In a series of posts on X Monday night, Musk said that he would not want to grow Tesla to become a leader in artificial intelligence and robotics without a compensation plan that would give him ownership of around 25% of the company’s stock.
Notably, Musk held a stake of more than 20% in Tesla before he sold a large number of shares to buy X, the social media company he purchased over a year ago for $44 billion.
In January 2022, he said on a call with Wall Street analysts that he believes the company’s goal of building a humanoid robot is the most important technology it’s developing.
Nevertheless, Tesla believes in a robot-led future, and investors have sent the stock surging over the past year in the hopes that Musk & Co. can deliver innovations that propel the company to new heights.
The deal was so large that Musk and Tesla faced a shareholder lawsuit over the package last year, and they continue to await a Delaware Chancery Court ruling on whether the pay was excessive.
Musk and the Tesla board of directors were accused of breaching their fiduciary duties for waste and unjust enrichment.
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Tesla's lofty stock price is to some extent based on hype, and Musk being credited (far too much imo) for the company's success. If he did leave the stock price would come down to something more sensible, which at least short-term would make shareholders unhappy. But yeah leaving him in charge after what he did to Twitter must also be causing sleepless nights.
There's good reason to believe that Tesla is an Enron-esque style fraud. No one in charge has shown any business acumen, and no one can explain how it is actually profitable. But that requires only stooges and yes-men on the board. There cannot be any accountability.
Every time I leave my house, I see dozens of Teslas driving around. If they're not profitable, then they're horrifically bad at making money. They're ubiquitous. Pretty impressive market penetration for a business run by people who don't know what they're doing.
Yeah but in their cases the "hustle" got them the funds to move into their current space. Musk just had so much money that Tesla outlasted all the red it was in. Same thing going on with Twitter.
We all know it'll never fully go under, he has too much money for it too. It'll last long enough to sooner or later come back up.
That depends on how bullshit the numbers really are. If it is just Jack Welch level of financial shenanigans, you can see a stump version of the company eventually surviving. If it is worse than that, then probably not.
and no one can explain how it is actually profitable.
Hang on a sec, its publicly trade company. Its pretty easy to see how its profitable especially compared to other legacy automakers.
Tesla vs Ford numbers:
On the other hand, "let’s look at Tesla and the Model 3. Tesla is aiming for 25% gross margin on the Model 3 and mid-teens profit margin (let’s say 14%). The average price of the Model 3 is projected at around $42,000... [so] the average gross margin on a Model 3 would be $10,500 and profit margin would be $5,880. Compared to Ford’s average vehicle profit margin of $1,100, the Model 3 would be 5x as profitable." source
Disclaimer: the source is from March of 2023 and Tesla has cut prices (which means less profit) since then, but they had a lot of room to do so with so much profit per car.
So one could say that Tesla has been able to charge a premium for a cheaper car, or they've been able to reduce manufacturing cost for a moderately priced car. Both result in high margin returns for the company.
They have a direct sales model which is more expensive to operate and exaggerates profit margin. There’s also reason to believe they are wildly understating warranty costs plus ignoring R&D costs. People who look closely have consistently concluded that Tesla cannot really be making money, or have very narrow profit margins at best.
Huge price cuts will compound these problems dramatically.
They have a direct sales model which is more expensive to operate and exaggerates profit margin.
How would adding a middleman that also has to make profit make the company earn less? Wouldn't direct sales allow Tesla to sell for a higher price because they can sell at retail instead of a "wholesale" cost normally sold to a dealership?
People who look closely have consistently concluded that Tesla cannot really be making money, or have very narrow profit margins at best.
I'd be interested in reading more on this assertion. Do you have a source you can point me to?
You have to build the entire system out yourself. That costs a lot of money. The dealership model also costs the manufacturer basically zero dollars, because it really profits on used car sales and maintenance works. You don't make anymore money by having your own dealerships. The whole argument that there's some secret behind Tesla's business smacks of gaslighting, not something that actually holds up to reason.
