49 ms·

Tesla makes 25% margin on their cars.

by elchief 10y ago

whoiskevin 10y ago
But still loses money
- ProAm 10y ago
  I wouldnt be surprised if Apple is working with Tesla for the model 3. They have the money to invest and help, I can see them owning 25% of Tesla for it. But the fact they are hiring away Tesla engineers argues against this point.
  - nl 10y ago
    Tesla is a public company. Apple would have to disclose a buying significant stake, plus it is publicly available information.
    - ProAm 10y ago
      I dont think they have yet, but Im wondering if hiring Tesla engineers is a way to skirt that issue and help to collaborate/co-develop a product. I dont see Apple building it's own car from scratch, especially given Apples quality track record the last 5 years.
- bjelkeman-again 10y ago
  There is a big difference between loosing money because you build and sell individual cars at a loss, and investing in further capacity. They make money on the cars they build and sell, the overall loss comes from investing in the new factories and product lines. This should come as no surprise to anyone familiar with startups.
  - mozumder 10y ago
    You're supposed to include capital expenses and depreciation in margins. Just because they're building factories doesn't mean they have higher margins. This is why startups underestimate their expenses.
    - maccam94 10y ago
      The new factory isn't part of the current production cars Cost of Goods Sold because it isn't being used yet. See the matching principle. The depreciation of the factory will absolutely factor into the COGS of the cars it produces in the future, but the increase in sales volume should compensate for that.
dragontamer 10y ago
IIRC, Tesla has had only one profitable quarter since 2003, its founding. Last quarter, they had 1.4 Billion in cash and had a $280 Million shortfall. In ONE quarter. That's AFTER accounting for the +$350 Million-ish they brought in from the Model 3 pre-orders btw. I don't think they are going to repeat the +350ish thousand preorders at +$1000 cash per anytime soon.
- _ph_ 10y ago
  But they are also growing by about 50% year over year (and more!). In 2015 they sold as many cars as Porsche sold in 2000, this year probably as much as Porsche in 2004. Tesla is spending every dollar they can get hold of into growth. The preorders for the Model 3 equal a possible revenue of 15 Billion alone.
  - bidatzi 10y ago
    Sales went up 50% YoY. Loses went up 83% YoY.
    - JBReefer 10y ago
      They have the Bank of Musk, which is a massive advantage. Apple does have all of that cash on hand, though, so that's less of an advantage if they are truly working on a car.
- marvin 10y ago
  This doesn't give a completely accurate picture of Tesla's financial situation. Tesla has MASSIVE capital expenditures and will continue to have so for years. They could probably become quite profitable on a quarter-to-quarter basis by stopping all new development and manufacturing investments, but this would kill their possibility of becoming a major auto manufacturer. The gross margin on Model S is indeed 25%, and the gross margin on Model X is also expected to exceed 25% once volume production is finished ramping up.
  - dragontamer 10y ago
refurb 10y ago
I find that shocking. They are using new/expensive technology, high quality parts and low volume production methods and they are making a higher margin than a company like BMW or GM who have the benefit of scale and ability to squeeze suppliers? Not saying your number is wrong, I'm just really surprised.
- gambiting 10y ago
  BMW or Mercedes make million different models of their vehicles. Some of them make a lot of money, some of them are probably losing money and always will - M or AMG products are very expensive, but they sell relatively few cars every year - their brands keep those cars to be leaders in their sectors, not because there's a huge amount of money to be made on them(good example of that is the Veyron made by the VW group - VW said that they will never make profit on that car, despite it costing over $1 million USD, because the research to make it was so costly. The only reason it exists and you can buy one is so that VW can say they make the fastest car in the world). Tesla on the other hand, makes 3 models, they are not trying to cater to every single market, so they can afford the focus and very high profit margins that come with it.
  - pbhjpbhj 10y ago
    >despite it costing over $1 million USD, because the research to make it was so costly // Does the research only apply to the Veyron? I'd be surprised if they can't use advances there in other lines of cars or get patents that they can profit from when used by other car manufacturers. It does however speak to good marketing to say "we make this car for the love of making cars" rather than "we use this as a way of targeting R&D that we can then exploit in other vehicle lines". /cynicism
    - gambiting 10y ago
      Well, that's a good point. I'm pretty sure VW uses technologies invented for the Veyron in their other cars, but I guess it's hard to estimate the cost/profit ratio in this case. In any case, the point I was trying to make was that other car companies don't maintain 25% profit on all of their vehicles like Tesla does, because they have a much more varied portfolio of models.

