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Tesla Financial Results 2019 Q4 (tesla.com)
208 points by xyby 19 days ago | hide | past | web | favorite | 333 comments

The bull case for Tesla is clear. Aside from Nissan with the Leaf, who recently loss their galvanizing CEO and who's market cap has tanked since, what major automaker has anywhere near the success of Tesla with EV?

No doubt execution has been an issue in the past, but recent sales trends, completion of gigafactory, and Chinese expansion show that they are on the right trend.

Tesla's were confined to the luxury market, but the Model 3 is doing well and Tesla is being allowed to come out with more and more SKUs while the other big auto's are still finding their footing.

The branding is on point without the need to advertise, like the iPhone, Tesla's are becoming just a feature of everyday life (at least in large metro's). Finally, and this is absolutely non-empirical, I just believe in Elon. Tesla might be one of those companies that simply fades away once a galvanizing leader leaves, but as long as his heart is beating I'll hold.

Other car manufacturers are missing what makes Tesla do so well.

It's a lot of things, really. Range, performance, the hope of self-driving, the supercharging network (Which is much bigger than people think!), and of course, the fact that they look like normal cars. Most other EVs like the Leaf are either incredibly lacking in range and performance, or they're incredibly ugly like the BMW i3.

Then you've got cars like the Mullen Qiantu K50 [0] that try to be something special, but other than looks are incredibly lackluster and overpriced. $125K, and its performance and range are on par with a $48K Model 3 LR AWD. They're trying to brand it like a supercar, but it's only a supercar in the looks.

It's crazy to me that other makers can't even get charging done well. Most public CHAdeMO or CCS chargers are only up to 50 kW, while Tesla superchargers are usually 72 kW and sometimes up to 150 kW. Being able to charge quickly is a must when one of your biggest barriers to getting customers is overcoming their range anxiety.

[0] https://mullenusa.com/reserve-qiantu-k50/

Yes and other car manufacturers capital is tied to a return on manufacturing lines of petrol and diesel vehicles so if BMW were to release 7e tomorrow what would happen to the 7 sales.

This is while Telsa is building out a charging network and fighting for a direct to consumer sales model and also possessing a knowledge base of every fault that's ever occurred in it's entire fleet and every Tesla Sale increases the return on Tesla's deployed capital plus a highly dedicated creative resilient workforce that are at the point of smoothing variability and product refinement.

So for BMW to win they have to bet the factory that they will take enough market share while Tesla's quality and brand strengthen. Hence the current share valuation.

Now a lot of people say Elon is a manipulative exaggerator but the fact remains he has built car sensor database company with a carbon advantage that has BMW on the ropes while reigniting a space race. If machine learning can sort the data and it seems to be improving year on year then alot of people who haven't built nearly as much will probably be taking a Tesla to work.

Why do people want Tesla to fail. Economies of scale, improving battery technology and a global charging network and everyone eventually has a cheaper travel option. How revered the founder was is a quite irrelevant.

> Range, performance, the hope of self-driving, the supercharging network (Which is much bigger than people think!), and of course, the fact that they look like normal cars.

The self-driving bit is a risk either way, but I think Tesla is dangerously close to losing out on both the “looking like a normal car” and potentially the performance factor if they’re serious about Cybertruck.

Personally I think cybertruck is a one-off looks wise. The model Y looks totally normal.

Plus I actually think the cybertruck looks awesome (you have to see it as a driving space ship not a car) and the value is amazing - so much range for not that much money. And that thing looks built to last (balls of metal thrown at the windows withstanding)

The glass issue will be solved eventually. And I don't mind a bulletproof car that looks amazing (to me).

>the fact that they look like normal cars

This was my first thought during the Cybertruck unveil. It no longer looks like a normal truck. Rivian was far out originally, but this blew it out the park.

So the question is really, would people want an electric pickup truck that looks like nothing before it?

I'm leaning towards yes, but we have to wait for the market to make its choice to find out for sure.

It looks as much like a conventional truck as the Hummer did, and that was arguably a great success. I think the primary market, at least at first, is going to be guys who want a big flashy truck to be noticed in. I mean, look how much attention Elon gets in it everywhere he goes.

Cybertruck is going to be an Edsel-type blunder if they keep pursuing it. It’s obvious that Elon is a car guy because the Tesla cars all look slick and sporty but he’s obviously not a truck guy and I think he’s utterly misunderstood the market with Cybertruck.

Based on what? Its cheap, can pull lots of stuff fast, you can plug in power tools and it has lots of storage area.

It looks stupid, the trapezoidal side walls around the truck bed actually make it much less usable, and it looks stupid.

The whole problem with eg the BMW i-Series or most other electric cars is that they are designed in a silly way that says, “look at me, I’m a weird electric car, I’m not a normal car at all, I’m willing to look like a total dork in order to virtue-signal about being eco-friendly”. Teslas just look like sports cars—except the Cybertruck’s styling is 100% “dorky virtue signal about having a weird special truck”, and truck people are even less likely than car people to put up with that.

Because you have active suspension you the bed can actually be lower then most trucks. Also overall usability seems like its clearly better on this truck compared to the competition you basically point out one single thing and ignore everything that goes the other direction.

And I think it looks cool, so that literally purely your opinion.

The design of the truck allows it to be produced for 40k and still have quite a bit of range. Those performance and price measures matter. Had they copied an F150 it would cost at least 50k and would not have as much range.

Tesla had to make conservative cars to establish themselves, but a revolutionary brands will not always just copy the competition, specially when trucks are on of the most uninspired markets where literally every vehicle is a copy of the other.

Do you own a truck? What do you use it for and how would the Cybertruck provide an improvement?

I wouldn't characterize Tesla's other cars as "conservative" in the slightest. "Conservative" makes me think of Volvo or Lexus. The Model S is absolutely gorgeous and if any car aficionado saw it, he would say, "that is an absolutely gorgeous car". It literally looks like a better Lamborghini, Ferrari, or Porsche. The Cybertruck provokes reactions somewhere on a spectrum between "what the fuck is that?" and "hmm, that's interesting". Which is roughly the same design space that the Pontiac Aztek, Chrysler PT Cruiser, and BMW i-Series inhabit. It's not fertile ground.

For usability, I looked to see what truck users on /r/Trucks had to say about it.[1][2] Here are some highlights, both positive and negative:

> It’s really damn cool aside from the roof coming to a point. I’m not sure I understand that design decision. However, onboard air compressor, 110v/220v accessory power, fast as shit, good ground clearance, integral bed cover and ramps, air ride suspension, and tough shell to boot... there is a lot to like here. I might just have to buy one in a couple years.

> Yeah because everyone wants a ‘bed’ you can’t load from the sides.

> I think [being able to load the truck bed from the sides] really only matters for people who use their trucks for actual work. This is obviously for people who want a truck for play and not work.

> ... he could have taken this seriously and actually made an impact. Now he’s proven the older anti EV crowd 100% correct that an electric truck isn’t a viable alternative.

> Clearly designed by someone who has literally never even used a truck once in their entire life.

> It's stupid tall bedsides ruin it for slide in campers too. If it wasn't for that the 3500lb payload and huge battery would make it great for a slide in.

> I'm surprised you all are not pouncing on the unibody. The other "truck" (Honda) that uses a unibody construction does not get much love.

> [People who like the Cybertruck design are] those who've never actually used a truck to haul items and/or trailers. Those who are in the ranching, mining, and other similar industries are laughing at this.

> Is the bed cover transparent? Seems like the rear window is only usable when the cover is retracted. I'm sorry. This is a truck for the Ridgeline crowd. No 8ft bed option. Only crew cab configuration. AWD, not 4WD. Can't tow a Gooseneck or 5th wheel, which you're gonna want when towing a 14K trailer. People will buy it. I won't.

> It’s a weird case of form over function. He was so focused on the blade runner vibe he forgot to make sure it was usable as a truck. Can’t even get to the front of the bed without opening the tailgate and getting inside.

> Trucks have a utilitarian purpose. There is a reason for their shapes. And if you look worldwide there are some differences, but also some commonalities. Like being able to access the frigging bed. That’s a massive failure here.

> There’s some things about truck design that are important to the function of being a truck. Like not having angled bed sides so you can fucking reach the first 1/2 of the bed without getting in it or being able to tow a 5th wheel.

> After looking at more pictures today I realized it doesn't even have a true 6.5' bed. It's much shorter than that, but angles in underneath the rear seats. Probably ok for hauling a few sheets of plywood, but putting in, say, furniture, would be harder.

> I set things in the bed over the bedside a lot. And climb in the sides. I’d have to awkwardly yeet shit over the side of that angled monstrosity

> This truck looks like an absolute nightmare to load and unload tbh. I actually even ditched my bed for a Bradford flatbed to make my truck easier to use. Rear/side visibility looks awful. Boasts a 14,000 towing capacity yet it looks like a nightmare to hook up to a trailer. I’d love to know how far this thing can tow 14,000lbs. Payload of “3,900lbs”. What does the truck itself weigh? Does Tesla understand GVWR or how to calculate payload or is it assuming it’s potential buyers do not? I guess I just don’t understand the whole concept and what exactly they’re going for. Seems like they’re trying to do too much. This has been the plague of these types of “crossovers” which is exactly what this is. El Camino, Ford Ranchero, Subaru Brat, Subaru Baja, Chevy Avalanche, Honda Ridgeline, the list goes on and on.

> Having a large locking cover would give me so much peace of mind when I'm parked with my tools in there. Having the thing build of stainless steel made me ask why hasn't trucks been main of stainless steel for years.

