Tesla

[Morris Minor]

Surprising new development.

Biden finally said the word... T***a
"... our nation's largest electric vehicle manufacturer..."

[SJ_GTI]

Well, some recent analysis of Tesla income might make MrH's anti-Tesla views seem more realistic.

Tesla says all of its record profits from last year came from overseas (ie: Shanghai) and in fact it doesn't expect to be able to utilize its current US NOL carryforwards in the future. In other words, it doesn't have any viable way to make a profit at its US manufacturing operations.

Now technically speaking, it is common corporate practice to shift profits to a location where you will have the lowest tax bill. So on one hand you could suppose that Tesla is using bookkeeping maneuvers to understate its US taxable income (which lots of companies do). The issue here is that they already have gigantic NOL carryforwards they could apply to any US taxable income. The fact that they are disclosing that they won't even show any value on the balance sheet for the current NOL means they cannot show their auditors any reasonable way to ever show a profit from operations in the US. Because they already have those NOL, from an overall global tax strategy they would be advantaged if they COULD show a profit in the US...because even if they made a profit in the US they would have years of NOL credits they could use to offset them and not end up paying any tax. Instead they ARE paying taxes overseas while continuing to rack up losses in the US with an already huge NOL carryforward that they do not believe they can ever use.

I am probably not doing a good job of explaining it and to be fair taxes are far from my expertise. I am only familiar with this type of situation because the company I work for went through something like this when one of our largest customers (Solyndra) went bankrupt a decade ago. FWIW, we only recent started paying taxes again because the huge NOL that bankruptcy caused offset our taxes for nearly a decade.

Suffice it to say I remain highly skeptical about their stock valuation.

[Morris Minor]

The market bet is whether they are "on to something." In terms of US operations they are hemorrhaging money on R&D, plus manufacturing in one of the highest cost locations in the country. The Texas location has yet to start up, and as for Berlin... well I think they should write it off: pack their bags and leave; Germany will never allow it to open. Donate the shell of the building to a homeless charity or something.

[Soup DeVille]

Tesla gained and deserved a lot of attention for being the first real player in the affordable (relatively speaking) car game. They're still running on hype and this sort of cult of personality around Musk, which is bound to fade, but when it does, there will still be a company there.

[r0tor]

Their market reflects being GM and ExxonMobil rolled up into a single company

[Morris Minor]

Tesla gained and deserved a lot of attention for being the first real player in the affordable (relatively speaking) car game. They're still running on hype and this sort of cult of personality around Musk, which is bound to fade, but when it does, there will still be a company there.

Key man risk is never talked about with Tesla; he's been the driving force and pushes very hard. He is not a healthy-looking guy.
But his primary interest is SpaceX; he spends most of his time in Boca Chica TX, & devotes most of his energies to that.

[SJ_GTI]

Their market reflects being GM and ExxonMobil rolled up into a single company

Oddly enough, for GM the US (and North America) has long been its most profitable market. Part of the reason why it has become more and more profitable as it has shrunk and removed itself from other markets (2021 was a record year for their profits).

[Soup DeVille]

Key man risk is never talked about with Tesla; he's been the driving force and pushes very hard. He is not a healthy-looking guy.
But his primary interest is SpaceX; he spends most of his time in Boca Chica TX, & devotes most of his energies to that.

That's no surprise as risk tolerance has really been their major advantage so far. They aren't doing anything any other player in the market can't do; they're doing things they won't do (like using customers as beta testers on public roads).

Only time will tell how wise that is.

[NomisR]

That's no surprise as risk tolerance has really been their major advantage so far. They aren't doing anything any other player in the market can't do; they're doing things they won't do (like using customers as beta testers on public roads).

Only time will tell how wise that is.

I wouldn't be surprised if they lost a lot of future customers because of that, while at the same time, i feel like the younger generations of more tolerant of being beta testers due to them growing up being beta testers for tech items.

[r0tor]

That's no surprise as risk tolerance has really been their major advantage so far. They aren't doing anything any other player in the market can't do; they're doing things they won't do (like using customers as beta testers on public roads).

Only time will tell how wise that is.

Well they are doing a significant thing their rivals are not doing - building EV infrastructure to actually allow their EVs to be driven

[NomisR]

Their rivals have achieved their goals though, they've waited long enough for the government to invest money to build the infrastructure . 

