3s-a-charm
Active Member
Personal opinion... I don't think the profit on these cars will be 20% - especially at the beginning. Lucky to break even.
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Red Sage
The Cybernetic Samurai
Here's the way I look at it... If Tesla shoots for the claimed automotive industry standard of a 6% margin...? That means that a $35,000 car would cost them around $32,900 to build. I figure the Destination Fee will probably be around $1,000. Since they do not use 'independent franchised dealerships' and will not need to use traditional advertising for some time, there is a bit of savings for them there as well. So, compared to other cars offered at $35,000 the Model ☰ will certainly be profitable, even for the lowest trim version of the car from the outset. Not breaking even, not below water.
I figure that the trim levels for the Model ☰ will be predicated on the drivetrain and battery pack capacity. I figure there will probably be three or four trim levels. Perhaps set up like: 1) Base car, rear wheel drive, software limited battery pack; 2) Dual motor all wheel drive car, mid-level battery pack capacity; 3) Performance dual motor all wheel drive car, maximum battery pack capacity. Each of those will have a multitude of hardware that is standard across them all, and the higher trims will have some standard features that are not available on lower trims. Further, some items will be optional on all trims, possibly allowing you to add as much as $15,000 in options packages to any trim level.
Due to the economies of scale Tesla is building the Model ☰ at, they may be able to get very good deals on components from third-party Suppliers. As a result, I think the worst their internal cost would be is a 1:2 ratio, and possibly as good as 1:3, 1:4, or 1:6 versus the retail amount. So, if $15,000 in options only cost them $7,500 to put in the car... That $32,900 build cost for a $35,000 car becomes $40,400 to build a $50,000 car. That's a worst case 19.2% margin on a maxed out base car. If it only costs Tesla $5,000 to add $15,000 in options...? That pushes the profit margin to 24.2% on a $50,000 car. Good times.
FlatSix911
Porsche 918 Hybrid
Red Sage
The Cybernetic Samurai
JeffK
Well-Known Member
You know, I've tried his salad dressing and I have to say I like Hidden Valley better.
AP data is retrieved from every user whether AP is enabled or not... There's zero need for it to be free.
The typical cost of dealer distribution for a major manufacturer (which sells a range similar in price and positioning to that of 2020 Tesla) is around 10-15% of MSRP. That is composed of some disclosed items, like MSRP-Invoice, some consumer incentives, other dealer ones, and manufacturer support for dealer facilities. That 10-15% range tends to increase for less-than-desirable models/brands/options. Overall no manufacturer I have known budgets less than 20% for dealer distribution costs. Because Tesla has no dealers. a 20% cushion can be a powerful force.
FWIW, I worked on manufacturer-level assessment of these costs in several countries for several manufacturers ranging from low-volume luxury to high-volume entry-level. The costs do vary quite a lot, but on average the 20% figure keeps repeating itself. For the tiny handful of countries in which onon-franchised-dealer models are common, I have assessed only three. Each of the three had distribution costs or around 10-12%. Other things are not equal in this world, so generalizing is risky. In the cases I dealt with the advertising budgets ran between 4-6% of total costs, but were frequently obscured in many different budgets, so never transparent.
Given all that I'll postulate that Tesla distribution costs run around 8% of sales, and the promotional costs are around 2% of sales. If so, that would give Tesla 4%-8% of sales advantage over typical competitors. That advantage, in a world of 8% gross ROS being pretty much the highest end, is huge! That advantage is dwarfed by the Tesla construction/sales model. In the Tesla case WIP includes raw materials (a la Ford River Rouge in the 1920's), with vertical integration far higher than any other typical auto builder today. So WIP is presumably high than, say, Toyota, famously the leanest builder (true or not). On the other side Tesla holds title until the end-user has taken delivery. That cycle means Tesla holds as WIP somewhere between 60-90 days of finished goods that most manufacturers will have already sold to distributors/dealers. GAAP sales recognition for auto manufacturers is an entertaining subject (for accountants anyway
) but Tesla actually carries more than is typical on both input and output sides. Further the typical large car manufacturer outsources large amounts of design work, ranging from the entire car to major components, thus reducing design work. Similarly, many outsource even the actual manufacturing. How would Mercedes or BMW customers feel if they knew their shiny new high value chariot actually was made by Valmet or Magna-Steyr. All of that dramatically reduces capital and marginal costs to the banded car. Tesla, despite loading up on Mercedes supplier-supplied switchgear, compressors and assorted other stuff, still has been more and more vertically integrated.Tesla does have one serious Tier One supplier, sort of, Panasonic, except that Tesla itself is the primary design leader, Panasonic the battery-builder leader, tesla again design and quality control leader or co-leader depending on the case. This relationship is not unusual in kind (e.g. GM and Ford sharing their new 9-speed automatic transmission) but it is in that this one is braking technological, materials and manufacturing precedent. There is no clear way to understand the impact on capital expenditure or cost on the gigafactory without tons of data proprietary to Tesla, Panasonic, or both.
Entertainingly the Tesla manufacturing approach owes not too much to Silicon Valley conceptually. except for those robots, of course. Another topic relating to quality control, capital costs and scale economies
Once all that is done my personal guess is that Tesla is more than doubling effective gross margins due to their unconventional approaches, which will improve dramatically with scale.
these are my views. I might be wrong but I'll need proof to change my thinking
FloridaGary
Member
You're not alone. Someone posted that if you write to Tesla and let them know you never received it, they will mail one to you. I tried this yesterday and they called today saying if you haven't received one by now, you won't receive it. It was a nice gesture to offer a copy of the artist rendering to those of us that ordered on 3/31, but surprised they are not honoring it for all who ordered.
shrspeedblade
Rideshare Monkey
Well, that's frustrating, as I ordered in-store 3/31 and didn't receive one either- I guess there's little reward in this world for not being a complainer!
Garlan Garner
Banned
Elon said there is a gift coming.Well, that's frustrating, as I ordered in-store 3/31 and didn't receive one either- I guess there's little reward in this world for not being a complainer!
I posted that, not in this thread but in a different one. I don't consider it complaining to ask them if you could still get one. I waited for a couple of months after people stopped reporting that they were getting theirs, then sent the email. I just asked if they were still being sent out, told them I had reserved my car on the 31st, even provided my reservation number, and asked if there was a way to still get one.Well, that's frustrating, as I ordered in-store 3/31 and didn't receive one either- I guess there's little reward in this world for not being a complainer!
Where did you send your email. I originally sent one to customer service, they told me to send it to [email protected], I did that and got it via fed ex a few days later. Of course it is entirely possible that they are out of them and have no more to send out.
JeffK
Well-Known Member
There was a high res scan floating around here somewhere. You could print it on a color laser printer and it'd be virtually the same thing. It might not make you feel as special though
FloridaGary
Member
Thank you. I emailed Tesla Sales, but will try the merchandise email and see how they respond. Thanks!
BluestarE3
Active Member
This, perhaps?There was a high res scan floating around here somewhere. You could print it on a color laser printer and it'd be virtually the same thing. It might not make you feel as special though
M3 preorder gift scans (high-resolution)
