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Disclaimer: I work and worked for subsidiaries of big automakers but this opinion is of my own. I would guess it’s a mixture of culture, cost, and scale. Cultu

Disclaimer: I work and worked for subsidiaries of big automakers but this opinion is of my own. I would guess it’s a mixture of culture, cost, and scale. Culture wise, Tesla is extremely vertically integrated so that gives them a lot more breathing room. Cost wise, Tesla pretty much still sells car at a loss and relies heavily on carbon offset subsidies for income. When your revenue is established, trying to change margin or anything is probably much more difficult. Lastly, it’s scale, while Tesla is trying to catch up, the throughput of the major automakers is absolutely mind defying. The whole system is an oil machined that any sort of downtime is detrimental and difficult once the line is established. To put into perspective, Tesla “monumental” Q2 quarter shipped 200K cars or so. GM in the US only sold 200K per month.

panick21 5y ago
> Cost wise, Tesla pretty much still sells car at a loss and relies heavily on carbon offset subsidies for income. I'm sorry but that is just straight up complete nonsense. Like seriously, you are directly disagreeing with public financial statements. We know exactly how much margin Tesla has, with and without carbon offset. The simple fact is, Tesla has leading automotive margins even when you exclude any carbon credits.
- mcguire 5y ago
  Hmm. I'm not sure I'd go strongly either way. According to reports (https://www.cnn.com/2021/01/31/investing/tesla-profitability/index.html https://www.cnn.com/2021/01/31/investing/tesla-profitability...) Tesla received $1600M in regulatory credits and had a net income of $721M. If you look at the 10K (https://www.sec.gov/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm https://www.sec.gov/Archives/edgar/data/1318605/000156459021...), Tesla received $27,236M in automotive revenues (which includes sales of regulatory credits, thanks Elon). The corresponding cost of sales is $20,259M giving gross profit of $6,977M and gross margin of 26%. But after that, you have operating expenses ($4,636M) (blah, blah, interest, taxes, other, blah) and a final net income of $721M.
  - pokerhobo 5y ago
    Tesla has to deduct the “cost” of issuing new shares for stock compensation like for their CEO. It’s not a cost as in they spent cash, but is deducted because it lowers shareholder value. A better sense of their actual profit/loss is their free cashflow which is positive even after your deduct ZEV credit sales.
    - hef19898 5y ago
      Cash flow =|= profit. You can be cash positive and profitable (best case), cash positive and not be profitable (at least you won't go under automatically), cash negative and profitable (you face the risk of going bancrupt by running out of cash) or cash negative and not profitable (usually dead). Whatvyhe other poster did was diving into Tesla's sec fillings. Those show: Tesla is offering stock -> they still raise money Tesla is selling emissions certificates -> that explains most, if not all, of their profits. Not sure how new funding factors into their cash flow, and I am too lazy to look it up. It does seem so, that Teslas car business isn't enough to stand upon for now.
  - panick21 5y ago
    What matters in terms of what we are discussing now is automotive margin. Their 'Automotive gross margin' is 28.4%. If you exclude regulatory credit that is still '25.8%'. Those are flat out great margin number in the automotive industry. These facts literally disprove this phrase: > Tesla pretty much still sells car at a loss Unless you simply interpret that phrase differently then everybody else. If you want to make a larger statement about Tesla on a company level, that is a whole different thing. If you want to ignore unit economics Q2 they made 354 million $ in credits. Total GAAP gross margin 24.1%, ignoring credits its still 21.8%. I'm to lazy to calculate the operational margin, but its still good excluding regulatory credits. This regulatory credit storyline is literally on its last legs. Tesla is still a growth company and their margin and profitability are already good despite them not even having manufacturing in all large markets. In Q2 they didn't even build their high margin vehicles. My main point being again, claiming that Tesla sells vehicles at a lose, is literally nonsense. Find the numbers here: https://tesla-cdn.thron.com/static/ZBOUYO_TSLA_Q2_2021_Update_DJCVNJ.pdf?xseo=&response-content-disposition=inline%3Bfilename%3D%22q2_2021.pdf%22 https://tesla-cdn.thron.com/static/ZBOUYO_TSLA_Q2_2021_Updat... Any claim that Tesla has no business without credits is just fundamentally wrong. And Q3 looks like it will beat these numbers again.
brianwawok 5y ago
You need to read their financials closer. They are profitable without offsets.

