Inflation

[ducati916]

None of that shows that the other manufacturers are producing vehicles at a more efficient rate than Tesla, and that was/is my original theme.

Your link does go further by giving links to related news proving that the manufacturers had issues producing vehicles, thus not able to sell. And as I mentioned before, Tesla increased its production and sold everything that they produced. Have a look at the last quarter figures.

Produce less = sell less + factory idle time + staff idle time = poor efficiency.

TOKYO (Reuters) - Toyota Motor Corp is slowing production at as many as 11 plants in Japan because of rising COVID-19 infections among its workers and those at parts suppliers, it said on Thursday.

That disruption, which comes amid a shortage of semiconductors that is already forcing it to curb output, could cut production plans this month by about 47,000 vehicles, a Toyota spokesperson said.

Toyota on Tuesday said it expects to fall short of an annual target to build 9 million vehicles because it did not have enough chips. The company's business year ends on March 31.

https://finviz.com/quote.ashx?t=tm#statements[/URL

http://

None of that shows that the other manufacturers are producing vehicles at a more efficient rate than Tesla, and that was/is my original theme.

Your link does go further by giving links to related news proving that the manufacturers had issues producing vehicles, thus not able to sell. And as I mentioned before, Tesla increased its production and sold everything that they produced. Have a look at the last quarter figures.

Produce less = sell less + factory idle time + staff idle time = poor efficiency.

TOKYO (Reuters) - Toyota Motor Corp is slowing production at as many as 11 plants in Japan because of rising COVID-19 infections among its workers and those at parts suppliers, it said on Thursday.

That disruption, which comes amid a shortage of semiconductors that is already forcing it to curb output, could cut production plans this month by about 47,000 vehicles, a Toyota spokesperson said.

Toyota on Tuesday said it expects to fall short of an annual target to build 9 million vehicles because it did not have enough chips. The company's business year ends on March 31.

TM - Toyota Motor Corporation ADR Stock Price and Quote

TM - Toyota Motor Corporation ADR - Stock screener for investors and traders, financial visualizations.

finviz.com

The issue was whether 'productivity' could ameliorate the effects of inflation.

The numbers clearly indicate that TSLA currently cannot.



jog on
duc

 

[JohnDe]

http://

View attachment 136220View attachment 136221View attachment 136222

The issue was whether 'productivity' could ameliorate the effects of inflation.

The numbers clearly indicate that TSLA currently cannot.



jog on
duc

Which numbers?

• the number of vehicles build at or near factory capacity?
• the manufacturing cost per vehicle compared to competition?
• the number of idle staff per shift per month?
• the number of days that production is stopped or dialed down?
• the number of vehicles sitting in storage waiting for semiconductors?

The above are all issues that the other manufacturers are suffering. those issues increase the cost of each vehicle, which they may or may not pass on which causes other issues.

Regardless of the inflation rate, Tesla will be able to maintain a better control over pricing of its product compared to the competition. Which means that inflation will not be as big of an issue to Tesla.

My point that you quote still stands, inflation can be reduced by improving productivity and there there are companies that will continue to profit when others suffer through high inflation (I did use incorrect wording in my rush due to work commitments, but basically the same) -

Somewhat true ducati916. Yes cheap labour is not the way to productivity in the 21st century, yes 'zombie' companies are an issue. However, there are multiple means in achieving productivity.

Tesla is proof, they found an obvious way to design and manufacture vehicles at a reduced cost and time that all the other major vehicle manufacturers have not been able to do. Read the book Power Play: Tesla, Elon Musk, and the Bet of the Century

Keep an eye out for investments in artificial intelligence, robotics, energy storage, DNA sequencing, and blockchain technology.

 

[sptrawler]

This is an article on how CPI and inflation is calculated, it isn't a one line thing and the basket of goods changes also.

Inflation and its Measurement | Explainer | Education

This series provides short, concise explanations for various economics topics.

www.rba.gov.au

So if for example the RBA feels fuel or electricity prices are a spike and not a permanent trend, they wont be counted in the CPI calculation from what I understand.

 

[divs4ever]

"CPI definition - the RBA is incorrect"

Big call.

