Debt gets serviced before shareholders.
Weird thing is the amount of debt. Doesn't Rivian have
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
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Weird thing is the amount of debt. Doesn't Rivian have
Your claim that they are on the steep part of the demand curve is completely arbitrary. You don’t have the data to back that up.
Either way this analysis is incomplete as you are ignoring general increased demand for EVs as well as sizable subsidies from various governments.
It can't be good.
The fact they are raising so little and this early would be a serious concern to me if I were a shareholder (thankfully, I'm not). It will be interesting to find out the terms of the debt offering. Perhaps they are trying to get an indication of appetite as they talk with Amazon about long term financing options.
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I give you credit for using the supply and demand curves to attempt to explain price movements. However, you have no idea how interest rate changes moved the demand curve. Was it a parallel move? Did the shape of the curve change? What is the demand function with respect to interest rates? This is the kind of information that Tesla hires economists to estimate. I tend to assume that their economists know best what the price elasticity of demand is and what the optimal price-quantity trade-off looks like.
What I also agree with you on is that high interest rates are not good for demand. That said, people are still going to buy new cars and interest rates impact all automakers. Even though we don’t know if Tesla’s production cost improvements and quantity will make up for the lower purchase price, improving market share is only going to help Tesla increase charging infrastructure density and make their products more and more desirable while purchases keep going down. Short term profits may be impacted, but the long term vision is intact.
Gigapress
Trying to be less wrong
Good point. However the other issue with your projection of QoQ decline is relying upon data from just four countries that happen to do daily registration updates as being precisely representative of the entire continent. With data so granular there’s a lot of room for logistics lumpiness to skew the overall trend.
We do know that Giga Berlin is producing cars at a higher rate than ever in Q1 and Giga Shanghai is still cranking out cars at full speed. So what’s your explanation of that? Are the cars from these two factories that are allocated to Europe not going to get sold?
Tesla did not experience a “small improvement in demand” after the price drops, unless you’re asserting that management is flat-out lying to shareholders. Listen to the comments on the Q4 earnings call and Investor Day. Look at how prospective customers stampeded Tesla showrooms and the spike in Google search interest too. Orders exploded after the price drop and now are far in excess of the production rate. In response, Tesla started tweaking the prices back up.
For example:
Elon Musk: “The most common question we've been getting from investors is about demand. Thus far -- so I want to put that concern to rest. Thus far in January, we've seen the strongest orders year-to-date than ever in our history. We currently are seeing orders at almost twice the rate of production. So I mean, that -- it's hard to say whether that will continue twice the rate of production, but the orders are high. And we've actually raised the Model Y price a little bit in response to that. So we think demand will be good despite probably a contraction in the automotive market as a whole. So basically, price really matters. I think there's just a vast number of people that want to buy a Tesla car but can't afford it.”
Tom Zhu: “…earlier this year we had a price adjustment. After that we generated huge demand, more than we can produce, really, and as Elon said, as long as you’re offering a product value at an affordable price you don’t have to worry about demand.”
Elon Musk: “The desire for people to own a Tesla is extremely high. The limiting factor is their ability to pay for a Tesla, not do they want a Tesla…For the vast majority of people it is affordability-driven…One of the things we weren’t sure about was the price elasticity of demand for Teslas. So, like, as we lower the price how much does demand increase? And we found that even small changes in the price have a big effect on demand. Very big. So that was a good thing to learn. … I mean, demand for our vehicles in terms of desire to own them may as well be infinite; it’s indistinguishable from infinite at this point…So as you make the car more affordable, we’ll have demand go crazy basically. … I cannot emphasize enough, the hard part is building the cars.”
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Todd Burch
14-Year Member
Patience, they’re still ramping.
i gave a disagree because of this "Tesla hires economists" ... Elon is probably the only economist at Tesla
Elon " I cannot emphasize enough, the hard part is building the cars.” so no need for economists
That's true. Even though I would argue that while there's no economist at Tesla, there must be others who have an economist's skills in forecasting supply and measuring market opportunity. Tesla is such a bizarre company. I love it.
KBF
Model X owner (formerly Cdn Signature Model S)
Yes, and to put a fine point on this - Tesla has plenty of room to drop prices even more, even at present levels of efficiency. Their presentation of reducing manufacturing costs means gives them even more capacity to generate demand as they ramp.
It's not true for other auto makers because they already have been working with razer-thin or non-existent margins, so for them demand is not 'indistinguishable from infinite" > they've maxed out their pricing lever, and I haven't heard of any plans to increase efficiencies from any of them - GM's idea of generating demand is paying Netflix money to put their cars on shows...
