By on February 20, 2014

tesla-model-s-01

Tesla announced their Q4 2013 earnings saw a total net loss of $16 million while pulling in an annual revenue of $2 billion on the strength of higher sales and more efficient manufacturing methods.

Automotive News reports the luxury EV automaker’s annual loss for 2013 totaled $74 million, while Q4 revenues using GAAP accounting standards were $615 million; non-GAAP revenue for the same period totaled $716 million. Contributions to the fourth quarter revenue stream included $13 million via a powertrain-sharing program with Daimler and Toyota, $15 million in regulatory credits, and $5 million from favorable foreign currency rates.

Tesla’s crystal ball for 2014 sees deliveries climbing to over 35,000 units worldwide through expansions into new markets — including China, Australia and the United Kingdom — production output increasing from 600 to 1,000 units/week, and the introduction of the Model X SUV.

Near-term, deliveries for Q1 2014 are predicted to hit 6,400 units, though production of the Model S will be constrained due to battery-cell supplies. Tesla CEO Elon Musk hopes to remedy the issue in the long-term through his “giga-factory” concept, meant to supply the automaker with lithium-ion packs while protecting it from forces outside of their control.

Finally, Tesla’s assets for the outgoing year were $846 million in cash and $738 million in equipment and property, including a new body-in-white assembly facility that will serve as the starting point for the Model X when units begin to roll off the line early next year.

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121 Comments on “Tesla Q4 Sees $16 Million In Losses, Annual Revenue Climbs To $2 Billion...”


  • avatar
    Astigmatism

    Apparently the market considers this good news, based on results today, but maybe they know something we don’t. I’m not so worried about the net losses as the trend in EBITDA (which I haven’t seen for Q4 but looked pretty grim for the rest of the year): http://www.wikinvest.com/stock/Tesla_Motors_(TSLA)/Data/EBITDA

    • 0 avatar
      Pch101

      The market is praying that Apple will buy the company. (They had better hope so; no conventional automaker would buy out the firm at the current valuation.)

      Meanwhile, the speculators are preying on the dumb money that is driving the share price.

      As Tesla sells more cars, its costs per unit are rising. That’s backwards from what one would hope that it would be.

      Incidentally, I don’t believe that it’s a coincidence that news of the Apple story leaked one day before the earnings announcement.

      • 0 avatar
        snabster

        At the current valuation, TESLA is more than likely to buy another automaker. Or supplier.

        Pump up the stock, buy something real with it. Old game. Well played though.

        If the apple news came from TESLA, pretty big violation of the quiet period rule.

        • 0 avatar
          Pch101

          Apple probably won’t buy Tesla; even the news accounts suggest that. But the hype behind the story seems to have captured the imaginations of those who read the stories.

          If I recall this correctly, Apple has denied there being any truth to it, while Tesla has remained mum.

          • 0 avatar
            DeadWeight

            You & I disagree over whether or not Ben Bernanke & the Federal Reserve ran sane monetary policy over the course of the last 5 years, but I couldn’t’t agree more with your comments regarding Tesla.

            The news leak of a possible merger of other “tie up” between Apple & Tesla was scripted specifically to support the Feels miracle growth story, at a time when more and more astute questions are being raised not only about its nosebleed valuation (market cap), but its very long term viability as a going concern.

            And you hit on a critical point that is extremely spoken of by ANYONE; Tesla has what appears to be reverse economies of scale; that is, its production costs are apparently rising on a per unit basis as it produces more units, which is a terrifying position to be in, especially in anything that deals with commodity products such as motor vehicles, electric or not.

        • 0 avatar

          Who’s in a “quiet period?”

          Let’s see. TESLA is still losing money, needs to invest in a battery plant, product development, charging stations, AND its own dealership points, and they have the money to buy another car company?

          Why would they do that?

          • 0 avatar
            CRConrad

            @ruggles: “Let’s see. TESLA is still losing money, … and they have the money to buy another car company?”

            Depends on how you define “money”: Many deals of this kind are done with the buyer paying not in cash, but its own stock. What “snabster” intimated was that Tesla’s stock at the moment is overvalued, so buying stuff with it means getting that stuff cheaper than by paying for it in cash.

            “Why would they do that?”

            As snabster suggested, to get something of real value for what may — he seemed to be trying to imply — perhaps be nothing much *but* over-hyped expectations.

      • 0 avatar

        Why are the costs per unit rising with each car sold?

        • 0 avatar
          Pch101

          I’ve only glanced at the numbers, so I can’t be sure.

          But the rising SG&A number would suggest to me that selling cars direct ain’t cheap. It provides Elon Musk with a chance to brag about high gross margins, but then he gets to give that money back below the line and ultimately book a loss.

          • 0 avatar

            Interesting. Maybe Ruggles can chime in on the expense of selling direct?

          • 0 avatar
            Pch101

            I’m not sure that his experience translates well for understanding this particular situation. Tesla has done a fair job thus far of avoiding some of the overhead costs of traditional dealerships (although that probably isn’t sustainable over the long haul for an independent Tesla.)

            I would guess that Tesla’s efforts to expand international sales and to “lease” cars come at a price. The 10-K for 2013 isn’t out yet, but this was in the third quarter 10Q:

            “SG&A expenses during the nine months ended September 30, 2013 were $184.1 million, an increase from $104.5 million during the nine months ended September 30, 2012. SG&A expenses increased primarily from higher headcount and costs to support an expanded retail and service footprint as well as the general growth of the business. The $79.6 million increase in our SG&A expenses consisted primarily of a $36.8 million increase in employee compensation expenses related to higher sales and marketing headcount to support sales activities worldwide and higher general and administrative headcount to support the expansion of the business, a $17.4 million increase in office, information technology and facilities-related costs to support the growth of our business as well as sales and marketing activities to handle our expanding market presence, a $13.5 million increase in professional and outside services costs and a $9.7 million increase in stock-based compensation expense related to a larger number of outstanding equity awards due to additional headcount and an increasing common stock valuation applied to new grants.”

            A lot of those costs would ordinarily be carried by franchised dealers, and they’re high. (On the other hand, it does provide for higher revenues per unit, since Tesla is booking retail revenues instead of wholesale revenues as do the major automakers.)

          • 0 avatar

            Regarding the expense of selling direct: Since it has never been done successfully with new vehicles on any scale there is no template. One thing I know for sure. Local entrepreneurs do a MUCH better job than OEM types. That’s been proven but Elon Musk insists on make his own rules. It does allow for some accounting figures that don’t look like a traditional OEM. Most importantly, the money invested in the corporate owned sales points could be better used for product development. I expect they reach a decision point on the issue within 3 years. They’ve done amazing things thus far. But guaranteeing residuals at such a high rate is just an unimaginable risk. It seems to me to be an act of desperation.

          • 0 avatar

            > Local entrepreneurs do a MUCH better job than OEM types

            That must be why they’re so fond of legislation to keep the OEM’s out. My question is why Ruggles is considered a worthwhile expert on this subject? I’ve seen some of his writing and it appears remarkably free of insights much like the comment here. Maybe someone can point me to the stuff that shows otherwise. Thx.

          • 0 avatar
            Pch101

            Here’s Tesla’s dealer problem in a nutshell:

            -Tesla wants salespeople who will be strictly dedicated to selling new Teslas and who are willing to spend considerable time and effort on evangelizing the product and the brand. Tesla doesn’t just want bodies with credit scores, it needs eager converts who will enthusiastically bring others to the fold.

            -Dealers want to sell a car — any car — TODAY.

            This creates an obvious conflict. A Tesla franchisee with commissioned sales people will steer customers toward the used car lot — that’s a quicker, easier sale that requires less training and produces more margin.

            The Tesla dealer will then demand incentives from the OEM when the new EVs aren’t selling, as is customary in the car business.

            So Tesla really has little choice in the matter — if it wants to sell its own cars, its brand and the electric car experience, then it will need to do the job itself. But this is very expensive, and the ability to keep the gross by skipping the middleman doesn’t offset this greater expense, which hits SG&A hard.

          • 0 avatar
            Vulpine

            @agenthex: “My question is why Ruggles is considered a worthwhile expert on this subject?”
            Ruggles claims to be a dealership advisor–an economic/procedural advisor to automotive dealerships across the country. As such, I am of the firm belief that he has a vested interest in keeping things as they are PLUS he is so ingrained with the current dealership system that he can’t imagine any other system succeeding; much as Sony ignored Apple with the iPod; Blackberry ignored Apple with the iPhone and Microsoft ignored Apple with the iPad. All of them ignored Apple with their direct-to-consumer stores because they had all failed with their own attempts; much easier to let someone else do all the hard work of selling.

            That is an argument that has run in nearly every thread that Ruggles enters and he seems unwilling to even offer Tesla the benefit of the doubt–it has never worked so it CAN never work. I don’t agree and have held more than one long discussion on the matter. He won’t bend while I say, “Give Tesla a chance either way.”

          • 0 avatar
            trackratmk1

            Selling autos direct HAS been proven out on a large scale.

            GM Brasil introduced an internet build-to-order purchase of the Chevy Celta and went on to sell 100,000′s of thousands of vehicles in South America this way. It proved so successful that they expanded their lineup of internet-sale vehicles to the Sonic, Spin, and Montana vehicles.

            A United States DOJ economist in the antitrust division wrote a white paper on the Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers elaborating on this issue. Worth a read for anyone interested in this thread.

            http://www.justice.gov/atr/public/eag/246374.htm

          • 0 avatar
            DeadWeight

            Don’t forget that Tesla really emphasized both its revenues and earnings on a non-GAAP basis, a d engaged in some truly wild accounting gimmicks.

            Here are the thoughts of Bloomberg’s Jon Weil who does a great job of delving into a few of these gimmicks:

            “Most companies that play the non-GAAP game goose their numbers by excluding expenses. Tesla does this, too. It backs out stock-based compensation, for example. But the biggest kick to its non-GAAP earnings comes from an increase in top-line revenue.
             
            The company reported third-quarter non-GAAP revenue of $602.6 million, which was about 40 percent more than its GAAP revenue. It achieved such a boost by transforming $171.2 million of liabilities into sales.
             
            Here’s how it worked. In April, Tesla started a new financing program under which customers have the option to sell their vehicles back to the company after three years for guaranteed minimum amounts. The accounting rules say Tesla can’t recognize all of the revenue immediately in those instances and must account for such transactions as leases. So after Tesla takes customers’ cash, it records liabilities for “deferred revenue” and “resale value guarantee” on its balance sheet.
             
            Mahoney noted two main problems with including so much of those amounts in non-GAAP revenue. Some customers wouldn’t have chosen Tesla cars were it not for the financing program. So the non-GAAP revenue isn’t comparable to Tesla’s sales before the program began, and it may overstate the true growth and demand. Plus, by adding back the resale-value guarantee, the company “assumes that nobody is going to return the vehicle, for purposes of the non-GAAP revenue,” he said.

