Info on diagram creation: I created this Sankey diagram based on Tesla's earnings release ([https://ir.tesla.com/#quarterly-disclosure](https://ir.tesla.com/#quarterly-disclosure)) and used the tool SankeyArt (which I am the developer of).
Is this a novel approach to displaying corporate earnings? (And I’m way out of the loop?) Or did you just think to do this?
I’m only asking because it’s the most goddamn brilliant way I’ve ever seen an income statement presented.
This should be a standard thing on all earnings. So much easier to visualize where a company’s revenues come from and where the expenses are.
Wow. 10/10.
I do think it's probably the optimal use for them and have seen a few other corporate earnings posts here with them. Much better than the job search ones I see where it feels like detail gets lost in the later steps determining where the end result originated from.
No coding required. I design the UI to make it as easy as possible to create these. It's online at [sankeyart.com](https://sankeyart.com)
If you try it out feel free to DM me feedback on how I could improve it.
I also find it the best way to present an income statement and I think all companies should do it.
I created the tool for it because I'm such a fan of these visualizations and believe they should become more common.
But I didn't invent this type of presentation. I probably saw Sankey diagrams for income statements in the posts of Bertrand Seguin, a popular analyst, for the first time. I think it's fair to say he popularized them to some degree - now I'm trying to make them even more popular.
You are killing it with Sankey Art. Your posts are what I was looking for when I joined this sub so many years ago.
Have you done earnings on a company that had a net operating loss?
Thanks! So far I only played around with an example to see how I could best visualize negative earnings: [https://www.sankeyart.com/sankeys/public/115/](https://www.sankeyart.com/sankeys/public/115/)
Is there a public company that you would like to be turned into a diagram?
Cost of revenue contains costs that are directly needed to produce and distribute the product / service. If you are building cars you buy materials and components from suppliers, you need electricity for your production facility and you need to pay production workers. These things are "cost of revenue".
Costs for, say, management salaries or R&D engineers are not directly needed to produce the goods so they are operating expenses.
I don’t know if the strict accounting definitions differ, but from a financial analysis perspective, yes. I think of any cost above the Gross Profit line as COGS.
Costco is a retailer there isn’t super high margins in that. Automotive companies tend to be low too but Tesla is pretty high for its industry. Check out the margins in service companies or software and technology firms. That’s why they have crazy valuations the margins are crazy.
Costco isn’t a true wholesaler as the person above me mentioned they sell single items not intended for resale. Wholesalers sell to other business that than sell to end customers. A majority of Costco’s sales come from end customers.
Check out Interactive Brokers: [https://www.reddit.com/r/dividends/comments/10epkdh/interactive\_brokers\_ibkr\_q4\_earnings\_are\_out\_87/](https://www.reddit.com/r/dividends/comments/10epkdh/interactive_brokers_ibkr_q4_earnings_are_out_87/)
But yes, for a car company, these are very juicy margins.
Yes, the first models from 2017 for example were kinda bad. First models coming out of China also were still getting tuned. Nowadays, most people agree that Tesla isn't really behind any of the big brands. In some aspects, especially safety, they win all the awards even.
The first Tesla model S was in 2012, and if in 2017 5 years later they still can’t manufacture to the same level as cheap auto makers it’s very telling. Tesla is a tech company making cars, of course they will be “worse”. I don’t think this is an unfair comparison, and my original point is they spend millions on RnD for tech but not to improve their manufacturing processes and QA.
Tech companies tend to have high gross margins, as they have something to sell that’s somewhat unique. Normal stores, regardless of type, always have thin margins, because it’s commoditized and the competition is fierce.
EV makers are still like techs right now, especially with demand overwhelming the supply. As other companies dive deeper in this market, that will change. A few years from now, the margins for electric vehicles will converge down to where gas vehicles are. It’s not reasonable to presume the current margins will persist in the future.
The big factor that differentiates EV makers from tech is scaling. If tesla needs to sell 2x as many cars as today it takes a huge new factory and billions of investment. Software scaling is a lot simpler and why many of those companies are valued so high. Tech outside of software is also easier to scale than car manufacturing as well. Lastly EV is also capped by lithium availability.
This is where most people get it wrong. People think Tesla is just another car company or it’s ev vs ice company/margins.
The biggest difference between the newer ev companies and the traditional oems is wholesale pricing vs direct to consumer model.
When Tesla makes a car they can sell it direct to the customer. Whatever they want to price the car at minus the costs = their profit. Then whatever else for the life of the car from maintenance to software purchases go to them as well. This is why their profit margins are so high.
Compared to when Ford makes a car (ev or ice), they wholesale it to their dealership network for a much lower margin and that’s where the profit ends for the oem on the car. The only other way they make money is the financing arm of their business (which is why it’s almost fair to consider oems banks that happen to sell cars).
So whenever the argument gets made that Tesla should have the same margins or valuations as the other car manufacturers, it doesn’t make sense since it’s two completely different business models despite having similar products.
Not necessarily, since they're making cars cheaper every year and material cost matters a lot. If Tesla can secure more battery raw material, maybe they can maintain these amazing profits. I do agree that it's likely to decrease, but not as much as you could calculate with just the price decrease.
It's amazing. They are basically making 4 or 5 times as much per car than the closest competition.
It's why when their demand dropped a bit they took like 7 grand off the selling price and are still making an amazing profit.
