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Possibly because other auto manufacturers do include R&D in their COGS? Tesla, instead, treats it as an OpEx which to be fair, most non-automotive companies do
by encoderer 10y ago
Possibly because other auto manufacturers do include R&D in their COGS? Tesla, instead, treats it as an OpEx which to be fair, most non-automotive companies do as well. Still, it's not standard for the industry the are in.
tldr: Because if Tesla did their accounting the way Toyota does, they have a negative gross margin.
- thesimpsons1022 10y agotesla isn't a company like Toyota though.
- rpgmaker 10y agoYes, Toyota has solid financials.
- toomuchtodo 10y agoSo does Walmart (compared to Amazon). I'd still be betting on Amazon.
- Teever 10y agoWhy not bet on both? Why are you so dismissive of walmart?
- toomuchtodo 10y agoThey're a just in time logistics company that uses technology, not a technology company focused on logistics. Big difference in my mind.
- marvin 10y agoBut does not grow its sales 40% every year.
- seanmcdirmid 10y agoTheir losses do not increase in each unit sold, they actually go down. It is an important difference (shared by other auto companies also), so it is technically true that "they do not lose more money on each car sold."
- konschubert 10y agoIn other words, the marginal cost of producing a car is lower than its selling price?
- TeMPOraL 10y agoThat would fit the common understanding of the phrase "not losing money on every X sold".
- vonmoltke 10y agoActually, per their latest earnings reports[1], if they did what Toyota does and roll their R&D expenses into their cost of revenue, they would still show a gross profit. It would just be $70M for Q1'16 instead of $252M. [1] https://finance.yahoo.com/q/is?s=TSLA https://finance.yahoo.com/q/is?s=TSLA
- encoderer 10y agoI guess I made a gross assumption? Thanks for the link -- i had just accepted the premise of the question.
- gozur88 10y agoIt's really not correct to say Tesla "loses money on every car" if the marginal cost is less than the sale price, because the implication of the phrase is Tesla would lose even more money if they sold more cars.