I have no doubt that your company and all the other big automakers are running the numbers and trying to weigh those risks and costs with the risks and costs of not updating.
Given that the chipmakers and supply chain experts are not making rosy predictions for things to drastically improve in the next 12 months or longer, I wonder if the balance is shifting towards taking action.
I can't find a public source, but some actions are being taken. Bear in mind that any major shifts would happen in a new product, that is, something 5-7 years out.
Is it that the component specification+acquisition cycle you describe is optimized to take as long as the development cycle of a new car?
Tesla is valued as a growth/tech company. As long as people believe in their growth, they get more cash.
I don't personally understand how Tesla hasn't had more problems with their apparently uncontrolled engineering changes. At least part of it is customer enthusiasm for the product papering over any drawbacks.
It's not that GM can't make changes like this, it's that GM WON'T make changes like this.
All of this is, again, solely my own opinion.
It's that nobody cares and the media doesn't cover it. A friend of mine-- his Tesla has broken down a dozen times and he still happily pre-ordered the cyber truck.
My 10-year-old Honda has never had any work done to it other than maintenance-- but that doesnt make the news either.
This is not a useful way to look at a product.
https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/0000...
"On July 16, 2021, we issued a notice of redemption to the holders of the 2025 Notes informing the holders that we will redeem the notes in full in August 2021 at a redemption price equal to 102.65% of outstanding principal amount, plus accrued and unpaid interest, if any."
It appears to me that they are steadily issuing stock at the rate of about 20% of their market cap per year, or roughly at the rate of $10 billion per month.
It looks like the number of (diluted) shares outstanding increased by over 20% between 2019 and 2020.
What did that consist of? Their annual report says mainly:
- Issuance of common stock for equity incentive awards
- Issuance of common stock in public offerings
"On September 1, 2020, we entered into an Equity Distribution Agreement with certain sales agents to sell $5.00 billion in shares of our common stock from time to time through an “at-the-market” offering program. Such sales were completed by September 4, 2020 and settled by September 9, 2020, with the sale of 11,141,562 shares of common stock resulting in gross proceeds of $5.00 billion and net proceeds of $4.97 billion, net of sales agents’ commissions of $25 million and other offering costs of $1 million."
"On December 8, 2020, we entered into a separate Equity Distribution Agreement with certain sales agents to sell $5.00 billion in shares of our common stock from time to time through an “at-the-market” offering program. Such sales were completed by December 9, 2020 and settled by December 11, 2020, with the sale of 7,915,589 shares of common stock resulting in gross proceeds of $5.00 billion and net proceeds of $4.99 billion, net of sales agents’ commissions of $13 million and other offering costs of $1 million."
Also, as of their 2020 annual report, roughly a billion shares were authorized to issue, which is on the order of another 100%, or double the current outstanding.
https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/0001...
You might dismiss this as "way back in 2020", but it does seem to be their latest annual report.
Their latest quarterly report is as of June 30, 2021, and guess what? Shares outstanding are up about 4.6%. Compounded over a year, that's going to be just about 20% again.
10-Q: https://www.sec.gov/ix?doc=/Archives/edgar/data/131860
"Stock-based awards" seem to have been 93 million in the last three months. TSLA is around $775/share.
2020 was a significant shift in the company as it became profitable ex-ZEV credits. Future public offerings are unlikely absent major changes in the company's fundamentals.
Stock based comp is a standard cost of business in most large tech companies; given how badly TSLA is been beating competitors (esp in the context of the chip shortage), it seems to paying off.
>Stock based comp is a standard cost of business in most large tech companies
The public offerings come at intervals, but the total raised seems to be pretty steady. It all contributes to keeping the business running. Money is fungible. "Everybody does it" is not an argument for anything.
Your opinion could be perfectly correct, in terms of predicting the future, and I am not an expert on Tesla. But your comment doesn't convey to be even the tiniest hint of why you hold your opinion.
Maybe they are simply more dynamic, have better on the fly testing, more flexible software to manage their production, are more vertically integrated and have thus more control over their production.
The argument that Tesla had significant more quality problems compared to others really doesn't hold much water today. The fact is Tesla had far fewer problems with batteries and drive trains while delivering far more EV. People love to complain about minor panel gaps (that most people don't ever notice anyway) and ignore that Tesla has a very good track record in terms of drive train and battery.
Compare Tesla Model 3 to Leaf or the Bold that came out at the same time and had far more problems. Leaf had to replace all early batteries and Bolt is being recalled right now.
Tesla should get credit for this, rather then just them being 'lucky' or that Tesla costumers are just willing to buy broken products (another myth that doesn't hold up).
