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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
bkp_duke
Well-Known Member
Tesla advertising expense is Zero, Nada, worldwide.
Accurate and precise auto manufacturer and dealer spend on advertising per vehicle is available fairly accurately within paywalls, that usually prohibit public quoting. Thus I shall give some US market-specific generalizations. These are always included in required regulatory reports but are always carefully packages to obscure facts.
For vehicles with MSRP above $40,000 the GM, Ford, FCA, Hyundai average is about $2500 per vehicle. For Daimler, BMW and VAG the numbers are less easy to discern but appear to be around $3000 per vehicle. In all cases there are GAAP allowable methods of moving substantial amounts fo these expenditures to categories not easily extractable. Specifically all of those manufacturers place substantial advertising costs in corporate overhead, distribution, even in factory accounts in some cases. Much more is placed in SGA accounts related to dealer distribution, especially rebates and dealer advertising support. I cannot print any of my direct source materials. Sorry.
Summary: Tesla has more than US$2500 per vehicle cost advantage because of zero advertising.
Next: cost of dealer system vs direct to customer:
This category is more difficult than is advertising because there are myriad categories affecting dealer system costs. The major ones:
1. Dealer 'cost' vs selling price: almost everyone thinks this is straightforward but it is not. There are dealer rebates, quota-based financing (i.e. floor planning) discounts, special promotion types to meet periodic sales goals, dealership employee 'spiffs', and many more. One a study of this subject I led for a major OEM this category averages 16% of average vehicle actual sales price. They actually did not know how much this cost because they placed such costs in so many different uncoordinated accounts.
2. Dealer infrastructure: dealership facilities maintenance subsidies, new facility subsidies, signage, architectural fees, building permit costs, property tax subsidies tondi including direct payments for specific features such as charging stations, special tools, employee training programs, and countless other major and miner categories. By the way, this category is also very useful to weed out undesirable dealers (e.g. the recent Cadillac weed-out over EV sales).
3. Maintenance,repair, warranty and body shop: This category is one of the most important because this accounts for >100% of typical dealer profits in North America (it does in many other countries but the system differs greatly country to country). In order; maintenance is highly profitable so manufacturers make short service intervals with unneeded items to make more money. (I have several stories, including that of a famous high luxury car that required annual major service that is completely unneeded. (For the brands that own ultra expensive brands and cheaper ones that use the same basic mechanicals, check out servicing costs). Warranty payments to dealers, especially recalls, are very lucrative and have major opportunity to sell other unneeded service. Body shop is often among the highest profit centers because of parts markups and the practice of separate incorporation to avoid disclosing all accounting.
In two distinct projects for different OEM's my firm evaluated the cost per vehicle of this category. The total averaged about 40% of new vehicle selling price and in more than half the case this category was the only net profit maker for the dealership owners (remember: the most successful ones do much of this in separate companies, non-consolidated.
It is safe to say that direct distribution is more valuable to Tesla than is manufacturing prowess, not least because they can make periodic maintenance unnecessary. Precisely no other OEM could do that.
~~~Thank you. For ease of future reference, added to "Of Merit" thread.~~~
Accurate and precise auto manufacturer and dealer spend on advertising per vehicle is available fairly accurately within paywalls, that usually prohibit public quoting. Thus I shall give some US market-specific generalizations. These are always included in required regulatory reports but are always carefully packages to obscure facts.
For vehicles with MSRP above $40,000 the GM, Ford, FCA, Hyundai average is about $2500 per vehicle. For Daimler, BMW and VAG the numbers are less easy to discern but appear to be around $3000 per vehicle. In all cases there are GAAP allowable methods of moving substantial amounts fo these expenditures to categories not easily extractable. Specifically all of those manufacturers place substantial advertising costs in corporate overhead, distribution, even in factory accounts in some cases. Much more is placed in SGA accounts related to dealer distribution, especially rebates and dealer advertising support. I cannot print any of my direct source materials. Sorry.
Summary: Tesla has more than US$2500 per vehicle cost advantage because of zero advertising.
