GetOffYourGas
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Re: Official Tesla Model 3 thread

Wed Jul 05, 2017 1:16 pm

lpickup wrote:
cwerdna wrote:
GetOffYourGas wrote: Tesla as a corporation "loses" money because they are investing heavily in the future. But an investment isn't a loss, hence the quotes.
They are losing money. What are these investments you speak of that you claim are helping contribute to putting them in the red?
Gigafactory, Supercharger network expansion, Expansion of service centers and mobile ranger fleet, and the creation and expansion of the Model 3 assembly line itself to name a few.

There are also some dubious investments not directly benefiting their car business such as the Solar City acquisition and the Powerpack/Powerwall product lines. I think it's probably somewhat fair to criticize them on those grounds, but again, those aren't directly related to their car business's ability to make a profit on a vehicle anyway, which is what's being debated here.
This. The first list lpickup provided are all investments for the future of the company. Yes, they are spending money. And they have negative profits, putting them in the red (spending is greater than revenue). I'm not suggesting otherwise. I'm just suggesting that the prudent observer would consider these investments in the future.
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cwerdna
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Re: Official Tesla Model 3 thread

Wed Jul 05, 2017 1:18 pm

lpickup wrote:
cwerdna wrote:
GetOffYourGas wrote: Tesla as a corporation "loses" money because they are investing heavily in the future. But an investment isn't a loss, hence the quotes.
They are losing money. What are these investments you speak of that you claim are helping contribute to putting them in the red?
Gigafactory, Supercharger network expansion, Expansion of service centers and mobile ranger fleet, and the creation and expansion of the Model 3 assembly line itself to name a few.
Regarding the bolded portions, those do not count against the loss portion of their P&L other than interest expense and depreciation, which minimal and spread out over time.

Please see http://www.mynissanleaf.com/viewtopic.p ... 96#p494496. Will need to look into the other items in their SEC filings when I have some time later today.

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lpickup
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Re: Official Tesla Model 3 thread

Wed Jul 05, 2017 2:57 pm

cwerdna wrote:
lpickup wrote:
cwerdna wrote: They are losing money. What are these investments you speak of that you claim are helping contribute to putting them in the red?
Gigafactory, Supercharger network expansion, Expansion of service centers and mobile ranger fleet, and the creation and expansion of the Model 3 assembly line itself to name a few.
Regarding the bolded portions, those do not count against the loss portion of their P&L other than interest expense and depreciation, which minimal and spread out over time.
Cool, thanks...learned something.

So I did review the 1Q17 finanical report. Looks like SG&A costs (selling, general & administrative) is the biggest culprit in the "loss" column for Tesla ($603 million).

Here is the statement regarding SG&A costs in the financial report:
Selling, general and administrative expense increased by $285.3 million, or 90%, in the three months ended March 31, 2017 as compared to the three months ended March 31, 2016. This was primarily due to the inclusion of selling, general and administrative expenses from SolarCity of $136.6 million. Additionally, the increase was due to an $85.3 million increase in employee and labor-related expenses from a 71% headcount increase as we expanded our business, a $37.6 million increase in office, information technology and facilities-related expenses to support the growth of our business as well as sales and marketing activities to handle our expanding market presence and a $25.8 million increase in professional and outside service expenses to support the growth of our business.
Also elsewhere in the report it mentioned the $25.8 million was related to their acquisition of Grohmann Engineering.

R&D also accounted for $322 million...presumbably this effort is targeted towards the semi, pickup, Model Y, battery research, etc.?
Research and development expense increased by $139.6 million, or 76%, in the three months ended March 31, 2017 as compared to the three months ended March 31, 2016. This was primarily due to the inclusion of research and development expenses from SolarCity of $44.8 million. Additionally, the increase was due to a $42.8 million increase in employee and labor-related expenses from a 57% headcount increase as we expanded our business, a $22.4 million increase in facilities and depreciation expenses and an $18.4 million increase in expensed materials to support our Model 3 development.
So a total of $925 million in operating expenses against a gross profit of $627 million on the vehicles themselves.

Note: Energy generation & storage made some money while "services and others" lost some, so the TOTAL gross profit was slightly higher at $667 million

Now every company is going to have some amount of R&D and SG&A costs, so it's not really fair to make the statement that Tesla made $627 million (on $2,290 million of automotive revenue--27% gross profit margin) in their auto business without considering the R&D and SG&A costs, but I think the point being made regarding whether Tesla makes or loses money on each car boils down to whether their R&D costs + SG&A costs are out of scale compared to the competition because Tesla is growing or not. I'm not a financial analyst, so I don't have the answer. I think based on Tesla's own words you can blame SolarCity for a good portion of that--and while that is a fair critique of the company as a whole, you can't really lump that in with statements on whether they would be able to make money on vehicles only.
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edatoakrun
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Re: Official Tesla Model 3 thread

Wed Jul 05, 2017 3:43 pm

Tesla has never had a profitable year, and the model 3 is unlikely to change that reality for at least the next few years.

