Comment by estearum
2 days ago
Operating margin fell from 16% to ~2% over the last 10 years and will probably be negative in 2026 and 2027. They have a big cash pile to burn through but they’re spending it on ummm “a flying car,” humanoid robots, and an AI fab. They’re fucked.
Similar, to the time Tesla was fucked, because they wanted to sell EVs when there was neither demand nor charging infra. Or when SpaceX wanted to build a rocket that could land on legs, whereas every wannabe rocket scientists knew that to be impossible.
Or similar to the time Cybertruck was a giant success, FSD was ready in 2022, and Falcon 1 would launch 600kg for $7 million.
Don't forget the roadster from 2017 which has taken nine years and counting to evolve into something not remotely like what was promised
I'd be very surprised if the roadster project was particularly expensive. That operating margin tells you they are spending all the cash they are earning on cars on the other stuff, not that the cars suddenly became more expensive to make.
I'm interested to meet someone online who's short both on-shore US silicon fabs and the market for humanoid robots. Can you say more about your thinking?
I'm short on an allegedly successful automotive company that has a rapidly deteriorating automotive business (due entirely to management's own decision-making) pivoting into the most hyped business ideas in the world. I'm bearish on the type of creative accounting and self-dealing we see between the Musk companies.
Musk is similar to Zuck in that they get some credit for sheer courage to turn the wheel on their massive businesses, but they also have to be right. Aside from his anticompetitive behavior, Zuck continues to miss. Musk's pattern has been that the more Musk is personally involved, the worse the outcomes. Cybertruck was his baby. Optimus is his baby.
If Tesla is doing so well as an automotive business, then why doesn't he just continue making it a great automotive business?
I mean the short answer is that it doesn’t temperamentally suit him to do so.
Maybe a mid length answer is if you agree with his assessment on say humanoid robots in terms of market and you believe they might have a geometric growth factor in production (eg robots can make more robots) then you’d want that business build out done by a team that can scale rapidly.
For fabs spacex and Tesla are significant consumers of the output- vertical integration is preferred by lots of companies.
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