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dennis
Model S Plaid
All tech companies report R&D and SG&A as operating expenses, not cost of goods. For some reason auto companies report R&D in cost of goods. I used to think this was because they capitalized the R&D expense and amortized it over units sold as part of COGS. After doing a little research it looks like they expense all R&D in the current period in COGS. That doesn't make sense to me since the bulk of development in a specific period is going to products that aren't shipping yet, so why include it in COGS?
Since my background is not in finance, can anyone here who did this stuff for a career please confirm this? (I thought of asking @Donn Bailey over a SA but changed my mind.)
adiggs
Well-Known Member
I thought there were 10 kinds of people in the world. Those that do math in binary and those that don't.
Now I'm confused.
They do lose that much money per each model 3 they sell right now.
Tesla to break even on Model 3 at $41,000, says UBS based on cost analysis of Chevy Bolt EV
Now I cannot guarantee they will continue to lose 6k per each car in 2020, which GF1 was expected to complete. Battery prices will be bought down significantly so as the cost to produce each car.
As of now, Tesla might break even if the buyer decides to get tons of extra features, such as ap2, big rims, heated leather seat etc
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It shouldn't be a surprise that they run into problems. After Tesla saw the massive interest in the model 3 and with it the opportunity for even more growth than expected, they had a choice to make, do we rush into massive production and fix the problems that come with it on the fly or let's do it more conservative way with less hickups.
This is not 100% consistent. Most auto companies are not vertically integrated, so much R&D is done by Tier One suppliers. (LG with Bolt is a good example). In those cases R&D becomes part of COGS by definition. When evaluating the specific topic of GM, including R&D tends to equalize the data. Still we have R&D definitional questions too. Some will include a new factory, for example, others will not. How to change compare apples to apples is always less than perfect.All tech companies report R&D and SG&A as operating expenses, not cost of goods. For some reason auto companies report R&D in cost of goods. I used to think this was because they capitalized the R&D expense and amortized it over units sold as part of COGS. After doing a little research it looks like they expense all R&D in the current period in COGS. That doesn't make sense to me since the bulk of development in a specific period is going to products that aren't shipping yet, so why include it in COGS?
Since my background is not in finance, can anyone here who did this stuff for a career please confirm this? (I thought of asking @Donn Bailey over a SA but changed my mind.)
It’s been a few years, but I spent several years doing financial risk analysis for auto and aerospace industries. We used to go line item by line item, note by note, searching for discrepancies. I am not quite that detailed anymore.
The only regularly reliable way to solve this issue is to examine every automaker parts sourcing, factory practices (third parties build lots of vehicles), and distinctions in platform sourcing and major component sourcing.
R&D vs COGS classification issues are typically greatest (often not disclosed directly in financial reporting)for:
Platforms- nearly all manufacturers have some developed inside others bought elsewhere, others developed jointly.
Engines- Even intra-company this is a nightmare. VAG is typical with the same parts, similar design from Polo to Porsche to Lamborghini and Bugatti. When internal design is nearly the same R&D expenses shift to where they are least consequential.
HVAC/sound/sensors/suspension- nearly always totally outsourced
Differing allocation practices and business practices make precise comparisons harder. In periods of high growth the least vertically integrated have the best GM while in steady state it matters less. Tesla is among the most vertically integrated, Porsche and Ferrari among the least.
This may not resolve the issue, but I hope it explains it somewhat.
For us it is slightly more difficult to compare because Tesla most follows tech reporting habits and the others do not. Lots of the FUD comes from not understanding Tesla financial,reports.
Reciprocity
Active Member
Even if that were true, it would be $4,000 less then GM. Even if that were true, Tesla can make up that difference in Zev sales and data acquired as well as a small amount in charging per vehicle. GM cannot do any of those things with the Chevy bolt.
I have no idea where you got that figure, but I'm going to assume you made it up. It's pretty hard to determine without knowing actual costs.
Reciprocity
Active Member
I’ll just point out that MY joke goes to 11.
JRP3
Hyperactive Member
No they don't, even using the link you provided:
Since they are not selling the $35K version of the Model 3 right now, nor in the near future, your statement is completely false, as expected.
On your previous post, didn't you said you were going to block me or something? I figured, you are learning quite alot from me so you decided not to block me. This can only be the obvious reason.
Why wouldn't they be selling the $35K model? The car itself is $35K (starting price) with most of the features locked and it can be unlocked at any time once you pay extra $$. Buying extra features are not required and who is going to stop me from not buying it? Stop your flattering yourself that you think you are the king of Tesla knowledge. haha
Model 3
And also, EM said the bare bone version cost $35K unless he's trying to bait buyers in for something else.
JRP3
Hyperactive Member
I'm having a bit of fun pointing out your stupidity. Soon I'll be bored and you'll disappear.