> The bed has some L-Tracks and T-Slots in it too for easy tie downs, which was something I learned from a video I saw that someone did a test drive in

> Literally the only good truck feature is the integrated full width ramp in the tailgate.

> And you can lower the suspension in the back to make it easier! I would have killed for that the last few times i was loading heavy equipment into the back of my truck by myself. I had to make due with backing up to a hill and using a shitty steel ramp that would fall if i so much as looked at it wrong.

> Let's be honest, most people in suburbia/cities with trucks are just drugstore cowboys anyway. This truck will meet the needs of most consumers

> Good luck towing a 5th wheel with that thing

> If you need a truck, Cybertruck's already disqualified itself. Little clearance, no room for mods, unibody, no side access to the truck bed, likely range issues (once you add a load), and that's just the stuff we know about now. I can only imagine buying this if you buy a truck just so you can feel like you're driving a truck but never plan on using the truck features beyond occasional off-roading.

[1] https://old.reddit.com/r/Trucks/comments/dzvqhx/tesla_truck/ [2] https://old.reddit.com/r/Trucks/comments/e061ru/style_contra...

Wel, that’s just like... your opinion, man. Seriously, the world has enough identical-looking sedans and identical-looking trucks. I can’t tell most major brands apart anymore until I see them up close.

Let me guess, you used to drive a PT Cruiser :)

I don't love the look of the Cybertruck but what I do love is the value per dollar and the larger than expected cab space.

Many EVs have a good enough range and more than good enough performances. Sure a ipace or etron don't drive as far as a equivalent Tesla, but sometimes you don't need that.

Also, we are many to love the i3 look. It's a matter of tastes.

> Many EVs have a good enough range and more than good enough performances.

Range is good enough for daily driving, sure.

More than good enough performance? Subjective and debatable. I frequently hear about all the instant torque of an EV, but all it takes is a ride in a Leaf to learn that this really only applies to Teslas and the more sport-intended EVs. In other words, not the Leaf. Sure, the torque is still instant, but its...not a lot.

But the range...we need more 300+ mile EVs that support 150+ kW charging in order to overcome people's range anxiety for road trips, not to mention more 150+ kW chargers. I'm taking my Model 3 Performance on a 2,250 mile road trip later this year, and it'll be my first EV road trip. I'd be lying if I didn't say that I'm feeling a little anxious about it. I've planned the crap out of my stops (Thanks to sites like ABRP), but still a little nervous. If I had a SR Model 3, I'd probably just say forget it and take my wife's CRV.

I realised awhile back how my brain works when I buy stuff. Most of my happiness with something I buy is based on regret or not.

I know that if I buy an electric car that isn’t a Tesla, whenever that car bugs me, I will think ‘damn it, I wish I bought a Tesla’

But if I buy a Tesla, I’m not going to think it wish ‘I’d bought a leaf’

That’s just me. I don’t even have an electric car yet. But my name is down for the cybertruck.

I understand you well. However, it's a lot simpler when you can't afford or justify buying the fancy car.

I bought an used electric car with a tiny range to commute and every time I did long trips with it I wished I got a Tesla with a five times bigger battery.

But then I think about it, I do not regret not spending the money on a Model S, renting a long range car a few times a year, and buying a bigger flat with the money I saved.

But a model 3... maybe?

The logo for Mullen is incredibly similar to Tesla's.

Also, Supercharger v3 goes up to 250kW

250? That's insane! Do you know what the timeline is? Can we assume all charging stations will be upgraded, or will there be a limitation in capacity?

For example, what Mercedes is missing for the EQC electric SUV production is, enough batteries for full production. I wonder how many other makers are looking at this particular bottle neck?

I went to a supermarket in the UK recently that had an electric car charging area, with space for around 8 cars. Guess what the maximum charging power was?

7 kW.

Seven! What is the point of that?

You’ve got to realize electric cars are evolving fast, the affordable 200+ mile-range that charges in 30 minutes is Tesla’s 1-year old model 3. 7kW is what everyone who bought a Nissan Leaf 4-5 years ago expected and used. Also, the charger is probably 4-5 years old.

It’s a totally different mind-set and usage pattern. Gas-like refills vs just topping off for free. Older EVs with smaller batteries that you charge all around town, vs newer Tesla’s that you supercharge like a fill-up. But 7kW can still give you 30 miles of range in an hour of shopping, plenty to get home somewhere in the suburbs even if you happen to be low already.

7 kW would take ~11 hours to recharge a Model 3 LR/Perf battery.

The only place a 7 kW charger should be considered acceptable is at home, a hotel, or the workplace. A supermarket where you're likely to only be parked up to an hour? Nah, that needs to be much more.

What you describe would be the “bull case” dozens of billions in valuation ago. Right now we are quite disconnected from that, in my analysis.

To justify their current valuation, the “bull case” is for them to dominate the entire automative industry (not just the EV segment) and do an Amazon-like turnaround of losses into profitability.

Anything short of that, their valuation is ludicrous.

> To justify their current valuation, the “bull case” is for them to dominate the entire automative industry (not just the EV segment)

Toyota has over twice the market cap that Tesla has (230 billion vs 105 billion) and considering how big the auto industry is outside of just these 2 companies, I don't know how you think an automotive company at 105 billion is vastly overvalued.

The argument is not that no car maker deserves to be valued at $XXX billion. It's that Tesla, which produced around ~1/30th the number of autos as Toyota last year, probably shouldn't have a market cap that's anywhere near Toyota's.

I think your mistake is in assuming that Tesla only makes cars, and the number of them they make is the only factor that goes into their valuation.

They also have the world's biggest charging network, storage solutions, solar solutions and produce more batteries than virtually everyone else combined. Mercedes actually just put out a press release that said they can't build enough electric cars because they can't build enough batteries, because Tesla acquired the company they were going to use in 2016. Evidently Mercedes have done exactly zero about that in the years since.

Of course Tesla also have the whole "self driving car" thing they've been working on for a while. If they crack that one in the next ~24 months, their valuation will easily top Toyota's, because they're worth so much more than just how many cars they can build.

How much of their revenue comes from not making cars?

Good point. Right now it's not much, but I think the valuation is based on the speculation that it could soon be a lot.

Right now revenue from energy storage resembles Tesla's auto business in 2013[1].. so if it grows at the same rate...

[1] https://twitter.com/kerooke/status/1222637828741439488

Their solar business, which they purchased, has declined every year since the acquisition

Until now. "The company marked a 26% quarter-on-quarter increase in solar installations"


QoQ. They still showed a YoY decline for 2019. And that's in a market that's been expanding, so they've significantly lost market share.

What is important is that they can make money from selling lots of electric cars. While the other companies get horrifying margin on their electric car and they have no clue how to make money with them.

Can they? They had a loss of $800 million in 2019, and that’s with over $500 million in regulatory credit sales boosting that. The EV market still seems like it incinerates capital

They lost that money because they had to repay massive amount of debt early in the year. They did that successfully and once that debt was payed they were profitable.

What matters is that they produce lots of cars and the cars have a better then expected profit margin, focusing on anything else is simply foolish.

No, that’s GAAP loss, so that doesn’t include any debt repayments. That’s what the business generated.

And they produced the most cars they ever did and still lost money for the tenth consecutive year, in a year where the expectations given from Wall Street and the company were to make money.

Can you please link me to this press release?

Press release for what?

This: "Mercedes actually just put out a press release that said they can't build enough electric cars because they can't build enough batteries, because Tesla acquired the company they were going to use in 2016. "

That's not a press release from Mercedes, and given that Mercedes denied the core allegation that production would be halved this year, I would probably give them the benefit of the doubt on the rest...

Stock valuation also includes future growth and Tesla is consistently showing large growth in deliveries and expanding with new factories.

This growth will eventually plateau but it's a good bet that it will do so with millions of cars in production.

One of them has manufactured 900k cars the other manufactured more than 200 million. Even if Tesla were the market leader and reached peak production rates of 10 million cars per year it would still take 20 years to catch up and justify that valuation.

What does the total car manufactures have to do with anything at all? Cars sold last year, sure, that makes sense.

They would have to do substantially better than Amazon, who lost far less money before becoming profitable.

Hardware startups are always harder.

Even as a long-time Tesla fan, I think their stock price is fairly excessive.

> the “bull case” is for them to dominate the entire automative industry (not just the EV segment)

Is Tesla's market valuation highest than the highest valued automakers?

Tesla is not just a car manufacturer though right? They are a solar company and battery company too. They could conceivably have astronomical growth in both of those segments.

The valuation of Tesla also seems very high to me at first, but given their growth in the other segments such as energy storage and generation, I absolutely think that the valuation could be justified.

Tesla owns the entire vertical from battery cell manufacturing, using those cells to do work (automotive), home and grid energy storage, and solar generation. Throw in the rest of Elon’s companies and you also get the transportation network itself (Boring) and even the data provider for these cars that need to be highly connected (Starlink). And if you really want to believe Elon, some weird, someday a pressurized version of the Cybertruck might become the transportation off of this planet.

And that's not all. They are also now a chip maker, an insurance company, a technology company with some of the leading research and IP in self-driving, and also leaders in automated manufacturing.

Other car manufacturers would be smart to source their batteries from Tesla.

I doubt Tesla will sell to them, Elon has said a few times their vehicle output is constrained by how many battery cells they can make. If they sell those cells to other manufacturers, they won't be able to make so many cars themselves.

Making vehicles is hard. There are a lot of logistical and technological challenges, plus the deep penetration of cars into society means that marketing, perception, and utility are on the lips of the hyper-rich down to the common man.

