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They're investing aggressively in new factories and new product lines. If they wanted to show profits today they could give up building and expanding factories

They're investing aggressively in new factories and new product lines. If they wanted to show profits today they could give up building and expanding factories and stop entering new product categories. But that would be stupid.

deleted 6y ago
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bqe 6y ago
The parent commenter was discussing revenue and not profit. If they were aggressively expanding, I would expect that profits to remain small or negative, but I'd expect revenue to grow as a result.
- sbelskie 6y ago
  Yea, if they are adding product lines without an increase in revenue that seems (possibly) concerning, though obviously the current economic situation makes it hard to know how to value year over year comparisons.
- H8crilA 6y ago
  Just to make it more clear what bqe is saying: they are selling the ~same amount of cars as 2 years ago. Both in terms of $ and in terms of #. Growth is completely flat.
  - samfisher83 6y ago
    Most companies have shown big declines due to covid. Just being flat is good.
    - H8crilA 6y ago
      It was flat pre-covid too. It has been flat for 2 years.
      - labcomputer 6y ago
        Referencing your other comment, this claim really starts to fall apart. * You're cherry-picking 2018Q3. So it's not exactly 2 years, it's actually 1.75 years (2018Q3 - 2020Q2). * But now you're saying pre-covid too, so now it's actually 1.25 years (2018Q3 - 2019Q4). That period in question is the time after Tesla finished ramping Model 3 production (using a tent!) at Fremont in 2018Q3, and before they finished building the factory in Shanghai in 2020Q1. So... doesn't it seem reasonable that production gains would be a bit "lumpy"? They go up every time a new factory is finished, and they stay flat until the next one.
        H8crilA 6y ago
        I hope it works out for them! Good luck.
  - Brakenshire 6y ago
    They’ve lost a $7500 subsidy in the US during that time period, and just recently had Coronavirus. So it’s not that surprising.
  - guerby 6y ago
    Q2 2018: 53,339 vehicules produced Q2 2020: 82,272 vehicules produced 2 years ago flat? Source: https://en.wikipedia.org/wiki/Tesla,_Inc https://en.wikipedia.org/wiki/Tesla,_Inc. Tesla production will be around 100k+ per quarter until they open a new factory (Berlin, july 2021) or expand current ones. If they're still production limited the only growth in production numbers for the next 12 monthes will be in their China factory and may be a bit in Fremont (p7 of PDF). Tesla announced they hope to be close to 500k produced vehicules in 2020 (p10 of PDF) so that makes 157k/quarter for the next two quarters. I don't think they'll reach 500k in 2020. But of course the thing you have to look at is results from other automakers (hint: ugly).
    - H8crilA 6y ago
      Not exactly 2 years: look up Q3 2018 onwards.
itsoktocry 6y ago
>If they wanted to show profits today they could give up building and expanding factories and stop entering new product categories Can you show me in the financial statements where this "aggressive investing" in factories is, and how it affects net profit? Why are they doing it if revenues are stagnant?
- modeless 6y ago
  Factory construction expenses aren't explicitly broken out in the financials. But cutting R&D could more than double their net income this quarter, if they wanted. What's your point? Do you believe that doubling their number of vehicle factories along with significant expansions at both existing factories isn't having a material impact on their expenses? They are doing it because they need more capacity to increase revenue, because their ASP is lower in the new markets they've entered. And because they need local factories to reduce tariffs. And do you really think that comparing this quarter YoY is a good way to evaluate their revenue growth?
  - itsoktocry 6y ago
    >But cutting R&D could more than double their net income this quarter, if they wanted. What's your point? What's your point? That if we exclude all expenses from their income statement they'd be profitable? Unfortunately, they can't do that. >They are doing it because they need more capacity to increase revenue Are any of their factories running near capacity? >And do you really think that comparing this quarter YoY is a good way to evaluate their revenue growth? Probably not. Q1 y-o-y wasn't great either though.
    - modeless 6y ago
      My point is succinctly stated here: https://news.ycombinator.com/item?id=23921383 https://news.ycombinator.com/item?id=23921383
xenophon 6y ago
OP referenced revenue growth, not margin expansion. All else equal, you'd expect to see existing products take share and generate movement on the top-line. Though it could be the case that their investment in new product development reduces their ability to meet current demand and therein throttles revenue; not sure if the 10Q references their order backlog.
- donor20 6y ago
  I think they have taken share recently, but total volumes are down. That said, I think tesla is WILDLY overpriced (and I used to own tesla stock).
xoxoy 6y ago
huh? they’ve had four quarters of profits.