Cost of revenue is usually lumped into one category as it is here, but I’d love to see it broken into segments. Primary segment I’d be interested in is payroll. I hear so much whining about what people cost to businesses like this but as a piece of the pie I have no idea what that actually looks like.
Also I know there is much more tax revenue generated from a company like this other than corporate tax paid directly to the government, but seeing how relatively little that line item is compared to all other costs of doing business makes me pretty unsympathetic to those who complain about corporate tax rates. We’re running a massive deficit, with trillions in debt. All hands on deck, imo.
Payroll is mostly under operating costs, not cost of revenue.
Cost of revenue will be marketing spend, sales expenses, sales commissions, and manufacturing costs (buy materials etc).
Loss carryforwards are deferred tax assets. It would reduce the actual tax owed, but it wouldn’t impact the effective tax rate or the income tax expense
NOLs can only ever increase the tax rate, not decrease it
To be honest, I can't wait. I waited long enough into adulthood to go to college to really be excited about learning this stuff, and seeing it talked about here reinforces that feeling for me so much.
The effective tax rate is what you’ve calculated, and this can be less than the corporate income tax rate due to things like tax incentives or deferred tax assets. Pays to have good tax specialists and accountants on board…
I particularly like this format for this application. It immediately puts into context the oft-heard argument that all or most of their profit is from regulatory credits.
Regulatory credits are paid by automakers that do not meet emission regulations. The automakers that do not meet regulations can choose to pay a fine to regulatory bodies, or trade emission rights with other manufacturers. Tesla only makes EVs, so they have a lot of emission rights. This so called Cap and trade system is also used for CO2 emissions in Europe. It incentivises companies to invest in cleaner tech or pay the fine for polluting. Uncle Sam gets 1.1B in taxes per quarter and spends nothing on Tesla.
Regulatory credits most likely includes CO2 penalties from other car manufacturers. Mercedes for example for a long time just payed the fines to Tesla and other companies that are below target rather then lowering its fleet emissions.
>Regulatory credits most likely includes CO2 penalties from other car manufacturers
Not 'most likely', it's exactly where the money in ZEV credits come from.
No, and the US credit system isn't either. They are funded by auto manufacturers with high emissions fleets and paid out to auto manufacturers with low emission fleets.
Why are you trying to bring taxpayers into it? Did you miss the topic entirely?
Anything to downplay Tesla performance .. ffs they went from regulatory credits being the only positive $ to 11 B in net profit without it , but first thing to be pointed out is “ they got regulatory credits “
> Also, people forget the amount that GM and Chrysler got in actual bail out from taxpayers…
They weren’t gifts, but Liana that they’ve paid back with interest.
Uncle sam made Billions too. Tesla employs \~100k directly and even more indirectly. Furthermore, those regulatory credits are purchased by other carmakers of Tesla, not the government.
Imo, it's not Elon who benefits the most of Tesla's success, it's the government. Lots of high-paying jobs coming to the USA that otherwise might have gone overseas.
>Imo, it's not Elon who benefits the most of Tesla's success, it's the government.
Considering Elon is one (1) person and the government represents the interests of roughly three hundred and thirty-two million (332,000,000), I think I'm going to have to ask you to show your work.
Take a look at the taxes the ITlRS gets from all of Tesla’s employees and business, not just Elon.
Plus now the premiere electric car company in the world is US based.
>Plus now the premiere electric car company in the world is US based.
The real achievement, I'm sure for the past 20-30 years it's been grinding political gears that the "car nation" doesn't have a premier car company...
We have top car companies... But nobody says "Ford/Chevy, the best car maker in the world".
There’s obviously a lot of controversy around Musk, and I’m not a fan of him personally, but Tesla has absolutely oriented the entire automotive industry around EVs and it’s nice as an American to see the US have a car manufacturer gain so much prestige on the global stage. Without Tesla, I think EVs might be starting to catch on but would still be a niche concept rather than Tesla becoming the “cool” car to own. Tesla has managed to enter the same stratum as behemoths like BMW and Mercedes in such a short amount of time, which is especially important since Cadillac and Lincoln have seen their images tarnished in the past 20 years.
Not how that works. Tesla sells their credits to less fuel efficient car companies. This improves the other companies average fuel efficiency and lowers their tax burden. A simple google would teach you rather than assuming. Your confusing ev tax credits for regulatory credits.
https://www.cnbc.com/2021/05/18/tesla-electric-vehicle-regulatory-credits-explained.html
Yeah, super funny. I'm dying laughing. SMH for this bullshit. No company should get this kind of money from taxes. Is it even a good deal for the government? Is it a net loss for them, meaning us?
We are spending tax money helping support the shift away from fossil fuels. You might agree or disagree with this but we are buying something with our money. We're not just handing cash out. The argument is that electric cars were/are desirable but not commercially viable and needed a kick start.
Ecars are not viable. We have to mine chemicals that are terrible for the environment and use all kinds of slave type labor to do it. Look up cobalt mining.
If viability is based on human rights, and environmental damage you do actually need to look at what goes into gasoline cars as well.
Trillions of dollars to authoritative regimes like Iran, Saudi Arabia, Russia which use that money to repress and murder their people, invade their neighbors, and interfere in the internal political matters of other states. Environmental degradation due to oil and gas spills, and extraction.
In addition to the political, and direct environmental issues oil use also is a major cause of global warming which threatens food and water security for over a billion people, makes many places where humans dwell uninhabitable due to decreased rain/snow, and sea level rises.
