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Pretty odd to consider that every other carmaker, obsessed with optimizing their business, would rather pay Tesla straight cash than rush out an electric drivet
by shuckles 6y ago
Pretty odd to consider that every other carmaker, obsessed with optimizing their business, would rather pay Tesla straight cash than rush out an electric drivetrain car. Across the Taycan, i3, and Bolt, there’s certainly plenty of evidence that they can.
- baggachipz 6y agoThat's because they could build them, but not profitably. Changing the design wholesale and then retooling your lines to build the cars at scale is insanely expensive and will take a long time to do. The i3 and Bolt are objective failures (in the US) because they're just not that good compared to what Tesla is doing at about the same price. The dealers also have an inverse incentive to sell them so one has to go way out of their way to purchase an electric from the legacy manufacturers. It's a classic disruption case against entrenched players who refuse to adapt. The only one making a real effort is VW and they're currently paying dearly for it.
- shuckles 6y agoYou first point is around whether it’s economical. A carmaker can scale a program in ~3 years, so that they haven’t is almost certainly a conscious choice. Furthermore, the Bolt shares a production line with the Sonic so the process concerns are limited. In terms of competitiveness, the Bolt offered longer range at a lower price than the Model 3 at launch and still does. Here people respond by saying the Tesla is a much better driving experience because of software, but if that’s the case they’d be much more profitable selling their in car experience software on top of ICE vehicles. All that said, Tesla also doesn’t build and sell cars profitably. Selling credits is the source of their profits. EVs are not disruptive in any well-defined sense of that word. They are more expensive and do not create demand against non-consumption of automobiles. The disruptive electric mobility option is the explosion of personal form factors such as ebike, scooters, and the like.
- bryanlarsen 6y ago> All that said, Tesla also doesn’t build and sell cars profitably. Selling credits is the source of their profits. GAAP gross margin is 21%. They're making excellent profits on their cars.
- shuckles 6y agoThere are a lot of accounting choices that go into gross margin, and a forensic accountant could dedicate a year to understand the various shell games played by car companies between financing, depreciation on equipment, and warranty. So as a simple matter, it helps to double check the reported gross margin against EBIDTA. And with that measure, my comment stands: Tesla’s reported profits depend on continuing to sell regulatory credits.
- bryanlarsen 6y agoSure, if you assume fraud then anything goes. But barring that, GAAP is a well tested metric. It's been often gamed and then patched to plug the holes.
- shuckles 6y agoI never assumed fraud. My comment is true of car companies generally.
- jeffbee 6y agoIt costs them almost nothing to pay the credits. Meanwhile here in the second age of free gas the gross margins on trucks are more than good enough to cover this small expense. Ford alone makes $10 billion annual in gross profits on just the F150 model. The regulations are enough to carve out a little niche for Tesla to hoover up a few dollars, but not enough to change the industry. Pass a realistic carbon tax and see what happens.
- shuckles 6y agoIf Tesla would thrive in a world where gasoline was priced correctly, it would surely fail in a world where automobile infrastructure (parking, highways, sprawl) was priced correctly. This is not a reassuring line of reasoning.
- DanCarvajal 6y agoLet's be clear we're mostly talking about, Fiat is the company buying tons of Tesla credits. This might be better for everyone all around. Would you want a Fiat EV?
- jupp0r 6y agoSure, if they made an electric Dodge Charger or an electric RAM Rebel ....