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Yep. I know Tesla has manufacturing people who get it, but some of Tesla fans are just lost in the wilderness. "Tesla's plant has so many robots!" -- that's ev

Yep. I know Tesla has manufacturing people who get it, but some of Tesla fans are just lost in the wilderness. "Tesla's plant has so many robots!" -- that's every car plant these days! Nobody wants to pay for labor or deal with recalls for inconsistent welds. Here's a random video of a GM SUV production process -- just filled to the brim with robots. https://www.youtube.com/watch?v=-Ow7gmZTIpo https://www.youtube.com/watch?v=-Ow7gmZTIpo They're obviously aiming to cut cost and build time as much as possible, so they automate where they can without sacrificing quality for things like spacing gaps. Over time, that'll be automated too. GM as an example spends like $30 billion/year in CapEx -- that'll buy a lot of robots!

bob33212 6y ago
That is the problem. The Execs at GM are MBAs who are good at pulling financial levers. "Reduce costs by X%", "Increase R&D budget by Y%". Tesla is playing a different game based on first principals. "How low can we get cell cost?", "How can we get range to 300 miles without extra costs?" Obviously finance is important. If you run out of cash you can go bankrupt. But in the long run whoever is innovating the fastest without going bankrupt wins.
- mikeyouse 6y ago
  This is pretty meme-y. Elon's got a degree in physics and econ... Mary Barra has an engineering degree and managed an auto manufacturing plant. Which is probably why GM makes a profit on every car they sell and Tesla.. doesn't... There is no doubt Tesla is a revolutionary company and as a "car guy", I'm ecstatic that they somehow bootstrapped a new American auto manufacturer. Their commitment to reducing electric car costs likely put a huge dent in the trajectory of climate change which as an unequivocal good. My only point is that they could have done all that and built a "normal" manufacturing plant in the South somewhere and never have been two weeks away from shutting the company down vs. trying to "First Principles" design a new way to build cars that had them reinventing the wheel in messier, more expensive way.
  - bryanlarsen 6y ago
    Tesla's GAAP gross margin is 21%, GM's is 11%.
    - mikeyouse 6y ago
      GM (and all other auto manufacturers) include their R&D expense in their COGS since they acknowledge they must release new models every year. Tesla, doesn't. Tesla also doesn't include showroom costs in their COGS, but they can't sell cars without them.. (all other autos only include the revenue they receive from their dealer networks as the top-line revenue figure). These are the kinds of thing that makes people suspicious about their ultimate financials. https://seekingalpha.com/article/2783335-how-teslas-deceptive-self-defined-gross-margin-really-compares-to-porsches https://seekingalpha.com/article/2783335-how-teslas-deceptiv... I don't care at all about stock prices, I'm actively shopping for an electric car and Teslas are near the top of my list since they're so technologically advanced, but they're just not very well as a manufacturer or as a responsibly run corporation which annoys me since I'm in corporate finance. As an example, if Tesla and GM both had $10,000 cars for sale. GM's "Cost of Goods Sold" would include the manufacturing costs, costs for R&D and their revenue would only be $8k since the dealer networks have their own books - but then GM isn't responsible for all of the showrooms and sales staff, etc. Tesla's revenue would show $10k, but would only include the cost to manufacturer (the R&D expense is "below the line") and they wouldn't include any costs to have hundreds of showroom locations - even those those showrooms are necessary to sell cars at any volume, and Tesla has to pay for out of that $10k sales price. It's obviously not apples-to-apples to compare those "GAAP Gross Margin" between those two things.
      - bryanlarsen 6y ago
        Your original statement "Tesla doesn't make a profit on every car" is a blatant untruth. That's an understandable mistake for a layman to make given the misinformation out there, but you claim to be in corporate finance and should have better standards.
        6y ago

bob33212 6y ago

That is the problem. The Execs at GM are MBAs who are good at pulling financial levers. "Reduce costs by X%", "Increase R&D budget by Y%". Tesla is playing a different game based on first principals. "How low can we get cell cost?", "How can we get range to 300 miles without extra costs?" Obviously finance is important. If you run out of cash you can go bankrupt. But in the long run whoever is innovating the fastest without going bankrupt wins.

mikeyouse 6y ago
This is pretty meme-y. Elon's got a degree in physics and econ... Mary Barra has an engineering degree and managed an auto manufacturing plant. Which is probably why GM makes a profit on every car they sell and Tesla.. doesn't... There is no doubt Tesla is a revolutionary company and as a "car guy", I'm ecstatic that they somehow bootstrapped a new American auto manufacturer. Their commitment to reducing electric car costs likely put a huge dent in the trajectory of climate change which as an unequivocal good. My only point is that they could have done all that and built a "normal" manufacturing plant in the South somewhere and never have been two weeks away from shutting the company down vs. trying to "First Principles" design a new way to build cars that had them reinventing the wheel in messier, more expensive way.
- bryanlarsen 6y ago
  Tesla's GAAP gross margin is 21%, GM's is 11%.
  - mikeyouse 6y ago
    GM (and all other auto manufacturers) include their R&D expense in their COGS since they acknowledge they must release new models every year. Tesla, doesn't. Tesla also doesn't include showroom costs in their COGS, but they can't sell cars without them.. (all other autos only include the revenue they receive from their dealer networks as the top-line revenue figure). These are the kinds of thing that makes people suspicious about their ultimate financials. https://seekingalpha.com/article/2783335-how-teslas-deceptive-self-defined-gross-margin-really-compares-to-porsches https://seekingalpha.com/article/2783335-how-teslas-deceptiv... I don't care at all about stock prices, I'm actively shopping for an electric car and Teslas are near the top of my list since they're so technologically advanced, but they're just not very well as a manufacturer or as a responsibly run corporation which annoys me since I'm in corporate finance. As an example, if Tesla and GM both had $10,000 cars for sale. GM's "Cost of Goods Sold" would include the manufacturing costs, costs for R&D and their revenue would only be $8k since the dealer networks have their own books - but then GM isn't responsible for all of the showrooms and sales staff, etc. Tesla's revenue would show $10k, but would only include the cost to manufacturer (the R&D expense is "below the line") and they wouldn't include any costs to have hundreds of showroom locations - even those those showrooms are necessary to sell cars at any volume, and Tesla has to pay for out of that $10k sales price. It's obviously not apples-to-apples to compare those "GAAP Gross Margin" between those two things.
    - bryanlarsen 6y ago
      Your original statement "Tesla doesn't make a profit on every car" is a blatant untruth. That's an understandable mistake for a layman to make given the misinformation out there, but you claim to be in corporate finance and should have better standards.
      - 6y ago