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Is it the gigapress that allows Tesla to have high margins? Could it also be that EV cars are subsidized around the world by governments? Maybe Tesla's "self d

Is it the gigapress that allows Tesla to have high margins? Could it also be that EV cars are subsidized around the world by governments? Maybe Tesla's "self driving beta" addon adds to the profit more? I genuinely don't know.

toomuchtodo 4y ago
https://english.hani.co.kr/arti/english_edition/e_business/1016533.html https://english.hani.co.kr/arti/english_edition/e_business/1... > The secret behind Tesla’s 30% gross margin > The company's Q3 sales rose 58% year-on-year despite a 6% decrease in average selling price, allowing for high margins for the electric vehicle manufacturer > Analysts point to another factor behind Tesla's high profit margin. Park Hyung-keun, a senior researcher at POSCO Research Institute, said, "Through vertical integration by directly being involved from floor design to parts supply and demand, production and service, Tesla has helped reduce costs by raising the degree of its parts integration and cutting overlapping costs." > Tesla's unique structure of vertical integration, ranging from the development of semiconductor chips, software and batteries for electric vehicles, to charging, unmanned driving and insurance services, helps lower costs. Its “do-it-all” approach simplifies the automotive production process in a manner resembling that of electronic products. In contrast, other automakers actively utilize production outsourcing to diversify vehicle quality risks and raise output efficiency. > A leading example is Tesla's “giga” aluminum die-casting process. A Giga Press weighing more than 1 giga pound (400 tonnes, or around 900,000 pounds) stamps the entire rear chassis of a car with a large aluminum alloy. About 70 metal plates can be welded to the chassis, but giga casting can simplify the process and slash production costs by about 40%. This is why Tesla electric vehicles have recently reduced panel gaps issues — defects caused by misaligned steel plate seams.
- hef19898 4y ago
  So instead of figuring out "precision" welding (maybe SpaceX could have helped out?), Musk used pounds instead of kg or tons in order to implement "Giga"presses? Well, at least the manufacturing inexperienced Tesla crowd has something new to rave about... Still no < 35k Model 3 so.
  - toomuchtodo 4y ago
    They found a cheaper, faster, more efficient way to make structural components. SpaceX already shared with Tesla how to friction stir weld [1] (and that technique is still used currently [2]), but that is not as fast as stamping out body components. Simplicity is the ultimate sophistication. There is no extra credit for making your manufacturing process more complex than necessary (if you want to show off, fire your EV into space). Tesla's manufacturing ramp rate is primarily a function of how fast the org can improve the speed and process at which atoms travel through the manufacturing process, feedstock to final product. [1] https://electrek.co/2015/05/24/spacex-transferred-novel-welding-techniques-and-equipment-to-tesla-motors/ https://electrek.co/2015/05/24/spacex-transferred-novel-weld... [2] https://www.teslarati.com/tesla-model-y-spacex-welding-technique-analysis-video/ https://www.teslarati.com/tesla-model-y-spacex-welding-techn...
    - hef19898 4y ago
      Tesla tried full automation, which didn't work. Now they use pressed parts limiting the use of platform startegies, which enable all other manufacturers to produce a multitude of models, including loe cost ones, using the same tooling, parts and R&D. I guess we will see were that ends.
  - fragmede 4y ago
    Why would, or should a business decide to make less money selling a cheaper version of a product when demand for the more expense (and hence more profitable) product shows no sign of waning? Don't get me wrong, I'd love to buy a $35,000 Model 3, but it makes no business sense, especially considering the fact that the average new car cost is something like $44k these days.
    - zaroth 4y ago
      Just food for thought… $35k in Feb 2019 when Tesla announced the “$35k Model 3” is now just under $42k simply adjusted for inflation.
ajross 4y ago
All auto manufacturers are subsidized in some sense. Remember that GM was straight up insolvent in 2009 and had to be bailed out with enormous federally-guaranteed loans. But none of that discounts the value of talking about engineering activities involved in reducing the costs of production, because that stuff matters too. And yes, single-piece chassis are absolutely part of that, as is the minimalist interior (the cockpit BOM for a Tesla is a tiny fraction of what you see on competing EVs), the ongoing sensor fusion architecture (yes, everyone loves to scream about it here, but the upshot is that Tesla doesn't pay for the radar units everyone else uses), etc... They're actually extremely trim vehicles from an assembly perspective. There's a Munroe video out somewhere where he estimates production costs for a Y vs. a Mach-E and figures there's something like a $10k advantage for Tesla.
cs702 4y ago
It's one of the reasons, but not the only one. That's why I wrote "Thanks in part to..."
