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Tesla surges by over $100B on a $4B (revenue) deal, likely at very low margins. Memes galore.

jordanbeiber 5y ago
They also reported that model 3 sales in Europe for the month was just shy of 25k which is the first time an EV topped monthly sales. Renault Clio on spot #2 with 18k sold. Interesting considering the price of the tesla….
- theshrike79 5y ago
  I think people are doing the math on car TCO finally. If nothing goes wrong, the first two-three years are practically free for an EV. Home charging costs pennies and if you're really stingy you can use free public chargers. Then you might need a new set of tires maybe a quick maintenance at the dealership and you're good for a few years again.
  - londons_explore 5y ago
    With Electricity prices topping $0.30/kWh in many places, this is no longer true... Unless you also have solar panels at home and want to have the hassles of making sure your EV only charges on sunny days, you're going to be paying rates for electricity close to rates for dinosaur-fuel, especially if you're comparing to a modern 60 mpg gas car.
    - _ph_ 5y ago
      But even at those electricity prices, the cost per mile is still cheaper than with an ICE car. And fuel prices are going to raise further with higher carbon taxing.
    - petra 5y ago
      Which cars are 60 mpg?
      - aembleton 5y ago
        The aforementioned Renault Clio. https://www.parkers.co.uk/renault/clio/hatchback-2019/iconic-dci-85-5d/specs/ https://www.parkers.co.uk/renault/clio/hatchback-2019/iconic...
        iso1210 5y ago
        That's 56mpg (American gallons are smaller). It's also a claimed number, real numbers tend to be about 70% of that, which would make it about 40mpg (US). https://www.honestjohn.co.uk/realmpg/renault/clio-2013 https://www.honestjohn.co.uk/realmpg/renault/clio-2013
      - londons_explore 5y ago
        Most cars in Europe where fuel is much more expensive, and therefore manufacturers put a lot of effort into energy efficiency.
        iso1210 5y ago
        60mpg (us) is 72mpg (uk), or 4l/100km. A Vauxhall Corsa may claim that[0], but I've got one at the moment as a rental and don't get anywhere near that, more like 45-50mpg (uk) - so about 40mpg (us). [0] https://www.parkers.co.uk/best-cars/most-economical-cars/ https://www.parkers.co.uk/best-cars/most-economical-cars/
    - jordanbeiber 5y ago
      Most charging takes place at night. At least where I am it’s a lot cheaper.
    - theshrike79 5y ago
      The supermarket 5 minutes from my apartment just opened their chargers at 0.20€/kWh for 22kW charging and 0.25€/kWh for fast charging (50kW+). Still a hell of a lot cheaper than gas over here (coming up to 2€/litre in some places). Even diesel is over 1.8€/litre. At 15kWh/100km consumption it'd cost me under 4€ to drive 100km on my EV. My old Prius did around 5l/100km, which would be closer to 10€/100km.
  - foepys 5y ago
    A family friend just got an increase from their electricity provider to 0.44€/kWh due to increased costs of gas and coal. Assuming 18kW/100km (including charging losses) that's 8€/100km. Not very far from gas prices at the moment.
- NicoJuicy 5y ago
  Check all the months. Tesla usually delivered them all in the same month/quarter as far as I'm aware. It leads to a misleading number if not averaged over the other months. > Normally, Tesla would deliver only a handful of cars during the first 2 months of a quarter and then deliver an incredible amount of cars during the last month a quarter. https://electrek.co/2018/06/07/tesla-sales-norway-surge-stabilize-delivery-issues/amp/ https://electrek.co/2018/06/07/tesla-sales-norway-surge-stab...
muttantt 5y ago
Market cap is an illusion, in both stock markets and crypto.
fallingknife 5y ago
One rental company buying 100k indicates that many rental companies will buy millions in the future.
patd 5y ago
Reports are saying Hertz paid close to MSRP so they probably have around 20% margin (as Q3 margin overall was 28%) Makes little sense for Tesla to sell at low margin when they are supply constrained.
_ph_ 5y ago
This isn't just a very profitable deal for Tesla, it is a strong indicator towards that electric cars are really around to stay and that the electric car market is growing quickly. If it is more profitable for Hertz to buy Teslas than other brand cars, it should be for most car rentals and probably also most other customers. Not too long ago Elon talked about Tesla making up to 20 million cars per year in 2030. That would make Tesla twice as large as VW, the currently largest car manufacturer. Of course this statement was treated as Elons typical optimism, but deals like this pave the way to that actually coming true.
- TeMPOraL 5y ago
  > Of course this statement was treated as Elons typical optimism, but deals like this pave the way to that actually coming true. I feel people have really short memory wrt. Elon's optimism. Not everything he promises pans out (autopilot being the prime example), but usually, it does, just slightly later than promised.
  - _ph_ 5y ago
    Right, though it currently looks that autopilot is about to work out, if you look at the FSD beta releases (check the videos on YouTube). And the Hertz order points to the possibility of the 20M cars/year being not to far off both in volume as in time frame.
- panick21_ 5y ago
  Why is this not profitable for Tesla? The cars were bought at full consumer prices and Tesla has very good unit margin. In 2012 Elon predicted 500k vehicles in 2020 and he was spot on. So lets see the 2020 prediction for 2030.
  - _ph_ 5y ago
    I think this is profitable, but my post was about that the profit goes far beyond the money earned in this contract. Perhaps I shouldn't have used double negation :)
jillesvangurp 5y ago
That's only if you consider this a one time thing. Those 100K vehicles are going to need replacement in a few years. And considering, Hertz's stock price increase, investors are clearly believing this is a great deal for them. Which raises the question about where all their competitors will be buying their EVs. There are millions of rental vehicles. Close to 2M in the US alone. The reasons Hertz is considered to be getting a great deal here by investors is that EVs retain their value a lot better and are known to have much lower maintenance overhead. So, they'll get more miles out of them before they have to sell them on, get back more when they do, and be able to charge a premium for them at the same time. In a market where margins are razor thin, that's a big deal. It's more a question of when than if their competitors will be lining up to buy some EVs. They'll have to. And then of course the next question is which one they'd be buying. The answer for the next few years is that Tesla is one of the few companies that has both product and manufacturing ready for volume production. Of course a few other manufacturers might make some nice money here too. So, investors are thinking that Tesla could end up supplying many hundreds of thousands of vehicles for rental per year in the next few years. On top of their other business, which is also continuing to grow at a very nice pace. They'll likely need a few new factories for this but they've shown they can deliver those as well.
- bovine3dom 5y ago
  Do you have some numbers on lower maintenance? From a quick look around [1-2] they seem pretty similar to other manufacturers. [1]: https://caredge.com/toyota/maintenance https://caredge.com/toyota/maintenance [2]: https://caredge.com/tesla/maintenance https://caredge.com/tesla/maintenance
  - mlac 5y ago
    It’s not about the cost in the charts you shared, it’s about the frequency (downtime / opportunity cost) and what’s involved: https://caredge.com/tesla/model-3/maintenance#schedule https://caredge.com/tesla/model-3/maintenance#schedule - Hertz could easily train 1 tech at every airport to do this entire maintenance with a basic lift and simple materials. For a Toyota Camry, this work occurs 2x as often (downtime is a big deal for rental companies) and is not easily performed without a much more capable shop: https://caredge.com/toyota/camry/maintenance#schedule https://caredge.com/toyota/camry/maintenance#schedule Less moving parts, less fluids…now I want a Model 3.