In terms of drive train and battery Tesla worse failure by far was that they had to under-power a number of Model S produced in 2017. There has never been a large recall of Model 3 or Model Y.
Maybe they are simply more dynamic, have better on the fly testing, more flexible software to manage their production, are more vertically integrated and have thus more control over their production."
Yes. That's cost of entry. It works when the customer takes delivery.
They can also do smart things like have consistent APIs, electrical bus systems, etc (I don't know if they do, but they could)
Even with all of that, technical debt on physical products in the real world will drag you down to the depths of the ocean.
You see this with the customer experience on repairs. But like I said, Tesla is a growth company. As long as people believe Tesla is a growth company it will continue to be a growth company.
Most complaints about experience with repairs are more about how long it takes because of limited service centers, not actually bad service or overly broken cars.
On the other hand, many people have a really great experience as well. The mobile service is absurdly popular and make many repairs 10x better then what basically anybody else has.
In terms of 'check this individual horror story', you can find those for every car maker.
I have not yet seen any systematic real analysis on costumer experience for repair. The evidence seems to be based on individual stories.
Partly I think because Tesla is so integrated all repair problems are more directly associate with the company, while for other companies you just had a bad dealer experience.
I honestly don't know how to evaluate this in any systematic way, 'my friend had X problem with Tesla Service' is not good enough.
Judging by the number of recalls, Tesla doesn't seem to be doing worse than GM, Porsche or Ford.
There's things they do well but I don't know if I'd qualify them as having better reliability.
I would guess it’s a mixture of culture, cost, and scale. Culture wise, Tesla is extremely vertically integrated so that gives them a lot more breathing room. Cost wise, Tesla pretty much still sells car at a loss and relies heavily on carbon offset subsidies for income. When your revenue is established, trying to change margin or anything is probably much more difficult. Lastly, it’s scale, while Tesla is trying to catch up, the throughput of the major automakers is absolutely mind defying. The whole system is an oil machined that any sort of downtime is detrimental and difficult once the line is established. To put into perspective, Tesla “monumental” Q2 quarter shipped 200K cars or so. GM in the US only sold 200K per month.
I'm sorry but that is just straight up complete nonsense. Like seriously, you are directly disagreeing with public financial statements. We know exactly how much margin Tesla has, with and without carbon offset.
The simple fact is, Tesla has leading automotive margins even when you exclude any carbon credits.
According to reports (https://www.cnn.com/2021/01/31/investing/tesla-profitability...) Tesla received $1600M in regulatory credits and had a net income of $721M.
If you look at the 10K (https://www.sec.gov/Archives/edgar/data/1318605/000156459021...), Tesla received $27,236M in automotive revenues (which includes sales of regulatory credits, thanks Elon). The corresponding cost of sales is $20,259M giving gross profit of $6,977M and gross margin of 26%. But after that, you have operating expenses ($4,636M) (blah, blah, interest, taxes, other, blah) and a final net income of $721M.
Their 'Automotive gross margin' is 28.4%. If you exclude regulatory credit that is still '25.8%'.
Those are flat out great margin number in the automotive industry.
These facts literally disprove this phrase:
> Tesla pretty much still sells car at a loss
Unless you simply interpret that phrase differently then everybody else.
If you want to make a larger statement about Tesla on a company level, that is a whole different thing.
If you want to ignore unit economics Q2 they made 354 million $ in credits. Total GAAP gross margin 24.1%, ignoring credits its still 21.8%.
I'm to lazy to calculate the operational margin, but its still good excluding regulatory credits. This regulatory credit storyline is literally on its last legs.
Tesla is still a growth company and their margin and profitability are already good despite them not even having manufacturing in all large markets. In Q2 they didn't even build their high margin vehicles.
My main point being again, claiming that Tesla sells vehicles at a lose, is literally nonsense.
Find the numbers here:
https://tesla-cdn.thron.com/static/ZBOUYO_TSLA_Q2_2021_Updat...
Any claim that Tesla has no business without credits is just fundamentally wrong.
And Q3 looks like it will beat these numbers again.
Whatvyhe other poster did was diving into Tesla's sec fillings. Those show:
Tesla is offering stock -> they still raise money
Tesla is selling emissions certificates -> that explains most, if not all, of their profits.
Not sure how new funding factors into their cash flow, and I am too lazy to look it up. It does seem so, that Teslas car business isn't enough to stand upon for now.
Other OEM might have new platforms, but those platform are built with supplier and OEM themselves often do not make the detailed choices.