It's been a long standing issue with Tesla's accounting. No one can really explain how profits are actually being generated going back years, especially considering everyone in the West is losing money on EVs. It's also being ran entirely by sycophants and people with minimal qualifications, with zero accountability anywhere. So it just seems, via Occam's razor, that they're cooking the books.
You still have to pay out warranty work either way. Someone has to fix it after all.
There are many people who have made the claim that Tesla doesn’t really make money. You can google it up. Just look for stuff like “tesla profits” or “tesla not profitable” and you see it. Also, the only people who do vigorously insistent that Tesla is profitable are the fanboy investors and some of the least credible analysts out there. It screams gaslighting no matter how you look at all.
You still have to pay out warranty work either way. Someone has to fix it after all.
Yes, but if you're paying a dealer, they need to be paid to make it worth their while. Manufacturers using dealers are essentially hiring an outside company for the work. This would contrast very differently with a direct sales company that simply has its own employees doing the work. A direct sales company doesn't need to "profit" from the effort put into its warranty work.
There are many people who have made the claim that Tesla doesn’t really make money.
Then what, Tesla owns their own repair and maintenance service? That also costs money.
Ultimately, you’re going to accept that there’s no way around some of the cost of running a car company. If you won’t accept it, then there’s nothing I can say to change your mind.
Also, most of the numbers can’t be trusted. It’s known as “regulatory capture.” And they’re probably not the only one. Likely many companies have doctored accounting numbers these days. If anything, this is a huge problem in business today.
Also, most of the numbers can’t be trusted. It’s known as “regulatory capture.” And they’re probably not the only one. Likely many companies have doctored accounting numbers these days. If anything, this is a huge problem in business today.
This is not accurate at all.
This is not what regulatory capture is
PWC is massively incentivized to catch any fraud by Tesla/Musk
Then you live in on another planet. Or at least another decade. Regulatory capture is everywhere these days, and PWC is 100% motivated to hide any fraud. In fact, pretty much all accounting firms are motivated to do so. I'd rather believe every major accounting firm is guilty of aiding some kind of accounting fraud than the reverse.
Your understanding of the term is incorrect. I am definitely using it correctly. And you are definitely wrong about PWC, plus any other accounting firm on Earth.
But I think it is clear that your mind is made up. If you won't believe me, then I won't press any further.
Regulatory capture is anytime that special interests have overridden the enforcement agencies' desire to protect the public. That can also apply to accounting firms. So yes, it is correct.
There's no reason for them to conduct audits honestly. Again, if you are totally convinced that what I described is impossible, just let me know. We can end this conversation now.
Not OP but regarding sources, there's a group referred to as "TSLAQ" (Q referring to a letter typically added to bankrupt stock symbols, but they're not entirely free of conspiratorial thinking) that's been critical of TSLA and others including David Einhorn who have criticized their accounting practices. I've not had time to look much into it myself but see: https://en.wikipedia.org/wiki/Criticism_of_Tesla,_Inc.#Accounting
Here's the section for the wikipedia article you mentioned in your comment:
=
In 2017, a lawsuit alleged Tesla made materially false and misleading statements regarding its preparedness to produce Model 3 cars. The U. S. Department of Justice also began an investigation in 2018 into whether Tesla misled investors and misstated production figures about the Model 3. The lawsuit was dismissed in Tesla's favor in March 2019.
In the 5 years I've owned my Model 3 it's never needed any service. Only new tires. They are not even remotely as bad of a car as clickbait sites make them out to be. Yeah yeah Teslas aren't perfect, but no car is. Be realistic.
It being associated with Musk and his crazy rants is annoying though. Almost annoying enough to trade it in, but I don't particularly want to spend a bunch of money and getting rid of an almost like-new working car.
I'm being realistic. You're embarrassed by it and association with Musk.
Musk is genuinely a bad person who is pushing bogus race science and other horrible unequivocal bullshit.
