Model S still really selling at a loss?

thx1139 said:

So was watching a video yesterday from Bloomberg. I just cant believe that the actual vehicle is selling at a loss?

Click to expand...

Bullcrap.

Tesla 10k said:

Gross margin for the year ended December 31, 2014 was 27.6%, a significant increase from 22.7% for the year ended December 31, 2013. Higher vehicle production volume, supply chain efficiencies and component cost reductions, partially offset by one-time manufacturing inefficiencies associated with transitioning to our new final assembly line and introduction of All-Wheel Drive Dual Motor Model S, contributed to higher gross margin in 2014.

Click to expand...

Tesla Motors - Annual Report

Edit:

Saw today an article that says battery prices have dropped to $410 per kWH

Click to expand...

Also way off. More like $250 per kWh for Tesla packs, if not lower.
They are targeting $100 per kWh cell-level costs with the Gigafactory.

thx1139 said:

So was watching a video yesterday from Bloomberg. I just cant believe that the actual vehicle is selling at a loss?

Now I can see Tesla as a whole losing money right now. With R&D on the Model 3, with R&D and ramping up production on the Model X, etc. With building out the Supervharger Network, etc. etc. etc.

But an actual Model S.

Take away the battery and the car is simpler then an ICE vehicle and should be less costly to build then a comparable class car.

So are they saying that the $90K Model S I just ordered in itself costs more to individually manufacture then I am paying for it.

Saw today an article that says battery prices have dropped to $410 per kWH. That would make the 85D battery at about $35K and the 70D at about $29K.

Click to expand...

No. They quote margins of something like 30%.

I've seen some haters argue that if it wasn't for the tax breaks they'd have to sell the car for $7500 less (actually, the last person who I saw argue this was in CA and claimed that all car got a $10k credit, conveniently forgetting that the additional $2500 were CA-only thing) and if it wasn't for the ZEV credits they'd make $6k less per car sold and that if you take all that money out of the equation then Tesla would be selling the Model S at a loss (so net of all tax incentives and other government involvement).
In related news, if it wasn't for all the tax breaks for <insert industry of your hating> that industry wouldn't make the money it does.
It's what you do when you run out of arguments :wink:

dirkhh said:

I've seen some haters argue that if it wasn't for the tax breaks they'd have to sell the car for $7500 less (actually, the last person who I saw argue this was in CA and claimed that all car got a $10k credit, conveniently forgetting that the additional $2500 were CA-only thing) and if it wasn't for the ZEV credits they'd make $6k less per car sold and that if you take all that money out of the equation then Tesla would be selling the Model S at a loss (so net of all tax incentives and other government involvement).
In related news, if it wasn't for all the tax breaks for <insert industry of your hating> that industry wouldn't make the money it does.
It's what you do when you run out of arguments :wink:

Click to expand...

This is easy to refute as well. Tesla sells cars in many places in the world where buyers don't get tax incentives, and they sell the car at roughly the same price (give or take some for the fluctuations in currency exchange rates). People clearly are willing to pay those prices for that car. Maybe not as many of them, but if this is just an argument about profitability (not volume), then it is obviously a bad argument.

Don't forget the zev credits.

Get used to the fact that 95% of the information put out there by financial folks about Tesla is 100% wrong.

They make money on each car. They spend more than they make - TO GROW - radically fast. Therefore some "journalist" "analyst" can claim, and many do constantly, that they "lose money." Still hard for me to believe they don't get it.

The fact is that you can spin numbers to come to any conclusion you want. There were plenty of journalists eager to latch on to the story about how the Chevy Volt was losing $40,000 per car. It was done by counting all the development costs of the car then dividing by the number of cars sold. Absolutely ridiculous. Happily, I haven't seen that one done with the Model S. The big arguments have been mentioned: ZEV credits, Tax Break, looking at only the bottom line, and even the government loan.

The refuting arguments, for me, are:

ZEV credits - This is legitimate income. The manufacturers buying the credits would need to buy the credits no matter what. They'd just have to buy them from some other manufacturer or pay the penalty - period. The money does not come from the government as most would have you believe. These are often confused with Carbon Credits.

Tax Break - It's a tax break. The government is not giving people money. They get to keep their own money. The loss to the government equals out to about 60 cents per taxpayer for the entire years worth of tax breaks to Tesla. Most people pay more than that on one fast food meal. You can point out that gas and their car has received lots more government support.

No profits/Looking only at the bottom line - Tesla is not trying to make lots of profit. The company is growing at an incredible pace. There is plenty of profit per car (29%) which is then re-invested into the company. You have Superchargers, battery gigafactory, expansion of production, preparation for the Model X, and R&D.

Government Loan - Paid off. They are the only company that doesn't owe the American taxpayer or had a massive government debt tossed out.

Those are the arguments I use - a lot.

Grendal said:

Government Loan - Paid off. They are the only U.S. car company that doesn't owe the American taxpayer or had a massive government debt tossed out.

Click to expand...

You left out a couple of important adjectives.

Robert.Boston said:

You left out a couple of important adjectives.

Click to expand...

Thanks for correcting me. Though Nissan does owe some on their ATVM loan, I believe.

thx1139 said:

So was watching a video yesterday from Bloomberg. I just cant believe that the actual vehicle is selling at a loss?

Click to expand...

Could I ask if that Bloomberg video featured Cory Johnson? He has always stated in all of his stories that Tesla is selling each car at a loss. He has even stated that Spacex and SolarCity also sells services and products at a loss. He for some reason has always spread FUD about Tesla and is now blocked on Elon's Twitter by the man himself. So much for objective journalism.