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I don't understand the mentality people have when calling Tesla an automaker. Automakers today traditionally outsource a majority of their parts and are just gl

by yrral 6y ago

I don't understand the mentality people have when calling Tesla an automaker. Automakers today traditionally outsource a majority of their parts and are just glorified assemblers. Meanwhile tesla has much more vertical integration in their cars and owns much more of the stack, from the batteries (there are even rumors they'll go into mining to secure steady supply), to their software and self driving stack, to grid storage, etc. I'm not sure exactly what I'm getting at here, but it reminds me of back in the day when people called amazon just a bookstore.

Andrex 6y ago
Amazon began selling more than books, Tesla is still only automobiles. I'm not sure the analogy holds up, unless Tesla started licensing out parts of their vertical integration (such as how Sony's image sensor business licenses and contracts to all kinds of non-Sony devices.)
- xur17 6y ago
  Tesla also sells batteries and solar panels. And folks would argue that Tesla is more software focused than other car makers (and therefore should be able to command a larger margin).
- rcMgD2BwE72F 6y ago
  >Amazon began selling more than books, Tesla is still only automobiles. 82% of Tesla revenues are from the automotive segment. https://ir.tesla.com/static-files/c1723af4-ffda-4881-ae12-b6f3c972b795 https://ir.tesla.com/static-files/c1723af4-ffda-4881-ae12-b6...
agumonkey 6y ago
I think you're twisting reality a tiny bit. Car brands have used all kinds of partnerships from car body design, to engines. Just last week I learned that DMC Delorean use a PRV engine. PRV standing for Peugeot Renault Volvo. 3 European brands, nothing American in it.. Same goes for airplanes, boeing and airbus uses parts from similar suppliers.
- kiba 6y ago
  I don't see how this is a criticism given that Tesla is actually vertically integrated.
  - agumonkey 6y ago
    integration probably varies over time, is it fair to take it into account ?
- felipelemos 6y ago
  And manufactured in North Ireland (while the headquarters was in Detroit, USA).
leereeves 6y ago
Most of Tesla's revenue comes from auto sales and their gross profit margin is about the same as other automakers. It seems they're making their money the same way Toyota does and the vertical integration doesn't translate into increased profits. https://www.statista.com/statistics/314741/revenue-of-tesla-by-segment/ https://www.statista.com/statistics/314741/revenue-of-tesla-... https://ycharts.com/companies/TSLA/gross_profit_margin https://ycharts.com/companies/TSLA/gross_profit_margin https://ycharts.com/companies/TM/gross_profit_margin https://ycharts.com/companies/TM/gross_profit_margin
- nickik 6y ago
  Tesla is making that margin with EV, nobody else is doing that. There is a reason nobody else produces EVs at those numbers. Specially not those with these battery seizes. And Tesla has just gotten to the point where they get to those margins. The margins on the Model Y are already better then Model 3 and competitive with ICE cars of the same price. It is because of their vertical integration that they managed to achieve that margin. There is reason why the were laughed at so much, nobody believed you could make good margins on EVs. This is quite literally what the CEO of Ford said over and over. Tesla doesn't have 10s of billions or even 100s billions investment in legacy infrastructure that is raptly losing in value. And they don't need to redesign their whole fleet to EVs for many billions per vehicle. That is the base for the case for their stock price. However that by itself would make them valuable, but not as valuable as Toyota.

by yrral 6y ago

Andrex 6y ago

Amazon began selling more than books, Tesla is still only automobiles. I'm not sure the analogy holds up, unless Tesla started licensing out parts of their vertical integration (such as how Sony's image sensor business licenses and contracts to all kinds of non-Sony devices.)

xur17 6y ago
Tesla also sells batteries and solar panels. And folks would argue that Tesla is more software focused than other car makers (and therefore should be able to command a larger margin).
rcMgD2BwE72F 6y ago
>Amazon began selling more than books, Tesla is still only automobiles. 82% of Tesla revenues are from the automotive segment. https://ir.tesla.com/static-files/c1723af4-ffda-4881-ae12-b6f3c972b795 https://ir.tesla.com/static-files/c1723af4-ffda-4881-ae12-b6...

agumonkey 6y ago

I think you're twisting reality a tiny bit. Car brands have used all kinds of partnerships from car body design, to engines. Just last week I learned that DMC Delorean use a PRV engine. PRV standing for Peugeot Renault Volvo. 3 European brands, nothing American in it.. Same goes for airplanes, boeing and airbus uses parts from similar suppliers.

kiba 6y ago
I don't see how this is a criticism given that Tesla is actually vertically integrated.
- agumonkey 6y ago
  integration probably varies over time, is it fair to take it into account ?
felipelemos 6y ago
And manufactured in North Ireland (while the headquarters was in Detroit, USA).

leereeves 6y ago

Most of Tesla's revenue comes from auto sales and their gross profit margin is about the same as other automakers. It seems they're making their money the same way Toyota does and the vertical integration doesn't translate into increased profits. https://www.statista.com/statistics/314741/revenue-of-tesla-by-segment/ https://www.statista.com/statistics/314741/revenue-of-tesla-... https://ycharts.com/companies/TSLA/gross_profit_margin https://ycharts.com/companies/TSLA/gross_profit_margin https://ycharts.com/companies/TM/gross_profit_margin https://ycharts.com/companies/TM/gross_profit_margin

nickik 6y ago
Tesla is making that margin with EV, nobody else is doing that. There is a reason nobody else produces EVs at those numbers. Specially not those with these battery seizes. And Tesla has just gotten to the point where they get to those margins. The margins on the Model Y are already better then Model 3 and competitive with ICE cars of the same price. It is because of their vertical integration that they managed to achieve that margin. There is reason why the were laughed at so much, nobody believed you could make good margins on EVs. This is quite literally what the CEO of Ford said over and over. Tesla doesn't have 10s of billions or even 100s billions investment in legacy infrastructure that is raptly losing in value. And they don't need to redesign their whole fleet to EVs for many billions per vehicle. That is the base for the case for their stock price. However that by itself would make them valuable, but not as valuable as Toyota.