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This is how you do it folks! Auto companies, take note....
Tesla’s recently posted 10-K filing has revealed something quite interesting about the company’s plans for the near future. Amidst the pursuit of its ambitious goal of ramping to 20 million vehicles per year by the end of the decade, Tesla has noted that it is planning to spend between $6 billion to $8 billion this year.
And in 2024 and 2025, Tesla is expecting to raise its capital expenditures to between $7 billion and $9 billion. For comparison, Tesla’s capital expenditures reached $7.16 billion last year and $6.48 billion in 2021. With this in mind, it would definitely appear that Tesla is setting up a notable ramp in the coming years.
Tesla explained its intentions to raise its capital expenditures in the coming years in the following section of the 10-K filing.
“We are simultaneously ramping new products, ramping manufacturing facilities on three continents and piloting the development and manufacture of new battery cell technologies, and the pace of our capital spend may vary depending on overall priority among projects, the pace at which we meet milestones, production adjustments to and among our various products, increased capital efficiencies and the addition of new projects.
“Owing and subject to the foregoing as well as the pipeline of announced projects under development, all other continuing infrastructure growth and varying levels of inflation, we currently expect our capital expenditures to be between $6.00 to $8.00 billion in 2023 and between $7.00 to $9.00 billion in each of the following two fiscal years,” Tesla wrote.
Tesla’s comments about its increasing capital expenditures could be perceived as bullish news for the company. The EV maker, after all, has only gotten better at managing its growth and investments. This suggests that its $6 billion to $8 billion capital expenditures this year would likely go a long way toward the ramp of the company’s numerous projects.
The next years will be particularly busy for Tesla, as the company will be starting the production of the Cybertruck. The Tesla Semi is expected to see a ramp to 50,000 units per year by 2024 as well. Tesla is also expected to launch new products such as the Optimus humanoid robot, an affordable car, a dedicated Robotaxi, and a “Robovan,” among others.
In 3 years Tesla went from losing money to a CaPeX of $7-9 billion/year and they still have plenty of cash left over it's hard for me to wrap my head around that.
What this tells me is that without a shadow of a doubt, there is an insatiable demand for EV'S world wide. It can't be sugar coated. There is no stop or reverse button, the deed is done. Only Tesla can stop Tesla
The EV demand curve is in the sweet spot right now - the current US buy rate is 6% of new sales to EV. Getting that to 30% will be fairly easy, especially if you see sub $30K EVs, as many people have otherwise been totally priced out of the new car market. But its going to get harder after that, more consideration given to charging infrastructure, how well the cars perform in the northern tier of the country during the winters, people who live in multi dwelling housing who have no access to a private garage, etc - all the stuff mentioned before. These states passing laws to force people into 100% EVs by 2030, are going to train wreck - people will just remain in the pre-owned market or keep the cars they have.
The EV demand curve is in the sweet spot right now - the current US buy rate is 6% of new sales to EV. Getting that to 30% will be fairly easy, especially if you see sub $30K EVs, as many people have otherwise been totally priced out of the new car market. But its going to get harder after that, more consideration given to charging infrastructure, how well the cars perform in the northern tier of the country during the winters, people who live in multi dwelling housing who have no access to a private garage, etc - all the stuff mentioned before. These states passing laws to force people into 100% EVs by 2030, are going to train wreck - people will just remain in the pre-owned market or keep the cars they have.
The 2030 date is arbitrary, I wouldn't worry about it. It's unrealistic, and even heavy EV adopters like myself know it's not realistic. As far as colder climates, yes it can be a challenge but it works, as I talk to a lot of my fellow EV owners in Europe and places like Sweden.
The charging infrastructure will be solved in a few years, and apartments adding Level 2 chargers or providing NEMA 14-50 plugs is cheap and the can add it in the rent, which would add an extra few dollars
Fun video.
I watch ya'lls videos while I'm working so it give me something to do.
Didn't know the model T was made from wood, thought for sure the body was sheet metal not just sheet metal skin.
They start hitting sub $30k offerings and make the designs look "less EV", gonna be a hit.
That design is why Tesla's are the best EV's on the market. They are optimized for aerodynamics, space and efficiency. The design is not going to change, at least dramatically. Now the sub $30K could happen, but as you know prices of all vehicles have been going up, and what goes up in this case probably will never go down. But once you drive one I guarantee you will change your mind
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That design is why Tesla's are the best EV's on the market. They are optimized for aerodynamics, space and efficiency. The design is not going to change, at least dramatically.
I hope this is the case, and they take the 911/Wrangler approach to design updates, where its a slow evolution. It seems to work really well to keep a loyal audience.
It seems like they are doing that, at least with the Model S/ The result, IMO, its that it is their best looking vehicle by a long margin.
