Musk: Tesla must cut costs or stock will be ‘crushed like a souffle under a sledgeham
12-02-20, 02:09 PM
#1
Lexus Fanatic
Thread Starter
Musk: Tesla must cut costs or stock will be ‘crushed like a souffle under a sledgeham
https://www.cnn.com/2020/12/02/busin...ice/index.html
Tesla CEO Elon Musk is telling his employees they need to cut costs or they can kiss its lofty stock price goodbye.
Tesla shares have been among the best performers in 2020, rising nearly 600% through Tuesday trading, making it among the most valuable stocks in the country, worth more than any major automaker. After years of losses Tesla has now reported five straight quarters of positive net income.
But in an email to employees Musk acknowledged that Tesla’s actual profit margin is fairly low, only about 1%, and that the stock price is due to investor expectations of future profits rather than recent results.
“If, at any point, they conclude that’s not going to happen, our stock will immediately get crushed like a soufflé under a sledgehammer!” he wrote in the email, which was first reported by Electrek. Tesla did not respond to a request for comment about the email.
The email was primarily focused on the importance of finding even small cost savings in the car building process.“This a tough Game of Pennies — requiring thousands of good ideas to improve part cost, a factory process or simply the design, while increasing quality and capabilities,” Musk wrote. “A great idea would be one that saves $5, but the vast majority are 50 cents here or 20 cents there.”
While Tesla has become the leader in electric cars, all the top automakers are making major pushes to build more electric vehicles. General Motors has announced plans to switch to nothing but electric vehicles, and expects 40% of the cars it sells to be electric within five years. Part of the incentive is that electric vehicles can be cheaper to build because they have fewer moving parts than gasoline powered vehicles.
In separate comments Tuesday, Musk repeated a statement he has made previously that the Tesla stock price is “too high.”
“I even said the stock was too high. I mean what am I supposed to do,” he said while rolling his eyes during an interview with Mathias Doepfner, CEO of technology and media company Axel Springer. Musk was responding to the fact that Tesla is worth more than five times as much as Volkswagen, the world’s largest automaker in terms of sales.
Doepfner asked if Musk would consider using Tesla’s lofty stock price to buy an established automaker and although Musk said he’s not looking to do that, he wouldn’t rule it out.
“We’re definitely not going to launch a hostile takeover,” he said. “If somebody said, ‘Hey, we think it’d be a good idea to merge with Tesla,’ we’d certainly have that conversation.”
https://www.wraltechwire.com/2020/12...-sledgehammer/
Tesla CEO Elon Musk is telling his employees they need to cut costs or they can kiss its lofty stock price goodbye.
Tesla shares have been among the best performers in 2020, rising nearly 600% through Tuesday trading, making it among the most valuable stocks in the country, worth more than any major automaker. After years of losses Tesla has now reported five straight quarters of positive net income.
But in an email to employees Musk acknowledged that Tesla’s actual profit margin is fairly low, only about 1%, and that the stock price is due to investor expectations of future profits rather than recent results.
“If, at any point, they conclude that’s not going to happen, our stock will immediately get crushed like a soufflé under a sledgehammer!” he wrote in the email, which was first reported by Electrek. Tesla did not respond to a request for comment about the email.
The email was primarily focused on the importance of finding even small cost savings in the car building process.“This a tough Game of Pennies — requiring thousands of good ideas to improve part cost, a factory process or simply the design, while increasing quality and capabilities,” Musk wrote. “A great idea would be one that saves $5, but the vast majority are 50 cents here or 20 cents there.”
While Tesla has become the leader in electric cars, all the top automakers are making major pushes to build more electric vehicles. General Motors has announced plans to switch to nothing but electric vehicles, and expects 40% of the cars it sells to be electric within five years. Part of the incentive is that electric vehicles can be cheaper to build because they have fewer moving parts than gasoline powered vehicles.
In separate comments Tuesday, Musk repeated a statement he has made previously that the Tesla stock price is “too high.”
“I even said the stock was too high. I mean what am I supposed to do,” he said while rolling his eyes during an interview with Mathias Doepfner, CEO of technology and media company Axel Springer. Musk was responding to the fact that Tesla is worth more than five times as much as Volkswagen, the world’s largest automaker in terms of sales.
Doepfner asked if Musk would consider using Tesla’s lofty stock price to buy an established automaker and although Musk said he’s not looking to do that, he wouldn’t rule it out.
“We’re definitely not going to launch a hostile takeover,” he said. “If somebody said, ‘Hey, we think it’d be a good idea to merge with Tesla,’ we’d certainly have that conversation.”
https://www.wraltechwire.com/2020/12...-sledgehammer/
Last edited by Toys4RJill; 12-02-20 at 02:22 PM.
12-02-20, 02:14 PM
#2
Lexus Fanatic
Thread Starter
I have said time and time again...once the big boys like GM, Mercedes or Hyundai and the behemoth Toyota start making EVs, it will be very hard for Tesla to make money. The economies of scale are there for the legacy makers as the profits for their gas models will fuel and electrify their EV models such as Toyota CHR and Lexus UXin gas, hybrid and now EV form
Last edited by Toys4RJill; 12-02-20 at 02:19 PM.
