What are the accumulated losses so far? $5-10B? Even if Tesla were to spend another $50B and go bankrupt, I would still maintain it's great.
What Tesla has achieved is so important in the long run for the environment, for ending the strategic dependence on oil dictatorships, and for renewing the belief in technology. And the cars are really nice too.
Speculating, as some do, that the EV revolution would end with a Tesla bankruptcy is silly, not just because Google and Apple (and probably other companies) would be more than happy to take over before or after a bankruptcy, but also because consumers and the the auto industry have now been shown where to go. None of us can unlearn what Tesla has taught us. There is no way back now. Tesla has already won.
Ever since we decide to concentrate farming and transport most food to mouths, we've relied on oil as a life-support system for 7.5+ billion people. There is no going back to pre-oil without a lot of those people dying, and oil will eventually be too pricey to extract. We should think harder about post-oil.
I've written about this before if you're interested: https://medium.com/@simon.sarris/the-moral-technology-6413ca...
This statement makes me so happy, (a) because I feel I've noticed the same thing, (b) because it gives me faith that people actually care about putting money in good/important places, and (c) it implies that the economy understands that sustainable transport is actually an important cause, to the tune of $50B. This is what investment should be about: People cooperating to improve the way things are.
Model --> https://28oa9i1t08037ue3m1l0i861-wpengine.netdna-ssl.com/wp-...
Full Article --> https://waitbutwhy.com/2017/04/neuralink.html
Also Tesla. BMW announced usable fully electric Mini and other manufactureres such as MB and Volvo are full on. I am sorry to say but Tesla will go down very soon....it's cool and everything but 'normal' businesses would already be down in similar position. You can't also really compare it to Amazon who actually formed the market. Tesla is competing with 100 years old manufacturers who nailed production down to the millionth of a cent.
There will always be these monopolistic business practices and there is nothing much we could do about it.
We'll have to wait and see if the fully electric Mini is going to be any better.
But we can look at the hybrid Mini Countryman S E, cleverly getting AWD from putting the electric motor on one set of wheels and ICE on the other set. Great idea. Except... it gets 27mpg. Terrible. The only excuse I can see is that it's a "performance hybrid", i.e. they weren't trying to be particularly fuel efficient.
Volvo currently sells only big cars that get bad gas mileage even in the hybrid versions.
I'm not holding my breath for any of these companies to save the planet.
my thinking is that bmw is going to sell electric cars with a diff spec in the US, same way bmw doesn't sell 1.5L 3 series there.
that said, given China's penchant for American sized cars, I feel like they're missing out on the two biggest economies in the world focusing on europe/asia exC.
Elon has already won. His goal was to get the whole EV thing really going. Looks like the snowball is already rolling downhill now.
I know that 'anyone can make an electric car' (they did on Top Gear), however Tesla have worked with the toolmakers and component suppliers to build a factory to make cars, this is the main creation, the factory not the car.
Whilst older petrol hears have been sneering about range anxiety, something wonderful has happened to what is going to happen with the energy market and these electric cars. Soon you will be able to get a plug in the lamppost by your door fitted by your electricity company, this will be a bit like getting a satellite dish installed, except the lamppost will work for three cars. Then you get the option to buy cheap electricity from the windfarms when it is windy and sell it back to the grid at peak demand time, earning someone a profit. You won't need to go to garages and those extra long journeys would work out fine too - superchargers are there for that.
This fit - domestic energy demand, variable supply renewables and cars that have large batteries for range reasons - is all coming together nicely.
Tesla could make a 2CV grade electric car if they get the manufacturing sussed. In this situation the ICE dinosaurs just can't change quick enough and it becomes Nokia/iPhone again. This probably summarises it for me, what Tesla are doing is that revolutionary a change, much like what Apple did.
... and except that you need to have a bunch of guys with heavy machinery come dig up and re-lay the road, so that the electricians can come and lay the new 60 A cables for the lamppost, while another bunch of guys is upgrading the neighborhood distribution transformer which has reached max capacity, apart from those minor details, it's exactly like one guy screwing a parabolic piece of aluminium to your house wall.
