jeewee3000
Active Member
EDIT: @saniflash beat me to it, but my reply was more in laymans terms so I'll let it stand:I realized today I might've been majorly misinterpreting European prices and if so I'll need to adjust my earnings model. As an uncultured American, I'm accustomed to seeing sales tax added after the listed price and I'm not sure I understand how the value added tax (VAT) works.
For example, in Germany (link) the Model Y Performance is listed for 63,990 € and in the details window the English-translated statement is:
Pay the vehicle price by bank transfer to become the owner of your vehicle after delivery.Cash payment price 64,970 €Incl. VAT of approx. 10,373 €Processing fees of 980 €Incl. €2,500 environmental bonus (net)
How much revenue would Tesla receive from this order? Is the VAT embedded in the 64970 € cash price? Is the environmental bonus also embedded in the listed price where the government pays 2500 to Tesla, or is it a personal tax credit?
If Tesla only gets 64970-10373 = 54597 € = $ 58.8k then the revenue on a German Perf Y is $10k less than in the US. That would be surprising to me considering the fuel price situation in Europe right now and the lack of supply of Teslas with Berlin barely making anything yet and Shanghai having been restricted so much this year.
In the EU the VAT part of the sticker price (10,373 EUR in your example) is payed by the customer to Tesla, but every quarter the company has to inform the government (department of Finance) of the total VAT received and spent.
Companies receive VAT when they sell goods/services (such as cars in Tesla's case) and they spend VAT when they buy goods/services (suppliers, contractors, NOT employees, that's a different tax system).
The net-VAT is owed to the government every quarter. If you spend more than you make (VAT-wise), you can receive the VAT from the government or transfer the virtual debt to the next quarter.
Long story short, the VAT that is received by Tesla can be used directly to fund the cost of the car. To guesstimate the net profit, you could say Tesla has to pay VAT on the profit margin of the vehicle.
So a 65k car with a 30% profit margin (19.5k) would consist of ~16k pure profit after ~3.5k VAT owed to the government. (assuming 21% VAT rate)
(This calculation is flawed in either direction. For starters, not all of the cost of goods sold is VAT deductible (for example employees). On the other hand Tesla will probably spend more on VAT-deductible services than just for their cars (but also R&D, expansion, etcetera). Therefore I'm assuming these cancel each other out.)