          • 0 avatar
            Pch101

            You’re making too much of the GAAP thing.

            You need to understand what GAAP is — it’s a series of standards for auditing and presenting data.

            GAAP is good because it imposes some quality standards on auditing. But GAAP does not provide every ratio and performance measure that is useful for analyzing a company. In some respects, measures such as EBITDA are more useful than GAAP calculations such as net income, for a variety of reasons that I won’t go into here. Just so long as the non-GAAP figures were derived from GAAP accounting, they are useful.

            You can question Tesla without assuming that the numbers are bogus. Here are some basic issues that Tesla faces:

            -Its costs are resistant to scale
            -Its sales costs are necessarily very high, for reasons that I’ve explained elsewhere on this thread
            -Its ARPU is destined to fall
            -The company’s R&D has declined, in spite of its claims of having two more cars in the pipeline

            Q4 had a bump in ARPU, presumably due to the shift toward filling export orders. The losses shrank because of that. But unless Tesla becomes a major exporter, that bump is unlikely to last.

            On the upside, the company has built a strong brand and is well managed, which count for a lot. I doubt that it will fail, but the current market cap makes absolutely no sense at all. Unless demand shoots up and battery prices nosedive, this whole thing is a clever but precarious balancing act.

        • 0 avatar
          CJinSD

          Economies of scale don’t apply to scarce resources. Tesla is competing for battery materials.

          • 0 avatar
            Vulpine

            Battery materials (i.e. lithium) aren’t exactly scarce. The one plant in the US produces enough lithium to meet all current US needs and other ‘reservoirs’ exist within a reasonable distance. Oddly, the only visible sign that it is a lithium ‘mine’ is a number of evaporation pools sitting a short distance away from a plant that looks like a grain elevator.

        • 0 avatar

          My guess is increased investment in the type of stuff that will allow TESLA to survive. Product development, expanded facilities, recharging infrastructure, dealership facilities, etc. etc. They’d better be reserving so cash for when all those guaranteed residuals come home to roost.

          IMHO

      • 0 avatar
        Astigmatism

        Does anyone with serious money really believe this? It reminds me of the rumors that Sony would buy out Apple in the late 90s. It gives “idle speculation” a bad name.

        • 0 avatar
          Pch101

          Tesla is heavily traded. It’s hard to know how much of it comes from those who are betting on the greater fool theory, and how much of it is coming from the fools themselves.

      • 0 avatar

        > The market is praying that Apple will buy the company. (They had better hope so; no conventional automaker would buy out the firm at the current valuation.)

        Tesla seems to be traded more like an upstart tech stock than traditional car manufacturer. Anyone who’s seen the WhatsApp acq and various IPOs should see it’s all floated on the hopes and dreams of tomorrow.

        Tesla will no doubt make announcements about self-driving cars at the next dip in the stock and it’s off to the races again.

  • avatar

    GAAP? EBITDA?

    Can we spell out acronyms instead of assuming that everyone knows what they mean?

  • avatar

    Can Model S be serviced independently if Tesla flops? What repair documentation is available?

    • 0 avatar
      trackratmk1

      Good question. I believe there is some consumer protection law that requires replacement parts to be manufactured and remain available for a certain number of years after an automaker goes under. Happened with part numbers unique to Hummer, Pontiac, SAAB, etc however, they all had a parent company to depend on. TSLA does not.

      Even if the parts were available, it doesn’t mean shops are remotely qualified to work on one. Considering how many of the car’s systems rely on software and updates, you certainly wouldn’t get any new updates or bug fixes.

      Some states have gone through bitter battles with manufacturers over whether or not they should be forced to provide independent repair shops with proprietary software and vehicle specs. Would be curious to hear from any Tesla owners about their factory maintenance schedule.

  • avatar
    Lorenzo

    Only $15 million selling carbon credits? I thought it was a much bigger cash cow than that.

    • 0 avatar
      trackratmk1

      The $15M revenue is not ZEV credits, but some other regulatory credits.

      From the shareholder letter: “Q4 sales also included $15 million of regulatory credits revenue, but no zero emission vehicle (ZEV) credit sales.”

      Wonder who that $15M came from?

  • avatar
    Kendahl

    Back during the dot com boom, I remember a stock analyst claiming that it was no longer important for a company to make a profit. We all know how that turned out.

    • 0 avatar
      Astigmatism

      Hey, it worked for Amazon.

      • 0 avatar

        Amazon is different in that it can go on indefinitely while not making any profit. That is what “cash-flow positive” is. Same is true of another of Elon Musk’s ventures, SpaceX. However, Tesla is not cash flow positive (as far as I understand). If it continues to take losses, it will run out of cash in hand (which is why it’s mentioned — to give you a quick estimate), enter debt, and go bankrupt when creditors lose patience.

    • 0 avatar
      CJinSD

      Have you read “The Billionaire and the Mechanic”? Larry Ellison was thinking about retiring because he was so bewildered by the new paradigm of clicks and revenue trumping profit.

  • avatar
    Z71_Silvy

    Houde of cards company. They should change their name to Solyndra Motors.

    • 0 avatar

      Really, @ Z71_Silvy? I mean, I’ll be the first one to say that Tesla has never made a real profit. The only profit they have ever made was through accounting chicanery, and they continue to hemhorrage money.

      But to compare them to Solyndra? So you’re saying that Chinese companies are selling cars with equivalent or better dependability and output as the Tesla Roadster and Model S, while Tesla continues cranking out vehicles at a higher Kwh cost?

  • avatar
    E46M3_333

    My guess is that when BMW or Mercedes sells an $85K car, they make much more profit per unit than Tesla. The Model S’s battery alone costs $35K; that’s probably more than the direct material cost of the entire cars that the Model S competes with.
    .
    .

    • 0 avatar
      Beerboy12

      I think you will find Mercedes sells quite a bit more than 35,000 world wide cars in that price range and their cars are MUCH more complex to manufacture. I believe Tesla makes a fair profit on the cars, the just need to make more than they do.

  • avatar

    RE: “Depends on how you define “money”: Many deals of this kind are done with the buyer paying not in cash, but its own stock.”

    So TESLA would have to find an automaker willing to accept a highly inflated stock which would now be further diluted by additional issuance? Good luck with that.

    RE: “What “snabster” intimated was that Tesla’s stock at the moment is overvalued, so buying stuff with it means getting that stuff cheaper than by paying for it in cash.”

    Yes, my point exactly. With the additional element of further stock value dilution. Tesla has major stockholders like Toyota and MB who might have something to say about Tesla buying another car company. They know all too well the capital needs of an auto OEM and how suddenly things can turn around. Recall Daimler paid big money for Chrysler, then ended up having to pay Cerberus to take it off their hands. Also, I am not aware of any car companies that own their own dealer network. Does anyone think Tesla is ready to accept a group of franchised dealers?

    There are a host of reasons Tesla won’t be buying any car companies. In my mind it is a more likely scenario for Apple to buy Tesla, even though “likely” isn’t a word I’d use. I believe the folks at Apple know the difference between a vehicle and a gadget.

    “Why would they do that?”

    As snabster suggested, to get something of real value for what may — he seemed to be trying to imply — perhaps be nothing much *but* over-hyped expectations.

  • avatar

    RE: “That must be why they’re so fond of legislation to keep the OEM’s out.”

    OEMs keep themselves “out” through the franchise agreements the sign with private capital entrepreneurs. Where do you think new car dealers came from in the first place?

    If auto OEMs don’t want a dealer body, and the investment they bring to the table, they are free to buy them out. They can do so by negotiating buy out agreements before the franchise agreement runs out OR they can wait until the current one expires. There ARE states like TX where they will have problems because of state law. But there is nothing stopping them in most states other than the lack of capital and the knowledge of how to run car dealerships.

    RE: “My question is why Ruggles is considered a worthwhile expert on this subject?”

    Well, compared to you, I’ve actually done it successfully over the decades. I’ve put my money where my mouth is. Have you?

    RE: “I’ve seen some of his writing and it appears remarkably free of insights much like the comment here.”

    And how would YOU have any insight on the auto industry?

    RE: “Maybe someone can point me to the stuff that shows otherwise. Thx.”

    The unschooled and inexperienced aren’t likely to know when the encounter the truth. This is evidenced by your continuous bleating about OEM owned dealerships. You demonstrate a complete lack of understanding of the issue. Let’s start here. There are about 1200 Toyota dealerships in the country. How much would Toyota have to come up with to buy them all out? If you can come up with an answer even close to reality, you might have standing to have an opinion. Until then, you’re like arguing with an eight year old.

    • 0 avatar

      ruggles> There ARE states like TX where they will have problems because of state law.

      You mean most states that have franchise laws: http://www.justice.gov/atr/public/eag/246374.htm. Again, it’s unclear why Ruggles is considered by anyone to be an expert in this subject when he’s either ignorant of basic facts about the industry, or perhaps chooses to lie which isn’t much better.

      > Well, compared to you, I’ve actually done it successfully over the decades. I’ve put my money where my mouth is. Have you?

      Seems like an industry where ignorance or dishonesty goes a long way. In your professional experience which is it?

      > And how would YOU have any insight on the auto industry?

      No, the question is how someone who worked decades in an industry manages to produce such atrociously poor comments. For example I don’t claim much expertise here, but it was easy to find TX is hardly the only state with franchise law after googling for 30sec. When someone’s “expertise” is worth less than 30sec on google, they really should stop using that term.

      > How much would Toyota have to come up with to buy them all out?

      Surely after they defeat franchise laws in just about every state they only have to buy out the best ones? The ones you claim are making money hand over fist? Shouldn’t an expert be the one offering insights instead of opportunities for just about anyone to mock them?

      Speaking of which, it looks like you forgot where the reply button is again. I believe you also do this to get maximum exposure for your own comments on the main tread, and since some only check the box to get emails for new comments there, and have no compunction about abusing the software to get that little selfish advantage. But let’s ask the expert: why do you intentionally reply in the wrong place?

  • avatar

    RE: “Selling autos direct HAS been proven out on a large scale.”

    I should have said “In the U.S.”

    RE: “GM Brasil introduced an internet build-to-order purchase of the Chevy Celta and went on to sell 100,000′s of thousands of vehicles in South America this way. It proved so successful that they expanded their lineup of internet-sale vehicles to the Sonic, Spin, and Montana vehicles.”

    I have no knowledge of the S. American market. I can talk at length about the Japanese market, having done business there for years. I know enough about foreign auto markets to know they don’t translate well to the U.S. market.

