COVID-19 has certainly been an unfortunate event for many companies and families, but for Tesla, it was a miracle. In this video, I explain how COVID-19 has benefited Tesla in many ways.
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Without a doubt, covet 19 has forced upon the world an unprecedented period of time, while most automakers are struggling to recover. Tesla has continued to grow, despite the shutdowns. Many will compare tesla's deliveries year over year to show that not much growth has taken place. However, the truth is that tesla is taking more and more market share, as the pandemic continues and could come out of coven 19 with close to, if not the majority of the automobile market share in this video, i'm going to explain how covet 19 has been a Miracle for tesla, if you're new to the channel, please consider subscribing for more content like this and let's get right into it.
In the second quarter of 2020, the legacy automakers witnessed a huge decline in revenue. Gm fiat chrysler and ford all saw their sales drop 50 to 60 percent year over year, whereas tesla's revenue only declined four percent when it comes to car sales, gm, fiat, chrysler, volkswagen, ford and toyota all had their sales drop 30 to 40 percent year over year, Whereas tesla sales only dropped four percent year over year, while the legacy automakers have taken a huge hit from a sales standpoint, these sales are inflated due to the fact that most automakers sold their cars at a loss throughout the second quarter. The legacy automakers burned through billions of dollars of cash, ford, general motors and fiat chrysler all burned through five to eight billion dollars of cash. Each.
In the second quarter of 2020., volkswagen didn't release the amount of cash used, but one executive stated that the automaker was burning through 2.2 billion dollars per week. On the other hand, tesla had a 104 million dollar profit in q2 of 2020, representing a huge shift in the automotive industry. These numbers are all reflected in the stock price, as the legacy automakers have seen. Their stock drop in a one year span, whereas tesla stock has gone up over 500 in one year.
So what are the key factors that cause this massive move and given those factors, how much longer will this continue without a doubt? The first thought that many of you must have had was the dealership model. While tesla has some stores located around the us, the legacy automakers have to spend billions of dollars just to pay the rent for their vast network of dealerships. To top it off. Car buyers know that the traditional car manufacturers are desperate to sell cars at this time and are more likely to negotiate a lower price.
On the flip side. Tesla is still production constrained and while there have been some price drops, the company knows that it can still sell its vehicles at a profit. Tesla recently secured a 780 million dollar loan through bonds that have a triple a rating, which is the highest rating of security. A bond can have, on the other hand, legacy automakers have had their bonds downgrade significantly leading to higher interest on loans.
For example, ford was recently downgraded to junk status, which literally means that ford's bonds are junk. To put this into comparison, tesla has to pay one percent in interest per year on its bonds, whereas ford has to pay eight to nine percent in interest per year. The difference is substantial and it puts a considerable amount of financial strain on the legacy automakers, which will last even after the pandemic, is over the fact that the legacy automakers have to pay such a high interest further delays the transition to evs. While it is true that many of the legacy automakers sell plenty of vehicles in china, these automakers are beginning to lose plenty of traction on the automobile market, for example, gm which is best known for selling vehicles in china. Solid sales fall 15 year over year. In 2019 - and that was before the pandemic even started. On the other hand, tesla is heavily production constrained in china and with the rapid expansion of the shanghai gigafactory, along with the vast amount of partners offering cheap battery prices, tesla will be and already is, making humongous profits at its shanghai gigafactory. On the other hand, the legacy automakers are still losing boatloads full of money at china due to the fact that the chinese are strong negotiators.
For example, in the second quarter of 2020, general motors international lost 270 million dollars, despite having 27 plants open and no pandemic to worry about. Tesla's strong financial health has allowed the company to continue upgrading its factories during shutdowns, for example, during the first shutdown that occurred. Tesla upgraded its fremont factory so that it could maximize the production capacity of the model y. This upgrade codenamed.
Ga 4.5 was an extra assembly line for the model y built under a tent shaped building. Additionally, tesla has also upgraded the fremont factory by thirty thousand square feet under the project codenamed roadrunner, in order to test out the production of its new battery. All of these upgrades cannot be done by the legacy automakers because of the fact that the automakers are financially constrained and because of that, the main focus for the traditional car manufacturers is to survive not thrive. Kovit-19 has not damaged tesla.