panick21 5y ago

> Cost wise, Tesla pretty much still sells car at a loss and relies heavily on carbon offset subsidies for income. I'm sorry but that is just straight up complete nonsense. Like seriously, you are directly disagreeing with public financial statements. We know exactly how much margin Tesla has, with and without carbon offset. The simple fact is, Tesla has leading automotive margins even when you exclude any carbon credits.

mcguire 5y ago
Hmm. I'm not sure I'd go strongly either way. According to reports (https://www.cnn.com/2021/01/31/investing/tesla-profitability/index.html https://www.cnn.com/2021/01/31/investing/tesla-profitability...) Tesla received $1600M in regulatory credits and had a net income of $721M. If you look at the 10K (https://www.sec.gov/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm https://www.sec.gov/Archives/edgar/data/1318605/000156459021...), Tesla received $27,236M in automotive revenues (which includes sales of regulatory credits, thanks Elon). The corresponding cost of sales is $20,259M giving gross profit of $6,977M and gross margin of 26%. But after that, you have operating expenses ($4,636M) (blah, blah, interest, taxes, other, blah) and a final net income of $721M.
- pokerhobo 5y ago
  Tesla has to deduct the “cost” of issuing new shares for stock compensation like for their CEO. It’s not a cost as in they spent cash, but is deducted because it lowers shareholder value. A better sense of their actual profit/loss is their free cashflow which is positive even after your deduct ZEV credit sales.
  - hef19898 5y ago
    Cash flow =|= profit. You can be cash positive and profitable (best case), cash positive and not be profitable (at least you won't go under automatically), cash negative and profitable (you face the risk of going bancrupt by running out of cash) or cash negative and not profitable (usually dead). Whatvyhe other poster did was diving into Tesla's sec fillings. Those show: Tesla is offering stock -> they still raise money Tesla is selling emissions certificates -> that explains most, if not all, of their profits. Not sure how new funding factors into their cash flow, and I am too lazy to look it up. It does seem so, that Teslas car business isn't enough to stand upon for now.
- panick21 5y ago
  What matters in terms of what we are discussing now is automotive margin. Their 'Automotive gross margin' is 28.4%. If you exclude regulatory credit that is still '25.8%'. Those are flat out great margin number in the automotive industry. These facts literally disprove this phrase: > Tesla pretty much still sells car at a loss Unless you simply interpret that phrase differently then everybody else. If you want to make a larger statement about Tesla on a company level, that is a whole different thing. If you want to ignore unit economics Q2 they made 354 million $ in credits. Total GAAP gross margin 24.1%, ignoring credits its still 21.8%. I'm to lazy to calculate the operational margin, but its still good excluding regulatory credits. This regulatory credit storyline is literally on its last legs. Tesla is still a growth company and their margin and profitability are already good despite them not even having manufacturing in all large markets. In Q2 they didn't even build their high margin vehicles. My main point being again, claiming that Tesla sells vehicles at a lose, is literally nonsense. Find the numbers here: https://tesla-cdn.thron.com/static/ZBOUYO_TSLA_Q2_2021_Update_DJCVNJ.pdf?xseo=&response-content-disposition=inline%3Bfilename%3D%22q2_2021.pdf%22 https://tesla-cdn.thron.com/static/ZBOUYO_TSLA_Q2_2021_Updat... Any claim that Tesla has no business without credits is just fundamentally wrong. And Q3 looks like it will beat these numbers again.

brianwawok 5y ago

You need to read their financials closer. They are profitable without offsets.