Elon Musk Buys Twitter

[Magical Mudcrab]

Well they had net profit of 3 billion and of that only 700 million was regulatory credits. We also know that the other parts of Tesla have negative gross profit margins so it's easy enough to figure out from the gross profits that they have a net profit on each car that is quite substantial vs the industry average.

No, this is not correct. I will quote the article again.

Eleven states require automakers sell a certain percentage of zero-emissions vehicles by 2025. If they can't, the automakers have to buy regulatory credits from another automaker that meets those requirements -- such as Tesla, which exclusively sells electric cars.

It's a lucrative business for Tesla -- bringing in US$3.3 billion over the course of the last five years, nearly half of that in 2020 alone. The $1.6 billion in regulatory credits it received last year far outweighed Tesla's net income of $721 million -- meaning Tesla would have otherwise posted a net loss in 2020.

"These guys are losing money selling cars. They're making money selling credits. And the credits are going away," said Gordon Johnson of GLJ Research and one of the biggest bears on Tesla shares.

- Link

Tesla's net income in 2020 was $721mn, which included the $1.6bn in regulatory credits. This means that Tesla almost posted a loss of $1bn in 2020, which includes the time which you said "[cars] have become massively profitable".

Also, Gross is not worthless since it takes into account cost of goods sold and gives you a specific accurate take on profit per vehicle. It tells you what cost are directly associated to building the car vs other operations in the corporations.

From that you can then determine how much things like R&D and Selling, General and Administrative Expense are per vehicle.
Of course, then there are taxes, interest, one-time charges, etc etc

Gross is a better indication when comparing the profitability of tesla EV cars vs, the rest of the automotive industry.

Absolutely none of this is relevant in the question of whether Musk is a competent businessman. He can have as high of a gross income as he wants for Tesla, but the company only being profitable because of the sale of regulatory credits is a condemnation of his ability to run a profitable business.

Net ends up with way too many variables that have nothing to do with the profitability of building the actual vehicles. Just takes a single one time write down on assets (or something like this) to have your net income jumping from 3 billion to 15 billion and then what, you claim you made 15 billion on building cars?
Or have a huge purchase of regulatory credits, like has happened over a dozen times, to beef up net income with ZERO of it relating to actually building cars.

When most entities look at Net it is Net after adjusting out all these factors getting you much closer to the gross anyway.

It has everything to do with the profitability of your business. You can gross however many billions of dollars you want, but if you make negative net, you are losing money. You don't magic away the factors that lead to net income to somehow make it closer to gross, which would be accounting fraud if you tried to cook the books like that.

[Zan15]

No, this is not correct. I will quote the article again.


- Link

Tesla's net income in 2020 was $721mn, which included the $1.6bn in regulatory credits. This means that Tesla almost posted a loss of $1bn in 2020, which includes the time which you said "[cars] have become massively profitable".



Absolutely none of this is relevant in the question of whether Musk is a competent businessman. He can have as high of a gross income as he wants for Tesla, but the company only being profitable because of the sale of regulatory credits is a condemnation of his ability to run a profitable business.



It has everything to do with the profitability of your business. You can gross however many billions of dollars you want, but if you make negative net, you are losing money. You don't magic away the factors that lead to net income to somehow make it closer to gross, which would be accounting fraud if you tried to cook the books like that.

2021 net income was 5.5 billion.
Regulatory credits were 1.465 billion. 1.465 billion does not represent net income on regulatory credits, but gross revenue on regulatory credits.
Same thing in your example. Net income was 721m but the 1.6 billion in credits was revenue not net income associated to regulatory credits.

https://www.sec.gov/Archives/edgar/d...a-20211231.htm

Automotive regulatory credits includes sales of regulatory credits to other automotive manufacturers. Our revenue from automotive regulatory credits is directly related to our new vehicle production, sales and pricing negotiated with our customers

You (and the articles) are assuming the regulatory credits are 100% profit and there is no cost associated to selling regulatory credits, which is not true.
In order to gain those credits, they have to produce cars.
Thus the credits are impacted by the same automotive cost of goods that car production is impacted by.

Assuming the same gross margin on regulatory credits as car production would put regulatory credits at around 400-500 million Net out of the 5.5 billion net income.

