Electric cars

Martyn1981

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almillar

As models, variants and production volumes increase the 'up-front' investment can be amortised over the higher numbers and therefore the cost per vehicle reduces ... that's where volume related profit comes from.

Yes, I should have mentioned 'economies of scale' working for ICE and against EV at the moment, but I was arguing with buglawton basically saying 'fewer components means cheaper' whilst he wasn't taking into account the COST of the the components.

Tesla/Elon have suggested that they might be looking at a smaller size $25k EV in a few years, perhaps 5yrs.

Renault Zoe. £20,000, 41kWh battery. It can be improved upon, sure, but Tesla have been beaten to this price point. The 'big boys' are already there.

Another gem from AdrianC

He is arguing this against buglawton, which you were also doing, whilst buglawton was accusing manufacturers for profiteering because their EVs should be cheaper. I think we all realise that EVs do have fewer moving parts.

Had 19 years of service out of it without a service visit or a repair

Yes, quite a good analogy I think, apart from lack of battery. Problem is, that 19 years is WAY longer than most people get out of a washing machine. Evidence? Look at the age of dumped washing machines.

So much petty denial will give you an Ade a stomach ulcer at this rate, or perhaps 22 of them.

Martyn, you can educate many people about many facets of electric cars, but please confirm you're aware that Tesla lose money? I think it's important amongst your accusations towards others of denying reality.

zeupater

Hi

Tesla's lack of profitability to date simply looks to be a factor of design, start-up & expansion relative to sales volumes & revenue.

Looking at their financial reporting history you can effectively see two major completed development cycles, each of which would have almost certainly resulted in profitability had further expansion decisions involving new facilities & models not been made. The latest (& largest!) third cycle involves a move to volume production and the impact of the cost of capital & revenue upon the profitability can be seen as having a major impact (2016 onwards) on what was a relatively small operation before the expansion ... after-all, it's costly to finance expansion from being a niche-market player into mass-market manufacturing involving an ~800% increase in production volumes with a totally new product from scratch!

As the third cycle shows signs of moving the company into profit, the management really have two options - sit back and earn money for shareholders and hand a market lead to existing legacy manufacturing competitors .. or .. expand production facilities & ranges further in order to earn value for the same shareholders - the decision is one of short or long term thinking, but it's pretty clear which road is to be taken.

Okay, the big step into volume manufacturing has been taken and a 'small' company grows to a size where economies of scale become a significant factor and, importantly, many of the 'wrinkles' in product build, production facilities as well as initial quality issues have been ironed out, so further expansion should be relatively simple - copy what exists & paste elsewhere on an incremental basis ... note, that's incremental as in being far less than an 8 fold increase in volumes over the next investment cycle, so the scale of the hit on margins should be far less painful to investors, but the potential for returns increases significantly.

It's not really a new manufacturing business model, I'm sure that most can think of plenty of market leading national brands that returned decent dividends for their shareholders that have ceased to exist over the past 40 years because of of the rise of competition based on growing global market share through investment, rapid expansion, efficiency & low margin initial returns to shareholders.

HTH
Z

Martyn1981

almillar wrote: »

Martyn, you can educate many people about many facets of electric cars, but please confirm you're aware that Tesla lose money? I think it's important amongst your accusations towards others of denying reality.

Please don't fall for the FUD that's out there, and especially the nonsense being posted on here by 1 or 2 silly people.

The Tesla S became profitable, but CAPEX on the X meant that profits haven't been made. Then the X became profitable, but CAPEX on the 3 meant profits haven't been made.

This is simply business, nothing strange, nothing wrong, and the use of 'losses' or lack of profitability in the case of Tesla is mostly misleading and used to spread/create/diffuse negative carp.

Production levels of the TM3 are now high enough that Tesla expects to become profitable in Q3 or Q4 of this year.

Of course, the CAPEX for the MY and Semi will then mean that 'losses' will once again appear on the P&L sheet, but it's very important that we don't confuse investment in future income and profits, with lack of profitability in the product.

I believe I'm quoting facts, figures and reality. You may not like me pushing back against the anti-Tesla nonsense and carp, but in my experience folk like that don't stop, they have to be stopped ...... with facts and again ...... reality.

almillar wrote: »

He is arguing this against buglawton, which you were also doing, whilst buglawton was accusing manufacturers for profiteering because their EVs should be cheaper. I think we all realise that EVs do have fewer moving parts.

