But why the picture of the founder who is suing Tesla at the moment? Otherwise amazingly great news. That is what US is all about: forget stodgy old companies which haven’t worked right for the past quarter of the century and embrace new ones that do work!

Borat, I’m a little more skeptical. The minute he can prove it is profitable watch for rumors to surface that it’s for sale. I’m just throwing it out there but it fits the kid’s MO.

And don’t forget Daimler already has one fang in his jugular.

Well now they can meet their part of the bargain and come out with that 300 Mile Range Electric that is great news. This should spurn on others to say hey. We no longer have to follow the old paradigm of IC engines. When you can get electric to go that far. Their has got to be better science to get even higher and more cost effective than lithium ion battery technology. This will create a whirl wind of great competition. Happy Tesla Got their Money, and Happy for Ford Motor that they got their 5.9 Billion to develop the next generation electric. I want to see electrics far outstrip the IC engine not only in performace but sheer range. Shoot for say 1000 Miles on a single Charge!

IC>>batteries

Something is wrong here – companies don’t just straight out say how much it cost to produce a car. It seems a little sketchy to me.

How is Tesla able to get an EV with a 300 mile range while the Cheny Volt only gets 40 miles?

The idea that Tesla is “profitable” is very deceptive. Given Elon Musk’s tenuous relationship with the truth in the past this shouldn’t come as a surprise. Basically, all they are claiming is that they’ve managed to get the costs of producing a roadster down below what they sell them for. And a lot of these “profits” are the funds that they got several years ago as payment from customers who are finally taking delivery of their cars. Now they can recognize that money as revenue but the “profits” were spent a long time ago. It doesn’t mean that they have recouped any of their fixed costs, R & D costs, etc… Plus, as a private company, they don’t have to open their books, so there is no way to back up Musk’s claims. I don’t think any of the investors in Tesla are expecting to see a profit any time soon. I like the company and think the sedan could be a great car but let’s not get too far ahead of ourselves. They don’t have any $$$ to build the production facility and are banking on government funds to get them off the ground. I think Tesla’s future is in licensing out their battery technology to other companies, like they have with MB, and continuing to produce a small amount of niche vehicles.

If they are profitable, why are they getting bailed out via fed loans?

“Energy Secretary Steven Chu was scheduled to announce the loan funding for Ford, Nissan Motor Co. and Tesla Motors Inc. in Dearborn, Mich., congressional officials said. They requested anonymity because an official announcement was pending.”

Tesla is a scam. period….They excel at making statements, but will never get off the ground making Automobiles

gallonofuel, that money was set aside long before the current recession, it is not a bailout. all it is, is an investment in america, remember a while ago too, that they wouldnt give GM and Chrysler any money because they received the bailout money? and in case any of you guys are wondering, im canadian, so ranting about american jobs really has no effect on me. i just want you guys to get out of this recession so i can hear news that isnt about declining sales

Johnny, ’cause Tesla secured support of Benz they may not need to sell. I don’t think they will sell: financial backings come from Google boyz.

Jake, if companies knew what it cost to produce a vehicle, they would not be in Chapter 11. There are no accounting or economic laws specifically for car industry: it is either your product cost less to produce then you can sell it or out of business. nobody take a blood bath selling pants or shoes, why cars?

Borat:
Did you just compare $100 shoes to a$100,000 car?

winnipegjets, thank you for the clarification.

wakeNbake – Let’s see…. The Volt is a full on family car having to be built so it can be serviced and maintained at any ole’ Chevy dealer while the Tesla needs to fly in engineers to fix a recall on your car and costs $110,000 versus the Volt’s $40,000 – and also has a gasoline power generator on board so you can go as far as you want and not wait for it to be charged – just fllerup like a normal car.

Caddy, how one knows how much car should cost? Why should it be 100K? Maybe the price should be 145K? You got to know your cost – that is the first law of business (I am not talking US Government sponsored companies, of course for them is does not matter – we will help).

@Borat

A car should cost the buyer whatever the buyer is willing to pay. Obviously the Tesla Roadster is work over $100,000 because people are paying that for them.

The cost accounting for any manufacturing concern is more black art than white science. There are rules and guidelines about things such as fixed costs and variable costs (which are inherently backwards from how they sound at first thought). Essentially, the costs of manufacturing a product is accounted for as such:

Variable Costs (Annualized):
Total R&D / Length of Product Lifecycle
Plant Depreciation / Length of Product Lifecycle
Machinery Depreciation / Length of Product Lifecycle
Plant Overhead
Salaried Employees wages and benefits
Non-Salaried Employees fixed benefits
Marketing

Fixed Costs:
Materials
Hourly Labor
Shipping

OK, so why are things like salaries variable costs and things like materials fixed costs? Because in cost accounting you are calculating the Cost of Goods Sold per unit.

Let’s say that it takes 300 man hours to build a car at $20 per hour. Labor expense is $6,000. The car contains 3000 # of steel at $1 per pound, which is another $3,000. It costs $500 to ship the car. Total fixed costs for the car is $9500.

Now, the factory that produces the car employs 100 salaried workers whose wages and benefits average $100,000, thus having a $10,000,000 fixed salary expense. The hourly employees each receive $20,000 in benefits regardless of hours worked and it takes 200 workers to build the car bringing in another $2,000,000 in annual expenses. Plant overhead is $2,000,000 per year. Depreciation of the plant and machinery during a 4 year product lifecycle is another $10,000,000 per year.The product has a marketing budget of $20,000,000 per year. Finally, it costs $100,000,000 to design the car and prep the factory for production, yielding $25,000,000 per year during the product lifecycle. Our total variable expenses are $69,000,000 per year.

Let’s assume that the plant builds and sells 10,000 units per year. Our cost structure looks like this:

Fixed Costs: 10,000 * 9500 = $95,000,000
Variable Costs: $69,000,000
Total Costs: $164,000,000
Costs per unit: $16,400

As you can see, if they manage to sell more cars, they make a bigger profit because of the lower variable costs per unit. This is the exact reason why you’ll see a car company talk about projected sales. It’s how they actually budget for variable expenses and know when they need to lay off or hire more salaried employees. Keeping headcount on hourly employees is much less important as the variable costs are much lower.

You can be 100% assured that every auto manufacturer has these numbers figured to the penny. All public businesses keep three sets of books: The tax books, the SEC books, and the management books. The tax books and SEC books do not need to have breakdowns on exact costs per unit, nor even total units sold. Instead you’ll find a line item called Cost of Goods Sold, which is a total of the CoGS for ALL of the products sold by the manufacturer. The management books are the goldmine, and these are what get audited whenever a company is bought or sold, or if the company is seeking credit. The real numbers are in the management books, and accountants make a LOT of money to ensure that the management books are correct.

Payton, great math skills. Take accounting 101 in either graduate or undergraduate program. They’ll tell you have to know the cost of your product. The rest is history.

@Borat

I have a minor in Accounting in addition to majors in Organizational Management and Computer Science. I know what I’m talking about. You’re to one who needs to take some classes.

Anyone else wanna punch that guy in the picture?