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Im not arguing that the big miss on S/X is all that important. It’s not important.

But it will be a material hit on margins and there will be plenty of cars bear 🐻 narratives around S/X until we get Q2’s numbers

It's a hit to free cash flow but not a hit to margins. Margins are calculated once revenue is recognized. If you don't know the revenue obtained for the product, you don't know what the margins are.

Cars not sold (whether produced or not) does not greatly impact vehicle gross margins as a percentage, unless the unsold population's GM has a high deviation from the norm, which S/X do.

Cars not sold does impact operating margin disproportionately to the proportion sold (less so as OM approaches GM). For S/X with high price and GM, their contribution to the bottom line is higher per car.

Now though, what constituents "material", is 10k S/X significant? Using made up numbers: 120k ASP @ 40% GM would be around $0.5B gross profit. Against Q4 2022 auto profit of $5.5B it's a 0.9% hit to GM (on $5.5B 25.9% orig) and operating margin takes a 1.3% hit ($3.6B orig 16%)

For 3/Y sales, the volume means each $1k of margin results in a $0.4B profit & revenue shift. That's roughly a 1.5% hit to both GM and OM.

Therefore, 10k time shifted S/X sales can shift gross and operating margins percentages in a noticeable way, but that effect is similar to a $1k change in the 3/Y pricing.
 
Looks are always subjective of course, the 3&Y are excellent cars, looks aside.
As a professional artist I have to strongly disagree with you. I think the Model 3 is a beautiful, clean, uncluttered, timeless design and that beauty is not merely subjective. There's a science to it attached to an understanding of human psychology.

Human beauty is not merely subjective even with varying preferences, and often transportation design plays upon our preferences here. Those preferences are based on millions of years of evolution and sexual selection.

Example, the seductive curves of sports cars, the wide-stanced hulking 'muscles' of muscle cars, the air-slicing look of a supercar, the eyes of a car (headlights) and how that affects its 'face' or perceived attitude...all of it plays on human beauty standards and our intuitions about the world.

Why is a car 'cute' or imposing? Why are trucks made to look 'tough', appealing to males? A vehicle is your avatar on the road, and humans tend to connect to them deeply.

Why is a vehicle seen as a 'woman's car' or not? This is again related to form language as it plays on perception from a majority. The New Beetle is not the most masculine thing you could drive, nor is the Gucci trim FIAT 500. There are discrete reasons for this not lost on designers. In the U.K. the 500 might be known as a hairdresser's car but I loved my Abarth because it was cute and rorty. Trim level matters too, natch.

Why is the Pontiac Aztek so sad looking, and why was it the perfectly cast vehicle for Walter White of the amazing "Breaking Bad" series? It all comes down to how humans over large sample sizes interpret form language, bold design vs. safe and boring, color (e.g., bold primaries vs. pastels or muted Earth tones), color balance, symmetry, presence and gravitas, etc. This is why you won't see Batman driving a smart car.

To me, the Model 3 is the best looking sedan, ever. It's hard to do much when form has to follow function but Tesla has done it. However, it's very easy to ruin a design. Just look at the back end of a Hyundai Ioniq and that saggy mess when the front end is so clean and modern. Or, look at any vehicle with fake vents or cluttered form language, fussy sculpted lines, or goofy proportions like the aforementioned Aztek.

What does it even mean to say a design is 'fussy' or 'clean'? It comes down to purity of vision, form cohesion, inspired confidence, flow, rhythm, etc. In design, all of these terms apply and separate great artists from the noobs, hacks, or those lacking confidence. Worse is the art designed by committee, a blight of some OEM design centers, I'm sure.

Opinions vary, but there's a science to what humans find beautiful and it's not merely subjective. Otherwise, vehicle design wouldn't be such a painstaking process and there wouldn't be celebrated designers, right? Why with subjective design could there ever be 'bad' design? It's because humans are particular about beauty, and nobody cares about hurting a car's feelings.

The good thing is, we understand human beauty standards well enough to design vehicles that generate a predictable emotional response for most people, namely the car's target market demographic.
 
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From our friend James Stephenson (I cannot underscore enough)

FsuQOCXWwAAIq8y

source tweet

The Moore of this I see, the better I feel about the future being so bright I gotta wear shades. :cool:

Ain't that Wright?
 
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I love the look of the Model S (X has also grown on me over the years) and would be upset if they went away as well. Though I wouldn't call the Model 3 or Y "horrible looking". Far more appealing to my eyes than most cars on the road. :cool:
Gave a friend a ride in the Model X. His comment on the unobstructed view from the windshield: it must be really hard to go back to another car where it isn't like that.
 
As a professional artist I have to strongly disagree with you. I think the Model 3 is a beautiful, clean, uncluttered, timeless design and that beauty is not merely subjective. There's a science to it attached to an understanding of human psychology.

Human beauty is not merely subjective even with varying preferences, and often transportation design plays upon our preferences here. Those preferences are based on millions of years of evolution and sexual selection.

Example, the seductive curves of sports cars, the wide-stanced hulking 'muscles' of muscle cars, the air-slicing look of a supercar, the eyes of a car (headlights) and how that affects its 'face' or perceived attitude...all of it plays on human beauty standards and our intuitions about the world.

Why is a car 'cute' or imposing? Why are trucks made to look 'tough', appealing to males? A vehicle is your avatar on the road, and humans tend to connect to them deeply.

