New York (CNN Business)Tesla faces billions of dollars in losses from its new plants, supply chain problems and Covid lockdowns — enough for CEO Elon Musk to mention the possibility of bankruptcy in a recent interview.
“The past two years have been an absolute nightmare of supply chain interruptions, one thing after another,” Musk said in an interview with a Tesla owners group. “We’re not out of it yet. That’s overwhelmingly our concern is how do we keep the factories operating so we can pay people and not go bankrupt.”
Tesla is neck deep in China. The Chinese government can shut him down immediately. Perhaps in a way that he is not expecting. Musk’s publicly stating that is an invitation for the Chinese government to kill Tesla and promote Chinese EV.
Musk’s crazy ego opening his mouth can destroy Tesla.
New York (CNN Business)Tesla faces billions of dollars in losses from its new plants, supply chain problems and Covid lockdowns
Doesn’t every car maker that opens a new plant (or plants) have accounting losses of billions starting the day after (or even before) the plant opens? It would only be a problem if they weren’t going to be making money on each new car that they make. But they do have high margins. A bit unlike, for example Ford, which just said they were losing something like $25K on each Mustang Mach-E they are selling.
No. Watch the interview. Just hyperbolic blather, maybe intended to be motivational at the end of a difficult quarter. And maybe intended to soften the blow of the 10% of salaried staff reduction (~3% of all employees). Tesla is ramping two new factories while their Shanghai factory was shut down for a few weeks due to COVID restrictions.
In any case, at this point Tesla is about the least likely company to go bankrupt. They’re swimming in cash and their margins are enviable. Their cash conversion cycle is negative (meaning they are getting paid for their delivered cars before they pay their suppliers), which is unheard of in the auto industry.
A bit unlike, for example Ford, which just said they were losing something like $25K on each Mustang Mach-E they are selling.
Where did Ford say this?
I know there were rumors that they stopped selling the Mach-e recently because it isn’t profitable anymore (and has some recall headaches), but I don’t recall reading any numbers about it anywhere.
Ford’s Cost to Build the Mach-E Increased $25,000 Per Car Due to Battery Prices Skyrocketing While inflation has wiped out the profits Ford made off the EV, consumer demand remains strong.
Ford’s Cost to Build the Mach-E Increased $25,000 Per Car Due to Battery Prices Skyrocketing While inflation has wiped out the profits Ford made off the EV, consumer demand remains strong.
Google is indeed your friend. But READING the material is an even better friend.
From the top of your link, a direct quote -
“Our report was based on an article from CNBC which included that $25,000 figure. Today, CNBC has issued a correction on that piece, stating that the article “has been updated to remove an incorrect figure for cost increases associated with building Ford’s Mustang Mach-E. Ford CFO John Lawler did not provide a number for that increase.”
“Our report was based on an article from CNBC which included that $25,000 figure. Today, CNBC has issued a correction on that piece, stating that the article “has been updated to remove an incorrect figure for cost increases associated with building Ford’s Mustang Mach-E. Ford CFO John Lawler did not provide a number for that increase.”
Also, the original article, which included the incorrect $25k figure, still never said anything about Ford losing $25k per car like Mike said above. Instead they (incorrectly) said that Ford had experienced increased costs of $25k per car, which had wiped out profits on the car.
Here’s what the corrected CNBC story on the subject now says:
"
Demand for new Fords and Lincolns continues to exceed supply, which is still constrained by an ongoing global shortage of semiconductor chips, Ford CFO John Lawler told analysts at a conference hosted by Deutsche Bank – even after the company raised vehicle prices to offset the effects of inflation.
For the most part, those price increases have preserved Ford’s profit margins, Lawler said. But the price rises weren’t enough to offset the impact of climbing costs on the company’s electric Mustang Mach-E.
The model saw its costs increase substantially due to sharply higher battery material costs. While the Mach-E was profitable when it was first launched in late 2020, that’s no longer true, he said.
" https://www.cnbc.com/2022/06/15/ford-cfo-says-inflation-has-…
Ford CFO John Lawler did not provide a number for that increase."
So much for the trusty MSM!
But Ford did stop selling (or taking orders for) the 2022 Ford Mach-E. There is demand well in excess of production capacity for most EV models. The real competition now is in building manufacturing facilities to meet the demand. In The Gorilla Game terms “The Tornado” which comes after “Crossing the Chasm.”
