MaxedOutMama joins me to take a closer look at Tesla’s second quarter effects in China.
Unfortunately, there is very little in Tesla’s reports to advise us, as the most recent quarterly report continues with detailed industry reports.
The omission is disappointing. We know why Tesla’s failure to provide industry data is at odds with the criteria enacted through the Financial Accounting Standards Board.
MOM has reviewed the evidence we have, and it seems that the effects of Tesla Shanghai’s second quarter were far from stellar. In fact, it turns out there’s a big money hole.
Finally, we will hear from the largest authority in the Chinese automotive market over Tesla in China. And neither is his criticism, his criticisms consistent with mom and I.
According to the highest reports, China positives it for Tesla (TSLA) at the time of the quarter. Quarterly revenues and deliveries fell sharply in the United States and the rest of the world, yet China accounted for part of declining revenues and more than all declining deliveries.
In the economic press and among analysts, the triumph is that Tesla is fine in China. Let me give an example among many: a recent discussion about Autoline This Week with Michael Dunne of ZoZo Go, which Autoline host John McElroy presented as the leading authority of the Chinese automotive industry.
Dunne noted that sales in China of GM, Ford and FCA had declined in recent years, prompting this comment (around 6:00 a.m.) by Jamie Butters, content director at Automotive News:
The Detroit Three have had problems, but Tesla is doing great. They had the right to own their factory. They gained a lot of support. And Elon Musk has been excited about China’s business culture, and feels that Silicon Valley is already big, stupid and satisfied and that China is already where it is.
I need to get back to this (precious) Autoline discussion later on, but for now, quote it only to point out that even an expert like Jamie Butters easily assumes that Tesla is “doing well” in China.
China is in my opinion. The power in China is excellent. People there: there are a lot of smart, hard-working people. And they – they have no right, they are not complacent, while I see more and more complacency and laws in the United States, especially in places like the Bay Area, Los Angeles and New York.
[V] we can go through the entire list of COGS (collecting steps sold) between the labor charge, the charge of apparatus by location, the opening of suppliers that would have made economic sense in the component of the States.
The location of the source chain also affects inbound logistics and outbound logistics costs, so we do not ship cars from California to China. And then you have corresponding savings on our reduced import costs. And then there’s a slide in the shareholders’ letter that shows the design comparison between our Fremont plant here in California and also the Model 3 plant in China, and the simplification in terms of is pretty evident from this arrangement and that extends to all types of savings for facility operations.
[L] has something to help, it’s as if there are a ton of portions made in other parts of the world that were shipped to Shanghai from all over the world.
And just getting those parts locally makes a big difference in the vehicle’s load. And, I mean, the proportion of local source is literally higher from about 5% to 10% consistent with the month, from 40 – like 40% earlier this year, something like that, it will be 80% until then. end of this year, consistent with perhaps more.
Combine charge savings on production capital according to the unit with The Litany discounts of featured charges through Kirkhorn and the “massive” savings on the parts produced, and it is transparent that Tesla Shanghai materially has other economic features than Tesla Fremont.
(Elon Musk with Chinese Prime Minister Li Keqiang, whom he said, “I love China and come here more often.” Photo Credit: Mark Schiefelbein / AFP / Getty Images)
The Financial Accounting Standards Council (FASB) is an independent organization that establishes accounting and monetary reporting criteria for (among other types of business) state-owned enterprises that must adhere to accepted accounting principles. Their criteria are identified as final through the Securities and Exchange Commission, and CPA in the United States respects their authority.
The FASB enacts detailed rules in its so-called accounting criteria (ORS) encodings. Among these CSAs, ASC 280 is committed to reporting. The stated objective of CSA 280 is:
Providing data on the other types of business activities involving a public entity and the other economic environments in which it operates to users of the monetary statements highlight all of the following actions:
A. Improving the functionality of the public entity
Yes. Better assess your long-term net money outlook
C. Make more judgments about the public entity as a whole.
(emphasis added)
You know what, Jamie? China needs to become the world leader in long-term electric vehicles. The basis of production, studies and the basis of progression; they already have the largest battery manufacturer. Tesla is betting on this master plan. Bring Tesla, bring Tesla’s origin base. And yes, we’re going to let them hold 100%.
But theyArray.. they areArray.. The Chinese also have an expression. Think of the Chinese economy as a birdcage. The Communist Party is guilty of keeping the birds in the cage. You can fly all you want; you’re loose to fly in this cage and do what you love.
But at the end of the day, it all comes down to the Communist Party. And that’s where Tesla is. It had a wonderful start; 50,000 sales in the first part of the year, en route to 100,000 for the full year. But keep in mind that, at the end of the day, Tesla is indebted to the smart graces of the Chinese government, the Chinese Communist Party. That’s what’s going on.
Where have you heard all this before? Me and Mom, it’s there. I must say it’s gratifying to see that world leaders in the Chinese automotive market agree.
Now, if American auto writers and Tesla analysts would stand up and pay attention.
I’m tired of writing it and you get tired of reading it, but short-circuiting Tesla, or any other apparent short film, in the existing market, is incredibly risky, and I still discourage it enormously.
In my life, I had never noticed that stock markets were more indifferent to genuine economic conditions. I’ve never noticed such reckless fiscal and financial policy. I have never realized that trading is driven by the forced acquisition of an indexed or more messy budget through individual investors who were not informed and indifferent to the basics of finance. I’ve never felt social clothes so dangerously close to fraying.
When to short-circuit Tesla? Maybe when, as Marc Cohodes says, “the jaguar fell off the tree”? It’s worth paying attention to is the TC Chartcast with Cohodes that deals with the dangers and strain of short sales.