They also reported that model 3 sales in Europe for the month was just shy of 25k which is the first time an EV topped monthly sales. Renault Clio on spot #2 with 18k sold. Interesting considering the price of the tesla….

theshrike79 5y ago
I think people are doing the math on car TCO finally. If nothing goes wrong, the first two-three years are practically free for an EV. Home charging costs pennies and if you're really stingy you can use free public chargers. Then you might need a new set of tires maybe a quick maintenance at the dealership and you're good for a few years again.
- londons_explore 5y ago
  With Electricity prices topping $0.30/kWh in many places, this is no longer true... Unless you also have solar panels at home and want to have the hassles of making sure your EV only charges on sunny days, you're going to be paying rates for electricity close to rates for dinosaur-fuel, especially if you're comparing to a modern 60 mpg gas car.
  - _ph_ 5y ago
    But even at those electricity prices, the cost per mile is still cheaper than with an ICE car. And fuel prices are going to raise further with higher carbon taxing.
  - petra 5y ago
    Which cars are 60 mpg?
    - aembleton 5y ago
      The aforementioned Renault Clio. https://www.parkers.co.uk/renault/clio/hatchback-2019/iconic-dci-85-5d/specs/ https://www.parkers.co.uk/renault/clio/hatchback-2019/iconic...
      - iso1210 5y ago
        That's 56mpg (American gallons are smaller). It's also a claimed number, real numbers tend to be about 70% of that, which would make it about 40mpg (US). https://www.honestjohn.co.uk/realmpg/renault/clio-2013 https://www.honestjohn.co.uk/realmpg/renault/clio-2013
    - londons_explore 5y ago
      Most cars in Europe where fuel is much more expensive, and therefore manufacturers put a lot of effort into energy efficiency.
      - iso1210 5y ago
        60mpg (us) is 72mpg (uk), or 4l/100km. A Vauxhall Corsa may claim that[0], but I've got one at the moment as a rental and don't get anywhere near that, more like 45-50mpg (uk) - so about 40mpg (us). [0] https://www.parkers.co.uk/best-cars/most-economical-cars/ https://www.parkers.co.uk/best-cars/most-economical-cars/
  - jordanbeiber 5y ago
    Most charging takes place at night. At least where I am it’s a lot cheaper.
  - theshrike79 5y ago
    The supermarket 5 minutes from my apartment just opened their chargers at 0.20€/kWh for 22kW charging and 0.25€/kWh for fast charging (50kW+). Still a hell of a lot cheaper than gas over here (coming up to 2€/litre in some places). Even diesel is over 1.8€/litre. At 15kWh/100km consumption it'd cost me under 4€ to drive 100km on my EV. My old Prius did around 5l/100km, which would be closer to 10€/100km.
- foepys 5y ago
  A family friend just got an increase from their electricity provider to 0.44€/kWh due to increased costs of gas and coal. Assuming 18kW/100km (including charging losses) that's 8€/100km. Not very far from gas prices at the moment.
NicoJuicy 5y ago
Check all the months. Tesla usually delivered them all in the same month/quarter as far as I'm aware. It leads to a misleading number if not averaged over the other months. > Normally, Tesla would deliver only a handful of cars during the first 2 months of a quarter and then deliver an incredible amount of cars during the last month a quarter. https://electrek.co/2018/06/07/tesla-sales-norway-surge-stabilize-delivery-issues/amp/ https://electrek.co/2018/06/07/tesla-sales-norway-surge-stab...

