Tesla publishes its financial results for 2023; profit margin shrinks
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Scary Devil Monastery
Ars Scholae Palatinae
How many chinese EV carmakers exist is irrelevant to the topic of someone deciding to go with Tesla rather than buy chinese.
And my point remained that the argument 'peterford' brought to the table was, deliberately or not, a false choice.
The choice isn't between Tesla and China. The choice is really between Tesla and about literally everyone else of a dozen automakers of varying nationality, including Chinese ones.
Yet 'peterford' brought a very long song and dance to the table where buying a Tesla was the only proper choice in an invented paradigm where China presented the only other option.
And what you point out widens the field even further.
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Scary Devil Monastery
Ars Scholae Palatinae
If you're in the market for a new car at all then even the higher-priced EV's are likely well within your wallet's reach. Don't forget that both maintenance and fuel cost will be literally negligible over the vehicles lifespan.
You'll have to take a loan either way but honestly, the difference between a 25k USD loan or a 35K one isn't going to matter that much for most.
It gets a little more contextual if what you're looking at is a used car, because at that point it can only be argued that the secondhand market for EV's still isn't as mature as it is for ICE's.
All that said, however, if your perceived choice still stands between a chinese carmaker or Musk then that's a choice between two evils the lesser of which can be clearly determined. And, objectively, it still isn't Musk.
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The depths of misunderstanding on these "critical items" is so deep that I think I'm going to need to create some dedicated copypasta that I can use to educate Tesla fans (since they seem to be the only ones making these critical errors in business logic).
I don't yet have one written up on 2) and 3), but just the other week I needed to educate Kamus on the subject of 1), so I have copied and pasted the information from that thread below:
Almost all the companies with the highest debt loads in the world are automakers. This is not because they are in desperate financial shape, or because it's a capital intensive business (though it obviously is), or anything at all like that. It's because the automakers are actually some of the biggest banks in the world. They provide tens of billions of dollars of financing to their customers. They borrow money from a bank (this is their debt) at a low interest rate, and then they sell the customer the car with a loan at a higher interest rate. They make money on the spread between interest rates. This is also what's called "recourse debt." It's debt that is fully backed by collateral. If the customer defaults on their loan, they simply repossess the car and sell it to someone else instead. As a result, there is almost no downside risk associated with this kind of debt. (Obviously it's not "zero risk" because if the economy implodes completely and everyone defaults on their loans at the same time, they will be in deep trouble. But so will every other company in the country and/or world, so that's not really a scenario worth fretting over).
The basic point to understand is that the more cars Toyota or VW or GM sell, the higher their debt loads are. This is such a common arrangement that in order to keep it straight, if you look at any of the automakers SEC filings they explicitly discuss their "Non-Financial Services" and "Financial Services" sides of their business.
Inline XBRL Viewer
You can see that 2/3 of all of Toyota's debt is owned by their Financial Services Business:
And if you look farther down, you'll see that almost always, the "interest received" line is larger than the "interest paid" for the operations of that Financial Services Business. The "net income" and "net cash provided from operating activities" are both very positive for these lending businesses. Which is why they do it. The more debt they take on, the more cars they're financing, the more they take advantage of the spread between the financing rates that they can access as AAA creditors compared to the rates they offer their customers, the more money they make.
I don't expect everyone to understand this, but for someone seriously trying to be an "auto business explainer" you really, really should understand this stuff or else you just look like a complete fool to anyone who actually does know the first thing about any of this.
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I recall peterford saying that he'd prefer Tesla be the leader in EV sales than the Chinese manufacturers be the leader in EV sales. While sure, someone else might be the leader in the future, currently it's between those two groups, just based on manufacturing infrastructure.
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I wrecked my wife's car a bit over a year ago and had to buy another car ASAP. In terms of what we could guarantee afford on an ongoing payments basis I was looking at sub $15k models, and ultimately spent down our savings on a used ICE car.
I'm hoping that our finances do indeed change in the future, but even then we've got a couple decades of not saving for retirement to catch up on. So we're probably stuck with this used ICE car for the foreseeable future. If things really go good and we want to buy a new vehicle I still wouldn't want to take on the ongoing expenses of anything north of $30k. Retirement savings are a bit more important. The ongoing expenses of this (and our last) ICE vehicle are less than $300/month even including unexpected maintenance.
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Right... which is kind of fucked because on the one hand... you're giving money to a right-wing asshole who's trying to destroy the western world through right wing demagoguery and on the other... you have companies that aren't necessarily tied lock step with the PRC, as others have pointed out earlier in the comments. Instead, the OP is trying to lump all Chinese OEMs into the bucket of "being controlled by the CCP". That's what I was calling out for being xenophobic and/or sinophobic. Just because something is "Chinese in origin" doesn't mean the CCP is always behind the curtains.