Yeah, one thing the environment definitely needs is our continued reliance on personal transport vehicles, more roads, and more mining.
How anyone can frame this as being good for the environment is a joke. Yes, it is better than a gas car. That is a long way for actually being green.
Lets just not lie about what it is. Time to start having a real conversation about what we need, rather than slightly diverting course by a few degrees, hoping the iceberg is really thin.
In fact, in places it will likely have increased the CO2 emissions, again rounding error figures, due to the electricity generation mix and associated losses with generating that electricity (30-60% efficiency), plus transport losses (0.5 - 10%), plus charging loses, plus the efficiency of the motor itself.
[1] https://greentransportation.info/energy-transportation/evs-n...
[2] https://electrek.co/2017/06/05/electric-cars-cleaner-than-ga...
[3] https://cleantechnica.com/2017/05/16/coal-use-china-india-li...
Petrol cars can do a lot better than 20%
There is a study, link below, showing what the subsidy should be for electric cars and in a lot of places in the US the subsidy should be negative.
Granted things might've changed since then, but probably not to overturn the gist of it, which is the point I'm making. In places, EV cars are not the solution.
Quite happy to be proven wrong, at the of the day I've only got a passing interest on the topic so I'm not exactly 100% up to speed with any new studies, etc ...
https://www.citylab.com/environment/2015/06/where-electric-v...
"[I]t’s important to realize that the situation reflected in this data represents the past, not the present. States across the country are rapidly cleaning up their grids, thanks to cap-and-trade programs, investments in renewable energy, tightened air quality standards, and more coal plants put to sleep." [2]
"Here’s the cool thing about electric vehicles in the U.S. right now: In many areas, the longer you own one, the cleaner it gets." [1]
[1] https://www.citylab.com/life/2017/06/electric-vehicles-are-c...
[2] https://www.citylab.com/transportation/2016/12/the-surprisin...
In the short term, yes, folks will need to rely on existing fossil fuel technologies to build factories, transport materials, and power the grid. That is because there is no other economically viable option. To expect the entire clean energy industry to bootstrap itself only using clean energy is a fallacy. In 20-30 years when the grid is more green and clean transportation is widely available, then arguments like these would be valid.
I think it is too late and too optimistic to hope for CO2 reduction.
The world only aims for a moderate decrease in CO2 rate of increase.
http://www.businessinsider.com/is-eating-meat-bad-environmen...
What is the net change in CO2 usage that results from the investments Tesla has made?
There's a massive difference in Amazon raising cash vs Tesla and the form of capital raise is also huge. Amazon has only had one secondary offering (2003) while Tesla has had an offering every year except 2014. The Amazon "big capital" raise you point out was in the form of vanilla corporate bonds while Tesla has only issued convertible bonds. Had Tesla wanted to issue regular corporates (more than likely junk rated if their convert ratings are any indication), I'd imagine they would struggle to meet the interest payments. Additionally, any large corporate issuer with good cash flow has been taking advantage of low interest rates and Amazon is among them.
Tesla is raising money and is valued like it's a growth stock and it should. Amazon has been and arguably still is valued as a growth stock but has been internally financed to a much larger degree.
This is not to say that Tesla is doomed blah blah blah. It's to illustrate that Amazon has cash flow while Tesla doesn't and is much more susceptible to the whims of capital markets. I'd also like to point out that Amazon is probably more able to weather economic cycles than Tesla is and that's primarily when cash flow poor companies either aren't able to raise or raise at ridiculous terms.
Apple is routinely making several billion dollar bets. They invest Amazon & Tesla debts regularly but it just doesn’t make a dent.
At some point a cash pile is so large it’s basically impossible to spend responsibly. Even with big bets.
They have so much cash they could buy Disney outright if they wanted to. Think about that for a second...
Yeah and they don't.
Why don't they buy Tesla? Why don't they buy Disney? Why don't they attempt to reinvent home construction which is a stagnant for the most part? Why aren't they the next Bell labs? Why not reinvent major home appliances most of which are a huge drag and a dumpster fire of usability? "This changes everything" was their tagline for a phone. Why stop at the phone? Why not redesign everything?
