Hadn't thought of that before. Do you think the trade-in revenues are larger than the service centre revenues? The 'service and other' revenue line item seems to be scaling with Tesla's overall fleet size, so I suppose either could be the driving factor (or both).
Interesting point re: overpaying for trade-ins, but I'm not sure I completely understand your point about how that might affect gross margins. Can you elaborate?
Ex. If I trade in my old car (worth $5,000), and Tesla offers me $10,000 at the same time that I purchase their $50,000 car, I get that they'd be offering me an under-the-table discount, but how might that show up on their income statements? Would the $10,000 they paid me be a cost of 'service and other'?
Telsa has said used cars are the biggest piece of Services, Other. If they took 50k trades last quarter (roughly have of deliveries) at $10k average value that's $500m. And $10k is probably low.
Tesla's 800k fleet is very new, so the vast majority of repair are done under warranty and not counted as revenue or expense. Non-warranty repairs would only be a fraction of the 59m charged against warranty reserve last quarter.
In your trade example Tesla would count:
50k - Automotive Sales Revenue
40k - Cost of Automotive Sales
------
10k - Automotive Gross Profit
20% - Automotive Gross Margin
When the sold your trade-in they'd report:
5k - Services, Other Revenue
10k - Cost of Services, Other
------
(5k) - Services, Other gross profit
Discounting the new car purchase price to $45k would show as:
45k - Automotive Sales Revenue
40k - Cost of Automotive Sales
------
5k - Automotive Gross Profit
10% - Automotive Gross Margin
When the sold your trade-in they'd report:
5k - Services, Other Revenue
5k - Cost of Services, Other
------
0 - Services, Other gross profit
Overall gross and net profit are the same either way, but Automotive Gross Margin is the metric they promote. As I said, though, I don't think they do this. At least not to any significant degree. I just think they manage used cars in a way that protects and promotes the Tesla brand instead of trying to make money on them.