Most On Wall Street Can't Comprehend What Tesla Has Managed To Pull Off
I posted these graphs several weeks ago demonstrating Tesla's impressive 5 year Operating Margin % Growth.
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As I delved into the GM and Ford 10Ks, I realized that the Tesla story was much more impressive than my graphs had conveyed.
GM & Ford's Operating Margin gains have come mainly from their financing arms (see boxes in yellow).
When you isolate the Auto Operating Margins, GM's margins over the past 3 years have been flat in the 3%-4% range while Ford has not made money on its auto business.
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Meanwhile, Tesla OpInc Margin in 2021 was 13% for Auto. The number is likely higher than 13% as I did not allocate any SG&A costs to Energy.
Note: The Services revenues and costs are included in Auto.
Some additional facts & thoughts to compliment these findings:
- Tesla achieved the 13% margin in 2021 with slightly under 1m deliveries while GM delivered 6m and Ford 4m.
- Having higher OpInc margins with fewer deliveries indicates that Tesla's business is less complex, more streamlined with a lean operating structure.
- The 13% for Tesla in 2021 was for the full year. Tesla achieved Auto Operating Margins of 16.5% in both Q3 and Q4. I expect to see at least 18% for Tesla in 2022.
- These operating margins help to understand the decision to focus on Model 3/Y for 2022 and delay the Semi and CT . . .don't screw up the money printing machine !!
- Model 3 & Y 2021 price increases surfacing in 2022 with continued cost reductions will further improve margins despite the Berlin/Austin ramps.
- GM/Ford and other OEMs will see increasing Operating Margin pressures as they pivot from ICE to EV and when their Financing Margins come back down.
- When supply issues subside, I expect Tesla Energy to return to Operating Income profitability . . .I expect it to be this year.