical investment scheme, or something like the 'network marketing' scams on social media where they sell Product X to their friends/family. They all usually make money for those who aren't at the bottom. Using reservations for future product to pay for current product isn't that fundamentally different to me than paying old investors with new investor money. Neither approach is self sustaining.
Tesla the company has been in the red nearly every quarter of its existence. It's profitable quarters have been buoyed largely by selling emissions credits to other OEMs, and all of this has occurred in the longest bull market in history with very little domestic competition.
Now, the emissions credits are running out, and there's less demand for them from OEMs anyway as their competing products are coming to market. Car sales and manufacturing are slowing dramatically across the globe. VW and Ford have committed to a combined $20 billion in EV investments over the next 3 or 4 years and they've been screwing vehicles together, and building supply/distribution networks to sell/support their product for 80 years.
Tesla has had it relatively easy thus far, and it's still been perilous. Things are only going to get tougher for them from here on.
STM317 said:In reply to dculberson :
Just a similar vibe. Ponzi schemes do make money for those who aren't at the bottom. Using reservations for future product to pay for current product isn't that different to me than paying old investors with new investor money. Neither approach is self sustaining.
If that was true, then there would be no crowdfunding at all because using the capital to buy machinery could be considered " Using reservations for future product to pay for current product ".
Tesla the company has been in the red nearly every quarter of its existence. It's profitable quarters have been buoyed largely by selling emissions credits to other OEMs, and all of this has occurred in the longest bull market in history with very little domestic competition.
Now, the emissions credits are running out, and there's less demand for them from OEMs anyway as their competing products are coming to market. Car sales and manufacturing are slowing dramatically across the globe. VW and Ford have committed to a combined $20 billion in EV investments over the next 3 or 4 years and they've been screwing vehicles together, and building supply/distribution networks to sell/support their product for 80 years.
Tesla has had it relatively easy thus far, and it's still been perilous. Things are only going to get tougher for them from here on.
While Tesla is long out of the $7,000 credit scene, FCA is paying them billions to dodge fines barely 6-8 months ago So I'm not sure what you mean by "running out".
As for OEMs now getting invested- OH LOOK, NOW THAT THE NISSAN LEAF/CHEVY VOLT/WHATEVER IS ENTERING TESLA IS FINISHED. Comeon; building batteries is hella hard, a Tesla's been on top of the research mountain for lithium techs because it's how they're gonna live and die. They're the only ones with actual patents on specific chemistries, electrolytes and designs- and even if someone tomorrow came out with a production-ready tech that could blow them out of the water, you're still years away from having a factory made, initial runs, and teething to be sorted.
Now in your defense, i'm not 100% on the whole 'crowdfunding' aspect for cars- but it's proven to be a great barometer if Elon's wild ideas will work or if they have a market, and no company would ever say No to a hype-man that can raise over $250 million tax-free with a wacky concept. If the truck uses readily available parts in a Taco Bell approach as well as I think, it'll cost them hardly anything while making hand-over-fist.
In reply to GIRTHQUAKE :
They've got tons of money from traditional investors to fund development. They shouldn't need money from customers to pay for things like machines. Can you imagine the fallout if GM started a GoFundMe for a new factory, or to keep an existing one from closing all while sitting on billions in cash? That's essentially what Tesla has done. Crowdfunding is a useful tool that provides vital capital for new companies, often in exchange for an ownership stake. It's not customers reserving future product. And it's not for 15 year old, industry leading companies worth 60+ Billion (as of this writing).
They had 600 million in revenue in the report you linked, but no mention at all of profit. Tesla has always been very cagey about how much (if any) profit they make per vehicle, and that's ultimately the only question that matters to investors. It doesn't matter how many of an item you sell if you're not making money on the product. Their profitable quarters have largely come on the backs of credits to other OEMs, a la the FCA purchase you mentioned.
Speaking of FCA, they're way behind in the fuel economy game, and even they have hybrid Ram and Jeep models coming in the next year. As fuel economy increases for a manufacturer, the demand for Tesla's credits goes down. That doesn't mean it's gone, but it's reduced. Simple supply/demand.
Tesla seems to have very impressive tech, no question. But having the best tech doesn't guarantee the most sales or profitability. Quality matters. Support matters. Price matters. Perception matters. With the enormous investments being made by mature OEMs, we're going to see where everything ends up in a couple of years. It wouldn't surprise me at all to see other OEMs take significant sales from Tesla because they're more visible and established, with fewer question marks.
