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Yes, Tesla is orders of magnitude more efficient than industry. They also maintain the highest profit margins in the industry (14.95% vs 4.32%). For comparison

by tzm 4y ago

Yes, Tesla is orders of magnitude more efficient than industry. They also maintain the highest profit margins in the industry (14.95% vs 4.32%). For comparison, if Toyota was as efficient as Tesla they would've posted 2022 Q3 profits of ~$24 billion, not $3.1B. Tesla achieved $3.9B from only 344k cars. Operational efficiency is their leverage. Cars sold (2022 Q3) Toyota: 2.6M (+5% y/y) Tesla: 344K (+42% y/y) Operating profit excl. FX impact Toyota: $3.1B (-38% y/y) Tesla: $3.9B (+97% y/y)

itsoktocry 4y ago
>They also maintain the highest profit margins in the industry (14.95% vs 4.32%). They have a different business model than OEMs, this is not apples-to-apples. OEMs act as wholesalers. Besides the fact that you're talking about the efficiency of a company that literally produces 10x the number of cars. Let's see what happens to Tesla if they ever reach that scale. >Toyota: 2.6M (+5% y/y) Tesla: 344K (+42% y/y) Base rate fallacy. Why not use absolute numbers of cars, rather than percentage increase? It would tell a different story, wouldn't it?
- vardump 4y ago
  > Besides the fact that you're talking about the efficiency of a company that literally produces 10x the number of cars. Let's see what happens to Tesla if they ever reach that scale. 10x higher production should in itself bring a lot in terms of economies of scale. Generally, the more you make of something, the cheaper one unit is to make. So Tesla's position is certainly more impressive in this comparison.
- panick21_ 4y ago
  Its not longer 10x the cars. Toyota is targeting only 9.1 million. Tesla is targeting close to 1.5 million. That's more like 6-7 times as much. And next year it will likely be even less.
  - SEJeff 4y ago
    With the recent increases at the Shanghai and Austin Gigafactories, Tesla is able to sustain a rate that would extrapolate to two million vehicles manufactured per year.
elil17 4y ago
They're better at making profit, that doesn't make them more efficient at building cars. Tesla sells a product which is differentiated based on software and brand, leading to huge margins. Tesla also uses more labor to make it's cars than traditional car companies, despite the fact that their cars are more mechanically simple. There's building a profitable company (Tesla has done this) and then there's doing good manufacturing engineering (Tesla is still working on this).
- tzm 4y ago
  No other automotive company is achieving this level of OpEx efficiency: https://i.imgur.com/ZroV0by.jpg https://i.imgur.com/ZroV0by.jpg
  - elil17 4y ago
    Yes, it is true that their operational efficiency of OPEX/revenue is excellent. But you can measure operational efficiency for a lot of different variables. Their headcount/unit is awful. Their OPEX/unit is not great either, about 50% higher than the average car. All that OPEX/revenue is telling you is that they charge a lot of money for their cars. I'm not even saying they don't have great manufacturing practices objectively - if you compare them to a lot of other industries they absolutely do. But auto manufacturing has always been the cutting edge of manufacturing tech and they simply are not at the top of that highly competitive field yet.
    - tzm 4y ago
      Agree to disagree. I'm very (very) familiar with their manufacturing abilities in automotive. Tesla is absolutely bending traditional supplier capabilities. It's a fact. Ask any Tesla supplier and they'll agree.. expectations are next level (compared to traditional) in almost every aspect.
      - bumby 4y ago
        Can you elaborate on what is unique about their supplier expectations? I'm curious, because sometimes exceptional supplier expectations come from a customer not really knowing what they need, so they ask for the world.

by tzm 4y ago

itsoktocry 4y ago

>They also maintain the highest profit margins in the industry (14.95% vs 4.32%). They have a different business model than OEMs, this is not apples-to-apples. OEMs act as wholesalers. Besides the fact that you're talking about the efficiency of a company that literally produces 10x the number of cars. Let's see what happens to Tesla if they ever reach that scale. >Toyota: 2.6M (+5% y/y) Tesla: 344K (+42% y/y) Base rate fallacy. Why not use absolute numbers of cars, rather than percentage increase? It would tell a different story, wouldn't it?

vardump 4y ago
> Besides the fact that you're talking about the efficiency of a company that literally produces 10x the number of cars. Let's see what happens to Tesla if they ever reach that scale. 10x higher production should in itself bring a lot in terms of economies of scale. Generally, the more you make of something, the cheaper one unit is to make. So Tesla's position is certainly more impressive in this comparison.
panick21_ 4y ago
Its not longer 10x the cars. Toyota is targeting only 9.1 million. Tesla is targeting close to 1.5 million. That's more like 6-7 times as much. And next year it will likely be even less.
- SEJeff 4y ago
  With the recent increases at the Shanghai and Austin Gigafactories, Tesla is able to sustain a rate that would extrapolate to two million vehicles manufactured per year.

elil17 4y ago

They're better at making profit, that doesn't make them more efficient at building cars. Tesla sells a product which is differentiated based on software and brand, leading to huge margins. Tesla also uses more labor to make it's cars than traditional car companies, despite the fact that their cars are more mechanically simple. There's building a profitable company (Tesla has done this) and then there's doing good manufacturing engineering (Tesla is still working on this).

tzm 4y ago
No other automotive company is achieving this level of OpEx efficiency: https://i.imgur.com/ZroV0by.jpg https://i.imgur.com/ZroV0by.jpg
- elil17 4y ago
  Yes, it is true that their operational efficiency of OPEX/revenue is excellent. But you can measure operational efficiency for a lot of different variables. Their headcount/unit is awful. Their OPEX/unit is not great either, about 50% higher than the average car. All that OPEX/revenue is telling you is that they charge a lot of money for their cars. I'm not even saying they don't have great manufacturing practices objectively - if you compare them to a lot of other industries they absolutely do. But auto manufacturing has always been the cutting edge of manufacturing tech and they simply are not at the top of that highly competitive field yet.
  - tzm 4y ago
    Agree to disagree. I'm very (very) familiar with their manufacturing abilities in automotive. Tesla is absolutely bending traditional supplier capabilities. It's a fact. Ask any Tesla supplier and they'll agree.. expectations are next level (compared to traditional) in almost every aspect.
    - bumby 4y ago
      Can you elaborate on what is unique about their supplier expectations? I'm curious, because sometimes exceptional supplier expectations come from a customer not really knowing what they need, so they ask for the world.