Even at 100% margin for RC, he'd still have a net of 4+ billion for 2021 without them included

It has everything to do with the profitability of your business. You can gross however many billions of dollars you want, but if you make negative net, you are losing money. You don't magic away the factors that lead to net income to somehow make it closer to gross, which would be accounting fraud if you tried to cook the books like that.

We were specifically talking about car production and profitability.
Even if you take the company as a whole, it's now making money hand over fist producing cars.

[Magical Mudcrab]

2021 net income was 5.5 billion.
Regulatory credits were 1.465 billion. 1.465 billion does not represent net income on regulatory credits, but gross revenue on regulatory credits.
Same thing in your example. Net income was 721m but the 1.6 billion in credits was revenue not net income associated to regulatory credits.

Sure, and it's great that Tesla made a profit just on EV sales for the first time. Credit where credit is due, Tesla posted a whopping 6x net income in 2021 over 2020, with the biggest increases in sales being in China and Europe; however, given Tesla's history, I'm skeptical that this trend will continue, especially with the supply chain disruptions that Musk didn't plan for.

https://www.sec.gov/Archives/edgar/d...a-20211231.htm

Automotive regulatory credits includes sales of regulatory credits to other automotive manufacturers. Our revenue from automotive regulatory credits is directly related to our new vehicle production, sales and pricing negotiated with our customers

No one assumed that they were being given regulatory credits by the EV Fairy and were not attached to any work they've done. Instead of an SEC document which will be hard for people to read, it would probably be more effective to just link a source that describes how they're assigned. It would also be good for anyone coming into the conversation late and just wanting to understand what regulatory credits are:

In a push to reduce carbon emissions, governments around the world have introduced incentives for automakers to develop electric vehicles or very low-carbon emitting cars. Credits are given to carmakers that build and sell environmentally friendly vehicles.

In the U.S., California and at least 13 other states have rules surrounding regulatory credits. They require auto manufacturers to produce a certain number of so-called zero-emission vehicles (ZEVs) based on the total number of cars sold in that particular state.

Automakers that produce such cars will get a certain amount of credits based on factors like the range of the vehicle — longer range ZEVs get more credits.

These carmakers are required to have a certain amount of regulatory credits each year. If they can’t meet the target, they can buy them from other companies that have excess credits.

Because Tesla only sells electric cars which come under the ZEV category, the company always has excess regulatory credits and can effectively sell them at a 100% profit.

- Link

The problem with the regulatory credits isn't the selling of the credits themselves, although it does make the idea of being a "green" company while selling credits to companies like GM a bit funny (and has been something Tesla has not wanted to engage with historically because they know it's a bad look), but it's when people try to convey this as meaning Tesla's car sales are profitable. There's a difference between:
"We sell electric vehicles for a profit."
and
"We sell electric vehicles for a loss, but use government-provided regulatory credits to sustain our business."

You (and the articles) are assuming the regulatory credits are 100% profit and there is no cost associated to selling regulatory credits, which is not true.

Full disclosure, I am a layperson when it comes to understanding the inner workings large-scale business, and it's far outside of my realm of expertise so I have to rely on professionals to form my opinions on how these things work. In this case, that would be the interpretation of how much Tesla made in 2020, including both car sales and regulatory credits. With this in mind, why should I take your word over someone who is credentialed and writing for a reliable news source? Understand that I have to choose between believing you or believing the article's writer, Chris Isidore, who is a business writer, overseen by editors, and focuses on financial news. I'm not trying to be rude, but I'm sure you see the problem here.

We were specifically talking about car production and profitability.
Even if you take the company as a whole, it's now making money hand over fist producing cars.

I'm only referring to Musk's ability to run a profitable business. This was my original post:

Has this ever been in question? Tesla has never been profitable, with the overwhelming majority of its profits in the last 5 years being through the sale of regulatory credits.


- Link

Musk is completely and utterly unable to run a lucrative business and Tesla is only making profits because of its sale of zero-emission credits. If Tesla cannot sell these credits anymore, they will be in the red. The only reason Tesla is worth anything is because the market is irrational, emotion-driven, and prone to overvaluation due to speculation. Musk is great for investors, bad for the companies he runs.

