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Wow, a full half of Tesla's operating income came from tax credits( around $800M of $1.6B operating income). They had a few decent misses on operating income a

Wow, a full half of Tesla's operating income came from tax credits( around $800M of $1.6B operating income). They had a few decent misses on operating income and earnings per share. And their operating margin is in the low 6%ish which would make it one of the worst performing auto manufacturers around at the moment. Man things have turned quickly on Tesla. They are still in a good cash position but their car business is really showing signs of strain at the moment. they did announce that they'll release a more affordable model by the end of H125 so that will help, but with that timeframe its likely to be a model 3 refresh and not a new car.

oblio 2y ago
Turns out people were right and Musk had a bunch of good ideas, some of which might have a very positive impact on the world (probably EV adoption) but all predicated on getting government money. > their car business is really showing signs of strain at the moment. Their car business aka "their entire business"? :-)
- throwup238 2y ago
  > Their car business aka "their entire business"? :-) Tesla acquired SolarCity which became their Tesla Energy division so it's not just cars, they also do residential solar, batteries, and supercharger infrastructure (which more and more manufacturers are using).
  - oskarkk 2y ago
    Tesla's residential solar was falling since the acquisition (SolarCity before the acquisition deployed like 4x more solar than Tesla in 2023), and now they don't even mention it in the document we're discussing. But "energy generation and storage revenue" is 12% of their revenues, and they're showing a big growth in storage deployment, so the storage part is looking good, charging too.
- dotancohen 2y ago
  > all predicated on getting government money. Ostensibly the government spends its money and things that benefit the population, no?
  - oblio 2y ago
    True, but then you can't brag as much as, I dunno, a company in a field with 0 government subsidies.
    - dotancohen 2y ago
      Why not? They are specifically addressing the things that the public (the government) have stated are important to society. How is that not noble, even if profit-motivated?
      - oblio 2y ago
        That's an interesting angle, but the usual concern about this is lobbying/pork barrel/corruption and of course, regulatory capture, especially for SpaceX. In an ideal world, what you're saying makes sense, but at least to give an example, for an Android phone, you have to persuade 500 million people to buy it. For SpaceX to get a multi billion dollar contract with the government you only have to persuade 10 people.
        dotancohen 2y ago
        Regulatory capture for SpaceX? Is that a joke? Are you heard of a company called Lockheed, or perhaps Boeing?
- m463 2y ago
  So what if a car company makes EVs, but pays a someone else a signficant portion of each car (the batteries). And what if another company (tesla) makes its own batteries. Are they judged in a similar fashion?
  - oblio 2y ago
    Fairy sure Tesla partners with LG Chem and I think another company to make those batteries.
metalliqaz 2y ago
In Teslaspeak, "2025" actually means "no earlier than 2029"
huntertwo 2y ago
I think a pivot to energy infrastructure is inevitable. The EV business can be seen as a stepping stone imo to build a strong cash position with all of the reservations. Sort of like free financing.
- JumpCrisscross 2y ago
  > a pivot to energy infrastructure is inevitable What is Tesla's edge in energy infrastructure?
  - huntertwo 2y ago
    I think something to do with battery production for grid usage. Combine that capability with renewable energy subsidies and you might have a good next chapter for Tesla until others catch up.
    - JumpCrisscross 2y ago
      > something to do with battery production for grid usage Tesla isn't a top-ten battery producer [1]. The batteries it does use (and make) are optimised for EVs. [1] https://cleantechnica.com/2024/01/19/top-10-battery-producers-in-the-world-2023-provisional-data/ https://cleantechnica.com/2024/01/19/top-10-battery-producer...
      - huntertwo 2y ago
        Interesting - however, they do have a financial position that may make it easier for them to pivot than some of the other manufacturers in addition to their consumer image that makes it easy to raise money in the form of EV reservations. They don’t seem to be in a super strong position either way.
        JumpCrisscross 2y ago
        > they do have a financial position that may make it easier for them to pivot than some of the other manufacturers Relative to a utility? Or any deep-pocketed investor who can buy Panasonic cells? Tesla is a terrific EV company. They shouldn’t be pivoting away from their roots but reclaiming them.
christkv 2y ago
I'll tell you a secret from a friend in Audi. They are doing as bad or worse.
- mmcclure 2y ago
  Are you referring to Audi's EVs? Or Audi in general? Either way, looked it up out of curiosity: Audi's parent company, Volkswagen, currently has a market cap of ~58B EUR with revenue over 300B EUR in 2023. Tesla has a market cap of $772B with revenue just under $100B in 2023. Tesla's stock is trading (and has) at a staggering multiple for the automotive industry. It's fair to call out that their competitors may have their own struggles, but negative growth in Tesla's primary product line is going to make it increasingly tough for investors to stomach that premium. Elon has a gift for selling a vision, so I certainly wouldn't bet against Tesla on any short-term horizon, but I struggle to imagine that alone will be able to carry their stock price in perpetuity.
  - christkv 2y ago
    Audi part. Cars are not moving. If the rest of Volkswagen is similar its going to be bad. Tesla is just more visible. I think only Toyota is making money right now.
Workaccount2 2y ago
>Wow, a full half of Tesla's operating income came from tax credits( around $800M of $1.6B operating income). Totally logical for the CEO of the company to be vocal supporter of the man who wants to kill those credits.
- reverius42 2y ago
  He did say he considers the "woke mind virus" to be a bigger threat to humanity than climate change. So I think he's being consistent even if it hurts him and his shareholders.
  - throwaway5752 2y ago
    "he's being consistent even if it hurts him and his shareholders" That is not a luxury CEOs get. They do not have a free hand to run companies, they are hired by boards of directors who represent the shareholders. His job is to work for the benefit of shareholders, and if he can't do that then it's simply a case of firing him.