kjksf 4y ago
All EVs are subsidized and pretty much all of them (except Tesla) are loosing money while Tesla has industry leading gross and operating profit margins. So it's definitely not subsidies. On a definitional level, gross profit is difference between price and cost. Tesla has biggest difference which implies that it's a combination of charging higher prices and having lower production cost that other.
- akiselev 4y ago
  Only EVs assembled in the US can receive the full subsidy now, ever since the Inflation Reduction Act came into force.
sacred_numbers 4y ago
I think the biggest reason for Tesla's gross margins is that millions of people want EVs for various reasons (gas prices, environmental concerns, fun, status) and Tesla is one of the only companies making them in large quantities. They don't have to be the best (even though they probably are on many metrics). They just have to be available and they can kind of set their price.
rootusrootus 4y ago
I think it's vertical integration in general that drives their profit margin. It's why Teslas are good but not great, and will rarely be the best at any particular thing. Brewing up your own rain-sensing wipers saves on component costs, but is inferior. Building your own seats saves on costs, but is inferior. They're playing for the middle. Not a bad strategy at all if you're going for profits, so it makes sense. It'll be interesting to see how it all settles out compared to the legacy manufacturing style of subbing out components. Some people will pay extra for Recaros (me!) but a lot of people couldn't care less.
- martin8412 4y ago
  They're suspected of underallocating funds for warranty repairs. Those funds would normally eat into the profit margin, but at Tesla they're supposedly accounted as good will service, so it comes out of a different post.
- sliken 4y ago
  Never seen a Tesla review claiming the seats were inferior. In a few they were claimed they claimed they were among the best, but most reviews don't mention the seats in particular.
  - tyfon 4y ago
    The seats in my X and 3 are the only car seats I've tried that does not give me back pain after long trips. They are one of the biggest reasons i drive tesla instead of the etron.
jackmott42 4y ago
Everything is subsidized.
deleted 4y ago
[deleted]
sliken 4y ago
Telsa has been relentless in simplifying the part count of a tesla. Each part needs to designed, tracked, inventoried, installed, verified, made available for repairs, increases the size of the factory, and decreases the rate of production. Added parts also require space to install, clearance, sometimes custom tools, testing, might create vibration/wear/noise that requires mitigation, etc. The front and rear chassis used to require 100s of robots and parts, and then alignment would have to be checked, more material used, more time, more robots, etc. Replacing the front and rear chassis removed 300 robots ... each, and of course the factory space for the robots, and the time for the assembly line to run past those robots. The glass roof, which IMO isn't a big feature, can be installed after the chassis is built. Enabling robots to install the dashboard, central console, seats, etc before the roof is installed. On most cars the dashboard is complex, multilayered, complex set of sensors, displays, spinning needles (speed, rpm, temp, fuel levels, etc). On a Tesla the dash is built on a big square straight piece of aluminum, a simple slot for airflow (no fancy/fiddly air flow controls), and a 15" display. Likely reducing 100s of parts. The octovalve and related cooling system is a marvel as well, nicely integrating heating/cooling of the cabin, motors, and battery. Dramatically simpler than competing solutions, in particular the Ford Mach E and Lightning. Most cars have an extremely complex set of CPUs, sensors, and control distributed all around the car. Chips in doors for locks/windows, a separate system for ABS (usually from bosche), networks of temperature/pressure/movement sensors, torque controls/monitoring for window motors, windshield wipers, airflow motors, etc. In the model 3 it's largely integrated into a single board at a level of integration Munroe claims they have seen in no other car, or even any product ... outside of a satellite. This might sound like hand waving and marketing, but one metric that supports this is the cars products per square foot of factory per hour. Tesla is way ahead. It's also supported by high profit margins, even when compared to companies that have as high or higher prices. So yes I'd say that the gigapress is a key part of reducing the part count, assembly time, and number of robots required to build a car. The result is a Tesla factory builds more cars than the competitions factory of the same size.
- lallysingh 4y ago
  The underlying trick to this, in part, is the fact that Tesla's making exactly 4 models (S3XY). The models are long-lived. This lets them invest in specialized parts that reduce the cost (significantly!) of their vehicle. I read a stat somewhere that the Y takes 10 hours to build. Disclaimer: I respect Tesla's manufacturing prowess, I despise the self driving claims, and think the vehicles are hideous.

