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.
One of the last questions on the earnings call that just completed, was what would happen to Tesla revenue if Trump wins and those get cancelled. His answer after a pause, was that it probably would have an impact...and would probably be worst for his competitors...but does not really matter because they are all into FSD....
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.
I'm not sure if you're passing judgement on Musk or the person you're replying to, but just for context, both Musk and Trump often use "woke" as a derogatory word.
That is a judgement on Musk and Trump. 'Woke' is a stereo type, it is used as a dog whistle rather than an accurate description of a large set of people. It is a way of 'othering' that is both very defined and yet a complete characterure.
It is one of those terms were if you were to actually find people that are truly 'woke' and respresent everything it stands for, it would be a very difficult task indeed. It is like taking the 'No true Scottsman' fallacy and tipping it on its head.
"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.
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.
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.
I think you might be underestimating how many potential customers are unwilling to buy from Tesla after Elon Musk decided to openly support the MAGA wing of republicans.
Not sure why that makes you more inclined to buy a Tesla or flip someone the bird?
If the CEO has to work for the shareholders benefit even outside the work then what about the rank-and-file? Should not all the Amazon employees be forced to shop only at amazon.com and WFM? Should not all Microsoft employees use only Microsoft software? Should all Google employees use Pixel phones and Netflix employees fired for subscribing to competitor streaming services or buying movie tickets?
I think your expectations of loyalty might be a bit exaggerated. A job is a job. Whether as a CEO or as a warehouse picker, it's not one's life.
All officers are employees, but not all employees are officers. C-suite employees are all officers at least. I’m not sure how far below that it expands.
So it's just the name of the position? Somebody with a title of "chief nutritional officer" has to live for the employer and somebody doing the same job with the title of "associate project manager" doing the same job of ordering lunches can have a life?
I mean, nothing stops you from making it into job requirements in your company, but, apparently, this is not a requirement at Tesla...
> I mean, nothing stops you from making it into job requirements in your company
What, nothing stops you making director-style fiduciary responsibility a job requirement for normal employees in your company? I'd, er, check with a lawyer before you try that one.
There's a Feynman brain virus that reshapes "fiduciary duty" as "profit for shareholders uber alles".
While institutional shareholders generally mean your boss is an excel sheet seeking profit, the only "duty" to shareholders is still "do not defraud them". They can, of course, seek to change the board though...
That is right in theory, wrong in practice. You can go to jail if you violate your fiduciary responsibility, you can also fulfil your fiduciary duties and easily lose your CEO job if you do not prioritize shareholder returns. I'm talking about publicly traded US based companies, like Tesla. This is how proxy advisory services like ISS and Glass Lewis, and board politics in general work. Tesla has defied the rules for a long time, because of the massive cred for innovation and value creation that Musk has accrued over time. That is finite.
I mean, can Musk argue that he legitimately believes battling the woke mind virus is for the benefit of Tesla shareholders and their returns on investment and thus fulfilling his fiduciary duty?
In theory shareholders can vote pretty much as they want regarding removal and approval of CEOs.
Breach of fiduciary duty however would be if CEO intentionally defrauded then of their value (essentially, through intentional bad care for the company)
I seem to recall that there was a US Supreme Court decision stating that that is the essential purpose of a corporation. Looking for the citation, though.
What I mean is if you’re against “woke” things and you define “woke” as things you’re against those two things can’t be in conflict.
I’m not saying what he (or anyone else) says today is consistent with anything else he says or has said. Just that that one statement is _internally_ consistent.
"When Elon Musk came to the White House asking me for help on all his many
subsidized projects, whether its electric cars that don't drive long enough,
driverless cars that crash, or rocket ships to nowhere, without which
subsidies he'd be worthless, and telling me how he was a big Trump fan and
Republican, I could have said, 'drop to your knees and beg,' and he would
have done it..."
-Trump, who Elon is currently giving $45 million / month for his campaign.
But hey, that's pocket change compared to the brand value he has incinerated on Twitter.
Ouch! It is that age old problem. Massive wealth is unelected power, and they use the wealth to influence who we get to pick and what they do. Its not guranteed to happen but it is a sizable influence.
Elon is not giving Trump $45 million per month. Musk denied this in a recent interview with Peterson. He did say created a PAC though. [1]
I know it makes Musk an easy target and easier to attack when a report comes out saying he's donating $45m to Trump but seriously people need to stop believing blindly what the media says about anyone (and Musk especially) without fact-checking first. When I first saw the article about it in WSJ I was skeptical. There were 0 sources and it was sus.
"Oh WSJ said it so it must be true!"
WSJ's source: "according to people familiar with the matter." [2]
Where do you see he donated $45 million to it? Legit source please? Not WSJ "someone familiar with the matter"
Yes the PAC may support Trump but I don't think he's pumping 45 mil a month into it. WSJ put that article about it without any sources and Musk denied it.
You believe everything Trump says? His staff told him that after reading business insider. They didn't even bother checking their actual accounts to see if Elon's super PAC donated $45M this month.
Musk is thinking more about getting Trump elected to avoid the DOJ investigations. Seems that he is willing to sacrifice Tesla to avoid federal prosecution.
>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).
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
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.
They own the most fast chargers across America and since EVs are forming around the NACS standard, the country's entire new electric car market will be able to use their chargers.
The fast charging infrastructure that they laid off the entire team? The one that is starting to get competition from companies with decades in the energy distribution business[1]?
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.
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.
Megapack is a product they've been perfecting for many years and it's already at least a v3 product.
Not only they are not using Panasonic cells in Megapack (those go exclusively to their higher-end cars), if you think all it takes to create a competing product is to have money to buy battery cells then you exemplify "a little knowledge is a dangerous thing".
Megapack is a product with lots of sophisticated electronics that takes serious engineering to develop, it's at least v3 product with years of improvements. You need high-powered voltage conversion, battery management hardware and software so that it doesn't explode etc.
Tesla is a clear leader in the field: every major energy project announced, from Australia to California, uses Tesla megapack. I don't hear much about any of the competition.
Tesla is leading in scale and expanding rapidly (just finished ramping up first U.S. factory and building another factory in China).
Even for Tesla to build another 40 GWh factory which is mostly copy & paste of their existing megapack factor, it's a year long process.
If you start with battery cells, you're looking into a multi-year design & testing & initial production for the first megapack-like product and then at least another year to scale your first factory to 40 GWh yearly production.
By which time Tesla will have few more factories and v5 of Megapack.
> every major energy project announced, from Australia to California, uses Tesla megapack
I was nodding along to most of your comment but this part is a clear exaggeration. Many of the California BESS projects are using LG systems. For example Morro Bay, Edwards Sanborn, and Moss Landing, which are among the largest on the planet, all used LG, at least for some phases.
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"? :-)
> 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).
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.
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?
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.
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).
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.