With batteries... you just make batteries. With cars you have to score adequate or better in lots of different areas to be competitive.

It’s funny how closely Tesla mirrors iPhone and the doubts everyone had about that VS The traditional phone makers.

“No-one wants a touch screen keyboard” etc, the CEOs said as their business evaporated.

Tesla are still at iPhone 3G point I reckon, having just released their first affordable car.

Also consider that while they are so far ahead - they are still accelerating. And the traditional car makers haven’t even realised they’re in a race to the death yet.

Most countries have barred the sale on non-EV cars in couple of decades. That’s not actually that far away. Or self driving could make all other cars seem like Nokia 3310s.

Out of curiosity: Could you explain your reasoning with numbers?


GM? Bolt is a great car and GM has enormous production capability.

Well aware of the difference in sales figures, but having driven both, I prefer it to the Model S.

I think battery tech will end up deciding the market, though, and GM would have to pivot harder that I think they are able to in order to beat Tesla. I am very curious about their internal R&D pipeline for the Maxwell technology.

Why do you prefer the Bolt?

From my perspective the Bolt is: -Ugly -Less safe -Slower -Doesn't drive itself, or will be capable in the future

Worst of all the Bolt's infotainment system is horrible.


I preferred the Bolt because it had similar and adequate range, adequate recharge capability, better drive, felt substantially roomier in the interior, and I preferred the higher seating.

I have no use for an infotainment system in any vehicle (give me a hotspot and I'll bring my own devices). I disliked the Tesla center mounted tablet console dashboard, though that's subjective.

I don't think the Tesla drives itself, does it? That was not a factor for me, and if anything would be a mild negative at the current level of self-driving tech maturity. At any rate, the Bolt had some useful driver assist packages for safety, though they are upgrades. I think they both have fairly similar safety ratings. And speed isn't a consideration for me, as long as it goes fast enough for highway. Nor is appearance, within reason.

I really am thrilled for Tesla's success and don't think there is a "right car" but a "right car for you". The Bolt is a good car, though.

> would be a mild negative at the current level of self-driving tech maturity

Tesla's more or less take over on the freeway. They are also on their way to mastering traffic lights.

> center mounted tablet console dashboard Yeah, that's a little weird.

> the Bolt had some useful driver assist packages for safety, though they are upgrades

Tesla's are the safest cars on the road now.

> They are also on their way to mastering traffic lights.

Sure and I’m on my way to mastering Russian Roulette. Until I actually get there though you might not want to sell me life insurance.

There are some things where being “on the way” to mastery is worse than nothing, and propelling a two ton object at a red light is one of those things.

What statistic says that Tesla’s are the safest cars on the road right now? Based on death statistics for vehicles of their age and class they generally are about 2x worse.

> Tesla's are the safest cars on the road now.

Eh, I imagine that depends on how actively you use the autopilot and auto unpark features. I know they don't want to cede the frontrunner status of that technology, but it still feels like a risky gambit for tesla and for its customers.

The IIHS rates TM3 it's top tier aware of Top Safety Pick+ which is a higher rating than the Bolt (noted in the article)[0]. This doesn't factor in autopilot although it does evaluate collision avoidance systems, which must rate advanced to superior.


I recently bought a 2020 Bolt LT and I really enjoy it - $26k "out the door" price (after taxes, registration, etc) - 260 miles of range (66kWh battery by LG Chem) - DC Fast Charging - upright seating - lots of headroom/legroom in the front and backseat - dedicated LCD for the driver, separate from infotainment system

I compared it to a Tesla (test drove a Model 3), and a Tesla would be about $15k more. I have no use for self-driving. As a software engineer, I feel that full self-driving requires a general AI, which I think is on the order of decades away.

I really just wanted a simple electric car with minimal maintenance and no fossil fuel dependencies. Minimal complexity, no gimmicks (fart generator, Tesla? come on...)

With those requirements, the Bolt is awesome.

> I have no use for self-driving. As a software engineer, I feel that full self-driving requires a general AI, which I think is on the order of decades away.

Doctors make the worst patients.

> Why do you prefer the Bolt?

The 2020 Bolt has 259 miles of EPA range and is the best value for money of any EV in the world at the moment. Have a look at these prices:


Here's a real world example of someone who has leased a 2020 Bolt:


He has a 2017 Bolt on lease and he was thinking about getting a different EV, but in the end he went with a 3 year lease on a 2020 Bolt because the offer was too good to refuse. He paid $2500 down (which was covered by state EV incentives) and the lease is $147 a month for 12,000 miles per annum.

Show me a better EV deal than that.

Is it practical to own it as the primary car though? Can you travel cross-country in the Bolt without spending hours charging?

Yes. In the video he talks about the roadtrip he is on right now from Boston to Austin for the Fully Charged Live event. He's posting more videos as he goes.

Here's a 2020 Bolt doing a 1,000 km trip: https://www.youtube.com/watch?v=bMVRm8UvHjs

Here's a Bolt which did the Cannonball run: https://www.torquenews.com/8861/chevrolet-bolt-ev-set-cannon...

Here's a 2017 Bolt surviving the cold: https://www.torquenews.com/8861/my-chevy-bolt-ev-sat-unplugg...

As ever, you need to plan your trip around charging stops. A Better Route Planner (https://abetterrouteplanner.com/) is a useful tool but it's a bit conservative for the Bolt (although I think it's better to be conservative than stranded). It also doesn't necessarily take into account overnight charging. On a long trip you'd charge overnight and start the next day with a full battery: https://www.torquenews.com/8861/chevrolet-bolt-ev-issues-bet...

How often do you really travel cross country?

>Worst of all the Bolt's infotainment system is horrible.

It has Carplay/Android Auto; you'd never look at that UI if you didn't want to.

Agrees. GM is building a battery factory


And recently an ounced a $2.2 billion investment to turn a plant into one that will produce only electric vehicle


GM has the EV knowledge from Bolt and Volt. It has autonomous tech from Cruise Automation.

GM is planning 20 all electric vehicle models by 2023.

IMHO they would be the clear leader in the pack of traditional manufacturers.

I also don't think anyone needs to beat anyone. Everyone will have their market share sooner or later as the tech becomes a commodity. I just want my self driving EV cheaply, and reliability. I've never owned a GM vehicle but I'm an keeping an eye on what they come out with.

The problem is that all old car manufacturers are treating EV like the enemy, which it is to their old ways. Same thing happened with Kodak. Imagine your art, your soul, your heritage of combustion engines ripped away. You spend decades, centuries even, perfecting the internal combustion engine. Your pride and joy is now obsolete. You can see why it was so hard for everyone to switch over. Almost all your cumulative knowledge, obsolete. Everything back to the drawing board. It is why Toyota, with their insanely successful Prius, who knew full an well how transformative the EV side is, dragged their heals until to this very day. Most of the Germans have delayed their EVs for mass market in the US from 2021 to 2022. Even Hyundai, who is the closets to Tesla in efficiency, is frought with delays. "We are X* we will have no problem making an EV" they said!

*Daimler, Volkswagon, Audi

> The problem is that all old car manufacturers are treating EV like the enemy, which it is to their old ways.

In what way are they treating EV like the enemy?

> Same thing happened with Kodak.

No it did not. What happened to Kodak was that its primary source of profit, film, was threatened by new technological developments. That is in no way comparable with the situation of car manufacturers.

> You spend decades, centuries even, perfecting the internal combustion engine. Your pride and joy is now obsolete. You can see why it was so hard for everyone to switch over.

It was hard to switch over because it was thought that it wasn't profitable. Now that it is apparent that it is profitable nobody has any problems switching over at least not any problems of the kind you are talking about.

> Almost all your cumulative knowledge, obsolete.

Almost all knowledge is obsolete... wtf. Are EVs not vehicles and haven't we been making vehicles for a long time?

> It is why Toyota, with their insanely successful Prius, who knew full an well how transformative the EV side is, dragged their heals until to this very day.

Because they were concentrating on hydrogen cars.

> Most of the Germans have delayed their EVs for mass market in the US from 2021 to 2022. Even Hyundai, who is the closets to Tesla in efficiency, is frought with delays. "We are X* we will have no problem making an EV" they said!

And how many delays did Tesla have?

The management of car manufacturers are full of dinosaurs and execs that hate evs due to compliance regs.

The dealer networks are outright hostile to them since maintenance revenue is reduced so much.

I still think the other manufacturers aren't going to stay behind forever. VW in particular seem to be betting the company on their MEB platform.

Tesla still lost $800 million this year and has never had a profitable year, on both record car sales and record regulatory credit sales. What about that indicates sustainability?

The financial results from the link don't show a $800 million loss for this year.

From that document in the FINANCIAL SUMMARY section there are these quarterly profit/loss number:

    Income (loss) from operations 
    Q1-2019  Q2-2019  Q3-2019   Q4-2019  
       -522     -167      261       359
So for the first half of the year Tesla did lose 689 million dollars.

But for the whole year that was only a loss of 69 million dollars.

I think what the market likes is the Tesla cash position.

If you look at those it would appear Tesla is no longer burning cash.

    Cash and cash equivalents 
    Q4-2018   Q1-2019  Q2-2019  Q3-2019   Q4-2019  QoQ   YoY
    3,686     2,198    4,955    5,338     6,268    17%   70%
The fact that the year on year cash position grew by 70% would be pretty comforting to shareholders.

You’re using non-GAAP numbers. By GAAP standards, they lost $800 million

LOL, it was ONLY ~$70 million.

