Financial Analyst Pierre Ferragu, New Street Research, has analyzed the history of Tesla’s cash return on operating assets. Cash return on operating assets. broke-even at some point in 2018 with the ramp of model 3 then went straight up to 20% in 2020. This excludes credits. They don’t care about credits, and this is 100% cash metrics, no possible accounting cheats. The projection is that Tesla is heading in 2-3 years to 40% cash return on operating assets.
3 – The best way to measure a right to make money™? Cash return on operating asset (CRoOA), i.e. (3-2)/1. In other words: how many cents of cash per year can you generate, out of a dollar you invest in your operations? As simple as that.
— Pierre Ferragu (@p_ferragu) May 21, 2021
3 – The best way to measure a right to make money™? Cash return on operating asset (CRoOA), i.e. (3-2)/1. In other words: how many cents of cash per year can you generate, out of a dollar you invest in your operations? As simple as that.
— Pierre Ferragu (@p_ferragu) May 21, 2021
SOURCES- Pierre Ferragu, New Street Research
Written by Brian Wang, Nextbigfuture.com (Brian owns shares of Tesla)
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
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It also helps that Tesla has pretty much all brand new equipment and mostly new factories (the california plant is an ex-Toyota facility that was well regarded for its design when new, and it wasn't that old), squat for pension load, limited model lines, and a nearly absurd manufacturing line redesign rate (for otherwise fairly conventional manufacturing processes). It's almost like they are approaching model months, rather than typical automotive model years in terms of vehicle variants. Not having legacy cruft, and not needing to herd and spoonfeed a federation of suppliers also helps.
Embedding the agile software development methodology to automotive manufacturing creates a lot of churn, but allows swift pivots.
Like understanding O'Neill, ideas matter!