Bigger and better

[Phil xxkr]

 

I know that things in the USA are bigger and better than anywhere else but this is ridiculous 😎

Luxury electric vehicle manufacturer Lucid Motors has posted massive losses while reportedly losing over $225,000 per sold car.

According to the company's latest quarterly earnings release, the market has not responded well to its products. Lucid listed a $630.9 million net less for the quarter, stemming from remarkable overhead costs.

The $137.8 million in revenue was dwarfed by a $469.7 million lost from "Cost of Revenue." Additionally, "R&D Operating Expenditures" cost another $230.8 million, while "SG&A Operating Expenditures" provided another $189.7 million in losses.

In total, the company's "Free Cash Flow" was a whopping negative $706.1 million. These numbers are actually an upgrade from 2022, when the company lost $530 million and was in the hole for $860 million.

[Shahpor]

This might explain why it can afford to do so:

Plenty more oil money for them to spend 🙂

[Boomer54]

19 minutes ago, Phil xxkr said:

 

I know that things in the USA are bigger and better than anywhere else but this is ridiculous 😎

Luxury electric vehicle manufacturer Lucid Motors has posted massive losses while reportedly losing over $225,000 per sold car.

According to the company's latest quarterly earnings release, the market has not responded well to its products. Lucid listed a $630.9 million net less for the quarter, stemming from remarkable overhead costs.

The $137.8 million in revenue was dwarfed by a $469.7 million lost from "Cost of Revenue." Additionally, "R&D Operating Expenditures" cost another $230.8 million, while "SG&A Operating Expenditures" provided another $189.7 million in losses.

In total, the company's "Free Cash Flow" was a whopping negative $706.1 million. These numbers are actually an upgrade from 2022, when the company lost $530 million and was in the hole for $860 million.

Remember the days amazon used to post similarly lousy numbers, but at least in their case you could see the growth progression from their investment. Lots of times that just does not happen and it's a sink hole for capital that is never coming back .

[Phil xxkr]

1 hour ago, Shahpor said:

This might explain why it can afford to do so:

Plenty more oil money for them to spend 🙂

Exactly! 

[Linas.P]

1 hour ago, Phil xxkr said:

 

I know that things in the USA are bigger and better than anywhere else but this is ridiculous 😎

Luxury electric vehicle manufacturer Lucid Motors has posted massive losses while reportedly losing over $225,000 per sold car.

According to the company's latest quarterly earnings release, the market has not responded well to its products. Lucid listed a $630.9 million net less for the quarter, stemming from remarkable overhead costs.

The $137.8 million in revenue was dwarfed by a $469.7 million lost from "Cost of Revenue." Additionally, "R&D Operating Expenditures" cost another $230.8 million, while "SG&A Operating Expenditures" provided another $189.7 million in losses.

In total, the company's "Free Cash Flow" was a whopping negative $706.1 million. These numbers are actually an upgrade from 2022, when the company lost $530 million and was in the hole for $860 million.

Don't forget that loss could be offset by tax write-offs, this is how all UK Insurance companies claims not to make any profit ever.

As well this "$225,000 loss per car" is horrible misinterpretation of what is going on. They simply divided total money lost, by the number of cars sold and that is the figure. It does not mean they selling cars at loss, but for company that is growing it's market share and developing new products this is normal. If it costed them $2 billion to build a factory and they only sold 15,000 cars for $50,000 each, then you inevitably making $1.25 billion loss. Even if to build each car only costs $15000 and they making gross profit of $35000 per car. Making net loss in the end is normal for new company which is building capacity and market share, and it is beneficial for investment fund as they write-off loses against taxes. It is basically free money they write-off and tax payers are basically picking-up the bill. Because when we lose money we lose money, but when fund loses money they just offset their taxes from gains elsewhere.

[ColinBarber]

51 minutes ago, Linas.P said:

As well this "$225,000 loss per car" is horrible misinterpretation of what is going on.

