Electronics whiz Elon Musk is now the world's richest person

[ogden]

One thing to remember is that although the initial green tech initiatives are ending their course, other car manufactures are subject to the mandating of higher taxes on cars that require fossil fuel to run. Cities such as L.A.

All other car manufactures are subject to this tariff in proportion to the number of cars sold that are smog spewers. In this regard, Tesla owners don't pay extra just to own the car.

Well... Good for EV carmakers then. Time ago many laughed about idea of "battery car" manufacturing, laughed about idea to land rocket booster. Now (same) skeptics say that Tesla and SpaceX had head-start and it is unfair to competition. Go figure

[Halcyon]

Tesla sells their cars at a loss. They make their money from "green" certificates in the US.

Really? Could you please provide links to resources supporting your claims? I know that Subsidies for Tesla finished at the end of 2019. TSLA reports do not show any "sell at loss" either.

Really? You didn't know this? I though this was fairly common knowledge. Tesla making a profit has nothing to do with the manufacture of vehicles. Anyone who knows anything about Tesla and their vehicles seems to know this? Those subsidies for EV still exist in the US today.

Here is a brief overview. This is not the only source of the same information either, feel free to investigate yourself.



As I said, Tesla are becoming irrelevant in the EV market. I have a Volvo sitting in the garage that does everything a Tesla can do (legally) and then some. You have real car makers like Volvo, Hyundai, Ford, VW etc... investing a lot of R&D in EV and semi-autonomous vehicles long before Tesla were a thing.

[ogden]

Really? You didn't know this? I though this was fairly common knowledge. Tesla making a profit has nothing to do with the manufacture of vehicles. Anyone who knows anything about Tesla and their vehicles seems to know this? Those subsidies for EV still exist in the US today.

Didn't know about Regulatory credits sales. Thanx. Same story: good for battery-car makers. FYI Tesla automotive gross margin @Q2 was 25.4% (pdf). [edit: ~17% w/o reg.credits] This is far from "selling cars at loss" as "expert" in video tries to prove. We shall take in account that profitability of whole company is set at target 1..2%, excess (including money from regulatory credits) goes into growth. Look at growth and buy some Tesla share for your kids [disclaimer: I am pertrolhead, far from Tesla fanboy].

[tom66]

Tesla sells their cars at a loss. They make their money from "green" certificates in the US.

Really? Could you please provide links to resources supporting your claims? I know that Subsidies for Tesla finished at the end of 2019. TSLA reports do not show any "sell at loss" either.

Yup.  It's nonsense.  Tesla has a gross margin of about 20% on every car they sell.  Less on Model 3/Y, more on Model S/X.

Most automakers would KILL for a 20% GM.

[Halcyon]

Tesla sells their cars at a loss. They make their money from "green" certificates in the US.

Really? Could you please provide links to resources supporting your claims? I know that Subsidies for Tesla finished at the end of 2019. TSLA reports do not show any "sell at loss" either.

Yup.  It's nonsense.  Tesla has a gross margin of about 20% on every car they sell.  Less on Model 3/Y, more on Model S/X.

Most automakers would KILL for a 20% GM.

Would you like to link to figures? 20% on every car? That is laughable and demonstrably untrue.

[ogden]

Tesla sells their cars at a loss. They make their money from "green" certificates in the US.

Really? Could you please provide links to resources supporting your claims? I know that Subsidies for Tesla finished at the end of 2019. TSLA reports do not show any "sell at loss" either.

Yup.  It's nonsense.  Tesla has a gross margin of about 20% on every car they sell.  Less on Model 3/Y, more on Model S/X.

Most automakers would KILL for a 20% GM.

Would you like to link to figures? 20% on every car? That is laughable and demonstrably untrue.

I already linked pdf which says automotive GM is 25.4% including "green" certificates and 17% when we deduce them:

https://tesla.gcs-web.com/static-files/f41f4254-f1cc-4929-a0b6-6623b00475a6

[sandalcandal]

Really? You didn't know this? I though this was fairly common knowledge. Tesla making a profit has nothing to do with the manufacture of vehicles. Anyone who knows anything about Tesla and their vehicles seems to know this? Those subsidies for EV still exist in the US today.