Next: cost of dealer system vs direct to customer:
This category is more difficult than is advertising because there are myriad categories affecting dealer system costs. The major ones:
1. Dealer 'cost' vs selling price: almost everyone thinks this is straightforward but it is not. There are dealer rebates, quota-based financing (i.e. floor planning) discounts, special promotion types to meet periodic sales goals, dealership employee 'spiffs', and many more. One a study of this subject I led for a major OEM this category averages 16% of average vehicle actual sales price. They actually did not know how much this cost because they placed such costs in so many different uncoordinated accounts.
2. Dealer infrastructure: dealership facilities maintenance subsidies, new facility subsidies, signage, architectural fees, building permit costs, property tax subsidies tondi including direct payments for specific features such as charging stations, special tools, employee training programs, and countless other major and miner categories. By the way, this category is also very useful to weed out undesirable dealers (e.g. the recent Cadillac weed-out over EV sales).
3. Maintenance,repair, warranty and body shop: This category is one of the most important because this accounts for >100% of typical dealer profits in North America (it does in many other countries but the system differs greatly country to country). In order; maintenance is highly profitable so manufacturers make short service intervals with unneeded items to make more money. (I have several stories, including that of a famous high luxury car that required annual major service that is completely unneeded. (For the brands that own ultra expensive brands and cheaper ones that use the same basic mechanicals, check out servicing costs). Warranty payments to dealers, especially recalls, are very lucrative and have major opportunity to sell other unneeded service. Body shop is often among the highest profit centers because of parts markups and the practice of separate incorporation to avoid disclosing all accounting.
In two distinct projects for different OEM's my firm evaluated the cost per vehicle of this category. The total averaged about 40% of new vehicle selling price and in more than half the case this category was the only net profit maker for the dealership owners (remember: the most successful ones do much of this in separate companies, non-consolidated.
It is safe to say that direct distribution is more valuable to Tesla than is manufacturing prowess, not least because they can make periodic maintenance unnecessary. Precisely no other OEM could do that.
~~~Thank you. For ease of future reference, added to "Of Merit" thread.~~~
gabeincal
Active Member
Funky idea: Tesla's dojo would be used for the medical purposes as well...? Now THAT would knock valuation models out of the park and make me want to go all in. Oh, hang on, no more money between the cushions - have to sell the couch... 
I guess this means BMW saved on insulation for the HV wiring.Another no-frunk design. Thanks to @avoigt for the translation and @KarenRei for color commentary.
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pz1975
Active Member
Nominated for “Posts of Particular Merit” - very interesting and thank you for the inside/expert information on all of this.
I sold even my wallet when I was in the accumulation phase buying TSLA last summerFunky idea: Tesla's dojo would be used for the medical purposes as well...? Now THAT would knock valuation models out of the park and make me want to go all in. Oh, hang on, no more money between the cushions - have to sell the couch...
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Tesla Demand Soars in Norway in December as Global EV Storm Is Just Charging Up
ICE cars feel like Rube Goldberg machines compared to EVs. More and more people are realizing this every day. There are far too many advantages and the few limitations like charging time and range are being addressed with tech advances that will continue to accelerate.
ICE cars feel like Rube Goldberg machines compared to EVs. More and more people are realizing this every day. There are far too many advantages and the few limitations like charging time and range are being addressed with tech advances that will continue to accelerate.
dc_h
Active Member
I don’t think they’ll pay down debt, but keep the war chest strong. If there’s a COVID 2.0, or regulatory breakdowns with China and USA or some other black swan, they’ll be better positioned to ride out the storm than anyone except, possibly, Toyota and government backed BMW and VW.
If Elon and Kirk make an exception, maybe pay down a billion of they higher rate notes that would add the most to the bottom line. I think the focus will be maintaining a deep cash base, which could approach 30 billion by the end of 2021 and accelerating construction of battery plants and the Semi, Cybertruck plants and finally on getting a Europe and Chinese market entry level car. Tesla will need 100 GW of added battery output by the end of 2021 and another 200 GW in 2022 and that’s going to cost a few billion.
StealthP3D
Well-Known Member
I really liked every job I've ever had and always learned a ton of new stuff at every job, no matter how menial. The bulk of the jobs might have been menial but the learning was not. Often the learning was only tangential to the job.