12-02-20, 03:12 PM
#3
Lexus Test Driver
I have said time and time again...once the big boys like GM, Mercedes or Hyundai and the behemoth Toyota start making EVs, it will be very hard for Tesla to make money. The economies of scale are there for the legacy makers as the profits for their gas models will fuel and electrify their EV models such as Toyota CHR and Lexus UXin gas, hybrid and now EV form
Musk is there to rally the troops and drive cost control because that is how to make an auto manufacturer successful. Seems to me that he is doing pretty good given that Tesla is worth $500B.
12-02-20, 03:16 PM
#4
Lexus Champion
I popped an artery when I saw the PE ratio of that stock.
12-02-20, 03:50 PM
#6
Lexus Test Driver
It’s pretty crazy that this one guy can say something and Tesla stocks drop 4%.
https://m.benzinga.com/article/18622...Fwww.google.ca
https://m.benzinga.com/article/18622...Fwww.google.ca
. FWIW, its probably overvalued
12-02-20, 04:32 PM
#7
Lexus Fanatic
But in an email to employees Musk acknowledged that Tesla’s actual profit margin is fairly low, only about 1%, and that the stock price is due to investor expectations of future profits rather than recent results.
Last edited by mmarshall; 12-02-20 at 05:44 PM.
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12-02-20, 04:42 PM
#8
Lexus Test Driver
You keep mentioning investment money pouring into Tesla which is wrong. Elon mentions investors in terms of stockholders who already own the shares on the public market. These investors expect Tesla to be profitable in the future but do not directly give Tesla any money...they already own the shares. If you keep saying the wrong things, we will keep correcting it.
12-02-20, 05:51 PM
#9
Lexus Fanatic
You keep mentioning investment money pouring into Tesla which is wrong. Elon mentions investors in terms of stockholders who already own the shares on the public market. These investors expect Tesla to be profitable in the future but do not directly give Tesla any money...they already own the shares. If you keep saying the wrong things, we will keep correcting it.
This part is not fact, though, but just my opinion......if it wasn't for the huge number of Model 3 sales, Tesla would have been in serious trouble several years ago. That vehicle has been a gold mine for the company.
12-02-20, 05:54 PM
#10
Lexus Test Driver
Originally Posted by mmarshall
Money paid for stock shares does not simply go into a vacuum. Even the broker who sells the shares to an investor only get a commission on the sale, not most of the money from the stock-sale itself. A good part of that money ends up benefitting the company. What you say is true, though, that Musk was referring to the negative reaction of future investors, in a lower share price, if Tesla does not start making higher margins.
This part is not fact, though, but just my opinion......if it wasn't for the huge number of Model 3 sales, Tesla would have been in serious trouble several years ago. That vehicle has been a gold mine for the company.
This part is not fact, though, but just my opinion......if it wasn't for the huge number of Model 3 sales, Tesla would have been in serious trouble several years ago. That vehicle has been a gold mine for the company.
12-02-20, 05:59 PM
#11
Lead Lap
Yawn, Tesla sets up this impossible task facing them and then magically overcomes it. Great PR campaign
12-02-20, 06:12 PM
#12
Lexus Test Driver
Every time Musk says Tesla stock is too high - it skyrockets again lol
I think they will be very profitable for at least the next 10yrs as EV niche continues to grow. Their initial costs in tooling and factories will not be as high going forward.
I think they will be very profitable for at least the next 10yrs as EV niche continues to grow. Their initial costs in tooling and factories will not be as high going forward.
12-02-20, 07:42 PM
#13
Lexus Fanatic
iTrader: (20)
You're right, it goes to the SELLER of shares, who normally ISN'T Tesla. Tesla sold those shares to investors when they went public and various additional stock sales, but apart from those, Tesla's stock price is of NO BENEFIT to Tesla.
No, it doesn't unless the company is selling the shares, which generally they are not. Those buying shares are normally buying from others who are selling them.
Even the broker who sells the shares to an investor only gets a commission on the sale, not most of the money from the stock-sale itself. A good part of that money ends up benefitting the company.
12-02-20, 09:03 PM
#14
You're right, it goes to the SELLER of shares, who normally ISN'T Tesla. Tesla sold those shares to investors when they went public and various additional stock sales, but apart from those, Tesla's stock price is of NO BENEFIT to Tesla.
No, it doesn't unless the company is selling the shares, which generally they are not. Those buying shares are normally buying from others who are selling them.
No, it doesn't unless the company is selling the shares, which generally they are not. Those buying shares are normally buying from others who are selling them.
12-02-20, 09:22 PM
#15
Lexus Champion
I have said time and time again...once the big boys like GM, Mercedes or Hyundai and the behemoth Toyota start making EVs, it will be very hard for Tesla to make money. The economies of scale are there for the legacy makers as the profits for their gas models will fuel and electrify their EV models such as Toyota CHR and Lexus UXin gas, hybrid and now EV form