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Just because legacy auto has a painful and wasteful sales process doesn’t make comparing their vehicle gross margins “apples to oranges”. It means legacy auto n
by zaroth 6y ago
Just because legacy auto has a painful and wasteful sales process doesn’t make comparing their vehicle gross margins “apples to oranges”. It means legacy auto needs to smarten up about their sales process.
Their gross margins do fluctuate quarter to quarter but over the last couple years on average have increased and they expect they will continue to do so as their new factories come online.
As I mentioned you have to example their operating profit (net margins) as a factor of their growth rate. Operating profit with no growth is the sign of a stagnating company.
No physical good manufacturing company can be both high growth and high operating profit. By definition profits are being spent on expanding the manufacturing lines.
The comparison with Amazon is because not many companies have year after year of CAGR in the realm of what Tesla has achieved.
- itsoktocry 6y ago>It means legacy auto needs to smarten up about their sales process. No, it means their gross margins are necessarily lower because of the way the accounting works when manufacturers sell to dealers. Anyway, gross margins are not profit margins, so why should they try to maximize them? >Operating profit with no growth Let me give you the 101 on base rates: Tesla is small (sub 1% market share), so therefore big growth numbers as a % is easy. VW is massive, and therefore high % growth numbers are hard. VW made $12B in profit last year. >The comparison with Amazon is because not many companies have year after year of CAGR in the realm of what Tesla has achieved. Nonsense. No car companies have, lately, maybe. But plenty of companies have grown as fast or faster than Tesla. Their last 3 years of revenue are: $25B, $28B, $31B. Good, but nowhere approaching 50% CAGR.