Here is a brief overview. This is not the only source of the same information either, feel free to investigate yourself.

Need to watch that video fully but looks like a rant video with opinions based off 2nd hand news articles. Edit: I really hope you're not basing your opinion on this video alone and pushing it so heavily without looking at some first hand information.

Here is a video (1:13-8:49) by a business analyst (with very pro-tesla interests) using first hand information and the actual numbers rather than flinging around hearsay. In particular looking at how the company balances up without regulatory credits. Tesla is not losing money on their cars or as a company even without regulatory credits but the extra cash is obviously beneficial to grow the company.


Well worth watching this debate about Tesla's value as a company. It address lots of points people have brought up or probably will bring up.

Edit: Another albeit less less productive debate (same pro-tesla bull vs different bear) https://youtu.be/19Xkj2PKOV4

[tom66]

Their gross margins are 35%+ for made in China Model 3 according to analysis.  https://thenextavenue.com/2020/06/10/teslas-model-3-profit-margin-is-35-and-it-can-double/

You'd need to ask Sandy Munro what his thoughts are on the newer Model 3's but they are profitable on a per car basis, after all manufacturing costs.   Can't recall where I got the 20% figure from but remember reading it from investor analysis.

Note I don't have any investment or personal interest in TSLA (I hold some S&P500 in an index tracker, but <2% of that is TSLA), other than hoping that they succeed as a company (or that some other big EV succeeds, like ID.3)

[nctnico]

Margin isn't everything. In the end the R&D needs to be paid for as well. It is not a secret that Tesla receives a huge amount of money for their CO2 emission rights (which in itself is insane because it means that for each EV out there, there is also an ICE vehicle creating the CO2 output on top of the CO2 output most EVs cause). The big question is whether Tesla can continue their R&D efforts at a sufficient level in order to stay ahead of the competition without the revenue stream from the CO2 emission rights. Either way I don't think Tesla will ever dissapear because the brand is so strong.

[tom66]

Margin isn't everything. In the end the R&D needs to be paid for as well. It is not a secret that Tesla receives a huge amount of money for their CO2 emission rights (which in itself is insane because it means that for each EV out there, there is also an ICE vehicle creating the CO2 output on top of the CO2 output most EVs cause). The big question is whether Tesla can continue their R&D efforts at a sufficient level in order to stay ahead of the competition without the revenue stream from the CO2 emission rights. Either way I don't think Tesla will ever dissapear because the brand is so strong.

Of course R&D is an issue but no company burns R&D money without expecting a return (well, maybe with exception of uBeam etc...)

Also Tesla only make about 10% gross margin from auto credits,  so while it's non-zero,  they're still profitable without them.

VW spent over $91 billion on MEB, a single car platform that currently only underties ID.3, yet people seem to balk at Tesla spending ~$4 bn/year?

The biggest problem with TSLA I have right now is their $700 bn valuation seems sky high, it's got to crash down to something more reasonable like $100 bn... right?  I just can't see that being sustainable.

[BravoV]

Like him or not, personally I valued what he is doing or has contributed in space launching system, hard to argue about that. 

[sandalcandal]

Like him or not, personally I valued what he is doing or has contributed in space launching system, hard to argue about that. 

YOU CUT OUT THE BEST PART OF THE TEST!

[BravoV]

YOU CUT OUT THE BEST PART OF THE TEST!

LOL  , still impressive though where a fat big ass metal thingy can do that while falling, even eventually it turned into pieces at the end, but pretty sure next time there is a huge chance of a successful landing.

[nctnico]

Margin isn't everything. In the end the R&D needs to be paid for as well. It is not a secret that Tesla receives a huge amount of money for their CO2 emission rights (which in itself is insane because it means that for each EV out there, there is also an ICE vehicle creating the CO2 output on top of the CO2 output most EVs cause). The big question is whether Tesla can continue their R&D efforts at a sufficient level in order to stay ahead of the competition without the revenue stream from the CO2 emission rights. Either way I don't think Tesla will ever dissapear because the brand is so strong.

Of course R&D is an issue but no company burns R&D money without expecting a return (well, maybe with exception of uBeam etc...)

Also Tesla only make about 10% gross margin from auto credits,  so while it's non-zero,  they're still profitable without them.

