Electric cars

zeupater

Hi

I believe that the point is being missed here ...


With companies experiencing rapid expansion periods, profitability is a poor measure of success, and that's what the current tedious discussion continually revolves around, and around, and around - success.

So, in a situation where little or no profit exists what is it that keeps investors happy enough to maintain their holding? ... simple really, the potential for future returns when the growth stage starts to level out - and that's reflected by market value and that's the case for the business models being compared ...

Where there's an obvious expansion model in place it's probably better to look at revenue vs net income, net operating cash-flow or simple segmental market share as it must be accepted that profit will intentionally be held down by reinvestment to expand ...

The argument about Amazon's profitability history and how this relates to Tesla is effectively meaningless because they are at different stages of development and operate in different sectors with differing capital investment intensities - ie Product vs Service ... however, it is relevant to note that Amazon's net income has remained relatively poor when compared to the stellar growth in sales revenue .... the reason?, well if expansion is continually consuming profit there's nothing to book tax against thus allowing faster expansion ...

At some time either the bubble bursts or the company becomes sector dominant ... at the moment Amazon has become dominant in their sector and using the same expansion model Tesla have attained a market lead and are becoming dominant in the EV sector at a period in time when worldwide governmental policies are set to ensure that the EV sector will become the dominant element in the automotive sector ...

In a nutshell what's happening is akin to natural selection - those who adapt to change survive & those who adapt early have a seriously good advantage ... those that don't are consigned to becoming museum exhibits!

HTH
Z

AdrianC

zeupater wrote: »

At some time either the bubble bursts or the company becomes sector dominant ... at the moment Amazon has become dominant in their sector and using the same expansion model Tesla have attained a market lead and are becoming dominant in the EV sector at a period in time when worldwide governmental policies are set to ensure that the EV sector will become the dominant element in the automotive sector ...

That seems a fair analysis, although I'm not sure the Amazon and Tesla models of expansion are "the same". Amazon have grown through earnings, and particularly through growth into additional market sectors - away from being a book shop into being an everything shop, then into cloud and kindle. Tesla are growing through out-borrowing their losses, and hoping to take a previously-tiny market with them - that's a model that's far more akin to many of the dot com businesses, which is where Musk's business background lies. Neither of the businesses Musk founded survive directly - all were quickly sold and subsumed into much larger corporates, with Musk taking the money and leaving. Tesla is a business he bought into, and is now growing. His other spin-off projects (Boring, spaceX, Hyperloop etc) are all totally separate from Tesla Inc, although the battery (Powerwall, SolarCity) side is a small part of Tesla Inc.



Tesla are - currently - dominant in a niche segment of the larger automotive market. It's a niche that's currently small and - so far - relatively empty of major players. The question is whether they will survive the challenges that lay ahead of them.
Those challenges are both internal and external.
Internally, can they survive their own growing pains?
Externally, can they survive the inevitable forthcoming competition from traditional players?



It's relatively easy to be dominant in a niche sector of a market if you aren't concerned with profitability, when the traditional players who dominate the rest of the market are staying away precisely because of those profitability questions. But when that niche starts to look like it's hitting the mainstream... As volumes grow, so economies of scale come in - especially where many of the fixed production and development costs can be amortised across the non-niche products. Loss-leaders start to become acceptable, especially if they're hyped around to get people into showrooms, where availability is restricted, instead leading customers into profitable closely-related but profitable products.



Add that lot together, and you see why Tesla's production and profitability, the questions around Musk's stability, VAG's platform-sharing, Renault's line-sharing, Hyundai's dealerships et al are all very relevant to the short-term future of the EV. There's zero point in being in denial about any of those, because you can bet the industry and investors are well aware of the realities.

almillar

(Martyn)

When I produced evidence that you'd repeated it ......... you mysteriously didn't respond. Now you are even trying to change the narrative about what you lied about, by lying about it!

I have tried to apologise multiple times now for getting 'Tesla never made a profit' wrong. I'll do it again - I'm sorry. They've made a profit 2 quarters. Do you want it in blood or do you just enjoy calling me a liar?

This is a lie. There is no dispute about Q2 results, there never has been, you have simply tried to change the narrative from Q3 to Q2.

I'm getting bored repeating this. The narrative hasn't changed. We're arguing about 'current profit'. You're accusing me of living in the past (Q2 results) whilst I accuse you of living in the future (Q3 results). To say that they may or may not be in profit right now, isn't really much of a statement. You can say that about any company, any time, apart from when they have just announced their results. It just came across as a bit defensive, in my opinion.