Tesla isn't "starting a GoFundMe" any more than Ford is when their dealers take a $5k deposit to order a GT350r. It's the same deal, and if GM had product that people wanted they would take deposits on it too. The dealers are taking deposits to order C8 Corvettes, and Tesla is their own dealer network. How is that significantly different? Because tons of people actually want the Tesla?
Also note, the Cybertruck orders are $100. That's nothing. Even at 250,000 of them that's nothing to a company with $21 BILLION in revenue last year. They're not funding development with that money, it's not even enough to develop a minor subsystem on the truck. They're gauging interest and that's it.
You know what a $100 deposit does? It creates a potential customer with a vested interest in following the development. It's the equivalent of Corvette Racing selling t-shirts. They're not funding the racing operation with t-shirt sales. Sure, the extra money comes in handy but the engaged following does much more.
In reply to dculberson :
Valid points. I think a more established OEM, with more stable financial position gets a little more lee-way when it comes to deposits than a company that has spent its entire existence on a financial tightrope.
Cybertruck preorders are fairly small potatoes admittedly, it's just a continuation of a trend that can be perceived negatively by anybody with a skeptical or negative outlook of the company (raises hand). That trend being that anytime they need a cash infusion, Elon tweets something to remind people of an exciting new product, or they do a flashy unveiling for a product and take money from customers with years to go before it's actually available.
Yep, and $100 for the Cybertruck is nothing compared to the $1,000 for the Model 3 or the $2,500 down payment for delivery that it also had (has?). Every company has some vehicle- I think all of them do right now- that had a pre-order deposit option for people to buy.
STM317 said:In reply to GIRTHQUAKE :
They've got tons of money from traditional investors to fund development. They shouldn't need money from customers to pay for things like machines. Can you imagine the fallout if GM started a GoFundMe for a new factory, or to keep an existing one from closing all while sitting on billions in cash? That's essentially what Tesla has done. Crowdfunding is a useful tool that provides vital capital for new companies, often in exchange for an ownership stake. It's not customers reserving future product. And it's not for 15 year old, industry leading companies worth 60+ Billion (as of this writing).
What company would ever say "we don't want more liquid cash"?
I think you also are under an impression that a shareholder or someone like that (Elon) can simply walk down to the bank and say "I'd like to cash out my stock options for Tesla" and they'll just give him the dosh on the spot. It takes months to truly cash out stock, because something only has value if someone ELSE wants it and buys it from you. If a company can build/buy something comfortably on cash on hand instead of stock options or dividends, they'll choose cash each time. Less trouble, less work, less taxes, ect.
They had 600 million in revenue in the report you linked, but no mention at all of profit. Tesla has always been very cagey about how much (if any) profit they make per vehicle, and that's ultimately the only question that matters to investors. It doesn't matter how many of an item you sell if you're not making money on the product. Their profitable quarters have largely come on the backs of credits to other OEMs, a la the FCA purchase you mentioned.
... are you claiming revenue is not profit? They pretty clearly said they made that $600 million in sales. That's a Big Brain take if I ever saw one.
Besides, it's business 101- if you're making money, and there's more to make, you're gonna invest your earnings into your company to make more money later.
Speaking of FCA, they're way behind in the fuel economy game, and even they have hybrid Ram and Jeep models coming in the next year. As fuel economy increases for a manufacturer, the demand for Tesla's credits goes down. That doesn't mean it's gone, but it's reduced. Simple supply/demand.
Tesla seems to have very impressive tech, no question. But having the best tech doesn't guarantee the most sales or profitability. Quality matters. Support matters. Price matters. Perception matters. With the enormous investments being made by mature OEMs, we're going to see where everything ends up in a couple of years. It wouldn't surprise me at all to see other OEMs take significant sales from Tesla because they're more visible and established, with fewer question marks.
Fuel economy might increase- Or it might not, as Toyota has actually decreased shown here by Jalopnik in a rare moment of journalism. There's also particulate emissions to discuss; the EU doesn't rate milage or emissions like we do and FCA loves them some diesels, so that FCA assumption is just that- an assumption. We can also assume that if the Pugeot merger goes though they won't have to deal with it anymore. We can also assume Dodge will flip the double bird and pay the EPA for increased emissions to toss 1,000HP Hemiphants into everything, just like I can assume that you'll never post anything like I have that bolsters or prooves your opinion in this conversation.
