7 ms·

"Tesla loses money on every car too." This is false, Tesla averages $18,000 margin on every model S & model X it sells. "So how did GM pull off a $30,000 car

"Tesla loses money on every car too." This is false, Tesla averages $18,000 margin on every model S & model X it sells. "So how did GM pull off a $30,000 car with 200 miles of range?" It didn't. It is $30k only after $8000 of federal tax credits.

forgetsusername 10y ago
Tesla also includes the tax credit in their price. And at present they don't even have a car. Why are people so bitter that GM is competing? Is this not a good thing?
- colechristensen 10y ago
  Many people are Tesla fanboys, many other people are cheering on Tesla to fail. When the failure-cheerleaders exaggerate or make false claims the Tesla fanboys are overzealous in defense.
- vvanders 10y ago
  People are bitter because GM has a history of screwing the customer WRT electric vehicles. Many people wanted to buy their EV-1 but instead they sent them to the crushers. Like other people have said, GM is doing this to offset their truck/suvs and not out of a real interest in EVs.
  - Spooky23 10y ago
    I don't think that's a fair statement. They shipped the Volt when Tesla was mostly vapor. The Bolt isn't like the electric Fiat they they just shoved a battery into.
  - coredog64 10y ago
    Had they sold them they would have had to produce spare parts for 10 years. Maybe it was cheaper to crush them? Offsets are nothing new. Ford used to sell Escorts near or below cost in order to sell Crown Vics.
    - jwatte 10y ago
      Yes, and that's a problem if you believe Crown Victorias are less sustainable for the Earth we all have to share and that our market does not price in sustainability externalities.
  - forgetsusername 10y ago
    >Like other people have said, GM is doing this to offset their truck/suvs and not out of a real interest in EVs. This is simply incorrect, and is like saying Tesla is building EVs for the subsidies. GM are doing it because the future is EVs, and Tesla is to thank for that.
  - smackfu 10y ago
    Ancient history at this point.
    - EdHominem 10y ago
      Hah, reputation doesn't age the same way. It's like wine.
  - mikestew 10y ago
    People are bitter because GM has a history of screwing the customer WRT electric vehicles. If by "people" you mean the general population, I'd propose that the majority of people don't even know the EV-1 ever existed. Like other people have said, GM is doing this to offset their truck/suvs and not out of a real interest in EVs. GM's selling an EV, does the motivation matter? Especially if it's to offset the trucks that people were going to buy regardless?
- ekzy 10y ago
  Even if we can now witness the benefits of competition in the short term (cheaper electric cars for us), it is not necessarily a good thing because it can force the company to be competitive to stay alive, instead of spending cash on R&D (innovation).
- pseudometa 10y ago
  "Tesla also includes the tax credit in their price." This is false... Tesla advertises their model 3 targeted base price as $35,000. This is before any tax credits.
  - mark-r 10y ago
    By the time the model 3 rolls off the line, there may not be any tax credits. We'll have to see what Trump has planned.
  - forgetsusername 10y ago
    >This is false... Tesla advertises their model 3 targeted base price as $35,000. This is before any tax credits. The Model 3 doesn't exist yet, so how do you know? Where are these advertisements you are seeing?
    - NickM 10y ago
      https://www.tesla.com/model3 https://www.tesla.com/model3
- dsfyu404ed 10y ago
  >Why are people so bitter that GM is competing? The left coast hippies want to root for their home team.
colechristensen 10y ago
Someone please correct me if I'm wrong. It seems like the battery packs on cars are engineered to manipulate people, and this would be an easy way of making two very different cars seem the same. Lithium batteries degrade. With heat, with time, with charge cycles. Article after article writes about how Tesla's battery packs barely degrade! 8% capacity loss over 100,000 miles. This has to be a lie. Unless they've come up with a new magical battery chemistry. Lithium batteries degrade. 15-20% capacity loss per year. 2-5% per hundred cycles. There are ways to cheat though, design your battery electronics to pretend to have a lower capacity at first and then gradually allow them to discharge more and more as the battery ages. It's true that there's a small boost to capacity retention if you don't fully discharge. A new Tesla might well have an actual 400 mile range the day it comes off the lot, but they figure consumers would be really disappointed if that 400 mile range went to 350 after a year and so on... instead I'm guessing they pretend the battery capacity starts lower so that it's more consistent. In the end when they run out of spare room they'd initially left themselves the battery would fail fast. What's to prevent a competitor to cut just a few corners on this strategy – don't give yourself as much future wiggle room so that you can say your capacity is higher? I would actually love to be wrong, but what you see from the battery performance metrics just doesn't match up with any of my existing knowledge about how battery cells work.
- slededit 10y ago
  SSDs do this exact same thing. The individual flash cells have much lower durability than the drive itself.
  - colechristensen 10y ago
    Hard disks do too but the difference is that for disks it's more or less an essential function. If you don't leave plenty of spare sectors over the very inevitable bad sectors will cause the drive to fail outright. Perhaps that's a decision I'd like to make myself but it's still an essential function no matter what. Leaving spare capacity in my battery isn't an essential function. That extra hundred or two miles the first few years of ownership has value and if I use it right away I don't lose anything (except marginally faster wear on the battery pack) The disk issue is about essential function. If I left no spare room the disk would have unrecoverable failures in days or weeks. The battery issue is only about perception. If I left no spare battery charge the battery would function exactly the same. It's life would only be reduced in that I'd be using it more (this is assuming that my above theory is correct)
deleted 10y ago
[deleted]
gizmo 10y ago
Tesla uses very unconventional accounting to arrive at that gross margin. Specifically they don't subtract R&D costs from their margins. When you correct for this Tesla's gross margin is within a few percent of the median for the automotive industry. > In 2015, Tesla spent over $700 million on research and development while selling about 50,000 vehicles. If Tesla reported gross margins like other automakers, gross margin would have been reduced by $14,000 PER VEHICLE. Tesla also has huge sales expenses that they don't subtract from their margins. Take that into account, and Tesla isn't making any profit per car anymore. To make matters worse, they also need to raise an enormous amount of money in order to manufacture the model 3 at scale. It's questionable if they'll be able to do that. Tesla is operated very much like a silicon valley startup. They're growing rapidly in the hope of becoming profitable when they reach scale. But they sure as heck aren't profitable right now. Source: http://seekingalpha.com/article/3994655-teslas-gross-margins-mean-think-mean http://seekingalpha.com/article/3994655-teslas-gross-margins...
- NickM 10y ago
  > Tesla is operated very much like a silicon valley startup. They're growing rapidly in the hope of becoming profitable when they reach scale. But they sure as heck aren't profitable right now. They have already reached scale, and are already profitable. They're just pouring their profits back into further growth. Yes, they're spending a lot on R&D, but that's not sending money into a vacuum, that's investing in the future expansion of the company. The article you link even admits this: "Would it be fair to include the billion-plus dollars spent to bring the Model 3 to fruition in a few tens of thousands of Model X and Model S gross margins? Probably not." Incidentally, I would take anything from Seeking Alpha with a huge grain of salt. Anyone can post an article on there, and people often try to use that site to skew investor perceptions in their own favor. In fact, the author of the very article you link openly confesses at the bottom that he "may initiate a short position in TSLA over the next 72 hours." Conflict of interest, anyone? If you want to see how profitable Tesla is, I would recommend the GAAP numbers from their last quarterly report, rather than some Seeking Alpha author's selective reinterpretation of the facts.
  - forgetsusername 10y ago

