Tesla can make money from anything, that's not a problem. But if the profits only come from selling emmission rights, Tesla will have problems once that stops, and it will stop one day. It is is a fact that Tesla loses money on building cars. It is also a fact that selling emmission rights will bring each year less and less money and will eventually stop. I am pointing at the weak point of Tesla. A weak point that, if it will not change, can make Tesla go broke. The initial aim of Tesla was building cars and making profit, not selling emmission rights. And after so many years they are still not able to do that. To make an evaluation of a company you should analyze the balance sheets and the profit and loss sheet. These tools are essential to see what the real value of a company is. It shows clearly the strong and weak points. If a company makes profit because they won the powerball, you know that they were lucky, but also that this had nothing to do with the essential business they are in. Musk never mentioned hid aim was to sell emmission rights. He told numerous times they would make money from building cars. My remarks are real and fair. Not mentioning them would not be fair.
Ok, then I disagree with you. Tesla makes profits on emission rights like other car manufacturers do. It's not an anomaly, it's part of the business plan. Let's no blow these out of proportion either; they represent less than 10% of revenue. Not insignificant but not insurmontable. Furthermore, these deals will be going in for the foreseeable future, at least 5 years, and long enough for Tesla to continue to increase their lead in battery development and car manufacturing so as to squeeze a profit in the process. Neither I nor you know what the future holds, but as far as today is concerned, Tesla is demonstrating day in and day out that they know what they're doing, which is why Tsla us worth nearly 450....
Almost no car factories sell emission rights as they need them for themselves. So your statement is nonsense. It is also clear that your have no clue about bookkeeping, analyzing balance sheets or doing business. The impact of the selling of these emission rights should be watched on the NET PROFIT, not the revenues. Revenues don't pay dividends, profits do. If we deduct the sold emission rights from the NET PROFIT, then there is no profit anymore. There is a loss. Emission rigths are bigger than 100% of the NET PROFITS. Tesla generates all his profits with "less than 10% revenue", so more than 90% of revenues only generate losses. These 90% come from building cars. Profit margin on emission rights is 100%, profit margin on building cars is negative. In the second quarter, Tesla said it sold $428 million in credits, all pure profit. Net income for the second quarter came in at $104 million. Without the credits, the 17-year-old company would have lost $324 million. For the first half of the year, Tesla’s net income was $120 million on the strength of $782 million in credits. For all of 2019, Tesla sold $594 million worth of pollution credits. Tesla’s business model is currently 100% predicated on selling one-time temporary credits to guys who increasingly don’t need them. Which leads to the conclusion that soon profits will crash if the profits from emission rights are not replaced by operational profits from carbuilding.
Short term traders could be wise to sell this bounce if the expected market outcomes do not come true.
2nd quarter old news. What about 3rd? Me thinks that is a different story and your argument might not hold water.
https://www.thedrive.com/news/24659...-selling-regulatory-credits-not-sales-revenue The sales of emission credits are down and will go down. Car manufacturers are continuously reducing emissions what results in having to buy less emission credits. SO that will be a problem for Tesla as they have to replace these losses buy profits from building cars. Which they still cannot do after 17 years. On top of that all carmakers are selling less ICE engines and more EV's. Volkswagen is speaking about 25% of sales will be EV's. This will reduce again the need to buy emission credits. So in a few years the only source of income from Tesla will disappear completely. Even Musk confirms that they make no profit on building cars: Though a valid form of profit, the earnings pose a question of just how much of a profit Tesla made on its vehicles alone, sans other fiscal deductions and credits. On the last few days of the quarter, CEO Elon Musk tweeted that the company was "close" to being profitable for the quarter and was relying on a strong push to bring the automaker into the black.
Do you really believe what you write or are you just being contrarian? Tesla is making money on emission credits and Tesla is on the cusp of making money selling cars and other products and services. They are a profitable company today and soon will join the S&P 500 and climb to 600 and up while you are stuck complaining about "fake" income from credit.
Did you read what Musk said in my last posting? "On the last few days of the quarter, CEO Elon Musk tweeted that the company was "close" to being profitable for the quarter and was relying on a strong push to bring the automaker into the black." Tesla will get a lot of competition. In the sales of the Tesla 3 that is very clear visible. Several carmakers (BMW and Mercedes) are already selling more EV cars than Tesla in that segment. And soon they will start in the higher priced 85 and 100 too. Futur can look much different the next few years. Combine that with the dropping profits on selling emission credits and you can only conclude that their position is much weaker. Notice how in EU Tesla3 sells much less than EU carmakers. Each car EU carmakers make reduces the potential of Tesla. Nobody will by two EV's if they need only one.
You're not taking in consideration a major point, which is that EVs will be mandatory in Europe within 15 years. That's a lot of cars that are going to be replaced with EVs. Within that time Tesla will have a sub 20k car on the market to compete with euro small car makers. But yes, it will be more competitive for Tesla cars, no questions about it. But I expect by then Tesla will have a more compelling product, because they manufacture their batteries and will manage the electricity grid (already has UK and German licenses). That vertical integration is not even on the radar of car makers, whose job is to make cars. Tesla is a lot more than that, and his profit margins will be substantially higher than traditional auto makers. I would be far more concerned for the traditional car manufacturers whose margins making differentiable engines is evaporating and replaced with new parameters, such as weight, charging time or driving distances, none of which they control as they depend on Tesla's other competitors like LG Chem to sell them batteries.