Which is entirely about Tesla not being profitable, which started with this article, that describes Tesla losing billions of dollars due to supply chain disruptions. This is why I'm focused on net income, and disregard gross income. I'm not concerned with Tesla selling cars, I'm concerned with Tesla, for almost its whole lifetime, selling cars for a loss (i.e.: selling cars and not making a profit after all deductions).

[Zan15]

Sure, and it's great that Tesla made a profit just on EV sales for the first time. Credit where credit is due, Tesla posted a whopping 6x net income in 2021 over 2020, with the biggest increases in sales being in China and Europe; however, given Tesla's history, I'm skeptical that this trend will continue, especially with the supply chain disruptions that Musk didn't plan for.


.

Hmm their first quarter wasn't too shabby for 2022 and shows a profit on EV.

No one assumed that they were being given regulatory credits by the EV Fairy and were not attached to any work they've done. Instead of an SEC document which will be hard for people to read, it would probably be more effective to just link a source that describes how they're assigned. It would also be good for anyone coming into the conversation late and just wanting to understand what regulatory credits are:


.

The story you posted took the full number of regulatory credits and offset profits by that same amount. Which is incorrect and exactly what i was talking about.

I linked the exact definition of the regulatory credits and how they are applied to the business, right from Tesla's submission to the SEC.
Why would i link a story when the report is the most accurate description of how it's applied?

You can't have regulatory credits without producing cars. The cars cost money to make. Thus, the regulatory credits are not 100% profit, even though most news reports have gone with the fact that they are.

Automotive regulatory credits includes sales of regulatory credits to other automotive manufacturers. Our revenue from automotive regulatory credits is directly related to our new vehicle production, sales and pricing negotiated with our customers

The problem with the regulatory credits isn't the selling of the credits themselves, although it does make the idea of being a "green" company while selling credits to companies like GM a bit funny (and has been something Tesla has not wanted to engage with historically because they know it's a bad look), but it's when people try to convey this as meaning Tesla's car sales are profitable. There's a difference between:
"We sell electric vehicles for a profit."
and
"We sell electric vehicles for a loss, but use government-provided regulatory credits to sustain our business."

.

Oh, I agree for years the only reason tesla was still in business and probably survived was cause of regulatory credits.
But the point was as of 2021 regulatory credits were not the reason why they were proftable.

At this point they still help build and strengthen his business, but Tesla could stand on its own without them and might have to do so sooner rather than later. Defiantly has been an impact on their stock because of this eventual reality.

Full disclosure, I am a layperson when it comes to understanding the inner workings large-scale business, and it's far outside of my realm of expertise so I have to rely on professionals to form my opinions on how these things work. In this case, that would be the interpretation of how much Tesla made in 2020, including both car sales and regulatory credits. With this in mind, why should I take your word over someone who is credentialed and writing for a reliable news source? Understand that I have to choose between believing you or believing the article's writer, Chris Isidore, who is a business writer, overseen by editors, and focuses on financial news. I'm not trying to be rude, but I'm sure you see the problem here.

I'm only referring to Musk's ability to run a profitable business. This was my original post:

Which is entirely about Tesla not being profitable, which started with this article, that describes Tesla losing billions of dollars due to supply chain disruptions. This is why I'm focused on net income, and disregard gross income. I'm not concerned with Tesla selling cars, I'm concerned with Tesla, for almost its whole lifetime, selling cars for a loss (i.e.: selling cars and not making a profit after all deductions).

You don't have to take my word, it's right in the SEC submission on their full year 2021 results and 1Q 2022 results. that is why i linked the full year 2021 results just in case you wanted a source on where i got my information.

So, do you choose to believe a reporter or Tesla legally binding report to the SEC for which they can be fined to hell for lying on?

Tesla is not losing billions of dollars that is just a better headline. Tesla is losing the opportunity to make billions more than they are making now because of supply chain disruptions. They will still have a profit according to them just seems that it might end up much lower than the initial forecast.


Analysts surveyed by Refinitiv forecast that adjusted earnings in the second quarter will fall to $2.5 billion in the second quarter, down from the record $3.7 billion Tesla made in the first quarter. That would still be up from the adjusted income of $1.6 billion in the second quarter of 2021.