    - toomuchtodo 2y ago
      Tesla did what it needed to do: force the world towards EVs. If it dies, legacy auto and BYD will carry on. It will be a shame if Tesla dies because the board didn’t have the will to push Elon out (wrt the brand, its stationary storage business, and ~120k global employees), such is the peril of poor corporate governance. I cancelled my Cybertruck res, and after buying four Teslas, I will not spend another dime on one until Elon is gone. Tesla is, hopefully, forced into self preservation by market fundamentals.
      - newZWhoDis 2y ago
        [flagged]
        toomuchtodo 2y ago
        I support you spending your fiat as you see fit, and will encourage you all the way to the bank, your feelings costing you a chunk of change you can hopefully afford to part with. We vote with our purchasing power, and I support your right to vote. I hope you can respect my vote to not further empower a terrible human. I also upvoted your comment and will vouch for it as well, shared perspective is important, even if contrarian or deviating materially from a consensus.
rozap 2y ago
imo this is a big part of why Elon is cozying up to Trump and the right. If the left wins, there will probably be tax incentives for EV manufacturers at large because that's just part of their platform. And if the right wins, then he has bribed them and will get preferential treatment. Given his companies are so dependent on government money, it does make sense as a strategy because it ensures continuity of those handouts in both cases.
- jjulius 2y ago
  > And if the right wins, then he has bribed them and will get preferential treatment. That it would largely be about Musk winning, rather than doing all that he can to support global EV adoption, would absolutely track for him.
  - decafninja 2y ago
    He has pivoted to defeating the woke mind virus as his priority.
throwaway5752 2y ago
"their car business" Service and Energy Generation are <10% LOBs. They are a car business.
hnburnsy 2y ago
>Wow, a full half of Tesla's operating income came from tax credits( around $800M of $1.6B operating income). Of course if Tesla didn't make those car and batteries they wouldn't have regulatory credits to sell. Also the credits were 3.5% of total revenue ($890M of $25,500M).
bryanlarsen 2y ago
Tax credits aren't pure profit. You actually have to build and sell a car to get a tax credit.
bottlepalm 2y ago
Your comment sure is catchy. Making it read like half of Tesla's income came from tax credits. When in reality 'regulatory credits' revenue isn't significant. https://x.com/EconomyApp/status/1815845019053613480/photo/1 https://x.com/EconomyApp/status/1815845019053613480/photo/1
- chollida1 2y ago
  Thanks appreciate it!! I'll explain for you what my comment means. Operating income is a measure we use to see how profitable a company is at its core business after you subtract the costs of running that business. Yes the credits are a small portion of Tesla's income but after account for the costs of building cars what's' left is the operating income. Those credits are about half o that income, without them the operating income( a measure of if the core business works) would be cut in half. That is a significant measure.
  - bottlepalm 2y ago
    Some of the 'cost' of building cars is paid for with money from 'tax credits'. It's very clear on the diagram I linked above. You can't attribute 100% of 'operating income' to one thing. If anything you need to attribute things proportional to their inputs. Otherwise it's misleading. I mean if that's what you want, here you go - https://imgur.com/a/dWrGKuN https://imgur.com/a/dWrGKuN Then you create a strawman scenario of 'without tax credits...'. Well no, without tax credits the spending policies and prices of other revenue streams change in order to hit net income targets.
DoesntMatter22 2y ago
They also had a 600 million dollar restructuring charge so it's mostly a wash as they normally take in about 430 million in regulatory credits. Really they aren't doing poorly when you consider the awful interest rates out there.
- reaperducer 2y ago
  Really they aren't doing poorly when you consider the awful interest rates out there. Until you've lived at a time when 13% was considered a great mortgage rate, you have no idea what an "awful" interest rate is.
  - DoesntMatter22 2y ago
    I did live through that time. But that was a long time ago. Awful is relative to the zirp era we lived in which was quite long lasting
satvikpendem 2y ago
The Model 3 recently got refreshed so I'm not sure they'd refresh it again so soon.
- browningstreet 2y ago
  The Y is scheduled to get its refresh next year, but both the 3 and the Y need upgraded and better suspensions. I took my Y to the Bay Area this last week and with the crappy roads, it was a rough, rough ride. That being said, like others have said.. I won't spend money on another Tesla while Elon's there, even if they ship magic on a stick.
  - perryh2 2y ago
    The current Model Y in production is known to have significantly better suspension than Model Ys produced 2020-2022. If you have an older Model Y, you can upgrade the suspension (cost about $2k with installation).
    - browningstreet 2y ago
      Mine's a 2022.. I'll look into that, thanks.
mensetmanusman 2y ago
Someone should calculate how much lower medical costs will be with fewer ice engines on the road. Honestly curious if that is one of the payback strategies for the government.
7e 2y ago
Those tax credits are pollution indulgences what Tesla sells to competitors to stall their EV programs. They completely offset any environmental benefit of buying a Tesla. There is none.
culi 2y ago
> Man things have turned quickly on Tesla Hasn't this always been the case? Haven't they always been dependent on credits and subsidies to make a profit? Tesla's received almost $3 billion in state and federal subsidies and half a billion in bailouts[0] (and has more violations[1] than most other companies of its size). Additionally, they regularly engage in probably illegal accounting practices like categorizing automobile warranty expenses as part of the "Goodwill" category rather than the cost of making the vehicle leading to a huge inflation of Tesla's claimed gross margin [0] https://subsidytracker.goodjobsfirst.org/?parent=tesla-inc https://subsidytracker.goodjobsfirst.org/?parent=tesla-inc [1] https://violationtracker.goodjobsfirst.org/parent/tesla-inc https://violationtracker.goodjobsfirst.org/parent/tesla-inc