How does this stack up to last year, and forecasts for next year? If they were in the hole $120MM last year and now only 69, with forecasts for ~20MM or less next year then there is a clear road to profitability and I might be willing to do the Long thing.

$800M loss on $25B sales (which are growing YoY while R&D actually resulting in new models and features is maintained stable) is a noise at this point.

Agree. Given the growth numbers and their market leadership in the EV area, there's a strong case to be made that this 'loss' is more of an 'investment' to set up for future revenue growth and consequently profits that come with increasing maturity and operational cost reductions.

They have shrunk in sales YoY in the US and Norway, their two largest markets. They managed to grow globally by finding the most advantageous subsidies for them to take advantage of. However, even that only gave them 1% growth of the past year.

The low growth was because of production problems and because they maxed out their single factory. Now they have another factory producing and a third under construction.

As to subsidies, governments are pushing ev's harder and harder. The EU has continually-increasing fleet standards that can be met only by adding more ev's, and China has continually increasing ev production standards. Ev sales are going to keep increasing, and Tesla makes the best ev's. Sales, revenues and profits are going to keep going up.

Why were they able to meet a run rate or 500k cars a year in Q4 of last year and not sustain it if their factory was maxed out? And why would they claim in projections that their factory was capable of producing that if they didn’t meet that?

Companies are rarely production constrained. Many claim they are, but the fact that Tesla sales in their two largest markets declined doesn’t indicate to me that production is their number one issue.

At 500k per year they were still nowhere near meeting global demand, and they decided to move sales away from markets they were already well-established in, and into new ones.

The nice thing about this disagreement we are having is it will be settled by what happens in the next year. I say Tesla's sales will go up strongly now that it has another factory. I take it you think they won't, and all that new capacity will go unsold.

You're spot on with everything. I think the biggest hitch this year will be China. That is such a huge market

Again they produced 367k, not 500k, like they claimed they could. If they could produce 500k, why claim they could, and why didn’t they?

And I would say Tesla’s revenue growth will start to flatline, yes, as the last two quarters have shown.

Their production capacity increased in every quarter. By the end of the year it was at a 500k per year rate. And it is continuing to go up rapidly, now that it has a new factory.

Did it? They only produced a small number more than they did per quarter at the end of last year. Why do we think they are production constrained?

R&D isn’t even meeting depreciation though. Either these factories are some how never before seen in accounting history or this company is underinvesting in its futures

Actually there’s a third option which has been discussed on their financial calls.

Their capital efficiency has markedly increased.

To put it less glamorously, they burned boatloads of money chasing “alien dreadnaught” style fully automated production, and after recognizing that failure (better late than never) they now find they are able to build out new production lines at a fraction of the first line’s cost.

If you look at their letter you can see a comparison between the layouts of their California and Shanghai factories. Massive difference in efficiency. They learned a lot from their initial debacle of Model 3 ramp-up. Cap-ex per unit was announced as being 65% lower in the China factory.

65% lower cap-ex per unit in China is astonishing. Elon's "machine that builds the machine" vision really created a lot of misprioritization.

Maybe. My bet is that they have been underinvesting in order to meet financial results, and that that will catch up to them. Looking at other financial statement history, this seems like a safe bet.

It is really hard to say they are underinvesting when they just opened a new factory and have a new vehicle, the Y, that just started production.

It’s really hard to ever say a company is properly investing if their CapEx on their income statements exceeds their depreciation. Can you name other fast growing companies that is true for?

I don't understand enough about financials to understand what you are saying.

But more to the point, what exactly do you think Tesla should have been spending its money on that it didn't?

And let add to my original comment that Tesla also has the Semi going into production later this year, and recently brought out a greatly improved version of its solar roof, and is working like crazy on self-driving.

But back to my question: what should it have been spending its money on that it didn't?

> I don't understand enough about financials to understand what you are saying.

Capital Expenditures are what a company spends on land, buildings, equipment -- all of those sort of long term assets. Depreciation is how much the value of those assets decline over time with usage and would eventually require maintenance or repair costs.

Usually, when depreciation exceeds CapEx, it means the company isn't spending enough to maintain their current assets, and this will eventually catch up to them. For growing companies investing in the future, CapEx is usually a great deal more than depreciation, since there will be a large amount spent on future assets.

> But more to the point, what exactly do you think Tesla should have been spending its money on that it didn't?

> And let add to my original comment that Tesla also has the Semi going into production later this year, and recently brought out a greatly improved version of its solar roof, and is working like crazy on self-driving.

> But back to my question: what should it have been spending its money on that it didn't?

My point is that the PR statements that Tesla releases don't match the financials. It's easy to announce that a factory is being built or a new car is going into production, but we should be extremely skeptical of these statements when they aren't backed up by audited financial information.

Generally when investing in a company you should look at their financials first, as they are going to be the most honest, and PR statements/rumors last, as they will be the least honest.

>My point is that the PR statements that Tesla releases don't match the financials. It's easy to announce that a factory is being built or a new car is going into production, but we should be extremely skeptical of these statements when they aren't backed up by audited financial information.

Oh dear, are you saying that Tesla did not actually recently open a new factory in Shanghai, or start a new one outside Berlin? In spite of all the news stories and announcements by the governments in each of the countries. And ditto it has not been developing the Y in spite of all the reported sightings? Or that the new version of the solar roof did not go into production, in spite of all the reviews of it, and all the people who have said they have ordered one? It is all an extremely elaborate hoax? And even when their latest quarterly report discusses all this?

You know, when someone is so far gone into conspiracy theories as you appear to be, there is no reasoning them.

How many of these things exist currently? As far as I know I’ve only seen a total of 10 deliveries from the Chinese factory, there has not been a single Model Y sold to the public yet, the German factory hasn’t even broken ground, and the Solar Roof, despite being in production for three and a half years still hasn’t had even a thousand customers install yet.

Companies exaggerate in their PR statements. It’s very easy to claim a factory is complete but not have meaningful production. It’s very easy to claim that the Model Y is just around the corner. It’s apparently very easy to bilk investors that solar roofs are beyond a concept phase for three plus years. That doesn’t mean they are.

It’s not a conspiracy theory to want a company to produce audited financials that show that they have done the complete investment in all of these projects and they aren’t vaporware.

optimiz3 19 days ago [flagged]

Our TSLA brokerage accounts thank you and your /r/RealTesla brethren for your sacrifice.

Please don't post unsubstantive and/or flamewar comments.


xkjkls 18 days ago [flagged]

Well, let's check back next year. The bears are already 1-0 against Elon Musk, given that a large percentage of Tesla bears were originally short SolarCity.

optimiz3 18 days ago [flagged]

Bears are down over 5B in mark to market losses. Sure, call that 1-0.

xkjkls 18 days ago [flagged]

Tesla has lost -6.5 billion, so, yeah, I'd still stick with the Bears.

Please don't post unsubstantive and/or flamewar comments.


Using non-GAAP numbers. Non-GAAP gives you substantial lee-way to not charge things to your bottom line. I don't think you get to claim to run a profitable business just because you started paying your employees completely in stock.

Because it has overcome the problems that lead to the losses, and it is set in a number of ways to be highly profitable this year and into the future.

This company has been unprofitable for ten consecutive years as a public company. That’s a record. I’ll hold my breath on people saying the future will be different.

This is what a speculative bubble looks like. Enjoy popcorn on the sidelines until people start pricing in financial reality. Manias sometimes take a while to fizzle out. Year over year revenue growth is actually flat to slightly negative for the past 2 quarters. If top-line revenue growth continues to stall out, that's often a catalyst for corrections.

Yeah, it will be hard for Q1 to be as bad as last year, but it doesn’t look pretty from there.

I have been a longtime bull, but their stock value is now up over 140% in the last 3 months and I can't say I fully understand why.

Well, short interest in Tesla has decreased significantly over the past six months, from over 40% of the float in June 2019, to under 20% in December 2019. As more and more short sellers choose (or are forced) to close their positions, they drive the value of the stock higher and make it harder for other shorts to maintain their positions. With 20% of the float still sold short, I personally don’t think $TSLA has hit its peak yet, although the stock price will probably recede as short interest approaches normal levels (1-2% of the float)

If they are still a company still trading at the multiples they are, short interest is never going to be 1-2%

Yeah probably true, I did say “approaches” though! My guess is that short interest will eventually drop below 5% over the next couple years if Tesla continues to perform well and grow their revenue stream, but we’ll see.

I dunno. My bullish view has more to do with Tesla using the vehicle market as an entry point to the broader energy market.

If the Tesla cars start throwing off profit and make the company self-sustaining, their vertically-integrated energy thing opens the kind of insanely huge global energy market. They're not just going to eat Ford's lunch - but also Chevron, Saudi Aramco and your local energy company.

I think you've hit the nail on the head for the bullish Tesla case. I don't think there's enough profits in the automotive industry for Tesla to be worth $105-120B. Sure, Toyota is worth more, but basically no one else is and Tesla is a long time from being the next Toyota and I think the odds of them becoming the next Toyota have to be below 50% and are realistically probably more like 5-10%. That's not a dig at Tesla, just a recognition that there may never be another Toyota (just as no one has been dominant at anything like Microsoft was with Windows in the 90s) and even if there is another Toyota, it's a long shot that Tesla will be there.

I think Tesla might run into issues around energy regulation. They are working on energy storage and solar, but we'll have to wait and see how that turns out in the market. Energy companies are highly regulated and generally provide highly reliable service. This comes with costs like running higher than you can actually charge for so you don't get outages, employing a lot of people for emergency response and storms, etc. What happens when solar roofs get covered with snow and don't work as well? If the utility company is tasked with making sure they have enough generation power to cover that, then we'll still need to pay them for the investment even if we're using our solar roofs 90% of the time. We're already seeing net metering going out of fashion as the unpredictability of it doesn't help utility companies lower their costs enough.