Instead, it has widened the gap between the legacy automakers, as many of the famous investors, including buffett and monger, say recessions are the time where disruptive companies are, and in this scenario it's no different. Let me know what you think about covert 19's effect on tesla in the comment section below. If you enjoyed this video, please hit the like button and subscribe and i'll see you in the next one.
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so let me get this straight, a big company like ford pays an interest of 8% because some thing calls its bonds junk? that way how can a company evolve if someone keeps pushing down? its like trying to still charge money to someone who is having dificultys.. i never understood this type of thing where u still charge to someone who is in need of space and quiet to grow… (no im not a tesla hater, jut use logic on this one)
VW, Toyota and a few others will survive, but it's just a matter of time till the others go belly up. And you are correct in your assessment that the pandemic has just sped this process up.
You have a good product. Must earn to roll with the punches they will never stop. It is the only way the incompetent can survive. Call it Global Flu or something. Mega sickness; etc will also work.
The thumbnail should be changed lol, imo it could be perceived as bad taste, 160k people are dead in America, let’s not call it a “miracle” at least. Just call it an “opportunity” maybe
Most people in America are hit hard by the pandemic. There’s over 40 million people out of work. Who has the money to buy any car?
Thats cuz the automakers keep using those shitty dealerships. Almost all salesmen and dealership owners are scum bags. I hope they all go bankrupt. U deserve worse.
Slight correction: most manufacturers are not paying rent for dealerships. In fact, by law most cannot in the US, and the dealerships are owned and operated similar to franchises. This is why Tesla "showrooms" don't sell cars – they would be considered a 1st party dealership if they did, which is illegal.
Tesla having so little dealerships has not only allowed them to loose less money, but also make basic vehicle repairs like an accidental dent on the rear bumper take 5 months to repair and cost $72000. Tesla needs more dealerships not only to repair vehicles quicker but also so that they can sell more cars and run their vehicle service. If you don't believe me that the repairs take 4-5 months just google: "Tesla repairs", there's a YouTube channel called TFLcar and they have an entire series dedicated to a tiny accident, they needed a new rear bumper, trunk lid and a taillight, but because Teslas have sutch a shoddy construction inside, you can't replace the trunk lid without breaking the rear glass and the entire roof, so it took 4 months and cost them $15000 in total, and they are not the only ones, there's many stories like this online. And because of this you see Teslas that are running and driving with broken front bumpers and hoods sitting on salvage vehicle yards, rediculus.
We shall also not forget, Tesla sells every car they produce. Legacy automakers sometimes even dump cars they produced 20 years ago because nobody ever bought them.
I’m a Tesla share owner and Model 3 owner but I’m worried you aren’t getting your full facts right in these videos. In relation to Tesla’s bond value and the dealership rent you mentioned. I really enjoy your videos but get your facts straight so I can continue to enjoy the content.
I don't think the word "miracle" and "Covid-19" should be used in the same sentence.
Get your head straight and where your heart should be and stop being the greedy opportunistic man like the low life in the CCP, Chinese Communist Party, the enemy of my enemy is NOT my friend. If you think this way, you are tainting Elon Musk's legacy, he deserve better than this. He does not need this evil engineered virus to become successful. Thumbs DOWN.
Legacy auto makers DO NOT pay the rent on their dealerships. The dealerships are privately owned franchises.
There's a lot of uncertainty about COVID-19. A lot of uncertainty. How long will antibodies persist? Preliminary studies suggest it might only be for a few months – if recovering patients even have detectable antibodies for it. Some don't.
Herd immunity may not happen. If it doesn't, everything will have to adapt, including Tesla. Hard times could be ahead, even for them. The socioeconomic impacts could be endless.
The only certainty at this point is that speaking of a 'wave' of infections is no longer the right metaphor. It's a raging wildfire, and the worst is ahead, not behind us. We do not know how this will play out. It might be very grim. Tesla hasn't been scorched too badly, but that's the past. The future might go a different way.
I don't think using short-term historical stats will be of much predictive value for what's looming ahead.
We should not feel safe and secure about market prospects, or Tesla's, either. We're being disrupted on two fronts: the bid to end fossil fuels is one, and COVID-19 is the other. In times of severe disruption, everyone has risk, including those who are adding to the disruption. Tesla looks safer than the legacy automakers, but in no sense is that safety absolute. Even Tesla could be crushed if the right negative factors come into play. And they just might.
We really don't understand SARS-CoV-2. It's nothing like the 1918-1919 Spanish Flu pandemic. We have no precedents.