oblio 2y ago

Turns out people were right and Musk had a bunch of good ideas, some of which might have a very positive impact on the world (probably EV adoption) but all predicated on getting government money. > their car business is really showing signs of strain at the moment. Their car business aka "their entire business"? :-)

throwup238 2y ago
> Their car business aka "their entire business"? :-) Tesla acquired SolarCity which became their Tesla Energy division so it's not just cars, they also do residential solar, batteries, and supercharger infrastructure (which more and more manufacturers are using).
- oskarkk 2y ago
  Tesla's residential solar was falling since the acquisition (SolarCity before the acquisition deployed like 4x more solar than Tesla in 2023), and now they don't even mention it in the document we're discussing. But "energy generation and storage revenue" is 12% of their revenues, and they're showing a big growth in storage deployment, so the storage part is looking good, charging too.
dotancohen 2y ago
> all predicated on getting government money. Ostensibly the government spends its money and things that benefit the population, no?
- oblio 2y ago
  True, but then you can't brag as much as, I dunno, a company in a field with 0 government subsidies.
  - dotancohen 2y ago
    Why not? They are specifically addressing the things that the public (the government) have stated are important to society. How is that not noble, even if profit-motivated?
    - oblio 2y ago
      That's an interesting angle, but the usual concern about this is lobbying/pork barrel/corruption and of course, regulatory capture, especially for SpaceX. In an ideal world, what you're saying makes sense, but at least to give an example, for an Android phone, you have to persuade 500 million people to buy it. For SpaceX to get a multi billion dollar contract with the government you only have to persuade 10 people.
      - dotancohen 2y ago
        Regulatory capture for SpaceX? Is that a joke? Are you heard of a company called Lockheed, or perhaps Boeing?
m463 2y ago
So what if a car company makes EVs, but pays a someone else a signficant portion of each car (the batteries). And what if another company (tesla) makes its own batteries. Are they judged in a similar fashion?
- oblio 2y ago
  Fairy sure Tesla partners with LG Chem and I think another company to make those batteries.

metalliqaz 2y ago

In Teslaspeak, "2025" actually means "no earlier than 2029"

huntertwo 2y ago

I think a pivot to energy infrastructure is inevitable. The EV business can be seen as a stepping stone imo to build a strong cash position with all of the reservations. Sort of like free financing.