Would Tesla be willing to also go into the generation and transmission side of things? It's definitely possible, but that's also difficult. Generation is easier since they could just set up solar arrays and batteries and sell into the grid. However, that still means customers paying the transmission company. It's possible that you're talking about the generation side and Tesla could tackle that a lot easier. In terms of the transmission side, they'd probably have to start buying utility companies which don't come cheap.

I think it's more likely that Tesla will sell tech to transmission companies and solar roofs and small batteries to individuals. I think there's still a lot of money and environmental benefit there, but I think transmission companies are going to stick around. It's a good business if you're just looking for standard return-on-investment, but it also requires dealing with a lot of regulation and communities that end up hating on you.


In terms of Tesla being up so much, it's a bit surprising. Automotive revenue is basically flat year-over-year. Total revenue is up only 2%. So, Tesla isn't really growing. By contrast, Apple's revenue was up 9% year-over-year and Apple is solidly profitable today. Assuming that Tesla continues having profitable quarters, their PE ratio would be around 250 which would be fine if they were growing revenue rapidly.

On the plus side, Model 3 production and sales are up over 40% YoY which is excellent, but it's clear why revenue is flat: Model S/X sales are down significantly and they carry a high price tag. For every three Model 3 sales, they lost a Model S/X sale. That's certainly to be expected. The Model 3 is really nice. However, it does mean that revenue is flat.

As a car offering, I like the Model 3. However, I don't know if demand will continue to increase. How many people want to spend $40k on a car - and specifically a Tesla Model 3? Will there be some hockey-stick like growth in revenue? Probably not. Profits? Maybe. Tesla's vertical integration might pay long-term dividends. Maybe they can spend less developing things they've already paid for or maybe they can keep spending on R&D and really outpace the industry.

Still, it seems unlikely that they will grow more than 10x their current size in the automotive industry. That's not a dig at Tesla. If they're pushing out around 600k cars this year, becoming 10x the size would put them in the same place as Ford and GM. A 17x increase would make them larger than Toyota. But that's going to take time. It looks like Tesla is looking to increase production capacity by 15.6% in 2020 (from their slides). At that rate, it would take 20 years to match Toyota's capacity (starting from 640k production capacity and compound expanding at 15.6% per year for 20 years).

Maybe Tesla can expand faster than that, but that would also likely require moving into lower cost/margin vehicles, many more types of vehicles, etc. Toyota has 17 US vehicles not including variants like hybrid vs non-hybrid not to mention many more for other markets and not including things like Lexus - Lexus adds another 12 models, not counting variations like hybrid vs non-hybrid.

And I'm not saying that Tesla isn't going to do that. However, I think it's going to take a long time and a 20-year horizon (and the risk involved in money that might materialize in 20 years) deserves a discount compared to money that's actually being earned today.

You might totally be right that Tesla will not only eat Ford and GM's lunch, but also energy companies. However, that future is likely 20 years away with a lot of risk between now and then. Musk has been very upfront that electric vehicles are easier to make than ICE cars. Other auto makers are creating good electric vehicles except they won't offer enough range because batteries are expensive. When batteries become cheaper, will competition limit Tesla's automotive expansion? I think they'll still be highly successful, but what happens when Toyota or Volkswagen puts their full weight behind battery-powered cars? Some people will surely buy them instead of Teslas. At some point, if battery-powered cars are our future, Tesla will clash head-on with Toyota. Toyota is so good at manufacturing. Even if Tesla is good, Toyota is likely to find ways to capture a lot of the market. Heck, if electric cars are more reliable as Musk touts, what happens when people double the lifespans of their cars? That's a much smaller customer base to be selling to.

Again, I want to emphasize that Tesla is doing well, but anything with a long time horizon has all sorts of things that can happen in the interim and Tesla is playing a long game and going up against a lot of established incumbents and that means risk. I don't think it means risk of bankruptcy or anything like that, but there's a big difference between Tesla's current market cap (around $115B in after-hours trading) and ending up as the next Mazda (a solid, profitable, and well-respected auto maker) that's only worth $6B. Even if they're the next VW (the second largest auto maker sitting just behind Toyota), VW is only a $95B company - and there's a lot of risk between now and Tesla selling 10M cars per year. Likewise, there's a lot of incumbents, competition, and risk between Tesla's current solar and storage deployments and eating energy companies' lunch.

I have to say, thank you for this thoughtful post.

Tesla is one of the most compelling stories to follow in recent years, but it seems like moderates have been pushed out and discussions have devolved in to Tesla is a fraud vs Hodl to the moon, with both sides cherry picking facts so hard it's mildly impressive.

So the above is a breath of fresh air, and I'd love to read more in depth takes from others whether I agree with them or not.

I agree with the other comment, great post! Tesla is doing amazing work (and I'm a fan, owner, shareholder, yada yada) but the stock price currently is disconnected from fundamentals. That said, it could definitely continue to stay disconnected from fundamentals for a very long time. I believe Tesla will only show modest profits for the near future. They are going to continue reinvesting to push out more product lines (Cybertruck, Semi, ??) and that will take time. Their mission is not to make the most money. Their mission is to accelerate the move to EVs and solar. They'll show some modest profits, hopefully get added to the S&P 500, and maybe the stock will become less volatile.

> Automotive revenue is basically flat year-over-year. Total revenue is up only 2%. So, Tesla isn't really growing.... On the plus side, Model 3 production and sales are up over 40% YoY which is excellent, but it's clear why revenue is flat: Model S/X sales are down significantly and they carry a high price tag. For every three Model 3 sales, they lost a Model S/X sale. That's certainly to be expected. The Model 3 is really nice. However, it does mean that revenue is flat.

In Q4 2018 they sold 27,607 S/X, and in Q4 2019 they sold 19,475 (-8132, 29%). In Q4 2018 they sold 63,359 M3, and in Q4 2019 they sold 92,620 (+29,261, 46%). Vehicle production over the trailing 12 months increased from ~245k to 365k (~50%).

Why didn't revenue grow? It's not just the 8,000 fewer Model S/X, because S/X doesn't cost 3.6x a Model 3. Just as important was the ASP of the Model 3 fell... about $7,500 to be precise.

> If they're pushing out around 600k cars this year, becoming 10x the size would put them in the same place as Ford and GM. A 17x increase would make them larger than Toyota. But that's going to take time. It looks like Tesla is looking to increase production capacity by 15.6% in 2020 (from their slides).

Tesla says their current production capacity is 640k vehicles (I was surprised by this - it's well beyond the promised "500k run rate by the end of 2019", so I think we're seeing the full effect of Giga Shanghai turning on here).

By mid-2020 Tesla has said they will be running at a 740k annualized production rate based on added Fremont capacity for Model Y. They have said they intend to increase Model 3 capacity in Shanghai and have at least equivalent capacity for Model Y starting in 2021. That means Shanghai + Fremont will be producing nearly 1m annually in 2021. Now, at that point Berlin will be coming online, which is planned to produce 500k units/year. The upshot I think is that production capacity is increasing at a rate of 40-50% year-over-year -- I'm not sure where you got 15.6% from.

> Even if they're the next VW (the second largest auto maker sitting just behind Toyota), VW is only a $95B company - and there's a lot of risk between now and Tesla selling 10M cars per year.

Many people confuse market cap with enterprise value. VW enterprise value is $255B vs $110B for Tesla. You have to subtract the outstanding debt, of which Tesla has very little compared to most automakers, before you get down to Market Cap, which is the value remaining for the shareholders.

All that said, it is clear that the current valuation of Tesla has ceased to be based purely on fundamentals.

>This comes with costs like running higher than you can actually charge for so you don't get outages, employing a lot of people for emergency response and storms, etc.

That's an interesting point. During/after the worst of the recent California drought years, some water companies had to raise their rates because people were so good at saving water. Because so many of the utility company's expenses are fixed costs, their savings from not distributing as much water weren't proportional with their reduction in revenue.

I wouldn't hold your breath on that.

I was actually expecting a pretty big drop today given the huge recent runup, so it's fair to say that my breath is not held.

But it's the long term I care about, and I'm fairly confident that Tesla is well-positioned for the direction things are headed.

Electricity (and solar in particular) - Continually reducing production costs on a resource that is unlimited, at least from the perspective of our planet.

Fossil fuels - Continually increasing costs as resources are depleted and externalities are accounted for.

I guess you can tell where my chips are. :-)

Tesla’s Solar deployments declined YoY as their recent report indicated


At the very least Tesla (and any similar 'electricity' co) already benefits from policies geared toward limiting greenhouse gases (and various 'pollutants') emissions, and as those will probably ramp up, will benefit more and more from them.

But there may be more, maybe even much more.

The gorilla in the room is the fact that solar (nor wind) energy cannot deliver 100% of the time.

Any intermittent energy source has to be compensated. On a grid in order to provide the necessary 'baseload'. On most autonomous locations because people don't want or cannot wait for power, they want to switch it ON and immediately enjoy the ride.

At any moment delivering power to a non-producing geographical zone may be done thanks to power produced in other areas, or (this not a XOR!) by storing energy.

From a practical viewpoint a mix of sources (windfarms, geothermal...) and interconnecting grids (forming a continental-scale supergrid) are mandatory, and in many nations there are massive investments towards all this, boosting 'distributed generation' (mainly wind energy, various other forms of renewables, long-distance transmission (see high-voltage, direct current (HVDC)))...