forgetsusername 10y ago

Tesla also includes the tax credit in their price. And at present they don't even have a car. Why are people so bitter that GM is competing? Is this not a good thing?

colechristensen 10y ago
Many people are Tesla fanboys, many other people are cheering on Tesla to fail. When the failure-cheerleaders exaggerate or make false claims the Tesla fanboys are overzealous in defense.
vvanders 10y ago
People are bitter because GM has a history of screwing the customer WRT electric vehicles. Many people wanted to buy their EV-1 but instead they sent them to the crushers. Like other people have said, GM is doing this to offset their truck/suvs and not out of a real interest in EVs.
- Spooky23 10y ago
  I don't think that's a fair statement. They shipped the Volt when Tesla was mostly vapor. The Bolt isn't like the electric Fiat they they just shoved a battery into.
- coredog64 10y ago
  Had they sold them they would have had to produce spare parts for 10 years. Maybe it was cheaper to crush them? Offsets are nothing new. Ford used to sell Escorts near or below cost in order to sell Crown Vics.
  - jwatte 10y ago
    Yes, and that's a problem if you believe Crown Victorias are less sustainable for the Earth we all have to share and that our market does not price in sustainability externalities.
- forgetsusername 10y ago
  >Like other people have said, GM is doing this to offset their truck/suvs and not out of a real interest in EVs. This is simply incorrect, and is like saying Tesla is building EVs for the subsidies. GM are doing it because the future is EVs, and Tesla is to thank for that.
- smackfu 10y ago
  Ancient history at this point.
  - EdHominem 10y ago
    Hah, reputation doesn't age the same way. It's like wine.
- mikestew 10y ago
  People are bitter because GM has a history of screwing the customer WRT electric vehicles. If by "people" you mean the general population, I'd propose that the majority of people don't even know the EV-1 ever existed. Like other people have said, GM is doing this to offset their truck/suvs and not out of a real interest in EVs. GM's selling an EV, does the motivation matter? Especially if it's to offset the trucks that people were going to buy regardless?
ekzy 10y ago
Even if we can now witness the benefits of competition in the short term (cheaper electric cars for us), it is not necessarily a good thing because it can force the company to be competitive to stay alive, instead of spending cash on R&D (innovation).
pseudometa 10y ago
"Tesla also includes the tax credit in their price." This is false... Tesla advertises their model 3 targeted base price as $35,000. This is before any tax credits.
- mark-r 10y ago
  By the time the model 3 rolls off the line, there may not be any tax credits. We'll have to see what Trump has planned.
- forgetsusername 10y ago
  >This is false... Tesla advertises their model 3 targeted base price as $35,000. This is before any tax credits. The Model 3 doesn't exist yet, so how do you know? Where are these advertisements you are seeing?
  - NickM 10y ago
    https://www.tesla.com/model3 https://www.tesla.com/model3
dsfyu404ed 10y ago
>Why are people so bitter that GM is competing? The left coast hippies want to root for their home team.