    RE: “A United States DOJ economist in the antitrust division wrote a white paper on the Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers elaborating on this issue. Worth a read for anyone interested in this thread.

    http://www.justice.gov/atr/public/eag/246374.htm

    I’ll be glad to read the piece at the link. In fact, that might be a lively discussion.

  • avatar

    RE: “That is an argument that has run in nearly every thread that Ruggles enters and he seems unwilling to even offer Tesla the benefit of the doubt–it has never worked so it CAN never work. I don’t agree and have held more than one long discussion on the matter. He won’t bend while I say, “Give Tesla a chance either way.”

    You really have this wrong. I have said REPEATEDLY that NADA needs to back off. I chide them on this every time I have contact with them. I believe TESLA has every right to own its own dealer network AS LONG AS it owns them all. The problem is with a “mixed system.” I have been clear on this from the beginning including a discussion on my own blog from MANY months ago. My blog partner and I are in complete agreement on this. What I AM saying is that Tesla will reach a point where it will realize it doesn’t have the resources for product development and things like its own battery plant AND recharging stations across the world, AND own its own dealership points too. At that point I expect them to sell out their “dealerships” to private capital. IF they have been successful to that point, they can expect to receive large multiples from auto dealers. In the meantime, they keep their options open. Who knows, they may end up as a division of Toyota or MB. Or APPLE? Who knows. OR the Tesla experiment could collapse it another OEM or two or three bring more compelling models to market at better pricing.

    But to mischaracterize what I have said repeatedly causes me to doubt your reading comprehension. I like Tesla. If it wasn’t for the range anxiety and uncertainty I might be driving one. They are drop dead gorgeous. I have a personal dislike for Elon Musk over PayPal, BUT I give the devil his due. He’s gotten farther than most expected.

    • 0 avatar
      Vulpine

      @Ruggles: “I have said REPEATEDLY that NADA needs to back off.”
      Not in any thread in which I’ve commented. What you have said is that such lawsuits to block Tesla’s direct sales by NADA are unnecessary as Tesla’s direct-sales model cannot succeed in the long run.

  • avatar

    @ Vulpine: “I have said REPEATEDLY that NADA needs to back off.” Not in any thread in which I’ve commented. What you have said is that such lawsuits to block Tesla’s direct sales by NADA are unnecessary as Tesla’s direct-sales model cannot succeed in the long run.”

    Actually, I know what I have said and a mostly respond to a comment rather than the person who made the comment. It is simply to much to do to try to scroll through 100 posts to find the exact one to respond to. However, since I have REPEATEDLY made the same statement, I’ll stand on that.

    Yes, I HAVE OFTEN AND REPEATEDLY said that any lawsuits to block Tesla’s direct sales are unnecessary because Tesla’s direct sales model cannot succeed in the long run. The following is the comment I responded to:

    “That is an argument that has run in nearly every thread that Ruggles enters and he seems unwilling to even offer Tesla the benefit of the doubt–it has never worked so it CAN never work.”

    It won’t work unless Tesla decides to remain a niche brand. And that would probably spell its doom. I have nothing to do with whether or not Tesla is “offered” the benefit of the doubt. In fact, it has nothing to do with Tesla. It is a fact of life that there just isn’t enough capital available for that business model to succeed.

    RE: “I don’t agree and have held more than one long discussion on the matter. He won’t bend while I say, “Give Tesla a chance either way.”

    So feel free to disagree and invest in Tesla. I’m not holding anyone back. I’m just pointing out the realities of the market. What exactly is it I’m not “bending” on? What do I have to do with “giving Tesla a chance?” I already on record as advocating that Tesla be given a chance. What’s your beef?

    • 0 avatar
      Vulpine

      With that response, Ruggles, you’ve proven my point. Despite proof that a company CAN change an established paradigm, you insist that it is impossible for Tesla to do so even though Tesla is currently doing just that.

      So far Tesla’s direct sales methods are working and look capable of scaling up reasonably soon. Much of Tesla’s cost right now is as much in creating infrastructure for the car as it is building the car itself. As the demand to expand that infrastructure goes down and the number of cars sold continue to rise Tesla will reach a break over point when income exceeds outlay. Tesla knew it was going into this as a severe underdog and chose to spend the money itself to develop the necessary technologies and distribute them rather than relying on third parties who may be opposed to what Tesla offers. There are simply too many variables to count and Musk seems to be taking every one of them into consideration as he proves the car’s abilities.

      You say yet again that it is effectively impossible for Tesla to continue as it is and I say it’s not impossible, though acknowledge that it is difficult. Hey, if making money were easy all of us would be Trillionaires.

      • 0 avatar

        RE: “With that response, Ruggles, you’ve proven my point.”

        If you say so.

        RE: “Despite proof that a company CAN change an established paradigm”

        What “proof?”

        RE: “you insist that it is impossible for Tesla to do so even though Tesla is currently doing just that.”

        Why don’t you wait until they have actually done it instead of taking victory laps BEFORE they have crossed the finish line. I’m patient. Why do you want to jump to a conclusion? The math doesn’t work. Something has to be sacrificed. The money has never existed for a start up to be able to invest in product development and own its own dealer network. If you want to bet on it, feel free. I won’t be investing any time soon. You make your own investment decisions.

        RE: “So far Tesla’s direct sales methods are working and look capable of scaling up reasonably soon.”

        “So far.”

        RE: “Much of Tesla’s cost right now is as much in creating infrastructure for the car as it is building the car itself.”

        Like a battery plant, Recharging stations all over the world, showroom/service facilities all over the world, PLUS new product development? Do the math.

        RE: “As the demand to expand that infrastructure goes down and the number of cars sold continue to rise Tesla will reach a break over point when income exceeds outlay.”

        So how much Tesla stock do you own? Better buy some more, right? Exactly when will the demand to expand infrastructure go down? Before or after they sell out their dealer network to raise capital?

        RE: “Tesla knew it was going into this as a severe underdog and chose to spend the money itself to develop the necessary technologies and distribute them rather than relying on third parties who may be opposed to what Tesla offers.”

        Good for them. They reap the benefits or the downside, depending on which way things go. I support their efforts but understand how the math works. Owning their own showrooms works well in the beginning. Its like establishing a savings account that could one day pay of with large dividends when they sell it out to private investment. Of course, they company AND its products need to be accepted in the marketplace in volumes that might entice that investment.

        RE: “There are simply too many variables to count -”

        Yes, my point exactly.

        RE: “and Musk seems to be taking every one of them into consideration as he proves the car’s abilities.”

        Which is why I believe he has a plan to some day sell out his distribution points to private investment. He certainly is holding that as an option.

        RE: “You say yet again that it is effectively impossible for Tesla to continue as it is and I say it’s not impossible, though acknowledge that it is difficult. Hey, if making money were easy all of us would be Trillionaires.”

        I say impossible, you say difficult. Sounds like we mostly agree.

        • 0 avatar
          Vulpine

          RE: “Despite proof that a company CAN change an established paradigm”

          What “proof?”

          The proofs were well presented above. If you’re too lazy to use this system as it was designed, that’s not MY fault.

          RE: “you insist that it is impossible for Tesla to do so even though Tesla is currently doing just that.”

          “Why don’t you wait until they have actually done it instead of taking victory laps BEFORE they have crossed the finish line. I’m patient. Why do you want to jump to a conclusion?”

          Unlike you, I don’t believe in absolutes. I concede that you MAY be right in that it won’t succeed, but I don’t concede that such failure is ordained. Other companies have proven that they CAN succeed where others have failed–in many industries. Saturn was a success for almost 20 years–and failed more due to bad decision making by their parent company than to any inherent failure of Saturn itself. Had Saturn been allowed to remain “independent” as they were for their first ten years, Saturn would still be alive today. As it is, by diluting the brand through badge manipulation and literally importing Opels to replace Saturn-designed and assembled models they destroyed what what made Saturn cars popular. GM drove itself into bankruptcy through micromanagement and I’m not sure they’ve learned their lesson.

          RE: “As the demand to expand that infrastructure goes down and the number of cars sold continue to rise Tesla will reach a break over point when income exceeds outlay.”

          “So how much Tesla stock do you own? Better buy some more, right? Exactly when will the demand to expand infrastructure go down? Before or after they sell out their dealer network to raise capital?”
          None. I do intend to become a customer if they offer the right model for my needs and desires. I don’t need or want a sedan; I don’t need or want an SUV. As such, they don’t offer the right vehicle–yet. That doesn’t mean I want them to fail however; it only means I want them to successfully establish themselves so they can build the models I want.

          RE: “Tesla knew it was going into this as a severe underdog and chose to spend the money itself to develop the necessary technologies and distribute them rather than relying on third parties who may be opposed to what Tesla offers.”

          “Good for them. They reap the benefits or the downside, depending on which way things go. I support their efforts but understand how the math works. Owning their own showrooms works well in the beginning. Its like establishing a savings account that could one day pay of with large dividends when they sell it out to private investment. Of course, they company AND its products need to be accepted in the marketplace in volumes that might entice that investment.”

          And that’s part of your problem. Statistics can be manipulated to say whatever you want them to; the math, while valid, can be made to lie through the willful or inadvertent exclusion of datum. Again, just because something hasn’t worked before doesn’t mean it can’t work this time. Technology has progressed to the point that “just in time” shipments effectively reduce the cost of maintaining warehouses full of parts that may then have to be stored for weeks or even months. This also eliminates the cost of maintaining large inventories of vehicles at lots across the country where they are at risk of damage or destruction through natural or man-made malady. Fisker folded because of a not-quite hurricane destroying 300 cars awaiting shipment. Those 300 cars represented millions of dollars that for whatever reason were not covered by insurance. It was a loss they simply could not absorb. Sure, such just-in-time operations will have their costs, but the savings can, and obviously does for some companies, overcome the costs.

          RE: “and Musk seems to be taking every one of them into consideration as he proves the car’s abilities.”

          “Which is why I believe he has a plan to some day sell out his distribution points to private investment. He certainly is holding that as an option.”

          At least you admit this is opinion rather than supposedly established fact. This doesn’t come across in the majority of your commentary.

          RE: “You say yet again that it is effectively impossible for Tesla to continue as it is and I say it’s not impossible, though acknowledge that it is difficult. Hey, if making money were easy all of us would be Trillionaires.”

          “I say impossible, you say difficult. Sounds like we mostly agree.”

          No, we mostly disagree because I at least think it’s possible.

          • 0 avatar

            RE: “Technology has changed a lot and what might have been impossible before may be possible now.”

            Key word is “may.”

            RE: “Just as there were those who scoffed at the first railroad, the first cars, the first airplanes, there are those scoffing at Tesla today.”

            Being realistic and keeping one’s feet on the ground is not scoffing.

            RE: “What if this current crop are as wrong as those previous groups?”

            Then the current crop will be right and the naysayers will be wrong. Wasn’t that easy? Why get emotional about this? Are you sure enough to bet the family fortune on it? Yes or No?

