>>Tesla is known for having very unhealthy relationships with suppliers

That is pretty much all of automotive, Tesla is not an outlier. All of the big manufacturers know they have their suppliers over a barrel, and they exploit that at all times.

I don't know why any supplier ever agreed to net 30 (or more!) without something like the board members' personal finances as guarantees. Companies can just declare bankruptcy, then you're lucky if you're towards the front of the line of creditors.

So you believe every vendor that supplies a screw or push pin to Ford or GM has a personal guarantee from a Ford or GM Board Member?

Really?

Strawman argument, we aren't talking about single screws. We are talking about lots of tens or hundred of thousands of screws.

But, yes, if you want the supplier to loan you money there should be collateral. I don't know why suppliers allowed it to become industry practice.

Because Unsecured debt has been a thing forever, at every level of the economy.

I mean a huge part of the population carries around an unsecured line of credit with them every where they go, aka a credit card.

I have been in the business for decades, having bought millions of dollars worth of equipment, never once have I had any vendor ask me to get a board members person guarantee to give me a line of credit, nor do I believe have I ever heard of my company asking any of our customers do to anything of the sort.

It is very strange that you (and seemingly others given the downvotes) think it is a common practice or should be a common practice.

Your credit card is guaranteed by your personal finances and there are actual consequences for you if you default or declare bankruptcy.

It is weird to have a completely unsecured loan that is dischargeable by bankruptcy that won't cause personal loss for the owners.

You can be angry that people think it is weird, but if the best you can come up with is, "I am a big important person and it is industry practice because it is industry practice," you're not going to convince me it is good for the suppliers to have historically allowed this to come about.

>>our credit card is guaranteed by your personal finances and there are actual consequences for you if you default or declare bankruptcy.

These are the same consequences a business face if they do not pay vendors on net 30 terms...

>It is weird to have a completely unsecured loan that is dischargeable by bankruptcy that won't cause personal loss for the owners.

Having been through personal bankruptcy, its not.. In Chapter 7 Bankruptcy a person can discharge many unsecured debts while keeping their primary home, and most personal possessions, this is a common. There are several ways you can come through Chapter 7 with secured debt being protected / excluded (meaning you still owe) from the bankruptcy and all unsecured debt being discharged.

it is common myth that to be "bankrupt" means you have nothing and are homeless, because of this myth people often wait far far far too long to seek legal advice around their rights under the bankruptcy laws and often do something stupid like paying off unsecured debt with secured 2nd mortgages, or HELC making their situations FAR FAR worse

>>you're not going to convince me it is good for the suppliers to have historically allowed this to come about.

If ti was not good for the suppliers they would not do it

To be clear I am not even sure what you are on about, my orginal comment about Automotive Companies being predatory to vendors has NOTHING to do with net 30 terms, or unsecured debt in the form of accounts payable.

Hell every supplier I know would be happy with Net 60 terms..

large Auto suppler agreements have all kinds of provisions about quality, On time delivery, and various other performance metrics that the companies can use in very creative ways to claw back money already paid to the vendor, then there are the changes to production forecasting that requires suppliers to spin up or down capacity, staffing ect, only to have it then change soon after.

i could go on and on listing abusive practices that have NOTHING AT ALL to do with the very common practice of invoicing customers for goods sold

It is not good for suppliers to allow no collateral. But they are being forced into. That is what the market has naturally created for supplier. Think about this, a company produce a widget to sell to consumer. Before they can sell, they have to "invest". If the entire world that producer is the one to produce, then consumer can put up the deposit which in this case act a bit like collateral (though more of partial payment). Now, imagine ice cream producer ask you to pay up first, even if you like that brand, you probably will just walk to another seller who offer you the same thing but without the pay first. Now imagine there are many producers but only one of you. Every producers will automatically waive the deposit or collateral to get you to buy from them. This has always been the case in suppliers world. In some instance, supplier able to get collateral but in the form of insurance. That gets very complicated and I feel like it would be harder for you to relate unless you have some finance or business background.