Shame all those past and present RBA people have wasted their education

i don't know about their education , but they sure have wasted their breath on me .. i haven't believed them for decades

 

[JohnDe]

This is an article on how CPI and inflation is calculated, it isn't a one line thing and the basket of goods changes also.

Inflation and its Measurement | Explainer | Education

This series provides short, concise explanations for various economics topics.

www.rba.gov.au

So if for example the RBA feels fuel or electricity prices are a spike and not a permanent trend, they wont be counted in the CPI calculation from what I understand.

I posted the same link on the previous page and ducati916 told me that it is wrong.

Are you saying that the RBA is incorrect?​

​

Yes, that is exactly what I am saying.​

 

[ducati916]

Which numbers?

• the number of vehicles build at or near factory capacity?
• the manufacturing cost per vehicle compared to competition?
• the number of idle staff per shift per month?
• the number of days that production is stopped or dialed down?
• the number of vehicles sitting in storage waiting for semiconductors?

The above are all issues that the other manufacturers are suffering. those issues increase the cost of each vehicle, which they may or may not pass on which causes other issues.

Regardless of the inflation rate, Tesla will be able to maintain a better control over pricing of its product compared to the competition. Which means that inflation will not be as big of an issue to Tesla.

My point that you quote still stands, inflation can be reduced by improving productivity and there there are companies that will continue to profit when others suffer through high inflation (I did use incorrect wording in my rush due to work commitments, but basically the same) -

Somewhat true ducati916. Yes cheap labour is not the way to productivity in the 21st century, yes 'zombie' companies are an issue. However, there are multiple means in achieving productivity.

Tesla is proof, they found an obvious way to design and manufacture vehicles at a reduced cost and time that all the other major vehicle manufacturers have not been able to do. Read the book Power Play: Tesla, Elon Musk, and the Bet of the Century

Keep an eye out for investments in artificial intelligence, robotics, energy storage, DNA sequencing, and blockchain technology.

jog on
duc

 

[sptrawler]

I posted the same link on the previous page and ducati916 told me that it is wrong.

Are you saying that the RBA is incorrect?​

​

Yes, that is exactly what I am saying.​

I'm sure you guys will come to consensus.

 

[JohnDe]

View attachment 136225

jog on
duc

OK, so let me get this right - you have finally agreed that Tesla productivity is better than the competition. Wow that was long winded.

"TSLA is the best of a bad bunch (industry)" ducati916

And for the record (again) I did not mention anything about a company that can "outrun inflation", my point has always been that the companies that can improve productivity over its competitors should be able ride through a high inflation economy, and what will help the company is new technology. Thus my examples of which technology to look at and one company and a company using new ways, TSLA, which has ridden through the Covid-19 induced shortages that have caused all its competitors to slow production and reduce operation hours.

 

[JohnDe]

i don't know about their education , but they sure have wasted their breath on me .. i haven't believed them for decades

No one is perfect, just like no institution is. However, the RBA has helped keep Australia out of recession for the longest period in recorded history, when other countries went into recession. We've had some luck on the way, but luck doesn't come without hard work. And nothing good lasts forever.

 

[qldfrog]

I'm sure you guys will come to consensus.

For what it is worth:
Avocado at corner fruit shop were $4 a kg up to 6 months ago,lately $5 and today $7.95
We can say seasonal variation, but with these avocadoes, you get them for 6m+ a year, plus in a cold room seasonal variation are minimal.
And we produce tons of avocadoes locally so not a supply issue.
Add tomatoes at $7 a kg, meat price up the sky...when will RBA release the next meaningfull figures..?

 

[againsthegrain]

some interesting claims here:

Westpac predicts six interest rate rises by March 2024

Australian borrowers could see their monthly repayments rise by about $500 over the next two years, with the central bank tipped to begin jacking up interest rates as early as August.

www.news.com.au

won't believe it until I see it, but I like it

Westpac is now predicting six interest rate rises between now and early 2024 – in August 2022, October 2022, March 2023, June 2023, December 2023 and March 2024 – to bring the cash rate from 0.1 per cent to 1.75 per cent.

