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There is a big difference between loosing money because you build and sell individual cars at a loss, and investing in further capacity. They make money on the
by bjelkeman-again 10y ago
There is a big difference between loosing money because you build and sell individual cars at a loss, and investing in further capacity. They make money on the cars they build and sell, the overall loss comes from investing in the new factories and product lines. This should come as no surprise to anyone familiar with startups.
- mozumder 10y agoYou're supposed to include capital expenses and depreciation in margins. Just because they're building factories doesn't mean they have higher margins. This is why startups underestimate their expenses.
- maccam94 10y agoThe new factory isn't part of the current production cars Cost of Goods Sold because it isn't being used yet. See the matching principle. The depreciation of the factory will absolutely factor into the COGS of the cars it produces in the future, but the increase in sales volume should compensate for that.