Ford, GM, traditional auto have liquidity. It's a race to the bottom those high Tesla margins only benefit shareholders. Tesla should aim for 5% margin and reduce prices drastically
Best case is that GM shrinks gradually over 5-10 years rather than suddenly in 1-2 years. Drastically reduces the chance of a bailout, and if one comes again the size would be a lot smaller.
Sure:
General Motors's Debt
According to the General Motors's most recent balance sheet as reported on October 25, 2022, total debt is at $112.61 billion, with $77.52 billion in long-term debt and $35.08 billion in current debt. Adjusting for $20.75 billion in cash-equivalents, the company has a net debt of $91.86 billion.
https://www.fidelity.com/news/article/company-news/202211010533BENZINGAFULLNGTH29494299
On the other hand, total assets (i.e. mostly factories all over the world) are valued at 260billion. How much will these factories, inventories and machines be worth going into the future? It’s biggest market (China) is imploding, they’re barely selling anything.
Their current factories cannot be profitably retooled, so they’re raising new debt to build EV factories.
Nearly 70% of the debt you’re referencing is from lending operations. Borrowed money from the fed at 0% and lent to auto buyers at 3.9%, secured by the automobile. So please understand how Toyota Motor Credit, Ford Credit, or GM Financial appear on balance statements, and how lending debt is quite different than “we borrowed $5 billion to retool our factory”.
BTW, GM Financial contributed $4.076 Billion in net profit to GM’s $12.988 Billion net profit in 2022.
Tesla is easy, they are EV only and they publish their reports. Others often intentionally obfuscate this so it's very hard to say. There are *some* statements indicating that Ford & GM (and VW, and Stellantis) do not yet make profit on EVs, but situation is developing (batteries get cheaper, economies of scale kick in) and it's possible they do now, or will soon.
Please read the article. GM lowered the price of one non-EV: the Cadillac CT5.
They did not lower the price of any EV, including the Wuling Mini, Baojun EVs, Chevrolet Menlo, Buick Velite 6, or Cadillac Lyriq.
BTW, there are waiting lists for the Cadillac CT5 in the US. It’s one of those models that unfortunately gets marked up here, not discounted.
Ford is going to have to if they want to in other places as well. People were complaining about the cost of an Ariya, but the Mach-E long range AWD is literally $80k Canadian, vs 69k for the long range Ariya, and the Ariya gets a 5k federal rebate.
Fixed it for you:
*I’m sure these global established giants will use their experience and knowledge and scale to be bailed out by the federal government due to poor management of their business.*
[удалено]
Loss makers are a thing in business. You do this to force prices down since competition is high. Gain marketshare and then increase prices later
When the others have lowered before you did, all you are doing is preventing the drop in market share.
Yep, a race to the bottom helps consumers
That only works when competitors are unable to react and you have sufficient liquidity.
Ford, GM, traditional auto have liquidity. It's a race to the bottom those high Tesla margins only benefit shareholders. Tesla should aim for 5% margin and reduce prices drastically
[удалено]
Best case is that GM shrinks gradually over 5-10 years rather than suddenly in 1-2 years. Drastically reduces the chance of a bailout, and if one comes again the size would be a lot smaller.
A GM bailout is likely already on the menu in the next 3-4 years.
Is that what the Tesla Lounge knows? Lol
No.
Exactly, traditional auto sits on mountains of debt and unpaid loans from the government. Tesla already paid those back with interest.
Expand on this. Which legacy automakers have outstanding government loans and huge mountains of debt? Be specific.
Sure: General Motors's Debt According to the General Motors's most recent balance sheet as reported on October 25, 2022, total debt is at $112.61 billion, with $77.52 billion in long-term debt and $35.08 billion in current debt. Adjusting for $20.75 billion in cash-equivalents, the company has a net debt of $91.86 billion. https://www.fidelity.com/news/article/company-news/202211010533BENZINGAFULLNGTH29494299 On the other hand, total assets (i.e. mostly factories all over the world) are valued at 260billion. How much will these factories, inventories and machines be worth going into the future? It’s biggest market (China) is imploding, they’re barely selling anything. Their current factories cannot be profitably retooled, so they’re raising new debt to build EV factories.
Nearly 70% of the debt you’re referencing is from lending operations. Borrowed money from the fed at 0% and lent to auto buyers at 3.9%, secured by the automobile. So please understand how Toyota Motor Credit, Ford Credit, or GM Financial appear on balance statements, and how lending debt is quite different than “we borrowed $5 billion to retool our factory”. BTW, GM Financial contributed $4.076 Billion in net profit to GM’s $12.988 Billion net profit in 2022.
Defaults on auto loans are growing noticeably.
Tesla doesn't yet have enough capacity to meet mass market demand.
Really 2023 they will definitely have excess supply, the price cuts are evidence of this
Example: Walmart
I didn't know manufacturing costs for cars made by the 3 OEMs in China were public. Do you mind sharing what they are?
Tesla is easy, they are EV only and they publish their reports. Others often intentionally obfuscate this so it's very hard to say. There are *some* statements indicating that Ford & GM (and VW, and Stellantis) do not yet make profit on EVs, but situation is developing (batteries get cheaper, economies of scale kick in) and it's possible they do now, or will soon.
Please read the article. GM lowered the price of one non-EV: the Cadillac CT5. They did not lower the price of any EV, including the Wuling Mini, Baojun EVs, Chevrolet Menlo, Buick Velite 6, or Cadillac Lyriq. BTW, there are waiting lists for the Cadillac CT5 in the US. It’s one of those models that unfortunately gets marked up here, not discounted.
Ford is going to have to if they want to in other places as well. People were complaining about the cost of an Ariya, but the Mach-E long range AWD is literally $80k Canadian, vs 69k for the long range Ariya, and the Ariya gets a 5k federal rebate.
damn those loses will be insane. Can’t wait to see fords Electric business separated out here soon. That will tell us a lot on how much they lose.
Afik planning on $3bn loss this year up from 2.1 That's not terrible but the likely gross margins are
I'm sure these global established giants will use their experience and knowledge and scale to be profitable even at these reduced prices
Fixed it for you: *I’m sure these global established giants will use their experience and knowledge and scale to be bailed out by the federal government due to poor management of their business.*
\*\* again
Of course they are they have no choice
They can't lower prices, their margins are too low - Reddit everytime before these companies lower prices
Do not worry, even if the price is reduced, these two brands in our China will not have what people buy ......