Have you lost faith in Tesla?

[boombap]

Tesla need people like you who are quite happy with their massively inflated profit margins.

I never said I was happy, though as investor, margins aren’t a bad thing to me if they can still sell all the cars they can make at those margins, I just disagree with the characterisation that Tesla is the big bad wolf in this scenario when the reality is more complex than that.

 

[SalisburySam]

The main point of the 4680 is speed and scale of production which over time will lead to lower prices for consumers.

While I agree as to the purpose, I disagree with your result. I don’t see that as a given in any way. Much more likely it is a margin booster.

Version 1.0 of the cell is doing well even if not meeting some of the unrealistic expectations some people had. Raw materials in, cars out. Which will eliminate waste on things like profit for Panasonic or CATL.

Panasonic, CATL, others, all must be profitable or they no longer exist. That profit is not waste, but required.

Same for the castings, all about scale and speed of production, which over time will come down to the consumer…

Again, totally agree with the result for Tesla but disagree on consumer impact. There is no real reason to believe any savings will accrue to the customer but rather will be margin-boosters.

There seems to be an implicit link in your post connecting cost to price. Cost is the amount Producers pay to suppliers, utilities, employees, taxes, charitable contributions, etc. to produce a product. Price on the other hand is what a marketing person/team thinks the product can sell for in the quantities produced. This may or may not have anything to do with cost other than it needs to exceed that number. Shareholders of public companies, executive bonuses, stock exchange analysts, and any profit-sharing program all demand margins and no margin, regardless of how high, is ever enough.

 

[Js1977]

My M3 is by far the ugliest car I’ve ever owned, and the MY sinks to new depths of ugliness. I don’t buy cars for their looks.

Tesla need people like you who are quite happy with their massively inflated profit margins.

Very clever to remove yourself from the offensive remarks albeit. Unfortunately dumb enough to sink to the op's level! So why did you buy the M3? Why does it bother you that they make so much profit? at the end of the day the bigger margins are only due to their business model. If they were to bring their margins inline with the competition, there just would be no competition and potentially actually be faced with anti competition law.

 

[Drew57]

No, I never had much 'faith' to lose in the first place, even before purchasing my first car from them (their CEO has always made sure of that).

Tesla have a corporate attitude which seems arrogant and contemptuous & it must sound terrible but I will never risk my own credibility by recommending Tesla to anyone who asks.

Great cars but new buyer beware,

 

[boombap]

While I agree as to the purpose, I disagree with your result. I don’t see that as a given in any way. Much more likely it is a margin booster.

Let’s see who’s right!

Panasonic, CATL, others, all must be profitable or they no longer exist. That profit is not waste, but required.

You miss my point. Right now their profit forms part of the vehicle cost. Tesla producing the 4680 batteries on-site will eliminate a bunch of costs including the profit of its suppliers as well as transportation costs like the ridiculous Japan to Fremont shipping of 18650s and the Reno to Fremont haulage of the 2170s. If there isn’t a 3rd party involved then that extra profit is not required and just becomes rolled in to Tesla’s COGS, which will be dramatically lower with the dry battery electrode being far cheaper and less energy hungry to produce.

Again, totally agree with the result for Tesla but disagree on consumer impact. There is no real reason to believe any savings will accrue to the customer but rather will be margin-boosters.

Tesla themselves have this as their goal and they’ve stated on multiple occasions that they will lower prices when conditions allow. If you think they’re lying thats a different conversation.

here seems to be an implicit link in your post connecting cost to price. Cost is the amount Producers pay to suppliers, utilities, employees, taxes, charitable contributions, etc. to produce a product. Price on the other hand is what a marketing person/team thinks the product can sell for in the quantities produced. This may or may not have anything to do with cost other than it needs to exceed that number. Shareholders of public companies, executive bonuses, stock exchange analysts, and any profit-sharing program all demand margins and no margin, regardless of how high, is ever enough.

Yes, there is an explicit link between cost and price.
Right now Telsa is still supply constrained, they still only really have two fully operational factories and once the next two are ramped later this year those dynamics will begin to change. Once that happens they will cut costs and even Space Karen himself laid this out the other day saying that in the worst case scenario in a recession with weak demand it’d be better to sell lots of volume at low margin that less volume at high margin because it still helps Tesla scale to 20m vehicles per year in the medium to long term even if that has a short term hit to earnings.

 

[M1tch]

Nope.

Most things have issues / gripes and I had a few with my car. Overall nothing world ending and I don’t spend my time having faith in, or loosing faith in companies.

If I go for a meal, haircut, car service etc etc and it’s crap or not up to the mark I won’t use them again. Businesses need me, I don’t need them.

 

[Masklin]

I’d have more faith if they binned their obnoxious CEO, he is little more than an embarrassing liability these days.

 

[SalisburySam]

Let’s see who’s right!