          • 0 avatar

            RE: “you insist that it is impossible for Tesla to do so even though Tesla is currently doing just that. Why don’t you wait until they have actually done it instead of taking victory laps BEFORE they have crossed the finish line. I’m patient. Why do you want to jump to a conclusion?”

            Your response – “Unlike you, I don’t believe in absolutes.”

            Let me give you an absolute. You either invest or you don’t. If you invest, you put your money where your mouth is. If not, you are engaging in speculation without commitment. Commitment is absolute.

            RE: “I concede that you MAY be right in that it won’t succeed, but I don’t concede that such failure is ordained.”

            I say unlikely. You say unlikely. I know the math intuitively. I’ve shared it with you. Proceed as you will.

            RE: “Other companies have proven that they CAN succeed where others have failed–in many industries.”

            Yes.

            RE: “Saturn was a success for almost 20 years–and failed more due to bad decision making by their parent company than to any inherent failure of Saturn itself.”

            Saturn was NEVER a success. It lost money from the beginning.

            RE: “Had Saturn been allowed to remain “independent” as they were for their first ten years, Saturn would still be alive today.”

            If my grandmother had wheels, she could be a bus.

            RE: “As it is, by diluting the brand through badge manipulation and literally importing Opels to replace Saturn-designed and assembled models they destroyed what what made Saturn cars popular.”

            I repeat, Saturn lost money from the first vehicle they sold. GM was relieved to get rid of it. Toyota would like to launch SCION, but they’re stubborn too.

            RE: “GM drove itself into bankruptcy through micromanagement and I’m not sure they’ve learned their lesson.”

            I’m not sure you have enough info to make this arbitrary statement. I’m sure you think you’re right, however.

            You Wrote: “As the demand to expand that infrastructure goes down and the number of cars sold continue to rise Tesla will reach a break over point when income exceeds outlay.”

            I wrote: “So how much Tesla stock do you own? Better buy some more, right? Exactly when will the demand to expand infrastructure go down? Before or after they sell out their dealer network to raise capital?”

            Your answer: None. I do intend to become a customer if they offer the right model for my needs and desires. I don’t need or want a sedan; I don’t need or want an SUV. As such, they don’t offer the right vehicle–yet. That doesn’t mean I want them to fail however; it only means I want them to successfully establish themselves so they can build the models I want.”

            See my comment about commitment above. I hope they succeed in some form but they will have to adapt and compromise to do so. It happens to everyone.

          • 0 avatar
            Vulpine

            Re: “I say unlikely. You say unlikely. I know the math intuitively. I’ve shared it with you. Proceed as you will.”

            No, you say unlikely, I say “Difficult” We do NOT agree.

            “Being realistic and keeping one’s feet on the ground is not scoffing.”
            Being unrealistic and assuming failure on a severe lack of data IS scoffing–and jumping to conclusions. You’re basing your entire argument on obsolete data.

            “RE: “What if this current crop are as wrong as those previous groups?”
            “Then the current crop will be right and the naysayers will be wrong. Wasn’t that easy?”
            You’d better read that argument again. I proposed that the current crop may be WRONG–meaning current crop of naysayers. WHO is letting emotion get the better of him?

            “See my comment about commitment above. I hope they succeed in some form but they will have to adapt and compromise to do so. It happens to everyone.”
            Prove it. You adapt and compromise. For now, you’ve pretty well proven you can’t. I have committed as best I can; I do NOT buy things I do not need. I’m not a member of the so-called One Percent so cannot afford to buy every car, every stock, every *thing* I might want. When I buy, I buy what meets both my needs AND my wants. I will make one car do the job of two and to the job of four. As such, a sedan or an SUV do not meet my criteria. When they make one that does, I will buy it. THAT is commitment.

      • 0 avatar

        RE: “My position on Tesla is clear. I have no opposition to them owning their own points as long as they own them all.” Yet you insist Tesla CANNOT succeed if they own all of their outlets because nobody else has succeeded before them.”

        The math didn’t work before, and it won’t work now. In fact, it is less likely to work now long term. Imagine if Tesla needed to raise some capital and decided to sell off some of its points to raise cash. Would they try to sell the most successful ones or the least successful ones? But the BIG question is: Why would private capital come in knowing its OEM/supplier is in competition with it and would try to poach buyers out of its market via Internet sales? How would that work? Tesla would have to enter into franchise agreements precluding that possibility to attract investment. And now you know how we got where we are today with the other OEMs. The other OEMs want NOTHING to do with owning their own dealerships. They want to try to tinker here and there in an attempt to show real dealers how to retail cars and make consumers happy. They ARE really concerned about that because none of them have any experience at the retail level. Its easy to retail cars in an environment where supply and demand are well balanced, especially when there is a waiting list. Things fall apart when OEMs do what they do best… build the hell out of vehicles to achieve a lower cost per vehicle even if the market has to be forced. IF Tesla stays niche, they might pull off owning their own stores for a longer period of time. If they try to go mainstream, they will face the capital challenges earlier. The build from the current volume to the total capacity of the Fremont plant will be a lot easier than expansion from that point on.

        • 0 avatar

          RE: My Statement – “My position on Tesla is clear. I have no opposition to them owning their own points as long as they own them all.”

          I advocate the right of Tesla to own them all and make it work if they can. They DO ALWAYS HAVE a “fall back” position. NADA is wrong if the fight Tesla owning ALL of its own points. The states precluding OEMs from owning ALL of their own points within their borders are wrong EXCEPT in an instance where an OEM might own its own sales points in another state and attempt to poach sales from within another state via the Internet, thereby undermining its own dealer/partners. Frankly, I don’t see the need for legislation on that issue because I don’t think there is an OEM stupid enough to try it. BUT there are some real dingbats working at some of the OEMs.

          • 0 avatar

            To clarify: I have said repeatedly that if auto OEMs want to own all of their own points I would have no problem with it, and neither should NADA. Yet, there are and have been numerous instances where auto OEMs HAVE owned their own points. I don’t have any problem with that either and that’s what I need to clarify. Those instances are business arrangements with minority dealer candidates that allow more minorities a shot at being a successful car dealer. I have no problem with that UNLESS their OEM gives those dealerships favorable treatment, thereby undermining the investment of other like brand dealers. For the most part, there are already laws in place that preclude an OEM from selling inventory to their own point for less money than other dealers. There are also laws that are not specific to the auto business but apply to any business that preclude suppliers from favoring one dealer over another in supplying merchandise either as to quantity and/or market appeal.

            The common sense laws of general business make it difficult, if not impossible, for an auto OEM to attempt to compete against own dealer network by undercutting it on price. Imagine, if you will, a business environment where factory stores buy their cars from the OEM for less than stores owned by private capital investment. OR imagine consumers being able to by directly from a supplier/OEM via the Internet for less than the OEM charges its partner dealers. What happens other than chaos in the market?

        • 0 avatar
          Vulpine

          Answered above. Technology has changed a lot and what might have been impossible before may be possible now. Just as there were those who scoffed at the first railroad, the first cars, the first airplanes, there are those scoffing at Tesla today. What if this current crop are as wrong as those previous groups?

  • avatar

    ruggles> There ARE states like TX where they will have problems because of state law.

    You mean most states that have franchise laws: http://www.justice.gov/atr/public/eag/246374.htm. Again, it’s unclear why Ruggles is considered by anyone to be an expert in this subject when he’s either ignorant of basic facts about the industry, or perhaps chooses to lie which isn’t much better.

    > Well, compared to you, I’ve actually done it successfully over the decades. I’ve put my money where my mouth is. Have you?

    Seems like an industry where ignorance or dishonesty goes a long way. In your professional experience which is it?

    > And how would YOU have any insight on the auto industry?

    No, the question is how someone who worked decades in an industry manages to produce such atrociously poor comments. For example I don’t claim much expertise here, but it was easy to find TX is hardly the only state with franchise law after googling for 30sec. When someone’s “expertise” is worth less than 30sec on google, they really should stop using that term.

    > How much would Toyota have to come up with to buy them all out?

    Surely after they defeat franchise laws in just about every state they only have to buy out the best ones? The ones you claim are making money hand over fist? Shouldn’t an expert be the one offering insights instead of opportunities for just about anyone to mock them?

    Speaking of which, it looks like you forgot where the reply button is again. I believe you also do this to get maximum exposure for your own comments on the main tread, and since some only check the box to get emails for new comments there, and have no compunction about abusing the software to get that little selfish advantage. But let’s ask the expert: why do you intentionally reply in the wrong place?

  • avatar

    RE: “There ARE states like TX where they will have problems because of state law. “You mean most states that have franchise laws: http://www.justice.gov/atr/public/eag/246374.htm.”

    All states have franchise laws. All states do NOT have laws that preclude an auto OEM from owning its own sales points. TX happens to be one that does. If you had any understanding of the industry you might know that.

    RE: “Again, it’s unclear why Ruggles is considered by anyone to be an expert in this subject when he’s either ignorant of basic facts about the industry, or perhaps chooses to lie which isn’t much better.”

    Well, it certainly seems to be unclear to you. But then you haven’t given anyone any indication why your opinion of anyone’s contributions might have “legs.” What gives YOU any cred?

    RE: “Well, compared to you, I’ve actually done it successfully over the decades. I’ve put my money where my mouth is. Have you? Seems like an industry where ignorance or dishonesty goes a long way. In your professional experience which is it?”

    Answer my question first. Exactly how would YOU know?

    RE: “And how would YOU have any insight on the auto industry? No, the question is how someone who worked decades in an industry manages to produce such atrociously poor comments.”

    How would YOU know a poor comment from a good one?

    RE: “For example I don’t claim much expertise here.”

    You seem to claim enough expertise to know a good comment from a bad one.”

    “But it was easy to find TX is hardly the only state with franchise law after googling for 30sec.”

    ANd this is the plight of the inexperienced and uninformed. Gathering information and knowing how to interpret are two different things as I pointed out in the first paragraph.

    RE: “When someone’s “expertise” is worth less than 30sec on google, they really should using that term.”

    Well, I’ve already pointed out your error, one of many you’ve made. But let’s just say you catch me making a mistake, not that this is one of those times. I’m only human, right. Do you then wish to take a leap of knowledge to assert that I know very little or nothing because of an anecdote? I think I’ve already mentioned that I really don’t care what 8 year olds think of my comments.

    RE: “How much would Toyota have to come up with to buy them all out? Surely after they defeat franchise laws in just about every state they only have to buy out the best ones? The ones you claim are making money hand over fist? Shouldn’t an expert be the one offering insights instead of opportunities for just about anyone to mock them?”

