Tesla Model 3: End of the Internal-Combustion Engine?

[bojangle]

https://twitter.com/RealDanODowd/status/1672325190112641024

That is a dishonest manipulated video. The driver clearly has his foot on the accelerator, thereby overriding the full self driving program. Look closely. You can see his foot on the accelerator the whole time, and when he intentionally ran the stop sign, he moved his foot to the brake pedal. It was a set up attempt. There have been other set up videos intentionally trying to discredit Tesla.

 

[Abacinator]

It's such a trip driving around the City and seeing the driverless Cruise and Waymo cars. Those things have a whole host of sensors, lidar, radar, infrared in addition to cameras... It's absurd that Tesla think they can pull off autonomous driving with only cameras.

 

[bojangle]

Faked Tesla videos.

https://electrek.co/2022/08/30/tesla-battery-fire-crash-faked-insurance-company-bizarre-showcase/

https://www.tesmanian.com/blogs/tes...roject-test-results-are-completely-fabricated

 

[Killroy1999]

That is a dishonest manipulated video. The driver clearly has his foot on the accelerator, thereby overriding the full self driving program. Look closely. You can see his foot on the accelerator the whole time, and when he intentionally ran the stop sign, he moved his foot to the brake pedal. It was a set up attempt. There have been other set up videos intentionally trying to discredit Tesla.

Dan O'Dowd works for a competitor to Tesla Autopilot/FSD and is frequently pushing FUD.

That does not mean Autopilot/FSD is perfect, but Dan O'Dowd has been discredited.

 

[bojangle]

Dan O'Dowd works for a competitor to Tesla Autopilot/FSD and is frequently pushing FUD.

That does not mean Autopilot/FSD is perfect, but Dan O'Dowd has been discredited.

Yup. Agreed on both points.

EDIT: Dan O'Dowd was also behind the faked Tesla hitting a child mannequin video I posted about above.

 

[Holeshot]

To be very clear, this data confirms what I'm saying, not what you said.

Ford is putting twice as much money into their entire EV division than they are earning in that division. That's different from saying it takes twice as much money to make an individual Mach E as they are charging for one.

He's correct in saying so. R&D can be both a capitalized cost and expensed at the same time. Labor gets expensed and PPE gets depreciated. EBIT includes deprecation and expensed labor.

 

[ScarySpikes]

He's correct in saying so. R&D can be both a capitalized cost and expensed at the same time. Labor gets expensed and PPE gets depreciated. EBIT includes deprecation and expensed labor.

His original statement is not correct. His first statement was not about about EBIT. The initial claim, which he already admitted he should have put differently, was that it cost Ford twice as much to make an EV as they were selling it for. That implies the cost to produce a single vehicle, on an already existing production line with laborers already trained on building that model, is double the cost that dealers pay for the vehicle. That's not true.

What he is referencing in reality is how much money the EV branch is spending, vs how much it is making. Right now, Fords EV program spends twice as much as it makes. Ford has 3 US models that are pure EVs. The F-150 Lightning, the Mach-E, and the E-Transit. Meanwhile they are investing heavily into scaling up, expanding the models being made, improving their supply chain R&D, etc. These are not quite one time costs, but once Ford has a mature supply chain, and has scaled up production to meet their 2 million EVs a year goal, the cost to maintain that is not nearly as much as the cost to develop it from scratch, meanwhile the profits will go up because they are selling way more EVs.

The cost of parts and labor for each Mach-E or Lighting, is not more than the sale MSRP, you can only make it look 'twice as expensive' if you tack on costs that are completely separate from that specific vehicle.

 

[tzrider]

In terms of their accounting, Ford is saying that it currently costs twice as much to make an EV as what they sell it for. That presumably won’t always be the case, but according to their accounting for this period of time, it is.

As he said, argue with Ford.

 

[ScarySpikes]

In terms of their accounting, Ford is saying that it currently costs twice as much to make an EV as what they sell it for. That presumably won’t always be the case, but according to their accounting for this period of time, it is.

