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As a business it seems smarter to grow the pie and increase your revenues even if Tesla's marketshare decreases. Even through the lens of hating Elon Musk and

As a business it seems smarter to grow the pie and increase your revenues even if Tesla's marketshare decreases. Even through the lens of hating Elon Musk and wanting alternatives, most people have no strong feelings at all. Price and availability largely dictates what Tesla will sell. I have not seen any data Elon's antics change sales volumes.

bryanlarsen 3y ago
Smart or not, it's definitely Tesla's strategy. They have an explicit goal of 20% of the vehicle market. They don't care what their share of the EV market is, they want 20% of the combined market.
Retric 3y ago
Tesla’s gross margins are down quite a bit since the Twitter deal. It’s hard to correlate consumer sentiment with the price drop vs other factors, but gross margins dropped from 27% to 23% which represent a lot of money. How much this impacts the company going forward is hard to say, but my guess is we’re talking 10’s of billions. Which makes it much harder to keep up with the expanding EV market, their super charger network for example needs to dramatically increase capacity just to keep up with the current rate of new Tesla production. Aka 25 year old EV’s will still need a place to recharge.
- erikstarck 3y ago
  The margins were inflated during the pandemic, though. Musk even called their prices "embarrassingly expensive". https://www.carscoops.com/2022/07/teslas-prices-are-embarrassing-to-elon-musk-as-he-offers-hope-that-they-might-come-down/ https://www.carscoops.com/2022/07/teslas-prices-are-embarras...
  - Retric 3y ago
    Tesla’s gross margins were much higher in 2011 than 2022. But yea, this is why I said it’s hard to separate how much of this was Tesla specific vs industry wide. However, the need to cut prices despite high inflation was unusual in the car industry and suggests a Tesla specific issue.
    - _ea1k 3y ago
      It is easy to explain when you consider that 2 car models are representing ~1.7M cars this year. Their strategy is a little nutty and has basically required them to underprice their vehicles. Any other mfg would cut back production to maintain margins.
      - seanmcdirmid 3y ago
        Most non-Tesla auto manufacturers are taking a loss on their new EVs ATM as they try to optimize supply and recoup R&D costs.
        _ea1k 3y ago
        Yeah, but I bet that changes once they get to ~400k per year. That isn't much different from Tesla's path.
- megaman821 3y ago
  There is no telling how much money is involved in falling margins if you don't also look at revenues. A quick Google search shows their gross profits look fine. Also, you would have to compare them to other manufacturers. If profits were down an average of 20% and Tesla's were down 10% then they would be over performing their competitors during a down market.
  - Retric 3y ago
    Gross profits need to pay back capital expenses for equipment or land, R&D, etc which is why moderate drop in gross profits represents a much larger drop on long term profits.

bryanlarsen 3y ago

Smart or not, it's definitely Tesla's strategy. They have an explicit goal of 20% of the vehicle market. They don't care what their share of the EV market is, they want 20% of the combined market.

Retric 3y ago

Tesla’s gross margins are down quite a bit since the Twitter deal. It’s hard to correlate consumer sentiment with the price drop vs other factors, but gross margins dropped from 27% to 23% which represent a lot of money. How much this impacts the company going forward is hard to say, but my guess is we’re talking 10’s of billions. Which makes it much harder to keep up with the expanding EV market, their super charger network for example needs to dramatically increase capacity just to keep up with the current rate of new Tesla production. Aka 25 year old EV’s will still need a place to recharge.

erikstarck 3y ago
The margins were inflated during the pandemic, though. Musk even called their prices "embarrassingly expensive". https://www.carscoops.com/2022/07/teslas-prices-are-embarrassing-to-elon-musk-as-he-offers-hope-that-they-might-come-down/ https://www.carscoops.com/2022/07/teslas-prices-are-embarras...
- Retric 3y ago
  Tesla’s gross margins were much higher in 2011 than 2022. But yea, this is why I said it’s hard to separate how much of this was Tesla specific vs industry wide. However, the need to cut prices despite high inflation was unusual in the car industry and suggests a Tesla specific issue.
  - _ea1k 3y ago
    It is easy to explain when you consider that 2 car models are representing ~1.7M cars this year. Their strategy is a little nutty and has basically required them to underprice their vehicles. Any other mfg would cut back production to maintain margins.
    - seanmcdirmid 3y ago
      Most non-Tesla auto manufacturers are taking a loss on their new EVs ATM as they try to optimize supply and recoup R&D costs.
      - _ea1k 3y ago
        Yeah, but I bet that changes once they get to ~400k per year. That isn't much different from Tesla's path.
megaman821 3y ago
There is no telling how much money is involved in falling margins if you don't also look at revenues. A quick Google search shows their gross profits look fine. Also, you would have to compare them to other manufacturers. If profits were down an average of 20% and Tesla's were down 10% then they would be over performing their competitors during a down market.
- Retric 3y ago
  Gross profits need to pay back capital expenses for equipment or land, R&D, etc which is why moderate drop in gross profits represents a much larger drop on long term profits.