colechristensen 10y ago

Someone please correct me if I'm wrong. It seems like the battery packs on cars are engineered to manipulate people, and this would be an easy way of making two very different cars seem the same. Lithium batteries degrade. With heat, with time, with charge cycles. Article after article writes about how Tesla's battery packs barely degrade! 8% capacity loss over 100,000 miles. This has to be a lie. Unless they've come up with a new magical battery chemistry. Lithium batteries degrade. 15-20% capacity loss per year. 2-5% per hundred cycles. There are ways to cheat though, design your battery electronics to pretend to have a lower capacity at first and then gradually allow them to discharge more and more as the battery ages. It's true that there's a small boost to capacity retention if you don't fully discharge. A new Tesla might well have an actual 400 mile range the day it comes off the lot, but they figure consumers would be really disappointed if that 400 mile range went to 350 after a year and so on... instead I'm guessing they pretend the battery capacity starts lower so that it's more consistent. In the end when they run out of spare room they'd initially left themselves the battery would fail fast. What's to prevent a competitor to cut just a few corners on this strategy – don't give yourself as much future wiggle room so that you can say your capacity is higher? I would actually love to be wrong, but what you see from the battery performance metrics just doesn't match up with any of my existing knowledge about how battery cells work.

slededit 10y ago
SSDs do this exact same thing. The individual flash cells have much lower durability than the drive itself.
- colechristensen 10y ago
  Hard disks do too but the difference is that for disks it's more or less an essential function. If you don't leave plenty of spare sectors over the very inevitable bad sectors will cause the drive to fail outright. Perhaps that's a decision I'd like to make myself but it's still an essential function no matter what. Leaving spare capacity in my battery isn't an essential function. That extra hundred or two miles the first few years of ownership has value and if I use it right away I don't lose anything (except marginally faster wear on the battery pack) The disk issue is about essential function. If I left no spare room the disk would have unrecoverable failures in days or weeks. The battery issue is only about perception. If I left no spare battery charge the battery would function exactly the same. It's life would only be reduced in that I'd be using it more (this is assuming that my above theory is correct)

deleted 10y ago

[deleted]

gizmo 10y ago

Tesla uses very unconventional accounting to arrive at that gross margin. Specifically they don't subtract R&D costs from their margins. When you correct for this Tesla's gross margin is within a few percent of the median for the automotive industry. > In 2015, Tesla spent over $700 million on research and development while selling about 50,000 vehicles. If Tesla reported gross margins like other automakers, gross margin would have been reduced by $14,000 PER VEHICLE. Tesla also has huge sales expenses that they don't subtract from their margins. Take that into account, and Tesla isn't making any profit per car anymore. To make matters worse, they also need to raise an enormous amount of money in order to manufacture the model 3 at scale. It's questionable if they'll be able to do that. Tesla is operated very much like a silicon valley startup. They're growing rapidly in the hope of becoming profitable when they reach scale. But they sure as heck aren't profitable right now. Source: http://seekingalpha.com/article/3994655-teslas-gross-margins-mean-think-mean http://seekingalpha.com/article/3994655-teslas-gross-margins...

NickM 10y ago
> Tesla is operated very much like a silicon valley startup. They're growing rapidly in the hope of becoming profitable when they reach scale. But they sure as heck aren't profitable right now. They have already reached scale, and are already profitable. They're just pouring their profits back into further growth. Yes, they're spending a lot on R&D, but that's not sending money into a vacuum, that's investing in the future expansion of the company. The article you link even admits this: "Would it be fair to include the billion-plus dollars spent to bring the Model 3 to fruition in a few tens of thousands of Model X and Model S gross margins? Probably not." Incidentally, I would take anything from Seeking Alpha with a huge grain of salt. Anyone can post an article on there, and people often try to use that site to skew investor perceptions in their own favor. In fact, the author of the very article you link openly confesses at the bottom that he "may initiate a short position in TSLA over the next 72 hours." Conflict of interest, anyone? If you want to see how profitable Tesla is, I would recommend the GAAP numbers from their last quarterly report, rather than some Seeking Alpha author's selective reinterpretation of the facts.
- forgetsusername 10y ago