 

[JohnDe]

some interesting claims here:

Westpac predicts six interest rate rises by March 2024

Australian borrowers could see their monthly repayments rise by about $500 over the next two years, with the central bank tipped to begin jacking up interest rates as early as August.

www.news.com.au

won't believe it until I see it, but I like it

Same. I’ve been waiting 5 years.

 

[ducati916]

OK, so let me get this right - you have finally agreed that Tesla productivity is better than the competition. Wow that was long winded.

"TSLA is the best of a bad bunch (industry)" ducati916

And for the record (again) I did not mention anything about a company that can "outrun inflation", my point has always been that the companies that can improve productivity over its competitors should be able ride through a high inflation economy, and what will help the company is new technology. Thus my examples of which technology to look at and one company and a company using new ways, TSLA, which has ridden through the Covid-19 induced shortages that have caused all its competitors to slow production and reduce operation hours.

So TSLA is the best of a bad bunch. TSLA's ROCE is over the last 3 years 7.88%. With inflation at 3.3% over the same time period, your ROCE is under 5%. That is woeful. Currently at 11.83% - 7%, we have 4.83% ROCE. Still woeful.

Take AAPL which has x3 (+/-) the market cap of TSLA. It has a ROCE of 50% net 43% after inflation on current numbers.

Although TSLA 'thinks' it is a tech company, at the end of the day it is just another car company.

Productivity has been falling across the board:





Productivity, broadly speaking, is doing nothing to ameliorate inflation.

There are some very good companies out there, but, their share prices unsurprisingly were bid to bubble levels and are now coming down with the general market. Definitely worth buying at some point. Just not atm.

jog on
duc

 

[divs4ever]

No one is perfect, just like no institution is. However, the RBA has helped keep Australia out of recession for the longest period in recorded history, when other countries went into recession. We've had some luck on the way, but luck doesn't come without hard work. And nothing good lasts forever.

but the list is getting longer , the RBA , BoM ( Bureau of Meteorology ) Treasury , and several more and sadly most are tax-payer funded

 

[JohnDe]

So TSLA is the best of a bad bunch. TSLA's ROCE is over the last 3 years 7.88%. With inflation at 3.3% over the same time period, your ROCE is under 5%. That is woeful. Currently at 11.83% - 7%, we have 4.83% ROCE. Still woeful.

Take AAPL which has x3 (+/-) the market cap of TSLA. It has a ROCE of 50% net 43% after inflation on current numbers.

Although TSLA 'thinks' it is a tech company, at the end of the day it is just another car company.

Productivity has been falling across the board:

View attachment 136305

View attachment 136306

Productivity, broadly speaking, is doing nothing to ameliorate inflation.

There are some very good companies out there, but, their share prices unsurprisingly were bid to bubble levels and are now coming down with the general market. Definitely worth buying at some point. Just not atm.

jog on
duc

You're drifting way off target. This discussion started with me basically saying - 'Tesla productivity is better than its competition, I believe that will help it survive any massive inflation hit of the international economy, while the competition will struggle'.

This article was published in late October 2021, before Tesla's glowing sales numbers where release at the end of 2021 -

The secret behind Tesla’s 30% gross margin

The company's Q3 sales rose 58% year-on-year despite a 6% decrease in average selling price, allowing for high margins for the electric vehicle manufacturer

Manufacturers of vehicles using internal combustion engines say large investments funded by revenue from selling gas and diesel vehicles can make up for the deficit incurred by the production of electric vehicles (EVs).

This is why governments worldwide offer huge subsidies to buyers of such eco-friendly vehicles, which are not profitable for manufacturers, to expand the supply of EVs.

US-based Tesla, the world's largest EV maker, however, has broken this paradigm in the sector. Its recent report on its third quarter performance refutes the idea that the company cannot earn huge profits by selling EVs.

Gross sales margin that outstrips that of luxury automakers

Tesla's car sales in the third quarter rose to an estimated US$12.1 billion, up 58% or US$4.4 billion won from the same quarter last year, as the number of units sold from July to September this year was around 240,000, up 100,000 over the same period.

