Thread

Tesla takes on $30B in credit as it approaches unprofitability

161 points · 221 comments · ciconia

rgmerk · 1790747861 · focus · HN ↗
Look, I get that Elon wants to chase AI, but why not do relatively simple, low-cost things like build a proper 7-seat SUV that uses the Cybertruck platform - or even a properly stretched Model Y platform (rather than the six-seater L)? Or how about a delivery van on a stretched Y platform?
Tesla's product line is narrow and aging rapidly.
1. tehlike · 1790748152 · focus · HN ↗
  I would also like a 7 seater, but that might be uniquely american concept.
  1. eddythompson80 · 1790748776 · focus · HN ↗
    Not really. Peugeot has been making 7 seaters for over half a century now.
  2. Svip · 1790749038 · focus · HN ↗
    In Europe, they are usually known as MPVs or "people carriers"; Renault has made their Espace since 1984 (though, it looks like they abandoned that format in 2012); there was also the Renault Grand Scénic, which ended in 2022. So not a uniquely American concept, but it seems like the market in Europe for them is thinning significantly. A shame though, I really like the look of that Espace mk1.
    zh3 · 1790749795 · focus · HN ↗
    Also the Citroen Grand C4 [1], which is a 7-seater where the back row fold down to get a completely flat foor - great family car. It's been replaced by the Space Tourer now I believe, which goes up to a 9-seater.
    [1] <a href="https://www.autotrader.co.uk/cars/used/citroen/grand-c4-picasso" rel="nofollow">https://www.autotrader.co.uk/cars/used/citroen/grand-c4-pica...
    ygra · 1790749997 · focus · HN ↗
    It's not really a vehicle that many people need. Our VW Caddy seats 7 with the third row of seats, but that was installed for a week before we took it out and it's been in the garage since then. I've had the car full of stuff more often than I had it full of people. And even then it's mostly air in a car that's shaped like a brick wall that's been driven around most of the time. I can drive it at around 6.5 l/100 km of gas, but 7.1 is more typical. So a more sensible choice would have been a smaller and more efficient car.
    drcongo · 1790755095 · focus · HN ↗
    Full size MPVs are status symbols in Japan and China, they're making a little bit of a comeback in Europe at the moment with various copies of the Toyota Alphard like the Lexus LM and about 50 different Chinese clones arriving soon like the Denza D9, Xpeng X9, Zeekr 009 etc. I have an imported Vellfire, so I'm quite exited for all the clones coming.
  3. Hamuko · 1790750892 · focus · HN ↗
    Any more than the four-door full-size pickup truck that is the Cybertruck?
  4. IsTom · 1790753133 · focus · HN ↗
    I've seen taxi drivers use them in Europe multiple times basically every time you want to transport more people. Beats using 2 cars.
  5. fjlunky · 1790753701 · focus · HN ↗
    I feel like the opposite is true, Americans seem oddly opposed to vans, minivans, and people movers. Toyota alone make something like 20 different models with three rows of seats as standard, and school event parking where I am is packed with 7 seaters. Wasn’t Tesla Model X a 7 seater?
2. jmalicki · 1790748218 · focus · HN ↗
  Because tesla has always been selling dollars for $0.50. Investing in their product lines doesn't help them, it's always been a grift and a shell game. Some great products have come out of it, but the valuation has never been one where selling more products helps the business, unless it can lead to the hype train.
  1. rgmerk · 1790749560 · focus · HN ↗
    Sure, but if they're losing money, you go looking for ways to make a bit more money without having to spend too much. My contention is at least some of these things could be done relatively cheaply and would generate additional sales.
    Tesla may be getting belted from pillar to post elsewhere in the world by the Chinese but they a) still have a near-monopoly in EVs in the US, and b) have a cost-competitive EV manufacturing operation in China from which they can supply other parts of the world.
    That still doesn't help their image problem, which is still very real for many left-leaning affluent consumers around the world, but that's less of a problem for commercial vehicles.
3. yodsanklai · 1790748443 · focus · HN ↗
  Do they still care about cars though or they're chasing some new things after losing to the Chinese.
  1. fooker · 1790751746 · focus · HN ↗
    >after losing to the Chinese
    The total market cap of all the Chinese car companies combined is about 300B.
    Tesla alone is worth ~5x that, because the market rewards this behavior of chasing new things.
    If Tesla suddenly pivoted to 'caring about cars' and tried their best to produce low cost reliable EVs, the market is going to punish them by valuing them at less than 300B. That is, if they succeed at that. If they fail, which would be more plausible, they go bankrupt.
    Why would they voluntarily do that?