[r0tor]

Tesla's method has not only made their customers comfortable buying an EV knowing they have a reliable network to charge from - but also gives Tesla an income stream.

[Soup DeVille]

Well they are doing a significant thing their rivals are not doing - building EV infrastructure to actually allow their EVs to be driven

That is a good point; but what I suspect will happen is that as EV production becomes more universal, legislation will be written that will force standardized a charging system, and those Tesla superchargers will, by law, become universal chargers for all EVs.

[Morris Minor]

That's no surprise as risk tolerance has really been their major advantage so far. They aren't doing anything any other player in the market can't do; they're doing things they won't do (like using customers as beta testers on public roads).

Only time will tell how wise that is.

Owners have to apply to be beta testers & they're only eligible if they've first opted in to a driver monitoring program & met that standard; it's not involuntary.  I think they've had about 60,000 takers.

[CaminoRacer]

That is a good point; but what I suspect will happen is that as EV production becomes more universal, legislation will be written that will force standardized a charging system, and those Tesla superchargers will, by law, become universal chargers for all EVs.

The new fast charger program will require CCS chargers to be installed.

[Morris Minor]

The new fast charger program will require CCS chargers to be installed.

[Soup DeVille]

Owners have to apply to be beta testers & they're only eligible if they've first opted in to a driver monitoring program & met that standard; it's not involuntary.  I think they've had about 60,000 takers.

And?

[Morris Minor]

And?

You said they're being used - I  may have misread it as an implication that they're hapless victims locked into an abusive relationship.

[r0tor]

That is a good point; but what I suspect will happen is that as EV production becomes more universal, legislation will be written that will force standardized a charging system, and those Tesla superchargers will, by law, become universal chargers for all EVs.

At which point Tesla makes $$$$ on it's competitors cars

[Soup DeVille]

At which point Tesla makes $$$$ on it's competitors cars

Maybe. Or maybe they're stuck having paid for installing a system they can only charge subsistence prices on.

GM and Ford, no matter what else they are, have been playing the lobbying game a whole lot longer.

[NomisR]

Maybe. Or maybe they're stuck having paid for installing a system they can only charge subsistence prices on.

GM and Ford, no matter what else they are, have been playing the lobbying game a whole lot longer.

I think this would most likely end up being true.

[FoMoJo]

Not GM? They were the first to have a Model 3 competitor with the Bolt. I don't fault GM for the battery recall as much as LG, and Hyundai/Kia and Ford both use LG too. Kia had similar problems, so Ford better do a lot of QC checks...

Is it the battery or the application?

[NomisR]

Is it the battery or the application?

It's the battery chemistry by LG. 

[CaminoRacer]

It's the battery chemistry by LG. 

And some bent tab or something

[Morris Minor]

Rumors flying that the Grünheide factory is going to get the permits this week... production to start in three weeks.
I'll believe it when I see it.

(EV stocks are doing well today - can't think why)

[Morris Minor]

Count me shocked - they've got the formal (but conditional) go-ahead to start production in Berlin.

https://www.cnbc.com/2022/03/04/tesla-factory-in-germany-gains-approval-to-start-commercial-production.html

[NomisR]

Count me shocked - they've got the formal (but conditional) go-ahead to start production in Berlin.

https://www.cnbc.com/2022/03/04/tesla-factory-in-germany-gains-approval-to-start-commercial-production.html

With the whole war in Russia, I guess they want to move to electric even quicker.. but I wonder if Germany would actually decommission their remaining nuclear power plant at this point because it seems like a really bad idea.

[SJ_GTI]

With the whole war in Russia, I guess they want to move to electric even quicker.. but I wonder if Germany would actually decommission their remaining nuclear power plant at this point because it seems like a really bad idea.

A bit off topic but I saw they are changing policy a bit on their defense because of the issues with Russia. Would make sense for them to reconsider shutting down their nukes until that situation is sorted out. That being said, if the decommissioning is already underway it might be too late to stop.

[Morris Minor]

Musk's said Germany should consider bringing their nuclear power stations out of mothballs. Nuclear power is a better stopgap on the road to renewables than Russian fossil fuels. One of the benefits is that you are not funding the ambitions of a psychopathic maniac.

[MrH]

The transition to EVs is not dictated by the change in price of oil yesterday to today.  It's the price of oil vs the price of the commodities needed to make batteries.  Unfortunately, those have also erupted in price.

The spike in commodity pricing is the largest seen in recorded history.  Not good.