RE:Jim Farley: EV adoption will take longer than expectedCorrection:
Ford only lost $32,000 per EV sold in Q2. That is a big improvement on the $58,000 loss that they had on each EV sale in Q1. Ford now anticipates a $4.5 billion loss on their EV division in 2023 but that number may go higher now that the company has slashed the price of their Lighting trucks by $10,000.
That means Ford is going to make about $17 billion on its ICE vehicle sales.
Some here might think that I'm hoping for the demise of Ford and others but that is not true. The longer Ford and GM and Stellantis keep pumping out ICE vehicles, the more Tesla receives in compensation for the credits.
In 2023, Tesla will likely "earn" about $1.5 billion in credits. The company announced that the intial build of Giga Mexico will be about $1 billion. The factory will need to ramp up its run rate to 500,000 vehicles per year to start making big money. That goal will probably be met by in the first half of 2025 and total investment will approach $5 billion. By then Tesla will have received that entire amount from credits paid for by ICE car buyers through 2023, 2024, and 2025. After 2025, the ramp will happen MUCH faster as the run rate will likely meet 1 million per year by the end of 2026 and then 2 million or 2.5 million by 2028. I expect margins will be back up to 25% by then, so Tesla will make about $6,000 on a $24,000 car. Multiply that by 2.5 million and the plant will be generating a gross profit of about $15 billion per year in 5 years. All financed by ICE vehicle buyers. Those numbers are without FSD which will add about $15,000 per vehcile taken up which likely means about another $2,000 of bottom line profit per car on average = another $5 billion per year of profit. That is for ONE plant. Tesla currently has 3 other large scale plants plus Freemont and it is expected that they will add another in India next year along with two others in different locations.
The best part of the Tesla story is that by the time that auto maker competitors begin to ramp up enough to be profitable, Tesla will have moved on to sell them all FSD as well as selling the world battery storage to make renewables take over all new requirements of the energy grid.
Oh, and they will also have computer capacity of about 100x the largest computer in the world in about a year from now. That might not mean anything to you now, but it will. If you dig into how Amazon became a business monster, you will find out that they created enough computing power to handle their peak needs and then some. It was only after the fact that Amazon realized that they could use the excess capacity to power their AWS which is the backbone of Amazon now. And now on to the really absurd, Tesla intends to use their computing capability to make robots that will change life as we know it.
It is not that I hate SU. In fact, I have a nice memory of cashing out at double my cost. It is just that investing in SU is pretty much dead money now as the company has decided that it is going to die defending the Athabasca.