deleted 6y ago

[deleted]

bqe 6y ago

The parent commenter was discussing revenue and not profit. If they were aggressively expanding, I would expect that profits to remain small or negative, but I'd expect revenue to grow as a result.

sbelskie 6y ago
Yea, if they are adding product lines without an increase in revenue that seems (possibly) concerning, though obviously the current economic situation makes it hard to know how to value year over year comparisons.
H8crilA 6y ago
Just to make it more clear what bqe is saying: they are selling the ~same amount of cars as 2 years ago. Both in terms of $ and in terms of #. Growth is completely flat.
- samfisher83 6y ago
  Most companies have shown big declines due to covid. Just being flat is good.
  - H8crilA 6y ago
    It was flat pre-covid too. It has been flat for 2 years.
    - labcomputer 6y ago
      Referencing your other comment, this claim really starts to fall apart. * You're cherry-picking 2018Q3. So it's not exactly 2 years, it's actually 1.75 years (2018Q3 - 2020Q2). * But now you're saying pre-covid too, so now it's actually 1.25 years (2018Q3 - 2019Q4). That period in question is the time after Tesla finished ramping Model 3 production (using a tent!) at Fremont in 2018Q3, and before they finished building the factory in Shanghai in 2020Q1. So... doesn't it seem reasonable that production gains would be a bit "lumpy"? They go up every time a new factory is finished, and they stay flat until the next one.
      - H8crilA 6y ago
        I hope it works out for them! Good luck.
- Brakenshire 6y ago
  They’ve lost a $7500 subsidy in the US during that time period, and just recently had Coronavirus. So it’s not that surprising.
- guerby 6y ago
  Q2 2018: 53,339 vehicules produced Q2 2020: 82,272 vehicules produced 2 years ago flat? Source: https://en.wikipedia.org/wiki/Tesla,_Inc https://en.wikipedia.org/wiki/Tesla,_Inc. Tesla production will be around 100k+ per quarter until they open a new factory (Berlin, july 2021) or expand current ones. If they're still production limited the only growth in production numbers for the next 12 monthes will be in their China factory and may be a bit in Fremont (p7 of PDF). Tesla announced they hope to be close to 500k produced vehicules in 2020 (p10 of PDF) so that makes 157k/quarter for the next two quarters. I don't think they'll reach 500k in 2020. But of course the thing you have to look at is results from other automakers (hint: ugly).
  - H8crilA 6y ago
    Not exactly 2 years: look up Q3 2018 onwards.

itsoktocry 6y ago

>If they wanted to show profits today they could give up building and expanding factories and stop entering new product categories Can you show me in the financial statements where this "aggressive investing" in factories is, and how it affects net profit? Why are they doing it if revenues are stagnant?

modeless 6y ago
Factory construction expenses aren't explicitly broken out in the financials. But cutting R&D could more than double their net income this quarter, if they wanted. What's your point? Do you believe that doubling their number of vehicle factories along with significant expansions at both existing factories isn't having a material impact on their expenses? They are doing it because they need more capacity to increase revenue, because their ASP is lower in the new markets they've entered. And because they need local factories to reduce tariffs. And do you really think that comparing this quarter YoY is a good way to evaluate their revenue growth?
- itsoktocry 6y ago
  >But cutting R&D could more than double their net income this quarter, if they wanted. What's your point? What's your point? That if we exclude all expenses from their income statement they'd be profitable? Unfortunately, they can't do that. >They are doing it because they need more capacity to increase revenue Are any of their factories running near capacity? >And do you really think that comparing this quarter YoY is a good way to evaluate their revenue growth? Probably not. Q1 y-o-y wasn't great either though.
  - modeless 6y ago
    My point is succinctly stated here: https://news.ycombinator.com/item?id=23921383 https://news.ycombinator.com/item?id=23921383

xenophon 6y ago

OP referenced revenue growth, not margin expansion. All else equal, you'd expect to see existing products take share and generate movement on the top-line. Though it could be the case that their investment in new product development reduces their ability to meet current demand and therein throttles revenue; not sure if the 10Q references their order backlog.

donor20 6y ago
I think they have taken share recently, but total volumes are down. That said, I think tesla is WILDLY overpriced (and I used to own tesla stock).

xoxoy 6y ago

huh? they’ve had four quarters of profits.