They're losing money because they've been growing their business.
Nope, they make operating losses. They'd be losing money even without growing their business. That's why they're in so much debt. Unlike Amazon, they can't fund their expansion from their own cash flow, because they don't have any, so they borrow at high interest rates.
Hard work has consequences. Americans work long hours and have no vacation yet their country is beset by horrible poverty and destitution. Millionaires go to work dodging human shit from homeless people, finance centres have cracked sidewalks and gas explosions, bridges collapse from lack of maintenance, debts are reaching record levels.
Maybe if they took things easier they'd have more time to think about their problems.
Not only is that capitalism, it's the ultimate end-goal of capitalism. No-one runs a business because they want to compete, they run a business because they want to crush everyone and enjoy a profitable monopoly.
You see, once they figured out how to actually produce in volume, from there it's very easy to scale up
Except they haven't figured it out. A burst week where they use a weasel term 'factory gated', including unfinished cars sent out to a giant parking lot in the desert, and an 84% reject rate, followed by a week-long shut down because it was so unsustainable. This is not figured it out. And it isn't easy to scale up, cars are not software.
If scaling up was easy, Tesla wouldn't be losing so much money, wouldn't be dependent on junk bonds for cash flow, and wouldn't be having to rework 84% of cars off the production line.
That comment of Musk is going to be extra juicy when they go bust. It'd probably be better for them if they went into Chapter 11, but it would wipe out Musk and destroy his credibility, and his ego comes first.
They don't know how to build cars. That's why the X is the most unreliable car you can buy. That's why they have an 84% rework rate on the Model 3 line. That's why they have thousands of cars parked up waiting for rework and new paint jobs. That's why they're losing so much money.
That's why Tesla hired people who know how to do it.
Then fired them because they disagreed with Musk over soft tooling, or the alien dreadnought which was replaced by forklifts and manual labour in a tent full of junk and dust. Time and time again the experts are proven right, and Musk wrong. Hence the meltdowns. CEOs of successful companies don't pull the shit he pulls.
You're assuming those costs are one off and they won't have to continually spend on replacing equipment, maintenance, R&D, opening new dealerships, service centres etc. Tesla is a story/growth stock, it needs to keep growing to keep the story alive. They're valued like a company that's ten times bigger. If the growth stops the story stops, then the share price collapses, the margin calls come in, the convertible notes don't convert, Musk goes bankrupt etc.
What is the point in number 6? R&D isn't a one off, you have to keep spending to keep up, there's a reason big car companies don't have huge profit margins. What happens when the alien dreadnought needs replacing? What happens when the tent needs replacing? What happens when they need to refresh the S and X to reverse the decline in sales? What happens when they need to build the Y, the semi, the roadster, the pickup truck etc etc etc?
Maybe they need to spend more than 3% so people aren't waiting weeks/months for something that would be done in a day with any other car. And this is before all these tent Teslas start falling to bits.
SG&A, by contrast, scales at a far-below-linear relationship to production volumes.
Not at Tesla, their SG&A has a much more linear relationship with growth. Their business model doesn't scale. They tried to run it like a Silicon Valley startup, hoping that early losses would turn into profits as the company grew, but instead only losses and debts grew. Car manufacturing is capital intensive, if you want to make twice as many cars you need twice the hardware, it's not like an app you just throw on the Internet.
Stamping out panels faster doesn't mean that you need to hire a new janitor.
Except they're not stamping out panels faster. They haven't found a magical way to make cars faster than anyone else. Musk tried to do that with the alien dreadnought, but it turns out being a SV coder doesn't mean you know more about making cars than Toyota or Nissan. The whole thing was an expensive failure, and in order to increase production they had to build a tent and fill it haphazardly with hardware and parts.
Maybe they do need to hire new janitors to deal with all the crap they have lying all over the place. Maybe if they hired more janitors they wouldn't have had that fire in the big pile of cardboard strewn all over the yard. And yes you do need more janitors, if you stamp out panels faster that's twice as much packaging you're getting through, twice as much dust, twice as much maintenance on the equipment etc.
Reducing interruptions in the paint shop doesn't mean you have to hire a new director of accounting
So why do they get through so many accounting officers? The last one only lasted a month and left ten million dollars worth of option on the table. But seriously, rushing cars through the paint shop has left Tesla with thousands of cars needing rework. Cars are being delivered covered in scratches, smears, hairs, orange peel etc. The accountants will be needed to work out how much all this is going to cost to repair.
I also love the fact that you never mention the fact that Tesla took a SG&A hit in Q2 in order to reduce its SG&A expenses from Q3 onward,
And now they are in 'delivery hell', they'll need to increase the 'S' in order to get those cars out. Like I said, their business model doesn't scale. Twice as many cars means twice the capacity needed to make, sell, delivery and repair them. And twice the supercharging capacity, unless you want Model 3s queueing for hours to get into them.