Tesla may have put all it's eggs in the wrong basket by choosing to try enter the mass market in its weakest segment, mid-sized sedans.
scottf200 wrote:...Too bad they (TSLA?) don't sell mainly gas cars like Nissan so they can keep making large profits. One example below $$$ of just US sales...
Image
Declining sedan sales as shown above, and in the report below, is not specific to Altima, or to Nissan, but is showing up for virtually all participants in the American market (and many others). And due to heavy discounting, profits in the low and mid-priced sedan market are nearly nonexistent.
U.S. June new vehicle sales figures show mixed results

Major automakers on Monday posted mixed U.S. new vehicle sales figures for June, with the U.S. automakers reporting lower numbers while the major Japanese automakers said their sales were up versus the same month in 2016...

The U.S. auto industry has been bracing for a downturn after hitting a record 17.55 million new vehicles sold in 2016. A glut of nearly new used vehicles poses competition for new vehicle sales and automakers have relied increasingly on high consumer discounts and loosened lending terms...

Nissan Motor Co Ltd said its U.S. sales increased 2 percent. But while truck, SUV and crossover sales jumped 19.5 percent, sedan sales dropped 12.1 percent.

In the past few years, Americans have increasingly shunned smaller passenger cars in favor of larger vehicles...
https://uk.reuters.com/article/autos-sa ... KL1N1JU0M7

Of course, unlike Tesla, Nissan remains highly profitable, and should have no trouble introducing the multiple BEVs as planned after the LEAF gen 2 introduction.

Tesla, on the other hand, faces declining sales and lower margins on its elderly S/X platform, with no replacement in sight.

And whether Tesla will ever make a profit selling model 3s at what buyers are willing to pay for them is entirely speculation at this point.
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Re: Official Tesla Model 3 thread

Wed Jul 05, 2017 4:46 pm

I finally put down money for a reservation on one of these things. I'm currently driving a hybrid avalon and I like it a lot.

For me, the clincher--the only thing I care about--is the promise of autonomous driving. The tesla 3 is tiny compared to an avalon. It will be faster (more likely to get into trouble!), consume a bit less fuel (but at current gas prices and 40 mpg a tank who cares). For me, Tesla has me absolutely sold on where they are going with autonomous driving. I believe so much in that I am willing to buy the tesla despite its small size, high price, etc.

Since I'm in new york and late to the game on this I expect delivery in about 18 months based on what musk has said.

The $1k was the easy part, convincing my wife I need this will be the hard part. But, she hates driving to work and at the spectacular rate self driving is coming along from Tesla, unless NY puts a regulatory hurdle in the way, it won't be long before she can leave the driveway, hit a button, and then show up at work. I've also been going on about Tesla for years so she knows it's not an impulsive thing. :D We also have a kid hitting driving age in a few years and I've long said we will maximize computer defensive driving in a car when they get to that point.

Nobody else is pushing the envelope like Tesla is with autonomous driving. It's going to be the greatest technological accomplishment since the internet or cellular phones. A massive industry disruptor, the benefits of it are hard to overstate.

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Re: Official Tesla Model 3 thread

Wed Jul 05, 2017 4:52 pm

edatoakrun wrote:Tesla may have put all it's eggs in the wrong basket by choosing to try enter the mass market in its weakest segment, mid-sized sedans.
You may be right. It's worth reminding though that Musk has done this sort of thing (all eggs in one basket) many times and he keeps doing nothing but win. He pushes through the challenges when others would quit.

Here's my take on the model 3. They have promised it will have all self-driving hardware. Already a tesla is capable of total autonomous driving in traffic and with pedestrians. Already. There are videos of it. In the next couple of years Tesla does nothing but iron out more problems, validate, tweak code, pull back more data. Makes it safer so it can be rolled out en masse.

When a person pulls up to the grocery store, in front of all the spots, steps out of their car, and it drives itself to the back of the parking lot...
When you pass a person on the highway and they are not just texting but hardcore into reading a book...
When you start reading that insurance rates are dropping on autonomous cars and they are safer and don't you love your kids enough to protect them...

At that point, the masses who know so very little about technology except what is shown right in front of their face, they'll finally get it. They will see, and they will want. And tesla will be the only manufacturer who can deliver it. Nissan and others are working on self-driving, but they are behind the curve.

As a pure electric car the tesla is good but nothing amazing. The leaf will have another model out, the bolt is already there with range and power. The safety features and ability to say "bring me to work", as you read the news and drink coffee and for only $35k is just amazing.