VW spent over $91 billion on MEB, a single car platform that currently only underties ID.3, yet people seem to balk at Tesla spending ~$4 bn/year?

The big difference is that VW has the cash on hand and Tesla doesn't. Tesla needs to emit shares in order to get more money to spend. Besides that VW has a production capacity for the ID.3 which rivals Tesla's production capacity for all Tesla's models together. In the end Tesla is a very small car manufacturer with limited resources.

[Halcyon]

Like him or not, personally I valued what he is doing or has contributed in space launching system, hard to argue about that. 

Oh I completely agree. The stuff he is doing with relation to space/satellites, amazing. Their cars, meh. I can buy a Hyundai or Kia which is built better than a Tesla for less money.

[VK3DRB]

Don't know about you blokes but I drove a high end Tesla myself and it was one impressive car, especially the acceleration and responsiveness. BUT, it was not mine and I only drove it for a day .  I have heard the build quality is generally not that good. I drive a Honda Civic since it was new 12 years ago and it is the most reliable car I have ever owned. Pretty happy with it, despite its relative lack of power. It does not attract the chicks, does not feed my ego and my down-to-earth Australian culture does not require me to drive a something like BMW or Mercedes to save face.

[tom66]

The big difference is that VW has the cash on hand and Tesla doesn't. Tesla needs to emit shares in order to get more money to spend. Besides that VW has a production capacity for the ID.3 which rivals Tesla's production capacity for all Tesla's models together. In the end Tesla is a very small car manufacturer with limited resources.

VW did a share offering to raise cash after the dieselgate scandal, and has done numerous other offerings.  It's a common procedure as it's often cheaper than borrowing from institutional lenders.

I agree that Tesla is small and I think VW represents the biggest existential threat to them.  If they get ID.3 right and launch an ID.2 to represent the smaller Polo/sub-Golf market and the ID.4 to cover small SUVs, they may well have Europe sealed from an EV perspective.  Getting success in US and China will be harder.  And for VW, their biggest risk is PSA Group and the Chinese manufacturers.

Definitely a good time to be an electric vehicle enthusiast.  Want to change my PHEV Golf GTE for a pure electric soon.

[VK3DRB]

I personally don't think Musk is worth even 1% of his so-called net worth. However, the meritocracy system allows some smart people to amass such an obscene amount of wealth and generally pay minimal tax. Worth should be somehow based upon how you help others and mankind. You'd be blind Freddy to think Alice Walton, "worth" $54 BILLION, is not at least just a little bit greedy when Walmart only pays their cashiers a lousy $10.78 per hour. Something is wrong when lowest paid workers can barely afford a decent meal for their kids or transport to get to work, whilst the super-rich are hell-bent on making more money than they know what to do with. Inequality is getting a lot worse in the US and other places (very evident during COVID-19) and I suspect this kind of greed might be a major cause of the civil unrest in the US.

It will not be long before the world has its first trillionaire and my bet is he will make it from the tech sector. However, Gates is working very hard at increasing his "net worth" with most of his investments in the non-tech sectors, including a large investment in Walmart. There might need to be a global movement (or revolution) to limit the amount of wealth a person can accumulate, or at least share wealth more equitably. Easier said than done. History has proven society works better when there is incentive. I would like to see a society where people are rewarded in proportion to their real worth.

[BravoV]

There might need to be a global movement (or revolution) to limit the amount of wealth a person can accumulate, or at least share wealth more equitably.

Hmmm .. so no more freedom of greed and right for collecting wealth, and if you are rich, your wealth must be distributed among those low life peasants ? 

I guess you are the socialism aficionado ? Any plan to migrate to Rusia or China ?  Be warned though, every and any thing related to China, is evil.

[nctnico]

The big difference is that VW has the cash on hand and Tesla doesn't. Tesla needs to emit shares in order to get more money to spend. Besides that VW has a production capacity for the ID.3 which rivals Tesla's production capacity for all Tesla's models together. In the end Tesla is a very small car manufacturer with limited resources.

VW did a share offering to raise cash after the dieselgate scandal, and has done numerous other offerings.  It's a common procedure as it's often cheaper than borrowing from institutional lenders.

