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Model X Profit Margin &Future Affect on TSLA price

Discussion in 'TSLA Investor Discussions' started by mdevp, Nov 22, 2015.

  1. mdevp

    mdevp Member

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    Seeing that the MX will be just 5k more than the MS with similar features, it seems obvious to me that the MX profit margin will be significantly lower than the MS and thus will decrease overall profit margin. If you look at the premium seats, the huge glass windshield, and obviously more car I can't fathom the MX matching the +28% similarly spec'd MS profit margin. Is this pretty much accepted by analysts? I haven't seen anything written about it. I'm wondering if the Q1/Q2 profit margin drops what affect would it have.
     
  2. Dwdnjck

    Dwdnjck Member

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    Model X will more than double Tesla's addressable market and profit margin will be just fine.
     
  3. andrewket

    andrewket 2014 S P85DL, 2016 X P90DL (soon 100)

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    Model X Profit Margin &Future Affect on TSLA price

    Don't forget that Tesla's costs on some parts are also going down because of volume and innovation.
     
  4. mdevp

    mdevp Member

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    edit

    - - - Updated - - -

    That wasn't my question, how can the profit margin be the same or fine if the 5k difference in price doesn't make up for all the incredible things a similar MX have vs an MS.

    - - - Updated - - -

    Hope so but I can't imagine the MX margin will come close to the MS. Hopefully with the revenue boost no one will care.
     
  5. ggr

    ggr Roadster R80 537, SigS P85 29

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    What evidence do you have other than your own guesswork? Elon has never been known to underprice a product in the past, why would he start now?
     
  6. chickensevil

    chickensevil Active Member

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    Considering the talk is still of getting to 30% for S and X combined I can't think of a reason why the X would drag the GM down... Most likely it will average about the same overall. It should be noted though that until they get the X properly ramped and worth through some likely inefficiencies the GM will come down a bit. They said as much as they were guiding for Q4. But that is because they are making hundreds in Q4 and not thousands. When they scale up I see no reason why they shouldn't be able to meet similar GMs.

    base to base, we are looking at presumably the base S 70D vs a base X 70D. It would not surprise me if you needed to add in the price of the rear kid seats and the pano roof as well since you can't opt to not take the third row nor can you opt for a solid roof. So that puts it closer to 80k out the door on an MS. Assuming they don't charge for the wheel size in that base price, I wouldn't be surprised if we get an 85k price on a "base X". Then you are accounting for roughly the differences between the two and the GMs should stay easily intact.
     
  7. ChadFeldheimer

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    I'm guessing:

    Base X = Base S + jump seats + panoramic sunroof + next gen seats + $5k

    Panoramic sunroof is approximately the X windshield + falcon door skylights.

    X premium seats is approximately next gen seats on the S.

    I wouldn't be shocked if the base (cyclone?) 20" wheels on the X also represent an upgrade from the base 19's on the S.

    In summary, the margin will be fine since the $5k premium is intrinsically "similarly equipped".
     
  8. chickensevil

    chickensevil Active Member

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    See I didn't count the seats since I assume there will be a textile option and such in the X. From what I have seen in the photos and been told the front X seats are the same as the S seats. Only the second and third row would be different (for obvious reasons). But I assume the other rows will eventually have a textile option. Anyway, I think the key is as you say "similarly equipped". This allows room for Tesla to set the price as needed to maintain the GM.
     
  9. electracity

    electracity Active Member

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    I doubt the MX costs 5K more to manufacture compared to the MS. First, Tesla doesn't have R&D in reported car margins. Second, they have learned from the MS how to make an easier to build vehicle.

    The really expensive components are either shared between the MS and MX, or are likely superior in the MX. I doubt the MX will have the drive unit problems of the MS.

    The M3 is the car that will reduce margins.
     
  10. ecarfan

    ecarfan Well-Known Member

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    Model X Profit Margin &Future Affect on TSLA price

    Since we are all just guessing, my speculation is that the X Falcon Wings cost significantly more to make than the S rear doors (highly likely), the auto opening X front doors cost more, the X windshield costs more, the X second row pedestal seats cost more, the X air purification system costs more (nothing comparable yet for the S), base 20" Cyclone wheels cost more than S base wheels, and who knows what else.
    So I agree with those that say a "comparably equipped" S probably includes options like the pano roof and rear child seats.
    If Tesla can get acceptable margins on a base X that is only $5K more expensive than a truly "base" S (with no options) then my hat is off to them! If I wore a hat...[emoji6]
     
  11. chickensevil

    chickensevil Active Member

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    Let's assume the 5k difference captures everything in it about the car being "larger", to that end, that would be slightly more overall glass, and slightly more aluminum, more lining and things like that.