Also, not sure why you are going back to 2020 and not looking at the most recent year reported of 2021 and 1Q 2022 when commenting on how well a company is doing and the ability to run the company?

[Magical Mudcrab]

Oh, I agree for years the only reason tesla was still in business and probably survived was cause of regulatory credits.
But the point was as of 2021 regulatory credits were not the reason why they were proftable.

At this point they still help build and strengthen his business, but Tesla could stand on its own without them and might have to do so sooner rather than later. Defiantly has been an impact on their stock because of this eventual reality.

Then we basically agree for years prior to 2021.

You don't have to take my word, it's right in the SEC submission on their full year 2021 results and 1Q 2022 results. that is why i linked the full year 2021 results just in case you wanted a source on where i got my information.

So, do you choose to believe a reporter or Tesla legally binding report to the SEC for which they can be fined to hell for lying on?

Not quite, it's not their understanding of the facts vs. the SEC's documentation, it's your interpretation of the SEC report vs. theirs. Even taking a cursory look, it appears that they are correct:

Automotive Regulatory Credits

We earn tradable credits in the operation of our automotive business under various regulations related to zero-emission vehicles, greenhouse gas, fuel economy and clean fuel. We sell these credits to other regulated entities who can use the credits to comply with emission standards and other regulatory requirements.

Payments for automotive regulatory credits are typically received at the point control transfers to the customer, or in accordance with payment terms customary to the business. We recognize revenue on the sale of automotive regulatory credits, which have negligible incremental costs associated with them, at the time control of the regulatory credits is transferred to the purchasing party. Revenue from the sale of automotive regulatory credits totaled $1.46 billion, $1.58 billion and $594 million for the years ended December 31, 2021, 2020 and 2019, respectively. Deferred revenue related to sales of automotive regulatory credits was immaterial as of December 31, 2021 and 2020, respectively. Revenue recognized from the deferred revenue balance as of December 31, 2020 and 2019 was immaterial and $140 million for the years ended December 31, 2021 and 2020, respectively.

- Link

Tesla's revenue from selling regulatory credits is $1.58bn for 2020. Unless I'm mistaken, there are no expenses, such as labor or cost of goods, to be paid for regulatory credits. Unless there's a special tax that is significantly higher than the 21% corporate tax rate, I think it's very clear that regulatory credits are effectively 100% profit. That said, I'm more than happy to amend my opinion if we have the adjusted numbers somewhere and they are significantly different.

Tesla is not losing billions of dollars that is just a better headline. Tesla is losing the opportunity to make billions more than they are making now because of supply chain disruptions. They will still have a profit according to them just seems that it might end up much lower than the initial forecast.


Analysts surveyed by Refinitiv forecast that adjusted earnings in the second quarter will fall to $2.5 billion in the second quarter, down from the record $3.7 billion Tesla made in the first quarter. That would still be up from the adjusted income of $1.6 billion in the second quarter of 2021.

To be fair, "not making money" and "losing money" are effectively the same thing in this context. If Tesla has the capacity to make those billions and is losing out on them because they were not prepared for supply chain disruptions, then they are making however many billions of dollars less than they otherwise would be.

Also, not sure why you are going back to 2020 and not looking at the most recent year reported of 2021 and 1Q 2022 when commenting on how well a company is doing and the ability to run the company?

The only reason I was looking at 2020 was because in early-mid 2021 Tesla's reliance on regulatory credits was a common discussion point when talking about Tesla, so I was well aware of it due to it saturating some of the RSS feeds I use. I had not been aware that 2021 was such a good year for them. As of right now, the only reason I'm going back to 2020 is because facts pertaining to 2020 are some of the things in question. I do acknowledge Tesla's profitability 2021 and later, though am also skeptical that this will continue for the long term.

[ShakesForPRide]

Elon announces that he is a enthusiastic supporter of Hershel Walker!

[PC2]

Wonder how much money makes these things objectively moral.

Elon Musk can have as many babies as he wants with whoever he wants. There's nothing wrong with that and in fact it's a moral good due to our current underpopulation problem.

[s_bushido]

Wonder how much money makes these things objectively moral.

When you have enough money, morality doesn't even enter into the equation.