A noteworthy detail is that automotive gross profit — overall sales minus manufacturing costs — surged 74% over the same period. The automotive gross margin of such vehicles — the ratio of gross profit divided by sales — also rose from 27.7% to a record-high 30.5%, meaning Tesla earned a profit of around US$25,000 for every roughly US$90,000 vehicle it sold.

Im Eun-young, a senior analyst at Samsung Securities, told the Hankyoreh over the phone, "The gross sales margin of 30% is higher than those of German luxury carmakers BMW and Mercedes-Benz, and this standard is exclusive to the best luxury automakers like Porsche and Ferrari."

Germany-based Daimler AG, which owns Mercedes-Benz, had a gross sales margin of 23% in this year's second quarter, while Toyota — nicknamed the "master of cost reduction" — had 21% and Hyundai Motor only 19%.

The average selling price (ASP) of Tesla EVs is also falling. The figure fell 6% in a year from around US$54,000 in the third quarter last year to around US$50,000 in the same quarter this year. This is because the Tesla Model S and Model X — each priced around or over US$90,000 — saw their share shrink to about 4% of overall sales, but the lower-priced Model 3 and Model Y saw jumps in sales.

Despite this, the company's profit margin improved because manufacturing costs decreased significantly more than sticker prices. Over the cited period, the cost per unit decreased 12% from around US$40,000 to roughly US$35,200.

The Tesla report said, "Our operating margin reached an all-time high as we continue to reduce cost at a higher rate than declines in ASP." Thus, cost cutting seems to be the secret to achieving high profitability.

The "economy of scale" effect and a low-cost plant in China

How did Tesla earn such a high margin by selling electric vehicles, which are traditionally money losers?

The first factor is its economy of scale. In industries with a large proportion of fixed costs such as facility investment and development expenses such as cars, profits surge when sales increase due to the profit-leverage effect, in which the manufacturing cost per unit falls with high sales volume.

Tesla makes four models: the Model S, Model X, Model 3 and Model Y. Lower production costs are made possible through efforts like cutting the unit price of parts and maintaining fixed costs due to rising sales. Makers of cars using internal combustion engines that entered the EV market late face different circumstances, however. Until sales of electric vehicles reach a given scale, losses are inevitable due to massive investment costs.

Koh Tae-bong, head of research at Hi Investment and Securities, said, "The profitability of EVs basically depends on the scale of output using the EV-only framework [platform] developed by the manufacturer," adding, "Tesla will produce about a million units this year, resulting in economies of scale, but Hyundai is only capable of doing the same by 2025."

Also helping Tesla's margins is the company's expansion of factories in China, where labor and logistics costs are relatively cheap. Output capacity at the automaker's Shanghai plant, which went online in late 2019, is 450,000 units, and production there growing enough to cover the recent scale of exports to Europe.

The magic of "giga casting"

Analysts point to another factor behind Tesla's high profit margin. Park Hyung-keun, a senior researcher at POSCO Research Institute, said, "Through vertical integration by directly being involved from floor design to parts supply and demand, production and service, Tesla has helped reduce costs by raising the degree of its parts integration and cutting overlapping costs."

Tesla's unique structure of vertical integration, ranging from the development of semiconductor chips, software and batteries for electric vehicles, to charging, unmanned driving and insurance services, helps lower costs. Its “do-it-all” approach simplifies the automotive production process in a manner resembling that of electronic products. In contrast, other automakers actively utilize production outsourcing to diversify vehicle quality risks and raise output efficiency.

A leading example is Tesla's “giga” aluminum die-casting process. A Giga Press weighing more than 1 giga pound (400 tonnes, or around 900,000 pounds) stamps the entire rear chassis of a car with a large aluminum alloy. About 70 metal plates can be welded to the chassis, but giga casting can simplify the process and slash production costs by about 40%. This is why Tesla electric vehicles have recently reduced panel gaps issues — defects caused by misaligned steel plate seams.

The company plans to expand the use of giga casting, which it began applying last year, to the front of its EVs.

