Elon reveals Cybertruck details / production expectations on Q3 2023 call

[charliemagpie]

Tesla has lost a fraction per car compared to experienced ICE competitors who would not have to outlay from scratch...existing buildings, buying, logistics,admin etc.

And I venture to say, Legacy has a choice where they allocate certain expenses, we may not be seeing the real picture, wherea tesla had nowhere to hide.

Yes, Tesla also lost money for a long time, but we can never compare apples to apples.. Tesla is an apple, legacy is a banana.

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[HaulingAss]

Tesla has lost a fraction per car compared to experienced ICE competitors who would not have to outlay from scratch...existing buildings, buying, logistics,admin etc.

And I venture to say, Legacy has a choice where they allocate certain expenses, we may not be seeing the real picture, wherea tesla had nowhere to hide.

Yes, Tesla also lost money for a long time, but we can never compare apples to apples.. Tesla is an apple, legacy is a banana.

What most people don't realize is that Tesla has had positive automotive net profit per car going back to near the begining of Model S sales. There may be a a few isolated quarterly exceptions, but Tesla has generally always sold their EVs at a profit, unlike legacy automakers today. The Tesla losses that the media focused on were corporate losses, not the result of selling the cars for less than it cost to make them. Tesla just wasn't making enough cars , at a high enough profit, to pay for all their growth and other corporate expenses.

 

[cvalue13]

What most people don't realize is that Tesla has had positive automotive net profit per car going back to near the begining of Model S sales. There may be a a few isolated quarterly exceptions, but Tesla has generally always sold their EVs at a profit, unlike legacy automakers today.

show your work

because you seem to be shifting between what is leveled at Ford (eg all in net profit per vehicle) to a different metric on Tesla

would be interested to see the apples-to-apples data you claim

 

[Arctic_White]

show your work

because you seem to be shifting between what is leveled at Ford (eg all in net profit per vehicle) to a different metric on Tesla

would be interested to see the apples-to-apples data you claim

Cvalue, it's obvious that Tesla has several major advantages. One is the lack of dealership network. Dealers parasites and such value. Dealers had their role back in the day but in this information-based day and age, they don't add any value to the end user.

Tesla also is the best auto manufacturer from an efficiency point. This isn't obvious to many yet but just wait a few more years.

Finally, Tesla has pioneered new manufacturing techniques that are now being copied by everyone. If Tesla wasn't so good at making cars, why is everyone copying them (Gigacasting, for example)?

 

[Arctic_White]

What most people don't realize is that Tesla has had positive automotive net profit per car going back to near the begining of Model S sales. There may be a a few isolated quarterly exceptions, but Tesla has generally always sold their EVs at a profit, unlike legacy automakers today. The Tesla losses that the media focused on were corporate losses, not the result of selling the cars for less than it cost to make them. Tesla just wasn't making enough cars , at a high enough profit, to pay for all their growth and other corporate expenses.

100% this.

Tesla makes the machine that makes the machine. Tesla has solved the problem of complex manufacturing.

If they can simply copy/paste what they have learned so far, they will eventually get to 20M annual sales with a 30% gross profit margin. This isn't just conjecture on my part, but a firm belief in what Tesla has the ability to do.

execution is key though.

 

[Arctic_White]

show your work

because you seem to be shifting between what is leveled at Ford (eg all in net profit per vehicle) to a different metric on Tesla

would be interested to see the apples-to-apples data you claim

What would you like him (or me) to show? All the data is readily available online.

I've owned 4 Teslas and I know more about Tesla than any other company. I also put my money where my mouth is and I have a substantial position in TSLA. Because I've got massive skin in the game, it behooves me to do the research to ensure that I don't lose my money. So I'd be more than happy to discuss with you if you have any specific questions regarding Tesla or its financials.

 

[Crissa]

The only reason Cybertruck is 'hard' is because it's not a copy-paste of their other development lines. They went hard into developing new techniques to make it lighter and more durable than the competition, choosing to use materials no one else uses.

That's the hard part. They know how to scale up a process, it just takes time. And it sounds like they're sandbagging, but their sandbagging numbers are Model Y numbers. As in, the car they ramped the fastest.

What were people even thinking, if that's sandbagging.

-Crissa

 

[cvalue13]

What would you like him (or me) to show? All the data is readily available online.