    A little test of your understanding of the business, which you flunked because you have no clue of the answer. I would recommend you study franchise law in general first, than specific auto industry franchise law. You seem to think that auto industry franchise law protects just the dealers. It also protects consumers and the OEM. Perhaps you are too lazy to put in the time and effort. You seem to think you know how to operate Google. But you have also shown a problem with interpreting the information you stumble across.

    RE: “Speaking of which, it looks like you forgot where the reply button is again. I believe you also do this to get maximum exposure for your own comments on the main tread, and since some only check the box to get emails for new comments there, and have no compunction about abusing the software to get that selfish advantage. But let’s ask the expert: why do you intentionally reply in the wrong place?”

    Asked and Answered

    • 0 avatar

      @ agentex: While it is unlikely that you will understand this stuff, here is a starting point. Knock yourself out. One would have thought that with your “mastery” of Google, you could have found this for yourself. You might even find that franchise laws for the auto industry are Federal, state, and local. You might even find that the laws are designed to PROTECT OEMs and consumers, not just dealers. Of course, this varies by the state.

      http://franchiselaw.net/startups/usfranchiselawbasics.html

      http://faculty.som.yale.edu/FionaScottMorton/documents/StateFranchiseLawsDealerTerminationsandtheAutoCrisis.pdf

      But I think what is really stuck in your craw is the idea that dealers don’t care what a few cranks think. Or maybe its that you were taken advantage of a dealer once when you didn’t do your homework or shop astutely. Perhaps you don’t believe in free markets and don’t like the idea of winners and losers. Or perhaps you’re pissed because the average dealer made around $850K last year and you have a problem with that. Or maybe you don’t appreciate being exposed when you say something particularly stupid like not kowing the difference between generic state auto franchise law and the specific elements of particular states like Texas. I have a feeling that trying to teach the world of the auto business to you is a lost cause. Maybe someone will benefit, however.

    • 0 avatar

      > All states have franchise laws. All states do NOT have laws that preclude an auto OEM from owning its own sales points.

      Perhaps in the strictest sense of that wording to allow someone to weasel out of the actual argument at hand, but the franchise laws by definition preclude intrusion on existing territories by OEMs, which is rather relevant in your own toyota example above. Again, you seem to realize this nuance, but frame the debate in a patently dishonest way to avoid worthwhile discussion.

      > You seem to think that auto industry franchise law protects just the dealers.

      Given they’re propagated by the dealers and their shills it’s pretty obvious who they protect. The way that shills work is they start with a position advantageous to their own interests, and do whatever it takes to promote that position. This is dissimilar goal to providing other readers with useful information (such as why an “expert’s” commentary is so info-deprived). It’s not hard to figure out what’s going on here.

      > Answer my question first. Exactly how would YOU know?

      Reading worthwhile experts such as the link above seems to work; in fact reading just about anything else seems more informative compared to what you post here as an “expert”. In fact simply assuming the opposite of your claims gives better results for reasons stated.

      > Asked and Answered

      Also succinctly answers the question of ignorant or deceitful. It’s also noteworthy you were on best behavior when replying to one of the staff above, but seek to take out an advantage against other readers.

      • 0 avatar

        RE: “Franchise law supports the franchise agreements, which OEMs and dealers enter into, and protect consumers, dealers, AND OEMs. You seem to think that franchise laws are all the same. Only certain states prevent OEMs from owning dealerships. TX is at the top of that list. You should have been able to figure that out from the fact that Tesla ALREADY OWNs its own outlets in most states.

        RE: “but the franchise laws by definition preclude intrusion on existing territories by OEMs.”

        No, the franchise laws force the parties involved to abide by the terms of the agreements they enter into. Except in the few states, these laws do not preclude an OEM from owning its own outlets. How do you think Ford owned so many dealerships during the Ford Collection days? Your ignorance is showing again.

        RE: “Given they’re propagated by the dealers and their shills it’s pretty obvious who they protect.”

        If you have ever read an actual state franchise law, which you obviously haven’t, you would have a better understanding and wouldn’t come off to the knowledgeable as particularly ignorant. States have franchise AND licensing laws, which go hand in hand, to ensure there is a dealer to do warranty work. There are often capitalization requirements that back up an OEM’s own. Depending on the state one might not be able to be a dealer without having a paved lot, precluding someone from parking a bunch of cars on gravel and/or grass and calling themselves a dealership. For example, if a dealer loses his/her lease on a reasonable facility, they might try to move to a sub standard facility. Most states think that harms consumers. Sometimes there will be a minimum square foot building specified to prevent someone from placing a port a potty on some concrete and calling that a dealership. Then there are specifications for storage and maintenance of records. Requirements in state franchise laws sometimes support an OEM request that a dealer maintain tools and parts for regular maintenance as well as for warranty work. Then there are the franchise law elements that protect legitimate business people from being defrauded by their OEMs. For example, if a business person in any business makes a substantial investment on behalf of an OEM, contingent on that OEM living up to its own commitments, that WOULD protect that business person whether or not that business person was a car dealer or not. Sorry if you find that objectionable. If you ever venture out from being a lifetime employee, some of these things will become readily apparent to you.

        RE: “The way that shills work is they start with a position advantageous to their own interests, and do whatever it takes to promote that position.”

        Yes, that is precisely why franchise laws became necessary to protect dealers from their OEMs. I see you haven’t bothered to read any of the info I sent. OR, more likely, you weren’t able to understand it.

        RE: “This is dissimilar goal to providing other readers with useful information (such as why an “expert’s” commentary is so info-deprived). It’s not hard to figure out what’s going on here.”

        Certainly it is difficult for you.

  • avatar

    > All states have franchise laws. All states do NOT have laws that preclude an auto OEM from owning its own sales points.

    Perhaps in the strictest sense of that wording to allow someone to weasel out of the actual argument at hand, but the franchise laws by definition preclude intrusion on existing territories by OEMs, which is rather relevant in your own toyota example above. Again, you seem to realize this nuance, but frame the debate in a patently dishonest way to avoid worthwhile discussion.

    > You seem to think that auto industry franchise law protects just the dealers.

    Given they’re propagated by the dealers and their shills it’s pretty obvious who they protect. The way that shills work is they start with a position advantageous to their own interests, and do whatever it takes to promote that position. This is dissimilar goal to providing other readers with useful information (such as why an “expert’s” commentary is so info-deprived). It’s not hard to figure out what’s going on here.

    > Answer my question first. Exactly how would YOU know?

    Reading worthwhile experts such as the justice dept link above seems to work; in fact reading just about anything else seems more informative compared to what you post here as an “expert”. In fact simply assuming the opposite of your claims gives better results for reasons stated.

    > Asked and Answered

    Also succinctly answers the question of ignorant or deceitful. It’s also noteworthy you were on best behavior when replying to one of the staff above, but seek advantages against other readers.

  • avatar

    It’s also worth pointing out why shilling produces worse quality of answers than those arbitrarily chosen by the completely uninformed (and generally no one is 100% uninformed); we’ll do so via trivial induction:

    Assume the 100% uninformed arbitrarily picks any one of two conflicting positions with various facts/reasoning in support. Assume the shill supports the same side. Both will regurgitate the same supporting facts, the shill despite whatever additional knowledge certainly won’t admit to any value of the other position any more than the uninformed, and is far more likely to create specious arguments. Thus their answer are same or worse in every instance. QED.

    IOW, asking some guy off the street to pick a stance and regurgitate their material is more useful than asking a shill.

  • avatar

    > Only certain states prevent OEMs from owning dealerships.

    That must be the shill way to say pretty much all. Tesla was able to exploit loopholes in certain states:

    http://www.washingtonpost.com/opinions/a-bump-in-the-road-for-tesla/2013/06/13/03cb3988-d3a3-11e2-b05f-3ea3f0e7bb5a_story.html

    and even then the dealers are eager to patch laws after the fact:

    http://www.geekwire.com/2014/tesla-wins-battle-auto-dealers-washington-state-future-rivals-screwed/

    Of course you should know this, but choose to lie and hope nobody notices. It’s similar for about every state I bother to look up (WA, Ariz, etc). There’s probably some resource out there that tallies obstacles by state, but frankly it’s not worth more than a couple min on google to expose the rather obvious. The rest of your comment is abundant illustrated by how this first sentence went and serves nothing other than to reinforce how worthless shilling is.

    In case you deny this is deceit and admit to ignorance, consider learning a very simple description of how franchising came to be. Gotta start somewhere after decades learning nothing of value:

    http://www.reddit.com/r/explainlikeimfive/comments/1h1a2l/eli5_why_tesla_is_banned_from_selling_cars_in_48/

    • 0 avatar

      Tesla has exploited loopholes in franchise laws? And you know this how?

      You are saying that Tesla’s current retail outlets are only in existent because of loopholes in franchise law?

      You are saying Tesla’s business model is predicated on loopholes and that it has been able to attract investors to a business model built on such a fragile foundation?

      I see you have cited links to articles written about Tesla. My position on Tesla is clear. I have no opposition to them owning their own points as long as they own them all.

      Do you know how many of its own outlets each non Tesla OEMs might own at this very moment? DO you know about programs OEMs have had ongoing that involved factory ownership of retail points?

      What allowed Ford to own so many of its own points in OK, UT, IN, NY, and CA. Loopholes? I believe they owned about 50 stores in major markets in those states? Loopholes?

      Another question: What kind of a business environment do you imagine where a business person or group enters into an agreement with a corporate manufacturer to represent its products, and based on that agreement the business group agrees to make a substantial investment, say $20 million, with the agreement and expectation that the OEM will supply enough desirable products to support their investment and make a return. Both parties are eager to execute the agreement and both sign off. Both parties have certain obligations they agree to live up to in the contract, known as a franchise agreement. I’m pretty sure you’ve never read one, and have certainly never entered into one.

      What set of circumstances might motivate the OEM to violate both common sense AND their agreements to compete against their own distribution network?

  • avatar

    > You are saying that Tesla’s current retail outlets are only in existent because of loopholes in franchise law?

    Obviously many exist because they just built them thus why they’re being sued left and right.

    But let’s take a step back. What would you say you do here?:
    http://findwhatworks.files.wordpress.com/2010/08/bobandbob.jpg

    Your comments contain nothing which can’t be trivially refuted with an internet connection (and those who read here have that), or some capacity to rub brain cells together, so who are these comments proclaiming “expertise” supposed to fool? People sympathetic to car dealers but can’t be bothered to fact-check?

    > What allowed Ford to own so many of its own points in OK, UT, IN, NY, and CA. Loopholes? I believe they owned about 50 stores in major markets in those states? Loopholes?

    Should I care enough to google it because the “expert” can’t be bothered to post ANY useful info?

    Seriously, what exactly do *you* think you do here?

    • 0 avatar

      Sued right and left? How many is that? You have a list?

