4 ms·

Car is a low margin item. SaaS is a high margin item

• goodluckchuck 3y ago
  Yes, from what I’ve seen, Ford sells their vehicles at cost and uses that line of business as a funnel to generates profits from via financing. Some higher trim models have a decent margin, but many lower trims are sold at a loss, resulting in essentially no profit from manufacturing. Moreover, EVs are shaping up to be a financial disaster for carmakers. Tesla is essentially the only company to turn a profit on EVs, with the likes of Ford etc. hemorrhaging billions every year, with no end in sight. EVs simply aren’t shaping up to be a viable business without supplemental revenue streams.
  • margorczynski 3y ago
    Tesla has premium/luxury pricing and the clout. I'm not sure if your "average Joe" brand of car can make EVs work in their current state. There's a limit how much someone will pay for a Toyota or a Ford, less so for a Tesla or BMW.
    • ChuckNorris89 3y ago
      Also Tesla customers will tolerate the bobby-car build quality that enables Tesla to have great margins. Toyota and others actually bother with QA which eats some of their margins.
      • panick21_ 3y ago
        The idea that Tesla has high margin because their final assembly is not as perfect as BMW is complete nonsense. They have high margin because of advanced manufacturing, vertical integration, cheap battery supply and so on. Also, the evidence for Tesla having much worse quality (the reports) shows that they are only marginally worse then everybody else. Nowwhere near far enough to make a 30% margin difference.