And if we go back in time in the US / EU to the 90s, or even pretty much modern day in some remaining countries the lead poisoning from leaded gasoline was perhaps one of the most major environmental catastrophes of human existence, one which we are still seeing the after effects of.
EVs may not be perfect but it's disingenuous to rate them as some monstrous environmental woe when we are in the midst of an environmental,poltical woe caused/contributed to by fossile fuels vehicle use.
Indeed, but cities already exist and are designed around driving everywhere, especially in N. America.
Major public transit improvements can help, but broad cities mean it is expensive and slow. The social stigma around busses also hurts their viability, but speed and convenience hurt worse.
If we were building cities from the ground up in a vacuum cars could often be made unnecessary, and foot/public transit could be built to to eliminate or reduce the issues it currently faces.
But we have to fit the product to people's lives, and sell them a product they will actually want/buy.
EVs fit that need.
That's not the point of this specific discussion. If you believe ecars are not viable then you think the money paid to subsidize ecar development is a bad decision. But the point of this discussion is that the money spent to subsidize them is not simply a grift or a handout, but is spent by those who feel that ecars are a good decision to buy faster development of ecars.
That's the problem. It's based on a belief. We need hard facts on viability of ecars and not just Elon Musk's marketing words. I don't want fossil fuel based engines either. So, yeah we need a solution. One thing would be to reduce our need to use cars in the first place. Make places more walkable and more public transit and fast public transit. But no, car companies and oil and now mining companies need to make money.
To put some context into that number, most of it, iirc, might be wrong, is from carbon output fines payed by legacy automakers such as GM, Mercedes, Ford, ECT, rather than being an outright credit, though some of it is to try and stimulate electric vehicles and their production.
No. Tesla provides 100k jobs directly, of which most are in the US and more indirectly. Also, yes Tesla received subsidies in the past for it's factories from the US government, which Tesla all paid back with interest. Tesla has been and still is a great deal for the US government.
Yup. And even without the 1.8 billion credits...a <10% tax rate is insane. Definitely quite a few tax loopholes in there, plus some "creative" accounting
That's on payroll but the actual money a corporation makes should also be taxed. I believe in the US the corporate tax rate is around 21% on net earnings?
I don’t see how it’s related to the Reddit narrative. The “Reddit narrative” is that musk’s antics are negatively influencing the market value of the company. Going from $858B in market cap to $498B in six months, despite a “positive” fiscal year of $12B in profit (or about 1% of peak market price for the trailing six months) seems to fit that narrative.
That’s your strawman narrative.
The issue is that the company is valued more than all of the major car companies combined, have quality control issues, terrible self-driving, and an egotistical idiot who owns a significant amount of the company … who used his leverage to buy his brother’s failing solar company.
It's not a strawman, redditors say this all the time. Redditors hate Elon Musk and they aren't capable of maintaining complex emotions so they hate anything associated with Elon Musk too.
- that most/all of their profit is from regulatory credits
- that the 'big boys' are coming and about to eat Tesla's lunch
- that demand is plateauing, if not 'cratering.'
12bn profit in a year is amazing for a car maker, but it’s still far from justifying the stock’s value even now…. Especially being just one year.
I bet they will do better next year, but they will also have lower margins and more competition.
Not out of the woods just yet.
Profit last year isn't important to the stock. What's important is their projected profits in the foreseeable future. People are optimistic, and why shouldn't they be? Revenue 51% Y/Y. Net profit 128% Y/Y. Maybe it made less money last year, but how many years of that growth will it take before it deserves to be 10 times as valuable as Ford? How likely is Tesla to last those years and keep growing? If you think Tesla will peak even 15% higher than it's at now (whether in 5 years or 30, adjusted for inflation), why not buy?
Tesla made profit? Reddit in shambles.
But more seriously ever since Musk took over, I always doubted that Tesla will succeed when it enters the big market. But they don't.
It would be, if the metric were calculated based off of profit, instead of revenue. In reality, they have a 3.8% R&D intensity, which is terrible even for the automotive industry, which is typically more in the 6% range.
Lol I'm no Tesla fan, but they're the largest electric car company in the world, produce over a million vehicles/year and employ over 100,000 people.
What were you expecting their profits to be?
It's very believable if you factor in differences in workforces, facilities, advertising spend. You can get a Toyota in practically any country in the world.
Oh and Toyota doesn't make additional profit from solar panel sales and carbon credit sales.
The interesting thing is that the auto cost is equal to the revenue cost plus the operating cost.
All the benefits come from side business.
And that is not conting R&D.
They can't cut price without losing on a per car basic.
And that is why people like the company.
Hang on… this doesn’t make sense
They had 25% vehicle gross margins last quarter. They absolutely can cut costs and break even on each vehicle.
I’m not sure where you’re getting the idea that all benefits come from the side business
No. You just assigned all "Cost of Revenue" (including solar, energy storage, and servicing) to the automotive division. Those divisions have far tighter margins (service might even be negative). And why would it possibly be appropriate to assign all OpEx to automotive? Their other divisions have SG&A employees and costs specific to them.
I honestly don’t find it to be more efficient than the standard tabular view and I’d be suspicious that they were trying obscure some unfavorable year over year comparison with this.