Tesla ability to deploy supercharger networks in many countries ties them with local folks in charge of the gridpower. They know about local energy storage (batteries, which will not be only useful for the car). They also explore distributed generation (Solarglass roof). The necessary smartgrid is mainly tied to operational research and IT (Tesla knows about those)...

In summary Tesla knows about a fair part of many pertinent domains, at worse as an integrator.

Moreover Tesla stands nearby the consumer (mindshare).

Therefore Tesla may become the most prominent ultimate link to the customer when it comes to electric power (which will become more and more pervasive as policies geared toward limiting effects of climate change will phase out fossil fuel), enabling them to rack-up a fair part of the benefits from more and more massive infrastructure-oriented investments.

They’re energy business (SolarCity) has declined every year since they bought it. They’ve lost significant market share in the rooftop Solar market, and the market has started to move away from rooftop solar in favor of large Solar farms in general. There is nothing to indicate any advantage in the energy space

Except if I want to lower my power bills

There are many other residential solar companies with more competitive products

I'm curious how you see Tesla as "vertically integrated energy" company. You mean Tesla is going to run power plants and transmission lines? Both are highly regulated, including the price you can charge, with a very low profit margin in most cases, not sure Musk would be a fan.

I agree that Tesla is unlikely to be interested in playing directly in a tightly regulated market as a utility.

But they are happy to sell solar and storage to utilities, to the extent that power grids still provide useful services. (And I definitely believe they do...) See: https://www.tesla.com/utilities

I also think that consumer 'behind the meter' solar generation and battery (or other) storage tech will also capture a lot of value that goes to utilities right now.

Tesla's products allow for decentralized power. A Tesla solar panel feeds into a Tesla battery which powers your Tesla car and the rest of your house. That all works without Tesla building power plants or transmission lines.

> Tesla solar panel

It's actually Panasonic solar panel + SolarEdge inverter, that Tesla puts their sticker on. Tesla is just an installer of third party products, like majority of all other solar companies. That can possibly change with solar roof, but it's very early stage.

Solar Roof Deployments have started a few weeks ago: https://www.youtube.com/watch?v=LRPy8UZv9V0

And the product was announced 3.5 years ago and has been thorough 3 iterations. I’ll hold my breath this time too.

What else you got?

What else do you got?

Solar is generally moving away from decentralized consumer Solar to more industrial levels given the decreased maintenance burden. Why do we believe Tesla is on the right side of this?

I don't know if it's fair to say that it's moving away from decentralized installations. There were a lot of subsidies for home solar when solar wasn't competitive on its own. Now the subsidies are gone but the panels cost less.

In the new context a large solar installation connected to the grid is more cost effective if you need a grid for nighttime. The real question is whether batteries will make it so you don't need that. They're currently too expensive for that, but they're also declining in price. So if batteries get cheap enough that you can run your home from local panels and batteries without needing the grid, the cost of needing to keep the grid when you could otherwise not have it anymore makes the centralization lose its cost advantage.

In many nations solar power is subsidized, more often than not in an administratively burdening way (paperwork!), and subsidies/regulation were frequently modified, discouraging the average citizen. A prominent case is France. This is IMHO at least partly crony capitalism at work. However it is only temporary and doesn't magically suppress benefits tied to local production.

Industrial solar generally has much less maintenance costs than distributed. There’s some exceptions, Hawaii for instance, but it’s very expensive to have to constantly maintain solar panels in peoples homes in ways that industrial solar isn’t

Many setups I saw (PV) are mainly maintained by being washed by rain, and I fail to understand why the maintenance of a (non obsolete) home solar panel would be expensive (neglecting vandalism/theft)(?)

Moreover energy produced by solar panels in homes is locally consumed, therefore there is no maintenance (nor any non-neglectable cost or loss) related to distribution (they are non neglectable).

Solar panels and accompanying equipment break. It’s much easier to maintain a centralized installation than having people need to travel for service.

Home thermo solar (solar water heating) sometimes breaks (pump...) but a home setup is so simple many owners can repair it themselves, and nearly all can easily find a local serviceman, a competent plumber can tackle most problems.

As for photovoltaic a home system seems very robust to me, even serious hail cannot damage it (some windshields will break under it way before the panels!).

I completely fail to see even a single and most prominent problem.

In a sunny geographical zones there usually are many user, and a is local service offering.

simple back of the envelope calculation: in 3 years time, they will have 3 giga factories (+1 in upstate new york), each of which should be scale to 500k cars. at an average resale price of $50k (might be a little lower, but let's keep it simple), that's $75B in revenue. at a 10% profit margin, that's $7.5B profit. let's presume a 20x factor as a growth stock, you have an evaluation of $150B, which it's currently trending to.

This is excluding any other growth opportunities (self driving, solar, battery storage, drive train). just plain car sales...

This also assumes that there's demand for all of these $50,000 cars, which isn't necessarily the case.

The base Model 3 costs $40k in the US, and even without any extra options at all, it’s a great car to drive IMO! (Although it IS a lot more expensive in foreign markets)

So far, it seems that Teslas are so great that they sell themselves. The more Teslas on the road, the more demand gets created for Teslas as more and more people are exposed to them.

Currently, the demand is still strong enough that the wait time on a new TM3 is 4-8 weeks. That may decrease, but right now Tesla can't make them fast enough.

The Y will have more demand. Crossover rules the us market

I'm sure there is, if you consider all the climate politics ramping up. Politicians, officials, other virtue signallers will prefer to be seen in EV soon.

Battery cost is plummeting, Tesla is at the forefront of that. They can collect all the extra margin, or drop prices as needed

As you mentioned that's marginal profit. You'd have to include estimates of their other costs/liabilities before estimating future market cap.

Why do you assume they can sell all those cars, when they can’t even sell all their current capacity of cars? They’ve been able to produce 500,000 cars for awhile, yet only delivering 367,000 this year.

Extraordinarily strange, given that inventories haven’t changed to near the same degree.

I’m sorry but that is also not true. Inventory is reported as Days of Sales, and was 30 days in Q1 and has decreased every quarter to now just 11 days of sales.

They could sell a lot of semis and cybertrucks if they were ready.

And just think, they could put a dashboard on the model 3 and sales would probably double.

Neither of those cars exist.

The Tesla semi is a whole new game in battery production. 300kwhr packs? If tech gets good, Tesla could find buyers for 1000 kwhr packs.

People shorted the stock expecting the company and Elon will go under. They didn't go under and this Q4 despite not being spectacular in any number is "beating the market expectations" because the market expected the company not to continue operations.

> because the market expected the company not to continue operations.

The market did not expect the company to cease operations and that was particularly not the expectations baked into this quarterly result (the bar Tesla had to jump over this quarter). A small group of agitator shorts pushed that narrative, which very little of the market actually believed as witnessed by Tesla's persistently outsized market value (pre rally it was still worth more than Ford).

Companies the size of Tesla don't trade with $40-$50 billion market caps when the market actually thinks they're going to stop operating soon.

No? The market expectations were a EPS if 1.76 this quarter. Tesla best that, but acting like the market expected them to go under is ridiculous. At the beginning of 2019, the Wall Street consensus was a profit of close to $400 million for the year. They lost $800 million.

I think the cybertruck announcement caught the attention of a lot of "normal" people.

I remember years ago reading that although the "please don't squeeze the charmin" commercials were annoying, people remembered the name. Maybe a really weird truck announcement works the same.

Or it could be that "normal" people are starting to see model 3s showing up (outside of california for once)

I'd never seen that before and it's brilliant. Advertising isn't meant to be unobtrusive and transparent like software. It needs to be attention-grabbing and memorable in order to work.

Stocks sometimes aren't rational. It's just speculation/hype.

Most people are not very good at looking into the future. People are may be making rational decisions off of poor estimations (both up and down).

I agree with your statement, but maybe it's more accurate to say its speculation/hype about future return on investment. I think the real question (for me at least) is whether that return on investment is in share price increase (like Amazon) or in dividends and the value of assets (like the majority of other public companies).

India and China have to go full electric or global warming will be insane.

You're talking 3 billion people that all want cars.

Same here. Perhaps it's Chinese investors getting on the bandwagon, perhaps the short squeeze, or even an attempt by someone to get a significant chunk of Tesla for strategic reasons. It's futile to try to come up with any scenario where this could be considered a reasonable valuation by traditional standards, I tried.

My understanding is the market's optimism when the Shanghai completed in record time and began assembling for the Chinese market. But then again, with the coronavirus fears in China, both production and sales could very well be negatively impacted, yet that's not really reflected in the market.

Short squeeze I think.

this. It's still one of the most, if not the most shorted stock. As long as people keep shorting, the squeezes will keep propelling the stock higher, regardless of fundamentals. 1 week ago you might think it's overvalued and the meltup's run its course, but look where it's at AH today.

There still is billions of dollars short this company. Not that much has changed

> Not that much has changed

The short interest has declined from a high of ~44 million shares in mid-May last year to about 25 million shares currently, which is currently 18.7% of float.

[1] - https://twitter.com/ihors3/status/1222630157535588352/photo/...

It’s inexplicable. They aren’t even beating the estimates they have put in front of them.

Shorts got squeezed?


Model Y production ramp started in January, ahead of schedule. Deliveries expected to start before the end of Q1. Exciting stuff!

I was happy to see they'd increased range to 315 miles.

That's 507 km, which is starting to become an acceptable range in countries where you tend to travel longer distances.

