"Unit Profit" vs. "Business Profit". Yes, if you factor in the R&D they "lost money per car", but at scale, they would make money per car. If your unit cost is

"Unit Profit" vs. "Business Profit". Yes, if you factor in the R&D they "lost money per car", but at scale, they would make money per car. If your unit cost is $50 and your unit revenue is $100, your unit profit is $50. If you sell 100,000 units, your business revenue is is $10M. If you spend $10M on R&D (and other overhead), your business costs are $15M and your business profit is -$5M. BUT, if you sell 1M units, your revenue is $100M, your costs are $60M ($50M unit + $10M R&D), and your profit is $40M. That's the power of scale. (Compare this to a business with a negative unit profit: it won't scale no matter what you do.)