JumpCrisscross 2y ago
> a pivot to energy infrastructure is inevitable What is Tesla's edge in energy infrastructure?
- huntertwo 2y ago
  I think something to do with battery production for grid usage. Combine that capability with renewable energy subsidies and you might have a good next chapter for Tesla until others catch up.
  - JumpCrisscross 2y ago
    > something to do with battery production for grid usage Tesla isn't a top-ten battery producer [1]. The batteries it does use (and make) are optimised for EVs. [1] https://cleantechnica.com/2024/01/19/top-10-battery-producers-in-the-world-2023-provisional-data/ https://cleantechnica.com/2024/01/19/top-10-battery-producer...
    - huntertwo 2y ago
      Interesting - however, they do have a financial position that may make it easier for them to pivot than some of the other manufacturers in addition to their consumer image that makes it easy to raise money in the form of EV reservations. They don’t seem to be in a super strong position either way.
      - JumpCrisscross 2y ago
        > they do have a financial position that may make it easier for them to pivot than some of the other manufacturers Relative to a utility? Or any deep-pocketed investor who can buy Panasonic cells? Tesla is a terrific EV company. They shouldn’t be pivoting away from their roots but reclaiming them.

christkv 2y ago

I'll tell you a secret from a friend in Audi. They are doing as bad or worse.

mmcclure 2y ago
Are you referring to Audi's EVs? Or Audi in general? Either way, looked it up out of curiosity: Audi's parent company, Volkswagen, currently has a market cap of ~58B EUR with revenue over 300B EUR in 2023. Tesla has a market cap of $772B with revenue just under $100B in 2023. Tesla's stock is trading (and has) at a staggering multiple for the automotive industry. It's fair to call out that their competitors may have their own struggles, but negative growth in Tesla's primary product line is going to make it increasingly tough for investors to stomach that premium. Elon has a gift for selling a vision, so I certainly wouldn't bet against Tesla on any short-term horizon, but I struggle to imagine that alone will be able to carry their stock price in perpetuity.
- christkv 2y ago
  Audi part. Cars are not moving. If the rest of Volkswagen is similar its going to be bad. Tesla is just more visible. I think only Toyota is making money right now.

Workaccount2 2y ago

>Wow, a full half of Tesla's operating income came from tax credits( around $800M of $1.6B operating income). Totally logical for the CEO of the company to be vocal supporter of the man who wants to kill those credits.

reverius42 2y ago
He did say he considers the "woke mind virus" to be a bigger threat to humanity than climate change. So I think he's being consistent even if it hurts him and his shareholders.
- throwaway5752 2y ago
  "he's being consistent even if it hurts him and his shareholders" That is not a luxury CEOs get. They do not have a free hand to run companies, they are hired by boards of directors who represent the shareholders. His job is to work for the benefit of shareholders, and if he can't do that then it's simply a case of firing him.
  - toomuchtodo 2y ago
    Tesla did what it needed to do: force the world towards EVs. If it dies, legacy auto and BYD will carry on. It will be a shame if Tesla dies because the board didn’t have the will to push Elon out (wrt the brand, its stationary storage business, and ~120k global employees), such is the peril of poor corporate governance. I cancelled my Cybertruck res, and after buying four Teslas, I will not spend another dime on one until Elon is gone. Tesla is, hopefully, forced into self preservation by market fundamentals.
    - newZWhoDis 2y ago
      [flagged]
      - toomuchtodo 2y ago
        I support you spending your fiat as you see fit, and will encourage you all the way to the bank, your feelings costing you a chunk of change you can hopefully afford to part with. We vote with our purchasing power, and I support your right to vote. I hope you can respect my vote to not further empower a terrible human. I also upvoted your comment and will vouch for it as well, shared perspective is important, even if contrarian or deviating materially from a consensus.

rozap 2y ago

imo this is a big part of why Elon is cozying up to Trump and the right. If the left wins, there will probably be tax incentives for EV manufacturers at large because that's just part of their platform. And if the right wins, then he has bribed them and will get preferential treatment. Given his companies are so dependent on government money, it does make sense as a strategy because it ensures continuity of those handouts in both cases.