Did you know that there are now 6 different identified strains of the virus in circulation? This, only 7 months since the virus escaped China. Did you know that incidents of people catching the disease, falling ill, recovering, and catching it again a few months later, often becoming even sicker, are becoming more frequent? Did you know that a large percentage – maybe as high as 40% – of persons who caught the virus but didn't become sick enough to be hospitalized are turning up with serious damage to their hearts, lungs, kidneys and brains, among other organs? The virus left a calling card.
Ask yourself, do you know how much damage COVID-19 will inflict? Not just deaths, but disabilities, too?
It's an easy question to answer: nobody knows. And so economic predictions might not work the way they did in the past. There may be a new logic required of us. How would we operate a society where long-term social distancing becomes mandatory for survival?
Pre-COVID designs and procedures for factories, office buildings, schools, government, harvesting, transportation, retail, almost everything would be actively dangerous to humans. Yeah, wear a mask, but if the virus becomes so prevalent that every time you venture into contact with others, there's a 5% chance your filter won't stop the virus, that is a hellish thing to have to face every day. We can't ask that of people.
I can't fault your logic. It's all very rational. But under the logic are assumptions that may not hold true. Key personnel illnesses, state health orders, faltering demand, anything could happen. This is not a time to be satisfied that you know what will happen.
Tesla's Best Marketer and PR guy is Elon Musk. That guy has a lot of people steadily waiting for the next thing he says, and he is a really marvelous CEO. I'm glad Elon is richer than Warren.
He deserves it!!
“I never give up, I’d have to be dead” – how can someone not like this man?
Cheers! I am up $683,676 today. Eye on the prize, stay the course!
Does anyone remember when Elon Musk said "me and my boys are going back to work and any of you bleeding cunts that have a problem with it can come and arrest me" ? Am I the only person that remembers that?
If there was a virus and the hot spot was New York City why would anyone send away a state of the art hospital military ship? Anybody? Really?
You said the big auto companies were paying rent on their dealerships during the pandemic. As far as I understand, those dealerships are independent companies and their rent is not paid by the big auto companies. Can you substantiate what you said?
We have only begun to see the death spiral of the legacy ICE vehicle companies. It will get worse and worse for them. Failure to adapt is extinction.
Sounds like the ICE makers really need a vaccine.
Just can't picture how big that needle has to be!?!
The guy walking his dinosaur, he needs a leash. Besides, who's going to clean up after it? Lol… Another great video! I'm working on paying off my house, then I'm ordering a Model Y…
Once Bezos will buy Tesla the game will be properly over. We gonna end up with a duopoly, a Jeff Bezos or a Jack Ma car pick one…
Nice number crunching here. I agree that Tesla is outperforming the legacy auto makers during this crisis but I will add one caveat. There's a risk factor with gigafactory 3 Shanghai. I believe that an internal conflict is brewing in the CCP which could end up in major instability in China and worse case civil war. Not good for business. There's also the possibility of external conflict with the likes of India that could easily esulate given the belligerent nature of current Chinese leadership. Musk is a brilliant engineer and businessman but sometimes the best laid plans can come unstuck. Btw if the cyber truck is as good as we expect it will be a dagger in the heart of Ford's financials. I propose a new definition of madness buying shares in ICE automakers.
I do not feel sorry for them. Every since the 1950's they teased us with prototype and concept cars and in the end they gave us the Pinto
I usually hit like, this time, I found a very indelicate way of using the words Covid 19, instead you should have used pandemic, crisis etc. There were no need to associate this problem to a commercial success. We are not deaf and blind, we made the idea association by ourselves.
Great video, agree most of it. But you got the bonds wrong. Tesla went from BB to A- which is amazing, but they don’t have AAA as you said
I usually don’t ask for this, but please consider hitting the like button on this video because YouTube is attempting to censor it (it has COVID-19 in the title and is mentioned in the video)
I bought my model 3 in June of 2020, can’t say I even considered an ice car. I am probably one of many. Maybe a sketchy time to buy but I’m fortunate to be in an ok financial place. Just gotta chip at that loan haha
An electric car is just made out of 6000 parts on average, in comparison to 30000 parts for an ice car. Thus ice cars suffer significant supply chain disruption
I don't believe in covid beeing more dangerous than the flu, I don't know a single person who has covid