Elon Musk can have as many babies as he wants with whoever he wants. There's nothing wrong with that and in fact it's a moral good due to our current underpopulation problem.

That has to be the most delusional justification a person could possibly give. Congratulations.

[UnifiedDivide]

When you have enough money, morality doesn't even enter into the equation.

Actually, per PrimaryColor, the more money you have, the more morally superior you are!

[PC2]

Actually, per PrimaryColor, the more money you have, the more morally superior you are!

Heh so maybe we should rename "dollar bills" and call them "morality points" instead?

Nah just kidding of course, I think morality is orthogonal to wealthiness. There can't be a direction connect between wealth and morality because then there would never be people like Jeffrey Epstein who had acquired half a billion dollars and was constantly doing immoral stuff.

[Evil Midnight Bomber]

Heh so maybe we should rename "dollar bills" and call them "morality points" instead?

Nah just kidding of course, I think morality is orthogonal to wealthiness. There can't be a direction connect between wealth and morality because then there would never be people like Jeffrey Epstein who had acquired half a billion dollars and was constantly doing immoral stuff.

Or Elon Musk...who constantly does immoral stuff...

[beanman12345]

Or Elon Musk...who constantly does immoral stuff...

Or PrimaryColor himself, if his claims of wealth are to be believed.

[Paranoid Android]

Elon Musk can have as many babies as he wants with whoever he wants. There's nothing wrong with that and in fact it's a moral good due to our current underpopulation problem.

Tell us more about the Great Replacement Theory.

[NED funded]

Twitter employees finally getting laid off!!

A decade of not producing results and they can't even sell stocks

No one should feel bad about software engineers or related ppl btw. These people get paid 1% level salaries. They'll be fine I just love it that they can't sell the stock after they've spend a decade surviving on that alone and selling vapor to normal people

[PC2]

Or PrimaryColor himself, if his claims of wealth are to be believed.

My parents became successful small-scale entrepreneurs in the 1990s as I was growing up and going through middle/high school, so yeah money has not been a problem. This is what started my fascination with entrepreneurship and with people like Elon Musk who create new businesses at the largest scale.

Tell us more about the Great Replacement Theory.

It's a wrong theory because it doesn't explain anything. The problem is with our current anti-natalist culture and it has nothing to do with race.

Also as far as Western civilization it's good if there is more non-European people because that will put the West in a very strong position to justify its value system. Over the long run the society with the most 'universality' will prosper the most.

[Paranoid Android]

It's a wrong theory because it doesn't explain anything. The problem is with our current anti-natalist culture and it has nothing to do with race.

Also as far as Western civilization it's good if there is more non-European people because that will put the West in a stronger position to justify its value system and culture. Over the long run the society with the most 'universality' will prosper the most.

Critics of the population collapse theory touted by Musk cast the idea as racist and anti-immigrant. Though Musk is right that the fertility rate declined in the U.S. from 3.67 total births per woman to 1.6 births per woman from 1960 to 2020, the U.S. population nearly doubled from 179 million to 331 million over the same time period. Recent population growth has largely been driven by immigrants. Obsession over birth rates is common among supporters of the “Great Replacement” conspiracy theory that white people are being replaced in America by people of color. Musk didn’t comment on recent pushback about the often problematic links to birth rate concerns, but said in 2019 his worries about potential population decline aren't anti-immigrant, explaining, “The common rebuttal is like, ‘Well what about immigration?’ I’m like, ‘From where?’”


This is what Musk believes. While birth rates have declined as stated above the US and world population has exploded in past 60 years or so. You know close to 8 billion people.

So on a macro level of we needing more people on earth for what, is crazy. We have automation, likely a climate collapse (I'm guessing you deny) and overall taxing of our resources. So why do we need more people? Idiots like Musk preach a collapse of our system which is a code for consumerism,
.

The piece I link here is an opinion piece but backs well my opinion that we are not collapsing, but just increasing at a slower level of .6% to a population of 9.3 billion by 2041.

An oh btw, is the easy correlation of women joining the workforce are having less babies.. Simply woman who choose to join the workforce may put their careers ahead of kids or in our shitty US model cant take time off or afford kids. Oh yea, Conservatives who love effin people on wages should know that if you can't afford to have kids, then you don't have kids. Housing right.