You're also seriously misunderestimating the tech portion of this. Wanna know where some of that $26 Billion evaluation comes from? Data. Tesla has been gathering info on all their drivers to further their tech in autonomous driving, from highlighting signs to seeing them suddenly stop or pullover in certian circumstances to build their machine AIs to drive us- it's just like when you have a CAPTCHA that asks you to pick out street signs before you can post a comment. Even though problably more than 90% of that is worthless, it still has a value to companies that sell adsence like Google or systems that capitalize on human nature, like our own Stock Market. Tesla's not a car company- they're a tech and energy company that builds cars.
It wouldn't surprise me at all to see other OEMs take significant sales from Tesla because they're more visible and established, with fewer question marks.
Leaf. Leaf II. Volt. Bolt. Kona. Livewire. It can happen, but Tesla's sold hundreds of thousands of Electric cars now.
Also, you gonna post some proof of your claims or something?
Nikola boss offered their truck design to Tesla for free. I think they should take him up on his offer.
It would be really interesting to know if there was a significant difference in production costs between that and the Tesla design. Is the Nikola anything more than a designer doodle?
GIRTHQUAKE said:They had 600 million in revenue in the report you linked, but no mention at all of profit. Tesla has always been very cagey about how much (if any) profit they make per vehicle, and that's ultimately the only question that matters to investors. It doesn't matter how many of an item you sell if you're not making money on the product. Their profitable quarters have largely come on the backs of credits to other OEMs, a la the FCA purchase you mentioned.
... are you claiming revenue is not profit? They pretty clearly said they made that $600 million in sales. That's a Big Brain take if I ever saw one.
Besides, it's business 101- if you're making money, and there's more to make, you're gonna invest your earnings into your company to make more money later.
I am 100% claiming that revenue is not profit. So, before we go any further, I need some clarification here, because it seems like you think revenue is the same as profit and that would truly be a "Big Brain take". I'm not trying to be condescending, but they're very different, and understanding that difference is critical to this discussion moving forward.
The difference between revenue and profit.
Revenue sort of shows demand for a product, but profit is what keeps the lights on and allows a business to survive, investors to make money, etc. If you sell a product for $200, you've got $200 in revenue. If it cost you $175 to make and market that product, etc, then you have $25 of profit on $200 in revenue/sales. You may hear revenue called "sales" or the "top line", while profit is often referred to as "income" or the "Bottom line". So "top line growth" or "sales" growth means there's lots of product being sold, probably due to high demand. "Bottom line growth" means the company is making more profit per unit due to more efficiency or selling higher profit versions of the same product. GM and Ford sold tons of small cars. They had a ton of revenue. But they weren't very profitable, so they stopped making them. No business can exist long term without profit. This is also a concern with Tesla as they're selling tons of Model 3s, but at lower prices (and presumably lower profits) than Model S and X.
I'm not sure what kind of proof you're looking for specifically. Feel free to clarify, and I'll do my best to back up my claim. Here are some general facts:
Tesla has had 5 profitable quarters since 2009 (Not making money isn't uncommon for startups, as they invest in the company but eventually they have to make some money or investors pull their money. Again, Tesla is the industry leader. They're worth 60 Billion. Compare that to Ford currently being worth $35 Billion. Which one is the startup again?)
Here's Ford's profitability over the same time for comparison:
Why is the company for that top chart worth nearly twice what he company from the bottom chart is?
Q3 2018 Tesla posts 312 million profit (largest ever), but almost 190 million of that came from credits sold to other OEMs. So their most profitable quarter ever (by far) was 60% due to credits to other OEMs.
Q1 2019 Tesla failed to disclose 200 million in credit sales to OEMs in investor calls
The Leaf, etc aren't really Tesla competitors. They don't compete on range or performance. The bolt is the closest thing thus far, and it missed the mark. The stuff coming down the pipe from Ford and VW/Porsche/Audi is a much larger threat to Tesla's bread and butter than anything thus far.
STM317 said:I am 100% claiming that revenue is not profit. So, before we go any further, I need some clarification here, because it seems like you think revenue is the same as profit and that would truly be a "Big Brain take". I'm not trying to be condescending, but they're very different, and understanding that difference is critcal to this discussion moving forward.