    We could do that by changing public opinion or regulating what public companies must do/report, but that seems somewhat unlikely. It's so much easier to claim that autonomous driving will be solved in six months :)
    blooalien · 1790752962 · focus · HN ↗
    > It's so much easier to claim that autonomous driving will be solved in six months
    Why so long? Six months? According to God-King Trump who apparently knows everything better than anyone, we're already well past "AI" into Super-Intelligence. Just ask the Machine-God to bestow autonomous driving upon us and we're good to go, yeah? Time to bring on those flying cars in every garage we was all promised decades ago!
    fooker · 1790753338 · focus · HN ↗
    Six months is the ideal time for people to forget about what you claimed.
    Opposite seasons, new wars, at least one new thing to be outraged about.
    alphabeta3r56 · 1790757504 · focus · HN ↗
    BYD had revenue of 110B while tesla had 96B and both have around 4B dollar of profits. BYD also has better credit line (from Chinese govt), which is the whole point of market cap. I dont think official market cap value reflrct this reality.
    schiffern · 1790758376 · focus · HN ↗
    Did BYD stop losing money on EVs yet?
    Last I checked they (still) never release their EV profit alone, always bundling the numbers with plug-in hybrids and high-margin battery sales to other companies. If BYD made money on EVs there'd be no need for shenanigans.
    surgical_fire · 1790759867 · focus · HN ↗
    Wasn't Tesla unprofitable until as late as 2020? And I mean, fully unprofitable, with no shenanigans to save it.
    Why for US companies is it okay to be unprofitable while they grow, but for Chinese companies it is shenanigans?
    Also, if they actually sell things such as high-margin batteries, is it even shenanigans? Using a profitable division to finance the growth of another division sounds like excellent business strategy to me. Better than promising bullshit FSD to artificially inflate the stock price.
    schiffern · 1790824279 · focus · HN ↗
    >Why for US companies is it okay to be unprofitable while they grow, but for Chinese companies it is shenanigans
    If the narrative is "China won EVs" then "they didn't do the R&D to make EVs a net economic win, and it's been a predatory loss-leader the whole time" is a pretty big caveat.
    Predatory pricing is nothing new. Walmart did the same thing, but (of course) they raised prices as soon as the local competition was dead. China is merely doing the same, so their "winning" in the economic market is a temporary illusion.
    "Turns out communists make great capitalists" is still true.
    surgical_fire · 1790847077 · focus · HN ↗
    That's a fair point, but US companies do that all the time, especially startups.
    What annoys me is that when this discussion is about US companies it is taken as just "that's how business is done" and accepted as a perfectly voable strategy but when it is companies elsewhere it is suddenly evil, icky, and predatory.
    schiffern · 1790898813 · focus · HN ↗
    My point isn't to say it's evil and icky.
    My point is China hasn't "won" this technology race, despite what the seemingly competitive product offerings and pricing would otherwise imply.
    TheScaryOne · 1790779820 · focus · HN ↗
    Nope, just like SpaceX can't stop losing money when you take out xAI.
    6510 · 1790821497 · focus · HN ↗
    It doesn't work like that overthere. It's just like there is no need to make profit from trains. We have road tax, it isn't enough to cover road maintenance. They are just investing in driving their economy all kinds of places... almost literally.
    I got a new job once, the boss asked me what I thought after a few days. I told him I wouldn't be around for very long. "why?" It took me 2 hours to figure out you don't get it. "how?" Well, you have a coin operated coffee machine in the lunch room. It tells me everything I need to know. "But it's just 50 cents?" I laugh and point at him, EXACTLY! Now tell me how it tastes. "I don't know, I have my own machine upstairs" I dig in my pocket and pull out a shiny 50 cent coin. HERE! "what is that for?" I say, it's uhhh just 50 cents? "Why are you giving me 50 cents?", well technically you should explain to me why I would have to give you 50 cents but okay, you are selling a product in the lunch room, I suggest you go and test if it lives up to your standards. He actually walked off to the lunch room, I could see though the window that he put my 50 cents in the machine, then he waited... the cup filled up slowly... he took a sip then spit it into the sink. He came back but I was unable to continue the conversations, I couldn't stop laughing so he walked away. I wanted to say it tasted like: I need to get away from this place as fast as possible.
    [deleted] · 1790824724 · focus · HN ↗
    [deleted]
    [deleted] · 1790759265 · focus · HN ↗
    [deleted]
    jjav · 1790759315 · focus · HN ↗
    > The total market cap
    Market cap is not a useful comparison because it can (as here) be driven by hype.
    A better comparison is revenue and profit, that tells us a lot more about the business each is operating.
    Zigurd · 1790777276 · focus · HN ↗
    The whole idea is to build a cult that can transcend comparisons of revenue and profit.
    ryanmerket · 1790802207 · focus · HN ↗
    r/LateStageCapitalism ?
4. gfrecvh · 1790748508 · focus · HN ↗
  If they start doing that, everybody will finally see that they're just a car company and their stock will be priced like one.
