This is an irrelevant ad hominem argument. I presented the relevant math and assumptions.
For automotive margins, the cost-side projections were pretty accurate but I did not anticipate an unprecedentedly rapid increase in interest rates and credit tightening that resulted in plummeting car prices throughout the entire global market. Sorry. I did my best. In any case, I’m banking on long-term gross profit of $5-10k per car (excluding software), which is pretty conservative in my opinion considering Tesla’s extreme lead on cost control that Gen 3 technology will provide. Most of the money will come in the 30s and beyond when Tesla Automotive is making tens of millions of vehicles per year.
To be clear, I’m specifically talking about potential 50% margins for Megapacks:
- Produced and sold in the USA and getting the $45/kWh IRA credits, some amount of critical mineral credits, as well as the 30% subsidy for the customers
- At current prices
- Including the net present value of service and software profits
This is obviously a best-case scenario that is going to apply to a minority of overall Megapack sales, and I do not expect it will last long. 20-30% gross margin off of $200-300/kWh average global price sounds about right if we’re looking out a few years from now. The main point is was trying to make was that people thought the 50% margin projections were outlandish earlier this year, yet Tesla just cut prices by a whopping 22%. This move strongly suggests that margins were actually very high at the previous prices.
That being said, like with cars, this is heavily influenced by the cost of capital (i.e. interest rates) and a variety of other market factors beyond Tesla’s control and well beyond my own ability to predict. What I am confident in is that Tesla has the best product, the strongest market position, and what will soon be the lowest cost, and this will make the Megapack business very profitable when at TWh scale.