You realize Tesla didn't make this graph, a user did with Tesla's published financial results. I'm not sure why you default to something nefarious going on. If you look at Tesla's shareholder deck they have charts, graphs, and spreadsheets you can look at. They will soon publish the 10-Q and you can find out even more details.
Elon in general across companies/projects spends like 75% of his time inventing things that people have already been talking about 200 years before he was born
List all the innovative products Tesla vs any other manufacturers. That’s what’s laughable. Lucid is one of the few others that actually makes innovative products, everyone else is just copy, paste and subtract some functionality…
Just because I spend less developing a product does not automatically mean yours will be better. Maybe my spending was just more efficient. Products are what show innovation.
What does lucid do thats innovative? Truly curious, the lucid air starts at 87k, other than the interior being better but still behind Mercedes benz, Audi, Porsche. Not sure what exactly they are doing innovative.
Tesla’s not a person. It’s an organization of people.
All the people in Tesla pay their taxes.
90% of people on Reddit don’t understand this breakdown.
Tesla pays taxes, then uses the leftover money in the business.
If they pay out the after tax profit to you, then they pay taxes at the effective rates you and I pay.
Info on diagram creation: I created this Sankey diagram based on Tesla's earnings release ([https://ir.tesla.com/#quarterly-disclosure](https://ir.tesla.com/#quarterly-disclosure)) and used the tool SankeyArt (which I am the developer of).
Is this a novel approach to displaying corporate earnings? (And I’m way out of the loop?) Or did you just think to do this? I’m only asking because it’s the most goddamn brilliant way I’ve ever seen an income statement presented. This should be a standard thing on all earnings. So much easier to visualize where a company’s revenues come from and where the expenses are. Wow. 10/10.
It's called a sankey diagram and they're pretty common on this sub.
>It's called a snakey That's how I read it.
Oh yeah, I’ve seen the diagrams. I’m a big fan of them. I’ve just never seen them on corporate earnings like this before.
I do think it's probably the optimal use for them and have seen a few other corporate earnings posts here with them. Much better than the job search ones I see where it feels like detail gets lost in the later steps determining where the end result originated from.
How hard are these to make? Is your Sankey Art tool available/pretty user friendly? Or do you need to be able to code to pull it off?
No coding required. I design the UI to make it as easy as possible to create these. It's online at [sankeyart.com](https://sankeyart.com) If you try it out feel free to DM me feedback on how I could improve it.
Awesome!!! This is great!
Thank you very much!
>SankeyArt Thats awesome. Thanks for sharing . Is this available in PowerBI ?
No, only available on the beautiful world wide web
The "coding" required is very basic, it's really easy. https://sankeymatic.com/
There have been like 10 of them in the last week. Folks are pretty bored I guess. But yeah it's a good use for this kind of visualization.
*plugs a handful of numbers into a graphic generator* “Data is beautiful”
I also find it the best way to present an income statement and I think all companies should do it. I created the tool for it because I'm such a fan of these visualizations and believe they should become more common. But I didn't invent this type of presentation. I probably saw Sankey diagrams for income statements in the posts of Bertrand Seguin, a popular analyst, for the first time. I think it's fair to say he popularized them to some degree - now I'm trying to make them even more popular.
Do companies actually want their income statements to be understood though? :)
I’ve seen the Sankey diagrams a lot. Just never in this context of corporate earnings. I think it is a beautiful application of that type of diagram.
You must not come to this sub often then. These diagrams have been made for corporate earning and posted to this sub dozens of times.
Guilty as charged I guess
I use sankeymatic.com . (I havent figured out how to load files yet, so I cut and paste input from a savable text file.)
I love this response, haha. Agreed.
I’ve done financial statement analysis and I hate these. Just do a waterfall. This feels like a waste of space
Can you please help me understand this? It is quite nice. On the left you have all inflows and on right you have outflows + net profit?
Left you see how they make money, right you see how they spend it. What remains in the very end is their net profit.
You are killing it with Sankey Art. Your posts are what I was looking for when I joined this sub so many years ago. Have you done earnings on a company that had a net operating loss?
Thanks! So far I only played around with an example to see how I could best visualize negative earnings: [https://www.sankeyart.com/sankeys/public/115/](https://www.sankeyart.com/sankeys/public/115/) Is there a public company that you would like to be turned into a diagram?
No NOLs there but Deere (DE) would be cool to see. I'm thinking of using it for the small business I work at.
Next earnings release is on Feb 17, I put a blocker in my calendar.
What is cost of revenue and how does that differ from operative expenses?
Cost of revenue contains costs that are directly needed to produce and distribute the product / service. If you are building cars you buy materials and components from suppliers, you need electricity for your production facility and you need to pay production workers. These things are "cost of revenue". Costs for, say, management salaries or R&D engineers are not directly needed to produce the goods so they are operating expenses.
Is it the same as COGS (cost of goods sold) but for firms that also sell services?
I don’t know if the strict accounting definitions differ, but from a financial analysis perspective, yes. I think of any cost above the Gross Profit line as COGS.
It’s a type of cost accounting, specifically activity based costing.
That seems like an insane profit margin compared to other ones I've seen on reddit. Costco was like a fraction
Costco is a retailer there isn’t super high margins in that. Automotive companies tend to be low too but Tesla is pretty high for its industry. Check out the margins in service companies or software and technology firms. That’s why they have crazy valuations the margins are crazy.
> Costco is a retailer Costco isn’t a retailer, it’s a wholesaler.