The constant drive for Tesla to improve when they're already way ahead of competitor's manufacturing efficiency is why I can't help but keep buying shares. The others don't seem to get it.
Edit: and unless we understand this concept we can't evaluate TSLA properly. Pricing = demand lever. Many seem to forget that Tesla raised prices so that they could decrease demand (avoid excessive wait times - not just for the customers' sake, but for the sake of administration and being able to respond to fluctuations in COGS, for example). Tesla is cutting prices not because they're desperate, but because they're carefully managing demand. They've also tweaked a couple of models up recently, too - it's amazing how they can affect consumers' perceptions of 'a good deal' without resorting to advertising.
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Bet TSLA
Active Member
Elon is no more an economist than Zach is an engineer. Having some undergraduate schooling in a field does not make you a practitioner.
Knightshade
Well-Known Member
Master of coin has a degree in economics from the Wharton School
He also has a degree in mechanical engineering and applied mechanics from Penn
Kind of brings up a curious thought. It is going to take a significant amount of time and money for legacy auto to change their processes over to producing EVs. It is also going to take a significant amount of time and effort for them to adopt more effective manufacturing techniques.
It seems extremely clear to me that some of these companies are not going to make it.
If you think of their runway as: Current Assets + Available Credit + Future cashflows from ICE production
Part of this problem is that last number varies greatly based on how long it takes for EVs to replace ICE. If the ICE profit tap turns off, the runway ends much quicker.
How many companies will simply run out of resources to invest into this transition and never become profitable? Do any legacy auto companies have the resources to survive this transition?
Hyundai? Maybe a couple brands which are smaller and command a larger premium like BMW? Just feels to me like the amount of work to be done for automakers is getting much larger even the ones which have a bit of progress on migrating to EVs.
Guys I feel like buying another Tesla again even if I don’t need one right now. My brother-in-law just bought a Model Y after accumulating his money for 4 years. His father bought a Model Y. Just had the Tesla tech came to replace the broken passenger trim in the garage at work today. He texted me because he received the part 1 week earlier and asked me if he could pass today. I set up this service call in literally 30 seconds on the app, the mobile tech arrived 1 week late, texted me if I could unlock the car, he changed the trim, sent me a photo. Didn’t even have to go see him and continued working while the job was done. People do not understand how this is the greatest company ever. There is no service in any other company offering the same quality of service. Any problem I had with them was solved with wasting so few of my time. I am having a Polestar 2 test drive tomorrow on the way to the airport just to compare how mediocre other companies are.
Just can’t wait to buy the Cybertruck, already.
Just can’t wait to buy the Cybertruck, already.
I've finally caught up with the thread post Investor Day. I had a careful look back through the thread and couldn't see this video posted anywhere. Apologies if I missed it.
This is a video tour of the QC, GA and BIW sections of the Model Y assembly line at Gigagfactory Shanghai. It was posted by New China TV about a week ago and is in English. It provides a really good close up look at the processes within the Shanghai factory. I thought it was also a useful reference point to compare current Tesla car GA with what is likely to be radically different with the Gen3 platform. It's also a good example of how Telsa China is currently doing PR and what Tom Zhu may have in store for other parts of Tesla's operations.
This is a video tour of the QC, GA and BIW sections of the Model Y assembly line at Gigagfactory Shanghai. It was posted by New China TV about a week ago and is in English. It provides a really good close up look at the processes within the Shanghai factory. I thought it was also a useful reference point to compare current Tesla car GA with what is likely to be radically different with the Gen3 platform. It's also a good example of how Telsa China is currently doing PR and what Tom Zhu may have in store for other parts of Tesla's operations.
Same feelings here; I'm getting such an urge to DO SOMETHING Tesla I might hafta' order at least a Starlink or something before I go mad.
Elon already answered that question in a recent quarterly CC. He said they would opt for increased volume rather than maximize gross profits … which would overall increase net profits. Your actual question was a false dichotomy.
Even if deposits were non refundable (which they aren’t), they wouldn’t be recognized as revenue until the customer took delivery. It would be tucked away on the balance sheet as deferred revenue until then.
This article says Rivian only has cash for less than the next three years of operation. Not good. Has info on the bond offering too.
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Rivian plans to sell $1.3 bln in bonds to shore up capital, shares fall
Rivian Automotive plans to sell bonds worth $1.3 billion, it said on Monday, as weakening demand and lofty costs tighten a cash crunch around electrical vehicle makers.
www.reuters.com
running multiple large companies certainly does make you a "real" economist ...
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