Please don't pander to Adrian by trying to re-write or re-word what he says, the statement was simple:

Which is exactly why this "Oooh, but there's fewer moving parts" argument is just codswallop.

The facts are quite simple:-

EV's have less moving parts
EV's need less maintenance and servicing
EV's incur less maintenance and servicing costs

If you disagree with that, then say so, but you can't agree with Adrian whilst also claiming that

I think we all realise that EVs do have fewer moving parts.

since you too appear to disagree with his statement.

BTW, I'm not sure what you mean by my also arguing with buglawton. Other than having a nice chat and 'joint' ponder about EV prices I'm unclear what you are on about.

PS - Any chance you can reference your posts properly so I can more easily follow who you are talking too. It's really easy, honest.

AdrianC

All this "CapEx" clearly hasn't had much of a positive effect on the business's assets, so quite how they'll be accounting for depreciation, I have no idea. Seems like a fairly damn steep current-year write-off to me, so much so as to put it more into the "OpEx" side of expenditure. Unless there's some Humpty-Dumpty-ish redefinition of the terms going on.



But, hey, I'm no accountant. I'm sure there must be a tax benefit somewhere... <shrug>

Martyn1981

almillar wrote: »

Renault Zoe. £20,000, 41kWh battery. It can be improved upon, sure, but Tesla have been beaten to this price point. The 'big boys' are already there.

Missed this bit.

Can you let me know what the production, sales and profitability figures are for the Zoe please. And to be clear. I'm not interested in the profitability of Renault, but of the Zoe, thanks.

Martyn1981

AdrianC wrote: »

All this "CapEx" clearly hasn't had much of a positive effect on the business's assets, so quite how they'll be accounting for depreciation, I have no idea. Seems like a fairly damn steep current-year write-off to me, so much so as to put it more into the "OpEx" side of expenditure. Unless there's some Humpty-Dumpty-ish redefinition of the terms going on.



But, hey, I'm no accountant. I'm sure there must be a tax benefit somewhere... <shrug>

The profitabilty of a production line will obviously be linked to the output of that production line, so CAPEX expenditure in the early days before production, and during low production, will naturally lead to losses, until such time as production rates are high enough to exceed variable costs, then higher still to also exceed fixed costs, then you have profits.

Perhaps you need to be more clear in your throwaway comments about Tesla. Are you saying they can't make a profit? Are you saying they won't make a profit in the near term? Are you saying/conflating new investment (at higher rates than the company income) is a loss?

AdrianC

Around 93,000 Zoes built to December 2017. (For comparison, the Model S hit 200,000 total global production around the same time. ~120k of those are in the US, where the Zoe is not sold. Both were launched around the same time.)



I very much doubt that you'll find any profitability figures for the Zoe (or any of Renault's other EVs) outside of commercially-confidential internal figures. They're probably not easy to break down, even internally, since all the Renault EV range is built alongside IC models, with considerable parts cross-over.

Martyn1981

At the risk of setting of the anti-Tesla guys yet again, here's a fun article speculating on where Tesla might be in 2025 if they roll out the products they are hoping/planning to.

Of course if they expand at this rate, they may not show a 'profit' (like Amazon), but hopefully by then the FUD will have ended (perhaps?)

Tesla In 2025 Bigger Than Toyota In 2017 — Forecast

there's even a mention of the Model $25k

The $25,000 Tesla model is the best car in its class, according to the fanboys, but Nissan/Renault, Hyundai/Kia, VW Group, and PSA did have the advantage of being earlier and benefiting from brand loyalty. Toyota is leading a group with the other Japanese carmakers that were too late to the party. The competition in the classes below $30,000 is now between the Europeans and the Chinese, with the Koreans tagging along.

Martyn1981

AdrianC wrote: »

Around 93,000 Zoes built to December 2017. (For comparison, the Model S hit 200,000 total global production around the same time. ~120k of those are in the US, where the Zoe is not sold. Both were launched around the same time.)



I very much doubt that you'll find any profitability figures for the Zoe (or any of Renault's other EVs) outside of commercially-confidential internal figures. They're probably not easy to break down, even internally, since all the Renault EV range is built alongside IC models, with considerable parts cross-over.

Wow, only 1,800 per week, better not tell Ade, he throws his toys out the pram when Tesla only build 4,000 - 5,000 TM3's per week.

(Oops, too late).