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Re: Official Tesla Model 3 thread

Wed Jul 05, 2017 7:09 pm

I hate to be the one to break this to you, but the Model 3 will not be capable of the fully autonomous driving you describe. By all accounts, Tesla's system uses cameras only which means it will never be capable of fully autonomous driving. Reminds me of the HD ready t.v. I bought in 1997. It is capable of dislaying an HD picture, but's pretty crappy and it lacks all the proper inputs necessary to work with today's set top boxes. The best input it has is S-video - state of the art in the late 90's. The only reason I haven't gotten rid of it is that it weighs a ton and I am too lazy to move it.
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cwerdna
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Re: Official Tesla Model 3 thread

Wed Jul 05, 2017 10:03 pm

lpickup wrote: Cool, thanks...learned something.
No prob.
lpickup wrote: R&D also accounted for $322 million...presumbably this effort is targeted towards the semi, pickup, Model Y, battery research, etc.?
R&D would also include ongoing work on the Model S, X, and 3, including software updates, bug fixes, new features, autopilot improvements, autonomous driving work, etc. besides what's mentioned in their SEC filing
Research and development expense consists primarily of personnel costs for our teams in engineering and research, supply chain, quality, manufacturing engineering and manufacturing test organizations, prototyping expense, contract and professional services and amortized equipment expense.
I've always worked in software development so the expense for me (I test software), the developers and other staff all count as R&D.

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Re: Official Tesla Model 3 thread

Wed Jul 05, 2017 10:11 pm

EatsShootsandLeafs wrote:They have promised it will have all self-driving hardware.
Yeah and when will they get sued if they don't deliver? Three years down the road?
Already a tesla is capable of total autonomous driving in traffic and with pedestrians.
Yeah, that is like saying a twelve year old can drive a car.
Already. There are videos of it.
Yep, you can probably find videos of 12 year olds driving too.
In the next couple of years Tesla does nothing but iron out more problems, validate, tweak code, pull back more data. Makes it safer so it can be rolled out en masse.
Yep, that is the dream and hope. It will work well on a sunny day on a good freeway. Other conditions, we will have to wait and see.
When a person pulls up to the grocery store, in front of all the spots, steps out of their car, and it drives itself to the back of the parking lot...
When do you expect this to be available?
And tesla will be the only manufacturer who can deliver it. Nissan and others are working on self-driving, but they are behind the curve.
That statement sounds like it is coming from a very strong fan of Tesla. The truth is Elon said there won't be fully self driving for two years, same as Nissan. Nissan is using Mobileye technology. Mobileye has been in the business far longer than Tesla and has the backing of many manufacturers.
As a pure electric car the tesla is good but nothing amazing. The leaf will have another model out, the bolt is already there with range and power. The safety features and ability to say "bring me to work", as you read the news and drink coffee and for only $35k is just amazing.
Is $45K closer to reality? Compare that to a plain mid size sedan that one can purchase for $20K. There are plenty of people who will decide they can't afford that and will just drive themselves.
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cwerdna
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Re: Official Tesla Model 3 thread

Thu Jul 06, 2017 3:11 am

EatsShootsandLeafs wrote: Here's my take on the model 3. They have promised it will have all self-driving hardware. Already a tesla is capable of total autonomous driving in traffic and with pedestrians. Already. There are videos of it. In the next couple of years Tesla does nothing but iron out more problems, validate, tweak code, pull back more data. Makes it safer so it can be rolled out en masse.
...
At that point, the masses who know so very little about technology except what is shown right in front of their face, they'll finally get it. They will see, and they will want. And tesla will be the only manufacturer who can deliver it. Nissan and others are working on self-driving, but they are behind the curve.
EatsShootsandLeafs wrote: Nobody else is pushing the envelope like Tesla is with autonomous driving. It's going to be the greatest technological accomplishment since the internet or cellular phones. A massive industry disruptor, the benefits of it are hard to overstate.
Gotta love the Tesla hype machine and the confusion they've spread.

Have you looked at the California disengagement reports for Tesla and others via https://www.dmv.ca.gov/portal/dmv/detai ... us/testing? Specifically look at https://www.dmv.ca.gov/portal/dmv/detai ... eport_2015 and https://www.dmv.ca.gov/portal/dmv/detai ... eport_2016.

Regardless of whether the allegations at http://dailykanban.com/2017/02/ca-dmv-r ... ive-video/ are true, the timing of those 2016 Tesla disengagements is right around the time of their publicity stunt video. Notice they had ~182 disengagements for about 550 miles of driving?

Compare that ratio to Waymo (Google's efforts) and the miles they drove. Tesla seems WAY behind Waymo. Waymo's doing https://www.theverge.com/2017/4/25/1541 ... er-phoenix. Where's Tesla something like that?

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