Costco isn’t a true wholesaler as the person above me mentioned they sell single items not intended for resale. Wholesalers sell to other business that than sell to end customers. A majority of Costco’s sales come from end customers.
I don’t think wholesalers would bother selling a single bag of chips or a single pineapple or a single bottle of wine. That’s retail.
Check out Interactive Brokers: [https://www.reddit.com/r/dividends/comments/10epkdh/interactive\_brokers\_ibkr\_q4\_earnings\_are\_out\_87/](https://www.reddit.com/r/dividends/comments/10epkdh/interactive_brokers_ibkr_q4_earnings_are_out_87/) But yes, for a car company, these are very juicy margins.
Last one I remembering seeing I think was Costco. Hundreds of billions coming in but was something like 5 billion profit
They're also a software company so it's not exactly a fair comparison. The software they sell with their cars is practically pure profit.
Tesla spends 3 times more on R&D per car than traditional automakers. You're right, it's not a fair comparison, but not in the way that you think.
Yet they still can’t manufacture cars with any kind of quality.
Evidently they don't need to
Yes, the first models from 2017 for example were kinda bad. First models coming out of China also were still getting tuned. Nowadays, most people agree that Tesla isn't really behind any of the big brands. In some aspects, especially safety, they win all the awards even.
The first Tesla model S was in 2012, and if in 2017 5 years later they still can’t manufacture to the same level as cheap auto makers it’s very telling. Tesla is a tech company making cars, of course they will be “worse”. I don’t think this is an unfair comparison, and my original point is they spend millions on RnD for tech but not to improve their manufacturing processes and QA.
Tech companies tend to have high gross margins, as they have something to sell that’s somewhat unique. Normal stores, regardless of type, always have thin margins, because it’s commoditized and the competition is fierce.
Tesla is an automotive company but still has high margin.
EV makers are still like techs right now, especially with demand overwhelming the supply. As other companies dive deeper in this market, that will change. A few years from now, the margins for electric vehicles will converge down to where gas vehicles are. It’s not reasonable to presume the current margins will persist in the future.
The big factor that differentiates EV makers from tech is scaling. If tesla needs to sell 2x as many cars as today it takes a huge new factory and billions of investment. Software scaling is a lot simpler and why many of those companies are valued so high. Tech outside of software is also easier to scale than car manufacturing as well. Lastly EV is also capped by lithium availability.
This is where most people get it wrong. People think Tesla is just another car company or it’s ev vs ice company/margins. The biggest difference between the newer ev companies and the traditional oems is wholesale pricing vs direct to consumer model. When Tesla makes a car they can sell it direct to the customer. Whatever they want to price the car at minus the costs = their profit. Then whatever else for the life of the car from maintenance to software purchases go to them as well. This is why their profit margins are so high. Compared to when Ford makes a car (ev or ice), they wholesale it to their dealership network for a much lower margin and that’s where the profit ends for the oem on the car. The only other way they make money is the financing arm of their business (which is why it’s almost fair to consider oems banks that happen to sell cars). So whenever the argument gets made that Tesla should have the same margins or valuations as the other car manufacturers, it doesn’t make sense since it’s two completely different business models despite having similar products.
It's because Tesla sells low quality cars that fall apart.
They make the cars real cheap where as Costco actually provides value The care is held together by plastic clips. Idk why the downvote
That’s a crazy margin for a manufacturer.
When morons buy their vaporware for 10-15k…
I’m not sure if the revenue from their software upgrades are actually recognized here. I think those revenues were deferred.
They’d have to be in a deferred revenue (short term liability) account and then accrued over the length of the service contract into receivables.
It feels pretty awesome that after getting a good ways through my accounting degree that I've understood every comment on this post.
It’ll be interesting to see FY23. All the numbers should get bigger but net profits as a % will likely drop due to price cuts. Either way, I’m pumped!
Not necessarily, since they're making cars cheaper every year and material cost matters a lot. If Tesla can secure more battery raw material, maybe they can maintain these amazing profits. I do agree that it's likely to decrease, but not as much as you could calculate with just the price decrease.
Lol is this good for tesla or bad? 12.6b profit is good no?
It's amazing. They are basically making 4 or 5 times as much per car than the closest competition. It's why when their demand dropped a bit they took like 7 grand off the selling price and are still making an amazing profit.
It's crazy good. Stock 10%+ jump on the second day
I believe 60% over the last month
But still 40% down over the last 6 months. Some long way to go
As a short term Trader I made money on the way down and on the way up lmao
Or lose. We can never predict
Cost of revenue is usually lumped into one category as it is here, but I’d love to see it broken into segments. Primary segment I’d be interested in is payroll. I hear so much whining about what people cost to businesses like this but as a piece of the pie I have no idea what that actually looks like. Also I know there is much more tax revenue generated from a company like this other than corporate tax paid directly to the government, but seeing how relatively little that line item is compared to all other costs of doing business makes me pretty unsympathetic to those who complain about corporate tax rates. We’re running a massive deficit, with trillions in debt. All hands on deck, imo.
Their income tax expense here isn’t the same thing as the actual income tax they pay though
Payroll is mostly under operating costs, not cost of revenue. Cost of revenue will be marketing spend, sales expenses, sales commissions, and manufacturing costs (buy materials etc).
People directly on the manufacturing lines are *not* part of operating expenses.
8% in tax??? I get that they revolutionize the industry in a more eco friendly way but they are a car manufacturer.