      Your comments contain nothing but raw emotion and a complete ignorance of the basics of business. It is easy to understand why you select pick the questions you respond to. If you can google something, you post a link. Any link will do. It can be some mindless ranting from other know nothings, and to you it is refudiation regardless of how baseless and arbitrary it might be. I do love that word!

      But YEA, why don’t you see if you can google how Ford managed to own around 50 stores in a variety of markets in a number of states and see what you come up with. You might even find some quotes from competitive Ford dealers on why they were so disappointed to see Ford give up their grand experiment and sell their stores back to real dealers.

      You might also see if you can google how many points auto OEMs currently own. You might even refudiate your own assertions in the doing.

      • 0 avatar

        RE: “Dan, Dave and Dean then pooled a bunch of money together to get a law passed that bans Hank from selling directly to the public to protect their investments. Then they get laws passed that say once Hank has made them a dealer, it’s a permanent relationship and Hank has to keep selling to them or pay them a lot of money.”

        So you compare this characterization based on opinion with the scholarly pieces I linked to? Ok. I understand mine were written in language that wasn’t as easy to comprehend as this but REALLY? So where to begin. First, auto dealer franchise agreements are NOT permanent relationships and never have been. Dealers are and have been terminated on a regular basis even before the massive termination during the auto restructuring. The laws preventing OEMs from selling directly exist only in a few states. It is the franchise agreements themselves, plus common sense, that prevent OEMs from launching full scale attempts to undermine their partner dealers. Franchise law doesn’t allow an OEM to arbitrarily terminate a dealer without “just cause.” And those laws often spell out exactly what “just cause” is. But there are many laws protecting business arrangements that have nothing to do with auto dealer franchise law.

        RE: “75 or so years go by. The dealers in other states get similar laws passed.”

        Business people in other states get laws passed to prevent their suppliers from taking advantage of them. These businesses are not car dealerships. Auto franchise laws build on those existing laws and add items specific to that auto business.

        RE: “And some get other tougher laws passed. They get a law passed that makes it a crime to sell directly to the public.”

        That would be TX, and a few other states. I am on record on this.

        RE: “They get a law passed that makes it illegal for a manufacturer to set up a dealership within 10 miles of another dealership. They put the kibosh on internet sales of new cars.”

        Some states do have laws requiring a certain distance between sales points. This know it all states it as if it is a fact in all states. No one has put the kibosh on the Internet sale of new cars. Dealers do it all the time.

        I’m beginning to think you google up just anything and post it as if you think it has any credibility or truth to it. This one is just riddled with things that indicate the complete ignorance of the author. That’s probably why it was on an opinion blog.

        RE: “Tesla starts making cars. It wants to sell them directly to customers. But because of what happened with Dan and Hank, there are all of these laws (in 48 states, apparently) that say manufacturers cannot sell cars to people directly.”

        This begs the question, how has Tesla succeeded in establishing its current dealerships? Perhaps this guy is ignorant of that fact? Technically, there is some truth to this. The OEM has to get a dealer license from the state they want to do business in, something that has not proven to be a problem in literally hundreds or perhaps thousands of cases. To get a dealer license, one must also get a business license in the city and county one wants to locate in. To do all this requires one to produce a bond. A sales tax number has to be obtained. After all, the state doesn’t want anyone selling vehicles without the sales tax being forwarded to the proper authority. They probably have to have someone inspect their business premises to make sure they meet certain standards, not the least of which includes proper storage for business records. After all, someone might want to see if all of the proper FTC, EPA, DOJ, Reg Z, M, N, CFPB,etc. records are properly maintained. Its hard to regulate a business if you don’t know where to go to audit their records. OEMs typically have no problems meeting these standards and have repeatedly over the years owned their own points. AND they do today.

        There must be a reason you accept this kind of error riddled opinion as truth. Sorry to burst your bubble.

        • 0 avatar

          RE: “Perhaps in the strictest sense of that wording to allow someone to weasel out of the actual argument at hand”

          The actual argument at hand is whether or not state franchise laws preclude OEMs from owning their own points. They do in the state of TX and a couple more. They obviously don’t in the other states where Tesla has opened dealerships and where OTHER AUTO OEMs also own their own or have in the past. Weaseling? I don’t think so. You’re wrong on the facts.

          RE: “but the franchise laws by definition preclude intrusion on existing territories by OEMs,”

          No, the franchise agreements signed by both OEMs and dealers preclude this. Wrong again on the facts.

          If nothing else, you are consistent.

      • 0 avatar

        > It is easy to understand why you select pick the questions you respond to.

        In my first reply I literally picked your first sentence, and found it trivially false in ~1min. While doing the same for the rest would probably be similarly trivial it’s not worth even that effort for the reasons stated.

        In my second reply I didn’t pick the first one because it looked like it would another wasted minute to look up, so I picked the second one which was trivial to refute by using basic logic about how law works.

        Note I didn’t bother to read the rest of the posts for obvious reason. There might be a couple accurate statements in there but it’s not really worth the effort to find them. Maybe consider leading with those or marking the statement where you don’t lie with a * symbol.

  • avatar

    I posted some links to some scholarly pieces while you produce links to opinions written by people with no credentials, let alone any understanding. Still, they occasionally stumble across a kernel of truth. The Washington Post editorial board, which collectively has little or non actual business experience, notes that “auto dealers aren’t concerned about Tesla, but are concerned about other OEMs getting the same idea.” That is exactly what NADA is concerned about and reflects my ongoing disagreement with them. My advice to them has been to drop any efforts to stymie Tesla’s drive to own its own points. Both common sense and franchise agreements protect the investment of NADA member dealers. I think they must have too much time on their hands. Not to worry, they have new issues to deal with.

    Another quote from the Washington Post piece:

    RE: “It’s not for politicians to determine the optimal mode of distributing merchandise, even when the merchandise in question is something as large and as important to society as an automobile.”

    Absolutely true. What they must not understand is that it was the auto OEMs who made the choice of attracting private investment to partner with in the distribution of its vehicles, not politicians. Politicians had nothing to do with it. While auto industry franchise laws exist as an umbrella over the industry itself, the basic agreement is the contract between OEM and its dealer.

    The ignorant might think it is unjust for state authorities to license businesses, but most people understand that it is a good idea. If a particular state wants to deny Tesla a retail dealer license, it should do so based on the same rules as other auto dealers. In most states OEMs are allowed a dealer’s license under a set of circumstance that currently allows OEM ownership in most states and has in the past. I won’t try to explain it to you as you don’t understand the fundamentals so far and I certainly don’t want to confuse you further.

  • avatar

    > I posted some links to some scholarly pieces while you produce links to opinions written by people with no credentials, let alone any understanding.

    I did look into the one link co-authored by an economist, and it proves especially embarrassing because it’s quite obvious you didn’t, given it concludes:

    “However, theory and evidence suggest that
    the protection that automobile dealers have obtained from local legislatures has
    been to the detriment not only of manufacturers, but also of consumers, resulting
    in higher cost of retailing and higher prices for cars, inflexibility of the dealer in higher cost of retailing and higher prices for cars, infl exibility of the dealer
    network, and a lack of innovation in car distribution.”

    I would actually recommend the paper to those interested in the subject. Frankly at this point mocking you isn’t even amusing anymore; it’s just too easy.

    Again, to be crystal, we’re not talking high level sophistry on your part here; this is literary grade school type fibbing. When someone proclaims “decades of experience” yet can’t seem to put 2 and two together for their own industry, interviewers start to wonder about everything else on that resume.

    Also, how about answering that questions of what you do here.

    • 0 avatar

      RE: “However, theory and evidence suggest that the protection that automobile dealers have obtained from local legislatures has
      been to the detriment not only of manufacturers, but also of consumers, resulting in higher cost of retailing and higher prices for cars, inflexibility of the dealer in higher cost of retailing and higher prices for cars, inflexibility of the dealer network, and a lack of innovation in car distribution.”

      Let’s say this opinion is correct. After all, GM and Chrysler said they could save money by cutting dealer count. Right? They were able to do that through Chapter 11. Now we’re on the other side. New franchise contracts have been signed but now GM and Chrysler want to sell direct to consumers, undermining their dealers “partners.”

      Exactly how would you go about accomplishing that and innovate in auto distribution? They can’t go with the Tesla model because they aren’t starting from scratch.

      What is inflexibility of the dealer network?

      What higher costs of retailing do dealers impose on their OEMs? Did you pick this out of the 18 pages you say you read?

      • 0 avatar

        > Let’s say this opinion is correct

        Frankly I don’t really care about this enough to research the comparative lit and append to the relative merit of their case, esp not with someone who has likely never read a paper in their life.

  • avatar

    RE: “In my first reply I literally picked your first sentence, and found it trivially false in ~1min. While doing the same for the rest would probably be similarly trivial it’s not worth even that effort for the reasons stated.”

    I know you get upset when you hear auto dealers don’t care if a bunch of cranks like them or not, and whether or not you understand what I’m saying doesn’t mean anything to me. You wouldn’t know fact from fiction as evidenced by the fact that you posted another amateur’s opinion as fact. In your world just posting any rebuttal seems to make you’ve actually refuted something.

    RE: “In my second reply I didn’t pick the first one because it looked like it would another wasted minute to look up, so I picked the second one which was trivial to refute by using basic logic about how law works.”

    BTW, aren’t you the same guy who wants to resort to transparency? You and logic have never been in the same room together. You’re fine with gathering information. Its interpreting it where you have a problem.

    RE: “Note I didn’t bother to read the rest of the posts for obvious reason. There might be a couple accurate statements in there but it’s not really worth the effort to find them. Maybe consider leading with those or marking the statement where you don’t lie with a * symbol.”

    Not a concern since you wouldn’t know a fact if it bit you in the a**.

  • avatar

    > Not a concern since you wouldn’t know a fact if it bit you in the a**.

    This is the only line I read in that post, but it’s pretty funny that someone like you is questioning that someone like me might be confused on what facts are.

    That tesla is engaged in franchise legal machinations in the states they want to operate is very much an objective fact, and no amount of weaseling around this between pathetic appeals to authority can erase the abundance of evidence everywhere. This is something any reader can check for themselves so lying about it is incredibly dumb.

  • avatar

    RE: “I did look into the one link co-authored by an economist, and it proves especially embarrassing because it’s quite obvious you didn’t, given it concludes:”

    I’m glad you did. So did I. Why would the opinion of two economists from Michigan embarrass me? Opinion is just that, opinion. It is the background content leading up to it that is important.

    So now that we have reached the point where OEMs are free to free themselves from abusive state and federal franchise law, what do you do about the contracts they have with individual dealers. See, now that you have an opinion on your side, you get to tell us how you would accomplish the transition.

    BTW, if you want another opinion from a Yale PhD Economist AND a real expert on the auto industry, I will put glad to put you together with him. So then we can have the discussion over which PhD economist knows more about the auto industry, yours or mine. Just let me know.