This. You cannot place all start up and R&D costs against initial cars sold. There would have been an investment and breakeven strategy which is probably still a number of years from being completed.

[Malc1]

And the costs both upfront and ongoing are a bit irrelevant with a Saudi Arabia State Fund that really is simply a forever “ Bottomless Pit “ 

Could be similar to the Norway similar State Fund should that nation wish to venture that way too 

Malc 

[Boomer54]

Given Saudi wealth is primarily based in fossil fuel historically you can understand that investing in whatever threatens to make their wealth obsolete is as much strategic as it is anythingelse.

[Malc1]

Obsolescence of oil fuel might not happen any time soon !

Methinks the odd $ billion or two won’t be missed by them 

Malc 

[Boomer54]

14 minutes ago, Malc1 said:

Obsolescence of oil fuel might not happen any time soon !

Methinks the odd $ billion or two won’t be missed by them 

Malc 

I agree, but nonetheless it is a good long term strategy to invest in what threatens your economic existence.

I mean do BP and Shell really give a rats a... about climate change, or are they investing to manage the threat to their core historic business? If your answer is more than two letters please sign up for my well priced course in cynicism.

[Malc1]

Just thinking where the arab nations might have been some 80 years past when bedouin tents and way of life might have been prior to the likes of BP, Shell Exxon and all those other Oil businesses that have enabled US ALL to enjoy the lives we have these past decades 😇  ..  and will continue to  WHATEVER the modern day thinking around cracking down on fossil fuels

Malc

[GMB]

I could never figure out how some new companies could go for years making losses and keep going. But that's why you hire accountants. I tried the same thing until her majesty's customs and excise turned up on the doorstep... Ouch!

[Linas.P]

28 minutes ago, GMB said:

But that's why you hire accountants. I tried the same thing until her majesty's customs and excise turned up on the doorstep... Ouch!

Yeah, exactly! As I said - big funds have to write off some cash, because for them it is like use it or lose it situation. They don't look into profits and money like me or you, for them it is more like supermarket gift coupon that expires on 1st of January. They have £538 billion in the fund, so they need to lose some value over the year, because if they keep increasing it by 8% or whatever market, then that will be worth £43billion, capital gains from that will be 20%, so they literally have £8 billion to waste! On top of that most likely the investment in company like Lucid may be considered desirable and there may be government grands for it, so not only that they don't pay tax investing in such company, but they as well get grants for it!

Now I am not saying nobody should invest in companies like Lucid, I am just saying what looks $billions lost and "making loss per car" first of all is just normal for any capital investment, secondly they not even losing anything. At least in 19th Century when magnates were building railway they used their own fortune up front, not same magnate equivalents using tax savings on building that capital (although I am not sure there were no such scheme in 19th century either). 

[GMB]

Here's good example of working the system - from the retail gazette:

In his letter to Asda, Mr Jones said: “The committee has concerns that the complex company structure within which Asda sits, and associated decisions on financing, may restrict your ability to help meet cost-of-living pressures on your customers.”

In response, the Asda co-owner said it was not uncommon for a business of its size to have such a complex structure.

Issa said the business was set up this way to enable smooth lending practices and fuel future takeover activity.

MPs also asked for more detail about interest-free loans allegedly provided to fund the purchase of private jets.

Issa said EG Group, the petrol forecourt empire owned by the two brothers, had publicly disclosed the loans in its accounts: “The board of directors of the EG Group are aware of, and approved, this arrangement.”

[Linas.P]

4 minutes ago, GMB said:

Here's good example of working the system - from the retail gazette:

In his letter to Asda, Mr Jones said: “The committee has concerns that the complex company structure within which Asda sits, and associated decisions on financing, may restrict your ability to help meet cost-of-living pressures on your customers.”

In response, the Asda co-owner said it was not uncommon for a business of its size to have such a complex structure.