There is a difference between loving your job and saying there is nothing better you would rather be doing. While it's possible for those two things to be one and the same, it's not typical, even for those who love their job. This has been studied enough for it to be a statistical fact. I lived for the experience of living, I worked to put food on the table and a roof over my head and did not treat my time at work any differently from the rest of my activities where I was focused on whatever I was doing at the moment. I learned how to make an effective compost pile at age 5 but it wasn't "at work", it was at home from my father.
For the last twenty-some years my "job" has been investing. In other words, I'm "retired". I really like investing but if I were guaranteed a 30% return on my capital without going through the process of investing, I would. I do it to make a living. Most of the things I would rather be doing with my time pay exactly zero. Many of them have additional expense associated with them. This is what people who are confused by people who have the goal of retirement or not needing to work anymore are missing. Not needing to work doesn't mean you are done being productive, it means your productivity no longer needs to be measured in dollars. Because, believe it or not, not all productivity is accurately measured in dollars. Therefore it's empowering to take money out of the equation of how you spend your time.
disclaimer: no one paid me to write this. I did it because it was the thing I most wanted to do at this moment. Some would say my time would have been better spent researching new companies to invest in but that's not what I most wanted to do.
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I've always thought that there's no point in doing a job you don't like because you will likely fail at it. However, it's important to focus on the positive parts of the job rather than concentrate on the negative parts (which too many people do).
StealthP3D
Well-Known Member
It looks angry and menacing. The design language says "I'm scared and unhappy and I feel inconsequential so this is appealing and empowering to me".
Thanks for sharing @saniflash , giving me the warm fuzzy feeling of validation that I've been doing something right (aiming for high Delta) all along. It has become apparent that my TSLA success level has far surpassed my basic knowledge level of everything stock/option/trading related; perhaps a bit of luck was involved.
So I'm posting my unposted draft replying to @Davidzhao365 below:
I trade in my Roth mostly; taxed accounts are an ever-leaking barrel. I buy OTM LEAPS simply so I can afford more of them, latest expiring to more safely bridge over a small recession. In Roth, I trade out to later ones more frequently, especially if it increases total account Delta at no extra cost since there's no tax penalty at every trade. If you don't know how to view your account Delta in your trading platform, I suggest you learn how as it can be an amazing factor.
IMHO, new traders should try small experiments - even if you're picking a few pennies in front of a steam roller - on the smallest scale possible, losing or not - so long as the risk isn't too big, if only for the learning experience.
When comparing choices, remember that any investment not done will definitely not have any return; the unpurchased share of TSLA will never grow.
None of these ramblings are investment advice.
Gee, I guess it's "there are many good people on both sides" time. Or not.
https://seekingalpha.com/article/4396280-not-merry-christmas-for-tesla-in-netherlands
That was a weird article. Lots of references to wildebeests and hyenas and canaries...
Kuo: Apple Car Still in Early Stages, Unlikely to Launch Until 2025-2027 at Earliest
I was waiting for input from Ming-Chi Kuo, a well-respected Apple analyst.
"..our latest survey indicates that the current development schedule of Apple Car is not clear, and if development starts this year and everything goes well, it will be launched in 2025–2027 at the earliest."
"...we remind investors that although Apple has a variety of competitive advantages, it is not always successful in new business...we think it's perilous to jump to the conclusion that Apple Car will succeed."
I was waiting for input from Ming-Chi Kuo, a well-respected Apple analyst.
"..our latest survey indicates that the current development schedule of Apple Car is not clear, and if development starts this year and everything goes well, it will be launched in 2025–2027 at the earliest."
"...we remind investors that although Apple has a variety of competitive advantages, it is not always successful in new business...we think it's perilous to jump to the conclusion that Apple Car will succeed."
Apple can speed up their time lines significantly if they partner with someone else to manufacture.
If they worked with Nio, the combined entity of NIPPLE might get something done In 2024.
Most people here will not click on a Seeking Alpha link. You should give us a synopsis so we know what we are ignoring.
I see a brisk market for refurbished Yugo badges in your future!
I kinda knew that, but didn't think to quote him because every point he makes he qualifies or refutes in another part of his article. Except the author bio part, where he states he is short TSLA. But the posts are few here this weekend, and a SA epistle is sometimes entertaining, when you are in the mood...
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