  • avatar

    > Yes, you are obviously confused about the difference between opinion and fact.

    The existence of these lawsuits are not an opinion. Not everything that directly contradicts you is “merely an opinion”. That only works against those peers in the car selling biz of similar academic pedigree.

    > I’m glad you did. So did I. Why would the opinion of two economists from Michigan embarrass me? Opinion is just that, opinion. It is the background content leading up to it that is important.

    It’s quite obvious you never bothered to read the paper; otherwise a shill would just link one from that Yale “PhD economist” you’re now pretending is the “real expert”. Just look at how sloppy your sourcing is: that other link isn’t even about auto franchising.

    This is the problem when the uneducated aspire to scholarship, what they lack is genuinely difficult so faking it doesn’t work at all.

  • avatar

    RE: “The existence of these lawsuits are not an opinion.”

    What lawsuits?

    RE: “Not everything that directly contradicts you is “merely an opinion”. That only works against those peers in the car selling biz of similar academic pedigree.”

    Never said it was. What’s YOUR pedigree?

    RE: “I’m glad you did. So did I. Why would the opinion of two economists from Michigan embarrass me? Opinion is just that, opinion. It is the background content leading up to it that is important. It’s quite obvious you never bothered to read the paper.”

    If you say so. It is also quite obvious that YOU didn’t. You scanned to the sum up without wading into the detail, which you wouldn’t have understood anyway.

    RE: ” otherwise a shill would just link one from that Yale “PhD economist” you’re now pretending is the “real expert”.”

    A little arbitrary don’t you think? Is that what you would do? So are you ready to engage Professor Smitka?

    RE: “Just look at how sloppy your sourcing is: that other link isn’t even about auto franchising.”

    You’re beyond education. Of course it wasn’t. I see you are resistant to learning the basics of franchising. Of course, you think outsider theory trumps actual participation too.

    RE: This is the problem when the uneducated aspire to scholarship, what they lack is genuinely difficult so faking it doesn’t work at all.”

    Yes, this is what happens when the inexperienced theorist encounters an actual market participant.

    So what do you do now that you have abolished franchise law. Or have you now painted yourself into a corner?

  • avatar

    “franchise legal machinations?”

    “consumers resort to transparency”

    Did you just learn the word sophistry? :)

  • avatar

    > What lawsuits?

    http://www.lmgtfy.com/?q=tesla+franchise+lawsuits

    It’s a good thing this is recorded for posterity so in the future we can all point to the thread in case anyone takes this clown seriously.

  • avatar

    So are these the franchise legal machinations?

    RE: “What lawsuits?”

    What is your issue with the lawsuits? Tesla has filed some of their own. Some state associations have filed some against Tesla. What’s your point.

    My position has always been that Tesla should be allowed to own all of its own points. Are you trying to prove or disprove my position? What do the lawsuits have to do with my position?

  • avatar

    RE: “Here’s how it worked. In April, Tesla started a new financing program under which customers have the option to sell their vehicles back to the company after three years for guaranteed minimum amounts. The accounting rules say Tesla can’t recognize all of the revenue immediately in those instances and must account for such transactions as leases. So after Tesla takes customers’ cash, it records liabilities for “deferred revenue” and “resale value guarantee” on its balance sheet. Mahoney noted two main problems with including so much of those amounts in non-GAAP revenue. Some customers wouldn’t have chosen Tesla cars were it not for the financing program. So the non-GAAP revenue isn’t comparable to Tesla’s sales before the program began, and it may overstate the true growth and demand. Plus, by adding back the resale-value guarantee, the company “assumes that nobody is going to return the vehicle, for purposes of the non-GAAP revenue,” he said.”

    Excellent points! I don’t believe they have set up a dime for reserves against residual losses.

  • avatar

    RE: Let’s say this opinion is correct “Frankly I don’t really care about this enough to research the comparative lit and append to the relative merit of their case, esp not with someone who has likely never read a paper in their life.”

    What kind of gibberish is this? Of course you don’t want to explain how OEMs might go about establishing the new distribution system. In your theoretical world you just abolish them and things work out like you think they are supposed to?

    Read a paper? I’ve written a few.

  • avatar

    > Read a paper? I’ve written a few.

    BWAHAhahahahahaha, all that posing and it doesn’t even know what a paper is.

  • avatar

    RE: “Read a paper? I’ve written a few. BWAHAhahahahahaha, oh look it doesn’t even know what a paper is.”

    non sequitur

  • avatar

    RE: “You are saying that Tesla’s current retail outlets are only in existent because of loopholes in franchise law? Obviously many exist because they just built them thus why they’re being sued left and right.”

    Tesla is being sued right and left? Is that what you are saying? I think you are confusing this with the fact that Tesla has filed numerous suits of its own and if you add them together there are quite a few legal actions taking place. MANY of the legal activities are NOT actual lawsuits. Its understandable that your lack of experience might cause you to think anything lawyers do is a “lawsuit.”

    As far as the “paper” goes, since you’ve come out with accusations you shouldn’t object to going over it paragraph by paragraph, right? Or are you afraid of being exposed as a serial Googler who can find data but can’t interpret it correctly? You know, one who finds an opinion piece by amateurs named Tom and Jerry and submits it of some kind of “proof” and then takes a scholarly piece, and instead of grasping the facts, logic, and data chooses to pluck the opinion sum up of the many pages as if that was its sole content. In fact, the purpose was to float the issues to dispute the opinion. It seems a bit cowardly to select pick the questions you choose to answer. But you DO have a track record.

    And you shouldn’t mind coming out from behind your cloak of anonymity and revealing who you really are and what YOUR credentials are.

    AND as soon as you do this, I will be glad to share with you some of the “papers” I’ve written, including the latest one about to be published. But I expect you to remain the coward behind the curtain.

  • avatar

    Are you seriously replying to me again after I ignored it the first time as if I cared to start with? If you can’t manage to figure out what an academic paper is after 50 or whatever years it seems a little late to start thinking about things of greater complexity.

  • avatar

    Re: “I say unlikely. You say unlikely. I know the math intuitively. I’ve shared it with you. Proceed as you will.” No, you say unlikely, I say “Difficult” We do NOT agree.”

    Okay, what are the odds? Put it anyway you like, the math doesn’t work ESPECIALLY for a startup.

    “Being realistic and keeping one’s feet on the ground is not scoffing.”
    Being unrealistic and assuming failure on a severe lack of data IS scoffing–and jumping to conclusions. You’re basing your entire argument on obsolete data.”

    Severe lack of data? You mean because it hasn’t happened yet? I’m basing my argument on the math. I know it well.

    “RE: “What if this current crop are as wrong as those previous groups?”
    “Then the current crop will be right and the naysayers will be wrong. Wasn’t that easy?” You’d better read that argument again. I proposed that the current crop may be WRONG–meaning current crop of naysayers. WHO is letting emotion get the better of him?”

    I know exactly what you said. I was agreeing with you but you’re so defensive you don’t see it. But I’ll say it again. Tesla can’t succeed while owning its dealer network. But if you’re convinced, feel free to invest. If you find someone else who’s advice you like better, then take it.

  • avatar
    Vulpine

    “Okay, what are the odds? Put it anyway you like, the math doesn’t work ESPECIALLY for a startup.”

    This is where you’re making your first miscalculation because no other startup has realized over $2B in revenues in just one year. With those kinds of numbers, a mere $16M in losses is chump change. Worse for your numbers, again like no other startup, Tesla has hundreds of millions of dollars in readily-available cash to absorb that loss and maintain the expansion of it’s production and infrastructure. And then, above all of that, Musk himself has billions more available to shore it up–unlike ANY other startup. It’s YOUR numbers that are wrong because you’re ignoring factors that make a difference. Sure, it’s still POSSIBLE that they may fail; it’s still POSSIBLE that they may be forced to go the traditional dealership route, but by no means is it inevitable. And this is where your ‘absolutes’ fall flat on their face.

    I mean your “severe lack of data” is the willful ignoring of the person behind Tesla and the numbers Tesla is already working with to continue their growth. Sure, the other companies may talk about a couple of tens of billions in revenue off of millions of vehicles built for a few hundred million in profits, but Tesla is looking at $2Billion on well under 100,000 cars built. Please show me any other startup that was that far along in such a short time. Tesla as a company is almost 10 years old, but they had one advantage no other startup had–a lot of money behind it with the advanced knowledge that it would be EXPENSIVE to succeed and willing to spend whatever it takes.

    And don’t forget the previous successes that Elon Musk has behind him. He doesn’t intend to fail and quite bluntly by thinking different, he’s making the other companies look old-fashioned.

    “I know exactly what you said. I was agreeing with you but you’re so defensive you don’t see it.
    Oh, I’m well aware that you agreed with me, but your emotional outburst had you say it backwards, forcing you to clarify with the very next phrase. Taking a word out of context is quite typical of an evangelist trying to twist what even the Bible says. It’s you who are being defensive–because you can’t stand that thought that for once you might, just might, be wrong about Tesla’s future.

    • 0 avatar

      Frpm Seeking Alph: The prospect of a higher-capacity lithium ion cell in mass production is probably what has drawn the widely reported interest of Apple and the meeting of Apple’s M&A Chief Adrian Perica with Tesla last year. I doubt that Apple wants to buy Tesla or that Tesla wants to sell. Musk admitted at the earnings conference call that a capital infusion would be necessary in order to bring the Gigafactory on line in three years, and a joint venture with Apple would provide that.”

      Does he need the Gigafactory more than he needs dealers? How about recharging stations? Without the recharging stations, he won’t have many customers Without the battery factory Tesla doesn’t achieve economy of scale.

      Guaranteeing residual is a move of desperation.

      • 0 avatar
        Vulpine

        What you may not be remembering here is that Steve Jobs himself mentored Musk. Apple and Tesla have been relatively close together for years already. What you’re reading is only guesswork, albeit educated guesswork. If this Gigafactory truly does get built, he’ll have nearly every electronics maker in the world beating at his door–especially if he can reduce the price of Lithium batteries.

  • avatar

    RE: “This is where you’re making your first miscalculation because no other startup has realized over $2B in revenues in just one year.”

    Revenue and net profit are two different things.

    RE: “With those kinds of numbers, a mere $16M in losses is chump change.”

    Again, there is a BIG difference between revenue and net profit. Tesla is looking a needing $2 billion just to build a battery plant. Without the plant they can’t deliver the Model X at the promised price. PLUS, they need to continue to build a recharging infrastructure AND invest in more sales and service outlets. They can’t pay for the plant with $2 billion of revenue. They need $2 billion in earnings to do that OR they have to go back to the market to attempt to float more stock OR borrow. At some point, hope and optimism yield to harsh reality.