5. qwerpy · 1790748576 · focus · HN ↗
  Yeah I’d love a cybervan or model XL. Pretty much every family I know would get one. In lieu of that we all got model Ys / cybertrucks instead, and then we grumble about it when the in-laws come to visit and we need to drive two cars to take the family out. YL is fine but they needed to go further. Need 3 proper rows and storage space!
6. [deleted] · 1790748964 · focus · HN ↗
  [deleted]
7. kersplody · 1790748976 · focus · HN ↗
  Why not a Cyberbus based on the cybertruck platform? I’d kill for 8–12 passenger minibuses in the LVCC tunnels during CES instead of the 3 passenger Teslas.
  1. cosmicgadget · 1790786378 · focus · HN ↗
    This is a strangly specific thing to want so badly.
  2. bryanlarsen · 1790786743 · focus · HN ↗
    They've already "announced" a 14-20 passenger Cyberbus. Is that not better than an 8-12?
    rgmerk · 1790818593 · focus · HN ↗
    They’re two different products and market classes. In many markets you can drive up to a 12-seater on a regular car license.
    bryanlarsen · 1790819237 · focus · HN ↗
    Driver requirements aren't much of a concern for a vehicle without a steering wheel.
8. fooker · 1790748992 · focus · HN ↗
  This will get TSLA valued as a car company.
  They want to be valued as a ~~scifi~~ tech company.
  Which is fair, given that the market (and by extension we) chose to brutally punish boring car companies that make reliable high volume cars.
  1. Gud · 1790751876 · focus · HN ↗
    And by punish you mean fairly value?
    DickieStarshine · 1790752350 · focus · HN ↗
    So, in comparison, punish.
    fooker · 1790753161 · focus · HN ↗
    I think you missed my point.
    I'm arguing that the fair value of boring companies making reliable things should be much higher. We don't do that, you have to promise hot air based growth to prevent your valuation from crashing.
    The behavior we incentivize is the one we'll get.
    jjav · 1790759950 · focus · HN ↗
    > I'm arguing that the fair value of boring companies making reliable things should be much higher.
    In theory (occasionally in practice) when you purchase a stock you are purchasing a piece of the future cash flow of that company. For a company which operates in a known environment and we can roughly predict how their revenue will grow (i.e. boring companies), the correct fair value of the stock can be easily computed.
    So, no, those predictable companies should not be valued much higher, they are already valued correctly because the are no big surprises in their future, the profits and revenue are predictable.
    This logic breaks down with companies where the growth can't be predicted to any reasonable accuracy. So in those you're just buying the hype, which sometimes turns out to be real, sometimes not.
    Unfortunately this also incentivizes some companies to pump themselves purely on hype so they never get valued on actual revenue and profit. Tesla is a prime example of this. If you value them as a car company we can easily compute a fair value, but that number is very low. So, instead, robots! AI! self-driving! Space! That keeps the fair value an unknown, so it can ride the wave of hype for a long time.
    jasomill · 1790770588 · focus · HN ↗
    Did I miss something? Tesla is developing spacecraft?
    bryanlarsen · 1790783281 · focus · HN ↗
    Rumors of a merger with SpaceX is one of the things pushing up TSLA.
    ASalazarMX · 1790797508 · focus · HN ↗
    SPCX is the teat from where all other Elon's side projects feed (or will feed), it seems. I hope he doesn't ruin it.
    bryanlarsen · 1790805106 · focus · HN ↗
    Starship and Starlink are prerequisites for the silly Starmind, so I don't think they'll quite as badly destroy their core competency as they are doing at Tesla.
    cyanydeez · 1790768628 · focus · HN ↗
    yes, you've discovered the plight of the bigot: equality feels like punishment.
    fooker · 1790787399 · focus · HN ↗
    Of course equality is a punishment when you have more to lose than others.
    If the world's wealth was equally distributed, it would be pretty punishing for everyone who is commenting on this platform.
    cyanydeez · 1790792879 · focus · HN ↗
    which is the philsophical/moral point of view which asks: If you had to randomly be born in anywhere in the world, how would you prefer the world work?
    Very few people would choose the one where there's a slight chance they're in the wealth classes currently.
    Not moving towards equality is just a selfish choicel.
    fooker · 1790794987 · focus · HN ↗
    > Not moving towards equality is just a selfish choicel.
    It is. People are selfish.
    Companies even more so.
    cainxinth · 1790773877 · focus · HN ↗
    There was an HN post recently about “startup anti-patterns” [0]. And the broad takeaway was that most failures stem from preventing facts on the ground from reaching you, i.e., the company plows ahead with a strategy that misses or actively ignores countervailing data.
    [0] <a href="https://www.itamarnovick.com/intro-to-startup-anti-pattern-series/" rel="nofollow">https://www.itamarnovick.com/intro-to-startup-anti-pattern-s...
