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Tesla's 10-K shows an accumulated shareholder deficit of $6B. That's over and above money spent to buy factories which are still operating. That's $6k a car at

Tesla's 10-K shows an accumulated shareholder deficit of $6B. That's over and above money spent to buy factories which are still operating. That's $6k a car at 1M cars sold. Add to that the $7500 rebate the US was providing until recently. That's $13.5k, on average, they lost per car they sold through the end of 2019. Saying nothing about Tesla cars versus other companies, that's a huge financial advantage against other car companies. This is particularly true given that most of those car sales happened post-Q1-2018, when Tesla had already established a strong brand. I'm not sure any established player could, at that point, compete with a company that gets to lose $13.5k per car they sell. That would be like if Nissan started building base-model Sentras and selling them for $4500. Yes, they would sell a lot of them. As markets normalize and Tesla has to compete on a level playing field, my guess is their product is viewed more and more as what it is: a luxury car. Nothing wrong with that, but it's hard to see them owning more than a few percent of the market, especially considering established companies have gone all in on electric at this point. And, nothing can justify a price-sales multiplier of 20 for the company. Nothing.

TotempaaltJ 7y ago
How does Tesla lose money on the rebate?
- sfblah 7y ago
  They don’t. It’s that they get to charge less for their cars than would a competitor.
  - mrep 7y ago
    Those competitors can sell cars with the same rebate as Tesla though.
    - sfblah 7y ago
      Yes, assuming Tesla doesn’t successfully lobby to change the law, which I expect them to do.
  - rootusrootus 7y ago
    They get to charge more, you mean. They have had to steadily lower their prices as the rebate phased out.
toomuchtodo 7y ago
Fiat Chrysler and GM used to build compliance cars. Fiat's CEO was famous for saying not to buy theirs [1] because they lost money on it, but were required to build them to meet emissions mandates so they could sell their polluting combustion cars (fun fact: Fiat has to pay Tesla $2 billion now to continue selling non-EVs in Europe, they are effectively funding Gigafactory 4 in Berlin [2]). These companies have enormous existing manufacturing capacity, and capital market resources. If they didn't have spineless management, or short term shareholders, they could've been the ones to capture the gains from the transition to electrified transportation. Instead, Tesla came along, doing the hard work for a decade performing R&D, building their own manufacturing capacity (GF1, 2, 3, and now 4) and Supercharger network, and most importantly, a desirable and sexy brand. TLDR Tesla spends crazy money on capex but everyone funding Tesla is onboard with it, legacy automakers cannot do so. Polluting and emissions have a very real cost (climate change, particulate pollution). I am astounded when someone complains that this cost must be paid for, and that it was in some way wrong or economic fraud for Tesla to take advantage of intelligent public policy (ZEV credits, tax credits, etc). Disclaimer (bigger one in profile): I am a TSLA shareholder, and willing to wait until the heat death of the universe for any return on capital. My investment is in fixing climate change. [1] https://www.reuters.com/article/chrsyelr-ceo-evs/fiat-chrysler-ceo-please-dont-buy-fiat-500e-electric-car-idUSL1N0O71MS20140521 https://www.reuters.com/article/chrsyelr-ceo-evs/fiat-chrysl... (“I hope you don’t buy it because every time I sell one it costs me $14,000,” he said to the audience at the Brookings Institution about the 500e. “I’m honest enough to tell you that.” -- Sergio Marchionne) [2] https://www.bloomberg.com/news/articles/2020-01-09/fiat-will-effectively-fund-tesla-s-german-factory-baird-says https://www.bloomberg.com/news/articles/2020-01-09/fiat-will... (Fiat Will Effectively Fund Tesla’s German Factory, Baird Says)
- tardo99 7y ago
  Except that's not how public policy works. It's not like Tesla just happened to luck into these policies. They actively lobbied for them. There's a significant amount of "greenwashing" involved there. I think it's instructive to realize that both of Musk's companies have, as critical elements of their success, government policies which favored them at just the right time. I have nothing against Tesla as a luxury car brand. I do get tired of fanboys suggesting they'll take over the entire industry. Normal people can't afford a $60k Model 3 (and that's what they actually cost). Other companies will do fine in the electric space. I'm quite happy with my used Nissan Leaf. Price? $8500. Let's see Tesla beat that.
kmonsen 7y ago
The 7.5k is available for anyone selling electric cars in the US, well except Tesla themselves at this point so right now they are actually fighting an uphill battle and still winning.
- DanCarvajal 7y ago
  Is it a battle when almost all the other competitors are just producing California compliance cars? They've barely survived financially without competition, I'd be deeply concerned with their ability to compete going forward.
deleted 7y ago
[deleted]
AnthonyMouse 7y ago
> Tesla's 10-K shows an accumulated shareholder deficit of $6B. That's over and above money spent to buy factories which are still operating. That's $6k a car at 1M cars sold. The money was spent on things like R&D and product development. That means you amortize it over the total number of cars they're ever going to make using that technology. They've made 1M already, but why would you expect them not to make any more? Some of that money went into developing models that haven't been released yet. If you break it down per model using existing sales numbers then those models would have cost infinity dollars per car, but that's now how it works.
- sfblah 7y ago
  Let’s hope. The question is how relevant the 13.5k subsidy is to whether others can compete. The top comment about luxury cars being irrational purchases is probably the best commentary here.
rconti 7y ago
Yeah, there was an article the other day interviewing James Dyson about his new flatiron. The first part of the article asked him about their EV, which was basically ready for production (they spent years on it), but he said there was no way to make it profitably. That said, Tesla is still selling cars with no federal rebate. So, actually, while you're right about $13.5k (historically), that's no longer correct. (of course, they've lowered prices, so perhaps that $6k number goes up?) I don't doubt a more efficient automaker could shave thousands off that $6k number. And people would still buy it for a couple thousand more; making up the pricing difference. Of course, that still brings us "only" to $0 unit profit.

