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> Their gross margin is 50% higher than Toyota's > vs Toyota being an older and larger company with far more overhead due to an older and larger workforce. Gr
by tinyhouse 5y ago
> Their gross margin is 50% higher than Toyota's
> vs Toyota being an older and larger company with far more overhead due to an older and larger workforce.
Gross margin is net sales minus the cost of goods sold, hence doesn't include workforce cost.
- runako 5y agoExactly. In fact, Toyota has better economies of scale on its side, so their raw materials costs will be lower than Tesla's all things being equal.
- danans 5y ago> Gross margin ... doesn't include workforce cost. I don't think that's right. From https://www.investopedia.com/terms/g/grossmargin.asp https://www.investopedia.com/terms/g/grossmargin.asp "The Formula for Gross Margin Is Gross Margin=Net Sales−COGS where: Net Sales=Equivalent to revenue, or the total amount of money generated from sales for the period... COGS=Cost of goods sold. The direct costs associated with producing goods. Includes both direct labor costs, and any costs of materials used in producing or manufacturing a company’s products." It wouldn't surprise me if a lot of Tesla employees are compensated in large part via equity, therefore lowering their apparent labor costs. Also, they probably have lower health insurance costs for their relatively young workforce (they are more like a young tech company in this way). Of course, battery prices will continue to decline, so in the long run, yes, EVs will be cheaper to buy, but I'm not convinced we are there quite yet. They are already far cheaper to operate, though.