And of course we shall. Not placing bets however either way.

You miss my point.

You’re right, I did. Thanks for the clarification.

Tesla themselves have this as their goal and they’ve stated on multiple occasions that they will lower prices when conditions allow. If you think they’re lying thats a different conversation.

OK, different convo then. Tesla has stated lots of goals, some of which have come to fruition, some have not. The key here are those “conditions.” I would posit they certainly include all elements of COGS, but I suggest those conditions also include whatever margin goals they have internally as well. Doubt that consumers will ever benefit from those “conditions.” Recent exception: money-off deals for taking inventory delivery before 1st of the year. But that’s an exception, not a goal achievement.

Yes, there is an explicit link between cost and price.

Really? The only explicit one I can point to is that Price needs to exceed Cost to succeed. Other than that, I see no link.

Right now Telsa is still supply constrained, they still only really have two fully operational factories and once the next two are ramped later this year those dynamics will begin to change. Once that happens they will cut costs and even Space Karen himself laid this out the other day saying that in the worst case scenario in a recession with weak demand it’d be better to sell lots of volume at low margin that less volume at high margin because it still helps Tesla scale to 20m vehicles per year in the medium to long term even if that has a short term hit to earnings.

Yeah, again, we’ll have to see. Huge amount of skepticism here, though I hope you’re the one who’s correct. Also again, no bets placed.

 

[Whyone]

.....My M3 is by far the ugliest car I’ve ever owned, and the MY sinks to new depths of ugliness.....

This!

 

[GRiLLA]

I didn’t say anything about Telsa making more profit.

If they’re going to bring prices down for consumers they need insanely high volume and both 4680s and castings achieve that through speed of production per vehicle and eliminating supply chain costs. In the short term while they integrate the new technologies, that’s expensive and the benefits won’t be immediately realised, in the long term it’ll dramatically reduce the price of the vehicles.

They haven’t even got any full size 4680 production lines underway yet beyond their Kato Road pilot line, give them time to get the process ramped and Berlin and Austin online. You can’t have it both ways where they invest in new features but you don’t see the point of things they’re implementing before they’ve had an impact. It took them 8 months to make their first million 4680 cells and they now at a run rate of a million in 8 days. They’ve done that in a little over 18 months going from making zero batteries to almost a million a week. That’s an insane level of progress even by the standards of the biggest doubters.

Well, they will need to bring down prices as the cars aren't likely to be competitive due to a lack of investment compared to other brands £50K EVs. I'm no expert in business growth but racing to the bottom doesn't seem like a good strategy for shareholders.

The point isn't that their price optimization is a bad thing but it's the only thing they are doing, the company isn't innovating enough in things that matter to customers and that's due to poor leadership over a number of years.

 

[Durzel]

I don't care about Tesla making even more profit per car, achieves nothing at all for me. Other manufacturers are delivering capabilities that customers want.

Added to which when has a profit seeking entity that lowers their production costs ever translated to cheaper prices for consumers?

All it may do is give Tesla more margin to play with, which may lower the retail price but it won’t be because of the tech, it’ll be because of competition and supply/demand dynamics.

Don’t know what planet some people are on when they think a capitalist entity is going to lower prices out of the goodness of their hearts.

 

[boombap]

Well, they will need to bring down prices as the cars aren't likely to be competitive due to a lack of investment compared to other brands £50K EVs. I'm no expert in business growth but racing to the bottom doesn't seem like a good strategy for shareholders.

The point isn't that their price optimization is a bad thing but it's the only thing they are doing, the company isn't innovating enough in things that matter to customers and that's due to poor leadership over a number of years.

Can I get some of what you’re smoking?

Lack of investment? Race to the bottom? That isn’t a thing that’s happening at all, quite the opposite. Just because they aren’t investing in the think you think they should be doesn’t mean there is no investment.

Tesla is pouring billions in to EVs and without exception has invested more than any other vehicle manufacturer in the industry which is why they have dramatically more EV capacity than literally any other manufacturer and no one has even come close to meeting them let alone beating them. Right now that’s the only thing that matters, who can make the most cars and Tesla is miles ahead of the pack, the next closest are BYD and VW and both are about half of Tesla‘s output. It’s not even close.

 

[Durzel]

In the case of Tesla a huge amount of your money is pure profit. They are acknowledged to have the biggest margins of just about any manufacturer in this price range and anyone who buys one now is paying through the nose. No way would I buy an M3 or MY at current prices.

A friend of mine has an MG4 which cost a lot less than half the price of my M3P. I wouldn’t say the interior of the MG is inferior to my M3, and at motorway speeds the MG is significantly quieter. It has its faults and, ultimately, the M3 is a better car, but is it worth more than twice as much? No way. Teslas are not good value for money. And that’s before you start shelling out for permanent beta FSD vapourware.