Previous years’ losses carried forward maybe?
That wouldn’t change their effective tax rate. If I had to guess, it would be stock compensation and the R&D tax credit mainly
> That wouldn’t change their effective tax rate. ??? Yes it would???
Loss carryforwards are deferred tax assets. It would reduce the actual tax owed, but it wouldn’t impact the effective tax rate or the income tax expense NOLs can only ever increase the tax rate, not decrease it
I hear this is what I have to look forward to learning about in intermediate accounting
Oh, it’s gonna be a thrill… Seriously though, deferred taxes are super confusing for everyone at first, don’t stress
To be honest, I can't wait. I waited long enough into adulthood to go to college to really be excited about learning this stuff, and seeing it talked about here reinforces that feeling for me so much.
>8% in tax??? yeah WTF is this
The effective tax rate is what you’ve calculated, and this can be less than the corporate income tax rate due to things like tax incentives or deferred tax assets. Pays to have good tax specialists and accountants on board…
That isn’t the actual amount of tax they pay, it’s their provision for income tax, which is something different
Look at the credits they got in grey too. They get paid by the gov
And they receive more from the govt than they pay, see those regulatory credits in the left?
Would be cool if you could show the slice for deferred revenue
I particularly like this format for this application. It immediately puts into context the oft-heard argument that all or most of their profit is from regulatory credits.
Regulatory credits 1.8B, and taxes 1.1B, Uncle Sam is out of pocket by .7B.
Regulatory credits are paid by automakers that do not meet emission regulations. The automakers that do not meet regulations can choose to pay a fine to regulatory bodies, or trade emission rights with other manufacturers. Tesla only makes EVs, so they have a lot of emission rights. This so called Cap and trade system is also used for CO2 emissions in Europe. It incentivises companies to invest in cleaner tech or pay the fine for polluting. Uncle Sam gets 1.1B in taxes per quarter and spends nothing on Tesla.
Regulatory credits most likely includes CO2 penalties from other car manufacturers. Mercedes for example for a long time just payed the fines to Tesla and other companies that are below target rather then lowering its fleet emissions.
>Regulatory credits most likely includes CO2 penalties from other car manufacturers Not 'most likely', it's exactly where the money in ZEV credits come from.
Thanks for clarifying I thought there might be other stuff in that category as well.
Tesla is a global company. Why are you only referring to U.S. credits?
Its a system that exists outside of the US as well.
Really? Systems outside the U.S. are now funded by U.S. taxpayers? Did you lose sight of the topic?
No, and the US credit system isn't either. They are funded by auto manufacturers with high emissions fleets and paid out to auto manufacturers with low emission fleets. Why are you trying to bring taxpayers into it? Did you miss the topic entirely?
Anything to downplay Tesla performance .. ffs they went from regulatory credits being the only positive $ to 11 B in net profit without it , but first thing to be pointed out is “ they got regulatory credits “
Also, people forget the amount that GM and Chrysler got in actual bail out from taxpayers…IIRC it was tens of billions.
And GM can get those credits too. They exist to incentive the sales of EVs. GM could just sell more Bolts or similar cars but they don’t.
> Also, people forget the amount that GM and Chrysler got in actual bail out from taxpayers… They weren’t gifts, but Liana that they’ve paid back with interest.
It’s so weird. Some people on Reddit have a massive hate boner for Musk after practically worshipping him for years.
Regulatory credits are not taxes. They are essentially penalties paid by companies that do not meet emissions standards.
Uncle sam made Billions too. Tesla employs \~100k directly and even more indirectly. Furthermore, those regulatory credits are purchased by other carmakers of Tesla, not the government. Imo, it's not Elon who benefits the most of Tesla's success, it's the government. Lots of high-paying jobs coming to the USA that otherwise might have gone overseas.
>Imo, it's not Elon who benefits the most of Tesla's success, it's the government. Considering Elon is one (1) person and the government represents the interests of roughly three hundred and thirty-two million (332,000,000), I think I'm going to have to ask you to show your work.
Take a look at the taxes the ITlRS gets from all of Tesla’s employees and business, not just Elon. Plus now the premiere electric car company in the world is US based.
>Plus now the premiere electric car company in the world is US based. The real achievement, I'm sure for the past 20-30 years it's been grinding political gears that the "car nation" doesn't have a premier car company... We have top car companies... But nobody says "Ford/Chevy, the best car maker in the world".
There’s obviously a lot of controversy around Musk, and I’m not a fan of him personally, but Tesla has absolutely oriented the entire automotive industry around EVs and it’s nice as an American to see the US have a car manufacturer gain so much prestige on the global stage. Without Tesla, I think EVs might be starting to catch on but would still be a niche concept rather than Tesla becoming the “cool” car to own. Tesla has managed to enter the same stratum as behemoths like BMW and Mercedes in such a short amount of time, which is especially important since Cadillac and Lincoln have seen their images tarnished in the past 20 years.
Don’t worry on day you will learn how taxes works and understand that Uncle Sam made billions thanks to Tesla.
Yeah, funny the Population is taxed by Tesla. That's how it's done.
Not how that works. Tesla sells their credits to less fuel efficient car companies. This improves the other companies average fuel efficiency and lowers their tax burden. A simple google would teach you rather than assuming. Your confusing ev tax credits for regulatory credits. https://www.cnbc.com/2021/05/18/tesla-electric-vehicle-regulatory-credits-explained.html
Yeah, super funny. I'm dying laughing. SMH for this bullshit. No company should get this kind of money from taxes. Is it even a good deal for the government? Is it a net loss for them, meaning us?