As he said, argue with Ford.

No, they didn't.

Again, individual vehicle vs the entire Model e division. They are putting twice as much money into the division as it's making in profits. That is what they said. They went over their spended in detail last year:

https://www.cnbc.com/2023/03/23/fords-plan-for-2026-ev-profitability.html

But Model e as a whole won’t be profitable for a while yet, Lawler said, because of the heavy investments Ford will be making to scale up production and roll out more new EV models.

Fords own words, they are talking about the division, not individual vehicles there. In order to get the 'each EV costs twice as much for Ford to produce as they make from it' claim, you would have to include the part of the cost for making an EV Explorer assembly line, and designing several other EV models, into the cost of making that one vehicle. That is just silly.

 

[bojangle]

No, they didn't.

Again, individual vehicle vs the entire Model e division. They are putting twice as much money into the division as it's making in profits. That is what they said. They went over their spended in detail last year:

https://www.cnbc.com/2023/03/23/fords-plan-for-2026-ev-profitability.html



Fords own words, they are talking about the division, not individual vehicles there. In order to get the 'each EV costs twice as much for Ford to produce as they make from it' claim, you would have to include the part of the cost for making an EV Explorer assembly line, and designing several other EV models, into the cost of making that one vehicle. That is just silly.

Weren't the same claims made about Tesla vehicles before they became profitable? They were losing money on selling vehicles, but they were also putting money into developing several different models and lines, some of which have yet to go into full production.

I get that it's another way of wording it that may not be entirely accurate on a vehicle to vehicle basis, but does that really matter. Companies can only go so long on losses. They will need to start turning a profit. That's where Tesla has a head start on all other brands right now. They can also afford to drop prices where others can't right now.

Tesla is basically an underdog that shook up the vehicle market, and now all other companies have been kinda forced to adapt and model their businesses following Tesla's business model.

 

[tzrider]

Fords own words, they are talking about the division, not individual vehicles there. In order to get the 'each EV costs twice as much for Ford to produce as they make from it' claim, you would have to include the part of the cost for making an EV Explorer assembly line, and designing several other EV models, into the cost of making that one vehicle. That is just silly.

No shit. That’s what balance sheets report on.

 

[Holeshot]

In order to get the 'each EV costs twice as much for Ford to produce as they make from it' claim, you would have to include the part of the cost for making an EV Explorer assembly line, and designing several other EV models, into the cost of making that one vehicle. That is just silly.

That's what I said above. Capitalized costs. R&D are generally capitalized costs (taken over the life of the production line). When a company doesn't invest in PPE and instead, cash cows production lines, they generate considerably more line item profit. This is the explanation for why Tesla has not put capital back into their design; R&D costs impact profitability over a set period of time.

There are so many tricks firms use with accounting, it's exhausting to follow the pathway. All the same, if you're truly interested in this subject (and material) a basic accounting class online will clear the basics up and give a good base understanding. Friendly advice.

 

[Killroy1999]

Hi, this is when we started talking about negative EBIT margin.

Ford Model e, Ford's EV division, lost $722 M EBIT for the quarter.

That is a negative 100% EBIT margin.

In order for EV to be successful, legacy auto like Ford and GM will have to catch up.

@9:19
[YouTube]psmkJVSKrMs?t=559[/YouTube]

 

[ScarySpikes]

Weren't the same claims made about Tesla vehicles before they became profitable? They were losing money on selling vehicles, but they were also putting money into developing several different models and lines, some of which have yet to go into full production.

I get that it's another way of wording it that may not be entirely accurate on a vehicle to vehicle basis, but does that really matter. Companies can only go so long on losses. They will need to start turning a profit. That's where Tesla has a head start on all other brands right now. They can also afford to drop prices where others can't right now.

Tesla is basically an underdog that shook up the vehicle market, and now all other companies have been kinda forced to adapt and model their businesses following Tesla's business model.