But Ford did stop selling (or taking orders for) the 2022 Ford Mach-E. There is demand well in excess of production capacity for most EV models. The real competition now is in building manufacturing facilities to meet the demand. In The Gorilla Game terms “The Tornado” which comes after “Crossing the Chasm.”
There are lots of rumors about Ford, since right now it is the only real competitor (in the USA) to Tesla, so that is understandable. I suspect that Ford has a few issues:
They can’t build EVs fast enough. They’ve stopped taking even reservations for the F-150 Lightning for many months now (I try to reserve one periodically with no success).
Their costs have gone up on the mach-e, so they stopped selling them, and will probably raise prices shortly and begin selling them again, but -
The mach-e also has a pesky safety recall in progress which requires hardware and software changes to the vehicles. So, it is very convenient to stop sales now while waiting for parts anyway. In fact, they may even just write off the rest of MY22 and restart sales with MY23 (safety issue fixed, new pricing “due to MY change”, customers DO NOT like pricing changes mid-model-year).
But these are all my own educated guesses. Could be completely wrong. We shall see with time.
But these are all my own educated guesses. Could be completely wrong. We shall see with time.
Your guesses have a good probability of being right. Ford in America and VW in Europe are currently the only two serious Tesla competitor. Rivian had a bad experience raising prices on existing orders and had to backtrack. At a $25K cost increase (if true) the Ford Mach-E can’t be making money. I think Jim Farley is playing his cards right.
Rivian had a bad experience raising prices on existing orders and had to backtrack.
That’s not the only problem Rivian has. They also can’t seem to make any vehicles, so far they’ve only shipped a couple of thousand. Literally “couple” as in 2-something thousand of them. If they can’t kick it up a notch or three, they will run out of money before they can ever gain traction (pun intended). Yes, even though they have about $15B remaining, they will run out if they can’t start producing a lot of vehicles soon.
I have yet to see a Rivian in the wild. I see Teslas constantly, Mach-es periodically, Nissans periodically, Audis here and there, a Lucid or two, I see 2 mini coopers in a nearby parking lot sometimes, and a few Taycans, but never a Rivian yet. Oh, and a Polestar was parked next to me a few months ago charging. And I think I saw a Kia or Hyundai driving by recently.
I have seen a couple Rivians on the road, but then, their engineering department is in Plymouth, MI, according to Google Maps, 4 miles from my home.
If they can’t kick it up a notch or three, they will run out of money before they can ever gain traction (pun intended).
This is Shinyland. Bankruptcy isn’t failure, it’s a business strategy. Borrow a ton of money, invest it in facilities and engineering to get the project off the ground, then declare BK to stiff the stakeholders, then carry on with the business, without the “burden” of a big pile of debt.
Saw one in Georgia in January. Oddly enough, Georgia recently told Rivian that they can’t sell directly to their customers. No idea how many other states have such restrictions.
And the irony of course is that Rivian is trying to build trucks in Georgia - that they can’t currently sell to their employees.
Polestar was parked next to me a few months ago charging.
I lucked out and had one for a rental for a week-long FL vacation. It had long been on my shortlist for consideration. Nice car and one I would strongly consider buying. Waiting on the GV60 and the Electrified G80 (and I still need to test drive the Etron Q4 sportsback) to be available nationwide before I make my decision.
Hawkwin
No political commentary necessary on Georgia.
Rivian has used mostly equity for funding itself, not much debt (like 20:1 or something like that). So it’s the actual OWNERS of the company who stand to lose, not the debt providers. In fact, it is much more likely the opposite could happen - the equity holders (current owners) get wiped out and then the debt holders end up owning the remains of the company.
Nice car and one I would strongly consider buying.
I would consider buying most cars, BUT I won’t actually buy until I am reasonably certain that the manufacturer will survive through my expected ownership period (usually 10-12 years). That’s why the EVs that I currently own are Tesla and Nissan. And I’m considering a Ford (F-150 Lightning) and have pre-ordered another Tesla (that isn’t likely to become available for a few years).
Therefore, I can’t consider Lucid, Polestar, Rivian, etc because none of those are stable enough companies yet. And, I can consider VW, Ford, Hyundai/Kia, Audi, Toyota, etc.
Therefore, I can’t consider Lucid, Polestar, Rivian, etc because none of those are stable enough companies yet.
Isn’t Polestar just a brand extension of Volvo, kind of like other auto company brand extensions (like Toyota created Lexus or Nissan created Infiniti)? I know they just recently did an IPO by SPAC merger, but Volvo still has a very large stake in the company, and my understanding is that Volvo dealerships will be service locations for Polestar…