It doesn't matter if you want it or not. A global, open Internet is impossible, governments will not give up control that easily. There will eventually be a US internet, a Chinese internet, a European internet etc.
It doesn't threaten foreign corps, its rules apply to all companies, European or foreign. It's just that American companies are not used to having to obey the law so they come unstuck in European courts.
Small town kids don't go anywhere alone, they're driven everywhere, that's why they're all fat. And a lot of these small towns don't even have a downtown, just lots of parking lots and strip malls.
In fact, Attorney General Jeff Sessions is expected to meet with statesâ(TM) attorneys general next week to discuss possible criminal action against tech firms that bias their products against conservatives
Which proves this whole thing is politically biased by conservatives who think they run the world and no-one should be able to oppose them. Why isn't he discussing criminal action against firms that bias their products against the non-right?
Why is Google not allowed to be political in a country where even fast food outlets are openly homophobic? And where Fox News can run far-right propaganda 24/7?
Elon Musk is not an engineer, he has no engineering education or qualifications. He is not spending 80% of his time engineering, and if he is he should be fired because if he's doing that who's doing the job of CEO?
Because 1, you want equity in a million dollar house not a 200k house, 2, you don't want to raise a family in a giant, city-wide parking lot, 3. you don't want to eat out exclusively at diners and fast food chains, 4. you don't want to have to drive everywhere, and raise fat children.
Does it really make sense to move to a place where there's only one good job in the city or the state? In SV you can walk out a job in the morning and have another one by lunch time. In the flyover states if your one-company town becomes a no company town you're fucked. You can't even sell your house because the local market collapses.
A little bit less pay? It's a lot more than that. Plus the lesser amenities, no options for eating out other than chains and diners, no stores other than Walmart, the racism, homophobia, religion, worse education results, no great colleges etc.
You're confusing democracy with direct democracy. You want asylum in the US, where the President is elected by 538 electors and not the people, where the people have no way to change the Constitution, where politicians gerrymander their own districts, where people in large states are disenfranchised in both the Senate and the Presidential election.And a country where there are only two political parties. You have no idea what you're talking about.
And hope that the app doesn't log you out so you get stranded. That happened to an actual Model 3 owner, they phoned up Tesla support, who told them to find someone to pick them up.
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Nope, they make operating losses. They'd be losing money even without growing their business. That's why they're in so much debt. Unlike Amazon, they can't fund their expansion from their own cash flow, because they don't have any, so they borrow at high interest rates.
The entire company is a loss-leader.
Fox News? Chick Fil A? The NFL?
You mean, Europeans have 1 month vacations because their success in making products that Americans want to buy lets them go on vacation?
Germany has short working hours and they do pretty well. And don't have the debts that hard-working Americans have.
Hard work has consequences. Americans work long hours and have no vacation yet their country is beset by horrible poverty and destitution. Millionaires go to work dodging human shit from homeless people, finance centres have cracked sidewalks and gas explosions, bridges collapse from lack of maintenance, debts are reaching record levels.
Maybe if they took things easier they'd have more time to think about their problems.
Not only is that capitalism, it's the ultimate end-goal of capitalism. No-one runs a business because they want to compete, they run a business because they want to crush everyone and enjoy a profitable monopoly.
Are you drunk?
Except they haven't figured it out. A burst week where they use a weasel term 'factory gated', including unfinished cars sent out to a giant parking lot in the desert, and an 84% reject rate, followed by a week-long shut down because it was so unsustainable. This is not figured it out. And it isn't easy to scale up, cars are not software.
If scaling up was easy, Tesla wouldn't be losing so much money, wouldn't be dependent on junk bonds for cash flow, and wouldn't be having to rework 84% of cars off the production line.
That comment of Musk is going to be extra juicy when they go bust. It'd probably be better for them if they went into Chapter 11, but it would wipe out Musk and destroy his credibility, and his ego comes first.
They don't know how to build cars. That's why the X is the most unreliable car you can buy. That's why they have an 84% rework rate on the Model 3 line. That's why they have thousands of cars parked up waiting for rework and new paint jobs. That's why they're losing so much money.
Then fired them because they disagreed with Musk over soft tooling, or the alien dreadnought which was replaced by forklifts and manual labour in a tent full of junk and dust. Time and time again the experts are proven right, and Musk wrong. Hence the meltdowns. CEOs of successful companies don't pull the shit he pulls.