I hope this is the case, and they take the 911/Wrangler approach to design updates, where its a slow evolution. It seems to work really well to keep a loyal audience.
It seems like they are doing that, at least with the Model S/ The result, IMO, its that it is their best looking vehicle by a long margin.
I personally hate redesigns. First of all, they introduce issues that now need to be addressed. I love the incremental approach Tesla takes. It keeps things simple and refreshes happen slowly. Whenever car companies drastically redesign a vehicle, it usually doesn't turn out well
I personally hate redesigns. First of all, they introduce issues that now need to be addressed. I love the incremental approach Tesla takes. It keeps things simple and refreshes happen slowly. Whenever car companies drastically redesign a vehicle, it usually doesn't turn out well
100% with you, not only do complete redesigns introduce issues, they tend to introduce more complexity than was originally intended and extra weight.
A Tesla car is displayed at a showroom and service center for the auto maker in Amsterdam on Oct. 23, 2019. Tesla recently cut prices across the board, a move with big potential ramifications for the automaker as well as for the industry.
John Thys/AFP via Getty Images Last month, Tesla dropped its prices dramatically — up to 20%.
Auto companies offering discounts to promote sales is nothing new, but this move sparked a lot of reaction. So what was so special about these price cuts? And what do they mean?
A lot, actually. Here's how the announcement is having ripple effects, from the impact on Tesla owners to the changes it could spur across the auto industry.
Others are now under pressure to cut prices
When a leading company cuts prices, all their rivals feel pressure to follow suit — it's economics 101.
And the textbook scenario is playing out in the headlines.
On Monday, Ford announced it was cutting prices on the Mustang Mach-E, an electric SUV that competes against Tesla's Model Y. Prices dropped by $900 to $5,900, depending on the vehicle's options.
It was clearly a response to Tesla, and Marin Gjaja, the chief customer officer of Ford's electric vehicle business, confirmed to reporters that the company was "responding to changes in the marketplace."
The big question now may be whether other companies can afford to follow suit. Tesla, which started out as an automotive underdog, now has become the overwhelming market leader in the EV sector.
It makes healthy profits on electric vehicles that big automakers are, in many cases, still making at a loss — or struggling to make at volume.
On an earnings call this week, General Motors CEO Mary Barra said she doesn't plan to cut prices on the Cadillac Lyriq. The luxury SUV is supposed to be a Model Y competitor, but GM only managed to deliver 122 of the vehicles in 2022.
"We think, right now, we're priced where we need to be," Barra said. The Ford Mustang Mach-E is on display during the 19th Shanghai International Automobile Industry Exhibition in Shanghai on April 20, 2021. Ford cut the prices for the Mustang Mach-E this week in response to Tesla's price cuts.
Hector Retamal/AFP via Getty Images
Used Tesla prices dropped overnight
Lowering prices affects used cars too.
Used car prices in general finally started trending down last year, after a precipitous rise. According to CarGurus, prices overall are down less than 2% for the month, while prices for Teslas are down 8%.
"This is what we call the waterfall effect," said Jeremy Robb, senior director of Business Intelligence at *** Automotive. "If new prices come down, used prices have to be pushed down as well."
And it's not just used Teslas — used electric vehicle prices in general are being pushed down by this price drop, according to *** Automotive. (*** owns Manheim, the world's largest wholesale auto auction company.)
EV sales are likely to get a boost
Electric vehicles are increasingly popular with shoppers. And the cost of operating an EV is already lower than a gas-powered car.
But the upfront cost has long been a hurdle. According to Kelley Blue Book, the average EV now costs more than $61,000.
At the Washington, D.C., Auto Show last month, attendees Xavion Butler and Frank Smart recently agreed that electric vehicles are the future. "Get on board or get left behind," Butler said cheerfully.
"But everybody's gotta be able to afford them," Smart said. "They've gotta make them more affordable."
Making the best-selling electric vehicle in the U.S. significantly cheaper, while also boosting production, would logically provide a direct boost to electric vehicle sales. Globally, Tesla delivered 1.3 million vehicles last year, and it plans to sell 1.8 million this year.
The more rivals follow suit and cut their own prices, the more dramatic the impact could be. The GMC Hummer EV is seen behind President Biden as he speaks during a visit to the General Motors Factory Zero electric vehicle assembly plant in Detroit on November 17, 2021. Not all automakers are expected to cut prices for their electric cars. GM CEO Mary Barra said she doesn't plan to cut prices on the Cadillac Lyriq, for example.
Mandel Ngan/AFP via Getty Images
But price cuts annoy Tesla owners
As you can imagine, people who bought a Tesla in late 2022 were not delighted to narrowly miss out on a bargain.