I don’t believe the ‘data’ he was suggesting *is* there

there’s the (essentially) cost of the vehicle proper, vs it’s sales price

then there’s (essentially) net income of the business in a period of time divided by the number of vehicles sold attributable to that period of time

This second calculation is the basis upon which Ford and others “lose money on every car they sell.”

@HaulingAss suggested above that, in t contrast to Ford and others, “Tesla has had positive automotive net profit per car going back to near the begining of Model S sales. There may be a a few isolated quarterly exceptions, but Tesla has generally always sold their EVs at a profit.”

Which is *impossible* on any cursory glance at Tesla’s company history, because the numerator is the net profits of the business

further to the above, the graph looks even more telling if one backs out of Tesla’s net profits the amounts made from carbon credits and Bitcoin sales

 

[cvalue13]

Cvalue, it's obvious that Tesla has several major advantages. One is the lack of dealership network. Dealers parasites and such value.

that’s *not* obvious, especially in the long term

they are two very different business models, which are widely recognized across industries, each representing a different balance of risk and benefits

dealerships are like McDonald’s franchises - in exchange for the “parasitic” value McDonald’s corporate “gives” to the owner of a retail location, that owner takes on the business risks and and OpEx of being in the retail last mile. There are downsides to McDonalds, and upsides to McDonalds.

In contrast, your local wholly-owned mom-and-pop burger joint, gets to retain all margin to the point of the customer - but only in exchange for retaining the business risks and OpEx of the retail last mile. There are downsides to mom-and-pop, and upsides to mom-and-pop.

Point being, to act like Ford et al merely and accidentally “lose” money by not owning and controlling the retail arm of their business is to ignore that this is done for a reason that is risk-adjusted. To act like the mom-and-pop are by some definition brilliant for retaining the entire margin vertical is to ignore that doing so is at the expense of various retail-business risk.

Now, there are good and interesting discussions to be had regarding whether, when applied to the car industry, one strategy is superior to the other.

But yours and other commenters never get to any of those discussions, and instead just suggest some cartoon-simplistic view of the world where “keeping more of the vertical is better as demonstrated by Tesla getting more margin,” as though you don’t even appreciate that Tesla also takes on more risk and OpEx.

To which I would point out, since you claim to be so agile with the financials of Tesla:

(1) VERY bizarrely, Tesla calculates its vehicle margin AFTER backing out the OpEx for its retail distribution arms - that’s both unusual and perhaps an explanation of why folks like you appear to miss its importance.

(2) as a company, like McDonalds, begins to scale globally, the risks, OpEx, and compliance loads avoided at the “dealership” level begin increasing almost exponentially - meaning the larger retail footprint onboarded, the more it makes sense to exchange a tail of margin for someone else to take on those downsides.

So, not only is it a matter of deep debate (or mere strategy) as to whether it’s better/worse for Tesla to not have dealerships (just as with McDonalds vs wholly owned mom-and-pop), that calculation changes as global footprint and penetration increases (just as with McDonalds vs wholly-owned mom-and-pop).

None of this is to say the dealership model as currently exists doesn’t have problems, or that on a merely theoretical level it is the better approach for car companies.

instead only to say quips like yours appear to betray only a deep, misguided, misunderstanding of whether or to what degree the “lack of dealership network” is a “major advantage” of Tesla in the long run, both as markets shift (and so risks can be realized” and as Tesla’s penetration increases.

frankly, until you say a lot more, I’m left feeling only embarrassed to see someone say “I understand a company deeply” along with such a basic misstatement of the risk/benefits of a business strategy that is widely recognized in this and other industries as being a matter of basic risk/scale strategy

 

[TyPope]

machined how? And you think every one of them had been machined?

For the ones that had been you don’t think it’s possible that the machining process can be when flaws are discovered?

or let me put it a different way: what would you say if someone *told* you every CT casting seen outdoors at GFTX right now is non-conforming, headed to recycle/scrap?

Yes. They've been machined. Or, at least the ... whatever the flow paths for molten aluminum is called... has been machined out of them. These still have them:

I suppose a case could be made to say they are all scrap. I confess I do not know the process verification challenges and each of these casting could be an incremental test. I was under the impression that Tesla was setting them outside to cool because having that much metal just sitting around in the factory cooling from 1,200 degrees to something that can be handled would really heat up the place.