    Zigurd · 1790776975 · focus · HN ↗
    Yes, that would be the punishment. It's also why Elon is irreplaceable. You might think the long-term health of Tesla would be well served by leadership that would build on the remarkable initial success of creating a viable mass market electric car company. As many on the thread pointed out, there are many plausible ways to formulate a product that would do exactly that.
    But that would be a massacre of shareholder value. One more quarter of a ridonculous valuation is worth more than having a product that will keep Tesla viable as a car company. The idea that Grok could become a first tier AI product is more valuable than a mass market SUV, because that untested idea keeps the share price up.
    Until it doesn't. If you can predict the day that happens, I want to subscribe to your newsletter.
    danny_codes · 1790781189 · focus · HN ↗
    Grok isn’t part of Tesla.
    sshine · 1790794518 · focus · HN ↗
    Right, it's part of SpaceX.
  2. ryandvm · 1790778305 · focus · HN ↗
    What's funny is that nobody even believes the SpaceX/Tesla fever dream stuff - not even the fanboys. Data centers in space that violate the laws of logistics+thermodynamics? 30 trillion dollars worth of revenue?
    No, they only believe that somebody else believes this shit. The entire valuation of Elon's companies is based on greater fool theory. But it notably is called greater fool, not infinite fool; we are going to run out of fools at some point...
    roryirvine · 1790779044 · focus · HN ↗
    I'd love to know what their actual plan is, the one they hope will allow them to manage a soft landing rather than a sudden crash when the music stops.
    I mean, they must have one and it must be at least minimally plausible - otherwise the regulatory authorities would have stepped in long before things got to this stage... right?
    fooker · 1790787221 · focus · HN ↗
    The plan, as always, is monopoly.
    Push out competitors and get the market, bet the market is large enough.
    fooker · 1790787171 · focus · HN ↗
    > Data centers in space that violate the laws of logistics+thermodynamics?
    Are you convinced enough that you are correct to short the stock though?
    rainsford · 1790811576 · focus · HN ↗
    Shorting it would only make sense if you believe the stock value is at all correlated to the technical feasibility of the long term vision. I think the entire point of the person you're responding to is that it's fairly obviously not.
    Paradigma11 · 1790853879 · focus · HN ↗
    No, but I would be willing to bet against concrete milestones on polymarket/kalshi.
    fooker · 1790856342 · focus · HN ↗
    Here you go.
    <a href="https://kalshi.com/markets/kxspacedatacenter/data-centers-in-space/kxspacedatacenter-26" rel="nofollow">https://kalshi.com/markets/kxspacedatacenter/data-centers-in...
    <a href="https://polymarket.com/event/ai-data-center-in-space-by" rel="nofollow">https://polymarket.com/event/ai-data-center-in-space-by
    Paradigma11 · 1790860140 · focus · HN ↗
    Thanks, will do.
9. Betelbuddy · 1790751948 · focus · HN ↗
  Its not a car company, according to the CEO...
  1. KellyCriterion · 1790754247 · focus · HN ↗
    yeah, its a .com == AI company :-D
    KellyCriterion · 1790777325 · focus · HN ↗
    For the downvoters:
    The market hype is quite similar, so even if its a metaphoric commparison, it makes sense :-))
10. UltraSane · 1790759237 · focus · HN ↗
  Honestly it seems like Musk is just plain bored with cars.
  1. cosmicgadget · 1790786507 · focus · HN ↗
    Which might have been a good thing except that he decided instead of delegating the car company he'd use it to make robots.
11. MisterMunchkin · 1790759783 · focus · HN ↗
  And why don’t they have a HUD? Every other car does. Teslas were cool in the 2010s, but now they’re just old and sad.
  1. rgmerk · 1790768846 · focus · HN ↗
    Just like an instrument panel and an indicator stalk.
    It’s a shame, because even after all these years Teslas are still state of the art in quite a few aspects (their packaging and drivetrain efficiency, among others). But here in Oz where we have a smorgasbord of cheap and excellent Chinese EVs, there are better options unless you want FSD above all else.
  2. benhurmarcel · 1790770794 · focus · HN ↗
    They skimp on plastic buttons, you think they'll include a HUD?
12. dzhiurgis · 1790770937 · focus · HN ↗
  > aging rapidly.
  Visually yes, but technology still vastly mogs all but zeekr maybe.
  But that doesn’t matter - most people seem to buy cars entirely by how it looks.
13. fearmerchant · 1790810117 · focus · HN ↗
  An electric truck the size (and look for that matter) of the Hyundai Santa Cruz would be a lot more practical for most folks imo.
14. roosterIllusi0n · 1790820162 · focus · HN ↗
  He already transferred the AI technology to X. Tesla already shares information and employees between them and spacex. All he has to do now is let the company die so he can buy it cheap under spacex. That is how he merged solar city into tesla.

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