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Scary Devil Monastery
Ars Scholae Palatinae
This is the current barrier of entry when it comes to EV. You can find decent ICE vehicles twenty year old and with unbelievable amounts of mileage on them still in good serviceable condition...and as a result, dirt cheap. A suitable first car for an 18 year old with a smoking new license and a few thousand in savings. Or for fast purchases and unplanned ones, as you say.
Even so, it depends on the long haul. SMR (service, maintenance, repair) costs are about 20% lower for an EV than for an ICE;
https://www.fleetnews.co.uk/electri...ce-costs-for-electric-vehicles-really-cheaper
The real trimmings are in the fuel costs, of course.
https://www.saveonenergy.com/ev/compare-driving-cost/
With a conservative monthly $100 fuel saving...that's $1200 less you spend on fuel per year. If you plan on keeping the vehicle for ten years that's $12k you can just tack on to whatever your budget would be for an ICE. Assuming you don't have PV at home at which point fuel costs drop a bit further.
These numbers jiggle a bit back and forth depending n how well you stick to maintenance plans and service, and how much you use the actual vehicle but...if you were going for a sub 15k keeper, at least the napkin math says that after ten years you might as well have invested in a brand new EV Bolt or Ioniq because the expenses would have been the same.
The issue remains that for an EV the total cost is very heavily frontloaded.
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Scary Devil Monastery
Ars Scholae Palatinae
Myeah, and I'll wager that literally everyone writing here is doing so using hardware which contains chinese-manufactured chipsets or on a mobile device which is wholly or partially owned by a chinese company.
As long as we still have the majority of our supply lines terminating in China that ship has sailed. A valuable debate is to be had just how we go about fixing that, but 'not buying chinese' simply isn't a viable option for most westerners as things stand today.
That's the first break in the logic of 'peterford'
The second break in logic is where BYD isn't the only viable alternative to TSLA. GM, Hyundai, BMW? All have good offers in the right price range.
...and looking at that the entire assertion that 'between the nazis and the yellow peril, I have to give the nazis my money, because ethics' just looks really weird right out of the gate.
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Even within new cars, they are exceptionally expensive. In the US, the average price for all new cars is just a little lower than the cheapest battery cars are (and if you do find a significantly cheaper one in other countries, invariably they have a short range).
Lower maintenance is largely a myth. Most maintenance is the same anyway, and those that are different tend to be inexpensive in gasoline cars. In addition, even comparable maintenance items such as tires (a big ticket item in any car) tend to be cheaper for gasoline cars.
And the reason fuel costs seem to be lower right now is gasoline taxes. Many areas in the world are looking to abolish them and replacing them with a miles-travelled tax.
That sounds like a very privileged position...
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A quick run through an auto loan calculator with the same inputs other than purchase price tells me the monthly payment on a $35k loan is approximately 38% higher than on a $25k loan (~$741 vs ~$536), which is slightly better than the 40% increase in purchase price.
The wildcard is, who is deciding to buy new, since the assertion intentionally ignored used purchases. It's already a position of privilege, by definition (understanding that used vehicles offer the same functionality for a cheaper price, so the choice is one of preference, not utility), and the question is, who is opting into that privilege where the jump to an EV is not affordable. I certainly agree that the answer isn't "no one", but I have no idea if the answer is "most" or not.
Splitting hairs? Probably. I do think it's pretty flippant to suggest a ~40% increase on one of the largest expenses people have is meaningless, but if he's not suggesting people should make that jump, merely that most in that market could make that jump, I can live with it. Maybe it's right, maybe it's not. The argument is whether the cars are positioned competitively at the low end, and I think the answer for now is, maybe just enough.
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You might also consider a used Bolt if you don't require Tesla-level road trip capability (Bolt "fast" charging stops from 30-80% are usually near 1 hour). Unless you insist on CPO <2 years old low miles (which might be a mistake given the tax credit criteria), you can probably find the EV (not EUV) for <$20K. KBB tradein value for a 2017 LT (the first year) is around $10K, so a dealer demanding more than ~$15K for one is oinking loudly. If you get a 2019 or older (and also many 2020s - use the VIN search at GM to make sure), you will get one with a battery that was replaced in 2021 or later with a 8y/100k part warranty (GM warranty info should show battery warranty extending to at least 2029, most 2030). Some 2020s and most 2021s-early 22s with the battery recall have it cleared by a firmware patch with no warranty extension, which is very undesirable.
