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Cost Accounting can be a bit of a dark art. It's pretty tricky to apportion part of the cost of a factory to every different widget made in it. But in this cas

Cost Accounting can be a bit of a dark art. It's pretty tricky to apportion part of the cost of a factory to every different widget made in it. But in this case, it's likely just BS. They're probably just taking the yearly loss and dividing it by the number produced. Which is different from each marginal car produced costing them 30K. edit to add: the article claims the main reason for them losing so much money is lack of throughput, which demonstrates that the claim is bullshit. If they made even more cars and "lost 30K" on each one they'd be worse off.

Paul-Craft 3y ago
> edit to add: the article claims the main reason for them losing so much money is lack of throughput, which demonstrates that the claim is bullshit. If they made even more cars and "lost 30K" on each one they'd be worse off. Hah! I knew I wasn't the only one who noticed that. It's like the old joke: > Q: How do you expect to stay in business if you lose money on every sale? > A: Easy. We'll make it up on volume! More seriously, a production line has huge fixed costs associated with it, so you really need to get the most throughput out of it that you can, in order to maximize profits.
giobox 3y ago
> the article claims the main reason for them losing so much money is lack of throughput, which demonstrates that the claim is bullshit. If they made even more cars and "lost 30K" on each one they'd be worse off. Generally speaking, the cost per unit goes down as throughput goes up, especially in the car manufacturing space. Production rate is insanely important to car manufacturers making any money at all. Virtually every single new mass produced vehicle ever made started off losing money on a per-unit basis until manufacturing scales.
- datadrivenangel 3y ago
  Exactly right. cost per unit = cost per unit + total non-unit costs/total units. So they're loosing money overall, but the unit economics may still work.
- throwawaaarrgh 3y ago
  Generally speaking, you can't generalize vehicle production with new companies, or even old ones. Vehicle production is extremely complicated and expensive. Minor quality errors lead to increasing delays and costs. Famously, GM used to spend ridiculous amounts of time and money to fix cars coming out of some of its plants. It wasn't uncommon for some cars to be incapable of being driven out of the plant. The more cars they made, the more errors, and the more time and money spent on fixing them. This was a major factor in the development of the NUMMI plant. What brings cost down is increased quality, reduction of waste, and increase of speed. If you don't have all three you aren't gonna save money.
throwawaaarrgh 3y ago
Tesla famously was at one time spending almost $200K per car because it sucked at building so badly. It's completely plausible that a SV-inspired company with no experience manufacturing cars would lose a whole bundle on pretending it could do it cost effectively, while bilking investors for more cash to stay afloat

Paul-Craft 3y ago

> edit to add: the article claims the main reason for them losing so much money is lack of throughput, which demonstrates that the claim is bullshit. If they made even more cars and "lost 30K" on each one they'd be worse off. Hah! I knew I wasn't the only one who noticed that. It's like the old joke: > Q: How do you expect to stay in business if you lose money on every sale? > A: Easy. We'll make it up on volume! More seriously, a production line has huge fixed costs associated with it, so you really need to get the most throughput out of it that you can, in order to maximize profits.

giobox 3y ago

> the article claims the main reason for them losing so much money is lack of throughput, which demonstrates that the claim is bullshit. If they made even more cars and "lost 30K" on each one they'd be worse off. Generally speaking, the cost per unit goes down as throughput goes up, especially in the car manufacturing space. Production rate is insanely important to car manufacturers making any money at all. Virtually every single new mass produced vehicle ever made started off losing money on a per-unit basis until manufacturing scales.

datadrivenangel 3y ago
Exactly right. cost per unit = cost per unit + total non-unit costs/total units. So they're loosing money overall, but the unit economics may still work.
throwawaaarrgh 3y ago
Generally speaking, you can't generalize vehicle production with new companies, or even old ones. Vehicle production is extremely complicated and expensive. Minor quality errors lead to increasing delays and costs. Famously, GM used to spend ridiculous amounts of time and money to fix cars coming out of some of its plants. It wasn't uncommon for some cars to be incapable of being driven out of the plant. The more cars they made, the more errors, and the more time and money spent on fixing them. This was a major factor in the development of the NUMMI plant. What brings cost down is increased quality, reduction of waste, and increase of speed. If you don't have all three you aren't gonna save money.

throwawaaarrgh 3y ago

Tesla famously was at one time spending almost $200K per car because it sucked at building so badly. It's completely plausible that a SV-inspired company with no experience manufacturing cars would lose a whole bundle on pretending it could do it cost effectively, while bilking investors for more cash to stay afloat