Okay so Great Replacement Theory. While birthrates are down and I will keep this part to the US, ethnic non-whites are having more kids by numbers than whites (big general terms here). Musk is iffy for me with his past racism, but even giving him a pass a white man bragging about having X amount of children is telling the Great Replacement people he is doing his part.

Probably going off rail on this thread. So I won't reply and keep this going.

[PC2]

Critics of the population collapse theory

Well I don't want to use a fear-mongering word like "collapse". Countries just need to make sure their child-per-woman rate is at 2.2, in order to prevent a population decline.

touted by Musk cast the idea as racist and anti-immigrant.

Okay so maybe Musk should say that both white people and brown people should have more kids.

Recent population growth has largely been driven by immigrants.

Musk probably supports immigration. For me I'm okay with the entire planet immigrating to the US as long as it's done legally and as long as they pull their own weight.

This is what Musk believes.

That's your interpretation.

While birth rates have declined as stated above the US and world population has exploded in past 60 years or so. You know close to 8 billion people.

Great now we need to make sure that continues up to 8.5 billion by the end of the century.

We have automation,

Good, there's an infinite amount of tasks that need to be carried out and automated.

likely a climate collapse (I'm guessing you deny)

That doesn't mean civilization will decline.

overall taxing of our resources.

The opposite is happening, we're generating more new resources over time.

So why do we need more people?

To speed up the rate of progress.

The piece I link here is an opinion piece but backs well my opinion that we are not collapsing, but just increasing at a slower level of .6% to a population of 9.3 billion by 2041.

Hopefully that is accurate and remains accurate. The state of California shrunk for the first time in history last year. It's a problem...

An oh btw, is the easy correlation of women joining the workforce are having less babies..

Ya because our culture is telling them work is more important than babies.

Simply woman who choose to join the workforce may put their careers ahead of kids or in our shitty US model cant take time off or afford kids.

Well if the European model creates more babies then we could think about copying their model.

While birthrates are down and I will keep this part to the US, ethnic non-whites are having more kids by numbers than whites (big general terms here).

Cool, race doesn't matter here.

but even giving him a pass a white man bragging about having X amount of children is telling the Great Replacement people he is doing his part.

I highly doubt that but it doesn't matter either way because that wouldn't be harmful to anyone.

Probably going off rail on this thread. So I won't reply and keep this going.

We'll see.

[Endus]

Well I don't want to use a fear-mongering word like "collapse". Countries just need to make sure their child-per-woman rate is at 2.2, in order to prevent a population decline.

Literally zero need or benefit to doing so.

The opposite is happening, we're generating more new resources over time.

A literal impossibility. When your ideology is rooted in violating the 1st Law of Thermodynamics, your ideology is cuckoo for coconuts crazy nonsense.

To speed up the rate of progress.

There is literally no rush, and rushing is how we got into the current complications of wealth inequality, climate crisis, and so forth.

Ya because our culture is telling them work is more important than babies.

Independence and freedom of choice is more important than forcing women into being brood-mare livestock, you mean.

Kudos on expressing your hostility to women being offered choices, though. Always cute when the mask slips.

[Forogil]

Well I don't want to use a fear-mongering word like "collapse". Countries just need to make sure their child-per-woman rate is at 2.2, in order to prevent a population decline.

You have missed out on recent human progress.

The replacement fertility rate is currently not listed as 2.2 but as 2.1, and I couldn't find up-to-date data but I assume it is a bit lower (2.05?) in some western countries (but not the US). (It's substantially higher in some less developed countries that also have high fertility rates, and the improvements needed in those countries will both decrease the actual fertility rate and the replacement fertility rate.)

Now you might ask: Why does it matter and why isn't it just 2?

The reason is that it is number of children per woman of child-bearing age, so if no woman died before child-bearing age it would be close to 2 (there are not an equal amount of girls and boys born) - but the more girls that die the higher the replacement fertility rate needs to be to compensate. That's why a replacement fertility rate of 2.1 instead of 2.2 (or 3 or higher in under-development countries) is a massive sign of progress.

[ShakesForPRide]

I wonder how much Elon spends to exercise the option to "acknowledge and rename babies".