7 ms·

Made over a billion in profit, and margins are close to 25% which are great.

new_realist 5y ago
Operating margin is 11%. It’s the first time Tesla has been GAAP profitable without regulatory credit sales (pollution credits that delay other automakers’ EV programs) included, which is significant. They never should have sold a single pollution credit; that’s a violation of their supposed mission statement. Every Tesla you buy allows a big polluting gas guzzler to be sold elsewhere, so there’s no environmental benefit.
- rcMgD2BwE72F 5y ago
  >They never should have sold a single pollution credit; that’s a violation of their supposed mission statement. Every Tesla you buy allows a big polluting gas guzzler to be sold elsewhere, so there’s no environmental benefit. These credits allowed Tesla to build the factories that are now pumping out EVs. If they had not sold these credits, the other manufacturers would sold less ICE, and without a successful EV markers to convince politicians that EV are viable, ICE makers would have proved to regulators that penalties are killing jobs and hurting the economy... for nothing. Credits would have been canceled and we would have more big polluting gas guzzlers around a handful of aging Tesla roadsters for billionaires.
- xeromal 5y ago
  Hard to perform the mission if you go out of business.
Someone1234 5y ago
This may be an overly naive take on my behalf, but if it was 25% on a Model 3 specifically that means each one costs them $30K~ to build at a $40K price (and frankly 25% is likely too optimistic for their lowest margin vehicle). That makes me think we're many, many years away from seeing $25K~ EVs. You can cut some things off of the Model 3, but battery reduction in particular is a headache since you risk damaging your reputation/EV's reputations if you make it too weak (particularly with normal degradation). I know this is proprietary/secret, but I'd love to see a pie chart of where each dollar on a Model 3 goes. In particular how much is pure battery/drive system, and basically the whole rest of the car.
- toomuchtodo 5y ago
  If the total cost of ownership is lower with an EV, you can drag the payments out longer with lower interest financing because the vehicle will last longer. The upfront cost is higher, but you hack around it with financial engineering. I don't mind an 84 month auto loan at <2% interest, as long as it's cheap to drive (EVs are half the cost per mile as combustion vehicles) and retains enough value to defend against negative equity as the loan balance and vehicle value decline roughly at the same rate. You might not see $25K new EVs, but you'll see used versions around that price with 100k+ miles on them that still drive like they're new (there are Model S and X vehicles with hundreds of thousands of miles on their drivetrain still going strong). TLDR We're financially engineering our way out of combustion based transportation.
  - itsoktocry 5y ago
    Why do you assume they'll drive like new? It's wear and tear that makes a car feel old, and Tesla isn't known for high quality.
    - toomuchtodo 5y ago
      I have ridden in Teslas with hundreds of thousands of miles on them, and am able to compare between that and my own Teslas and their (lower) mileage.
  - Someone1234 5y ago
    > If the total cost of ownership is lower with an EV, you can drag the payments out longer with lower interest financing because the vehicle will last longer. An EV is much less convenient than a conventional vehicle, it needs to have a lower CoO just to offset that. Once electric vehicles can charge in comparable times to gas for comparable miles, then we can talk, in the meantime you're gaining lower ownership cost for more hassle (and that's ok, but you cannot double-dip it). > I don't mind an 84 month auto loan at <2% interest That's available on gas vehicles too (and even better interest rates in some cases), largely offsetting whatever edge you're trying to argue. > You might not see $25K EVs, but you'll see used versions around that price with 100k+ miles on them that still drive like they're new Drive like? Yes. Range? Unlikely. Just look at the costs of a full battery module replacement, it would eat up over 50% of that $25K price. Plus the rate of technological advancement may hurt old EVs worse than gas vehicles, because one is advancing more rapidly than the other. I suspect a lot of people care that electric sedans costs almost $15K more than hybrid sedans, and I suspect you'll see sales explode if a "Model 2" that cost $25K~ were ever produced (with a few disclaimers on range, seat capacity, etc).