muttantt 5y ago

Market cap is an illusion, in both stock markets and crypto.

fallingknife 5y ago

One rental company buying 100k indicates that many rental companies will buy millions in the future.

patd 5y ago

Reports are saying Hertz paid close to MSRP so they probably have around 20% margin (as Q3 margin overall was 28%) Makes little sense for Tesla to sell at low margin when they are supply constrained.

_ph_ 5y ago

This isn't just a very profitable deal for Tesla, it is a strong indicator towards that electric cars are really around to stay and that the electric car market is growing quickly. If it is more profitable for Hertz to buy Teslas than other brand cars, it should be for most car rentals and probably also most other customers. Not too long ago Elon talked about Tesla making up to 20 million cars per year in 2030. That would make Tesla twice as large as VW, the currently largest car manufacturer. Of course this statement was treated as Elons typical optimism, but deals like this pave the way to that actually coming true.

TeMPOraL 5y ago
> Of course this statement was treated as Elons typical optimism, but deals like this pave the way to that actually coming true. I feel people have really short memory wrt. Elon's optimism. Not everything he promises pans out (autopilot being the prime example), but usually, it does, just slightly later than promised.
- _ph_ 5y ago
  Right, though it currently looks that autopilot is about to work out, if you look at the FSD beta releases (check the videos on YouTube). And the Hertz order points to the possibility of the 20M cars/year being not to far off both in volume as in time frame.
panick21_ 5y ago
Why is this not profitable for Tesla? The cars were bought at full consumer prices and Tesla has very good unit margin. In 2012 Elon predicted 500k vehicles in 2020 and he was spot on. So lets see the 2020 prediction for 2030.
- _ph_ 5y ago
  I think this is profitable, but my post was about that the profit goes far beyond the money earned in this contract. Perhaps I shouldn't have used double negation :)

jillesvangurp 5y ago

That's only if you consider this a one time thing. Those 100K vehicles are going to need replacement in a few years. And considering, Hertz's stock price increase, investors are clearly believing this is a great deal for them. Which raises the question about where all their competitors will be buying their EVs. There are millions of rental vehicles. Close to 2M in the US alone. The reasons Hertz is considered to be getting a great deal here by investors is that EVs retain their value a lot better and are known to have much lower maintenance overhead. So, they'll get more miles out of them before they have to sell them on, get back more when they do, and be able to charge a premium for them at the same time. In a market where margins are razor thin, that's a big deal. It's more a question of when than if their competitors will be lining up to buy some EVs. They'll have to. And then of course the next question is which one they'd be buying. The answer for the next few years is that Tesla is one of the few companies that has both product and manufacturing ready for volume production. Of course a few other manufacturers might make some nice money here too. So, investors are thinking that Tesla could end up supplying many hundreds of thousands of vehicles for rental per year in the next few years. On top of their other business, which is also continuing to grow at a very nice pace. They'll likely need a few new factories for this but they've shown they can deliver those as well.

bovine3dom 5y ago
Do you have some numbers on lower maintenance? From a quick look around [1-2] they seem pretty similar to other manufacturers. [1]: https://caredge.com/toyota/maintenance https://caredge.com/toyota/maintenance [2]: https://caredge.com/tesla/maintenance https://caredge.com/tesla/maintenance
- mlac 5y ago
  It’s not about the cost in the charts you shared, it’s about the frequency (downtime / opportunity cost) and what’s involved: https://caredge.com/tesla/model-3/maintenance#schedule https://caredge.com/tesla/model-3/maintenance#schedule - Hertz could easily train 1 tech at every airport to do this entire maintenance with a basic lift and simple materials. For a Toyota Camry, this work occurs 2x as often (downtime is a big deal for rental companies) and is not easily performed without a much more capable shop: https://caredge.com/toyota/camry/maintenance#schedule https://caredge.com/toyota/camry/maintenance#schedule Less moving parts, less fluids…now I want a Model 3.