Why stop at a nice looking HQ, why not create Castalia? Why not create a house of study and give one hundred architects and designers a rest-of-their-life pension and see what they come up with? Because it might cost too much?
Why not pick a hard problem of any kind and actually tackle it? Because Q3 might look bad? Is that why?
Why don't they do anything ambitious with that hoard? Really ambitious. Not hire more CS students for machine learning and deciding which iPad to kill next to make Q3 look the best.
If you ponder the existence of money-to-imagination ratio, Apple is dead last. They are guilty of all the interesting things they do not do. Just an astonishing lack of real vision.
Castalia was an isolationist academy where young men spent all their time studying glass toys they falsely believed modeled all art and history, while the rest of the world slowly collapsed around it.
Apple's already built that.
In September, iOS 11 will allow 100s of millions of iPhones and iPads to use AR apps which is important for when they eventually want to sell these customers Smartglasses. I also expect Apple to build a next-gen Siri in the near future. One that can intelligently program its way out around natural language. Similar to the Samsung acquired Viv.ai
I plan on buying a Model 3 in a few years but I think Apple has bigger plans for autonomous driving. Their physical car project has been shelved, for now, turns out it's pretty hard to build a car company with in an already established computer company. Autonomous driving system in the works, which could put them in the position to partner with other car companies, implementing CarKit and Self driving branded by Apple.
Apple just believes those companies have a better shot at accomplishing those goals than Apple does and it's fine letting them continue.
You want us to believe Apple is a charity now?
Pretty sure it's more about paying repatriation taxes.
I think it's worth considering that prices for assets just might be a little high right now.
I have no idea what Apple is doing and don't have any specific insights but I have, in the past few years, found myself passing on certain growth and investment opportunities because I felt the prices were quite high relative to what I think the prices could be in the next 3-5 years.
Why buy Disney now when you can buy two of them a few years from now ?
On the flip side, I think there is some political risk for Apple here in sitting on too large of a cash horde ... there is a point when the amount of money becomes too big to ignore, politically. Consider that a 1% taking of some form amounts to almost $3B. At some point someone will figure out how to structure such a taking ...
Have you seen what Apple charges for their products?
That’s not a failure of imagination - that’s business focus.
What good does it do for AAPL's business focus to sit on cash for years? The management paralysis is only made more obvious by the cash hoard. Even their existing products (pro desktop) they let languish.
If you don't have the imagination and need a past example, consider the success of AWS. The project was born out of Bezo's edict early on in the creation of Amazon that everything the company does internally must be able to be turned into a service. Almost every analyst in 2006 was against the idea, it was not at all a business focus at the time and Bezos himself admitted it would not be a forseeable revenue stream:
> Stifel Nicolaus & Co. (SF ) analyst Scott W. Devitt notes: "There's not going to be any economic return from any of these projects for the foreseeable future." Bezos himself admits as much. ... "We think it's going to be a very meaningful business for us one day," he says. "What we've historically seen is that the seeds we plant can take anywhere from three, five, seven years."
From this 2006 story: https://www.bloomberg.com/news/articles/2006-11-12/jeff-bezo...
Plenty of people call AWS obvious now, and it's easy to fall into that mindset. It's worth remembering that almost everyone back then thought it was a big folly. Why burn the cash making AWS? What's the business focus?
In 2011(or 2010?) AWS revenue was still listed in the "Other" column on their 10K, even though it was by then their #1 area of growth. Now? It's a sea of pure profit.
The scale of the success surprised even Bezos, but he had enough imagination to take real risks anyway.
What's the difference between a hobby, a folly, and the future?
But one of the key constraints of functional orgs is that they require incredible focus and discipline or the entire structure breaks down. Apple doesn't have iPhone marketing and iPad marketing that report to the boss of iPhone and iPad respectively, they just have Apple marketing that is in charge of making Apple better and reports to the boss of Apple.
That's a huge reason why they were able to self-cannibalize their most successful product so ruthlessly. Because there was no iPod boss who's bonus depended on iPod sales and would throw grit in the wheels of any rival projects. But you can only do this when every single employee is able to hold the entire corporate business model in their head.
