Business News: Tesla unveils it is spending dramatically more money on R&D.
Tesla is spending drastically more money on research and development for its vehicles and other technologies such as battery cell development, it revealed in a 10-Q filing with the SEC. However, the most expensive part of the increase in R&D spending has come from Drastic growth in employee and labor expenses as Tesla’s workforce continues to grow. However, the redesign of the S and X models, along with the development of proprietary battery cells, also contributed to the exponential growth of the money spent.
Tesla is one of the fastest growing companies in the world. It is already the most valuable auto company in existence, and as the electric carmaker expands its presence to other countries and regions, it is hiring vast numbers of new people to handle any responsibilities. From executives to production workers, Tesla is hiring in almost every aspect of its business and its expenses are increasing accordingly.
Research and development spending increased by $ 342 million, or 106% in the first quarter of 2021 compared to the first quarter of 2020. Tesla attributes the increase in research and development costs to an increase in the employee workforce. including anything from more people working in the company for an appreciation of the share price.
Tesla wrote, “Research and development expenses increased by $ 342 million, or 106%, in the three months ending March 31, 2021, compared to the three months ending March 31, 2020. The increase is was mainly due to an increase of $ 147 million in employee and labor related expenses due to the increase in staff and the increase in payroll taxes related to appreciation of the price of our shares. “
Earlier this month, we reported that Tesla’s workforce had grown substantially, according to the 10-K document released to the SEC. The workforce increased by 22,651 total full-time employees in 2020 compared to 2019, and the number continues to expand as Tesla opens more factories, service centers, and showroom locations globally.
In addition to the increase in the workforce and the overall growth of the company, a significant amount of money has been pumped into consumables. These expenses contributed to the “expanding product roadmap,” which included the redesigned and updated Model S and Model X, along with the 4680 battery cell design Tesla worked on.
Tesla reported “a $ 122 million increase in external materials and services spent on R&D and a $ 60 million increase in stock-based compensation spending. These increases were to support our expanding product roadmap, such as new versions of Model S and Model X and technologies, including our proprietary battery cells. “The percentage of spend due to increased revenue has increased from From 5 to 6% on an annual basis, but the higher expenses were offset by “an increase in total revenues from expand sales, “Tesla said.
Tesla has been shown to funnel a lot of money into its products and aims to improve the functionality of the product through internal spending. For years, Elon Musk has advocated his strategy of not keeping an advertising budget, but rather funneling that money into the product itself. “Other companies spend money on advertising and manipulation of public opinion, Tesla focuses on the product,” Musk said.