toomuchtodo 4y ago

https://english.hani.co.kr/arti/english_edition/e_business/1016533.html https://english.hani.co.kr/arti/english_edition/e_business/1... > The secret behind Tesla’s 30% gross margin > The company's Q3 sales rose 58% year-on-year despite a 6% decrease in average selling price, allowing for high margins for the electric vehicle manufacturer > Analysts point to another factor behind Tesla's high profit margin. Park Hyung-keun, a senior researcher at POSCO Research Institute, said, "Through vertical integration by directly being involved from floor design to parts supply and demand, production and service, Tesla has helped reduce costs by raising the degree of its parts integration and cutting overlapping costs." > Tesla's unique structure of vertical integration, ranging from the development of semiconductor chips, software and batteries for electric vehicles, to charging, unmanned driving and insurance services, helps lower costs. Its “do-it-all” approach simplifies the automotive production process in a manner resembling that of electronic products. In contrast, other automakers actively utilize production outsourcing to diversify vehicle quality risks and raise output efficiency. > A leading example is Tesla's “giga” aluminum die-casting process. A Giga Press weighing more than 1 giga pound (400 tonnes, or around 900,000 pounds) stamps the entire rear chassis of a car with a large aluminum alloy. About 70 metal plates can be welded to the chassis, but giga casting can simplify the process and slash production costs by about 40%. This is why Tesla electric vehicles have recently reduced panel gaps issues — defects caused by misaligned steel plate seams.

hef19898 4y ago
So instead of figuring out "precision" welding (maybe SpaceX could have helped out?), Musk used pounds instead of kg or tons in order to implement "Giga"presses? Well, at least the manufacturing inexperienced Tesla crowd has something new to rave about... Still no < 35k Model 3 so.
- toomuchtodo 4y ago
  They found a cheaper, faster, more efficient way to make structural components. SpaceX already shared with Tesla how to friction stir weld [1] (and that technique is still used currently [2]), but that is not as fast as stamping out body components. Simplicity is the ultimate sophistication. There is no extra credit for making your manufacturing process more complex than necessary (if you want to show off, fire your EV into space). Tesla's manufacturing ramp rate is primarily a function of how fast the org can improve the speed and process at which atoms travel through the manufacturing process, feedstock to final product. [1] https://electrek.co/2015/05/24/spacex-transferred-novel-welding-techniques-and-equipment-to-tesla-motors/ https://electrek.co/2015/05/24/spacex-transferred-novel-weld... [2] https://www.teslarati.com/tesla-model-y-spacex-welding-technique-analysis-video/ https://www.teslarati.com/tesla-model-y-spacex-welding-techn...
  - hef19898 4y ago
    Tesla tried full automation, which didn't work. Now they use pressed parts limiting the use of platform startegies, which enable all other manufacturers to produce a multitude of models, including loe cost ones, using the same tooling, parts and R&D. I guess we will see were that ends.
- fragmede 4y ago
  Why would, or should a business decide to make less money selling a cheaper version of a product when demand for the more expense (and hence more profitable) product shows no sign of waning? Don't get me wrong, I'd love to buy a $35,000 Model 3, but it makes no business sense, especially considering the fact that the average new car cost is something like $44k these days.
  - zaroth 4y ago
    Just food for thought… $35k in Feb 2019 when Tesla announced the “$35k Model 3” is now just under $42k simply adjusted for inflation.

ajross 4y ago

All auto manufacturers are subsidized in some sense. Remember that GM was straight up insolvent in 2009 and had to be bailed out with enormous federally-guaranteed loans. But none of that discounts the value of talking about engineering activities involved in reducing the costs of production, because that stuff matters too. And yes, single-piece chassis are absolutely part of that, as is the minimalist interior (the cockpit BOM for a Tesla is a tiny fraction of what you see on competing EVs), the ongoing sensor fusion architecture (yes, everyone loves to scream about it here, but the upshot is that Tesla doesn't pay for the radar units everyone else uses), etc... They're actually extremely trim vehicles from an assembly perspective. There's a Munroe video out somewhere where he estimates production costs for a Y vs. a Mach-E and figures there's something like a $10k advantage for Tesla.