So the issue was clearly about Q3. It was only about Q3. It had nothing to do with Q2.

Indeed it was. but it was speculation (well informed, well reasoned speculation, that I happen to agree with), but I was trying to stick with facts. Q3 profits are not a fact, yet (pedant - not a reported fact, yet). Q2 is factual.

I'm extremely confident to state, not speculate, that Tesla in Q3 may, or may not be in profit.

You're doing yourself a disservice with this 'statement', as above, it doesn't really contain any information, does it?!

Your attempts to argue against this position are irrational to the extreme.

I'm not arguing against it. There's nothing to argue against. I'm saying maybe you shouldn't say it, as it looks overly defensive.

As I explained, you didn't quote my reply to your comment, you quoted the sixth paragraph later, not the first, not the second, not the third, not the fourth, not the fifth, but the sixth, and tried to pass that off as my 'response'. That was a blatant lie

Again, I would define that as 'taken out of context', not a lie.

as and when that expansion investment takes place for the MY and semi, they will most likely go back into 'loss'. This will be perfectly correct and reasonable, but many sites will jump to FUD, and I think it's fair to say that Ade (and if anyone criticises him, Car 54) will start Tesla knocking again.

Criticising a company that's not making a profit is not FUD. Companies are there to make a profit. Tesla certainly does it a bit differently (for which I praise them), but to a bean counter, not having a profit is bad. Now, saying electric cars are rubbish because the batteries degrade, they don't go far enough, they spontaneously combust and kill kittens - that's FUD. A company not being in profit, plans or no plans, is a negative. It can be explained, but shouldn't be glossed over. Nor should it be used as a sign of doom.

(Movie Star)

Forgive me as I don't own an electric. It seems to me that any fuel and running cost savings are offset against the cost of battery replacement when that becomes due

Forgiven. Now, when do you expect the battery needs to be replaced? The answer is, it'll last a very long time, and it looks like it'll last the lifetime of the car. And after that, the battery can be used for stationery storage for a long time after that anyway - it would have a 'trade in' value against a fresh battery, if you like.

(zeupdater)

With companies experiencing rapid expansion periods, profitability is a poor measure of success, and that's what the current tedious discussion continually revolves around, and around, and around - success.

Yes indeed! I 'judge' Tesla to be hugely successful, even though they're not profitable. For now.

(Martyn)

Anyone else doing better?

Yes, Renault! I think I've mentioned the Zoe being 'successful'.


From this article

http://europe.autonews.com/article/20180711/ANE/180709760/renault-prepares-to-double-output-of-zoe-ev
Last year (2017) about 30,000 Zoes were produced at the Flins plant, with a total of 100,000 made since the model's debut. Renault officials want to increase the rate of production to about 440 per workday from about 220 per day.

Martyn1981

almillar wrote: »

I have tried to apologise multiple times now for getting 'Tesla never made a profit' wrong. I'll do it again - I'm sorry. They've made a profit 2 quarters. Do you want it in blood or do you just enjoy calling me a liar?

Please stop with the theatrics and cheap tricks. You claimed that I had falsely stated that you'd repeated the statement, I showed that you had repeated the statement. That is what you didn't acknowledge - and still haven't - as being a lie. You need to follow and stick with the narrative, not keep re-writing it.

almillar wrote: »

I'm getting bored repeating this. The narrative hasn't changed. We're arguing about 'current profit'. You're accusing me of living in the past (Q2 results) whilst I accuse you of living in the future (Q3 results). To say that they may or may not be in profit right now, isn't really much of a statement. You can say that about any company, any time, apart from when they have just announced their results. It just came across as a bit defensive, in my opinion.

If you are bored, then stop. You should never have started as you have previously confirmed that I have said nothing wrong.

My statement was 100% correct, 100% accurate, and 100% appropriate. You have since admitted that you don't understand profits (variable and fixed costs), you don't follow all of the discussion, and you don't remember all of it too. You have also clearly referred to Q2 as the present

almillar wrote: »

No. We're diametrically opposed on this issue. I've been talking about the present all along.

Q2 is not the present, Q2 results are not Q3 results, Q2 results do not deny the potential for Q3 profits.

Since this whole issue is your opinion, and your opinion on this matter is so badly flawed (as per your own admissions), then I'd suggest you stop repeating it.

almillar wrote: »

Indeed it was. but it was speculation (well informed, well reasoned speculation, that I happen to agree with), but I was trying to stick with facts. Q3 profits are not a fact, yet (pedant - not a reported fact, yet). Q2 is factual.