It's great that it hasn't needed service, but my point stands: once it needs service, you will be handing money to Elon Musk.
If you want him to go away that badly, there are things you could do. Like trading in your vehicle for another EV. There's other brands, who are not run by a racist, misogynist, ableist, megalomaniacs.
You can complain on the internet all you want, but if you're unwilling to find a way to not give him money, you're just one more person with Elon's foot stuck up your ass.
With all due respect my 2021 Model 3 is a gargantuan piece of shit. Every interior joint and connection squeaks, the range is and has always been far below stated range, both seats rattle, the wood trim has basically disintegrated, and my car only has 21k in it. I’d trade however my interest rate is 2.5%. I hate the car, the company, and Musk, but until interest rates drop I’m not trading. But hey it’s never needed service so yay for me. My 2012 Prius was a better built car than the Tesla Model 3, by miles.
Once the other care companies started making electrics, I wondered why anyone was still going with Tesla. Car companies have so many more decades of taking care of build issues.
At least in the US the charging network has been a huge differentiator. I've heard from a few people doing road-trips in non-Teslas and having trouble with the multitude of charging networks. Superchargers can get busy but I've never had a problem with them or gotten stranded. Hopefully NACS will improve this situation for all brands.
Yeah if I could buy a similar car with the same features at the same price from a manufacturer like Toyota, the choice for better build quality is obvious. However up until basically this year that has not been the case. My only real complaint with my M3 is the terrible paint they use. But I can live with it.
Point to me to a similarly specced ev for a comparable price in the US taking into consideration federal tax rebate and dealership bullshit fees. There still ain't anything this year. It will happen but we aren't there yet.
Same. Coming up to 4 years owning my Model 3 with no major issues and no work needed other than normal serviceable items common to all cars (tyres, wiper blades, cabin filters, etc).
On the flip side, one of my old coworkers who got his Model 3 at the same time as me had a litany of problems from day one. We used to joke that his car had been built by an intern on a Friday night before a major holiday.
I don't do enough miles these days to justify getting rid of a perfectly good, functional, almost brand new car and buying a new one - I plan to just run it into the ground instead.
I don't think I'd buy another Tesla in the future, though. Not necessarily because I care what people think of the car I drive, but because Tesla has made some astonishingly stupid decisions with their new/refreshed cars. No physical drive selector? No TURN SIGNAL STALK? Yes, because I love having critical vehicle controls on a movable surface. Come on now.
Interest rates and depreciation make that a losing bargain, better to get the utility out of it now that the trade in is low and interest rates are high
As much as I hate Musk, I don’t have $10k+ to burn on making a statement.
Sure, if the car market was flush with used EVs, swapping one used car for another might not hurt as much. But right now it’s slim pickings if you want a used EV that isn’t a Telsa, that is similarly spec’ed to a Tesla.
Just run the thing into the ground and charge on non-Tesla infrastructure as much as reasonably possible.
Hard to say. Cars put out before the Model 3 were typically not sold at large quantities. So the lower runs were sold to rich people or fanboys at first and it’s hard to get an honest long term review about them.
From what I’ve seen though, their earlier cars weren’t filled with tech like the newer ones which meant less points of failure so I’m betting the older ones were at least somewhat better.
I've driven in a Model S from before the Model 3 came out (2015 or 2016, IIRC), and the build quality was worse than the Model 3.
Significantly worse than the Skoda Fabia I bought almost new for £12k at around the same time. That thing isn't flashy but man it's put together solidly. Nothing rattles, nothing wobbles, all stitching is consistent, no glued-on materials are peeling off, the panels line up consistently everywhere, the paint is thick. None of that was true for the Tesla.
Don't get me wrong, part of me enjoyed driving in that Model S, the acceleration was insane, but the build quality was absolutely appalling.
I thought it was just car reviewers who are used to high end Mercs, Bentleys, and BMWs, needlessly trashing Tesla, and that the build quality would be fine. But it wasn't, if anything they go way too easy on Tesla.