Operating margin is 11%. It’s the first time Tesla has been GAAP profitable without regulatory credit sales (pollution credits that delay other automakers’ EV programs) included, which is significant. They never should have sold a single pollution credit; that’s a violation of their supposed mission statement. Every Tesla you buy allows a big polluting gas guzzler to be sold elsewhere, so there’s no environmental benefit.

rcMgD2BwE72F 5y ago
>They never should have sold a single pollution credit; that’s a violation of their supposed mission statement. Every Tesla you buy allows a big polluting gas guzzler to be sold elsewhere, so there’s no environmental benefit. These credits allowed Tesla to build the factories that are now pumping out EVs. If they had not sold these credits, the other manufacturers would sold less ICE, and without a successful EV markers to convince politicians that EV are viable, ICE makers would have proved to regulators that penalties are killing jobs and hurting the economy... for nothing. Credits would have been canceled and we would have more big polluting gas guzzlers around a handful of aging Tesla roadsters for billionaires.
xeromal 5y ago
Hard to perform the mission if you go out of business.

Someone1234 5y ago

This may be an overly naive take on my behalf, but if it was 25% on a Model 3 specifically that means each one costs them $30K~ to build at a $40K price (and frankly 25% is likely too optimistic for their lowest margin vehicle). That makes me think we're many, many years away from seeing $25K~ EVs. You can cut some things off of the Model 3, but battery reduction in particular is a headache since you risk damaging your reputation/EV's reputations if you make it too weak (particularly with normal degradation). I know this is proprietary/secret, but I'd love to see a pie chart of where each dollar on a Model 3 goes. In particular how much is pure battery/drive system, and basically the whole rest of the car.

toomuchtodo 5y ago
If the total cost of ownership is lower with an EV, you can drag the payments out longer with lower interest financing because the vehicle will last longer. The upfront cost is higher, but you hack around it with financial engineering. I don't mind an 84 month auto loan at <2% interest, as long as it's cheap to drive (EVs are half the cost per mile as combustion vehicles) and retains enough value to defend against negative equity as the loan balance and vehicle value decline roughly at the same rate. You might not see $25K new EVs, but you'll see used versions around that price with 100k+ miles on them that still drive like they're new (there are Model S and X vehicles with hundreds of thousands of miles on their drivetrain still going strong). TLDR We're financially engineering our way out of combustion based transportation.
- itsoktocry 5y ago
  Why do you assume they'll drive like new? It's wear and tear that makes a car feel old, and Tesla isn't known for high quality.
  - toomuchtodo 5y ago
    I have ridden in Teslas with hundreds of thousands of miles on them, and am able to compare between that and my own Teslas and their (lower) mileage.
- Someone1234 5y ago
  > If the total cost of ownership is lower with an EV, you can drag the payments out longer with lower interest financing because the vehicle will last longer. An EV is much less convenient than a conventional vehicle, it needs to have a lower CoO just to offset that. Once electric vehicles can charge in comparable times to gas for comparable miles, then we can talk, in the meantime you're gaining lower ownership cost for more hassle (and that's ok, but you cannot double-dip it). > I don't mind an 84 month auto loan at <2% interest That's available on gas vehicles too (and even better interest rates in some cases), largely offsetting whatever edge you're trying to argue. > You might not see $25K EVs, but you'll see used versions around that price with 100k+ miles on them that still drive like they're new Drive like? Yes. Range? Unlikely. Just look at the costs of a full battery module replacement, it would eat up over 50% of that $25K price. Plus the rate of technological advancement may hurt old EVs worse than gas vehicles, because one is advancing more rapidly than the other. I suspect a lot of people care that electric sedans costs almost $15K more than hybrid sedans, and I suspect you'll see sales explode if a "Model 2" that cost $25K~ were ever produced (with a few disclaimers on range, seat capacity, etc).