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PaperclipPerfector  19d ago (text post)   2557 thread views

Small-Scale Question Sunday for February 2, 2025

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

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  1. Much of their revenue and until recently all of their profit is based off of various government regulatory schemes for selling pollution credits to other automakers. Elon seems... Unlikely... To remove those particular government boondoggles.

  2. They are genuinely amazing, class leading, genre destroying pieces of machinery.

  3. People just think of it as investing in Musk. His stock is up, I'd imagine.

I hate to do this but can you provide a source for claim #1? “Much” of their revenue seems like a stretch. I’ll define much as >20% but I’ll accept 10%.

https://www.axios.com/2025/01/09/tesla-clean-credits-trump

It's less of their revenue than I thought, only around 5% anymore, but still makes up 43% of their profits for 2024, which is much higher than I'd think. We're talking about $2bn in 2024 and ~$10bn to date. It's not a small amount of money.

ETA: Probably the sentence would be more accurate as "derives much revenue" than "derives much of their revenue"

I think this was very much true in the past. Net income rather than revenue circa 2021:

Net profit reached a quarterly record of $438 million on a GAAP basis, and the company recorded $518 million in revenue from sales of regulatory credits during the period.

So in the early part of the 2020's, more than all the net profit was driven by credits.

But with a current TTM PE Ratio over 100, I assume >90% of the "value" of the company is in future expectations.

Edit: The "until recently" is sort of load bearing though. The 2024 annual report gives $2.8B in regulatory credits, $97.7B total revenue, $7.2B net income on a GAAP basis. So single digit portion of revenue but >1/3 of the net profit last year.

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