By Park Jong-o, staff reporter

The secret behind Tesla’s 30% gross margin

The company's Q3 sales rose 58% year-on-year despite a 6% decrease in average selling price, allowing for high margins for the electric vehicle manufacturer

english.hani.co.kr

 

[JohnDe]

Performance Summary

• Tesla's latest twelve months return on capital employed is 12.4%.

How does Tesla's Return On Capital Employed benchmark against competitors?​

We've identified the following companies as similar to Tesla, Inc. because they operate in a related industry or sector. We also considered size, growth, and various financial metrics to narrow down the list to the ones listed below.
Tesla Return On Capital Employed Benchmarks

Name	Ticker	Return On Capital Employed
Workhorse Group Inc.	NASDAQCM:WKHS	-97.2%
Rivian Automotive, Inc.	NASDAQGS:RIVN	-57.0%
Virgin Galactic Holdings, Inc.	NYSE:SPCE	-35.7%
Electrameccanica Vehicles Corp.	NASDAQCM:SOLO	-30.5%
Netflix, Inc.	NASDAQGS:NFLX	0.0%
Ford Motor Company	NYSE:F	1.8%
Consumer Discretionary	SECTORSCY.US	5.7%
General Motors Company	NYSE:GM	7.7%
Tesla, Inc.	NASDAQGS:TSLA	12.4%

The Complete Toolbox For Investors | finbox.com

finbox.com

 

[sptrawler]

IMO and it is only my opinion, as we said on here when Tesla first came to prominence, the main advantage they have is they aren't carrying the baggage that the legacy manufacturers are.
That advantage will only last so long, the legacy manufacturers are already counteracting the albatross effect of the ICE product, by deleting the cheap and cheerful models and only selling the the up spec models where the profit margin is greater.
The legacy companies are also going into partnerships to share development and research costs of the EV product, retooling and model changes to keep the product aligned to changing consumer tastes is also reduced, whereas Tesla will have that carrying cost, unless they go into partnerships but that in itself would erode its advantage.
So the legacy manufacturers may be making a smaller percentage profit, but it is still a much larger pool of money they are playing in, 1m EV's sold in a pool of 70m sales, so whether Tesla can stay ahead of the pack remains to be seen, but they certainly have changed the face of motoring and in the process got rid of our cheap and cheerful drive away cars which just adds to the inflation basket.

 

[over9k]

Lots of mean reversions going on at the moment.

 

[over9k]

No one is perfect, just like no institution is. However, the RBA has helped keep Australia out of recession for the longest period in recorded history, when other countries went into recession. We've had some luck on the way, but luck doesn't come without hard work. And nothing good lasts forever.

The RBA has created a debt and housing bubble leviathan that will take a great depression style event to undo.

 

[JohnDe]

The RBA has created a debt and housing bubble leviathan that will take a great depression style event to undo.

It takes more than just one organisation to do that.

Federal governments from the past 20 years have been spending like there is no tomorrow, and then the State governments got involved, I am still flabbergasted with East West Link: Cost of scrapping project more than $1.1 billion
And lets not forget us the citizens that like to mortgage their home for more than it's worth so they can buy a new car and boat. Or the second mortgage for the holiday home with pool and gourmet kitchen.

Everyone is at fault here, just like all great recessions and depressions.

When a flood is coming nothing can stop it, measures can be put in place to slow it and to minimise damage and protect critical infrastructure but that is all. That is what most Reserve Banks have been doing, protecting the critical parts of the economy and minimizing the harm to the people.

The Reserve Bank of Australia (RBA) is Australia's central bank and derives its functions and powers from the Reserve Bank Act 1959. Its duty is to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. It does this by conducting monetary policy to meet an agreed medium-term inflation target, working to maintain a strong financial system and efficient payments system, and issuing the nation's banknotes.

The RBA provides certain banking services as required to the Australian Government and its agencies, and to a number of overseas central banks and official institutions. Additionally, it manages Australia's gold and foreign exchange reserves.

About the RBA

Overview of Functions and Operations; History of the RBA; Governance and Accountability of the RBA; Structure of the RBA; Reserve Bank Act 1959; Freedom of Information; Archives; International Financial Sanctions and Cash Reporting

www.rba.gov.au