I'm sure the same claims were made against Tesla, but not by me. People will point at money invested into growing a company, or point at money invested into growing a new department of a company, and claim that because of that investment, the company is clearly losing money and on the wrong track. They will cite 'Economics 101' or 'Accounting 101', but really it's a dumb take made by folks who are textbook examples of the Dunning Kruger effect. Companies, especially huge companies, are complicated, and to get a sense of their actual position you need to do a lot more than look at EBIT. A great example of a company with great financials that hid deep and systemic problems with their R&D that made them ripe for an upstart challenger to start taking their market share is Intel. They had at least as much of a monopoly on the CPU market at Tesla did, but they stopped innovating, and that left an opening for AMD to go from nearly bankrupt around 2014 or so, to eating up massive amounts of market share from Intel in all sectors, and Intel's profit numbers have collapsed.

Case in point on the Dunning Kruger effect:

That's what I said above. Capitalized costs. R&D are generally capitalized costs (taken over the life of the production line). When a company doesn't invest in PPE and instead, cash cows production lines, they generate considerably more line item profit. This is the explanation for why Tesla has not put capital back into their design; R&D costs impact profitability over a set period of time.

There are so many tricks firms use with accounting, it's exhausting to follow the pathway. All the same, if you're truly interested in this subject (and material) a basic accounting class online will clear the basics up and give a good base understanding. Friendly advice.

 

[tzrider]

It's pretty ironic to see someone with no experience running a company invoking the D-K effect towards someone who has run a successful business for years on the topic off accounting.

 

[ScarySpikes]

It's pretty ironic to see someone with no experience running a company invoking the D-K effect towards someone who has run a successful business for years on the topic off accounting.

If the Shoe fits, wear it. This discussion isn't really about accounting. It's more about definitions, Berto is trying to defend a misleading statement from Killroy, which Killroy already clarified/walked back. I agree with Killroys clarified statement that Ford has a 100% negative EBIT. The statement I originally disagreed with

Today, it costs twice as much for Ford to make a EV as what they sell it.

Is still wrong. The reason the difference in the 2 statements is clear from his next sentence

So, maybe they will make it up in volume .

Killroy said is as a joke, The implication being 'ford is losing money with every EV they sell so if they sell more EVs they'll just lose more money.' .The reality is, that is completely true, and Fords goal. If Ford's investments into increasing volume are successful, they think they can get to a positive 8% EBIT in 2026, producing 2 million EVs per year.

'Running a company' doesn't necessarily mean understanding accounting. The CEO of the company I work at knows almost nothing about accounting. The VP of Finance does the accounting for the business, His personal accountant handles his personal accounting. Almost every business with more than, like, 10 employees I've seen has someone dedicated to just the accounting part

Separate from that, a lot of people who end up running companies , even companies that are pretty successful, are, quite frankly, idiots and charlatans. Something that is definitely relevant in a thread having to do with Elon Musk.

 

[tzrider]

All that said, I'm certain Berto understands accounting better than you do. But you keep on doing you.

 

[ScarySpikes]

All that said, I'm certain Berto understands accounting better than you do. But you keep on doing you.

Probably. I hate accounting. I don't even do my own taxes.

But, again, this isn't really about accounting.

 

[Holeshot]

Probably. I hate accounting. I don't even do my own taxes.

But, again, this isn't really about accounting.

Yes, it is. The discussion is about costing and profitability, last I checked. Those are two items that are not reasoned, theorized, nor defined with words. Numbers and GAAP. EBIT is only about accounting.

I'm being nice by saying: take an abbreviated course on accounting basics if we're going to get in the weeds on corporate costing/ profit/ equity/ etc. You can't bullshit accounting principles very much in a numbers conversation, but one can argue how items may be classified. Once again, that changes the end number (profit).

And flip flops. I'm wearing flip flops.

 

[Killroy1999]

I was thinking about how Tesla models are stale.

Tesla rushed Model S,X,3 out and they were later on each one. They were trying to become profitable and now that they have good sales and operating margins, they don't really need new models until the competition starts catching up.

They have some time, so they can focus on ironing out the design and manufacturing details.