05-11-2017, 03:05 PM
(05-11-2017, 01:44 PM)JustWinBaby Wrote: Well, admin costs and R&D is part of building a car. While some of that is growth and other initiatives, you are also ignoring massive tax credits they've been getting to subsidize their vehicles, both directly to the company and indirectly to the consumer. The tax incentives alone make up at least half of that "25% gross margin".
If I take Ford and GM, with R&D and SG&A 14-15% of sales....Obviously they have a much larger base to spread those costs, but factor that in and a generous 10% tax incentive and you realize Tesla doesn't make a profit on its cars (and we're talking high-end luxury, which has much higher margins than Ford and GM average fleet).
Let's start backwards and work forwards. BMW makes about 9.5% on their cars and Mercedes 7.9%, Porsche's 18% is closer inline with what Tesla makes on their cars but still not as high. Even if you want to try and argue the incentives are propping up the margins, I disagree seeing as the EV credit is $7,500 and won't even apply to the Model 3 in the 25% projections by analysts. As far as direct incentives Tesla has received 4.9 Billion from the government across ALL AREAS OF WORK, while Ford has gotten 2.3 Billion in just the last 15 years to build nothing but cars. The subsidies was an investment in building up their infrastructure which is finally in place.
As for the admin costs and R&D, they are not part of "building a car" it is part of building a company that one of their product lines are cars and there is the issue with trying to distribute it evenly across their car line only. The cost incurred with building the giga factory are included in that "loss per car" figure but it is supply line investment to multiple business lines. With them controlling the supply of arguably the most important component to the cars their margins will continue to grow on the cars though. That R&D also was fed into the power wall which will be sold as part of the solar roof project which will also generate revenue. Applying it all up front to the automobile business and a per car figure is a short sighted view of a larger company. I have seen figures that put them closer to making around 21k per Model S they sell, this is when accounting for only expenses directly related to the automobile side.
It's all kind of an aside to this specific product, but interesting to discuss none the less.