You're assuming those costs are one off and they won't have to continually spend on replacing equipment, maintenance, R&D, opening new dealerships, service centres etc. Tesla is a story/growth stock, it needs to keep growing to keep the story alive. They're valued like a company that's ten times bigger. If the growth stops the story stops, then the share price collapses, the margin calls come in, the convertible notes don't convert, Musk goes bankrupt etc.
What is the point in number 6? R&D isn't a one off, you have to keep spending to keep up, there's a reason big car companies don't have huge profit margins. What happens when the alien dreadnought needs replacing? What happens when the tent needs replacing? What happens when they need to refresh the S and X to reverse the decline in sales? What happens when they need to build the Y, the semi, the roadster, the pickup truck etc etc etc?
All this talk and yet SG&A continues to scale linearly with revenue. You can argue all you want but the numbers are staring you in the face.
Maybe they need to spend more than 3% so people aren't waiting weeks/months for something that would be done in a day with any other car. And this is before all these tent Teslas start falling to bits.
Not at Tesla, their SG&A has a much more linear relationship with growth. Their business model doesn't scale. They tried to run it like a Silicon Valley startup, hoping that early losses would turn into profits as the company grew, but instead only losses and debts grew. Car manufacturing is capital intensive, if you want to make twice as many cars you need twice the hardware, it's not like an app you just throw on the Internet.
Except they're not stamping out panels faster. They haven't found a magical way to make cars faster than anyone else. Musk tried to do that with the alien dreadnought, but it turns out being a SV coder doesn't mean you know more about making cars than Toyota or Nissan. The whole thing was an expensive failure, and in order to increase production they had to build a tent and fill it haphazardly with hardware and parts.
Maybe they do need to hire new janitors to deal with all the crap they have lying all over the place. Maybe if they hired more janitors they wouldn't have had that fire in the big pile of cardboard strewn all over the yard. And yes you do need more janitors, if you stamp out panels faster that's twice as much packaging you're getting through, twice as much dust, twice as much maintenance on the equipment etc.
So why do they get through so many accounting officers? The last one only lasted a month and left ten million dollars worth of option on the table. But seriously, rushing cars through the paint shop has left Tesla with thousands of cars needing rework. Cars are being delivered covered in scratches, smears, hairs, orange peel etc. The accountants will be needed to work out how much all this is going to cost to repair.
And now they are in 'delivery hell', they'll need to increase the 'S' in order to get those cars out. Like I said, their business model doesn't scale. Twice as many cars means twice the capacity needed to make, sell, delivery and repair them. And twice the supercharging capacity, unless you want Model 3s queueing for hours to get into them.
It doesn't matter if you want it or not. A global, open Internet is impossible, governments will not give up control that easily. There will eventually be a US internet, a Chinese internet, a European internet etc.
It doesn't threaten foreign corps, its rules apply to all companies, European or foreign. It's just that American companies are not used to having to obey the law so they come unstuck in European courts.
Small town kids don't go anywhere alone, they're driven everywhere, that's why they're all fat. And a lot of these small towns don't even have a downtown, just lots of parking lots and strip malls.
Which proves this whole thing is politically biased by conservatives who think they run the world and no-one should be able to oppose them. Why isn't he discussing criminal action against firms that bias their products against the non-right?
Why is Google not allowed to be political in a country where even fast food outlets are openly homophobic? And where Fox News can run far-right propaganda 24/7?
Elon Musk is not an engineer, he has no engineering education or qualifications. He is not spending 80% of his time engineering, and if he is he should be fired because if he's doing that who's doing the job of CEO?
Because 1, you want equity in a million dollar house not a 200k house, 2, you don't want to raise a family in a giant, city-wide parking lot, 3. you don't want to eat out exclusively at diners and fast food chains, 4. you don't want to have to drive everywhere, and raise fat children.
Does it really make sense to move to a place where there's only one good job in the city or the state? In SV you can walk out a job in the morning and have another one by lunch time. In the flyover states if your one-company town becomes a no company town you're fucked. You can't even sell your house because the local market collapses.
A little bit less pay? It's a lot more than that. Plus the lesser amenities, no options for eating out other than chains and diners, no stores other than Walmart, the racism, homophobia, religion, worse education results, no great colleges etc.
You're confusing democracy with direct democracy. You want asylum in the US, where the President is elected by 538 electors and not the people, where the people have no way to change the Constitution, where politicians gerrymander their own districts, where people in large states are disenfranchised in both the Senate and the Presidential election.And a country where there are only two political parties. You have no idea what you're talking about.
And hope that the app doesn't log you out so you get stranded. That happened to an actual Model 3 owner, they phoned up Tesla support, who told them to find someone to pick them up.
It wasn't illegal adopted, it was passed into legislation by the elected legislatures of all the member states. Who voted for the US constitution?