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HZM SP will go to double, when many other shares battering
tricky
of course increases in base costs gets multiplied, otherwise margins would eventually go to zero, you dont seem to understand arithmetic or dont understand the difference between margin and profit per unit
if a car production costs 20000 to produce which is then sold for 30000, so 10000 profit giving a gross margin of 33 percent, if the car production cost goes up by 10000 to 30000 they need to add 15000 to maintain the margin, otherwise it falls to 25%
so you are completely wrong about base costs not being multiplied on the final price, i presume you realise multiplied can mean 1.01, it doesnt have to mean larger numbers
evan887
"the point you raise about paint costs is..."
I don't recall raising anything about paint costs.
Tesla's margins are in the region of 25% to 30%. Add that onto the increased material costs. Its still not a show stopper.
"raw materials does not get added to the final retail, it gets multiplied"
No it doesn't.
TDT
tricky
ok i didnt follow the whole thread
as for marketing costs, they do have them, they may not book any in their accounts, but researching how many red necks like the cyber truck is called r&d by tesla, most other companies call it marketing, marketing is not just sales
the point you raise about paint costs is just another reason that a nickel price increase is much worse news than you seemed to think, the main point i was trying to make is that an increase in raw materials does not get added to the final retail, it gets multiplied
if a company makes 1 million profit for every 3 million pounds in sales, then saving 1 million pounds in raw material or marketing costs is the same as 3 million pounds of sales
evan887
The issue under discussion wasn't just the price of one particular metal. Of greater significance is the cost reductions that come with a doubling of volume produced. The article that generated the discussion focused on the increased cost of some raw materials. It neglected to address the reduction in cost as volumes scale up.
At not point did I say nickel doubling was no big deal.
You say "the final cost of the car includes marketing" .The example I quoted was a Tesla Model 3. Tesla do not have marketing costs.
You said "if they thought they could currently get away with an additional 1000 dollars on the retail price, they would have done it".
https://electrek.co/2021/11/04/tesla-increases-model-3-y-prices-again-new-standard-paint/
TDT
tricky
re your post about the cost of the nickel doubling being no big deal, and extra 605 dollars on the cost of the car is massive, its not viewed as a percentage of the retail cost, the additional cost is a much larger percentage of the raw material cost, the final cost of the car includes marketing, distribution, show rooms, people etc - to maintain margins - which they must or the stock gets hammered - the increase on the retail price would be much more than 605, if they thought they could currently get away with an additional 1000 dollars on the retail price, they would have done it
TDT
Thanks , that make sense .
I see subsidies are being withdrawn and we need big investment in a
wider available charging infrastructure .
I guess HZM mines tee ally will be coming online at that or above inflection point
Hazbeen
Putting the metals costs into perspective.
Take a Model 3 which costs, in the USA, about $45,000. This is just the basic Model 3 not long range, dual motor, 4 wheel drive or anything like that. The battery pack, not the batteries themselves, are about one third of the O/A cost so about $15,000.
There is 50kg of nickel, tops, in the car. That's 110lbs. of nickel which, when it was $5.50/lb amounted to $605. Now double that and you have the nickel in the battery costing $1,210. The increased cost of the nickel, from $5.50/lb to $11.00/lb adds $605 to the O/A cost of the battery pack and the O/A cost of the car. That's approximately 4.35% onto the cost of the battery pack or 1.35% onto the O/A cost of the car. There are other metals to take into consideration but in essence the increased cost of these metals in total will not be a show stopper.
As production increases economies of scale kick in on the production side. Materials costs might experience some upward pressure but production volume counters that effect. The learning curve model posits that for each doubling of the total quantity of items produced, costs decrease by a fixed proportion.
https://en.wikipedia.org/wiki/Experience_curve_effects
The production of batteries is still very much in its infancy so plenty of efficiencies and therefore cost reductions to come from that quarter.
TDT
Do not be alarmed by the headline here -
The shortage of battery metals is driving up the costs of electric vehicles to the point where car ownership may transition to various types of rental models, said Matt Fernley, editor of Battery Materials Review and Head of Research for Westbeck Capital’s Volta Energy Transition fund.
Demand for electric vehicles is up sharply due to a big worldwide regulatory push and swiftly changing consumer sentiment. However, battery metals costs are rising quickly due to supply disruptions and just not enough mines online to meet the rising demand. This week nickel hit a 10-year high.
"I think there is a risk that EV prices will have to stay outside the mass market," said Fernley "And that then raises the question: how do you sell EVs if they're double the price of internal combustion engines.
"Perhaps the auto companies will have to look at different ownership structures. So one structure that's been very successful in China is battery as a service where the OEM effectively sells the car, but they don't sell the battery, and the user—the owner of the car—rents the battery of the company," said Fernley, who points out this arrangement has advantages for battery recycling.
Other means of getting EVs to consumers are fleet sales and contracting "...whereby the end consumer, like you and me, doesn't actually own the car.
The podcast talks very bullishly about Nickel in details and is very interesting opinions from 8mins+