I just drove an MG4 40 miles to town and back in preference to driving my M3P (it’s absolutely pissing it down so the performance and Autopilot would be useless)

It’s a lovely car and pretty much unbeatable for the price. Everything feels more solid, it’s a lot quieter as you pointed out, etc. It has its quirks in terms of UI (largely remedied by CarPlay), as pretty much everything non-Tesla does, but I can’t find anything to seriously complain about, and it’s less than half the price of my car.

I would also strongly disagree about it being ugly, even though it’s subjective.

Anyway just my 2p.

 

[DaveNN]

I just drove an MG4 40 miles to town and back in preference to driving my M3P (it’s absolutely pissing it down so the performance and Autopilot would be useless)

It’s a lovely car and pretty much unbeatable for the price. Everything feels more solid, it’s a lot quieter as you pointed out, etc. It has its quirks in terms of UI (largely remedied by CarPlay), as pretty much everything non-Tesla does, but I can’t find anything to seriously complain about, and it’s less than half the price of my car.

I would also strongly disagree about it being ugly, even though it’s subjective.

Anyway just my 2p.

This is good to know.
I'm not due to change mine for sometime however.

 

[CWT3LR]

The MG is ugly and slow though.
Margin is a good thing, when they didn’t have good margins a couple years ago people were crowing about them going out of business and not being a real car company, if they do have strong margins people like you complain about value for money. You can please some of the people some of the time etc.

To my eyes, Teslas of all types have never been nice looking cars. The MG4 is a much better looking car than my Y, as is the Ioniq5. And I find that the performance of my Y is more than adequate, so for the sake of £30k would be happy to lose a second or two to 60mph. And with the Ioniq and the MG, you get decent equipment that works, like HUDs and USS.

 

[boombap]

To my eyes, Teslas of all types have never been nice looking cars. The MG4 is a much better looking car than my Y, as is the Ioniq5. And I find that the performance of my Y is more than adequate, so for the sake of £30k would be happy to lose a second or two to 60mph. And with the Ioniq and the MG, you get decent equipment that works, like HUDs and USS.

Different strokes for different folks I guess.

The USS on my 3 always annoyed me, I found the random beeping more distracting than actually useful and given I’ve only ever hit one car when parking without sensors, way back before I got my full licence, the whole brouhaha over that is just baffling to me. Haven’t smacked my USS-less Y on anything yet, I’ll promise to post here and eat crow if I do though. Same for the HUD, literally don’t care. It’s not unique to Telsa, had driving lessons in a Yaris with the speedo in the middle. I actually prefer the 3/Y approach to the S/X, especially for directions where everything is on the same screen instead of map in one place and next turn in another. I never got used to that.

 

[doats1]

I think Tesla will exist and be relevant for a while; certainly for as long I intend to own the car. That’s as far as my faith in Tesla stretches. It’s still got the best mix of performance and efficiency for me and those aspects stay regardless of faith.

Though I’m more likely to express my joy in owning an EV rather than a Tesla specifically these days.

My next car probably won’t be a Tesla, but that’s because I’ve never stuck with the same car maker and I see no compelling reason to break that trend.

 

[Type2]

Very clever to remove yourself from the offensive remarks albeit. Unfortunately dumb enough to sink to the op's level! So why did you buy the M3? Why does it bother you that they make so much profit? at the end of the day the bigger margins are only due to their business model. If they were to bring their margins inline with the competition, there just would be no competition and potentially actually be faced with anti competition law.

Oh, I would never sink that low

I bought an M3 because back in June 2019 there wasn’t much competition. Things are very different now and there are some fantastic cars out there with plenty more on the way. I’m looking forward to BYD establishing themselves in this country.

The huge profits bother me because I’d rather the money was in my bank account, not theirs.

 

[GRiLLA]

Can I get some of what you’re smoking?

Lack of investment? Race to the bottom? That isn’t a thing that’s happening at all, quite the opposite. Just because they aren’t investing in the think you think they should be doesn’t mean there is no investment.

Tesla is pouring billions in to EVs and without exception has invested more than any other vehicle manufacturer in the industry which is why they have dramatically more EV capacity than literally any other manufacturer and no one has even come close to meeting them let alone beating them. Right now that’s the only thing that matters, who can make the most cars and Tesla is miles ahead of the pack, the next closest are BYD and VW and both are about half of Tesla‘s output. It’s not even close.

I don't care about their factories; I'll buy the best product. 3 years ago that was clearly Tesla, but it's not nearly as clear right now and seems very unlikely to be Tesla in a few years.

 

[boombap]

I don't care about their factories; I'll buy the best product. 3 years ago that was clearly Tesla, but it's not nearly as clear right now and seems very unlikely to be Tesla in a few years.

Who has the best product in your opinion, and if you’d care to elaborate further, why?