Hacker News Reader

Comment by Closi | Hacker News Reader

> I'm not sure where you are getting those numbers from. Ford had $37b in revenue Q4. Tesla had $16b.

Tesla makes a 27.4% gross margin on that revenue though, while Ford has a gross margin of 4.8%.

> Tesla is an impressive company that's managed to finally be profitable.

Although technically true, this is a little misleading as it implies that Tesla is barely profitable - in reality they have moved from 'finally becoming profitable' to now being the most profitable automaker (in terms of total profit).

View on HN

Tesla pulls all sorts of accounting tricks to make gross margin appear higher than it actually is. Warranty repairs are apparently done by pixies for free, so is R&D, factory amortization, or service centers

A like-to-like comparison would have Tesla's gross margin at ~18%, which is decent, bu not all that unusual for a premium car brand. Ford and GM tend to have much lower gross margins than VW or Toyota. The latter two are usually in the mid-to-high-teens, while competing in a cutthroat mass-market

They still need to 10x their profit to make their current PE of 130 to make sense.

I'm not saying they are worth their valuation, I'm just saying you can't exactly claim/imply that they aren't very profitable compared to others in the market they are operating in.

Also remember that they almost tripled profit in the last year, so that PE ratio will be 1/3 if they manage to do that again. Again, I'm not claiming that it is possible, or that that would be a sensible P/E ratio, or that they aren't overvalued, but P/E can change quickly.

I would be shocked if they were able to maintain those margins.

They’ve faced relatively little competition in the EV space until this point and benefited from a shortage juicing prices. As demand eases and more entrants come into the EV space, they will have to lose margin, market share, or both.

> I would be shocked if they were able to maintain those margins.

I wouldn't be. They have fundamental and very broad patents on important things like:

* Pre-heating the battery on the way to a charging stop (enables the battery to accept faster charging without damage on road trips)

* Using motor waste heat for battery heating (increases range while use the above strategy)

* Dynamically adjusting charge rates due to real-time battery conditions (enables charging faster)

Those patents don't expire until the mid/late 2030's. That allows Tesla to force competitors to either pay a licensing fee or use more-expensive workarounds, like different battery chemistries, to match the battery range and charging rate. Either way, it means Tesla is likely to have larger margins than competitors.

I’m not intimately familiar with teslas patent strategy, but to my knowledge they aren’t enforcing any of those patents at all. Every single one of those features are present on competitor vehicles already.

https://www.tesla.com/blog/all-our-patent-are-belong-you

Good. The fact that very specific mechanisms that anyone could have thought of for something everyone understands is beneficial (keeping your battery warm) is patentable to begin with is... not great.

I feel like that’s not unreasonable over a decently long period of time?

Tesla as a product is a status symbol though. It's naturally going to be a high margin product but the cost means that the market is smaller. For example, the cheapest Tesla currently sells for $61,980 before tax in Canada. The number of people who can drop $62,000 on a car are a lot fewer than those than can spend $30,000.

tesla does not need to advertise, does not need dealerships

this also why Elon wants to buy twitter, besides the issue of free speech. it means PR for his companies.

> tesla does not need to advertise

What do you think Elon's shenanigans are exactly?

Reply on news.ycombinator.com