You think Apple would do better under a more divisional structure. That's fine, the pros and cons of functional vs divisional have been debated for ages. But it's also a moot point because Apple is never going to switch to a divisional structure and without switching to one, they can't do all the things you want them to do.
To be able to vertically integrate at a moment's notice.
Of course, that was 2004, about 1/20 of today's price. <sigh>
The interesting thing to me is that we know that Tim Cook (and other cash rich companies sorry to pick on Apple) cannot spend the money wisely. And they know it too. That's why it's sitting there, where "sitting there" is the best ROI they can think of so far. I think the existence of such large cash piles should worry us all more than it does.
* just kidding if I bought AMZN at IPO and sold it I'd take it pretty badly.
[1] thought of one. If you don't remember pets.com, you owe yourself a treat: https://en.wikipedia.org/wiki/Pets.com
https://www.youtube.com/watch?v=E0_tfoTTGOQ
At least the absolute $s weren't that big for me at the time. And the lessons formed a base of experience that served me well as I had more to invest. It's been much better since.
I partially disagree on this. Apple's $250 Billion dollars stashed in Europe is both a way to defer paying taxes on these profits (the main reason), and a huge gun pointed at the head of the US government (a secondary, but important reason). That amount of money is now big enough to count as a constant threat to market stability, currency stability, etc.
I'm not sure what do you mean by market stability but I doubt very much about the currency stability thing.
The USA government (Fed included there) can issue or tax money whenever they want and have total control over the monetary economy.
For comparison's sake, the FED quantitative easing program was about $4.5 trillion
Wasn't this expected after Steve Jobs passed away?
The real troubles for Apple will start when they will end up exhausted milking iPhone and its ecosystem of products.
The same will happen with Amazon if Bezos goes away and with Tesla if Musk goes away. These are largely companies driven by individual visions, take them away and they are no better than any other company.
In fact, I'm pretty sure it's now many times larger on its own than the entire online shopping industry was when it started.
I am skeptical, though, that it should continue on this trend. Maybe find new markets (like AWS), but they need to watch out for the tendency of organizations to attempt to grow themselves far beyond what makes sense.
Similarly, GM or Toyota do not need to take on huge investments to grow big. They are already very big.
It hasn't changed since the breakup of Ma Bell in 1982, the Baby Bells having re-formed into two companies: Verizon and AT&T, who control the last mile of wire and wireless, the network neutrality of which they have been fighting against. It hasn't changed since the big eight accounting firms became the big four accounting firms. It hasn't changed as Google and Facebook swallowed up all online advertising, search, social networks etc.
The idea that the zeitgeist has shifted from monopoly is absurd. Billionaires from Warren Buffett to Peter Thiel seem to think otherwise. In every industry, mergers and acquisitions leave an increasingly fewer companies with control of more and more of their markets. The data is out there and quite obvious, you really have to put on some kind of ideological fantasy land kool-aid trip to see otherwise.
[1] https://www.bloomberg.com/news/articles/2017-07-14/big-oil-j...
[2] https://www.forbes.com/sites/timworstall/2017/04/30/indias-a...
[3] https://thinkprogress.org/norway-aims-to-end-sales-of-fuel-b...
[4] http://www.fleetcarma.com/buying-ev-low-oil-prices/
[5] http://insideevs.com/monthly-plug-in-sales-scorecard/
[6] http://www.infomine.com/investment/metal-prices/crude-oil/5-...
[7] https://www.pluglesspower.com/learn/driving-electricity-chea...
Tesla will make some cars for Tesla fans. Tesla will make billions selling key parts to everyone else. So they'll be the new Bosch of EVs, really.
I do hope they succeed this is a major market; automobiles and such; that needs new infusions to move forward both in technology and design. However they are at a very dangerous point in their history and how they execute over the next six months is most important.
Have you even heard of electric cars like Renault Zoe, Chevy Bolt, BYD ev300? All with range from 180-230 miles, selling since 2016.