You're of course correct here, revenue is not profit. What Girthquake linked to actually listed $5 billion in revenue for the quarter (q2 2019) and $613 million in "free cash flows" for the same quarter. That is NOT the same as income of course! It's probably a fancy way of dressing up their Q2 losses. (Loss of $408 million in q2 2019)
Is this Corner Carvers? I don't care about the endless profitability/subsidies/political discussion. Let's just look the damn thing as a vehicle.
Kreb said:Is this Corner Carvers? I don't care about the endless profitability/subsidies/political discussion. Let's just look the damn thing as a vehicle.
Ok. It's horrifically ugly and I'll never own one.
A company is trying to make a truck that tows like a diesel and accelerates like super car all while seating 5 and cost you nothing in fuel for the typical maybe lower than the average price of a new truck.....GRM people complaining....
In reply to yupididit :
The *last* time I gave myself a time-out from GRM was when someone more or less insisted that anybody who had any use for Tesla was an unmitigated Musk fanboi and Kool-Aid guzzler.
Ransom said:In reply to yupididit :
The *last* time I gave myself a time-out from GRM was when someone more or less insisted that anybody who had any use for Tesla was an unmitigated Musk fanboi and Kool-Aid guzzler.
The truth hurts.... Kidding!
I think that the price is unrealistic, the truck has serious deficiencies, and it's awesome. When was the last time that a prototype vehicle caused such a stir? In a me-too business where every class of vehicle seems to gravitate towards a common look and performance benchmark, Elon just threw a hand grenade into the punchbowl. Good on 'im!
Ransom said:In reply to yupididit :
The *last* time I gave myself a time-out from GRM was when someone more or less insisted that anybody who had any use for Tesla was an unmitigated Musk fanboi and Kool-Aid guzzler.
Tesla seems to be one of those topics where people assume absolutes and really get into an "us" vs "them" mindset. If you mention anything positive about them you're seen as a koolaid chugging Musk fanboi. If you dare criticize them for any of the many legitimate reasons, you're an anti-EV, coal rolling hater or short seller that wants them to fail.
For the record, I'm pro-EV, and I want Tesla to succeed even though I'm a bit skeptical of their long term viability as a car manufacturer. They do a lot of things right. But their products, and more so the business as a whole have some warts that would likely be blasted if they existed in other companies. If you or anybody wants to own a Tesla, or put a deposit on this truck I have no problem with that. I see some of the appeal, but I have enough misgivings about the product and the company as a whole to stay away for the time being.
Not trying to rain on anybody's parade, but I hope we can be realistic about the situation and not see everything through rose colored glasses. Being an educated consumer is better for everyone than being blissfully unaware of the benefits or the drawbacks.
In reply to STM317 :
Yeah, the decsiveness is wild, and even harder when you start to try and parse through the minutae. Differences between earnings and profit, how much is fine to invest in new production and space, how much is fine for Elon to be a hype man... and then getting into cash flow, how much of their debts have been paid down, ect. It's confusing, and being realistic gets into genuinely passionate discussions because so many want him to succeed and show that you CAN make a car company still.
STM317 said:For the record, I'm pro-EV, and I want Tesla to succeed even though I'm a bit skeptical of their long term viability as a car manufacturer.
Although I did put down a $100 deposit to reserve a spot in line for the CyberTruck, I am also skeptical. On one hand I think Musk is a visionary who wants to radically change our world and one of his vehicles (pardon the pun) to accomplish that is rethinking our transportation means. On the other hand I think he's a con man who has created a company and products that cannot be sustained on their own in the current market. With the phasing out of federal tax credits for purchases of Tesla EVs and the increased interest and investment of more traditional auto manufacturers in this segment, I think we will see the viability of Tesla's EV business tested in the next 3-4 years. Then there are also issues with parts availability and long term "reliability" such as the flash memory issue with some early cars that are starting to appear.
6 months ago when I first heard about Tesla making a pickup I got excited to think that this might be a way to reduce my fleet down to 1 regularly driven vehicle that can do it all. The proposed range should be good enough, the truck functionality and towing capacity should be adequate, and the acceleration means it won't just be left for dead if I need to merge. One vehicle to rule them all! My expectation was that we were at least 5 years out from being able to buy one, so that would probably fit pretty closely with time to refresh the fleet. Not sure if that is still the case, but if Tesla claims to be 2 years out from starting production (which probably means closer to 3 years based on past performance) my "reservation number" of approximately 170k might just put me in the 5-6 year range.
