Judging by your forward look it looks like Elon has 6ish months for one last pump (energy+cyber+model refresh...+who knows) sell a load of shares and then step down. Let someone else oversee the end of high auto GM so he can snipe from the sidelines saying they're doing it all wrong.
New pivot to AI plus his clear obsession with the bird app suggest Tesla may be losing its shine for him.
Further musings on the financials - do you think the raw materials costs above spot price could be booked to hedging losses or similar to reduce the cost/car?
Also, what on earth are they doing to do with all the idle factory capacity, surely they should be able to comfortabley make >2m cars per year but this year will stagnate with prices dropping?
Thank you for your article. I got question regarding your P&L modelling: I have not seen anywhere the R&D line, do you include the figure into the variable cost?
I'm sure I could quibble some of these points, but I don't think you are too wrong on some of the details. What's mainly wrong is the points you're NOT making, the ones you're leaving out. For starters you're getting hung up on the financials but Tesla was never a financial company first and foremost it's about the mission. In the near term money is completely inconsequential as long as they are positive cash flow to continue growing and funding the great ambitions laid out over the years and most recently in Master Plan 3.
Even if your dour prediction of 1.7 million comes true, that will be due to the Biden recession which has really killed all automakers. Tesla has fared by far the best through these trying times.
The other thing is you ONLY talk about cars. Tesla has so many areas with higher TAMs than cars. Energy is a huge industry and Tesla is growing extremely rapidly there see the new China news. With X company growing Tesla may become more and more one entity with SpaceX, which is competing in what will someday be a MASSIVE market. And most importantly of course our kids and grandkids may mainly know Tesla as a humanoid company, Optimus is essentially competing with the largest market: the labor market.
Brad I really appreciate the effort and time you put it in getting into some details of car selling, but with Tesla that's like trying to look at a forest with your eyes a couple inches from a solitary trunk. Take a step back. I highly advise starting with the MP3 white paper.
If you don't mind wasting your time, another "layman" question: do you have any idea, how is the 2nd hand Tesla cars market going? Meaning, do people really buying used Teslas? I am pretty much in that market myself, for private use, I buy 3-4 years old, used ICE car, because I don't really care that much about "status symbol" and find these cars to be better value, especially if the previous owner was picky and polish the car more than did actual driving.
Anyways, i just wonder, how this market works in case of EVs (ie Tesla) , I would be really scare to do so, because such car is half way trough the warranty and an problem with the battery (which I see very likely between 8-10 year) means the end of the car, despite the fact that there would still be relatively high residual value on the car.
Do people really buy them or does Tesla stores them somewhere out of the sight?
Used Tesla prices are dropping by 20%-30% depending on age. In the UK, 1yr old Model 3/Ys are dropping by 25% vs their prices last September (link below).
Since the battery packs only have a lifetime of around 7yrs, it's not worth buying used EVs in my opinion, unless they have very little mileage used.
"How will Tesla book subsidies from America’s new Inflation Reduction Act (IRA) for its battery packs? Given that it’s a subsidy or “credit”, it should be booked along with regulatory credits that Tesla earns."
Thanks for the analysis, very interesting.
Judging by your forward look it looks like Elon has 6ish months for one last pump (energy+cyber+model refresh...+who knows) sell a load of shares and then step down. Let someone else oversee the end of high auto GM so he can snipe from the sidelines saying they're doing it all wrong.
New pivot to AI plus his clear obsession with the bird app suggest Tesla may be losing its shine for him.
Further musings on the financials - do you think the raw materials costs above spot price could be booked to hedging losses or similar to reduce the cost/car?
Also, what on earth are they doing to do with all the idle factory capacity, surely they should be able to comfortabley make >2m cars per year but this year will stagnate with prices dropping?
Thank you for your article. I got question regarding your P&L modelling: I have not seen anywhere the R&D line, do you include the figure into the variable cost?
I'm sure I could quibble some of these points, but I don't think you are too wrong on some of the details. What's mainly wrong is the points you're NOT making, the ones you're leaving out. For starters you're getting hung up on the financials but Tesla was never a financial company first and foremost it's about the mission. In the near term money is completely inconsequential as long as they are positive cash flow to continue growing and funding the great ambitions laid out over the years and most recently in Master Plan 3.
Even if your dour prediction of 1.7 million comes true, that will be due to the Biden recession which has really killed all automakers. Tesla has fared by far the best through these trying times.
The other thing is you ONLY talk about cars. Tesla has so many areas with higher TAMs than cars. Energy is a huge industry and Tesla is growing extremely rapidly there see the new China news. With X company growing Tesla may become more and more one entity with SpaceX, which is competing in what will someday be a MASSIVE market. And most importantly of course our kids and grandkids may mainly know Tesla as a humanoid company, Optimus is essentially competing with the largest market: the labor market.
Brad I really appreciate the effort and time you put it in getting into some details of car selling, but with Tesla that's like trying to look at a forest with your eyes a couple inches from a solitary trunk. Take a step back. I highly advise starting with the MP3 white paper.
If you don't mind wasting your time, another "layman" question: do you have any idea, how is the 2nd hand Tesla cars market going? Meaning, do people really buying used Teslas? I am pretty much in that market myself, for private use, I buy 3-4 years old, used ICE car, because I don't really care that much about "status symbol" and find these cars to be better value, especially if the previous owner was picky and polish the car more than did actual driving.
Anyways, i just wonder, how this market works in case of EVs (ie Tesla) , I would be really scare to do so, because such car is half way trough the warranty and an problem with the battery (which I see very likely between 8-10 year) means the end of the car, despite the fact that there would still be relatively high residual value on the car.
Do people really buy them or does Tesla stores them somewhere out of the sight?
Used Tesla prices are dropping by 20%-30% depending on age. In the UK, 1yr old Model 3/Ys are dropping by 25% vs their prices last September (link below).
Since the battery packs only have a lifetime of around 7yrs, it's not worth buying used EVs in my opinion, unless they have very little mileage used.
https://www.fleetnews.co.uk/news/manufacturer-news/2023/03/07/carmakers-rule-out-reductions-after-tesla-price-cut-shocks-the-market#:~:text=The%20used%20value%20for%20a,models%20were%20strong%20through%202022.
This is the $100B question in your write up:
"How will Tesla book subsidies from America’s new Inflation Reduction Act (IRA) for its battery packs? Given that it’s a subsidy or “credit”, it should be booked along with regulatory credits that Tesla earns."