There is no need to "convince" you of anything. This is simply how things operate in the industry. No one involved in those transactions cares what you think because your opinion means nothing.

Suppliers can't do that or else they lose the contract to supply. You should work in business especially finance side to see no such thing as suppliers' demanded collateral. At best they "bribe" the finance controller/purchasing manager to get a better preferential treatments for them (e.g. clear their invoice faster, or better payment terms from 120 days to 30 days). Collateral may exists if suppliers are limited, e.g. during the chip shortage. Even then, they don't ask for collateral but downpayment deposit or partial payment upfront. It is simply not due to their willingness to turn into industry practice. They are pretty much being pointed a gun to their head to do so. If not, lose the contract and likely business face bankruptcy (akin to death from being shot to the head).

Because another supplier will happily agree to the "riskier" terms. Competition baby.

You mean non-competition on the buyer side. Oligopoly baby!

A better term in this case is monopsony.

Net payment terms really are not part of the problem here.

Monopsony. So you make, say, seatbelt buckles? Congratulations there are like basically six companies that buy those in meaningful quantities. The power imbalance is inevitable.

Was in a local bid for a tender. Foxconn was demanding net 180 or off the program if supplier can’t stomach it.

> That is pretty much all of automotive, Tesla is not an outlier. All of the big manufacturers know they have their suppliers over a barrel, and they exploit that at all times.

So? Is it okay then? It's only common because of this type of acceptance.

> And what happened in response to that? He became wealthiest person on earth and for years was considered second coming of Jesus in the tech circles, that only started to fade recently.

No, it wasn't in response to that. I don't understand this sort of deliberate misinterpretation. It happened because the world rewards production. For example, Tesla jump-started the world's EV movement, and leads it by volume. SpaceX means the US aren't currently trying to get a Russia that it's in a proxy war with to take its astronauts to the ISS.

> It happened because the world rewards production.

The world rewards anticipated production - I find Tesla's P/E absurd.

Because it was (and to me still is) absurd.

At one point, Tesla was worth more than: Toyota, Volkwagen Group, Hyundai/Kia, General Motors, Ford, Nissan, Honda, Fiat Chrysler, Renault, Suzuki, Daimler, BMW, Mazda and Mitsubishi combined. (Plus several Chinese manufacturers: SAID, Geely, Changan, Dongfeng).

The hypothesis is Tesla becomes like Apple in cell phones vs all the other manufacturers. Apple may not have all the sales but it has most of the profits. Not saying that will happen with Tesla but it's a possibility.

Well, not exactly. It rewards current production, i.e. people buy Teslas, as well as future production, i.e. we think you can make us money based on your track record.

I should say more precisely that the world doesn't reward Tesla; it thinks it can get more out of Tesla than it gives it. Which is probably the least worst system.

Their PE is “only” 65 atm, which isn’t THAT crazy. At one point it was 1000 lol. It’s been falling since 2020 when they started being profitable.

Yes and bodies that reward growth over all else develop cancer.

Not everyone blindly rewards production at all costs.

I'm sorry, I've no idea how this relates to anything being said here.

I think it implies that Musk and or US society are cancerous. Quite a bold assertion but one that doesn't seem wrong on the face of it.

Of course it's wrong. Without specifics it's 100% wrong. With some very well-chosen parameters that percentage might drop slightly, but I can't see how.

There is a parallel between chasing growth at all costs biologically and financially. Both heuristics produce ugly results.

Just pointing out that rewarding growing things absent any sort of elegance or tact can result in oligarchs having too much undue influence just as cancerous growth in biology diverts too many resources toward undeserving cells that mismanage it.

We have to be aware of when things can go wrong to develop an appropriate immune response.

America jmp started it via incentives and Tesla happened to have the business model.

It didn't happen to have anything.