3-4 more years of battery cost decreases didn't help on margins, as the overall has been around 25% for the past two more years. What makes it different at this time? Cell production at GF is still months away.
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Lower the price point, hence increase the addressable market, hence generate more sales.
Once in the tesla EV ecosystem, no turning back .
Once in the tesla EV ecosystem, no turning back .
Exactly. Constant battery cost reduction is just another "lie" from Tesla management. Unfortunately it did fool a lot of fanboys in TMC.
GF won't be able to produce lower cost cells than Panasonic does for many years. GF grand opening is just another "show" from Elon Musk.
Is Tesla a non-profit organization? Shareholders want not only growth but also margin and profit. Using S60 sales to make up the shortfall of X sales is not a good idea. Tesla needs to at least sell TWO S60 to compensate ONE X.
Margins roughly remained same because battery cost savings were roughly offset by increase other costs: addition of AP hardware and many premium features becoming standard.
What you should pay attention instead is to the significant increase in revenue, roughly 70% every year, at the same margin.
Gerasimental
Member
James, do you understand what "quotation marks" are for‽
Agreed that (re)introduction of S60 is at worst neutral.
Agreed that (re)introduction of S60 is at worst neutral.
And "generate more sales", increases capacity utilization, which spreads fixed costs over larger volume production, which actually increases margins across the board, not decrease(assuming they already spent the money on add'l capacity via capex).
Tesla used to use 60kWh battery in S60, now using 75kWh battery. As Fallenone pointed out earlier, it's $3000 loss in margin for every S60 car sold.
Can you recall Q1 showed the similar pattern but still missed?
Those are totally numeric games Tesla management played with shareholders. They even guided 100K back to 2014. Until they deliver, you can't trust their guidance.
Losing 3000 can only happen if someone who was willing to buy 70 battery now goes with 60. I don't think so. Those who had made up their mind on 70/75 battery will go with 75.
Adding 60 battery will bring in a new set of customers who are a much larger group. As someone commented before, this would greatly help in spreading the fixed cost.
In a highly leveraged high fixed cost business, increasing volume or revenue is far more important than slight penalty you pay in reduced margin.
Great, JamesTSLA apparently has come off his ban and will now be providing his "insight" in the form of 50 one-line inflammatory posts per day worthy of Yahoo message boards. Can't wait for the permanent ban.
Back on topic...volume looks to be back to normal, though relatively light today. $232.50 has provided solid support. Looks like a consolidation before heading higher once we (hopefully) confirm a beat on Q2 guidance in early July.
Back on topic...volume looks to be back to normal, though relatively light today. $232.50 has provided solid support. Looks like a consolidation before heading higher once we (hopefully) confirm a beat on Q2 guidance in early July.
MartinAustin
Active Member
You'll be asking for a dividend next!!!
I think you may have forgotten Tesla's mission.Tesla was first to market, is now the market leader, and has a technology advantage of several years over competitors, and are still on the same mission they were on when they began. They probably know what they're doing with this new 60kWh car.
While I'm here - the new 60kWh car has one more standard feature it didn't have previously - free access to the Supercharger network.
I suppose you both have forgotten about autopilot hardware standard, supercharging standard, how the S60 used to be a much smaller proportion of the sales mix versus the S70, and all the other free new features introduced since the original S60?
These things have always eaten away from margins, every single time. The original S60 was a way worse car for pretty much the same cost. If their battery margins weren't improving, all the freebies thrown in the past few years would have tanked gross margins on the car to well under 20%.
3Victoria
Active Member
Selling a 60 with a 75 battery means:
- less battery types = savings on inventory cost;
- loss of revenue from "$3k loss" likely made up by extra options purchased -- many are willing to have less range but may want the other options -- and very likely the upgrade to 75 later (at a better margin).
As well as the other reasons, eg volume savings.
- less battery types = savings on inventory cost;
- loss of revenue from "$3k loss" likely made up by extra options purchased -- many are willing to have less range but may want the other options -- and very likely the upgrade to 75 later (at a better margin).
As well as the other reasons, eg volume savings.
I'm well aware this new 60kWh is far better than the old 60kWh, and the cost for making it should be higher than 3 years before, and off-set by better battery costs. I wouldn't worried about the margins for 60kWh if it actually has 60kWh battery in it. But, this new 60kWh costs Tesla just as much the 75kWh. Tesla is now at the customers' mercy of getting the 8500k-9000k revenue back. So yes, I am worried about the impact on margins.
To maximize profits, produce as long as marginal revenue exceeds marginal cost.
The fixed costs are sunk, now just push the robots to full throttle.
The fixed costs are sunk, now just push the robots to full throttle.
Honestly, for this guy to be back on the board after his earlier behavior while Julian is kept on the sidelines seems wrong to me.
Actually both parts of that sentence seem wrong to me.
Why wouldn't you think so? Apparently Tesla thinks they will have additional buyers at a price point of 66k with a 60kWh battery. And every buyer that goes with this and don't upgrade means Tesla losing a chunk of margin for these cars sold. Remember, the cost to Tesla for the 60 kWh and 75 kWh is the same.
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