The day after the "big reveal" I set up a spreadsheet to compare ownership costs of the CyberTruck and various 4x4 ICE trucks over a 30 year period. There were a "ton" of assumptions made (partially due to planned changes in my housing location within the next year or two, partially due to planned retirement further out, and partially due to other factors such as actual purchase prices of considered vehicles not being negotiated, estimated ownership duration, etc.). I compared my current operating plan of buying 10-15 year old trucks or SUVs at 10%-15% of original cost and using them for 8 years, buying new extended cab Colorado/Ranger size trucks and using them for 20 years, buying new extended cab full size trucks from all of the Big 3 and using them for 20 years, or buying the CyberTruck (dual motor with autonomous driving option) and using it for the full 30 years. I tried to consider purchase prices, recoup from sales if not lasting the full 30 year period, fuel costs (based on my current average electric costs and current local gas prices), maintenance costs (estimated a little high considering that I'm getting older and may not want to do all of it myself for the next 30 years), insurance costs, and inflation. My reasoning for only one Tesla over the 30 year period was based on some info in Keith's thread indicating the batteries and electric motors should go 500k miles without serious degradation or problems. Lots of the assumptions may be bad or invalid...
Surprisingly, the outcome (considered varying annual miles driven of 5k, 10k, and 25k) was that the used vehicles or mid size truck traded off as the lowest overall cost due to lower purchase prices. Full sized ICE trucks were always the highest overall cost and the CyberTruck was in the middle. As the annual miles driven climbed the CyberTruck got closer to the used vehicle and mid size truck costs. Taking off the autonomous driving feature at $7k might change the outcome, but I included it initially thinking about as I near the end of the 30 year period this feature might allow me to keep driving longer into my old age and more safely if it is fully functional at that time.
So, based on my ASSumed recreation mathematics I decided to plunk down $100. If Tesla folds up and blows away before I can buy a CyberTruck I won't miss dinner...If they sell me one and it's a POS and they disappear the next year I might be hurting.
About the loss of the tax credit - it doesn’t just disappear. It fades. Teslas haven’t been eligible for the full tax credit for almost a year now, and it’s been under $2k for all of Q3 and Q4. So we should already be seeing the effect if it’s going to happen. I think the Mach-E will have a much bigger effect than the loss of the tax credit at the end of this month.
I think Elon is playing a long game with a goal that is not to be the biggest EV manufacturer, but to change the way the world works. He’s using Tesla to push the industry, and he’s taking gambles to get there because life is short and that’s how he’s wired. It would be good if he’d shut up once in a while but that’s not how he rolls. I’d like to see him get someone like SpaceX’s Shotwell at Tesla and the solar company, I think that would mellow out the public conversation and take some of the focus off whatever is boiling out of Elon’s brain today.
Keith Tanner said:I think Elon is playing a long game with a goal that is not to be the biggest EV manufacturer, but to change the way the world works. He’s using Tesla to push the industry, and he’s taking gambles to get there because life is short and that’s how he’s wired. It would be good if he’d shut up once in a while but that’s not how he rolls. I’d like to see him get someone like SpaceX’s Shotwell at Tesla and the solar company, I think that would mellow out the public conversation and take some of the focus off whatever is boiling out of Elon’s brain today.
^^^ This. He's into cars, he's into home energy storage and he's into solar electricity production. Anyone see a pattern? I'm not sure how SpaceX fits with those others, but it does in the sense that he wants to be a game changer. Egomaniac? Probably. But don't most really significant people dance down that aisle to some extent?
I just long for the day I have a Model 3 track car that I tow with my Cybertruck to various track days and autocrosses, and charge both of them with my Tesla roof. Oh, and when a hurricane knocks out power, I've got my Tesla power wall so I'll still have power. What's next? On the Joe Rogan podcast, Elon said he wants to make a more efficient air conditioner. That could be interesting.
Keith Tanner said:It would be really interesting to know if there was a significant difference in production costs between that and the Tesla design. Is the Nikola anything more than a designer doodle?
No idea if Nikola did anything other than design studies as I don't think they ever had any real intention of manufacturing it.
In reply to STM317 :
Just cause I want to stir the pot on this whole financial model discussion...
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