I agree that Tesla is small and I think VW represents the biggest existential threat to them.  If they get ID.3 right and launch an ID.2 to represent the smaller Polo/sub-Golf market and the ID.4 to cover small SUVs, they may well have Europe sealed from an EV perspective.  Getting success in US and China will be harder.  And for VW, their biggest risk is PSA Group and the Chinese manufacturers.

VW is a strong brand in both the US and China. AFAIK the ID.4 will be produced only in China AND the ID.3 alone has outsold all Tesla models combined in some markets already (for example in the Netherlands). But in the end the market for EVs is not that big in Europe so it makes more sense to produce in China and ship whatever is needed to the EU and the US. According to (recent) research from KPMG about 10% of the consumers in the EU is interested in buying an EV in the next 5 years versus 80% in China. The number of people is in the same order of magnitude so it is easy to see it makes sense to concentrate on China where it comes to EVs.

[wraper]

Also, Tesla sells their cars at a loss. They make their money from "green" certificates in the US.

20-30% profit margin is selling at loss? Green certificate money goes into building new factories.

[nctnico]

Also, Tesla sells their cars at a loss. They make their money from "green" certificates in the US.

20-30% profit margin is selling at loss? Green certificate money goes into building new factories.

But without new factories there are no cars to sell. The big question is whether Tesla can still expand without the revenues of the emission certificates.

One of my former co-workers was offered early retirement at 80% of his income. Much to my surprise he declined. It got clear to me once he explained to me that that last 20% of your income is the part you use to do fun stuff. Sure you can survive on 80% but no more fun stuff like holidays or buying something for your hobby.

For companies it works the same way; enough money has to come in in order to maintain and possibly expand the product line. Otherwise it is only surviving and slowly moving towards being obsolete.

[wraper]

I personally don't think Musk is worth even 1% of his so-called net worth. However, the meritocracy system allows some smart people to amass such an obscene amount of wealth and generally pay minimal tax. Worth should be somehow based upon how you help others and mankind. You'd be blind Freddy to think Alice Walton, "worth" $54 BILLION, is not at least just a little bit greedy when Walmart only pays their cashiers a lousy $10.78 per hour. Something is wrong when lowest paid workers can barely afford a decent meal for their kids or transport to get to work, whilst the super-rich are hell-bent on making more money than they know what to do with. Inequality is getting a lot worse in the US and other places (very evident during COVID-19) and I suspect this kind of greed might be a major cause of the civil unrest in the US.

It will not be long before the world has its first trillionaire and my bet is he will make it from the tech sector. However, Gates is working very hard at increasing his "net worth" with most of his investments in the non-tech sectors, including a large investment in Walmart. There might need to be a global movement (or revolution) to limit the amount of wealth a person can accumulate, or at least share wealth more equitably. Easier said than done. History has proven society works better when there is incentive. I would like to see a society where people are rewarded in proportion to their real worth.

Net worth is not like having that money in cash, it's a virtual "money". Taxing net worth like lunatic Bernie Sanders suggested is ridiculous. It's like if government told you to sell part of your home to pay the tax as housing market price rises. Which happens to some extent as property tax, and then old couples are forced to sell their home in expensive area because they can no longer afford paying tax  . Limiting amount of wealth would mean that private companies cannot have strong leadership, and would become the same ineffective jelly as governments. Even communists in China understand that this does not work.

[BravoV]

Even communists in China understand that this does not work.

I guess the OP is an extremist, more extreme than China that he hates so much. 

[wraper]

Also, Tesla sells their cars at a loss. They make their money from "green" certificates in the US.

20-30% profit margin is selling at loss? Green certificate money goes into building new factories.

But without new factories there are no cars to sell. The big question is whether Tesla can still expand without the revenues of the emission certificates.

One of my former co-workers was offered early retirement at 80% of his income. Much to my surprise he declined. It got clear to me once he explained to me that that last 20% of your income is the part you use to do fun stuff. Sure you can survive on 80% but no more fun stuff like holidays or buying something for your hobby.

For companies it works the same way; enough money has to come in in order to maintain and possibly expand the product line. Otherwise it is only surviving and slowly moving towards being obsolete.

Being in expansion stage does not mean you work at loss. It means that instead of stopping growth and paying dividends you choose to invest into expansion, which Tesla does very rapidly.