A Tesla net income margin infographic hammers the point of its record profits home, as the second in line GM earns less than a quarter of what Tesla makes per car. Even with the recent price cuts, Tesla is likely to keep its record profit margins intact as a lot of its new affordability target will come from government subsidies.
While it was already known that Tesla makes 8x more money per car than the world’s largest automaker Toyota, a new profit margin infographic shows that no other car brand is even close, too. Tesla earned US$9,547 per vehicle in Q3, while General Motors whose profits come in second made US$2,150, or less than a quarter of the margin that Tesla commands. Interestingly enough, Tesla’s biggest EV competitor BYD earned US$1,550 per car, taking the third place in profitability. Here’s a list of some electric car makers’ profit margins per car:
- Tesla: $9,574
- GM: $2,150
- BYD: $1,550
- Toyota: $1,197
- VW: $973
- Hyundai: $927
- Ford: -$762
BYD was expected to surpass Tesla as the world’s largest EV maker this year, but with Tesla’s latest price cuts of more than 20% with subsidies, it may have a hard time doing so as Elon Musk predicts Tesla could produce up to 2 million electric vehicles in 2023, which means that BYD would have to double its 911,000 tally from 2022. Still, Elon Musk probably meant BYD when he admitted at the last earnings call that Tesla’s biggest competitor would come out of China:
We have a lot of respect for the car companies in China. They are the most competitive in the world. That is our experience. They work the hardest and they work the smartest. And so we guess, there is probably some company out of China as the most likely to be second to Tesla.
Tesla’s profit margins come from keeping production costs in check by constantly optimizing its manufacturing process and increasing the share of its newest and most efficient Gigafactories like the ones in Texas or Germany in its production mix. Tesla is always getting rid of parts and functions it doesn’t need, down to saving US$144 per car from ditching the ultrasonic parking sensors. It also switched to giga-casting the unibody chassis of its cars and is betting on cheaper battery technologies like the LFP chemistry in its standard range vehicles, or the 4680 cell-to-chassis packs that save it 30% per unit.
Tesla is not stopping here, though, as it intends to start an EV price war in the budget segment with the upcoming “smaller, cheaper” Model 2 as well. Elon Musk said that Tesla will aim to make the Model 2 at half the US$33,600 production costs of the Model 3, and with the federal tax credit it may sell for well below US$25,000, putting the competition in a bind while preserving its record US$10,000 per vehicle profit margins.
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Daniel Zlatev – Tech Writer – 581 articles published on Notebookcheck since 2021
Wooed by tech since the industrial espionage of Apple computers and the times of pixelized Nintendos, Daniel went and opened a gaming club when personal computers and consoles were still an expensive rarity. Nowadays, fascination is not with specs and speed but rather the lifestyle that computers in our pocket, house, and car have shoehorned us in, from the infinite scroll and the privacy hazards to authenticating every bit and move of our existence.
Daniel Zlatev, 2023-02- 6 (Update: 2023-02- 6)
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