For years, skeptics have argued that Tesla will never be profitable, that electric cars are "structurally unprofitable," that batteries are too expensive, and so on.
But recently, Tesla released its annual data, one of which pointed out that in the third quarter of 2021, it achieved the highest operating profit margin among all mass production car manufacturers, which has exceeded 12%, and the gross profit margin of single vehicles is as high as a staggering 30.6%.
Is not advertising the secret?
It is understood that Tesla's COGS cost per electric vehicle (COGS is the cost of goods sold, including all costs and expenses directly related to product production, but excluding management expenses, sales and marketing costs) fell to about $36,000 (about 229,000 yuan) in the third and fourth quarters of last year.
Considering Tesla's current starting price in the U.S. product line, the $36,000 cost figure is quite substantial. It can also be seen from the cost that the majority of Tesla's models on sale come from the Model 3, and the sales of the Model Y have also increased significantly in 2021, especially in the United States and the Chinese market. The cost of an electric car at $36,000 is already out of reach for many traditional automakers.
And considering that Tesla doesn't advertise like traditional automakers, costs including marketing will save Tesla a lot of money. But can Tesla be a "standout" presence just by not doing advertising? Obviously not. For example, Weilai, which is a high-end electric vehicle in China, has a gross vehicle gross profit margin of 18% in the third quarter of 2021, while the gross profit margin of Xiaopeng Motors in the third quarter of 2021 is 13.6%.
The root cause of high profit margins?
Tesla can achieve the highest profit margin, in short, that is, the cost of relatively fixed mechanical parts is greatly reduced, and the proportion of semiconductor devices has increased significantly, coupled with Tesla's own cost pricing method, so that Tesla can reduce costs. On the Model 3 and Model Y, a steering wheel, two rollers, two levers, and a large central control screen cover almost all the functional operations and information display. On traditional vehicles, the mirror adjustment knob, wiper lever, and other buttons in the center control are all omitted by Tesla. From the perspective of cost reduction and efficiency, it is these highly simplified designs that help Tesla save a lot of costs of panels and buttons.
As for putting most of the functions into the software of the central control, it does not cost extra money. Moreover, after the localization of the Shanghai factory, Tesla has continuously reduced manufacturing costs by replacing domestic suppliers to drive motors, domestic lithium batteries, lithium iron phosphate batteries and other methods. By matching different models with corresponding electric motors and battery packs, the classification of high and low models is realized, and the cost performance of products is further improved under the premise of ensuring profits.
In the second half of last year, first-tier cities accounted for only 38.5% of Tesla's sales, while the proportion of sales in new first-tier + second-tier cities has increased to 55.8%. Under this top-down strategic layout of gradually infiltrating from first-tier cities to second- and third-tier cities, it is inevitable to continuously reduce prices and sink themselves into a wider user base to obtain more consumers. After the Model 3 price cut, Tesla has formed a complete product layout at 230,000, 270,000, 340,000 and 370,000, further expanding the coverage of potential populations.
Of course, as a smart car, its bicycle cost includes the software part in addition to the hardware part, hardware transactions can bring the most direct benefits, and software transactions are sustainable benefits. Tesla's idea is to sell the whole vehicle first, and then customers can pay to choose the functions they need, and Tesla officials unlock the corresponding functions through the activation of the background OTA to achieve functional differentiation under a single product. The diversification of profit models has also made Tesla's profit margins high.
Write at the back:
Finally, we share an interesting thing that Tesla's Fremont plant in North America will produce an average of 8550 cars per week in 2021, and Toyota's plant in Georgetown, Kentucky, will produce 8427 cars per week. Toyota's factory area is almost twice that of the Tess factory, and tesla's strong cost control is well explained if the output value per unit area of the factory is calculated.