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They are very good at math. They are good at what they do-- ignore the obvious profit train powered by increasing margins in the auto industry which is hard to do. And soon to come lithium extraction, otherwise known as margins equal to software companies.
Wall Street is only interested in churning shares so they can collect the vig. They keep telling people that they have too many shares of skyrocketing companies and need to decrease risk by buying more losers like Ford and GM. Some of us here have learned the hard way that the way to make money is to ignore the sharks and HODL. You and I see the future but all the sheep selling today just see what the MMs want them to see.
Not Advise just my observations after 30 years of being hosed by the market makers until I figured out that I'm not who they were concerned about.
If Tesla's share price appreciates at the following compounded percentages for 10 years, here's what $1,000,000 of TSLA would be worth in 10 years (we're not at the $2 table here, are we?) So the share appreciation doesn't even need to match the growth trajectory of the company for some significant gains. But it's ok if it does...
Well, I watched it. Total waste of time unless you know nothing about SpaceX and don't want to know anything beyond "Wow, these things are big." I suppose such stuff is useful for getting the news out there, but there's pretty much no technical content whatsoever. And Leno comes into it clearly knowing nothing at all.
So, if you want something with meat on its bones, watch the best Elon Musk interviews ever, as The Everyday Astronaut wanders around Starbase with Elon. In three parts. First one here:
Well, I watched it. Total waste of time unless you know nothing about SpaceX and don't want to know anything beyond "Wow, these things are big." I suppose such stuff is useful for getting the news out there, but there's pretty much no technical content whatsoever. And Leno comes into it clearly knowing nothing at all.
So, if you want something with meat on its bones, watch the best Elon Musk interviews ever, as The Everyday Astronaut wanders around Starbase with Elon. In three parts. First one here:
It is interesting if you look at the comments section, all 100% of the comments are about SpaceX/Musk, even though there were three other guests on this same video (one a comedian and another some car guys).. Of course I skipped those
Tesla R&D and SG&A Efficiency
Compared to competitors, Tesla is squeaking by with almost no bloat in operating expenses. This organization is incredibly lean.
With an annual R&D budget that added up to just $2.6 billion in 2021, Tesla is doing research and development in areas including but not limited to:
Autonomous driving
Artificial general intelligence and Optimus
Machine learning video training at massive scale
Battery day stuff
Vehicle systems (powertrain, interior, electronics, operating software, aerodynamics, etc.)
Semi
Cybertruck
Roadster
Robotaxi
Megapacks
Powerwalls
Solar roof
Advanced die casting and metallurgical engineering
Paint shop (fancy new one in Berlin)
In-house enterprise software
Autobidder
Virtual power plants
Becoming an electricity provider in Texas and the United Kingdom
Perpetual continuous improvement of a lot of little things, as shown by Munro teardowns
OTA software upgrades, including advanced active safety features like automatic seatbelt pre-tensioning and automatic injury probability minimization based on fleet data
Manufacturing engineering and next-generation factory design
$2.6 billion is a tiny amount of R&D spending compared to other big leading companies in the software and automotive sectors, and even compared to science and engineering companies with high market caps in general. The largest gap is with the other elite Big Tech companies. Tesla spends an order of magnitude less on R&D than Amazon, Alphabet, Meta, Microsoft and Apple. In 2021, Amazon spent $56 billion on R&D which is 22x more than Tesla spent, and Amazon spent $116 billion on SG&A, 26x more than Tesla. Amazon is the most extreme case but the others aren't too far behind.
The gap in SG&A is quite large as well, with Tesla 2x to 8x below competing automotive companies. This is even more incredible than the R&D gap if we consider how vertically integrated Tesla is, doing so much in house. Tesla owns, for example:
Sales & distribution, including trade-ins and used car sales
Service and customer support
Parts that would normally be done by suppliers like seats and the FSD computer
Charging network
Insurance
Tequila
Other automotive companies offload this overhead burden onto partners, yet they still spend a lot more than Tesla does. Granted, companies like Toyota currently sell a lot more cars than Tesla, but operating expenses should by definition be pretty invariant to the scale of production volume. I especially don't see any good excuse for Volkswagen Group to be blowing $36 billion on SG&A expenses.
The Big Tech companies spend 5x to 8x more on SG&A than Tesla, although it should be noted that they have different business models than Tesla. The exception is Amazon with its huge spending on distribution and fulfillment and AWS administration, which costs a staggering $116B per year for SG&A which is 26x more than Tesla.
This is where we see Tesla is saving big on areas like marketing, useless bureaucracy, and layers of management.
Apparently they still have a lot of work to do on R&D and SG&A to get more efficient though, as Elon says it's "embarrassingly high":
It is interesting if you look at the comments section, all 100% of the comments are about SpaceX/Musk, even though there were three other guests on this same video (one a comedian and another some car guys).. Of course I skipped those
Tony Hawk's Tesla swapped Stingray Corvette was pretty cool. Leno just scratched the surface compared to Tim Dodd's interviews, but Leno reaches a much broader audience. I appreciate that someone like Jay gives credit where credit is due.
In Australia BYD are using partner organisations for delivery and service.
That approach does pass some costs on to customers.
Sales, delivery and service in China is probably cheaper, and the ordering/delivery process may be similar to Tesla.
IMO the challenge for Chinese auto-makers is overseas delivery and service,
At first I thought the BYD approach was smart and would work well, but I am starting to see the limitations. The overseas partners can be of variable quality, and can add an additional layer of cost. There is also some dilution of the brand, and the customer experience.
It is under-appreciated how well the Tesla sales and delivery process works worldwide,
IMO a key consideration is that Tesla can start deliveries and service out of a single relatively small location in a city. Customers will drive some distance to pick up the car, and for longer distances cars can be delivered.
Just yesterday we picked up my wife's Model Y, it was about a 4-5 hour roundtrip but a more convenient location than my Model 3 pickup. Customers 1 hour north of where we live get cars delivered to their home/work.
Tesla staff told us the next step is a delivery and service location closer to our home, I suspect within 20-30 minutes drive. After that, those folks from 1 hour north will need to drive down and pick up their cars like everyone else.
Seems to me the expansion is happening at the right pace, and I always hoped Model Y would mean service and delivery close to home.
Why is BYD selling its Blade Battery to Tesla instead of keeping all the Blade Batteries to themselves? We thought of four possible answers. Two of the answers speak volumes about the prospects of BYD.
It is a well known ploy for someone to make intentionally incorrect, yet authoritative sounding, postings on an Internet forum in order to get others to do their homework for them. I've been messing with online forums since Usenet news in the 1980s. Have seen it many times. Yet even I fall for the ruse occasionally. Best to just rate the post with a "laugh" emoji, or nothing at all, and move on.
The gap in SG&A is quite large as well, with Tesla 2x to 8x below competing automotive companies. This is even more incredible than the R&D gap if we consider how vertically integrated Tesla is, doing so much in house. Tesla owns, for example:
Sales & distribution, including trade-ins and used car sales
Service and customer support
Parts that would normally be done by suppliers like seats and the FSD computer
Excellent points. And also keep in mind that Tesla's SG&A in 2021 had $1.3B in Stock Based Compensation with the CEO Award expense accounting for $0.9B of the $1.3B. Ford for example only had $0.3B in Stock Compensation in 2021.
