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Would we expect Tesla to optimize for profitability ex-regulatory credits? It seems like they know what they'll get from that, and they invest in building out n

Would we expect Tesla to optimize for profitability ex-regulatory credits? It seems like they know what they'll get from that, and they invest in building out new gigafactories based on the total net income they have, or they pass the savings onto customers (which leads to more sales). What makes ex-regulatory credit profitability a metric that anyone should care about?

itsoktocry 6y ago
>and they invest in building out new gigafactories based on the total net income they have Oh look, another person making the claim capex comes off top line income.
- dhnajsjdnd 6y ago
  I didn’t interpret the comment that way. If a company is trying to be cash flow neutral, they could (very roughly) consider the net income to be the amount left over for capex.
  - itsoktocry 6y ago
    Is that how you imagine billion dollar automotive factories get built? Tesla saves up some money and buys the parts as they have the cash?
    - dhnajsjdnd 6y ago
      Of course not, finance people make a bunch of spreadsheets and then the factories poof into existence. The regulatory credits factor into those spreadsheets.
- viscanti 6y ago
  Tesla just announced they were profitable for the full year of 2020. What's the compliant about top line income? They make money from sales and from credits because governments want to incentivize the sale of electric cars. My point is that the relevant thing seems to be unit economics. They seem to make a profit on most models, and the ones that aren't profitable at the point of sale, seem to have the price of the credits factored in. What value would anyone get from looking at profitability ex-credits?
  - itsoktocry 6y ago
    Why are tiny unit economics so important? Are you one of these people who believe that they will own 50% market share? The automotive world is competitive, as seen by Tesla fighting for share as we speak. They need to make money sooner than later. Building cars is expensive, you can't scrape by. They should be crushing it right now, with little competition. These financials don't look good to me, all I'm saying. YMMV.
RivieraKid 6y ago
Regulatory credits and net profit don't change what they optimize for. They have lot of cash and can easily raise more.
- dhnajsjdnd 6y ago
  This wasn’t always true years ago when decisions about building these factories were made. Tesla has had a cash crunch more than once in its history.

itsoktocry 6y ago

>and they invest in building out new gigafactories based on the total net income they have Oh look, another person making the claim capex comes off top line income.

dhnajsjdnd 6y ago
I didn’t interpret the comment that way. If a company is trying to be cash flow neutral, they could (very roughly) consider the net income to be the amount left over for capex.
- itsoktocry 6y ago
  Is that how you imagine billion dollar automotive factories get built? Tesla saves up some money and buys the parts as they have the cash?
  - dhnajsjdnd 6y ago
    Of course not, finance people make a bunch of spreadsheets and then the factories poof into existence. The regulatory credits factor into those spreadsheets.
viscanti 6y ago
Tesla just announced they were profitable for the full year of 2020. What's the compliant about top line income? They make money from sales and from credits because governments want to incentivize the sale of electric cars. My point is that the relevant thing seems to be unit economics. They seem to make a profit on most models, and the ones that aren't profitable at the point of sale, seem to have the price of the credits factored in. What value would anyone get from looking at profitability ex-credits?
- itsoktocry 6y ago
  Why are tiny unit economics so important? Are you one of these people who believe that they will own 50% market share? The automotive world is competitive, as seen by Tesla fighting for share as we speak. They need to make money sooner than later. Building cars is expensive, you can't scrape by. They should be crushing it right now, with little competition. These financials don't look good to me, all I'm saying. YMMV.

RivieraKid 6y ago

Regulatory credits and net profit don't change what they optimize for. They have lot of cash and can easily raise more.

dhnajsjdnd 6y ago
This wasn’t always true years ago when decisions about building these factories were made. Tesla has had a cash crunch more than once in its history.