Why is a vehicle seen as a 'woman's car' or not? This is again related to form language as it plays on perception from a majority. The New Beetle is not the most masculine thing you could drive, nor is the Gucci trim FIAT 500. There are discrete reasons for this not lost on designers. In the U.K. the 500 might be known as a hairdresser's car but I loved my Abarth because it was cute and rorty. Trim level matters too, natch.

Why is the Pontiac Aztek so sad looking, and why was it the perfectly cast vehicle for Walter White of the amazing "Breaking Bad" series? It all comes down to how humans over large sample sizes interpret form language, bold design vs. safe and boring, color (e.g., bold primaries vs. pastels or muted Earth tones), color balance, symmetry, presence and gravitas, etc. This is why you won't see Batman driving a smart car.

To me, the Model 3 is the best looking sedan, ever. It's hard to do much when form has to follow function but Tesla has done it. However, it's very easy to ruin a design. Just look at the back end of a Hyundai Ioniq and that saggy mess when the front end is so clean and modern. Or, look at any vehicle with fake vents or cluttered form language, fussy sculpted lines, or goofy proportions like the aforementioned Aztek.

What does it even mean to say a design is 'fussy' or 'clean'? It comes down to purity of vision, form cohesion, inspired confidence, flow, rhythm, etc. In design, all of these terms apply and separate great artists from the noobs, hacks, or those lacking confidence. Worse is the art designed by committee, a blight of some OEM design centers, I'm sure.

Opinions vary, but there's a science to what humans find beautiful and it's not merely subjective. Otherwise, vehicle design wouldn't be such a painstaking process and there wouldn't be celebrated designers, right? Why with subjective design could there ever be 'bad' design? It's because humans are particular about beauty, and nobody cares about hurting a car's feelings.

The good thing is, we understand human beauty standards well enough to design vehicles that generate a predictable emotional response for most people, namely the car's target market demographic.
Very thoughtful reply, now justify the potato on wheels that is the Y... 😝
 
Of course. But not with growth companies. First and foremost Tesla ia a growth compny, not a cyclical one.
Last year Tesla could not produce enough cars to cover the demand. This year they produced more than they sold. But its no big deal for me.:)
I disagreed only because 'growth companies' also have seasonality. Few countries might be so extreme as the UK for car sales, driven by registration and tax issues, but all countries have highly seasonal auto sales. That affects nearly all OEM's from Alfa to Zhidou and everywhere in between. While Tesla once had less direct consequences of that, there still was the (in)famous end of quarter push plus large swings due to shipping and other logistics issues.

Thus the only consistently reliable way to minimize those effects is to measure quarterly Year on Year. That is not perfect either, just as every 'measure of merit' has its particular limitations. Beyond that we all need to be less obsessive about deliveries and inventory levels because those are much less consequential than is Free Cash Flow.

Anyone who's watched company results knows that sales volumes are a singular obsession for many analysts and investors. Why? That is easy to look at, titillating and generates clicks.
Just do not confuse those with company value.
 
Very thoughtful reply, now justify the potato on wheels that is the Y... 😝

Thanks!

Though I love the look of the Y unto itself, it's a little too much like the 3 for my taste. But, I think it's objectively beautiful even if the familial relationship to the 3 feels a little too close for comfort sometimes. Then again, Tesla reuses parts and processes because they're smart and efficient, so in the end I count the Y as a win despite looking like a larger Model 3. Tesla definitely has a cohesive style across its entire lineup, which I think is a good thing.

The Model S is beautiful too, but I never liked the way the rear chrome trim speared into the taillights, though this effect is reduced with the new black trim. I did not like the original big black fake 'grill' on the Model S either, though I understand why Tesla added this feature during the very early introduction of its EVs. I have a feeling that this was a concession to tradition and customer expectation. The new Model S 'grill' is fantastic and matches the high-end Model X SUV.

Sorry about the off-topic! Doing what I do for a living, I just had to address the 'subjective' beauty standard thing—especially as it applies to what I think is a very successful transportation design from Tesla. I also love the minimalist interiors, and this is reflected in the clean exterior design/form language as well. Seriously, I would put the Model 3 design on par with anything from Ferrari when it comes to sedans.
 
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Cars not sold (whether produced or not) does not greatly impact vehicle gross margins as a percentage, unless the unsold population's GM has a high deviation from the norm, which S/X do.

Cars not sold does impact operating margin disproportionately to the proportion sold (less so as OM approaches GM). For S/X with high price and GM, their contribution to the bottom line is higher per car.

Now though, what constituents "material", is 10k S/X significant? Using made up numbers: 120k ASP @ 40% GM would be around $0.5B gross profit. Against Q4 2022 auto profit of $5.5B it's a 0.9% hit to GM (on $5.5B 25.9% orig) and operating margin takes a 1.3% hit ($3.6B orig 16%)

For 3/Y sales, the volume means each $1k of margin results in a $0.4B profit & revenue shift. That's roughly a 1.5% hit to both GM and OM.

Therefore, 10k time shifted S/X sales can shift gross and operating margins percentages in a noticeable way, but that effect is similar to a $1k change in the 3/Y pricing.
I believe what you are saying is contributing margins, where if the product has higher margin than the base products could have contributed to a higher OM and if the product has a lower margin than base would have contributed negatively to OM.
 
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