    RE: “Worse for your numbers”

    They aren’t MY numbers, they are the numbers of harsh reality.

    RE: “again like no other startup, Tesla has hundreds of millions of dollars in readily-available cash to absorb that loss and maintain the expansion of it’s production and infrastructure.”

    See above. You can’t pay bills with revenue for long.

    RE: “And then, above all of that, Musk himself has billions more available to shore it up–unlike ANY other startup.”

    He’d better hope the residuals he guaranteed come true.

    RE: “It’s YOUR numbers that are wrong because you’re ignoring factors that make a difference.”

    And if the hopes and dreams come true, you can rub my nose in it, but not until then.

    RE: “Sure, it’s still POSSIBLE that they may fail;”

    No kidding.

    RE: “it’s still POSSIBLE that they may be forced to go the traditional dealership route, but by no means is it inevitable.”

    Always a chance.

    RE: “And this is where your ‘absolutes’ fall flat on their face.”

    Absolutes? You either bet the farm or you don’t.

    RE: “I mean your “severe lack of data” is the willful ignoring of the person behind Tesla and the numbers Tesla is already working with to continue their growth.”

    Severe lack of data? There are real numbers and hoped for numbers. Then there is being able to interpret the real data. Tesla will reach a decision point. Based on the new news about the battery plant, that decision might come sooner rather than later. I hope they put it in NV.

    RE: “Sure, the other companies may talk about a couple of tens of billions in revenue off of millions of vehicles built for a few hundred million in profits, but Tesla is looking at $2Billion on well under 100,000 cars built.”

    Revenue don’t buy squat.

    RE: “Please show me any other start up that was that far along in such a short time.”

    Tesla is as far along as anyone, but then they have a taller hill to climb. They’d better be farther along.

    RE: “Tesla as a company is almost 10 years old, but they had one advantage no other startup had–a lot of money behind it with the advanced knowledge that it would be EXPENSIVE to succeed and willing to spend whatever it takes.”

    Then you can take a victory lap when they are pronounced “successful.” Why are you in such a hurry?

    RE: “And don’t forget the previous successes that Elon Musk has behind him. He doesn’t intend to fail and quite bluntly by thinking different, he’s making the other companies look old-fashioned.”

    Maybe they should break black before taking a victory lap. Not for a couple of quarters, from inception. Kjell Qvale and John DeLorean had previous success. The others are old fashioned and profitable. Tesla will be in the conversation when they are profitable, and not just for a couple of quarters.

    What’s your hurry?

    • 0 avatar
      Vulpine

      Again you try to throw opinion absolutes as facts. Are you certain that the Model X is intended to be the “economy” model? You said it yourself that it would take at least a year to build that plant and the Model X is due out next year. On the other hand, the Model “E” is the one forecast to price around $35K and is not due for another year after that. You can bet that Must isn’t trying for net profits yet; he’s dumping all that income right back into the company to build the infrastructure. What you’re calling a net negative *Is exactly what students are taught in Economics in college!* You’re not teaching me anything new; that paradigm is at least 60 years old.

      RE: “Worse for your numbers”
      “They aren’t MY numbers, they are the numbers of harsh reality.”
      They ARE your numbers, and as I stated before, you’re leaving out data to bend those numbers in the direction you want them. Harsh reality is that in every single industry, one company eventually comes out to change the paradigm that becomes the NEW reality for a few decades–before yet another company comes out to change it again. There is not one industry that has not seen this happen.

      “You can’t pay bills with revenue for long.”
      Really? Then how DO you pay your bills? The money has to come from somewhere.

      “He’d better hope the residuals he guaranteed come true.”
      And you’re hoping they don’t.

      “And if the hopes and dreams come true, you can rub my nose in it, but not until then.”
      You mean like the hopes and dreams of the Wright Brothers?
      How about Henry Ford?
      How about Sears?
      IBM?
      Apple?
      Google?
      Facebook?
      They all started somewhere and to be quite blunt every one of them had their naysayers at one time or another, claiming “It will never work.”

      RE: “And this is where your ‘absolutes’ fall flat on their face.”
      “Absolutes? You either bet the farm or you don’t.”
      No. The one or group that are bringing whatever new product to market is the one “betting the farm”, not YOU. Or are you willing to bet everything you own–every stock, every property, every single thing down to the last penny to prove you are right? I am not a “day trader”, someone who buys a stock in the morning just to sell it in the evening–that’s not the effective way to make money. I’ve owned one stock in my lifetime and that has earned me thousands of times what it cost to buy–but I’m not selling it because I know it will go higher. I’ve watched this company grow from nothing, nearly die and rise from the ashes to become one of the most valuable companies in the world. I don’t expect Musk to make the same mistakes that company did.

      • 0 avatar

        I don’t have time for this. You keep your stock. I’ll keep mine. If Tesla succeeds and owns its own sales points, you can rub my nose in it. I understand the math. You’re wishing and hoping. Good Luck. I’ll be happy to see Tesla succeed in some form. They don’t have to own their own sales points to be successful. They just have to make consistent profit.

        • 0 avatar
          Vulpine

          In other words, you’re beaten. Your job is at risk if Tesla succeeds and that is your greatest fear. (Yes, I fully know you will deny this.) This is the same situation people in every one of those other industries feared and they adapted. You will too, if you don’t retire first.

          • 0 avatar

            RE: “In other words, you’re beaten.”

            If you say so.

            RE: “Your job is at risk if Tesla succeeds and that is your greatest fear.”

            Why would I lose my job? I’ve worked for myself at a pace that pleases me for 20 years. Why do you need to make stuff up? It comes off as desperate.

            RE: ” (Yes, I fully know you will deny this.)”

            My boss isn’t likely to fire me since he is me. You ought to try that sometime. Being self employed brings reality into focus. A little of that would do you some good.

            RE: “This is the same situation people in every one of those other industries feared and they adapted. You will too, if you don’t retire first.”

            Oops. Too late.

  • avatar

    All this talk over apple or not and a paltry 16m ignores the fact that Elon et al come from tech royalty. These people have money, and if this is the price to pay to be on the ground floor/ first mover then those amounts are insignificant. Hell not a few years ago they were worth nothing, and now it’s in many billions.

    Anyone who’s ever been in a Tesla S knows this is the look of things to come. Anyone who’s ever looked under one knows gas cars are dead once they figure out the battery situation. Will tesla be the one to make this happen? Who knows, but this technology is the future.

    • 0 avatar
      Vulpine

      Agreed, agenthex. There may be a number of different technologies created over the next decade or two, but either way you look at it the internal combustion engine is nearly dead within 50 years. Electric motors can produce more horsepower than gasoline and electricity can come from a number of sources that do not require fossil fuels to generate. Petroleum oil, as we know it, will be gone, or nearly so, by the end of this century if not sooner.

  • avatar

    RE: “Again you try to throw opinion absolutes as facts.”

    Facts, Tesla has lost money since inception. Fact: Commitment is when you invest. Fact: Tesla will have to make some hard decisions. Fact: There are reasons to be elated if you are a Tesla fan, but the game is FAR from over. Fact: Your crystal ball isn’t any better than anybody elses, and probably worse than those from the business world who understand the auto business. Fact: Steve Jobs wasn’t god. He was a genius and an asshole. So was Henry Ford.

    • 0 avatar
      Vulpine

      Look VERY closely at what you just said; your own words demonstrate how willfully you’re resisting Change.

      Fact: Steve Jobs wasn’t god. He was a genius and an asshole. So was Henry Ford.

      Steve Jobs was a genius–and a college dropout.
      Henry Ford was a genius–and never went to college.
      Albert Enistein was a genius–and never completed formal education, though he attended many high-level schools.
      Thomas Edison–kicked out of school.
      Nikola Tesla–accused of cheating on tests due to his speed and accuracy. Graduated early.

      All of them profoundly changed how things were done in various industries. Edison is best known for the light bulb and the phonograph, but he failed miserably to convince the early electric companies to use DC current for all electrical generation–failed to Nikola Tesla, who proved that AC was simply more efficient than DC for long-distance transmission. Each of them did things that were claimed to be impossible in their day.

      You see, I don’t use a “crystal ball”, I use MACROvision, to see the Big Picture.

      • 0 avatar

        > Steve Jobs was a genius–and a college dropout.

        Technically Steve Jobs was a visionary. He was also a great project manager which is very uncommon in a CEO/decision making role outside of the tech industry. The funny thing is that comp tech at least is moving away from that model to the standard wall st. norm which doesn’t portend well for them.

  • avatar

    RE: “What you’re calling a net negative *Is exactly what students are taught in Economics in college!* You’re not teaching me anything new; that paradigm is at least 60 years old.”

    So do you now teach college economics? Do you understand accounting? Credit markets? Ever run a business? Is there anything to give your hope and dreams weight other than enthusiasm?

  • avatar

    RE: There may be a number of different technologies created over the next decade or two, but either way you look at it the internal combustion engine is nearly dead within 50 years.”

    Perhaps dead. Perhaps not. Who knows. Everyone is free to speculate. I don’t really care. Id be happy with whatever technology is easiest on the globe. And if it ain’t petroleum driven, I’d be thrilled.

    E: “Electric motors can produce more horsepower than gasoline and electricity can come from a number of sources that do not require fossil fuels to generate. Petroleum oil, as we know it, will be gone, or nearly so, by the end of this century if not sooner.”

    I certainly hope petroleum will be gone but why make predictions, then argue with people about it? What are you trying to prove?

  • avatar

    Ok Ok. You’re a visionary. The race has barely started, but your horse is going to win.

    SO what do you want me to do? Write a national piece declaring Tesla the winner, Elon Musk a God, and what else?

    This is like arguing with a 5 year old.

    • 0 avatar
      Vulpine

      The answer is very, very simple. Stop using absolutes like “must” or “won’t” or “can’t” and use qualifiers like “may” or “might” or “could.”

      We CAN’T know what the future holds because we DON’T know everything about the present. We can guess and make informed opinions, but to be quite honest nobody on this earth truly knows everything about every aspect of a business because there simply too much going on at any one time. The stirrup changed warfare forever at Agincourt over 600 years ago and perhaps as long as 1600 years ago in China. The Tesla can change modern motoring forever by truly becoming the world’s first truly popular all-electric automobile. It has already changed the face of electric cars by offering more than twice the range of the next nearest model with effectively 4x the performance and comfort of that same next nearest model while totally blowing away the all-electric performance of all the current crop of EREVs through the simple factor of not having to carry around an extra few hundred pounds of iron and aluminum AND the fuel to power it.

      Whether it WILL do so is still a question. Whether it WILL fail as an independent OEM distribution method is still a question. Everything about Tesla beyond what we know for FACTS about Tesla are still a question. I accept that. I don’t know. But I can predict that Tesla is going to surprise a lot of people who insist they cannot succeed.


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