I would buy from a company that knows how to build cars already so the difference is mostly a new power train, not an entirely new product. That’s not to say Tesla, Lucid, or Rivian can’t build a good product, but there are more unknowns with them. As with any car, be careful buying the first model year.
I felt the same way but ended up going with a volvo anyway because Chinese Investment or not, the company does at least try to make an effort to be more safe, ethical, and sustainable. Given the alternatives I made the decision that volvo was still the right car for me.
Edit: why the downvotes? If I wanted to buy a car from the number one brand in my nation, I couldn’t right now. BYD isn’t selling cars in the US. Moreover, their presence in Europe is still small.
They downvote you because that's a very western-centric vision.
Additionally, a car manufacturer in one of your western nations, Volkswagen, is also one of the top EV manufacturers.
And nearly every other manufacturer like Hyundai, BMW, Mercedes and Ford are now making EVs too. So it's not like there's a shortage of non-Tesla EVs in the western.
All I’m saying that #1 is relative with car brands.
In Europe and the Americas, the Model Y is still king. By you’re right, VW group is catching up.
Right now BYD is killing it because they’re affordable and a brand that centered in the world’s largest auto market. Outside of China, BYDs numbers are very very different.
Yup, just going back to the root of this thread. As that article states, even in Australia, Telsa is still “comfortably deliver[ing] the most electric vehicles of any brand.”
I wouldn’t be shocked if that flips in the coming years. Telsa has a toxic CEO which is bad for marketing, and many people question their attention to detail. But, going back to my original point, Telsa is still the number 1 brand in western countries by a very large margin.
Not trying to be a Tesla fanboy - I’m in camp Volvo / Polestar. I’m just presenting the numbers. BYD is crushing it because of their domestic sales.
I have a Kona Electric but I think my next car will be either a Polestar 2 if I can afford it or an EX30. Volvo/Polestar are doing things extremely well
If you haven't, I would make sure you test drive a polestar 2. I personally wasn't impressed with the quality. And trust me. I really wanted to be. Just felt super super cheap
If BYD was available in the US (and i'm certain BYD is looking into how to get here, probably the same trick Renault tried with Saturn and ultimately Mitsubishi) they would probably saturate the market, because at the very least, they're affordable. Nobody in Detroit or Wolfsburg will make a cheap EV because Tesla spooked the market into being a luxury thing.
Renault tried it with AMC first and didn’t “succeed“ until merging with Nissan and then Mitsubishi as well. BYD should probably try to buy out them, or somehow license to Stellantis to give them small cars worth buying. I bet an EV Neon would sell if it was remotely affordable (I know, no new cars are affordable to younger drivers, even if it’s a cheap BYD underneath).
Volkswagen EVs are pretty crap though. Teslas are way above them even if VW is catching up. There's a reason why they fired a lot of C-level people and other execs in the software side last year.
The Ford Mach-E is excellent. I have also heard great things about Kia/Hyundai, VW and Volvo EVs as well.
In 2016 I drove a Tesla Model S P85D and I was surprised at how crappy the interior was considering it was a six figure car. And I don’t mean minimalist, I mean poor quality.
Back then, Tesla was you only real option. Today, there’s a lot of great competition in the market.
VW and Volvo both make some pretty bad EV's IME, they have a ton of software issues and the entire infotainment system is insanely slow and buggy, which is a big problem when thats the main interface to the car. The interior is also very low quality. But these are probably general issues for them though and not strictly their EVs.
Exactly. At the moment we're just watching the Tesla board grit their teeth and look worried. By the time they get around to Doing What Needs To Be Done, will it be too late?
Same for SpaceX. No one will ever give a shit about Twitter again already.
If I was a shareholder or board member and heard “I don’t want to grow the company in ways you want with out a raise” I’d hear it as “he’s no longer doing the job we hired him for. Publicly going against our wishes.” Which is a short cut to getting fired in any other job on the planet.
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