Yes reasoned speculation, nothing more, nothing less, yet you have spent weeks objecting to that statement. I'm happy that you are now walking it back and I assume you now, finally agree, that Tesla might or might not make a profit this quarter, meaning that in hindsight (to which my original comment was in preparation for), Tesla might now be profitable (or might not).

almillar wrote: »

You're doing yourself a disservice with this 'statement', as above, it doesn't really contain any information, does it?!

Finally, the penny has dropped. My statement that they might be in profit was just for completeness, your attempt to spin it into a claim that I've said they are now profitable, was false from the very start. Phew, glad that's over, and you got there eventually.

almillar wrote: »

I'm not arguing against it. There's nothing to argue against. I'm saying maybe you shouldn't say it, as it looks overly defensive.

Nope, nothing defensive or otherwise in trying to give you a full and fair response to the Q3 position. It's not my fault that you don't understand the issues and spent weeks trying to deny a statement that is undeniable.

almillar wrote: »

Again, I would define that as 'taken out of context', not a lie.

And I would define deliberately taking something out of context in order to give a false impression akin to lying. But if you prefer it, OK I'll say that you ignored the first five paragraphs of my answer, in order to misrepresent (on here) what I'd said, by taking comments out of context.

Either way, it was a desperate cheap shot, and you should stop.

almillar wrote: »

Criticising a company that's not making a profit is not FUD. Companies are there to make a profit. Tesla certainly does it a bit differently (for which I praise them), but to a bean counter, not having a profit is bad. Now, saying electric cars are rubbish because the batteries degrade, they don't go far enough, they spontaneously combust and kill kittens - that's FUD. A company not being in profit, plans or no plans, is a negative. It can be explained, but shouldn't be glossed over. Nor should it be used as a sign of doom.

Can't stop shooting yourself in the foot can you.

If Tesla go back into the red whilst financing their MY and semi lines, then that will be perfectly acceptable and reasonable. But if you, Ade, or the anti-Tesla community go on and on about it yet again, in order to mislead folk that it's a bad thing ...... then that's FUD.

As you don't have a leg left to stand on, and we are both bored with this latest crusade of yours against me, might I suggest you stop now. Please.

AdrianC

"Go back into the red"...?


They're redder than Jeremy Corbyn's favourite undies.

zeupater

AdrianC wrote: »

"Go back into the red"...?


They're redder than Jeremy Corbyn's favourite undies.

Hi

But that's exactly the pattern they've followed so far .. as soon as there's a sniff of profitability in a quarter further expansion & investment starts to ramp-up, so why would anyone not expect the same to happen for a copy & paste expansion of production facilities for the M3 or development of the Model-Y & other products in the pipeline?

There's a long way to go before product range, production volumes & related economies of scale allow the company to be ranked amongst the familiar global sector players so it's probably a case of watching revenue, cash-flow & re-investment grow without reporting/maintaining a decent (if any!) profit for some time yet ...

HTH
Z

Car_54

almillar wrote: »

And after that, the battery can be used for stationery storage for a long time after that anyway - it would have a 'trade in' value against a fresh battery, if you like.

Really? How much power does a stationery cupboard need?

Martyn1981

Car_54 wrote: »

Really? How much power does a stationery cupboard need?

Hard to say, depends if you want to push the envelope, or not?

Martyn1981

The war on Tesla has just escalated, now they've deployed the US Air Force (well, DEA to be precise).

Tesla vs. Plane — No Contest. Tesla Model X – 1, Cessna – 0.


Not sure I should mention wars, and Germany, a bit tasteless perhaps, but it seems BMW are on the retreat.

US BMW 3 Series Sales Have Collapsed

Martyn1981

almillar wrote: »

(Martyn)

Yes, Renault! I think I've mentioned the Zoe being 'successful'.

From this article

http://europe.autonews.com/article/20180711/ANE/180709760/renault-prepares-to-double-output-of-zoe-ev
Last year (2017) about 30,000 Zoes were produced at the Flins plant, with a total of 100,000 made since the model's debut. Renault officials want to increase the rate of production to about 440 per workday from about 220 per day.

I do wish you'd learn how to reference posts, I nearly missed this prize comment.

So, the question was whether anyone else was doing better than Tesla and the TM3 production numbers, and you've claimed that Renault are.

Would you like to have another think about that, are you sure that Renault are building more Zoe's per week than Tesla is building TM3's?


I've got to say, I'm a big fan of the underdog, so I'm actually rooting for you now, and can't wait for the day you actually get something right. We'll throw a party, balloons, pass the parcel, ice cream and jelly. I'm getting excited, don't keep me waiting forever.