The model 3 and S already have that range or more. You'll only get ~350km out of that at highway speeds though. The supercharger network makes it perfectly reasonable but it's not yet ideal. Other EVs tend to be far behind still. Most can't charge fast enough and even the ones that do don't have enough charging infrastructure in most places. We're getting very close to mass adoption but will still need 5-10 years more depending on location to get enough battery improvement and charging deployment to make it a no-brainer to get the EV over the pretty good plugin-hybrid models that exist right now.

Depends on the definition of highway speeds a bit. At 60mph I hit the rated range pretty much dead on (500km/310mi). At 75mph it’s probably between 350 and 400km.

Generally agree about the charging infrastructure. Personally I have fun trying to find where I can connect to the grid but I don’t think everyone would call that fun...

Round numbers: I think when there are ~2-3x the number of supercharger locations (not chargers but locations), it will basically be at parity with the convenience of gas. I believe range (500km @ 60mph) is already acceptable and if the number of locations is increased it will be even less of an issue. Just my $.02

Sure, given the context being in kilometers instead of miles I was using the ~130km/h that is common in a lot of European highways. From experience that gets you less than 350, particularly in winter. Some places (and drivers) are quite a bit faster still. US highways have fairly low speed limits and so range is less of an issue.

True parity with gas will take a much longer time. My previous diesel car had almost 4 times the range and could be refueled in 5 minutes. But there are other advantages that cover for that. Which is why my estimate is that 5-10 years depending on location is what will be needed for both the offer of models and the charging infrastructure to all be in place.

As a counter point, my current gas powered car only gets about 240mi/385km in range. And my car before that was 300mi/480km. So compared to that a 300mi range is perfectly adequate.

OTOH, they killed the RWD version. That likely would have had an even longer range, and certainly had a lower cost.

I used to think the same as you but it's not exactly what you think. The front motor is a bit smaller than rear so at cruising speeds on the highway, the rear motor disengages and the front can handle the speed while using less KW even with the added weight of the extra motor.

That has been true in the past with the S & X, but the motors on the 3 (and presumably Y) are a bit different. The RWD 3 was slightly more efficient than the AWD.

The Y will mostly cannibalize 3 sales, but will be good for a few quarters’ pop.

That Model A is going to cannibalize Model T sales, but it will be good for a few quarters' pop. Ford is doomed.

iPad started cannibalizing Macbook sales ten years ago. Apple is doomed, we'll see them fail RealSoonNow™️.

Ford was making a profit when the Model T existed. Tesla isn't.

False. Tesla earned a net and operating profit this quarter and last and looks set to continue the trend toward consistent profitability as they roll out their more profitable position in China. They've reached a sales scale where their operating income is annualizing to well over a billion dollars per year. Operating income was $359 million this quarter, and $620 million combined for the two most recent quarters. Free cash flow for the quarter was a billion dollars. They're sitting on $6.2 billion in cash now.

While you can easily make a good argument that Tesla will be profitable from now on based on extrapolation, given that they lost money ($862 million) in 2019 your declaration of "False." like it's an open and shut case is misplaced (and rude).

Parent cherry picked the facts for his argument, you cherry picked yours, neither of you have objective truth on your side. FWIW, I lean towards your argument more than theirs.

You're quoting non-GAAP numbers. It isn't an achievement to make money just by paying people in stock. Cash flow is also inflated by the use of long-term leases.

Tesla lost $800 million this year. That should be the focus.

I think so too, and I think they know that. It sounds like they are "only" planning to ramp US production from the current rate of ~400k total units per year to just over 500k per year. Of course, with China coming online, that still leaves a net increase.

It sounds like they may have backed away from some of the more extreme high end projections for the Y. It looks like worldwide production may double within 1-2 years, though.

According to their own figures, they have capacity to produce 650K, but only project 500K deliveries next year. Why is that?

They appear to be giving conservative figures this time around.

On which? Production or delivery?

Yes to both.

Error margin

That's quite an error margin for a $100 billion company.

I agree. They have been steadily decreasing the amount of guidance that they give out each quarter and this is another part of that.

I don't particularly like it.

It will ~cannibalize~ eat Toyota Rav 4 and Ford Escape sales as well.

I thought the Y was most similar to the X? Am I missing something?

> I thought the Y was most similar to the X?

IMO, all Tesla vehicles (so far) are pretty similar to each other.

On the one hand, Y is a less expensive X.

On the other hand, Y is a bigger 3 with a hatch back.

I'm not an expert in automotive consumer behavior, but I have to imagine that Y will cannibalize some amount of 3 sales. I also don't think that will matter that much - there is so much demand for Tesla vehicles that they are battery limited.

Also, Ys are more expensive, meaning an increased bottomline if they really displace 3s.

Increasing the top line, not necessarily bottom line. There is nothing to indicate that Ys have better margins than 3s.

There's some evidence: pretty much same platform as 3 should imply roughly the same cost structure for the Y. That+higher price implies higher margin. It would be akin to Performance Model 3 in that sense.

There is still more material in the Y than the 3. That doesn't seem to indicate better margins

But they might have reduced the number of stamped parts by an order of magnitude, improved wiring in a revolutionary way (there’s a patent by Tesla for that), MUCH less R&D and production setup than model 3 (they won’t make all the mistakes twice),... and let’s not forget economies of scale, they will produce more Y than 3.

All of this is theoretical and we don't have any real data on how it will affect gross margins. When the car is larger, many things are going to be more costly, like painting, which takes up a significant part of automotive margins.

> I thought the Y was most similar to the X? Am I missing something?

The Y is a crossover SUV like the X, but based off the Model 3 platform/chassis; what I'm really surprised by is the notion that they will build these in Fremont!

I actually interviewed at the Fremont Factory in '17 in logistics, the factory was a at Max capacity even with the low 3 numbers being produced. In 18-19 they hit their stride and started to use auxiliary lots:


They stated that at full capacity and with a successful ramp up 3 would overwhelm their storage capacity, so turn around was critical with little to margin for error; if anyone remembers all the Tesla employee parking lots were full and created a parking nightmare. Well, the outbound deliveries were equally bad. The shutdowns and refitting of the assembly lines showed just how drastic things were for a while.

They overcame this and I'm glad they did as they are now offering the 35k base model 3 as was announced in the beginning which was the 'game changer,' but I'm also glad I turned down the offer in the end, especially because they don't seem to be utilizing their Sparks and Shanghai factory for this model which would probably be best as S/X/3 are still being made in Fremont. Then again that stock price leap to 600 is pretty nice, just not worth the stress induced heart attack or stroke at 40.

I wonder where Semi/Roadster II/Cybertruck are being made then. I honestly thought they'd consider doing the Roadster II at Fremont for that extra 'Made in California' cache to match its price tag, but not the Y.

Its pretty in between as far as size goes. But it shares many parts with the 3 and most importantly is much closer to the 3 on price. The 3 Dual Motor Long Range is about $48k and the Y is $50k. The X Dual Motor Long Range is $80k.

So if it will probably take some sales from both the 3 and X. But X sales aren't very significant compared to 3 sales anyway.

In terms of margin the X sales are still significant. S/X sales are still the only thing that provides any consistent profit to Tesla.

It's similar to a 3 and the X. Basically, the question is whether there are a large number of customers not buying Tesla's because an affordable model without 7 seats doesn't exist. From there, you have to question how many people who are currently deciding on 3s would decide to buy Ys.

If that was a bad thing, no auto manufacturer would have more than one model.

Congrats to the whole Tesla team + SpaceX. Crushing things. It's taken a long time, but it's all starting to pay off.

For a while there it seemed like Musk would die from stress. He just looked like he's hanging on by a thread, which he probably was. He seems far more relaxed now - if I were an investor (I'm not - the company metrics are completely detached from its valuation), I'd consider that to be a good sign.

I don't think investment thesis based on the body language of the CEO are great ways to place your money.

Given that if this particular CEO were to, like, physically die (or even just throw in the towel) _Tesla_ would immediately die, I challenge this view of the situation. Even in its current, more stable state, this is a good signal that things are going well - this is not something most people can fake, certainly not people "on the spectrum" like Elon.

I would never invest in any company which the bus factor is 1.

How many billions were made off of Amazon with a bus factor of 1?

I don’t think anyone who really understands Amazon would have ever claimed that they have a bus factor of 1. In fact, I don’t think much would have changed if Bezos retired a decade ago. There’s a reason there are two other Amazon CEOs.

Ex Amazon here (AWS). Pretty much agree with your statement. Bezos "replicated" his management style extensively, the executive team in charge of that is called the "S team" (S = Senior), and I agree that Bezos retiring would not affect the company too much.

Not really, no. I hope you don't have a large position in AMZN. It can only have a PE ratio of 82 because investors believe in the myth of Jeff Bezos.

Jeff Bezos could retire tomorrow and it would barely change the stock. Is it expensive? Sure, but it’s expensive because it has a wide variety of charismatic businesses, not Jeff Bezos.

Yeah it's easy to forget how early Model 3 production days were still "Tesla won't survive" for most people. What a change.

Is it? They still lost close to $800 million this last year. And the company is growing slower than it ever was.

If they have a full year of profitability will you agree?

This is non-GAAP.

Yeah, I’ll definitely consider changing my mind. 2020 seems like a hard year for them to pull that off

what SpaceX has to do with Tesla's financial results?

I believe they still own SolarCity, now Tesla bonds, technically.

Part of Musk's "get your ass to Mars" bundle.

I think they should buy this company [0] and sell the vehicle at cost (temporarily) to capture the lowest end of the market, too. [Only half kidding, I was sad to see this happen and couldn't find anywhere else to post about it in my limited free time.]