TotempaaltJ 7y ago

How does Tesla lose money on the rebate?

sfblah 7y ago
They don’t. It’s that they get to charge less for their cars than would a competitor.
- mrep 7y ago
  Those competitors can sell cars with the same rebate as Tesla though.
  - sfblah 7y ago
    Yes, assuming Tesla doesn’t successfully lobby to change the law, which I expect them to do.
- rootusrootus 7y ago
  They get to charge more, you mean. They have had to steadily lower their prices as the rebate phased out.

toomuchtodo 7y ago

Fiat Chrysler and GM used to build compliance cars. Fiat's CEO was famous for saying not to buy theirs [1] because they lost money on it, but were required to build them to meet emissions mandates so they could sell their polluting combustion cars (fun fact: Fiat has to pay Tesla $2 billion now to continue selling non-EVs in Europe, they are effectively funding Gigafactory 4 in Berlin [2]). These companies have enormous existing manufacturing capacity, and capital market resources. If they didn't have spineless management, or short term shareholders, they could've been the ones to capture the gains from the transition to electrified transportation. Instead, Tesla came along, doing the hard work for a decade performing R&D, building their own manufacturing capacity (GF1, 2, 3, and now 4) and Supercharger network, and most importantly, a desirable and sexy brand. TLDR Tesla spends crazy money on capex but everyone funding Tesla is onboard with it, legacy automakers cannot do so. Polluting and emissions have a very real cost (climate change, particulate pollution). I am astounded when someone complains that this cost must be paid for, and that it was in some way wrong or economic fraud for Tesla to take advantage of intelligent public policy (ZEV credits, tax credits, etc). Disclaimer (bigger one in profile): I am a TSLA shareholder, and willing to wait until the heat death of the universe for any return on capital. My investment is in fixing climate change. [1] https://www.reuters.com/article/chrsyelr-ceo-evs/fiat-chrysler-ceo-please-dont-buy-fiat-500e-electric-car-idUSL1N0O71MS20140521 https://www.reuters.com/article/chrsyelr-ceo-evs/fiat-chrysl... (“I hope you don’t buy it because every time I sell one it costs me $14,000,” he said to the audience at the Brookings Institution about the 500e. “I’m honest enough to tell you that.” -- Sergio Marchionne) [2] https://www.bloomberg.com/news/articles/2020-01-09/fiat-will-effectively-fund-tesla-s-german-factory-baird-says https://www.bloomberg.com/news/articles/2020-01-09/fiat-will... (Fiat Will Effectively Fund Tesla’s German Factory, Baird Says)

tardo99 7y ago
Except that's not how public policy works. It's not like Tesla just happened to luck into these policies. They actively lobbied for them. There's a significant amount of "greenwashing" involved there. I think it's instructive to realize that both of Musk's companies have, as critical elements of their success, government policies which favored them at just the right time. I have nothing against Tesla as a luxury car brand. I do get tired of fanboys suggesting they'll take over the entire industry. Normal people can't afford a $60k Model 3 (and that's what they actually cost). Other companies will do fine in the electric space. I'm quite happy with my used Nissan Leaf. Price? $8500. Let's see Tesla beat that.

kmonsen 7y ago

The 7.5k is available for anyone selling electric cars in the US, well except Tesla themselves at this point so right now they are actually fighting an uphill battle and still winning.

DanCarvajal 7y ago
Is it a battle when almost all the other competitors are just producing California compliance cars? They've barely survived financially without competition, I'd be deeply concerned with their ability to compete going forward.

deleted 7y ago

[deleted]

AnthonyMouse 7y ago

> Tesla's 10-K shows an accumulated shareholder deficit of $6B. That's over and above money spent to buy factories which are still operating. That's $6k a car at 1M cars sold. The money was spent on things like R&D and product development. That means you amortize it over the total number of cars they're ever going to make using that technology. They've made 1M already, but why would you expect them not to make any more? Some of that money went into developing models that haven't been released yet. If you break it down per model using existing sales numbers then those models would have cost infinity dollars per car, but that's now how it works.

sfblah 7y ago
Let’s hope. The question is how relevant the 13.5k subsidy is to whether others can compete. The top comment about luxury cars being irrational purchases is probably the best commentary here.

rconti 7y ago

Yeah, there was an article the other day interviewing James Dyson about his new flatiron. The first part of the article asked him about their EV, which was basically ready for production (they spent years on it), but he said there was no way to make it profitably. That said, Tesla is still selling cars with no federal rebate. So, actually, while you're right about $13.5k (historically), that's no longer correct. (of course, they've lowered prices, so perhaps that $6k number goes up?) I don't doubt a more efficient automaker could shave thousands off that $6k number. And people would still buy it for a couple thousand more; making up the pricing difference. Of course, that still brings us "only" to $0 unit profit.