Edit: Chevy built something like 200K of the things over 7 years, so there should be a few around for sale used. Beware of very high-mileage ones, though; the non-EV portions of the car were built to a price, and don't hold up much better than other cheap cars of the period around 2020. Steering, suspension, and brakes can have expensive issues as the cars get beat up, and parts can be hard to get for the older ones.
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This hasn't really been true since 2019. The used car market is a mess.
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It was $6000 + $600 in taxes + an unexpected $1400 for a new radiator (this didn't seem to stop the leak until I cleaned the radiator cap, so I still don't know if it was worth it) for a 2007 model mid-range car with new tires. I'm currently at around $1600 - $2000 in yearly fuel costs, about $740 in yearly insurance costs, and maybe another $100 or so in oil changes.
The main issues with a 10 year positive payback on an EV (or even a hybrid) is that even extended auto loans max out at about 7 years, no hookup for electricity at home (I'd have to run a 100 foot extension cord or something like that), and unless I bought an old one it would almost guaranteed come with touchscreen controls which is a no go for personal reasons I won't get in to.
Yep.
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Scary Devil Monastery
Ars Scholae Palatinae
In order.
- Yes, see the "frontloaded expense" part. The reduced service, maintenance and repair cost are a fact as is the reduced fuel cost.
- No, it's not a myth. SMR has been calculated - I mean, the statistics exist and are already fairly well established. All in all the SMR cost is 20% less - with service costs in particular being 65% less, absorbing and exceeding the increased cost of parts.
- No, even if you abolish gasoline tax that won't be enough with the comparable cost difference being ballpark 60% less.
https://www.nrdc.org/stories/electric-vs-gas-cars-it-cheaper-drive-ev...and abolishing the gas tax to the point where that equation even comes close to changing would be a screeching reversal of even trying to mitigate climate change. A bold and controversial decision, to say the least.
Point of note this is still talking about the US where gasoline costs a lot less than literally everywhere else. In the EU the EV becomes a complete no-brainer as soon as you look at fuel savings alone.
Of course in both cases the price of electricity as fuel drops even further if you've already got PV at home where recharging the car is close to free using surplus alone.
- No, it's not a privileged position, assuming you are already in the running for a loan - if you can afford a $25k loan for a car you can usually afford a $35k loan for a car. With the savings on the vehicle exceeding that over a ten year period there's no real difference in the long run. Again here YMMV. If you can foot part of the bill over the counter, only taking out a partial loan? The end result skews further towards the black. My point is that if you're already looking at a 25k cost then you are by definition already privileged fiscally.
As I mentioned, the primary barrier of entry is the secondhand market where you can find good quality ICE's twenty years old still in serviceable condition for 1k-2k USD. EV tech isn't mature enough yet to provide for that sort of secondhand market - and we can likely guess it isn't in the best interests of any carmaker to keep building vehicles (ICE or EV) who'll still remain market competition 20 years down the road.
This is the biggest hurdle. 'Vimes socioeconomic theory of boots' as it were. Because with 40% of the US citizenry not able to meet an unplanned $400 expense without bankruptcy (treasury numbers, roughly 2020's) any vehicle at all exceeding maybe USD 2k is going to be out of scope for many. At that price point, a very old but still serviceable ICE is the only option.
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Scary Devil Monastery
Ars Scholae Palatinae
Myeah. There are valid concerns when it comes to ubiquitous adoption of EV - beyond the hyperbolic trombone repairman having to get themselves across the aussie outback - The frontloaded higher expense, the fact that full use of EV advantages also wants a certain amount of addition to the normal at-home environment (PV and outdoors charging at the parking spot), the lack of a mature secondhand market...
Those can certainly be overcome, but for many average consumers the fact that long hydrocarbons are more portable than electricity by far if you don't have accessible wiring will remain a barrier until modern society infrastructure gets used to having at least wall sockets if not charging stations, literally everywhere within one extension cord's distance of where a car might get parked.
Financially though, we already see that, just like PV, EV adoption is worth it - if you have the wherewithal to fork over the initial expense.
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Scary Devil Monastery
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Not too sure about that;
https://www.topgear.com/car-news/top-gear-advice/10-best-used-cars-ps2000-top-gear-guide
YMMV, but you can still find decent cheap cars with a lot of mileage and years on them.
What is true is that many car manufacturers are slowly moving away from building cars which will still run twenty years later. Planned obsolescence is a thing, and it's in no carmakers interest to see people getting used to buying even a five year older model secondhand rather than purchase against a loan, or lease a brand new offer of theirs.
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How is that a defensible statement?
Cars today last longer than they ever have in history. They are far, far more reliable.
