Nothing Wrong With TESLA Having High Profit Margins Per Car
Tesla recently reported record profits for the fourth quarter and the full year.
Before the shift towards electric cars (about a decade or so ago) European car manufacturers, especially the German brands were having very high profit margins per car and there was no ‘noise’ about this.
Now, this latest profit margin infographic which has been circulating online is stirring non electric car fans. Please note that Tesla has been making ONLY electric cars and they have been doing far longer than anyone else.
All other established car manufacturers are having to deliver both electric and also petrol powered cars which means costs are higher.
Take Toyota Motor Corporation for example, which is the worlds most valuable car brand and Mercedes-Benz who has the highest per-vehicle profit margin, both these high value automotive brands are now earning less per car than Tesla and it will continue until they both go fully electric like Tesla.
This is why some car manufacturers, like Volvo have said that they will no longer be developing any all new petrol powered cars and in a few years they will ONLY have electric cars for sale across the globe.
In a recent interview, Volvo management promised to deliver 6 new electric vehicles in the coming 5 years and it will include a compact crossover that might carry the name XC30.
Meanwhile, Tesla has been in the news for offering heavy discounts on certain models and also offering high lease rebates in some countries.
As 2022 came to an end, it could be seen that Tesla’s profit margins were smaller with higher production costs and lower year end sales. CEO Elon Musk said the price cuts announced late last year and earlier this year has spurred demand for its cars and that orders are now outpacing production by a two-to-one margin.
Meanwhile, Tesla posted adjusted earnings of USD1.19 per share in the quarter, up from 85 cents a share a year earlier.
Interestingly, Tesla management set a sales target 1.8 million vehicles for this year, which is an increase of 37 percent from 2022 sales of 1.3 million vehicles.
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