Capital expenditures are actually up over last quarter, to $72M. I don't see that as sustainable with a gross margin of only eight percent at twenty thousand c

Capital expenditures are actually up over last quarter, to $72M. I don't see that as sustainable with a gross margin of only eight percent at twenty thousand cars a year, as that leaves a gross profit of only $120M a year at a $75K average selling price. So something must be improved--either expenditures need to go down or gross margin needs to go up. Meanwhile, the average selling prices of Teslas will go down as early adopters run dry, even as R&D and capital expenditures on other models ramp up. At 25% gross margin, though, they can recoup their billion dollars in only three years. If they're indeed flying in tires from the Czech Republic it sounds like there's a lot of low hanging fruit in the cost department, but it's quite possible Tesla has just built a more expensive car than they thought they were making. I suspect it, in fact. I'm not sure they'll be able to avoid going back to the public markets for more money this year if they want to expand their product line. I think the interesting question is whether incumbent manufacturers will produce an equivalent auto lineup at less cost, or not. Many competitors, like Mercedes, BMW, or Ford, have existing labor, plants and tooling they could leverage for electric vehicle manufacture. Some have been in business for a hundred years. If the answer is no (market is too niche, existing plants are too old, incumbents lack the skillz) I think Tesla may be a viable entity. However, I think mainstream manufacturers have stayed away from aggressively creating new hotness in the vehicle market because they don't yet see any profits there. Their approach has been conservative, and I think the reason is that conditions are not yet ripe. Tesla was founded ten years ago; timing is everything.