Margins on Model S

Margins on Model S

Just saw this article on the Chevy Volt:

I'm curious as to how relevant this is to the Model S. My guess would be somewhere in between completely irrelevant and moderately relevant. Obviously, the Model S doesn't have to equip a car with an ICE, so that is a lot of money saved over the Volt. However, not knowing what battery costs are, etc., I thought I would raise the question.

I obviously don't want the price of the Model S to go up :), but would love to make sure the business model is sustainable for decades to come.

nickjhowe | September 10, 2012

This is a non-story. The profit/loss per vehicle is completely dependent on how you allocate the fixed costs and whether you are talking about gross margins, net margins, operating profit, etc. etc. Elon has committed to the market that TM will make 25+% gross margin on every car.

The break-even point for Model S is something around 8000 cars per year (according to Elon).

LarsT | September 10, 2012

Well, the pretty cool thing for Tesla Motors is that prices for Li-Ion batteries drop every month - so the margin should increase every month, if the car prices stay constant. That is pretty unique in the industry.

Captain_Zap | September 10, 2012

I didn't see any talk of the CAFE standards figured into their equation. Therefore, I don't see this as a complete analysis of the real profit/loss for the company with regard to this specific vehicle.

Brian H | September 10, 2012

I think TM's contract with Panasonic probably doesn't provide for monthly adjustments, but the long term trend will be reflected.

Brian H | September 10, 2012

TM is selling credits for exceeding emissions standards, if that's what you're referring to.