Traditional car makers are just extremely slow to adjust, because they have never faced any real disruption. They've effectively been selling the same product for decades with only some marginal and incremental improvements. Tesla, on the other hand, is using the SV model of doing business: First create an MVP, then iterate rapidly until you have something that is so good, it can steamroll the market. When Tesla was founded, traditional car makers laughed at them, claiming they would never be able to even build a proper car. These comments are eerily similar to what the Palm CEO had to say about Apple and the IPhone ten years ago: That a couple of computer people from SV would never be able to build a proper phone.
Traditional car companies are entirely unprepared to deal with the kind disruption that is coming to their market. And that does not only concern EVs but also self-driving cars and the sharing economy. I don't think they can stop Tesla. The real question is how much of their business they will be able to save.
Is there a term for the dismissive attitude tech people have for any older company?
[1] https://www.forbes.com/sites/adamhartung/2017/03/22/sears-to...
[2] http://io9.gizmodo.com/25-obsolete-technologies-that-future-...
They already have. Its too late. Who else is going to be producing 500k EVs a year in the next 3-5 years? No one.
Renault-Nissan already produce around 100k EVs per year. Is it that hard to imagine them doing 500k in 5 years?
What about China? They're certainly making plans for these kinds of volumes.
“What people should absolutely have zero concern about, and I mean 0, is that Tesla will achieve a 10,000 unit production week by the end of next year. […] I think people should really not have any concerns that we won’t reach that outcome from a production rate.”
Tesla certainly has a market, but it isn't competing for the same consumers that Honda is. The market Tesla is competing for is significantly smaller than 17M.
The amount of people who can afford any new car is not the same as the number of people who can afford a new Tesla.
Across their entire lineup BMW sold 2.4M cars in 2016 (including MINI) [1]. I just don't see them selling 500k/year in the immediate future. Once they add models (the Y, a replacement for the Roadster, and a Truck), then they very easily could blow through that rate. But baby steps... I'd rather see Tesla exceed modest expectations than fail to meet unrealistic ones.
[1] https://www.press.bmwgroup.com/global/article/detail/T026708...
Also... nissan has an interesting play here. Waiting to see what they do.
[1] https://www.cnbc.com/2017/04/17/demand-for-electric-vehicles...
[2] https://www.scientificamerican.com/article/electric-car-sale...
It can be your fantasy, your dream, your oprinion, that's all very fine. But you cannot say that is what is going to happen, that's just one bet, one possibility (and not the most likely IMO) amongst several possibilities.
By the way Tesla hasn't made a battery, ever. They are made by Panasonic. Tesla packs them into little metal boxes.
When a business makes $1 of profit, it's that business saying "we couldn't find a single project across our entire organization that we believe would have given us a higher expected return than that dollar sitting in a bank account."
It's not that troubling. Even massive companies (AMZN in 2014) need to raise big capital. When you have something you want to do, you get the money and spend it.[1]
This seems to be constantly framed as negative ("they aren't making any money!"), but that's the correct growth strategy for what Musk wants to do. Nobody adds tons of debt just to not use it. Cribbing from my comment yesterday:
I've owned TSLA a long time and I hope they don't start making money, and continue the Amazon model and actually build something with years of minimal or no profits, re-investing vigorously. Amazon had almost 20 years in business without "making any money" except a few quarters where they accidentally eked out some non-trivial profit.
But without their spending, they wouldn't have become Amazon. Without Tesla's spending, they won't be a future company, they'll just be a tiny car company.
For some historical comparison: Amazon added $6bn in debt as recently as 2014. Even very large and very successful companies take on debt to fuel growth far beyond "bootstrap" numbers. Both companies leverage as much investment money as they can to build and expand as fast as they can. If you look at Amazon's raises in the late 1990's you'll find something more comparable to Tesla today relative to revenue. In 1999 Amazon raised $1.25 billion, and their revenue for the year was $1.64 billion. So they raised proportionally way more money than Tesla has so far this year. And spent it all!
full comment here: https://news.ycombinator.com/item?id=14915317
[1] The flipside of this is that it's an indictment of companies that hoard huge amounts of cash, like Apple. That they can't find a way spend it building future stuff is a signal that they are out of big ideas, and (in the case of Apple) have been for some time.
Musk and Bezos, on the other hand, have clear ideas of what to spend money on to build something.