 

[cvalue13]

Yes. They've been machined. Or, at least the ... whatever the flow paths for molten aluminum is called... has been machined out of them. These still have them:

yeah sorry, I wasn’t so much asking what you meant by machining, as why it would be relevant

at any stage of prepping a casting for use some non-confirming aspect could be identified

 

[HaulingAss]

Today's margins are today's margins. If you want to speculate about future margins, that's a different conversation, but today's R&D expenditures do not predictably track to future profit growth.

True, it's very short-sighted to measure the amount of R&D each company does by how much they spend on R&D. Tesla is far more efficient with their R&D spending than legacy auto, not even in the same ballpark.

Anyone who thinks Tesla must be similar to legacy auto doesn't understand the fundamental way that Tesla is transforming the entire auto industry.

 

[CyberGus]

True, it's very short-sighted to measure the amount of R&D each company does by how much they spend on R&D. Tesla is far more efficient with their R&D spending than legacy auto, not even in the same ballpark.

Anyone who thinks Tesla must be similar to legacy auto doesn't understand the fundamental way that Tesla is transforming the entire auto industry.

Tesla is indeed doing things very differently. The decades-old methods of the auto industry were overdue for disruption.

The mistake is when some assert that Tesla's profit/loss dollars are somehow different from everyone else's dollars. You can't count unhatched chickens.

 

[HaulingAss]

Tesla also is the best auto manufacturer from an efficiency point. This isn't obvious to many yet but just wait a few more years.

Anyone who, at this point, can't see that Tesla is on another level of efficiency from any legacy player has their eyes closed. They are living inside their own head. Some people just want to shut their eyes and prop up legacy automotive, as if their past greatness makes them worth keeping around even after they have outlived their usefulness to society. They are the very reason a new car is unaffordable for the majority of Americans and Tesla is about to change that in a big way.

I think most of the people we see on auto forums who are advocating for legacy auto have deep ties to the industry. Their income is probably dependent upon legacy auto, most often the dealership networks. Nearly 1/4 of American's take home pay is consumed by auto related expenses. That's a huge part of the economy and Tesla wants to shrink those costs which will give consumers more money to spend on other things. Legacy auto loves the status quo, and hates to see the changes that shift economic power to the consumer. Tesla is driving that change, more than any other industry player (most are trying to slow down the techtonic shifts that are already underway).

Back in 2018, fans of legacy auto argued that Tesla should not be able to count income from emissions credits sold to legacy automakers as automotive income because those credits would shortly be dissappearing (as legacy ramped EV's to high volume production and no longer needed to buy the credits from Tesla). They argued the income from credits were not recurring revenue because they would peter out to nothing by 2020 when legacy auto flooded the market with EVs. Indeed, the credits were available to all manufacturers equally, they were designed to encourage ICE manufacturers to make enough EVs, or to make their fleets clean enough, that they no longer needed to buy the credits on the open market.

Auto analysts bought that storyline and always backed the income from the credits out of automotive revenue (because, they said, it would not be recurring revenue). But here we are 6 years later and Tesla's revenue from credit sales has grown, not shrunk. That's because legacy auto doubled down on their most profitable ICE sales, the biggest and least efficient vehicles, SUVs and Pickup trucks.

Even though auto analysts still back out revenue from credits, Tesla is still far more profitable selling EV's than legacy is at selling ICE vehicles. This proves they are unable to compete head to head with Tesla in either the ICE or the EV space. They have zero chance of becoming efficient enough to compete with Tesla, ever. Because selling EVs at a loss is not competing. Their only hope is for the growing demand for EV's to reverse course. And that's not going to happen for the simple reason that economics is real. EV's are becoming less expensive and ICE are becoming more expensive to build.

People who make their living from the ICE industry will fight tooth and nail to slow down this transition by denegrating Tesla and Elon Musk, but you cannot stop an idea whose time has come. Follow the money.

 

[TyPope]

yeah sorry, I wasn’t so much asking what you meant by machining, as why it would be relevant

at any stage of prepping a casting for use some non-confirming aspect could be identified

Copy. I would think the maching is quite straight forward and would not introduce many defects. however, you bring up a good point that machining may find errors in casting. If casting got too far ahead, the number of affected units could be high. Like how Harley Davidson, back in the day, set up a super efficient line where handlebars went along a big conveyor to the line. By the time they realized the handlbars were wrong, they had thousands that had already been made. They then doubled down on the mistake and used them anyway. That became the focal case on how NOT to manufacture things.

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