Tesla Moving The Battery Production Equipment To US - It Is Worth Millions In Profit
The Inflation Reduction Act is now paying battery producers for US domestic production. Tesla aims to take advantage of this by moving its equipment from Germany to the US. This is a big move that is going to amount to a lot of profit for the company.
In this video I discuss how the average for each vehicle is around $2,0000. As the manufacturer of the batteries, this is going to add up to a lot of money the USG is going to hand Tesla.
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Having components built domestically should also improve upon just-in-time production as they won't need long lead times to ship product from overseas. They may realize more profits from not having to tie up capital in transit.
Perhaps the products might cost more to produce domestically, at first. But, in time they could drive down cost. And, they would make up for lower margin by being able to produce faster.
The advantage to technology is that costs tend to get driven down. While there are no guarantees in this instance, it is still likely.
Plus the economies of scale do enter. So if Tesla is constantly ramping up their production, they will gain there.
For now, I guess the gov't handing out money makes it viable to shift production.
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While I like the domestic production piece of this, anything that has a subsidy is a way to fuck up and imbalance the market. Perfect for government as they love to mess shit up in a free market.
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You are presuming markets are balanced to begin with which is untrue. Markets are insane even when left alone. Then, you have players in many forms throwing the balance out of markets.
And the imbalance doesnt only come from government. Look at the diamond industry and the imbalance there due to one company.
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The move would also allow Tesla to avoid the complications that come with shipping its cars to the US from Europe. Tesla has been facing production delays due to the pandemic, and this has led to a number of its cars being stranded in transit. By moving its equipment to the US, Tesla would be able to avoid these delays and get its cars to customers more quickly.
Tesla doesnt ship cars from the Europe to the US. All Europe produced cars stay there (only a small amount now). Most of Europe demand is filled from their China plant.
This applies to batteries only. Their vehicle distribution is remaining unchanged.
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All companies always look for where they can get better profits, even if it is moving factories to different countries.
"Inflation Reduction Act" Any act the US Congress passes does exactly the opposite of what it is named. For proof see "No Child Left Behind", "Patriot Act", "Affordable Care Act", etc.
There does seem to be a trend.
Governments, even if we remove the corruption component, does excel at the law of unintended consequences. Of course, the only ones who see this are those outside government.
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The government people see it too. They even joke about it. It's just when they are in charge, they tell themselves thing like, "I'm going to be different." And then they aren't different at all.
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I saw that earlier this week but I am just not that optimistic about the Inflation Reduction Act as it won't really solve any issues in the economy. It just seems like a bandaid and most of the money will fill the pockets of the larger companies.
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It wont solve anything.
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Its really a great way of making profits,thumbs up to the founder for the idea. Thank you greatly for this information.
Summary:
The video discusses Tesla's decision to halt production at its battery plant in Berlin and relocate the equipment to the United States. This move is attributed to the new "Inflation Reduction Act" signed by President Biden, which incentivizes domestic battery production. The act offers rebates to battery manufacturers, such as Tesla, thereby reducing costs and potentially boosting profit margins. The discussion includes the implications of these incentives on Tesla's operations, the significance of reducing battery costs for different vehicle models, and long-term benefits for Tesla as it scales up production in the U.S.
Detailed Article:
The video delves into Tesla's strategic shift in response to the "Inflation Reduction Act" signed into law by President Biden, which has prompted the company to relocate its battery production equipment from Berlin to the United States. This relocation is seen as a move aligned with the U.S. government's push to promote domestic battery production, motivated by China's dominance in the global battery industry. The act offers incentives to battery manufacturers, like Tesla, to boost domestic production, a move akin to efforts in other industries like chips to encourage onshore manufacturing.
The discussion emphasizes how Tesla's priority is to ramp up battery production, evident through its existing facilities like the one in Nevada and plans for similar setups in Berlin and Texas. With the new law in place, the U.S. government's proactive stance in incentivizing local battery production is noted, aiming to reduce dependence on foreign sources and bolster the country's competitiveness.
The speaker highlights the financial implications of these incentives for Tesla, citing potential rebates of around $2,000 per vehicle built using domestically produced batteries. This incentive, targeted at manufacturers rather than end-users, could significantly impact Tesla's profit margins, particularly for lower-priced models where a $2,000 saving per vehicle holds substantial weight. Furthermore, the speaker draws attention to how these incentives extend beyond vehicles to other battery products like power walls and power packs, underlining the broad scope of benefits for Tesla's overall battery production efforts.
Additionally, the video touches on the long-term nature of these incentives, spanning over a decade, presenting a lucrative opportunity for Tesla as it scales up production in the U.S. The speaker posits scenarios where future Tesla models, especially if catering to the lower-end market, could benefit immensely from reduced battery costs driven by these governmental incentives.
In closing, the video suggests that Tesla is adept at navigating such government subsidies, despite facing criticisms from certain quarters. The speaker lauds Tesla's advantage in capitalizing on these incentives to augment profit margins, concluding with a positive note for shareholders on the potential financial gains for Tesla as it expands its production capacity in the U.S.