Proving your ignorance once again, Tesla is currently only selling the larger battery long range model. Guess what? It costs more than $35K. haha
See above.
dc_h
Active Member
There are some people who have posted on this forum who seem like paid provocateurs. Schonelucht is not one of them. Differences of opinion are different understandings or interpretations of technical processes are NOT lying. There is plenty of BS out there, but please show some difference and humility when having a discussion. Too many people seem to have forgotten the difference between an opinion, and interpretation of fact/s and facts themselves. It is also ironic when people with common values throw each other under a bus when they hear something they don't like. I know this is the internet and respect is not the norm, but TMC generally has a higher standard.
I see no sources that indicates they only sell longer range battery version or that they skipped the $35K version.
If it is true then EM is somewhat of a con-artist or not a straight talker. also, you can be his messenger. haha
He made countless promises that he couldnt kept. things like driving demonstration from LA to NY hands-free, delay on model 3 production in a few occasions, delay on semi event.
They're currently only selling the long range version with premium interior. Cheaper versions will become available when production ramps up. Probably December at the earliest.
Reciprocity
Active Member
Sweet, low key fud. The fact is if Tesla had come out with the $35k version it probably would have been better because no one really wants that version and so no one would have an issue with delays.
Model 3 info.com tracks people's expectations and they expect to pay $50k+ on average. That tells me that almost no one wants the base model. I think $41k will be the minimum not the ASP.
dennis
Model S Plaid
I'm an owner who made a deposit early on Day One and the Delivery Estimator on mytesla currently shows Early 2018 for the standard battery.
I totally agree with what you are saying. You just picked the wrong target. I wasn't talking about @schonelucht; we were all commenting on an article. It's the author of that article who was *my* target.
[EDIT:] I guess this misunderstanding could have been avoided by more liberal use of the "quote" feature.
Paracelsus
Active Member
China just built a 250-acre solar farm shaped like a giant panda
I needed to see this today. It is so uplifting to see China having fun with its transition to Renewable Energy, and they are sending a message to world with it. After spending too much time this morning thinking about the US/Saudi campaign over the last 30 years to conquer every nation standing in their way to build a pipeline from the Europe to India and pay for it with the Aramco IPO, I might have preferred that China designed the giant Panda to be giving the Google Earth satellites the finger.
Why does the US really fear China? Because while we have spent trillions of dollars expanding a campaign over 3 decades that has cost millions of lives and completely disrupted the Middle East and now Europe for fossil fuel interests, China has quietly reinvested a similar amount of money into a massive transition to renewable energy without 'Pottery Barn' foreign obligations. And the US citizens shopping at Walmart paid for it. What an irony!!!! While our US Government has been passing legislation to protect our Billionaire-class since the first Gulf-War, the Walton Family of Walmart was unknowingly funding the World's largest movement away from fossil fuels in China and starting a Renewable Energy Revolution. I love it!
What a train-wreck. And it keeps getting worse. Now after 30+ years of failed foreign policy led by our fossil fuel-hungry interests, our government is actually discussing the need to implement an import tariff on Chinese solar panels to help justify our horrific investments and stranded assets. All this as the rest of the world is following China's lead with a transition to renewables....Ha! Good luck getting every country from Europe to India to stop buying cheaper Chinese solar panels in an effort to financially justify the decades-long Aramco plan. No wonder the Panda is smiling.
I needed to see this today. It is so uplifting to see China having fun with its transition to Renewable Energy, and they are sending a message to world with it. After spending too much time this morning thinking about the US/Saudi campaign over the last 30 years to conquer every nation standing in their way to build a pipeline from the Europe to India and pay for it with the Aramco IPO, I might have preferred that China designed the giant Panda to be giving the Google Earth satellites the finger.
Why does the US really fear China? Because while we have spent trillions of dollars expanding a campaign over 3 decades that has cost millions of lives and completely disrupted the Middle East and now Europe for fossil fuel interests, China has quietly reinvested a similar amount of money into a massive transition to renewable energy without 'Pottery Barn' foreign obligations. And the US citizens shopping at Walmart paid for it. What an irony!!!! While our US Government has been passing legislation to protect our Billionaire-class since the first Gulf-War, the Walton Family of Walmart was unknowingly funding the World's largest movement away from fossil fuels in China and starting a Renewable Energy Revolution. I love it!
What a train-wreck. And it keeps getting worse. Now after 30+ years of failed foreign policy led by our fossil fuel-hungry interests, our government is actually discussing the need to implement an import tariff on Chinese solar panels to help justify our horrific investments and stranded assets. All this as the rest of the world is following China's lead with a transition to renewables....Ha! Good luck getting every country from Europe to India to stop buying cheaper Chinese solar panels in an effort to financially justify the decades-long Aramco plan. No wonder the Panda is smiling.
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You whooshed on his point entirely. As only cars with additional options are being sold at the moment, the money losing scenario you spelled out isn't happening.
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