[0] https://www.treehugger.com/bikes/want-buy-high-tech-low-carb...

Tesla's entire schtick is that they sell good cars that happen to be electric, instead of the deliberately wacky science project offerings that most companies try to sell.

Those things basically look like a rehash of the Twike, which has been around since the 80s: https://en.wikipedia.org/wiki/Twike

Sure, but if you could convince people to drive around in wacky science project offerings, it would be a hell of a lot cheaper, better for the environment, safer, and healthier.

I'm not sure it'd be any of those things, apart from 'better for the environment'. The definition of 'good car' is largely defined by value for money, safety and healthiness for the occupants.

For the same reason apple doesn't have a cheap, low end iPhone.

Tesla cars are nice cars. Polluting that brand with a cheap bicycle is a mistake IMO.

How profoundly silly!

Year-over-year revenue flat, year-over-year GAAP income down 25% on 20k more units delivered. Hard to understand...

Tesla is at breakeven. Marginally profitable for 2019, but R&D was cut by more than the difference between last year's loss and this year's profit. Still $26 billion in long term debt, up a bit from last year. Not clear on the terms on that. They had to agree to some awful terms about two years ago, but dodged the bullet on some of those.

Read the numbers on page 21-22 first, of course.

R&D was at $356 million in Q4 18 and $345 million in Q4 19. For the year, it moved from 1.4 billion in 18 to just over 1.3 billion in 19. I don't see how these minor differences were a major factor.

R&D hasn't been up to depreciation for a year.

They weren't profitable in 2019 though.

It's non-GAAP profit, which is not very useful metrics. GAAP they lost over $800M last year.

Way to move the goalpost.

Non GAAP accounting is literally the definition of moving the goalpost.

When is non-GAAP accounting ever the goalpost?

As a TSLA ahareholder I'm enjoying this ride but am honestly equally puzzled. The numbers are not good. On a related note: FB has been profitable for years, is growing earnings each year by more than 20% and just beat wall street expectations, which wall street rewards with -6% on after-markets trading. Huh?!

Facebook is getting punished based on expectations. Investors were looking for indications of faster growth and better margins. Expenses skyrocketed 51% in 2019, while sales growth is running closer to half that and looks permanently trapped under 30%, which is combining to crush their profit margin. The market never likes to see a company like Facebook lose margin so rapidly. Their margin fell from 45% to 34% for 2018 vs 2019. Investors are going to want to see that stop falling sooner rather than later.

After the big FB rally, the report was mostly underwhelming.

Entirely different expectations on the shoulders of FB vs Tesla at this juncture of their operational histories.

In the document "GAAP gross profit of $4.1B remained essentially flat in 2019 compared to 2018. Volume growth and successful cost reduction efforts were offset by normalization of ASP, mix shift towards Model 3 and a higher lease mix."

It’s a deteriorating margin mix; discounts to move metal.

I guess the hard to understand part is: how does a $50B company that is growing revenue at 1% annually more than double its market cap in 3 months. It's insane (ludicrous?)!

> I guess the hard to understand part is: how does a $50B company that is growing revenue at 1% annually more than double its market cap in 3 months.

This is just my opinion:

The way people were valuing Tesla is a massively valuable stock with a high potential of blowing up.

From the looks of things, Tesla has crossed into prolonged profitability. It's not a huge increase in revenue, but it is a big decrease in the chance of bankruptcy. Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down.

The bull case (robo-taxis, etc.) is still there, but the chance of Tesla going bankrupt is much lower than 1 year ago, so the stock has shot up.

> From the looks of things, Tesla has crossed into prolonged profitability

How? They lost $800 million in 2019.

> Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down.

They still have increasing bills and huge liabilities. Acting like they have no risks if they don't raise money is crazy.

> They lost $800 million in 2019.

You're not wrong.

Of course the counterpoint is that they were profitable both the 3rd and 4th quarter.

> They still have increasing bills and huge liabilities.

That is true. However, some of their debt will convert into equity as long as the stock price remains where it is.

More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not.

It's absurdly volatile. There's also a good chance that they won't win the race to level 5 autonomy.

All I'm saying is: enough people believe in the upside and think the downside has been diminished sufficiently to drive up the price to where it is.

Maybe they're wrong. Maybe they're right. I certainly don't know.

> Of course the counterpoint is that they were profitable both the 3rd and 4th quarter.

Less so than last year. Why do we believe this is sustainable over a full year?

> More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not.

There seem to be people who do, and I want to insure that they don't lose their whole retirement savings chasing that.

They’re growing while the market for legacy automakers is shrinking. Everyone else is tapped out, while there’s still a whole lot of people left on Earth who’ll buy Tesla products (and you’ll notice Tesla keeps changing where the production firehose is pointed based on local incentives maximizing sales).

Heck, Fiat has to hand over almost $2B to Tesla just to be permitted to sell cars in Europe because they have little to no low or zero emissions vehicles to sell.

As an investor desperate for returns, do you invest in the past or the future?

>They’re growing while the market for legacy automakers is shrinking.

Do you have data for this?

Tesla had, essentially zero growth in the US in 2019, which is where it sells half of its cars. There are many companies that had higher growth than that, including Volvo, which grew 10% in the US. LandRover sold 125k units in the US in 2019, which is far more than the Model S + X (its competitors).

So, I'm not sure where you get the idea that everyone else is shrinking while Tesla is growing. Some companies might be, but some are growing faster than Tesla. These are not mysteries; there is data out there.

Tesla delivered ~250k cars in 2018 and ~360k cars in 2019. In the 4th quarter, they had a run rate of >400k, and it is expected that 2020 will produce at least 500k. I'm purely focused on why people see it as a growth story, despite some numbers implying otherwise.

Its a drop in the bucket compared to the rest of the industry, so I wouldn't expect it to be possible to tease out the impact on other manufacturers in a reliable way.

The growth will come from China, where there's still plenty of EV incentives by the government. Growth in US will depend on new EV incentives IMO

Why is that a bull thesis though? If the growth is that dependent on subsidies?

China is one of the biggest markets in the world and is committed to the rapid deployment of EVs.

Unlike the US, those subsides will be around for a while. China also gave Tesla very favorable loan terms for the China Gigafactory.

> Unlike the US, those subsides will be around for a while.

Why? That doesn't seem like a stable investment thesis.

> China also gave Tesla very favorable loan terms for the China Gigafactory.

And if Tesla doesn't meet a number of targets the Chinese government takes complete ownership of the factory. They didn't give the good financing terms out of goodwill. Tesla entered an incredibly risky proposition with its Chinese factory.

You asked what the bill thesis is. Bull thesis is there’s a ton of growth ahead for Tesla. Market reaction seems to agree.

If one disagrees with the market, short TSLA. Hasn’t worked out that well for those starting with relatively large amounts of capital, but maybe shorts are still right! Vote with your dollars.

Maybe they agree, but the last two quarters should make anyone skeptical. For a company at the multiple it is it post negative to zero YoY growth for two quarters is crazy

What I do not understand is, what the company performance has anything to do with its stock performance? It's not like they are paying dividends, right?

Totally unrelated markets, it's no different than the crypto coin markets. Even the volatility is similar.

Besides that, Tesla has a rockstar CEO. He can achieve things that conventional companies can't even dream of. If he needs money he can do a publicity stunt and collect the money. It's a cult and the members believe in the cause and the members are quite affluent.

> What I do not understand is, what the company performance has anything to do with its stock performance? It's not like they are paying dividends, right?

Stocks are valued at the long term discounted value of their future cash flows. Are the markets always accurate and rational? No, but that's how they are intended to be valued.

Is there a central authority that makes the calculation and assigns the right value? AFAIK, there's no such thing and the price is determined by the amount that a buyer agrees to pay. It has nothing to do with company performance. The company performance can result in an acquisition, bankruptcy or shares sales/buybacks though, but until that happens nobody knows.

> It has nothing to do with company performance.

If that's true then no one would ever invest in stocks.

Why wouldn't they?


Because investing is entirely about determining future value?

of what? Stock? If so, the company performance is irrelevant as people might buy the stock for any reason(some might consider the company performance too, of course).

No? Plenty of people buy stocks based on the financial performance of the company, and given that the majority of capital invested in stocks are large institutional investors, the vast majority of money invested in stocks are from people who care about financial performance

and plenty of people but stocks on their horoscope

Not a meaningful amount of capital though.

The idea here is that stock prices are determined by the people who want to pay for that stock. It's not a function of the company's operational success.

What you are saying is circular reasoning, you essentially say that company performance matter because many people think that is should matter. There's no causality relationship here, essentially people think that matters because other people thing that matters.

No. Businesses are eventually valued by the capital they can return. Otherwise numbers are all meaningless

Scaling is costly?

Can you explain how that affects revenue?

Did revenue go down???

Are they scaling? Gross margin is down YoY? That's the exact opposite of scaling.

More discounts, marketing expenses, and spending on the Chinese factory.

They guided for $2.5 billion in capex, and only spent $1.3 billion.

Ignorant question: if they spent only ~1/2 their projected capex, how did that happen?

Did they get a bunch of great deals on land/machinery/etc?

Or did they not build all the things they intended at the time they gave that guidance?

Their guidance for US production is relatively low compared to some of their guidance in the past. I'm guessing this means sluggish demand for the Model Y and a more cost-conservative approach to launching the product.

Right, but we're not talking about quarterly guidance, we're talking about YoY comparisons.

Where is the Chinese factory expenses on their balance sheet?

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