Because of the way Tesla handles its pricing, the sudden drop is more transparent, and possibly more upsetting, than typical carmaker discounting.
Most carmakers set a "manufacturer's suggested retail price" that is, in fact, just a suggestion. Dealerships and buyers negotiate the actual price.
To boost sales, a carmaker, through a dealership, can offer a variety of discounts — like rebates, price reductions, discounts on loans — to reduce what customers actually pay without adjusting the MSRP. The MSRP tends to stay the same for an entire model year.
Tesla sometimes offers incentives like that, but for the most part the price listed on Tesla's website is the price. And it can change whenever the company likes.
Brian Levine, a physician in Tucson who ordered a Model Y last summer, definitely was not thrilled when he heard about the price cut.
"The reptilian-brain part of [you thinks] 'That stinks,' " he says.
Levine is trying to be philosophical. He says he understands not everyone gets every deal. But the immediate loss in his vehicle's value was a bitter pill to swallow.
Levine also owns a Model 3. But he now says he would think twice before buying another Tesla again.
... while attracting new ones to Tesla
Someone in Levine's family was thrilled, though. His dad went out and ordered a Model 3.
And that, of course, is why discounts and bargains are a huge part of the auto industry. Price cuts work: They boost sales.
On Tesla's earnings call last week, CEO Elon Musk said that orders for vehicles are coming in at almost twice the rate of vehicle production.
"It's hard to say whether that will continue," he said, "but the orders are high."
Meanwhile, the percentage of people using the automotive data site Edmunds to research Tesla, as opposed to other brands, more than doubled after the auto maker announced its price cuts, according to Edmund's head of insights, Jessica Caldwell.
It's "a tale as old as time," she said. "You want market share, you're just going to increase your production, drop the prices." Bollywood actor Shah Rukh Khan, left, and a Hyundai executive in India pose in front of the Hyundai IONIQ 5 during the Auto Expo 2023 in Greater Noida, India, on Jan. 11, 2023. Interest in electric cars is growing around the world.
Money Sharma/AFP via Getty Images
Teslas will get more accessible (which could affect the brand)
Caldwell noted the price cuts could negatively affect Tesla's brand, which until now, has enjoyed luxury status.
On the other hand, Tesla's not-so-secret "secret plan" has always been to become a mass-market automaker selling millions of affordable vehicles — like a GM or a Volkswagen, not a Ferrari or Porsche.
And the price cuts could make some Teslas even more affordable than the price cut itself suggests, because they can now qualify for a $7,500 tax credit.
The base Model Y, for example, is now eligible for the credit (though there's an income cap for the prospective buyer.Read all about it here.)
The price cuts are being welcomed by Tesla investors
Investors had been questioning if Tesla still had the magic touch after the company faced increased competition just as Musk appeared distracted by his purchase of Twitter.
Tesla still has other key advantages — including, crucially, a reliable and expansive high-speed charging network. (Teslas can charge at the Tesla Supercharger network; other brands rely on a patchwork of chargers from various companies, and malfunctioning or poorly maintained chargers are a common frustration for drivers.)
But would that be enough?
Enter the price cuts. While some analysts had worried that they would cut too deeply into margins, overall, the stock market seemed relieved to see the company taking action to protect its dominance of the EV market.
Investors now seem optimistic about Tesla's outlook after a miserable 2022 for the company's investors.
Since the price cuts were announced, Tesla stock has risen more than 48% — less of a ripple effect, and more of a big, fat wave.
Tesla is just killing it. Other automakers are scrambling. The Hyundai dealership I was talking to last year trying to find my brother in law an Ioniq 5 has been emailing and calling me suddenly about deals they are having. I remember the sales manager told my brother in law regarding the ridiculous ADM's "we have to keep the lights on". My brother in law said something like "so do I. And next year I'll remember"
A Tesla car is displayed at a showroom and service center for the auto maker in Amsterdam on Oct. 23, 2019. Tesla recently cut prices across the board, a move with big potential ramifications for the automaker as well as for the industry.
The Ford Mustang Mach-E is on display during the 19th Shanghai International Automobile Industry Exhibition in Shanghai on April 20, 2021. Ford cut the prices for the Mustang Mach-E this week in response to Tesla's price cuts.
The GMC Hummer EV is seen behind President Biden as he speaks during a visit to the General Motors Factory Zero electric vehicle assembly plant in Detroit on November 17, 2021. Not all automakers are expected to cut prices for their electric cars. GM CEO Mary Barra said she doesn't plan to cut prices on the Cadillac Lyriq, for example.
Bollywood actor Shah Rukh Khan, left, and a Hyundai executive in India pose in front of the Hyundai IONIQ 5 during the Auto Expo 2023 in Greater Noida, India, on Jan. 11, 2023. Interest in electric cars is growing around the world.
