Thoughts on Margin Comparisons

Allan

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#1
I'd be curious to see if anyone has some better insight on this. I'm not currently a Tesla stockholder but I have been many times including at IPO and I likely will be again with todays massive dip. In seperating my love for my car and being a rational investor I find one item a big difficult to evaluate.

We have been expecting the Base $35K Model 3 to still manage to have excellent marging but I see comparisons to others that are either on par or even show the Tesla marging being lower. Its very difficult to dig into these are the underlying data is simply not cited or published. Using this article as an example,

https://finance.yahoo.com/news/teslas-model-3-margins-could-130513581.html

This quote shocks me "According to the note, Tesla's gross margin comes in at 18 percent for a high-end Model 3, while the BMW 330i records 21 percent. The powertrain for Tesla's Model 3 costs $17,827, more than double BMW spends on the component.
"With these economics, we expect the $35k base Model 3 to lose about $6k/car," Langan said.

So, first off - Margin per unit is a delicate calculation because there are many many variables. But in reality there are less variable for Tesla than BMW. The $35K Model 3 will be sold BY TESLA for $35K. The $49K Model 3 is sold BY TESLA for $49K. Tesla does have to pay for the Delivery Center personel and the peopel in a Tesla store as part of the overall sales cost. A $50K MSRP BMW is actuall sold to a dealer for something significantly less than $50K and almost impossible to calculate. BWM then has the benefit of not having to actually pay for the staff in the dealership. Its complicted to compare.
My personal take is that these analysts don't have the numbers straight and the journalism is a little weak. I believe that Tesla will be able to make the Base Model for under $30K, but it will not be nearly as profitable as the model I have. My larger battery and interior upgrades if taken alone are probably close to a 50% margin. That's not uncommon really with any product for the high-end components to be very profitable.

 

garsh

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#2
"With these economics, we expect the $35k base Model 3 to lose about $6k/car," Langan said.
Yes, this is from UBS. Their calculations are WAY off compared to two other firms' calculations.

https://electrek.co/2018/08/17/tesla-base-model-3-money-losing-ubs-teardown/

The firm has come up with completely different results than other Model 3 teardowns. For example, Munro research said their Model 3 teardown showed over 30% profitability and a German teardown of the Model 3 showed only $28,000 in potential material and production costs.

I'm willing to bet that UBS is completely wrong on this one.
 

SoFlaModel3

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#3
My simple thought is that there is no way Tesla is going to bring their highest volume potential vehicle to market at a loss per unit sold so there is no way it’s accurate.