Yes, it's possible that maybe one day the infotainment might conk out or become unreasonably slow 10-15 years later. But considering the cars that supposedly don't incorporate planned obsolescence never had those features in the first place, how does that actually make the current situation worse?
Cars have had fully integrated electronics governing critical systems for decades now. Ask anyone how much fun it was to track down the electrical gremlins in a '90s VW.
Old luxury cars have always been nightmares to maintain, so I guess the issue is that even entry-level cars today have features that would be rare or completely absent on luxury cars in previous decades.
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Scary Devil Monastery
Ars Scholae Palatinae
You're not wrong in facts, but consider that even the gremlin-riddled cars of the 90's didn't risk getting bricked the very minute some ass decided the 2020 model has reached EoL, or because one component has expired;
https://www.vice.com/en/article/qvgxqp/worn-out-flash-memory-is-suddenly-bricking-tesla-cars
It doesn't even have to be malicious. Just that the manufacturer ceases to push OtA firmware updates for certain models after a while means the vehicle becomes either useless or a road hazard.
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In fairness, that's Tesla, a company that is actively antagonistic to auto industry best practices. The reason the other automakers have such comparatively slow and clunky infotainment is that they wait until the automotive / integrated versions of SoCs and other components are out that have been proven reliable for thousands or millions of cycles in extreme conditions. As a result, they're usually at least 2 generations out of date by the time they show up in your car (and they're rarely the flagship version of the components in the first place!) but you at least know that they will be reliable.
Tesla takes the opposite approach and uses high-end consumer grade components and basically rolls the dice on reliability, and/or hopes that their buyers will want the new shiny thing in just a few short years.
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Scary Devil Monastery
Ars Scholae Palatinae
Yeah, I'm hoping and praying that auto industry best practices don't catch the TSLA bug. From what we've seen in tangential industries such as agri (John Deere), and tangential topics within the auto industry (BMW 'subscription' models) I'm not sure we can count on the 'best practice' of carmakers making cars built to last too much longer.
I'd go further than saying that TSLA 'rolls the dice' on their choice of cutting edge tech barely out of open beta. When the Great Visionary decides the hardware has to be able to run console games while it struggles to calculate assisted driving out of only a few second-rate cameras around the vehicle I feel we've gone back in time to the early days of plug-and-pray as far as reliability is concerned.
A lot of the reason Tesla tech is unreliable can be directly traced back to executive decisions made by the Apartheid-happy man-child.
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What you have missed, or at least not directly addressed, here, is the reason they're considering eliminating the gas tax.
It's because there's too many electric cars not getting taxed. And they wouldn't eliminate the tax without replacing it with a tax on all road vehicles, just no longer tied to gas purchases. The argument is not that the cost of driving an ICE car will go down, it's that the cost of driving an EV will go up, because you'll no longer be able to dodge the taxes.
The gas tax is functional, after all. It's used to pay for road maintenance. Right now, EV drivers are literally getting a free ride, paid by everyone else. It may be thought of as a measure to combat climate change, but it'll get eliminated in a second if there's a better way to generate revenue to pay for the roads.
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Scary Devil Monastery
Ars Scholae Palatinae
That would be a shift, to be sure.
I very much doubt it'll be enough to shift which way the balance falls though. Electricity cost would have to go through the literal roof, even in the US, for that balance to change.
Mind you, I don't hold it completely impossible that's exactly what will happen.
There's just too much money invested in fossil fuels with at least a few very influential countries having their literal survival riding on still being able to sell oil.
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It's also worth pointing out the US federal gas tax is currently $0.18/gallon on gas that cost $3.00ish per gallon.
For all the idiotic Biden stickers saying "I did this!", the US gas tax of 5-6% (and 5-15% more depending on your state and current prices) is fairly small when it comes to the overall cost of buying gasoline. Depending on your state.
If they abolished the federal gas tax and tried to raise revenue by taxing your vehicle's mileage instead in order to catch EVs, a tax of equal magnitude would only hike the cost of running an EV by (0.05 * cost of gasoline).
And of course, a fair pay-for-the-roads tax that took into account the magnitude of road damage would fall 99% on 18-wheelers.
Sample calculation: In California ($0.66/gallon state fax, $0.18 fed tax) this would be maximally significant. If your EV gets 120mpge and the state said you had to pay for that, then you'd be paying $0.84 per 120 miles or $0.007 per mile. So... not much. But I suppose they could say "we'll tax EVs by mileage equivalent to an ICE, and EVs are 4x more efficient, so now it's $0.028 per mile". That gets closer to and maybe above the electricity cost to move a mile.
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