cwerdna wrote: lpickup wrote:
They are losing money. What are these investments you speak of that you claim are helping contribute to putting them in the red?
, 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.