jjulius 2y ago
> And if the right wins, then he has bribed them and will get preferential treatment. That it would largely be about Musk winning, rather than doing all that he can to support global EV adoption, would absolutely track for him.
- decafninja 2y ago
  He has pivoted to defeating the woke mind virus as his priority.

throwaway5752 2y ago

"their car business" Service and Energy Generation are <10% LOBs. They are a car business.

hnburnsy 2y ago

>Wow, a full half of Tesla's operating income came from tax credits( around $800M of $1.6B operating income). Of course if Tesla didn't make those car and batteries they wouldn't have regulatory credits to sell. Also the credits were 3.5% of total revenue ($890M of $25,500M).

bryanlarsen 2y ago

Tax credits aren't pure profit. You actually have to build and sell a car to get a tax credit.

bottlepalm 2y ago

Your comment sure is catchy. Making it read like half of Tesla's income came from tax credits. When in reality 'regulatory credits' revenue isn't significant. https://x.com/EconomyApp/status/1815845019053613480/photo/1 https://x.com/EconomyApp/status/1815845019053613480/photo/1

chollida1 2y ago
Thanks appreciate it!! I'll explain for you what my comment means. Operating income is a measure we use to see how profitable a company is at its core business after you subtract the costs of running that business. Yes the credits are a small portion of Tesla's income but after account for the costs of building cars what's' left is the operating income. Those credits are about half o that income, without them the operating income( a measure of if the core business works) would be cut in half. That is a significant measure.
- bottlepalm 2y ago
  Some of the 'cost' of building cars is paid for with money from 'tax credits'. It's very clear on the diagram I linked above. You can't attribute 100% of 'operating income' to one thing. If anything you need to attribute things proportional to their inputs. Otherwise it's misleading. I mean if that's what you want, here you go - https://imgur.com/a/dWrGKuN https://imgur.com/a/dWrGKuN Then you create a strawman scenario of 'without tax credits...'. Well no, without tax credits the spending policies and prices of other revenue streams change in order to hit net income targets.

DoesntMatter22 2y ago

They also had a 600 million dollar restructuring charge so it's mostly a wash as they normally take in about 430 million in regulatory credits. Really they aren't doing poorly when you consider the awful interest rates out there.

reaperducer 2y ago
Really they aren't doing poorly when you consider the awful interest rates out there. Until you've lived at a time when 13% was considered a great mortgage rate, you have no idea what an "awful" interest rate is.
- DoesntMatter22 2y ago
  I did live through that time. But that was a long time ago. Awful is relative to the zirp era we lived in which was quite long lasting

satvikpendem 2y ago

The Model 3 recently got refreshed so I'm not sure they'd refresh it again so soon.

browningstreet 2y ago
The Y is scheduled to get its refresh next year, but both the 3 and the Y need upgraded and better suspensions. I took my Y to the Bay Area this last week and with the crappy roads, it was a rough, rough ride. That being said, like others have said.. I won't spend money on another Tesla while Elon's there, even if they ship magic on a stick.
- perryh2 2y ago
  The current Model Y in production is known to have significantly better suspension than Model Ys produced 2020-2022. If you have an older Model Y, you can upgrade the suspension (cost about $2k with installation).
  - browningstreet 2y ago
    Mine's a 2022.. I'll look into that, thanks.

mensetmanusman 2y ago

Someone should calculate how much lower medical costs will be with fewer ice engines on the road. Honestly curious if that is one of the payback strategies for the government.

7e 2y ago

Those tax credits are pollution indulgences what Tesla sells to competitors to stall their EV programs. They completely offset any environmental benefit of buying a Tesla. There is none.

culi 2y ago

> Man things have turned quickly on Tesla Hasn't this always been the case? Haven't they always been dependent on credits and subsidies to make a profit? Tesla's received almost $3 billion in state and federal subsidies and half a billion in bailouts[0] (and has more violations[1] than most other companies of its size). Additionally, they regularly engage in probably illegal accounting practices like categorizing automobile warranty expenses as part of the "Goodwill" category rather than the cost of making the vehicle leading to a huge inflation of Tesla's claimed gross margin [0] https://subsidytracker.goodjobsfirst.org/?parent=tesla-inc https://subsidytracker.goodjobsfirst.org/?parent=tesla-inc [1] https://violationtracker.goodjobsfirst.org/parent/tesla-inc https://violationtracker.goodjobsfirst.org/parent/tesla-inc