Issa said the business was set up this way to enable smooth lending practices and fuel future takeover activity.

MPs also asked for more detail about interest-free loans allegedly provided to fund the purchase of private jets.

Issa said EG Group, the petrol forecourt empire owned by the two brothers, had publicly disclosed the loans in its accounts: “The board of directors of the EG Group are aware of, and approved, this arrangement.”

what is more horrifying - ASDA is not even worst offender, apple and amazon are way worse. Other absolutelly horrible person is Mike Ashley (Sports Direct)... and I mean it isn't even worth start building the list. Any company worth more than £100 million and any person worth probably more than £10 million does that, some to smaller extent some to larger. 

[Malc1]

We will never understand the vagaries of global accountants understandings of international tax regimes and tax saving capacities ……. BUT we all know that these are minnows,Asda Issa bros and more ….. in the greater oil and national wealth funds that really control the wealth of nations ……. Lest we forget the delightful Mugabe who personally raped the wealth of the nation of Zimbabwe which has not yet recovered …… at that time he was really the wealthiest individual ever …… now surpassed I’m sure by the Ruskie Oligarchs who have raped the wealth of the Soviets and the generally impoverished citizens of Russia …… 

Oil companies have been the “ friendly faces “ helping our societies survive and grow in our personal wealth and modern living standards ……. and paying huge taxes too I’m sure 🤔

Malc 

[Boomer54]

Business Life Cycle - Understanding the 5 Different Stages (corporatefinanceinstitute.com)

In a nutshell for anyone interested to read.

Less of the "We "will never understand the vagaries of global accountants understandings of international tax regimes and tax saving capacities".

It can indeed be extremely complex and if I showed you the books containing matters apertaining to International Tax Law you would run screaming. However, at the heart of it it is essentially optimisation of tax using the myriad tax law that allow a corporate entity to decide where they pay tax and of course where it is most effective to deploy investment capital. Not easy , because you need to know your Law inside out and there is a mountain of it to know. Pays very well for a reason.

 

[Boomer54]

My first career was in Accountancy albeit I was Cost and Management, but I picked up a huge amount from my brother who was Chartered for a Mulitnational Pharma. His son, my Nephew, now does this stuff in London for some Hedgie. ***** Whittington wasn't wrong about the streets 'paved with gold', but it helps if you are in the right line of work.

Just and experiment if I had typed Dirk would it ? Nope.

[Malc1]

My first career as an eventual City banker, very sober, enlightening and very very personally satisfying 👍👌 ……. My 2nd as a 2nd hand car dealer ….. also very very satisfying 🤩 and my first Ls400 👍👌👍

In both aspects I had to understand some accountancy vagaries to get on in life …… it’s no different today in my 3rd career  ….. global tax efficiency is a mantra I’m getting to grips with 😂 ( hopefully ) 

Im sure no accountants are competent enuf to cope with it all …… I’ve never read of any that don’t come horribly unstuck 🥵

Malc 

[Boomer54]

11 minutes ago, Malc1 said:

My first career as an eventual City banker, very sober, enlightening and very very personally satisfying 👍👌 ……. My 2nd as a 2nd hand car dealer ….. also very very satisfying 🤩 and my first Ls400 👍👌👍

In both aspects I had to understand some accountancy vagaries to get on in life …… it’s no different today in my 3rd career  ….. global tax efficiency is a mantra I’m getting to grips with 😂 ( hopefully ) 

Im sure no accountants are competent enuf to cope with it all …… I’ve never read of any that don’t come horribly unstuck 🥵

Malc 

Actually Malc it's not usually any one acct. At the multinational level it's done by teams as there is a mountain of research done before decsions get taken and it would be simply too much for any individual to do.

Personally,  Accountancy bored me to tears. Psychology on the otherhand is endless fascinating. Observing and trying to understand the vast complexity of human behaviour is far more rewarding and challenging intellectually.