    Focusing in specifically, and we are just talking about manufacturing cost right? Looking at the Rear doors, instead of stamping one main piece for each door, and then one piece for the roof, they just need to stamp two pieces for the rear doors which intrude into the same amount of alluminum (other than the overall size increase of the X itself). I would think that overall glass coverage is roughly the same between the cars, although they are certainly different pieces all around. the lining and such would cost roughly the same. So we are talking about one extra hinge (well two for each side of the door, which is four extra brackets), and the extra wiring to make them lift (probably similar to the power lift gate, only the computer again is able to control two different moveable parts instead of just one) so however much that costs, although the rear handles don't come out (at least I don't think they do) so maybe that helps save something... There is also the cost of the "hidden" sensors in the door. So I wouldn't picture from a component cost that we are talking all that much of a difference here, other than largely being captured in it being a bigger vehicle. Resource cost, is it more difficult to put together in the factory? By this I mean, does it take more time to install? I ask since the employees would be paid by the hour (or robots running certain volumes through), so if the time for assembly of piecing these together greatly exceeds the time of the Model S, then there would be an increased cost here. What I don't care about here is R&D cost to program the doors, and make them altogether work as this is a non-factor in the GM and would be cut and paste from one to the next. So what is "significantly more"? Because assuming it doesn't take them longer to assemble the X over the S (even if the doors themselves take a bit longer, it may balance out over the whole line with minor improvements, say, in not needing to attach a nose cone) then I don't think the raw component cost would be all that significant.

    The auto doors, there is no reason for them not to stick this on the S, and we don't know if they will wrap this into a package or include it in the base. It could be like the power lift gate where it is in the cost of the premium interior, and presumably there is no logical reason not to make this part of the S at some point.

    Same with the air filter. Is there any technical reason they couldn't make some modifications to the S to add in the bigger and better filter?

    As for the 20" wheels I am torn on this one, I could see this going either way, where they aren't charging anything more for it, and this too is included in that "5k" price difference.

    Not saying anything you said is wrong, just trying to analyze and over-analyze the question to figure out where the line gets drawn. Whatever the base ends up at, I am certain Tesla won't sacrifice margins for it. Especially given the demand for the vehicle.
     
  12. mdevp

    mdevp Member

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    This is what I was thinking about when adding all the MX's extra features and cost and trying to come up w/a 5k price. If Tesla can do it that's great. I am wondering what analysts are expecting however. I haven't seen an analyst comment on the MX's PM.
    edit And I definitely agree about the M3's margin. Didn't even think about that. We'll see though.
     
  13. anticitizen13.7

    anticitizen13.7 Enemy of the Status Quo

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  14. Fallenone

    Fallenone Active Member

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    Why wouldn't it? Except for the first two or three months when production is still being smoothed out, the first year after X mass production would be mostly fully loaded ones that have GM in the 30%. After that giga starts production and brings down the cost of batteries in addition to the economy of scale and production efficiency to keep the GM near the 25% level when the sales start to shift to a larger % of the 70kWh and less options.
     
  15. dalalsid

    dalalsid Member

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    Why offer an X70 and X90 but not an X85 just like the S? Is this a hint that 85 is going away? Also the premium package is a combination of a bunch of random unrelated stuff and priced too high. Could easily have been two separate packages and caused more option intake.
     
  16. andrewket

    andrewket 2014 S P85DL, 2016 X P90DL (soon 100)

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    I think the writing has been on the wall for awhile that the 85 is going away.
     
  17. chickensevil

    chickensevil Active Member

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    It is likely because the 90 is a different chemistry in the same packaging that they are just burning through the production of the last of the old cells before they drop it completely. Which means I must finally concede that those who said the 70 was a different chemistry was correct (I probably knew this was true for a while, I just know I had a decent amount of back and forth with some people here on the forums back when it was released and never admitted to being wrong). Maybe they started with the 70s instead of the 90s since they still had a large amount of old chemistry to burn through and very little amounts of the new chemistry coming in?

    In any case, Panasonic has likely been shifting their production lines to accommodate the new chemistry over the past year or so, and they are likely either finished or near finished with the old chemistry such that they aren't even going to both with it outside of what few orders are still hitting on the Model S.
     

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