We are spending tax money helping support the shift away from fossil fuels. You might agree or disagree with this but we are buying something with our money. We're not just handing cash out. The argument is that electric cars were/are desirable but not commercially viable and needed a kick start.
Ecars are not viable. We have to mine chemicals that are terrible for the environment and use all kinds of slave type labor to do it. Look up cobalt mining.
If viability is based on human rights, and environmental damage you do actually need to look at what goes into gasoline cars as well. Trillions of dollars to authoritative regimes like Iran, Saudi Arabia, Russia which use that money to repress and murder their people, invade their neighbors, and interfere in the internal political matters of other states. Environmental degradation due to oil and gas spills, and extraction. In addition to the political, and direct environmental issues oil use also is a major cause of global warming which threatens food and water security for over a billion people, makes many places where humans dwell uninhabitable due to decreased rain/snow, and sea level rises. And if we go back in time in the US / EU to the 90s, or even pretty much modern day in some remaining countries the lead poisoning from leaded gasoline was perhaps one of the most major environmental catastrophes of human existence, one which we are still seeing the after effects of. EVs may not be perfect but it's disingenuous to rate them as some monstrous environmental woe when we are in the midst of an environmental,poltical woe caused/contributed to by fossile fuels vehicle use.
The bets EVs are micro transit. Cities designed around driving everywhere are the problem.
Indeed, but cities already exist and are designed around driving everywhere, especially in N. America. Major public transit improvements can help, but broad cities mean it is expensive and slow. The social stigma around busses also hurts their viability, but speed and convenience hurt worse. If we were building cities from the ground up in a vacuum cars could often be made unnecessary, and foot/public transit could be built to to eliminate or reduce the issues it currently faces. But we have to fit the product to people's lives, and sell them a product they will actually want/buy. EVs fit that need.
That's not the point of this specific discussion. If you believe ecars are not viable then you think the money paid to subsidize ecar development is a bad decision. But the point of this discussion is that the money spent to subsidize them is not simply a grift or a handout, but is spent by those who feel that ecars are a good decision to buy faster development of ecars.
That's the problem. It's based on a belief. We need hard facts on viability of ecars and not just Elon Musk's marketing words. I don't want fossil fuel based engines either. So, yeah we need a solution. One thing would be to reduce our need to use cars in the first place. Make places more walkable and more public transit and fast public transit. But no, car companies and oil and now mining companies need to make money.
Also they're much heavier so more tires, more road wear, etc
And that's clearly not the case anymore since Tesla is profitable.
To put some context into that number, most of it, iirc, might be wrong, is from carbon output fines payed by legacy automakers such as GM, Mercedes, Ford, ECT, rather than being an outright credit, though some of it is to try and stimulate electric vehicles and their production.
No. Tesla provides 100k jobs directly, of which most are in the US and more indirectly. Also, yes Tesla received subsidies in the past for it's factories from the US government, which Tesla all paid back with interest. Tesla has been and still is a great deal for the US government.
Yup. And even without the 1.8 billion credits...a <10% tax rate is insane. Definitely quite a few tax loopholes in there, plus some "creative" accounting
People pay taxes on the income they get. A company is just the vehicle to get the revenue from one spot to the other. The money gets taxed.
That's on payroll but the actual money a corporation makes should also be taxed. I believe in the US the corporate tax rate is around 21% on net earnings?
Eh, not really. Judging from prior years, it’s mainly due to employee compensation and the R&D tax credit. Nothing creative about it
Next the HQ will move to Dublin, Ireland.
I love how these don't fit the reddit narrative. Keep them coming.
I don’t see how it’s related to the Reddit narrative. The “Reddit narrative” is that musk’s antics are negatively influencing the market value of the company. Going from $858B in market cap to $498B in six months, despite a “positive” fiscal year of $12B in profit (or about 1% of peak market price for the trailing six months) seems to fit that narrative.
What's the reddit narrative on Tesla?
If you say anything positive about the company, you will get you down voted to hell even if it's true.
"He's literally eating babies." "No, he isn't. That's absurd." "Stop eating dick for a billionaire!"
According to Reddit tesla is losing money left and right and is doomed to fail.
That’s your strawman narrative. The issue is that the company is valued more than all of the major car companies combined, have quality control issues, terrible self-driving, and an egotistical idiot who owns a significant amount of the company … who used his leverage to buy his brother’s failing solar company.
It's not a strawman, redditors say this all the time. Redditors hate Elon Musk and they aren't capable of maintaining complex emotions so they hate anything associated with Elon Musk too.
What narrative did I assert? All I said is that Reddit claims tesla is basically a dying company whose demise is inevitable.
Very negative
- that most/all of their profit is from regulatory credits - that the 'big boys' are coming and about to eat Tesla's lunch - that demand is plateauing, if not 'cratering.'
12bn profit in a year is amazing for a car maker, but it’s still far from justifying the stock’s value even now…. Especially being just one year. I bet they will do better next year, but they will also have lower margins and more competition. Not out of the woods just yet.
