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Cost of Roadster

Discussion in 'Roadster' started by Arnold Panz, Jun 23, 2009.

  1. Arnold Panz

    Arnold Panz Model Sig 304, VIN 542

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    Tesla CEO says Roadster costs down


    Within EM's blog is a rather detailed discussion of the fact that unit cost on each Roadster is down to $80,000, and that because of this, the Roadster is going to be profitable quite soon.

    My question is, does the $80,000 in costs include leases, labor (salaries) etc.? EM's post talks about shipping costs, parts etc., but I don't know if that factors in all of these company-owned stores, management salaries and the like. With the opening a several additional stores, which means paying rent and salaries to the people working in those stores, TM's costs continue to rise, and I don't know if a $30,000 margin per car can pay for all of that if that isn't already included in the "cost" of building the car.
     
  2. Kardax

    Kardax Member

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    I'm pretty sure that's just the parts & labor for the manufacturing of the car itself. It doesn't include any of the R&D or service infrastructure.

    I don't think Tesla ever had a plan to pay off the Roadster development with Roadster sales... it's more of a technology development & marketing platform to enable the Model S. The Model S should generate enough income to pay for everything.

    -Ryan
     
  3. Arnold Panz

    Arnold Panz Model Sig 304, VIN 542

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    Thanks. That's what I had thought, but EM's been pretty vocal in recent interviews, and his blog post, about the Roadster now being "profitable". I assume the additional stores are in anticipation of the Model S, and eventually Bluestar. It just seems weird to me to claim that one particular product is "profitable" if the whole enterprise that supports that one product isn't profitable. It's probably not something I'd go bragging about, although I suppose it's much better to make $30k or so per vehicle than lose money just on parts and labor.
     
  4. DrComputer

    DrComputer Member

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    Why wouldn't you brag? Perception is reality in the business world. If the Roadster is now profitable, the company wants the world to know. Anything positive is always worth noting... especially in this economic climate.
     
  5. Arnold Panz

    Arnold Panz Model Sig 304, VIN 542

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    Maybe in the short run, but I come from the school of thought that you don't want to appear deceptive, because people (investors, customers, etc.) become disillusioned if they don't think you're being straight and honest with them. In this case, I would definitely brag about bringing the unit cost down well below the list price, but just not use the term "profit", which really implies that the Roadster can survive on its own, which it can't.

    I'm also not sure I'd detail exactly how much the car costs to produce -- it tells prospective customers how much they're giving straight to Tesla. I don't think most car companies are that transparent about their profits per vehicle, in part because it doesn't account for the allocations of overhead, marketing etc.
     
  6. DrComputer

    DrComputer Member

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    I think that is part of what makes Tesla different. They have been very up front about their costs, financial issues, productions delays, etc. That is why I think by saying their are going to be "profitable" with the Roadster this month, it only helps and not harms their position as a reputable company.
     
  7. BBHighway

    BBHighway Member

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    What's deceptive about announcing that the Roadster is becoming profitable? Isn't it progress that they have positive cash flow from Roadster production, instead of losing money on each one going out the door?

    I remember when Amazon when through a similar stage a few years ago. Initially they were losing money on book sales as they were getting the company going. Then, they turned the corner and the books starting making money, even though the company as a whole was still losing money as the were spending to expand and gain market share. It turned out to be a good strategy, now they are very successful.
     
  8. Kardax

    Kardax Member

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    A profitable enterprise is made out of profitable products. Making money on the Roadster is more of a symbolic victory, but it's important to show that the company can do it.

    The Model S, with its much higher sales volumes, should be able to carry the whole company.

    -Ryan
     

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