cs702 4y ago

It's one of the reasons, but not the only one. That's why I wrote "Thanks in part to..."

kjksf 4y ago

All EVs are subsidized and pretty much all of them (except Tesla) are loosing money while Tesla has industry leading gross and operating profit margins. So it's definitely not subsidies. On a definitional level, gross profit is difference between price and cost. Tesla has biggest difference which implies that it's a combination of charging higher prices and having lower production cost that other.

akiselev 4y ago
Only EVs assembled in the US can receive the full subsidy now, ever since the Inflation Reduction Act came into force.

sacred_numbers 4y ago

I think the biggest reason for Tesla's gross margins is that millions of people want EVs for various reasons (gas prices, environmental concerns, fun, status) and Tesla is one of the only companies making them in large quantities. They don't have to be the best (even though they probably are on many metrics). They just have to be available and they can kind of set their price.

rootusrootus 4y ago

I think it's vertical integration in general that drives their profit margin. It's why Teslas are good but not great, and will rarely be the best at any particular thing. Brewing up your own rain-sensing wipers saves on component costs, but is inferior. Building your own seats saves on costs, but is inferior. They're playing for the middle. Not a bad strategy at all if you're going for profits, so it makes sense. It'll be interesting to see how it all settles out compared to the legacy manufacturing style of subbing out components. Some people will pay extra for Recaros (me!) but a lot of people couldn't care less.

martin8412 4y ago
They're suspected of underallocating funds for warranty repairs. Those funds would normally eat into the profit margin, but at Tesla they're supposedly accounted as good will service, so it comes out of a different post.
sliken 4y ago
Never seen a Tesla review claiming the seats were inferior. In a few they were claimed they claimed they were among the best, but most reviews don't mention the seats in particular.
- tyfon 4y ago
  The seats in my X and 3 are the only car seats I've tried that does not give me back pain after long trips. They are one of the biggest reasons i drive tesla instead of the etron.

jackmott42 4y ago

Everything is subsidized.

deleted 4y ago

[deleted]

sliken 4y ago

Telsa has been relentless in simplifying the part count of a tesla. Each part needs to designed, tracked, inventoried, installed, verified, made available for repairs, increases the size of the factory, and decreases the rate of production. Added parts also require space to install, clearance, sometimes custom tools, testing, might create vibration/wear/noise that requires mitigation, etc. The front and rear chassis used to require 100s of robots and parts, and then alignment would have to be checked, more material used, more time, more robots, etc. Replacing the front and rear chassis removed 300 robots ... each, and of course the factory space for the robots, and the time for the assembly line to run past those robots. The glass roof, which IMO isn't a big feature, can be installed after the chassis is built. Enabling robots to install the dashboard, central console, seats, etc before the roof is installed. On most cars the dashboard is complex, multilayered, complex set of sensors, displays, spinning needles (speed, rpm, temp, fuel levels, etc). On a Tesla the dash is built on a big square straight piece of aluminum, a simple slot for airflow (no fancy/fiddly air flow controls), and a 15" display. Likely reducing 100s of parts. The octovalve and related cooling system is a marvel as well, nicely integrating heating/cooling of the cabin, motors, and battery. Dramatically simpler than competing solutions, in particular the Ford Mach E and Lightning. Most cars have an extremely complex set of CPUs, sensors, and control distributed all around the car. Chips in doors for locks/windows, a separate system for ABS (usually from bosche), networks of temperature/pressure/movement sensors, torque controls/monitoring for window motors, windshield wipers, airflow motors, etc. In the model 3 it's largely integrated into a single board at a level of integration Munroe claims they have seen in no other car, or even any product ... outside of a satellite. This might sound like hand waving and marketing, but one metric that supports this is the cars products per square foot of factory per hour. Tesla is way ahead. It's also supported by high profit margins, even when compared to companies that have as high or higher prices. So yes I'd say that the gigapress is a key part of reducing the part count, assembly time, and number of robots required to build a car. The result is a Tesla factory builds more cars than the competitions factory of the same size.

lallysingh 4y ago
The underlying trick to this, in part, is the fact that Tesla's making exactly 4 models (S3XY). The models are long-lived. This lets them invest in specialized parts that reduce the cost (significantly!) of their vehicle. I read a stat somewhere that the Y takes 10 hours to build. Disclaimer: I respect Tesla's manufacturing prowess, I despise the self driving claims, and think the vehicles are hideous.