Yes it is and in time they'll be making money on their EV offerings.
GM Now “Variable Profit Positive” on EVs
- Thread starter E365
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Do you have the numbers? If so please post them if not then why the guessing game?
I don't know why some people are hung up on GM losing money on their EVs. GM is a huge corporation, they lose money on EV's, they make money on ICE. When you take all of their operations into account, they, GM the entity made money for the quarter, and for the year. If you want to play with the math, they lost less money per EV this year. They will eventually make money on EV's w/o the fuzzy math. The good news for GM is if EV sales tank Globally and ICE sales rise, they're going to end up better off than a company that only makes and sells EVs. If EV sales only tank in the US and ICE is up, that's good for them too.
Debt to the CCP does not matter. The CCP owns the banks. Xi can say there is no more debt, and there is no more debt. No one really knows how much money China has created, most estimates are 4X more than the fed since 2008. Trying to apply western principles to China is why we keep losing to them.
As long as GM is delivering EVs with marginal revenue exceeding marginal cost then it's all good.
Investments to date are a sunk cost but GM is now beginning to recoup that investment.
EVs are a growing faction of the market and so GM must be a player, along with every other volume producer of vehicles.
Imagine what a prolonged oil price shock would do to the market for all passenger vehicles?
It's happened a few times before and it will happen again.
Light truck sales would instantly die and EV sales would burgeon with GM set to make up some of its losses in ICE trucks with gains in EVs.
Investments to date are a sunk cost but GM is now beginning to recoup that investment.
EVs are a growing faction of the market and so GM must be a player, along with every other volume producer of vehicles.
Imagine what a prolonged oil price shock would do to the market for all passenger vehicles?
It's happened a few times before and it will happen again.
Light truck sales would instantly die and EV sales would burgeon with GM set to make up some of its losses in ICE trucks with gains in EVs.
Exactly. If you spend 8 minutes in the accounting office you figure out they can allocate centralized costs wherever they like. So long as the books balance in the end, no one cares. For all we know the EV segment could be absorbing all the R&D costs for for the entire company - or none. The books will show whatever they need them to show. So long as the top line and bottom line are accurate - no foul was committed.
I agree with all that and as an extension of that - because debt means nothing, profit means nothing.
By those same principles it becomes meaningless to value any Chinese company that wont operate under IFRS principles and be audited quarterly by an IASB entity.
https://wallstreetpit.com/122698-behind-the-numbers-is-byds-supply-chain-masking-debt/
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No, I don't have the numbers. Nor do I care. I tried to explain cost accounting in an attempt to answer your question.
Perhaps you might ask, why didn't they post some numbers? Why did they use "variable profit"? Because they lose money on every EV sale.
Look, GM is improving and that's a good thing. GM is doing better in their EV business unit than any other domestic automaker that isn’t Tesla. There are 2 big looming problems for domestic EV margins: the loss of the tax credit and the China supply chain (big in GM's case).
In all my years I have never seen a manufacturing line not include all variable costs like labor, and energy, as direct costs. To use your oil change analogy - it would include the oil, filter, lube tech's time, shop towels, percentage of electricity attributed to operating for that change, and any environmental or recycling costs. It would not include the cost of the building or advertising or management.
Its an important number, because it reflects the amount to make one more unit. So it always includes materials, labor, supplies, energy. Anything that is required to actually make the part.
From the sounds of it, if GM is to be believed, there not actually shipping additional dollars with every additional EV they make. Of course it doesn't count all the R&D and factory and equipment they have invested in thus far.
Additionally like I said before, indirect or shared costs can be plastered around to wherever the accountants think it makes the most sense. So in reality, you never really know who is paying for what - an age old problem in manufacturing.
Absolutely, but there is a caveat. Certain published numbers, like revenue, have to follow rules. Like you said, companies do not all use the same formulas, often for good reason. The SEC will hold you to follow the rules you have established, aka consistancy. I worked closely with Finance to establish the Revenue Recognition reporting for a multi billion $$ SEMI company.
Cost components can be far more complicated, when you include warranty costs, royalties, installation and process qual, etc.
It becomes impossible to compare companies to investors, at least on a detailed level.
Yes, but none of that is what were talking about. Top line Revenue has to be exact - that is all the money that is taken in.
Profits have to be exact, that is shareholder money.
Costs have to be exact. But they don't really care if I assign 100% of the costs to this department or that - so long as the costs add up at the end. So how I assign costs to EV's vs Silverado's has a bit of wiggle room.
Well, it's not nearly that simple... Are you familiar with SAB 101 and 104? Revenue Recognition, Deferred Revenue, Cost, etc?
That's what we keep hearing. "Waiting for the big boys to compete with Tesla. " I feel like I've heard that somewhere.
Dude for the last time - I am not talking about revenue.
Even if I were how much deferred revenue can an auto OEM have. There not taking progress payments on a reactor or leasing intellectual property.
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They were profitable, that's the bottom line. Eventually their EVs will be profitable too. Every EV sold that isn't a Tesla is one less EV sale for Tesla. GM has a major advantage over Tesla, from millions of people like me who won't buy an EV. They still have a chance of selling millions of us an ICE vehicle, and their ICE sales were very strong, and profitable.
And as I have commented the big boys are BYD and there not allowed to compete - here at least.
Actually they weren't. Hence the stock down 10%
They will make dozens of dollars. Dozens!
You've lost me. I've tried to respond to your posts. Please explain your point.