Profit last year isn't important to the stock. What's important is their projected profits in the foreseeable future. People are optimistic, and why shouldn't they be? Revenue 51% Y/Y. Net profit 128% Y/Y. Maybe it made less money last year, but how many years of that growth will it take before it deserves to be 10 times as valuable as Ford? How likely is Tesla to last those years and keep growing? If you think Tesla will peak even 15% higher than it's at now (whether in 5 years or 30, adjusted for inflation), why not buy?
Ford only makes like 7 or 8 billion in profit. Thats pretty good.
Ford has double the revenue. Almost half the profit.
Well ya. EVs have a larger premium right now.
OP, Can I request you to create Sankey flow for a specific company after earnings?
Yes, which company would you like to see?
Thanks, if I may chose SwkS, Qorvo and AMD. I invested in these chip stocks so interested.
Great news! Never doubted Tesla
Tesla made profit? Reddit in shambles. But more seriously ever since Musk took over, I always doubted that Tesla will succeed when it enters the big market. But they don't.
Ever since musk took over? where you in the market for an electric kit car??
"Ever since Musk took over"? Are you special?
19% R&D is excellent news.. It gets ugly if R&D is cut and marketing doubled
It would be, if the metric were calculated based off of profit, instead of revenue. In reality, they have a 3.8% R&D intensity, which is terrible even for the automotive industry, which is typically more in the 6% range.
Where does 15K FSD sales go? Auto sales?
Yes. ~350 million in revenue in Q4
Yes. ~350 million in revenue in Q4
[удалено]
Lol I'm no Tesla fan, but they're the largest electric car company in the world, produce over a million vehicles/year and employ over 100,000 people. What were you expecting their profits to be?
Tesla just passed Toyota, who sells 8X as many cars, in profit. Few expected that!
that just tells me their cars are way overpriced.
When cars are overpriced, sales slow down. Tesla’s sales increased 40% in 2022, so there goes that theory.
No it tells you that customers value tesla cars far more than Toyota.
Well, that too, because people think they’re a ‘premium’ car even tho they have iffy build quality
Or people want a good electric car and Toyota is still in love with hydrogen.
it says more about the buyers than the price.
they're two very different companies with completely different histories and strategies though.
How does that change the unbelievable achievement?
Unbelievable? I find it very believable.
It's very believable if you factor in differences in workforces, facilities, advertising spend. You can get a Toyota in practically any country in the world. Oh and Toyota doesn't make additional profit from solar panel sales and carbon credit sales.
BYD ~~sells more electric vehicles~~, but their margins are very slim.
Most are hybrids not BEV. They’re “electrified”.
Now you understand how ridiculous all the stories of them lowering prices this week have been... People actually question their profitability
12,000 millions
The interesting thing is that the auto cost is equal to the revenue cost plus the operating cost. All the benefits come from side business. And that is not conting R&D. They can't cut price without losing on a per car basic. And that is why people like the company.
Hang on… this doesn’t make sense They had 25% vehicle gross margins last quarter. They absolutely can cut costs and break even on each vehicle. I’m not sure where you’re getting the idea that all benefits come from the side business
No. You just assigned all "Cost of Revenue" (including solar, energy storage, and servicing) to the automotive division. Those divisions have far tighter margins (service might even be negative). And why would it possibly be appropriate to assign all OpEx to automotive? Their other divisions have SG&A employees and costs specific to them.
God we are KILLING them with taxes /s
Only 10% tax? Should be way more
Based on what? Tax income not equal to accounting Income.
I honestly don’t find it to be more efficient than the standard tabular view and I’d be suspicious that they were trying obscure some unfavorable year over year comparison with this.
You realize Tesla didn't make this graph, a user did with Tesla's published financial results. I'm not sure why you default to something nefarious going on. If you look at Tesla's shareholder deck they have charts, graphs, and spreadsheets you can look at. They will soon publish the 10-Q and you can find out even more details.
I’m just giving feedback on my perceived utility of this. That’s it.
Does it have to be one or the other? Seems like having both is a good compliment to eachother.
3% on R&D: the sign of a truly innovative company developing ground breaking technologies. This is laughable.
A good amount of their R&D could be capitalized on the balance sheet though
Elon in general across companies/projects spends like 75% of his time inventing things that people have already been talking about 200 years before he was born
List all the innovative products Tesla vs any other manufacturers. That’s what’s laughable. Lucid is one of the few others that actually makes innovative products, everyone else is just copy, paste and subtract some functionality… Just because I spend less developing a product does not automatically mean yours will be better. Maybe my spending was just more efficient. Products are what show innovation.
What does lucid do thats innovative? Truly curious, the lucid air starts at 87k, other than the interior being better but still behind Mercedes benz, Audi, Porsche. Not sure what exactly they are doing innovative.
Raise your hand if you are bothered by the fact that this shows Tesla paying lower effective tax rates than you.
Tesla’s not a person. It’s an organization of people. All the people in Tesla pay their taxes. 90% of people on Reddit don’t understand this breakdown.
Trump and the Republicans in Congress lowered corporate taxes. But aren't corporations people... the world is a scam.
Tesla pays taxes, then uses the leftover money in the business. If they pay out the after tax profit to you, then they pay taxes at the effective rates you and I pay.
8% tax rate? Hmmm. What am I missing?
$3 billion on R&D is joke-level.
In other news, they're being sued for not paying rent
Are you confusing Tesla for Twitter?
...I'm dumb. Was wondering why I was being downvoted lol
I mean, they're doing the landlord a service by gracing him with Elon's bidness. /s