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The first section of my comment was based on a napkin gross margin calculation as best I could. I e: sales - cost of goods sold. In this case I divided by the

by yial 3y ago

The first section of my comment was based on a napkin gross margin calculation as best I could. I e: sales - cost of goods sold. In this case I divided by the number of cars sold to get an idea of who was making more. I don’t see why you’d need to normalize for the type of cars sold. It’s irrelevant. If you have 2x the margin, because of not using dealers, that would be an overwhelming difference and I would imagine be in teslas favor for this calculation. If I sell 100 items, and they cost me $9, and I sell them for $10. I’ve made $100. $1,000-$900=$100 If I sell 1 item, for $1,000 that cost me $900, I’ve still made $100. My margin is the same in both calculations. 10%. But I also am not sure if the original comment perhaps meant markup vs margin.

schiffern 3y ago
> I don’t see why you’d need to normalize for the type of cars sold. Pickups and large SUVs are known to be much more profitable vehicle segments than mid-sized cars and SUVs. That's why Ford stopped selling cars domestically (except the Mustang). https://slate.com/business/2018/04/its-logical-for-ford-to-stop-selling-cars-in-north-america-its-also-heartless.html https://slate.com/business/2018/04/its-logical-for-ford-to-s... https://www.siouxfallsford.com/blog/2023/august/25/why-did-ford-stop-making-cars.htm https://www.siouxfallsford.com/blog/2023/august/25/why-did-f... ("Profitability and Production Costs") https://www.nbcnews.com/business/autos/ford-stop-making-all-passenger-cars-except-mustang-n869256 https://www.nbcnews.com/business/autos/ford-stop-making-all-... Tesla's strong demand has shown the go-to "evolving consumer preference" line was more about consumers avoiding Ford cars (which were indeed awful), not cars/crossovers in general.
- yial 3y ago
  I think I understand the point you’re trying to make - as in, compare apples to apples. However, if you’re trying to assess “Tesla has double the margin because they don’t use dealers” it’s not about the type of car. Does Tesla have double the margin of xyz car brand that does use dealers. But I may be a tad pedantic there. Now I agree it would be interesting to know if they have double the margin in luxury sedans, but not in suvs.

by yial 3y ago

schiffern 3y ago

> I don’t see why you’d need to normalize for the type of cars sold. Pickups and large SUVs are known to be much more profitable vehicle segments than mid-sized cars and SUVs. That's why Ford stopped selling cars domestically (except the Mustang). https://slate.com/business/2018/04/its-logical-for-ford-to-stop-selling-cars-in-north-america-its-also-heartless.html https://slate.com/business/2018/04/its-logical-for-ford-to-s... https://www.siouxfallsford.com/blog/2023/august/25/why-did-ford-stop-making-cars.htm https://www.siouxfallsford.com/blog/2023/august/25/why-did-f... ("Profitability and Production Costs") https://www.nbcnews.com/business/autos/ford-stop-making-all-passenger-cars-except-mustang-n869256 https://www.nbcnews.com/business/autos/ford-stop-making-all-... Tesla's strong demand has shown the go-to "evolving consumer preference" line was more about consumers avoiding Ford cars (which were indeed awful), not cars/crossovers in general.

yial 3y ago
I think I understand the point you’re trying to make - as in, compare apples to apples. However, if you’re trying to assess “Tesla has double the margin because they don’t use dealers” it’s not about the type of car. Does Tesla have double the margin of xyz car brand that does use dealers. But I may be a tad pedantic there. Now I agree it would be interesting to know if they have double the margin in luxury sedans, but not in suvs.