Tesla makes 25% margin on their cars.

by elchief 10y ago

Tesla makes 25% margin on their cars.

whoiskevin 10y ago

But still loses money

ProAm 10y ago
I wouldnt be surprised if Apple is working with Tesla for the model 3. They have the money to invest and help, I can see them owning 25% of Tesla for it. But the fact they are hiring away Tesla engineers argues against this point.
- nl 10y ago
  Tesla is a public company. Apple would have to disclose a buying significant stake, plus it is publicly available information.
  - ProAm 10y ago
    I dont think they have yet, but Im wondering if hiring Tesla engineers is a way to skirt that issue and help to collaborate/co-develop a product. I dont see Apple building it's own car from scratch, especially given Apples quality track record the last 5 years.
bjelkeman-again 10y ago
There is a big difference between loosing money because you build and sell individual cars at a loss, and investing in further capacity. They make money on the cars they build and sell, the overall loss comes from investing in the new factories and product lines. This should come as no surprise to anyone familiar with startups.
- mozumder 10y ago
  You're supposed to include capital expenses and depreciation in margins. Just because they're building factories doesn't mean they have higher margins. This is why startups underestimate their expenses.
  - maccam94 10y ago
    The new factory isn't part of the current production cars Cost of Goods Sold because it isn't being used yet. See the matching principle. The depreciation of the factory will absolutely factor into the COGS of the cars it produces in the future, but the increase in sales volume should compensate for that.

dragontamer 10y ago

IIRC, Tesla has had only one profitable quarter since 2003, its founding. Last quarter, they had 1.4 Billion in cash and had a $280 Million shortfall. In ONE quarter. That's AFTER accounting for the +$350 Million-ish they brought in from the Model 3 pre-orders btw. I don't think they are going to repeat the +350ish thousand preorders at +$1000 cash per anytime soon.

_ph_ 10y ago
But they are also growing by about 50% year over year (and more!). In 2015 they sold as many cars as Porsche sold in 2000, this year probably as much as Porsche in 2004. Tesla is spending every dollar they can get hold of into growth. The preorders for the Model 3 equal a possible revenue of 15 Billion alone.
- bidatzi 10y ago
  Sales went up 50% YoY. Loses went up 83% YoY.
  - JBReefer 10y ago
    They have the Bank of Musk, which is a massive advantage. Apple does have all of that cash on hand, though, so that's less of an advantage if they are truly working on a car.
marvin 10y ago
This doesn't give a completely accurate picture of Tesla's financial situation. Tesla has MASSIVE capital expenditures and will continue to have so for years. They could probably become quite profitable on a quarter-to-quarter basis by stopping all new development and manufacturing investments, but this would kill their possibility of becoming a major auto manufacturer. The gross margin on Model S is indeed 25%, and the gross margin on Model X is also expected to exceed 25% once volume production is finished ramping up.
- dragontamer 10y ago

refurb 10y ago

I find that shocking. They are using new/expensive technology, high quality parts and low volume production methods and they are making a higher margin than a company like BMW or GM who have the benefit of scale and ability to squeeze suppliers? Not saying your number is wrong, I'm just really surprised.

gambiting 10y ago
BMW or Mercedes make million different models of their vehicles. Some of them make a lot of money, some of them are probably losing money and always will - M or AMG products are very expensive, but they sell relatively few cars every year - their brands keep those cars to be leaders in their sectors, not because there's a huge amount of money to be made on them(good example of that is the Veyron made by the VW group - VW said that they will never make profit on that car, despite it costing over $1 million USD, because the research to make it was so costly. The only reason it exists and you can buy one is so that VW can say they make the fastest car in the world). Tesla on the other hand, makes 3 models, they are not trying to cater to every single market, so they can afford the focus and very high profit margins that come with it.
- pbhjpbhj 10y ago
  >despite it costing over $1 million USD, because the research to make it was so costly // Does the research only apply to the Veyron? I'd be surprised if they can't use advances there in other lines of cars or get patents that they can profit from when used by other car manufacturers. It does however speak to good marketing to say "we make this car for the love of making cars" rather than "we use this as a way of targeting R&D that we can then exploit in other vehicle lines". /cynicism
  - gambiting 10y ago
    Well, that's a good point. I'm pretty sure VW uses technologies invented for the Veyron in their other cars, but I guess it's hard to estimate the cost/profit ratio in this case. In any case, the point I was trying to make was that other car companies don't maintain 25% profit on all of their vehicles like Tesla does, because they have a much more varied portfolio of models.